MARKET OF CHOICE: INVESTING IN INTEGRATION

MINA WILLIAMS

THE WEST COAST HAS A REPUTATION for earthquakes, but it's also a longtime epicenter of health and wellness. Retailers who have been operating in this region need to walk a straight line with their shoppers, who are among the most experienced and knowledgeable consumers of whole health products.

In the case of seven-store independent Market of Choice, this means operating a hybrid supermarket concept that merchandises natural, organic, conventional and specialty items side by side.

“‘Choice’ is in our name,” said Rick Wright, president and chief executive officer, who took over the Eugene, Ore.-based chain from his father in 1997. “Customers have to have the choice to choose to purchase Oreos or Newman-Os.”

Maintaining this level of selection has presented challenges for a retailer whose largest store is 43,000 square feet. Wright and his staff face not only physical limitations, but a customer base that is as varied as it is singularly demanding.

“Some of the folks think of us as a natural food store, some think of us as a grocery store,” he said. “We simply offer the best products in categories. Many are locally made, others are imported. We ask area farmers and producers if they would be willing to create artisan products expressly for us.”

Such a diverse list of traits could pull lesser retailers apart. Market of Choice struck on a solution that, while risky, has allowed it to thrive: integration of all products, in virtually every category, throughout the entire store. The merchandising question is important to all food retailers, since the mainstreaming of health and wellness means that one day they, too, will have to make a similar decision.

“First you have to have a thorough knowledge of your customer base,” Wright explained. “In the Eugene area integration worked well. Customers want to evaluate products. They want them side by side.”

Integration can be labor-intensive for buyers, because it means recasting planograms and working with multiple vendors. Ordering for Center Store, for example, may involve one or two suppliers. Adding in natural, organic and specialty items boosts that to at least three major suppliers, plus hundreds of local vendors, according to Wright.

“Coordination with ordering and coordinating the stocking side is crucial. Eliminating out-of-stocks is so difficult,” noted Wright. “We grocers are used to adding elements to control labor when labor costs get out of control. Integrating products can get labor [costs] seriously out of whack.”

When Market of Choice started carrying organics in 1998, consumers might have told the retailer what they wanted, but not necessarily how they wanted it presented. Wright said the decision to place items side by side was prompted by a focus on small-store efficiency and labor issues.

“We simply thought of our total product mix,” he recalled, adding that he wanted to show customers in the most visible manner that the chain offered organic items.

“When you have a large and knowledgeable customer base of natural shoppers, along with customers who don't consider an integrated store as a natural food store per se, plus another segment who find natural food stores new and exciting, the market is right for integrated marketing,” Wright said.

Integration is not a total-store solution, he warned. Some categories do not perform when conventional and natural or organic are set together. Vegetarian consumers, for example, may find it offensive if meat analogs are located near the beef display. Sometimes government regulations prohibit a side-by-side presentation.

“A lot has to be thought through,” Wright said.

Site selection is another key Market of Choice uses to unlock success. A new unit in West Linn, Ore., is positioned on a highway that serves several small towns surrounding Portland, an area Wright described as a “micro-market.” Another Portland-area store is in a university neighborhood. Wright considers this a “pocket.”

“We have no intention of ‘invading’ Portland,” he said. “Portland already has everything. Our format is not filling a void. We simply find a pocket within the market and fill it with unique items and locally grown, produced or raised products.”

During his tenure as CEO, Wright has taken the original units and rebuilt and recycled each one. The West Linn store is a 32,000-square-foot remodel, opened last October on a site formerly occupied by another grocer. The newly built 43,000-square-foot Eugene unit opened last December, adjacent to an existing 28,000-square-foot Market of Choice unit.

“We literally had a seamless operation,” Wright explained. “We closed the old unit one night and opened the new one the next morning. We even kept the same store layout.”

A 2,500-square-foot food-service commissary has been added, producing pasta, sauces, soups and deli salads. Bakery offerings are also centrally produced, with more and more trans fat-free items being added to the product mix.

Throughout this seven-year development process, the Market of Choice team has kept a close watch on their marketplaces and the customers they serve. With units ranging from 10,000 square feet to the new 43,000-square-foot Eugene store, each facility's come-to-market presentation is dependent upon the neighborhood and the unit's size. This means tighter assortments in smaller units and a variety of product offerings based on shoppers' desires. But the hybrid concept of offering natural, organic, conventional and specialty items remains consistent chainwide.

“Some stores are more natural- and organic-oriented,” explained Wright. “The store set follows what the customers want.”

The result is destination stores offering customers an experience with service meat, seafood, deli and bakery departments, along with a large specialty service cheese assortment and beer selection — both focusing on locally produced offerings alongside upmarket imports. A Whole Health section has information kiosks and trained associates available to assist customers in selecting homeopathic remedies, herbs, supplements and vitamins.

Produce by far receives the largest emphasis at Market of Choice stores. Departments generally present between 600 and 700 items in both organic and conventional guises. At the new Eugene unit, an outdoor area has been earmarked for local farmers to set up during the season. On warm days, the glass doors behind this area can be opened, providing direct access to the indoor produce department.

Market of Choice stores also spotlight an “entertainment zone” encompassing wine, beer, whole coffee beans, a service specialty cheese case and a full-service deli. This strategy is particularly well developed in the new Eugene unit. The multi-category zone extends to seating areas upstairs and on the main level. A rock fireplace with a flat-screen TV presents a cozy spot for shoppers to relax. The wine cave, at 30 square feet, punctuates the selection and dedication to the category with a barrel roof system and LED lighting to set the mood. A wine steward is available to help shoppers make their selections.

In the two newest units, a hearth oven bakes pizzas while chickens roast on a rotisserie. Over at the grill station, shoppers bring vegetables from the salad bar for associates to stir-fry, adding meat as requested. Customers can also select gelato, sushi and handcrafted coffee beverages, each of which has its own service point.

A new community room in the Eugene store provides organ-izations with a place for meetings; the space also includes a cooking demonstration area for cooking classes.

The large Eugene store allowed Market of Choice to add two “neighborhood stops” to the floor plan. In the original unit, shoppers would stop mid-aisle to chat with their neighbors. Now the aisles are reconfigured so that customers can park their carts without creating a bottleneck in the shopping flow.

Other physical elements of the Eugene store resonate with natural food customers. A solar power system on the roof generates electricity, and physical design elements capture plenty of natural light. The flooring is made from recycled materials — ground concrete with pieces of granite, glass and marble added.

Bottle recycling — a law in Oregon — is made more convenient and comfortable here. The bottle return area has sinks available for washing containers right there, along with a separate sink for hand washing. For consumers, it's another nice choice to have.