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    Supermarket FRESH FOOD Business: Strategies for holding the perimeter

    Marketers with innovative strategies have given their bottom lines a boost by making hay out of the humdrum.

    In tough times like these, it's even more important than usual for grocers to pull as much profit as possible from their major contributors, and that starts with emphasizing produce, meat, bakery, and deli. One of the most effective strategies for a supermarket to improve its competitive position and better serve its customers in those all-important perimeter departments is to find innovative ways to persuade them to shop more often and buy more on each visit.

    Here are several stories of successful perimeter strategies that are helping retailers meet customer needs and boost returns in once-anonymous categories.

    Raising the status of spuds

    John Pope, v.p. of sales and marketing for Houston-based MountainKing Potatoes says spuds just don't get enough respect from retailers.

    Pope says the category has for far too long been used as a supermarket loss leader, creating a big challenge for potato marketers: to change the perception of the product in the face of indifference and price-sensitivity among produce buyers and merchandisers.

    "It wasn't long ago that people would rush into the store to buy the most shiny red delicious apple they could find, only to discover it had no flavor," he says. But now the pendulum has swung in the other direction. "People are seeking out produce items with unique characteristics—rich flavors, nutritional benefits, and a wow factor—like grape tomatoes, donut peaches, Vidalia onions, and cremini mushrooms, which have made great inroads in recent years," he says.

    Simple, descriptive branding has been the key to helping MountainKing generate increased store sales and separate its spuds from other fresh potatoes, according to Pope, who notes new insights that he hopes will prompt retailers to rethink their potato buying patterns.

    "We've conducted two recent studies which provide conclusive evidence that retailers who expand their potato offerings increase overall category sales," Pope says. He says that finding counters the theory that increasing a store's potato selection will merely cannibalize category sales.

    One study tracked overall potato sales in some 500 retail locations where MountainKing Butter Reds were added to traditional offerings. "During a 20-week period, these retailers witnessed an average category sales increase of 20 percent," says Pope.

    To confirm the findings, MountainKing tracked category sales at another 500 stores that once carried the company's premium Butter Golds but then limited their inventories to russets and reds. "Sales at these retailers declined 20 percent during the 20 weeks after the Butter Golds were no longer sold," he says.

    "Time and again we see that increased selection leads to increased category sales, increased purchasing frequency, and increased consumption," says Pope. "The fact is, consumer preference is shifting to more high-quality premium potatoes, and when a retailer offers more choice and assortment, and promotes the category in this way, they will get more additional category sales overall."

    One of MountainKing's most recent product introductions, Butter Reds, testifies to the difference one word can do for a brand, notes Pope. By adding the word "butter" along with bold graphics on the package, the company generated significant increases in sales. A descriptor helped shoppers more readily recognize and better understand the product's attributes.

    "Butter Reds appeal to shoppers who prefer a potato with a more flavorful, distinct taste, because they combine the look and feel of red potatoes with the cooking quality and unique creamy flavor of Butter Golds," says Pope. He says Butter Golds are MountainKing's fastest-growing premium product.

    The company chose the name Butter Reds to capitalize on the established recognition of Butter Golds, he adds.

    With a strategy aimed at segmenting its varieties, educating consumers about the cooking qualities of different potatoes, and heightening awareness of its products, MountainKing's fall crop program, "A Menu for Every Taste," focuses on several new premium items designed to create a unique product mix for retailers, according to Pope.

    "Up to now, people haven't used the words 'innovative' and 'potato category' in the same sentence," he says. "But we're out to change the way retailers look at the potato category."

    Harris Teeter brands

    tender beef

    An innovative collaboration between retailer and supplier has arrived in the meat cases of Harris Teeter's 144 stores. It's called HT Rancher, a new line of branded fresh beef products.

    The Matthews, N.C.-based chain has long been recognized for its exclusive brands. HT Rancher is focused on meeting the needs of customers with products of exceptional quality at an affordable price. The line, launched in early October with Wichita, Kan.-based Excel Corp., aims to take the guesswork out of selecting better beef.

