PG’s Retail Deli Review highlights meal solution opportunities
LOCAL PRODUCE’S NEW LOOK Hydroponics, farmer partnerships lift segment MIND HOW YOU SNACK Healthier options accommodate anytime noshing for consumers CBD + HBW Items arrive at retail, but are grocers ready?
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TOP SELLING GLUTEN-FREE SPIRIT 1
The original Mockingbird Distillery shack in Austin, Texas, 2018 Tﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁ ﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁ998ﬁﬁqﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁWﬁ’ﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁTﬁﬁﬁ’ﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁﬁ
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Volume 98 Issue 5
PROGRESSIVE GROCER ’S
STORES OF THE MONTH
The giants share the top while midsize and indie operators reach for a higher rung on the ladder.
Independents navigate the crowded San Diego market to make themselves stand out.
16 MENU TRENDS
22 ALL’S WELLNESS
Produce Produces Results
Healthy Snacking Registers at Retail
The evolution of mealtime is fueling the trend toward new kinds of nibbles.
Sun, Sand, Surf Don’t Look Down! and … Groceries
8 EDITOR’S NOTE
Breaking New Ground 10 IN-STORE EVENTS CALENDAR
18 NIELSEN’S SHELF STOPPERS
94 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS
20 MINTEL GLOBAL NEW PRODUCTS
Key Takeaways from Home Delivery World
12 CONSUMER INSIGHTS
Services That Attract Shoppers
98 TECH TALK
16 PROGRESSIVE GROCER May 2019
Volume 98 Issue 5
8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 800-422-2681 Fax: 978-671-0460
56 FRESH FOOD PRESIDENT, CANADIAN DIVISION & NORTH AMERICAN GROCERY Jennifer Litterick email@example.com
Hydroponics and partnerships mark new offerings in local produce. 63 PROGRESSIVE GROCER’S 2019 RETAIL DELI REVIEW
Keeps on Giving
PUBLISHER John Schrei 248-613-8672 firstname.lastname@example.org
EDITORIAL EDITORIAL DIRECTOR James Dudlicek 224-632-8238 email@example.com MANAGING EDITOR Bridget Goldschmidt 201-855-7603 firstname.lastname@example.org
When it comes to sales, deli continues to deliver.
SENIOR EDITOR Kat Martin 224-632-8172 email@example.com
73 TOTAL MEAL SOLUTIONS
ADVERTISING SALES & BUSINESS
Creating Hybrid Hospitality
SOUTHEAST ACCOUNT EXECUTIVE Larry Cornick (NEW ENGLAND, SOUTHEAST) 224.632.8248 firstname.lastname@example.org
CONTRIBUTING EDITORS D. Gail Fleenor, Kathy Hayden, Bob Ingram, Lynn Petrak and Barbara Sax
SENIOR MARKETING MANAGER Judy Hayes (CA, PACIFIC NORTHWEST) 925-785-9665 email@example.com
Foodservice industry experts weigh in on ways that grocerants can create unique experiences in stores.
SENIOR MARKETING MANAGER Theresa Kossack (MIDWEST) 214-226-6468 firstname.lastname@example.org WESTERN REGIONAL MARKETING MANAGER Rick Neigher (SOUTHWEST) email@example.com 818-597-9029 ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 firstname.lastname@example.org
CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 email@example.com EVENTS VICE PRESIDENT, EVENTS Michael Cronin firstname.lastname@example.org MARKETING MARKETING MANAGER Carly Kilgore 201-855-7601 email@example.com
AUDIENCE ENGAGEMENT DIRECTOR OF AUDIENCE ENGAGEMENT Gail Reboletti firstname.lastname@example.org
LIST RENTAL MeritDirect Elizabeth Jackson 847-492-1350, ext. 318 email@example.com
Smaller players are investing in big solutions to boost the shopper experience – and the bottom line.
SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES 978-671-0449 or email at EnsembleIQ@e-circ.net
84 EQUIPMENT & DESIGN
CREATIVE DIRECTOR Colette Magliaro firstname.lastname@example.org
PROJECT MANAGEMENT/PRODUCTION/ART VICE PRESIDENT OF PRODUCTION Derek Estey email@example.com
ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 firstname.lastname@example.org
Sustainable supermarket refrigeration systems are becoming the norm.
ART DIRECTOR Bill Antkowiak email@example.com REPRINTS, PERMISSIONS AND LICENSING Wright’s Media firstname.lastname@example.org 877-652-5295
The Cannabis Conundrum
Legal and reputational issues remain, but H&W products containing non-psychoactive CBD are finding their way into the grocery channel.
EXECUTIVE CHAIRMAN Alan Glass CHIEF EXECUTIVE OFFICER David Shanker CHIEF FINANCIAL OFFICER Dan McCarthy CHIEF OPERATING OFFICER Joel Hughes CHIEF INNOVATION OFFICER Tanner Van Dusen CHIEF HUMAN RESOURCES OFFICER Ann Jadown EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several
EDITOR’S NOTE By Jim Dudlicek
Breaking New Ground ore online shopping and home delivery of groceries means fewer stores, right? Not so fast — new grocery store openings were actually up 30 percent in 2018, with more than 17 million square feet of space added in the United States. That’s according to Chicago-based JLL’s “Grocery Tracker 2019” report, which notes that more than one-quarter of the new stores were in Florida, California and Texas, due to expansion by their respective local market-leading grocers: Publix, Sprouts Farmers Market, Aldi, Kroger and H-E-B. “Grocery is one of the strongest retail sectors, with nearly twice as many new stores opening than closing last year,” said James Cook, JLL’s director of retail research. “The grocery sector has seen shopper habits shift to more frequent, shorter trips, versus large weekly hauls. As a result, grocers are focusing on developing smaller-format stores, those under 10,000 square feet, with more local offerings to appeal to the surrounding community.” Indeed, smaller-format stores are back in vogue, like these examples called out by Brick Meets Click’s Steve Bishop in a blog post earlier this year: Amazon Go (Seattle, Chicago, San Francisco); Raley’s 5-ONE-5 (Sacramento, Calif., PG’s March 2019 Store of the Month); Hy-Vee HealthMarket (West Des Moines, Iowa; Kansas City; coming soon to Sun Prairie, Wis.); and Kroger Express (concept inside Walgreens stores). Grocery is one of There’s also Giant Heirthe strongest retail loom Market, PG’s April 2019 Store of the Month, sectors, with nearly launched earlier this year in twice as many new Philadelphia; Ahold Delhaize stores opening than USA is planning three more closing last year. of these urban-format stores in the Philly metro area. And Houchens Industries just opened an IGA-branded c-storesized market, offering a full grocery selection, sandwich shop and fuel station, in Lexington, Ky. “In 2019, we expect to see even more grocery stores rolling out their smaller-format stores as they battle razor-thin margins in prime locations while still serving evolving consumer needs,” Cook said. Likewise, Bishop blogged: “The growth of smaller stores will accelerate business-model innovation in the grocery industry. Expect that successful new stores will be fundamentally different and 8 progressivegrocer.com
built to be economically viable in serving specific trip missions. … Those that succeed won’t just be smaller, they will operate differently.” Grocers haven’t totally abandoned the grand experience, however. I just visited Albertsons Market Street, a 110,000-square-foot temple of food in suburban Boise, Idaho, that offers in-store dining, a full bar, fresh prepared foods for every taste, and expertly curated products in each department. The truly progressive grocer knows that it’s not all one way or the other. Just as a combination of brick and mortar and ecommerce is likely to be a winner, so is the retailer who knows just what type of store to put where. Hy-Vee is particularly adept at this, with stores ranging from tiny to giant based on local needs. And Raley’s CEO Keith Knopf told me, during my visit to Market 5-ONE-5, that his company is actively reassessing its store footprints, reconfiguring square footage to accommodate ecommerce growth. The common thread among all of the retailers mentioned here? They’re all leaders in our Super 50, PG’s annual ranking of the top grocers. Check out their latest status, starting on page 24.
But It’s Got a New Hat!
Lisa Lionheart was the doll created by Lisa Simpson to better represent the feminist ideals she found lacking in her longtime favorite doll, Malibu Stacy. But on the day of the rollout, her innovation was overshadowed by the release of a new Malibu Stacy, same as the old one, except sporting a new hat. So? Well, it’s that time of year again — PG is seeking nominations for its Editors’ Picks contest. We want innovative, trend-setting new products that can drive supermarket sales by meeting the desires of today’s consumers. Show us real innovation and creativity. Don’t just send us something with a new hat on it. Deadline is June 14. Enter at https://progressivegrocer.com/timee n t e r- p r o g r e s s i v e - g r o c e r s - 2 0 1 9 editors-picks.
Jim Dudlicek Editorial Director jdudlicek@ensembleIQ.com Twitter @jimdudlicek
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National Baked Bean Month National Culinary Arts Month National Hot Dog Month National Ice Cream Month
National Picnic Month National Pickle Month National Grilling Month National Watermelon Month
S M T W T F S
National Anisette Day
National Chocolate Wafer Day
National Gingersnap Day Encourage customers to share their most outrageous flavor ideas for Creative Ice Cream Flavor Day.
National Strawberry National Sundae Day Chocolate with Almonds Day National Macaroni Day
National Sugar Cookie Day
Celebrate all things French for Bastille Day and National Grand Marnier Day.
Independence Day is a perfect opportunity to celebrate National Barbecue Day, complemented by Caesar Salad Day.
National Apple Turnover Day
National Fried Chicken Day
National Graham Cracker Day is a great opportunity for a s’mores display.
If you like National National Blueberry Piña Colada Day, Muffin Day and getting caught in the rain … National Mojito Day
National Pecan Pie Day. Is it pronounced “PEE-can” or “peh-CON”?
Offer a combination of treats for National French Fries Day and Beans ‘n Franks Day.
‘Pick Blueberries’ Day
Promote chocolates from all around the globe for World Chocolate Day.
National Tapioca Pudding Day
National Corn Fritter Day
National Gummy Worm Day
National Peach Ice Cream Day
National Caviar Day
Hot Dog Day
Run a poll to find out customers’ favorite flavor for National Daiquiri Day.
National Ice Cream Sundae Day National Lollipop Day Fortune Cookie Day
National Fresh Spinach Day
National Junk Food Day
National BLT Day
Offer customers a cool beverage for National Refreshment Day.
National Ice Cream Day
National Penuche Day
National Vanilla Ice Cream Day
National Tequila Day
National Hot Fudge Sundae Day
Lox or no lox is the question for National Bagelfest.
National Coffee Milkshake Day
National Milk Chocolate Day
National Lasagna Day
Celebrate National National Chicken Hamburger Day with Wing Day a towering-patties contest
Plain, chocolate or strawberry, it’s all good for National Cheesecake Day.
National Raspberry Cake Day National Cotton Candy Day National Jump for Jelly Beans Day
National Scotch Day National Creme Brûlée Day
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Services That Attract Shoppers In conjunction with last month’s Annual Report, Progressive Grocer, along with sister company EIQ Research Solutions, surveyed 1,000 grocery shoppers about the importance of various services or departments in deciding where to shop. The results were then compared with what retailers feel is the most important to their customers. When looking at the results, it’s important to keep in mind that the areas where there’s a large discrepancy don’t mean that the retailer is putting effort into the wrong places, but rather that consumers might not consciously realize that these amenities are in fact playing a role in their decision of where to shop. They likely do have a subconscious effect on customers’ feelings about, or perceptions of, a store.
20% 40% 60% 80%
SERVICE-BASED KIOSKS (CURRENCY)
INFORMATIONAL KIOSKS (RECIPES, SHOPPING)
23% 26% 20% 31% 19% 23% 17% 49% 17% Retailer Question
CHILDREN’S/ STUDENT PROGRAMS
On-site butchers are by far the most important in-store service when it comes to retailer strategy — far above the level of importance placed on the service by a shopper when deciding where to purchase, but for most retailers, a good meat department is table stakes. Community programming isn’t as important to shoppers as to retailer strategy, but that may be due to a lack of awareness/opportunity to leverage. Consumer survey respondents were sourced via ProdegeMR, reinventing the research process by taking a respondent-first approach. Visit www.prodegemr.com/ensembleiq.com for more information.
EVENT PLANNERS/ CONCIERGE
22% 17% 14% 16% 23% 14%
(Rate each on a scale of 1 to 6, where 1 = not at all important, through 6 = extremely important. (n = 66)
16% 13% 33% 13% 24%
How important are each of the following strategies to your company?
12% Source: Progressive Grocer market research, 2019
How important are each of the following in-store services to you when deciding where to shop for groceries? (Rate each on a scale of 1 to 6, where 1 = not at all important, through 6 = extremely important. (n = 66)
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Research & Analysis
Produce Produces Results Perimeter store sales continue to grow, driven by shoppers’ demands for fresh, healthy and natural foods. As that demand develops, variety will become key to holding consumers’ attention and bringing them back. You can vary your assortment at each stage of the Menu Adoption Cycle (MAC), too — variety doesn’t just originate at Inception. Here are some ideas from the MAC to start you thinking about how to mix it up in the produce aisle. Shishito Pepper MAC stage: Inception — Ethnic markets, ethnic independents, and fine dining. Trends start here and exemplify originality in flavor, preparation and presentation.
These small green peppers originated in Asia and are not all spicy. However, about one in 10 can be, so take care. Shishitos are often cooked and eaten with a light seasoning or dipping sauce, or charred until the skins are blistered. They’re often paired with aioli, lemon or soy. On 3.6% of U.S. restaurant menus Up 159% on U.S. restaurant menus 26% of consumers know it / 11% have tried it Menu Example Brio Tuscan Grille Shishito Pepper Hash Crispy fingerling potatoes, feta, green onions and sriracha aioli
Heirloom Tomato MAC stage: Adoption — Ethnic aisle at supermarkets, casual independents, fast casual. Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. Heirloom tomatoes represent the strains of open-pollinated tomatoes grown from old cultivars, and are believed to have more flavor and character than their mass-produced cousins. They’re often used in caprese salads paired with basil, mozzarella and balsamic. Heirlooms are most common on the menus of fine-dining restaurants. On 5% of U.S. restaurant menus Up 112% on menus over the past four years 69% of consumers know it/ 53% have tried it Menu Example Buca Di Beppo Italian Sausage Cheese Dip Mild sausage, parmesan, provolone and asiago cheese dip topped with roasted heirloom tomatoes and basil
Brussels Sprouts MAC stage: Proliferation — Proliferation-stage trends are adjusted for mainstream appeal. Often combined with popular applications (on a burger, pasta, etc.) A small green vegetable resembling a mini cabbage, Brussels sprouts are popular as an appetizer, side or addition to a salad. Restaurants are pairing them with contemporary ingredients such as bacon, miso and maple, and drizzling them with balsamic.
Radish MAC stage: Ubiquity — Ubiquity-stage trends have reached maturity, and can be found across all sectors of the food industry. Though often diluted by this point, their inception-stage roots are still recognizable. This crunchy root vegetable has a pungent flavor and is typically eaten raw. There are many varieties, including black, white, red, watermelon and daikon. While it’s more typically a Northeast favorite, the radish is much more popular nationally now than ever.
On 13% of U.S. restaurant menus On 15% of U.S. menus Up 70% over the past four years Up 38% over the past four years 91% of consumers know it/ 67% have tried it Menu Example Mod Pizza Roasted Brussels Sprouts Salad Mixed greens, parmesan, roasted Brussels sprouts, roasted garlic, lemon vinaigrette and croutons
90% of consumers know it/ 64% have tried it Menu Example Houlihan’s Crispy BBQ Carnitas Lettuce Wraps Crispy, slow-roasted barbecue pork served with lettuce cups, jicama radish slaw with lemon vinaigrette, pickled red onion, and barbecue sauce
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Frozen Vegetables TOTAL FROZEN VEGETABLE SALES REACHED $2.97 BILLION IN THE PAST YEAR
(52 weeks ending April 2, 2016)
Household Care Total Department Performance Latest 52 Wks 2 YA W/E 02/23/19
Latest 52 Wks YA W/E 02/24/18
Latest 52 Wks W/E 02/25/17
Top Household Care Supercategories by Dollar Sales
Paper and Plastics Laundry Care Household Cleaners and Supplies Home Air Fresheners Facial Skin Care
In the United States, the average household Consumers choseper spends $280.43 frozen broccoli year on householdover care. alternatives for Within the household a variety of reasons: care department, which category do Americans spend the most on each year?
because it’s quick and easy
because it tastes great
on paper and plastics
Spotlight on Frozen Broccoli WHEN ARE CONSUMERS EATING FROZEN BROCCOLI?
Broccoli as an ingredient is most commonly consumed at dinner, followed by lunch.
Frozen broccoli is most often used in a side dish, followed by as a main entrée. 3%
0 Latest 52 Wks 2 YA W/E 02/23/19
Latest 52 Wks YA W/E 02/24/18
Source: Nielsen Homescan, Total U.S., 52 Weeks ending Feb. 23, 2019 OCCASION 29% TYPE 62%
Latest 52 Wks W/E 02/25/17
MEAL ITEM CLASS 35% 61%
Our research shows that, globally, four in every five surveyed consumers feel strongly that companies should help improve the environment. This sentiment, and the overall movement towards DINNER greener, cleaner will be LUNCH consumer OTHERgoods, is something SIDE DISH that MAIN ENTRÉE OTHER essential to the household cleaning category. In the latest year, sales of overall household care products have reached over $55 billion. But there’s still room for growth. In fact, half of surveyed consumers around the world are willing to pay higher-than-average prices for products with high quality/safety standards. To continue an upward growth trajectory, it will be essential to unlock the opportunities awarded to those adhering to sustainable practices.”
because it’s healthy and nutritious
because it’s low in calories, fat and sugar
on laundry care
$42.16 on household cleaners and supplies
—Lauren Fernandes, Manager-Strategy and Analytics, Nielsen
Demographic Spotlight Among several household cleaner and supply categories, empty-nest and senior couples spend more on household cleaners and supplies than the average American. These two groups in particular spend more on abrasive cleansers, bathroom cleaners and kitchen cleaners. In comparison, young transitionals, independent singles and senior singles spend significantly less on household cleaners and supplies, especially kitchen cleaners. Household income shows an impact on how much cohorts spend on household cleaners and supplies. Within the kitchen cleaner category, for example, purchasing skews toward more affluent households, where those who earn more than $100,000 annually are spending 40 percent more than their expected share on this category.
