SHOPPING FOR SOLUTIONS 2001

BARBARA MURRAY

CHICAGO -- Solution selling can be used to bring the supermarket out of the 1950s and into the new century, said industry leaders and critics at a three-hour session held at the recent Food Marketing Institute's annual show and meeting here.

All solution selling situations are not about profit, they said, but can also be about building traffic and building image.

Suggestive selling has been around forever but quantifying it has not, and this is now feasible with data management techniques. The nine men on the panel debated the manufacturer's role, the need for bells and whistles in stores, and whether that money would be better spent on improved training for employees.

Solution selling typically uses props, stage sets and lifestyle vignettes to induce shoppers to buy. One speaker used the example of putting a freezer of ice cream in the midst of a beverage aisle, "to make Mom think of Coke floats."

"A lot of retailers worry too much about consolidation. The real evil in the supermarket industry today is not consolidation, but homogenization. Take a solution approach to differentiate your store," said one of the moderators, Kevin Coupe, vice president, content, for IdeaBeat.com, Darien, Conn.

The other moderator was Phil Lempert, consumer advocate and editor of SupermarketGuru.com, while presenters included John Opasinski, senior manager, business consulting division, food and retail, for Arthur Andersen here; Chris Foltz, vice president, Performance Engineering Group, Winter Garden, Fla.; and Kevin Ervin Kelley, AIA, co-founder and partner, Shook Design Group, Charlotte, N.C.

Retail was represented by John Fegan, vice president of pharmacy, Stop & Shop, Quincy, Mass.; Ray Stewart, senior vice president, perishables, Hy-Vee's Cherokee, or C-store, division, West Des Moines, Iowa; Tom Heinen, co-president/chief operating officer, Heinen's Inc., a 13-store family business based in Warrensville Heights, Ohio; and Mike Jadrich, corporate category manager, store brands, Supervalu, Chanhassen, Minn.

The discussion showed how each department in the supermarket is related to others, and, indeed, how everything is merging into one whole. It turned out to be impossible to discuss solution selling in a vacuum. Personnel policies are affected, as is store design.

Slides of an Albertson's unit in Sandy, Utah, and of Kowalski's Market, Woodbury, Minn., were shown to illustrate the common bond of solution selling, even though several of the participants and members of the audience disagreed over whether Kowalski's upscale format cost too much money.

"Consumer confidence is low," said Lempert. "That's a wonderful opportunity for supermarkets." Because electronic shopping cards enable operators to know more about the consumer than ever before, and because most people like to shop (it's checking out that they hate, according to Lempert), the ball is in the supermarket's court.

Lempert said what the consumer wants is to never run out of toilet paper, Coke or paper towels -- all perfect for e-commerce, while they pick out their fresh fruits and vegetables, meat and seafood, in the store in person.

"Consumers are telling us what they want, but are we listening? Are we prepared to do something about it?" Lempert asked.

Opasinski said some retailers say, "We're too big to do solution selling," while others say, "We're too small." With imagination, innovation and intelligence, anyone can do it, and size doesn't matter, the consultant said.

Albertson's store in Sandy, two years old and 63,000 square feet, uses a series of mini-destinations such as Beverage Boulevard, Snack Central, Pet Care Center, Baby Care Center, Better Care Center (for drugs and OTC products) and a Party Center. Its Fresh Bakery department has packaged baked goods adjacent to the peanut butter and jelly, which are stocked on the same shelf as the wrapped bread.

Kowalski's, which opened last year, is a 48,000-square-foot store that took "vision and courage" to open, Opasinski said. Its basic issue is that it could not look like a grocery store -- it wouldn't sell mops and brooms, for instance -- but it does carry ample supplies of products that customers cannot find elsewhere. Its mission is to educate the consumer, Opasinski said. It has a classroom upstairs, and a spa and a hair salon. "If we take care of people, we will be successful," said Jim Kowalski, the president, in a taped interview shown at the session.

Kowalski's Market is running an "Ordinary and Extraordinary" campaign now, for instance, that offers a conventional product, such as Kraft Original Barbecue Sauce, alongside a specialty variety such as Maker's Mark, and Caldrea environmentally friendly cleaning products alongside the Joy liquid and Tide, Bob Kowalski, vice president of marketing, explained to SN after the session. He said the Woodbury store has Cub and a Rainbow Foods stores within three miles, and yet it is growing its market share.

The health-conscious consumer drives a lot of the business, said Fegan, a registered pharmacist. An aging America will give retailers many opportunities in the coming years, he said, in people wanting to "buy healthy," to take care of an existing health problem or to prevent one.

