Shoppers have no doubt noticed the shuffle going on inside and out at the South Gateway Center Fred Meyer.

The mini-blinds, paint, tools and household goods are headed out the door to create more space for produce and organic goods.

"We're responding to what customers want," said Fred Meyer regional spokesman Zach Stratton. "Our natural and organic sales are skyrocketing."

The remodel of the 20-year-old store off Center Drive is indicative of a shift from the traditional one-stop shopping model Fred Meyer pioneered generations ago. It's also part of a broader industry response by Fred Meyer's Cincinnati-based parent organization Kroger Co. to regain market share lost to the likes of Whole Foods.

Fred Meyer began tinkering with its landscape last year when it spent $22 million to revamp four stores in the Spokane-Coeur d’Alene area in eastern Washington and Idaho. General merchandise and electronics will be reduced to make way for more food.

“This is the beginning of the process of figuring out how we go to market for the next 10, 15 or 20 years,” Fred Meyer spokesperson Melinda Merrill told the Spokesman-Review.

Since then, Fred Meyer has opened a new store in Happy Valley in Clackamas County, and remodeled its Bellevue, Washington, location.

"We try to do remodels every 10 years," said Stratton, noting such projects typically cost about $12 million. "South Medford's last remodel was in 2004, so it was due for a major makeover."

Kroger operates nearly 2,800 stores, including Fred Meyer, QFC and Ralphs, in 35 states and the District of Columbia. The company earned just under $110 billion in revenue in 2016.

Stratton said Kroger's decisions were influenced by surveys and focus groups.

The chain has aggressively ramped up organic offerings, including its own "Simple Truth" line of organic goods, to lure shoppers from stores such as Whole Foods, Sprouts Farmers Market and Fresh Market in recent years. Barclays Capital research shows Kroger's sales of organic and natural food totaled $16 billion in the past year, compared to $15.8 billion at Whole Foods.

Whole Foods is present in parts of Oregon, but not in the Rogue Valley. Competition for the organic shopper generally has been among the co-ops, Market of Choice, Sherm's Food 4 Less, Shop'n Kart and — more recently — Trader Joe's and Natural Grocers.

Joan McBee, who heads up the business school at Southern Oregon University, said the move to more fresh produce corresponds with other societal trends.

"People are more concerned and more knowledgeable about what they put in their body," she said. "We are more knowledgeable and demanding more from retailers."

McBee said retail research indicates a change in taste, with shoppers valuing intimate settings.

"Consumers are getting tired of big stores offering everything," McBee said. "They're much more apt to go into smaller stores where they can get in and out quicker. They're not shopping for the next few weeks, instead they're shopping for tonight's dinner or the next few days."

As a result, McBee said, stores are catering to people in faster shopping modes.

Baby boomers and empty nesters don't buy as much, and other people are waiting longer to start families, so there are more single people shopping for just themselves.

But better eating habits don't necessarily mean the region's organic food producers benefit.

Tom Marks, an organic produce distributor who has operated Rogue Natural Foods for the past 15 years, said Fred Meyer's makeover could have broad implications.

"When I started in this business, organic products were artisanal," Marks said. "Now, they're just commodities."

Gluten-free products were unique, but now they're commonplace, he said.

"The reasons the big boys are getting involved is because these are legitimate commodities. They are no longer fringe whims."

Although his firm succeeded in landing business with the resurrected Ashland Safeway, he said that's not an option with Fred Meyer.

"They source all of the produce from United Natural Foods, a public company (headquartered in Rhode Island)," Marks said.

He's concerned Fred Meyer could take market share from Food 4 Less, the local food co-ops, Natural Grocers and others.

"I'm trying to figure out if it's a real victory when that happens," Marks said. "When you take business from smaller stores that support a regional food system, it's likely to break the food system. Fred Meyer gets everything from its main warehouse. When Safeway let us in, it was a huge deal, but if Shop'n Kart and Market of Choice are not selling as much, we're losing."

— Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at www.facebook.com/greg.stiles.31.