Progessive Grocer - March 2018 by ensembleiq

GET READY! GET SET, GO

Daymond John

Christina Tosi

CEO & Founder, FUBU

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Bill McDermott

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CEO, SAP

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Exclusive! Retail Seafood Review: Grocers spotlighting health, sustainability LET IT GROW Organic produce offers more sales opportunities than ever ThE FuTuRE Is NOW Tech-savvy Chinese chain shows grocery’s true potential BLOCKChAIN PARTY Grocers at the forefront of adapting technology for the food industry

IN THe HeIgHTs FOODTOWN of Washington Heights takes urban retailing to a whole new level

March 2018 • Volume 97, Number 3 $10 • www.progressivegrocer.com

Nasri Abed, owner Foodtown of Washington Heights

C R A F T E D

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Delightfully shareable for every occasioN A premium almond of unmatched quality and taste

C R A F T E D

Four flawlessly seasoned flavors

After we remove the almond skins, we roast, lightly oil and season to create a smooth texture, delicious taste and nutty crunch A premium almond snack that delivers a must-share gourmet experience to your category

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Perfect Grocery Basket Pairings with Blue Diamond Crafted Gourmet Almonds Blue Diamond Almonds has been at the forefront of almond innovation for more than a century and they are proving this once more with the introduction of Crafted Gourmet Almonds, a premium offering for a new occasion in the almond category – social gatherings and “sharing food” occasions.

The Craftsmanship Behind the Flavor

Dollar sales of “specialty” snacks grew 13.6% from 2014 to 2016, compared with 2.3% growth for all foods, and 60% of household food shoppers say high-quality ingredients inﬂuence their purchasing decisions. On trend with consumer preferences, Crafted Gourmet Almonds are a delightful, high-quality almond offering that will resonate with your customers and increase your sales.

• First, the almond skins are removed for a smooth texture and nutty crunch.

Available in Garlic, Herb and Olive Oil, Pink Himalayan Salt, Black Trufﬂe, and Rosemary and Sea Salt, Crafted Gourmet Almonds also complement a variety of savory and sweet foods to create shareable plates, boards and bowls, dining and entertaining options popular among consumers. Crafted Gourmet Almonds ﬁt perfectly on a charcuterie platter with cured meats, cheeses, and jams, work well with vegetables and fruit, and pair deliciously with artisan-style desserts like chocolates and caramels. Featuring Crafted Gourmet Almonds in your store will increase your sales because they align with consumer preferences and will encourage customers to get creative when planning special occasions, elevated snacking experiences, and potential pairings. In-store tastings and demonstrations are effective ways to cross-merchandise foodie-friendly snacks like Crafted Gourmet Almonds and other foods. Give shoppers a taste of Crafted Gourmet Almonds: the quality, specialty, and pairable offering they’re looking for.

Blue Diamond Crafted Gourmet Almonds offer a unique ﬂavor – something that can be attributed to the process behind the product:

• Then the almonds are roasted, lightly oiled and seasoned with herbs and spices to create a rich, savory and delicious taste.

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Contents Volume 97 Issue 3

Photo by Sue barr

03.18

Features

COVER STORY

Store of the Month

28 2018 Fmi midWiNTER ExECuTiVE CONFERENCE

50 FROzEN/REFRigERaTEd FOOdS

all Signs Point to Solutions

frame frozen foods as part of daypart solutions to build traffic and profits.

annual confab stresses that retailers must fully embrace collaboration, connectivity, customization.

Solid Centerpiece

Reaching New Heights

a onetime movie theater takes retailing in a diverse community to a whole new level.

departments 8 EdiTOR’S NOTE

Grocery’s natural abilities 12 PulSE

22 16 CONSumER iNSigHTS

26 aWaRdS

What’s hooking Consumers on Seafood

PG Celebrates outstanding Independents

18 NiElSEN SHElF STOPPERS

86 EdiTORS’ PiCkS

Dressings/Salads/ Prepared foods

food, beverage & nonfood Products

20 miNTEl CaTEgORY iNSigHTS

90 TECH Talk

Sugar and Sweeteners

add More Content, Sell More Groceries

14 iN-STORE EVENTS CalENdaR

May 2018

22 all’S WEllNESS

reeling in retail Sales Progressive grocer March 2018

contents 03.18

Volume 97 Issue 3

8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 800-422-2681 Fax: 978-671-0460

www.ensembleiq.com

56 Fresh Food

Organic’s Time is Ripe

svP, Brand director Katie Brennan 201-855-7609 • Mobile: 917-859-3619 kbrennan@ensembleiq.com editorial Managing Director of content Strategy Joan driggs 224-632-8211 jdriggs@ensembleiq.com

Sales opportunities for this produce segment have never been better.

eDitorial Director James dudlicek 224-632-8238 jdudlicek@ensembleiq.com Managing eDitor Bridget goldschmidt 201-855-7603 bgoldschmidt@ensembleiq.com Digital & technology eDitor randy hofbauer 224-632-8240 rhofbauer@ensembleiq.com

62 Progressive grocer’s 2018 retail seaFood review

Senior eDitor Katie martin 224-632-8172 kmartin@ensembleiq.com Senior eDitor anna wolfe 207-773-1154 awolfe@ensembleiq.com

Sea Change

contributing eDitorS D. Gail Fleenor, Bob Ingram, Jenny McTaggart, Lynn Petrak and Barbara Sax

Retailers are keen to provide a point of differentiation in this section – even, perhaps, the option of plant-based alternatives.

advertising sales & Business SoutheaSt account executive larry cornick 224.632.8248 lcornick@ensembleiq.com MiDweSt Marketing Manager angela Flatland (ar, co, il, in, ia, kS, ky, Mi, Mo, ne, nD, ok, SD, tn, wi) aflatland@ensembleiq.com 224-229-0547 • Mobile: 608-320-4421 Senior Marketing Manager Judy hayes 925-785-9665 jhayes@ensembleiq.com

Senior Marketing Manager theresa Kossack 214-226-6468 tkossack@ensembleiq.com weStern regional Marketing Manager rick neigher (ca, or, wa) rneigher@ensembleiq.com 818-597-9029 northeaSt Marketing Manager mike shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@ensembleiq.com account executive/claSSifieD aDvertiSing terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com

72 technology

claSSifieD ProDuction Manager mary Beth medley 856-809-0050 marybeth@marybethmedley.com

Has Grocery’s Future Already Passed ‘Go’?

events SvP, eventS & conferenceS Maureen Macke 773-992-4413 mmacke@ensembleiq.com

Amazon’s cashierless concept is innovative, but Alibaba’s Hema stores may show grocery’s true potential.

custom media general Manager, cuStoM MeDia Kathy colwell 224-632-8244 kcolwell@ensembleiq.com marKeting Marketing Manager courtney hofbauer 224-632-8215 chofbauer@ensembleiq.com

75 suPPly chain

Building ‘Blocks’

audience develoPment Director of auDience DeveloPMent gail reboletti greboletti@ensembleiq.com

IBM and a consortium of retailers and suppliers are paving the way for a game-changing technology that can achieve product traceability at the ‘speed of thought.’

auDience DeveloPMent Manager shelly Patton 215-301-0593 spatton@ensembleiq.com liSt rental the information refinery 800-529-9020 Brian clotworthy

78 nonFoods

SubScriber ServiceS/Single-coPy PurchaSeS 978-671-0449 or email at EnsembleIQ@e-circ.net art/Production Director of ProDuction Kathryn homenick khomenick@ensembleiq.com aDvertiSing/ProDuction Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@ensembleiq.com

Supplemental Knowledge

creative Director colette magliaro cmagliaro@ensembleiq.com

Understanding the category can help retailers tailor their selection for maximum sales.

art Director Bill antkowiak bantkowiak@ensembleiq.com rePrints, Permissions and licensing Wright’s Media ensembleiq@wrightsmedia.com 877-652-5295

83 equiPment & design

Streamlined Service Working with retailers, kiosk suppliers are growing their supermarket presence.

progressivegrocer.com

corPorate oFFicers

executive chairMan alan glass chief executive officer david shanker chief oPerating officer/ chief branD officer richard rivera chief buSineSS DeveloPMent officer Korry stagnito PreSiDent of enterPriSe SolutionS/ chief revenue officer ned Bardic PreSiDent anD executive Director, Path to PurchaSe inStitute mike mcmahon chief Digital officer Joel hughes chief huMan reSourceS officer Jennifer turner

Editor’s NotE By Jim Dudlicek

Grocery’s Natural Abilities s demand for organic and natural foods continues to accelerate, grocery retailers stand poised to own the health-and-wellness category if they can effectively communicate the message to consumers that they’re more than just sellers of goods, but also gatekeepers of lifestyle solutions. Competition is fierce and growing by the day. Giants like Kroger and Walmart, which, by their size and volume, came to overshadow the organics prowess of Whole Foods, now face a chain owned by Amazon, which is merging its Prime Now and AmazonFresh services to boost its fresh food fulfillment. Kroger announced last month that its organic produce business has achieved $1 billion in annual sales by “making this category more mainstream, accessible and affordable,” according to SVP of Merchandising Robert Clark. In fact, Kroger boasts that it now represents nearly 20 percent of the United States’ annual organic produce business, and its Simple Truth brand of of natural, organic and free-from products has attained $2 billion in annual sales. According to IRI, the U.S. organic produce market reached $5 billion in 2016. Within a segment worth nearly $70 billion, Packaged Facts estimates that U.S. retail sales of natural and organic foods rose 7 percent from 2012 to 2016, with growth anticipated to reach double digits by 2021. Traditional grocers, large chains and independents alike, stand to profit. The National Grocers Association (NGA), which represents independent supermarkets, released its third annual shoppers survey during its annual convention last month. Among the key findings: More than 80 percent of shoppers prefer their local grocery store to an online alternative, and those who do buy online also shop a physical store (68 percent). The desire to see items before buying them and concerns about freshness are the biggest obstacles to online shopping, a plus for brick-and-mortar grocers investing in colorful, fragrant produce departments to create destinations in their fresh perimeters. Particularly key to grocers aiming to own health and wellness: Most independent shoppers expect help from grocers in pursuing a healthier lifestyle. Shoppers want instructions on how to cook; help with reading labels, including ingredients and health claims; and general guidance on nutrition. Helping grocery consumers to eat smarter is the goal of the inaugural SmartFood Expo, a joint venture of the United Fresh Produce Association and Progressive Grocer. It’s the only B2B event solely focused on better-for-you food and beverages. Retailers and industry leaders will meet June 25-27 for three days of education, networking and discovery, co-located with United Fresh’s annual food and floral shows at Chicago’s McCormick Place. Learn more and register at www.smartfoodexpo.org. 8

progressivegrocer.com

Grocers can own the healthand-wellness category if they can effectively communicate the message to consumers that they’re more than just sellers of goods, but also gatekeepers of lifestyle solutions. Further driving PG’s leadership in health and wellness is our Healthy Shopper Summit, co-located with SmartFood Expo, where retail dietitians and wellnessfocused grocery executives will drill down on an allstore approach to delivering healthy solutions. Learn more in upcoming issues of PG and an informative video on our website.

Highs and Lows As this issue went to press, news broke of expected bankruptcy filings by Bi-Lo, a subsidiary of Southeastern Grocers, and Tops Markets, both of which may have occurred by the time you read this. Are these the first signs of the carnage some say will be wrought on traditional grocery operators by Amazon? It’s more likely a result of these retailers’ debt structure, particularly Bi-Lo, which has sought bankruptcy protection twice previously since 2005. But it certainly indicates the extremely competitive nature of the business and the overwhelming need to innovate to stay relevant and profitable. We’ll look at these issues more closely next month in our 85th Annual Report of the Grocery Industry. Meanwhile, watch all of the latest news unfold at progressivegrocer.com.

Jim Dudlicek Editorial Director jdudlicek@ensembleIQ.com Twitter @jimdudlicek

THE ART OF MERCHANDISING

Inside the Dinner Confessional. A closer look at shoppers. We know what shoppers tell us, but their shopping behaviors reveal a different story. Tyson Foods is currently following ten participants in a yearlong experiment2 to learn how deli departments can better meet their needs as a go-to solution when faced with dinnertime stress. While our test group generally concurred they idealize the dinner hour, hoping to relax, unwind and bond with their families; they confessed it usually turns out to be unrewarding.

According to Eric LeBlanc, director of channel marketing, deli, at Tyson Foods, Inc. – “Many shoppers, including those participating in our Unconventional Shopper Connections experiment, admit they aren’t turning to prepared foods, even as a bail out. While most see our departments in a favorable light, they don’t think prepared foods are for them. They’d like to incorporate them into meal ideas that feel planned out and made from scratch, but they need some inspiration. So, it’s up to us to provide it.”

Finding Opportunities Beyond Good Execution The test group did say that perceptions of freshness, taste, and flavor are important, but good execution alone is not enough to inspire them to put prepared foods into their mindsets or carts. This feedback aligns with past research1 in which purchasing behaviors were negatively impacted by the old broken deli concept that promotes individual products and value proposition,

neither of which helped shoppers create satisfying meals their families would actually enjoy. As we look closer at the needs of our shoppers, we can find opportunities for retail to become more of a regular “go to” mealtime solution as well as an inspirational choice for quick, tasty and easy meal ideas.

Looks Really Do Matter

Shoppers ﬁnd that fresh, ﬂavorful and novel foods are appealing and inspiring.

Offer meal ideas and simple solutions that focus on the freshness and versatility of prepared foods.

Use messaging to reach shoppers during the “4pm dinner decision hour” with options featuring prepared foods with other store items.

TysonVelocity.com/ChangingTheConversation

Sources: 1) Tyson Foods, On The Go Foodservice Study, 2015; Tyson Foods, Emotional Trigger Research Study, 2016; Tyson Foods, Prepared Foods Challenge, 2016 2) Tyson Foods, Unconventional Shopper Connections, 2017-18

What’s trending noW on progressivegrocer.com

Pulse

The 15 recipients of Progressive Grocer ’s 2018 Outstanding Independents Awards made the strongest buzz among all news topics during the Jan. 16Feb. 15 time period on progressivegrocer.com, with independent grocers from coast to coast honored in categories ranging from outstanding single and multi-stores to exceptional design and performance in various departments and technological innovations. Among other buzzworthy stories were more controversial pieces surrounding such topics as Amazon’s layoffs of hundreds of employees in Seattle and abroad; a pullback in store openings and sizes from Lidl, whose once-feared presence and expansion are now in question; and the resignation of Pacific Northwest grocer New Seasons CEO Wendy Collie, who was accused of hiring union busters following a unionization drive last fall “largely sparked” by a healthcare rollback. Other coverage getting attention concerned consumer behavior — notably how five distinct generations are altering the grocery landscape, and how brands and retailers can respond to these changes, and new research showing that seven in 10 consumers will purchase groceries online by 2024.

15 Independent Grocers that are Ahead of the Curve http://bit.ly/2nJEe5H

“This year’s winners all have ideas that can work in a variety of other stores to improve customer experience and, in turn, increase sales.” —Katie Martin, senior editor, Progressive Grocer

Research Shows How Demographics Influence Shopping Habits http://bit.ly/2GeEUIF

Amazon to Lay Off Hundreds

70% of Consumers Will Buy Groceries Online by 2024

http://bit.ly/2EvSC8A

http://bit.ly/2Bvr1WB

Lidl Opening Fewer, Smaller U.S. Stores: Report http://bit.ly/2HmGUz1

New Seasons CEO Wendy Collie Steps Down http://bit.ly/2Bystas

“Today’s disruptive retail landscape has inspired many companies such as ours to re-evaluate their organizational structure and strategy.” —Wendy Collie, CEO, New Se asons Market

progressivegrocer.com

Lower carbs. Lower calories. Higher expectations. 85% 85 % O OF F LI LIGHT G HT BE BEER ER D DRINKERS R I NK E RS AND AN D 84 % O F HI S PA N I C BE ER D RI N K ER S SAY 84% OF HISPANIC BEER DRINKER T HE Y WOU LD BUY COR O NA PR E MI E R .* THEY WOULD CORONA PREMIER.*

226 g C A R B S 90 C A L O R I E S

enjoy the view

Drink responsibly. Corona Premier® Beer. Imported by Crown Imports, Chicago, IL. Per 12 fl. oz. serving average analysis: Calories 90, Carbs 2.6 grams, Protein 0.7 grams, Fat 0.0 grams. Compared to 12 fl. oz. serving Corona Extra Calories: 149, Carbs: 14.0 grams, Protein: 1.2 grams, Fat: 0.0 grams. *Source: 2017 Nielsen BASES II Study, Post-Use Purchase Intent, “Definitely/Probably Would Buy”

in-store events

Calendar S

05.18

National Barbecue Month National Mediterranean Diet Month National Hamburger Month National Salsa Month

National Chocolate Parfait Day

SIAL Canada begins in Montreal and continues through the 4th.

Celebrate May Day with a display of baskets for easy gifting.

National Chocolate Truffle Day

National Strawberry Month National Egg Month National Salad Month National Beef Month

National Raspberry Popover Day National Chocolate Custard Day

The 144rd Kentucky Derby is run today. Break out the mint julep accessories.

