SOLOMON'S ISLAND, Md. (FNS) -- Woodburn's here has been a successful destination as a conventional family-owned grocery store since the 1940s. But these days, customers are finding big changes afoot in response to the arrival of a major out-of-town retailer, which threatened the store's existence.Rather than compete head on with giant Food Lion, which opened nearby, Woodburn's has just completed a

SOLOMON'S ISLAND, Md. (FNS) -- Woodburn's here has been a successful destination as a conventional family-owned grocery store since the 1940s. But these days, customers are finding big changes afoot in response to the arrival of a major out-of-town retailer, which threatened the store's existence.

Rather than compete head on with giant Food Lion, which opened nearby, Woodburn's has just completed a top-to-bottom renovation that has redirected its focus, and saved most of its customer base, according to brother-and-sister owners, Thomas McKay and Betty Johnson.

By actively seeking a solution to the chain threat and doubling the store's space, Woodburn's has gone from a "mom-and-pop" type store with a little bit of everything, to an upscale food purveyor. Now, Woodburn's features homemade meals, gourmet foods and even a sushi bar and an espresso bar with Seattle's Best coffee.

The grand opening, which began Sept. 16, features giveaways, as well as about 10 food demonstrations throughout the store each day. The demonstrations include cheeses, homemade meals and organic foods, and representatives from several gourmet food companies such as Honest Tea and Route 11, are doing demonstrations, too, to celebrate Woodburn's promising future.

According to McKay, sales are about 10% ahead of last year. "Although we doubled our size [and sales did not double], all in all we think it's been very successful. We were faced with losing 50% of sales and instead we're getting 10% more," he said.

Woodburn's latest chapter began when the news that Salisbury, N.C.-based Food Lion was opening a unit nearby reached McKay and Johnson. The pair, veterans of their family-owned McKay's grocery stores, a three-store chain in the area, had been proud of their independent efforts with Woodburn's, which the pair acquired in 1992. They took it from $85,000 in sales per year to a profitable $170,000 by 1997. Indeed, they had plans to add a second site -- ironically, on the exact place where Food Lion opened.

When McKay and Johnson learned that Food Lion was opening a unit at the high-traffic site, they asked their wholesaler, Richfood, Richmond, Va., to conduct a market study to see what would happen to their business after Food Lion opened. The results were discouraging: the study predicted sales would drop 50%. When Food Lion did open its 42,000-square-foot store in March, sales, indeed, initially dropped 50%.

But by February Woodburn's had already begun working on its major overhaul, which was completed in mid-August. Woodburn's spent nearly $1 million on remodeling and doubled its 9,000-square-foot-footprint by taking over a 7,000-square-foot CVS drug store next door, plus an additional 2,000 square feet of space next to the CVS for use as a back room and preparation area.

According to McKay, the store was redesigned to resemble a food court. Sections include an Italian area where customers can buy ready-to-eat or made-to-order pizzas and pasta dishes; a Tex Mex area with such dishes as barbecued ribs and chicken, burritos, tacos, and side dishes; and a sandwich shop with sandwiches, subs and a short-order grill.

Here, a featured case of panini sandwiches has quickly become a local favorite, he said. There are currently seven varieties available, such as poached salmon or rotisserie chicken. Their popularity is evident during peak hours, when the sandwiches are stacked 35 to 40 high in the case, McKay said.

The store also features a carving station, where customers can buy roast beef, turkey and ham every day, as well as a featured daily special, such as pork roast on Thursdays. Customers can buy side dishes here, too. The Chef's Gallery, which is where Woodburn's anchors its prepared meals in a cold case, is right in front of the kitchen. Dishes, such as jambalaya and stuffed chicken breasts (cordon bleu, for example) are here with several side dishes, including pasta salads and tabuli. McKay said that Woodburn's menu includes about 35 items, all in microwavable containers.

The sushi bar has two chefs, who take turns staffing the station during Woodburn's 7 a.m. to 9 p.m. business hours. McKay said that Woodburn's is the only retail-oriented establishment with fresh sushi between Solomon's Island and Annapolis, which is about 45 miles away.

"Our prepared foods represent almost 25% of store sales now, and that's very high," McKay said. "We have a large kitchen where entrees are prepared on-site. We do buy some commercial food products, such as some sauces, but most products are prepared in-house."

He added that Woodburn's hired chefs from four different area restaurants. "Being from four restaurants, they each brought a unique background with them," he said.

Before the changes, half of Woodburn's business was based on convenience shopping, rather than traditional shopping. "We were kind of the only store in the market, so we were trying to be everything to everybody," McKay said. "And price wasn't an issue."

The ratio of dry goods vs. perishables has reversed itself at the new Woodburn's. Where dry goods once represented 60% of sales, perishables now represent 70%, McKay continued. The meat, produce and bakery departments have all been expanded to two to three times their original size, and natural and organic foods have been added. The store accommodated the larger fresh departments by not only increasing total square footage, but by keeping only its best-selling national and private-label brands, and eliminating size duplication of products.

Woodburn's was known for good quality meats, a tradition it has improved on under the new format. "That was probably the one thing that drove our weekly business," said McKay. "We expanded on that by doubling our service meat and we added service seafood."

The meats and seafood now represent 22% of sales, noted McKay.

Finding new suppliers for the added upscale products was "a bit of an adventure," said McKay. "We had to knock on suppliers' doors, rather than them knocking on ours. We spent a lot of time in alternative supermarkets looking at products and trying to see what we wanted to carry."

And, he and Johnson are still learning about new products. "Not a week goes by that we don't add new products," he said.

The annual Fancy Food Show, sponsored by the Manhattan-based National Association for the Specialty Food Trade, helped. Once McKay and Johnson knew what they wanted to carry, they used the exhibition floor of the show to track down those products, and their local distributors. Trade journals were another important resource.

The physical expansion into the former CVS space was another adventure, according to McKay. "It took a long time to get the plans ready and a lot of time was spent under the floor because we had to have refrigeration, electrical and plumbing for the food kiosks," he said.

"The [fresh-meals] market was here and no one was filling it," McKay said. Because customers come from as far as 25 to 30 miles away to shop at Woodburn's, the store has expanded its marketing area that far, and sends out specialty and organic-food fliers once a month. McKay said that Woodburn's still uses some traditional grocery products in advertising to attract shoppers, but stresses the fresh, gourmet aspects of the new store.

"Our business is very successful, and I think, long term, it will be very profitable," he said. "Sales are right on target, and we're still growing. People are still learning about us, and we're still learning about our new products."