From The April/May 2003 Issue of Natural Grocery Buyer

High on the Hog

Piggly Wiggly adds 850 new natural and organic SKUs

Connie Guglielmo

In the retail world, having your wife shop at a competitor's store is, to put it mildly, not a good thing.

So when Fresh Brand Inc.'s Michael Houser's 40-something wife started shopping at specialty retailers for natural and organic products as part of a health and lifestyle change, he knew it was time to do something.

That something? The introduction in December of an expanded natural and organic merchandising program at Fresh Brand's flagship Piggly Wiggly supermarket in Sheboygan, Wis. Houser is vice chairman, executive vice president and chief marketing officer of Fresh Brands, a $1 billion supermarket and grocery wholesale chain that owns and franchises more than 100 Piggly Wiggly and Dick's Supermarkets. From soup to soymilk, produce to pasta sauce, shampoo to soap, customers who "Shop the Pig" can now choose among some 1,500 natural and organic products. More than 850 products were added to the store's shelves under the new merchandising push, including all-natural poultry and pork.

Counting on the program to play well in Sheboygan, Houser says the company plans to expand its offerings of natural and organic products throughout Fresh Brand's store network in Wisconsin and northern Illinois. The most recent store to go all out with natural and organic offerings opened in January in Kenosha, Wis.

Piggly Wiggly's flagship Sheboygan, Wis., store is a sleek, well-lighted place for customers to explore their organic inclinations. Careful attention to signs help shoppers make natural food selections as they "shop the pig."

Although his wife's shopping defection may have spurred things along, Houser says he, like most other grocery industry executives, has been keeping tabs on the natural and organic market for a while. "We started out several years ago, along with most other supermarkets, going after organics primarily in produce," Houser says. But back then, he says, "there was not a great reception from our shoppers because there was a significant price difference between a Gala apple organically grown and a regular Gala."

It's a different story today. Houser says the food industry has seen double-digit growth in consumer demand for natural and organic products, prompted by Americans' interest in healthy living and concern about food safety. It also hasn't hurt, Houser says, that more and more food producers and national brand companies are offering natural and organic products and that the price divide between the conventional and organic products is not as great as it once was.

Using research collected from its loyalty card program and by polling about 30,000 shoppers via e-mail, Fresh Brands has been gauging its customers' interest in natural and organic products. More importantly, surveys showed Fresh Brands' customers—80 percent of whom are women—"were interested in buying healthy products in our stores as opposed to going out of their way" to niche and specialty retailers.

In the past two years, the number of those women who say they are interested in natural and organic products has grown from a "very, very small percentage" to 15 percent, Houser says.

To keep the numbers growing, Fresh Brands has adopted what it calls a "segregated/integrated" merchandising approach at its stores. Rather than a natural/organic store-within-a-store, Piggly Wiggly shoppers will find specially marked sections of natural and organic products integrated into departments and product category sections throughout the store. The natural and organic products are placed on distinctive green colored shelving within product category sections; wood-framed "naturally good and good for you" signs sit above the shelves. Fresh Brands also uses colorful shelf tags to attract shoppers' attention to the natural and organic products.

Houser says the company tested the store-within-a-store concept about three years ago because it seemed like a growing trend among grocery chains. However, "we found people were going past those departments instead [of] going inside them." Fresh Brands asked its shoppers how they would want to find natural and organic products. The segregated/integrated approach grew from that research. "People told us, 'We want to compare the natural organic cereal with Raisin Bran—we want to look at products, side by side, and see if it's a reasonable value rather than walk across the store to compare cereals,'" Houser says. At the same time, Fresh Brands wanted its natural and organic products to be recognizable to consumers.

It doesn't hurt that side-by-side comparisons are increasingly starting to favor the natural and organic line of Full Circle products Piggly Wiggly promotes as its store brand. The higher-margin Full Circle line is sourced through Topco of Skokie, Ill., which Houser says is the nation's largest procurement cooperative for supermarket store brands.

Piggly Wiggly carries more than 100 Full Circle items, including an organic raisin bran cereal that sells for $1.99—considerably less than the comparable national brands. In addition to packaged goods, the Full Circle line includes organic produce, such as salad mixes, spinach, celery, carrots and several types of lettuce. "The customer may not be willing to pay $1 per pound for organic bananas, but they may be willing to pay 49 cents per pound," Houser says. "With our Full Circle line, we can do that because the produce compares so favorably against national brands."

Piggly Wiggly also sells all-natural poultry and pork under the Full Circle/Gerber Chicken and Full Circle/ Farmland All Natural Pork brand names. Gerber poultry is raised on small family farms in Ohio's Amish Country without the use of hormones, steroids, antibiotics or chemicals. Farmland pork is produced with no antibiotic residues, no added hormones or artificial ingredients. To promote the products, Piggly Wiggly offers samples, primarily on the weekends when the store is busiest. Houser says the taste tests are paying off and the supermarket is seeing "terrific sales" of natural pork and chicken.

Like many other grocery retailers that have made the leap into organic and natural products on a grand scale, Houser says Fresh Brands views its program as a way to offer consumers more product choices. "It's our responsibility to give people alternatives, to have a natural choice in produce, dairy, in pork. It's not just good business—it also makes me feel good to be able to say we are giving people those choices."

But his enthusiasm alone is not enough to carry the program. Houser says the biggest challenge he faced in introducing the natural and organic program was convincing people within the organization that the decision is right—not only today, but for the future. "Operationally versus marketing is a different thing," Houser says. "You have to make sure that there is understanding and communication across the company and that it's not perceived as a personal mission. It's fine for me to be a zealot, but it's nice that the president is tuned in to what we're doing."

That's key because despite the growing promise of the natural and organic marketplace, growth can be a slow process within a supermarket. Houser says the company is hoping its flagship store will see its natural and organic sales grow to 5 percent of overall sales soon.

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Connie Guglielmo is a freelance writer and novelist in Los Altos, Calif. She may be reached at acmewriter@aol.com.