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DOING WHAT COMES NATURALLY WHOLE FOODS AND FRESH FIELDS GROW THEIR OWN STRATEGIES

By Published on .

The marketing strategies being pursued by the country's top two natural foods supermarket chains are as different as the stores themselves.

Whole Foods Markets, the Austin, Texas-based chain that has the appearance of catering to singles, is undergoing a strategy change. While marketing will still stress issue-oriented health and environmental issues, more focus will be placed on food products and sampling.

At the same time, Fresh Fields, Rockville, Md., will continue to key in on direct mail.

Which strategy is right? They both may be.

Natural food sales totaled $6.2 billion last year, up 18% though still a small percentage of the total $350 billion supermarket and food store category, said Frank Lampe, editor, Natural Foods Merchandiser.

That percentage is bound to grow, analysts say.

"There's a lot of growth ahead from a sales standpoint," said Neil Stern, partner, McMillan/Doolittle, a Chicago-based retail consultancy. "The gap [natural foods supermarkets] have to bridge to be mass market is to get people to do everyday shopping there."

The two chains have their roots in different cultures, he said.

"Whole Foods is a health food store grown up. It is stronger in vitamins and al-ternative lifestyle products ... They are in urban areas, college areas ... Fresh Fields has its roots in the supermarket business," Mr. Stern said.

In an effort to expand its appeal, Whole Foods is charting an aggressive growth strategy and introducing a "new generation" of natural foods supermarkets.

The company, with 1993 sales of $322 million, now has 34 stores open with 15 more in development. Whole Foods projects expansion to nearly 100 stores by 1999.

The "new generation" stores-expanded natural food supermarkets with restaurants, cooking schools, food sampling centers and more-will be unveiled in Austin in January. That prototype store also will have a breast cancer support center and a 30,000 volume bookstore.

"We are trying to create an environment so they can do all their shopping with us," said Sherry Matthews, president of Sherry Matthews Advertising, Austin, Whole Foods' agency.

"We are looking at increased competition from mainstream supermarkets," she said. As a result, Whole Foods' strategy will be to focus on "shopping experiences, food experiences and lifestyle experiences ... The focus is getting back to food and taste."

McMillan's Mr. Stern said those changes seem "to be an attempt to become more mainstream."

Whole Foods' marketing is focused on radio spots and direct mail, including coupons.

Direct marketing is the key for rival Fresh Fields, said Kathy Ordan, director of marketing.

"While we are a very appealing store to a lot of people, we find it more efficient to target market. We are much more than a health food store, but to try to compete with major chains in the newspaper is not as efficient," Ms. Ordan said.

A monthly newsletter, letters, cards and coupons are mailed on a broad basis for a store opening and other mailings are limited to Fresh Fields' active cardholder base, now numbering a few hundred thousand, Ms. Ordan said.

Market Imaging, Norwalk, Conn., handles.

There is widespread speculation Fresh Fields, now privately held, will go public.

"I don't know. We have no plans rights now," Ms. Ordan said.

Fresh Fields' co-founder Leo Kahn has retired from the chairman post, and an investor group acquired his 30% ownership. The chain currently has 14 stores and plans to open eight more in 1995.

Fresh Fields had a slight setback in November when it closed its Richmond, Va., store. The move shows how important site selection is to this category.

"Our strategy is to have multiple stores in major metro areas ... [Richmond] wasn't big enough for several stores. A single store is not efficient, for advertising or in terms of operations," Ms. Ordan said.

That experience backs up the view of McMillan's Mr. Stern. While natural foods retailers "are filling a niche and doing well," he said, "the question is how big that niche is. Every city has a college market and an affluent market that these stores are good for. But how will these stores play in other areas?"

How long the interest in natural foods will last also is a consideration, Mr. Stern said.

"Natural foods retailing has been very popular. How much of it is trendy or a fad and how much of it is a permanent shifting of how people are eating, I'm not sure. Right now they are benefiting from interest in fat-free, healthy foods," Mr. Stern said.

Emily DeNitto coordinates Grocery Retailing.

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