$29.97 on home air fresheners
Source: Nielsen Homescan, Total U.S., 52 weeks ending Feb. 23, 2019
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MINTEL CATEGORY INSIGHTS
Global New Products Database
Hairstyling Products Market Overview
Mass merchandisers are the top places where beauty consumers primarily shop, capturing 35 percent of total shoppers.
Some 19 percent of women age 18-34 are interested in augmented-reality (AR) tools to test beauty products before buying them. These women are also drawn to retailers that offer in-store kiosks (28 percent) as well as personal makeup artists (21 percent).
Most consumers are aware that dry shampoo doesn’t actually clean hair: A mere 6 percent of consumers agree that dry shampoo cleans as well as regular shampoo, while 16 percent don’t like the way their hair feels after using dry shampoo.
Strong interest in scalp scrubs and micellar shampoos is a key indicator that scalp care products have the potential to disrupt and reshape the hair care regimen. Roughly 40 percent of consumers are interested in trying micellar shampoo or a scalp scrub, and the number rises to more than 50 percent among women age 18-34.
Consumers are washing their hair less often: 38 percent of consumers use shampoo a few times a week, and an additional one-third use dry shampoo a few times a week. Washing hair less often and supplementing regular shampoo with dry shampoo in between, while slightly less damaging than daily shampooing, can lead to scalp buildup. Scalp buildup causes unwanted side effects such as dryness, flakiness and clogged hair follicles, all of which can lead to hair loss and slowed growth.
FOR MORE INFORMATION, VISIT WWW.MINTEL.COM OR CALL 800-932-0400
What Does It Mean?
Specialty beauty stores may lose some customers to massmarket merchants as they continue to emulate many of the tactics that draw consumers to specialty stores to begin with. Offering affordable — and potentially lower — pricing only makes this threat stronger. While damageconcerned consumers may avoid exfoliating or clarifying claims, it’s important to educate them on the benefits of scalp care. The key to healthy hair begins with the scalp, and treating it like the rest of the body, with a regimen, is the first step in reducing damage and fostering healthy growth. Strong interest in scalp care among key hair care demographics, such as women and young consumers, highlights an opportunity to disrupt the traditional hair care routine.
CHANGING TRENDS MEAN CHANGING BEHAVIORS. Grow with purpose-led brands.
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ALL’S WELLNESS By Diane Quagliani
Healthy Snacking Registers at Retail NUTRITION, CONVENIENCE AND TASTE ARE KE Y. here’s no question that America is a nation of snackers. One in three consumers (31 percent) say that they always or often snack at least twice a day, and another 39 percent say that they sometimes do so, according to the 2018 Food & Health Survey, from the International Food Information Council Foundation. The appetite for “healthy” snacks in particular is on the rise. A trends report by Hexa Research projects the U.S. market size for such snacks to rise from $3.58 billion in 2017 to $5.3 billion by 2025. The report defined healthy snacks by just five categories, however — cereal and granola bars, nuts and seeds, meat snacks, dried fruit, and trail mix — which means that the market size for healthy snacks is considerably larger after factoring in other popular choices. Just a few examples are individual servings of cheese, yogurt, yogurt drinks and cottage cheese; vegetable and legume-based chips and crackers; hummus and other dips; nut butter packets; fresh-cut fruits and vegetables; smoothies and fruit cups; and snack boxes with combinations like fruit, cheese and nuts.
Call on your retail dietitian for expertise in promoting the nutrition, ingredient and functional attributes of snacks through social media channels, as well as via instore events and signage. When planning healthy-snack promotions and media outreach, bear in mind that just about every snack has its day — or month. Consider fun commemorations such as International Hummus Day (May 13), National Trail Mix Day (Aug. 31), National Bittersweet Chocolate with Almonds Day (Nov. 7), and, of course, National Snack Food Month (February). For more ideas throughout the year, check out Progressive Grocer’s In-Store Events Calendar in every issue.
One in three consumers (31 percent) say that they always or often snack twice a day. Source: 2018 Food & Health Survey, International Food information Council Foundation
Putting Healthy Snacks Front and Center
Factors fueling the demand for healthy snacks — especially among Millennials — are busy lifestyles, the need for convenience and portability, an interest in health and wellness, and the desire for nutrition attributes such as protein, fiber, probiotics and no added sugar. “Clean” ingredient lists, non-GMO, and being free from artificial colors and flavors are also important. In sourcing such products, however, don’t forget the always important attributes of great taste and enjoyment. To meet the demand for more nutritious snacking, some retailers are swapping out traditional front end power categories like candy and soft drinks for dedicated checkout lanes of health-focused, easy-to-grab choices such as fresh fruits, protein bars, nuts and seeds, trail mix, multigrain chips, and meat snacks, and adding coolers with plain, sparkling and coconut waters; unsweetened teas; and 100 percent juice boxes. As one example, West Sacramento, Calif.-based Raley’s has implemented better-for-you checkstands throughout its stores. The initiative removed all artificially sweetened sodas from the checkstand cold cases, enlarged offerings such as granola bars and nutrition bars, and improved the quality of certain candy options.
Healthy Snacks Have Their Day
Beyond the front end, retailers can cater to shoppers who consume snack foods at main meals, a growing trend among Millennials and Gen Zs, according to The NPD Group. Fresh fruit and yogurt are popular mealtime choices, but this trend also offers an opportunity to promote portable mini versions of prepared sandwiches, quiche, sushi, pizza and other main-dish items.
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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M&A activity of the past year suggests that smaller deals will rule the day for the foreseeable future. Deal volume and value both declined for grocery stores, but the deals completed in 2018 were 13 percent larger than those in 2017, according to “Fortifying Before the Storm,” the fourth edition of global management consulting firm A.T. Kearney’s “Consumer & Retail Merger & Acquisitions” report. With regard to grocery, the report found that the subsector is experiencing higher premiums, with deal volume falling 18 percent, while deal value dropped by only 7 percent. The growth in 2017 was due to Amazon’s $14 billion acquisition of Whole Foods. In 2018, the average deal size was $530 million, the highest average deal size in the past 14 years, and a 13 percent increase from 2017. For consumer packaged goods and retail in general, the report predicted that in 2019, strategic mergers and acquisitions will replace the megadeals of recent years. Overall CPG and retail M&A activity declined from $392 billion in 2017 to $308 billion in 2018, mainly because of the lack of such megadeals. “We see 2019 as a critical year for CPG and retail companies seeking to fill in gaps in their portfolios — notably last-mile delivery, digital capabilities and ecommerce,” noted Bahige ElRayes, partner at Chicago-based A.T. Kearney and co-author of the report. “Companies will look for M&A activity to rebalance the portfolio to enhance, deepen, and ‘own’ the consumer experience of their brands and stores.” Further, while investors continue to pay a premium for large targets, small targets — those below $25 million — have overtaken midsize ones in multiples. Investors are increasingly focusing on strategic deals that aim to boost legacy companies’ capabilities via the acquisition of smaller, disruptive companies. The volume of midsize deals dropped 4 percent in 2018, but their value rose 6 percent as investors sought to integrate change agents — in the form of new brands, new customers, new concepts, new capabilities and new talent — at both lower cost and risk. A.T. Kearney’s report was based on a proprietary analysis of 2018 M&A transactional data and an opinion survey of more than 100 C-level CPG, retail and private-equity executives. “We expect to see more divestitures happening in the next 12 months, as companies are looking to rebalance their portfolios,” observed Bob Haas, partner at A.T. Kearney and co-author of the report. “In parallel, the nature of the M&A market will shift from building economies of scale to investing in capabilities that will fortify the portfolio of CPG and retail companies.” 26
Methodology Information for Progressive Grocer ’s annual Super 50 is based on information from Nielsen TDLinx, which collects and maintains store information across all channels selling consumer packaged goods. The four categories within the Super 50 report include annual sales from the most recently concluded fiscal year, store count, top banners, and employee counts, either total or fulltime equivalents. Full-time equivalent employees are the sum of regular workers, plus one-half the number of part-time employees. Nielsen TDLinx uses the Food Marketing Institute’s definition of a supermarket: a grocery store with a minimum of $2 million in annual sales; its data omit sales from convenience, drug and other retail channels that may be part of total revenue for some companies. Wholesale membership clubs such as Sam’s Club, Costco and BJ’s Wholesale Club are also not included. Supercenters are included, but only for their grocery-equivalent merchandise. Not included are soft goods; clothing; general merchandise such as hardware, appliances, computers and auto service; and other items not common to supermarkets. Sales estimates from Nielsen TDLinx are presented in terms of all-commodity volume (ACV), which is defined as an annualized range of the estimated retail sales volume of all items sold at a retail site that pass through the retailer’s cash registers. Nielsen TDLinx’s ACV is an estimate based on best available data — a directional measure to be used as an indicator of store and account size, not an actual retail sales report. All data is collected by Nielsen TDLinx from a wide range of independent sources, and then enhanced with computer modeling. Information shown is from the March 2019 database. Additionally, Progressive Grocer reached out directly to each retailer to confirm data, and adjusted figures and rankings accordingly.
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THE SUPER 2019 2018 Rank Rank Company
Fiscal Year-end Sales (000)
No. of Supermarkets Top Banners
1 1 Walmart Inc. $514,410,000 4,253 Bentonville, Ark.
Walmart Supercenter 2,200,000 www.walmart.com Walmart Neighborhood Market
2 2 The Kroger Co. $121,162,000 2,764 Kroger Cincinnati Harris Teeter Smith’s
3 3 Albertsons Cos. Inc. $62,179,000 2,275 Safeway Boise, Idaho Albertsons Vons
4 4 Ahold Delhaize USA $48,090,120 1,963 Food Lion Carlisle, Pa./Quincy, Mass. Stop & Shop Hannaford
5 5 Publix Super Markets $36,100,000 1,215 Publix Lakeland, Fla. Publix GreenWise Market
6 6 H-E-B $26,000,000 331 H-E-B San Antonio H-E-B Plus H-E-B Central Market
7 12 Meijer Inc. Grand Rapids, Mich.
8 7 Wakefern Food Corp. $16,500,000 352 ShopRite 70,000+ Keasbey, N.J. Price Rite Marketplace The Fresh Grocer
9 9 Aldi Inc. Batavia, Ill.
Aldi Food Store
10 8 Amazon $15,887,300 477 (as Whole Foods Market) Seattle/Austin, Texas
Whole Foods 365 By Whole Foods Market
11 10 Trader Joe’s Co. Monrovia, Calif.
12 15 Hy-Vee Food Stores Inc. $10,200,000 249 Hy-Vee West Des Moines, Iowa Hy-Vee Dollar Fresh
13 11 Southeastern Grocers LLC $9,055,800 552 Winn-Dixie Jacksonville, Fla. Bi-Lo Harveys
14 16 Giant Eagle Inc. $8,900,000 474 Pittsburgh
Giant Eagle Giant Eagle Market District
15 13 Target Corp. Minneapolis
16 14 Wegmans Food Markets Inc. Rochester, N.Y.
17 17 WinCo Foods Inc. Boise, Idaho
18 25 Demoulas Super Markets Inc. Tewksberry, Mass.
19 23 Save Mart Supermarkets Inc. $4,773,600 208 Save Mart Modesto, Calif. Lucky/Lucky California FoodMaxx
20 20 Smart & Final Inc. $4,741,800 326 Commerce, Calif.
Sprouts Farmers Market
24 30 Ingles Markets Inc. $4,092,877 200 Ingles Black Mountain, N.C. Sav Mor Foods/Ingles Markets
25 24 Golub Corp. $3,841,500 133 Schenectady, N.Y.
21 19 Defense Commissary Agency (DeCA) Fort Lee, Va. 22 22 Sprouts Farmers Market Phoenix 23 21 Stater Bros. Markets San Bernardino, Calif.
Smart & Final Extra! Smart Foodservice Warehouse Smart & Final
Price Chopper Market 32
Sources: Nielsen TDLinx, March 2019; Progressive Grocer Market Research, 2019
Employees (Total or Full-time Equivalents)
New Year New Innovation
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THE SUPER 2019 2018 Rank Rank Company
Fiscal Year-end Sales (000)
Employees (Total or Full-time Equivalents)
27 26 Raley’s Supermarkets $3,421,600 129 Raleys West Sacramento, Calif. Bel Air Nob Hill Food
28 28 Tops Markets LLC Williamsville, N.Y.
29 29 Save-A-Lot/Onex Corp. Earth City, Mo.
Save A Lot
Cub Foods Shoppers Food Warehouse
32 32 Brookshire Grocery Co. $2,587,260 181 Brookshire Tyler, Texas Super 1 Foods/Brookshire Spring Market
33 35 SpartanNash Co. $2,495,740 158 Byron Center, Mich.
FamilyFare Supermarket Martin’s Super Markets D&W Fresh Market
34* 48 Bodega Latina Corp. $2,354,300 125 Paramount, Calif.
El Super Fiesta Mart
35 33 K-VA-T Food Stores Inc. $2,083,640 130 Abingdon, Va.
Food City Super Dollar Discount Foods
36 37 Big Y Foods Inc. Springfield, Mass.
37 36 Houchens Industries Inc. $1,869,868 355 Save-A-Lot Bowling Green, Ky. IGA Food Giant
38 34 Grocery Outlet Inc. Emeryville, Calif.
39 38 Bashas’ Markets Inc. $1,730,300 115 Bashas’ Chandler, Ariz. Food City AJ’s Fine Foods
40 39 Saker ShopRites Inc. Freehold, N.J.
41 41 The Fresh Market Inc. Greensboro, N.C.
42 42 Village Super Market Inc. Springfield, N.J.
43 43 Woodman’s Food Markets Inc. Janesville, Wis.
44 50 Coborn’s Inc. $1,294,280 61 Coborn’s St. Cloud, Minn. Cash Wise Hornbacher’s
45 46 Marc Glassman Inc. Cleveland, Ohio
26 27 Weis Markets Inc. Sunbury, Pa.
No. of Supermarkets Top Banners 200
159 Tops 1,200
30* N/A United Natural $2,704,260 102 Foods Inc. (UNFI) Providence, R.I. 31 31 Schnuck Markets Inc. St. Louis
Grocery Outlet Bargain Market
The Fresh Market
46 45 Lowe’s Pay-N-Save Inc. $1,167,296 141 Littlefield, Texas
Lowe’s Grocery Food King
47 N/A Rouse Enterprises LLC Thibodaux, La.
49 40 Inserra Supermarkets Inc. $1,068,600 25 ShopRite Mahwah, N.J. Price Rite Marketplace
50 49 Alex Lee Inc. $1,049,360 84 Hickory, N.C.
48 47 Fareway Stores Inc. Boone, Iowa
Sources: Nielsen, Progressive Grocer Research *Company merger/acquisition
Lowes Food Store Just Save
Join the conversation: @HersheyCompany The-Hershey-Company thehersheycompany.com
C I N OF ICO S D N BR
ith the ults w s e r E e Driv VATIV
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Room to Grow
As the grocers at the top of the list duke it out for industry dominance, those lower down in the rankings experience more fluidity, in keeping with evolving consumer expectations.
By Bridget Goldschmidt he top six slots of Progressive Grocer’s 2019 Super 50 list offer no surprises in terms of position — all of the companies that ranked first through sixth last year have reclaimed their places. But while these food retailers continue their battle for ultimate dominance over the U.S. grocery sector, those operators further down on the list are showing more movement as they strive to keep up with consumer trends. The first inkling of this in the ranking is the swapping of places of Amazon/Whole Foods Market (down two spots to No. 10) and Aldi U.S. (holding steady at No. 9) from last year, showing the solidifying influence of limited-assortment hard discounters, with their largely private-brand offering, in the United States. While Aldi’s aggressive push to open more U.S. stores has helped it maintain its top 10 ranking, arch-rival Lidl — a fellow European operator that has managed to recover its momentum after a rocky U.S. debut — now sits slightly below the Super 50, coming in at No. 56, while last year it failed to chart entirely. Notable rises were those of Meijer, up five slots to No. 7 from last year’s No. 12; Hy-Vee, up three spots to No. 12; Giant Eagle, up two spaces to No. 14; Demoulas Super Markets, operator of Market Basket stores, up seven spots to No. 18; Save Mart Supermarkets, up four rungs to No. 19; Ingles Markets, up six spots to No. 24; SpartanNash, up two rungs to No. 33; Coborn’s. up six spaces to No. 44, along with Rouses, new to the Super 50 at No. 47, from 51st place last year. All of these positive moves are indicative of regional grocers more than holding their own at a time of increasing consolidation among the top players by displaying an unparalleled ability to meet the needs of the shoppers in their respective market areas, based on years spent catering to those local customers. This regional mojo didn’t work for every grocer on the list, however: Southeastern Grocers (No. 13), Wegmans (No. 16), Stater Bros. (No. 23) and K-VA-T/ Food City (No. 35) were each down two spots, while Grocery Outlet slid four slots to No. 38 and Inserra Supermarkets (a ShopRite operator) dropped nine spaces to No. 49, all of these downward trends showing that competitive pressures
may be taking their toll on smaller players in certain markets. Further, as Target’s two-slot slip to No. 15 shows, even large national players are feeling the competitive heat. Still, significant M&A activity was reflected in this year’s Super 50 in a couple of instances. One company in particular saw a dramatic debut on the list: United Natural Foods Inc. (UNFI), which, thanks to its purchase of wholesaler/grocer Supervalu last October, roared into the rankings at No. 30. Despite industry speculation last July that UNFI would eventually divest itself of Supervalu’s remaining stores, the company hasn’t entirely rid itself of those banners yet, leading to the wholesaler’s place on the list. In the other major transaction, following its acquisition of Fiesta Mart last year to become the nation’s largest Hispanic-focused grocer, Bodega Latina Corp. leapfrogged an astonishing 14 spots to No. 34 on the 2019 list. What will next year’s Super 50 reveal? The top six grocers will most likely remain the same, barring any huge deals as yet undone, but lower down the list should present some fascinating developments in a rapidly changing industry.
