Central Market finds niche in Texas

DSN Retailing Today, Oct 22, 2001 by Debbie Howell

Lone Star consumers give in to gourmet lure

FORT WORTH, TEXAS -- The battle for the grocery dollar in the highly competitive Dallas-area market just got tougher with the opening of Central Market, a 75,000-sq.-ft. high-end food concept owned and operated by grocery chain H.E. Butt Company. The new store, which is the company's fifth Texas unit, attracted shoppers with the promise of the ultimate food shopping experience--and if the first day of business was any sign of things to come, it's a promise they're prepared to keep.

Throughout opening day on Oct. 10, food shoppers patiently lined up for a chance to experience the new high-end food store. Once inside, they were led through a maze of 700 varieties of produce; a seafood case stocked with whole fish and live shellfish; grocery aisles offering hundreds of choices in wine, cheese and gourmet mustard; and a fresh food case full of chef-prepared entrees.

"I feel like I've died and gone to heaven," said one shopper, amazed at the selection of 20 fresh-squeezed juices, including apple lemon ginger and watermelon.

This is exactly the reaction H.E. Butt wanted, considering any move into the Dallas/Fort Worth region already held enough risks. Many consider the Dallas market one of the most over stored in the nation for supermarkets, yet it obviously is lucrative. Some of the hottest concepts in food retailing have staked a claim here--Costco, SuperTarget and Wal-Mart's Neighborhood Market.

"It's overstored but under-served. What was missing was this incredible selection of perishables, meat and produce," said Jim Smits, vp of sales and merchandising.

Smits described Central Market as a haven for food lovers. The market thrives on variety, quality and depth. Differentiation is key because the store doesn't stock most items found at supermarkets, such as Coca-Cola and Tide. Instead, Central Market carries hard-to-find items, including whole swordfish, green zebra mushrooms, marinated goat cheese and imported Danish butter.

Part of the appeal of Central Market is what Smits called the "theater of food," with sampling, demonstrations and cooking classes enhancing the experience. Employees called "foodies" walk the store, answering questions about the store's products or providing meal suggestions. Most foods are prepared within view, from rotisserie meats to tortillas to baked goods.

"We want the customers to know products are being prepared fresh in front of them," Smits explained.

With such a heavy emphasis on fresh foods, he added, the Central Market must generate double to triple the sales of a typical supermarket to rein in its higher operating costs and generate profits. Perishables make up about half of Central Market sales, much higher than the average of 30% for a conventional supermarket. Though Smits declined to divulge sales for Central Market, he did say the four earlier stores were all performing to expectations.

Since H.E. Butt opened its first Central Market in 1994, it has grown to five stores in Texas: two in Austin and one each in San Antonio, Houston and Fort Worth. Two more are scheduled to open in the Dallas/Fort Worth market next year, in Plano and Dallas.

H.E. Butt also wants to expand in Houston, possibly growing five to seven units there, but the company isn't looking beyond Texas borders right now. As the largest privately-held grocer in the nation, which generated $8 billion in sales last year, H.E. Butt also operates 295 conventional supermarkets, primarily in Texas. Outside the state, H.E. Butt has one store in Louisiana and 16 in Mexico.

Whether H.E. Butt moves its traditional supermarkets into Dallas is yet to be determined. This metropolitan market is about the only one in Texas that the company hasn't touched. Smits indicated H.E. Butt has eyed the market for the past decade, but decided to test the waters with its Central Market format before taking on a glut of traditional supermarket operators into the region.

As for the evolution of Central Market, Smits said the Fort Worth store and the Houston site were enhanced from earlier models. The perishables sections were reconfigured and enlarged about 30%, based on visits to European food markets. The full-service restaurant at the earlier stores is lacking, replaced with a Cafe on the Run section of chef prepared meals.

Even though some obviously pricey gourmet food items can be found, H.E. Butt doesn't consider Central Market a format catering only to upper-income shoppers. Smits said the store is for food lovers of all incomes, explaining that pricing is comparable to conventional supermarkets on same items.

"We have one criteria: If you love to eat, we are the place," he said. "What we really want to do is expand your food horizons."

Anyone visiting Central Market will find it hard not to be enticed into buying by the sights and smells. The layout of the store is deliberate, with a serpentine track that takes the shopper along every produce aisle and into each critical department.

The first stop when entering the store is produce, where shoppers can find 27 different varieties of apples, along with other unique find,s such as Asian vegetables, fresh herbs, banana leaves and organic Colorado blue pumpkins.