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    GROCERY: Imported Foods: United rations

    Imported specialty foods will become less and less 'special' in a multicultural market -- but they'd better be the real thing.

    By Bob Gatty

    When Byerly's reopens its innovative supermarket in St. Louis Park, Minn. later this month, the unconventionally upscale store -- complete with chandeliers and carpeting -- will feature an expanded international foods section that chain officials say is designed to meet the needs of Byerly's evolving customer base.

    "We've always had a huge amount of specialty products, many of them imported," says Phil Lombardo, senior director of nonperishables, "but now we've expanded these sections dramatically." The sections, he adds, "will provide us a point of differentiation from our competition."

    Lombardo says the new international section at the St. Louis Park store will be used as a prototype and, if successful, will be added to the company's other outlets. The 12-store regional chain is operated by Minneapolis-based Lund Food Holdings, Inc., which also operates eight Lunds and three Rick's Markets in the Twin Cities and surrounding area.

    If an operator like Byerly's, already a leader in specialty and international foods merchandising, sees the need to expand and to differentiate with its international foods program, where does that leave the many conventional stores out there in relation to the product trend? If they know what's good for them, they'll be rethinking their sets and their sourcing mechanisms. International foods will become increasingly important in many communities across the nation, and supermarkets must make sure they've got the right representation of products on their shelves.

    The market is expanding rapidly. In 2002 the United States imported almost $49.7 billion in foods, feeds, and beverages, according to the U.S. Department of Commerce. By 2004, that number had risen to just over $62.1 billion -- nearly a 25 percent increase in three years.

    Broad array of customers

    Two major factors are at play here: growing numbers of foreign-born consumers who are bringing their food cultures along with them, and generational changes resulting in more American-born consumers searching for new and different products at retail, often seeking to replicate dishes and eating experiences they've enjoyed in ethnic restaurants.

    International foods attract a broad array of customers, but there are some patterns. They tend to be more upscale and live in urban areas, for instance. Younger male shoppers, as well as Hispanics, tend to be big consumers of the segment. According to the Food Marketing Institute's 2005 U.S. Grocery Shopper Trends study, 24 percent of shoppers eat ethnic foods at least weekly, and consumers who do so tend to have annual incomes of more than $75,000 per year, and are often men under age 44.

    Region, residence, and ethnicity play big roles, as well. Consumers in the West (30 percent) and South (25 percent), those in urban areas (31 percent), and Hispanics (47 percent) report the most frequent consumption rates of ethnic foods.

    At AJ's Fine Foods, the upscale gourmet format operated by 153-store Bashas' of Chandler, Ariz., imported products have gained "wide appeal" across virtually all shoppers, according to Steve Lafevre, center store buyer. "The proliferation of food shows on television has created a greater awareness and education of the virtues of imported products."

    Lafevre says AJ's considers itself a specialty format: It already has a "significant" amount of space dedicated to international foods in its stores; but the retailer nonetheless is constantly seeking to improve the product mix within the category.

    Sushi bars in Iowa

    "We have recently added a British food section to a number of our stores, with encouraging results. Space pending, we would like to do the same in all of our locations," he adds.

    "This is no longer a coastal phenomenon," says Michael Sansolo, s.v.p. at FMI. "You can go to the middle of the heartland and find that 90 percent of a store's shoppers are speaking Spanish. Or you can find sushi bars in Iowa and Nebraska. The tastes of all American shoppers keep changing. People are eating out as much as ever. They are trying new dishes, especially Generation Y (those born between 1981 and 1990). They are very open to trying new dishes, and when they go home to cook, there's no reason for them to say, 'I don't want to do this.'"

    David Atkins, director of specialty foods at Giant Eagle, the Pittsburgh-based regional chain, agrees. "Customers today are more interested in cooking with and experiencing the authentic tastes and textures of unique, and at times exotic, culinary treats, and we are committed to providing the highest-quality food available from around the world," he says.

    Niemann Foods, a regional 28-store chain in the Midwest, has also seen growing demand for international foods, particularly at the 21 County Market conventional units and three Cub Foods stores it operates.

    "About 15 percent of our specialty food sales are what I would classify as international," says Lisa Sheffield, senior category buyer. "The growth is mostly in Hispanic products, but there is some growth in Asian, as well."

    Authenticity a prerequisite

    Supermarkets increasingly must find ways to appeal to consumers with offerings from every region of the globe. Japanese, Chinese, and Mexican foods have become standards in many markets. Middle Eastern and Caribbean cuisines comprise the next wave, say observers.

    "And often it's not the high-end exotic items to appeal to the upscale consumer, but the brands that immigrants are used to seeing in their [old] country that they want to find here," adds FMI's Sansolo.

