UPGRADING DOWN HOME

CHRISTINE BLANK

SAG HARBOR, N.Y. -- An independent retailer in this upscale resort town has discovered that it pays to play up its fresh meals, even if it means investing in costly renovations.

Mike Schiavoni, president of Schiavoni's IGA, is still fine-tuning the atmosphere of the 8,000-square-foot store, after spending $250,000 on equipment and renovating the interior in 1996. As a result, sales are up in each updated department.

Stark, white lights were replaced with warm bulbs, accentuating fresh-meal offerings in the deli, while knotted-pine paneling and hand-painted blue tiles were placed on the walls to give the store a "country kitchen" feel.

On the food side, Schiavoni switched from the usual deli offerings in several cases to a more focused fresh-meals approach, after he noticed that many customers purchased frozen dinners in the late afternoon. In addition, he wanted to create "signature" products for the store, to draw people from other supermarkets and nearby restaurants.

"When you're totally unique and have more signature stuff, you have more people coming in," he said. Retailers have to offer something different in the close-knit town of approximately 10,000 in the summer and 2,500 in the winter. "It's hard to compete on groceries. Other stores will take six to seven specials that are loss-leaders, but everything else is just a little less than regular price. The perception is that independents are going to be higher-priced, but we're pretty much the same as the chains," Schiavoni said.

A King Kullen store about 8 miles away is Schiavoni's nearest rival. Instead of competing on groceries, Schiavoni concentrated on boosting profit margins in the fresh areas, and remodeled those areas first. He visited several gourmet and grocery stores in the Northeast, garnering ideas on salad bars, lighting, bakery equipment, and self-service meat offerings. (He also received input from the engineering department at wholesaler Bozzuto's, Cheshire, Conn., and his wife, Karen, who helped design and set up deli displays and the wood lattice design hanging over a deli case in the aisle).

As a result of the changes, total store volume has increased 20% a year for the past two years.

He started the changeover in the store's deli with "ugly green awnings" over the cases. He removed the existing tile floors and green paneling throughout the store. The tile, which would often crack and split, was replaced with a wood floor and the walls now feature knotted-pine paneling. In addition, blue tiles, hand-painted by a friend of Schiavoni's, were put on the walls in the deli, meat and bakery departments.

Details are abundant and add a domestic theme: pine wood lattice-type displays with dried flowers and hanging baskets hang over the deli and produce departments. And Schiavoni added a novelty: a 60-year-old sign touting coffee cakes and sandwiches from a former shop in the area, along with pictures of his grandfather, who purchased the store in 1941.

Since 1996, Schiavoni has switched from basically a refrigerated deli operation of cold cuts, salads and other items to numerous prepared meals, with an emphasis on Italian, American and Mexican foods. Customers order entrees by the pound, and ask staff to reheat the meals there, or reheat them at home. Schiavoni is also experimenting with some packaged meals, such as Shrimp Primavera for two, in a black plastic oval tray with a clear, snap-on lid.

New emphasis has also been placed on fresh foods -- at least 80% of prepared meats, salads and entrees are made from scratch. And the "open" appearance of the deli promotes freshness.

"They can see you preparing foods. They like that freshness," Schiavoni said. An 8-foot slanted glass deli case holds cold cuts, arranged on large trays, and a 12-foot case features salads and prepared foods, such as lasagna, in rectangular 5- and 10-pound stoneware crocks. "They aren't as pretty as the black and white marbled bowls we used to have, but they hold more," Schiavoni said.

The deli includes only 10 square feet of actual work space, and 20 feet of cases. Although he "really needs" a large kitchen, Schiavoni does not have room on his lot, squeezed between two other buildings on the town's main street. Still, changes in the deli have had an effect: sales are up from 7% of total store sales to between 10% and 12%.

In the meat department, a new 12-foot curved glass case features fresh meat, sliced on trays, and another 8-foot case holds chopped meats, sausages and prepared foods. "Oven-ready" meat entrees include stuffed chicken, Beef Rollettes, marinated steaks and kabobs. In addition, a Nax slanted 5-foot case features fresh fish. Customers have been especially attracted to the sliced meat arranged on trays. "It's unique in the area we live. Most stores are either self-service packaged or cut for you. The trays are probably the most attractive way to present it, and it seems to get the freshness across better," Schiavoni said.

The primary challenge is keeping the meats fresh. "You can't let things get old. You don't load the case in the morning, for example; you just have some displays out there," he said.

Other major changes made during renovations included:

Cooking Equipment: A new Baker's Aid, 4-foot by 4-foot rack oven helped Schiavoni save space because he previously had a 6-foot deck oven, which was primarily for baked goods. The new oven, with rotating racks that can be wheeled into the unit, is shared by the deli and bakery because it can cook baked goods, roasted chicken and turkey and other foods. Schiavoni also added a six-burner Imperial gas stove, to cook entrees for the deli.

In addition, he would like to purchase a larger self-serve warmer for the front of the deli, to replace a 4-foot wide, 2.5-foot high warmer on top of the deli case that holds chicken, ribs, etc. He would keep the 4-foot warmer for grab-and-go stuffed pasta shells, meatballs and other items.

Lighting: Schiavoni added track lighting over a 4-foot by 6-foot refrigerated roll bin in front of the deli. He also put in recess lighting -- comprised of flat fixtures on the ceiling with soft floodlight bulbs -- directly over the deli work area and perimeter of the cases. In the cases, Schiavoni opted for high-intensity warm lighting. These amplify the red, pink and yellow tinges in the food, instead of stark white, blue and green hues. The perimeter of the deli is actually relatively dimly lit, to encourage customers to focus on the entrees and meats under the high-intensity lights.

"The cases tend to be the brightest thing back there -- they really draw your eyes into the food," Schiavoni said. When remodeling, Schiavoni was able to use some of the fixtures already in place over the deli, bakery and meat cases and under the green awning that he removed. Schiavoni replaced "cool" light bulbs with "warm" bulbs in the fixtures that hang from the ceiling.

Schiavoni is in the midst of taking his "warm" lighting campaign to the rest of the store. He is adding some 6-foot by 6-foot fixtures on the ceiling, and is replacing bulbs in other fixtures with "high-intensity" bulbs from General Electric and Phillips. "They are expensive, but they last longer than traditional warm light or cool white bulbs," Schiavoni said.

Salad bar: Schiavoni added a salad bar near the deli, the "only self-serve salad bar" in the area, he said. He purchased a small table, 40 inches by 20 inches, cut a hole in the middle, and made a holder for ice and metal trays. He added a sneeze guard over the unit, which features "basic" salad-bar offerings. In addition, one end of the table features self-serve hot soups in the winter and cold drinks during the summer months.

Olive and cheese displays: Two 4-foot cases of specialty olives, fresh pasta and gourmet cheeses in front of the deli, in the middle of the aisle, are so popular Schiavoni wants to expand the concept. "Those are high-profit margins. I wish I had more space to expand," he said. Before he added the cases, Schiavoni had a small, self-serve olive bar that was "mostly a mess. People perceive that the items are more fresh when packaged by the deli," he said.

Produce: Although he added a high-quality hanging wood lattice display in the produce department, sales have risen from 10% to 14% of total stores sales because of the "quality of the produce itself," Schiavoni said. Staff keeps the cases fresh and mixes in organic offerings, which are becoming more popular "when the price is right," Schiavoni said.