ETHNIC EXCELLENCE

It's not every day that a retailer is told it's "Wal-Mart-proof," but that's just the kind of accolades Caputo's Fresh Markets receives for its unique approach to food retailing.While Wal-Mart could certainly hurt Caputo's to a degree, the effects wouldn't be as damaging as that to traditional supermarkets, said Harold Lloyd, a Virginia Beach, Va., retail consultant who's worked with the Addison,

It's not every day that a retailer is told it's "Wal-Mart-proof," but that's just the kind of accolades Caputo's Fresh Markets receives for its unique approach to food retailing.

While Wal-Mart could certainly hurt Caputo's to a degree, the effects wouldn't be as damaging as that to traditional supermarkets, said Harold Lloyd, a Virginia Beach, Va., retail consultant who's worked with the Addison, Ill.-based operator.

"Caputo's has created a niche that's so well-defined it's Wal-Mart-proof," Lloyd told SN.

That niche is catering to multiple ethnic groups with 400 types of fresh fruits and vegetables, many of which are hard-to-find items like cime cicoria, a fancy term for the base of a dandelion plant.

Caputo's got its start in 1958 in Elmwood Park, Ill., as Caputo's New Farm Produce and Italian Specialties. Produce certainly remains the retailer's nucleus, but dry grocery is making a stronger impression as well -- as an extension of the fresh-foods offerings. Indeed, Center Store is becoming increasingly diverse to complement the eclectic produce offered in the retailer's three Illinois stores: Elmwood Park, Hanover Park and Addison.

"We're expanding our dry grocery section based on the demographics of people who come in to buy our fruits and vegetables," said Dale Ohman, business development manager.

Mainstream grocery brands like Kraft, Betty Crocker and College Inn are carried and promoted, but about half of the dry grocery offerings in Caputo's newest store -- an 18-month-old, 55,000-square-foot building in Addison -- are ethnic, catering to the area's Italian, Hispanic, Polish, Swedish, Irish, Middle Eastern and other groups.

"The demographics of the areas where we operate are changing, so we're changing, too," said Ohman.

Caputo's business strategy is simple: Give customers what they want. That means that when a request comes in for a specialty item like sweet vinegar cherry peppers, buyers search the globe to find it.

"If a customer asks us for a product, we feel it's our responsibility to go and get it for them," said Ohman.

Caputo's not only brings in requested items, but also makes sure it has plenty of merchandise in stock to meet customer demand. Jasmine rice, for instance, is so popular among Indian shoppers that Caputo's puts out full pallet displays directly on the retail floor, where they typically sell out in one week.

Then there's Nutella, a European hazelnut spread in such high demand that it's purchased by the truckload and merchandised in-line, as well as in shipper displays in multiple areas of the store.

LA BELLA ROMANA

One of Caputo's most-prized product possessions is La Bella Romana, a fast-growing private label that founder Angelo Caputo named after his wife, La Bella (the beautiful) Romana. The line got its start more than 10 years ago in the olive oil and canned tomato categories, and has grown to encompass more than 100 stockkeeping units, including pasta, spices, bottled water, vinegar, condiments and canned beans.

La Bella Romana is positioned as a quality, high-end private label. Nearly 50% of the assortment is imported from Italy. The line has been so successful that it's piqued the interest of other retailers. Caputo's officials concede they have had opportunities to market the label outside the chain, but have decided to keep it all in-house.

"For now, I want everyone who wants our label to come to our stores to get it," said Tom Incandela, Caputo's general manager.

Customers welcome the breadth of selection available in the line, whether it's the 4 feet of semolina, polenta and other flours, or the 16 feet of bulk spices.

"Our spices offer an incredible value compared to the big brands," Ohman noted.

ETHNIC OFFERINGS

To provide a one-stop-shopping experience for its customers, Caputo's segregates ethnic offerings by nationality. This way, a shopper who may want only Hispanic foods can find everything from beverages to beans in one aisle.

"People want a destination, a place where they can grab everything they need," Incandela said.