    This is a crucial point for retailers whose strategies include appealing to immigrants in the companies' trading areas. Authenticity is a prerequisite to success; whether the offering skews upscale, downscale, or aims for the middle, it had better be the real thing.

    Byerly's international foods strategy has three primary objectives, according to Lombardo: Appeal to both the "international cuisine, and palate of our customers"; provide items "that our well-traveled customers" are interested in buying, for instance, "items they have seen and tasted in other countries"; and provide products that appeal to "our customers' heritage[s]."

    That's why the remodeled St. Louis Park Byerly's is featuring four-foot sections for German, Indian, Scandinavian, British, and Polish nonperishable products, in addition to a 15-foot section for Asian, a 24-foot section for Italian, and a 32-foot section for Mexican foods, explains Lombardo.

    The remodeled store also takes advantage of the numerous cross-merchandising opportunities international products offer. "What we've done with Italian, for example, is to bring in olive oil, cookies, tomatoes, [and] a four-foot culinary set with pasta makers and pizza stones," says Lombardo. "We're bringing it all together, both imported products and the more traditional brands by domestic manufacturers."

    Foods from various countries will be displayed in sections with headers indicating the country of origin, making it easy for customers to find what they need.

    Sourcing challenge

    Retailers looking to upgrade their programs are finding that sourcing international products can be a challenge, involving a lot of legwork and the development of relationships with any number of smaller specialty distributors.

    "We sent a group of people to the Fancy Food Show in New York," notes Byerly's Lombardo. "They look for products and resources that can help us. We use multiple distributors for specific foods, so it takes some effort."

    For example, Kehe Food Distributors, Inc. of Romeoville, Ill. provides products for the Polish section of the department. "They put together planogram recommendations and are the exclusive distributor for that four-foot set," says Lombardo. "But in Italian foods, we have five different distributors because of various expertise and alliances with Italian importers."

    Thus, Byerly's is constantly working to develop strategic relationships with supplier partners that can help maximize its international foods investment.

    It's the same at Giant Eagle, according to Atkins. "We strive to form true strategic relationships with our suppliers that allow us to effectively leverage each other's expertise in order to proactively anticipate customer trends and provide customers with the best overall value," he says.

    Recognizing the opportunities to profit from a greater inventory of imported products, six wholesalers have formed Portland, Ore.-based McKenzie Buying Co., a consortium that imports products for member companies including Seattle-based Associated Grocers; Associated Food Stores in Salt Lake City; Affiliated Foods of Amarillo, Texas; Robesonia, Pa.-based Associated Wholesalers, Inc; URM Stores in Spokane, Wash.; and Los Angeles-based Unified Western Grocers.

    Lefevre of AJ's says his international foods sourcing strategy includes discovering what's available from distributors, finding new imported products at food shows, heeding the advice of category experts, and, perhaps most importantly, responding to customer requests.

    Meet specific requests

    Stocking imported brands that shoppers recognize and specifically request is particularly important, concurs Lombardo at Byerly's. "I have customers who are from the U.K., and who asked us to bring in certain items that they were used to having. So we checked our distributors and obtained them, and we have some happy customers who won't shop anywhere else."

    The request can get specific, indeed, such as Paxo Sage & Onion Stuffing, which one British shopper said her son missed. Needless to say, she "was very happy when we brought it to our store," recalls Lombardo.

    In making purchasing decisions, AJ's pays attention to brands most readily recognized by customers shopping in particular import categories. This can be especially important for first-generation immigrants.

    But Lefevre says AJ's also looks for brands that would appeal to all customers, and that's when packaging and labeling play important roles.

    Niemann's Sheffield says even if the consumer target is broad, the demand is still for "authentic" brands, because "people like to be adventurous with their cooking. They're becoming more aware of what's available and what they can do."

    Giant Eagle offers a broad selection of ethnic items chainwide, while some 100 Giant Eagle stores include Worldwide Foods aisles that "provide customers with the opportunity to experience some authentic international specialty items from various countries and ethnicities, including Italian, Mexican, Hispanic, Cajun, Asian, kosher, and Mediterranean items."

    Giant Eagle continually has to tweak its strategy because the market is a moving target, according to Atkins. At present, factors bearing on the strategy include demand that's well above average for imported pasta in the Pittsburgh market, and the growth of the crossover appeal of kosher, due to perceived health benefits related to the food's purity.

    Atkins adds that Giant Eagle will continue to watch the consumer barometer, with an eye toward spotting more opportunities for growing the international foods section. "We continue to examine customer trends regarding taste preferences, lifestyles, and cooking methods in order to accommodate specific interests and dietary needs," he explains.

    By Bob Gatty
    • About Bob Gatty Bob Gatty is a Washington, D.C.-based freelancer who specializes in covering the food and convenience industries.

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