National Enchilada Day

National Hoagie Day

Cinco de Mayo

National Crepe Suzette Day

National Pizza Party Day

Honor National Armed Forces Day with displays celebrating the four branches of the military.

Roast Leg of Lamb Day

National Coconut Cream Pie Day

National Moscato Day

National Beverage Day

National Apple Pie Day

National Buttermilk Biscuit Day

Mother’s Day This is the start of American Craft Beer Week. Display local beers, growlers and beer glasses.

National Chocolate Chip Day

National Barbecue Day

USA Trade Tasting & Conference begins in New York and continues through the 16th.

Make sure your store is prepared for Memorial Day and have plenty of grilling accessories on hand.

National Cherry Cobbler Day World Baking Day

National Eat What You Want Day. Offer samples of tasty treats throughout the store.

It’s No Dirty Dishes Day. Crosspromote liquid soaps, sponges, drying racks and dish towels.

National Nutty Fudge Day

National Devil’s Food Cake Day

Ramadan begins

National Quiche Lorraine Day National Pick Strawberries Day

Italian Beef Day

In honor of Jewish Heritage Month, offer discounts on kosher products.

National Vanilla Pudding Day

National Taffy Day

NCA Sweets & Snacks Expo begins in Chicago and continues through the 24th.

Memorial Day National Hamburger Day

National Brisket Day

progressivegrocer.com

National Biscuit Day

National Escargot Day

Review your summer travel plans.

National Mint Julep Day

National Macaroon Day

National Wine Day. Showcase your drinkware and other outdoor-entertaining items. National BrownBag-It Day. Run specials on your grab-and-go items.

National Blueberry Cheesecake Day National Cherry Dessert Day

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Consumer InsIghts

Market Research

What’s Hooking Consumers on Seafood? He altH is one l arge purcHasing driver. What’s influencing consumers’ purchasing decisions when it comes to seafood? Progressive Grocer, along with sister company EIQ Research Solutions, interviewed 500 consumers who have household responsibility for grocery shopping to find out the reasons behind the buy for seafood. The desire to eat more healthfully ranked high for all age groups, and younger consumers were more interested in pre-seasoned fresh products than their older counterparts. Survey respondents were sourced via ProdegeMR, reinventing the market research process by taking a respondent-first approach. Visit www.prodegemr.com for more information. For more about seafood, read PG’s 2018 Retail Seafood Review, starting on page 62.

rate the appeal of each of the following types of seafood offerings that might be offered in a supermarket: Total

83% of respondents surveyed eat seafood, with Baby Boomers trending higher, at 89%.

Younger Millennials

Older Millennials

5 0.0%

5 4.7%

Gen X

Baby Boomers

Mature/ Silent/GI

Sushi Very or Somewhat Appealing

42 . 8%

4 4. 5%

3 5.0%

0.0%

Fresh seafood in the seafood department that is pre-marinated, pre-seasoned, crusted, etc., but still needs to be cooked Very or Somewhat Appealing

6 5.7%

74.1%

74.7%

70. 8%

5 4.7%

3 6.4%

79.6%

4 5. 5%

5 9.1%

4 6.0%

27.3%

5 9.1%

5 8 .4%

3 6.4%

4 8 .9%

49.6%

3 6.4%

Fresh seafood in the seafood department without any marinade, seasoning, crust, etc., that still needs to be cooked Very or Somewhat Appealing

75.4%

74.1%

72 .0%

75.9%

Frozen seafood that is pre-marinated, pre-seasoned, crusted, etc. Very or Somewhat Appealing

51.7%

4 6.3%

5 6.0%

Frozen seafood without any marinade, seasonings, crust, etc. Very or Somewhat Appealing

89%

rate freshness as very or somewhat important as a deciding factor in purchasing seafood, while 86% indicate that variety/ selection is very or somewhat important.

6 4. 8%

6 5.3%

Shelf-stable seafood in a pouch or can (e.g., tuna, salmon, etc.) Very or Somewhat Appealing

4 8 .6%

4 4.4%

5 0.7%

Prepared seafood options in the deli/prepared food section (glazed salmon, crab cakes, etc.) Very or Somewhat Appealing

51.7%

57.4%

52 .0%

61.3%

41.6%

27.3%

4 0. 8%

37.0%

49.3%

3 8 .0%

41.6%

27.3%

Seafood-based soups Very or Somewhat Appealing

Base: Respondents who eat seafood (414) 83

Source: Progressive Grocer market research, 2017

6 0.1%

progressivegrocer.com

To what degree are each of the following factors influential in why you consume seafood? Total

Younger Millennials

Older Millennials

Gen X

Baby Boomers

Mature/ Silent/GI

Dietary recommendations from organizations such as USDA, American Heart Association, etc. Very or Somewhat Influential

4 4. 2%

42 .6%

3 6.0%

4 6.7%

47.4%

3 6.4%

6 8 . 5%

6 8 .0%

67. 2%

51. 8%

6 3.6%

62 .7%

67. 2%

67.9%

72 .7%

6 3 .0%

6 6.7%

75.9%

5 4. 5%

74.1%

76.0%

81.0%

82 . 5%

81. 8%

27. 8%

4 6.7%

4 0.1%

47.4%

3 6.4%

Desire to consume more protein Very or Somewhat Influential

62 .3%

Desire to consume more omega-3 fatty acids Very or Somewhat Influential

6 5.0%

5 3 .7%

General desire to make healthier dietary choices Very or Somewhat Influential

72 .0%

Desire to add more variety to diet Very or Somewhat Influential

79.7%

Desire to cut back on meat consumption Very or Somewhat Influential

42 .0%

Base: Respondents who eat seafood (414)

The majority (54%) of consumers who eat seafood report no change in how often they do so. Among the age groups, younger consumers show increased consumption in larger numbers; 46% of younger Millennials indicate that they are eating seafood more often versus a year ago, as well as 40% of older Millennials.

Front End

Shelf Stoppers

Frozen Vegetables TOTAL FROZEN VEGETABLE SALES REACHED $2.97 BILLION IN THE PAST YEAR

(52 weeks ending April 2, 2016) Dressings/Salads/Prepared Foods $2,500,000,000

Consumers chose Consumer frozen broccoli over Insights alternatives for

2,000,000,000

1,500,000,000

a variety of reasons:

Which deli salad offerings are seeing the fastest dollar 12% becausein it’s the growth quick and easy latest year?

1,000,000,000

500,000,000

0 52 Wks - W/E 1/27/18 Deli Salads

52 Wks - W/E 1/28/17

Prepared Foods

52 Wks - W/E 1/30/16

10%

52 Wks - W/E 1/31/15

because it tastes great

Salad Dressings

33% 9%

Top 5 Deli Prepared Salads in Dollar Sales Spotlight on Frozen Broccoli Category

Potato Salad Pasta Salad

because Salad it’s Vegetable

Latest 52 Wks Latest 52 Wks EATING FROZEN Latest 52 BROCCOLI? Latest WHEN ARE CONSUMERS 3YA - W/E 2YA - W/E Wks YA - W/E 52 Wks - W/E 01/31/15 01/28/17 01/27/18 Broccoli as an ingredient is01/30/16 most commonly Frozen broccoli is most often used in a side consumed at dinner, followed by lunch. dish, followed by as a $427,755,333 main entrée. $381,160,072 $401,111,641 $410,280,491

161,848,552

175,225,917

186,389,008

3% 199,682,753

103,389,420

125,396,993

139,788,354

96,262,320

96,103,798

95,661,778

Chicken Salad

89,193,995 9%

Cole Slaw Salad

93,264,272

Vegetable Salad

34,676,736OCCASION 40,627,768 29% TYPE 62%

57,013,646 MEAL ITEM 75,540,897 CLASS 35% 61%

Across the store, we’re seeing the impact of transparency on consumer decision-making at the shelf. With more information at the tips of their fingers than ever before, consumers are educated on the products they desire, and the DINNER SIDEsalad DISH dressing MAIN ENTRÉE OTHER ingredients they decidedlyLUNCH choose to OTHER seek or avoid. The category is no exception. While overall sales are down by 2.2 percent, once-popular fat-free and low-fat varieties are driving the steepest of declines. Where they can avoid undesirable ingredients, consumers are often more willing to choose ‘full-fat’ products. The perception of what is ‘healthy’ is changing, and ignorance of these new norms can quickly leave your brand in the dark.”

healthy and nutritious

because it’s low in calories, fat and sugar

12%

Chicken Salad

Pasta Salad

—Jordan Rost, VP consumer insights, Nielsen

Spotlight on Dressings/Salads/Prepared Foods Comparison Products

Index

Breakfast Food

77.4%

111

Desserts Gelatins, Syrup

77.7

111

Prepared Food-Dry Mixes

90.4

110

Cereal

93.0

109

Cheese

96.9

109

Source: Nielsen

Percent Penetration

progressivegrocer.com

Potato Salad Source: Nielsen Retail Measurement Services, Core Syndicated Hierarchy, Total U.S., 52 Weeks Ending Jan. 27, 2018, UPC-coded

elaunch has everyone seeing more green.

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Mintel Category insights

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Sweeteners and Sugar Market overview A number of emerging markets have been experiencing strong value sales growth, particularly India, China and South Africa.

closer attention to the ingredients used in food. In 2016, eight in 10 Americans said that they were limiting the amount of sugar in their diet compared with the prior year.

Media and government messaging linking sugar to obesity has affected volume demand in many developed economies over the past five years, including the United States, the United Kingdom and France.

Sugar continues to promote its natural, organic and less processed benefits to compete better with natural alternatives and reduce negative perceptions of sucrose products.

Key issues As consumers become more determined to make healthier lifestyle choices, many are paying

Reflecting consumer desire for less processed foods, one-third of global launches of sucrose had a natural claim in the 12 months ending September 2017, with one in five launches certified organic. Ethical and environmental claims remain central to the category, with much of this innovation focused on eco-friendly packaging.

FOR MORE INFORMATION, VISIT WWW.MINTEL.COM OR CALL 800-932-0400.

What Does It Mean? Consumers are open to a wider range of sugar alternatives, indicating an opportunity for brands to experiment with a number of ingredients to find those that best suit consumersâ&#x20AC;&#x2122; needs. While plant-based sugar alternatives are still relatively niche in the global market, they could offer an opportunity for brands that are looking to target health-conscious consumers. More than half of Americans said that they were buying food/drink with natural sugar substitutes in 2016, more or the same as the prior year. The ubiquity of ethical accreditations has made it important for brands to adopt more detailed messaging focused on specific ethical activities and projects.

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All’s Wellness By Diane Quagliani

Reeling in Retail Sales HElP SHOPPERS MAkE THE CONNECTION bE T WEEN SE AFOOD AND WEllNESS.

omething’s fishy when it comes to seafood and wellness. Many Americans know that eating seafood is good for them, and yet average intakes are well below optimal amounts recommended by health authorities. Fortunately, retailers in partnership with retail dietitians can use health-focused education and promotions to reel in more seafood sales.

Awash in Health Benefits The 2015-2020 Dietary Guidelines for Americans recommend that adults consume about 8 ounces of seafood weekly (less for young kids). Research shows that consuming seafood, which includes fish and shellfish, is linked to a lower risk of cardiovascular disease and death, largely thanks to EPA and DHA, types of omega-3 fatty acids abundant in many types of seafood. When pregnant or breastfeeding women eat at least 8 ounces of DHA-containing seafood per week, their infants may enjoy improved health outcomes. Some research shows that eating seafood reduces risk for obesity. In addition, many types of seafood are excellent sources of lean protein, which is a powerful hook for today’s health-conscious shoppers.

8oz. The amount of seafood recommended that adults should consume weekly. Source: 2015-2020 Dietary Guidelines

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As highly trusted sources of health and nutrition information, your retail dietitians can address shopper questions and help those with special nutrition needs navigate the best seafood choices and amounts to eat.” seafood school for shoppers Common consumer barriers to purchasing seafood are perceived high cost, lack of confidence about preparing it well at home, and concerns about mercury content. Retailers and retail dietitians can help break down these barriers to boost seafood sales. To lure cost-conscious shoppers, feature promotions that encourage stocking up on economical frozen and canned seafood, especially tried-and-true consumer favorites like shrimp, tuna and salmon. At the fresh seafood case, point out less-expensive options and provide safe storage tips to help avoid spoilage and waste. Help home cooks get pleasing results by offering a guide that matches different types of seafood to the best cooking methods — for instance, salmon is sturdy

enough for the grill, but delicate flounder lends itself to poaching or steaming — as well as complementary flavors and seasonings. Simple recipes at the point of purchase and on your website can help move seafood from special-occasion status into the weekly meal rotation. To allay concerns about mercury content, the Dietary Guidelines recommend seafood choices that are higher in the omega-3s EPA and DHA, and lower in mercury. These include salmon, anchovies, herring, shad, sardines, Pacific oysters, trout, and Atlantic and Pacific mackerel (not king mackerel, which is high in mercury). As highly trusted sources of health and nutrition information, your retail dietitians can address shopper questions and help those with special nutrition needs navigate the best seafood choices and amounts to eat. October is National Seafood Month, but there are plenty of ways to keep promotions flowing throughout the year. Visit the National Seafood Partnership website at www.seafoodnutrition.org for resources that include a calendar of health-themed promotional ideas and recipes; an FAQ to help answer shoppers’ questions about selecting, preparing and storing their purchases; sample tweets on seafood and health; and much more. Retail dietitians will appreciate the resources in the nutrition communications toolkit, including tips and talking points for seafood store tours and cooking demos.

Diane Quagliani, MBA, RDN, LDN, specializes in nutrition communications for consumer and health professional audiences. She has assisted national retailers and CPGs with nutrition strategy, web content development, trade show exhibiting, and the creation and implementation of shelf tag programs.

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Outstanding Independents

PG Celebrates Outstanding Independents Congr atul atory dinner held during nga Show in l aS VegaS. By Katie Martin

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long with sponsor Post Consumer Brands, Progressive Grocer hosted a dinner honoring the recipients of its sixth annual Outstanding Independent Awards, Feb. 12 at the Carnevino restaurant in Las Vegas. All the winners were profiled in PG’s February 2018 issue. Recipients and their guests joined members of PG’s staff to celebrate their achievements. “Independent grocers are a vital part of the supermarket industry,” said Senior Editor Katie Martin. “You live in your communities, you know them, and you are nimble enough to adjust quickly to their changing needs. You are the center of your community.” Recipients who were present each received a trophy and spoke about what made their business so special. “Many of you mentioned how you were just

Clockwise from top left: Outstanding Independents trophies on display; John Najjar accepts the award for Outstanding Single Store Independent; Kenny Parlet (left) and his wife, Deana, were honored in the meat category; dinner attendees mingle and listen to the winners discussing what makes their businesses so special; Hailey Higashi and Craig Higashi Jr., along with Dave Yount, were honored for Outstanding New Concept; Mark Arrington, of Post Consumer Brands, thanks winners for attending the gathering.

small businesses serving just your small town,” Martin noted about the recipients’ speeches. “However, to your communities, you aren’t small; you mean something to the people in them, and you play a big part in their lives. You provide the food they put on their table to feed their families, and that is a big deal.” The dinner was held in conjunction with the recent NgA show, which offered independent retailers and wholesalers a place to explore the latest technologies, products and solutions, while learning best practices in workshops and through retailer-to-retailer and retailer-to-trading partner interactions. The show featured dual keynote speakers, with U.s. secretary of Agriculture sonny Perdue detailing some of the changes his department has enacted that have benefited the supermarket industry, and retired gen. Michael Hayden, former director of the central intelligence Agency and National security Agency, who outlined some of the global issues that the United states will face, noting that 2018 will be a year of consequences. During a general session, the association released

its findings from the National grocery shoppers survey, conducted by Nielsen on behalf of the National grocers Association (NgA). This year’s survey found that two-thirds (64 percent) of independent shoppers are very or extremely satisfied with their local supermarket, with seven out of 10 expressing no plans to switch from shopping at their independent supermarkets, and more than 80 percent of shoppers preferring their local store to an online option. Further, respondents strongly associate independent grocers with friendly associates, superior meats and produce, and easy-to-navigate layouts. “We become a part of the fabric of the community,” noted Ted Balistreri, co-owner of sendik’s Markets, in Milwaukee, during the presentation. “We can react quicker; we need to double down on customer service for continued success.” Jimmy Wright, owner of Wright’s Market, in opelika, Ala., added: “The future is in personalization and hyperlocal. We were hyperlocal before hyperlocal was cool. And community engagement is important.” Progressive grocer March 2018

Industry EvEnts

FMI Midwinter Executive Conference

All Signs Point to Solutions AnnuAl confAb stresses thAt re tAilers must fully embr Ace coll Abor Ation, connectivit y, customiz Ation. By Jim Dudlicek

he theme of this year’s Food Marketing Institute (FMI) Midwinter Executive Conference was “An Appetite for Change,” but seeing how the industry is evolving, retailers and their trading partners had better stay hungry for a good long time. “Disruption” is no longer just a buzzword, and concepts like collaboration and connectivity have become table stakes in a game that seems to change by the day. You’ve got to be nimble, willing to experiment, ready to take risks. To paraphrase the words of Midwinter Chairman Mark Skogen, president and CEO of De Pere, Wis.-based grocery chain Festival Foods, if you don’t like change, you’ll really hate irrelevance. “What is that mom purchasing on her phone while waiting to pick her kids up from school?” Skogen asked attendees at the conference, held Jan. 26-29 at the National Doral resort near Miami. “We don’t know, and it scares us.”

