UPPER END

JOEL ELSON

The upscale kitchen shop is becoming a signature place to attract higher-income grocery shoppers.

Whether in-line or in a stand-alone destination department, some supermarket chains are dedicating more space, using special fixtures, signage and lighting and stocking a quality mix of pricey products to spotlight their housewares sections. In doing so, these retailers are attempting to recapture some of the business snatched by department stores, kitchen specialty shops and mass merchandisers.

One example is at Wood River Valley Market, Bellevue, Idaho, where high-end cookware (priced at more than $200) has done well. Sales have doubled in the two years since the items were added to the mix, according to Stefanie Smythe, health and beauty care and general-merchandise manager.

"I can sell one pot for $100 and make $40," she said.

Gadgets, glassware, coffee makers and other kitchen domestics are displayed on metro racking, Smythe said. Larger hard goods range in price from $10 cookie sheets to $279 Brendes brand cookware sets.

The 260-member Central Grocers Cooperative in Franklin Park, Ill., is about to roll out a new kitchen-shop format. Bob Schaeffer, director of nonfood, said highlighting upgraded kitchen products "will allow our retailers to be more competitive with the discounters and mass merchandisers."

Sales of housewares in supermarkets remained flat at $3.2 billion in 1997, according to the latest figures compiled by the National Housewares Manufacturers Association, Rosemont, Ill. Of that total, kitchen tools and accessories represented 16.2%, the largest category share of the 15 housewares categories tracked. In comparison, kitchen tools and accessories represented just 3.4% of the $16.8 billion in housewares sales at mass merchandisers; 5.5% of the $5.2 billion in sales at department stores; and 11% of the $4.7 billion at specialty stores.

The trend across all retail channels is toward higher-end merchandise in kitchenware. Supermarkets are no exception, said general-merchandise executives surveyed by SN. Many buyers will gather in Chicago this week for the International Housewares Show, Jan. 10 to 13, to preview new products and trends for 1999.

Central Grocers' kitchen shops, featuring a customized mix of gadgets and cookware, are slated to go into selected retailers' stores later this year, Schaeffer said. Products will be priced up to $50.

Central Grocers will planogram the kitchen departments based on each store's demographics. "We'll pick the best items to trigger impulse sales," said Schaeffer.

"A kitchen shop is a highly viable concept that allows a retailer to offer customers an enhanced assortment," he added. "It's also a way to become creative, which is crucial today, or else you're dead in the water."

Central Grocers-supplied stores that choose the kitchen shop format can expect to make 40% to 45% profit on sales of upgraded products, Schaeffer noted.

Heavy weekly foot traffic positions these stores "to generate a lot more sales dollars per square foot" than retailers in other trade classes, he said.

Participating stores will display the program on department store-style racking. "You can display a lot of product in a relatively small amount of space, using red or black enamel fixtures," Schaeffer said.

A&P, Montvale, N.J., was an early proponent of such boutique departments. Over the past two and a half years, A&P has installed 84-foot-long in-line kitchenware runs in the baking aisles of new stores. These sections feature a wide range of basic and pricier goods.

"We believe in the kitchen shop as a point of difference," said Gene Lear, executive vice president at Super Market Service Corp., the chain's nonfood division.

"We like the presentation. We believe in focusing everything in that one aisle, compared to integrating the products in several areas. The customer knows where to find these products," Lear said.

"We're pleased with its performance. It has been successful." A&P will continue to planogram the set in new store locations, he said.

A&P's presentation is a "good, better and best" mix and includes such items as decorated ceramic bowls and serveware, tea sets, countertop appliances, tabletop accessories made of oak, lazy Susans, and napkin and towel holders. Products are priced from 99 cents for small plastic gadgets to $49.99 for a four-piece Shaker Collection canister set. A&P modifies the mix seasonally, Lear said. "More space is devoted to appliances, including blenders, for gift-giving in the fourth quarter and Christmas."

The chain tries to upgrade the housewares sets to department-store quality when possible, though there are limits, Lear said. "Certainly, we wouldn't handle Neiman-Marcus-type products, since we are dealing with a supermarket customer."

At Dierbergs Markets, Chesterfield, Mo., the kitchenware program revolves around Seattle-based Progressive International's 225-item line, priced from 99 cents for gadgets to $30 for boxed food-preparation accessories.

Since the company introduced the program three years ago, the chain has enjoyed double-digit sales gains, said Jim Denny, nonfood buyer.

Dierbergs allocates 24 feet of in-line selling space in the baking aisle to the pegged housewares products. About 75% of the program is gadgets, with the balance in boxed goods.

"The program does real well, with gross profit margins at 45%, compared to around 30% for typical supermarket housewares," Denny said. The program offers shoppers "variety and quality. It also presents a destination department."