They Have A Way With Gourmet
By Renee M. Covino
Remember when grocery shopping was about grabbing food and getting out? Upscale supermarkets/departments are changing all that.
There are food stations galore, with every imaginable cuisine from Texas BBQ to sushi to Italian to Indian — beautifully presented and well-lit under glass, atop marble, or in large ceramic serving dishes; available for takeout or eat-in at booths by the window or bar chairs assembled around a brick oven “bar.” A few hundred yards away, shoppers will find some adorable cotton baby clothes with matching beanies, handmade exotic jewelry, essential oils and some fine bath products. Beyond that, there are gorgeous blooms and baskets to assemble them in. Wines and spirits are available nearby too, in a Mediterranean-looking enclave complete with strewn decorative grapevines around the multitude of racks.
Years ago, this retail description might have belonged to an upscale shopping mall with its central food court and various boutique shops, or perhaps an eclectic European-style market. Today, it is a single shopping entity under one roof — one of the newest prototypes of Austin, Texas-based Whole Foods, an upscale supermarket that is successfully meeting the needs of more and more mainstream consumers while continuing to appeal to its core base of natural/organic/fresh-food customers.
Whole Foods does not stand alone, of course. Boulder, Colo.-based Wild Oats, Austin-based Central Market (a division of H-E-B in San Antonio), Rochester, N.Y.-based Wegmans, Norwalk, Conn.-based Stew Leonard’s, and Monrovia, Calif.-based Trader Joe’s are just a handful of upscale food retailers that are setting new standards in this increasingly competitive marketplace. Family-owned Wegmans has even landed on Fortune Magazine’s list of top 100 companies to work for every year since the list was initiated in 1998. Also family-owned, Stew Leonard’s has been on that same list for five straight years.
And now there are many others in the traditional grocery arena taking similar footsteps to higher “gourmet” ground. As more food-buying options become available in a multitude of channels for consumers, it will be the perpetual responsibility and challenge of food retailers to create uniquely compelling shopping environments and claim back their stake in the food category — perhaps even infringe on a few others (namely, general merchandise) in the process.
“We see a wholesale embracing of the concept of design in the mind of the American consumer right now,” maintains Christian Davies, vice president of Retail Design Strategy and creative director at FRCH Design Worldwide, and also a speaker at this year’s Food Marketing Institute (FMI) Show in Chicago, in a seminar titled, “Can Supermarkets Be Cool?”
“The consumer for the past 10 years has been on a steady decline towards cheap, cheap, cheap, and we all knew there would be a point where this would reach bottom,” he says. “We are living in a much more “luxe” place right now, and an increased level of design has been a huge part of that.”
And so, traditional grocery outlets are emulating the specialty market-place. Recent moves to higher ground include the following:
Ahold has taken its Stop and Shop brand to new levels with ceramic tile floors, skylights, and track lighting, where shoppers can browse a full-service cheese counter and gourmet hot food buffet or pick up toys and office supplies. Another division of Ahold, Giant Food Stores last year announced the closure of its Washington-area headquarters, cutting 500 jobs, but the money saved is being invested in nearly 40 new or remodeled stores during this year and next. A news report stated the move was to “give the grocery chain a competitive edge against stores such as Wegmans Food Markets Inc.”
Safeway Inc. is upgrading to “Lifestyle” stores to fend off rivals. Renovated stores carry up to 90 kinds of organic fruits and vegetables, compared with 30 in a “typical” Safeway, and suppliers must meet elevated quality and sweetness standards for produce. The chain makes what it says are restaurant-quality “Signature” brand sandwiches and soups. Going after a warmer, more upscale ambiance, Safeway has introduced earth tones, softer lighting, and mahogany shelving in the bakery and deli areas.
H-E-B, based in San Antonio, has always been known for its “best retail practices” strategy, but the chain continually improves on its ideas, most recently with its H-E-B plus! and Backyard prototypes, which feature expanded existing departments and the addition of some new ones, including Healthy Living, Card & Party, and Texas Backyard. According to the Texas grocer, there will now be a heavier emphasis on fresh products and healthy-living products. Also, the store’s bigger coffee bar will offer shakes, malts, and smoothies, while an expanded deli will carry a range of fresh salads and made-to-order grilled Panini sandwiches.
