C.A. Fortune Newsletter- September/October 2017

Newsletter September/October 2017 Volume 5 - Issue 7

C.A. Fortune Announcements Vol. 5 - Issue 7 Inside This Issue CAF Announcements 2-3 Distributor News 3-6 Industry News 6-10 Consumer Trends 10-12 Retailer News 12-21 Shows & Events 22

Contact Headquarter Office 1831-A Howard St. Elk Grove Village, IL 60007 630.539.3100

Follow Us

cafortune.com 2

Welcome to C.A. Fortune

Please join us in welcoming the following new employees to the C.A. Fortune team: C.A. Fortune is excited to announce that Laura Howell has joined the team as VP of Client Development on October 9th! She is responsible for overseeing the Client Development and Client Relations team. Laura is be based out of the Chicago HQ office, in Elk Grove Village and reports to Tyler Lowell, our Managing Partner.

Laura joins us from Acosta Sales and Marketing.

Paul Newton has joined the C.A. Fortune team as VP Sales, Kroger Team, Specialty/Conventional Channel, effective October 2nd. He is responsible for leading the Kroger Team based in Cincinnati, Ohio. Paul reports to Marty Walsh, VP Sales, East & West, Specialty/Conventional Channel. Paul joined C.A. Fortune from the Carlin Group’s Cincinnati office, where he was the Director of Business Development and also served as a Business Manager for the past three years.

Welcome Alisha Axe! Alisha came onboard as a Technician october 3rd. She is a Bakery Technician based out of Oregon. She reports to Ashley Ledsworth who is the Director, Sales, Bakery/Deli, West. Alisha has joined C.A. Fortune from Vanille Patisserie in Chicago, IL where she was the Pastry Sous Chef.

Colleen Coniff started October 1st, at C.A. Fortune as the Finance Manager. She is responsible for managing the day-to-day Accounting processes (A/R and A/P), as well as assisting the VP of Finance with the monthly and quarterly closing of financial statements. Colleen is based out of the Chicago HQ office, in Elk Grove Village and reports to Neil Chamness , the VP of Finance. Colleen has joined us from Universal Gaming with a background in Accounting and Human Resources.

Denise Mihalopoulos joined C.A. Fortune’s Client Services Department as a Client Services Specialist on October 2nd. She is based out of the Elk Grove Village, HQ office and is responsible for ensuring accuracy while processing PO’s, assisting customers & clients with questions, as well as maintaining client data (items, specs, promotions, etc.) in MCS. She reports to Ben Adelphia, the Lead Client Services Specialist. Denise has a great deal of Customer Service experience from working at International Ceramics, Metals & Services in the Chicago suburbs, prior to joining us.

C.A. Fortune is thrilled to announce that Melinda Smith has joined the team as a Client Development Manager, reporting to John Donleycott, our Sr. Director of Client Development. Based out of her home office in beautiful Ponta Verda, Florida, Melinda’s core responsibilities include managing and facilitating strategies for an assigned portfolio of clients. Melinda brings over 20 years of sales experience to our team; Most recently she spent 10 years with KeHE Distributors serving the last few years as Sr. Account Manager for Southeastern Grocers.

C.A. Fortune Announcements C.A. Fortune Opens Dedicated Kroger Office in Cincinnati, Marking Ninth Expansion in Four Years!

On September 13th, C.A. Fortune announced that effective October 1, the natural, specialty/conventional and bakery/deli consumer products sales & marketing agency would be opening a Cincinnati office dedicated to serving Kroger’s 2,796 stores in 35 states.

“Opening a dedicated Kroger office in Cincinnati was not only the logical next move for us, but in line with our overall strategic business plan,” said Tyler Lowell, managing partner of C.A. Fortune.

The Kroger Co. is one of the world’s largest grocery retailers, with fiscal 2016 sales of $115.3 billion. The Kroger Co. family of stores includes grocery, multi-department, discount, convenience, and jewelry store formats. Kroger operates under nearly two-dozen banners, including Fred Meyer, Dillons, Ralph’s and King Soopers.

“Similar to the approach we’ve taken in all markets across the country, we’ve identified top- quality talent, with a significant amount of Kroger experience, both in Cincinnati and across the country, to lead our newest expansion,” said Lowell. “Paul Newton (VP Sales, Kroger Team) will oversee our dedicated Kroger headquarter management, marketing/business insights and national retail teams from our new office, located just outside ofdowntown Cincinnati.”

Marking its ninth expansion in four years, C.A. Fortune has grown beyond its initial upper- Midwest roots in 2013, to today employing more than 330 associates, with eight offices across the U.S. The privately held firm remains solely focused on the natural, specialty/conventional and bakery/deli space.

Distributor News UNFI: No worries on Whole Foods Amazon’s takeover of Whole Foods has triggered plenty of anxiety for United Natural Foods (UNFI) shareholders, but as far as Whole Foods’ major distributor is concerned, it’s business as usual — with a little extra potential.

“I am really excited about the opportunities I believe this combination brings to UNFI,” Steven Spinner (pictured), UNFI’s president and CEO, said in a conference call late Wednesday discussing the distributor’s fourth-quarter earnings. “Amazon and Whole Foods are both incredible brands and we believe UNFI is well positioned to service them in our digital and brick-and-mortar growth strategy through our network of distribution centers, our logistics capabilities and our breadth of differentiated and unique product offerings.”

UNFI shares — which have taken a beating ever since Jana Partners introduced the idea of optimizing distribution for Whole Foods this past spring — were up by nearly 9% early Thursday following UNFI’s after-market earnings announcement and Spinner’s remarks in the conference call. Jana’s pressure helped to trigger a deal between Whole Foods and Amazon that was announced in June and completed late last month.