Kroger, Walmart Closing Gap on Amazon’s Digital Dominance? The omnichannel grocery race is tightening, according to Nielsen By Jim Dudlicek While Amazon is pushing into the grocery channel in a big way, larger traditional players that are investing in omnichannel appear to be holding their own against the ecommerce giant. Building on its investment in Whole Foods Market, Amazon appears to be doubling down on brick and mortar, with reports that it intends to launch another grocery chain in the foreseeable future and is shopping around for a small regional group of stores. Meanwhile, giants like Kroger and Walmart continue to invest in omnichannel initiatives, leveraging their strengths in traditional retailing against innovations in online shopping, seamless experience and last-mile delivery. Recent Nielsen ecommerce data, powered by Rakuten Intelligence, shows that Amazon’s dominance in digital retail, specifically for CPG products, is slipping. In fact, over the past two years, established brickand-mortar stores appear to have taken share back and
closed the competitive gap. “While it’s no secret that traditional brick-and-mortar retailers have ensured ecommerce is part of their overall strategy, data shows that some of the biggest brick-and-mortar players have turned strategy into reality, and have posted incredible growth along the way,” Nielsen reports. “In fact, key retail players like Walmart, Kroger and Target have grown their online customer base — all by at least 90 percent more than
Ecommerce Buyers Percent growth in buyers 260% 240 220 200 180 160 140 120 100 80 60 40 20 0
Source: Nielsen Total U.S. e-commerce measurement powered by Rakuten Intelligence, 52 weeks ended Jan. 31, 2019
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Amazon — over the past two years.” Amazon does have significantly greater domestic buyer reach — 10 times more — than any of the other merchants, Nielsen notes, so there’s not as much room to grow its buyer base. But the Chicago-based market researcher contends that’s not the only reason for the rapid success of the internet giant’s competitors. “These merchants have succeeded, in part, because they’ve embraced the click-and-carry model where consumers buy an item online and pick it up at a physical store,” the Nielsen study says. ”In fact, we estimate that the share of click-and-carry sales grew from 4 percent to 11 percent of all CPG ecommerce sales in just two years.” Consumers like this model, Nielsen contends, because it gives them the confidence to expand their online shopping beyond health and beauty. In fact, the grocery and gourmet food category has logged a compound annual growth rate (CAGR) of nearly 50 percent over the past three years, just behind pet supplies, the market researcher notes. At a high level, online penetration of consumer packaged goods is growing. Online CPG sales have increased 30 percent year over year, and 60 percent of shoppers have browsed and ordered CPG online, according to Nielsen data, while more than one-quarter (28 percent) of
“... Key retail players like Walmart, Kroger and Target have grown their online customer base — all by at least 90 percent more than Amazon — over the past two years.”
shoppers have purchased CPG online a few times per month. “Yet despite the increased willingness of consumers to shop online, challenges remain,” the Nielsen study observes. “Twenty-nine million people began shopping for CPG products online in the past two years, yet only two-thirds of all ecommerce shoppers buy CPG products through the internet. Among the barriers that deter them, food quality —Nielsen tops the list.” Connecting with unreached CPG ecommerce consumers represents a massive opportunity, Nielsen asserts: “Amazon still sits on the ecommerce throne, but the competitors are circling as all battle for their piece of the omnichannel pie.”
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3 Ways Grocers Can Weather Disruption A “undisruptable” model of leadership is needed. By Benjamin Finzi and Barb Renner The grocery sector is the poster child for the consumerand technology-driven disruption that no longer occurs in isolated events, but rather is constant. Recently, we conducted research on leadership across industries, which may point to ways that successful CEOs can navigate these relentless changes. Looking at a few of the diverse ways disruption is showing up in the grocery sector, our research suggested that a very different model of leadership is going to be needed to become “undisruptable.” A number of less visible forces are creating tectonic shifts in grocery. For example, who’d have thought that the health craze would get to the point where the very soul of American food, the hamburger, would be disrupted? Yet Eddie Yoon, of think tank Eddie Would Grow, estimates that demand for beef could drop by 30 percent over the next 20 years, the replacement being plant-based meats that are healthier, more eco- and animal-friendly, and less perishable. Suddenly, a deeply established sector faces a threat from startups that are developing plant-based “meat” products, and grocers should adjust their thinking in regard to this event. Looking at another macro disruptor, the University of Michigan’s Transportation Research Institute has shown that the majority of 16-year-olds would prefer to be on their phones than driving cars. This suggests that rather than driving to stores to shop, this generation would prefer to order groceries online and wait for delivery. Directly or indirectly, we’re seeing an uptick in online grocery shopping and a concomitant delivery imperative. Even as grocers grapple with how to excel at delivery, this disruptive broad trend calls for leaders to examine the problem with new eyes. Grocery faces a number of other disruptions, from threats to global supply to a radically changing consumer base. Those in the industry are already grappling with many of the known threats. Our recent research looked at how leadership might be able to approach these turbulent times. The CEOs we spoke with aspired to attitudinal changes that can yield a new model of leadership to face these colossal challenges. Can grocery leadership evolve toward undisruptability?
Become the Ultimate End-User Ethnographer
After decades of unquestioningly buying uniform center-aisle consumer packaged goods, consumers are demanding a much more personalized assortment. Sixty-five percent of consumers now purchase specialty foods, amounting to $140 billion, or roughly 16 percent of the total food industry market, according to The Specialty Food Association’s “State of the Specialty Food Industry 2018.” To better understand the all-powerful consumer’s tastes and changing demands, the CEOs we’ve spoken with described the paramountcy of becoming the ultimate end-user ethnographer of the customer — one of the key aspirational attributes of undisruptability. For the grocery CEO, this can mean possessing deep empathy for the customer, and craving insight into their most subtle habits and desires. Consider one such example: Procter & Gamble’s former CEO, A.G. Lafley, who, decades ago, actually visited the basements of P&G customers and noticed that none of them opened their boxes of laundry detergent with their hands, but rather used any tool they could find, all the while telling P&G representatives that they liked the packaging. This deeper understanding of the customer’s behavior led to a revolution in package design.
Grocery leaders should still appeal to loyal and longtime customers while reorienting their business to massive changes. Another keystone
characteristic of undisruptability discussed by the CEOs we interviewed is a willingness to embrace this duality, which we describe as ambidexterity. To be undisruptable, you must continue striving to retain current customers while effecting the changes needed to attract new and different ones. Consider the move toward meatless “meat” discussed above. The huge consumer base for beef isn’t likely to be going away anytime soon, but in the meantime, significant market share is moving toward ecological plant-based meat substitutes. For grocery leaders, embracing ambidexterity means to relentlessly execute and optimize efficiency strategies in regard to traditional categories that have been working for decades, while simultaneously exploring or reinventing a new or significantly modified business model.
Master Disruptive Jujitsu
Within the grocery segment, market patterns are so volatile that addressing them calls for nimble maneuvering. We describe this aspirational ability of our CEO subjects as mastering disruptive jujitsu. This posture may entail rapidly sizing up a competitor’s unique approach and using it against them. It may involve adopting an emerging trend from a completely different industry and applying it to one’s advantage. As mentioned above, fewer young people are driving cars, which
contributes to a need for ever-smarter grocery delivery services. This is an example of how a potentially threatening pattern could be recognized and turned into a competitive advantage. There’s a paradox within the ability to achieve composure amid market turmoil, a sense of fearlessness that allows the undisruptable CEO to infuse thoughtfully placed chaos into the organization to catalyze positive change. The CEOs we spoke with recognize that with the possibility of failure, there’s also the opportunity to learn and forge a new way forward. Grocery can’t completely “check out” from disruption’s effects, but perhaps CEOs could consider taking a new attitude toward food industry challenges — identifying strengths and improving organizational weaknesses that can help them thrive and keep pace with the consumer. Benjamin Finzi is a managing director, Deloitte Services LP, and co-leads Deloitte’s CEO Program. He can be reached at firstname.lastname@example.org. Barb Renner is vice chairman and the U.S. consumer products leader, Deloitte LLP. She can be reached at email@example.com.
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Power to the Indies Independent grocers made strides in this year’s rankings.
By Kat Martin aking a look at the Super 50, once you get out of the top 10, you begin to see the power of the independents. Half of the grocery companies in the rankings are majority family-owned, employee-owned or privately held — meaning that they answer to no one but their customers. That’s a loose definition of an independent grocer, and one that many of the smaller independents probably won’t agree with. But it does go to the point of the power of independents in driving the industry. And it is where most of the “action”
is happening. The rankings of the top four grocers have remained unchanged for the past three years, and the top five have been the same, although some have jockeyed for position a bit, since at least 2015. But take a look at the middle and below — that’s where the real action is, especially among independent operators. Tewksbury, Mass.-based Demoulas Super Markets has emerged from the drama of interfamily lawsuits to hit its highest ranking since 2015. It had hovered right in the middle of the pack with rankings from 25th to 27th until this year, when it leapt to 18th place. Sales this year were $5.2 billion, up from $3.4 billion last year. But making the biggest jump among indies was Bodega Latina Corp., which jumped from No. 48 last year to No. 34 this year with sales of $2.4 billion. In last year’s rankings, it barely cracked $1 billion in sales, but the number of locations jumped from 59 to 125 due to acquisitions, including the 63 stores it gained when it purchased Fiesta Mart at the end of the first quarter last year. It’s now one of the largest Hispanic-themed chains in the country. “The acquisition of Fiesta allows us to meaningfully expand into Texas via an established, well-known oper-
ator,” Carlos Smith, president and CEO of ParaH-E-B’s Central Market, Wegmans, “The aquisition mount, Calif.-based Bodega Latina, said at the Heinen’s and Gelson’s. time of acquisition. “Through the combination of Central Market, as part of the San of Fiesta the strengths of our two organizations, we will be Antonio-based H.E. Butt Grocery Co., allows us to well positioned to significantly accelerate our viranks sixth on PG’s 2019 Super 50 list, sion of efficiently offering high-quality products at while Wegmans comes in at No. 16. meaningfully the lowest possible prices.” Chains like these may be exactly what While Bodega’s ascent came by acquisition, sales Amazon is looking for to expand its expand into grew by about $54 million (from the combined sales brick-and-mortar footprint outside of Texas.” of the two chains last year), which demonstrates the Whole Foods Market. split in where shoppers are choosing to spend their Amazon’s acquisition of Austin, Tex—Carlos Smith, money. On one end of the spectrum, they’re choosas-based Whole Foods was top of mind for CEO, Bodega Latina ing specialty markets like the ones Bodega operates, many of last year’s Super 50 companies, while the other end is discount stores. and this year, it’s the news that the SeatOther independents, like Thibodaux, La.-based Rouses Supertle-based internet behemoth plans to launch a separate markets, are also benefiting from consumers’ choice to shop spegrocery chain. Word on the street indicates that this cialty. Rouses makes its Super 50 debut this year, at No. 47. Like new concept could open in the Los Angeles area someBodega Latina, it has also made strategic acquisitions in recent time before the end of this year, with growth coming years, including fellow independent LeBlanc’s in 2016 and three from the acquisition of regional brands. locations of Frank’s Supermarkets last year. These smaller, independently owned regional Regional and independent chains are attracting attention, chains have a handle on what their customers want, many because they’re often well regarded by their shoppers. and have the agility to change to meet shifting deThe four highest-ranking grocery chains in a recent Consummands quickly, which continues to garner them er Reports survey were independently owned regional chains sales — and attention.
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Regional Grocery Chains Top Consumer Reports Ranking
In Consumer Reports’ latest RANKED ranking of grocery stores, regional chains led the pack, with H-E-B’s Central Market netting the top spot, with a ranking of 91 out of 100, when it comes to overall customer satisfaction. out of 100 in customer satisfaction. Next was Wegmans Food Source: Consumer Reports Markets, with 90, followed by Heinen’s, with 89. Then there was a tie among Gelson’s Markets, Market Basket and Trader Joe’s (the highest-ranking national chain), all scoring 87. Rounding out the top scorers was a five-way tie, at 86, for Crest Foods, Fareway Stores, New Seasons Market, Costco Wholesale and Publix Super Markets. The list ranks the top 96 grocers, the most that the publication has ever had on the list, based on results from 75,000 Consumer Reports members who provided ratings of the one or two supermarkets they visit most often, according to several criteria, including cleanliness, price, food quality and variety, checkout speed and staff helpfulness, selection of healthy options and locally produced foods, and variety of international and multicultural foods. Price was a big factor for consumers and was the No. 1 reason that they gave for no longer shopping a particular banner. Trader Joe’s and Market Basket were the top-ranking stores when it came to competitive pricing. Trader Joe’s, H-E-B’s Central Market and Costco all garnered top marks for quality. This year also marked the first year that Consumer Reports ranked online grocery delivery services. Shipt, owned by Target, came out on top with a ranking of 79. These ratings were gathered from Consumer Reports members who noted in the 2018 survey that they used the services, and accounted for 7 percent of those surveyed in 2019. The rankings for other grocery delivery services were Amazon Prime Now, which offers same-day delivery from Whole Foods Market, at 75; Peapod, with 72; FreshDirect and Instacart, tied at 70 and AmazonFresh, with 66.
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STORES OF THE MONTH
San Diego-Area Independents
Independents navigate the crowded San Diego market to make themselves stand out. By Kat Martin
an Diego, the second-largest city in California, is known as a mecca for surfers and sun worshippers, but it also has a fiercely competitive grocery market, one that must cater to both tourists and locals alike. While Albertsons, along with its Vons banner, and Kroger’s Ralphs are the three dominant SoCal players, specialty grocers like Trader Joe’s, Whole Foods Market and Sprouts Farmers Market also have secure footholds. Additionally, San Diego County has several thriving independent grocery operators. Progressive Grocer recently visited three that had previously been recognized as PG Outstanding Independents: Gelson’s, Barons Market and Cardiff Seaside Market. Like every locale, San Diego has become known for certain things. Craft beer is one. “The U.S. has five major craft-brewing regions,” notes John Bagan, CMO for Encino, Calif.-based Gelson’s, which operates three stores in the San Diego area and 23 more in the greater Los Angeles area. “San Diego, by itself, is one of them. So we carry a lot of local brews and feature them in the bar.” Gelson’s regularly features Tap Takeovers with local breweries, in which the local brewer commandeers the bar. Customers buy $35 tickets to sample the brewer’s selections, paired with items from the store’s prepared food department. “We’ll take some of our steaks that we sell in our butcher shop, we’ll cook them up, and we’ll serve them as part of the event,” says Carlsbad Store Manager Ted Franklin. “It gives you the ability to try the local beers, but also try our food and product that we sell here.” The stores also have a similar program with local wineries selling $50 tickets for a pairing session. “We’ve sold out every event” of this kind, adds Franklin. Barons Market, which operates seven stores in the region, with two more opening this year, also does a brisk business in craft beer. “Our craft beer section is massive because San Diego is a craft beer town,” notes Rachel Shemirani, VP of marketing for Poway, Calif.-based Barons Market. “We carry mostly local craft beers, which was the inspiration for our Back Room Pairings.” Several times a year, the stores host charity events with local craft breweries in the back room of the store or on the loading dock, in which customers purchase tickets to try the local breweries’ products, along with Barons’ food options. All proceeds go to support a select charity, and all stores host a given event at the same time. Another local specialty is the tri-tip, a triangular cut of beef from the bottom sirloin subprimal cut. Both Gelson’s and Cardiff Seaside Market offer versions of the popular item. At Cardiff Seaside Market, the Burgundy Pepper Tri-Tip has become known as “Cardiff Crack,” and is shipped nationwide. The USDA Choice tri-tip, trimmed, marinated and infused with a one-ofa-kind burgundy pepper marinade, is one of the store’s best sellers. “The tri-tip is featured at Petco Park all over the place; we ship it all over the country,” says John Najjar, co-owner of the Cardiffby-the-Sea, Calif.-based grocer. “People within a 100-mile radius know our product, and we ship it everywhere.” Poké is also extremely popular. Both Cardiff Seaside Market and Gelson’s feature poké bars. For Gelson’s Carlsbad location, the poké station has grown exponentially in the past few years: It was originally four sections, but has grown to 12 sections, with two kinds of rice. “If you like poké at all, it’s amazing,” Bagan says. “Poké’s just been the gift that keeps on giving.”
