PRODUCE PROFICIENCY

The roadside produce stand is back -- but these days, it is looking less like it rolled off of a farmer's pickup truck, and more like a savvy category killer.A breed of specialized food retailer that focuses closely, if not exclusively, on very fresh fruits and vegetables, is making its mark in major markets across the country, both in traditional agricultural areas and in the heart of some important

The roadside produce stand is back -- but these days, it is looking less like it rolled off of a farmer's pickup truck, and more like a savvy category killer.

A breed of specialized food retailer that focuses closely, if not exclusively, on very fresh fruits and vegetables, is making its mark in major markets across the country, both in traditional agricultural areas and in the heart of some important urban markets.

While Harry's Farmers Market, Roswell, Ga., and the other massive farmer's markets in the Atlanta area leap to mind as prime examples, that is only one side of the trend. There are others of note who, in the last few years, have had success by responding in different ways to a growing and multifaceted demand for produce.

The produce specialists SN found vary from small independents with close ties to local farmers, and in some cases growing their own, to multistore chains with pristine gourmet produce departments supplemented with other specialty food, to neighborhood ethnicity experts. The common thread, however, is a market position as a produce specialist, doing produce better than the supermarket competitors.

The timing may be just right for such positioning, produce industry observers told SN. Americans are apparently trying to incorporate the five servings of produce per day into their diet recommended by the nonprofit educational group, the Produce for Better Health Foundation, Newark, Del. They are searching for more variety, better quality, fresher flavor -- and sometimes the supermarket falls short, the sources said.

"As more and more consumers look to consume five [servings] a day, they start to focus more on fresh produce," commented Peter O'Neil, head of the retail division of the Produce Marketing Association, Newark, Del. "It is becoming one of the key factors in determining where consumers shop."

PMA quotes research that shows that 63% of consumers have said a good produce department is extremely important in determining where they shop. The only other factor more important is low price, according to the research.

Meanwhile, since 1991 PBH has been pushing the message that consumers can improve their health with five servings of produce every day. Studies show that consumers have assimilated the message.

According to Robb Enright, manager of public relations for PBH, the latest U.S. Department of Agriculture research showed that adult consumption of fruits and vegetables increased from 3.9 servings per day in 1989 through 1991, to 4.4 servings per day in 1994. And research from the National Cancer Institute found that consumer awareness of the 5 a Day message increased from 8% in 1991 to 38% in 1996.

With consumers trying to increase produce consumption, many are seeking to branch out from the traditional bananas, lettuce and apples in their fresh produce purchases.

"You have a number of people in this country who are not vegetarians, but want to use more produce in their diet, and sometimes want produce items that they don't normally use," observed Britt Beemer, chairman of America's Research Group, a consumer research organization based in Charleston, S.C., that interviews 20,000 consumers every month.

Beemer said his research has revealed that when it comes to the variety and quality of produce, "the vast majority of supermarkets don't meet the customers' expectations, or even their needs."

Beemer said it is the size and method of operation of the typical supermarket, which often works against bringing in the freshest produce.

Many supermarket chains must ship all their produce to a central warehouse, which delays its arrival at the store, he said. Thus, supermarkets often can't buy the ripest produce because of they fear the product will break down during storage and handling.

And because produce is one of the more profitable areas of the supermarket, controlling shrinkage is an obsession, Beemer added.

"The bean counters often say this is the area of the supermarket that has got to make money. If the produce spoils in two days, the profit is gone," he said.

On the other hand, the smaller produce specialty stores "can deal with people who get them produce near the end of the growing cycle."

Watching product go from the their vegetable fields in south Florida to a central warehouse back to the supermarket across the street -- a process that robbed several days of shelf life from their tomatoes and cucumbers -- inspired the DuBois family earlier this year to open DuBois Produce World, a produce specialty format in Lake Worth, Fla.

"We are farmers, so we know produce. We know how to buy produce and get good deals," said Monte DuBois, president of the company.

He said that at DuBois Produce World, fresh fruits and vegetables "make up the majority of our sales," although other items, such as gourmet grocery products and deli and prepared-food items, are available in the 20,000-square-foot store.

The store does not carry conventional grocery items, such as paper products or pet food, because "we can't compete on those items. We focus on produce, because that's what we know," DuBois said.

"We specialize in every type of produce, from fresh apricots to fresh fennel. And we feel the quality is what sells. We will just buy No. 1 quality, while supermarkets buy whatever they can get cheap."

DuBois said he makes sure prices at his produce store are very competitive with area supermarket chains.

"We can offer the biggest, best product at the lowest prices. We are either right in line with them, or on a majority of stuff, we are cheaper," he said, pointing out that for example, his operation was "about 20 cents a pound cheaper on bell peppers" than the nearest supermarket.

Evidently, customers in the ritzy Palm Beach County area agree that DuBois Produce World offers them something extra. Monte DuBois said his one small store draws several thousand customers per day during busy periods.

"We probably draw from about 10 miles," he estimated. That kind of "destination" market positioning is encouraging DuBois to expand this fall, and get into fresh meat and seafood. After that, more stores may be added, he said.