Whole Foods is UNFI’s single largest single customer, accounting for nearly one-third of UNFI’s sales. When asked by an analyst to comment on the prospect of Amazon needing UNFI less than Whole Foods might, Spinner replied, “We feel good about the value that we bring to both Whole Foods and Amazon, we’ve got a lot of scale across a lot of products and a lot of suppliers that quite frankly, is very hard to replicate. continues next page...

3

Distributor News UNFI: No worries on Whole Foods cont...

And so… we feel really good about the direction that they’re taking. And quite frankly, I think it’s bringing more people into all the stores and so we’ll just have to see how it plays out.”

Spinner also reminded investors that a supply contract between UNFI and Whole Foods remains valid through 2025: “That’s a long time from now,” he said.

As reported previously, UNFI said quarterly sales improved as a result of acquisitions of Haddon House Food Products and Gourmet Guru, specialty providers aiding what Spinner called UNFI’s “building out the store” strategy, designed to expand offerings of fresh and specialty items to its customers. Spinner identified expanding sales of dairy, deli and proteins to be one of the company’s five strategic objectives for its 2018 fiscal year, which began last month.

UNFI will also aim to win new customers and expand business with existing customers; optimize gross margins; grow e-commerce infrastructure and sales; and maintain the balance sheet strength to make additional acquisitions.

Source

SUPERVALU Announces Agreement to Acquire Associated Grocers of Florida SUPERVALU INC. and Associated Grocers of Florida, Inc. announced that they have entered into a definitive merger agreement for SUPERVALU to acquire Associated Grocers in a transaction valued at approximately $180 million.

This transaction provides SUPERVALU with the ability to expand its operations into a new part of Florida as well as provides new opportunities to bring SUPERVALU’s products and services to Associated Grocers’ diverse customer base in South Florida, the Caribbean, and other international markets. Additionally, as part of the pending transaction, SUPERVALU has reached a long-term supply agreement with Associated Grocers’ largest customer that will go into effect upon the closing of the transaction.

Founded in 1945, Associated Grocers is a retailer-owned cooperative that distributes full lines of grocery and general merchandise to independent retailers, primarily in South Florida, the Caribbean, Central and South America and Asia. Associated Grocers’ customer base of conventional, specialty and ethnic stores includes an exciting mix of multi-cultural independent grocers that complements SUPERVALU’s customer base. SUPERVALU expects the combined company will be well positioned to efficiently serve its broad range of customers and offer an array of value added services, helping Associated Grocers and SUPERVALU customers compete and thrive in an increasingly demanding grocery environment. During Associated Grocers’ last fiscal year, which ended on July 29, 2017, Associated Grocers’ revenues were approximately $650 million, estimated by SUPERVALU under its accounting policies.

“Associated Grocers represents a great opportunity for us to further expand our wholesale business into another important region,” said Mark Gross, SUPERVALU’s President and Chief Executive Officer. “We believe SUPERVALU is uniquely positioned to be the supplier of choice across the grocery industry and this acquisition is another example of how we’re delivering on our growth strategy.” continues next page...

4

Distributor News SUPERVALU Announces Agreement to Acquire Associated Grocers of Florida cont...

Gross continued, “Christopher Miller and his talented team have done outstanding work to build and support a dynamic and diverse retailer base. We’re looking forward to welcoming the strengths and talents of the Associated Grocers team to SUPERVALU and working together so that, once the transaction is complete, we can bring the benefits of our combined scale and expertise to their customers to help them better compete in the evolving grocery industry.”

“I’m very excited about this announcement,” said Associated Grocers’ President, Christopher Miller. “Being a part of SUPERVALU will provide us with access to resources, products, services and overall capabilities that are essential to helping us continue to provide top-notch support to our customers. SUPERVALU and Associated Grocers share a common dedication and commitment to the independent retailer and together we’ll be in a great position to provide opportunities, innovation and increased value to our customers, both domestically and in foreign markets.”

The transaction, which was approved by each company’s board of directors, is currently expected to close by the end of calendar year 2017, subject to approval by Associated Grocers’ shareholders and other customary closing conditions. Following completion of the merger, Associated Grocers will be a wholly-owned subsidiary of SUPERVALU. Faegre Baker Daniels LLP and Cleary Gottlieb Steen & Hamilton LLP acted as SUPERVALU’s legal counsel. RBC Capital Markets LLC acted as financial advisor to Associated Grocers of Florida and Akerman LLP acted as Associated Grocers’ legal counsel.

Source

KeHE’s Natural Show Highlights Innovative Brands and New App Debut

KeHE welcomed natural grocery and specialty retailers and brokers to the Austin Convention Center, Oct. 4-5, for the first national Natural Show, featuring the hottest natural & organic, specialty and fresh products from nearly 500 exhibitors.

“We welcomed some of the best and emerging brands and retailers from across the country at our first national Natural Show,” said Brandon Barnholt, President and CEO, KeHE. “The excitement surrounding this show is encouraging as we take the KeHE show experience to the next level and deliver the benefits of our previous regional shows on a much grander scale.”

Mr. Barnholt opened the second day of the show with his President’s Address, sharing insights into the evolving natural and organic, specialty and fresh industry. A keynote address on edible ethics and socially conscious consumers by The Hartman Group’s CEO, Laurie Demeritt, was followed by an engaging panel discussion. She was joined by Michelle Elsom, Town & Country Markets Inc.; Greg Leonard, Native Sun Natural Foods Market; John Pittari, New Morning Market; and Corinne Shindelar, Independent Natural Food Retailers Association (INFRA). continues next page...

5

Distributor News KeHE’s Natural Show Highlights Innovative Brands and New App Debut cont...

The new KeHE Events app debuted for the Natural Show with an interactive floor map, schedule of events, live social media and photo feeds, exhibitor profiles, messaging and more to help attendees connect at the show.

Available for Apple iOS and Android devices, the free app can be downloaded on the App Store and Google Play for all upcoming KeHE shows.