PROGRESSIVE GROCER May 2019
STORES OF THE MONTH
San Diego-Area Independents
CARDIFF SEASIDE MARKET he San Diego area’s beach-town vibe is felt most strongly at Cardiff Seaside Market. Like its name implies, the 18,000-square-foot single store, owned by John Najjar and his brother, Pete, is right on the beach. Its décor reflects that geography, with surfboards lining one wall to help tell the story of the town. The location also poses some problems, however. “Where we’re at is a challenge,” John Najjar notes. “When you’re on the ocean, there’s only the road, and then there’s the ocean. There’s no people that live on the ocean.” While Cardiff Seaside Market may not be in the actual center of things, it can be the center of its community, and for that reason, Najjar sees being a single location as a big bonus. “It’s one thing to say you’re going to do stuff for the community, but when you live in the community, you’re connected differently,” he explains. “Having one store is an advantage. We see our neighbors, we actually go to the events. It’s a whole different experience, and when people connect with the proprietors, they always feel like they know where their money is going.” The store makes a name for itself through its perishable departments, with a menu of 650 prepared foods — orders can be placed online or texted to the store — that rotate in accordance with the availability of local produce. “The big deal here is local fruit,” Najjar says. “Local strawberries are grown within a 5-mile radius of my store. They don’t travel well, but they pick them today, and the strawberries are in my store the same day or the next. We’re known for our fresh food and connecting with the community.” When in season, the strawberries are positioned right by the entrance. “You can smell the strawberries when you’re coming in,” notes Michelle Tubon, Cardiff Seaside Market’s controller. “That’s not by accident.” The store emphasizes local whenever possible, and while local in the San Diego area is defined by about
a 20-mile radius, or within San Diego County, Najjar notes that his customers define the term more as within a 5-mile radius and prefer “local” to mean their own neighborhood. He also finds success by fostering local producers and manufacturers. For instance, Kashi cereal was first introduced in his store. “We’re very supportive of the entrepreneurial person bringing product to market,” Najjar affirms. “We help them along.”
STORES OF THE MONTH
San Diego-Area Independents
GELSON’S MARKET elson’s Carlsbad location is unique in that it’s significantly bigger than the grocer’s typical markets, at about 38,500 square feet —10,000 square feet larger than average. However, this space has allowed the location to put in a 900-square-foot bar that seats 27, a separate seating area for the prepared food department — alcohol can’t be served outside of the bar — and a produce butcher who has a dedicated space within the produce department to cut fruit in view of customers. The bar has proved successful, regularly ranking as the top-grossing bar in the company. In addition to the popular Tap Takeovers, the space is regularly rented out by a local retirement center for its residents to have a night out in the store. Two to three bartenders are needed to keep up with demand. “It gets crazy back there,” Bagan acknowledges. “We have a really good connection with them,” Franklin says of the seniors. “We do offer them discounts, so when they do come in and shop, they get an organizational discount.” The store also benefits from its location next to a large tourist resort that has kitchenettes, so visitors often shop the store to purchase groceries, and also come to the bar for cheaper libations than they can get at the resort. “What’s great about us being this close to the beach [is] we have year-round beach weather with lots of tourists, and we get so many different types of shoppers,” Franklin observes. “They come and stock up. It’s the convenience to be able to fill up their hotel room, be able to pick up beach gear, go straight down to the beach, get some sandwiches, get some food and enjoy the beach weather, and really make their vacation a little easier and more comfortable for them.” Adjacent to the bar, which is right within the entrance, is the prepared food department, which includes a carving station with turkey, prime rib and the aforementioned tri-tip. Every store has in-store chefs
preparing the food on site. Gelson’s also has a relationship with celebrity chef Wolfgang Puck for signature sandwiches and salads, as well as pizza. To help draw customers into the center store aisles, Gelson’s has introduced curation zones, which range from end caps to 12-foot sections within the aisle. The products highlighted range from coffee to olives to pasta to general merchandise. For example, the coffee curation zone has bulk coffee with a grinder, bagged coffee and coffee brewers — everything you need to make a great cup of joe. The Carlsbad location sets itself apart through product quality, customer service and cleanliness of the store, Bagan notes. Again, due to its location in Southern California, produce is of the highest quality, with the store maintaining relationships with local farmers for years. Local is also a big emphasis for the store, with every department featuring at least two local items, which are called out on the shelf tags. Further, Carlsbad water is extremely popular, and the store is a good source for consumers. “The San Diego stores have more local assortment than the rest of the chain,” Bagan notes. “It’s hyper-local down here.” Echoing Cardiff Seaside Market’s Najjar, Franklin adds that for much of California, “local” means the state, while in San Diego, it means San Diego. “We really try to be more than a grocery store,” Bagan says. “What we say is, if you really value product quality, customer service, the experience, then we want to be at the center of your food life. Whether it’s great greens you take home to make a meal at home, or picking up something prepared to take to a party, or dining in with our Sip and Shop, whatever it is, we want Gelson’s to be the first place you think of when you think of food.”
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STORES OF THE MONTH
San Diego-Area Independents
BARONS MARKET arons Market’s seventh location — two more are slated to open this year — is a departure from the suburban stores it has traditionally operated. “This is our first urban market,” Shemirani says. “Our concept and who we are is really perfect for this neighborhood. This area is very Millennialheavy, and people love to buy local. We sell a lot of local products. We support the community, and the Millennial generation loves knowing that their dollars go towards another cause.” At 14,000 square feet, the North Park store is the smallest of Barons Market’s locations, but the carefully curated product line of about 9,000 SKUs fits the neighborhood. “Smaller square footage is where it’s at,” Shemirani adds. “People don’t have time to shop up and down the aisles. Our shoppers shop with us three to five times a week, sometimes three times a day.” To keep the product selection in line with customer demands, Barons Market has weekly food panel meetings to taste 80 to 100 new products at a time. About five new products are typically chosen, which then means 10 items need to be discontinued. “It’s constantly having the balance and making our product selection really fresh and interesting, but keeping that selection very limited, intentionally limited,” Shemirani explains. For the North Park store, which is in a trendy neighborhood, the product selection becomes even more important. “While we’re not going to follow every trend, we’re going to follow the trends that make sense for us and make sure the pricing is there, make sure the quality is there,” Shemirani says. For example, gluten-free isn’t such a big deal anymore, but sugar-free is, as is high protein for those following a Keto diet. Most importantly, though, products have to be highquality, priced right and preferably local. “Because [San Diego] is so competitive, you have to make sure your pricing is right,” she notes. “Get fresh meat from the local
farmer, get their whole crop — that’s what we do, and make sure it’s the best price and very fresh, good quality. We’ve been known to turn around trucks of produce because the quality wasn’t there. I think, in Southern California, people do their research.” The other key element in Barons Market’s success is its people. “We’re not in the food business, we’re in the people business,” Shemirani emphasizes. “It’s making sure employees are happy, our customers are happy, and then offering the cool experience.” To facilitate employee happiness, Barons has a lead program to help make sure that employees are always growing in their careers. “It’s a set program, and the manager’s sole purpose is to grow that person,” she says. “That’s what we’re here for: We’re a garden that grows people, because bench strength is a hard thing for any company.”
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Mindful Munching THE E VOLUTION OF ME ALTIME IS FUELING THE TREND TOWARD NE W KINDS OF NIBBLES. By Lynn Petrak
nacks used to be fillers bridging three square meals a day. As traditional sit-down meals have given way to splintered eating at different times and locations, however, snacking is becoming a bona fide occasion on its own. Snacking is no longer all about sitting down with a bag of chips or a dish of ice cream — that still happens, of course, but more consumers are eating on the go and choosing smaller portions, mini meals, and packaged or prepared snacks for convenient consumption and satisfaction. “There’s been a definite shift toward more mindful snacking,” affirms Jim Low, EVP of sales and marketing for Schuman Cheese, in Fairfield, N.J. “Snacks are less of an impulse when consumers feel hungry, and instead, over time, they have moved toward purposeful snacking with higher-quality, more nutritious products. Snacking is now a more valuable food purchase.” Snack manufacturers have rolled with these changes. “Rather than perceiving snacking to simply be a way to squelch hunger between meals, instead it is an intentional way to graze,” observes Mark Singleton, VP of sales and marketing for the Southern Recipe Small Batch line from Lima, Ohio-based Rudolph Foods.
Key Takeaways More consumers are eating on the go and choosing smaller portions, mini meals, and packaged or prepared snacks for convenient consumption. This trend has led to an increase in snacking on items that provide a nutritional benefit of some kind, prompting manufacturers to create and market more of these better-for-you products. As Millennials and Gen Z consumers are particularly interested in foodservice/ prepared food offerings, retailers should target these shoppers when promoting snacks in that area of the store. Eating trends are boosting online snack sales: Internet sales of snacks have surged 173.5 percent around the world, Euromonitor reports.
& A Q&A WITH TOM “TD” DIXON, CHIEF MARKETING OFFICER, JACK LINK’S
HOW JERKY IS SHAKING UP THE CATEGORY AND DRIVING SALES IN BETTER-FOR-YOU SNACKING PROGRESSIVE GROCER: According to the International Food Council, 60 percent of Americans want to consume more or as much protein as possible, with that number continually rising. Is this a trend you are seeing at Jack Link’s? TOM “TD” DIXON: We see the protein trend occurring on a macro level, with this increased desire for protein playing out among more micro trends — the rise of better-for-you snacking, higher nutritional standards, “sugar is the enemy,” on-the-go snacking and meal-time blur. The forms, flavors and recipes we’re developing focus on these micro trends and emerging occasions. But protein is always our foundation. PG: What are the biggest benefits of consuming animal-based proteins versus plant-derived proteins and how do meat snacks fit that equation? TD: Animal-based proteins are considered complete proteins. They have all the amino acids your body needs to repair protein. Your body is also better at absorbing and utilizing them. When it comes to calories, fat and carbs, meat-based snacks are hard to beat.
PG: How would you describe the “typical” meat snack customer(s)? TD: The typical meat snack consumer has definitely evolved from the outdoorsmen of years ago to more of an “all family” audience today. Consumers’ growing health consciousness and awareness have transformed the category from a traditional road trip snack to an anywhere/anytime treat high in protein and satiety, yet low in fat, sugar, calories and carbs. PG: What type of retail product mix works best in meat snacks and how should products SP O N S O R E D CO N TE N T
be merchandised/presented to communicate benefits and taste profiles? TD: Our DSMP guidance provides channel specific assortment priorities focused on attracting new consumers and occasions while meeting current consumer needs in form, flavor, pack and size. Our “best-in-class” (BIC) shelving principles are tailored to increase shopability across in-store locations by anchoring strategic brands based on flavor and size. For example, a major grocer implemented our “BIC” principles last April. Its meat snack category growth has outpaced TTL US Foods during the last 52 weeks. PG: Outside of the snack aisle, what types of cross-merchandising, display and seasonal opportunities can retailers take advantage of? TD: Because protein is top-of-mind, multiple touchpoints are key. You can capture strong basket builds by placing meat snacks in refrigerated, the nutrition set and the on-thego salty set. They also do well near items that index high for category users, like energy drinks. PG: What kinds of in-store and out-of-store messaging best communicate the benefits/ taste profile of meat snacks? TD: It all comes back to protein. While it may seem obvious, we drive this message home consistently out-of-store and encourage retail partners to drive it in-store. Also, the number two reason consumers buy jerky is that it’s made with 100% beef. There’s still a lingering misperception that the category is filled with mystery meat products. We’ve made it a priority to call out 100% beef across our portfolio. PG: You are now offering meat snacks in bar form. How has this been received? TD: Consumers are seeking more in bars and don’t want manufactured or synthetic protein. Our meat bars are made with 100% beef and have been driving growth since they launched last year. They have eight grams of protein, 70 calories and are gluten free.
Consumer studies confirm the frequency of snack purchases and consumption. According to research from Chicago-based Datassential, consumers report eating up to four to five snacks a day. Another study, from Chicago-based Mintel, found that high-frequency snackers who indulge three to four times a day described themselves as “too busy” to eat a full meal. Given the demographics of frequent and heavy snackers, this shift is likely permanent. According to The NPD Group, based in Port Washington, N.Y., snacking accounts for more than a third (35 percent) of all eating occasions in the United States, and younger consumers are leading the demand. What Millennials have started, Gen Z will expand, as NPD also found that this younger demographic — born roughly between 1995 and 2015 — is driving a significant part of the snack market. Another consumer study, conducted for Stonyfield Farm Inc., of Londonderry, N.H., found that 75 percent of parents have a child who eats up to three snacks a day. “Eating is a lot more flexible today,” says Stonyfield Brand Director Natalie Levine. “It has to be — parents have work commitments and children have after-school activities, not to mention packed weekend schedules, and families are adjusting to make things work on the move. This often means grabbing a couple of portable items out of the fridge and pantry that may have previously been considered just a snack, but now parents are combining them for heartier mini meals that can sustain everyone throughout the long day.”
Snacking Around the Store
If the lines between dayparts and between retail and foodservice have blurred, the lines between what makes a great snack and what makes a satisfactory mini meal or meal replacement are also a little fuzzy, which opens up new opportunities for grocers to boost incremental sales. Beth Bloom, associate director of food and drink for Mintel, highlights the impact of that redefinition of snacking. “The strong demand for snacks has resulted in increased competition and an expanded view of what constitutes a snack, which can challenge
traditional snack categories,” Bloom noted in a March 2019 report on salty snacks from the market research firm. Grocers are delivering more innovative solutions to shoppers who snack and are also seeking more food value. In the frozen food section, for example, appetizers and smaller-portion meals meet this kind of need. Many of these items also align with interest in globally inspired flavors and plant-based ingredients. The fresh perimeter is another space to spotlight snacks as meal solutions. “This shift toward the snacking lifestyle certainly speaks to opportunity beyond packaged snacks for grocery,” says Sharon Olson, president of Chicago-based research company Y-Pulse, which has studied young consumers’ eating habits for the past 12 years. “Fresh has a powerful appeal to young consumers and their parents, and supermarkets score well when it comes to fresh perceptions.” Olson cites an example: “Freshly prepared bento-style snack boxes that are prepared on site at supermarkets appeal to kids in a big way. They can be eaten at once, over time or saved for later — readily available on demand, but no commitment required on when to consume them.” The dairy section, with a plethora of high-protein products that pair well with other foods, is also a high-potential area. “The snacking trend puts us in a real sweet spot,” notes Schuman’s Low. “The ‘real food’ quality of cheese makes it a great snack that consumers can feel great about enjoying. The more purposeful approach to snacking means consumers are looking for premium snack options.” One example he offers is Schuman’s Cello Copper Kettle Chisels, made with Copper Kettle cheese and packaged in an ergonomic cup. In the center store, traditional packaged snacks can fit into this new kind of eating and can be merchandised as such. Plant-based snacks are one example, as are nutrition bars. Salty snacks are also getting a makeover in product, packaging and promotions to grab the attention of snackers seeking greater sustenance in a convenient form. For instance, the Crunchmaster brand, from Loves Park, Ill.-based TH Foods Inc., recently underwent a repositioning, with new graphics and supporting campaigns. “In the last two years, we have launched more than 20 new products to meet the new, emerging demands of consumers,” says Kim Holman, marketing director. “Several of these
launches are snack crackers.” Within packaged snacks, there are some notable trend drivers, such as an ongoing demand for healthy snacks. “Crackers will become more functional,” predicts Holman. “Look for collagen, protein, fiber and other functional ingredients continuing to make their way into snack crackers.” At Southern Recipe Small Batch, pork rinds are getting an update based on consumers’ lifestyle and nutrition interests. “No longer are pork rinds considered ‘junk food’ by many of our shoppers, but rather a high-protein, low-carb and gluten-free way to cure the craving for a snack, with a flavorful crunch,” asserts Singleton, who points to other features like lower sodium, no artificial colors or MSG, and the use of cleaner ingredients. Others agree that snacks perceived as better-for-you are fueling consumers to eat snacks throughout the day and in place of some traditional meals. “Today, snacking honestly is a good way of adding nutrients to your body without sacrificing delicious flavors and textures, becoming a win-win for everyone,” says Kevin Joseph, VP of marketing for Thinsters and ParmCrisps, part of Fairfield, N.J.-based That’s How We Roll. ParmCrisps also fit into other eating plans, like the pizza variety that helps consumers following gluten-free and keto diets who can’t
or don’t eat pizza, adds Joseph. Healthy packaged snacks appeal to health- and wellness-minded consumers of all ages, from Baby Boomers, to Millennials and Gen Z, to even the youngest crop of snack eaters who will form the future market. In a recent survey of kids ages 5 to 11 and their parents, Stonyfield found that snacks are the easiest occasion for them to agree on. According to Levine, the company is providing solutions for busy families with items like new snack packs that combine organic low-fat yogurt and either organic cookies, pretzels or graham crackers, and new wholemilk yogurt pouches featuring real fruit and veggies.
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Paths of Success
Healthy snacks coexist with other types of snacks that can be positioned for all-day consumption. A recent Nielsen study, for example, projects some growth for healthy snacks, but even greater growth for indulgent snacks available in small sizes. As they showcase snack products to shoppers, either in traditional sections of the store or in special grab-and-go or snack displays, grocers can tie into snack manufacturers’ own promotions. For instance, Lehi Valley Trading Co., based in Mesa, Ariz., recently launched a campaign, the Snack Outdoors Challenge, to encourage the consumption of its items, including trail mixes, granolas, popcorn, dried fruit, nuts and seeds, when on the go in a nontraditional outdoor eating moment. Offering items that fall under the snack umbrella is also an approach for the foodservice or prepared food area. Many products fit into this segment within foodservice at retail, including offerings like appetizers, handhelds, salads, protein bowls, sushi and smoothies/nutrition drinks, to name just a few. Promoting these offerings to younger shoppers can be especially effective. “More than half of young consumers say the supermarket restaurant is among their favorite [sections of the store],” says Y-Pulse’s Olson. “Their overall favorite venues are home and restaurants, and this provides some insight for supermarkets. When supermarkets are developing offerings to appeal
The strong demand for snacks has resulted in increased competition and an expanded view of what constitutes a snack, which can challenge traditional snack categories.” —Beth Bloom, Mintel to young consumers, they have to be competitively desirable to restaurant offerings.” This notable change in eating has led to new paths of success for online snack sales, too, especially since snacks combined to make a meal, or eaten instead of a traditional meal, aren’t daypart-driven and are often suitable for ecommerce purchases and delivery. In fact, according to a recently released report on snacking from London-based Euromonitor International, internet sales of snacks have surged 173.5 percent around the world.