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FMI President/CEO Leslie G. Sarasin (far right) moderates a discussion featuring (from left) Coborn’s CEO Chris Coborn, Kings/Balducci’s CEO Judy Spires and Ahold Delhaize USA CEO Kevin Holt.

Further evidence of the pace of change: Chris Morley, president U.S. at Chicagobased Nielsen, offered research showing that up to 80 percent of American consumers could be buying groceries online within the next five to seven years, rather than 10 years as previously projected. Success stories like Ocado in the United Kingdom suggest that scenario could very well play out. Tim Steiner, CEO of the world’s largest pure-play online homedelivery grocery retailer, offered attendees a peek at Ocado’s highly automated operation, which generates more than $2 billion in sales in the most competitive online grocery market. Watch for Ocado’s influence closer to home, as it’s entering a partnership with Canadian grocer Sobeys. As David Portalatin, of The NPD Group, in Port Washington, N.Y., noted of grocery ecommerce’s tipping point: “We’re past it.” Portalatin was right on the money as he urged retailers to be solution providers: “The No. 1 question you need to answer is, what’s for dinner?”

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Industry EvEnts

FMI Midwinter Executive Conference n

Northgate Market’s Oscar Gonzalez (center) receives the Robert B. Wegman Award from FMI President/CEO Leslie G. Sarasin and Bristol Farms Chairman/CEO Kevin Davis.

And increasingly, those asking that question will be the up-and-coming Generation Z, today’s teens who are consuming more of the top three special food labels — organic, non-GMO and gluten-free — and driving the idea that clean eating is healthy eating. That opens opportunities for merchandising solutions in the fresh perimeter, where more than half of the growth in food and beverage is taking place, noted Larry Levin and Sally Lyons Wyatt, both of Chicago-based IRI. Fresh food — or perhaps, more persuasively, a fresh experience — is an edge that traditional grocers have over etailers. Also, grocers need to leverage outreach to their shoppers, like teaching them how to prepare food that’s convenient to buy, Levin added. Speaking of GenZ: This demographic, with $44 billion in purchasing power, is as likely to shop in brick-and-mortar stores as online, according to IRI’s Robert Tomei. Amid the adoption of faster technology to keep pace with consumers who use it, retailers need to organize their stores around solutions and need states instead of categories, urged John Clevenger, of Jacksonville, Fla.-based Acosta — echoing a rallying cry you’re going to hear more and more often in the pages of Progressive Grocer, most recently in PG’s latest Category Management Handbook (www.nxtbook.com/nxtbooks/ensembleiq/pg_cmh_201712/). Staying relevant and attentive to shopper needs will be key to consumer loyalty. Graeme McVie, of Toronto-based Precima, offered research indicating that 80 percent of shoppers consider themselves loyal to their grocery store, yet less than 20 percent actually do all of their shopping at one banner. It’s up to grocers to listen to their shoppers and derive the best combination of enhanced loyalty programs, personalized marketing, customercentric merchandising and shopper-driven supplier collaboration. Retailers, forge a bond of trust with your trading partners and share the information that you both need to achieve your common goals. “If you’re not opening up and sharing,” noted Marc Hubbard, of The Advantage Group International Inc., in Toronto, “you’re falling behind every day.” The final morning of the conference looked at ways that retail grocery could learn from the tech sector. The overarching goal of meeting needs

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as soon as — or before — consumers are aware of them makes food retail ripe for the adoption of artificial intelligence, asserted Steve Pinder, partner at New York-based retail consultancy Kurt Salmon. Pinder joined a panel including techsector players Kate Sayre, Facebook’s head of consumer goods strategy; Andrew Ives, Food-X’s managing director; and Ron Bodkin, Google’s technical director for applied AI. Bodkin called innovation “the right combination of partnerships and internal DNA.” Others acknowledged consumer desire for immediacy and companies that go deeper than sales. “Every dollar spent is a vote for the world you want to live in. Be the kind of company that engenders trust with consumers,” said Ives, while Sayre observed that “the smartphone has unleashed our Veruca Salt,” referencing the famously odious character from Roald Dahl’s children’s book “Charlie and the Chocolate Factory” and its movie versions. Truly, the emphasis is on the shopper. “We have to do everything the way the consumer thinks, not how our industry thinks,” Judy Spires, CEO of Parsippany, N.J.based Kings Super Markets and Balducci’s, said during a CEO panel discussion. And while the evolution of retail is proceeding at an ever-increasing pace, far more lies ahead. “We’re only at the 78 rpm phase

We have to do everything the way the consumer thinks, not how our industry thinks.” —Judy Spires, Kings Supermarkets and Balducci’s

of disruption,” observed Leslie G. Sarasin, president and CEO of Arlington, Va.-based FMI, noting that “disruptors may be our most beneficial collaborators.” Also during the conference, FMI honored several of its own: Oscar Gonzalez, co-owner of Southern California’s Northgate Markets, with the Robert B. Wegman Award for Entrepreneurial Excellence; Jerry Garland, former president and CEO of Kansas City, Kan.-based Associated Wholesale Grocers Inc., with the Sidney R. Rabb Award for Statesmanship; Irene Rosenfeld, chairman of Deerfield, Ill.-based Mondelez International, with the William H. Albers Award for Industry Relations; Rob Bartels, president and CEO of South Bend, Ind.-based Martin’s Super Markets, with the Glen P. Woodard Jr. Award for Public Affairs; and Robert Ling Jr., retired president and CEO of Commerce, Calif.-based Unified Grocers Inc., with the Herbert Hoover Award for Humanitarian Service. Additionally, retailers were honored during Sunday night’s Stir It Up! event with the Gold Plate Awards for promoting family meals, and the Gold Mitt Awards for creative recipes. Read more about these awards at https://progressivegrocer.com/fmi-midwinter-retailersscore-family-meals.

Chris Morley, Nielsen’s president U.S., shares research indicating that eight in 10 American consumers could be buying groceries online within the next five to seven years, much sooner than first anticipated.

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ARLA + CATEGORY LEADER Arla Foods entered the U.S. market more than a decade ago in the deli section. The brand sold Danish blue cheese, Havarti and Gouda, along with other yellow cheese types under the Castello brand name. As of late 2015, Arla expanded its product portfolio and directed its focus to include products in dairy aisles, where 92 percent of U.S. cheese volume is sold.

Though a relatively new player, sales of Arla’s sliced-cheese product quadrupled, catapulting the company into the No. 6 spot among slicedcheese brands, and ringing up over $10 million in sales.

ARLA + FUTURE GROWTH Americans are eating more cheese than ever before and we expect that to continue to grow, particularly with all of the innovations taking place in the category. According to the USDA, cheese consumption has grown 43 percent over the past 25 years. Convenience is driving the category in many ways. Just look to the fact that shredded cheese has become a household staple, accounting for more than a quarter of category share. Given our heritage in the dairy category, history of simply delicious products and control of the supply chain, Arla is well positioned to capitalize on the category growth and consumer trends.

Arla has a great story to tell from the farm to the fridge. And today’s consumer wants to know more about the products they’re feeding their families and the companies that make them. For free samples of Arla’s award-winning cheddar, contact: Director of Trade Marketing Marlo Yates at Arla Foods Phone: 908-542-2332 Email: marlo.yates@arlafoods.com

March 2018

Store of the Month

Reaching New Heights A onetime movie theater takes retailing in a diverse community to whole new level. By Bridget Goldschmidt Photography by Sue Barr

any buildings converted into supermarkets have started out as other types of businesses, but the origins of Foodtown of Washington Heights are particularly appropriate, given the current sense of drama on display in the two-story structure. “The site was a former movie theater, which had one level and, not surprisingly for a movie theater, a very high ceiling,” notes John T. Derderian, president of Iselin, N.J.-based Allegiance Retail Services, a retail cooperative whose members operate 80-plus stores in New York, New Jersey and Pennsylvania under the Foodtown banner. “The store took full advantage of the vertical space afforded, and a second level was constructed to maximize selling area.” The changeover to a modern supermarket presented significant problems, however. “The challenges were immense … both from a planning and designing standpoint, and the most difficult [was] the actual construction of this facility,” admits Derderian. “Although there were architectural and design difficulties, the actual construction and supporting logistics were profound challenges. Think about the construction effort — with all of the vehicles needed, deliveries and storage of materials required, and the logistics of operating in a highly trafficked — both vehicular and commuter — portion of Manhattan, and you can get a sense of the enormity and complexity of the construction effort.” Indeed, undertaking a major construction project in a busy urban community proved to be no small task. Notes Derderian: “The east-west arterials, 159th and 160th streets, which served as the logistics point, are very narrow (with 160th Street being one-way), with parking allowed on both sides of the street — except for alternate-side parking days, when garbage and street

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Foodtown of Washington Heights

New York, N.Y.

The bustling first floor of Foodtown of Washington Heights, as viewed from the escalator leading to the second floor. Progressive grocer March 2018

Store of the Month

Foodtown of Washington Heights

The two-story Foodtown of Washington Heights, a former movie theater, dominates a corner in the heart of a busy New York City community.

cleaning occur, and vehicles can only park on one side of the street. It would be like constructing a residential house, and having the ability to only use the sidewalk for preparation and logistics. Add to that the many ambulances screaming by — the huge Columbia-Presbyterian Hospital facility is [just] blocks away — and the constant fire engines whizzing past, and you can appreciate the logistical difficulties of constructing such an ambitious project in so small and busy an area.” On a tour of the store, owner Nasri Abed fills in more of the story. At some point after the movie theater went out of business, the site housed an earlier supermarket, called Foodarama, which lost its lease, and, most recently, a discount store, which also couldn’t keep up with the high rent for which New York City is infamous. “That’s where we came in,” explains Abed. “We gutted the whole building out. We built the second floor. …. We put the escalators and elevators in there. We refaced the whole building. … We had a designer and we redesigned it ourselves.” The whole process, including all of the necessary approvals and

If something doesn’t sell, what do we do? We keep changing it. We keep fixing it. We keep fixing it till it works.” —Nasri Abed, owner

progressivegrocer.com

permits, took about three years, he estimates. All of that effort paid off, however, when the brand-new Foodtown of Washington Heights made its much-anticipated official debut last November. As Derderian notes, “The neighborhood was in need of a full-service supermarket which provided all [of] the ‘flavors of food’ this community desired — at a value to consumers. … The community has been incredibly supportive, and the store constantly receives high marks from residents and community leaders alike.” For information on the somewhat unusual demographic makeup of the neighborhood, see the sidebar on page 42.

Getting in on the Ground floor In common with many grocery stores, Foodtown of Washington Heights greets shoppers with fresh produce, but with an ethnic twist: Among the usual complement of apples and carrots are nestled such items as dragon fruit and Ataulfo mangoes. At the time of Progressive Grocer’s visit last September, the section was slated to be “opened up” in the next month or so by another 2,000 square feet, making use of space adjoining the store. “The produce gives … the image of the whole store,” observes Abed. “When you walk in and you see the produce [and say], ‘Wow, this is a nice produce department,’ it makes you want to shop into the store.” The organic/conventional ratio of products in the store is 60/40 in favor of organic, since “that’s what the area’s calling for really right now,” he

DEAR FOOD INDUSTRY PARTNERS:

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Store of the Month

Foodtown of Washington Heights

says, noting that at first, many lower-income residents were “afraid to come into the store, because they think everything is expensive, but we’re not.” Abed attributes this affordability to Foodtown’s pricing program, which features “different zones, and they cater to the area that you’re in.” The store is also the venue for regular health-andwellness events targeting the community. “I have a couple [of] people that volunteer and put demos here [to teach] people how to eat,” he explains. Abed next leads the way to the popular grab-and-go section, stopping en route to show off a highly popular 6-foot case of vegan selections, observing, “We didn’t think it was going to do good, but since we put it in … I can’t believe [how well] this case is doing.” Joe Fantozzi, VP-retail/member development at Allegiance, chimes in that the area’s growing gentrification has contributed to the vegan items’ success. “That’s part of the beauty of the independent,” says Fantozzi. “He’s here every day. He’s getting to know his customers. … Everyone’s attracted to come here and shop to enjoy the drama, the theater and, of course, the right assortment to their offering.”

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Fabio Guerreiro, field merchandiser-meat/seafood for the Allegiance co-op, walks by the colorful variety of refrigerated juices at Foodtown of Washington Heights.

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Store of the Month

Foodtown of Washington Heights

By the grab-and-go section, Abed notes that the store sells products under its own brand, Brooklyn Market, created in a central kitchen in one of the eight Foodtown stores that he owns in the New York City boroughs of Brooklyn, Queens, Manhattan and the Bronx. Items sold under the Brooklyn Market label include such Middle Eastern fare as hummus and taboule, along with a hearty bread that he says is based on that offered by upstate New York’s organic Bread Alone Bakery. Another standout is the cheese department, which in the beginning “was half of a case,” recounts Abed. “It was a low case. We started doing so good with it, and a lot of people call for it, [so] we had to expand it higher and add more products.” About 60 percent of the cheese the department sells is imported, he adds. Next it’s on to the sushi bar and the deli/prepared food section, the latter of which includes house-made pizza, as well as a range of hot dishes that cater to the store’s busy lunchtime traffic. “We have a lot of people who work in the area,” affirms Abed. “Everything’s made here. Our kitchen is a full-blown kitchen.” To get the food ready on time, the kitchen staff starts work every day at 6 a.m. Although the menu changes daily, some items remain perennials, like the chicken and broccoli, due to customer demand. The hot bar is replenished twice a day for the lunch and dinner crowds. Meanwhile, a handsome circular olive bar imparts what he refers to as a “European” touch. After the deli, the store’s capacious beer section beckons. “We have the biggest beer section in this area, and have all the imported, craft beers, domestic beers,” says Abed. You name it, we have it in the store.” He confides, though, that “we were a little afraid of it when we first built it,” since “we didn’t think we were going to do the sales on it,” but “it’s one of our best departments now.” In fact, as he proudly points out: “We’re No. 1 in beer sales in the whole co-op.” IPAs have proved to be particularly hot sellers among the heavily Millennial demographic that frequents the department, along with craft items and ciders. Fantozzi champions the store as “a point of … destination for beer, which creates more trips that are coming in for beer that are picking other things up, and the independent, unlike a cookie-cutter corporate store, buys into all these niche departments … and that puts the differentiation in the neighborhood to create sustainability.” The bakery is next, displaying a mouthwatering array of items, among them bread, baguettes and cookies baked at one of Abed’s Brooklyn locations. “We have a straight Italian bakery,” he notes. “Our baker is 75 years old, still baking, and one of the best bakers I’ve ever met.” Other items are created in-store, including the store’s well-loved cheesecake varieties. 40

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Delectable prepared food offerings (top and middle) are a hallmark of Foodtown of Washington Heights, as is a well-stocked seafood section.

The deli/prepared food section (top) draws customers for lunch and dinner, while shoppers requiring assistance can go to friendly associates like Roman Adames, the storeâ&#x20AC;&#x2122;s evening service counter butcher.

Progressive grocer March 2018

Store of the Month

Foodtown of Washington Heights Whose Store is it Anyway? Foodtown of Washington Heights’ shoppers reflect an unusually dynamic area, both in terms of people who live in the neighborhood and those who work there. “The demographic makeup of the community really needs to be viewed from two lenses: a residential demographic composition and a daytime population makeup,” explains John T. Derderian, president of Iselin, N.J.-based Allegiance Retail Services, a retail cooperative whose members operate 80-plus stores in New York, New Jersey and Pennsylvania under the Foodtown banner. “From a residential standpoint, 63 percent of the population is Hispanic, predominantly Dominican; 31 percent, African-American; and 3 percent, Asian. Like much of New York, a gradual gentrification is being witnessed in the neighborhood, with many younger urban professionals moving into this area. The daytime population increases dramatically based on the business/ commerce in the area, the pedestrian shopping, and most importantly, the large number of people who work for the Columbia-Presbyterian Hospital complex and related medical facilities. … From a demographic standpoint, the daytime population is much more diverse, as hospital associates come from all over the greater metropolitan area.” Accordingly, he points out, “the store has to meet the needs of the residential and daytime population, as shoppers will often shop on their way home from work, often utilizing mass transit — 78 percent of households in the trade area do not own a vehicle. So the store seeks to satisfy a more diverse group of shoppers than just neighborhood residents, which presented our merchants with a more challenging product mix.”

By the Numbers Demographic breakdown of the residential community Hispanic African-American Asian Other

63%

31%

Hispanic

African-American

Asian

78%

Of the households in the trade area do Not own a vehicle.

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Associates at Foodtown of Washington Heights sport T-shirts offering guidance to customers, as well as touting the store’s free delivery service.