The New Products Showcase included more than 100 products new to KeHE within the last six months, as well as the latest on-trend items from Certified B Corp vendors and KeHE’s CAREtrade™ partners. Throughout the show, attendees sampled and cast their votes for the “best of” awards in seven categories: Best of Show – Kalena Sparkling Coconut Water Best of Packaging – Hellowater Best of Mission-Based Products – Tony’s Chocolonely Best of Organic Food & Beverages – Barnana Best of Center Store Products – The Soulfull Project Best of Frozen & Fresh Products – Grain Trust (Sage V Foods) Best of Healthy Living Products – EO Products Following the show, KeHE and exhibitors donated nearly 14,000 pounds of food products to The Central Texas Food Bank, which includes those affected by Hurricane Harvey. The next national Natural Show will be held Oct. 3-4, 2018 in Indianapolis.

Source

Industry News Four Years After Shark Tank, 23-Year-Old, Her Best Friend And Her Dad Build A $7M Nut Butter Company Back in 2011, Keeley Tillotson and Erika Welsh were college roommates at the University of Oregon who loved peanut butter. So they started making their own in their tiny apartment that mixed in new flavors, like cinnamon raisin, and chocolate coconut, without the high sugar content typical of such snack foods. One thing led to another, and before beginning junior year of college they ended up on Shark Tank, and suddenly realized: Either they needed to drop out of college or let the business go. They dropped out.

Fast forward four years from the Shark Tank airing, in May 2012, and Tillotson, now 23, and Welsh, 25, are running Portland-based Wild Friends, a nut butter company with sales expected to reach $7 million this year and distribution in Whole Foods, Costco, Kroger and a number of other supermarkets. t a time when funding has gotten tighter for many startups, the duo recently raised $1.4 million from investors on CircleUp, including a $100,000 continues next page...

6

Industry News Four Years After Shark Tank, 23-Year-Old, Her Best Friend And Her Dad Build A $7M Nut Butter Company cont...

investment from John Foraker, president of Annie’s, the prominent natural and organic foods company that is now part of General Mills, who they consider a mentor. Oh yes: Tillotson’s dad, Bruce Tillotson, 54, who previously worked for Honest Tea, is their chief salesperson, responsible for flying around the country to get the brand into stores.

“I always joke that I’m going to write a book about how to work with your dad and your best friend,” says Keeley Tillotson, Wild Friends’ chief executive.

In the beginning, Tillotson and Welsh, both college athletes, simply mixed up their own peanut butters with unusual ingredients and less sugar than the products they saw on the shelves. “It was exciting and fun, and so we started selling at farmer’s markets and street fairs,” Tillotson says. “We set up an online account so that our friends could pay us. We would make it all night long, and do deliveries during the day. It got to the point where the company was taking over our lives, and we were hardly going to school.”

Source

Retailers Cheer House Passage of 2018 Budget The retail industry was encouraged by the U.S. House of Representatives’ passage of a 2018 budget that will allow the Senate to pass tax reform with a simple majority of 51 votes, viewing it as a major milestone on the road to meaningful tax reform.

“Retailers welcome the final passage of the 2018 budget resolution,” said Jennifer Safavian, EVP of government affairs for Arlington, Va.-based Retail Industry Leaders Association (RILA). “Congress can now focus its attention on passing much-needed tax reform that benefits American consumers and businesses alike. A simpler tax code that lowers rates and addresses inequities will put more money back in customers’ pockets and encourage businesses to grow. As we approach the holiday shopping season, retailers are excited to see reforms that give American consumers and retailers a boost. We look forward to working with Congress and the Administration to get it done.”

“By quickly passing the budget resolution without further delay, Congress has signaled that they’re truly serious about tackling tax reform this year,” observed David French, SVP for government relations at the Washington, D.C.-based National Retail Federation (NRF). “Lowering the corporate tax rate and cutting middle-class taxes would help businesses create more jobs and put more money into consumers’ pockets. The positive impact tax reform would have on the economy can’t be ignored, and [the Oct. 26] vote clears the way for the hard work that will be required to make it happen.”

The reaction was similar from the grocery channel in particular.

“NGA applauds the House for passing the Senate’s budget, which is an important step in allowing the tax reform process to move forward,” noted Peter J. Larkin, president and CEO of continues next page...

7

Industry News Retailers Cheer House Passage of 2018 Budget cont...

Arlington-based National Grocers Association (NGA), which focuses on the independent grocery sector. “For decades Main Street supermarkets have faced significant tax burdens, often paying a very high effective tax rate.

We have a unique opportunity to reform our tax system and help make local American businesses more competitive. We look forward to reviewing the House Ways and Means Committee’s legislative language once it’s released and working with representatives and senators to pass smart reform that ensures Main Street businesses are able to take advantage of a reformed tax system and help grow their businesses and create jobs.”

Source

In-Store Signage Gets Sophisticated As food shoppers have become more sophisticated and adventurous in their product choices, so have the signs that guide them both outside and on their in-store travels.

According to Didier Blanc, president of Blanc Display Group, in Dover, N.J., “The trend in signage is in providing consumer education as well as ethnic-related merchandise.”

His company has responded to this trend by introducing the Signature Series and World of Produce Buyer’s Guide headers and ethnic category signage, inspired by cultural awareness and the consumer’s desire to learn and experiment. “We have also seen a surge in the popularity of our Hispanic-related signage and our ‘Organic’ and ‘Local’ product lines,” Blanc notes. “The spikes correlate to industry trends.”

The company’s Marketplace Chalk line is increasingly popular, creating a farmstand feeling within a store. “We introduced signage inserts with QR codes,” Blanc notes, “that, when scanned via a free app, offer item information like nutrition, selection and storage tips, recipes, and more, in one convenient location.”

Beyond that, the Fresh Food 411 Interactive Kiosk is what he calls “information central” for savvy shoppers, presenting instantaneous product information in a consumer-friendly style.

Blanc believes that signage will become more and more interactive, differentiating brick-and-mortar stores from their online competition.

