STORE OF THE MONTH: Born on the bayou

Down in the Bayou State, Rouses Supermarkets, Louisiana's largest independent supermarket chain, makes superior local food marketing look easy. Indeed, the retailer's spicy gumbo of assortment, merchandising, and personal service would be any national chain's dream -- or nightmare, if you have to compete against it.

The strategy is in full bloom at Rouses' newest "healthy lifestyle" format, in Mandeville, La. Piping-hot jambalaya and turtle soup wait at the food bar, while an in-store smoker churns out mouthwatering barbequed ribs. Muffaletta sandwiches are piled up in the deli, while nearby a chef crafts a unique "Louisiana roll" at the sushi bar. The bakery offers up a smorgasbord that includes a homemade six-layer doberge cake and tarte a la bouille -- also known as a Cajun custard pie. And don't even mention the king cake!

What would likely take years for an out-of-state retailer to learn about Louisiana food tastes and trends is second nature at homegrown Rouses, a 14-store chain founded in 1960 in Thibodaux, La. Its latest store blends classic and modern food retailing, and balances two primal and often opposing forces pulling at today's supermarket operators: low prices vs. high-quality fresh and prepared foods.

How does Rouses do it? Here's an explanation offered by Charles Hamblen, meat/seafood director at Rouses: "We listen to our employees and our customers." And luckily for Rouses, "People in Louisiana like to eat; they like to try different things," he adds.

That openness among the consumer base makes for a fertile testing ground for all kinds of programs. At Rouses many of the latest food trends -- from chic wines to the booming organic category -- are finessed and perfected, always to suit the tastes of the local clientele.

Katrina's mark

Mandeville, on the north shore of Lake Pontchartrain in St. Tammany Parish, is an ideal spot for Rouses' upscale localized fresh offering. At one time a popular resort, the town is now a bedroom community of New Orleans and home to many well-educated, high-income consumers.

Of course, much of the demographic makeup of New Orleans and its surrounding neighborhoods was drastically disrupted after Hurricane Katrina struck in 2005, and the disaster has left its mark in Mandeville as well. The town didn't suffer extensive damage, but in the wake of Katrina and other hurricanes it was left with crowded hotels; then a severe spike in housing demand spawned high-rent apartments and expensive homes that some of the locals could no longer afford.

Fortunately for Rouses, the Mandeville store, which was under construction when Hurricane Katrina hit, only received minor damage. But the hurricanes may have influence Rouses' decision to conduct a soft opening, instead of a grand opening on Dec. 8, 2005. "We haven't advertised the store yet. We're going to grow it slowly. We want to focus on hiring and training first, so that we can do a better job for the customer," says president Donald Rouse.

Indeed, another immediate impact on Rouses is that it has been facing a hiring challenge at the new store, according to human resources director Steve Galtier. "We've had to increase our pay rates to stay competitive. We've actually spent more money on advertising for help than advertising for our business."

Two for one

The Mandeville unit is the third of Rouses' "healthy lifestyle" stores, and the operator's second site in St. Tammany. It offers an unusual fusion of two store types that many other food retailers seem to believe are two separate and distinct species: the upscale, fresh-heavy market, a la Whole Foods, and the no-frills, value-priced traditional supermarket. (All of Rouses' stores feature EDLP pricing).

The 62,000-square-foot store's layout reflects this duality: It's essentially split in two. On the right-hand side, where the main entrance is located, prepared foods are the first things customers see. Across the aisle from the hot food and meals-to-go stations is a beautiful floral department, which itself is a store-within-a-store. As shoppers work their way through the store, toward the rear, they're treated to the fresh smells and tantalizing sights of baked goods, imported cheese, produce, meats, and seafood.

By the time they get all the way to the back, however, they may be wondering where the "supermarket" part of the store went. That would be the left-hand side of the store, which consists of a dairy case, frozens, and packaged baked goods, along with the other traditional center store aisles. It actually takes a little work to get to that side of the store from the main entrance, but maybe that's a conscious move, an effort to impress with something special right off the bat.

"This format gives the feel of an open-air market, with an emphasis on fresh, healthy lifestyles," notes Rouse.

Shoppers certainly seem to be noticing the special treatment Rouses gives products and presentation. During one visit, a shopper admits she purchased a toll card to make the regular 40-minute trip across the Lake Pontchartrain Causeway to buy her groceries at Rouses. "I've quit going to Whole Foods. I shop at Rouses because of their quality and experience," she says.

