Know GMOs
Behind the rising demand for ingredient disclosure labels Page 79
On Target
Anne Dament reshaping retailer’s food strategies Page 27
State of Health
Charting wellness trends in Retail Pharmacy Review, RD Symposium Pages 94, 101
Page 32
August 2016 • Volume 95 Number 8 $10 • www.progressivegrocer.com
THIS BUD’S FOR YOU AND EVERY ONE OF YOUR CUSTOMERS HERE’S WHY Budweiser shoppers spend over 10% more on beer than the average beer shopper. ** Today, Budweiser is the #1 Selling Premium Regular Beer Brand and the 3rd best selling beer brand nationwide. * ·
$2.1 Billion in Annual Sales*
·
Over 100 Million Cases sold annually. *
Budweiser shoppers make over 2X as many beer trips as the average beer shopper. **
*IRI TUS MULC Rolling 52 wks ending 5/15/2016 **IPSOS Alcohol Shopper Poll 2013-2015
© 2016 Anheuser-Busch, Budweiser® Beer, St. Louis, MO
THANK YOU FOR SUPPORTING OUR BRANDS
LIGHT LAGER
AMERICAN STYLE LAGER
©2016 MILLER BREWING CO., MILWAUKEE, WI ©2016 BLUE MOON BREWING COMPANY, GOLDEN, CO
August 2016
Volume 95, Issue 8
cover story
27
90
PG Profile
Making her Mark A conversation with Anne Dament, chief architect of Target Corp.’s revamped food business.
Produce cateGorY SPotliGht
Bite-size Bliss Snacking, greenhouse-grown and organic top the trends in fresh tomatoes.
58
94
SeaSonal MarketinG
Hot Promos, Cooler Times Autumn is prime time for retailers to leverage tailgating and Friday night pizza promotions, among others.
2016 retail PharMacY review
Wellness 2.0 ‘Complete care’ underscores in-store pharmacies’ increasing role of one-stop convenience.
65 Back-to-School MerchandiSinG
Heads of the Class In-store approaches take creative turns, focus on BFY foods.
68
Branded eGGS
Hatching a Plan Achieving success requires some strategy.
74
YoGurt
Shaken and Stirred New styles gain in popularity in the wake of Greek’s success success.
32
weGManS food MarketS’ 100
th
anniverSarY
Wegmans Wows for 100 Years Progressive ressive Grocer commemorates Wegmans’ Wegm centennial ennial with a special salute to the woww worthy regional supermarket chain. chain
Counter Balance Grocers can expect incremental gains as more prescription drugs transition to OTC.
101
79
GMo SPecial rePort
Rise of the Unknown Non-GMO demand soars despite lack of consumer understanding.
84
Produce
99
health, BeautY & wellneSS
Hungry for Half the Plate The produce roduce industry adopts a sophisticated approach to increasing fruit and veggie consumption.
induStrY eventS
The Future of Wellness Forum explores value of RDs for retailers, reveals results of annual survey.
107 PG Pet
Animal Instincts Retailer roundtable explores category shifts and the humanization of pets.
August 2016 | progressivegrocer.com |
5
570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com
112 E-coupons
Trouble Brewing for Digital Coupons As distribution grows, so does fraud.
116
supply chain
Driven by Demand Rethinking strategies can help grocers shore up weak links and prepare for multichannel retailing.
120 storE DEsign sErvicEs
New Directions in Design Store sizes, building materials and digital input are all being influenced.
124
svP, Brand Director 201-855-7621
Jeff friedman jfriedman@stagnitomail.com
EDiToriAl Editorial Director Joan Driggs 224-632-8211 jdriggs@stagnitomail.com Chief Content Editor Meg Major 724-453-3545 mmajor@stagnitomail.com Editor-in-Chief James Dudlicek 224-632-8238 jdudlicek@stagnitomail.com Managing Editor Bridget Goldschmidt 201-855-7603 bgoldschmidt@stagnitomail.com senior Editor randy hofbauer 224-632-8240 rhofbauer@stagnitomail.com senior Editor katie Martin 224-632-8172 kmartin@stagnitomail.com senior Editor Anna Wolfe 207-773-1154 awolfe@stagnitomail.com Technology Editor John karolefski 440-582-1889 jkarolefski@stagnitomail.com Art Director Bill Antkowiak bantkowiak@stagnitomail.com Contributing Editors Bruce Horovitz, Bob Ingram, Jenny McTaggart, Lynn Petrak, Barbara Sax and Jennifer Strailey ADvErTisiNG sAlEs & BusiNEss Midwest Marketing Manager John huff 224-632-8174 jhuff@stagnitomail.com Eastern Marketing Manager Maggie kaeppel 630-364-2150 • Mobile: 708-565-5350 mkaeppel@stagnitomail.com Western regional Marketing Manager rick Neigher (CA, OR, WA) rneigher@stagnitomail.com 818-597-9029 Northeast Marketing Manager Mike shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@stagnitomail.com regional Marketing Manager Mike Weinreich (DE, MD, NY, TN, AL, DC) mweinreich@stagnitomail.com 201-855-7609 Marketing Manager Janet Blaney (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) jblaney@stagnitomail.com 630-364-1601 Account Executive/ Classified Advertising Terry kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@stagnitomail.com Advertising/Production Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@stagnitomail.com Classified Production Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com
lighting trEnDs
A Brighter Today — and Tomorrow Energy efficiency is driving trends in supermarket lighting.
departments 8 EDiTor’s NoTE: Why Ask Why? 12 PG PulsE 14 iN-sTorE EvENTs CAlENDAr: oCToBEr 2016 16 NiElsEN’s shElf sToPPErs/sPoTliGhT: NoNfooDs/housEholD ClEANErs 20 MiNTEl GloBAl NEW ProDuCTs: fABriC CArE 22 All’s WEllNEss: ThE CAsE for DiETiTiAN-PhArMACisT PArTNErshiPs 126 WhAT’s NExT: EDiTors’ PiCks for iNNovATivE ProDuCTs 128 ThE suPPliEr siDE 130 ThE lAsT WorD: ExPloriNG ThE MAGiCAl MysTEry sTorE
6
| Progressive Grocer | August 2016 016
EvEnts • MarkEting • Digital • rEsEarch • circulation vP/Custom Media Division Pierce hollingsworth 224-632-8229 phollingsworth@stagnitomail.com Production Manager Anngail Norris Corporate Marketing Director Bruce hendrickson 224-632-8214 bhendrickson@stagnitomail.com Promotion Director robert kuwada 201-855-7616 rkuwada@stagnitomail.com Director of Events Pat Benkner 973-607-1330 pbenkner@edgellmail.com Director of Market research Debra Chanil 201-855-7605 dchanil@stagnitomail.com Audience Development Manager shelly Patton 215-301-0593 spatton@stagnitomail.com list rental The information refinery 800-529-9020 Brian Clotworthy reprints and licensing Wright’s Media 877-652-5295 sales@wrightsmedia.com subscriber services/single-copy Purchases 978-671-0449 or email at stagnito@e-circ.net CorPorATE offiCErs Executive Chairman Alan Glass aglass@stagnitomail.com President & CEo Peter hoyt phoyt@p2pi.org Chief Customer officer Ned Bardic nbardic@stagnitomail.com Chief Digital officer Joel hughes jhughes@stagnitomail.com Chief operations officer korry stagnito korrystagnito@stagnitomail.com Chief financial officer Chris stark cstark@stagnitomail.org
The Grocery Success Company
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editor’s note by Jim Dudlicek
Why Ask Why?
A
s more retailers comprehend the need for shopper behavior data, and category management standards evolve to embrace the concept of shoppercentricity, it’s becoming easier to answer what’s arguably the most important question in modern retailing: why? Understanding the motivation behind purchases is essential to staying alive and relevant in retail. Attending Nielsen’s Consumer 360 Conference in Las Vegas last month, I got a peek at some initiatives aimed at helping retailers and CPG companies answer the “why” question. Today, long-term tracking of shopper behavior — usage as well as purchases — illustrates reaction to product trials, loyalty — or lack thereof — to specific brands or banners, and even the effectiveness of in-store promotions. Retailers can see actual examples of how purchased items are used at home, bridging the gap between purchase and consumption — a wellspring of merchandising inspiration for retailers and CPG execs. These efforts are helping product marketers scratch below the surface. Leveraging Big Data allows retailers and suppliers to pinpoint the “why” behind the “who,” namely shoppers of different ethnicities. Case in point: Acosta Sales & Marketing’s annual “Why? Behind the Buy” study this year focused on Hispanic shoppers. Among the takeaways: Hispanic shoppers enjoy grocery shopping more than their U.S. counterparts, partly because they consider it a social experience. The desire to know why is driving retailers and suppliers alike to invest more and more resources into data analytics. It’s why grocery giant Kroger — a longtime player in Big Data — went a step beyond its joint venture with Dunnhumby, fashioning it last year into a new entity, known 84.51°, to further quicken the pace at which the retailer can gather, process and act upon consumer insights. It’s why IRI and SPINS teamed up this summer on a new shopper intelligence solution for natural retailers, to further drill down on what makes consumers in this channel tick. And with the digital realm making aisles endless
8
| Progressive Grocer | Ahead of What’s Next | August 2016
It’s becoming easier to answer what is arguably the most important question in modern retailing.
for retailers, it has become crucial for merchants to present clear, consistent information across all of their selling channels. Absence of imagery in an estore is as bad as out-of-stocks in a brick-and-mortar location — consumers rarely buy what they can’t see. But product imagery often isn’t enough, and more retailers and CPG companies are adopting lifestyle images and descriptive copy that help shoppers affirm their choice, and influence trial and repeat purchases by illustrating uses that consumers find appealing or with which they identify. The “why” is a key element of Category Management 2.0, being rolled out by the Category Management Association, and which will be formally unveiled at CMA’s conference next month in Las Vegas and in a special section in PG’s September 2016 issue. And our team will definitely be looking for the “why” behind the entries in our annual Category Captains Awards, which honor the best category management initiatives of the past year. PG is accepting nominations now — look for the entry portal at Progressivegrocer.com. Tell us about your shopper-centric strategies for helping grocers drive sales by delivering solutions that consumers demand. How are you taking advantage of cross-category connectivity? How are you leveraging the “why” to drive sales store-wide? PG Jim Dudlicek Editor-in-Chief jdudlicek@stagnitomail.com Twitter @jimdudlicek
IS FAILURE
THE NEW NORMAL? It doesn’t have to be.
