PRODUCE DEPARTMENT RINGS RIPE AT RALEY'S UNIT

LYNNE MILLER

LAS VEGAS -- At Raley's supermarkets, you won't find green bananas, gas-ripened tomatoes or rock-hard avocados.

Buy -- and sell -- fruits and vegetables when they're ripe. That's a key part of Raley's produce philosophy, said Mike Bauer, district manager of regional store operations.

"Who wants to grab a peach you can't eat for four days?" said Bauer, who recently escorted SN on a tour of two Raley's stores. "A lot of our competitors will buy green fruit. Mostly all of our produce is pre-ripened. That's a real point of differentiation for Raley's."

Produce has long been a signature department for the West Sacramento, Calif.-based retailer, and that emphasis can be seen at stores here in the gambling capital -- a new, fast-growing and highly competitive market for the privately held retailer.

In the produce department of a newly remodeled, 44,000-square-foot store in the Green Valley section of Las Vegas, Bauer picked up an avocado. The fruit is soft and ready for making guacamole. "You can always get a ripe avocado here," he said. To make sure customers know that, stickers bearing a message -- "ripe and ready-to-eat" -- are on each piece.

Bauer acknowledged the "buy ripe" philosophy presents store managers with additional challenges beyond simple sourcing, handling and merchandising. Here, one of the primary concerns is moving produce quickly before spoilage occurs.

"Produce managers have to be really sharp," he said.

Industry observers told SN Raley's "buy ripe" rule is something of a rarity in the supermarket business. Today's consolidated chains are burdened with larger distribution territories, and often purchase green produce to compensate for the transportation time; ripe produce is also more likely than harder fruits and vegetables to bruise easily, so produce department employees must handle the merchandise with extra care. Associates cannot build particularly tall or weighty merchandise displays without putting the product on the bottom of the pile at risk.

"We'd all love to have ripened product on display," said Ron Pelger, former director of produce merchandising for A&P, Montvale, N.J., and now operator of Ronprocon, a Reno, Nev.-based consulting company for the produce industry. "However, retailers cannot afford to take a chance and just have all ripe fruit out there. There is resistance on the part of store personnel to do that."

To move ripe product speedily, retailers must have sufficient customer traffic and attractive prices to encourage large purchases, said Pelger, who's also a columnist for The Produce News, a category trade publication.

"I praise Raley's if they can do that," he said. "That's a real art."

Other analysts note the convenience that comes with stocking unripe fruit can have a negative impact on sales, even though retailers think green product has a longer shelf life and reduces shrink.

"The net effect is many green grocers and natural foods grocers that have ripe product have taken business out of the supermarket chains," said Burt Flickinger, a food industry consultant with Reach Marketing, Westport, Conn. "It's a smart strategic move for Raley's to go with ripe produce in their Las Vegas stores and their other stores."

Another component of the retailer's produce philosophy introduces consumers to unusual merchandise. Raley's routinely features unique products, sometimes going so far as to buy entire crops of selected items, Bauer said. SN observed prominent displays of pluots -- a California-grown plum/apricot hybrid, selling for $1.49 a pound.

Raley's stocks an assortment of organically grown produce, and uses a third party to verify that certain items are free of detectable pesticide residues.

Perhaps the desert climate has something to do with it. Vegas shoppers love cold, fresh-cut fruit, and Raley's sells lots. It's a profitable category to begin with, and even more profitable in this market since store employees chop up and package the fruit themselves, using Raley's own produce department as the source, Bauer said. For the majority of fresh-cut products, Raley's uses its own melons and other traditional fruit salad ingredients, though more exotic papaya- and mango-based cuts come from outside suppliers.

In other markets, Raley's relies on outside vendors to supply all packaged cut fruit, so margins are lower, Bauer said. Here in Vegas, the operation is different because, two years ago, the retailer acquired 18 stores from Albertson's, which already had in-house, cut-fruit programs. Raley's officials decided to tweak the operation to fit into the company's program.

In the Vegas stores, salad-bar employees adhere to strict food-safety guidelines. They work in dedicated cutting rooms, separate from other food-preparation areas. Cutting and packaging fresh fruit is as labor intensive as the full-service deli operation, Bauer acknowledged. But the program delivers not only profits but the added advantage of quantity control.

"We get better control over the number of units we have out at any time," he said. "I can set that product up anytime I want to."

In a self-serve case filled with prepared foods at the front of the store, SN observed packages of cut watermelon, cantaloupe, honey dew melons and strawberries -- in several sizes. A 56-ounce fresh-fruit salad, and a 48-ounce fresh-fruit medley were on sale for $6.99 each. Also on display were 14-ounce fresh-fruit cups ($2.99), 12-ounce watermelon cups, and 14-ounce cantaloupe cups ($2.49 each). In other stores, fresh-cut fruit is found in salad cases in the produce department.

"It's phenomenal," Bauer said. "We sell so much fruit we're in perpetual cutting mode."

Raley's signature department played a part in the company's recent, two-day food fair, an event designed to introduce shoppers to an array of foods sold at the stores. In the produce department, customers sampled Washington State nectarines. One of the chain's top produce managers was on hand to talk to shoppers about Raley's specialty produce items, Bauer said.

Raley's competes not only against Albertson's, but Smith's Food & Drug Stores, owned by Kroger Co., Cincinnati, and Vons, a division of Pleasanton, Calif.-based Safeway. Developments of stucco homes with red tile roofs keep popping up in this boomtown, which led the nation in population and job growth, and new housing starts in the 1990s. To feed those new homeowners, supermarket companies are building units or have opened new stores recently, including units of Albertson's and Smith's.

Raley's stores here are smaller than the company's typical 64,000-square-foot superstore, but the retailer isn't finished making its mark in Vegas. The chain, which operates 148 supermarkets under four banners in northern California, Nevada and New Mexico, plans to expand as appropriate sites for new stores become available, a company spokeswoman said.