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COVER STORY: Store of the Month: The path less retailed

Imagine designing a full-scale supermarket that must fit the contour of a city block, will be partially underground, and must employ just 32,000 feet of selling space that's hampered by 39 columns. Now imagine operating the store in "the city that never sleeps": Deliveries come in 24/7, product has to be quickly turned from truck to shelf, and shoppers must be able to navigate the narrowest of aisles, also 24/7.

What you're envisioning is modern urban food retailing at its best, in the form of the new Pathmark supermarket in central Harlem, the famous New York City neighborhood. The store, a Pathmark Super Center at 42,000 square feet, is the latest in the company's portfolio of urban stores, which account for about 30 percent of its total store base throughout New York, Pennsylvania, and New Jersey. It's Pathmark's second location in Harlem, its fourth in the borough of Manhattan, and its 25th in the New York City area.

Inner-city markets present challenges that many supermarket operators choose not to take on, but for Carteret, N.J.-based Pathmark Stores, Inc., choosing the path less retailed seems to be paying dividends -- which is of particular importance as the chain looks for a buyer to help revitalize its overall business. (At presstime Keene, N.H.-based C&S Wholesale Grocers, Inc., Pathmark's primary supplier, was said to be in talks to potentially buy the company. Neither company would comment on the speculation.)

Several store-level managers at the new unit, which opened in January, say the season's inclement winter weather in New York has likely cut down some of the potential foot traffic, and that they expect spring to bring with it more foot traffic, a phenomenon familiar to urban operations.

While publicly held Pathmark won't divulge sales performance at individual stores, Rich Savner, director of public affairs, says the chain is "pleased so far with the Harlem stores. They're performing well enough that we're continuing to look for new locations throughout urban communities."

Suburban treatment

He also stresses, however, that the company doesn't give precedence to urban locations over suburban locations. In fact, the chain doesn't specifically differentiate between the two, in terms of the product and service offering. The difference comes in how the chain handles the unique merchandising and operational challenges of retailing in high-density areas.

Within a one-mile ring of the new Pathmark store, for instance, there are an estimated 212,956 residents, according to Spectra data.

The message here, is that "urban" customers are not so different from nonurban shoppers when it comes to their grocery needs and demands, and those operators willing to work with the more specific challenges of operating a store in urban conditions are likely to be rewarded by a consumer base hungrier than others for attention.

In the new Harlem store, which is located in the Bradhurst section, all the amenities typically found in suburban supermarkets are present -- albeit on a slightly smaller scale -- and the neighborhood shoppers have so far been showing their appreciation.

On one recent Friday morning, for example, a constant stream of customers was moving in and out of the store at a brisk pace that could be characterized as a New York minute. That kind of traffic, however, is a blessing that can easily turn into a curse for operations, if the store lets down its guard.

Notes Pathmark's operations v.p., Rocky Vitale, "There's a monitored merchandising plan from week to week, which can't be deviated from. The customers have to be able to get through the store."

"We're the store that never sleeps," quips store manager Mike Lupo, who is helping to make the operation successful with his keen attention to detail and passion for the business. His commitment and team-focused approach are evident in the warm smiles of store associates -- about 80 percent of whom live in the community.

"We have an excellent team in this store," notes Savner. "The company took the best of the best to staff it, because of the unique challenges involved."

The store offers the quintessential one-stop shop, inner-city style, complete with a miniature pharmacy; a branch from locally owned Carver Savings Bank; a full aisle of American Greetings cards; a service desk where customers can purchase money orders, Western Union services, and lottery tickets; hot foods to go; photo processing; and even a steam machine rental service for cleaning carpets.

"Anything that's customer-driven is here," says Savner.

Pathmark's been "here" for years, having first entered Harlem in 1999 with a 50,000-square-foot store on the bustling commercial drag of 125th Street. Since that time the section has seen an explosive amount of redevelopment, an achievement for which Pathmark officials like to take partial credit.

"When we first came to Harlem, there was some opposition based on a myth that we'd put other retailers out of business. Now look at 125th Street -- the area is thriving," notes Savner. "Because of the density of business in our first Harlem store, we knew we could afford a second store," he adds.

