RICE SEE'S ITS CHANCE

LISA SAXTON

HOUSTON -- Imagine pulling consumers into your store because you are the only one in town selling their favorite candy product.

Sound like a sweet dream? Well, it's come true for Rice Food Markets here.

At its six Epicurean Markets, Rice operates See's Candies boutiques. See's is a popular, old-fashioned, high-quality chocolate line found up and down the West Coast, with more than 200 retail shops in 11 states. But in Texas, it can only be found at Rice.

Although still profitable, the supermarket candy business in Houston, like all over, has fallen on hard competitive times. Margins have suffered, due to the aggressive candy programs of mass merchandisers and other classes of trade. However, because it's the only retailer offering See's Candies, Rice has carved out a genuine niche that can't be duplicated.

"Hershey bars are not a draw. Godiva chocolate is not unique when it's sold at every department store. We feel See's candy is a draw for our store," said Scott Silverman, Rice's vice president of specialty foods and marketing. "Outside of their West Coast candy shops, we're the only other place you can buy See's."

Many Texans had developed a taste for See's before Rice got involved. At one time, See's had its own stores in Houston and other Lone Star State markets. But when the economy turned sour, See's pulled up stakes.

"When they closed their last store, we really went after them, saying, 'We'd like to put you into our store.' And, after a lot of rustling because they wanted to retain control, they agreed."

And, so far, things are going along quite smoothly, said Silverman. "Basically, the customers don't know whether we own the department or it's a See's-operated department.

"We buy the candy. We own it, staff the department and pay all the labor. It's our department," he said.

In addition to departments in its Epicurean stores, Rice has See's departments with a limited selection in two Rice supermarkets. The latest Epicurean, the Holcombe store, is the fourth to carry a full See's candy boutique, which entails a service counter and a self-serve cart. Another full See's boutique will be added to a fifth Epicurean, now in the process of being remodeled.

At the service counter, customers can choose from the complete line of more than 90 varieties of candies. They are each sold for $9.90 a pound. Customers can mix and match their selections.

Candy sold off the cart is prepackaged in various sizes, such as 1-pound and 2-pound bags. For Easter, Christmas and other holidays, the candy comes specially wrapped. For Valentine's Day, for instance, heart-shaped boxes are employed. The rest of the year the product is packaged in a white wrap that is a traditional See's hallmark.

Rice's operation borrows more than packaging styles from See's. "It is being run with policies identical to See's shops. For example, they have a policy of offering samples to anybody who asks for samples," Silverman said. "We follow their dating codes, their rotation methods and their stocking methods. We follow everything to the letter, as if it was their own store."

At $9.90 a pound, See's remains a genuine value for consumers, Silverman said. "See's takes one price increase a year, after Christmas. The line has been around for over 75 years.

"They've added a few flavors, but they really haven't changed. They've never changed their quality. If the price of pecans goes through the roof, they don't raise the price of pecan fudge. It's kept stable for that entire year.

"They also don't spend a fortune on the packaging. But the product is high quality; no preservatives or additives and all natural. It's a fresh product, just like oranges and apples." But, of course, Texans can get oranges and apples at any supermarket. They can only get See's candy at Rice.

And they generally buy it during the holidays. While he said he was not at liberty to give out sales figures, he did say "sales are most significant around the holidays --

Christmas, Valentine's Day and Easter. They definitely drop off during the other times of the year.

"Summer is a really hot time here in Houston. Usually, sales are way, way down. We just pull back on our ordering and try to watch our control as much as possible and cut back a little bit on labor and use that labor in another department," he explained.

On the other hand, during the peak holiday time, sales are so brisk that Rice employs part-time help to assist with the boutique.

See's makes a good, traditional gift for a lot of customers, he added. "We can ship it anywhere in the country. We can ship somebody's whole gift list. And at under $10 a box, it's affordable."

The candy is shipped on refrigerated trucks from California. Silverman noted that other than a damaged box here and there, there have been no problems with shipping.

Placement of the boutiques varies from store to store, but ideally See's makes a nice tie-in with the bakery department or coffee area, Silverman said.

At the Holcombe Epicurean, Rice not only found a spot for a See's boutique next to bakery; the store also houses another unique department, the first Ben & Jerry's Scoop kiosk in the country to be located in a supermarket.

So, what is it about Rice that allows it to stand out and attract partnerships with the likes of See's or Ben & Jerry's, companies with strong brand equity to protect?

"With programs like this, we recognize that there are people who do things better than we can do ourselves," said Silverman. "It's our willingness to cooperate and follow to the letter all of their many guidelines.

"I think a lot of other [retailers] don't have the commitment at the highest levels to follow through and make sure things are being done properly. Companies like See's and Ben & Jerry's have enormous pride in their name because that's their strongest asset.

"Some other [retailers] may say, 'Well, we'll do it our way or we're not going to do it.' But we have the utmost respect for the See's and Ben & Jerry's names, and would never do anything to harm their reputation in any way, no matter what it cost us."

And it can cost. For instance, if it overbought, Rice might have to give away thousands of dollars worth of candy at the end of the season, rather than discounting the product to push it out.

"The candy has a relatively short shelf life. See's wants to make sure whoever buys or receives the candy has several weeks before the candy degenerates. So, when we pull it off our shelves, it's not necessarily bad; it's just past the code.

"I can't reduce it for five dollars and at least get my cost out of it," Silverman explained. "See's has a policy that its candy cannot be reduced. They don't need our business that bad. The bottom line is, they found a retailer that was willing to do it their way. We're kind of an experiment for See's -- a test."

Silverman said the candy will stay on Rice's shelves anywhere from four to eight weeks, depending on the variety and the time of year.