FRESH START

FRESH MARKET STAFF / ROSEANNE HARPER / ROBERT VOSBURGH / CHRIS YTUARTE / LYNNE MILLER

The in-store presentation of fresh foods took impressive steps forward in 2000, helped along by improved packaging, better fixtures, more service and customer interaction, product sampling and a renewed emphasis on freshness. It's an exciting time to be working in the perimeter of the store as it becomes the nucleus of retailers' merchandising palette.

Deli/Fresh Meals & Alternative Concepts

Pizzazz, action and soft colors, as well as a very carefully selected product mix, moved into the spotlight in supermarket delis this year.

Catchy and unifying private brands, customer education, greatly increased service levels and, ironically, more self-service merchandising, were part of it.

Bundling products in the case and creating synergies, designed to make customers think "meal," were added.

Innovative ways to showcase the deli mix, particularly prepared foods, took center stage. Using a celebrity chef's recipes worked for Haggen Inc., Bellingham, Wash. The 21-unit chain began using TV chef Graham Kerr's salad recipes and touting the fact through a variety of media, including roadside billboards.

Elsewhere, permanent demo stations, meals centers and on-the-spot cooking instruction played into a scenario that spurred unprecedented associate-customer interaction. Save Mart, Modesto, Calif.; Hannaford Bros., Scarborough, Maine; Food Emporium, a division of Montvale, N.J.-based A&P; Wegmans Food Markets, Rochester, N.Y.; and Kowalski's Markets, St. Paul, Minn., are among those that pushed service in the deli to new levels this year.

"We've at least doubled our efforts in that regard," said Bob Kowalski, director of marketing and public relations, at his namesake supermarket.

The five-unit, family-owned independent has put a huge emphasis on suggestive selling in a comfortable setting and it's paying off, Kowalski said last week.

"Our deli sales are just off the board. We've had 30% growth in deli since this time last year and much of that is a direct payback from the extra service. I think you'll see more retailers doing this."

All that action is one way small independents have withstood the competition, said Brian Salus, president, Salus & Associates, a Midlothian, Va., consulting firm that works with supermarkets.

"Many of the smaller, independent or family-run businesses have quietly used it as a key point in differentiating themselves from the 'big six,"' said Salus.

But even the multi-unit giants looked to increase the exchange between customers and associates.

"All the big chains have added some variation of a meals center," said David Casto, president, retail food division, North America, for Hobart Corp., Troy, Ohio.

Save Mart Supermarkets introduced what could easily be termed "extreme customer service" in its deli and bakery at a remodel last spring. It doubled staff and has an associate on each shift dedicated to customer service.

"That person's job is to see things from the customer's perspective and keep things right. They'll keep the department sparkly for one thing -- no smudges on the display cases. And, of course, they'll talk to customers, too," said an official.

To prepare for the effort, the 97-unit chain gave 22 associates and five deli-bakery specialists a full 40 hours of training that ran the gamut from merchandising products to handling an irate customer.

Meanwhile, trend-setting Wegmans began in-the-aisle instruction in cooking techniques at a demo station across from the deli counter.

And Food Emporium, at its newest store, in Manhattan, has made aggressive sampling and staffed demos a hallmark. Hannaford Bros., which has 142 units, hired a meals planner at a new store this summer. His job is to make cooking and serving suggestions and to answer customers' questions.

Customers love these things, retailers said.

The challenge, however, is finding the right personnel to do the job, said Bob Beckerman, director, wholesale bakery-deli-food service, for SuperValu, Minneapolis.

"There's been more competition for the food dollar in the supermarket's deli and bakery this year than ever before. And it's also a year that we've seen the greatest pressure in labor from the standpoint of hiring and retaining people. You can't find people," he said.

As a result, simplification has topped the menu in many instances, Beckerman said.

Simplification can highlight a line. For example, by cutting its variety of prepared foods and salads in half, Tidyman's, Greenacres, Wash., is able to show off what it has to better advantage, officials said. Each variety is now displayed in larger crockery bowls.

"Instead of 20 items merchandised all over the place [in different-sized bowls and trays] we have about 10, merchandised better. And a salad of the week is featured in a larger bowl in the center of the case and it's aggressively sampled," said Warren Marigny, deli-bakery director, at the company which operates 12 stores under the Tidyman's banner.

Kowalski's added new display cases with narrow, mezzanine shelves so it can merchandise add-ons like artichoke rolls above its entrees.

Such product adjacencies count, retailers told SN. Giant Food Stores, Carlisle, Pa., is one that carefully planned where and how it would show off some simple, but popular, deli items at a store it opened this fall in Hershey, Pa.