Tyson Foods’ Consequences of Failure Study shows that the number of shoppers who experienced incidences of failure in their grocer’s prepared foods area when purchasing prepared chicken products increased from 41% in 2015 to 48% in 2016. Velocity equals speed and direction. The knowledge to choose the right direction and the power to get there quickly. The Tyson Velocity process helps retailers to achieve their maximum velocity to attain their business goals.
It's time for a new direction. Tyson Foods, Consequences of Failure Study, 2016 Tyson Foods, Consequences of Failure Study, 2015 ®/© 2016 Tyson Foods, Inc.
DRIVES TRAFFIC • 20th Anniversary of Box Tops • 250+ Leading Brands • 40+ Categories • 80,000 Participating K-8 Schools
LEVERAGE BOX TOPS TO MAXIMIZE SHOPPER LOYALTY © General Mills
ACROSS THE STORE
What’s trending on Progressivegrocer.com …
The FTC-mandated divesture of 86 stores of the newly merged Ahold Delhaize to seven regional grocery companies — Weis Markets (38), Supervalu (22), Publix Super Markets (10), Big Y (8), Tops Markets (6), Albertsons (1) and Saubel’s Markets (1) — took honors as the top-read story on progressivegrocer.com during the July 1–July 22 timeframe. The forthcoming retirement of Bob Mariano, the lifetime grocery veteran whose namesake Mariano’s Fresh Market banner wowed Chicago-area shoppers and led to its acquisition by The Kroger Co., paced as the best-clicked runner-up, followed in third place by Marsh Supermarkets’ switch from C&S Grocers to Supervalu as its primary grocery wholesaler.
Ahold, Delhaize Divest 86 Stores in Piecemeal Deals http://bit.ly/29Ztcp4
Bob Mariano Retiring from Roundy’s, Kroger http://bit.ly/29vi2UT
Marsh Switches to Supervalu as Primary Wholesaler http://bit.ly/2aBCnss
Safeway Set to Open 4th Mountain View Store
Senate Passage of GMO Bill Draws Mixed Response http://bit.ly/2aBCW5P
Fairway Emerges From Bankruptcy http://bit.ly/29R3oeB
Supermarkets Fight to Retain Top Shopping Spot
http://bit.ly/29Zt3yR
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| Progressive Grocer | Ahead of What’s Next | August 2016
http://bit.ly/2ajukBp
Š2016 Goya Foods, Inc. *Nielsen Strategic Planner, Total US (unit sales), 52 weeks ending 12/19/15 The ChefsBestŽ Excellence Award is awarded to brands that surpass quality standards established by independent professional chefs.
October 2016 is... • American Cheese Month • Breast Cancer Awareness Month • Fair Trade Month • National Cookbook Month
S
M
T
W
T
F
• National Dessert Month • National Pasta Month • National Pizza Month • National Popcorn Poppin’ Month
S
Email your calendar submissions to
awolfe@stagnitomail.com
6
l Noodl
n y
14
| Progressive Grocer | Ahead of What’s Next | August 2016
WHAT MAKES
California Ripe Olives special are... the multi-generation farming families that work hard to bring high-quality olives from the grove to the pantry.
MEET CALIFORNIA RIPE OLIVE GROWERS:
The Nerey Family The Nerey family started working as laborers in the olive groves of Northern California. With hard work and financial assistance from family, Pablo Nerey’s grandfather was able to buy his first grove and harvest his own California olives. Today, Pablo manages the family’s olive growing operation alongside his brothers, Juan Carlos and Oscar and is teaching his son, Pablo Jr., about farming and sharing his love for California Ripe Olives.
With hard-working grower families, like the Nereys, across the Golden State, California Ripe Olives are a truly farm-to-table choice for shoppers.
Stock up your shelves today. For more California Ripe Olive grower stories, please visit www.calolive.org
/CaliforniaRipeOlives
/CalRipeOlives
Made in California © Copyright 2016 California Olive Committee
@CalRipeOlives
CalOlive.org
Front End
Market Intelligence By The Numbers
Shelf Stoppers
Nonfoods
Top Segments in Terms of Dollar Volume by The Nielsen Co. (52 Weeks Ending July 2, 2016) Sales (Millions) Tobacco/Tobacco Alternatives Traditional Tobacco Household Care Bath Tissue Laundry Detergent Kitchen Accessories Personal Care Oral Hygiene Disposable Diapers and Training Pants Bar and Liquid Soap Health Care Vitamins and Supplements Upper-respiratory Medicine Pain Relief Pet Care Cat Litter Other Pet Accessories Flea and Tick Pet Product Beauty Care Cosmetics Hand and Body Lotion Hairspray and Hairstyling Product
$72,163.6 71,397.3 $57,376.6 8,863.5 7,100.2 5,428.0 $42,794.6 8,435.0 5,038.2 5,003.2 $42,393.7 9,035.8 8,054.9 4,767.9 $20,100.5 1,860.9 814.3 402.6 $16,493.0 7,681.8 1,986.9 1,895.6
% Change Dollars 2015 2016
% Chang Units 2015 2016
1.4% 1.3 1.6% -0.1 -0.9 3.9 2.6% 2.7 4.2 4.0 5.8% 5.9 9.7 5.2 1.3% 4.8 6.2 4.0 2.4% 4.5 3.0 2.4
0.9% 0.7 -0.4% -1.9 -0.2 2.8 0.4% 0.2 1.9 2.2 3.4% 7.5 4.3 1.4 -0.8% 0.8 3.3 0.3 0.1% 1.9 -0.9 -0.5
2.7% 2.8 2.1% 1.0 3.7 4.4 1.6% 2.5 0.0 3.3 3.9% 6.0 3.1 2.7 1.7% 3.9 5.2 5.8 1.8% 4.7 2.3 -0.9
1.1% 1.1 0.2% -1.7 1.2 6.3 -0.4% 0.0 -1.7 0.4 1.0% 3.2 -1.3 0.2 0.0% -0.4 4.8 2.0 -0.8% 1.0 -0.6 -3.5
NielseN’s Spotlight Consumption Index: Household Cleaners LIFESTYLE Behavior Stage
Cosmopolitan Affluent Comfortable Struggling Centers Suburban Country Urban Spreads Cores
Modest Working Towns
Plain Rural Living
Total
% HHs Top Stores
wITH CHILdrEN: startup Families
78
104
114
75
94
113
97
7.0%
small-scale Families
76
119
109
103
86
93
98
7.5
Younger Bustling Families
100
97
104
99
99
104
101
6.8
Older Bustling Families
114
125
116
121
108
118
118
12.3
Young Transitionals
55
75
73
80
68
81
71
7.3
independent singles
65
80
90
78
69
72
74
9.1
senior singles
70
75
85
75
65
72
73
7.7
established Couples
104
119
117
111
105
115
112
11.6
empty-nest Couples
123
128
125
115
118
118
122
13.8
senior Couples
124
133
132
119
122
127
127
17.1
Total
88
111
110
95
91
102
100
12.3%
19.0%
17.0%
20.6%
HHs with young children only <6 Small HHs with older children 6+ Large HHs with Children (6+), HOH <40 Large HHs with children (6+), HOH 40+
Within household care, the top segments are bath tissue, on which consumers are spending more per trip versus year-ago, although this increase in spending is due solely to inflation, as they’re consuming 4.7 percent fewer units and making 3.9 percent fewer trips versus yearago; laundry detergent (up 1.2 percent in units and 3.7 percent in dollars); and kitchen accessories (up 6.3 percent in units and 4.4 percent in dollars). CroSS-mErCH Candidates
No CHILdrEN: Any size HHs, no children, <35 1-person HHs, no children, 35-64 1-person HHs, no children, 65+ 2+-person HHs, no children, 35-54 2+-person HHs, no children, 55-64 2+-person HHs, no children, 65+
% HHs Top Stores Very High Consumption (150+)
18.6% 12.5%
High Consumption (120-149)
Average Consumption=100
Source: spectra Behaviorscape
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| Progressive Grocer | Ahead of What’s Next | August 2016
• Nuts • Fresh Produce • Stationery and • • •
School Supplies Baking Mixes Batteries and Flashlights Bread and Baked Goods
Itâ&#x20AC;&#x2122;s about time someone gave the status quo the heave-ho.
Might as well be us. The cereal company with 16 of the top 50 best selling brands and an 18% dollar-share in the cereal category. The cereal company with choices for every consumer. The cereal company committed to all our brands and a willingness to partner with you to find win/win solutions. Talk to your rep to learn more and visit postconsumerbrands.com/fresh. Source: Nielsen, Total US XAOC, $ Volume, 52 Weeks Ending 9-19-15
Mintel Global New Products Database Category Insights For more information, visit www.mintel.com or call 800-932-0400.
Fabric Care Market Overview With sales reaching $12.5 billion in 2014, the U.S. fabric care market is the largest in the world. This is a mature market however, which is forecast to decline in the next few years. Ongoing competition at retail, as well as the rise of high-efficiency washing machines that require less detergent, is the main reason for the recent decline in the American market.
key issues Green packaging is becoming the norm in fabric care launches in North America, with nearly half of launches offered in recyclable, recycled or reusable packs. Fabric care manufacturers in North America also stand out thanks to a greater proportion of hypoallergenic and free-from formulations.
The leading type of fragrance in North America for fabric care is “fresh and clean.” Another important type of fragrance is “outdoors,” including scents evoking “mountain” and “moonlight” settings.
Although liquid automatic detergents are the most popular format, capsules are rising in popularity. Powder and tablets remain less popular in terms of new product development. Despite remaining on top of new product development in North America, automatic detergen detergents have decreased the their lead in favor of conditio conditioners and softeners. Other subcategories that are more important in North America than in any other region include stain/ spot removal, bleach/fabric brighteners and upholstery/ carpet care.