INFORMATION, PLEASE “Supermarkets are using a lot of fabric” in new store-sign scenarios, because they can be changed relatively quickly and are inexpensive to ship, says Jimmy Keith, president of Richmond, Va.-based KeithFabry Reprographics.

The company’s latest innovation is a retractable battery-powered banner system that can be as big as 24 feet by 10 feet. The system allows the changing of large displays monthly rather than yearly, enabling more promotions, which keeps the store more interesting and appealing. continues next page...

8

Industry News In-Store Signage Gets Sophisticated cont...

Keith observes that quick signs and stanchion signs, as well as magnet signs, are also trending, but that floor graphics “are not as popular as we thought they would be in this industry.” Window clings are very popular, according to Keith, “because they work” as people walk in and see the special of the day.

Signs have a lot more information on them today, he notes; as a result, signs are getting bigger. “Better signage changes the environment. It’s not the same place — customer environment — over and over again,” Keith says.

“That makes a big difference.”

The Howard Co., in Brookfield, Wis., offers digital menu boards and digital signage for inside the store and for drive-through or pickup windows outside, and also provides guidance for placement and content.

The content can be changed based on the time of day, with the corporate office having control, says Regional VP Grant Gustke. “If a small to medium chain is not looking at the digital menu boards or outdoor products, they are falling behind the large chains because they are all doing that already,” he warns. “The technology of touchscreen ordering or ordering on an app is coming, too.”

CUSTOMIZED EXPERIENCES Customers of San Antonio-based Comet Signs LLC, “continue to focus on significant exterior signage packages providing a consistent brand appearance,” says Business Development Manager Mark Ahrens. “We see growth in both exterior and interior store-wayfinding signage designed to help customers find the products they need quickly.”

Ahrens says his company also sees trends to differentiate exterior and interior sign design and messaging, based on microtargeted demographics and research for each location’s trade area.

LED sign illumination provides energy savings and reduces maintenance costs, he says, and customization by store location and unique materials, and design styles that differentiate a brand from competitors, are also growing.

“We find pylon or multitenant signs, channel letter and cabinet signs for buildings, and wayfinding signs are all included in basic sign packages,” Ahrens notes.

In addition to “shopping by apps,” he sees as another key piece the use of mapping apps that show not only location, but also allow customers to see the store via programs like Google Maps. “This makes quality exterior signage even more important for branding,” he says. “As focus grows on convenience and quick-pickup shopping, the customer experience will continue to be enhanced with more custom signage,” Ahrens asserts.

MEASURES OF SUCCESS Erik McMillan, founder and CEO of Shelfbucks, in Austin, Texas, points out that as many as 50 percent of in-store merchandising materials never leave the back room, or aren’t executed in the right way at the right time.

Measuring in-store merchandising, he says, “has historically been costly, inaccurate and otherwise impractical.

In-store signage has always been a limited, one-way form of communication.”

According to McMillan, Shelfbucks’ MEASURE platform addresses these challenges by incorporating sensors into all in-store signage and merchandising, enabling CPGs and retailers to track their campaigns from production through execution by measuring in-store performance with what he calls “unprecedented accuracy.” continues next page...

9

Industry News In-Store Signage Gets Sophisticated cont...

“Our platform also enables in-store merchandising to engage directly with shoppers’ smartphones, delivering product videos, ratings and reviews, coupons, and other relevant content,” he says.

The Shelfbucks platform also gauges key factors like shopper traffic and conversion rates. “After all, you can’t improve what you can’t measure,” McMillan says.

The platform is a “pull” model for customer engagement, McMillan explains, meaning that it doesn’t send unwanted spam content to shoppers, but enables them to “pull” the information they want by placing their smartphones next to the sensor-enabled signage and displays. “In the future,” he says, “we believe every in-store store campaign will be measurable, adjustable and more effective.”

ON-THE-JOB TRAINING Germantown, Md.-based Hughes has been successful in rolling out Breakroom TV and MediaTraining across several large grocery conglomerates, according to Senior Marketing Manager Curtis Campbell, who notes: “I believe digital signage to be in its very infancy when it comes to grocery. Using it for employee communication is just the beginning.”

Hughes’ cloud-based, cost-effective solutions use SmartTVs to place employee-facing digital signage screens in areas where associates can see and interact with them often. “Now, grocers can provide key performance indicators to employees, as well as provide real-time and on-demand training at the screen,” Campbell says, “versus sticking associates in a training room for hours on end.”

The entire digital signage network can be controlled from a central location and managed from any device with an internet connection. “HR and communications teams no longer need to send stacks of paper fliers to bulletin boards or post endless announcements on an employee portal that no one goes to,” Campbell points out.

The Breakroom TV and MediaTraining solutions screens can be integrated with social media so that employees can interact with screens from their personal devices. “A great example of this, particularly within a grocer,” he says, “is employees learning about a recall. Rather than playing the age-old game of telephone, where information is always lost in translation, employees can inform each other via social media, which is then displayed on the screen to drive engagement even higher.”

This is yet another encouraging sign of the supermarket times, with even more to come.

Source

10

Consumer Trends Celiac Consumers Demand Quality and Nutrition Consumers with celiac disease may not be the majority of gluten-free consumers, but they will stick around after those who don’t need to eat gluten-free have jumped ship. Formulators and marketers of gluten-free foods should understand what these consumers want and need. Such was the nature of research presented by Alicia De Francisco, professor, laboratory of cereals, Federal University of Santa Catarina, at Cerals 17, the AACC International annual meeting, held Oct. 8-11 in San Diego.

Bread was the main bakery item that consumers with celiac disease said they still feel is lacking in gluten-free alternatives. Despite advancement in the past 10 years on quality and nutrition, these consumers still believe things could be better. Being able to eat bread helps these consumers feel less isolated from their gluten-tolerant friends and family, Ms. De Francisco said, citing comments from a survey respondent. They also not only expect the bread to have comparable taste and texture to conventional bread but also some nutritional value.