Some of the items are new, others were just promoted to a new, eye-catching level, said Hillary Gray, vice president, deli-bakery, for the 91-unit chain.

Olives, for example, have gained new prominence in crockery bowls in a self-service island that's right across the aisle from the service deli. They share the limelight at the self-service station with trendy roasted vegetables, grain salads and chicken wings, available every day in five flavors.

"To take the deli a step up, we've started to put all the pieces together synergistically," Gray said.

Giant considers self-service a sort of service to customers because it's so convenient. The ambiance at the new store, too, is designed to make the customer comfortable -- and to sell more food, Gray said. For example, the color scheme is soft, and the seating area has been expanded and given a "restaurant-like ambiance," making a comfortable place to eat -- and inviting customers to tarry longer in the store.

Before the announcement it would be acquired by Pleasanton, Calif.-based Safeway, Genuardi's Family Markets bunched its food-service concepts together at a new store in Lionville, Pa., to create a restaurant-like feeling.

"We've come as near to being a restaurant as we can in this [retail] environment," said Jim DeGilio, food service director at the 34-unit, Norristown, Pa., chain.

The company also for the first time is merchandising everything in the food-service category, including sandwiches, under The Kitchen at Genuardi's label. That, too, is seen as a convenience for customers, one that will spur them to buy more right there.

"The idea was to tie everything together so it would be just one thought process for the customer," DeGilio said. Simple food and making things simple for the customer was the order of the day.

Hobart Corp.'s Casto, who travels extensively for his company, said he saw retailers going for simplicity.

"It's a change from when retailers were trying to be everything to everybody. Now they're making the best meatloaf they can and very good mashed potatoes."

No matter how simple, the product's freshness is the sales driver, retailers said.

Larry Uhl, president of single-unit West Point Market -- a company known in the industry for its successful merchandising -- commented on the store's upcoming renovation in Akron, Ohio.

"The difference will be in the merchandising of the products and the look of the unit itself. For example, we're leaving no guess as to how fresh the [rotisserie] chickens are. They'll either be sold quickly or chilled right away. No heat lamps," Uhl said.

Produce and Floral

Produce again reigned supreme in 2000, casting a long shadow over the other fresh-foods departments, strengthening its position as the gateway to the total store. In the aisles, there was more color and variety, too, as the number of stockkeeping units spiraled to new heights.

Simple numbers reveal the reason for continued interest in produce, and even floral: According to USDA statistics, supermarkets and supercenters captured the lion's share, or 98%, of produce sales in 1997, totaling $30.9 billion (the most recent year for which statistics are available). Of that percentage, supermarkets alone took 88%, and supercenters 10%.

Produce department sales are improving the retailers' bottom line. Sales of fresh fruits and vegetables contributed 9.5% to total-store sales in 1997, up from 8.8% a decade before. For example, in 1987, the department's share of profits was 16.8%, or nearly twice its share of sales, and grew to 17.2% in 1997, according to USDA.

As such, retailers were able to set a gross margin that adequately covered departmental expenses. Citing a poll of retail produce executives, USDA calculated an average gross margin, as a percentage of sales, of 33.2% in 1997 -- higher than the overall store spread, which hovered near the 26% mark for that same year.

That's why Victory Supermarkets is among the operators leading a strategy promoting produce as a destination department. The Leominster, Mass.-based chain opened a 50,000-square-foot remodel a year ago that reserved 26% of its total floor space for produce. The tomato display alone runs a full 16 linear feet.

"We set the tone of the store with produce," Torrey Taralli, director of produce for the 19-unit retailer, told SN, echoing the sentiment expressed by other retail executives discussing growth of their produce departments.

Hannaford Bros. introduced a new, 55,000-square-foot store format in West Falmouth Crossing, Maine, that emphasizes fresh foods with open-air market flair, especially produce. Officials said fruits and vegetables were chosen after extensive research found that consumers prize the produce department over others.

"Our research showed consumers want variety and are interested and willing to try products that are new to them as long as they can get information about them, like how they look when they're ripe, how to prepare or cook them, and in some cases, what they are and how to use them," said Caren Epstein, spokeswoman for the 142-unit chain, based in Scarborough, Maine.

The chain responded to these findings with a produce department at this store that's 50% larger than any of its others; a new design that gives the department flagship ambiance; a product mix that hits 800 stockkeeping units (including yautia, islena, gobo root, lotus root, kimchee, fuzzy melon, water coconuts and four types of papaya) and includes an uncommonly large selection of organics, exotics and ethnic products; signage designed to inform customers about the less-common items; and a service level that features two staffed demo stations, a service melon bar and an expanded roster of associates.

