From The Winter 2004 Issue of Natural Grocery Buyer

Tracking Down Regional Food Specialties

Bag high margins with small-batch delicacies

Nancy Nachman-Hunt

Most buyers for supermarkets already know that specialty and gourmet foods are one of the growth drivers of today’s food retailing industry. But do they know where to find them?

Many of these trendy, high-profit items—such as Vermont maple syrup, authentic Texas barbecue sauce and New Mexico salsas—are regionally produced. But finding the best of the bunch, the ones that are going to compel shoppers to return to a store time and time again, isn’t easy.

As a result, says Michael Banks, of The MAP Agency in Danville, Calif., supermarkets need a new breed of buyers. He says traditional supermarket buyers are gatherers. In other words, they wait for brokers, distributors and manufacturers to come to them with new products. To source great regional specialty foods, buyers must become hunters.

With apologies to supermarket buyers, Banks says the task of buying regional specialty foods should be given to a new recruit, “a totally new person who doesn’t have the bad habits you get when you [have been a longtime] supermarket buyer.”

He says new-breed buyers should spend time on the supermarket floor, rather than behind the desk. “[Buyers] also better be talking to manufacturers of these kinds of products and tapping into their resources. Then [they] need to start working with operations departments to see if these products can get shelf space.”

The buyer who is looking for regional foods must be a good communicator, Banks says. “He has to talk to accounting and the advertising department and the store manager.”

Go get it
Ron Tanner, editor of Specialty Food magazine, says many buyers have success dealing directly with manufacturers. Here’s where the hunting comes in.

If you want the best barbecue sauce in Texas, you ought to go to Texas and talk to people, says George Whalin, president of Retail Management Consultants in San Marcos, Calif. “I think you’ve got to get out and look, at places like swap meets, where people might be cooking their own barbecue sauce and selling it,” he says.

In addition, buyers should connect with state agriculture departments, says Boston-based consultant Bob Burke. Most states actively support local agricultural and food endeavors, he says. “Contact them. Say, ‘Give me a list of all your barbecue sauces [or whatever regional specialty you’re looking for].’ It would be a real feather in their cap to be able to facilitate something like that.”

Once the hunt for the regional specialty is successful, the next step is to merchandise it to reap the margins of 30 percent and up that specialty products demand. Here experts have differing opinions. As with natural and organic foods, some say integrate them with mainstream products; some say showcase them in a store-within-a-store.

Individuals versus the common good
Whalin says integration works best. He says creative supermarketeers can make aisles interesting enough that specialty items will sell well among their mainstream counterparts.

“There are ways to make this stuff interesting,” he says. “Signage is a part of it. Shelf toppers are a part of it.”

Manufacturers often can supply their own eye-catching display fixtures. Whalin says one of the best he’s seen was from tea maker Celestial Seasonings. “It was in an aisle, not on an end cap,” he says. Tanner agrees that integration is the way to sell regional specialty foods—especially if you want to sell lots of them. The typical customer who may not venture into a specialty foods section may, for example, pick up a specialty jam if it’s integrated with other mainstream jam and jelly products, Tanner says.

Cross-merchandising also works to educate consumers about the availability of regional specialty foods. Consultants and industry experts say merchandising a boutique Texas barbecue sauce in the meat section, for example, is a natural fit.

But the practice of isolating regional specialties in their own section also has its supporters. Banks is one. He says while buyers must be hunters, customers should not have to be. “You’ve got to have a dedicated section,” he says. “You cannot make the shopper hunt for the products or stumble across [them].”

Creative merchandising is crucial to selling regional specialty foods, Banks says. “You cannot stack-it-high-and-make-it-fly with Vermont maple syrup,” he says. “Stack-it-high is a push strategy. You can’t do that with a specialty product.”

Banks goes so far as to say that to sell regional specialty products right, supermarkets should consider having a section modeled on Trader Joe’s inside their stores. Trader Joe’s, based in Monrovia, Calif., is a wildly successful specialty foods retailer. “Trader Joe’s is known for stuff you can’t find anywhere else,” he says.

The joy of discovery
Burke says the success of so-called discovery merchandising, which includes the store-within-a-store concept, depends on the retailer and area in which the store is located. If that area is upscale, maybe a store-within-a-store works, he says.

“One of the underlying arguments for a store-within-a-store is that in addition to bringing focus to specialty products, it appeals to foodie types who like to discover new things. It’s all there. They say, ‘I can head over to that corner of the store and see what’s new and exciting’—as opposed to stumbling across it in a 60,000-square-foot store.”

Nancy Nachman-Hunt is a free-lance writer in Boulder, Colo.