FELPAUSCH FIGHTING WAL-MART WITH NEW CONCEPT

JON SPRINGER

BATTLE CREEK, Mich. -- An independent grocer caught in the crossfire between battling supercenters is taking cover under a new identity.

Felpausch this month completed a conversion of one of its four stores here to Zucca's, a new banner featuring an upscale mix of natural and organic products and expanded fresh and prepared-foods departments. The 35,000-square-foot store replaces a conventional Felpausch Food Center, said Janine Dalman, spokeswoman for the Hastings, Mich.-based independent chain.

In the planning stages for around two years, Zucca's opens just months after Wal-Mart Stores, Bentonville, Ark., completed its own expansion of an area discount store into a Wal-Mart supercenter. That 205,000-square-foot store, which opened in April, is located less than half a mile from Zucca's. Felpausch also faces competition in Battle Creek from other independents and two superstores operated by Grand Rapids, Mich.-based Meijer, Dalman told SN. Battle Creek is a city of around 53,000 in south-central Michigan.

"With Wal-Mart and Meijer going head-to-head in Michigan, the independents are taking it pretty hard," David J. Livingston, managing partner of DJL Research, Pewaukee, Wis., told SN. "So, this sounds like a good move for Felpausch. They're trying to do something different to stand out."

Dalman said Zucca's offers Felpausch the opportunity to claim an upscale clientele that until now had difficulty finding organic foods and specialty items in Battle Creek.

"This particular location was chosen because the shopper we get in this location tends to be a little more upscale," Dalman said. "They have been traveling to the Whole Foods in Ann Arbor and to city markets in Chicago to get the specialty items they were looking for."

Although Zucca's has about the same number of employees as a conventional Felpausch store, Zucca's emphasis on customer service resulted in a number of employees being shifted among area stores. Zucca's features a wine specialist, a pastry chef, specialty meat cutters and a cheese specialist, Dalman explained. Prepared foods are headed by an area restaurateur whose Malias brand was licensed by Felpausch.

"We want this to be a destination where customers can come in and have their questions answered, or have their meal solutions put together by experts," Dalman said. "It's a place with a lot of knowledge and service available for the customer."

A local firm, Greenstreet Marketing, helped design and create the brand positioning for Zucca's. The exterior is striking in purple and gold with a new logo and the tag line, "For the love of food." Zucca (pronounced ZOO-ka) is Italian for squash. Inside, designers made room for expanded fresh areas, a bistro and around 3,000 new natural and organic stockkeeping units by reducing redundant center store items. "Instead of having cereal in five sizes, we have it in two sizes now," Dalman said.

Dalman declined to say how much money the conversion cost, nor did she provide details as to the store's performance other than to say it had exceeded the company's initial projections. Though no additional Zucca's stores are planned, Dalman said Felpausch would look to replicate certain aspects of the Zucca's store in its other locations. Felpausch operates 19 Felpausch Food Centers, and two limited assortment Save-A-Lot stores. It also operates five convenience stores, 17 video stores and nine pharmacies in central and southwestern Michigan.

Competition remains an issue in many of Felpausch's trade areas. The company closed a Felpausch store in Charlotte, Mich., in June, citing heavy competition that included a Meijer store and converted Wal-Mart Supercenter. This week, a supercenter is scheduled to open across the street from a Felpausch in Jackson, Mich.