“These consumers are dissatisfied with the nutrition in gluten-free bread,” Ms. De Francisco said. “They want some fiber in their bread and not just empty calories.”

Despite the higher price of gluten-free baked goods, those with celiac disease care more about taste and quality than price. It seems to be an accepted norm of buying these products.

“If it tastes good, they will buy it regardless about the price,” Ms. De Francisco said.

These consumers tend to be very brand loyal. When they find a product that meets their taste and nutrition standards, they tend to stick with that brand. This is also true of their fears about cross-contamination. Consumers with celiac disease will stick with a company they trust to ensure food safety and abandon those that drop the ball in this area. And being a small, tight-knit community, word spreads quickly for the good and the bad when it comes to gluten-free products and the bakeries that produce them.

Source

Consumers Enjoy the In-Store Grocery Experience: Reports More and more consumers are giving online grocery shopping a try, but a significant segment of the population still says they enjoy the in-store experience, according to some recent surveys.

Among the 71% of consumers who have not placed an order online for grocery items in the past three months, almost half — 48% — said the main reason was that they enjoy shopping in person more, according to data from The Hartman Group’s Food Shopping in America 2017 report.

The report found that online grocery shopping continues to grow, however. In 2017, 29% of consumers surveyed for the report said they had ordered food online in the last three months, compared with 23% in 2014 and 18% in 2012. continues next page...

11

Consumer Trends Consumers Enjoy the In-Store Grocery Experience: Reports cont...

“As our Food Shopping in America 2017 report finds, providing food for the household is an expression of love, care and nurturance for self and others,” said Laurie Demeritt, CEO of research and consulting firm The Hartman Group, Bellevue, Wash. “It is because of this that for many consumers, shopping for groceries is something much more than a chore — it is an act of love.”

A significant majority of shoppers surveyed — 86% — said they had shopped at a brick-and-mortar grocery store in the last 30 days.

Likewise, a recent Reuters/Ipsos poll found that consumers overwhelmingly preferred the shopping experience at their local grocery store, with 62.9% saying it provided the best overall experience, followed by club stores at 13.8%, specialty stores at 9.3% and online retailers at 4.2%.

Local grocery stores were also preferred for pricing, selection, quality and convenience by similar margins. Online retailers performed particularly poorly on pricing, with only 2.6% of consumers saying they found the best prices online, and quality, with only 2.3% of consumers saying they found online retailers to offer the best quality when it comes to grocery shopping.

The poll found that 75% of online shoppers said they rarely or never buy groceries online, according to a report in Fortune magazine.

Source

Retailer News Festival Foods Provides Update On Gordy’s Market Acquisitions Festival Foods entered into new agreements to purchase three Gordy’s Market locations in Wisconsin—two in Eau Claire and one in Tomah—on Sept. 13.

Festival Foods had announced plans to acquire those three Gordy’s Market locations in July, but those plans temporarily stalled in August when Gordy’s announced it would have a receiver appointed. Now that new agreements are in place to purchase the three stores, Festival Foods says it is “hopeful the court will approve them in the coming days.”

After the court approves the sales and transactions are complete, Festival Foods says it will begin the processes of updating technology, hiring and training associates, and updating the stores. If all goes according to plan, the Tomah store at 701 East Clifton Street would open Nov. 10, and the Eau Claire stores at 2717 Birch Street and 2615 North Clairemont Avenue would open Dec. 1.

According to Festival Foods President and CEO Mark Skogen, the company looks forward to expanding its presence in Eau Claire and Tomah.

“We see the Gordy’s receivership as only a detour in the process to move forward with the purchase of these three stores, and we fully anticipate completing the process,” he said. continues next page...

12

Retailer News Festival Foods Provides Update On Gordy’s Market Acquisitions cont...

Festival Foods already has restarted the process of hiring associates for the three new stores. Potential applicants may view job openings and complete an application here.

Festival Foods also recently announced a replacement store that will open in Wisconsin, in Holmen, on Oct. 6.

Founded in 1946 as Skogen’s IGA, Festival Foods is a Wisconsin family- and employee-owned grocer. The company began operating as Festival Foods in 1990 and today employs more than 7,000 full- and part-time associates. It operates 28 full-service supermarkets across the state of Wisconsin.

Source

Roche Bros. to Build 3rd ‘Marketplace’

Roche Bros. has revealed plans to open a third location of its Brothers Marketplace banner early next year in Waltham, Mass., signaling confidence in the innovative small-store concept it debuted three years ago.

Roche Bros. opened the first two locations of Brothers Marketplace in Weston and Medfield, Mass., respectively, in 2014 as a means of capturing the growing prevalence of single-meal and other convenience-focused food shopping trips that its traditional supermarkets were missing.

“I think after three years, we’re somewhat comfortable with proof of the concept and we’re looking to continue to grow the brand,” said Paul McGillavray, VP of sales and merchandising at Roche Bros. “Both stores have been really well received by customers and so there’s not a whole lot we are looking to change.”

Noting, however, that population density is an important element of the first stores’ success, the Waltham location should improve on that count, McGillavray said. The unit is to be located on the ground floor of The Merc, a recently opened mixed-use development in downtown Waltham that will draw residential, business and transit traffic.

“Being in a more urban environment is going to be more helpful over the long-term success of the concept,” McGillivray said. The store, planned for 8,500 square feet is also slightly smaller than its predecessors so could be more productive, he added.

McGillivray described Brothers Marketplace “not as a gourmet experience but an everyday convenience experience,” for shoppers, although assortments, presentation and service tend to cater to the “foodie.”

The stores offer a curated selection of everyday groceries; an array of fresh and prepared food; indulgences like scratch-baked pastries; and an assortment of local vendors like Armeno Coffee, based in Northborough, Mass., and Tea Guys, based in nearby Whately, Mass. Some product vendors will be handpicked by store associates, who are encouraged to provide samples and recommendations for food preparation. continues next page...

