PANEL SEES OPPORTUNITY FOR RETAIL FRESH FOODS

DAVID ORGEL

PHILADELPHIA -- The poor economy and recent U.S. terrorist attacks are altering the balance in which consumers spend dollars between the food-service and food retail sectors, according to panelists at a session sponsored by Produce Marketing Association at its Fresh Summit.

Speakers outlined how retail is picking up share from food service and discussed how supermarkets can further promote fresh-foods business in this environment.

Stephen Melton, director of chilled food operations for Ukrop's Super Markets, Richmond, Va., said his retail operation is employing a mix of proactive and subtle moves to draw business into stores as consumers begin spending less on away-from-home food.

"We need to promote quietly and with a sense of dignity that we're a meal provider and solution provider," he said. "We haven't done this with the print or TV media, but we are prepared to make sure we're in stock and that chefs are in the store and in the front line more so than before."

Melton said sandwiches is one category that has shown a sales increase since Sept. 11.

As retail business increases in some categories, the food-service industry has been negatively impacted, said Dariel Trottier, general manager of SERCA Foodservice, the Canadian company whose corporate headquarters is in Toronto.

"We've seen a downturn in our business, partly resulting from less travel," he said. "But there's been a small increase on the fast-food side. People are rushing home to see the latest events on TV, so they'll pick up fast food and then go home."

Dave Eldredge, executive vice president of Tanimura and Antle, Salinas, Calif., said that higher-end produce items are taking the biggest hit on the food-service side.

"My concern is that the higher-value items used mostly in restaurants will be the ones affected," he said. "I don't see retail picking up the slack on some of the higher-end items. I saw demand at retail on lower-end items."

Panelists also discussed longer-term trends, including the ongoing marketing of fresh foods in general and produce in particular as categories that promote health. "Our menu development discussions get into the health issue," Melton said, noting the retailer is integrating more produce into its sandwiches. "We're trying to steer people to fresher solutions, such as items with lower amounts of salt and fat. But there are still a lot of closet fried chicken eaters."

But Melton said store-labor limitations impact the degree to which Ukrop's can pursue this avenue. "We're trying to develop these healthier items in combination with what suppliers can provide so we can take the labor out of that process," he said. "We look to suppliers for any innovation that can help us with labor. Suppliers can help us continue to keep health-oriented menu options and to refresh menus."

Panelists also addressed the issue of interdepartmental retail turf battles at a time when more store operators are promoting cross merchandising of products.

"The cross-departmental store conflicts are alive, even in our company," Melton said. "Let's say you have a pastry with romaine lettuce and grilled chicken and other ingredients. What department do you sell it in?"

Eldredge said suppliers are often caught in the middle in this issue. "We get our hands slapped if we walk into the wrong department," he said. "So we're sensitive to retail politics. But a lot of chains that have minimized this problem have done very well. When things get so territorial, you hurt the consumer."