Indeed, Rouses' prepared foods lineup is founded on two decades of experience, putting it far ahead of most food retailers. "Twenty years ago we were packaging soups and hot food," says Dave Daroca, Rouses' general manager. "We didn't think about it as 'take-home food.'"

Like the store in general, Rouses' prepared food offering today reflects the latest trends, along with tried-and-true Louisiana classics. The most modern element is a Quizno's sandwich shop in the right-hand corner of the store. Rouses franchises the shop, which is used as the store's in-store cafe; and seating area (both indoor and outdoor seating are included). It's the fourth in-store Quizno's unit the retailer has opened.

"We wanted to pick a quality sandwich program, and Quizno's does very well," notes Rouse.

Another modern touch is a sushi station that offers popular Japanese-style rolls, in addition to a "Louisiana Roll" featuring Louisiana crab meat and designed by one of Rouses' sushi chefs.

Rouses' equipment is on trend, too. To better showcase hot foods, for example, the retailer uses a heated stone with lamps on top, custom-designed by Rotisol. The new setup takes the place of steam tables.

"This really shows the quality of our foods better," says Daroca. Baked chicken, pork roast, and gravy over rice are just a few of the daily specials that can be found on the stone. Customers can purchase an entree and one side dish for $4.09.

In its foods-to-go section, Rouses features inventive entrees with local flair, such as smothered okra, sausage jambalaya, and sauteed shrimp over pasta. "These are all made here," says Daroca. Prepared refrigerated entrees include Cajun boudin balls, another local favorite.

Muffalettas, sandwiches reportedly invented by a Sicilian in New Orleans' French Quarter, sell like hotcakes in the deli. Rouses also sells trays of mini muffalettas for shoppers who plan to entertain.

"We sell a lot of trays and meals to go," adds Rouse. "We do some off-premise catering for parties and weddings. We've even done wedding packages where we do the flowers and the cake, too."

Rouses also manufactures its own brand of salsas, salad dressings, and Italian olive salad, the last of which is used as a condiment on muffalettas and other sandwiches.

'Blast from the past'

The store punctuates its blend of old and new with signage reminiscent of antique illustrated posters. "We're blending modern and old, so we wanted to give shoppers a blast from the past," explains Rouse.

In the Meat Shoppe, for example, a sign sports an illustration of cows being judged at a county fair.

When it comes to meats, Rouses is "smokin'," literally and figuratively. The retailer's in-store barbeque program uses a Southern Pride smoker to cook ribs, sausage, beef briskets, and pulled meats, all sold to-go in the meat department as well as the deli. Its barbeque is branded as "Rouses Bayou Boys Barbeque," which has now become its trademark in Louisiana.

Customers can buy individual meat items, platter combinations, sandwiches, and side items such as homemade potato salad and BBQ baked beans. It's a big program for Rouses: The fresh sliced meats account for around 5 percent of the Mandeville store's total sales.

Other specialty meat items in the department include pinwheels, seasoned meats, jalapeno peppers stuffed with sausage and wrapped in bacon, and turducken, a chicken stuffed in a duck, stuffed in a turkey. For its overall selection, Rouses features a Choice Angus program, along with prime and select cuts.

Seafood, a staple of the Louisiana diet, is another of Rouses' signature offerings. In the mix: boiled crabs and crawfish, and Rouses' own brand of fresh and frozen shrimp, caught in Louisiana waters.

"On the weekends we can't keep this stuff on the shelves," notes the store's seafood/smokehouse manager, John Powells.

The seafood often finds its way into Rouses' meal solution program, which the stores display in the produce department as well as in center store. One such display at Mandeville highlights New Orleans' crawfish-eating season, which typically runs from March through June. The display includes lemons, onions, garlic, and spices.

Rouses' local food expertise is fully ripened in produce, where the retailer features locally grown items as they come into season. "We buy from local farmers whenever possible," says Rouses' produce director, Joe Watson. The latest trends in produce aren't merely local, however: fresh-cut items and organics are also big, according to Watson. "We sell a lot of fresh salsa, cut fruit, and gift baskets," he says. A workstation in the department allows customers to watch as associates prepare gift baskets and cut the fruit.

While Rouses outsources a few of its fresh-cut items, the retailer tries to do as much as possible in the store. For instance, when managers weren't satisfied with the consistency of some of the fresh-cut items they were receiving, they took it upon themselves to add veggie kabobs and asparagus tips as grilling items.

Organics, meanwhile, make up nearly 15 percent of the produce selection at Mandeville, according to Watson. "Just from the first six weeks we've been open, I can tell that organics will be really big here," he adds.

