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Strength at the High End and Online

For some food retailers operating at the high end, this is shaping up to be a strong holiday season.

For some food retailers operating at the high end, this is shaping up to be a strong holiday season.

Trip Straub, vice president, Straub's Markets, St. Louis, said that although times may be getting tough for consumers, the ongoing popularity of high-quality foods is making this year look like it will be even better than last.

“To date, this year things have been very strong,” he said. “I don't anticipate that will subside.”

The chain offers only fresh turkeys for Thanksgiving, and allows customers to preorder them online. Orders through the website were up 50% over year-ago levels, he said.

“I don't know if that's a result of people being more comfortable using the Web and our website, or whether it will be the same trend in-store, but what we're seeing is very encouraging, very positive,” Straub said.

“We tweak our website every year at this time, and we've seen our Web sales are up around 65%,” he added. “That's impressive growth, and if we follow that trend into the holidays, that's going to go off the chart. We added a bunch of gift baskets on the website and they have done well.”

Likewise, New York-based online food retailer FreshDirect also has seen early signs that 2007 is shaping up to be a good holiday season, according to Steve Michaelson, president and chief executive officer.

“I see strong consumer spending for food in our business,” he said. “We serve a higher-income demographic, and they are spending in our category, which is food and prepared foods. It is not slowing down. We also have advantage of competing with restaurants, and we are a strong value compared with restaurants. That helps us as well.”

He said Thanksgiving preorders are up 20% over year-ago levels. The company expects to deliver about 30,000 orders for Thanksgiving, including 2,300 prepared turkey dinners.

“It's early in the year yet, but our advance orders for Thanksgiving are very strong, and we've seen early parties in our corporate office service business,” Michaelson said. “We are optimistic.”

This year, FreshDirect allowed customers to order turkeys further in advance, and opened up a “Thanksgiving Central” area on its website that allows customers to order fully cooked turkeys and side dishes.

“I think we just have a more compelling offering this year with a little bit extra ease in days you can take delivery and a few more interesting items to sell,” Michaelson said. “What we did this year is reinvest in basics and tried to kick them up a notch.”

This is the third year the online retailer will offer the “Turducken” — a turkey, duck and chicken rolled into a roast, priced at $6.99 per pound. New side dishes this year include corn bread and sausage stuffing, and maple roasted yams with marshmallows.

FreshDirect hasn't seen much in the way of competitive pricing pressures, as Michaelson said he feels the online retailer competes to a great degree with restaurants. Retail prices have been raised to reflect increases in certain commodity costs.

The company has also added a fuel surcharge of 54 cents per order, which he said has been accepted by consumers.

At Straub's, Straub said he hasn't seen any “huge price pressures” at his stores.

“We actually raised the price of our fresh turkeys by 30 cents a pound, but the cost was also a significant increase for us,” he said. “We have to evaluate all of that going into the holidays. Some items are lower — steaks and ham — and we've brought our retails down on that. Fresh turkeys happened to go up.”

Straub said consumer interest in high-quality food, spurred by TV cooking shows and magazines, “has really translated to stores that have high-quality prepared food and that sell ingredients.”

“I would say our customers tend to be, if not recession proof, they tend to be less affected by some of the ups and downs of the stock market than shoppers of a traditional store might,” he said. “We are also affected less by the Wal-Mart supercenters of the world, since we're more on the high-end, specialty side.”
— C.V. and J.S.

TAGS: Marketing