APPLE'S CORE

BARBARA MURRAY

COMMERCE, Calif. -- Because wholesalers like to get all their small independent operators under an ad group or in a concept, the Apple Market community food store banner was established in 1996 by Unified Western Grocers here. Along with that comes regular communication that is said to enhance the discipline and grow sales and Center Store programs play a strong role in the Apple Market stores.

Nick Stefano, banner stores retail counselor for Unified Western Grocers, said that, depending upon which categories are considered Center Store by the various members, about 46% of sales on a normal basis are probably from that department.

UWG's Apple banner has 17 stores now, having just lost two that closed. Don Cicero, director of banner markets for Unified, is responsible for the direction and execution of all programs aimed at supporting and growing the Apple Market banner. He is also general manager of the Apple Market banner, and has a dedicated staff with specialists in bakery, deli, meat and seafood, produce, Center Store, and health and beauty aids. He explained the recent closings as typical of the expansion and contraction that happens in retail.

These 17 stores typically are not large -- around 20,000 square feet -- but better use of space is getting them better results, according to Dan Murphy, senior vice president, retail support services, for UWG. "Our Center Store business is up because we are paying attention to the category management mix," he told SN in an interview.

Also, UWG has introduced a specialty foods program that showcases unique products, which in some cases were not even carried before by the operators. This effort is related to category management, and to a new Power Panel program that takes out a 4-foot contained category -- coat hangers, for example -- and moves it to an end display. "We've freed up the 4 feet for specialty foods," said Murphy, who formerly worked for Wakefern Food Corp., Elizabeth, N.J., in retail support for its 60 corporate stores.

An added advantage to the specialty sets is that the Apple Markets can draw upon the expertise of Grocers Specialty Co., a subsidiary of UWG.

The first Apple Market to be reset was the 22,000-square-foot store in Shafter, Calif., owned by Paul Charon, who is a member of the Apple group board of directors. Among the 1,000 new items added to the shelves are some found on the seven specialty food Metro racks, scattered throughout the center aisles and grouped as teas, diet and health products, pasta and oils, Asian foods, crackers, candy, and salad dressings and mustards.

"One of the other things we did is bring back some of the J-hook programs, a 50% gross impulse item, like can openers in the canned goods section or little toys or water balloons in the cereal aisle. That program is working real well up there," Stefano said, referring to the Shafter store.

"They include little things like candy bars inside the frozen food doors, so when you open the door there they are. They are suction cups that don't take up any more space; we're trying to introduce them to capture the sales. A lot of that has gone away in the the past, but there is always the issue of maintaining them (the cups), as they tend to get lost and are hard to take care of," Stefano explained. He said the Shafter store participates in a service program, so UWG people do the stocking of those high-gross items.

Apple Advantage is another program launched by Murphy that includes pin-on buttons and refrigerator magnets. It's a temporarily reduced-price program that can add anywhere from 900 to 1,900 TPR items to Charon's store -- a lot more items than are seen in the circular. "With this flag here, people really see it's legitimate," Charon said, pointing to a shelf tag during a recent visit by SN. "Most independents don't spend the time on it," he added. What Charon did was train an employee who seemed to have a special aptitude and interest in it. She now devotes about 15 to 20 hours a week keeping track of the TPRs on computer printouts.

UWG is also currently upscaling its private-label Springfield brand, available throughout southern California, and will launch a "compare and save" program among the Apple Market members. The Springfield program also offers a new "double your money back" guarantee, which started in May and is supported by new point-of-sale material including ad slicks, dangling banners, window banners, shelf-talkers and shelf-molding strips.

In Center Store, in addition to the weekly advertisement, the group now has a weekly marketing bulletin that comes out a few weeks in advance of the actual ad, to allow retailers to prepare properly. The weekly advertisement is available in conventional form and also in Hispanic form.

"The ad group is worth its weight in gold," said Bill Lancaster, vice president of corporate sales for Associated Wholesale Grocers, Kansas City, Kan., which also uses an Apple Market banner, but one that is a couple of years older and separate from the California group. The Kansas City wholesaler likes to graduate its Apple Market stores as they grow in sales into either Country Fresh or Sun Fresh banners.