    "Our research shows that consumers want tender, flavorful beef products, but they have trouble making the right selection," says Brad Graham, Harris Teeter's v.p. of meat/seafood/deli. "HT Rancher is easy to choose and easy to use, yet also of a better quality and more affordable price that's perfect for everyday use. It's a consistent beef value that consumers can trust."

    Graham adds that each cut carries a Tender Verified seal signifying it is unconditionally guaranteed to be tender.

    The HT Rancher brand is the result of a new approach using both high-tech tools and time-tested methods to produce consistently tender and flavorful meat at an affordable price, says Paul Hiemenz, v.p. of new brand initiatives for Excel, a subsidiary of Cargill, Inc.

    The beef products—from cattle raised by exclusive ranch partners—were conceived with the consumer's needs foremost, Hiemenz notes. "In the past, consumers simply got what cattle ranchers produced. Now our approach is to find out what consumers need and provide the products that satisfy these needs."

    He adds, "Retailers are all battling for customer loyalty, and quality private label brands create trust among consumers, especially in the store that they regularly shop. To extend that trust in the meat case with a branded fresh program only makes sense."

    The program focuses heavily on the partners' continued efforts to address the two-decade decline in fresh beef sales attributable to a variety of factors that include health and lifestyle concerns, as well as a slow deterioration of beef quality, says Hiemenz. "The fact is that significant fresh beef volume has been lost because producers and retailers have failed to develop a comprehensive solution that is required to optimize sales," he adds.

    While overall demand for fresh beef is still down, the last couple years have seen a respectable improvement propelled by favorable reports on beef and high-protein diets and by improved merchandising strategies in the meat case.

    "The rollout of the HT Rancher fresh beef solution is a unique ranch-to-retail alliance based on shared rancher-producer-retailer goals and accountability throughout the channel to provide more consistent, quality products that meet consumer demand for tenderness, taste, consistency, and value," says Hiemenz.

    Says Chuck Corbeil, Harris Teeter's v.p. of marketing: "Customers weren't having satisfaction with every cut of meat—some were tender and some were tough. With this process, the cattle producers go through certain measures, such as looking for marbling and checking for tenderness. This beef is hand-selected, it's loosely trimmed, and it lasts longer."

    HT Rancher beef starts with a select group of ranchers "who place their hard-earned reputations on the line every day, applying decades of experience in knowing how to select cattle that have exactly what it takes to produce tender beef," says Hiemenz. "Every rancher follows strict quality-control guidelines, including grain feeding, strict health monitoring, and relentless quality checks."

    The brand's adherence to quality control, he adds, continues all the way to Harris Teeter stores, including:

    •Vision grading, in which a digital picture is taken of the rib eye surface to evaluate its size as well as the amount of internal and external fat. The pictures enable the meat to be graded with greater accuracy, improving product consistency and delivered flavor;

    •An aging process to develop additional tenderness and flavor. Ribs and loins are aged for a minimum of 14 days, the optimal time for aging these cuts, according to beef experts;

    •The final product is hand selected and carefully tracked to ensure that it meets the strictest standards for quality and tenderness, and it is trimmed to exacting specifications.

    Extensive industry studies, as well as independent Excel research, have confirmed that up to 90 percent of current meat buyers would buy more fresh beef it they were provided an everyday product that consistently met their quality expectations in terms of tenderness, juiciness, and freshness, says Hiemenz. "There is a sizable upside opportunity for retailers to address this issue and a potential vulnerability if they don't."

    The HT Rancher brand is exclusively owned and marketed by Harris Teeter, which offers a complete array of beef cuts in the line. The chain also offers cooking tips from its executive chef, Phil Anderson, on how customers can use the meat that's featured on sale each week. The stores keep free recipe cards near the meat cases, which are merchandised by cooking method to help make shopping for beef and cooking it easier than ever.

    Harris Teeter also offers customers a color-coded, easy-to-follow shopping guide designed to simplify fresh beef selection in the store and preparation at home. Each color corresponds to specific types and cuts of beef and comes with simple cooking instructions.

    Meringue cookies make a splash

    Reducing waste in the bakery department has become a top priority for supermarket retailers, who have been scouring the market for items that replicate the attributes of specialty baked goods without presenting a lot of risk.

