A SPECIAL CONNECTION

BOB BAUER

HOUSTON -- The results of a new merchandising approach for specialty foods -- displaying them on in-shelf racks alongside mainstream products -- has executives at Gerland's Food Fair here beaming.

Kevin Doris, Gerland's executive vice president, said the concept, introduced in the past two years during a company remodeling program, was an immediate success.

"As I see it, it's a home run. Our customers love it, and it's driving our business," Doris said. "Through this approach, we have consistently enjoyed same-store, same-week specialty food sales increases of between 30% and 50% over the year before. In stores where we've had this concept in place for over a year, we're still enjoying same-store, same-week increases over our one-year success."

In implementing the new approach, Gerland's has replaced sections of gondola shelving with black, 4-foot racks, allowing specialty items to be displayed adjacent to their mainstream counterparts. In smaller categories, half-racks are used. Signs identifying the category are placed over each rack.

"This merchandising concepthas been so successful that we are already implementing this program in 10 of our 20 stores, and we are planning to do five more this year," Doris said. "In fact, this merchandising concept is now part of our overall store, engineering and merchandising plans. It's now preplanned into all our remodels."

Speaking at the annual Food Marketing Institute convention in Chicago, Doris said the merchandising switch came after he saw a supermarket in the Northeast with a similar strategy. "This successfully highlighted the specialty food items and gave me the impression the store offered a tremendous variety," he said. Upon returning to Houston, he immediately set the wheels in motion to bring the format to Gerland's.

Gerland's started putting in the racks and incorporating the concept in one store during a major remodel, and it was immediately evident to all that the new approach was right for Gerland's, Doris said.

"The team of merchandising and store people implementing the program put up the specialty racks in a few categories and then set up a pattern set of the specialty items according to our new planogram," he explained. "They went to lunch, and by the time they returned, most of the pattern set was gone. Shoppers had already noticed and purchased these items. The team had to start from scratch and set up a new pattern set. This happened to us more than once. We finally had to completely stock an entire rack before moving on to a new section."

According to Doris, Gerland's has "found this concept versatile enough for merchandising all types of specialty foods; upscale, gourmet items in our high-income areas; ethnic items in a few of our ethnic stores. In three of our stores in Hispanic areas, we've successfully used the specialty food racks to feature Hispanic products. This highlights our strong ethnic food variety and shows that we do care about these very important customers."

While the new merchandising strategy has had a significant sales effect, it also has provided operational and consumer-based benefits.

"Operationally, specialty food items are no longer the stepchild to the mainstream items, getting

pushed around and even lost on the shelves," Doris said. "Now specialty foods are much easier to maintain. Also, category resets of mainstream items are much easier when the specialty foods are merchandised adjacent to the regular items on their own special racks."

From the consumer's point of view, he added, "the adjacent merchandising concept helps them find the items much more easily. As they shop across the store, specialty items within each category stand out.

"When you look at all the studies on why people shop at supermarkets, convenience keeps on coming up. At Gerland's, we're trying to make it very convenient, not only in where our stores are located, but once you get into our facilities and shop the store, convenience is important. I think that's what's driving sales -- the convenience of the racks."

The increased emphasis on specialty items has not led customers to believe they're paying more for shopping at Gerland's, Doris noted. "Our price perception came out exactly where we had been in the marketplace. So I feel having those racks hasn't hurt our price perception," he said.

Doris collected his price perception information through customer focus groups involved in a specialty foods study by Willard Bishop Consulting, Barrington, Ill. The study was conducted for the National Food Distributors Association, Chicago. Gerland's was one of three chains participating in the project, designed to test the effectiveness of merchandising specialty foods adjacent to their mainstream counterparts.

"The second part of that," Doris said about price perception, "is that the way we're doing it in the higher-income-level stores, price is not as important to those consumers. In the ethnic stores, where we're putting emphasis on the ethnic items, I think those customers are just so glad we're carrying those items. We've stayed away from the issue of price. We don't put any of those items on promotion. So we're not filling the rack up with temporary price reductions or anything like that."

The number of specialty food racks varies according to the size of the store, Doris said. The average number of racks for a 30,000-square-foot store is 12. In 45,000-square-foot stores, that number jumps to about 35.

Customer demand has led Gerland's to add to the number of items carried on its specialty racks, Doris said. "We have a customer comment book at each one of our checkout stands, where customers make comments on their shopping experience. In the first and second store that we put the racks in, the biggest requests we get out of the books are requests for more items that we would merchandise on those racks."

And Gerland's is aware of consumers in the Houston area who haven't heard of the new racks. "We do TV advertising, and we have done a commercial using this concept. We're running those commercials currently and have been for about 13 weeks," Doris said.