What's the best way to merchandise specialty foods? The answer to that question seems to depend on who the retailer is and who makes up the retailer's customer base.
Here's a look at the approach taken by three different chains. Jitney-Jungle Stores in Jackson, Miss., is beefing up its specialty inventory in a new store format dubbed Premier. Specialty retailer Zagara's, in Marlton, N.J., will be expanding following its acquisition by Genuardi's Family Markets. Meanwhile, Genuardi's has already tapped Zagara's expertise in merchandising specialty foods in Genuardi's mainstream stores. And Wild Oats, Boulder, Colo., shows how a leader in specialty retailing does it.
The Premier Stores
JACKSON, Miss. -- Jitney-Jungle Stores of America is using a "theatrical" format as the prototype for new and remodeled stores in both of its chains -- Jitney-Jungle in Mississippi and Delchamps in Alabama -- adding the word Premier to the store names.
"The Premier stores are not upscale stores," emphasized Michael Julian, who recently resigned as chairman and chief executive officer of Jitney to develop a consulting business in Chesapeake, Va.
However, he said, they do combine a strong focus on perishables and a much greater selection of specialty foods, with destination sections in Center Store for categories such as beverages, snacks and nonfood household products.
The chain opened the first Premier store five years ago and spent about three years tweaking the concept before rolling it out as the prototype for remodels, Julian noted. There are now 22 stores using the 60,000-square-foot Premier format; the newest is in the New Orleans suburb of Mandeville, La., and the Jackson, Miss., suburb of Brandon.
The company did not wait for the remodels to add specialty foods, however. "We did a lot of specialty-food work in other stores before they were remodeled," said Julian.
The Premier stores feature both international specialty foods and natural foods. "Depending on the store size, we typically integrate specialty foods, such as condiments, with their mainstream counterparts," said Julian.
International foods, however, are displayed in a separate section at the front of the store next to produce, with flags and signs identifying various ethnic products. "You can see the section as you enter the store, and you have to pass it as you finish shopping," he noted.
The international section is characterized by chrome Metro shelving, which is also used for ethnic products displayed in the grocery aisles "to duplicate the idea" and distinguish those products in the customer's mind, Julian said. For example, some 70 imported and specialty mustards are displayed on Metro shelving within the condiments section of the store. A similar approach is used for olive oils and for jams and jellies.
The separate international section features such ethnic cuisines as Thai, Irish and German, and also includes imported Italian products.
While the stores have had to increase inventory to handle the specialty assortment, "every store we've put a section in has seen a significant contribution to sales" from those products, said Julian. The international sections have also yielded "turns significantly high enough" to justify the space and inventory.
While many marketing consultants suggest that international products appeal primarily to an upscale customer who is educated and widely traveled, Jitney-Jungle has not found that to be the case.
"The international sections have worked virtually regardless of store demographics. There were maybe a couple of stores we shouldn't have done it in, but the products have sold very well in blue-collar and ethnic neighborhoods," said Julian.
The company is also adding natural-food sections adjacent to the international department, so that the product mix in the total area runs about 80% international, 20% natural, he said. The natural-food focus is on less-processed foods rather than on functional foods. Some processed organic foods are carried in the sections, and the stores also display organic items in the produce department.
The Premier stores are also distinguished by strong perishables departments and destination shops in the grocery aisles.
Perishables departments include a seafood shop with a Nantucket motif, what Julian called a "very strong" produce department, an expanded deli, an adjacent restaurant with wood-burning ovens for pizza, and, frequently, a scratch bakery.
In Center Store, a store-within-a-store concept has been used for some key categories.
In a space equivalent to two or three conventional aisles, the Premier stores feature a beverages and snacks center with gondolas on the left and right for drinks and nontraditional fixtures for snacks in the center.
There was some debate over the mix, Julian concedes; for example, the merchandising team decided cookies should not be in the snack section.
But the results of the approach have been positive. While there was little change in soft-drink sales, "we are seeing 300% increases in nonsoft-drink sales (including water, teas and fruit drinks) because [previously] we couldn't fit them in the soft-drink aisle, and people [had trouble finding them]." Snack sales are also up, selling 12% to 15% more in these sections than in Jitney's non-Premier stores, Julian said.
Another destination area in Center Store groups housewares with paper goods, plastics, cleaning supplies and such.
"We won't be a destination for someone looking to buy housewares for their first apartment," said Julian, but the section is designed to get the sales when the grocery shopper needs a replacement housewares item. The section, he added, has generated sales increases for these nonfood categories.
Zagara's
MARLTON, N.J. -- Zagara's Specialty & Natural Foods, a 25,000-square-foot unit here, has been in business 11 years and now has three new stores under construction, said John Zagara, president.
The new stores will be in Mount Laurel-Moorestown, N.J., Jenkintown, Pa., and Painters Crossroads, Pa.