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Redefining Local HYDROPONICS AND PARTNERSHIPS MARK NE W OFFERINGS IN LOCAL PRODUCE. By D. Gail Fleenor
ocal produce used to have an entirely different meaning. Tomatoes, peaches and a variety of other fruits and vegetables were sold in wooden baskets at the side of the road — that was local produce. In more recent years, farmers’ markets began to spring up seasonally, and supermarkets sometimes felt a little pinch in summer sales. Today, hydroponics brings year-round produce to customers’ baskets, and dependable quality comes from partnerships with local farmers.
Key Takeaways Interest in local produce is growing, with increasing numbers of customers reading in-store signage and on-pack labels more often to select such items. Festivals or special displays can be used to merchandise local produce and generate excitement among customers. Viewed as local produce by many shoppers, hydroponics is a growing section of the produce industry.
s. re also supply chain fanatic h fanatics, which means we’ We can’t help it—we’re fres d safety fanatics. Sustainability fanatics. Foo s. atic fan lity qua And s. And innovation fanatic ours. g your business along with And fanatics about growin
Del Monte Fresh Produce N.A., Inc
©2019 Del Monte Fresh Produce N.A., Inc.
What we are doing with our retail partners is turning local into a permanent segment of their produce departments, where in the past, it would have only been a brief seasonal promotion.” —Paul Lighfoot, BrightFarms
Local = Freshness
Locally grown produce means freshness for consumers. Such items are important to 84 percent of shoppers, according to “The Power of Produce 2019,” from the Arlington, Va.-based Food Marketing Institute (FMI). Additionally, 44 percent of consumers surveyed said that they specifically look for locally grown produce and buy it whenever possible. More than half of those surveyed — 53 percent — said that they want a larger locally grown assortment at their primary store.
Truly Good Foods Who could say no to Truly Good?
“Local produce has always been a trend with consumers, but it has been nearly impossible for most of the country to source … outside of farmers’ markets in the summer months,” observes Paul Lightfoot, CEO of Irvington, N.Y.-based BrightFarms. The company currently has growers using hydroponic greenhouses in four states. Lightfoot notes that demand for local produce continues to rise each year. Of course, local takes into account distance to farms for produce. A mileage radius of 88 miles was considered the limit for local overall, according to the FMI survey. Acceptable distance ranged from a low 62-mile radius in New England to a high 176-mile radius in the West South Central area of the South. State lines were the second most common way to define local produce. “We offer exclusively local product, when in season,” says Parker (who prefers to go by one name), a produce specialist at Portland, Ore.-based New Seasons Market, which has about 20 locations in Northern California, Washington and Oregon. “The only time we switch to nonlocal growers is when they don’t have the products we need available.”
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throughout the year that the fact nothing stands above the rest as most popular is a great thing, in my opinion,” he notes.
Heightened Interest in Hydroponics
Plants grown hydroponically are shielded by greenhouses and grown in water instead of soil.
According to Parker, different local items are most popular at different times of year, such as asparagus and greens in the spring, berries and soft fruit in summer, and potatoes, mushrooms and squash in the fall. “We have so many different options
Hydroponic farming is the growth of produce or plants, in a controlled environment, taking place entirely indoors. Produce grows using optimal temperatures, levels of artificial light, and nutrient solutions in water, without soil. Plants often grow a lot better in water or moist air. Hydroponically grown produce isn’t affected by weather, and is largely free from pesticides, herbicides and fertilizers. Production is year-round, and fresh produce doesn’t have to travel across the country, where it could experience loss and damage along the way. For customers looking for “clean” food or frightened by recent recalls, hydroponics is popular. For farmers faced
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with a lack of fertile land, this growing method could be an answer. Shoppers’ perceptions of taste and nutrition of produce grown by hydroponics is mostly positive. Sixty percent of those surveyed in FMI’s “Power of Produce 2019” said that hydroponics can qualify as locally grown. For growers that have taken the plunge, this is positive news. The U.S. hydroponic — also known as vertical farming — market is expected to reach $3 billion by 2024, according to Chicago-based market research company Arizton. Customers are noticing signage and labels specifying greenhouse or hydroponically grown items more often, with 42 percent in FMI’s survey having seen in-store signage or on-pack label references. Shoppers seeking local produce are especially observant, at 63 percent. Consumers more likely to have seen on-pack or signage references to hydroponics or greenhouses were urban shoppers, Millennials, organic shoppers, those with annual incomes greater than $75,000, Northeast shoppers, men, and those in three- to four-person households.
“Our local greenhouse farms enable us to supply year-round, locally grown packaged salads to supermarkets at a similar price to conventional and organic salads from the West Coast,” says Lightfoot, of BrightFarms, whose hydroponically grown produce uses 80 percent less water, 90 percent less land and 95 percent less fuel than long-distance field-grown produce. Currently, the company’s offerings are salads and greens. “By growing in a controlled hydroponic environment, we can provide consistent, high-volume yields of local produce in all seasons,” notes Lightfoot. “What we are doing with our retail partners is turning local into a permanent segment of their produce departments, where in the past, it would have only been a brief seasonal promotion.”
Hand in Hand With Local Farmers
Another way to satisfy customer desire for local produce is working with regional farms, a plan becoming more common with each growing season. Operators like six-store New Orleans’ Robért Fresh Markets use the arrival of locally grown produce as a reason to celebrate. “We are in the middle of our strawberry season — It’s a big deal,” says Terry Esteve, produce director for Robért. For its Strawberry Festival to celebrate the season, the independent grocer teams with Landry-Poche Farm, in Holden, La. Esteve notes that his stores will advertise “Rhonda Poche’s strawberries” on a three-week rotation from mid-February, if it’s not too cold, until Mother’s Day. Rhonda Poche, part of the farming
BY THE NUMBERS
Customers Most Likely to Seek Locally Grown Produce
MAKE 4+ TRIPS TO THE STORE/WEEK
BUY VALUE-ADDED PRODUCE
SHOP AT FARMERS’ MARKETS
MILLENNIALS WITH KIDS
BUY ORGANIC PRODUCE
WEEKLY SPEND >$150
>75K HOUSEHOLD INCOME
KIDS LIVING AT HOME
Source: “The Power of Produce 2019,” FMI
52% BUY FRESH PRODUCE ONLINE
3-4 PERSON HOUSEHOLDS
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family and well known in the area as “the Strawberry Lady,” is on You Tube and leads tours of schoolchildren around the farm. In addition to huge in-store displays, the store makes Louisiana shortcakes featuring the fruit and offers Strawberry Lager from nearby Abita Brewery, in Abita Springs, La. Also big at Robért’s stores is the Creole Tomato Festival, for which the chain partners with Matt
Local Avocado Marketing The California Avocado Commission (CAC) has launched a 2019 advertising campaign concentrating on “premium Californians” and frequent avocado users. With California avocado distribution focused on California and the West this year, the CAC is targeting its advertising geographically. Prior to this campaign, the CAC wanted to test its advertising and profile California avocado consumers. Nielsen research conducted during the California fruit’s season last year compared opinions of consumers exposed to CAC digital advertising with those in the same markets who didn’t see the advertising. The research showed that the campaign’s direction was working, and helped define this year’s program. After exposure to last year’s campaign, unaided brand awareness increased, and the percent of consumers who said that they’d recommend California avocados rose significantly, to 93 percent. The CAC also learned that adults with household incomes of more than $75,000 were more likely to say that they preferred avocados grown in California after ad exposure. Created in 1978, the Irvine-based CAC works to enhance the positioning of California avocados through advertising, promotion and public relations. The fruit is cultivated by 3,000 growers in the state. California avocados grow year-round, but are at their peak in summer. —D.G.F
“Creole” cauliflower, grown by local farmers in Louisiana, can be as “big as a basketball,” according to Robért Fresh Markets Produce Director Terry Esteve.
Ranatza Farms, in Belle Chasse, La. “We keep the tomatoes on about a three-week advertising rotation and do salads on our salad bars that feature the tomatoes,” observes Esteve. The foodservice department makes dishes with fresh mozzarella and Creole tomatoes, and the season usually continues until July 4. “Matt also grows squash, peppers and eggplant during the same period, so we will include one of those in the ads when we do the tomatoes,” adds Esteve. “The tomato and eggplant ad always drives sales.” During the fall, Ranatza Farms has Creole cauliflower bigger than a basketball, according to Esteve. “For New Year’s, Matt has cabbage which we advertise in our New Year’s ad,” he continues. “Of course, it is Creole cabbage — that name in front of vegetables gets people excited.” In October, citrus season kicks off with the chain’s partner, Thomas Becnel Citrus Farms, also in Belle Chasse, and there’s a festival for that, too. Citrus runs in ads from November through the end of the year. “Satsumas and navel oranges are huge sales drivers, so we maintain citrus displays throughout the season and tie in with the Abita Citrus Lager,” notes Esteve. “I call all of my relationships with these farms partnerships because they are committed to quality just as much as we are,” he asserts. “All are third- and fourth-generation farmers, and they really put a lot of pride in what they pack, because their name is on the box.” Esteve’s team places orders with local farmers in the morning; the orders are picked and pre-cooled overnight, and then delivered early the next morning. “Beats a week-long truck drive from California every single day,” he quips. Building a locally grown produce program that responds to customer needs and wants can satisfy the consumer desire for freshness, whether from local farms in growing season or hydroponics year-round.
2019 Retail Deli Review
Keeps On Giving WHEN IT COMES TO SALES, DELI CONTINUES TO DELIVER. By Jim Dudlicek
n deli there is strength, sayeth retailers. Deli department sales are robust and expected to continue on this trajectory, according to the grocers responding to Progressive Grocer’s exclusive Retail Deli Review survey. Nearly three-quarters of the survey respondents said that their deli sales rose in 2018 compared with 2017, and an even greater number — more than 80 percent — said that they anticipate additional growth during 2019. Deli is flourishing at Oleson’s Food Stores’ four locations in and around Traverse City, Mich., for three reasons, according to Samantha Oleson, assistant director of bakery and deli: “The economy, which has an effect not only at a store level, but a community level, due to tourism; our assortment of products to meet our customers’ needs; and our customer service to continue serving our loyal customers.” Oleson expects that success to continue. “The industry as a whole is able to keep up on up-and-coming food trends, health concerns, and ideas, and I think that will play a big role in the coming years,” she says. “The industry is always changing and growing; there are always opportunities.”
PROGRESSIVE GROCER May 2019
2019 Retail Deli Review Total Meal Solutions
The need for convenient meal solutions is a key consumer motivator, and that’s being reflected in the supermarket deli. The vast majority of survey respondents said that their prepared food programs are increasing both in dollar (78 percent) and unit (80 percent) sales. Additionally, nearly 70 percent of respondents said that they’re either “significantly” or “modestly” increasing the space devoted to prepared foods. Voni Woods, VP of foodservice, Starbucks and sushi at Pittsburgh-based supermarket chain Giant Eagle, says that growth in the deli is all about convenience, or, as she puts it, “deli in a hurry” — readyto-heat meals, meal kits, and grab-and-go sandwiches, salads and soups. To be sure, the top areas that survey respondents said they’ll be concentrating on in deli/prepared foods during 2019 are sandwiches and bundled meals. Fur-
Methodology Progressive Grocer’s Retail Deli Review is based on an online survey of retail grocery leaders in March and April 2019. There were 70 respondents in all, encompassing store owners, CEOs, presidents, deli executives and other supermarket deli department decision-makers. Of the respondents, about 55 percent were from grocery operations with 10 or fewer stores, with about 45 percent from chains of greater than 10 stores.
2019 Retail Deli Review ther, nearly two-thirds said that they’re cross-merchandising their deli offerings to drive sales throughout the store. “Since foodservice is highly perishable, we are mostly not cross-merchandising out of department, but rather bringing items into the area for a more solution-based approach,” Woods notes. “Cornbread by the chili, snacks by the in-department
Deli Department Sales Performance Increased
Stayed the same
12 .9% 12 . 8%
The concept of a traditional deli is becoming intertwined with other departments, and I only see that growing.” —Samantha Oleson, Oleson’s Food Stores
Projected for Total 2019 Increase
Stay the same
2 .9% 4.4%
Prepared Food Program Performance Increased register, all kinds of kid and adult beverages, bread, crackers for cheese and soup, all the toppings for a great salad bar, desserts for one — and more when appropriate, like pumpkin pie with dinners, etc.” Hot foods and ready-to-eat items are driving growth for Quincy, Ill.-based grocery chain Niemann Foods Inc. “These are home-cooked items made from recipes in store and taken home and warmed up by the customer,” explains Jim Brown, manager of Niemann’s store in Pittsfield, Ill. Brown notes that he expects deli sales to continue on their current trend of outpacing his overall store sales by about 3 percent.
Stayed the same
DOLL AR SALES 12 . 8%
Source: Progressive Grocer market research, 2019
2019 Retail Deli Review Have you dedicated more selling space to fresh prepared foods in your average store in the past year?
Is your deli area separated from your fresh prepared food selling area?
68.6% Yes Net
No, kept same amount of space
“Grocery is, of course, the easiest to cross-merchandise with deli items,” Brown acknowledges, adding that bakery items lend themselves well to pairings with deli meat and cheese. “As the make-at-home items still seem to be going well, I can see our deli getting in this game,” he says. “Take home, mix together and cook for a small amount of time. This would make the customer feel they made the dish. “Deli is a fun department, and it always seems to have a lot going on,” Brown continues. “Warm foods and take-home-to-go seem to be doing well in our area.”
Do your stores have a dedicated dining area for shoppers to eat fresh prepared offerings?
Are you cross-merchandising your deli to drive sales throughout the store?
Source: Progressive Grocer market research, 2019
What factors do you consider to be most influential in securing strong everyday deli department sales?
Engaged Associates Signature Items Merchandising/Experience Product Samples Active Sampling/Events Advertising/Promotions In-Store Specials Premium Brands Social Media Special Offers Incentive-Based Discounts Cross-Promotions POS Coupons/Discounts Executive Chef
58.3% 65.5% 43.3 48.3 43.3 27.6 35.0 27.6 33.3 37.9 21.7 41.4 15.0 13.8 10.0 6.9 8.3 10.3 6.7 0.0 6.7 6.9 6.7 3.4 5.0 3.4
Increased On-Ad Specials Extended Hours of Operation
3.3 0.0 3.3 6.9
Source: Progressive Grocer market research, 2019
What areas of your deli/prepared food operations will you concentrate on enhancing during 2019?
Sandwiches Meal Deals (bundled meals) Staff Training Catering Side Dishes Lunch Dinner Hot/Cold Bars Daily Specials Rotisserie Programs Breakfast Category Management Premium Brands Soup Stations Private Label Concept Food Stations (i.e. Asian kitchens, pasta, carving stations) Sushi Beverage Bars Antipasto Bars Other
43.3% 44.4% 41.7 48.3 41.7 44.8 30.0 31.0 30.0 27.6 28.3 44.4 26.7 31.0 23.3 44.4 23.3 44.4 20.0 48.3 15.0 13.8 15.0 10.3 15.0 3.4 15.0 24.1 11.7 20.7 6.7 3.4 5.0 17.2 3.3 6.9 3.3 0.0 10.0 0.0
Source: Progressive Grocer market research, 2019
For her part, Oleson says: “We love the opportunity to cross-merchandise. We see opportunities between all of the departments. Our bakery and deli go hand-in-hand, and we have many grocery items that fit in that mix as well. It is all about thinking about the recipes you make yourself, and if it works together, it is often shown together.”
Which operational issue do you consider to be the single most challenging for your fresh prepared food program? Percentage
Labor Shrink Product Quality Levels Inventory Management Pricing Packaging Product Mix Equipment Productivity/Maintenance Other
60.0% 16.7 5.0 5.0 3.3 3.3 1.7 5.0
Source: Progressive Grocer market research, 2019
Which operational issue do you consider to be the single most challenging with regard to your service deli program? Percentage
Labor Shrink Training Sourcing Equipment Productivity/Maintenance Pricing Other
61.7% 13.3 11.7 5.0 1.7 1.7 5.0
Source: Progressive Grocer market research, 2019
Talent and Experience
In PG’s Annual Report of the Grocery Industry in April 2019, retail grocery executives told us that the top issue keeping them up at night is recruiting, training and retaining talent. The folks running their delis agree — nearly 60 percent of respondents to PG’s deli survey said that “engaged associates” is the most important factor in securing everyday department sales. Additionally, labor was — by far — the leading operational issue named by deli operators, PROGRESSIVE GROCER May 2019
2019 Retail Deli Review
58.3% of respondents agreed that “engaged associates” was the most important factor in securing everyday sales.
I can’t stress enough the imperative of the team member and guest experience. Making every decision on layouts, offerings, concepts, merchandising and training is all in the best interest of our team members and guests.” —Voni Woods, Giant Eagle
and staff training tied for second place among areas most targeted for investment this year. “I can’t stress enough the imperative of the team member and guest experience,” Woods asserts. “Simply taking care of team members and guests by providing what they want, when they want it, and at a value they are willing to shop you for, is point of entry. Delivering a personal experience that includes Source: Progressive Grocer market research, 2019 surprise and delight, ‘worth it’ opportunities, personalized offers and simply being obsessive. Making every decision on layouts, offerings, concepts, merchandising and training is all in the best interest of our team members and guests.” Fittingly, “merchandising/experience” ONE OF THE tied for second, with signature items, as the most important factor in deli sales. Oleson expects a transformation in the coming years. “I believe the idea IN THE WORLD of a deli will change a lot over the next decade,” she says. “The concept of a traditional deli is becoming intertwined with other departments, and I only see that growing. I think it is best to keep an open mind and be prepared to jump on any opportunity. Our customers want different things then they did in the past, and it is our duty to follow their lead.” She continues: “As we see a shift in the generations, we will see a shift in our shopping habits and, in turn, how we need to serve those customers. The mix of Baby Boomers, Millennials and Gen Z will make for an interesting time HANDCRAFTED. FARMSTEAD. SUSTAINABLE. for merchandisers as they attempt to please all generations.” AWARD WINNING CRAVE BROTHERS MARINATED FRESH MOZZARELLA “There are opportunities for late adopters,” Woods concludes, “by promoting local, transparency, convenience, solutions, health — both for a lifestyle-of-want and a lifestyle-of-need opportunity — and doing CRAVECHEESE.COM grab-and-go right.”