    Enter Miss Meringue. "Up to five years ago, the only way for people to enjoy a meringue cookie was to bake a batch themselves," says Lynn Pittman, marketing manager for the San Marcos, Calif.-based company, which was first to market with a commercial version.

    Pittman says the product is the creation of master pastry chef and co-founder Jacques Pautrat, who was fond of meringue cookies while growing up in France.

    The light, super-sweet treats have been among the hottest products touted in the consumer press in the past year. The cookies recently were featured as one of Good Housekeeping's "best out of the box desserts," and they will be highlighted in the February issue of Fitness, Pittman says.

    One retailer who requested anonymity says that, although he is "somewhat baffled by the success of the product, which is far too sweet for my taste, we're selling quite a lot of them. The product is something different, and its very striking packaging just pops, so it really dresses up the department with an eye-catching item."

    The retailer also likes the healthy attributes of meringue cookies, which he says have gone over well with many Weight Watchers clients and Type II diabetics, who have been able to incorporate the cookies into their diets as a safe choice. Miss Meringue cookies, whose primary ingredients are sugar, egg whites, and air, have eight to 25 calories per cookie and zero to one-third gram of fat.

    The company's manufacturing capacity has tripled to keep up with demand, says Pittman. "Our sales increased over 70 percent [in 2001] and we continue to see major increases in business from month to month. The growth and market penetration have greatly increased, especially within the last three years. Not too many companies see this type of growth," she adds.

    Miss Meringue, which has national distribution via a large broker and distributor network, is available in a variety of major chain and independent grocery stores, including Publix, Wild Oats, Whole Foods, Kroger, and other national retailers such as Bed, Bath and Beyond and Target.

    Most recently, the company launched its Minis line, a bite-size version of the Classique meringue cookies, which are available in custom shippers for five new flavors—mochaccino, chocolate raspberry, very minty, very chocolate, and very vanilla—that brings the total line to 16 varieties.

    "The goal was to create a fun, easy to munch version of our classic line," Pittman says, adding that the national launch coincided with Miss Meringue's fifth birthday celebration that got underway in September.

    "To celebrate our fifth year in business, we are taking Miss Meringue on the road," she says. The tour kicked off with the Southern Women's Shows in Birmingham, Ala., Jacksonville and Orlando, Fla., and Columbus, Ohio.

    "It's an excellent opportunity for us to introduce people to meringue cookies, to thank our fans with free samples, and to show people how to make easy and simple desserts in seconds using Miss Meringue cookies," says Pittman, noting that the dessert angle was a primary consideration for the introduction of the minis.

    "We wanted to extend the brand by making the cookies easier for snacking, popping, and garnishes for desserts to complement—not cannibalize—the line, to give customers reasons to buy two or three tubs as opposed to one," she says.

    Among the product's most important attributes for in-store bakeries is a seven-month shelf life.

    Pittman says that, for the most part, the cookies are merchandised on wooden racks provided by the company in or near the in-store bakery department. "The cookies also lend themselves as a bakery item to be quickly displayed in other fresh departments," she adds.

    Miss Meringue has recently updated its packaging to reflect a more contemporary and sophisticated look, says Pittman, who notes the success the company has had with clear plastic containers. "This has been successful because it allows the consumer to see the attractive cookies," she says. "In addition to a top label, we've added a side band to give our packaging a complete look and make it easier for consumers to recognize the cookies and further help retailers merchandise the products on shelves and tables."

    Pittman continues, "Consumers have told us they like the freshness, resealable, and presentable nature of our package, which can be placed on their kitchen counters with confidence. What we have found during store visits is that our cookies really complement the bakery making the department more interesting and innovative by giving the population a wide variety of products."

    In conjunction with its fifth anniversary, Miss Meringue, which has received national recognition as a gold medal winner by the American Tasting Institute, is conducting a regional retail display contest, which runs until the end of the year and carries a $1,000 cash prize.

    The company is conducting a consumer party recipe contest, also with a $1,000 grand prize, urging home cooks to submit their best recipes for entertaining.

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