What Does it Mean? Consumers who use single-dose capsules in laundry tend to be satisfied with their effectiveness and convenience, but for lapsed consumers, price appears to be an obstacle, as well as the effectiveness of their
20
current detergents (they don’t see a reason to switch to capsules, since their current product meets their needs). The current expansion of capsules in new product development could therefore reach a ceiling at some point.
As more than a fifth of American consumers who do laundry look for laundry detergents for sensitive skin, more freefrom and hypoallergenic formulations should appear on the market. Companies could also consider co-branding
| Progressive Grocer | Ahead of What’s Next | August 2016 2
skin care properties with beauty brands to ensure that consumers trust their hypoallergenic qualities and believe that these detergents are designed with sensitive skin in mind.
At Irving
Consumer Products we are committed to helping our customers grow by providing premium quality products, superior service and innovation. For your consumer that means quality and value in a locally trusted name.
Quality Household Paper Products • Our Through Air-Dried (TAD) Technology creates a tissue that’s softer, stronger and more absorbent • We can supply a complete product line of facial and bathroom tissue, household towels and napkins • Our quality is on the inside, your store’s name is on the outside • All products made by Irving Tissue are backed by SFI® sourcing requirements
For more information, please contact us at 781-273-3222 • www.irvingconsumerproducts.com
Whether in-store or beyond, expect dietitian-pharmacy partnerships to continue filling a consumer demand.
All’s Wellness By Diane Quagliani
The Case for Dietitian-Pharmacist Partnerships Retail dietitians can help families provide healthier solutions at a busy time of year.
R
etailers are responding to timestrapped consumers by increasingly becoming one-stop shops for groceries and health-and-wellness needs, thanks in large part to an army of on-site pharmacists and registered dietitians. Almost all stores have pharmacists on staff and 95 percent employ dietitians, according to FMI’s “2014 Report on Retailer Contributions to Health & Wellness.” Although stores use a variety of tactics to promote health-and-wellness activities, they rank in-store pharmacists and dietitians tops in terms of effectively engaging consumers. So it’s no wonder that dietitianpharmacist teams are on the rise. Two-thirds (67 percent) work together to develop programs and almost half (48 percent) work together to make customer-specific recommendations, according to the FMI survey, while 52 percent say they cross-refer customers/patients to each other for counsel. Dietitians and pharmacists also work in tandem on an array of in-store and community activities, which can include health screenings, counseling sessions, and collaborations on health-related store displays and social media content.
Customer Convenience In-store health-and-wellness services are a boon to busy consumers. “In one trip, customers can get groceries, talk to the pharmacist about a medication and ask the dietitian a related food question right in the aisle,” says registered dietitian Eileen Myers, VP of retail dietetics and nutrition solutions at The Little Clinic, a wholly owned subsidiary of The Kroger Co. The Little Clinic operates 196 clinics in 10 states under the Kroger, Dillons, King Soopers, Fry’s and JayC banners; Cincinnati-based Kroger has more than 2,200 pharmacies enterprise-wide.
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| Progressive Grocer | Ahead of What’s Next | August 2016
The team approach is evident at Kroger, which employs 16 dietitians at 32 stores that also include nurse practitioners and pharmacists. “It’s much more convenient to send customers to a dietitian right in the store, rather than referring them to an outside source in an office environment,” says pharmacist Stacey Frede, clinical sales manager at Kroger. Frede notes that the company’s services aren’t meant to replace more traditional forms of health care, but aim to offer an additional resource at a place shoppers are already visiting each week.
Bright Future Retailers in the FMI survey recognize the value of providing health-and-wellness programs, with most (70 percent) viewing them as a significant business growth opportunity for the entire industry and nearly all (96 percent) saying that their companies were committed to expanding in-store programs in the future. There’s potential to expand dietitian-pharmacist partnerships out in the community as well. “We’ve had early positive results with programs on prediabetes, diabetes, hypertension and high cholesterol for employees at local companies,” notes Frede. “There are so many untapped topics such as cancer and pediatrics.” Whether in-store or beyond, expect dietitianpharmacy partnerships to continue filling a consumer demand. “People are interested in health and wellness, but are sometimes confused about what to do,” observes Myers. “Our teams work together to bring customers convenient, personalized health care, giving us the potential to make a greater impact. It’s a case where one plus one equals three.” PG Registered dietitian 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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Advertorial
Get real!
Why convenient authenticity is the missed millennial opportunity Millennial and Teen consumption trends are a
grand advertising measure, but by investing their
hot and sought after topic these days and with
money into developing an affnity for fresh
good reason. Food and beverage companies know
ingredients and authentic menu items. The relative
their long-term growth depends on winning a
success of these brands provides a window into
greater share of the Millennial and Teen wallet.
how other brands can win over the Millennial and
And yet these businesses are missing one of the
Teen consumer at home.
largest growth opportunities that the Millennial and Teen market have to offer them. They are
Don’t confuse settling for something with
missing this opportunity, not because they don’t
meeting ideal needs
know what 13-35-year-olds currently eat and
This is the trap that any business risks falling into
drink—but because they haven’t looked closely
when it confuses the categories of products that
enough at what this demographic would prefer
consumers settle for with the categories that they
to eat and drink if they were given the choice.
ideally want—and which therefore have greatest
They are failing to distinguish between what they
potential for growth. It’s why the perspective offered
do and what they want.
by TNS’s Growth Point rankings, which focus on unmet needs and the degree of positive momentum
The ‘barn-door-sized’ opportunity that food and
for a category, is so valuable. In this case, Growth
beverage Brands are missing is for foods that can
Point shows that the products currently offered as a
be prepared quickly and conveniently at home but
solution to Millennials and Teens time-pressed
are higher quality and more natural and authentic.
lifestyles don’t really resolve the tensions created by
When making a comparison, look no further than
time and budget pressures and what they really
Fast Casual dining brands like Chipotle and Panera
want to eat. They may buy and eat canned chili, hot
Bread and the impact they’ve had on mega-brands
dogs or ramen noodles but there is very little unmet
in fast food and casual dining. They’ve enjoyed
demand in these categories and even less
success with Millennials and Teens not by some
momentum behind them to drive future growth.
24
| Progressive Grocer | Ahead of What’s Next | August 2016
Their perceived lack of quality and sense
Millennials: Top potential for growth
of being unnatural and artifcial makes them a grudging purchase and one that Millennials and Teens are likely to stop making as soon as a better offer comes along. Convenience that doesn’t compromise on experience
Foods
Beverages
1 Comfort foods prepared
1 Waters: spring, sparkling
fresh at home
2 Fresh fruit
2 Coffee: brewed at home
3 High protein foods
3 Specialty coffees, favored
or from a coffee shop
Analysis of the Growth Point rankings shows that
prepared at home
13-35-year-olds would be willing to pay more for
4 Side dishes: grains,
higher quality foods and drinks that can still give them the same core convenience beneft. These products don’t necessarily need to have scientifcally proven health or weight-loss benefts, partly because millennials and teens are signifcantly less concerned
brown rice, potatoes
5 Hot breakfast cereals and fresh breakfast sandwiches
6 Greek yogurt,
coffees
4 Iced tea 5 Hot Tea 6 Smoothies: made at
dessert-type yogurt
home and ready-to-drink
7 Frozen fruit juice bars
7 Nutritionally complete
8 Sandwich/sub from shop
8 Fruit juices
9 Dried fruit
9 Milk
higher quality and authenticity.
10 Trail mix
10 Coconut water
As with all Growth Point rankings, the list of the
Millennials and Teens’ spending when brands get
foods and beverages with most growth potential
their proposition right. Focusing research on
does not guarantee growth for launches into these
concepts that can ft time-poor lifestyles while still
categories—but it does highlight the categories that
tasting, smelling and feeling like the real thing is a
offer the greatest potential for growing a share of
great place to start.
about weight control than other groups. However,
drinks
they do need to offer a crucial sense of authenticity. They see authenticity as being “real” food, not highly processed or containing artifcial ingredients. These can be healthy or more indulgent foods; as long as quick, convenient prep accompanies the
Finding the right path to growth Growth Point generates its rankings from the TNS
On the other hand, there is far
Consumption Universe, which consists of more than
less opportunity in meeting
19,000 consumer interviews and covers 250 food
unmet needs in a product area
and beverage products. The analysis combines the
that consumers are walking away
degree of unmet consumer needs with the degree
from. And there is limited opportunity in identifying
of consumer momentum that each product area
products that consumers will spend more on, if it’s
has. Where you fnd both unmet needs and positive
already fairly certain whose products they will buy.
momentum, you have better growth potential.
To fnd out more, visit www.TNSGrowthPoint.com.
