APPLE MARKET CONVERT STARTS FRESH

AMY I. STICKEL

COUNCIL GROVE, Kan. -- Sales were good but they could have been better, so Dave Baker, owner of the former Baker's Supermarket here, decided to do something about it.

With the help of his supplier, Associated Wholesale Grocers, Kansas City, Kan., he converted his single-unit independent to AWG's Apple Market format, which has a strong emphasis on fresh foods. It now operates under the Apple Market banner.

"It's been a real successful format," said Baker, noting that sales have been up about 10% in the fresh foods areas since he completed the conversion in May.

"We've had great success in bakery," he said. "We've had real good growth in the perishables department, particularly meat and produce."

An aggressive pricing structure directed by AWG is one key to his success, he added. When he converted the store, Baker joined the Apple Market ad group. Fresh foods have always been an important focus for Baker, who has operated in this town for 14 years. Baker described his market as "the middle of cow country," where his customers demand high-quality perishables.

The conversion to the Apple Market format provided certain programs for fresh foods areas -- including a bake-off program in the bakery and frequent buy-one-get-one-free programs in the meat department -- that helped boost sales.

The bake-off program has improved consistency of product, according to Baker. "The No. 1 reason is that all the items have a better mix," he said. "The consistency helps."

Meat sales have also been very good since the change in format. "In this market area, we've used the meat department to bring up business," he said. "We've run buy-one-get-one-free sales, and those have been extremely successful. "Meat department sales are up 3%, while meat consumption in general is down," he said. Produce, his lead department, has also been successful. Baker credited AWG for consistently supplying good produce.

Baker admitted that he has some serious competition in the deli. "I do struggle in deli," he said. "A pizza place opened across the street, and that hurt our pizza program. Then a Dairy Queen opened up nearby.

"I'm going into the deli department next, and putting my nose to the grindstone," said Baker, who said his background is in produce and meat.

The changeover to the Apple Market format required a new decor package, which was a hard pill to swallow, Baker said. Among the changes were the installation of the Apple Market red and yellow apple logo throughout the bakery and deli, and the addition of "Apple Market" to the store's name.

"The store was only three years old, and it was a $55,000 investment," he said.

Nonetheless, Baker decided to take the plunge. He had experienced 5% to 7% increases in sales growth since he built the 20,000-square-foot store three years ago, and he was worried sales would stagnate in 1995.

With no nearby competition from large chain stores, the format change was a sort of preemptive strike, which Baker said has paid off handsomely.

Despite increased training, the change has been hard on his staff, who were not prepared for the increased business brought on by aggressive pricing and weekly specials.

"The change has really stretched our help. They weren't used to the pace. I tried to explain before we switched, but some just weren't ready," he said. "Some struggled -- and others struggled real hard." According to Bill Lancaster, AWG's corporate vice president of sales, the Apple Market format was created for small independents like Baker.

In the supermarket version of the battle between David and Goliath, AWG wanted to give its independent operators a boost, so it developed the Apple Market format for smaller and medium-sized stores two years ago, Lancaster said.

"The perishables focus has given the store personnel direction, and it's also in line with what the consumer expectations are," said Lancaster. "They want fresh, high-quality perishable items, and food 'to go.' " Because Apple Markets stress competitive pricing, the Apple Market brand program is almost as important as high-quality perishables, Lancaster said.

"There is a future for small-town operators," Lancaster said. "People like the stores close to their homes, even though they visit large stores. They prefer a store closer if that store is addressing all of their expectations, with the food to go and the fresh, perishables area. "That's the reason we did it, and it's just done real well." Lancaster hopes to have 100 Apple Markets by next year. The first built-from-the-ground-up Apple Market opened earlier this year.

"These are not expensive conversions," Lancaster said. "They are new decor packs, and repositioning of bakery, deli and produce, all of the perishables areas."

Some conversions have required independents to rearrange, or even add, bakeries, delis, meat departments and produce departments -- something Baker did not have to worry about.

Baker's success in the bakery is common for Apple Market operators, Lancaster said. "The thaw-and-sell programs are a gangbusters area out in retail right now," Lancaster said. "Before, some just weren't into bakery because they just didn't want to go into the investment." The thaw-and-sell approach makes bakeries viable for independents, since the quality is high while training requirements are not, Lancaster said.

"It's phenomenal in terms of labor, because you have the top quality, and yet you don't have the investment in equipment. And in many of these stores, they didn't even have bakeries [before the conversion]," he said. "There's a standard, a continuity, a quality that is dependable with the thaw-and-sell. It just sells awfully well." In the deli, the emphasis is on food-to-go. Not all stores offer as much variety in this department as he would like, Lancaster said.

"We're in a time of change and evolution. All of them aren't doing everything to the extent that others are. But they're all moving forward very rapidly on this."

Besides allowing independents access to an ad group, the Apple Market format also provides a strength-in-numbers approach, and firm guidelines for store layout. "We were wanting to weave independents together into an ad group, get a remodeling program going for stores that had not invested in a while. "The success cycles are these: You invest, then you harvest for a period of time, then you reinvest, or else you divest and sell the store. Because if you're not going to reinvest, you're going to be so vulnerable that your future could be in jeopardy," he said.

Due to their autonomous nature, it was a challenge to sell independents on the concept early on, Lancaster said. "We convinced them that in an ad group, you have more access to vendor promotion monies, because you have an ad coordinator negotiating it as a group. It helps in many ways," he said. Apple Markets benefit from radio advertising, and, in the Kansas City market, television ads. "It's really like turning this into a chain recognition. And it's very beneficial, because we can layer in image in all those different areas. So when a new person opens an Apple Market, it means something," he said. While Baker's Apple Market does not have much competition from chains, other AWG independents do, including competition from the grand-daddy of big chains, Wal-Mart, Bentonville, Ark.

"We do more against Wal-Mart than anybody," Lancaster said. "They will eventually convert all their stores to supercenters, because the food is a big addition for them. "I don't see that changing, and I think they're going to be here forever. What we're doing with Apple and our other formats is to get every store into a concept where they can live against a supercenter competition," he said.