The Fresh Market spreads the joy of food

A combination of superior service, heavy emphasis on perishables, close alliances with vendors and an easy-to-shop layout results in a fun customer experience.

The Hartman Group recently released a study of Baby Boomers’ grocery shopping habits, which detailed the impressions of Atlanta resident “Sandy” as she visited Publix, Kroger and The Fresh Market.

“The Fresh Market is a totally different experience,” she told the Bellevue, Wash.-based consulting firm, emphasizing how everything in the store is beautifully displayed and enticing with a fresh, organic base, extensive produce, meat and deli sections and “mouth-watering” bakery. “This is not grocery shopping,” she said. “It is experiencing the joy of food.”

Millions of shoppers agree. That is because the Greensboro, N.C.-based chain works closely with its vendors and growers to ensure that it is offering its customers the utmost in quality, merchandised in a fun, unique atmosphere. Founded by Ray and Beverly Berry in Greensboro in 1982 and modeled after European marketplaces, The Fresh Market stores place a heavy emphasis on fresh produce, meats, deli and prepared foods, along with organic and conventional groceries, merchandised in an easy-to-shop footprint that is about half the size of a conventional supermarket.

Meat and seafood are 100% service and sales associates eagerly engage shoppers in conversations and offer meal and cooking suggestions; store managers are more apt to be on the sales floor assisting customers than in the office or stockroom.

Since going public in November 2010, The Fresh Market has been on a growth tear. Historically operating in small cities in the Southeast, the chain has been rapidly expanding into the Midwest, Northeast and New England, and now operates 132 stores in 24 states. In 2011 sales passed $1 billion for the first time. In 2012, a record 16 stores were opened, including three in California, establishing a West Coast presence. This year The Fresh Market is entering the Lone Star State—state number 25—opening four stores in Houston that it acquired from Rice Epicurean Markets in late 2012.

It is for these reasons and more that Grocery Headquarters is proud to honor The Fresh Market as our 2013 Natural and Organic Retailer of the Year.

Building partnerships
Vendors say one of the things that most sets The Fresh Market apart from other retailers is the way it closely works with them, especially local mom-and-pop natural and organic firms. Its buyers nurture them on how to market and merchandise their products to make them appeal to a broader audience. For many, being picked up by The Fresh Market is the springboard to going national.

“As we’ve grown, The Fresh Market has been one of our oldest and most supportive retail partners,” says Alejandro Velez, co-founder of Back to the Roots, an Oakland, Calif.-based firm that sells mushroom kits that use recycled coffee grinds as their growing medium. The Fresh Market has a large display of them in Produce. “From working with us on merchandising to in-store education, The Fresh Market has been integral to the growth of Back to the Roots,” he says.

The Fresh Market has also been instrumental in helping grow Charlie’s Soap, an all-natural laundry detergent powder packaged in a novel wide-mouth plastic jar. It was developed by Charlie Sutherland, Jr. and his brother-in-law Ron Joyce in 1976 as a way to clean up the oils and grime on the uniforms worn in Charlie’s dad’s textile factory. Charlie’s Soap is made in Mayodan, N.C. In The Fresh Market’s North Carolina stores that entitles it to a “Food from Your Neighbors Local 100 Miles” shelf tag and historical descriptor.

“Charlie’s Soap is chain-wide now,” says Marc Jones, senior vice president, marketing and merchandising, at The Fresh Market. “It works great and is non-toxic, hypoallergenic and biodegradable. It is fun to take these little individual products and share them with people around the country.”

As a new vendor, officials at Denver-based Dazbog Coffee & Tea are witnessing first hand how The Fresh Market can grow a business. In the fall the chain took on four SKUs of its Russian-style coffee. “I can see why The Fresh Market is so successful and has such aggressive growth plans,” says Leo Yuffa, co-owner.

“It is because they implement, as soon as they decide, very, very quickly, which is great from the vendor side,” Yuffa says. “From the plan-to-market and going out there and doing promos, they have been very insightful in terms of their customers, who their demographic is. They are really trying to provide the latest, greatest and newest products to the consumer, and that is not always the case with gourmet stores.”

“We view ourselves as a small and nimble company that gets excited about food,” Craig Carlock, The Fresh Market’s president and CEO tells Grocery Headquarters. “We are also highly centralized, so one person can make the decision here and all of our stores will have the product shortly thereafter. Similar competitors are decentralized, but our centralization is really an asset that can speed things up.”

