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Nineteen ninety-seven has come and gone, and the supermarket industry still seeks the path to enlightenment on how to transform itself into America's home-meal replacer.It was a year that did see progress, mostly on behalf of individual companies and in the form of experimental formats, program makeovers, promising partnerships -- kernels of insight, maybe, but not the stuff of miracles.It was not

Nineteen ninety-seven has come and gone, and the supermarket industry still seeks the path to enlightenment on how to transform itself into America's home-meal replacer.

It was a year that did see progress, mostly on behalf of individual companies and in the form of experimental formats, program makeovers, promising partnerships -- kernels of insight, maybe, but not the stuff of miracles.

It was not for lack of effort. Most everyone -- from the biggest chains and wholesalers to the smallest independents, from the upper-crust fresh-foods specialists to the most conventional grocers -- searched for the answers to questions such as how best to source the meals, how to merchandise and market them and how to make any money doing it.

These questions largely remain unanswered. The clearest revelation of 1997 is a humbling one of how far as an industry supermarket retailers and wholesalers still have to go.

Wholesalers did some notable soul-searching. Fleming Cos., Oklahoma City, for example, decided it would make meal solutions one of the major tenets of a re-engineering plan. Its home-meal replacement concepts, designed in modular fashion for easy implementation by retailers, were moved from the test stages into rollouts at independents during the year.

"We are probably the single most resilient industry in America and respond to threats big time," professed Robert Stauth, chairman and chief executive officer of Fleming Cos., at the end of 1996. "Food-service will mean a resurgence of independent retailers."

What Fleming rolled out was Chef's Concept, a five-module program consisting of a cinnamon roll shop, a sandwich shop, a pizza-driven Italian specialties shop, a limited-assortment bakery, and a rotisserie chicken and sides program. Plans called for 125 installations by the end of the year.

By the spring, Fleming was talking about starting a retail learning center at headquarters, to be called Food Service University, with workshops designed to aid its retail customers in the conversion from grocers to meals providers.

At a gathering of wholesalers, Bill Dowd, president and chief operating officer of Fleming, said his brethren faced "one of the most complex undertakings imaginable" as they attempt to find the way in the HMR game.

"Food service is the opportunity. Almost nothing else matters," Dowd said, backing it up with testimony. "Like many others, I had comfortably segmented the food industry into two separate pieces: the retail trade and the restaurant or food-service trade. It is now crystal-clear to me that the consumer is redefining portions of these two side-by-side industries into a single industry."

Spartan Stores, Grand Rapids, Mich., made an about-face this year, returning to the meals business after dropping out of deli-bakery wholesaling just the year before. It even created a new position, meal solutions and consumer affairs manager, to help it find the way.

Supervalu, Minneapolis, was also shepherding food-service skills, seeking to reposition its deli programs and services to reflect its independents' interest in the meals business.

"Limited menus and seasonal flexibility is the way we're trying to pursue this opportunity," said Bob Beckerman, corporate director of deli-bakery operations. "We're trying to develop and offer competitive food-service expertise. It isn't easy."

No one said it would be, but retailers kept chipping away at the challenge nonetheless. Almost all the major chains refined or broadened their fresh-meals experiments, from Albertson's, Boise, Idaho, to Winn-Dixie Stores, Jacksonville, Fla. Many smaller operators, too, made adjustments.

The current lack of any universal dogma about how to gain meals success kept most retailers experimenting, guessing and often tentative, however.

Some patterns did rise from the chaos. Programs leaned more toward sourcing foods from outside as opposed to producing them in-store, although many operators opportunistically blended the two options.

Chilled merchandising seemed to be gaining, but hot foods stayed firmly entrenched in some retailers' canon; and, again, the two divergent philosophies even coexisted under a single meals umbrella.

Sensing the prevailing winds, Will Dunlavy, director of food service for Harris Teeter, Charlotte, N.C., said, "It is likely there will be a greater emphasis on using third-party manufacturing and developing commissaries."

Similarly, more self-service merchandising was being planned and executed at many operators, with a doubling of self-service space in some cases.

In the first quarter of the year, Genuardi's Family Markets, Norristown, Pa., opened a new format store in Langhorne, Pa., featuring new programs for the meals department.

With fresh foods all grouped on one side, the focal point was the Italian Market, a 1,700-square-foot section that offered specialties like fresh-cooked pasta.

Self-service merchandising space was quadrupled, and variety increased by 20%. But all that self-service was still complemented by service elements such as a carving station. "We want to give customers so many choices that they'll have no reason to go anywhere else," said Ray Taglialatela, director of perishables merchandising.