IDDBA Reveals Concepts for What’s In Store Live at 2019 Expo The International Dairy-Deli-Bakery Association (IDDBA) has unveiled the lineup of retail concepts slated for What’s In Store Live, the interactive marketplace that will showcase innovative and aspirational merchandising on the show floor of IDDBA 19, slated for June 2-4 in Orlando, Fla.
Deli: Innovative ways to market lunch options with lunchbox sets geared toward both kids and adults. Grab-and-go options for customers searching for entertaining ideas and parties. A redesigned soup bar, featuring bone broth with custom inclusions. Design accents that bring the farmers-market feel into the deli. A stand-alone, grocerant-type concept named La Trattoria, featuring ready-toeat, ready-to-warm and all eating options in between. Ideas for fresh merchandising of pet meal options. A back-of-house area dedicated to meal-kit prep and space efficiency.
Cheese: A focus on cheese as an ingredient, illustrated through fresh grated, fresh cubed and shredded. Ideas on how to build a cheeseboard, including “build-to-order” concepts. Cheese occasions, with a focus on the nutritional benefits of cheese. A focus on milk and its varieties, butters, yogurts, and cultured items. Fondue merchandising concepts.
Bakery: The Sweet Shop, showcasing the conjoining of bakery items with indulgent additions such as dipped cookies and caramel apples. A bakery café, featuring a coffee bar as well as trendy sandwich and quiche concepts. Sweet and savory concepts for waffles, a hot trend with boundless opportunities for topping creativity. A make-your-own cookie-dough bar. An artisan bread focus, including scratch mixing and shaping, as well as live-action baking throughout the show hours.
Cake: New traditions/holiday creations, which will explore cake designs inspired by emerging occasions as new opportunities to celebrate. Personalization of treats through mobile devices, whereby attendees can place orders for themselves or a local charity. Building more with less, which will give attendees ideas on how to develop new creations in a short amount of time, with few products. Party in a pinch, which will demonstrate how to create “dessert charcuterie.” Pairing ideas for increasing cake-consumption opportunities.
We are Coca-Cola and so much more, offering the preferred categories and leading brands that have added the most dollar value growth to the industry of any company across the total store.* To learn more about driving your sales and proﬁt growth, contact your Coca-Cola representative, call 1-800-241-COKE, or visit www.ccrrc.org
Convenience Store: Creative grab-and-go snacking options. Innovative offerings for ready-to-eat snacking and meal pickup. www.iddba.org
*Nielsen Planners, YTD 2018 thru June 30th, Total US All Measured Channels ©2019 The Coca-Cola Company
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Creating Hybrid Hospitality FOODSERVICE INDUSTRY E XPERTS WEIGH IN ON WAYS THAT GROCER ANTS CAN CRE ATE UNIQUE E XPERIENCES IN STORES. By Kathy Hayden espite a challenging environment, foodservice is expected to grow to a projected $863 billion in 2019. Parts of that growth, according to Hudson Riehle, SVP of research for the Washington, D.C.-based National Restaurant Association (NRA), can be attributed to the number of categories and subcategories of foodservice that are proliferating into new venues. Retail settings are becoming bigger players. Also, among most restaurant categories, increasing takeout sales are boosting bottom lines. These two pieces of the NRAâ&#x20AC;&#x2122;s forecast are good news for grocerants, which, as newer players in the foodservice market, can be more agile in developing their concepts to respond to evolving consumer needs for prepared foods in supermarket settings.
A colorful array of prepared foods is attractively displayed at a Wegmans store.
Key Takeaways Grocers, as newer players in the foodservice market, can be more agile in developing their concepts to respond to evolving consumer needs for prepared foods in supermarket settings. Operators need to consider what style of service matches their store(s), with limited service often the most practical style. Food retailers should also connect their retail strengths to their foodservice efforts through such means as holding wine tastings in key areas of a store.
PROGRESSIVE GROCER May 2019
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Riehle recommends considering how customers use restaurants when developing grocerant concepts. “Dining out is an occasion-based decision,” he notes. “We use restaurants differently for a Tuesday lunch, which is convenience dining, than we do for Saturday-evening destination dining.” Retail foodservice may not fit on either end of the spectrum, making it a hybrid demand that continues to evolve and meet new consumer needs. “Consumers are mixing a few prepared items into ‘home-cooked’ meals,” Riehle says. (See sidebar, page 76). “Even notable chefs see this as an opportunity and are creating retail meal kits or pre-seasoned entrées that people can finish at home. Chefs don’t see these items as competition with restaurant visits. The recipe and preparation may be the same, but the equipment and skill needed to really replicate a signature dish will not be the same with home chefs, and the experience will never be the same.” But what about the experience? Can grocerants create a restaurant experience in-store? Or should the experience also aim to be somewhere in the middle?
Reaching Across the Aisles
Another expert, Laura MacPhail, president of Boston-based MacPhail & Associates LLC, and consultant on strategy and market insights at CCSI Marketing + Culinary, in Chicago, also sees hybridizing as the route to developing foodservice and retail operations that co-exist and cross-pollinate. “Going back to its roots, the restaurant industry has always kept the basics of consistency, quality, service and cleanliness as the core,” Not only explains MacPhail. “It’s all about butts in seats, do grocerants need to quick turns and a finite dining experience for stay on a par with maximum profit. Grocery stores don’t necessarrestaurant offerings, ily have that mindset, because there is so much going on in retail. The shopping experience is they need to be the affected by other priorities like price, variety, muplace where consumers sic and clutter. The goal is maximum sales per square foot, and that means customers might be see new items in the wandering around for hours.” market and learn how to MacPhail points out that it’s hard to have a use them in the in-store start-to-finish pleasant experience when food foodservice setting.” shopping, but that’s what you need in food—Hudson Riehle, service. She advises, when merging retail with National Restaurant Association foodservice, that you need to begin with the basics, and also put extra thought into making sure your customers know where to go for what. Is the bakery self-serve? Where’s the sandwich pickup? Do you pay first? Clear design and clear signage are essential to ease of experience. MacPhail also urges operators to consider what style of service matches your store. “In most cases, you’re not aiming for full service, and I think limited service is the most practical style for most markets,” she says. “Find ways to link your décor, signage, price points in your physical space. Keep store priorities — whether it’s organic produce or minimizing food waste — linked.” “From [a grocerant] operator perspective, there’s growth in the segment. Operators have really stepped up the fresh aspect, and offerings
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are not limited to deli food and fried chicken. The cuisine and beverage can compare to restaurants, in many cases,” Riehle asserts, noting that consumer expectations are higher. As more culinarians move into the category, and as the category matures, it’s becoming even more necessary to manage foodservice operations in retail as separate businesses, with their own strategic goals and profit-andloss expectations. Also essential, but often missing, is someone who stands in for a restaurant host, helping to direct the consumer experience, start to finish. Dedicated grocerant hosts may not be practical, but helpful staffers trained in hospitality need to be part of the picture. Riehle sees positive change in the way future culinarians are being trained for an array of back-of-house and front-of-house experiences. “The number of graduates from culinary school continues to increase, and they are trained to work in a greater variety of settings,” he observes. “This will mean we will continue to see food and beverages quality that compares to restaurant settings. We’ll also start to see better overall dining experiences in stores at whatever level you’re offering — whether that’s a sandwich counter or a coffee bar.”
When it comes to finding a restaurant identity in retail, MacPhail suggests looking at what’s already working, both in the category and in your store.
Go Hybrid and Go Home Takeout and delivery meals are two ways for all foodservice operators to build business. Another option: Help customers supplement their meals at home. Forty-three percent of adults say that they’re more likely to incorporate restaurant-prepared items — such as a main dish, side or dessert — into their home-prepared meals than they were two years ago. Among Millennials, this rises to 58 percent. See the following for the percentage of adults by demographic who say that they’re more likely to incorporate restaurant-prepared items into their home-prepared meals than they were two years ago:
Gen Xers (39-54)
Baby Boomers (55-73)
Source: National Restaurant Association, National Household Survey, 2019 | Restaurant.org
“Wegmans is successful with a very specific eating experience focused around prepared foods offered by the pound, ready to eat in-store or off-premises,” says MacPhail. “This section has its own cash-out with beverages and other add-on items. It’s convenient, clearly defined, spacious and easy to use. Wegmans nails the foodservice basics of quality, consistency, service and cleanliness. The little details, like nice tongs, full food bins and clear labels, are also done well.” Another way that grocerants can offer unique experiences is by staying on the cutting edge of global flavors, ingredients and spice mixes, exposing consumers to this new culinary material. “Not only do grocerants need to stay on a par with restaurant offerings,” notes Riehle, “they need to be the place where consumers see new items in the market and learn how to use them in the in-store foodservice setting.” He encourages grocerant operators to take some chances, especially to appeal to younger consumers, who are more inclined to “buy experiences” and want to know the stories behind their food. If your menu is the first place they ever encounter gochujang, a Korean red-pepper paste, or cauliflower-crust pizza, they’ll remember the experience.
Play to Your Strengths
MacPhail recommends that grocers connect their retail strengths to their foodservice efforts. “Operators can start small, with in-store wine tastings in key areas of the store,” she suggests. “Think about where customers can have an experience, like in the cheese section, where you’re featuring local cheeses.” MacPhail points to the Eataly food halls, in New York, Chicago and other cities, as the ultimate example of a hybrid retail-foodservice experience: “Eataly creates one big upscale eating experience that feels like being on an Italian street, but it’s inside.” While Eataly has full-service restaurants where guests are seated by a hostess, the experience also includes casual wine tastings next to the fishmonger, where you can see how employees are using the daily catch, or maybe take part in a crudo tasting there. These smaller experiences can happen in a grocery store as well. “If you’re known for butchery or baked goods, build experiences around that section and make sure you extend that specialty to your foodservice,” advises MacPhail. Another way to play to your strengths is to feature locally made goods on your menu and in your retail operation. Or go a step further and develop a partnership with a local foodservice operator to create an in-store version of a well-loved local eatery. “What’s clear is that consumers trust local,” Riehle says, “and the more you can incorporate local elements into parts or all of your foodservice, the more consumer confidence you can build.”
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Retail Foodservice Q&A
coconut milk, dried dates, dried cranberries, cashews and mint. One of our most popular items is Green Smash avocado toast with raw pumpkin seeds, and so we are appealing to a lot of different tastes.
Ask a Chef ALLTOWN FRESH’S JASON COOPER REINVENTS TRUCK-STOP FARE.
PG: Are freshly made sandwiches a big part of your prepared food business? What are some best-sellers, and what makes them hits?
By Kathy Hayden
resh food and diesel fuel don’t usually go together, but at Alltown Fresh, in Plymouth, Mass., Jason Cooper, head of food and beverage, is transforming convenience stores and rest-stop food. Alltown Fresh offers made-toorder meals created with organic, local and natural ingredients. Gluten-free, vegan and vegetarian options are the norm; by-the-cup coffee is brewed on demand; the soda is all-natural; and even the snacks are made fresh. Additionally, truckers can still fuel up their long-haul rigs.
Progressive Grocer: This is a new concept within a chain of convenience stores and rest stops. Tell me how you developed your menu and overall approach. Jason Cooper: The guiding idea is that people want more healthy alternatives for everything we eat, even for food on the run. Whether a customer wants pizza or kombucha, we want it to be the best it can be. That means we get vegetarian and vegan, clean-label pizza sauces from Cindy’s Kitchen, in Brockton, Mass., and Aqua Vitea kombucha from Vermont.
JC: I would say the sandwiches and bowls are equally popular. We roast veggies in a combi oven, so the place smells like roasting onions and broccoli all the time. We make hummus in-house, and we work with Plymouth Produce Co. to source the best organic produce from the Boston market. We offer made-to-order bowls with quinoa or a three-brown-rice blend. People can put whatever they want on both bowls and sandwiches, or they can pick from the combinations we put together. The grilled chicken with sweet chili lime sauce has been a big hit in the bowls. For sandwiches, the Spicy Tom Turkey, with roasted turkey breast, avocado, applewood-smoked bacon, aged cheddar and spicy chipotle aioli does really well.
PG: I see from your menu that using local, artisan food makers is part of your program. Why is that important to your concept? JC: We look for well-known and well-loved local brands. For example, in our sandwich program, we use Hearth Artisan Bakery, which is right around the corner from our Alltown store — they use local wheat; the locals already love their bread, and it’s a very recognizable brand. With vendors that we don’t know as well, we make sure each brand’s approach aligns with our goals. We look for clean labels made with the highest-quality ingredients, and we make sure they can provide a consistent supply to meet our daily demands.
People want more healthy alternatives for everything we eat, even for food on the run.”
PG: Your beverage program is pretty different from most c-stores or most restaurants, for that matter. How did this program come about, and how has it been going?
JC: We have a self-serve beverage program, as most c-stores and rest stops do, but we looked for alternative vendors to find better-for—Jason Cooper, PG: Tell me about your breakfast options and who your you, high-quality options Alltown Fresh breakfast customers are. with organic cane sugar, real juices and no high-frucJC: We have a great location for breakfast, and we offer breakfast anytime. tose corn syrup. We have 24 options The fire and police departments are nearby; we are a stop for short- and longavailable, with delicious flavors like carhaul truckers, and we serve a broad cross-section of people on their way to damom-mandarin soda and peach-bluework, or meeting here. We are offering a slightly healthier version of breakfast berry-mint kombucha. The kombucha is standards, like a sandwich with local eggs, cracked and made to order with apa kegged, fermented product with the plewood bacon and aged cheddar. We created a Forage Porridge with quinoa, alcohol removed.
Our coffee service has become a highlight of the market. We offer six varieties of our single-origin Alltown Fresh coffee that’s roasted and blended for us by a place in Connecticut. We invested in Swiss-made machines that grind and brew each cup on demand. The process takes a little longer than the usual urn service, and it might be more expensive, but it is so worth it. The machines also are not cheap, but we know we are serving the best cup possible, and that means more sales. We want to transform the coffee stations in more of our rest stops, starting with our properties on the Mass Pike.
PG: What is your approach to fresh prepared options?
JC: We have cold cases where people can buy anything on our menu made fresh daily and ready for grab-and-go. We want to be open 24/7, but at this point, we can offer made-to-order service only from 6 a.m. to 8 p.m. The prepared options guarantee that customers can get something great to eat at all times. We’ve noticed that people are buying three or four bowls for a family meal at home, or they are buying multiples for lunches for the week.
PG: Any other highlights from your new store are welcome — what has surprised you; what would you like to add?
Alltown Fresh’s high-quality, better-for-you offerings include (1) grab-and-go bowls and sandwiches, (2) brewed-on-demand coffee, and (3) self-serve sodas and kombuchas in unusual flavors.
JC: I’m surprised how successful the smoothie bar has been. Each smoothie is made to order from the kitchen, with 100 percent organic fruit and vegetables. We use no added sugar; instead, we use local honey. We offer add-ins like flax, chia, avocado and all the dairy alternatives, including hemp. Our best-seller is a Green Glow with baby spinach, kale, pineapple, fresh avocado, banana, apple, cucumber, lemon and mint. I see this as an example of just how far people have come in creating a demand for interesting BFY options. Another thing that has surprised me is how involved our customers are. They tell us what local vendors they want to see. They ask why we have no breakfast sausage, so now we are looking for a source for local sausage. They also come up with great sandwich and bowl combos that we want to add to the menu. PROGRESSIVE GROCER May 2019
Independent Initiative SMALLER PL AYERS ARE INVESTING IN BIG SOLUTIONS TO BOOST THE SHOPPER E XPERIENCE â&#x20AC;&#x201D; AND THE BOT TOM LINE. By Randy Hofbauer and Bridget Goldschmidt
one are the days when local supermarket operators could just depend on their stellar reputations in their respective communities to keep customers coming back. In an increasingly competitive landscape, more targeted engagement is necessary, especially for smaller independents lacking the deep pockets of their larger rivals, and that may require digital assistance. Just ask Foodtown Stores, part of the Iselin, N.J.-based independent supermarket cooperative Allegiance Retail Services, which in April named New York-based Constellation Agency as its first digital agency of record.
Key Takeaways Smaller independent grocers are adopting innovative technology to better compete against deeppocketed major industry players. Solutions implemented span the areas of food safety, product attributes, point of sale, mobile checkout and theft/accidental scan avoidance. Independent grocers have already seen success with such solutions, in terms of an enhanced shopper experience and savings.
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“Digital channels have an expanding role in today’s meal planning and grocery shopping,” noted Allegiance Retail Services Chief Marketing Officer Donna Zambo when the news came out. “Recognizing this, we are partnering with Constellation Agency to ensure that Allegiance and Foodtown are able to meet these needs now and into the future.” Asked to elaborate on the types of strategies envisioned by the co-op, a Constellation spokeswoman spoke of “hyper-local content in support of Allegiance members. Each member has unique and differentiating stories and go-to-market strategies — we want to enable them to tell these stories. Digital and social media is a great forum for this.” Beyond stronger digital engagement, independents across the United States have been adopting a wide range of forward-looking technology to enable them to hold their own against the big guys.