The community group that led the search for a supermarket in Bradhurst was initially in talks with another supermarket company, according to Savner, but the parties couldn't reach a viable agreement. Pathmark next responded to a request for proposal, but the journey to grand opening took a decade, spanning the tenure of three New York mayors.

"Approvals have to be obtained," says Savner, an explanation that might strike some as laconic understatement. "New York City has its hurdles. It did take a long time compared to what it takes in the suburbs."

Such a history made this store's opening ceremony in January all the more grand. At the event New York assemblyman Keith Wright (D-Harlem) noted that he recalled a time when no large food chain would entertain the thought of opening a store in Harlem. Bodegas and small mom-and-pop stores were the only food-shopping choices for local residents.

Now Wright and other community leaders emphasize that they expect Pathmark to maintain its standards of cleanliness and quality at this and all its inner-city units.

Notes Savner: "There's a common impression that stores in the inner city won't have the same level of quality as in the suburbs. That's just not true, at least not for Pathmark."

The Bradhurst unit, at the intersection of 145th Street and Bradhurst Avenue, was built literally at the foundation of a project emblematic of Harlem's current commercial revitalization -- a big new mixed-use development that includes 125 high-rise cooperative apartments. Indeed, the store supports the development in more ways than one: 39 large structural columns dot the store's selling space.

"One of the biggest challenges with this store is merchandising," notes Lupo. "The layout of the store is a contour of the block. The ceiling level is also different, because part of the store is underground."

To fit the space, Pathmark's store designers had to design the aisles in varying widths, ranging from five and a half feet to seven feet.

The traffic pattern is atypical. In the front of the store, customers encounter general merchandise and HBC items before any other aisles -- an unusual configuration, but one that immediately exposes shoppers to higher-margin items.

Produce gets plenty of play, as well, with fresh product filling 34 tables, while meat and dairy run along a continuous pathway on the outer ring of the store.

Another way the store designers coped with the challenges they inherited in the space was by cutting corners -- literally. "You won't find any corners in this store. The aisles are laid out in a continuous flow," notes Lupo. "The merchandising scheme is such to get dollars out of every square foot."

In two of the would-be corners of the store, for example, the designers built shelf displays into the walls. In the dairy department the shelf is used to merchandise impulse buys such as Cheez Whiz and Laughing Cow brand cheeses. In the meat department the shelf features a scale that customers can use to confirm the weight of Pathmark's packaged meats.

Big-city ops

The store's back room had to be made much smaller than Pathmark's norm. Storage space and the logistics of getting freight into the store are especially problematic in the inner city, where shipments come at all times of the day and night to avoid traffic snarls, explains Lupo. The Bradhurst store has hired an expediter to process loads and filter shipments through the back room.

"The departments work together tightly here," adds Lupo, which helps make the delivery process as efficient as possible. The need for efficiency must extend right out to the shelf, too; associates are motivated to keep products constantly replenished to meet Pathmark's current chainwide initiative to manage out-of-stocks.

The space at the front end of the store is also much tighter than what typical Pathmark store teams are used to.

For starters, the outside entrance allows for only one way in and one way out. "We have to expedite the checkout process," notes Lupo. "We also have to have a controlled process for what happens on the floor."

Lupo and his staff conduct crucial weekly meetings to go over any upcoming issues or merchandising obstacles, and to discuss how business will be affected. "We call it clutter control," he says.

To help expedite the shopping process, the store supplements its fleet of standard-sized shopping carts with smaller-than-average baskets made by EZ Cart. In a telling urban-oriented detail, the carts are equipped with clips that allow shoppers to attach their own carts, which are commonly used to transport their bagged goods from store to home.

Lupo estimates that approximately 85 percent of consumers in the area don't own an automobile. However, Pathmark offers parking under the store, for those who do drive. Public buses also run right in front of the store, and several subway stops are located nearby. Additionally, the store offers delivery service for $8.95 per order.

Pathmark's two Harlem units are only two miles apart, and there has been a slight overlap in the customer base, acknowledges Savner.

Customers who live outside Harlem are also converging on the 145th Street location to experience the "suburban" feel of a large, well-stocked supermarket, says Lupo. Some shoppers are even trekking across the Hudson River from New Jersey, via the George Washington Bridge.