August 2016 | progressivegrocer.com |
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PGProfile A conversation with Anne Dament, chief architect of Target Corp.’s revamped food business. By Meg Major
Making Her Mark
T
arget Corp.’s recently hired SVP of merchandising, Anne Dament, is in the bull’s eye of the 1,800-store retailer’s bold campaign to convert the full potential of its estimated $20 billion grocery business into an inspired destination in line with other parts of its stores. Settling into her still-new role of leading the strategic repositioning of the Minneapolis-based national retailer’s food business to make it more reflective of its widely admired flagship brand, Dament is decidedly up for the task. “My very first job was in a local grocery store, and I’ve had a passion for food ever since,” affirms Dament, who relished the opportunity to bring her professional experience and love of the retail food business to Target as its grocery segment transformation got underway. Charged with leading Target’s food business makeover
— which has included item-by-item tear-downs and overhauled processes and practices to enhance freshness, assortment and convenience — Dament says she’s pumped about the opportunities to elevate the company’s gastronomic cred to destination levels. The key categories factoring most prominently in her agenda include better-for-you snacks, coffee and tea, premium sauces and oils, specialty candy, wine and craft beer, and yogurt and granola. Concurrently, she and her team are nurturing the expansion of purely natural, organic, locally grown and gluten-free choices; healthy meal solutions; exclusive partnerships; and unique selections for both everyday and special occasions. Early results of her team’s efforts have thus far been promising, as evidenced by Target’s food segment outpacing its overall business in the back half of last year. Meanwhile, momentum continues to accelerate amid a companion menu of other large-scale initiatives that Dament is overseeing to elevate and solidify shopper affinity for the retailer’s food offerings. August 2016 | progressivegrocer.com |
27
PGProfile
“From the minute I started in my role, I hit the ground running. It’s been a fantastic year, and we’re making substantial progress.” —Anne Dament, Target
Maximizing Target’s Food Segment Recently chosen as a 2016 Top Women in Grocery — a first-time showing for Target on PGs national list of female food industry movers and shakers — Dament began her 20-year grocery and CPG career as a buyer at Minneapolis-based Supervalu. She next moved on to Safeway, where she held various category and sales management roles, and later led the Pleasanton, Calif.-based supermarket chain’s homecare and general merchandising business operations, focusing closely on the retailer’s global procurement strategies. In her final role at Safeway, Dament was group VP of perishables, where she orchestrated new assortment and merchandising strategies, including meal solutions and grab-and-go options. Returning to Minnesota in April 2015 to join Target from PetSmart, where her most recent role was VP of services, Dament also worked at ConAgra Foods’ Grist Mill Co. subsidiary and Otis Spunkmeyer. “From a business perspective, grocery is a critical component that we’re working to leverage as part of Target’s overall strategy,” says Dament. As the company’s largest individual business unit, accounting for one-quarter of its total sales, Target’s food segment “represents more than half of our total transactions,” she notes. To gain a better understanding of both its grocery business and customer profiles, Dament has spent the past year unpacking and digesting insights revealed in “significant deep dives across our entire business, inclusive of assortment, quality, produce, perishables and center store,” alongside “very deep dives” into guest preferences, whose shared feedback “is a critical component as we shape our strategy.” Immersion Excursions The most direct path to do so, observes Dament, “is by spending time in our guests’ homes” to gain firsthand insights into their families’ habits, routines and preferences. The overall experience and resulting takeaways, she adds, “were absolutely fantastic. They opened up their homes and let us look in their cupboards and refrigerators. We watched them create grocery lists, search for online recipes and post their ideas [on social networks]. And what we found from our extensive research,” she continues, “was that our [core grocery shoppers] use food as a way to connect with their families, and how food keeps them connected to their communities and their culture.”
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| Progressive Grocer | Ahead of What’s Next | August 2016
Dament was also intrigued by other insights unearthed during Target’s food immersion research interactions, which were gleaned from backyard guests in Minneapolis, as well as other major markets, including metro Dallas. “We absolutely learned that our [focus group panelists] want access to fresh and healthy options that are both easy and affordable, and that they really want to be inspired while food shopping,” she recounts. “They love shopping at Target, but they don’t necessarily look at grocery as the reason that they shop at Target.” However, considering that more than half of Target’s transactions have a grocery item in the basket, Dament believes it’s evident that “our guests are shopping for food while they’re in our stores” — but not nearly to the fullest extent possible. Armed with ample consumer data from the deep-dive findings of Target’s extensive in-home research, Dament and her team were well equipped to mold a rejuvenated strategy and accompanying framework for “a very simple, yet very focused approach. We want to be a trusted and reliable option for our guests’ food needs while they’re shopping at Target, and we want to win in three component pillars,” which are the “fundamentals of a lasersharp focus on freshness, abundance and quality; a very strong presence of natural and organic; and excellent execution of natural and organic. We want to achieve differentiation with a relentless focus on assortment within our signature grocery categories.” The best way to achieve these ends, Dament asserts, is an imperative “to work as closely as possible with our vendors to create meaningful partnerships that lead to unique assortments” in the specified key consumable categories. “By fully leveraging the strength of Target, we want to make grocery shopping fun, enjoyable and easy,” she notes. From an inspirational/aspirational perspective, Dament says, “We want to bring grocery to life in our stores, with really good displays, sampling programs and cross-merchandising.” Readily acknowledging the aggressive agenda before her, Dament is unwavering in her conviction that
FAb FArMerS Key components of Target’s evolving food strategy are curated products and exclusive partnerships with purpose-driven brandmakers, such as the Cooking Channel’s “Fabulous beekman boys,” Josh Kilmer-Purcell and brent ridge (right), whose beekman 1802 Farm Pantry products further enhance the retailer’s Made to Matter portfolio.
it’s both realistic and attainable. “We’ve been working on much of this for a year, and from the minute I started in my role, I hit the ground running,” she points out. “It’s been a fantastic year, and we’re really making substantial progress.”
In Search of Meaningful Products When asked to elaborate on the most advantageous opportunities residing in Target’s total grocery and perishables portfolio, Dament replies: “We look at center store categories as an ‘and’ — yet not necessarily an ‘or.’ We do a really good job at many areas in center store,” which she classifies as “a very strong performer in some segments. But we know we must have a well-rounded portfolio of fresh products,” including produce, meat and dairy. “It’s really about building the entire grocery basket, and satisfying the right assortment across the store for our guest,” she explains. At heart, Dament notes: “It’s about being easy and uncomplicated for our guests. Given the very competitive sets and formats we have across our portfolio, it would be easy to say we want to be all things to all people. But at the end of the day, having exclusive products and compelling own-brand products and lines is a really key part of our strategy,” an example of which is Target’s alliance with the Cooking Channel’s “Fabulous Beekman Boys” — Josh Kilmer-Purcell and Brent Ridge — to launch a 48-item line of exclusive Beekman 1802 Farm Pantry products. Describing the Target-Beekman Boys partnership as “incredibly strong,” Dament says: “We worked closely to create a unique ‘farm-to-shelf ’ line,” which includes locally grown and handcrafted ingredients like heirloom tomato pasta sauces, goat cheese salad dressing and hand-rolled granola. Each product features recipes developed by Ridge and Kilmer-Purcell, and also funnels a percentage of profits back to small farms across the country. “We really like partnerships like this, which
enhance the portfolio of our Made to Matter line of purpose-driven brands and meaningful products,” notes Dament, adding that they “offer our guests memorable, accessible, sustainable products with a curated assortment,” and which also dovetail well with Target’s established Simply Balanced and Archer Farms house brands. “We will continue to curate our assortment with products that are unique and impart differentiation in our portfolio,” she says. It’s all part of an overarching strategy that Dament notes “ties back to our core strategy of being a trusted and reliable source for our guest. And when it comes to brands and products within our portfolio, and what we are learning about our guests’ preferences, we are striving to really cater to their needs. When we look at innovation when working with our suppliers, we want to make sure they are also catering to our guest behaviors as well, and the brands that are winning are doing exactly the things I just described, with an established approach to satisfying our guests’ needs.”
“It’s about building the entire grocery basket, and satisfying the right assortment across the store for our guests.” —Anne Dament, Target
Lighting Up the L.A. Initiative Target is also cooking up new ideas to further evolve its in-store experience through food revamps in select markets such as the SuperTarget in Minnetonka, Minn., which was due for a full remodel. “We saw it as a great opportunity to put August 2016 | progressivegrocer.com |
29
PGProfile
“It would be easy to say we want to be all things to all people. But at the end of the day, having exclusive products and compelling ownbrands is a key part of our strategy.” —Anne Dament, Target
30
some food tests in motion in order to provide a closer look at how guests respond, and fine-tune as needed, moving forward,” explains Dament. Among the store’s updated features are a revamped product selection; new displays, layouts and signage; and fresh produce in an open-market format with prominent signage for organics and locally grown foods. In addition to an expanded selection of granola, yogurt and better-for-you snacks; baked-fresh-daily artisan breads; and grass-fed beef, the store boasts a do-it-yourself grain bar with nutrition information front and center. Pleased with the progress made in Minnetonka, Dament and her team ventured west to the Los Angeles market in January as part of the company’s LA25 initiative, which aimed “to capitalize on our findings with assortment, format, guest experience and execution initiative across the grocery arena. And we’re super-excited about the work that we’re doing in L.A., where our stores are very locally focused. We have categories of priorities across the floor plan where we lean heavily toward signature categories like yogurt, beer and wine — specifically craft beer — and a heavy emphasis on local L.A. products. We’re also building a really exciting relationship with our store teams about how to best curate [store-specific] assortment, in order to provide the best selections that stand for a local presence, based on our L.A. guests’ needs.” Other elements of the LA25 grocery overhaul, Dament continues, include new product displays and more in-store sampling, as well as wood-grain overhead signs and updated shelves with a black-andgray color scheme. Additionally, a greater emphasis is placed on cross-merchandising products, such as
| Progressive Grocer | Ahead of What’s Next | August 2016
grilling must-haves like ketchup, mustard and hot dog buns, to make it easy for families to round up all of the products they need to create easy and delicious meals. “We’ve also updated lighting, flooring and fixtures in the fresh market area, and added new bins to help enhance the produce presentation for our guests,” among other tactics, all of which Dament believes imparts a “brighter and more organized store that’s very easy to shop, and really showcases our high-quality approach to perishables.” While Dament’s plate is certainly full, she remains upbeat and energized by the rewarding results and favorable feedback tracked thus far. During a recent visit to Target’s Los Angeles stores, Dament seized the opportunity to observe guests navigating through the grocery aisles, where she says they appeared “more leisurely and satisfied. I found them stopping, browsing and more carefully studying products before placing them in their carts,” a discovery she describes as both encouraging and invigorating. Even better was the unsolicited guest, shopping for her son’s birthday party, who approached Dament to offer feedback on Target’s food transformation. Dament was unsure what to expect, but the guest’s comment that she had “no idea Target had so many great, quality brands” made the executive’s day. “She went on and on, and it made me feel really good that we not only had a first-rate curated assortment across the whole grocery area, but also that she was able to get what she needed across the remainder of the store,” observes Dament. “That’s the kind of experience we’re working on in the L.A. market, and we’re going to watch it closely and test and learn from here.” Her continuing journey — and Target’s — will indeed be well worth watching. PG
Cover Story
32
Wegmans Food Markets’ 100th Anniversary
| Progressive Grocer | Ahead of What’s Next | August 2016
As Wegmans Food Markets marks the centennial anniversary of its founding this year, Progressive Grocer commemorates the occasion with a special salute to the wow-worthy regional supermarket chain that woos shoppers to its cathedrals of consumption with market-leading innovations and superior service.