13

Retailer News Roche Bros. to Build 3rd ‘Marketplace’ cont...

The Waltham store is expected to open next spring. Rival Ahold Delhaize, which operates Stop & Shop supermarkets, has also been experimenting around Boston with a small-store concept known as bfresh, which also operates three locations today.

“The consumer is going to be the true test of whether a concept works,” McGillivray said. “But from a lifestyle perspective, it does address many of the everyday needs of today’s shoppers. They shop frequently. They shop for fresh. They are certainly shopping for prepared and convenient food. And so having these stores that are easy to shop, that are close by and easy to get in and out of, they can serve a segment of the market.”

Source

Kroger Launches Website Welcoming Local and Emerging Brands Kroger Co. is eyeing local suppliers through a newly-launched website platform called Kroger.Com/WeAreLocal, aimed at welcoming emerging and local brands.

“Kroger has always had a commitment to supporting small-business owners and local vendors,” said Executive VP of Merchandising Mike Donnelly. “Our business has a track record of successfully blending centralized and decentralized decision making to promote local products while also enjoying economies of scale. Since Kroger’s day one, we have had a longstanding, 365-day-a-year commitment to support and source from local farmers, ranchers, food producers, wineries, breweries, and product makers. There are tastes and products that are unique to every region.”

The site launched Friday, September 22, just after the industry reeled from an announcement that newly-Amazon powered Whole Foods would be backing away from its traditional small brand buying tactics into a more centralized strategy.

Kroger said in a press release that it recognizes the importance of carrying local and regional brands that are meaningful to the nearly nine million customers served in its family of stores daily, adding that it currently sources from thousands of local suppliers.

“Kroger has led the way for over a decade in making local, natural, and organic products more affordable and accessible to America–especially for shoppers on a budget,” said Donnelly. “We’ve always believed that our customers shouldn’t have to pay higher prices just because a product is local, natural, or organic. There are a lot of headlines about making local, natural, and organic foods more affordable. The truth is, we’ve always been affordable. That’s why we developed our Simple Truth brand, which today is the biggest natural and organic brand in the country by volume.”

The retailer cited a number of benefits to promoting and sourcing local brands. In addition to expanding its product portfolio, stimulating the local economy, and enhancing product freshness, Kroger said the buying method supports its sustainability commitments like the recently-launched Zero Hunger | Zero Waste initiative.

Source

14

Retailer News Kroger Unveils Plan to Invest in Technology, Store Resets

On October 11th, Kroger unveiled a series of strategic moves that include reducing its investments in new stores and leveraging technology to accelerate changes in assortments and improve customer service at existing locations.

The company also is considering the potential sale of its convenience-store division, a $4 billion business operating 784 locations in 18 states.

The “Restock Kroger” initiative will involve an accelerated and more data-driven effort around pricing, personalized communications with customers and a massive revamp of product assortments, executives form the Cincinnati-based company explained in Kroger’s annual Analyst Day. Kroger is the largest collector of food purchase data in the U.S., the company said, and it intends to use that data as a competitive advantage as it expands its efforts to provide meal- and food-shopping solutions.

“We will change the way people eat in the U.S.,” said Rodney McMullen, chairman and CEO. “If you are eating, we want to serve you. Unless you are eating in a white tablecloth restaurant, we want to be able to provide that meal for you.”

Among other initiatives in that area, the company is rolling its Prep + Pared meal kit program out to five additional markets in the coming months, up from three markets where the kits are currently offered.

One of the most significant elements of the Restock Kroger plan involves a reset of stores in which it anticipates making dramatic changes to product assortments, based on its trove of data. While the company has long curated its assortments to meet customer demands, the new initiative will be much more aggressive, touching more categories and more stores than in the past, the company said.

While last year the company revamped its category assortment in 6% of its stores using its new data-driven mechanisms, it anticipates do so in 20% to 30% of its stores per year beginning in 2018.

In the pasta category, for example, the company has learned that its own private label brands far outsell name-brand competitors, which has led it to reset the pasta category, giving its own brands a much more prominent positon on the shelves. Similarly, sparkling waters have been strong sellers lately, leading the company to completely rethink the beverage category in some stores.

“We’ve reinvented what beverage sections look like,” said Stuart Aitkin, CEO of Kroger’s 84.51° data analytics division. “We need to make sure our stores stay relevant.”

The resets, which the company describes as the “space optimization” element of Restock Kroger, will vary on an individual store basis, and will involve both optimizing product assortments in each category, improving product adjacencies, and integrating and expanding natural and organic product assortments. Private brands, particularly the Private Selection specialty line and the Simple Truth organic and natural offerings, will see significant expansion.

The category resets “will be done in categories where customers told us it matters,” said Aitkin. continues next page...

15

Retailer News Kroger Unveils Plan to Invest in Technology, Store Resets cont...

Data will also be used to enhance the personalization of offers to consumers through digital coupons, recipe suggestions and other means, and to help guide the rollout of the company’s ClickList online shopping offers.

Asked by analysts about the possibility of making click-and-collect shopping free for customers, Kroger said that customers don’t appear put off by the $4.95 flat fee and are willing to pay for the convenience.

Kroger will also roll out its “Scan, Bag, Go” mobile app-driven self-checkout service, which has been in test for the past couple of years in about 20 locations, to 400 stores in 2018. The service has been enthusiastically received by customers, Kroger said.

The company is leveraging technology to improve store operations in other ways as well, such as monitoring wait times at the pharmacy counter to alert pharmacists when customers need attention, and helping guide production levels by relaying sales data to employees so they know when to prioritize the restocking of certain prepared-foods items, for example.

Leveraging digital displays at the shelf edge is another element of the technology upgrades the company is rolling out, primarily on endcaps.

