IT'S A NATURAL: H.E. BUTT OFFERING ALL IN ONE STORE

AUSTIN, Texas -- H. E. Butt Grocery Co. has unveiled its answer to natural-foods retailers at its newest and largest store.

n, which carries about 8,000 stockkeeping units, is a first for the San Antonio-based company, which has 246 stores in Texas, Louisiana and Mexico.

"We wanted to get natural-food items and conventional items under one roof," said Michelle Sayers, category leader for Nature's Harvest. "We wanted a one-stop store."

The department consists of five freestanding aisles, one of which offers bulk food. The aisles, which run about 20 feet long, fan out from a central customer-service desk. Among the Center Store SKUs stocked are cereals, snacks, cookies, beverages and 10 doors of frozen foods. There's also an entire wall filled with nutritional supplements, herbs and aromatherapy products, and 30 feet of dairy products.

The department has a six-person staff, though customers pay for their selections at the store's main checkout.

Austin, one of the nation's largest markets for natural foods, is ideal for Nature's Harvest. H-E-B, like other supermarket giants such as Albertson's, Safeway and A&P, is making a commitment to natural and organic foods.

Much of this comes in response to the aggressive expansion of Whole Foods Market, here, and Wild Oats Markets, Boulder, Colo., which have been opening natural-foods supermarkets from coast to coast.

These retailers have been attracting customers who tend to have more disposable income.

Programs like Nature's Harvest are a way for conventional supermarkets to get a piece of the booming natural-food market, which is estimated at more than $11.5 billion and growing at an annual rate of 25%.

And supermarkets may have a leg up on their natural foods competitors when it comes to convenience. As reported in SN, a 1997 study by Hartman & New Hope, a Bellevue, Wash.-based research firm, found that 80% of consumers seeking organics would rather buy them in conventional supermarkets.

"Many customers will buy natural and organic products if they're available in the place they already shop," said Howard Solganik, president of Solganik and Associates, a Dayton, Ohio-based retail food-consulting company.

While many conventional supermarkets have integrated natural products into their stores, H-E-B chose to separate the assortment.

The retailer highlights the section in several ways. While the rest of the store has concrete and tile floors, Nature's Harvest has wooden flooring from China. Also, a large "Nature's Harvest" sign hangs above the section.

Nature's Harvest employees are well versed in the natural-foods business. Sayers was recruited from Sun Harvest Farms, a San Antonio-based natural-food-store chain. To offer even more information, H-E-B has included a self-service computer that provides data on a variety of nutrition and health subjects.

Will concepts like Nature's Harvest have an effect on companies like Whole Foods?

At an investor's conference last month in New York, Whole Foods Chairman John Mackey was asked whether he's concerned about competition from conventional supermarkets, which are expanding into his market.

"I wonder whether Barnes & Noble and Borders are concerned that Wal-Mart sells books?" Mackey said. "Even playing our game, supermarkets are having a tough time beating us. We kill the category."