By Meg Major
S
ynonymous in the supermarket business with excellence and innovation and renowned for its expansive destination stores, well-oiled execution, magnificent merchandising and fanatical customer fan base, Wegmans has left an indelible mark on the U.S. grocery scene, which has categorically become a better place as a result of the companyâ&#x20AC;&#x2122;s rising-tidelifts-all-boats leadership. Admired for its engaged front-line associates, quality-first approach, spectacular displays, restaurant-quality prepared foods, and big, beautiful stores, Wegmans has had an undeniable impact
on the grocery industry on its way to becoming one of the largest family-owned companies in America. Racking up a dizzying array of accolades and generating barrels of virtual ink on all sides of the internet buzz-meter, as its inviting, experiential food-shopping experience reaches new geographic markets, Wegmans never fails to cause a sensation when it comes to town. In 2015, more than 4,000 people contacted the retailer to ask for a store in their respective communities, alongside another 7,300 who wrote the company letters proclaiming their love of shopping at Wegmans. As one of the most admired retailers on the planet, Wegmans, based in the Rochester, N.Y., suburb of Gates, has long marched to its own beat. With a relentless quest for continuous improvement via calculated risks, a August 2016 | progressivegrocer.com |
33
PROGRESSIVE GROCER PRESENTS
The 2016
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Page 36
94 Number 11
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Winning gam e PlanS Shopper-cent ricit y is of PG’s 2015 the ultimate prize for the Category Cap winners tains Awards. By Jim Dudli cek, Bridget
S
Goldschmidt
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emerged some 20 years ago better advan are being rewri tage technology and of the advancements in tten to take data collec ting, in the past two shopp er mark eting that have emerged decades. Retailers and toward shopp suppliers need to look beyon er-centric soluti d ons that encom the aisle departments throu pass idea of occasion-b gh creative cross-merchandis multiple ased retailing ing. Te states — from snacks to partie to satisfy specifc need the new order s to the eveni ng of that have tipped the day. Te rise of multiple meal — is new channels kets’ long-held the scales away from tradit ional dominance over innovation a must grocery shopp supermarers for retaile rs to remain releva make such when consumers nt in want it now, and they want it their an age way.
| Progressive Grocer | Ahead of What’Breakf s Next ast | November in ory Capta2015
Kellogg Co.
The to lead in Kellogg’s continues ivity in innovation and product its work ate the growth Specialty oils the breakfast aisle with y. To further investig cereal and cooking oil categor area, the categor y management in the cold cereal, hot this in brand t categories. of iconic opport unities on-the-go breakfas Smuck er Co., maker learn about ans Americ to team at Te J.M. of study a custom Seventy percent meal of the day, the most important nces for cocoCrisco, commissioned is the anchor believe breakfast is es toward and prefere Trough its ’s research. Cold cereal consumer attitud lar. according to Kellogg breakfast, with sales reaching $9 nut oil in particu learned in nities researc h, Smuck er’s of center store category ’s identifed two opportumore During 2015, Kellogg that while 27 percent were providing billion. they fun in the aisle and respondents said in the segment: driving s. Fun was provided via new licenspuroil t already coconu “simple health” ofering g Kellogg’s Disney Frozen Cereal. perceive chasers , they didn’t ing opportunities, includin concerns, Kellogg’s suggested nt health hile, to address health that there was a domina simple Meanw other with an saw y oferings, along brand. Te compan blocking its Origin retailers to shelve to launch It also encouraged ideal opport unity Kid Friendly, products, together. Beage fow, which includesTis approach Crisco Coconut Oil. . their aisles by target r, Adult Health Central fore the launch, howeve Family Friendly and s to spend more time in the aisle homeits did Smuck er’s has encouraged shopper es, including granola, breakfast the most work to discover and shop multiple categori . As for hot cereal, Kellogg’s of cocopastries popula r attributes from a twin snacking and toaster more ul Special K Hot Cereal unit velocity. nut oil and to learn repackaged its successf boost favor bowl, which helped about consumers’ space in their hot pack to a single-serve Februa ry, retailers to increase preferences. Last Te brand also advised continued to provide d Crisco possible. Kellogg’s t-on-the it ofcial ly launche Recereal sections when but growing breakfas nal small c& the for Organi ip ce 27-oun thought leadersh create an intentio Retailers g how retailers can f display opfned Coconut Oil. go segment, studyin lity and develop of-shel ed the new have quickly embrac gone set, improve shelf shopabi of its breakfast business, Kellogg’s in t has to all hip with Kantar, tions. Contributing chain, since the produc y dollar a syndicated data partners to better optiitem: At one retail categor on ed weekly embark average 2015 has allowed the brand into full distribution, specialty oils growcalled RichMix, which Meanwhile, Kellogg’s continues to 10 percent , with os. t Oil contribsales have grown solution. mize retailers’ portfoli percent. Crisco Coconuty oil growth, gy with its ShopperMX ing more than 13 test virtual technolo percent of the special uted more than 60 er’s. accordi ng to Smuck
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90 percent complecereals, aiming for Meanwhile, its tion by the end of 2016.way to separate ed a employees develop g grains, allowoats from gluten-containin several of its market ing the company to ree. In its work gluten-f as Cheerios brands l Mills focused on with retailers, Genera variety and helped the importance of size shelves accordretailers set their cereal specifc to each metrics various to ing s, including customer. Its new product Valley Muesli Nature Star Wars Cereal, Granola Bites, brought and Nature Valley while continuexcitement to the category ing to drive growth.
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General Millsis one of the most
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• Be highlighted in Progressive Grocer’s November 2016 issue • Be publicized as a winner in an e-mail blast to retailers • Have exclusive use of the Category Captains logo • Be featured as a Category Captain on ProgressiveGrocer.com
Categ
— Oils
Category Captain
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| Ahead of What’s Next
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Wegmans Food Markets’ 100th Anniversary
Cover Story
LOOKING BACK, MOVING FORWARD: Throughout its 100-year history, Wegmans Food Markets has achieved many attention-getting milestones, many of which stem from the visionary leadership of the its late chairman, Robert Wegman (center), who expressed his gratitude to company associates when the company was named No. 1 on Fortune’s 100 Best Companies to Work For in 2005. The building blocks of its inventive store design began in the 1960s (top left), and have since given rise to stand-alone Wegmans Pubs (top right) and in-store Burger Bars. Today, Robert’s son, Danny Wegman, leads the company as CEO, alongside his daughters, Colleen, president (right), and Nicole, SVP.
willingness to experiment and an enlightened Fortune Continuously Smiles “When approach to honing the talents residing in its Viewed as the indispensable ingredient of people, the resulting payoffs are self-evident. our people Wegmans’ secret sauce is a high-trust/high-perWidely credited for raising the food retailforming culture that strives to treat each associate feel cared ing bar, Wegmans has all but single-handedly as an integral part of an articulated set of core changed customer expectations for grocery values made up of caring, high standards, making a about and shopping by prioritizing an exceptional overall respect and associate empowerment. respected, difference, experience with a whatever-it-takes mindset. Proof of the same can be found in the company’s Opening no more than four new stores each perennial place on Fortune’s 100 Best Companies to they turn year, Wegmans opted for deliberate growth in For list, on which it landed at No. 4 this year, around and Work a relatively compact six-state footprint — New in addition to being the top-ranked retailer. Wegmake our York, New Jersey, Pennsylvania, Massachusetts, mans is one of only 12 companies that have remained Maryland and Virginia — belying the dylist since the ranking’s inception in 1998. customers on the namic impact it’s had in new expansion markets, “When our people feel cared about and respected, feel that particularly during the past 35 years, when the they turn around and make our customers feel that 89-store retailer’s stellar reputation for quality, way, too,” said Danny, who sent out a Wegmans-size way, too.” quantity, consistency, price points and customer thank-you, after this year’s Fortune honorees were —Danny Wegman, experience made it the institution that modern revealed, to both customers and employees, “because CEO consumers have come to embrace. together they make Wegmans a happy place to be.” It’s no accident, of course, that the timeframe Hammering home its guiding belief — that of its ascent to the captaincy of the industry good people, working toward a common goal, can coincided with the tenure of Danny Wegman, CEO of the accomplish anything they set out to do, to accomplish its family-owned company and son of Wegmans’ legendary greater purpose: to be the best at serving the needs of its chairman, Robert, who died in April 2006. customers — Wegmans fortifies its ambitions by taking While the company’s foundation was already rockcare of its teams with attractive benefit programs, including solid, the ensuing years of good-to-great progression an employee scholarship program that provides $4.5 milfollowing Danny’s appointment to president in 1976 are lion in tuition assistance to associates each year. unmistakably linked. In recent years, his two daughters Its role as an exemplary employer mirrors its commit— President Colleen and SVP Nicole — have infused ment to the communities it serves with exceptional levels even more fresh thinking into the well-respected of charitable donations focused on programs that reduce organization, which proclaims its extended “family” of hunger, help young people succeed, promote healthy eating associates to be its deepest point of pride. and activity, strengthen neighborhoods, and support United August 2016 | progressivegrocer.com |
35
Cover Story
Wegmans Food Markets’ 100th Anniversary
Wegmans Wow-worthy Facebook Feedback Progressive Grocer asked our Faceb Facebook followers: rs:
When compared to other grocery stores, what do you like best about Wegmans? How does it WOW you? Vonnie T. Fresh organic produce; outof-this-world bakery; best seafood, meat and poultry; professional staff and wonderful pharmacy; best subs ever; fantastic finds in home and gift departments; and Wegmans brand coffee at only $2.49. Any more questions?
Tracy G. Wegmans is my happy place!!
Susan H. Cleanliness and food safety! I know what their standards are. I used to work there. Also, the storebrand products that carry their name are as good as the name brands, for a lot less. The company has a genuine heart and concern for every community they are in and take very good care of their employees. I got a scholarship from them to return to school when I was in my 40s.