Vons Cos., Arcadia, Calif., launched a fresh-meals store within a store at a remodeled unit in Carlsbad, Calif., with a huge lineup of self-service meals and meal components sourced from outside the company. The program, called Fresh & Ready, was kicked off with at least 50 entrees, 20 side dishes and 10 different soups offered on a daily basis.

Stop & Shop Cos., Quincy, Mass., on the other hand, made a big shift to a service food court format, at least for hot foods, at a new store in Stamford, Conn., after it found that self-service hot foods could be a labor headache. However, it also more than doubled its space for self-service prepackaged entrees and sides at the Stamford store, compared with its previous prototype.

Trend watchers predicted a movement of regional retailers teaming up with regional manufacturers, leaving the national suppliers to do frozens for national chains.

A working example of the localized solution was the HMR program at Quality Food Centers, Bellevue, Wash., which was expanded in 1997. A small-scale partnership of a manufacturer, distributor and retailer, it bypassed the larger traditional food-service pipeline. But sources in the project say it still has not been easy.

Partnering in 1997 was seen as desirable a goal as ever, and was proving just as elusive. Manufacturers and retailers continued to struggle with finding the right formula. Both suffer from internal inconsistencies of procedures and philosophy, from different sales divisions calling on different buyers in the same company, to deli executives saying they want to work with manufacturers to compete with restaurants but then being unable to adopt the margin flexibility restaurants live with.

"I think they are just as confused as we are," said one retailer at a pensive moment.

The internal retail dilemma of reconciling the forces of fresh-meals production and merchandising in the same space was attacked imaginatively by Balls Food Stores, Kansas City, Kan., at a Hen House supermarket in Lees Summit, Mo. A physical quirk of the site allowed for a subterranean 30,000 square feet reserved for food production, supporting a 60,000-square-foot selling floor, where the associates could fully concentrate on just that: selling.

"The cooks can really put out the food, while the teammates upstairs can devote their full attention to presentation and to the customers," explained David Gryszowka, executive director of store development.

And the Hen House prototype also featured a large cross-departmental meals center, one of a growing number of sites at which retailers were experimenting with consumer-driven marketing for meals by overruling the traditional practice of dividing the store into separate, even competing, profit centers.

For others, taking complexities out of prepared-foods programs, by simplifying menus and recipes, or paring back offerings, was one way to cut down on the burden of training.

Taking food production out of the store was, too. "We've changed our Oriental foods program from scratch, in-store preparation to preparing the items at our central location and sending them out to stores as prepacked kits," said Tom DeVries, food-service director for D&W Food Centers, Grand Rapids, Mich. "It takes the production labor out of the retail setting."

That's not all D&W did in 1997. It also drew a lot of industry attention to the small town of Holland, Mich., where it unleashed a new store format with fresh-foods innovations and 50% more space for food-service products than at its other stores.

More than a few prepared-foods thinkers trekked to Holland during the summer to see firsthand D&W's innovative store footprint. Its W-shaped design prompted some to call the 63,000-square-foot unit the Stealth Bomber.

The main attraction was the way the store's design incorporated ideas that meal executives and consultants have been talking up ad nauseum, ideas such as creating truly convenient stores-within-stores and establishing cross-departmental cooperation, thoughtful cross merchandising and design flexibility.

At the Market Square Meals Center, D&W placed all meals solution components -- ready to cook, ready to heat and ready to eat -- in one "meal-planning" area. The spot was designed around the idea that customer service, education and advice are essential to success.

The way it works is that staff chefs prepare a demonstration meal each day, then, along with the department head, they prowl the aisles, giving preparation tips and generally training customers to shop the area.

That was just the job D&W's vice president of fresh foods, Mike Eardley, said he had in mind for the in-store chef: to move products through the fresh cases fast, without the obstacles that get in the way of meal merchandising in other stores. Cross-departmental problems are avoided by making sure each originating department gets the gross margin for item sales. Meanwhile, the meal section is kept separate financially, as well as operationally, from the deli.

The ultimate question is whether D&W's customers reward the company's time, energy and dedication with some incremental food dollars.

H.E. Butt Grocery Co., San Antonio, also adopted an educational tone, opening in September a meals store inside a supermarket in Schertz, Texas, specifically aimed at offering the takeout shopper counsel as well as fresh products.

The 2,200-square-foot store, dubbed Great's, has its own front entrance as well as two entrances from inside the supermarket. While it sports a hearth oven, shop-around island cases and a diverse menu, the operation's most unusual feature is the handful of "meal planners cum waiters" roaming the selling floor to interact with customers. Aggressive demos have been the norm.

And instructive demonstrations were also a theme at Wegmans Food Markets' new prototype, opened this year in Pittsford, N.Y. There, the Rochester, N.Y.-based chain swerved sharply from its traditional emphasis on in-store dining to greater takeout ambience.