Playing it Safe
For instance, last November, Festival Foods, one of Wisconsin’s largest independent grocery chains, with 32 locations, implemented new technology chain-wide to provide real-time access to temperature and food safety data at the product level. Beginning with a pilot with Minnetonka, Minn.-based Internet of Things services provider Digi International, De Pere, Wis.based Festival adopted SmartSense by Digi for task management and continuous temperature across all of its locations. The technology provides a subscription-based service that continuously monitors task management activities and the temperature of perishable goods wirelessly. The 30-day test included real-time, product-level monitoring in all refrigeration units, food-temperature monitoring in deli sections, and automated task management. In addition to helping guarantee food safety, the combination of continuous, accurate temperature readings and automated record-keeping saves thousands of dollars and employee hours per year by reducing shrinkage and manual tasks. In the technology’s second year, Festival anticipates a 300 percent return on its annual investment. “SmartSense is a proactive approach to equipment maintenance and food safety that gives us the operational oversight we need to improve our bottom line and serve our guests better than ever,” says Hsing-Yi Hsieh, Festival Foods’ director of food protection and regulatory affairs. “Now every store has real-time access to temperature and food safety data at the product level, and we’re able to get ahead of any potential issues well before they become a reality.”
Know Your Products
Also in the Badger State, Fitchburg-based Certco Inc., which services more than 200 independent grocery stores throughout Wisconsin, Illinois, Minnesota and Iowa, in September 2018 adopted innovative grocery technology to help ensure that product attributes are best represented to its retailer network. In partnership with Chicago-based ItemMaster a cloudbased product content platform company, the grocery wholesaler and distributor asked its manufacturer suppliers also to team with the platform to build a repository of core product information, including product images. This commitment ensures that “Certco and its entire ecosystem of retailers and vendors have accurate and robust product content, which we know drives more sales,” notes David Ryman, the company’s VP of sales and marketing. According to Ryman, some of the key factors contributing to Certco’s decision were: A flexible approach to onboarding and managing product content, meeting the capabilities and requirements of both CPGs and independent grocers Six- to 10-day delivery of bringing a new product to market, representing accelerated speed to market Levering advanced technology, such as optical character recognition (OCR), artificial intelligence (AI) and machine learning, to enhance speed and accuracy, and enable enhanced attribution Centralized, complete and comprehensive product attributes streamlining Certco workflows, reducing resources required to acquire and deploy accurate and quality content “Consumers want to shop the way they want for their tastes, lifestyles and nutritional needs,” explained ItemMaster CEO Dev Ganesan when Certco implemented the technology. “The requirement from the consumers drives an evolution in what product information brands, wholesalers and retailers provide. Certco can now look forward to a streamlined workflow with retailers, by delivering complete and comprehensive product attributes, which will drive best-in-class shopper experience both online and in store.”
Our adoption of the company’s premium point-of-sale technology has already proven successful by enabling faster, more frictionless transactions for both our associates and customers.” —John Lauderbach, CIO, Roche Bros.
Meanwhile, Wellesley, Mass.-based Roche Bros., which operates 20 independent grocery stores under the Roche Bros., Sudbury Farms and Brothers Marketplace banners, modernized its supermarkets earlier this year by implementing point-of-sale (POS) systems that improve speed and efficiency at the front end. The retailer teamed with Durham, N.C.-based Toshiba Global Commerce Solutions to adopt the latter’s TCx 300 POS systems, which produce faster, seamless transactions. The technology offers intuitive, responsive
touchscreens to enhance associates’ ability to provide a more satisfying shopping experience. “Our adoption of the company’s premium point-ofsale technology has already proven successful by enabling faster, more frictionless transactions for both our associates and customers,” Roche Bros. CIO John Lauderbach observed in January, at the time of the grocer’s initial installation of the first 100 of the systems and their accompanying TCx displays in seven stores, followed by the deployment of 200 additional lanes throughout the remainder of Roche Bros.’ locations.
Check Out by App
When Fairway Market launched mobile self-scanning checkout in its 15 stores in New York, New Jersey and Connecticut last November, it reportedly became the first grocer with such an option in the region. Partnering with New York-based FutureProof Retail to introduce the technology, the grocer allows shoppers to use the Fairway-branded mobile checkout app to scan products via their phone cameras. Weighted items — such as produce and products from the olive bar or hot bar — can be weighed at digital scales. To check out, customers scan a QR code that shows up after they’ve scanned all of the products they wish to purchase. They then walk out, skipping the line for the cash register altogether. According to Mike Penner, director of retail applications and technology at the New York-based grocer, the move “continues Fairway’s tradition of offering the best food for our customers in the way that’s most convenient to them. The response from mobile shoppers has been incredibly positive.”
Putting a Stop to Theft
Finally, for anyone who may doubt the big impact that the right solution can have on one small operator, Hawaiian retailer Down to Earth Organic & Natural has reported a deterrence of 3,000 theft and accidental
Fairway Market’s mobile selfscanning checkout solution enables customers to skip the line for the cash register.
scan-avoidance incidents in the past year alone at its six independent grocery stores on Maui and Oahu through the adoption of new technology. The Honolulu-based indie saw its bottom line take a hit due to food theft, including cashiers “sweethearting” products — i.e., pretending to scan merchandise but deliberately bypassing the scanner. In response, Down to Earth installed StopLift’s checkout vision systems two years ago to monitor cameras over the checkout area, letting the system’s AI video analytics software analyze security video to detect theft and improve operational efficiency at all checkouts. As of February 2019, StopLift’s ScanItAll had detected about 3,000 incidents of theft and accidental scan avoidance over the past year — 316 in one month alone. It even singled out four cashiers in the act of stealing, which led to their termination under the grocer’s zero-tolerance policy. “It’s a viable deterrent from stealing,” says General Manager Clifford Hillier. “The cashiers know they’re being watched, and they’re careful. We show them the video incident of them giving an item away, and it doesn’t happen again.” StopLift’s Scan-It-All system determines what occurs during each transaction at the supermarket checkout to immediately distinguish between legitimate and fraudulent behavior. As soon as a scan-avoidance incident occurs, Cambridge, Mass.-based StopLift, which constantly monitors 100 percent of the security video, flags the transaction as suspicious. It then quickly reports the incident, identifying the cashier and the date and time of the theft. Hillier doesn’t want to install self-checkouts, because he believes that they detract from customer service. Further, with Hawaii’s unemployment rate the lowest in the United States, he wants to protect cashiers’ jobs, which, in his opinion, self-checkouts would erode. “No one is watching the overhead cameras,” he adds, “so there’s no point in having them without StopLift monitoring the video.” PROGRESSIVE GROCER May 2019
EQUIPMENT & DESIGN
Way Cool SUSTAINABLE SUPERMARKE T REFRIGER ATION SYSTEMS ARE BECOMING THE NORM. By Bob Ingram
efrigeration is one of the supermarket systems ranking highest in terms of energy use, and suppliers and retailers are working constantly to lessen its impact on the environment. It’s good business in so many ways. “Food Lion has been committed to zero-ODP [ozone-depleting potential] and low-GWP [global-warming potential] refrigerants for several years,” says Wayne Rosa, director of maintenance for the Salisbury, N.C.-based Ahold Delhaize USA banner. “We have also undergone a multiyear program retrofitting older R-22 systems with zero-ODP and low-GWP refrigerants.” Additionally, Food Lion has committed to test alternative refrigeration systems in some of its stores in Virginia and the Carolinas, Rosa notes. Food Lion worked closely with manufacturers to design new technology and also coordinates with them to provide training in
Key Takeaways Natural refrigerants like carbon dioxide will continue to gain popularity as they become more mainstream and the service community better understands the technology. Evolving refrigeration technology has led to such advances as the world’s first Zero Net Energy grocery store, a Bay Area Whole Foods Market location. With the emergence of a variety of system options, however, the industry has yet to reach consensus on what the standard technology will be.
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EQUIPMENT & DESIGN
the installation process for both contractors and the grocer’s internal technicians, Rosa explains. “Our intent is to learn as much as we can from these emerging technologies,” he says. “As governmental compliance requirements change, we can build on our experience with these technologies and make informed decisions for our organization.” Future refrigeration systems will need to be designed with a natural refrigerant that has no impact on the environment, Rosa asserts. Refrigerants like carbon dioxide will continue to gain popularity as they become more mainstream and the service community better understands the technology.
Achieving Zero Net Energy
Collin Coker, VP of sales and marketing at Houston-based Viking Cold Solutions, notes that the company’s Thermal Energy Storage (TES) came from a need for improved energy efficiency and food protection in the low-temperature cold chain. Coker recounts how, in 2017, Viking completed its Viking Cold Solutions’ Thermal first walk-in freezer installation Energy Storage (TES), seen with an international grocery here in a walk-in setting, chain in Fremont, Calif. “Total improves efficiency. freezer energy consumption was reduced 18 percent, and during the 13-hour window with peak energy prices, run time was reduced 60 percent,” he says. “Today, the company’s TES technology is installed in cold-storage warehouses, supermarkets, restaurants and food-processing facilities throughout the United States, Mexico, the Caribbean and Australia.” TES technology pairs phase-change material (PCM) with intelligent controls and 24/7 remote monitoring, notification and reporting software, which, according to Coker, increases refrigeration efficiency by an average of 26 percent, improves temperature stability to better protect food quality, and provides the flexibility to safely cycle off refrigeration for up to 13 hours per day. Coker explains that TES acts like a battery for refrigeration systems by storing thermal energy in the form of cold for future use. During periods with lower-priced energy, a facility’s existing refrigeration system freezes the PCM. During higher-priced hours, refrigeration is cycled off while the PCM absorbs up to 85 percent of all heat infiltration in the freezer and consolidates it directly in the refrigeration air flow for more efficient removal. “Notifications by email, call or text are sent when parameter limits are not met, in order to minimize maintenance costs, avoid costly problems and extend equipment life,” says Coker. As part of a four-year, $3.6 million project funded by the California Energy Commission, Viking installed a TES system inside an existing Whole Foods Market in the Noe Valley section of San Francisco, making the location the world’s first Zero Net Energy (ZNE) grocery store.
“The program’s efficiency goal is 40 to 60 percent reduction in the store’s energy-use intensity (EUI), and will act as a valuable blueprint for supermarkets around the world to implement technologies to achieve net zero,” Coker says. “Our cloud-based customer portal also provides a real-time view and historical archive of all data collected for every customer location and every freezer.”
‘The Way of the Future’
Emerson Commercial and Residential Solutions defines “sustainable” as environmentally responsible, financially viable from a total cost of ownership perspective, and energy efficient from a total equivalent warming impact (TEWI) that includes both direct and indirect carbon emissions, according to Andre Patenaude, director of food retail marketing and growth strategy for cold chain at the St. Louis-based company. “In the last decade, Emerson has introduced a variety of Copeland Scroll and hermetic compressors qualified for use with lower GWP synthetic and natural refrigerants,” notes Patenaude. “We take a full-system approach to sustainable refrigeration solutions that includes condensing units, valves and controls.” At Emerson, sustainability is evaluated within the context of other key equipment selection criteria and is a key component of a broader approach that Patenaude explains is referred to as the six S’s of refrigeration: Simple: Minimize complexities with systems that are easy to understand and diagnose. Serviceable: Facilitate ease of service and maintenance by ensuring technician familiarity and the availability of parts and refrigerants. Secure: Help maintain customer, employee and technician safety; help customers and operators preserve food quality/safety; and integrate information technology capabilities for operational and data security. Stable: Help ensure that systems are capable of maintaining consistent temperatures, delivering predictable performance and working according to design specifications. Smart: Recognize that electronic controls, system connectivity and integration with facility management services via loT (the Internet of Things) are becoming more important. Sustainable: Realize that lower-GWP refrigeration strategies, long-term economic viability and reducing energy consumption make up a sustainable refrigeration strategy.
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EQUIPMENT & DESIGN
We take a full-system approach to sustainable refrigeration solutions that includes condensing units, valves and controls.” —Andre Patenaude, Emerson Commercial and Residential Solutions
Recent Emerson innovations in sustainable refrigeration include integrated display-case architecture, which uses one or more R-290 compressors and supporting system components within a case and removes exhaust heat through a shared water loop, as well as carbon dioxide compressors, valves and controls for small to large application requirements; R-290 compressors and stand-alone condensing units; and modular refrigeration units for cold-storage applications that offer a variety of carbon dioxide and ammonia configurations. “We don’t think there’s any doubt that sustainable refrigeration is the way of the future,” affirms Patenaude.
The Rise of HFOs and CO2
Honeywell Fluorine Products and Stationary Refrigerants, in Morris Plains, N.J., has produced refrigerants for use in products designed by original equipment manufacturers for decades. Chris LaPietra, the company’s VP and GM, says that in the past decade, it began informing and educating supermarket system providers to migrate toward distributed-refrigeration systems with hydrofluoroolefin [HFO] technology. HFOs are non-ozone-depleting and don’t contribute to climate change. Many are nonflammable. Distributed-refrigeration systems, when combined with Honeywell lower-GWP refrigerants such as R-448A and R-450, provide a more sustainable approach than traditional centralized DX (direct expansion) systems. These systems provide reduced refrigerant charge, lower leak rates, higher efficiency due to less refrigerant-line heat gain, and higher efficiency due to better load matching, according to La Pietra. Honeywell’s Solstice N40 (R-448A) is billed as the supermarket industry’s most commonly used, lowest-GWP nonflammable refrigerant to replace R-404A. It’s used in more than 20,000 installations around the
Emerson’s 217-P-K5 unit offers a full-system approach to sustainability.
world and reduces energy consumption by up to 15 percent, according to LaPietra, who observes: “Based on HFO technology, Solstice N40 provides at least 3 percent lower energy consumption in low-temperature applications, and 5 to 15 percent lower energy consumption in medium-temperature applications, compared with legacy HFC [hydrofluorocarbon] refrigerants like R-404A. Solstice N40 can be used in new installations, as well as in installed systems that use high-global-warming refrigerants.” While Carrier has no commercial refrigeration business in North America, it boasts of being the European leader in natural-refrigeration carbon dioxide system installations. “The company’s research on CO 2 refrigerant R744 began during the 1990s,” notes Aline Lucas, communications director at Carrier Commercial Refrigeration Europe, in Rueil-Malmaison, France. “In 2004, Carrier installed its first transcritical CO 2 system in a Swiss hypermarket. The technology was thoroughly tested and commercially introduced as CO 2OLtec in 2009.” Carrier offers a comprehensive portfolio of next-generation products comprising refrigerated cabinets, freezers, counters, systems and controls that maximize merchandising opportunities while reducing energy consumption, operating costs and environmental impact. “For example,” adds Lucas, “our CO2OLtec system improves energy efficiency up to 10 percent and reduces the carbon footprint by 50 percent, compared to an R404A-based system.” Carrier Commercial Refrigeration’s latest innovation is the advanced CO 2OLtec Evo transcritical carbon dioxide system, whose new, adjustable modulating ejector increases system energy efficiency with more than 30 percent annual energy reduction (AEC) versus a standard transcritical system, making carbon dioxide systems a viable alternative in warmer climates, as well as providing heat reclaim advantages in colder and milder climates. The system’s use of carbon dioxide, which is a safe, non-ozone-depleting gas with a global-warming potential of 1, allows no additional global-warming impact from potential refrigeration leaks, since these systems use carbon dioxide repurposed from outdoor air, explains Lucas.
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EQUIPMENT & DESIGN
Bryan Beitler is VP and chief engineer at Brea, Calif.-based CoolSys, a firm of contractors and consulting engineers, which services and maintains many “natural” refrigeration systems around the country, dating back six to eight years to some of the first systems of this type. “Europe has accelerated their HFC-phaseout process, and is years ahead of the U.S. in this regard,” observes Beitler, who’s also president and CEO of the North American Sustainable Refrigeration Council (NASRC) A variety of system options have emerged as the technology has grown from its initial configurations, he says, which is an important consideration for retailers that are considering switching, as they must decide if the current technology is a final configuration for the long run. As for the future, “I’m not sure that the industry has reached consensus on what the standard is going to be,” admits Beitler. “Between transcritical, ejector systems, NH3 over CO 2 cascade, propane and micro-distributed, and hybrid gas coolers, the jury is still out. We are nearing the point where the oldest natural systems will need to be remodeled, and it will be interesting to note how flexible these systems will be to adapt to the retailers’ needs during a variety of remodel types.”
We are nearing the point where the oldest natural systems will need to be remodeled, and it will be interesting to note how flexible these systems will be to adapt to the retailers’ needs during a variety of remodel types.” —Bryan Beitler, CoolSys
He further notes: “The legacy systems with chemical refrigerants are also a big opportunity to upgrade; however, a reasonable cost solution is yet to be perfected. Use of the lowest-GWP chemical refrigerant available is a starting point.” These are all factors to weigh as grocers embark on their own sustainable-refrigeration journeys.
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Health, Beauty & Wellness
The Cannabis Conundrum LEGAL AND REPUTATIONAL ISSUES REMAIN, BUT H&W PRODUCTS CONTAINING NON-PSYCHOACTIVE CBD ARE FINDING THEIR WAY INTO THE GROCERY CHANNEL. By Barbara Sax
Key Takeaways More CBD-infused products are entering the market, particularly in healthand-wellness product categories. Topicals rather than ingestibles are likely to be the first CBD-infused product category to attract widespread supermarket interest. Personal care, beverages, snacks and sweets have been identified as key categories for CBD innovation.
hole Foods Market co-founder John Mackey recently told an audience that “chances were good” that the Austin, Texas-based chain would sell cannabis in its stores located in states where the sale of the substance was legal. “You just never know what happens over time with markets,” he said. “They change and evolve.” Mackey would be ahead of the pack on that decision — mainstream supermarkets aren’t likely to sell cannabis anytime soon. But there has been a surge of interest among retailers in products that contain cannabidiol (CBD), a naturally occurring cannabinoid compound found in marijuana and hemp plants that is non-psychoactive. The U.S. federal government continues to classify marijuana as a Schedule I controlled substance; however, the 2018 Farm Bill removed hemp and hemp-derived CBD from this restriction, formally making it an agricultural commodity, which enables major U.S. retailers to start selling some CBD products from hemp, with no legal risk. Cannabis industry analysts at The Brightfield Group, based in Chicago, predict that the U.S. hemp-derived CBD market will reach $591 million this year and $22 billion by 2022.