Tammy D. I love their organic section; they have a lot more than any other store.
Continued on page 38
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SWEET EATS: Wegmans’ in-store bakeries are renowned for specialty baked goods, desserts, and authentic European pastries and artisan breads.
Way initiatives. Last year, Wegmans donated about 13.5 million pounds of food to local food banks and programs that feed the hungry. Indeed, while much has changed over the century that Wegmans has been in business, the company’s beliefs about the way to treat people have endured, as Danny affirmed in his letter that appeared in the 100th-anniversary-themed issue of Wegmans’ Menu magazine: “Our values remain the same. They’re the foundation for our core business philosophy that my dad outlined years ago: To do something that no one else is doing, and offer customers a choice they don’t have at the moment. This is the only reason for being in business. This is the basic premise on which we at Wegmans operate.” Indeed, the company lives up to that premise in spades. With its upscale, open-air market appeal and lively displays accentuating an excellent assortment, Wegmans — also acclaimed for its spacious aisles — carries 50,000 to 70,000 products, depending on the specific floor plan, which ranges from 75,000 to 140,000 square feet in an ever-expanding geographic base. The chain is currently prepping for its next wave of evolutionary growth, which includes three more new stores in 2016, in Short Pump, Va.; Owings Mills, Md.; and Charlottesville, Va. Two more are on tap next year for Hanover Township and Montvale, N.J., followed by a new store
| Progressive Grocer | Ahead of What’s Next | August 2016
on the board for 2018 in Natick, Mass. A little further down the road, on dates yet to be announced, Wegmans will break ground for new sites in Chantilly and Tysons Corner, Va.; Lancaster, Pa.; and Medford, Mass. However, the most watch-worthy project in Wegmans’ development pipeline is a 74,000-square-foot store slated to open, perhaps by late 2018, in the Brooklyn Navy Yard. As Wegmans’ first-ever store within New York City’s five boroughs, the Navy Yard location will be the retailer’s smallest — and Brooklyn’s largest — supermarket. This certainly promises to be interesting for the vertically integrated company, which controls its entire distribution and supply chain. Moreover, Wegmans’ keen focus on its private brands throughout the store has been a linchpin in solidifying its strong price image.
Social Significance Inspired by Wegmans’ trailblazing industry innovation throughout its 100 years of existence, as well as its unrivaled ability to generate a flood of social feedback, we took to Facebook for the first time to enhance our reporting by inviting PG’s followers to tell us about the various ways that Wegmans wows them. All told, we received 200-plus comments from folks all across the country, who weighed in with comments to the following questions: Which department/section in Wegmans wows you the most? Why? What’s the rarest “wow” product find you’ve encountered in a Wegmans? What’s the most indulgent “wow” moment you’ve had in a Wegmans? How will Wegmans’ first New York City store next year in Brooklyn’s Navy Yard wow otherwise jaded New Yorkers?
The following pages of our centennial salute to Wegmans are peppered with some of our favorite comments captured in our pilot experiment with citizen journalism, which we feel best highlight the various ways the sensational supermarket chain wows its legions of food-shopping aficionados.
(%)
% Change $ Sales Latest 12 Months vs. YAG
60 50
+58.3%
40 30 20 10
+ 3%
+ 8%
Total Olives
Total Specialty Olives
0
Total Musco Specialties
Latest 12 Month Dollar Sales Ending December 26, 2015 for XAOC Markets as reported by Nielsen ScantrackÂŽ
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Cover Story
Wegmans Food Markets’ 100th Anniversary
Wegmans Wow-worthy Facebook Feedback Continued from page 36
Jennifer D. Grocery shopping at Wegmans feels less like a chore and more of a pleasant experience. It could be because the store is clean, always neatly merchandised and has a great assortment of products. And the cashiers are always friendly. It could also be that I can have a great lunch from the Asian food bar before I shop!
Samantha H. Atmosphere! It feels clean, healthy and somehow cool. I’m not sure if it’s the displays, the staff, the different zones of the stores, the fresh and prepared foods packaging, or the selection of goods. But there’s just something about walking into Wegmans that makes me feel like I’m at the coolest grocery store there is.
Kerrie S. Wegmans is the amusement park of grocery shopping! I always send my husband for groceries to other stores, but I am the one who wants to go to Wegmans. From the bakery with its fresh breads and desserts, to the amazing produce selection, I always know I’ll find what I’m looking for (and even a few things I didn’t know I was looking for).
Big Deal Wegmans is committed to giving shoppers more for their money. By Bridget Goldschmidt
A
s far as Wegmans Food Markets is concerned, bigger is better. That philosophy informs the Rochester, N.Y.-based grocer’s sprawling stores, which try their darnedest to be various things to as many shoppers as possible: grocery store, convenience store, liquor store, pharmacy, eat-in restaurant, corner bar, takeout joint and, last but certainly not least, a place for the community to gather and feel at home. From its wide, easy-to-shop aisles, to its peerless, reasonably priced product selection — including many private label options — to its super-courteous associates and its near-legendary responsiveness to customer requests, Wegmans has all of the bases covered. While there’s a definite minority of consumers who find such size and selection overwhelming — “Finding the handful of items I needed was like searching for a needle in a haystack, never mind the fact that I had to cover what felt like miles and miles of retail space
to hunt down a bottle of salsa and some black beans,” wrote Emily Leaman in Philadelphia magazine in 2012 about an apparently traumatic visit to a Malvern, Pa., store — many fans note that, despite their enormous scale, the stores provide various direct entrances — to the Market Café dining area, for instance — to enable customers to get in and out quickly. In fact, most visitors, as shown by the overwhelming response to PG’s social media queries, seem to be just fine with the grocery store chain the way it is. As one commenter on Leaman’s article similarly noted: “Wegmans is a destination, not a grocery store.”
Old Meets New Part of creating that sense of destination is the grocer’s willingness to blend innovation with the tried-and-true. For novelties, take a gander at the company’s unusual offerings — whoever heard of a bar where you can create your own trail mix, or an in-store bakery with its own mill to grind locally sourced artisan flours? — and sense of playfulness, as exemplified by its signature model train chugging along a track suspended from the ceiling. For the traditional, look no further than the outer design of Wegmans’ stores, with their familiar clock tower feature meant to evoke a small-town city hall, or perhaps a church or school, harking back to a semimythical American past recalled by your grandparents as a time when life moved at a slower pace and everyone was a little kinder to one another. Continued on page 42
Sharan K. From the first step inside a Wegmans, I knew I had found MY store. It was magic.
Continued on page 42
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REIGNING CHAMP: Wegmans’ 123,000-square-foot store in King of Prussia, Pa., showcases the grocer’s savvy in blending innovation with the tried-and-true.
| Progressive Grocer | Ahead of What’s Next | August 2016
Congratulations to Wegmans on their 100th Anniversary — where EVERY DAY YOU GET THEIR BEST. © Mondelēz International group
ADVERTORIAL
Q&A
Talking with…
Anthony Salathe SVP of Sales & Marketing, Emmi Roth USA
Progressive Grocer:When and why did Emmi Roth USA and Meister Cheese Company join forces to launch Kindred Creamery™ cheeses? Anthony Salathe: The partnership began in 2015. We recognized that between our two companies we had complementary strengths and if we worked together we could create an exceptional new cheese line. Meister’s strength in manufacturing capabilities combined with Emmi Roth USA’s “artisan with scale aptitude” came together and this year we officially launched Kindred Creamery. We produce a full line of classic, American style cheeses like Sharp Cheddar, and Colby Jack as well as an assortment of flavored cheeses such as Sweet Fire Mango Jack, Wild Ginseng and Garlic. PG: What sets Kindred Creamery™ products apart from all the other American cheeses in the marketplace today?
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AS: At Kindred Creamery, we believe that how you treat animals affects not only their contentment, but leads to higher quality milk and the best possible cheese. That’s why we started the Cow First™ program. Participating dairy farmers pledge to comply by certain standards and are regularly audited to ensure compliance with our standards. The Cows First standards include treating cows humanely, providing food free from animalbased food, not using artificial growth hormones, and providing cows pasture to graze and roam freely. In turn, the farmers are paid a premium price for the milk. PG: Why should grocery retailers add Kindred Creamery™ cheeses to their dairy cases? What benefits can they reap by merchandising the brand? AS: Shoppers are demanding more information from the companies they purchase food from. They care about the quality of the ingredients and the processes that go into creating the products they buy. For Kindred Creamery, a part of the process includes the treatment of the animals who play a vital role in the production of Kindred Creamery cheese. The dairy farmers who care for the cows are also an important part of this process we feel that empowering farmers to go above and beyond in the treatment of their cows really resonates with consumers.
| Progressive Grocer | Ahead of What’s Next | August 2016
CHEESE TH E WAY IT’S M EA NT TO BE.
At Kindred Creamery, our Cows First™ program ensures that cows are treated humanely with quality food and comfort and that their milk should always be natural. We know that doing the right thing for animals and family farms is also doing the right thing for the quality of the cheese we make.
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Cover Story
Wegmans Food Markets’ 100th Anniversary
Wegmans Wow-worthy Facebook Feedback Continued from page 38
Karen L. Their employees are better than [at] most other stores. They are friendly, helpful, and they stay on task.
Kathleen A. It’s a home away from home ... a one-stop shop. It is exciting to go there, you shop, you have tons of choices, and the prices are right. You can enjoy breakfast, lunch and dinner at a variety of restaurants within the store.
Continued on page 44
EASY AS PIE: Wegmans’ Market Cafés offer a variety of meal options to easily satisfy consumer cravings, whether for sushi, a hearty sandwich, a customized salad or a fresh slice of pizza.
Continued from page 38
To help create an in-store ambiance in keeping with its old-timey storefronts, Wegmans carefully selects and trains the people it hires to work in its stores.
“At a time when our stores continue to lead the industry, we are looking for talented individuals to help us remain the best,” Kevin Lang, manager of the Wegmans store in King of Prussia, Pa.,
Congratulations to
on your
100
from your partners at
Year Anniversary Inquiries@bayvalley.epowercenterdirect.com or 800.347.8876 ©2016 Bay Valley Foods, LLC All rights reserved.
