Thursday, March 26, 2009

Retail Memo: Hybird Natural-Specialty Foods Grocer 'Wholesome Choice' Set to Open New Store Tomorrow In Anaheim Hills, Orange County, Southern CA

Hybrid specialty-international-natural and fresh foods grocer "Wholesome Choice" is set to open its second unit in the Southern California city of Anaheim Hills in Orange County tomorrow, according to our sources.

The new market is located in a former Albertsons supermarket at the corner of Imperial Highway and La Palma in Anaheim Hills.

The flagship "Wholesome Choice" store is in Irvine, California, which is also in Orange County. That store opened in 2003.

The independently-owned grocer hasn't officially announced the new store's opening. However, our sources say it will be a soft opening tomorrow, March 27, will a grand opening to follow later.

The "Wholesome Choice" format is an interesting one. Below (in italics) is how the independent grocer describes its format and merchandising philosophy:

"Since 2003, Wholesome Choice Market has been providing the best the world has to offer. With a variety of products as diverse as the cultures that shop at our store, you can trust Wholesome Choice to carry your favorite American brands, plus an impressive line of Asian, Mediterranean, Russian, Eastern European, and even have South African foods. We even have the natural and organic foods you've come to expect, along with delicious market-fresh produce that arrives daily.

The Wholesome Choice difference begins with our hearthstone bakery, located at the front of the store. The special breads we bake can't be found at the supermarket, but you'll see them rising in our ovens throughout the day here! We also feature an international food court, feeding our community with the foods they love - both foreign and domestic! We cater to all cultures, so everyone feels welcome here at Wholesome Choice. You'll find lots of locals eating in our dining area rather than taking their food home, so feel free to come and sit, eat and talk. Then shop around for the extraordinary, which can be found on every aisle of the store."

The grocer has combined a selection of basic groceries with natural-organic, international and domestic specialty foods, fresh foods (produce, meat-seafood and bakery) and prepared foods under one roof.

The stores also include beer,wine and spirits departments along with fresh floral sections, making them a full-service supermarket with an international specialty and natural foods flair.

Below we take you on a brief departmental tour of the Irvine 'Wholesome Choice" market. The new Anaheim Hills store will be the same basic format with a few additions and differences, we are told.

Fresh Produce

Fresh produce is a big part of "Wholesome Choice," including organics and locally-produced fresh fruits and vegetables.

Produce department specialists also offer shopper information in-store on where the produce comes from (imported, local), as well as offering nutritional information and preparation tips.

The grocer's merchandising approach in the Irvine store to fresh produce is farmers' market style. The fresh fruits and vegetables are stacked high in bulk form in dry bins and in the refrigerated produce cases. Full case displays are also attractively used throughout the produce department, creating an abundant look and feel.

The place of origin -- domestic, local, imported -- are labeled with colorful signs. The nature of the produce, conventional or organic, also is indicated on the signs.

The store also encourages shoppers to taste many varieties of the fresh produce it sells, particularly the more exotic varieties and locally-grown items.

The fresh produce pricing is competitive.

Meat & Seafood

The meat and seafood department offers the same conventional-specialty-natural and organic hybrid theme that's apparent throughout the Irvine "Wholesome Choice" market, and will be the same in the new Anaheim Hills store.

The department offers conventional cuts of meat, although all of the meats sold are antibiotic-free, 100% vegetarian fed, and have no added hormones, along with specialty items and cuts. For example, the poultry selection includes Rosie Organic Chicken and Empire Kosher poultry.

The meat department also offers a full selection of Halal meats for observant Jews and Muslims, as well as for others who just prefer Halal certified meat products.

A full selection of beef, pork, lamb and other meat cuts are offered in the department, both conventional and organic.

Butchers also will prepare custom cuts by order for customers.

The department also offers a complete selection of fresh fish and seafood, along with a refrigerated case featuring a selection of hot and cold smoked fish products.

Fresh Bakery

The in-store bakery is mostly a made-from-scratch operation. It features varieties of breads from around the world baked daily in hearth ovens. Among the fresh-baked breads are several organic varieties, artisan loaves, French and Mediterranean breads, Russian, Eastern European, Greek and Persian varieties.

The bakery department also offers an extensive selection of fresh-baked pastries and cakes from around the world, along with other sweet treats.

There's also a full aisle of packaged breads and bakery products, ranging from basic brands to specialty and natural-organic brands and varieties.


"Wholesome Choice" integrates its extensive selection of basic groceries, domestic and international specialty and ethnic foods, natural and organic items by category throughout the core of the store grocery section. There's no segregation by product type (organic, conventional) or origin (domestic, international).

Below is how the grocer describes its product selection and merchandising philosophy and practice:

"Imagine a variety of little specialty grocers rolled into one big store: your neighborhood American market, a Mexican Mercado, a Mediterranean open-air bizarre, an Asian greengrocer, and a Spanish Boqueria: now you get the idea behind the selection at Wholesome Choice. Every aisle is packed with grocery items grouped by category, not culture. From Organic cereals to wasabi paste, tamarind fruit snacks to German vanilla sugar, it's here. Dried herbs, packaged products and canned goods from all countries, for all types of cuisine. We've got the brands you're sure to know, others you're sure to discover.