One of the largest representations of ethnic foods can be found in the Hispanic aisle, which encompasses two sides of a 60-foot-long gondola. Most of Caputo's Hispanic customers are Mexican, but other nationalities, including Puerto Ricans, are represented as well.

The section includes a broad assortment of spices, chiles, confections, beans, peppers and other items. One of the most popular Hispanic categories is beverages, merchandised in 12 feet. Hispanic nectars, including those marketed under the Jumex brand, are big sellers, especially in the warm months.

"Juices and nectars are especially big during the summer," said Incandela.

Polish foods cover an entire side of a 60-foot aisle, and include 16 feet devoted completely to the Cracovia brand of borscht, herring, beverage syrups and other groceries.

Polish mineral water marketed under the Nateczowianka brand is such a fast mover that Caputo's can sell through a pallet a day. When offered at regular retail, a pallet lasts a mere three days. The water is such a big seller that Caputo's dubbed it its Polish milk, referring to the fact that although it has small margins when on sale, it generates a lot of store traffic.

Along with the aforementioned large destination aisles, the store includes several mini ethnic sections, including 4 feet for Swedish, Irish and kosher foods.

Ethnic items are represented in virtually all Center Store categories, even nonfoods. In laundry care, for instance, Hispanics are treated to well-known brands from their homelands, including Ariel powder detergent and Suavitel fabric softener.

While that's true in most categories, it's especially important to Europeans. Take Polish shoppers. They buy the Cracovia brand and only the Cracovia brand.

"A lot of European importers offer private labels, but we've had limited success with them because our customers want brands they know from back home," said Ohman.

Besides stocking well-known specialty brands, Caputo's caters to its immigrant communities by recognizing certain religious holidays. One is St. Joseph's Day, an Italian feast day celebrated on March 19 in honor of the patron saint. In observance of the holiday, Caputo's gives more exposure to items like "pasta con sarde" from the Cuoco brand. Pasta con sarde is a macaroni seasoning consisting of sardines, fennel and nuts. Specialty breads, baked goods, candles and other items are also advertised and displayed for the holiday.

To build consumer loyalty to its vast product assortment, Caputo's has just kicked off weekly cooking classes conducted by a chef from a local cooking school. Called Caputo's University, the classes are held each Tuesday from 6:30 p.m. to 8:30 p.m. Menus intentionally include ethnic items found at Caputo's, like chile oil and coconut milk. Each class costs $20.

"The goal of Caputo's University is to educate consumers about what they can do with all the items we have," said Ohman.

PRICING

Just because Caputo's imports authentic specialty items from around the world doesn't mean it can't keep its prices in check. It purchases in volume and passes on the savings to the customer. Its 65,000-square-foot warehouse enables it to save by buying select specialty products direct.

Caputo's works just as hard to get the best price for its mainstream American brands, said Ohman.

"If we see an item like Capri Sun [juice drinks] at a certain price at Target, we'll try to get the same price at our store," Ohman said.

Heard Through The Grapevine

Caputo's Fresh Markets is a big supporter of the wine business, so much so that it actually helps its customers make homemade wine. During the peak season, it sells grape compresses, wine grapes, wine juice and bottles. It even even holds wine-making classes.

Now, it plans to make its presence known in the wine industry even more by marketing its own private-label vintages. Within the next year, the retailer plans to introduce a wine imported from Italy and marketed under its highly popular La Bella Romana brand.

The wine will be positioned as a value-priced item, and will most likely retail for $5.99 to $7.99 per 750 ml bottle.

"I don't want to make it too high-priced," said Tom Incandela, Caputo's general manager.

Value-priced wines are all the rage these days, due in large part to Charles Shaw wine, a Trader Joe's table wine that retails for $1.99 at many Trader Joe's stores. Due to its low price point, its nickname is "two-buck Chuck."

Plans for Caputo's private-label wine come at a time when the retailer has just made its foray into the wine and spirits business. Due to space restrictions, the retailer just started carrying wine and spirits -- and only in its largest store in Addison, Ill.