A FRESH START

SEMINOLE, Fla. -- Shelley Broader is serious about making sure Sweetbay Supermarket customers have fun.The president and chief operating officer of Tampa, Fla.-based Kash n' Karry, which opened its first Sweetbay Supermarket here Nov. 6, has tried to infuse the new brand with a unique value proposition based on product variety and a passion for food.A 12-year veteran of New England-based Hannaford

SEMINOLE, Fla. -- Shelley Broader is serious about making sure Sweetbay Supermarket customers have fun.

The president and chief operating officer of Tampa, Fla.-based Kash n' Karry, which opened its first Sweetbay Supermarket here Nov. 6, has tried to infuse the new brand with a unique value proposition based on product variety and a passion for food.

A 12-year veteran of New England-based Hannaford Bros., Kash n' Karry's Delhaize-owned sister chain, Broader also invested much of that chain's design and modus operandi into the creation of Sweetbay. Broader is leading a four-year effort to eliminate Kash n' Karry from the Florida marketplace and replace the entire 103-store chain with the Sweetbay concept. She closed 34 stores in the chain earlier this year and made extensive personnel changes to gear up for the transition.

"If we wanted to take the easy way out, we could rename those stores Sweetbay and be done by the end of the year, and we would have incremental change," she told SN during a store tour the day before Sweetbay opened to the public. "We want to have monumental change."

In a market that is increasingly dominated by Publix Super Markets, Lakeland, Fla., and Wal-Mart Stores, Bentonville, Ark., and where Albertsons, Boise, Idaho, also has a strong presence, Broader hopes to carve a new niche for Sweetbay that embraces the offerings of a specialty store and leverages the power of Delhaize Group to offer competitive pricing.

"I spent the first six months doing research and understanding my competition," she said. "Then I went to the customer and said, 'What do they need?' It turns out their needs and desires aren't being met by anybody.

"Some chains are about price, some are about service, and there are some very confused chains in the muddy middle -- Kash n' Karry was one. But nobody was really about 'delicious.' That's Sweetbay's position," she explained.

Customers enter the 44,000-square-foot store through its signature department, the Harvest Market produce section, which calls attention to the variety the chain offers with its expanded selections of peppers, tomatoes and mushrooms. Many of the 500-plus offerings -- more than one-and-a-half times the variety of a typical Kash n' Karry -- are accompanied by shelf tags offering product descriptions and suggested uses.

Displays in the produce area evoke an open-air European market, with some items stacked in wooden crates and barrels, and others displayed on wheeled carts. Signs include whimsical phrases that also serve to highlight the store's relatively wide selection: "20 reasons for tomato lovers to celebrate," for example.

In the middle of the Harvest Market section are two artificial, but lifelike, Sweetbay magnolia trees, which is where the store gets its name. Each tree is positioned under a skylight.

"We really wanted the physical plant to reflect the excitement of the food," said Broader. "When customers first walk into the store, we want them to have a smooth transition from the beautiful outside of Florida to the inside."

In addition to expanding the variety of the produce department, Broader made infrastructure changes that have tightened the delivery schedule to get product to the stores faster and have upgraded technologies in the warehouses.

The store relies more heavily on local sourcing for produce than Kash n' Karry typically does. It includes ethnic selections not only in produce, but also throughout the store.

Sweetbay is a store so serious about food that it has "taste ambassadors" whose job it is to oversee sampling events for customers and make sure that employees taste all new products.

"Part of working at Sweetbay is learning about food," said Broader. "We teach them about food, and have them taste it so we can open up their palates and have them really thinking about food.

"We are relying on our associates as a differentiating factor," she added.

The store employs about 175 people, vs. slightly more than 100 for a typical Kash n' Karry store, and has five managers instead of the usual four.

The transition is being welcomed by Kash n' Karry employees, according to Broader, who said the chain has been through so many changes in leadership during the past several years that workers are glad to have a focused direction.

"I spent a lot of time with our associates, telling them what they need to know and why Kash n' Karry is going out of business and why Sweetbay is the new direction. Their ability to understand and embrace that has been amazing," she said.

Before Broader even joined Kash n' Karry in June of last year, the chain had already been folded under the auspices of Hannaford Bros. and had been leveraging Hannaford's buying expertise. The influence of Hannaford can be seen throughout the Sweetbay store, from the logo itself to the nearly 800 private-label grocery items carrying the Hannaford brand.

For Delhaize, the Brussels, Belgium-based company that also owns the Food Lion chain, Sweetbay represents another chance to fulfill the promise of its $3.6 billion acquisition of Hannaford in 1999. Delhaize said then it hoped to leverage synergies from Hannaford throughout its U.S. operations.

Kash n' Karry has incorporated many elements of Hannaford into Sweetbay, including the Nature's Place natural/organic department, which has about 70% of its 3,800 stockkeeping units in common with Hannaford. The remaining 30% have been customized for the local demographic, which includes a large elderly population. Organic and natural pork, poultry and wines are offered in the store as well.

Other elements in the Sweetbay store include a full-service butcher shop; a seafood market with live lobsters, which is another example of Hannaford's influence; a Fire Works Roastery offering prepared foods; and Neighborhood Deli with local favorites like Cuban sandwiches and a bakery with an expansive selection of cakes and specialty breads, both store-baked and supplied by outside vendors. The cheese department -- a personal favorite of Broader's -- contains more than 160 varieties, including 15 types that are hand-cut in the stores.