Product mixes like these require a commitment to customer education and a dedicated roster of experienced associates. Produce, once largely a self-service operation, emerged this year as a primary location for sampling, cross merchandising, demo stations and an effective intercept for customer interaction.

Central Market, Shoreline, Wash., operates a kiosk -- fitted with a stove top and running water -- located inside the produce department. The operator's culinary education staff offers instructional classes, highlighting specific products, every day. And, every Thursday evening, two sessions are presented as a cooking class. Following the half-hour class a market tour points out to attendees where products used in the class could be found in the store, officials told SN.

Central Market bolsters this kiosk effort with several portable demonstration stations. The operator frequently positions one at the unit's entrance into the seafood and produce departments. Another is often found in an area between the meat and produce departments, they said.

Commodity trade associations are also picking up on the sampling trend and using it as part of their overall marketing efforts. For example, in-store sampling was a cornerstone to variety apple movement during the Associated Grocer harvest sale. West Seattle Thriftway offered a rotating menu of samples and Ballinger Thriftway included a baked apple recipe in its demo kitchen during the dinner rush.

Samples of the end product were passed out and the scent of baking apples with syrup permeated the store. Both events were part of promotions organized around the annual fall harvest of Washington State apples, represented by an association based in Wenatchee, Wash.

The new emphasis on the produce department was expressed not only in terms of larger footprints and increased service -- the changes have also revolutionized the way fresh fruits and vegetables are presented to consumers. Misted displays of color have become the norm, with contrasting hues and textures artfully arranged in striking fashion, under movie-set lighting.

Orville N. Roth, owner of Roth Family Markets, Salem, Ore., said his stores are attempting to enhance the shopping experience by making better use of color, particularly in perimeter departments. The retailer installed track lighting in the produce section "to bring out the color of the product," rather than dissipating the colors using more traditional fluorescent bulbs, he said.

Stater Bros. Markets, Colton, Calif., has also found success through remodeling, particularly the 43 stores it acquired from Albertson's last fall. Jack Brown, chairman, president and chief executive officer, told SN earlier this year that Stater has improved the customer experience at the acquired stores by installing triple-deck produce cases, while making changes at its existing stores, including expanding the seafood departments and enhancing the deli-bakeries by incorporating merchandising techniques it picked up from the acquired stores.

Another chain that undertook a major initiative to boost the profile of produce was Grand Union Co., Wayne, N.J. The retailer -- which auctioned itself off in November to a small number of buyers, primarily Brattleboro, Vt.-based C&S Wholesale Grocers -- launched a redesign of its produce areas as a direct result of the consumer demand for more items and a squeeze on physical space.

Victor Lomoriello, vice president of produce, said that the chain's renewed emphasis on the produce and floral categories required creative, updated thinking. "The space in stores is limited," he said. "You just can't keep growing because you have more SKUs. What we've done is go up the walls, go upwards -- vertical instead of spreading out."

While fruits and vegetables may not be alone among store departments in battling for maximum space efficiency, there are additional issues of perishability, seasonality, consumer expectations and store demographics that complicate the challenge of fitting more products into a limited area.

"All of the variety is great for the consumer but handling it can be difficult for the retailer," agreed Ed Odron, a former retail produce executive and now a partner in the consulting firm of Heintz & Odron 2000, Stockton, Calif. "While many of us have prototype stores where more space is being allocated to produce, a lot are working with great stores in great locations [that] only have, say, 30,000 square feet. That's when it becomes a real challenge to work all of these products in."

At Grand Union, Lomoriello said that modified dairy cases, with adjustable, multideck shelf options, are helping to ease the crunch. These flexible fixtures allow the retailer to categorize more merchandising room for improved presentation. And, they're less expensive than custom fixtures that may not be as adaptable, he said.

"We've installed the spray misters, and used a couple of different manufacturers for the racking. They're flexible and adjustable for depth," Lomoriello said. "We've also put in additional five-deck cases to expand for the future. Some sections we're using as a seven-deck case."

At a store in Carlstadt, N.J., the produce department comprises roughly 2,400 square feet of the store's 55,320-square-foot total. Given the constraints, vertical fixtures to create a wall of produce have had a positive effect on presentation.

"A few of the customers have told me they perceive an extended variety of produce, beyond what they're actually seeing," said Lomoriello of shopper reaction to the vertical schematics. "They can see a lot more product in the vertical set so that they can choose a lot more from the same item -- it's not all layered on top of each other in the case."