Wine, Beer, Spirits

"Wholesome Choice" carries over its eclectic international foods merchandising philosophy and hybrid natural-specialty products focus into its wine, beer and spirits department. The store offers a massive selection of wines, beers and spirits from throughout the world, as well as numerous organic and locally-produced wines and craft beers.

Wines and spirits are merchandised on utilitarian yet attractive warehouse-style racks. There's a large refrigerated case for the beers. Some wines are refrigerated as well. Lots of cross-merchandising tie-ins are created with items such as snacks, cheeses and the like in and around the department. There are also end-caps featuring various wine, beer and spirits items.

Bright yellow signs above the shelving (and refrigerated case) designate each section -- wines, beers, spirits.


"Wholesome Choice" offers an extensive selection of fresh flowers and green plants in its floral department. These varieties range from the basics to the more exotic. The department also does lots of seasonal floral merchandising, even offering trees and shrubs on a seasonal in-and-out basis. Organic flower varieties are included in the offering.

The floral department also is staffed with specialists who make custom floral arrangements for customers, along with doing special events like weddings, charity functions and the like. It's full-service in that regard.

Deli-Prepared Foods Court

Closing out (last but not least though) our departmental tour of the "Wholesome Choice" market in Irvine, California is the Deli-Food Court. The store's prepared foods department offers an impressive variety of ready-to-eat foods. These include: fresh in-store prepared pizzas; a cold and hot deli; soups and salads; an international grill; and Chinese, Thai, Indian, Persian and Mediterranean foods offerings, all prepared fresh in the store. You can learn more about the food court offerings here.

'Wholesome Choice': Natural~Specialty Foods Memo Analysis

Having toured the "Wholesome Choice" market in Irvine, California, it's our analysis that the grocer is on to something with its specialty-international-ethnic-conventional-natural-fresh foods hybrid format. It's a somewhat similar format to Stew Leonards (although the store isn't as big) on the east coast of the U.S. and Harry's Farmers Market in Atlanta, Georgia, which is now owned by Whole Foods Market, Inc.

The format is sort of a Whole Foods Market without the ingredient restrictions, times an international food court, plus an ethnic and specialty food and grocery emporium.

"Wholesome Choice" waited nearly seven years to open a second store, the new market set to open tomorrow in Anaheim Hills, which proves it's a prudent operator. It's used that time to fine tune its Irvine store.

The only danger we can see with the format is in trying to be all things to all categories. But in our analysis "Wholesome Choice" has avoided that happening thus far by using good product selection and merchandising criteria and skills.

Some years ago, way before its acquisition by Whole Foods Market, Inc., Wild Oats Markets, Inc. repositioned its Henry's Farmers Market banner stores in Southern California into a hybrid format similar to what "Wholesome Choice" is doing. But Wild Oats never got it right, in our analysis. Perhaps it takes an independent, hands on daily, to be successful at what can be a difficult format.

Wild Oats later changed the format a bit more closer to orthodox natural-organic but still left elements of that hybrid nature intact.

Henry's (and the Sun Harvest stores in Texas) are now owned by Los Angeles, California-based Smart & Final, which bought the chain of 36 stores from Whole Foods shortly after the 2007 acquisition of Wild Oats by the Austin, Texas-based natural grocery chain.

Smart & Final-owned Henry's, which operates largely as a separate division from Smart & Final's retail operations, has improved the look of most of the Henry's stores since taking them over in 2007, in our analysis. The stores are still a natural-specialty foods hybrid of sorts but not in the way Wild Oats took them years ago, which included selling mainstream grocery brands next to natural and organic products on the shelves. It will be interesting to see what direction Smart & Final takes the Henry's Farmers Market stores from here.

Meanwhile, although a single-store retailer up until now, and soon to be just a two-store retailer when its second unit opens, we think "Wholesome Choice" has an opportunity to extend its format into additional store locations successfully if it chooses.

We're told the new unit in Anahiem Hills will feature some additional touches that the current Irvine market doesn't have, but will keep the same basic format and focus, which in our analysis is a good idea.

We think taking a basic format blueprint and then "localizing" it to the particular community and neighborhood a store is in is the best approach. But we do mean real "localization" rather than just lip service. For "Wholesome Choice" that won't require much "localization" since the two cities are close by and share many characteristics. But they also have qualitative differences, which is why "localizing" a unit to its neighborhood within its basic blueprint is so important for grocers to do. "Wholesome Choice" has a good eye and ear for local merchandising based on our observation.

"Wholesome Choice" adds an additional element to the already competitive, multi-format Orange County, Southern California, food and grocery retailing mix. We think that based on how the independent grocer has performed with its Irvine market, "Wholesome Choice" should do well with its new store in Anaheim Hills, despite the current recession.

Of course, like all retailers regardless of format, our basic rule applies. That rule is that in the current economy, all grocers must focus on the value-proposition in their own unique and individual ways, whatever the format.

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