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The Simply Perfect Extra Virgin Olive Oil To offer Capatriti in your stores, contact Gourmet Factory • 631-231-4548 • sales@thegourmetfactory.com • www.thegourmetfactory.com
Cover Story
Wegmans Food Markets’ 100th Anniversary
Wegmans Wow-worthy Facebook Feedback Continued from page 42
Mike N. You have the best selection of organic products at the best prices, hands down.
Progressive Grocer asked our Facebook followers:
Wegmans is set to open its first New York City store next year, in Brooklyn’s Navy Yard. How will Wegmans wow otherwise jaded New York consumers? Cathy B. Wegmans will wow Brooklyn and the surrounding areas with its huge width and depth of product ranges, especially its store brands. Wegmans employees will also be a strength. Continued on page 48
TASTE AND SEE: Wegmans frequently hosts in-store sampling and product demonstrations to further enhance the customer experience.
noted at the time of a July hiring event for the grocer’s seven southeastern Pennsylvania stores. “It’s an exciting time to be part of Wegmans, with endless opportunity for employees to grow their careers right alongside the company’s continued growth. We have multiple paths for career success and give our employees the freedom to explore any career area throughout the company.” As for inviting customers to relax and take their time, a recent visit to a Wegmans Market Café around lunchtime revealed patrons tapping away at laptops in an unhurried manner, while others enjoyed leisurely sit-down meals. Employees
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working in the area were respectful and unobtrusive. Even outside of the café, in the store aisles themselves, shoppers seemed content to savor the experience, with no one in any rush to leave. With 100 years of growth under its belt, Wegmans’ unique approach to business has resulted in phenomenal success: The regional grocer regularly appears on Progressive Grocer’s Super 50 list of the nation’s top-ranked food retailers. This year, it landed on the 17th rung, with fiscal year-end sales of $8 billion. By becoming larger than life, Wegmans has perfected a winning formula for attracting and retaining customers.
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| Progressive Grocer | Ahead of What’s Next | August 2016
Seeing Wegmans With a Fresh Set of Eyes A road trip to the Woodbridge, N.J., store easily wows a veteran grocery trade editor.
FRESH SENSE: Wegmans’ “open-air” produce departments play up the sensory appeal of fresh fruits and vegetables, which are cut before shoppers’ eyes.
By Jenny McTaggart
A
s a trade magazine editor who has written about the grocery industry for more than a decade, I was embarrassed to admit to my colleagues that I had never stepped foot in a Wegmans Food Market. After all, Wegmans is viewed as the crown jewel of grocery stores. The chain enjoys a cult following of loyal shoppers in its core markets, and has earned a superior reputation among retailers, manufacturers and anyone else who knows the inside of the grocery business. I made my shameful admission during an editorial conference call earlier this year to discuss ideas regarding a tribute Progressive Grocer editors were conceptualizing to honor Wegmans’ ongoing 100th anniversary this year. The initial thought was to launch a social media campaign asking our followers to tell us, “How does Wegmans wow you?” Up until now, though, the only way Wegmans had wowed me was through anecdotal observations from the trade and consumers that I gathered throughout my years of covering the grocery business. I grew up in Georgia and spent the first half of my life there, so I was quite familiar with another family-owned chain known for stellar customer service and a great selection of fresh food and groceries: Lakeland, Fla.-based Publix Super Markets. And I knew from my past reporting that executives from Wegmans and Publix have been in share groups together. But from what I’d heard,
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Cover Story
Wegmans Food Markets’ 100th Anniversary
you really have to experience Wegmans firsthand to really appreciate its uniqueness. So it was decided: I would visit my first Wegmans, coinciding with the company’s centennial celebration, to find out for myself what the fervor and fanaticism are all about. I live in New York City, so the closest Wegmans is nearly 40 miles away, in Woodbridge, N.J. It would be about an
The World Standard For Destratification
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| Progressive Grocer | Ahead of What’s Next | August 2016
hour’s drive from my apartment in Queens, and it would make for a nice Saturday road trip with my happy-go-lucky husband and enthusiastic, foodloving 8-year-old daughter. Before we set out, I conducted a bit of research to better prepare and familiarize myself with what I could expect from a consumer perspective, while also delving deeper into the opinions from Wegmans’ faithful followers. Perhaps not surprisingly, I found more than one blog post devoted to praising Wegmans. Many people love it for its delicious prepared food selection, and some adore it for its high-quality private label products, while others just enjoy the store environment, including standout service and cleanliness. To be sure, the grocer has built an enviable level of trust among its most loyal clientele. Even my in-laws, who met in college in Buffalo, N.Y., are among the many fans of Wegmans.
First Impressions The first thing I noticed about Wegmans is that it’s not very flashy from the outside. The store in Woodbridge is located in what looks to be a typical suburban shopping center, and features an abundance of parking — which is a good thing, especially on a Saturday afternoon, when finding a space is no easy task. The store itself is undeniably huge. Spanning 124,000 square feet, the Woodbridge location has an exterior featuring floral displays amid several entrances. In fact, lunch was my first objective, after our late-morning hour-long drive. I was in the mood for something simple, while my daughter had pizza on her mind (as always). My husband was hungrier and craving a larger meal. Not to be let down, we found all three options at Wegmans. I decided to try a 4-inch sandwich from the sub shop. My daughter was thrilled to discover brick-oven-style cheese pizza by the slice. And my husband was impressed to find Southern-style barbecue and slaw with black-eyed peas (his mom’s family hails from South Carolina, so he can appreciate good Southern eats the same as me!) We sat upstairs in a large, open seating area that overlooked the prepared food section of the store. Familiar
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Cover Story
Wegmans Food Markets’ 100th Anniversary
A SLICE OF HEAVEN: Eight-year-old Ella McTaggart, daughter of PG Contributing Editor Jenny McTaggart, was clearly pleased by Wegmans’ brick-oven pizza.
Wegmans Wow-worthy Facebook Feedback Continued from page 44
Marty D. Wegmans will wow them with kindness.
Catherine M. Wegmans will wow the NYC area with service, quality products, variety of products, and cleanliness of store from top to bottom!
Kathy B. Wegmans’ customer service is amazing. New Yorkers love that sort of thing! Continued on page 50
rock music from the ’80s played over the speakers, and a homey décor reminiscent of townhomes with well-lit, welcoming windows made us immediately feel comfortable and ready to enjoy our food. And enjoy the food we did. It’s hard to impress with a sub sandwich, but Wegmans easily managed to do so. The fresh-
baked wheat bread hit my taste buds out of the park. Even the turkey, cheese and mayonnaise were a level above any other sub sandwich components I’ve ever consumed. As my daughter happily devoured her pizza, my husband commented on the “good, sweet” flavor of his barbecue. While eating, we noticed three college students playing a board game at their table. Clearly, they felt right at home at Wegmans, too. We were also impressed at the level of cleanliness at the store, including in the bathrooms. During our meal, we saw an employee meticulously cleaning off tables. I guess we’re just not used to seeing that much effort at cleaning up, especially in the New York metro area, where everyone’s in a big hurry to move on to the next thing.
CONGRATULATIONS ON 100 YEARS! From quality products to a quality partnership, Dairy Farmers of America is proud to have a strong relationship with Wegmans. Thank you for supporting our nearly 14,000 dairy farm families farmerowners through our brands.
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| Progressive Grocer | Ahead of What’s Next | August 2016
Cover Story
Wegmans Food Markets’ 100th Anniversary
Wegmans Wow-worthy Facebook Feedback Continued from page 48
Zenaida W. They will experience vastly diversified merchandise, very clean and well maintained aisles, well-stocked shelves, and very pleasant and courteous personnel. The food at the salad bars is delicious and always fresh.
Laura J. Cleanliness, wonderful local produce, friendly employees, fantastic selection, deli, café, bakery ... pure heaven!
Fresh at its Best After our meal, we took in the impressive variety of prepared foods downstairs, including a sushi bar, a salad bar, a soup selection and an Asian bar. I saw firsthand evidence of what I’ve read about Wegmans’ chefs: According to the company, they walk the stores each day to select the best meats, seafood and veggies for the signature entrées and sides that they create in Wegmans’ prepared food areas and restaurants. I have a feeling that the company also has a good handle on which products sell best and how much food to prepare — not an easy job for retailers, or foodservice operators, for that matter. Moving on from prepared foods, we encountered what turned out to be my favorite part of the store: the bakery and patisserie. My daughter and I couldn’t resist taking home a cookie and several pastries to enjoy later. We were also especially impressed with the fresh seafood department,
which was undoubtedly the most massive I’ve ever seen in a supermarket. It included whole fish on ice, fresh mussels and much more. A friendly seafood department associate was all smiles and ready to engage with shoppers. The next thing that stood out for us was the cheese cave. We knew we couldn’t leave without picking up a sampler of international cheeses for my mother-in-law. The variety of cheeses, representing numerous countries of
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Wegmans Wow-worthy Facebook Feedback Ginny L. Wegmans employees go the extra mile for their customers, especially if you have a special-needs child.
Progressive Grocer asked Progre ked our Facebook ook followers::
What’s the rarest “wow” product find you’ve encountered in a Wegmans?
STEP RIGHT UP: Wegmans’ deli and charcuterie offer shoppers an assortment of traditional and upscale meats and cheeses, served up by engaging, knowledgeable store teams.
origin, was seemingly endless. Next to the cheese section was a mouth-watering Mediterranean bar featuring stuffed olives, mushrooms and artichokes. After being so wowed by the other fresh departments, I wasn’t quite as impressed with the produce section — although part of my impression came from the fact that the selection had been picked over by Saturday afternoon. Even so, the produce looked fresh and included locally grown and organic products. The center store selection wasn’t too different from other traditional supermarkets, although I did notice plenty of Wegmans private label products (definitely a “wow” for me), a special section featuring family-size packaging, and a large area devoted to packaged international foods. My favorite “international” aisle was the Southern section, which featured canned collard greens, hoppin’ john and Sylvia’s peach cobbler. Additionally, I was struck by the diverse shoppers at the store. I had expected a somewhat upscale consumer base, but here I saw shoppers of various ethnicities, ages and apparent income levels, which speaks volumes about Wegmans’ universal appeal. It also suggests that the company has figured out a smart pricing strategy, especially in Woodbridge, where discounters Walmart and Aldi have stores close by.
