Autumn Special 2014

New Frontiers and New Leaf, two showpiece stores in California

Author: Karin Heinze

The stores New Frontiers Natural Marketplace in San Luis Obispo and New Leaf in Santa Cruz are good examples of small independent chains that have successfully positioned themselves with high-value retail concepts. Spacious and carefully presented fresh food departments and attractive and large eating areas are their visiting cards, and at the same time the parts of these businesses that generate the highest turnover. The size of these stores – both physical and in terms of their product ranges – is much bigger than you find in Europe. What’s great about them is the fact that people with conviction and a sense of mission are behind these concepts, and they communicate this commitment very effectively. (Picture: New Frontiers opened a flagship store at the end of 2010 in San Luis Obispo)

 

How an organic and natural foods store like New Frontiers Natural Marketplace can generate turnover of 50,000 – 60,000 dollars a day (ca. 20 million a year) in a shopping mall on the outskirts of the tourist town San Luis Obispo (about 50,000 inhabitants) is at first glance a mystery. Part of the explanation is the fact that there is no serious competitor in their catchment area – and the county has around 250,000 inhabitants. The other part is that the store is hugely impressive – with excellent displays of top-quality fresh foods, a massive product selection and meals that make travelling quite long distances well worth your while. According to marketing manager Dusty Colyer, the approximately 2000 m² store attracts on average 2000 customers a day. (Picture: Customers don’t have to wait: eight checkouts ensure there is no delay)

The gastronomy section alone (approximately 200 m²) accounts for 30 % of turnover. There is an attractive selection: at free-standing self-service islands you find salads, soups and hot food of all kinds, and freshly prepared fine foods are available at a long service counter. Separate bars sell sushi, juices, smoothies, coffee and hot and cold drinks. Of the 140 employees, half work in the store’s own kitchen and in gastronomy. (Picture: Fine foods from the store’s kitchen. Self-service for antipasti, salads, soups and other dishes)

A spacious training room (picture) with well equipped kitchen, where regular nutrition and cookery courses are held (from raw food to prevention of cancer), brings many customers into New Frontiers. After the course, they do their shopping – the store’s offer is simply too tempting to resist. The fresh food department is a feast for the eyes, and it’s difficult not to stop at the fruit and vegetable pyramids stacked in large, unglazed terracotta bowls (picture). Ernie, an employee with many years of experience at New Frontiers, and his team begin at four o’clock in the morning with getting the fresh fruit and vegetables ready. The enormous assortment and the impression of smartness and everything in perfect condition are features of the other service counters (meat, fish, delicatessen) and the store as a whole.The department of wellbeing, cosmetics, personal care and drugstore products and food supplements, where skilled personnel advise customers at the permanently staffed counter, takes up a lot of space.

(Pictures from left: Advice always on hand in the wellbeing department - The regular courses are in demand - Drinks are available at the coffee bar or you find a big selection in the chilled shelves)



Some of the fruit and vegetables come from the company’s own farm Nojoqui (34 ha) in the south of the county and not far from the headquarters of this family business in Solvang. They have had the farm since 1991, and it supplies the five New Frontiers stores. In Solvang is the hub of New Frontiers Holding, where all the strands of the business come together. The director, Jonathan King, is one of the founders of the enterprise. The story began in 1987 in Salt Lake City with the purchase of two small wholefood stores. Relocations, expansion and the sale of three stores to Wild Oats shaped their evolution over 25 years. The company invested 17 million dollars in the flagship store in San Luis Obispo but since its launch in November 2010 turnover has doubled that of the much smaller store that it replaced. (Picture: Products generating high sales include meat and fish)

Colyer says the company is not currently planning further big investment in new stores but that they are aiming for organic growth. More important than expansion is establishing this store in the region and, in keeping with their corporate philosophy, doing justice to the motto for customers and employees: “New Frontiers, a place where people grow”. Also, some older stores have to be renovated. The company currently consists of the store in San Luis Obispo, one in Solvang and three more in Arizona. In San Luis Obispo they run special campaigns to promote the good reputation of the company in the locality. For example, senior citizens get a 10 % discount and on the monthly Community Day 5 % of turnover is donated to charitable projects in the community. (Picture: Dusty Colyer is responsible for marketing)
 
New Leaf, with similar financial data and for the organic sector classic corporate values, is present in six locations: Santa Cruz (2 stores), San José, Half Moon Bay and other towns in the region between Santa Cruz and San Francisco. In Santa Cruz there is, however, much stronger competition compared with San Luis Obispo. Six competitors (two Whole Foods, Staff of Life, Trader Joe´s, Fresh´n´Easy and Safeway) have an organic offer that has to be taken seriously. But the size of the New Leaf stores (nearly 2,000 m²), the high-value concept, with a large-scale gastronomy/catering and fine food department and a professionally equipped kitchen for courses, and not least sales of 20 million dollars, are comparable with New Frontiers. (Picture: No shortage of parking at New Leaf. Outside view of the store)

One of the stores in Santa Cruz – the company owns the building – was opened in the vicinity of the earlier Food Co-op in 2009 (the warehouse is still there), out of which Scott Roseman developed New Leaf in the 1980s. He and Rex Stuart, and by now around 400 employees, operate seven stores (six supermarkets and one cosmetics and wellness shop). New Leaf positions itself as a lifestyle outlet with a regional focus. Direct collaboration with regional producers such as Swantonberry Farm - speciality vegetables and berries in Santa Cruz – a high proportion of organic products in the fresh food range and sustainable management are just some of the values expressed through their operations, but which are also illustrated on the walls as a means of communicating them to customers. (Picture: The fruit and vegetable department is the centrepiece of the store)

(Pictures: antipasti, deli, juices)


The share of organic fruit and vegetables is estimated by Roseman and Stuart (picture) to vary between 90 % and 100% according to season. In the deli department, that also offers a catering service, the proportion is around 60 %. The offer and the pleasant atmosphere at New Leaf are appreciated by an average of 1,200 customers a day. Roseman and Stuart say the annual growth in turnover is 10 % – 15 %, and their annual sales figures are currently in the region of 20 million dollars. They invest about 1.5 % of this sum in advertising, such as their own customer newspaper, flyers, radio ads, local sponsoring and visits to suppliers.

The labour-intensive gastronomy section seems to justify the high input of staff: Scott Stuart reports that the facility they opened a year ago for panini/sandwiches, a kombucha bar and a juice bar were an immediate success. He points out that living in Santa Cruz is expensive, but many affluent and educated people (there’s the university, research and tourism) are accustomed to high prices and are prepared to pay more for good quality. He says their prices are not exceptionally higher than in the conventional trade or conventional gastronomy. The premium you pay in the deli sector is 60 – 65 % and for groceries 38 %.

New Leaf’s Community Day donation programme – 5 % of the daily takings – means charitable organizations receive 200,000 dollars a year.

(Picture: Attractively decorated theme tables and the sheer abundance of the offer make shopping at New Leaf a pleasure)

18.05.2012

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