EASY PICKINGS

BARBARA MURRAY

Shopability could be the key to why family-owned, independent Schnucks Markets, St. Louis, has succeeded in chasing larger chains out of town, or absorbing them.

"It is our responsibility to make the stores easy to shop. Although displays are very important to us for suggestive selling and gross profit enhancement, the aisle is where most customers look for their products," said Rick Frede, group vice president, grocery, dairy and frozen food, for the 91-store chain.

He believes in stocking like items together wherever possible so shoppers can compare selection, size, price, ingredients and so forth. "We used to put crackers in three or four different places," he said, but space is too valuable.

For suggestive selling, Schnucks' beverage centers -- chilled cases holding single-serve drinks -- are found near the fresh-prepared foods. Wine, too, is merchandised in locations besides the wine and liquor department. Grab-and-go snack items are found atop the beverage cases near the checkouts; gum and mints on top of the cigarettes.

But the aisles are wide and comfortable to shop, and in most stores, groceries are stocked in 4-foot sections.

"We strive to carry products that suit the wants and needs of the consumers who shop in each store. Keeping the items in stock is extremely important. People do not care how many items you stock; they just want you to have what they want when they need it," Frede said.

Sometimes carrying too many items in a section prevents a store from having adequate capacity for the items that sell well. "This is where the decision making becomes difficult and emotional," Frede told SN after a recent visit.

Described by SN's hosts as a sports town, an Anheuser-Busch town, a strong union town and a big barbecue town, St. Louis, a city of 339,316, is ranked 50th in size among U.S. cities. It has had no conventional national supermarket chain since Kroger sold its eight stores here to Schnucks in 1986. The only national chains now are of the natural foods variety: Whole Foods Markets, which just opened a 32,000-square-foot store in the suburb of Brentwood, Mo., in September, and Wild Oats, which has been in town about five years. Schnucks' traditional competitors are other family-owned, but smaller, chains: Dierbergs Markets, opening its 19th store this month, and Straub's Markets, which has only four units but was named one of the 10 National Association for the Specialty Food Trade honorees as specialty retailers of 2001.

One store, not the largest but the most unique, is Schnucks' Lindbergh store, an older one. Manager Dave Birkenmeier takes advantage of its location near an upscale mall, Frontenac Plaza, and its affluent neighborhood to concentrate on specialty goods in Center Store, including wine and liquor. There is quite a buzz about this 39,000-square-foot store, remodeled two years ago and enlarged by 9,000 square feet.

It has branded itself "Schnucks on the Plaza" with signage inside, white paper grocery bags -- available only here -- and even an endcapped selection of boxed chocolates carrying the Schnucks on the Plaza name.

Surrounded by other Schnucks outlets -- one competitor says, "There's a Schnucks on every corner," and it's close to being true -- "we had to create something different," explained Frede. Sixty-seven of the chain's stores are in the St. Louis-metro area. (The metro area grew by 4% in population from 1990 to 2000, according to Frede.)

"Center Store is very small here, but we pack a lot of variety," said Frede, speaking of the Lindbergh store. Facings are kept to a minimum to stock more. Salad dressings are only one size, for the same reason.

"We rely very much on our warehouse," he added. Schnucks is self-distributing, ordering directly from food manufacturers, but gets its specialty goods from Kehe Food Distributors, Romeoville, Ill.

All the grocery aisles in this store have a mirrored fascia on top, which makes the tight space look less tight, and caps the Center Store in a picture-frame look.

Variety is one of the key points of differentiation, along with price and promotion. "We're a feature merchant, and we think people like that," Frede said. On promotion when SN visited was a St. Louis football Rams "One Stop Tailgate Shop," featuring in the circular Tostito's tortilla chips, 2 for $5; and Sweet Baby Ray's barbecue sauce, at 2 for $4. Besides tailgate themes, standard promotions include Back-to-School, barbecue and spring cleaning.

"We put a lot of effort into our endcaps. In most stores, we try to make a price impression, but here, we go for variety," said Frede.

Birkenmeier has a free hand to bring in what he feels his customers want, such as Kathleen's Cookies, sold in a paint can-like container. He attended the NASFT's Fancy Food Show in July in New York, and has developed specialty foods as the niche of this store.

On the last aisle over, by dairy, are Metro racks devoted to ethnic foods. The main items on the "American" rack were hot sauces, marinades and barbecue sauces. Maull's is the local sauce, he noted.

The wine department benefits from the tourists who come to the Hilton hotel across the street, Birkenmeier said, but Schnucks has a local reputation for its wine selection and claims 55% of the local wine market.

The Lindbergh store carries 250 Chardonnay, 170 Cabernet, 100 Zinfandel, 100 Pinot Noir and 150 Merlot selections.

But liquor and wine are not only important to Schnucks' Lindbergh store. St. Louis is a city without any major liquor chain stores. Walgreen decided to stop carrying alcoholic beverages in most of its stores in the first quarter of 2000, creating a big opportunity for Schnucks. Of about 33 St. Louis metro stores, Walgreen still stocks liquor in three units, Frede said, adding that Schnucks' liquor departments have been expanded in all of its new stores and remodels in the past few years.

Beer, imports and microbrews are doing well, but Bud Light still sells best, according to Frede. He thinks liquor and wine is the most exciting part of Center Store, but one that provides the least return on investment.

"Other than beer, you don't turn it fast enough," he said. The Clayton store recently doubled the size of its beer section, taking out one cash register to make room for the expanded department.

Schnucks conducts demographic marketing with the help of Spectra, a Chicago-based information services company, that gives a socio-economic breakdown of consumer buying habits.

Schnucks even tracks the license plates on cars in its parking lots to see where they come from.

Schnucks is also very aggressive in seasonal candy, Frede said, and SN noted a big display in the front end of the Clayton store, a supercenter that is open 24 hours.

"We put large displays up early and strive to stay in stock through the holiday," the grocery chief said. "Although we have a heavier markdown than other companies, we feel it is important to provide these items for last-minute customers."