Odron said more retailers will likely adopt this type of presentation strategy in the future.

"Fixture manufacturers have done a good job of designing cases that are flexible and maintain the proper temperatures," he said. "Many stores are putting in cases where a range of temperatures can be achieved to allow for different products to be merchandised, and that also allow for added shelving."

Meat, Seafood and Dairy

Meat and seafood departments across the country used different approaches to marketing fresh products throughout 2000, and case-management strategies gained credibility as an effective strategy for retailers seeking to rejuvenate their cases.

"The fact is that 79% of consumers shop a store simply for the meat," said John Hagerla, who at the time was vice president of marketing for the National Pork Producers Council, Des Moines, Iowa. "So case management is crucial both for meat sales and for keeping the rest of the store populated with consumers."

The combination of inventive, helpful and safe packaging techniques -- coupled with consumer-sensitive merchandising -- gave fresh meat and seafood aisles a distinct style in the supermarket industry this past year. Simplifying the selection process and making shoppers more comfortable with their knowledge of the products became high priorities when stocking the shelves with meat and seafood.

"Meat managers say consumers now make faster purchase decisions and they've noticed a decline in preparation questions," said Kevin Yost, executive director of channel marketing for the National Cattlemen's Beef Association, Chicago. As a result, selling plans had to emphasize convenience in presentation, he added.

Wakefern Food Corp, Elizabeth, N.J., exemplified the retail effort to improve presentation of such products by implementing a new case strategy for meat departments in the member-owned cooperative's ShopRite stores. The Integrated Meat Case program, created by the NPPC, allowed participating stores to simplify the shopping process for its customers by arranging the meat in a friendlier manner.

By organizing the fresh meat selections according to species, then subdividing them into segments and again according to specific cuts, consumers followed a "natural progression of thought" when selecting their items, right down to the final specifications of size and package quantity.

Each cut of meat sold under the integrated program came with on-package labels that included cooking times and simple recipes, further enhancing the presentation of the product and the ease and comfort with which consumers could purchase each item.

Another program that rolled out in some of the biggest grocery stores in the country, including the Kroger Co., Cincinnati, and Safeway, Pleasanton, Calif., was "Beef Made Easy," from the NCBA. Its color-coded system for purchasing meat organized by cooking method also used bright on-package labels that were coordinated with the case signs and on-pack cooking instructions and timetables. Advances in the packaging of fresh meat and seafood items also made headlines this year, as retailers learned that consumers may be more accepting of case-ready meat than at first believed.

Though there are a number of ancillary issues surrounding the case-ready debate, the category's growth has been due primarily to concerns about food safety, labor and profits. "The No. 1 comment is how clean the product is, that there are no juices and the package does not leak," said Jessica Moser, spokeswoman for Wal-Mart, Bentonville, Ark., which became one of the first large operators to switch to case-ready product.

Conversely, when it comes to customer service, no department made stronger surges this past year in reaching out to shoppers than the seafood aisle. The department made service and customer interaction a top priority in 2000, which went a long way to addressing consumers' concerns about freshness, safety and preparation issues.

"Seafood is lagging behind other proteins, but hasn't yet realized its potential," said Laura Flemming, public relations director for Alaska Seafood Marketing Institute, Juneau.

As one of the last supermarket categories to develop and sell fresh convenience products, many seafood retailers emphasized consumer education on preparation, safety and value.

Some stores, such as Lunds Byerly's, Edina, Minn., extensively used demonstrations and sampling to best tout the freshness and quality of their seafood products. According to Dave Barber, executive chef, meat and seafood operations for the retailer, seafood demos are run as often as three days a week. Lunds Byerly's seafood staffers also package some fish purchases in a special plastic bag and pump them full of blended marinades, chosen by the customer. Bag stuffers and colorful posters also drew shoppers to Lunds Byerly's seafood aisle, and associates in the meat and seafood departments began telling shoppers weeks in advance about products that the store was going to stock.

The retailer also continued its strong dedication to service and presentation in the meat and seafood departments in 2000 by offering cooking and serving instructions on entrees in-case, and items were packed in black styrofoam trays or in upscale, aluminum trays that were black on the outside and gold on the inside.

Lunds Byerly's stores even rolled their own salmon florentine and then sliced it into pinwheels, just to make it more eye-catching.

However, merchandising became totally reliant on quality. Keeping shoppers aware of seafood freshness remained vital to the department's success, and some retailers adopted strict sourcing, shelving and sanitation policies to protect seafood at the store level.

