'SPECIAL' REPORT

CHICAGO -- The National Food Distributors Association here is conducting the second phase of a study aimed at reinforcing the role of specialty foods in supermarkets.declined to name.This phase of the study began early this year and is slated to end at the end of next month. It comes in response to results from the first part of the study -- a retail panel convened last August to discuss the past,

CHICAGO -- The National Food Distributors Association here is conducting the second phase of a study aimed at reinforcing the role of specialty foods in supermarkets.

declined to name.

This phase of the study began early this year and is slated to end at the end of next month. It comes in response to results from the first part of the study -- a retail panel convened last August to discuss the past, present and future of specialty foods. One of the conclusions of the panel was that, to improve specialty-food profits, retailers need to get better profiles of their consumers.

"The profile of the consumer is one of the most important issues that retailers should and are focusing on," the association's newsletter, NFDA News, states.

The panel suggested that retailers should use loyalty cards better to collect the best data. One panel member said loyalty cards revealed that 76% of the volume of specialty foods came from the top 20% of his loyal customers, according to NFDA News.

The third phase of the NFDA study will cover how to present the results in the form of a report, whose working title is "NFDA Market Basket Study." The official release date has not been decided, though it's expected to be in the late winter or early spring.

The study is being conducted by Bill Bishop, of Willard Bishop Consulting, Barrington, Ill. Bishop is currently preparing a specialty-food report for the supermarket industry's Efficient Consumer Response category management committee. The goal of the report is to get the ECR committee to take specialty foods more into consideration.

According to initial conclusions of the study, which will be discussed at the NFDA's Minneapolis show in July, retailers need to pay more attention to specialty foods.

"Specialty foods don't have a large enough voice in the supermarket setting. They get lost," Margaret Laport, marketing director for the NFDA, told SN.

One reason for this may be that some retailers can't define what specialty foods are. Based on the retail panel, there are many different definitions for specialty foods: items that need special care, new products, products that don't have enough volume to justify a warehouse slot or are mature or near the end of their life cycle.

Along with the definition of specialty foods, the panel came up with three other "key findings": the category role of specialty foods, how to treat specialty foods, and the need to give specialty foods a stronger voice.

While the NFDA has prepared other reports about supermarkets, the panel was the first time it gathered a group of retailers, according to Laport.

Though the NFDA declined to identify participants in the retail panel, which was moderated by Bishop, NFDA News described one as a medium-sized upscale chain in a secluded Eastern market with several destination categories. The retailer started emphasizing specialty foods in 1992.

As for the other chains, one is a large operator of mass merchandise grocery combos that currently has no program for specialty foods; one is a small regional Midwestern chain that is wholesaler-serviced; and one is a large self-distributing chain of upscale stores in a less-sophisticated Southeast market.

The panel came up with "key findings" on how to handle three different category roles -- convenience, routine and destination -- for specialty products. According to NFDA News, if retailers want to merchandise specialty foods as a convenience category, they should integrate specialty foods into mainline sets with limited stockkeeping units.

If a routine category is desired, they should be segmented within a particular category with expanded SKUs.

For a destination category, there should be a special section with specialty foods dominating the number of SKUs. As for giving specialty foods special care, the panel said retailers should run regular ads, highlight items in-store, run themed promotions, merchandise at eye level, run demos and have adequate facings.