ZUCCA'S: FELPAUSCH MOVES INTO WHOLE HEALTH

Robert Vosburgh

Zucca might mean "pumpkin" in Italian -- but as a store, Zucca's is hoping to squash the competition in the area of health and wellness.

Zucca's, owned and operated by Felpausch Food Centers, Hastings, Mich., added more than 3,000 natural and organic food and nonfood stockkeeping units during a wall-to-wall remodel here last year. The changes have helped the independent operator compete more effectively with Meijer and Wal-Mart Stores -- two big-box formats that are Felpausch's primary competitors in this market.

The move was strategic. Not only is the store creating a niche for itself as a destination for harder-to-find items, it also provides shoppers with an experience that cannot be duplicated in other stores.

"About the same time we converted to Zucca's, we had a Wal-Mart supercenter open within a half-mile of us, and it didn't really affect the sales here," according to Janine Dalman, Felpausch's director of public relations. "We also have a Meijer within a half-mile of the Zucca's."

The changes were also practical for the company itself, she said. While the store was completely updated, only one-third of it is physically devoted to naturals, organics and diet-related products. It was a cost-effective way to alter the public's perception of the store.

"Zucca's is no longer a traditional grocery store, although two-thirds of it is still traditional," she told WH. "When you walk into the store, it's like walking into Zucca's Market, which is all of our perishable products, organics, naturals and specialty foods."

It's almost a store-within-a-store, she added.

Most of the health and wellness-related items are found in perishables and in health and beauty care -- and those departments are what greet shoppers as they walk in the door here. Following the perimeter, consumers start with produce and floral. Then, it's on to the bakery, natural/organics, deli, wine and meat.

"We've added more than 3,000 new organic and natural items, and it goes beyond perishables. We've added a very large health and beauty section, with vitamins and lotions and items like that," Dalman said.

Ironically, the store's expanded health and wellness sections were inspired partially by the store's reputation as a quality destination for home meal replacement.

"About a year and a half ago, we had a restaurant in a neighboring community that was very well known," Dalman recalled. "The chef owned the restaurant, but he was ready to get out of it and he sold the rights to the name -- Malia's -- and the recipes to us."

The first phase of the Ann Arbor store's makeover focused on the meals program, still known as Malia's Bistro to Go.

"Zucca's built itself on Malia's," Dalman added. "It was the snowball that started it."

From this more affluent, higher-spending customer base, management learned that increasing numbers of local residents were driving up to two hours to purchase diverse natural and organic items. At that point, supermarkets in Battle Creek offered a minimal assortment of the products.

"We had a few produce and grocery items, but really not a large focus on natural and organic," Dalman said, noting that consumers weren't necessarily vocal about wanting such products. "The difference with Zucca's is that we have a customer base that is actually driving to Ann Arbor and Chicago to get these same products. Zucca's aims to keep those customers in Battle Creek."

Much of the 35,000 square feet of selling space was updated and shifted to accommodate the new health and wellness SKUs, though the overall floor size remains comparable to regular Felpausch stores.

"We've had very positive response from customers because they're very happy they don't have to drive so far anymore," Dalman said. "We have customers that used to shop once, maybe twice, a week, and get all of their groceries in those trips. Now they come in three or four times a week because they want to get a bread that's being made that day, or they want just-delivered produce."

Zucca's pull on these types of shoppers helps the store in its bid to become more of a destination. Developing a strategy to accomplish that has been the goal from day one.

To that end, Zucca's has developed signature products, and staffed select departments with specialists -- a master baker, who does fresh artisan breads daily, a pastry chef, meat cutters and seafood specialists, a cheese expert, and a floral designer, among others. Not only do they assist shoppers, they also use the interaction to upsell customers on a higher-grade product, or build on a sale by talking up cross-merchandised items. For example, this store's wine area, which has always been a strong point, was expanded and moved into the Zucca's area around deli and seafood in order to boost the department's visibility and to take advantage of the cross-selling opportunities presented by the two fresh departments.

"Having experts in all of our departments allows us to assist our customers at a level you normally would not find at a grocery store," said Dalman. The combined effect of new SKUs and a revolving menu of specialty items has made the store more adventuresome to shop, "especially when you have someone in every department greeting you and helping you make a purchase. It makes you feel good about what you're buying."

HBC and grocery got the most space of the new health and wellness area. Center Store shelves reserved for naturals and organics have received "tons" of different sauces, chips and similar products, while HBC "now is almost like going into a bath and body shop, only it's all-natural and organic items," Dalman said.

All departments have expanded selections, however, with the addition of new products that fit the store's updated healthy image. For example, in the meat department, there is now a selection of organic beef and Bell & Evans poultry.

"I think overall, natural and organic is a growing category, and there will be other [Felpausch] stores that we expand," Dalman said. "In fact, we have a couple of stores where we've already expanded our natural and organic sections."