FRED MEYER GROWS NATURAL/ORGANIC OFFERING

ELLIOT ZWIEBACH

PORTLAND, Ore. -- Consumer trends will come and go, but demand for natural and organic foods will continue to increase. Retailers and manufacturers need to respond to that demand, a Fred Meyer executive told an industry forum last week.

"Those who enhance purchase opportunities and grow natural foods will reap the rewards of customers' loyalty," Nancy Moon-Ellis, vice president and merchandiser for the Natural Choice sections at Fred Meyer Inc. here, told the leadership session of the Network of Executive Women.

As far as natural and organic foods are concerned, "it's a new day," Moon-Ellis said, with a growing number of mainstream retailers beginning to increase their offerings of natural foods. Yet, Fred Meyer has been at it for more than 30 years, she pointed out.

Fred Meyer has Natural Choice departments at 133 stores in five states, offering 5,000 stockkeeping units in just 2,000 square feet, she said. The departments are experiencing "record sales growth," she noted, although she was not specific.

Three years ago, the chain began developing a signature line of 100% natural and mostly organic items called Naturally Preferred, "and sales have been impressive," she said, "and we expect that growth to continue throughout the Kroger chain." Fred Meyer is a division of Cincinnati-based Kroger Co.

In March, Fred Meyer rolled out a magazine called Naturally Preferred containing information and coupons; it is available free to customers, she added.

The Natural Choice departments are very responsive to customer requests, Moon-Ellis said, by offering coral calcium, gluten-free products and low-carb foods, including a line of specially developed breads and ice cream.

Moon-Ellis said the departments are stocked with service personnel who go through educational training and work with vendors to develop their knowledge base. Although some companies are cutting back on service personnel in stores, Fred Meyer believes such staff is vital in natural-food sections "because customers expect employees to be on hand to guide them through the department," she said.

Fred Meyer stores also offer Healthnotes, a computer-based information system available to customers and store staff, to access information on more than 650 health topics, she said.

In her talk, Moon-Ellis cited a variety of industry statistics attesting to the strength of natural and organic foods, with sales increasing from just $1 billion in 1990 to $11 billion in 2002, and expected to rise to $20 billion by 2005.