While it might not surprise many veteran grocers that a store in such a high-density area pushes out a lot of volume, they might be surprised at what some of the fastest movers are. In this multiethnic community -- about 50 percent African-American and 43 percent Hispanic -- the Goya section is as yet seeing only so-so sales, according to Lupo.

On the other hand, organics and low-sodium items have to be restocked daily, indicating that significant segments of the shopper base are health-conscious.

Carrots and other vegetables are the top sellers among the store's eight feet of organics. Also, root vegetables such as yucca appeal to the local clientele, which includes Dominicans, Puerto Ricans, and Cubans.

Pathmark's management aims to cater to the diverse demographic mix in the area, including those who were willing to pay $250,000 and more for the apartments above the store. (The residential building is already fully sold, and residents are scheduled to start moving in during May.)

"We try to merchandise to all our customers," says Vitale. In the deli, for instance, you'll find higher-priced gourmet cheeses from all over the world. Meanwhile the store is filled with budget-friendly value packs for families, including Pathmark's private label items.

Angels of Harlem

Like the rest of the store, the produce department's appearance is impeccable. "You could eat off these floors," Vitale says proudly. "We maintain very high sanitation standards at Pathmark. Our rule is, clean first, then fill the shelves." All Pathmark managers are required to participate in a state-approved training program, adds Vitale.

The halo effect of store cleanliness is often a prerequisite for the success of any fresh department, and at the Bradhurst unit the fresh seafood department is clearly a big draw for the community. The apparent freshness of the assortment (it's replenished continuously, with a variety of items delivered daily) helps, but the department is also one of the only places in the area where consumers can buy fresh fish.

During Progressive Grocer's visit, a line quickly formed in front of a counter appealingly stocked with a 20-foot smorgasbord of tilapia, Atlantic salmon, head fish, shrimp, and seafood burritos -- the last a brand-new item.

"There's always a line," notes department manager Anthony McLaughlin. The store also offers weekly sales in the department to entice budget-conscious shoppers, he observes.

A Dollar Day section, located across from the seafood department, includes items such as towels, oven mitts, and sponges. Dollar items are also highlighted throughout the store, to compete with the plethora of dollar stores in upper Manhattan.

Merchandising at an urban location is a process that requires constant finessing to maximize space. "If something isn't selling, we'll retrofit the space," notes Savner. "There's no dead space in this store."

The prepared foods section, for example, certainly maximizes its linear space. Open daily from 10 a.m. to 10 p.m., the department does a good business at lunch, as well as dinnertime and later. "We get people coming in at 10, when the chicken is ready to eat," notes deli manager Brian Holder. Among the best sellers: fried whiting and fried chicken.

The deli is equipped with a kosher slicer to serve the local Muslim population, notes Holder. Beef salami and Hebrew National brand meat are popular selections for those following a halal diet, he adds.

The meat assortment, meanwhile, comprising about 1,600 SKUs, also includes something for everyone, from the newest convenience items from Tyson and Perdue to ethnic staples like pork chitterlings to specialty items such as single-serve stuffed chickens from Butcher Van Gourmet that sell for $7.29 a pack.

Some of the best sellers have come from customers' suggestions, notes meat manager Carol Griffin. "One lady asked me if we carried Murray's organic chicken. I told her I'd bring it in and try it, even though it hadn't done as well in some of our other stores. Now it's really taking off."

Ground turkey is also a fast mover among health-conscious shoppers, says Griffin. "I have to keep as much turkey as I do beef. I order up to 10 cases a day." Likewise Laura's Lean Beef is a consistently strong seller.

The frozen section, which maximizes store space by wrapping around two aisles, includes a few good-for-you items, but also plenty of indulgent ones. A built-in grocery shelf containing toppings and cones is an excellent cross-merchandising tool, notes Lupo.

Come springtime, he envisions many more Harlem residents hitting the streets and checking out the store, as well as baseball fans, on their way up to Yankee Stadium in The Bronx, dropping by for picnic items.

As the store manager sees it, "We're taking small steps, but we plan to grow in a big way."
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