Movin’ on Up The time has now come to experience the upper level, accessible by elevators as well as by escalators that command attention as a store focal point. “This is our first location with a second floor,” says Abed. “At the beginning, we were in fear about it, but to get to be the biggest store in the area, we figured, let’s build a second floor.” Asked to explain his trepidation, he told the story of a store that he visited on Manhattan’s Upper West Side. “I went into the location, and it’s in the basement,” Abed says. “Understand, I’m not too crazy about stores in the basement. See, [a] second floor is better, because you’re going up instead of going down.” As to which departments he decided to put on the second floor, he observes: “You want to make people go up and down. I figured, if you put the meat, seafood, grocery and dairy further up, those are the items that the customers always want, so you make them go upstairs, you understand?” As he leads PG past a well-stocked seafood counter toward the meat cases, Abed notes, “This store, we took all our best managers from every location and we brought them here.” Under the management of an associate who used to work at one of the Brooklyn stores,

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Store of the Month

Foodtown of Washington Heights

the meat department offers such upscale items as grass-fed beef. “For us to sell these kinds of high-end products in the store, that means we’re doing good,” asserts Abed. “We never thought they would call for these kinds of products here. We’re very, very impressed with the way the store came along.” Grocery, with its large complement of natural, organic and ethnic items, also features custom wooden fixtures. “These end caps, we have a guy who works here with us, our company,” explains Abed. “His job is just to build end caps.” Additionally, the shelves feature Allegiance’s colorcoded tags calling out various products’ attributes, with green for organic, beige for natural, blue for conventional, and so on. Like many other grocers, the store integrates mainstream and organic items. “I want the people to choose between the conventional and … the organic and natural,” says Abed, and Fantozzi points out: “You’re going to see that as price gaps continue to shrink between organic Continued on page 48

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Store of the Month

Foodtown of Washington Heights MEAT

600 W. 160th St. and Broadway New York, NY 10032

Grand opening

Selling Area:

Size:

30,000

Total square footage

(15,000 square feet per level)

42,000

Square Feet

MEAT

November 11, 2016

Hours: 7 a.m. to 12 a.m. daily

SKUs

ELEVATORS

40,000 100 Employees Approximately

SEAFOOD

DOWN ESCALATOR

UP ESCALATOR

9 Checkouts Designer: In-house

COFFEE SANDWICH/SUSHI SALAD CHEESE/PREP FOODS PIZZA

DELI

OLIVE

HOT FOODS

ELEVATORS

BEER

BAKERY

DOWN ESCALATOR

UP ESCALATOR

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OFFICE

DAIRY

OFFICE

DAIRY

SEATING

TOILET

FROZEN FOOD

TOILET

GRAB & GO

SEATING

CHECKOUT

CUSTOMER SERVICE

PRODUCE

Progressive grocer March 2018

Store of the Month

Foodtown of Washington Heights

Heart of the Community Since itS opening, Foodtown oF waShington heightS haS Formed a Solid bond with the Surrounding neighborhood. “The store has been the focal point for several street events, with 160th Street — directly in front of the store — occasionally closed for vehicular traffic so the store can accommodate food trucks, demonstration/sample tables and live music, as a means to share, and give back to the community,” notes John T. Derderian, president of Iselin, N.J.-based co-op Allegiance Retail Services. Says store owner Nasri Abed of these well-attended “block parties,” on which he’s been known to spend up to $70,000: “We have over 100 vendors … giving out free products.” Local representatives of New York’s Finest (police) are welcome guests at these neighborhood events, where giveaways have included bikes, school bags and books for kids, as well as gift cards for adults. The location also provides a 10 percent discount for city workers and an everyday 5 percent discount for senior citizens — not just once a week like at other retailers — according to Abed, who makes plain his steadfast support for the community’s law enforcement, fire department and hospital. “The community, they all love me here,” he asserts. “I’m like the mayor of this area.” This level of connection with area residents is par for the course for an independently owned supermarket, according to Joe Fantozzi, VP-retail/member development at Allegiance, who believes that “the difference between us and a corporate store is we’re able to engage the community. We’re able to support the Little League teams, so we create a generational process to the brand, so their [parents] wind up shopping the store. It’s a whole process. The entrenchment into the community is part of what the message of the independent operator is, and [Nasri] really does it probably best in class for our whole co-op.” Another key way that Foodtown of Washington Heights helps the neighborhood is by hiring from it. “Certainly, many of the associates are from the local community — it just makes sense,” observes Derderian. “The area is so densely populated — 170,000 people in 1 mile — that the opportunity to staff the store with a local workforce is achievable. The advantage is the short travel distance for your store team; customers who shop in the store often know the employees, and it helps to serve the community by employing and providing paychecks locally. A win-win.”

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Continued from page 44 and traditional. The consumer is going to naturally trade up because it’s better-for-you kind of stuff. … Part of the integration philosophy is, if there’s a reasonable price gap between the two, she’s automatically going to trade up, which is good for the store owner; it’s also good because penny profit’s better, and ultimately, you get a more loyal consumer.” Indicating an end cap display of eco-friendly detergents costing close to $20 per bottle, Abed remarks, almost in disbelief, “When I brought it into the store, I was a little afraid of people not buying it, [but now] I can’t even hold it on the shelves.” The dairy department, meanwhile, “is also one of our best departments in this location,” he says. “This is another thing why the people come upstairs, just for milk and eggs.” Speaking of eggs, Abed is keen to show off an intuitive cross-merchandising solution pioneered at this store: bacon and eggs placed side by side. “It’s amazing,” he notes of shoppers’ response to the innovation. “I said, ‘You know what? Let me just take something off the meat department and let me just put them together,’ and it became the best.” Unsurprisingly, the approximately 65-door frozen section is, as Abed affirms, “No. 1 [in the co-op] again. I like breaking records, by the way.” Expanding on its success, he adds: “I like to challenge everybody. I love to challenge. I’m a big gambler. Our frozen department’s, hands down, No. 1. Reason why, if something doesn’t sell, what do we do? We keep changing it. We keep fixing it. We keep fixing it till it works.” Ice cream is a big seller within the section, particularly brands with healthier nutritional profiles, like Halo Top, which, as Abed puts it “came of out nowhere” to sell at Foodtown of Washington Heights at a slightly lower price than the $6.99 or so it normally goes for at other locations. Also upstairs are a lone checkout station, staffed by a real live associate, where shoppers can pay for quick purchases without having to go back down, and a seating area overlooking the teeming street below, where people can kick back, relax and enjoy the lunches they’ve just bought. Reflecting on his two-story supermarket, which dominates a corner in one the most dynamic cities on earth, Abed enthuses, “Honestly, it’s been nothing but just escalating to a higher level.”

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Eat the food you want to see in the world.

Frozen/reFrigerated Foods

Meal Solutions

Key Takeaways

Solid Centerpiece Fr ame Frozen Foods as part oF daypart solutions to build tr aFFic and proFits. By Lynn Petrak f the grocery store is a family, does the middle child get less attention? How do products merchandised in the center of the store, particularly in the frozen food section, fit into customerfocused solutions, interstore connectivity and profitability? While the freezer aisle may not get the attention of the “siblings” in this analogy, such as the buzzworthy fresh perimeter or prepared food department, there are ways for retailers to make frozen foods a destination by focusing on frozen entrées, snacks and desserts as important components of meal solutions that solve in-demand daypart needs. Grocers can connect their customers with solutions by encouraging them to take a new look at frozen foods for in-

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Encourage customers to reconsider frozen foods for innovative products, consumerfriendly packaging, and items that can be paired with other fresh and center store items. Promote hot segments in the category, such as breakfast foods and restaurant-style products. Meet consumers’ healthand-wellness needs with items that are betterfor-you, convenient and budget-friendly. Engage shoppers via social media.

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Frozen/reFrigerated Foods

Meal Solutions

dedicated Easy Home Meals website (easyhomemeals.com) that provides interactive recipes and enhanced search capabilities to show people how to incorporate frozen foods into their eating occasions. A recipe for Cherry Coke Meatballs, for example, calls for a branded gluten-free meatball product, along with other ingredients commonly found in supermarkets, including brown sugar, cherry cola, pineapple bits and jalapeños.

There’s a plethora of new offerings in the frozen food aisle: ethnic flavors, organic, vegetarian, and unique fruit and vegetable varieties.” —Adrienne Seiling, American Frozen Food Institute

novative products, consumer-friendly packaging, and items that can be paired with other fresh and center store items. “I think there’s an opportunity for retailers, in partnership with the frozen food and beverage industry, to think about dynamic new retail strategies featuring these exciting, innovative food options as a method to drive people down the frozen food aisle,” agrees Adrienne Seiling, VP of communications at the American Frozen Food Institute (AFFI), based in McLean, Va. In a category that has experienced flat sales in recent years, some excitement is needed, in promotions as well as offerings. “When I think about innovation and new food options in the frozen food aisle, I also think of a quote I read from Conagra Brands President and CEO Sean Connolly: ‘A Millennial does not know what a Salisbury steak is.’ That’s so true! That’s why you’re seeing some legacy brands offering new items like Buffalo-style chicken mac ’n’ cheese,” notes Seiling. AFFI is doing its part. The organization is hosting AFFI-CON in early March, a networking convention that presents trends and invites collaboration among processors, suppliers, retailers and foodservice operators from all sectors of the frozen industry. March is a particularly good time to focus on frozen foods and how they relate to customer daypart needs and overall store connectivity, given that it’s National Frozen Food Month. The National Frozen & Refrigerated Foods Association (NFRA), based in Harrisburg, Pa., is focusing its national Frozen Food Month promotion this year on “Savor the Taste of Real Food … Just Frozen.” Sponsoring brands are running digital coupons and offers on Coupons.com, and an integrated partnership shares frozen food messages across a variety of traditional media, digital media and social media channels. Stores have ordered and received POP materials to remind consumers that frozen food is, indeed, “real” food. NFRA provides other tools to help retailers maximize interest in frozen foods and, with that, their own sales. As part of its public relations outreach, the association has refreshed the

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go Where it’s trending

B&G Foods’ Green Giant Veggie Spirals line puts a new spin —literally — on frozen vegetables.

Beyond taking advantage of national programs and events, grocers can highlight frozen foods as a key component of meal solutions by promoting products that are already piquing consumer interest. An example of a hotspot in frozen meal solutions is breakfast. According to the “NFRA 2017 State of the Industry” report, the top 10 fastest-growing categories in supermarkets include frozen breakfast entrées. Breakfasts like frozen pancakes, waffles and French toast do especially well among younger consumers, including Millennials, the report notes. New product introductions reflect the buzz around frozen breakfast. Kraft Heinz, based in Pittsburgh, recently rolled out a line of Nancy’s Petite Stuffed Bagels, designed for quick and portable consumption, while Sheboygan Falls, Wis.-based Johnsonville introduced a Premium Breakfast Sandwich Collection in late 2017. Other brands that have gotten into frozen morning meals include Wellesley, Mass.-based Good Food Made Simple, which introduced a line of four organic burritos last fall, and St. Louis-based Start Right Foods, which recently debuted lean beef-sausage-and-egg and turkey-sausage-and-egg-white waffle sliders. “Traditional breakfast sandwiches typically only meet the convenience factor, but lack any sort of good nutrition,” says Start Right co-founder Clint Matthews. “That’s why we thought breakfast sandwiches were the logical

next product for us.” grocers can also encourage their shoppers to recreate restaurant breakfast experiences at home with co-branded breakfast items like a line of frozen iHoP breakfast foods (available at Walmart stores) and frozen breakfasts sold under the Moe’s southwest grill brand, which teamed with Battle creek, Mich.-based Kellogg co. to produce southwesternstyle favorites for a retail audience in addition to its restaurant patrons. According to NFrA’s “state of the industry” report, other top frozen categories are, in order, entrées, ice cream, novelties, seafood, pizza, vegetables, sandwiches, appetizers, potatoes and onion rings. Here, too, new product innovation and category expansion fuel the perception that the frozen section is a dynamic one reflecting modern eating trends. in the entrée arena, bowls are big, mirroring foodservice trends. several frozen brands offer bowls that can be touted as meal solutions, such as a new line of crazy cuizine Asian Bowls from santa Fe springs, calif.-based Day-Lee Foods, and chicago-based conagra Brands’ Healthy choice Power Bowls, Frontera Taco Bowls and Banquet Mega Bowls.

Healthy Products, Healthy Sales

Stahlbush Island Farms aims to generate excitement in the frozen section with a line of brightly colored veggies.

Another tactic for providing shoppers with solutions and enhancing a store’s profitability is by meeting consumers’ health-and-wellness needs with frozen meal solutions that are better-for-you, convenient and, in some cases, budget-friendlier than their fresh counterparts. The “state of the industry” report shows that glutenfree and free-from claims are delivering sizeable shares in frozen foods. There are, to be sure, many new gluten-free and free-from products that have been added to grocers’ cases in recent years, from englewood cliffs, N.J.based geeFree’s gluten-free frozen appetizers and sandwich pockets, to santa rosa, calif.-based Amy’s new gluten-free pesto pizzas, among many others.

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Frozen/reFrigerated Foods

Meal Solutions

Free-from increasingly encompasses meatfree products. Some frozen food brands are helping grocers connect to their vegan or plant-eating consumers with innovative entrées and sides, like Mebane, N.C.-based PlantPure Inc., which offers a plant-based frozen entrée line. That line is part of a larger movement for PlantPure, which has also produced a film, cookbooks, and weight-loss and health programs. The frozen vegetable segment has a lot of potential as a healthy side and center-of-the-plate item that can be easily prepared and combined with other ingredients for colorful, good-for-you meals. On the topic of color, one brand that has set itself apart as a solution provider is Stahlbush Island Farms, based in Corvallis, Ore., which offers multihued cauliflower, butternut squash and sweet potatoes; tricolored sliced carrots; and new golden beets and cut rainbow chard. “When we first started out, people were asking us, ‘What ingredients are you adding’? And the answer is none — we’re fortunate to be able to have these vegetables that have no artificial coloring or flavor, with no GMOs, and that are all-natural,” says Debbie Cozzetto, chief management officer and director of sales. Emily Hall, director of marketing, notes that the items appeal to children and represent another way to reach out to busy parents. “The color grabs their attention, and when they eat, they like it,” she says. Interesting — and trending — frozen vegetables include different forms of veggies. That’s evident in Pinnacle Foods’ Birds Eye Steamfresh Veggie Made Riced Cauliflower and Veggie Made Mashed Cauliflower, available in original and seasoned varieties. B&G Foods North America, based, like Pinnacle, in Parsippany, N.J., has gone to another type of frozen veggie format with its Green Giant Veggie Spirals. There has also been a seguing of frozen vegetables into traditional frozen food products for a best-of-both-worlds kind of solution. One example is a Los Angeles-based cauliflower-based frozen pizza crust brand called Caulipower, which is gluten-free and nutrient-rich. Birds Eye, for its part, has gotten into veggie “pasta,” offering new Spinach Lentil Pasta and Zucchini Lentil Pasta. Healthy frozen foods are a foundation of meals prepared and served at home, and can be positioned as such, AFFI’s Seiling notes. “All of these innovative food options make home cooking so much easier. There’s a plethora of new offerings in the frozen food aisle: ethnic flavors, organic, vegetarian, and unique fruit and vegetable varieties. Frozen ingredients can be great time savers, because the cleaning and chopping are already done.” At the same time, grocers can marry the benefits of frozen foods with those that are better for the planet. As Seiling points out, “Frozen foods can also be more easily portioned and stored for later use, which reduces spoilage and food waste, further increasing the value.”

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Piggyback on Brand Campaigns, Promos

Heeding consumer interest in lighter foods, SeaPak has launched better-foryou frozen meals such as Creamy Garlic Shrimp.

Grocers can connect consumers with frozen food products — and other complementary items in the store that are part of meal solutions — by learning about, and seeing how they fit into, manufacturers’ own promotional campaigns. SeaPak, based in St. Simons Island, Ga., is one brand tapping into consumer needs when it comes to meal solutions. The brand recently launched a “Chillax” campaign focusing on the stress of planning a meal. “It reinforces the notion that busy families can reduce stress and increase wellness just by adding more mindfulness and calm into their daily routines,” explains Kristen Beadon, shrimp and seafood marketing manager. The campaign includes an initiative to engage consumers via social media. “SeaPak is establishing relevancy among shoppers, particularly parents looking for easy and nutritious meal solutions, by bringing social media to the freezer section,” says Beadon. As part of that effort, the Buzzfeed Tasty logo will appear on SeaPak Shrimp Scampi packages from January through June. “As the first-to-market frozen retail brand to feature Buzzfeed Tasty, the largest social food network, on-pack, we anticipate the awareness of the SeaPak brand at the shopper level will increase,” asserts Beadon. Stahlbush also works with retailers to help them garner more shopper engagement and sales. The company’s promotional campaign includes coloring books and crayons that play off the colorful palette of its frozen vegetables. “The whole idea is to start involving more nutritious colors,” says Cozzetto, adding that grocers have placed the coloring books in juice and smoothie bars, and by checkout areas.

