SN's visit to Austin, Texas, was occasioned by the Organic Trade Association's third-annual conference and trade show, its final one in this city. Texas has the most organic farms in the country, and Austin is home to a healthy lifestyle, if what SN heard on the store tours is true.
Whole Foods Market, the natural and organic chain of 140 stores, was founded here and is building a new "Landmark" store of 80,000 square feet that will open in 2005 across the street from its eight-year-old 35,000-square-foot store that hosted a tour of OTA attendees in mid-May.
Whole Foods Market and Central Market are bright, active stores where customers enter via the produce department, then use a maze effect to direct them through the store, with signage for everything but the exit. Bulk dry grocery is important for them and for Sun Harvest Market.
Albertsons, not to be outdone, has "It's Only Natural," a wood-floored store-within-a-store format supplied by Kehe Foods, the distributor from Romeoville, Ill., which now also supplies H.E. Butt Grocery Co. Therefore, Kehe has an office in San Antonio and is growing.
The Albertsons in West Lake Hills, an affluent suburb that includes celebrities such as Sandra Bullock among its residents, has the largest natural foods section of all 15 Austin-area Albertsons, and the section is about to nearly double in size as the 65,900-square-foot store undergoes a remodel.
In early May, Forbes magazine named Austin as the best place in the United States for business and careers, largely because of the University of Texas, with almost 50,000 students.
"Austin is a little different since it's such a highly educated town," Catherine Markette, director of advertising, public relations and marketing for Sun Harvest Farms, San Antonio, told SN during a visit to the larger of those two stores, which is located in the Brodie Oaks Shopping Center II, Austin. The eight Sun Harvest stores in Texas, plus the 18 Henry's Marketplace stores in Southern California, make up the Farmers Market Division of Wild Oats Markets, Boulder, Colo. Wild Oats has 102 stores nationwide.
"There's a lot of upper income due to the high-tech industry and the university," Markette said. "Those upper-income people form part of our customer base, but this store was actually designed to appeal to the price-conscious shopper. This is a stepping-stone store," she explained. "People who shop here are not 100% organic shoppers. A lot of our grocery items are organic, such as oils and pasta sauces." (Big yellow shelf-talkers feature "organic" in large print, partially because many customers are 55 and older.)
The manager, Scott Darley, told the group of visitors that the staff educates consumers by doing a lot of demos and sampling, as well as answering questions such as, "Why is this better for me than that, and why should I pay 30 cents more for it?"
Also, people are more health-conscious here, Darley said. "In Austin, it's all about organics. It's all about a healthy lifestyle." SN observed much activity in the city's parks and greenbelts, such as people jogging in the 96-degree heat.
Katherine DiMatteo, executive director of the OTA, said in her welcome address, "Each year we have grown a bit, and at a rate that has surprised us. It reflects the fact that organic agriculture and organic products are becoming part of what the customer is asking for in the marketplace."
Austin has nine independent grocery stores, according to Trade Dimensions International, Stamford, Conn., with 1.52% of the market. H-E-B, based in San Antonio, is the market leader, with nearly 60%.
Students undeniably shop at one of the independents, the Wheatville Co-op, located near the university. General Manager Dan Gillotte told SN that as a co-op, "we tend to draw an alternative crowd," but the mix is broader than it used to be, and is less student-driven than it used to be. Sales used to dip significantly in the summer, when student enrollment drops to 18,000, but lately, summer business is not off as much. The 5,100-square-foot store got 15% to 20% sales growth in bulk in the past year and half, he said, by putting in new units that were more space-effective.
Bulk foods account for 10% to 11% of store sales right now, Gillotte said, and the frozen department is doing double-digit growth as well. Some of this is due to pizza, but mostly, he said, "it's simply having everything in stock all the time."
The frozen products that are most popular with Wheatville's members include organic bread, meat alternatives, and organic vegetables and fruits. "Particularly in Austin, in the summertime, people drink all their meals if they can -- it's too hot to cook. They like the frozen fruit for smoothies. Our whole store is driven by the increased options of organic food for sale, as more and more companies put out new products," Gillotte said. He has noticed an increase in coupon processing for Cascadian Farm and Muir Glen, organic brands now owned by General Mills. The increased use of coupons is seen as an example of how a big manufacturer has changed the promotion of those brands.
Wheatville Co-op carries primarily natural and organic products, although it also stocks Fritos, Coke, Wolf brand chili, and the like.
"We have had 6% [total] sales growth over the past year, and feel like we are on an uptick." In grocery, the increase is more like 5%, he said. Gillotte is interested in organic shelf-stable milk, due out soon from Horizon. Rudi's Organic bread, which comes frozen and thaws on the shelf, has been "a really big seller for us. It comes off having a really moist texture."
Over at the Crestview IGA, 7108 Woodrow Ave., on the other side of Austin, Ronald Prellop and his mother, Marion Prellop, fight the good fight against their more modern competitors. A Wal-Mart supercenter opened about three miles from their 50-year-old store, which is also called the Minimax (for "minimum prices and maximum service," Marion Prellop explained). Ronald Prellop, 53, has seen plenty of changes as far as the market goes.
"We're an old-time outfit. We don't have a deli or a bakery, and we have the best meat department in town," he told SN. It's one of IGA's Four-Star Stores, and is the only IGA in the area. "We are not real upscale. We service people who like to cook. We have no prepared foods. We have a very limited selection of frozen foods because we just don't have the space. Besides, it's kind of expensive to run the frozen foods," he said.
Asked if they are doing anything special in grocery, Prellop replied, "Just staying alive."
Volume is down compared to 12 years ago, he said. Also within three miles are Randalls, Albertsons, H-E-B and its original Central Market, and one of the two Sun Harvest Farms, the smaller of the two in Austin.
"We don't have much organic. I should get into it. I've been dragging my feet because it's a lot of work to re-do the store," Prellop said.
"Our supplier is Fleming, and they don't have much organic. If I get more, I'll have to go through a gigantic retooling."