Minyard Food Stores of Coppell, Texas has reopened four of its Carnival stores in Dallas to include elements of a new prototype the chain plans to unveil in mid-July, geared to Latino shoppers with a totally new upscale look. New elements include a prepared foods section with sit-down eating areas; expanded and improved offerings in produce, deli and bakery; newly installed service meat cases; an expanded tortilleria, and the addition of a “fruiteria” (fruit and juice bar).
Giant Eagle, based in Pittsburgh, is getting ready to unveil its new Market District stores this summer, the details of which are still under wraps, but guaranteed to be upscale in scope.
Wal-mart is in on the trend, too, even with its low-price-leader reign. The nation’s largest food retailer, with about 14 percent of all grocery sales, recently announced it’s going to double its organic offerings in many of its 3,800 stores.
Because competition is so fierce now, the industry is starting to see continual flow and change with these forward-thinking retailers that know this is no time to stop on one single upscale plan or idea. “The mindset shift I think we need is for retailers to realize that they need to be constantly prototyping – rather than launching these things every three years to huge fanfare and expectation,” says Davies. “Prototypes should be incremental and frequent, even doing several simultaneously . . . that reflects a fresh approach to evolving and learning.”
Not for Supermarkets Alone
This upscale “virus” is spreading — way beyond the grocery sector. Though supermarkets currently account for the majority of U.S. specialty food sales — 71.8 percent, according to Specialty Food Magazine’s State of the Specialty Food Industry 2006 — many companies in other retail channels desire a higher profile in what is loosely defined as the “specialty/upscale” approach.
“This absolutely expands beyond supermarkets,” says Rod Hawkes, a professor at the Cornell University Food Industry Management Program. “Leading retailers are more and more becoming niche marketers. It’s a broad-based trend.”
Hawkes mentions, as an example, JC Penney’s “targeted and more upscale” merchandising strategies, including the company’s recent announcement to have in-house cosmetics from Sephora.
As a channel, convenience stores are “maybe even more so trying to differentiate themselves,” says Hawkes. “Their key categories are being attacked. Supermarkets are offering gasoline as a loss leader, and beer and cigarettes have been troubled categories for a while.”
Thus, chains like Sheetz and Wawa are becoming “proactive and progressive in private branding,” according to Hawkes. 7-Eleven has leadership in takeout foods. And UK-based Tesco is coming to the West Coat with its Tesco Express format.
Even those outside the realm of traditional retail are in on the trend. Some regional movie theaters, for example, are featuring gourmet coffee bars, bakery items behind glass, and even childcare services on the premises.
So what is happening to the definition of specialty/upscale/gourmet if everyone starts to get a handle on it?
“That’s a good question,” says Hawkes. “There’s no question that one of the worst places to be in retail right now is in the middle” (meaning that those retailers who are at the top, usually with a specialty focus, are successful and those who are at the bottom, usually with a price focus, are successful). “But one of the things we’re seeing is that as everyone is shifting, the middle is shifting,” he continues. One of the points of a recent seminar discussion Hawkes conducted was on that very topic: “What is specialty if everyone is doing it?”
The trend Hawkes sees coming is that “the whole notion of specialty, gourmet, healthy, natural and organic in the consumer’s mind is going to be one thing. It’s not going to be good enough if something is fancy and specialty if it’s also not healthy and/or organic,” he says. “Those will all merge into one experience for consumers.”
What’s in a Niche?
Among the 77 companies representing 4,208 stores surveyed in the Food Marketing Institute’s "Facts About Store Development 2005" study, there is a strong interest in developing niche-focused stores to broaden market share.
Among retailers trying this avenue, gourmet/specialty foods ranked as the most embraced format, offered by 66.7 percent of companies. Next was natural/organic, featured by 50 percent, followed by ethnic, which was offered by 25 percent.