Mike Provenzano, a member of the board of directors of Unified Western Grocers and chairman of a special UWG committee that makes buys on Hispanic items, called the Apple program "the wave of the future. We need a core program for our independents to help the majority of guys."

Most of the Apple Markets are owned by one- or two-store owner/operators, and they stretch from San Diego in the south to Oakland in the San Francisco Bay Area and over to Shafter, which is north of Bakersfield in the Central Valley.

The Apple Markets follow a high/low-pricing strategy, which Murphy says seems to serve the working, blue-collar family well, but there are also stores that serve the middle-class and upper-end consumer. "We're not trying for a niche," he said. "Or, if you want to call it a niche, it's the niche of being right for the community."

Due to their daily community involvement, Murphy says they can compete with the chains. "They are able to get to know their consumer almost on a one-to-one basis," which was borne out in a visit to Charon's store in Shafter, he said.

"I would use Apple as a place to start. A lot of what we are learning we can make applicable to other banners," Murphy said, which include Thriftway, Century Supermarket and Select.

Charon is faced with a dilemma in serving Shafter, a small city of 12,000. "It's an interesting town. Sixty-nine percent is Hispanic, 29% are Caucasian and 2% are black. Of the Caucasian element in town, many resent the increasing Hispanic influence, since it's growing. They are real sensitive to how I merchandise the store.

"In this town, 60% of my volume is from Hispanics, 40% is from non-Hispanics, and half of that 40% are anti-Hispanic. So I have to merchandise my store very cautiously. I can't forget my bread-and-butter customers."

Growth, however, comes from the non-Hispanic customer base, so he doesn't want to offend them. "Those customers don't know that Mazola on the front end is a great Hispanic item, and I've got Del Monte corn on the front end, which is a great crossover item. Also, tomato sauce, dried cups of noodle soups, cereals, Mother's cookies, Kool Aid," Charon told SN and Cicero, who is the primary link between the Apple Market operators and UWG.

"I don't totally lay down for that element in town," Charon continued. "I do have an end display, at all times, of jalapenos. Right now I've got the No. 1 and No. 2 items out there side by side. I don't make any money on them at 99 cents, but I don't care. It's an image thing. On the back end, I generally have a hominy and an El Pato tomato sauce at 3 for $1, which typically is a great volume item.

"I do these items to let the Hispanics know that they're more than welcome here."

Charon, who has owned the store (a former Vons) for four years, has joined the local Community Chest, the Kiwanis Club and the Chamber of Commerce, so he is frequently helping to raise money, like the golf tournament he worked on recently to benefit a scholarship fund. Along with these activities come opportunities to network among the leaders of the small city.

"One of the things that has been helpful were my two customer surveys, and I gave them a free dozen eggs to fill it out," Charon said. One survey told him that his is the primary supermarket for 60% of his customers. A smaller store with a strong meat department is his chief competition in town, but there are new 60,000-square-feet or better Vons and Albertson's units in Bakersfield, a 20-minute drive, and a smaller Save Mart in Wasco. Charon said that when Murphy and Cicero encouraged him to do a reset, and Nick Stefano of the Apple staff came out to the store, "he thought this was like the typical Los Angeles independent, heavily into Hispanic products. Their first plan was to make my rice and bean section bigger, my ramen section bigger," recalled Charon. "Then we went to lunch, and I drove them around the neighborhood, and told them that my aim was go after the carriage trade.

"I told him, 'These are the people I want,' and he and the rest of the staff focused on going after this customer. They got behind the concept and they made tremendous contributions.

"I am a typical owner, who feels he knows enough, right? I used to do resets for a living. I ran five high-volume Hispanic stores. What do I need help for? But when they came in here and said, 'How about this, and that?' I said, 'OK, let's give this a try. I wouldn't have thought of that.' It was a compilation of ideas; mine and theirs."

"My role was to work with them, and figure out what additional programs were needed," Murphy explained, "to bring the business to the next level."

Through membership in the cooperative, all retailers share in the expense of these services.

"Now that we have a meat program, a produce program and our Apple Advantage TPR program, and we are upscaling our private-label Springfield brand, we believe we have a lot more to offer." It remains to be seen whether more retailers will join. But, Murphy pointed out, "the more retailers we add, the more the costs will go down."