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Cutting-edge retailers are paying more attention to how they merchandise and advertise specialty food, but a uniform strategy has yet to emerge.For example, Rice Epicurean Markets fully integrates specialty foods throughout the store, but also displays them on endcaps and in special gift centers. D&W Food Centers uses black Metro racks to merchandise specialty food, right next to mainstream items,

Cutting-edge retailers are paying more attention to how they merchandise and advertise specialty food, but a uniform strategy has yet to emerge.

For example, Rice Epicurean Markets fully integrates specialty foods throughout the store, but also displays them on endcaps and in special gift centers. D&W Food Centers uses black Metro racks to merchandise specialty food, right next to mainstream items, while most of Shaw's specialty items can be found in "Wild Harvest" sections in new and remodeled stores. Here's what some retailers had to say about the specialty category.

D&W Food Centers, Grand Rapids, Mich., uses four-foot Metro racking, along with special signage, in line in each of the sections that merchandise specialty food.

"We also have different areas throughout the store where we set up galvanized tabletops with a grid wall," said Deb Crisan, specialty food buyer for D&W. "Let's say we are doing an Italian theme. Then we may display Rao's pasta sauces along with fresh garlic, a stainless steel colander, and Oxo culinary tools."

D&W also merchandises specialty foods in gift areas, usually near the front and by the floral department. Of the 26 D&W stores, 12 are "higher end" stores that pay a lot of attention to specialty food. Of those 12, four are labeled "elite" stores.

"The Holland and Grand Haven stores host Chicago clientele with summer homes on the lake. That brings an additional 30,000 people to the lake shore area [during the season]," said Crisan. Not surprisingly, these stores carry an extensive selection of specialty foods.

The retailer uses the Metro shelving to highlight gourmet items as well as natural and organic food and ethnic specialties, and these sections are appropriately signed. "We have sections for organic and natural pastas, for example, and organic cereals, as well as one-step meals. We also have alternative beverage sections, for items like soy and rice milk and chai," said Crisan. In addition, D&W has special sections for Indian, Hispanic and Thai food, as well as Dutch and German sets; the latter two are a reflection of local ethnic heritage.

As far as promotion goes, D&W conducts demonstrations on a regular basis and has partnered with chefs and highlighted their recipes in inserts or regular ads. D&W has also begun to target specialty customers through loyalty-card data, said Crisan. In addition, the chain promotes specialty foods on its Web site, with recipes and announcements of special promotions.

According to Crisan, supermarkets in the future will be putting even more emphasis on specialty foods, as customers come to expect to find these items on retailers' shelves. "Customers will go to Sam's [and similar stores] to buy their staples, but supermarkets will sell specialty groceries, fresh bread, cheese and produce," she said.

The Marlton, N.J.-based Zagara's specialty food stores are booming. Recently opened was a third unit, in Jenkintown, Pa., and a fourth store in Britton Lake will come on-line late this year or early next year.

Zagara's uses the reverse strategy of integrating mainstream items, like Hellmann's mayonnaise, in its condiment section, for example, but often these items are relegated to lower shelves, explained Ralph Nagle, merchandising manager for nonperishables.

Zagara's often cross-merchandises nonfood items with related food products. For example, an oil dispenser may be sold next to the oil section; cookbooks may appear near the seafood; and Oxo cooking gadgets may turn up on power panels in the spaghetti sauce section.

Organic items are flagged at the shelf, but generally, natural and organic, gourmet and mainstream items are integrated. Kosher and Mexican items are the exception and command their own sections in Zagara's stores.

Not surprisingly, Zagara's puts a lot of emphasis on demonstrations in its promotional program. "We do weekly ads and monthly ads and direct mail, but we're very big on demoing and sampling," said Nagle.

"Specialty food has to be demoed," Nagle continued, "otherwise people won't pay the higher price. They have to taste it in order to taste the difference. We are doing grilling every weekend this summer, in the entranceway to our stores. This is supported by each of the departments with various products. For example, we may have a marinade for portabella mushrooms using something off the gourmet/natural sauce shelf."

Zagara's also makes use of passive demonstration stations in the aisles, which are set up in the morning and maintained all day. Live demonstrations are done three to five times per week, with at least two in the grocery aisle.

Shaw's Supermarkets, East Bridgewater, Mass., has a unique program for marketing regionally identified specialty foods. That is, the retailer sets aside four to eight feet of space for regional products from Maine, Massachusetts, Connecticut, Rhode Island, New Hampshire, and Vermont, the six states in which its supermarkets are found.

The retailer cooperates with state departments of agriculture to highlight regional food, and of course, items from the home state will predominate in respective supermarkets. According to Bernie Rogan, spokesman for Shaw's, Vermont and Maine have the strongest specialty food programs. Shaw's merchandises these local items in their own section, with signage and point-of-purchase materials. The sections are usually adjacent to the condiment aisle.

Other specialty foods are integrated with like items, or appear in special Wild Harvest store-within-store sections, or in World Market sections. These store-within-store concepts were brought into the Shaw's chain after it acquired Star Markets. The Wild Harvest sections mostly merchandise natural and organic foods, while the World Market sections are an umbrella for ethnic selections. As Shaw's opens new stores and remodels old ones, the retailer is adding these sections, Rogan said.

"Other items are commingled with mainstream items. In some places, items that were once specialty are now considered mainstream: for example, Hispanic spices may appear side by side with McCormick spices in some stores," said Rogan.

Shaw's promotes its Wild Harvest and World Market selections regularly and is also increasing its number of specialty private-label items.

Most retailers supplied by wholesaler Unified Western Grocers, Commerce, Calif., use the complete integration model for specialty foods, although more upscale stores like Andronico's or Bristol Farms make use of Metro shelving in the aisle and next to like mainstream items, said Dave Tucker, director of specialty food procurement.

Unified Western brought in more specialty items after it acquired Gourmet Specialties, along with the Reese brand specialty label. "The specialty mix increased significantly, beginning about a year ago," said Tucker. "We're pretty much entering the last phase of converting customers and the warehouse over."

Specialty food is an increasing part of Unified Western's business, said Tucker. From the retailer standpoint, these items have always been profitable and make up for other areas where margins are much lower.

The wholesaler uses monthly promotions for specialty food, as well as account-specific marketing programs. "We offer promotional allowances and work with retailers in supporting in-store flyers and mailers. We also help coordinate demos," Tucker said.

Specialty food is fully integrated throughout Rice Epicurean Foods, Houston, Texas, stores, said Scott Silverman, vice president of specialty foods, but the retailer also makes use of special endcaps and gift centers.

"In one store, we currently have a 'Natural Epicurean' department," with over 1,500 natural and health items that we currently don't offer in our other stores," said Silverman. But the other stores do offer several hundred items in the natural category as a matter of course.

Promotion of specialty food is done through circulars, newsletter, newspaper ads, billboards, and limited television and radio advertisements, Silverman said.

Although Rice Epicurean cannot expand its specialty selection at this time, the store makes additions and deletions based on current trends. "It's not enough to just put it out there," Silverman said. "You have to romance the items in how they are merchandised."

Some of the new trends that are affecting the specialty category include new diet-based products, based on the Sugar Busters diet, the Atkins diet, and Dean Ornish's heart healthy diet. In addition, organic continues to grow, said Silverman, and products identified as restaurant brands "continue to explode."