Fresh Food

Produce

Organics’ Time is Ripe SaleS opportunitieS for thiS produce Segment have ne ver been be t ter. By D. Gail Fleenor

CMY

rganic produce is a quiet sales powerhouse. A key growth driver for the produce department, organic produce demonstrates its appeal with continued double-digit dollar growth. Volume growth shows extremely healthy numbers, especially for organic fruit. Consumers concerned about clean eating and the all-important Millennial group lead the way in this area. Sales of organic fresh produce hit almost $5 billion last year, up 8 percent from 2016, according to a review of 2017 organic fresh produce sales at U.S. retail stores by Organic Produce Network (OPN) and Nielsen. The percentage of shoppers choosing organic produce is increasing every year, from 52 percent in 2015 to 60 percent in 2016 to 62 percent in 2017. Organic produce, however, accounts for less than 8 percent of the total retail produce market, according to a report from the Arlington, Va.based Food Marketing Institute (FMI), “The Power of Produce 2017.” Small percentage of the department or not, shoppers who choose organic fruits and vegetables are valuable to the entire store. Organic produce customers spend more when they shop than other customers, and they shop more often. Retailers could lose $5,800 or more of a shopper’s an-

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Key Takeaways Organic produce sales are currently booming, thanks especially to clean-eating trends, and health- and environmentminded Millennial shoppers. Berries are particular standouts in the organic produce segment, having increased an impressive 23 percent in sales. Retailers such as deep-discounter Aldi are battling the perception that organic produce is prohibitively expensive by offering it at value prices. Overcome supply issues by spotlighting, and creating organic produce displays to feature, what’s readily available.

Fresh Food

Produce

nual spend if the shopper decides to go elsewhere for organic produce, the FMI report warns. Elsewhere could be a supercenter such as Walmart, or a hard discounter such as Aldi, both of which tout organic produce offerings. As well as strong upward sales, there are other trends for the organic produce segment.

Berries Are Top sellers Organic berry volume sales have increased by an astounding 23 percent, with sales topping $586 million in 2017, according to recent numbers from OPN/Nielsen. Other top sellers are apples and bananas, increasing in volume by 11 percent and 17.5 percent, respectively. “Berries, berries, berries — strawberries, blueberries, raspberries and blackberries,” observes Jay Schneider, produce director for Malvern, Pa.-based Acme Markets, a division of Albertsons. “They are the biggest growth items and started to really kick in at the second half of 2017. The trend will continue to climb in 2018. The organic customer today is more educated than years ago, and they understand conventional berries are more susceptible to chemicals or pesticides.” Strawberries are the top-selling organic fruit at Geissler’s Supermarkets, according to Jim Nilsson, president and owner of the East Windsor, Conn.-based chain. At Kingma’s Markets, based in Grand Rapids, Mich., customers are willing to spend dollars on strawberries and grapes, which are two of the fruits most vulnerable to pesticides, notes Alan Hartline, owner and president. At H-E-B, apples, bananas and citrus — especially lemons and limes — rank high, says Alexander Warren, produce manager in Austin, Texas, adding that these sales may reflect Hispanic shopper purchases. Among vegetables, packaged salad was the leading organic fresh item in 2017, nearing $1 billion in sales. Other top organic vegetable sellers in dollar growth, according to FMI’s “Power of Produce,” were lettuce, spinach, carrots and tomatoes. At Geissler’s, green and yellow peppers are tops. Big sellers at H-EB are kale, yellow squash, zucchini and carrots. Organic value-added produce is a strong growth driver, achieving sales of almost $1 billion in 2017. Nilsson isn’t surprised, noting a trend toward pre-packaged organic items in his stores. H-E-B’s Warren agrees that there’s been a definite shift to pre-pack/pre-made, ready-to-serve/cook items in organic and also conventional. In FMI’s study, 14 percent of shoppers overall would buy more organic value-added produce if available.

Price Perception still an Issue High prices, or at least that perception, remains the top barrier to organic produce purchases, even if prices are declining. Average retail prices for apples and bananas were down 8 percent and 3 percent, respectively, in 2017, according to OPN/Nielsen. “Organics have held through pricing wars that have been going on the past

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two years,” says Warren. Many consumers who don’t purchase organic produce cite price as the reason. Many are also skeptical of the health benefits of “clean” produce and doubt that it tastes better. Potatoes, grapes and citrus all rank in the top 10 for conventional produce sales, but didn’t make the top 10 in organic sales, according to OPN/Nielsen numbers, indicating an opportunity for further promotion in supermarkets. “Understanding and setting pricing strategies between conventional and organic varieties is critical for success,” says Matt Lally, an associate director at Chicago-based Nielsen. “People will pay a premium for organic, but at some point, they will trade to conventional or out of the category altogether.” Batavia, Ill.-based Aldi, poised to become the third-largest grocery chain in the United States by number of stores, has followed consumer trends to offer more organic produce without the steep price premiums that may exist at other grocery stores, according to Rockville, Md.-based Packaged Facts’ “Fresh Produce: U.S. Retail Market Trends” report.

supply still an Issue for some Troublingly, lack of availability of organic produce was mentioned more often by Millennials than by other groups, per FMI’s report. “Over the years, more supply has been available to retailers as growers are adjusting to customer demand,” says

Yes, We Have No (Organic) Bananas Shoppers are most likely to leave a store if organic oranges or potatoes aren’t available, but will switch to conventional bananas if organic isn’t available, according to “The Power of Produce 2017” report from the Food Marketing Institute.

Fresh Food

Produce

Acme’s Schneider. “However, there are certain times of year when only certain apple varieties are available. Organic grapes continue to see large gaps once the domestic crop ends, and you have to account for weather events.” He belives in spotlighting, and creating displays with, items that are readily available. “Customers understand if an item is not available, as it is, for the most part, nowhere in the market area,” notes Schneider. “As we look to the future, global supply will continue to increase and customers continue to become more educated.” According to the Packaged Facts report, prices are expected to fall gradually and become more competitive with conventional produce, especially as more organic growers are popping up across the United States to meet demand. Kingma’s Markets has the advantage of year-round access to some organic produce items, including spinach grown in a greenhouse only a few miles away. This allows the grocer to keep prices down, since the produce has low transportation and no warehouse costs. Kingma’s Markets is located in Michigan, where Hartline says that greenhouses grow items year-round and produce the same yield without pesticides.

Who’s More Likely to Purchase Organic Produce? Organic store shoppers

93%

Club shoppers

77%

Weekly spend >$125

78%

Annual income >$100k

71%

Households with kids

70%

Older Millennials 27-37

69%

Living in the West

69%

Annual income >$75k

68%

3-4 weekly trips

68%

Households of 3+

66%

Female shoppers

66%

List makers

66%

Millennials

65%

Source: “The Power of Produce 2017,” FMI

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For Earth Day on April 22, grocers can promote organic produce like Stemilt’s Artisan Organic apples.

The organic shopper Younger customers — those ages 18-34 and 35-44 — are the most likely to purchase organic fruits and vegetables because of their opinions on health and the environment, Packaged Facts says. This demographic is also most likely to have a young family. “Younger parents especially are looking for healthy snacks for their children,” points out Schneider. Younger shoppers with lower incomes still purchase organic produce, but they often go to supercenters or club stores to do so. Among Millennial shoppers, 59 percent purchase organic produce at supercenters, compared with 21 percent at supermarkets. Organic produce appears to be a ripe segment for growth at supermarkets. Ethnicity trends show that minorities tend to use organic fruits and vegetables in higher percentages, according to Packaged Facts. For example, Asians purchase more organic fruits and vegetables than any other group by far, and Hispanics purchase more organic fruit than white or black/African-Americans do. There are two groups of shoppers that purchase organic produce, according to the FMI report, which names the groups by characteristics: Core and Periphery shoppers. Core purchasers buy organic produce as often as possible and as many items as possible, representing one-quarter of organic buyers. Two-thirds of shoppers are classified as Periphery shoppers, who buy when organic produce is on sale, only for select items or only when they feel that the item is of higher quality, according to FMI’s report. The remaining 10 percent are shoppers who buy organic only when nothing else is available. Core shoppers are usually women, who have high incomes and are willing to change stores to buy wanted organic produce. Promotions mean little to these shoppers, who have a high weekly expenditure for households of two to three people. Periphery shoppers are mainly Millennial and Gen X buyers with kids, a lower-/middleincome group with large households of four or more people. They seek deals and shop both supermarkets and supercenters. Since younger shoppers with families are strong purchasers of organic produce, many supermarkets are adding more to their mix and promoting their offerings to compete with those of Walmart and Aldi, the latter of which promotes its organic selection with the slogan, “Your favorite produce at the low prices nature intended.”

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Fresh Food

2018 Retail Seafood Review

Sea Change Re taileRs aRe keen to pRovide a point of diffeRentiation in this section — e ven, peRhaps, the option of pl ant-based alteRnatives. By Bridget Goldschmidt

hatever else one might say about seafood in supermarkets, it’s certainly prominent. According to the exclusive research undertaken for Progressive Grocer’s annual Retail Seafood Review, 80.4 percent of category executives who responded to PG’s survey have a service seafood department, generating an average of 8.4 percent of total sales. What’s more, the category is still perceived to be growing by a majority of respondents: 50 percent reported that total seafood sales had increased over the past 12 months, while 38.9 percent noted that sales had at least held steady, and only 11.1 percent saw sales decline. Looking ahead, 63.9 percent predicted that their seafood sales would increase, with 36.1 percent expecting them to remain the same, and no one — 0 percent — anticipating a sales decrease. Execs polled said that they believed sales would rise by a healthy 4.2 percent.

health and More The nutritional advantages of seafood appear to be driving this uptick, but there are other factors in play as well. “When asked why they eat seafood, 89 percent [of consumers] say it is because seafood tastes great, and 88 percent say it is because seafood is healthy,” observes Kyle Chamberlin, publications manager at Chicago-based market research company Datassential. “This indicates that nutrition is on nearly all consumers’ minds when they are eating seafood. Interestingly, fewer

progressivegrocer.com

Key Takeaways The majority of retailers surveyed expect sales growth in the category, with none anticipating a sales decline. Health is a key motivator for shoppers to purchase seafood, but taste, convenience, value and sourcing are also important considerations. Almost all retailers with a sustainable seafood program in place are actively promoting it as a key point of differentiation. The majority of grocers are open to the idea of carrying plantbased alternatives to seafood – and even merchandising it in the seafood section.

Progressive grocer March 2018

Fresh Food

2018 Retail Seafood Review

than half said they eat seafood because they are trying to eat less meat, suggesting that fish and shellfish are not necessarily seen as healthier meat alternatives, but rather as delicious proteins in their own right. When promoting seafood items, operators say ‘healthy’ positioning is far more effective than indulgent or customizable.” “Seafood is high in protein and is known to have many health benefits,” affirms Jason Pride, VP of meat/seafood at West Des Moines, Iowa-based Hy-Vee. “Additionally, customers are looking for quick, easy and healthy proteins, and seafood fits the bill. … Items that are already seasoned, breaded or packaged in oven- or grill-ready containers make it easy for customers to prepare the entrées at home. All of these factors contribute to continued sales increases.” “We believe there has been an upward shift in consumer behavior and overall opinion on eating seafood,” notes Bluzette Carline, director of marketing at Beaver Street Fisheries (BSF), a Jacksonville, Fla.-based provider of wholesale and retail seafood. “Efforts in education and promotion around the benefits of seafood may have some part in the steady increase.” Carline cites fresh meal kits as a powerful new draw in U.S. seafood departments, a trend that Victoria Parr, domestic marketing director at Juneaubased Alaska Seafood Marketing Institute (ASMI), has also observed: “Meal kits have helped seafood break through a pervasive perception that seafood is difficult to prepare, building consumer confidence with a variety of species.” From December 2016 to December 2017, the Bureau of Labor Statistics’

Seafood Department Sales Performance Ye ar ago

Current

4.7%

Net change

3 8.9%

52 .9%

Increased Stayed the same Decreased

Projected for Total 2018 Ye ar ago

Current

3. 8% 3 6.1%

63.9%

5 5. 8%

3.4%

4.2%

Net change

40.4% Increase Stay the same Decrease Source: Progressive Grocer market research, 2018

Progressive Grocer ’s Retail Seafood Review survey was fielded online by EIQ Research Solutions in October and November 2017 to supermarket retailers involved in the meat/seafood category. A total of 61 responses are included in these results, split between operators of fewer than 75 stores, and 75 or more stores. By title, 23 percent are category managers, merchandisers or buyers; 31.2 percent are from the c-suite; and 5 percent are store managers, with the remainder serving in various capacities, including marketing, consulting and analysis. Among the respondents, seafood represents about 5 percent of their total sales. progressivegrocer.com

39. 2%

1.6%

Net change

Methodology

7. 8%

5 0.0%

11.1%

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Fresh Food

2018 Retail Seafood Review

Consumer Demand In the past year, here’s how consumer demand has changed: Increased

Decreased

Stayed the Same

Free-from products (antibiotic-free, hormone-free, MSG-free, additive-free, etc.)

72.1%

0.0%

27.9%

Value-added products

67.4

0.0

32.6

U.S. wild-caught seafood

58.1

0.0

41.9

Smaller portions/pack sizes

58.1

4.7

37.2

Value-priced (ground, flat steaks, etc.)

48.8

20.9

30.2

Imported wild-caught seafood

34.9

14.0

51.2

Farm-raised seafood

23.3

14.0

62.8

Source: Progressive Grocer market research, 2018

Effectiveness of Promotional Activities Rated on a scale of 1-6, where 6 = extremely effective Current

Year Ago

Temporary price reductions

4.28

4.40

Product demos/sampling events

4.18

4.17

Point-of-purchase information

4.08

3.80

BOGOs

3.97

4.23

Cross-promotion within the store

3.87

3.67

Online marketing

3.74

3.58

Social media

3.67

3.86

Flash sales

3.36

3.89

Direct mail

3.28

3.70

Mix-and-match bundles (i.e., four for $20)

3.08

4.05

Source: Progressive Grocer market research, 2018

consumer price index for meats, poultry, fish and eggs increased 2.8 percent, after declining over the same period in 2015 and 2016, indicating an easing of deflation and enabling retailers to pass on those higher prices to consumers. Unlike in 2017, none of the retailers surveyed by PG brought up price as a significant factor in seafood sales; one respondent noted that due to price deflation, they were actually “up a little.” According to Chicago-based Nielsen, for the 52 weeks ended July 1, 2017, fresh seafood, which the company identified as a top contributor to inflation, dropped 2 percent in overall volume, in spite of dollar growth in prepared crustaceans (5 percent), prepared fish (4 percent) and shrimp (3 percent).

Wild Again Of the types of seafood offered at retail, U.S. wild-caught seafood remained tops in terms of consumer demand, with 58.1 percent of respondents reporting an increase in demand, 41.9 percent saying demand stayed the same and none seeing a decline. For imported wild-caught seafood, just

progressivegrocer.com

34.9 percent saw an increase in demand, while 51.2 percent experienced no change in demand and 14 percent reported less demand. For farm-raised seafood, only 23.3 percent noted higher demand, while a hefty 62.8 percent said demand had remained the same and 14 percent reported a decline in demand. “The perception that more sustainable farm-raised seafood is dirty or unnatural persists, while wild-caught seafood, which is often regarded as less sustainable, is seen as premium and cleaner,” notes Datassential’s Chamberlin. “Both consumers and operators show a strong preference for wild-caught seafood versus farm-raised.” He adds that “seafood … either caught locally or in U.S. waters is much more desir-

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Fresh Food

2018 Retail Seafood Review

Do you have a sustainable seafood program in place at your store(s)?

3 3.3% No

6 6.7% Yes

Do you promote the sustainable seafood program as a point of differentiation? 8.3% No

91.7% Yes

Has consumer demand increased, decreased or stayed the same for sustainable seafood products in the past year?