"We purchase new seafood every day, have very few afternoon deliveries, and buy directly from fisherman in most cases, which cuts down on any lag time in delivery and stocking," said David Bennet, co-owner of Mollie Stone's Markets, Mill Valley, Calif.

Some retailers, such as Minneapolis-based Supervalu, packaged seafood effectively in 2000 by touting it as a healthy alternative. Under its Heart-Healthy label, the retailer attracted a strong contingency of health-oriented consumers to an otherwise neglected department when it comes to that ideal.

As the fresh meat and seafood departments across the country slip into 2001, in-store presentation will continue to play a significant role in maintaining retail profits and a strong consumer base, yet industry members know that a new year will always bring new challenges.

And with them, new ideas.

Bakery

To a greater extent, retailers used cross merchandising to boost sales in their in-store bakeries this past year. They also found that better packaging and flashier, more visible presentation paid off and kept interest alive in what some feel is a maturing category. Recognizing the potential ISBs have to make them stand out from the competition, retailers stepped up their customer-service efforts in the department as well. At Morton Williams Associated Supermarkets, Bronx, N.Y., strawberry shortcake is merchandised in the produce department, next to the whole berries. Sandwiches in the deli are made using breads from the bakery, while hot fresh loaves of rye, pumpernickel and crusty French breads are sold in the deli department, Michael Castrataro, head baker for Morton Williams, told SN. As a result, Morton Williams saw double-digit increases in most sales involving these items.

It seems there was no limit to the number of ways to cross merchandise bakery items in 2000. While small independents routinely used the strategy, the trend also caught on at major supermarket companies, said Peter Houstle, executive vice president of the Retailer's Bakery Association, Laurel, Md.

Over the past year, he's observed dinner rolls, desserts and foccacia as a component of a prepared meal in the deli, and baguettes displayed on endcaps near the pasta section of Center Store. "Rather than looking at the bakery as isolated, the bakery is related to everything the store sells," he said.

Similarly, Carol Christison, executive director of the International Dairy-Deli-Bakery Association, Madison, Wis., has seen the deli evolve as an arm of the bakery. She has seen soup bowls made of sturdy breads for soups and stews, and signature items from the bakery featured as desserts in the deli/fresh meals department. It's a clear sign that supermarkets are beginning to "sell the total store," Christison said.

Retailers found it paid handsomely to promote baked goods in prominent places. Jerry's Foods saw unit sales of chunky cinnamon bread jump 40% after the retailer moved the display from the bakery shelf to racks by the entrance, said Darrell Mickschl, bakery manager and a master baker at Jerry's Enterprises, a 15-store chain based in Edina, Minn.

Small touches like flourishing a loaf of banana bread with a colorful bow paid big dividends in the bakery departments of Bristol Farms, El Segundo, Calif. Year-round, at various times, the retailer gift wraps from 20 to 30 bakery items, and as a result has seen single-digit sales increases on the designated items, said Craig Gehr, store director for the retailer's Manhattan Beach, Calif., outlet.

That effort was part of a bigger goal to rebuild ISB sales, which had slumped in recent years, Gehr said. The retailer increased product sampling, with employees on hand to describe the products to customers.

ISBs stayed focused on freshness during 2000, as customer enthusiasm for pies, fancy pastries and other sweet fresh-baked treats, as well as artisan breads, showed no signs of letting up.

In the fall, after hiring a new pastry chef, Jerry's Foods reinstated a fresh pie program, featuring 10-inch apple, pecan, Key Lime and French Silk varieties made from scratch daily. The retailer plans to add blueberry and cherry pies to the line, said Mickschl.

Kowalski's Markets, a St. Paul, Minn., independent, introduced a full-time pastry chef -- a first for Kowalski's -- when the chain opened its newest store in the Twin Cities area.

Tidyman's, Greenacres, Wash., used hot French bread as an enticement to get customers into the stores every day. The retailer's "Hot at Five" program featured warm loaves of bread at 5 p.m. daily. If no hot loaves were available, the retailer promised a free loaf.

Enhanced customer service took center stage at Save Mart Supermarkets, Modesto, Calif. The retailer in the spring rolled out a remodeled store with a special emphasis on service in the bakery and deli departments. The new store featured a bakery-deli department that had been nearly doubled in size. The staff also doubled in size and included an associate on each shift who was dedicated to serving customers.

Store officials said their goal was to make the chain stand out in the marketplace. Designed to sell merchandise, as well as contain it, packaging made strides. At Jerry's Foods, clamshell packages are preferred, Mickschl said.

More attractive than shrink wrap and gentler on fragile baked goods, clamshell packages have helped sales.

"We've gotten almost entirely away from shrink-wrapped products," he said.