Parent company Genuardi's is installing kiosks stocked with Zagara's private-label products where the demographics warrant it. Genuardi's customers are also able to buy Zagara's beef and crusty, European-style breads.
The Zagara's store opening in Mount Laurel in September will include a Fresh Mex section, said Zagara, with fresh salsas, burritos and other specialty items. A similar Fresh Mex section was recently introduced in a new Genuardi's store.
"Our clientele wants new and high-quality items. When you have a reputation and the customer trusts your buying capabilities, people want to try new items when you get them," Zagara noted.
Some of the categories where new items are most popular are olive oils, pastas, crackers, and cheeses in perishables.
"Our private label is hot right now," said Zagara. The line features "very upscale products" and includes processed organic foods, spices and imported pastas. Zagara's will soon add an organic-cereal line to the private-label mix.
In the prepared-foods section, Zagara's is working on a line of dim sum-style Asian products for takeout. Other popular ethnic cuisines include Mexican and Italian, as well as kosher products.
Zagara's is also increasing its assortment of functional foods and natural foods. In addition, the new units will have a Body Natural nutrition center in the center of the store, Zagara said. "We'll have an in-house certification process for the staff who work there. We feel this is a real growth area."
Currently, Zagara's has a stand-alone Body Natural store that sells vitamins and cosmetics. Zagara expects to offer seminars with a nutrition theme in the new units, on such topics as macrobiotics and vegan menus. Relevant food products will be introduced during those presentations.
Zagara's customer base is made up of two distinct types of shopper, Zagara said, and both tend to be affluent. One group is looking for the highest-quality perishables, while the other is more concerned with natural food, whether it is defined as less-processed or as organic.
Wild Oats
BOULDER, Colo. -- Wild Oats Markets, with about 80 natural-food supermarkets, is seeing strong growth in ethnic, gourmet and natural- or functional-food categories.
"These three categories are becoming interwoven. You're seeing ethnic foods with organic ingredients and gourmet appeal," noted Dale Kamibayashi, former manager of corporate brands and specialty foods. (Since SN spoke with him, he has moved from Wild Oats.)
In the gourmet category, Mediterranean items are seeing a lot of activity, he said, with increasing sales of specialty olive oils and vinegars, pesto, sun-dried tomatoes and eggplant.
And while the Mediterranean cuisines are growing, so too are various Asian cuisines, he said, such as Indian.
"Pacific Rim fusion is the coming upscale category," he noted, "with both authentic and high-end ingredients that could be classified as gourmet."
Kamibayashi finds manufacturers and importers of these specialty products are also increasing their efforts to make them meet the needs of retailers such as Wild Oats.
"There is a lot of awareness in their research and development of the specifications of the natural-food industry. They don't want to miss the opportunity to sell to the fastest-growing segment in food retailing."
In merchandising ethnic products, Wild Oats tries to keep most of the products for a specific cuisine together, but will also cross merchandise with appropriate categories -- for instance placing pesto in the pasta aisle, with condiments, or adjacent to meat and seafood displays or with Italian foods.
"When we accept a new product, we suggest areas where it might be merchandised," Kamibayashi said. He notes a trend toward ethnic crossovers or "fusion-type foods," such as Southwest cuisine with Asian accents, a trend already popular in many restaurants.
Another major growth area in natural-food stores is functional foods. "These have a very strong presence in our industry right now," Kamibayashi said, as customers look for "more ways to supplement their diet in a convenient fashion." Snacks and beverages are particularly popular.
"We are being very careful. We don't want this exploited to the point where you wave a magic wand over a bottle to get needed nutrition," he added. Wild Oats investigates companies and products in this area.
"If a company puts a stimulant in a product, it had better put a warning on the label as well. We are policing it carefully." Functional foods that are popular now include those enhanced with ginkgo, said to aid the memory, and those with ginseng, said to boost energy.
Wild Oats is staying away from the popular gaurana found in many energy-stimulating drinks, Kamibayashi added. "It's not allowed in our stores. We're very hesitant about its use as a nutraceutical. In studies and from experience we've seen some severe reactions, and it can be dangerous for pregnant women and for children."
The customer base at Wild Oats is changing, Kamibayashi said. The chain's customers are typically in their 30s to mid-50s. "We've seen the baseline move higher for natural food over the years, but we also see the baby boomers' children aware of the value of natural food," he said.
"We're now seeing an extension into the senior segment we've not seen before. This group wants to feel and eat better and keep themselves healthier over time," he continued.
The chain is trying to broaden its appeal to the growing Latino and Asian communities, he noted. "These customers are very brand loyal, and we want to make sure we don't lose the opportunity with them."
Kamibayashi acknowledges more conventional supermarkets are adding natural-food products. "But they have an agenda that works well for them," he commented. "It's difficult to duplicate what we devote an entire store and staff to."