Another element lifted directly from Hannaford was the private-label program. Kash n' Karry decided the slow rollout of the Sweetbay banner would make it too expensive to implement a store-wide private-label program immediately. Instead, it created a Sweetbay brand for private label in the perishables departments only and borrowed the Hannaford brand -- whose logo is similar to Sweetbay's -- for grocery products.

More important than the logo, however, was Sweetbay's leverage of Hannaford's purchasing system: the Average Cost Inventory System, or ACIS. ACIS had been rolled out already at Food Lion. The system allows the company to manage the margins on its products based on volume and price.

"That came with me on the plane," Broader said. "I got so spoiled with that system that I really don't know how to run a business without it."

Although Sweetbay doesn't bear the overt price messages of sister chain Food Lion, Broader said it will still offer pricing that is on par with Kash n' Karry. Unlike Kash n' Karry, however, Sweetbay will not offer a frequent shopper card. That decision was made based on customers' preference not to have a card, Broader said.

Shelf signs throughout the store call attention to the value component, with items tagged "Extended Savings -- Great value, day in and day out."

"It can't be an expensive store," Broader said.

"We've got 103 stores left [to convert to Sweetbay], and they cover a wide range, both geographically and demographically. We've got rural stores, urban stores, upscale suburban stores and inner-city stores, and in a lot of different sizes."

Although customers will be able to find a range of gourmet and specialty items, such as aromatherapy oils for $46.79 per bottle, Broader said customers seeking to fill a basic shopping list will be able to do so at a reasonable cost.

Despite heavy borrowings from Hannaford, Sweetbay has its own distinct personality, according to Ron Hodge, chief executive officer, Hannaford, who attended a reception at Sweetbay the evening before the store opened.

"Sweetbay has its own characteristics," he told SN. "It has some Hannaford characteristics, and it can take advantage of the Hannaford supply chain. But we have developed a concept around food expertise."

Hodge said he believes the first Sweetbay "rivals any of the Hannaford stores we have in the Northeast."

He credited Broader with infusing Kash n' Karry with a new corporate culture.

"We had to change this company from top to bottom," he said. "What they needed was new leadership, and Shelley is the best we have."

Broader said Sweetbay borrows elements not only from Hannaford, but also from other Delhaize properties like Food Lion's new Bloom concept and Delhaize's European operations.

"Delhaize is the best big company you can work for," she said. "It's very fun creating this new concept and having so many companies that are there to help you."

Several components of Kash n' Karry also have been preserved in Sweetbay, Broader pointed out. Kash n' Karry's popular Cuban bread recipe, for example, will still be used at Sweetbay. The new banner also will seek to retain Kash n' Karry's strong reputation as a spirits merchant. The first Sweetbay includes an adjacent liquor store with windows facing into the main supermarket.

One element that Broader said is lacking in the first Sweetbay, but which is part of the plans for future sites, is a pharmacy department. She said future stores will have a strong wellness component tied into the pharmacy, which will cater to the needs of Florida's elderly population.

The first store, which was built from the ground up, was not zoned for a pharmacy, Broader explained.

Plans call for a market by market conversion to Sweetbay, with the first round of new stores planned for the first quarter in the Naples/Fort Myers market.

Sweetbay Ads Use Food to Sell Food

SEMINOLE, Fla. -- A passion for food plays an important role in the new Sweetbay Supermarket concept here. So it's no surprise the ads promoting the store feature food in a prominent way as well.

The four TV commercials previewed for SN at the first Sweetbay location here before the store opened to the public feature a minimum of verbiage and a heavy emphasis on fresh-product images. As various photos of meats, fruits and vegetables dance around the screen in a kaleidoscopic pattern to Calypso music, subtle messages emphasizing variety and value, such as "Fanciful -- Not fancy," flash across the screen. A singer chants "sweet, sweet life" with a Caribbean accent as the products spin in front of a brightly colored backdrop.

At the end of the perishables montage, a smiling store employee simply looks into the camera and says, "Welcome!" The tag line that flashes on the screen at the end suggests viewers "Taste the Passion."

"We intentionally wanted to look different from what the others were doing here," said Steve Smith, vice president of marketing at Kash n' Karry, Tampa, Fla. Kash n' Karry is planning to convert all of its 103 stores to the Sweetbay concept by early 2007. "We wanted to embrace the colors, sounds and flavors of Florida."

The ads will air on local cable TV stations in Seminole, which is just south of Tampa. They will be rolled out to the Naples/Fort Myers area further south when Kash n' Karry converts its stores in that market to Sweetbay early next year. The spots were created by Pyper, Paul + Kenney, Tampa, although Kash n' Karry will also employ several additional outside partners in its marketing effort for the Sweetbay brand.

Other marketing materials include billboards with simple messages that tease consumers about the variety of perishables available at the store. One reads "20 cures for tomatomania," and features a colorful product shot and the Sweetbay logo.

Similar messages have been deployed on Sweetbay's truck fleet. The backs of the trucks bear the message: "Hungry? Follow me."

"We're keeping things fun and simple," Smith said.

As part of the campaign launching the first Sweetbay store here, Kash n' Karry also dropped a direct-mail piece to 120,000 homes within a six-mile radius of the store -- an area that includes stores operated by Winn-Dixie, Albertsons, Publix and Save-A-Lot. The piece features a brief description of the Sweetbay concept, along with introductions to the Hannaford private-label brand and the On The Go Bistro frozen-foods brand, another borrowing from Hannaford Bros., Kash n' Karry's sister chain in New England. The mailing also includes coupons for up to $3 off some products and free packages of others.