COFFEE SHOP SHOWCASES ISB ITEMS AT UNITED

ROSEANNE HARPER

LUBBOCK, Texas -- United Supermarkets has unveiled a branded, premium coffee shop and is using it to spotlight its in-store bakery's pastries and sharpen its competitive edge in other ways.

The coffee shop, offering fresh-brewed coffee and trendy, coffee-based drinks as well as a variety of premium, deep-roasted coffee beans and a selection of teas, is bred of a partnership the 44-unit chain forged with Peet's Coffee and Tea, an Emeryville, Calif.-based specialty coffee roaster and marketer.

United converted an existing coffee shop in its Market Street, fresh-format store here to Peet's Coffee Shoppe last month and is currently in the process of doing the same in its two other Market Street stores -- one in Wichita Falls and one in Amarillo. The chain also will add four more Peet's in new or remodeled stores, bringing the total to seven by the end of 2003.

In its new incarnation, the store's coffee shop features Peet's brand brewed coffee and other beverages in an upscale, coffee-house environment. Peet's, which has a cult-like following on the West Coast, has coffee shops in select Bristol Farms stores in California and in Larry's Markets in Seattle. It also operates stand-alone locations.

"We switched to Peet's because it was an opportunity to raise the bar in our stores, to bring the very best coffee to our customers," said Scott Malouf, director of innovative merchandising at United.

It also does other things, he said, like giving the chain a point of differentiation. Many Texans are familiar with Peet's products via the company's mail-order business. In fact, United and Peet's will do a direct mailing to those mail-order customers in United's market area to let them know Peet's has arrived.

"We're the first in Texas to have Peet's. There's brand recognition. That attracts attention and gives us a place to cross sell to our customers. For instance, we've brought in Bridor pastries, an upscale French pastry line. They're baked off in the bakery, and then we've introduced a series of 10 upscale cakes, ganache and cream-filled, very definitive. And cheesecake. We make them here. They're part of a whole new program we've had for only about 60 days."

It was part of the plan to give the new lines a big send-off with the Peet's launch, Malouf said.

"We discovered we have a person here who can do really upscale desserts," Malouf said, adding that products offered in the coffee shop are rotated, according to the time of day. United's signature cinnamon rolls and store-made doughnuts, for example, are the morning stars. Then, at lunchtime, cookies and brownies are offered. Slices of cake and other upscale desserts will be there for the evening crowd.

"The idea is that customers can come in at any time of day and get coffee or tea or another beverage and get something sweet to eat with it. The bakery keeps baking throughout the day," Malouf said.

And sales are gratifying, he added.

"Our average ring in the former coffee shop, which sold mostly flavored coffee, was $1. Now it's a little more than $2 and we expect to get it up to $3 or $4 soon. That's just the beverage and food part. [The premium coffee and baked goods synergy] promotes more of who we really are, instead of just offering the endless 99-cent cup of coffee."

No pastry to speak of was offered in the previous coffee shop and volume was not that big. But since the Peet's Coffee Shoppe opened June 8, brewed coffee sales alone are up 50%, Malouf said. And in that first week, United sold out its first shipment of 12-ounce bags of Peet's deep-roasted coffee beans.

"We're right on track with our projections, a little more than 100 bags. We had to re-order before the week was out," Malouf said.

Positioned just inside the fresh aisle entrance, the Peet's Coffee Shoppe is adjacent to the in-store bakery which juts into the aisle, making both quickly visible upon entering the store. There is seating for 30 and then 40 more on the patio outside. The food-service area, with ready-to-eat food, has seating for 70 just across the aisle.

United operates the coffee shop, which comes under the supervision of the store's food-service director, but Peet's offers ongoing technical support and training.

Malouf, appointed less than a year ago to the newly created position of director of innovative merchandising, is charged with finding "logical synergies throughout the store" to help build total-store sales. The effort between Peet's and the ISB is one of the first initiatives.