The aim was to press ready-to-heat and ready-to-cook foods to take home. The new tack was obvious right away in the 23,700-square-foot, brightly lit Market Cafe; Wegmans dramatically trimmed the number of hot selections it offered.

Speaking of education, Ukrop's Super Markets, Richmond, Va., went to school in 1997 in one of the most unusual and intriguing partnerships yet to emerge on the fresh-meals landscape.

Ukrop's crossed over into the institutional food-service market by striking a deal with McDonald's and Virginia Commonwealth University. The deal gave Ukrop's positioning for its branded hot pizza and soups alongside the Big Macs at two McDonald's outlets on the campus.

What's more, the retailer also agreed to supply chilled fresh sandwiches, salads and entrees in self-service cases. It was the first time Ukrop's ventured outside its own stores with meals solutions and McDonald's counterpeople were trained to handle and sell the Ukrop's products, by the supermarket chain itself.

The HMR format Emily's Market was reincarnated in 1997, at a new site in Scottsdale, Ariz., and with a new outlook. The 5,000-square-foot Emily's is about 40% larger than the first Emily's, with just about every meal occasion covered and less of a convenience-store feel.

The concept's blend includes a sit-down dining area; a separate takeout section; chef-prepared foods; a reach-in refrigerated case with convenience products such as milk, juices, beer, wine and flowers; a bakery that turns out signature cinnamon rolls and breads all day long; a cappuccino bar; and a streamlined ordering system.

"The atmosphere is calm and antichaotic, like our name sounds," said Mark Cain, chief operating officer of the investment company that gave Emily's Market its second chance. "We're traditional American. We give customers great food at a great value with a lot of choices" -- meal choices that lean toward homestyle rather than upscale, priced at $6.95 and $5.95 on blue-plate special.

Supermarket HMR nemesis Boston Chicken, Golden, Colo., meanwhile, teamed up with one of the retail industry's more unusual players when it invested $23 million in Harry's Farmers Market, Roswell, Ga.

The deal united Boston Chicken with a retailer whose Harry's in a Hurry HMR format has been closely watched by supermarkets and allows Boston Chicken to explore options such as rolling out Harry's HMR concept elsewhere, and marketing co-branded take-home meals that are ready to heat.

There were signs of turmoil and struggle inside Boston Chicken when, at mid-year, the retailer suffered stock depressions and a high-level shakeout. The problem was weakened sales momentum, which critics ascribed to the chain's marketing shift toward discounting to build its sandwich business, to the detriment of its image as a high-quality takeout dinner provider.

Boston Chicken's chief executive, Scott Beck, said the retooling of his operation was aimed at building a new business in "meal solutions," by which he meant chilled prepackaged takeout.

Later, the chain began a test of HMR chilled items in the Charlotte, N.C., market. Apparently the first fruit borne of its joint venture with Harry Blazer, the test began with meal-sized salads, sandwiches and ready-to-heat entrees. The experimental line was distinct from conventional Boston Market fare.

In the fall Boston Market said it would expand its test of grab-and-go chilled products into the Denver market, and it purchased 10 units from a franchiser to rework. Beck said the project was expanding sales of its core hot items.

Charlotte was the venue for another notable HMR project. Specialty gourmet retailer Dean & DeLuca, New York, made its big-time move into chilled ready-to-heat meals there. Consulting on the project was Anthony Tedesco, one of the food-service strategists behind Eatzi's in Dallas.

The new HMR-focused format featured multiple food stations with premium products, and heavy emphasis on bakery as an integral component of the meals package. The Dean & DeLuca store in Charlotte is a format that, if shrewdly rolled out elsewhere, could skim the upper crust from many a take-home meals market, it was said.

Dean & DeLuca's upscale aim notwithstanding, it was becoming more and more apparent to supermarket retailers that marketing was a stubbornly weak point for their meals programs, especially when many consumers still don't see the supermarket as a destination for prepared meals.

When SN assembled the expert opinions of eight front-line supermarket meals executives, one of the strongest common points was that credibility was a sore spot, and to gain credibility the industry had to offer better product quality. Tom Brewer, vice president of deli and food-service for Price Chopper Supermarkets, Schenectady, N.Y., put it plainly: "The supermarket industry has always taken the easy road."

Meanwhile, the retailer\restaurant Eatzi's was busy following its own road. No. 2 finally opened for business, at a site in Houston right across the street from an upscale unit of the local supermarket chain Rice Food Markets. The second Eatzi's adhered fairly closely to the winning formula of the initial Dallas store -- high-quality foods, in-store preparation and lots of theater -- with improvements such as more parking, production space and seating.

And plans moved forward to open more Eatzi's units next year, in a high traffic location in the affluent Buckhead section of Atlanta, as well as inside the department store icon Macy's Herald Square in Manhattan.