To attract local vendors The Fresh Market recently held what it calls a “local forum” in the O.Henry Hotel across the parking from its headquarters. “We invited in a couple hundred local producers, we made some local product selections and we coached those whose food was so good we wanted to bring it in,” Carlock says. “We kind of helped them get off the ground in some cases.”

“It is such a win-win for us because we find fantastic products that we might not otherwise have come across,” says Drewry Sackett, PR and community relations manager. “We’ll do this in new markets as well. We’ll put out an open call for a Local Products Open House where farmers and manufacturers can just come in and bring their products and samples.” The most recent one, held in Pensacola, Fla., on Nov. 7, was designed to service two of the chain’s newest stores in Pensacola and Daphne, Ala.

Because its stores are very scattered with one or two in a market, The Fresh Market relies on others for distribution. Its primary distributor is Milford, Del.-based Burris Logistics, supplying the chain out of Atlanta and New Castle, Del., while Medford, N.J.-based Haddon House supplies specialty grocery. Produce is supplied by four distributors around the country.

“The thing that has worked for us is that we focus on our customers,” Carlock says. “Our expertise and day-in and day-out effort is on delivering a great customer experience, and so we’ve always outsourced distribution and logistics, so we do not own our own warehouses. Our merchandising team identifies the products we want to carry. The distributors carry them for us, warehouse them, handle them, take title to them and then deliver them to our stores.”

Tennis courts and bowling alleys
At an average of 20,000 square-feet, The Fresh Market stores are about half the size of the supermarket industry average. Because of their mid-size footprint, The Fresh Market is regularly courted by landlords and developers to take over spaces in shopping centers that were previously occupied by big box tenants including bookstores, electronics stores and other supermarkets. “I won’t say they are ‘cookie cutter’ because they are almost always second generation stores, so each can be a little bit different,” Carlock says. “We have some that I refer to as ‘bowling alleys’ that are narrow and deep, and others that are ‘tennis courts’—shallow and wide.”

Each store stocks around 10,000 SKUs. “In a conventional store about one-third of the selling floor is devoted to perishables,” Carlock says. “Our ratio is reversed with two-thirds of our mix being perishables.”

The Fresh Market has carved out a niche specializing in prepared foods—its busiest day part is from 4 p.m. to 7 p.m.—giving new meaning to the term “center store.”

“In all of our new stores we have the deli in the center, so our Center Store is actually fresh food items – hot foods, salads, deli meats, sandwiches,” says Jones.

Shoppers entering The Fresh Market stores are greeted with a fabulous assortment of floral.

“One of our hallmarks is roses at $6.99 a dozen, which is a price point that makes people stop and say ‘Wow!’” Jones says. “They are good quality roses that will last for quite a long time and we have them in a variety of colors.”

“Our orchids are another signature item” Sackett adds. “We have for years sold them at a great price point and people find they make a great gift.”

Produce occupies a good 20% of the selling floor. Upwards of 30% of the items are organic and old-fashioned road signs point in the direction of farms where local product was sourced. Mushrooms and bulk salads are housed in Plexiglas bins to maintain freshness and extend shelf life, and the department houses a blend of mainstream (Driscoll strawberries, Bolthouse farms salad dressings, POM Wonderful pomegranates) and organic (Earthbound Farm Organic) items. “It depends on the crop, but you are starting to see that spread between conventional and organic narrow to the point where some of our salad greens are pretty much 100% organic,” Jones says.

In the company’s flagship Store No. 1 in Greensboro, the produce department  leads into seafood where the hot seafood bar is a popular destination. During a recent visit it was stocked with Sundried Tomato and Mussels, Thai Lobster, Salmon and Spicy Shrimp. “We come up with different recipes and assemble them here in the store,” Jones says, adding that the department’s mix is changed regularly.

“It makes it exciting for shoppers to come up to the seafood case and see that there is a different glaze on the salmon,” he says. “We do seasonal changes as well. You see the seasons change in produce; why wouldn’t you see the seasons change in other parts of the store?”

The adjacent meat department is another hallmark. Because it is full service, company officials admit consumers may perceive it as being more expensive, but it is really an excellent value, they say.

“We buy the top 12% of the beef in the U.S. for our Top Choice program,” Carlock says. “We then age it for 14 to 21 days, and then we trim the fat off. You pick the steak you want. We sell it to you full-service, so our steak pricing is maybe a dollar or two more per pound, buy it is an entirely different product and an entirely different eating experience.”