Overall, the company will increase technology spending by 200% in 2018 on areas including digital shopping, merchandising, in-store technologies, health and wellness and payments, any by 50% on areas including data, in-store WiFi and legacy system modernization.

“The business we are going to run next year or the year after that can’t be the same as the one we’ve run in the past,” said Chris Hjelm, executive VP and chief information officer.

Overall the company will re-align capital expenditures to spend $1.15 billion on building new and replacement stores and store expansions from 2018-2020, down from the $3.56 billion spent in 2015-2017 as the company invests in its new digital and product optimization initiatives.

Kroger also said the Restock plan is expected to generate $400 million in incremental operating margin by 2020.

Overall capital expenditures for 2018 are projected at $3 billion.

The company also projected that its earnings per share in 2018 would be flat to slightly higher compared with current-year levels, and that identical-store sales would be stronger in 2018 than in the current year.

The company also reaffirmed its financial guidance for 2017, including ID supermarket sales growth of 0.5% to 1%, excluding fuel, for the remainder of the year, and net earnings of $1.74 to $1.79 per diluted share, including an estimated 9 cents per share for the 53rd week. The company said the hurricanes that hit the U.S. in recent months will not have a material impact on its financial results.

Source

16

Retailer News Whole Foods to Hire 6,000 Team Members

Whole Foods will host a National Hiring Day at all of its U.S. stores on Nov. 2., with the goal of hiring 6,000 “passionate, food-focused candidates.”

The chainwide event will include immediate interviews and on-the-spot job offers for full- and part-time positions including cashiers, culinary experts, and prepared foods specialists. Interested candidates can fill out an application in person or apply in advance online.

Source

Amazon Sales Surge After Whole Foods Acquisition, Busy Prime Day Amazon.com Inc. on October 26th said its sales surged over the summer and profit trounced expectations, as shoppers jumped at “Prime Day” promotions on its website and bought groceries at its newly acquired chain of Whole Foods Market stores.

Shares rose more than 7 percent in after-hours trade.

Amazon is winning business from older, big box rivals by delivering virtually any product to customers at a low cost, and at times faster than it takes to buy goods from a physical store. It acquired Whole Foods for $13.7 billion in August to help it deliver groceries to shoppers’ doorsteps.

Amazon’s results defied expectations that it would invest nearly all of its earnings into new areas as it has in the past. The world’s largest online retailer said net income rose to $256 million, or 52 cents per share in the quarter ended Sept. 30. Analysts on average were expecting 3 cents per share, according to Thomson Reuters I/B/E/S. “This company has finally gotten itself to the point where it can sustain its spending growth and still leave some crumbs for shareholders,” said Wedbush Securities analyst Michael Pachter.

Prime Day, a summer marketing event Amazon has created to replicate the shopping frenzy that is more typical of the winter holiday season, helped boost sales.

Revenue rose 34 percent to $43.7 billion in the third quarter, including $1.3 billion in sales from Whole Foods.

Analysts had expected $42.1 billion.

“There’ll be a lot of integration,” Amazon’s Chief Financial Officer Brian Olsavsky said on a call with analysts, citing how Amazon’s two-hour delivery service Prime Now could work with Whole Foods, for instance.

“We think we’ll also be developing new store formats,” he said.

17

Retailer News Amazon Sales Surge After Whole Foods Acquisition, Busy Prime Day

In a first, Amazon broke out sales for its online retail business and for its physical bookstores and Whole Foods locations. Revenue from its online stores jumped 22 percent to $26.4 billion, the fastest growth Amazon has seen in the segment in more than a year.

Key to its success has been signing more people up for Amazon Prime, its fast-shipping and video-streaming club, whose members tend to buy more from the company. Revenue from subscription fees such as Prime grew 59 percent to $2.4 billion.

And Amazon Web Services (AWS), which handles data and computing for large enterprises, saw its profit margin expand from the previous quarter. It posted a 41.9 percent rise in sales to $4.58 billion, beating the average estimate of $4.52 billion, according to analytics firm FactSet. “They are firing on all cylinders. The machine is churning,” Benchmark Co analyst Daniel Kurnos said.

STILL BETTING ON HOLLYWOOD Amazon shares have a high valuation, with a price-to-earnings ratio more than eight times that of cloud-computing rival Microsoft Corp (MSFT.O), for instance.

Unlike peers, Amazon runs on razor-thin profit margins because it sinks most of its profit back into its business.

This quarter, which includes the shopping holiday Black Friday, Amazon said it expects operating profit between $300 million and $1.65 billion. Analysts were expecting $930.78 million, according to Thomson Reuters I/B/ E/S. Amazon’s profit is going toward a dizzying number of investments: warehouses for faster shipping, data centers for AWS, and a 77 percent uptick in employees last quarter, including Whole Foods workers.

The company plans to spend more on video content next year as well, Olsavsky said. Analysts estimate Amazon will have spent $4.5 billion this year.

The commitment to content comes after Amazon Studios chief Roy Price resigned last week, and other top studio hands left the company.

It is unclear what impact the shakeup may have on Amazon’s ability to secure video that competes with Netflix Inc (NFLX.O) for viewers’ attention.

The company’s shares, which closed down 0.05 percent on Thursday, rose about 7.5 percent to $1,046 in after-hours trading following the earnings statement. They had gained about 30 percent this year.

Source

18

Retailer News Acme Markets President Perkins To Expand Duties; Will Now Oversee Safeway Eastern Div. For the third time in 13 months, Safeway’s Eastern division has a new leader. Parent firm Albertsons Cos. has named Jim Perkins to head the approximately 120-store decentralized division, replacing Dan Valenzuela who has left the company. Perkins, who currently is president of 176-store Malvern, PA-based Acme Markets, will expand his duties and oversee both banners. He remains a corporate executive VP of retail operations and special projects for Albertsons.