61.1%

Increase Stay the same Decrease Source: Progressive Grocer market research, 2018

progressivegrocer.com

38.9%

able to most consumers than seafood without any sourcing information.” To address the matter of sourcing, one respondent to PG’s survey suggested “a pedigree program, with DNA testing, to prove up country-of-origin labels (COOL) and species of seafood,” as there are “too many mislabeled cheaters out there.” Interestingly, despite shoppers’ concerns about where their food comes from, Chamberlin goes on to assert, “Sustainability is low on consumers’ priority lists when they are purchasing seafood.” It seems, however, that shopper demand for sustainability may be catching up with that for wild-caught product. “Research conducted on behalf of ASMI by Datassential in 2017 to understand behaviors among seafood eaters revealed that 67 percent of consumers feel it is important that fish they purchase is naturally caught or wild, and 64 percent feel it is important that the fish they purchase is environmentally sustainable,” says Parr.

sustainability sells — for Now Given that finding, it’s not surprising that sustainability reigned as a major differentiation strategy among retailers, with 66.7 percent of respondents to PG’s survey acknowledging that they have a sustainable seafood program in place, and of those who do, fully 91.7 percent promoting it as a point of differentiation. That said, only 38.9 percent experienced increased demand for sustainable seafood over the past year, while 61.1 saw it remain the same — no one reported a decline — so perhaps demand is plateauing. “One hundred percent of our fresh seafood, as well as Hy-Vee and nationalbrand frozen seafood and sushi, meet our Seafood Procurement Policy,” notes Pride. “Customers want to know they are purchasing responsibly sourced seafood so we continue to have supply for generations to come. All of the tuna offered in our full-service seafood case is Fair Trade certified as well. This lets the customer know that it was caught in a way that

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Fresh Food

2018 Retail Seafood Review

Are you currently or would you consider carrying plant-based alternatives to seafood products? Yes, we currently carry them

2 2 . 2%

4 4.4%

3 3.3%

We do not currently carry them, but we would consider it We do not currently carry them and have no interest in doing so

Source: Progressive Grocer market research, 2018

As consumers seek delicious, sustainable and healthy alternatives to traditional animal proteins, plant-based seafood items are a great solution.” —Dave Benzaquen, Ocean Hugger Foods

Are you currently or would you consider merchandising plant-based alternatives alongside seafood in the seafood section of your store(s)? 45.8% No

54.2% Yes

supports the fishing community and its people.” “With the addition of our 100 percent Sustainable Seafood program, we offer a consistent promotion on the highest-sought-after items in the program, and our customers have responded,” says Todd Allen, senior manager, meat and seafood at West Sacramento, Calif.-based Raley’s, who adds that sustainability is a key reason that the grocer expects its seafood sales to increase in 2018, along with “high quality at value” and health considerations. “Sustainable sourcing practices is a core value of Raley’s; we want our customers to trust that the product they purchase from Raley’s will be the best quality and most responsibly sourced available,” continues Allen. “We have rigorous standards that we hold our suppliers to that guarantee quality and sourcing.” As for getting the word out, he notes: “We promote and communicate our sustainable seafood program with our weekly newspaper circular, radio spots, in-store POS and our website. I think responsibly sourced seafood matters to our customers, because everyone … would like to preserve our ocean’s bounty for future generations.” “In general, consumers just want know their seafood is caught/harvested responsibly,” observes Casey Marion, director of sustainability initiatives and quality management systems at BSF. Perhaps the current seafood preferences of shoppers are best summed up by another respondent to PG’s survey: “Customers are very vocal. They want seafood from the U.S.A., Canada [and the] Gulf of Mexico caught in sustainable, managed fisheries. They definitely don’t want anything from China, processed in China, or other Eastern sources.”

Plant it There

Source: Progressive Grocer market research, 2018

progressivegrocer.com

One clue as to what might become an effective differentiation strategy is in the area of plant-based alternatives, which have already infiltrated supermarket meat departments with such highly publicized

Seafood Department Category Performance Total U.S., 52 Weeks Ending Oct. 28, 2017

Segment

Fresh Seafood

Dollars per Store/Week

Dollars per Store/Week Percent Change vs. Year Ago

Volume per Store/Week

Volume per Store/Week Percent Change vs. Year Ago

$5,758

Volume Percent on Promotion

Volume Percent on Promotion Change vs. Year Ago

Average Retail Price

Average Retail Percent Change vs. Year Ago

-0.4%

789

-0.9

418

-5.5%

23.5%

-1.1%

$7.30

5.3%

-7.4

19.2

-1.0

Fin Fish

2,608

Shrimp

2,178

2.4

268

1.4

27.0

736

-7.3

-15.4

35.1

Crustaceans Mollusks Other Seafood Sauces and Seasonings Seafood Side Items Seafood Dips and Spreads Other Seafood Prepared Seafood Other Prepared Seafood Surimi Seafood Meals

237 $283 121 113 32 17 $1,371 1,230 124 17

6.23

7.1

-0.7

8.13

1.0

-4.0

10.39

9.6

2.1

-8.3

24.8

2.0

-1.4%

-1.5%

17.8%

-0.4%

-0.4 -3.6 0.3 3.7

49 20 8 2

-0.1 -5.3 -0.5 2.4

18.5 15.2 17.7 27.0

4.5% 5.2 -2.6 13.5

216 170 43 2

0.8% 1.5 -2.3 10.4

23.2% 24.1 20.1 20.0

-0.5 0.3 -2.0 -1.1 -0.7% -0.4 -1.9 1.8

7.49 $3.55 2.47 5.58 3.76 9.26 $6.36 7.23 2.87 7.59

-4.1 0.1% -0.3 1.8 0.8 1.2 3.7% 3.6 -0.4 2.8

Source: Nielsen Perishables Group

brands as Beyond Meat (see Pg’s retail Meat review in the February 2018 issue) Already, 22.2 percent of those surveyed carry plant-based alternatives to seafood in their stores, while 44.4 percent don’t yet offer them but would consider it. still, a substantial 33.3 percent said that they not only don’t carry such products, but they also have no interest in doing so. However, of those who already carry or would consider carrying plant-based seafood alternatives, 54.2 percent said that they were in favor of merchandising plantbased items alongside traditional seafood products, thereby potentially bringing new customers — vegetarians, vegans, people with seafood allergies, and those with religious or moral scruples regarding the consumption of certain seafood items— into the department. “consumer demand for plant-based alternatives to traditional animal proteins is skyrocketing, in response to concerns over diet-related disease, the environmental impacts of animal agriculture and the treatment of animals,” explains David Benzaquen, ceo of New York-based ocean Hugger Foods

inc., creator of Ahimi, an ahi tuna alternative made from tomatoes. “over the last decade, dozens of companies in the dairy, egg, meat and poultry alternative space have launched to meet this demand, but few have looked at seafood. … As consumers seek delicious, sustainable and healthy alternatives to traditional animal proteins, plant-based seafood items are a great solution.” Asked about the sales performance of ocean Hugger’s product, which is the central ingredient in plant-based sushi sold at Whole Foods Market stores, Benzaquen replies: “our success has been fantastic — so much so that we’re running on all cylinders to keep up! We have demand from thousands of stores and restaurants around the world, including some of the largest retail chains globally.” Although raley’s doesn’t yet carry plant-based seafood-style options, Allen says: “As our customer interest grows for that type of product, we will certainly accommodate their needs. We would merchandise these products with the seafood as an alternative for the discretion of our shopper.” Progressive grocer March 2018

Technology

Shopping Experience

Hema stores power everything via mobile: After downloading an app, shoppers scan items — all of which have barcodes — to learn more about products and recommended items, and to pay for them.

Has Grocery’s Future Already Passed ‘Go’? AmA zon’s cAshierless concept is innovAtive, but AlibAbA’s hemA stores mAy show grocery’s true potentiAl. By Randy Hofbauer

progressivegrocer.com

t’s been less than two months since Amazon debuted its Amazon Go cashierless store concept to the public, following 10 months of tweaking the location’s “just walk out” system, which uses driverless car technology to detect and charge a person for a product when it’s removed from the shelf and the store. What some retailers might not know, however, is that Amazon founder and CEO Jeff Bezos isn’t the first retail visionary to execute such a concept. Jack Ma, founder and executive chairman of China-based retailer and technology company Alibaba Group Holding Ltd., already has a similar concept operating in a number of small-format stores. China’s BingoBox stores rely on RFID technology to detect what a person is walking out with and charge him while the items are being scanned upon exit. Although not the same technology that Amazon Go employs, it

serves the same purpose — and, according to Technode, may be replaced by cameras with image-recognition technology that can scan and charge. For those who may know the company only by name, Alibaba group currently operates as the world’s largest retailer and one of its largest internet companies. While its businesses are diverse, it’s arguably best known for its three major ecommerce platforms: Taobao, a consumer-to-consumer website similar to eBay; Tmall, a business-to-consumer website for local chinese and international businesses to sell branded products to consumers; and Alibaba.com, the world’s largest online business-to-business trading platform for small businesses. But it’s also making its mark in brick-and-mortar, especially with groceries. And while BingoBox is quite the forward-thinking concept, it’s a chain of supermarkets that’s enabling Alibaba to really show the world what the future of retail looks like — and from which U.s. grocers can take inspiration.

Here Comes Hema Hema — not to be confused with the Dutch retail chain of the same name — supermarkets are said to be the “purest manifestation of Alibaba’s ambitions to marry online with offline,” offering shoppers a “more efficient and flexible” shopping experience, according to Alibaba’s news site. Using technology and data to provide a seamless and more efficient shopping experience, Hema powers everything via mobile: After downloading an app, shoppers scan items — all of which have barcodes — to learn more about products and recommended items, and to pay for them. Additionally, a dining area allows patrons to eat as they shop, letting them hand-pick fresh food, including live seafood from a large aquarium. To save hassle, the in-store kitchen can cook food for eating on the spot. For those who prefer to shop online, stores also serve as fulfillment centers, with each one serving a mile-and-a-half radius and delivering thousands of orders per day, each within 30 minutes. customers order via the app, and orders are gathered by employees with scanners and bags sporting unique barcodes before being dropped off for delivery. roughly 50 percent of Hema’s store revenue is through these app orders that are delivered from stores, says Jack chuang, partner in global firm oc&c strategy consultants.

Learning From Hema Key Takeaways b]Alibaba’s Hema supermarket chain in China marries online with offline in a way that should make U.S. grocers take notice. b]Mobile needs to become the main way that customers interact with U.S. grocers. b]U.S. grocers should team up with large digital-format companies, seeking out opportunities to collaborate with them in areas such as voice ordering and fulfillment of online orders. b]They should also focus on location, and bear in mind technology’s costs and inefficiencies.

Hema supermarkets arguably are the ultimate example of seamlessly blending online and offline shopping experiences, Alibaba group ceo Daniel Zhang has said. And blending online and offline shopping experiences is exactly what U.s. grocers have made progress toward but not fully arrived at yet. so if Hema is setting the standard, what must U.s. grocers do to seamlessly integrate the physical and digital?

Make Apps Central to the Experience creating a full picture of the customer based on his offline and online activity isn’t easy. early on, however, Alibaba invested in Alipay, an online payment account that also can be used for offline payments, particularly in grocery. “They found a way to make loyalty not just a discount-based thing, but a benefit — a convenience,” says Tom gehani, director of client strategy and research at New York-based business intelligence company L2 inc. Before shopping a Hema store, consumers download a mobile app that links to Alipay. Whether they’re ordering online from home for delivery within 30 minutes or scanning barcodes in-store for product information, the customer is Progressive grocer March 2018

Technology

Shopping Experience

empowered by the app and uses it for all points of interaction with the store, products and transactions. And across all points of interaction, the app gives information that helps paint a full picture of the shopper, both online and offline. Data collected from transactions are used to personalize recommendations, while geographic data help plan the most efficient delivery routes, Alibaba says on its site. “U.S. grocers need to do a lot more with mobile than just having a series of apps,” notes Bill Bishop, chief architect with Barrington, Ill.based retail consultancy Brick Meets Click. “Mobile needs to become the main way their customers interact with them. Mobile payment is probably the biggest gap in the U.S. today; nevertheless, there’s a lot more to do to fully integrate mobile into the path to purchase.”

Hema’s challenges should serve as a lesson for grocery stores to test out new concepts and formats in stages without biting off too much, too fast.” —Gina Ashe, ThirdChannel

Test and Partner Hema is one of Alibaba’s bigger retail tests, and its careful rollout and expansion are proof that food retailers can develop some of their most innovative ideas as small, quiet trials. “You need to have a couple different pilots occurring at the same time,” affirms Scott Webb, president of Chicago-based digital solutions provider Avionos. Although there have always been some rigid points of entry in grocery, the ways that people are changing their shopping habits and grocers are adjusting show the need for pilots, he notes. Even when a grocer can’t afford 18 months to introduce a new integrated POS system or develop and launch a shop-by-phone app, it can have a number of smaller pilots happening at once. This is where working with a partner can be beneficial. Hema points to its parent company’s forward-thinking approach to the digital retail landscape, and U.S. grocers could stand to benefit from this. Amazon is a secretive and real threat, but Alibaba appears open to discussions — it’s already playing a role in helping some brick-and-mortar retailers make the digital transformation. “Many of these retailers would be unable to achieve this transition on their own,” Bishop observes. “U.S. grocery retailers need to be Although some consumers prefer to shop from home, amenities such as an in-store aquarium that lets patrons hand-pick seafood for home, or on-site preparation and consumption, further bring together the physical and digital.

progressivegrocer.com

open to partnering with large digital-format companies, but they also need to search out new opportunities to collaborate with them in areas like voice ordering and fulfillment of online orders.” U.S. retailers have taken note: In January, the New York Post reported that senior executives at the Cincinnati-based Kroger Co. held meetings with counterparts at Alibaba Group about a potential partnership to “speed up the integration of online and offline sales.”

Think About location It’s been said that 90 percent of the U.S. population lives within 10 miles of a Walmart store, so pickup is a good option for many of the retailer’s customers. On a similar note, Alibaba’s Hema stores are strongly location-focused for customer convenience — built for those living within a 1.5-mile radius of them. “And they’ve been building these in very densely populated parts of Shanghai and Beijing,” L2’s Gehani says. “I think that’s something grocers in general are going to have to think through: What is a highly urban-density format going to look like versus [one for] a rural area?”

Be Aware of costs, Inefficiencies Hema’s model has many merits, but they bring additional costs. Alibaba has been challenged to make Hema profitable, given the stores’ massive size and many hirings for managing delivery and inventory fulfillment. Of course, this is to be expected, as, just like in any market, expanding in grocery will bring growing pains, points out Gina Ashe, CEO of Boston-based retail intelligence platform ThirdChannel. “Hema’s challenges should serve as a lesson for grocery stores to test out new concepts and formats in stages without biting off too much, too fast,” she notes. Sure, shoppers will love having the freedom to skip checkout lines and place orders for pickup minutes before they arrive, Ashe notes. But they won’t love arriving at a store if their order isn’t ready on time, or running into technical glitches if the technology isn’t yet ready for scale. “It is more important for the U.S. grocer to think through an ecommerce mindset,” says OC&C’s Chuang, such as “what drives traffic, how to collect data, how to use customer data to drive better assortment and conversion, and what excites customers in-store.”

Supply Chain

Blockchain Technology

Building ‘Blocks’ IBM and a consortIuM of re taIlers and supplIers are pavIng the way for a gaMe-changIng technology that can achIe ve product tr ace aBIlIt y at the ‘speed of thought.’ By Jenny McTaggart magine being able to trace a piece of fresh fruit from your store back to the farm on which it was produced in a mere 2.2 seconds. This isn’t a supermarket pipe dream — it’s the power potentially unleashed by a technology called blockchain. Two years ago, no one in the food industry was talking about blockchain, unless they were having a discussion about Bitcoin or other cryptocurrencies. But thanks to a 2016 proof-of-concept project with Armonk, N.Y.-based technology powerhouse iBM and the world’s largest retailer — Walmart inc. — blockchain is bringing new worlds of possibility to the concepts of data sharing and transparency. iBM’s initial work with Bentonville, Ark.-based Walmart involved tracing shipments of pork in china, and fresh mangoes in the United states. Building on the success of those tests, the technology continues to gain steam in the industry, as iBM is now collaborating with Walmart and two additional retailers — the cincinnati-based Kroger co. and rochester, N.Y.-based Wegmans Food Markets — as well as Temple, Texas-based supply chain services provider McLane co. and a consortium of leading suppliers such as Dole, Driscoll’s, golden state Foods, Mccormick and co., Nestlé, Tyson Foods, and

Key Takeaways b]Blockchain enables users to create shared ledgers of data and, because it follows a decentralized model, it’s more resilient to technical and organizational failure. b]The technology can empower solutions such as traceability, food safety and chain of custody. b]Retailer pioneers in developing blockchain for the food industry include Walmart (working with IBM), Kroger and Wegmans. b]A PMA initiative will be key to how produce is traced with blockchain.

Progressive grocer March 2018

Supply Chain

Blockchain Technology

We will continue to add partners who are interested in improving trust and transparency in the food sector.” —Brigid McDermott, IBM Food Trust

Unilever. Its master plan is to accelerate and bring to scale its enterprise-ready blockchain traceability solution, called IBM Food Trust. If all goes as planned, IBM could be rolling out the solution in the second half of this year, according to Brigid McDermott, VP of IBM Food Trust. But the company is being careful to work with as many parties in the food industry as possible, since McDermott says collaboration is necessary for the solution’s ultimate success. “[Our] goal is to have all members of the food ecosystem participating, so that the transparency we create is across the entire ecosystem,” she tells Progressive Grocer. “This means all retailers, all manufacturers, all growers, etc. We will continue to add partners who are interested in improving trust and transparency in the food sector.” As IBM works on its solution, many of the industry’s leading trade groups are separately ramping up efforts to educate their members and make sure that their sectors of the supermarket business are fairly represented in the blockchain discussion. Other technology companies are also working on traceability solutions based on blockchain, and at least one supplier, Wayzata, Minn.-based Cargill, has launched a test of its own (see the sidebar below for more information).

