The Summit Avenue of groceries

The strategic transformation that Jim and Mary Anne Kowalski shaped for their grocery business in the face of stiff price competition from Cub Foods and other large chains began in the mid-1990s with a cruise down St. Paul's ritzy Summit Avenue.

Intent on reshaping Kowalski's Markets as an upscale neighborhood grocer, Jim Kowalski took the architect hired to remodel his nearby Grand Avenue store on a drive along the fashionable avenue, pointing out the classic architecture of the homes along the way.

"That's the feel I want" for the remodel, Kowalski told the architect, who then adorned the store with copper ceilings, crown moldings and brick columns and archways. It all added up to a European market atmosphere that has become the company's signature look.

That look -- along with a focus on trend-setting merchandise and exclusive suppliers of high-quality meat and produce -- has helped the Kowalskis triple the size of their business from three stores and $37 million in sales in the late 1980s to 10 stores and $180 million in receipts in 2008.

It's a strategy that appeared to moderate the impact of the economic collapse last year, when the gross was down just 1.2 percent from the 2007 total of $182 million. The Kowalskis are not certain that 2009 will go quite as well, however.

Nonetheless, "if we hadn't made those changes, we wouldn't be here today," Mary Anne Kowalski said.

The look of the stores is just the dressing, however. The meat of the strategy was the shift from a conventional focus on lower, ad-driven prices -- a losing battle against "the big guys," Jim Kowalski said -- to an approach that positioned Kowalski's as the place to find the new and/or unusual.

Local and national varieties

Kowalski's, for example, was the first to bring Boar's Head deli meats, a popular East Coast brand, to the Twin Cities. On the opposite coast, the company found Kingsburg Orchards, a family owned business that supplies fresh fruit and develops new varieties that are introduced to the country by Kowalski's.

In Alaska, another family business, this one a fishing operation, is under contract to supply daily shipments of Copper River salmon during the season. And in Texas, Kowalski's signed Davis Mountains Organic Beef to fill a growing demand for meat produced without pesticides, hormones or antibiotics.

Despite these nationwide forays, Kowalski's is perhaps best known for its support of local brands. There's Thousand Hills Cattle Company near Cannon Falls, for example, to supply fresh, grass-fed beef. And Hope Butter from Hope, Minn., a product that one food critic described as "luscious" and "decadent."

Or chocolate-covered caramel corn made in Minneapolis by what one admirer called "artisan chocolatier B.T. McElrath." And Salad Girl organic dressings, which one food writer lauded as "intensely flavored pairings of blueberry basil, curry & fig, pomegranate pear and crisp apple maple."

Also a part of the strategy is a growing list of so-called "amenities." All the Kowalski's stores have gift and floral shops, and half of them boast a Starbucks. But the prime example is the largest store, the 48,000-square-foot Kowalski's flagship in Woodbury.

In addition to coffee, gift and floral shops, it offers a delicatessen, a hair-care salon and a Natural Path department featuring homeopathic remedies and organic and natural foods.

The Kowalskis also have marched off in a direction that Jim Kowalski said is "where the industry is heading," adding health education in the form of signage and brochures identifying foods that are "good for" the brain, the heart, the bones and the immune system.

It's part of a community-service focus that kept the company competitive into the 1990s even as it fought the battle.

For example, until a variety of mobility services reduced demand, Kowalski's hired buses to bring elderly customers to its stores weekly. The service still is offered at its stores in south Minneapolis and White Bear Lake.

In association with an organization called the Minnesota Active Citizenship Initiative, Kowalski's also has assembled a 12-week, 36-hour "culture" training program for employees that stresses responsibility and concern for both the community and the customer.

All of which does not mean there haven't been failures. A troubled store that Kowalski's bought in St. Paul's SunRay shopping center yielded big losses.

And a Lakeville store that closed in 2007 after little more than a year in business was the victim of fierce competition and what Jim Kowalski called a poor choice of location "too far south" of the key Apple Valley and Burnsville markets.

Nonetheless, a supermarket analyst told the Star Tribune at the time that he still thought Kowalski's "is one of the best retailers in the Midwest."

Dick Youngblood • 612-673-4439 • yblood@startribune.com