SMALL FORMATS, 'WHOLE STORE'

ROSEANNE HARPER

Convenience and freshness topped the deli/fresh meals menu this year as many retailers opened smaller-format stores -- some as small as 7,000 square feet -- that showcase their fresh departments, especially meal solutions. Grand Union Co., Clemens Markets and Kings Super Markets are among those who took that road in 1999.

Retailers also installed separate entrances to food courts, opened up the kitchen, and simplified programs to make them more manageable at store level. They also concentrated on "selling the whole store" with aggressive cross-merchandising. They may have stopped talking about Home Meal Replacement, but they buckled down to find practical ways to offer meals.

"[Supermarket operators] are beginning to look at the category as a possible growth area, not just a convenience for customers. They're looking closer at the top and bottom lines," said Anthony Tedesco, consultant at Arthur Andersen/Senn Delaney, Chicago.

The selection is decidedly upscale at a new-format store unveiled by Kulpsville, Pa.-based Clemens Markets in the toney Philadelphia suburb of Bryn Mawr. That 20,000-square-foot store was dubbed "foodsource" by Clemens and sports a chef's case reminiscent of EatZi's.

Meals in various stages of preparation are the feature at a new store Kings Super Markets, Parsippany, N.J., opened this summer in Hoboken, N.J., an upscale urban community that lies just across the Hudson from Manhattan. In addition to showcasing an extensive line of prepared foods, the chain is using that 7,000-square-foot store to launch value-added meat and seafood entrees.

"We think there's even a bigger market for products that are partially prepared," said Alan Levitan, president and chief executive officer of the 23-unit Kings. That sentiment was echoed by other supermarket operators.

Consumers themselves got more attention as retailers recognized a need to convince shoppers that supermarkets are a viable source for ready-to-eat and ready-to-heat meals. Roche Bros., Wellesley Hills, Mass., watched the way consumers shopped the self-service, prepared food cases and then made changes to make it more convenient for the meals-seeking customers. It rearranged cases to display items in "menu order," i.e. appetizers, soups and then entrees, and clearly designated the sections. The result: sales climbed dramatically.

Heeding consumers' concerns about freshness, retailers also took measures to show off freshness. Newly designed stores featuring open food preparation led the way.

A case in point is Foodland Super Market Ltd., Honolulu. The chain redesigned a store specifically to "open up the backroom." The major instruction to the architect was, "Show customers what we're doing," said Jenai Wall, president of the 27-unit chain.

To send the "fresh" message, other retailers, such as Schnuck Markets, St. Louis, installed a grill for the first time, in a remodeled unit. And, for customers' convenience, it put in a separate entrance to the food court at that store.

When the remodel was unveiled last spring, Craig Schnuck, chairman and CEO of the family-owned chain, told the consumer press that the store was designed to give customers what they want and to give the company a competitive edge.

"We think we can provide a larger piece of the total food-shopping needs of a consumer than competitors like Wal-Mart and Kmart," Schnuck said.

Food Lion, Salisbury, N.C., also took customer convenience to heart. It adopted a new motto -- "Food Lion & Fast" -- and a new merchandising strategy that includes giving its deli/food-service departments a separate register and moving them to the front of the store.

"We did a lot of research and we found that customers do want the deli upfront. We're out to take the [take-out meals] business back from the fast-food industry," said Bruce Dawson, vice president of operations for Food Lion's Northern division.

Some chains launched unprecedented guarantee programs to ensure convenience for the customer and/or the freshness of their products.

Food Emporium, a Bronx, N.Y.-based division of A&P, Montvale, N.J., launched a chainwide "Fresh or Free" program last spring that guarantees the freshness of products throughout the store.

"For products such as prepared salads or entrees that don't have a code date [because they're served up from the deli case], store personnel are responsible for defining fresh and satisfying the customer," said Andy Carrano, A&P's vice president of marketing and corporate affairs.

"For example, if a customer thought something in the case didn't appear fresh, we'd assure him it was fresh and offer him a taste of it. Then, if after tasting it, he insisted it wasn't fresh, we'd offer him a certain amount from a fresh batch without charge," Carrano said.

Safeway, Pleasanton, Calif., launched a program -- a first for the company -- that guarantees it will have roasted chickens hot and ready to go between 4 o'clock and 7 o'clock in the evening, or the customer will get a roasted chicken free on his next visit to the store.

That's an example of one of the most significant moves this year: retailers enhancing tried-and-true customer favorites like fried chicken, roasted chicken and sandwiches, and marketing them better.

Some companies shelved their fancier offerings and/or cut the number of varieties they offer -- especially in hot foods -- to minimize shrink and maintain quality.

Stop & Shop Cos., Quincy, Mass., cut way back on its hot-food menu at a new store in New Rochelle, N.Y. And Grand Union Co., Wayne, N.J., at its smaller-than-traditional Fresh Market format, unveiled this fall, offers only one hot entree a day. Most entrees and sides are offered chilled from a chef's service case. The product mix there includes both comfort foods and upscale "chef's creations."

Meanwhile, other retailers continued full speed ahead by reinvesting in their prepared-foods programs. Ukrop's Super Markets, Richmond, Va., celebrated the 10th anniversary of its central kitchen and prepared-foods program with a "Delicious Decade" promotion that included adding to its menu and highlighting the category with an extensive marketing campaign. And Wegmans Food Markets, Rochester, N.Y., at a Princeton, N.J., store it opened this summer, increased its merchandising of ready-to-cook fare alongside prepared items, and even offered instructions, via printed handouts, on how to arrange the dinner plate attractively.

Retailers, in many cases, continued to bring in branded products or branded operations. Schnuck in St. Louis and Foodland in Hawaii brought Starbucks coffee operations into their foodcourts, and Genuardi's Family Markets, Norristown, Pa., linked up with a locally revered Mexican restaurant to run a branded operation at a new store. Harris Teeter, Charlotte, N.C., added pizazz at its H-T Express store by partnering with a local caterer known for its top quality. The caterer's name, Something Classic, gets top billing on prepackaged gourmet entrees it offers there and at a staffed, made-to-order sandwich station just inside the store's entrance.

All this activity could, to some extent, have been bred of heated-up competition in the marketplace. Alternate formats such as convenience stores and bagel shops added to their menus and their marketing efforts. Southland Corp., Dallas, beefed up hot breakfasts at its 7-Eleven stores and officials said they're looking to test prepared, packaged entrees. Starbucks began offering lunch and Manhattan Bagel expanded its lunch menu twice, with marketing fanfare. Blimpie International added Pasta Central. McDonald's bought Boston Market. It looked like everybody was courting the meals customer.

But there were jolts this year, too. Westvaco discontinued its TrayFresh heat-sealed packaging line, which had been specifically designed for fresh entrees and sides. And EatZi's, the hybrid market-restaurant meals store that has held the industry's attention so tightly, closed its Westbury, N.Y., unit , and officials -- while they said EatZi's other locations are doing just fine -- admitted they're not happy with sales at the EatZi's site within Macy's department store in New York City.

Even though some supermarket operators mused that those events reflected a slowdown in the meals-to-take-home market, others in the industry said the market is stronger than ever. The only question, they said, is whether supermarkets will get their share of it.