Bulk foods are also enjoying a strong start, comprising about a 7 percent share of total produce sales. The store's current mix of 216 bulk items includes nuts, trail mixes, grains, pastas, and confections. "I've been rotating items to get the slower movers out," notes Watson. "We brought in our first bulk program at Rouses in July. This is our third. So we're learning as we go."

A self-serve peanut butter station in the produce area is another initial success. "This is the first one we've done," says Watson. "We're selling more of the self-serve." Honey and almond butters are also available to churn.

Healthy hits

The Mandeville Rouses merchandises organic and natural shelf-stable foods and nonfood items in a store-within-a-store, Healthy Lifestyles. It keeps organic and natural versions of perishables in the perimeter departments.

HBC/nonfood products in the Healthy Lifestyles section include supplements and vitamins, as well as earth-friendly paper products. In the Mandeville store Rouses is also testing a full line of Burt's Bees natural HBC items.

Overall, Healthy Lifestyles is proving to be a hit. "We started this concept in our Covington store," notes store supervisor Clint Adams. "The average transaction in this store is much higher so far, so we're going to go back and enlarge the Covington section."

Next to the Healthy Lifestyles department is Rouses' wine and spirits section, a true tribute to Louisianans' appreciation of the finer drinks in life. "The selection is different in every store," says Sunny Groom, Rouses' wine specialist. "In this area, people are into wines. They're interested in imports and are open to trying new things."

They have plenty of opportunity for experimentation, as the selection includes more than 2,500 varieties. Since Louisiana doesn't have standalone liquor stores, and allows off-premise alcohol sales on Sunday, Rouses enjoys brisk sales throughout the week. A "wine well" lets shoppers chill their wine purchases in just five minutes.

Groom says she attends to frequent special-order requests and stock-up trips from customers who have wine cellars in their homes. Thus, she does her best to remember customers' names and faces.

As for which variety goes best with Cajun cooking, she suggests white wines that are slightly sweet and lower in alcohol content. "I frequently recommend Louisiana wines to pair with local foods," she notes. Examples in the Mandeville store include table wines from Pontchartrain Vineyards or Landry Vineyards.

Good deals daily

Compared with the rest of the store, Rouses' center store aisles are more about price image, says Adams. The retailer has used an EDLP pricing structure for years. Still, specialty products are given prominence, via curved shelving.

Like many cost-efficient supermarket operators, Rouses has in recent years reduced the number of product sizes it offers. But at the same time it strives to maintain variety -- and in-stocks -- for a discriminating clientele.

"We work very hard to keep products in stock. It's a daily challenge," admits Daroca.

The enterprising independent has been relying more and more on technology for in-stocks and other issues, he adds. "We have wireless capability in all locations. Our store supervisors use wireless laptops. Operational documents and price guides, as well as P&L (profit and loss) statements, purchase orders, and human resources applications, are online. We have also begun mapping our shelves with a wireless unit to capture the gondola length; the shelf length, width, and height; and additional information that will allow us to print shelf price tags in a specific order, therefore saving time and reducing waste."

Rouses has yet to use self-checkout technology at the front end, but there's a good reason for that, according to Rouse. "We have enough checkers up front and prefer to provide that service. We try to maintain a company policy that there will be no more than one customer ahead of a person waiting in line at any time."

This commitment to service led Rouses to design the checkout area of the Mandeville store in a roomy circular configuration. "We wanted to create a feel of convenience," explains Rouse. "This way shoppers can see the registers, but they don't see a line of customers waiting."

As of yet, shoppers haven't had to fight crowds at the Mandeville unit. But as Rouse sees it, that's a good thing. "We've done store openings both ways -- highly publicized, and quieter, as we're doing here. We want to grow the business slowly."

Rouse takes a similarly calculated approach in his plans for the company's growth overall. "We're now at the point where we'd like to build two stores a year," he says. Last month the retailer began construction on store No. 15, a 62,000-square-foot upscale market in Slidell, which is another growing community in St. Tammany Parish. The store will closely resemble the one in Mandeville, but it will include a few exciting new additions, such as a dry-aged beef program with a refrigerated display on the sales floor, and a new in-store restaurant.

And if Rouse is worried by the competition in his state -- which includes A&P's Sav-A-Center, Wal-Mart, Supervalu's Save-A-Lot, Whole Foods, Winn-Dixie, and other independent operators -- he doesn't let it show. In fact, he built the Mandeville store and shopping center (which Rouses also owns) right up against an existing Winn-Dixie.
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