A BLEND OF RICE

AMY I. STICKEL

HOUSTON -- The best of both worlds. That's the idea behind Grocery World, a format that Rice Food Markets here is aggressively developing.

Designed to attract middle-income consumers, Grocery World attempts to combine the emphasis on quality fresh foods of the chain's upscale Rice Epicurean Markets with the

low-price appeal of its Price Buster discount units, according to Gary Friedlander, president of Rice Food Markets.

The new store is specifically using produce, meat and seafood as the main draws, said Rice officials interviewed by SN. In fact, Grocery World lacks service deli and bakery departments, bucking the latest supermarket trend toward getting into the home meal replacement business. Friedlander said, however, that Rice plans eventually to introduce some degree of food service into the format.

Currently operating two Grocery World units, Rice plans to open two or three such stores a year over the next several years, converting tired conventional Rice Food Market locations to the new fresh-oriented layout. The second store has been open only since February.

"We're still learning about the operation," Friedlander said. "We're real pleased with sales, but in any new operation there's an adjustment. We're learning a lot about it."

As part of the conversions, the chain shifted the produce department to the front of the store. It significantly expanded the produce and meat departments, and installed a 12-foot seafood case.

"When you walk into a Grocery World, you walk right straight into produce," said Mark Luchak, director of produce and floral operations. "That is different from the conventional Rice Food Markets." In the conventional Rice units, a lobby area and a courtesy booth greet shoppers at the front end.

"We've taken the best from all groups -- the large variety and selection, the quality, the sizing from the Epicurean -- and offered it at just super prices," Luchak said.

He estimated that the produce departments in Grocery World stores are about a third larger than at the conventional stores. Grocery World stocks about 350 fruits and vegetables, which is similar to the mix that Rice carries in the Epicurean Markets, and about 150 more than can be had in Rice Food stores.

The key additions to variety are in greater options for sizes within a category, he said.

For example, at Grocery World, shoppers can buy premium bulk strawberries, something that's generally not available at Rice Food stores, he said.

"At Grocery World, we offer a jumbo-size artichoke, along with a smaller size. In the Rice Food stores, we offer just one size. We also offer a jumbo grapefruit and a 36-count naval orange," he explained.

Tree-ripened fruits are another program at Grocery World that is up and running at the Epicurean Markets, but not at the conventional stores.

Luchak said produce sales at the Grocery World stores are "greatly improved" over sales at the conventional stores, although he declined to reveal how much stronger they have been.

Friedlander said that of Rice's four formats, Grocery World operates on the lowest margins. "This is a new operation. We don't ultimately know where the margins will end up," he added.

When asked how the prices for specific produce items at Grocery World compare to Rice's other formats, Friedlander said the Grocery World's mandate is to offer the "lowest possible prices," a commitment included in the Grocery World Store Manager's Pledge. However, he said that comparing Grocery World's prices to that of other Rice operations would be like comparing, well, apples to oranges.

"It's real hard to compare," Friedlander said.

Ron Shernak, director of meat operations at Rice, said high-volume sales is what will allow Grocery World to offer good quality while maintaining low prices in the meat department.

"Being a high-volume store, we can really offer an abundance, keep product fresh for the customers, and have a much better selection," he said.

"That's probably the biggest thing that makes Grocery World appealing to the customer. She comes into the produce department, or the meat department, or even the grocery department for that matter, and everything is so abundant and there's great selection." At Grocery World, dairy follows produce in the traffic line. The meat department is along the back wall. Like the assortment in the produce department, Grocery World's meat selections are long on quality, variety and competitive pricing, Shernak said.

"In the meat department, we do much the same things we do in the Epicurean stores," he said of the format's fresh merchandising approach. "However, the neighborhoods that Grocery Worlds are in are a little more middle-income [than the Epicurean stores].

"A lot of times, some of the competition will offer lesser grades of meat, a little less quality, and meat that might not be trimmed quite as good. We take the same approach in Grocery World as we do in the Epicureans -- the beef is trimmed with almost no fat on it," Shernak said.

He used the phrase "quality value" to describe his operation at Grocery World again and again.

"By that, I mean the prices will be as competitive as anyone in the area we do business against. Customers will also get a quality value for the cut and the freshness," he said.

Grocery World does frequent price checks with the competition, and feels so confident about its prices that it posts those results, Shernak said.

Besides competitive everyday low prices, Grocery World's eight-page circulars also feature about 50 items from the meat and seafood department, Shernak said.

"When you add those kinds of prices to the regular retail, there's just no way our image isn't going to be cheaper than our competition," he said. As testimony to the cost-consciousness of its shoppers, Grocery World does a good business in club packs. Shernak said he has researched the items that are most sought after by customers at places like Sam's Club.

"We price those as competitively as, if not less than, the club markets do. That gives the customers a reason to go to Grocery World rather than the club stores," he said. Fresh seafood has a place in Grocery World it never enjoyed at Rice's conventional stores. Where seafood once occupied a small display area, it now has a 12-foot case. That is another clear point of differentiation, he said.

"When you get away from the upscale neighborhoods where you've got the great service seafood departments, an awful lot of times seafood kind of takes a back seat," he said. "We try not to let that happen in Grocery World. That's why we devote a large amount of space to it," Shernak said.

And like the produce department, the meat department also has been enlarged in the new format. Shernak estimated that following the conversions, linear footage, including the seafood display, increased about 40% for the department.

Much of that increased footage is to allow for more abundant displays, he said.

"If you're going to offer an abundance, then you need the space. Even though we might have a lot more display space, it's not as much as it might sound," he added. "The real difference is that the meat packages aren't one or two deep. They're four or five deep, to offer selection and variety."

Unlike the Epicurean stores, however, the meat department at Grocery World is a self-service operation. In order to maintain a sense of service, its employees have been especially trained to offer customers any assistance in picking products they might need.

"We have people on the floor, talking to the customers, letting them know if we don't have something in the case they want, we'll get a custom-cut order," he said. The abundance of items to keep stocked, as well as the labor necessary to keep the cases looking clean, motivates the department manager to generally keep several employees on the sales floor at any one time, Shernak said.

"Those people have been trained to greet customers, to smile at them and make eye contact, and ask if there's anything they can help with.

Besides the lack of service, the meat product assortment at Grocery World also diverges from the Rice Epicurean model, said Shernak.

While both formats carry quail, steaks, lamb and veal, at Grocery World the demand for the gourmet end of the spectrum is eclipsed by bone-in chuck and pork chops.

Also, Grocery World does not even carry some of the most exotic meats in Epicurean, such as venison and buffalo. While employees do take special orders for such items, there haven't been many requests for rattlesnake, Shernak admitted.

One local observer told SN that Grocery World's fresh food mix overall seems very well suited to the local demographics, and is apparently harking back to the era of the neighborhood food store. Many of the shoppers appear to often walk to the newest Grocery World, and many also seem to have large families, the source said.

"There was a nice variety of meats and produce, and it all seemed very fresh," said the observer, adding that the format's mix of produce, meat and canned goods is fairly basic. "It's an old-fashioned grocery store. It's not what you see a lot of people building nowadays."

Another throwback to the old days is the lack of an in-store food-service operation. Friedlander said, however, that that omission may not necessarily be permanent.

Rice wants to get a better feeling for the demographics of Grocery World before attempting food service there.

"I don't know that we've decided not to go into food service," Friedlander said. "A lot had to do with locations. The former Rice Food Markets didn't have food service. We started without, with the feeling that sooner or later we'd get into it, in some manner.