What’s Blockchain? If you haven’t yet heard of blockchain, it’s a type of technology that enables users to create shared ledgers of data. Because it follows a decentralized model, it’s more resilient to technical and organizational failure, and there are many

Follow That Bird This past Thanksgiving, Wayzata, Minn.-based Cargill used blockchain technology to help its customers trace their Honeysuckle White brand fresh turkeys back to the exact family farm where each turkey was raised. Cargill’s North America Protein business, which is based in Wichita, Kan., used a distributed ledger that included input from key stakeholders in the supply chain. Key information collected from the participating family farms was available online to consumers throughout the holidays. Consumers in pilot markets could access the farm’s location by state and county, view the family farm story, see photos, and even read a message from the farmer. The pilot could inspire other similar promotions in the future, according to Deb Bauler, Cargill’s CIO for North American Protein. “We are in the process of evaluating the results of the Honeysuckle White transparency pilot,” she says, “and will then determine our next steps.”

progressivegrocer.com

shared owners. At the same time, it ensures a “single truth,” as data that are entered on the ledger can’t be manipulated. The Produce Marketing Association (PMA), based in Newark, Del., held a webinar on blockchain in September 2017 to explore the technology and its potential impact on the produce industry. Frank Yiannas, Walmart’s VP of food safety, told participants that blockchain is ushering in a “new era of food transparency,” noting that Walmart’s test with IBM involving a package of sliced mangoes grown in Mexico allowed the mega-retailer to achieve traceability at the “speed of thought.” Before the blockchain test, it took Walmart six days, 18 hours and 26 minutes to trace the mangoes back to their original source, he said. Blockchain not only cut that time down to an unbelievable 2.2 seconds, it also allowed Walmart to obtain a lot of information that was previously unavailable, including the knowledge that there were four days of bottleneck as its shipment got held up at the U.S. border. The retailer could also see audit certificates and other food safety-related documents attached to the product, all of which helped improve business efficiencies. “Blockchain has the potential to be a light shining on all nodes in the food system,” asserted Yiannas during the webinar. “That transparency leads to accountability, and accountability leads to responsibility. When people know they’re being held accountable, generally they self-govern their actions.”

A Call to Action Walmart is bringing other grocers along this journey and saying, ‘Let’s all figure this out together.’” —Ed Treacy, PMA

Yiannas also noted that Walmart has a long-term vision that “portions of this information could be made available to our customers via a code on the product package.” indeed, this power of transparency would interest many consumers who want to know more about where their food is grown, while also adding a new level of trust for those concerned about food safety.

Fundamentals of traceability ed Treacy, vP of supply chain efficiencies at PMA, says he wants to make sure his constituents are fairly represented in the blockchain discussion, since smaller produce growers have specific concerns and needs in their supply chains. To that end, he helped set up a blockchain taskforce committee at PMA and is participating in discussions in the latest iBM blockchain consortium. He has also joined a global nonprofit organization called Hyperledger Project that’s dedicated to blockchain development. “our members have some unique challenges from a systems and data perspective, aside from the perishable nature of produce,” notes Treacy. “As i’m participating in these discussions, if i hear of something that may be concerning to smaller produce companies, i can raise the issue and serve as a liaison.” Treacy says that he’s impressed with Walmart’s collaborative efforts in helping to develop the iBM blockchain solution. “With the results they got on their beta tests with the pork and mangoes, they didn’t just go down this path on their own,” he notes. “They are bringing other grocers along this journey and saying, ‘Let’s all figure this out together.’ i commend them for that.” He adds that he’s happy that Walmart has said that PMA’s produce traceability initiative will be a “fundamental” part of how produce is traced with blockchain. Another industry stakeholder that’s closely watching blockchain development in the grocery industry is gs1 Us, the organization supporting and educating businesses in the use and adoption of gs1 standards. Melanie Nuce, svP of corporate development for gs1 Us, based in Lawrenceville, N.J., says she believes that the “timing is right” for blockchain to impact the grocery business in a major way. “We’re at a great place of bringing industry and technology together to tackle blockchain, not just as a technology, but what to us is much more profound, which is traceability and the foundation of what is good business practice,” observes Nuce. While blockchain is an exciting technology in and of itself, its ability to solve business problems is what makes it so attractive to the supermarket industry, she notes: “Blockchain can empower solutions such as traceability, food safety and chain of custody. The newer versions include smart contracts, which enable you to enforce terms and conditions of business right into the ledger. “We’ve been very fortunate as an advocate for standards and education in industry to join the ride,” continues Nuce. “We built the UPc or the gTiN as a way for people to have interoperable identification all over the globe. These foundational traceability standards were developed many, many years before blockchain was ever a glimmer in someone’s eye. But now it’s all coming together.”

Frank Yiannas, VP of food safety at Bentonville, Ark.-based Walmart Inc., offered the following advice to companies looking to get involved in blockchain, when he spoke during a Produce Marketing Association webinar in September: Identify the business problem. “Don’t just chase the shiny coin” when it comes to new technology like blockchain, he advised. For Walmart, the clear business challenge to tackle was transparency. Develop your business case. Engage your stakeholders and tell your story. Act now! Pilot, test and learn. Create shared value. “Blockchain is more democratic than previous systems, and that’s why we believe it has more applicability for transparency and traceability,” he said. Yiannas also noted that the technology benefits farmers and processors, because it would immediately allow them to prove their innocence in cases of foodborne illness. “Today, growers have to pull everything when there’s a food safety investigation,” he pointed out. Last but not least, Yiannas advised companies not to let upfront costs be a deterrent to adopting blockchain. “On balance, when you look at our industry’s challenges, this technology should save the food system money, not cost money,” he said. “It should allow us to run a smarter, more sustainable food system.”

Frank Yiannas, VP of food safety, Walmart

Progressive grocer March 2018

NoNfoods

Vitamins, Minerals & Supplements

Supplemental Knowledge Understanding the category can help re tailers tailor their selection for ma ximUm sales. By Barbara Sax

hree out of five consumers say that they don’t get enough nutrition in their diet, and 50 percent say that they manage their health issues by taking supplements, according to a recent study from NMI, a Harleysville, Pa.-based consulting firm specializing in health and wellness. “That in itself is proof that retailers should be paying attention to this category,” asserts Maryellen Molyneaux, partner at the firm. Much of the category growth is coming from current users. “Consumers who use vitamins and supplements have added one or more additional products to their regimen, driving increases in the market,” says Molyneaux. Half of all vitamin/mineral/supplement (VMS) users take three or more a day, according to Kristine Urea, VP at Ronkonkoma, N.Y.-based Nature’s Bounty. Consumers who are taking more than one VMS a day are driving innovation of new delivery systems. Nature’s Way recently introduced a line of three Single Herb Powders that dissolve in a beverage: Beet (Beta vulgaris) Root Powder, Standardized Turmeric Powder to support joint health, and Activated Coconut Charcoal Powder for internal cleansing. “Sales of

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Herbal powers, like those offered by Nature’s Way, are seeing more interest from consumers.

Key Takeaways Consumers taking more than one VMS daily are driving innovation of new delivery systems like drinkable powders. Benefit-specific supplements continue to grab a bigger portion of category sales as products become more customized. Consumers are becoming just as concerned about what’s not in their VMS products as what’s in them. Sales of essential oils are booming.

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for joint health have strong sales. Renee Young, general merchandise manager for Trig’s Minocqua, Wis., store, observes that vitamins D and B12, glucosamine, and chondroitin are the best-selling vitamins and supplements at her store, part of a six-store chain based in Minocqua. “Turmeric has especially skyrocketed in popularity over the past few years,” says Backos. Nature’s Way recently expanded its portfolio of turmeric offerings with a new Turmerich line featuring two targeted formulas: Turmerich Heart and Turmerich Joint. herbal powders have been rapidly increasing, solidifying the drinkable powders as an emerging supplement industry trend,” notes Priya Backos, associate brand manager at Green Bay, Wis.-based Nature’s Way Brands. “In addition to powders, we’ve seen more interest in gummies, oils and innovative liquids.” Single VMS products are still popular with consumers. Calcium and vitamin D top the list of most used products, according to NMI research, and products

Growth of Nature’s Bounty Hair Skin & Nails line is being driven by younger consumers.

Reaping the Benefits NMI research shows that benefit-specific supplements continue to grab a bigger portion of category sales as products become more customized. IRI multioutlet data for the 52-week period ending Dec. 3, 2017, reveals that the highest dollar sales growth in the entire VMS category came from Nature’s Way Primadophilus Fortify (up 41 percent); Procter & Gamble’s Align (up 8 percent); and Schiff Digestive

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Advantage (up 8 percent), an indication that there’s still plenty of upside in the probiotic segment. Retailers have responded by adding more probiotics to their mix. “The average items per store in the food channel have continued to grow to 57.3, which is up 6.1 versus 2016, indicating a more cluttered shelf,” says Melody Harrity, client insights consultant for nutritionals at Chicago-based market research company IRI. The category is a profit center for retailers: IRI data show that price per unit and volume increased for both branded and private label shelf-stable probiotics last year. “Customers are willing to spend on these products,” notes Young, at Trig’s. “There’s been an increase in likelihood to use conditionspecific supplements, with some segments showing over 100 percent growth in consumers who say they have used these products in the last 30 days,” says Molyneaux. Supplements for skin, mental focus and anxiety were the three most mentioned condition-specific supplements. At the Paramus, N.J., Fairway location, supplements for hair, skin and nails are some of best-selling products, according to one saleswoman, who cited Nature’s Bounty Hair Skin & Nails as a particular customer favorite. “The base Hair Skin and Nails formulation is a blockbuster for our line,” affirms Urea, adding that growth of the line is being driven by younger consumers

Products that help people sleep better, think better and have more energy are top performers.” —Renee Young, Trig’s

coming into the category early. Nature’s Bounty is using targeted digital advertising and social platforms to reach this audience. “The product is a great entry point for Millennials,” she says. Since the customer for beauty vitamins typically shops premium beauty brands, Nature’s Bounty uses secondary placements in premium hair and skin care sections to boost sales and “elevate the beauty experience and tie the categories together,” according to Urea. Young has seen a big lift in sales of supplements targeted to hair, skin and nails from the Mason line that Trig’s carries. “Sales have really picked up in the last month,” she notes. Trig’s recently ran a buy-one-

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NoNfoods

Vitamins, Minerals & Supplements

get-one sale on Mason brand vitamins, which lifted sales considerably for the chain. “Hot-flash relief and joint-pain formulations are big sellers,” she says. Products specifically targeted to menopause relief and products formulated with melatonin for sleep and vitamin B for energy have also been strong at retail. “Products that help people sleep better, think better and have more energy are top performers,” Young observes. “Our Active Mind product has shown a lot of growth.” The eye health segment has also been a particularly active space as consumers spend more time on electronic devices. Last year, Nature’s Bounty introduced Lutein Blue under its namesake brand and iShield under its Sundown Naturals label. Additionally, consumers are becoming just as concerned about what’s not in their VMS products as what’s in them. According to NMI’s Molyneaux, among attributes important to purchase decisions for the VMS category, non-GMO is at the top. “As consumers become more aware of non-GMO certification, the number of products on the market that are non-GMO certified has doubled,” she says. “Consumers may be confused about what GMOs actually are, but the concern is there.” Customers at the Paramus Fairway store are “very aware of whether or not products are non-GMO,” affirms an associate at the store, while at South Bend, Ind.-based Martin’s Super Markets, Rob Kress, a buyer for the 21-unit chain, says that his customers “are interested in non-GMO products and gluten-free products.” “If I promote a line that’s allergen-free, it gets traction,” he adds.

Aura Cacia’s Aromatherapy Roll-ons target new users to the booming category.

Essential oils Growing Sales of essential oils are booming, spurring many retailers with tight space constraints to find a way to carve out a place for the products. “According to SPINS, the subcategory has seen growth of more than 40 percent in the last 12 months,” says Shannon Ousley, director of marketing for Aura Cacia essential oils, part of Norway, Iowa-based Frontier Co-op. “Over the past three years, we have seen more food, drug and mass retailers adding and/or expanding their essential-oil sets. Supermarket retailers such as Wegmans, Fairway and many others represent an important growth area for our brand.”

Over the past three years, we have seen more food, drug and mass retailers adding and/or expanding their essential-oil sets.” —Shannon Ousley, Aura Cacia

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Woodman’s Food Markets, a 16-unit Janesville, Wis.-based chain, has started to add essential-oil sections to some of its stores as the chain continues to expand its natural and wellness selection. “It’s one of those categories that, if you are into natural and health, you need to have,” explains Jeff Garey, nonfoods director at the chain. Garey admits that it’s a challenge to create a meaningful section in a small footprint for a category with so many SKUs. “You really need to have a good partner to understand where the category is going, and because it is constantly changing,” he says. Ousley notes that retailers need only 2 feet to display Aura Cacia’s top-selling essential oils, a few carrier oils, and essential-oil-based products and accessories like roll-ons or diffusers. The company recently launched Aromatherapy Roll-ons, geared for new users to the category. “They are a great option for supermarket retailers to display,” she asserts. Most essential oils are merchandised in a shelving unit that also serves as an educational vehicle for the category. “There could be more education out there, but it doesn’t hurt the category if there’s not,” says Martin’s Kress, who has a line of Pure Encapsulations oils behind the pharmacy counter. He notes that word of mouth and educational outreach alone keep sales brisk, adding, “It’s a category that’s absolutely building.”

EquipmEnt & DEsign

Kiosks

Streamlined Service WorKing WiTh reTAilers, KiosK suPPliers Are groWing Their suPerMArKeT Presence. By Bob Ingram

ith speed and convenience increasingly demanded by time-pressed grocery shoppers, kiosks are becoming ubiquitous in the supermarket space. “The increased popularity within the grocery channels is just the latest use case for kiosk acceptance for in-store product experience and transactions,” says David Anzia, svP of sales at grafton, Wis.-based Frank Mayer and Associates. Anzia’s firm teamed with The Kroger co. to introduce scan-Bag-go kiosks in 400 of the cincinnati-based grocer’s stores this year. This technology lets consumers scan barcodes using handheld scanners or smartphone apps before heading to the self-checkout kiosks. “We are a strategic partner who understands retail channels,” Anzia says. “We design customer-centric kiosks that elicit interaction. With technology moving at warp speed, we see projects from retailers and brands accelerating in 2018.” Frank Mayer sees a more technology-driven experience for consumers in the

Key Takeaways Supermarkets are beginning to offer a more technology-driven experience for consumers, including additional touchscreens and consumer engagement points within the environment. More kiosks will be tied to mobile apps to offer even greater flexibility and convenience for consumers. Retailers must be able to provide streamlined, user-friendly systems and processes, with customization and personalization as important features. Footprints must be reduced whenever possible to free up space on the selling floor. Progressive grocer March 2018

EquipmEnt & DEsign

Kiosks

Grocery store kiosks have to be about making customers’ shopping experiences better and more pleasant — a differentiating factor — and not just about the store’s bottom line.” —William Pymm, Redyref International

supermarket arena that will include additional touchscreens and consumer engagement points within the environment, Anzia says. “The engagement will not just occur when the consumer enters the store or checks out,” he emphasizes. “It will be immersive throughout the space.”

On the money Eden Prairie, Minn.-based grocery retailer/wholesaler Supervalu Inc. has selected Cummins Allison’s Money Machine 2 self-service coin counter and its associated coin redemption programs because of the flexibility, highly responsive sales and support, and opportunities to increase coin redemption revenue without increasing user fees. Additionally, U.K. food retailer Tesco has installed 160 Money Machine 2 self-service coin machines in its smaller-format Tesco Metro outlets, notes Jim Weaks, VP of Mount Prospect, Ill.-based Cummins Allison’s self-service coin business unit, “increasing the profitability of their self-service coin program.” Further, according to Weaks, Reasor’s, a grocer based in Tulsa, Okla., has experienced double-digit growth in its coin volume since installing Cummins Allison machines in its 19 stores. “This increase is a direct result of a decrease in downtime with the Money Machine 2 machines, as compared to Reasor’s previous coin-counting equipment,” he says. Coin redemption kiosks keep cash in stores, Weaks notes, and grocers can further tap into this by promoting store specials or high-margin items through on-screen advertising on the coin machines. Also, Cummins Allison has four flexible procurement options through which grocers can buy, lease, rent or place a machine free of charge, offering more choices for up to 8 percent profitability potential. Another benefit to retailers Weaks points out is that while the costs of purchasing coins from a bank can run up to $500 a month, by using recycled coins from their self-service machines, grocers can eliminate these costs. By offering differentiated and convenient self-service options, he adds, grocers can make up for revenue

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Redyref Interactive’s T series, top, is for grocery pharmacies, while the Money Machine 2, from Allison Cummins, counts coins.

lost from DVD sales and rentals, which are services that many retailers believe are becoming obsolete.

