A KINDER COMPETITOR

David Merrefield

Dare we hope that a competitor might come along who brings some innovative thinking about merchandising and product to the party -- thinking that supermarket retailers can readily adapt and put to work for their benefit?

It seems too much to hope for, doesn't it, even on Thanksgiving week? Yet such a situation may be unfolding when it comes to the handful of natural-food chains now in operation. At least that's an opinion turned up by a survey of a few conventional-store executives, results of which form the basis of a front-page news feature prepared by reporter Elliot Zwiebach. But first, what are the natural-food stores and what are they doing? What characterizes natural-food stores is an emphasis on products such as organically grown produce, grocery products in environmentally sensitive packaging and chemical- and drug-free meat, poultry and seafood. Merchandising includes an expression of concern about such matters.

The natural-food segment of food retailing is quite small at the moment. There are quite a few such stores in independent operation, but there are no more than four companies that qualify as fully fledged chains. But the chains cover more territory than might be imagined because, for some reason, they all have far-flung operations. Here are the chains: · Whole Foods Market, Austin, Texas, with 36 stores under four banners in Texas, California, Michigan, Rhode Island, North Carolina and other states. (A financial report on Whole Foods is on Page 8 of this issue and an executive change concerning the chain is on Page 6.)

· Fresh Fields, Rockville, Md., with 14 stores in the Washington, Chicago and Philadelphia regions.

· Wild Oats Markets, Boulder, Colo., also with 14 stores in Colorado, New Mexico and Nevada. (A news article on Page 6 of this issue shows that the chain plans to add four stores next year.) · Alfalfa's, also in Boulder, with eight stores in Colorado and British Columbia. Now, having defined our universe, what good might the activities of any of these operators confer upon the conventional supermarket industry? The nub of the issue seems to be that, to some degree, natural-food stores are teaching consumers to be more discriminating about the food they seek, however unwittingly or contrary to the intention of natural-food operators that might be.

Here's how: natural-food shoppers can be fairly easily wooed back to conventional supermarkets if supermarket managers take a few easy steps toward integrating natural products into the usual mix.

The fact that the number of natural-food stores is small, and that the number of stockkeeping units offered in each is also small, makes supermarkets' task that much more manageable. Here's what a few conventional-store executives had to say about the whole phenomenon: This from R. Randall Onstead, president and chief operating officer of Randalls, Houston: "Many customers shop our stores, as well as natural-food stores, and if they see something elsewhere that they would like us to carry, they let us know. As a result, the number of natural-food shoppers coming to Randalls is growing." And this from Claire D'Amour, vice president of corporate affairs at Big Y, Springfield, Mass.: "The growth of natural-food stores has helped create an awareness and a market for an increasing variety of natural foods in the supermarket. Every time a food-safety issue gets publicized, natural-food stores experience a surge of business, which exposes consumers to additional products that they subsequently seek out when they come back to us." These and other executives mentioned in the news article may be convinced that natural-food stores are teaching shoppers things that will eventually redound to the benefit of conventional operators, but do the natural-food operators see it that way? Not really: One averred that just as fine apparel offerings in department stores have failed to put specialty purveyors out of business, natural-food stores can exist alongside supermarkets. Maybe so, but I can't shake the observation that one observer made to me several months ago: "The biggest fear the natural-food people have is that supermarkets will catch on to what they are doing. Then they will be simply swamped."

I hate to end on such a down note for our natural-food friends, so I'll avoid that by switching to this: Happy Thanksgiving.