A wide produce selection may be even more important in cities with large ethnic populations, and a crop of retail specialists are popping up to grab that business as well.

The diversity of ethnic groups in the Chicago area, for example, led to the birth of Sun Harvest Markets two years ago, according to Mark Braun, company president.

Sun Harvest operates four markets in Illinois -- Chicago, Franklin Park, Mount Prospect and Skokie.

The stores vary in size from 8,500 to 30,000 square feet, but not in emphasis. At least 50% to 70% of the selling space of each of the Sun Harvest markets is devoted to fresh produce. From 400 to more than 600 items of fresh produce are featured at the stores, said Braun.

While traditional supermarkets may have a difficult time tailoring the selection in an individual store to a given ethnic group, Braun said he has done just that.

"Each one serves a different ethnic market. The stores are built around that," he said. And it takes expertise to pull that off with authenticity, he added. "Just because you have jalapeno peppers, it doesn't mean you have the right jalapeno peppers."

The extra care in selection pays off, however, because ethnic consumers also typically buy more produce, said Braun. "All you have to do is watch the shopping carts. The ethnic groups buy a lot of fresh vegetables and fresh fruits, and they don't buy as much prepared food," he said.

To make the most of local tastes, Sun Harvest makes a practice of promoting items that many a conventional stores would not bother to focus on because of the likelihood of a lukewarm response. "If we promote mangoes, for example, we get a lot of volume," Braun said.

Even among nonethnic consumers, Braun said he has seen a heightened demand. He is convinced there is a definite need for more produce, which he called a change in consumers' dietary demands.

Sun Harvest stores also carry a very limited number of meat and grocery products. "We realize we could never compete with traditional supermarkets on that side of the business. But on produce, that's another ball game."

Beyond selection and micromarketing, the company's buying practices also depart from supermarket norms, Braun said, explaining that his operation's small size allows for a methodology that for the most part cannot be followed by the chains.

While Sun Harvest buys directly from growers and shippers, it also purchases extensively from the terminal markets in Chicago, which Braun sees as a distinct edge on supermarkets because he can move fast to take advantage of fluctuating deals.

"For the large chains, [the terminal markets] are probably not an efficient supply chain. They just buy their shorts there. But we have to go where the market takes us, and it depends on where the value is."

Another edge, he said, is that Sun Harvest buyers never get a holiday. "We are buying seven days a week, and that sets us apart," said Braun. "We buy higher quality stuff and we have started to get a reputation for that."

Braun does not think that his produce stores are the only ones benefiting from the popularity of fresh produce. "Overall tonnage is increasing as more consumers' diets shift to produce," he said.

Many produce specialty stores are smaller operations, both in store size and number of units. But some are getting fairly large -- and their pursuit of the high quality product niche has moved them considerably further up the scale of sophistication.

The Fresh Market, Greensboro, N.C., a chain of 21 stores, has spread to six states since its inception 15 years ago, according to Ralt Bohn, vice president of finance.

While they are upscale units that include gourmet grocery, candy and deli items ranging from Godiva chocolates to fine imported wines, The Fresh Market stores nonetheless hang their hat on having a large selection of superior produce.

On a typical day, customers can weave through the artfully lit, wood-paneled produce section and select from a wide variety of produce ranging from portabella mushrooms at $6.99 a pound to common Golden Delicious apples at 99 cents per pound.

And there are specialty operators that made superior produce their signature for years before the current interest in fresh fruits and vegetables blossomed. One of them is Whaley's, a group of three stores in and around Tampa, Fla., that has been in the business 63 years.

About half the space in those stores is devoted to produce, and that is what draws most consumers to Whaley's, according to Janet Koenig, manager of the retailer's Hyde Park store.

"We try to carry items that are hard to get. Right now, we have white peaches, white nectarines and dandelion greens," she said. "And we buy a better grade -- a larger peach."

Despite the emphasis on quality, Koenig says the increasingly competitive food retailing market has affected Whaley's prices.

"Years ago, we were higher priced [than competing supermarkets] but we have been forced to become competitive," she commented. "We are very much in line with the competition, and on some items, we are cheaper."

As with other produce-oriented operators, Koenig said Whaley's buying and distributing practices differ greatly from large chains. "They buy product, take it to a central warehouse, and sometimes it is days until it gets to the store," she said. "We don't store anything. It goes directly into the store."

The good news for such produce specialists -- and supermarkets with superior produce departments, as well -- is that today's consumers' interest in the best and the freshest produce is likely to intensify in years to come, said industry observers.

Beemer of America's Research Group pointed out that the changing buying habits of many consumers may move more of them into produce specialty markets.

Consumers, he said, are tending to make more frequent shopping trips, but to fewer supermarkets, he said, and this may lead them to patronize stores that stand out by excelling in distinct segments of the food business.

Purely demographic trends, too, are in favor of produce specialty stores.

"Many retailers are choosing to define their stores through their produce department," said O'Neil of PMA, "and we expect that number to go higher as baby boomers go into their senior years. As long as people want to remain healthy, produce will continue to retain a viable, vital role for food retailers."