Ground beef is ground in the store each morning from steaks and roasts. Whatever is left at night is donated to local food banks.

“We have recipe cards around the store to provide ideas and we rely on our employees to engage with customers, especially around the meat counter, where they are always great about offering ideas on how to prepare something,” Sackett says. “It is one of the benefits of the full service counter.”

For its size, The Fresh Market has a large number of employees—about 90 per store—and all of them, including the store manager, regularly reach out to assist customers.

“We see our store labor as our sales force,” Carlock says. “I mean, this is how we succeed. For us labor is not a cost to be managed or a cost to be cut as much as it is a way to sell food and interact with customers.”

“On the red”
It is especially important for managers to be visible, say officials for the retailer.
“We ask our managers to be very physically present,” Carlock says. “We have an expression, ‘on the red’ because our sales floors used to be red. We want to be able to see them on the red—not in the backroom or the office—engaging customers. There was a real training and recruiting effort around that and I think that is part of the success of the company,” Carlock says.

With its free Cookie Club for children, the bakery department is a must-stop on almost every shopping trip.

“Our bakeries fire up each and every day in every store at 5 a.m.,” Carlock says. “We do a lot of baking, but not a lot from scratch because we need the consistency, timeliness and the ability to replenish. Instead of scratch, we came up with a centralization plan, which is to develop a nice recipe and work with a third party to make a mix of components that can be baked in the store. That ensures a consistent level of taste. The quality is consistent and you have a nice economic outcome so you can get the prices right.”

While the bakery department begins before the crack of dawn, The Fresh Market’s hours are generally 9 a.m. to 9 p.m. Monday through Saturday, and until 8 p.m. on Sunday. “There is a theatrical element to all of this and so we don’t want to pull back the curtain and open the doors until we are ready,” Carlock says. “And getting everything out and stacked and placed just right, especially in the meat department, is not something you can do 24 hours a day.”

The dairy department contains a mix of organic and traditional brands, including Daisy sour cream and Philadelphia cream cheese. “We have local milk and our private label milk is organic,” Jones says. “Our regular milk is rBST free, which may be more common now, but when we started with it five or six years ago it was hard to get. We were actually bottling organic milk and selling it as regular rBST free for a long time.”

The Fresh Market’s Grocery aisles contain an edited mix of conventional and organic products.

“We think you can have all of your food needs met here,” Carlock says. “You might want to go somewhere else for shampoo or soap or paper products because we carry a very small selection of those things. But we have Pop-Tarts, diet Coke and Cheerios. We want folks to be able to come in and get all of their food and not make them have to go somewhere else. The store needs to be convenient,” he says.

It also needs to be interesting, which The Fresh Market is accomplishing through its private label program. It includes items like two varieties of tartar sauce—dill and sweet pickle.

“Our private label program has really grown over the last couple of years,” Jones says. “It is kind of fun because other retailers might introduce a private label tartar sauce that is just another tartar sauce. We’re so small that this might be the only tartar sauce that we carry. It gives us a chance to say if we had one tartar sauce this is how we would want it to taste, and not be just another me-too item.”

“We often look to smaller artisan manufacturers for unique items,” Sackett says. “For example, we have a new line of single-origin olive oils that just came out. They are fabulous and we are able to provide them at a great price.”

And surely they turned to an artisan manufacturer to develop their private label capers. “Capers was a fun one because when we introduced it our capers sales went up dramatically,” Jones says.

National spotlight
Total sales and store count have been going up dramatically too. While going public in 2010 hasn’t resulted in any physically noticeable changes in the stores, Carlock says it has had major advantages behind the scenes.

“The IPO has put us in a national spotlight,” he says. “That’s been helpful as we try to build our real estate franchise because the landlord and real estate communities are now more familiar with us. They have access to our financial information so we’re able to have a little more credible introduction than we would otherwise. When we go to California or Texas now people go, ‘Fresh Market, I understand who you are.’ It is also useful in recruiting because there is more information and more buzz.”

Entering new markets has not been as difficult as one might think, Carlock says. “We always take an existing manager and move them, and in the case of California we moved more than one,” he says. “We always have people who understand our company and our culture opening our stores and planting our flag.”

“I’m always amazed at how many people have been in our other stores, no matter how far away we are, like Boston or California,” says Sackett. “Because we have a lot of stores in resort communities, people have been in our Hilton Head, Miami or Orlando stores. We hear that a lot when opening in new markets.”

 

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