Coin of the Realm Meanwhile, Bellevue, Wash.-based Coinstar has kiosks installed at most national grocery retailers, owning and operating 20,000 kiosks worldwide, with about 17,000 in the United States. “Today, there’s a Coinstar kiosk within five miles of 90 percent of the U.S. population,” according to Thien Truong, chief revenue officer at Coinstar. “Multiple products are available on most Coinstar kiosks that include coin-to-cash, no-fee gift cards and a charity donation option.” Truong says that Coinstar recently modernized its technology platform to an agile cloud-based system, and that the company has also launched a program, through a partnership with ProVision, to deliver 3D hologram advertising and consumer product coupons via its existing kiosk. “Coinstar has done pilot-testing with third-party partners to provide cash-out capabilities at the Coinstar kiosk,” he says. “Coinstar will also be launching cash-in capabilities. This gives online retailers, digital financial services vendors, bill pay companies and others a means to deliver or accept cash. Consumers want convenient locations to perform financial services without long wait times. We believe that we can provide a great customer experience by moving these transactions to a self-service-based system.” Truong sees self-service kiosks as an important and growing component of the supermarket landscape, observing that in other countries such as Japan, there’s a proliferation of kiosks offering a vast number of products and services, and that one might see an entire row of kiosks at the front of a Japanese retail store. In addition, with the explosion of mobile computing, Coinstar expects more and more kiosks will be tied to mobile apps to offer even greater flexibility and convenience for consumers.

Custom Kiosks Peerless-AV offers a self-ordering/checkout kiosk for mounting to a countertop or floor, and floor-standing landscape kiosks for education and wayfinding. “All of Peerless-AV’s kiosks have the ability to be modified with components

like printers, barcode scanners, credit card readers and stereo systems, as well as branded in a color or decorated with vinyl graphics,” explains rob Meiner, kiosk business unit manager of the Aurora, ill.-based company. The increased popularity of supermarket kiosks can be largely attributed to the role of Millennials in today’s society, Meiner asserts. “Millennials are perceptive and more educated,” he says. “They use their hand-held devices to meet all their needs. Whether it’s using the Uber app for a ride or ordering a meal through a foodservice app like seamless, technology is how they get things done. They are plugged into their devices and are disrupting traditional purchasing patterns.” To appeal to this generation, according to Meiner, retailers are continuously looking to create a seamless customer-facing retail experience, and one way they’ve accomplished this is by improving the payment experience through self-checkout kiosks and advanced digital payment technologies. “To retain this audience,” he says, “retailers must be able to provide streamlined, user-friendly systems and processes.” Peerless-Av designs its kiosks to be complementary to the brand in any space where they’re implemented, Meiner notes, to save space and not be intrusive in the retail location, to be easily installed in a few hours so as not to affect shoppers, to meet public-safety requirements by passing dynamic tip tests, and to require minimal to no maintenance from supermarket staff. in the future, Meiner says, interactive kiosk solutions will allow retailers to offer a three-dimensional experience to customers, rather than a simple self-serve. “While more expensive than mobile apps,” he explains, “kiosks will serve the dual purpose of advertising, alerting the busy consumer to overlooked or immediate needs at home. A kiosk can promote a special on bakery goods, fruit or fully cooked meals. They also could mimic the shopping experience, projecting specific items on a wall or through virtual reality, so commuters see them as if in the store.”

Less is More redyref interactive, in riverdale, N.J., offers kiosk hardware/ enclosures for telemedicine that are used in grocery pharmacies, allowing customers to speak to health care providers; kiosks that can be used with software for recipe suggestions and can print grocery lists to match; and kiosks that can be programmed to allow customized orders in different departments. redyref has added kiosks with smaller footprints with the same functionality as larger units, because, as William Pymm, svP and managing partner, notes, “it’s imperative that footprints be reduced whenever possible to free up space on the selling floor.” redyref envisions the future of supermarket kiosks as having more to do with customization and personalization, Pymm says, than their current primary use for checkout. “grocery store kiosks have to be about making customers’ shopping experiences better and more pleasant – a differentiating factor – and not just about the store’s bottom line,” he concludes.

Card Sharp supermarket kiosks are popular particularly for convenience of adjunct nongrocery services that can be handled under one roof, like coin-counting and lottery ticket sales. cheryl Madeson, marketing and communications vP at Louisville, colo.-based Kiosk information systems, says that her company

works with retailers that invest in kiosks to streamline store operations related to productivity, flow and overhead reduction. Job application kiosks and deli-ordering kiosks are two examples she gives. “our remote-monitoring capabilities enable us to receive real-time alerts on the system connectivity [and] software application status, as well as component-level status,” she says, permitting the retail platforms to run at 98.5 percent uptime or better. Kiosk information systems recently unveiled a kiosk for gift cards on demand that might be found at the supermarket front end. The company “manufactures the ideas & innovations gift card Buy-sell-Trade platform, which helps consumers buy, activate, personalize, reload, exchange/consolidate print cards on demand, while watching a targeted advertising screen with customized promotions,” Madeson says. The screen format will scan a customer’s characteristics and age and then play targeted advertising specifically for them, which will allow the stores to gain valuable insights into their customers’ shopping habits, according to Madeson. “The screens will also help the customers learn more about the store’s promotions and receive valuable coupons and discounts from a variety of their brands,” she adds. in the future, Madeson says, retailers will more aggressively integrate self-service options into their deli and bakery services, and “we would also not be surprised to see more Department of Motor vehicle kiosks in supermarkets, enabling shoppers to perform common transactions such as fine payment and registration and tag renewal. Kiosk information systems has clients where these state DMv services are offered in nontraditional locations like supermarkets. it provides a valued service for the shopper while increasing in-store foot traffic for the retailer.”

Cut to the Capers Mike James, president of Kiosk group inc., in Frederick, Md., observes, “since the Apple iPhone burst onto the scene in 2010, consumers have gotten very comfortable interacting with touchscreens; plus users are increasingly using kiosks for quick-service restaurants and customer service in retail.” His company has provided kiosk software and hardware for Whole Foods Market, Kroger and Publix super Markets, among others, and “we concentrate on providing low-cost tablet kiosks housed in heavyduty enclosures.” Kiosk group is currently developing a new line of ADA-friendly kiosks, according to James, who, when asked about the future, quips: “Wow – i certainly hope somebody comes out with grocery item locators. These are sorely needed! Where are the capers?” Progressive grocer March 2018

Editors’ Picks

Food, Beverage & Nonfood Products

A Bold twist Often, when developing a new consumer favorite, brands need not reinvent the wheel, as a new twist on a classic can do the job perfectly. That’s what Coca-Cola did with its classic Diet Coke brand, adding new flavors and a new look to the brand while leaving the recipe unchanged. The new flavors are Ginger Lime, Feisty Cherry, Zesty Blood Orange and Twisted Mango. The slimmer 12-ounce cans retain the brand’s iconic silver color, offering a simplified color palette focused on silver and red with accents of bold color to represent the new flavors. A slightly refined typography simultaneously preserves Diet Coke’s heritage, but presents it in a more progressive manner. The new varieties retail for a suggested $1.19 per 12-ounce can, and between $3.99 and $4.29 per 8-pack.

Not Your same old salad Consumers might be seeking lighter dishes, but that doesn’t mean they don’t want bold, exotic flavors. In response, Ready Pac Foods went global for inspiration with its Sweet & Spicy Korean Chopped Salad Kit, ethnic-inspired fare featuring a fresh mix of romaine lettuce, Napa and red cabbages, crisp vegetables, puffed brown rice, and black sesame seeds, all tossed in a slightly spicy gochujang vinaigrette dressing. The refrigerated mix is both savory and crisp, with a gentle heat and slightly sweet finish, and retails for a suggested $3.99 per 11.5-ounce bag.

smart cookie Indulging without guilt continues to be hot, and Brooklyn Bites’ new Cookie Brittle caters wholeheartedly to this trend. The product is exactly what it sounds like: very thin cookies that are crunchy and crisp. They’re made with quality glutenfree, soy-free, dairy-free and vegan ingredients. Available in such varieties as Crunch, Cinnamon, Almond Butter Chocolate Pretzel, Chocolate Drizzle, Chocolate Almond Sea Salt and White Chocolate Drizzle, the brittle retails for a suggested $4.99-$5.99 per 6-ounce bag.

‘scent-sational’ Personal care Fine fragrance trends inspired Procter & Gamble to develop the Old Spice Red Collection, which uses “superior ingredients” and the company’s innovative Fade-Resistant Scent Technology to provide long-lasting fragrance benefits. The collection comprises antiperspirants, deodorants, body washes, body sprays and shampoos. Scents include Captain: The Scent of Command, a modern scent with crisp top notes of water and citrus and subtle green notes; Ambassador: The Scent of Excellence, a classic masculine scent with warm, caring notes of creamy amber freshened by spicy, woody top notes; and Nomad: The Scent of Adventure, an aquatic fragrance that captures classic elements of fougere in an explosion of juicy citrus and crisp watery fruits. The SRP is $4.99 per product.

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Snacking without the ‘Gill’-t convenience-minded snacks that are also rich in protein are popular, and the Manischweitz co. is responding with season savories, its own ready-to-eat kits combining skinless, boneless flaked sardine salad with vegetables and spices, each packaged with six fat-free organic rice crackers and a foldable spoon for scooping. Made with sardines harvested from some of the cleanest waters worldwide off the coast of Morocco, the shelf-stable kits are packed with protein, omega-3s and calcium, and come in three flavors: sweet & spicy, Lemon veggie, and Mediterranean. certified “wild-caught and sustainable” by nonprofit Friend of the sea, each gluten-free, kosher pareve kit features a BPA-liner-free can with an eZ-Peel lid, a splash-free, convenient option that’s safer than conventional metal lids, and retails for a suggested $2.99.

Plant Power

Tahini Treats Today’s health-conscious consumers are increasingly falling in love with Mediterranean food, so when they snack, they should find a desirable treat in Absolutely gluten Free’s TahiniBar, a grab-and-go sesame-seed snack that clocks in at only 100 calories. certified oU Kosher and dairy-free, the bars are made with all-natural roasted sesame seeds, which help boost energy levels and are a good source of vitamins, minerals, protein, fiber, calcium, iron, zinc and potassium. Much lower in calories than other bars, the 100 percent gluten-free treat comes in three varieties – cocoa Nibs, Pistachio and vanilla — and sells in packs of seven bars for an srP range of $2.49-$2.99 per bar.

Healthy Refreshment everyone wants beverages that not only quench thirst, but also provide benefits that contribute to a healthier, happier life. Zyn beverages are a line of healthful drinks crafted from curcumin – the main anti-inflammatory healing ingredient in turmeric – which has been used for 5,000-plus years and researched extensively for its natural healing benefits. each bottle combines 200-plus milligrams of curcumin with piperine, an adaptogen believed to increase the bioavailability of curcumin by 2,000 percent, and comes in one of four flavors: Lemon ginger, Mango Lychee, Pomegranate cranberry and Mixed Berry. The beverages are low in sugar (just 2 grams) and calories (10) per serving, and are packed with antioxidants. The srP range is $4.49-$4.99 per 16-fluid-ounce bottle.

Plant-based protein is all the rage today, motivating a growing number of brands to create meat alternatives using current technology. one of these brands, Don Lee Farms, has introduced organic Plant-Based raw Burgers, which “bleed” organic beet juice and sizzle on the grill just like beef due to their organic vegetable-based fats. The refrigerated raw burgers, made from beans and seeds, are certified organic, vegan, non-gMo and gluten-free. They’re also free from artificial ingredients and preservatives. consumers can fully cook them on a grill or skillet to 165 degrees Fahrenheit, and then enjoy them as they would beef burgers. The srPs are $10.99 per club pack (10 3-ounce patties) and $5.99 per retail pack (four 2.25-ounce patties).

Progressive grocer March 2018

O D O F M T E R AN A S M R F S TTE OO

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chobani

crown imports LLc

cHieF oPerATiNg oFFicer/cHieF BrAND oFFicer richard rivera 973-264-4380 rrivera@ensembleiq.com cHieF BUsiNess DeveLoPMeNT oFFicer korry stagnito 224-632-8171 korrystagnito@ensembleiq.com cHieF cUsToMer oFFicer/PresiDeNT oF sTrATegic PLATForMs ned Bardic 224-632-8224 nbardic@ensembleiq.com seNior vice PresiDeNT/BrAND DirecTor katie Brennan 201-855-7609 • Cell: 917-859-3619 kbrennan@ensembleiq.com soUTHeAsT AccoUNT execUTive larry cornick 224-632-8248 lcornick@ensembleiq.com MiDWesT, MArkeTiNg MANAger angela flatland (Ar, co, iL, iN, iA, ks, kY, Mi, Mo, Ne, ND, ok, sD, TN, Wi) 224-229-0547 Cell: 608-320-4421 aflatland@ensembleiq.com seNior sALes MANAger Judy Hayes 925-785-9665 jhayes@ensembleiq.com seNior sALes MANAger theresa kossack 214-226-6468 tkossack@ensembleiq.com WesTerN regioNAL sALes MANAger rick neigher (cA, or, WA) 818-597-9029 rneigher@ensembleiq.com

Beaver street Fisheries

65 24-25 inside Front cover gatefold

epson America

international Dairy Deli Bakery Association

cover Tip

iovate Health sciences int’l inc.

Jack Link’s Beef Jerky

JBs Australia

38, 44

MasonWays indestructible Plastics

National restaurant Association

Nestlé Waters

organic valley Family of Farms

21, 45

Pernod ricard

Pfizer consumer Health

NorTHeAsT, MArkeTiNg MANAger Mike shaw 201-855-7631 • Cell 201-281-9100 mshaw@ensembleiq.com

Pre-Brands

ADverTisiNg MANAger Jackie Batson 224-632-8183 jbatson@ensembleiq.com

Premier Nutrition

inside Back cover

Puratos corporation

request Foods

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The Humane society of the United states

Progressive grocer (issN 0033-0787, UsPs 920-600) is published monthly by ensembleiQ, 8550 W. Bryn Mawr Ave. ste. 200, chicago, iL 60631. single copy price $10, except selected special issues. subscription: $135 a year; canada $164 (canada Post Publications Mail Agreement No. 40031729. Foreign $270 (call for air mail rates). Periodicals postage paid at chicago, iL 60631 and additional mailing offices. Printed in UsA. PosTMAsTer: send all address changes to Progressive grocer, P.o. Box 1842 Lowell, MA 01853. copyright ©2018 ensembleiQ All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms international, 300 North Zeeb road, Ann Arbor, Mi 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

The Nature’s Bounty company

The Wonderful company/Pistachios

The J.M. smucker company

Trion industries inc. Tyson Foods Unilever North America United Fresh Produce Association viking cold solutions

Back cover

9 10-11 43 61, 88 51 Progressive grocer March 2018

Tech Talk By Randy Hofbauer

Add More Content, Sell More Groceries Grocers, cPGs must coll aborate for more robust descriPtions, imaGery, bulle t Points.

mazon now owns one-fifth of the online grocery market. Let that sink in for a bit. The Seattle-based ecommerce giant reportedly earned 18 percent of U.S. online grocery sales — valued at $2 billion — in 2017, representing growth of 59 percent, according to January research from Sandy, Utah-based ecommerce solutions firm One Click Retail. Today, Amazon hosts nearly half a million product pages in its Grocery & Gourmet Foods category. Obviously, many products perform worse than others, but new research from Salsify, a Boston-based provider of ecommerce content management solutions, shows that top performers share a commonality: robust content containing longer product descriptions and more images, videos and bullet points. I’ve written in the past about how content is king in ecommerce, especially when connected to commerce itself. But digging further finds an interesting pattern: Titles with benefitladen language, imagery and/or written copy with prominent dietary information, and below-the-fold content that highlights positive brand attributes in detail are prevalent on the brand pages that stand out on Amazon. So consumers prefer products with richer content on Amazon, regardless of whether they end up purchasing the product on Amazon. The advantage to grocers is clear: If you have an ecommerce program, there’s no reason that you shouldn’t be working with your CPG partners to develop quality content across as many products online as possible to grow their sales potential. Not every high-performing product uses the same content, however; it varies from segment to segment based on pricepoint range. For instance: Under products less than $10 — listed as “impulse purchases and staples” — M&M’s gives consumers new reasons to consider its classic peanut variety’s 2-pound party pack by incorporating use cases into marketing copy and employing detailed imagery. Photos include in-image nutrition facts and ingredient callouts, the product description is heavy on usecase and marketing language, and below-the-fold content entertainingly visualizes use cases. Under products between $10 and $19.99 — listed as volume packaging — Bai Brands’ high-performing product pages entice new customers to purchase higher-volume packages through themed variety packs. To be increasingly findable and drive conversions on the product page, the brand doubles 90

progressivegrocer.com

down on unique, benefit-laden language and multimedia assets: The product title includes flavors and a unique “antioxidant-infused” selling point, a narrated video animates the story of Bai Brands’ products, and images showcase suggested uses and nutritional information. Under products between $30 and $39.99 — listed as “bulk products and long-term stockups” — McCormick drives bulk purchases of its vanilla extract through subscription discounts and by heavily marketing around product and ingredient quality. Looking to build trust with target consumers, McCormick focuses on its sourcing practices and purity standards with images, video and text copy: Vanilla sourcing and quality are highlighted with video assets, the product description includes “pure vanilla” and “premium vanilla” to address the target audience, and the brand makes use of Amazon’s Subscribe and Save option. Working with manufacturers to better inform and empower the customer, depending on the nature of the product and type of purchase, grocers clearly have a strong opportunity to hold their own as Amazon continues to take more market share online.

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