NEW SUTTON PLACE OWNERS LAUNCH REPOSITIONING EFFORT

LYNNE MILLER

BETHESDA, Md. -- Cutting prices on more than 1,000 products and reconfiguring the selection were at the top of the "to do" list for the new executives leading the Sutton Place Group of specialty food stores, based here.

The changes are part of a strategy to reposition the chain for growth by seeking to make the stores more accessible to existing shoppers and appealing enough to attract new customers, said Joe Dobrow, vice president of marketing for the Sutton Place Group, which operates 11 stores under the Sutton Place Gourmet, Hay Day Farm Market and Balducci's banners.

"What we hope to be able to do is maintain that uniqueness and specialness that separates us from conventional supermarkets, but at the same time get rid of the high-priced image," Dobrow told SN. "We want it to be a special shopping experience, but we don't want it to be so upscale/high end that people don't feel they can connect to it."

Dobrow is a member of the new management team assembled this month to reinvigorate the chain. The Sutton Place Group was recently acquired by Bear Stearns Merchant Banking, and the new owners have agreed to invest up to $50 million in the company. Dobrow previously worked with Mark Ordan, who is chief executive officer, Sutton Place, and Joel Danick, who is chief operating officer, at the Rockville, Md.-based Fresh Fields natural-foods chain, which was founded by Ordan in 1991. Whole Foods Market, Austin, Texas, acquired Fresh Fields in 1996.

Sutton Place this month launched a high-profile advertising campaign to let consumers know about the reduced prices and 40%-off clearance sale on items being discontinued. Print ads in the Washington Post and New York Times carried the headline "Going Into Business Sale," and informed readers, "We always loved the food here, but we hated the prices." Prominent signs were set up in the stores announcing the changes.

The company cut everyday prices -- in some cases by more than 40% -- on several fresh and shelf-stable foods, including select cheeses, filet mignon, seafood, bottled pasta sauces and spirits. At the same time, the company intends to discontinue certain specialty salsas, tablecloths, napkins and place mats, soaps, various soft drinks and other bottled beverages to make room for everyday household products, Dobrow said. There are also plans to increase the offerings in the grocery aisles and produce departments.

"You have customers now who will come into our stores to buy USDA prime meats or high-quality seafoods or baked goods or caviar, things that are very high end," he said. "Then they say I have to get aluminum foil today or need some laundry detergent. They can't get it at our stores. We haven't sold it. When you create that sort of shopping environment, what you're doing is giving consumers an excuse to shop elsewhere. We want to eliminate as many of those excuses as we can."

While one published report noted the new owners intend to have 50 stores, perhaps under the Balducci's banner, operating on the East Coast within five years, Dobrow refused to specify how many new stores the company planned to open. It also is not known yet whether Sutton Place will continue to operate three banners, he said.

"We've got a lot of work to do right now to bring these stores into the 21st century and make some changes to them," he said. "Yes, clearly we're looking to grow rather aggressively."

Industry watchers are keeping an eye on the changes, particularly in the highly competitive New York specialty food market. In recent years, the stores had lost some of their former luster. Observers noted the new management team's considerable retailing experience bodes well for the future.

"The trick is to bring in new [customers] without alienating your existing customer base," said Andrew D. Arons, president and chief executive officer, Gourmet Garage, the New York-based chain of gourmet supermarkets. "You need good leadership. I know Mark from his Fresh Fields days. He's a visionary guy, and he's good at what he does."

The new team at Sutton Place is likely to set the company on a more focused path, without straying too far from the high-quality image that made the stores successful, said the president of the National Association for the Specialty Food Trade, New York.

"The industry feeling was change was needed for the stores," said John Roberts, president of NASFT. "There was a feeling a clearer directional path needed to be set. This is a group that knows what it's doing at retail and can articulate what they're after, and will go after it dramatically. I'd bet a year from now, everyone will understand what this three-banner operation will be in the future."