The change in leadership is not surprising given the struggles that Safeway-Eastern has encountered during the past 18 months. When Albertsons acquired Safeway in 2015, it moved quickly to shift to the decentralized merchandising model, based in Lanham, MD, that it first adopted after it acquired nearly 900 stores from Supervalu in 2013.

At that time, Perkins served as EVP-east region for the Boise, ID-based chain which moved Safeway veteran Steve Burnham from a corporate post in Pleasanton, CA to oversee its eastern division. After a fast start, when Safeway lowered many prices and empowered both store managers and the new local merchandising team to act more quickly and decisively, Safeway seemed to be changing its formerly sluggish course.

However, as its new system evolved and market competition became fiercer, Safeway associates and suppliers told us that everyday retails were creeping up and the new decentralized system was not operating as efficiently as hoped.

In September 2016, Burnham was replaced by 39-year Safeway veteran Valenzuela, who since 2015 was president of the company’s Seattle division. Valenzuela also headed Safeway’s Phoenix division from 2003 to 2015.

Upon hearing the news that Perkins would be running the division, one veteran Safeway-Eastern executive said: “This is really exciting news. I’ve been especially concerned with the condition of our stores, both physically and morale-wise. I’m confident that’s going to change quickly. Jim knows the business, understands the market (he had a four-year stint with Giant/Landover) and connects with people on a very positive level. We need that here.”

Perkins began his Albertsons career as a store clerk in 1982. After multiple career advancing promotions, he was named president of Acme Markets in 2013 and also elevated to executive VP of the parent company. In 2015, he was promoted EVP-East and a year held the same title for the retail chain’s large Western operations. He returned to oversee a significantly larger Acme division (after the acquisition of more than 70 former A&P stores) in June 2017, before adding the Safeway leadership list to his list of duties.

Source

19

Retailer News Giant Foods Stores Pilots Marty, a Robot Rover

Five years ago, robots roving supermarket aisles might have seemed like a stretch of the imagination. Today, the concept is not only a reality, but quickly gaining footing with retailers. One such example comes in the form of Marty, a friendly, googly-eyed robot that Ahold USA, parent of Giant Food Stores, is piloting in Pennsylvania as part of a larger upcoming program, according to local source Penn Live.

Marty is a multi-purpose bot-- a tall gray gadget personified with a set of eyes. The robot is part of a test program being developed by Badger Technologies.

“We recognize an opportunity to have a robot that could give us an assistance in the building to our associates. The robot can’t do the work of the associates but he can report out information and data to us that is a value, not only to us as a business, but to our customers,” said Patrick Maturo, Manager of Store Optimization for Ahold USA. Marty the robot currently patrols the store aisles several times a day. It does not replace duties of any employees, but is able to:

• Scan floors for slip or trip hazards

• Read unit tags to recognize if items are out-of-stock and notify employees

or generate replenishment reports

• Check prices “Marty can actually look at a unit tag on the shelf, read that unit tag, reference it back to the front register system, and know whether or not that tag is reflective of the correct retail price,” Maturo added.

According to Maturo in the report, by 2018, Ahold USA is planning to have an expanded version of the program with a dozen robots operating throughout its banners.

Other retailers currently experimenting with robots include Target, Amazon, and Walmart.

Source

E&H Family Group Announces Sale of Buehler Supermarkets to its Employees E&H Family Group, parent company of Buehler’s, announced the sale of its 13 supermarkets to employees in the form of an employee stock ownership program (ESOP). All 2,100 employees will be retained in the transition and eligible employees will become owners. All 13 supermarkets will remain open with the same hours of operation.

“This was a decision we did not take lightly. Our generation of Buehlers are reaching retirement age and we think this a better option than selling the business to outsiders,” said Dan Buehler, president & COO, E&H Family Group.

“We want these supermarkets to be here serving customers and providing good jobs well into the future. There’s no one better qualified than our own employees to carry on that mission. continues next page...

20

Retailer News E&H Family Group Announces Sale of Buehler Supermarkets to its Employees cont...

We believe that the transition to an ESOP is a winning solution for the Buehler family, our employees and the communities we serve.”

The ESOP will be operated by the newly formed Buehler’s Fresh Foods, retaining the familiar name and led by an experienced team of Buehler’s veterans, including Dan Shanahan, Buehler’s Fresh Foods president and COO since 2011, Rick Lowe, VP of Human Resources of E&H Family Group since 1977, and Mike Davidson, VP of Store Operations since 2015.

Shanahan will serve as president and CEO of the new company, Lowe will be executive vice president and CAO and Davidson will be executive vice president of store operations.

“We wish Dan, Rick and Mike all the best as they lead this exciting transition. They know this business inside and out, our employees know them well, and we are confident that together, they will continue to achieve great success,” said Dan Buehler, President, E&H Family Group.

“On behalf of the Buehler’s Fresh Foods team, we are happy for the Buehler family and excited for the opportunity to write the next chapter in the great Buehler story,” said Dan Shanahan.

E&H Family Group, owned by the Buehler family of Wooster, also operates 22 hardware stores in Ohio under the E&H Ace Hardware name. The sale has no impact on the E&H Hardware Group, which will continue operating under Buehler family ownership.

The Food Partners represented E&H Family Group in its evaluation of strategic alternatives including as its financial advisor in the transaction.

“This is the right thing to do for our family, our customers and suppliers, and I know my brother Gene and our mom and dad would agree,” said Don Buehler, who worked in the store as a child and who stepped back from day-to-day responsibilities in the family business in June 1997 after decades of service. “We have deep and longstanding relationships with thousands of customers and farmers in the communities we serve, and we owe them a debt of gratitude for their loyalty and support over the past 88 years.”

“The Buehler family is not going away,” said Dan Buehler. “We’ve always been a family operated independent business that’s very involved in our communities. Our customers are our neighbors and friends. We live in the communities we serve, we’re committed to them and we will continue to support them.”

Source

21

Shows & Events

22