Fergal Quinn, the head of Ireland's Superquinn chain, said he had visited Kowalski's, and, while he thought it a beautiful store, said, "I've a concern that customers who love it may also question if they are doing the right thing for their budgets." Guilt, he thought, might play a part in keeping customers away except as an occasional treat.

Jadrich, familiar with the Minneapolis market, said Kowalski's cannot be all things to all people. "We have to fight that '50s mentality, and be there for special occasions." Bouncing right back with an opposing viewpoint was Stewart, who, with 34 years in the industry, insisted that "we can be all things to all people," stating that people of all income levels can feel comfortable in Hy-Vee stores. "Were they trying to win an award?" he asked, of Kowalski's. "I would go there on occasion, but it wouldn't be my main store."

Foltz, a consultant, called Kowalski's "a big show."

"Do we all have to do that?" he asked. "We make it too complicated. All we have to do is give the people information." This can be done in 30,000 square feet, using endcaps and signage, he said. In the audience, Alan C. Levitan, president and CEO of Kings Super Markets, Parsippany, N.J., said he agreed with Foltz. Another member of the audience suggested holding a consumer panel and offered that a bagged salad is a solution; so is bottled water.

During this freewheeling exchange, Lempert, who lives in southern California, admitted he feels he must shop in four different formats each week to get what he needs, including a farmers' market, an Albertson's, a Gelson's and a Wild Oats. Coupe, from IdeaBeat, said Stew Leonard's does it for him, in 1,000 stockkeeping units.

Heinen said the customer who wants to shop at a Wild Oats or a Whole Foods Market "is a very hard customer for us to attract," even though Heinen's has a lot of natural and organic products.

"They would shop there, but Heinen's isn't telling them what they have," observed Foltz. A woman from the audience said employees should be trained so well and treated so well that "they would go out and sell for us," a point that won wide agreement.

"We have to get outside our stores and see what people are buying at Wild Oats, at the farmers' market," said Jadrich.

Jack Allen, a professor of food marketing at Michigan State University, East Lansing, Mich., observed that the panel had no manufacturers, and that Kraft, for example, had at its booth a number of meal solutions. "Isn't it the role of the manufacturer to help?" he said. "And, you haven't mentioned category management."

Stewart, of Hy-Vee, said the chain's chairman has set up meetings with vendors, and that Hy-Vee is very much focused on how to do more partnering with category captains from those companies.

Fegan, of Stop & Shop, said, "When the Ocean Spray vendor said 'hello' to the pharmacist, that told me we had broken through." Stop & Shop has a program to display a food product with a health message (like Cheerios for heart health, he said) in the pharmacy for a week at a time.

Asked when the manufacturing role goes too far, with two manufacturers of similar products making conflicting claims, Heinen said their card program maps the information, which Heinen's buyers then compare with what the manufacturer tells them.

Jadrich said, "We have received conflicting information. It comes down to using your own filters."

Stewart said Hy-Vee's 214 stores are managed by store directors, which he compared to "operating a company with 214 CEOs." But it does give them a lot of information.

Stop & Shop turns health claims over to its own dietitians and pharmacists for evaluation.

In the audience, a small two-store operator said manufacturers never come to him, "so I don't get two points of view. I assume they are going to my warehouse. I'm only getting ideas from my warehouse, prefiltered."

Stewart advised him to ask questions that day on the show floor, "because that is exactly the job of the manufacturer," to answer them. "We've had store directors who have done purchasing right on the floor," he said.

At this point, Chris Foltz took over on the subject of people being engaged in their work. "If a task is required, and the people don't do it, they are out the door," he said, "but the people who do do it are paid more." He illustrated this with a story of a drug store chain he worked with in Miami that had 22 stores, a 6% increase in prescription business but a 6% drop in all other business. In finding the solution to turn this situation around, five of the 22 store managers had to go.

Fegan said Stop & Shop has more than 20,000 customers per store per week, and he wants to use the pharmacy to drive other parts of the store, by offering prepared foods for diabetics in the deli, for instance.

"We must teach the associates that part of serving the customer is to inform," he said.

As the discussion came to an end, Lempert asked each of the retailer panelists for "one great idea" that they would take from this session. "Personally, I've got to open my mind more," said Stewart. "I've heard a lot of things I don't agree with."

Jadrich said he liked Foltz's measuring tool to show how increasing sales impacts profit, and said he would bring it back to Supervalu. Stop & Shop's Fegan said, "You have to create a value in the eye of the consumer, so they know that they are stepping into something great" when they enter the store.

Heinen said the focus for him "was to understand that there are store design issues, people issues, and all of those factors had better align. You need an organizational focus, just to do solution selling."