CINCINNATI — The Kroger Co. has expanded its partnership with Murray's Cheese, the New York-based cheese importer and retailer, contracting to open 50 additional Murray's store-within-a-store locations in its supermarkets over the next three years.
Kroger currently operates three Murray's Cheese shops in stores in the Cincinnati marketing area, and one in Dayton. The latter, and most recent, had its debut last summer at a Fresh Fare-format store that replaced a traditional Kroger unit there.
The deal to expand the partnership, signed earlier this month, was spurred by the success of the first three locations, which together were regarded as a test that began almost a year and a half ago. It was a test that brought quite satisfactory results.
“Sales increases were significant,” Robert Kaufelt, president of Murray's Cheese, told SN.
“When the specialty cheese departments in those stores were replaced with Murray's, sales rose 50% to 100%.”
Reason enough to expand the effort, both parties agreed. But the partnership with Murray's also gives Kroger stores a special niche in a very competitive market, enhances its image, and gives its customers a superior selection of artisan cheeses.
“Expanding our relationship with Murray's Cheese will allow Kroger's family of stores to build on their expertise as we expand our cheese offerings for our customers,” said Jeff Burt, vice president of deli-bakery merchandising for Kroger.
The expansion deal calls for 50 more Murray's cut-and-wrap operations to go into Kroger stores within the next three years. Several of those will be in place in the Cincinnati area by the end of next year, officials said.
“It's a traditional licensing agreement we have with Kroger. In effect, we're paid a commission,” Kaufelt said.
But Murray's keeps close tabs on the operations. Here's how it works.
“Kroger operates the Murray's stores within their stores, but we're closely involved,” Kaufelt explained. “Kroger builds the Murray's stores, but we did the original design and decor. We even get involved with their IT people, with category management and SKU evaluation, and with distributor selection.”
Kroger has its own distributors, but Murray's experience over the years, when it used distributors, has informed the company as to which ones are most savvy about various aspects of distributing artisan cheese — including proper handling and storage.
“Some, for example, are better at back-room stuff,” Kaufelt said.
All deliveries for the Murray's stores in Kroger units are direct-store delivered or are delivered to a DSD warehouse to limit mishandling, Kaufelt explained.
The existing Murray's Cheese departments in Kroger stores — as well as those that will open over the next three years — look and feel much like Murray's Cheese flagship store in New York City's Greenwich Village.
In fact, many of the 500 items the departments carry include the same cheeses, crackers, dried fruits and olives offered at Murray's original store.
Kroger employees who staff the Murray's stores-within-the-store wear Murray's jackets, and the Murray's brand is ever present in signage, wall decor and point-of-purchase materials.
The in-Kroger Murray's operations, with an average size of 640 square feet, are always positioned near the deli. They're managed by a Kroger employee, with the new title of cheese master, and staffed by Kroger employees.
“As we learn more about Kroger and what they're doing and how, we'll be able to help them customize their cheese selection to particular locations based on the data they have, but we aren't that far along yet,” Kaufelt said.
This past year, Kaufelt said, his business in New York has been good, but “just good.” He has been importing fewer cheeses and relying more on quality domestic items, he said. With the dollar weak against the euro, and the difficult and competitive environment that prevails here, he has shifted toward more items from Wisconsin and other parts of the United States, Kaufelt said.
“One thing this expansion agreement we just signed with Kroger will give us is stronger buying power,” he said.
“Right now, after this expansion agreement was signed, my entire management team is involved in the Kroger project,” Kaufelt said. “As we go along, my vice president, Liz Thorpe, will be devoting most of her time to developing the program.”
Initially, when the test locations were set up, Murray's sent a contingent of its experts to Kroger to help train Kroger employees to sell Murray's cheese. Now several Kroger associates and managers — certainly including the cheese masters — will come to New York for some intensive training at the flagship store.
This is not just any match-up. Seasoned Kroger officials are working hand in hand with a seasoned supermarket man — Kaufelt — which helps eliminate a lot of misunderstandings and makes communication easy.
“They [Kroger officials] have been very nice. And easy to deal with,” Kaufelt said.
The officials who have worked most closely on the partnership have been with Kroger for years and have a good sense of their customers and what they want. And Kaufelt is no novice when it comes to supermarkets. Before buying Murray's, he had opportunity to see how the supermarket culture works because he was right in its midst.
“I worked with my father and grandfather in the family business, and came up through the ranks,” Kaufelt told SN. “We had Mayfair Supermarkets in New Jersey, and were part of the Twin County Food Cooperative. Actually, we were the largest member [40 units] of that co-op.”
The last five years he was with Mayfair, Kaufelt served as president of the family-owned chain.
“My father Stanley Kaufelt, one of the pioneers in the supermarket business [since 1947], is very enthusiastic about this current Murray's-Kroger partnership,” Kaufelt said. “He was with me in Cincinnati last week when we signed the expansion agreement.”
The store-in-a-store concept had its beginnings five years ago when some Kroger officials visited Murray's Greenwich Village store and spoke to Kaufelt.
“At the time, we were particularly busy doing our own thing, creating [aging] caves in our cellar, and classrooms here at this location,” Kaufelt said.
“A little later, they approached us, and asked if some kind of partnership could be worked out. We and Kroger officials decided to test the idea and put the first one in a Cincinnati store. That was about a year and a half ago.”
Kaufelt, in conjunction with Kroger, is developing a full schedule of promotions for the holiday season.
“Having a hot special featuring a particular cheese, a lot of demos, pairing cheeses with wine and even produce, and we'll tie in with the chefs in these stores,” Kaufelt said. “Just some old-fashioned promoting, even corny, maybe, but it'll be exciting. A sales contest between two or three stores, with just a token prize, maybe a T-shirt.”
<These promotions will make it tough for customers to ignore the Murray's cut-and-wrap operations this holiday season, and that will help Murray's fulfill its corporate mission, Kaufelt said.
“This relationship with Kroger,” Kaufelt said, “is another step toward fulfilling our mission: Getting more people to enjoy great cheese.”
Murray's, with three stores in New York, is widely renowned for the quality of the cheese it offers. It has been named “The Best Cheese Shop in the World” by Forbes.com, and “The Best Cheese Shop in New York” by Time Out-New York magazine.
Kroger, the country's largest conventional supermarket chain, operates 2,470 stores in 31 states. In the market areas where its stores currently have Murray's store-in-a-store cut-and-wrap operations, the company's competition includes Jungle Jim's International Market and Whole Foods Market as well as several long-established specialty stores.