CBD for Health
More CBD-infused products are entering the market, particularly in health-and-wellness product categories. Consumers are increasingly looking for natural alternatives to traditional OTC/HBC products, and CBD-infused products could answer that need: The “Cannabis Study,” from New York-based MRI-Simmons, found that 43 percent of people surveyed said that they prefer alternative medicine to traditional medical practices. Further, a recent study from The Hartman Group, in Bellevue, Wash., suggests that with less stigma than THC and a wide variety of calming and anti-inflammatory benefits, CBD has significant PROGRESSIVE GROCER May 2019
Health, Beauty & Wellness
potential to go mainstream as a natural remedy for a variety of common health-and-wellness issues. “This year, for the first time in our health-andwellness study, the No. 1 condition that people were managing was not weight, but stress and anxiety,” says Laurie Demeritt, CEO of The Hartman Group. “For day-to-day anxiety, many people don’t want to take a script, and there’s no OTC option to treat that. CBD could fill that gap.” Nationwide drug store chains CVS, Rite Aid and Walgreens all recently revealed that they would begin selling various hemp-derived CBD health products, including creams, patches and sprays, at a collective total of more than 2,500 stores. Currently, 33 states and the District of Columbia have legalized cannabis for medical use, and among those states, 10 have legalized recreational use. Under the U.S. Food and Drug Administration’s regulations, CBD is still prohibited within food products, but the FDA is exploring how it can best regulate the compound and hemp in food and dietary supplements.
For day-to-day anxiety, many people don’t want to take a script, and there’s no OTC option to treat that. CBD could fill that gap.” —Laurie Demeritt, The Hartman Group.
Opportunities at Grocery
“It’s inevitable that grocery will carry products infused with CBD,” says Jessica Lukas, VP of consumer insights for Boulder, Colo.-based BDS Analytics, a provider of cannabis industry market trends reports and analyses, and cannabis consumer research. “They have to keep up with their competitors.” According to experts, topicals will likely to be the first CBD-infused product category to attract major supermarket interest. “Until the FDA decides how it will regulate the products, topicals are less risky for retailers than ingestibles,” notes Dylan Summers, director of government affairs at Seattle-based Lazarus Naturals, which
Madison, Wis.based Willy Street Co-op features prominent displays of CBD products at its three locations.
produces a line of CBD topicals, capsules and tinctures. “There’s a big opportunity to reach people with topical applications who might not be willing to walk into a dispensary store,” says Lukas. “You’re not ingesting it, and there’s no concern about a psychoactive or intoxicating effect.” Lukas adds that she expects mainstream topical pain-management brands could eventually add CBD SKUs to their product lines. Dr. Kerklaan Therapeutics, a six-SKU line of CBD topical products for pain, PMS, sleep and skin, is currently on shelves at Market of Choice, a 12-unit chain based in Eugene, Ore. The line will expand to 30 SKUs in the next few months, and has been presented to national supermarket chains. “The consumer is ready and searching for the products,” asserts Dr. Andrew Kerklaan, founder of the Berkeley, Calif.-based brand. “Now that the Farm Bill is passed, it’s full speed ahead.” Topical CBD products are also carried at New Seasons, a 21-unit chain based in Portland, Ore., and New York-based Fairway Market recently launched Fairway Essential Wellness Full Spectrum Hemp Products, a line of CBD-containing items that includes balms and lotions for topical relief, as well as capsules and oils that can be ingested. Lazarus Naturals’ Summers believes that CBD tinctures, gummies and capsules will become more common in supermarkets once the FDA provides guidance on the ingredient.
Further Category Disruption
In addition to OTC medications, a recent study by The Hartman Group has identified personal care, beverages, snacks and sweets as key categories poised for CBD disruption. CBD is already emerging as an ingredient in beauty care products. Bolingbrook, Ill.-based beauty store chain Ulta recently added Cannuka’s five-product CBD skin care line in its stores and online, while Paris-based Sephora carries Lord Jones CBD-infused skin care products. The Specialty Food Association’s
Trendspotter Panel believes that edibles will continue to grow as more states legalize sales of hemp-derived CBD products. A recent study on consumer interest in food and beverages made with cannabis ingredients, from Culinary Vision, a Chicago-based culinary marketing firm, identified baked goods (48 percent), candy/gummies (45 percent), snacks (44 percent) and nonalcoholic beverages (41 percent) as top cannabis-infused categories that consumers expressed interest in trying. SteepFuze, a brand of gourmet small-batch infused coffee and tea products, is already carried at some Lucky’s locations and is being evaluated for national rollout. “We are carried by 160 retailers nationwide, but being picked up by Lucky’s was a big step,” notes Devin Jamroz, CEO and co-founder of the Boulder, Colo.-based company. “The Farm Bill brought a lot of legal clarity to the category, and more buyers are looking at the products at trade shows. With every landmark we hit, another tier of stores opens up. While I wouldn’t say the floodgates are opened, interest in CBD products is spiking, and coffee is a great category for retailers who want to get into the space.” Other CBD-infused drinks currently on the market include Recess, sparkling water infused with hemp extract and adaptogens, and Sprig CBD-infused soda. At Willy Street Co-op, a Madison, Wis., grocery cooperative with three locations, consumers can add CBD as a nutritional supplement to beverages for $1.25 per 0.75-milliliter shot. “Our juice bar has a long history of offering supplements as additives, so it was a natural addition for us,” says GM Category Manager Angela Pohlman. Willy Street offers several delivery systems for CBD, including CBD oil in tinctures and capsules, gummies, lozenges, vape products, chocolates, coffee, and kombucha. “We also have several topical options such as salves, lotions, oils, bath salts and even facial oils,” notes Pohlman. “Most [of our customers] are interested in taking CBD and hemp phytonutrients internally, so we’ve mostly brought in options that are consumable.” She expects to see CBD in more baked goods and other grocery items.
Among those retailers entering the category, there’s no consensus as yet on where or how to merchandise the products. Boulder-based Lucky’s merchandises SteepFuze coffee with other coffees, rather than in a CBD section with tinctures and topicals. While Lucky’s has product on shelf, fellow Boulder grocer Alfalfa’s Markets merchandises CBD oil at its two stores in a locked case. Assistance is also needed to purchase products in Fairway’s stores. Additionally, consumer education is an issue in a
Lazarus Naturals offers a line of CBD topicals, capsules and tinctures.
new category that consumers may not be familiar with. “It’s a confusing category that requires education,” observes The Hartman Group’s Demerritt. “We see a burgeoning consumer interest in using cannabis for health-and-wellness purposes, but a hesitancy because they don’t understand the category. That’s a wide-open gap that the industry needs to step into.” Even among cannabis users, only 36 percent are familiar with the use of CBD in various products for health and wellness. “There’s a lot of open space, and it would be beneficial for retailers and manufacturers to do more in the way of consumer education,” advises Karen Ramspacher, SVP of innovation and insights at MRI-Simmons. Some retailers are already stepping up in that regard. “We are starting to work on more outreach and customer education surrounding CBD — we’ve got some Facebook Live events scheduled, written newsletter articles, etc.,” offers Willy Street’s Pohlman. “We do offer training to our staff as often as we can to make sure they can help guide customers, as well as offering books about CBD and vendor-provided pamphlets in store.” Culinary Vision’s study revealed that when it comes to CBD-infused products, trust and traceability were key consumer concerns. Half of those surveyed said that they’d feel more comfortable buying such products if they had the opportunity to speak with a knowledgeable sales representative To that end, the Dr. Kerklaan brand provides online information, sampling programs and on-shelf educational information, and can customize in-store informational displays and train in-store staff about the product line. According to Dr. Andrew Kerklaan, purchasers should look for products that are U.S.A.-sourced or grown, that include information on lab tests, and that clearly state the concentration of CBD in the product and reference CBD oil or extract, not hemp seed oil, which is a low concentration of CBD. PROGRESSIVE GROCER May 2019
Food, Beverage & Nonfood Products
Use Their Noodles
Brothers Ice Cream, known for its nostalgic ice cream treats, has launched Brownie Ice Cream Sandwiches featuring the company’s all-natural, ultra-premium ice cream, made with real California milk, sandwiched between two freshly baked brownies. The frozen novelties are available in two flavors, Classic Vanilla Fudge Swirl and Mint Chocolate Chip, and contain 140 calories apiece. A 14-fluid-ounce box of four 3.5-fluid-ounce sandwiches retails for a suggested range of $4.49-$4.99, and the item is also available in 10-packs and club store 12-packs. brothersdesserts.com/brothersice-cream
In partnership with Panos Foods, specialty Asian food brand Ka-Me has introduced heat-and-serve Easy Asian Complete Meal Kits in four MSG-free varieties – Sesame Teriyaki with Hokkien Noodles, Pad Thai with Thai Rice Noodles, Spicy Mongolian with Spinach Vegetable Noodles, and Sweet Chili Mango with Nori Seaweed Noodles — three of which are vegan. The kits contain a microwaveable, reusable, recyclable and BPA-free container; fresh-cooked noodles; an authentic Asian sauce packet; a mixed-vegetable packet; sesame seed or roasted peanut topping; and a fork for on-the-go convenience. Preparers just pour sauce over the noodles and vegetables, microwave for two minutes, and eat. Available in 9.6-ounce packages –considerably larger than many competitive brands — and sold in a display-ready case for increased consumer visibility in retailers’ ethnic/Asian sections, the kits retail for a suggested $3.99. kame.com; www. panosfoods.com
Pioneering Dog Treats
Purina and blogger, food writer and television personality Ree Drummond have teamed up to create The Pioneer Woman Dog Treats line, which joins the brand’s extensive portfolio of wet and dry pet food and treat options. The line of adult dog treats drew its inspiration from the home-style recipes Drummond makes for her own family on their Oklahoma ranch, with the benefit of Purina’s long experience in pet nutrition. The treats are made with simple, high-quality ingredients, and come in nine flavors in three categories: Crunchy (Waffles and Biscuits); Meaty (Jerky Strips, Recipe Bits and BBQ-Style Cuts); and Chews (Drummies). Having launched exclusively at Walmart and Sam’s Club, the items are available in packaging sizes ranging from 5 ounces to 36 ounces, with SRPs of $5.49 to $19.88. www.purina.com
Endangered Species Chocolate (ESC), the No.1-ranking premium natural chocolate brand, has launched ESC Duoz, a dual-filled, single-serve chocolate bar. ESC Duoz is the first of its kind to use a one-shot process to create dual side-by-side fillings in one continuous movement, pairing ESC’s premium chocolate with quality ingredients. One bar places caramel alongside peanut butter, while the other offers coffee caramel beside cinnamon caramel. Further, as well as offering double delights in a single snack, ESC dedicates 10 percent of its annual net profits to supporting wildlife conservation, adding up to more than $1.7 million donated to its giveback partners in the past three years alone. A 1.6-ounce Duoz bar retails for a suggested $1.99. chocolatebar.com
MillerCoors has launched a sparkling cocktail line crafted from six simple ingredients: carbonated water, alcohol from real cane sugar, real cane sugar, lemon and or lime juice concentrate, natural flavors, and fruit juice added for color. The naturally gluten-free, 4.5 percent ABV beverage contains just 120 calories per serving – half the calories and sugar of leading flavored malt beverages. The line comes in Hard Strawberry Lemonade, Blackberry Mojito and Margarita varieties, each packaged in 12-ounce slim cans allowing for grab-and-go portability. The line is being supported by a national marketing campaign encompassing television spots, targeted out-of-home installments, digital media buys, in-store sampling events, broader sampling efforts within festivals, public relations efforts with a focus on social influencers and media, and even more experiential activations to launch throughout the summer. A variety pack of six cans or a stand-alone Hard Strawberry Lemonade 6-pack retails for a suggested $9.99, while a variety pack of 12 cans has an SRP of $15.99. www.capeline.com
Meat Snacks 2.0
Rustix by La Quercia provides salami snack sticks handcrafted in Iowa by charcuterie artisans from humanely raised, antibiotic-free pork. The lightly cured sticks come in two varieties: Spicy and Smoky. Embodying La Quercia’s commitment to quality food, sustainability and developing its own circular economy, the protein-packed items are made with meat from the pork shank, a lean cut that doesn’t work well for prosciutto, which the company also offers. The snack is available in a 2.2-ounce package retailing for a suggested $5.99. www.laquercia.us
The plant-based food category has just welcomed an innovative entry: Elmhurst Original Unsweetened Hemp Creamer, made with just four ingredients, including real hemp cream. The product boasts a healthy 3:1 ratio of omega-6 to omega-3 fatty acids, including 350 milligrams of omega-3 ALA per serving. Like all Elmhurst 1925 products, the hemp creamer is crafted through a unique HydroRelease method: Using just water, the process separates the components of a nut, grain or seed before reassembling them as a creamy, beverage-ready emulsion, retaining the full nutrition of the source ingredient without any added gums or emulsifiers. What’s more, all Elmhurst plant milks are certified vegan, dairy- and gluten-free, Non-GMO Project Verified, and OU kosher. As well as the original unsweetened variety of hemp creamer, Elmhurst plans to introduce more on-trend varieties this year. A 16-ounce carton of the creamer retails for a suggested $4.49. elmhurst1925.com
Family-owned Toufayan Bakeries is introducing four products at the IDDBA 19 trade show in June: Brioche Buns, Madeleines, Pita Chips and Everything Wraps. The Brioche Buns, available in six-count Original and Sesame varieties, have a slightly sweet taste and fluffy texture that makes them a suitable complement to burgers and other meats. The traditionally shell-shaped, golden-brown Madeleines, which come in a 9.88-ounce package, contain just the right amount of lemon to impart a bright flavor to the soft, light teacakes immortalized by Marcel Proust. Offering optimal thickness and crunch, the Pita Chips come in 8-ounce packages of Sea Salt, Garlic Parmesan and Caramelized Onion flavors. Finally, the endlessly versatile, cholesterol- and trans-fat-free Everything Wraps, made with garlic, onion, poppy seeds, sesame seeds and salt, are offered in a 6-count package, providing a tasty, foldable accompaniment to a wide range of fillings. toufayan.com PROGRESSIVE GROCER May 2019
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21 PROGRESSIVE GROCER May 2019
By Jim Dudlicek
Key Takeaways from Home Delivery World GROCERY RE TAILERS FACE SUPPLY CHAIN, L AST-MILE ISSUES. working backward, said Brian Bourke, VP of marketing for Itasca, Ill.-based SEKO Logistics. “These are the companies that are building amazing experiences for their customers.” Similarly, Guy Block, CEO of Israel-based delivery technology company Bringg, said that the last mile is becoming the key differentiator in driving revenue, “and current models are not sustainable.” Measure your progress: Lee Lambeth, director of ecommerce for Winston-Salem, N.C.-based grocery chain Lowes Foods, shared steps his company took toward making ecommerce profitable, among them: Create an online operations scorecard Develop an ecommerce P&L statement Require multi and zone picking to e Delivery World Matt Simon at Hom Giant Food Stores’
reshness — it’s what sets grocers apart from every other retailer offering home delivery services. And it’s why grocers are taking a keener interest in industry events like Home Delivery World, held last month in Philadelphia. Grocery retailers were among the keynote speakers and presenters on a broad agenda covering delivery and logistics across every retail sector. Here are some key takeaways for grocery retailers looking to up their game in online ordering and home delivery: Know what your brand stands for: “Before you push changes, you need to have the foundation right,” said Matt Simon, VP and CMO of Carlisle, Pa.-based Giant Food Stores, part of Ahold Delhaize USA. “You can’t just launch digital tools — you have to build relationships. ... It’s about inspiration.” Simon continued: “Look out for the customer, above all else. It’s all one experience, and if you break any part of it, the customer will hold you accountable.” Supply chain infrastructure is critical: Retailers need to win at warehousing, transportation and technology to succeed in home delivery, said Todd Bernitt, VP of managed services for Eden Prairie, Minn.-based produce marketer Robinson Fresh. To meet the demand, Bernitt predicted the “macro growth of micro supply chains,” with capacity spread across a growing number of small to midsize carriers. Cloud-based platforms are needed to handle the amount of data required, he added. Create demand chains: The most successful companies are the ones that create supply chains by starting with delivery and 98
save time and labor Above all, Lambeth added, keep rethinking how you execute your ecommerce strategy: “The most important part is the journey of the guest.” Prevent defections: The long game for retailers is not just to move shoppers online, asserted Sylvain Perrier, president and CEO of Toronto-based Mercatus Technologies, it’s also to eliminate reasons for consumers to defect to competitors; engage and delight consumers, however they shop; and solve the last mile. Be the customer: Albertsons is driving its ecommerce customer experience with quality, quantity and quickness, explained Jewel Hunt, GVP of ecommerce for the Boise, Idaho-based grocer. Product pickers need to ask themselves, “Would I buy this?” Hunt said, outlining the company’s guidelines for online order product selection. Turn your problems into strengths: Fresh grocery delivery is one of the hardest consumer experiences to translate to the ecommerce space, observed Nimish Dixit, senior director of operations innovation for New York-based online grocer FreshDirect. Among the strategies Dixit recommended: Use data to predict and resolve issues before
customers experience them Invest in hybrid teams to solve service
problems quickly Let customers know what to expect
when things go wrong Echoing a common theme, Dixit concluded: “Food delivered is trust earned.”
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