PRODUCE-DELI SECTION? A VALUE-ADDED SOLUTION

LOUISE KRAMER

SAN ANTONIO -- Deli departments beware.

The people in produce don't want to let you take away any of their business now that consumers are flocking to value-added items like dips, spreads, salads and fruit cups, which could theoretically be sold either in the deli or the produce department.

One small independent, Town & Country Thriftway, Bainbridge Island, Wash., has put a "produce deli" in its store as a way to take full advantage of the boom in value-added.

This new twist on value-added features a separate section in the store devoted solely to fresh-cut fruits and vegetables prepared at store level. The department has its own manager and its own staff, as well as its own preparation area.

A chef is on hand to demonstrate products, and regularly draws big crowds.

The items are merchandised in multideck refrigerated cases, and are self-service.

"We're doing a lot of turns on it," said Bill Earnest, produce merchandiser for Town & Country's 39-unit wholesale cooperative, Thriftway Stores Seattle, Olympia, Wash. Earnest discussed his program as a panelist at a seminar on fresh-cut produce at the annual conference of the Produce Marketing Association held here last week.

"We didn't want that glamour of our produce to go over to the deli and they were doing that," Earnest told the standing-room-only crowd of retailers and suppliers. "They were taking a lot of things that we thought we could do in produce. I could see in the

year 2000 us ending up with just needing potatoes and carrots. And this [fresh cut] is a department that can really draw people to produce," he said.

"Being an old produce guy, I did not want that going over to the deli department."

The items in the well-filled case at Town & Country include five types of store-prepared salad mixes in two sizes each, 10 varieties of precut vegetables, 15 assorted packages of precut fruit, 12 varieties of fresh-squeezed juice, three store-made salad dressings, three dips including seven-layer bean dip, a red and a green salsa, and apple sauce and apple butter. Croutons made in-store are also on sale.

The produce is universal product coded and code-dated, said Earnest.

The 32,000-square-foot store still sells prepacked, value-added produce from outside suppliers, but the new program has the benefit of communicating a fresh image. "Customers know it's made daily," Earnest said.

When a major retailer moved in with a store recently, this program helped the independent maintain a point of difference. "They've held their own," he said. He added that the chain store started up a similar program but did not appear to have the same commitment. This produce deli now represents 2% of total store sales, and 15% of produce department sales, he said.

Earnest said that the produce items, some of which have many different ingredients, have recipes along with pricing models. As the pricing of the commodities changes, the store puts the equation into the recipe model and comes up with a price per pound.

As with any perishables program that requires extra labor to make it work, commitment has to come from the top, said Earnest. The store needed to get a special exclusion from the local union covering deli staffers to run the produce deli as a separate department from the regular deli.

Chandler Copps, executive director of the Retail Produce Merchandising Network, Woodland Park, Colo., who moderated the seminar, said that precut programs done in-store generally yield about $30 to $50 per man hour, compared with conventional bulk produce, which yields some $100 per man hour.

He said a program such as the produce deli should look at doing about 5% of the store's produce business in the beginning, and produce to that number.