PLACEMENT TESTS

MARYELLEN LO BOSCO

While it's unanimous that natural and organic foods have earned their place in Center Store, it's a split decision on where to merchandise them.

Some chains integrate the assortment, while others separate it -- either in an in-line or freestanding aisle or a natural/organics department.

Major players in New York -- such as Food Emporium (a division of Montvale, N.J.-based A&P) and Carlisle, Pa.-based Edwards Super Food Stores (a division of Ahold U.S.A., Atlanta) -- and Shaw's Supermarkets, East Bridgewater, Mass., have to some degree integrated natural selections into their Center Store categories. For example, organic coffees may appear next to national brands, but are highlighted with distinctive signage and/or shelving in-line.

Some upscale retailers, such as Food Markets Northwest, Seattle, and Rosauers Supermarkets, Spokane, Wash., have gone a step further with full integration. Under their methods, natural products are not flagged in any way on Center Store shelves, although some are grouped together.

Another approach, used by Andronico's Market, Albany, Calif., is to integrate organic, natural and healthy choices, but tag them with shelf labels.

"Organic and gourmet food sections are truly for presentation, but they don't sell. The real sell is in the aisle," says Jim Martin, manager at Dahl's University store in Des Moines, Iowa. "If they are popular in the section, they will do that much better in-line, and that theory works 99% of the time."

Dahl's Food Markets, which has stores in Iowa, Missouri and Kansas, allows merchandising decisions to be made at the store level. In Martin's store, popular organic items like pasta sauces and pastas, salad dressings and apple sauce are "double placed," in a separate 24-foot section and in-aisle. The 24-foot section is labeled "Organic," "Domestic Specialties," "Imported" and "Low Fat/No Fat."

Once an item gains enough recognition, it is taken out of the special section and merchandised only in-line.

Pratt Discount Foods, Shawnee, Okla., has had great success with its integrated natural-food assortment, which is highlighted with distinctive signing and shelving.

At Pratt, natural or organic cereals, for instance, appear with conventional cereals, but are grouped together. The cereals are set off on either side with arching signs, perpendicular to the shelving, that say "Wellmarket." The shelving the cereal is on is also set off with green channel strips and special price tags.

The approach has been used successfully since 1990 in four stores where the demographics support the products, according to J.B. Pratt, chief executive officer. In these units, natural/organic products -- including vitamins, supplements and produce -- account for 8% of total store sales.

"These are conventional supermarkets, not in a highly health-conscious area of the country," Pratt noted.

Pratt also said that his Wellmarket stores do well in college towns or cities, with a more highly educated, but not necessarily higher-income population.

Still, to be successful, it's important to carry a complete line of natural and organic food and supplements, Pratt said.

For the most part, Pratt relies on one specialist at each store to help educate consumers and answer questions. He also provides written materials to customers.

Linda Gilbert, president of Des Moines, Iowa-based HealthFocus, a consultancy specializing in consumer health trends, also espouses integration.

She refers to a separate natural/organic section as a "natural-food ghetto," saying many consumers are afraid to walk down the aisle.

"When we talk to manufacturers, they tell us that when they move product out of that ghetto and [integrate it], sales typically go up 25%," Gilbert said at the Natural Products Expo, held in Baltimore.

"A lot of consumers will never hear of Muir Glen unless they see it on the shelf next to Hunt's," she continued.

In a follow-up conversation with SN, Gilbert explained that currently there are no hard data on which format works better, but anecdotal evidence indicates that in most retail environments it's better to integrate.

The strategy being used by New Organics, Boston, a company formed this year by three former executives of major retail chains, is clearly in line with Gilbert's thinking. As reported in SN, New Organics encourages retailers to integrate its organic grocery products into the regular set. The company is doing business using direct-warehouse-delivery arrangements with Albertson's, King Soopers and Kroger, among others.

But not all retailers have had success with integration. For instance, natural/organic sales initially dropped after a small Midwestern chain launched a full integration program in some of its units. It has taken the last year for sales to get back to their original levels, according to a store-level source, who requested anonymity.

"I think we are on a J-curve," the source said, "and sales should [continue to] rise."

While organic items -- which have been promoted heavily this year -- are doing very well, other natural-food items fared better when they were in a separate set, according to the source.

"If I had to do it over again, I don't know whether I would integrate or not," said the source.

Separate sections and stores-within-stores do seem to be thriving at many chains.

As reported in SN, many major chains -- including Kroger Co., Cincinnati; Harris Teeter, Charlotte, N.C.; Hannaford Bros., Scarborough, Maine; Ralphs Grocery Co., Compton, Calif.; Vons Cos.' Pavilion stores, Arcadia, Calif. (a division of Safeway, Pleasanton, Calif.); and Raley's Supermarkets and Bel Air Markets, West Sacramento, Calif. -- use separate sections.

Harris Teeter, Charlotte, N.C., now has natural food in most of its stores, according to Susan Mayo, spokeswoman for the chain. The products are merchandised in a special section either in freestanding aisles or in-line.

Depending on demographics and the amount of space in a store, a Harris Teeter natural-food section can range from 24 to 120 feet. Mayo said having a separate section draws attention to the department.

She expects these sections to contunue expanding, due to customer interest.