There's more 'super' in your supermarket
Nashua, N.H. — Today's trendiest shoppers are the ones who load up their carts with prosciutto at $12.99 a pound - and generic toilet paper. The supermarket industry has discovered that the devotees of the no-frills ''food warehouse'' picking their way among the sliced-open corrugated cartons are often the very same people lining up at the all-frills gourmet counters of conventional supermarkets to buy goat's milk, imported cheeses, and tomato pasta flour.
It's what one industry observer calls the ''scrimp and splurge'' phenomenon. It exists parallel to - or in tandem with - the one-stop shopping available at ''superstores'' or ''combination stores.'' And it's bringing many gourmet features into the food warehouses.
Warehouses, which have become a fixture on the retailing scene since the mid-'70s, are particularly strong in the Midwest, where recession hit so hard recently.
But perhaps the ultimate in ''gourmet food warehouses'' so far is Kealey Farms Inc., with stores here in Nashua and in Salem, N.H.
From outside it doesn't look like a food warehouse, or any kind of food store at all, except for the silvery line of shopping carts out front. The parking lot is full of trees, and the store entrance is decorated with a variety of seasonal bedding plants.
The inside is different: bare cement floors, 24-foot ceilings, endless aisles and banks of freezer chests, ladders on wheels to help clerks reach the stratospheric upper shelves. And no, that's not cement in those 50-pound sacks, that's sugar.
But that's only part of the story. The key, explains Larry Kealey, president and owner of Kealey Farms, is in the store's color scheme. Besides the basic gray of the walls and the bright blue identifying the checkout area, two other colors are important.
''This is the green area,'' Mr. Kealey explains, standing in front of a display of paper products. The green-on-white signs, he says, indicate ''this is a price-sensitive product, and the customer here is getting prices comparable to anything around.''
And then there is the ''orange area.'' Asked to describe that, he and a publicity aide exchange glances and he says, ''Well, let's just say these are the items that are neat and fun and where the quality control is everything.''
In other words, the specialty items, the more or less discretionary purchases where a competitive price is less critical. Of course, with some of the items sold here, it might be hard to know what is a competitive price. After all, how many places carry raspberry walnut salad dressing?
Kealey Farms does - along with vast arrays of spices in bulk, cheeses, coffees, teas, mustards, and marmalades. Other features of the ''orange zone'' are a fish market, complete with lobster tank; a butcher shop; and a deli bar, where most of the foods are prepared on the spot, in view of the customers. Ditto the in-store bakery.
Who are the customers here? ''About half of them are Yuppies,'' Mr. Kealey says. There is also a heavy sprinkling of first- and second-generation Americans , notably Italians and Asians. ''You can hear five or six languages in among the vegetable bins.'' It's this ethnic flavoring of his customer base - surprising if you think of New Hampshire as a monolith of Yankee granite - that pushed him into offering the broad array of fruit and vegetables at his stores, both here in Nashua and in Salem, his first store. ''We've been offering these things because of demand from our customers, not because they're fashionable in San Francisco.''
And Kealey really does have a farm. His first store, in Salem, which opened in 1978, grew out of a retail produce stand on the edge of the family farm, which his grandfather brought in the 1920s. Most of the original farmland was taken by eminent domain years ago, but Kealey has another 150-acre farm where crops for the stores are grown. There are also plots at the two stores where produce and plants are grown.
He also has property and plans for expansion - but not immediately, since the Nashua store opened only in June. And are there plans to get into general merchandise, as so many food stores are doing? He has a garden center and florist shop in the store, and the New Hampshire Savings Bank has just opened an office right in the store, complete with automatic teller. But as far as any more-general merchandise goes, ''We want to do food really well - really thoroughly - first.''
It is at this point that Kealey Farms diverges with another major trend - one-stop shopping, of which the new ''Super Stop & Shop'' in Quincy, Mass., represents ''the state of the art,'' according to spokeswoman Michelle Vaughters. ''We have no plans to build any more conventional stores; all our new stores are going to be 'superstores.' ''
''It's a fundamental change'' in the supermarket industry, says Kenneth Partch, editor of Supermarket Business, a trade journal. ''The conventional store is going to be challeneged.'' It's not just extra features for the consumer, he adds, but it's new technology as well.
There is a certain confusion of terminology, but Stop & Shop is using ''superstore'' to mean a huge (45,000 to 55,000 square feet, about twice the size of a conventional store) supermarket with a fairly extensive line of general merchandise and a number of labor-intensive service departments.
The Quincy store has traditional supermarket features, including aisles as wide as boulevards floored with acres of gleaming linoleum tile. Loudspeakers in the ceiling spill out the mindless background music, interrupted by the inevitable squawk, ''Mr. Smith to the courtesy booth for customer assistance!''
But that is only the beginning. A number of features, notably the Food Bazaar gourmet section, appear to be counterparts of the ''orange zone'' at Kealey's, including a fish market with a lobster tank and a trout tank. There is also a Barnes & Noble discount bookshop - well, book nook - within the store; an extensive health and beauty aids section; a florist shop that can wire flowers and also do weddings; and a housewares and small appliance area. Shoppers can buy specially cut stir-fry beef - and a wok to cook it in (Aisle 12).
Stop & Shop's first ''superstore,'' in Pembroke, Mass., opened in June 1982, also includes (as of last March) a financial-services center, a joint venture between Stop & Shop and Fidelity Investments, a Boston mutual funds concern.
But the idea of a superstore, or a combination store, has been around for a while. (A semiofficial definition of ''superstore'' is one with 25 percent of its stock in the nonfood category; a combination store has 40 percent.)
Meijer stores, of Grand Rapids, Mich., launched the first of what spokesman Dave Lukens calls its ''full-line supermarket-general merchandise-discount retail stores,'' in 1962. That was the year K mart got started, and Meijer management, then in the conventional supermarket business, wanted to entice a general-merchandise discounter to build next to one of its stores.
But as the saying goes, to get something done right, you do it yourself. Today, most of the 51 Meijer stores, across Michigan, Ohio, and Kentucky, are these mega-stores (100,000 to 248,000 square feet, up to five times the size of a typical ''superstore''). Lines include groceries, housewares, toys, clothing, home improvement products, automotive goods, sporting goods, and clothing; among other features are a videotape library, a pharmacy, an on-site bakery, and an ice cream and candy counter. Asked to identify his market, Mr. Lukens says simply, ''We try to appeal to as many people as we can.'' Meijer prices are ''competitive in all areas,'' he adds.
It is price competition that may be the undoing of some of the gourmet operators, says consultant Bill Bishop, particularly those combining gourmet features with some other kind of store.
''The volume of the business is in the basic grocery items. The 'sizzle' is in the gourmet department - the bakeries, the deli, and so on,'' says Mr. Bishop , of Willard Bishop Consulting Economists in Chicago. The problem is that some of these departments can be very labor- and cost-intensive. ''If they don't pay their own way, the temptation can be to try to subsidize them with prices on the branded grocery items.'' But high prices on those will not be acceptable to consumers. The way to handle the problem is to control the labor costs in the ''sizzle'' departments wherever possible, by making them self-service, for example.