My daughter, meanwhile, was excited to find Kellogg’s Disney “Frozen” cereal, as well as a cute miniature train that chugs along a track above the dairy section.
Cheers to 100 Years I would be remiss to not mention Wegmans’ adjacent wine, liquor and beer store in Woodbridge. Here I found a selection of $6 wines, reminiscent of Trader Joe’s “Two Buck Chuck.” If you feel like spending a little more, there’s a selection of “highly rated $10-andunder wines,” as well as “highly rated $20 and under.” A great option for beer lovers, meanwhile, is the mix-andmatch craft beer pack. As we were leaving, my family and I agreed that Wegmans is a grocery paradise of sorts. The company has figured out how to promote good, healthy eating with those you love, and it’s also evident that they’ve trained their staff well. Wegmans’ planned Brooklyn Navy Yard store won’t be a practical choice for my regular grocery shopping trips, but my family will head there whenever we feel like being wowed by a one-of-a-kind grocery-shopping experience. PG For more information about Wegmas Food Markets, visit progressivegrocer.com/wegmans.
Dobie B. After watching a cooking show in which one of the ingredients in a recipe was jamón, a Spanish ham, I went looking for some. Well, of course I found it at my local Wegmans deli, but it was $98 a pound! To say the least, I tried another recipe.
Catherine M. The truffles, the organic meats and produce, salt potatoes, and Hoffman’s hot dogs. And don’t forget the cheese section!
Blake H. Several years ago, I regularly purchased Sara Lee New York Style Cheesecakes at Wegmans, because their regular price was more than $3 less than I had ever seen it anywhere else.
Bonnie C. The finely chopped celery, and the celery and onions. Wegmans is the only store in the world that wows with these!
Tracey G. Black and white truffles. They keep them locked up, but just wow!
August 2016 | progressivegrocer.com |
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Integrated Operations:
The Key K to Building eCommerce Profits eCom
ndependent operators o and powerhouse chains are rolling ou out new or expanded programs to satisfy rapidly changing g g consumer demands, designed to cater to the needs of today’s shoppers who want to buy products using whatever channel they desire, at any given time. And with good reason—the potential for retailers is huge. Online sales, according to wide-ranging industry reports, are growing from 10% to 40%—far more quickly than brick-and-mortar store sales—and food is at the top of the list of items most desired
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by customers. But in order to leverage eCommerce successfully, retailers need to align all aspects of business operations p and integrate g systems y and solutions—from point of sale and peripherals to inventory management and fulfillment. The reason is simple: Failure to do so could result in missteps that have the potential to erode company profits and damage staff morale. And in today’s market environment, missed opportunities—like an underperforming eCommerce program—could have a serious impact on a retailer’s bottom line.
Building the Business Case for Integrated Operations To better understand the imbalances that can arise
when systems aren’t aligned, picture the following scenario: An associate receives an online order and first must pick the items from the shelves, typically using a handheld device. The associate must then individually scan the items into the store’s POS, effectively doubling the amount of work required for every online order.
The POS is the epicenter for capturing all transactions, and that must include eCommerce and physical store purchases.
Taking the necessary steps to ensure that eCommerce solutions and operations perations are tied seamlessly into existing corporate porate and store systems is vital, and this balance alance serves as the cornerstone for building a successful and profitable online sales channel..
Integrated Operations ons Mean Balanced Systems stems Integrated operations and systems ms determine, to a large degree, the level of eCommerce merce service and customer satisfaction grocers can provide, the accuracy of item management,, the swiftness of accurately reconciling profit-and-loss nd-loss statements based on sales channel, and much uch more. The POS is the epicenter for capturing all transactions, and that must include clude eCommerce and physical store purchases. ases. Integrating eCommerce into the core POS S systems is also key to tapping into peripheral systems that then provide the full range of third-party rd-party solutions critical to operational excellence. e. With eCommerce systems tied into the company’s third-party payment processor, r, for example, a customer who places an order online can pick up his or her grocery order in the parking lot without having to take out a credit card, ard, much less go into the store to pay. Convenience nce is king, but it won’t happen without full systems ms integration and operational execution.
This kind of redundancy inevitably results in frustration for the associate, not to mention an increased risk of errors because everyy item is handled twice. Both of these factors could mean additional costs and weakened profits. What’s more, this disjointed scenario doesn’t take into account the issue of ensuring accuracy in inventory tracking, promotional items, loyalty programs and many other key areas of grocery businesses.
Customer conveniences like these hese have become an expected part of the modern shopping experience and increasingly have a powerful impact on where customers choose to shop. Ultimately, y this can determine which grocers will win or lose market share.
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Aligning S Store Systems for eCommerce Success Building out a successful su eCommerce program requires providing online customers with the same promotions and loyalty loy program benefits offered to physical store shoppers. The offers must be essentially the same, or shop shoppers could question the store’s policies. After all, customers spending money in any channel expect to receive all the benefits and perks given to shoppers buying in-store. Similarly, for grocers groc to reap the rewards of selling online, they must align their systems to ensure operational and business bu precision. Among the key function areas tied inextricably to eCommerce and store systems integration: integ Grocers must mu have accurate, near real-time visibility into inventory levels in the warehouse, on the shelf shel and in the back room—something that can be achieved only if eCommerce transactions are processed through the same system as store purchases. In today’s age transaction of precise inventory i accuracy, continuous replenishment, and online fulfillment options, integrating eCommerce and store systems is crucial. Accurate profit-and-loss p reconciliation is also vital to success. No grocer can survive without tracking trac product movement and sales through the door. All item transactions and corresponding financial data must be captured at the item level in a single integrated correspond system, and spending trends online and in-store reconciled quickly. The loyalty program in place in the store must be offered to online customers and linked into the same sam core systems. Customers expect the same loyalty rewards regardless of channel and should receive equal treatment across all touchpoints. Grocers mu must make sure customers looking to take advantage of promotional offers can apply those coupons or discounts both online and in-store. Integration into the POS and peripherals is important from both a customer service and satisfaction perspective. As with any area of a business’s eCommerce operations, it’s critical that tools used by store associates to pick orders, check off what’s w needed and when, fulfill those orders and manage other tasks are fully integrated into the eCommerc eCommerce and store solutions already in place. By having tablets, handheld devices and other tools tied directly into i the company’s core infrastructure—typically via the cloud—store associates, head office personnel, shoppers sh and associates can all see the same information and have complete confidence in its accuracy. However, How this level of integration must exist beyond the store, extending to the warehouse. Teams both in-store in-stor and online need to be aware of the movement and progression p g of products p from the warehouse to the store to ensure accuracy and speed of service, which means tablet, handheld and warehouse computers must all be connected.
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Siloed Systems and the Barriers They Create The polarity between an integrated eCommerce operation and one weighed down by silos ilos of disparate data solutions is huge. By ensuring that store processes are unified and working in tandem, grocers have the power to maintain control of customer orders throughout their lifecyclesâ&#x20AC;&#x201D;from from placement all the way to delivery.
Achieving high performance levels through an integrated system infrastructure ensures ures that grocers can launch, grow g and thrive with eCommerce, and that their online programs p g can play a major role in driving sales and profits.
FOOD FOR THOUGHT
Visit our hub for industry insights & additional resources.
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2016‘s Top Women in Grocery Gala ov. 10, 2016 • Hyatt Regency Grand Cypress • Orlando, Fla.
Agenda W E D N E S D AY, N O V E M B E R 9 4:00)p.m.)_________________________________________________________________________________________________________________________________________________________________________________________________________________________)Registration)Open) 5:30)p.m.)–)7:00)p.m.) ____________________________________________________________________________________________________________________________________________________________________________________ )Welcome)Reception)
T H U R S D AY, N O V E M B E R 1 0 7:00)a.m.)–)8:00)a.m.) ________________________________________________________________________________________________________________________________)Rise)&)Shine)Yoga,)Sponsored by Clif B r 9:00)a.m.)–)10:00)a.m.)________________________________________ )Welcome)&)Networking)Breakfast,)Sponsored by Pos Consumer Br nds 10:00)a.m.)–)2:15)p.m.) ____________________________________________________________________________________________ )Leadership)Development)Program)(lunch included) 2:30)p.m.)–)5:45)p.m.) _______________________________________________________________________________________________________________________________________________________________________________________________________________)Free)Time 5:45)p.m.)–)6:00)p.m.) ____________________________________________________________________________________________________________________ )Pre-Cocktail)Hour)2016)TWIG)Group)Photo) 6:00)p.m.)–)7:00)p.m.) _______________________________________________________________________________________________________________________________________________________________________________________ )Cocktail)Reception) 7:00)p.m.)–)9:30)p.m.) _________________________________________________________________________________________________________________________________________________)Dinner)and)Awards)Presentation) 9:30)p.m.)–)10:30)p.m.)__________________________________________________________________________________________________ )Dessert)Party,)Sponsored by The Hershey Comp ny
F R I D AY, N O V E M B E R 1 1 9:00)a.m.) ______________________________________)5K)Charity)Fun)Run/Walk,)Benefiting the Network of Executive Women’s Future Fund
Leadership Development Program All)Attendees)(lunch Included)) ________________________________________________________________________________________________________________________________________________________________________)$75)per)person
Reception and Dinner 2016)Top)Women)in)Grocery)Winners)________________________________________________________________________________________________________________________________________________________________)No)Charge Dinner)Guests) _______________________________________________________________________________________________________________________________________________________________________________________________________________ )$285)per)person) Dinner)Parties)of)Five)or)More)(registered all at one time)) ______________________________________________________________________________________________ )$250)per)person)
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Feature
Seasonal Marketing
Hot Promos, Cooler Times
Retailers can base fall promotions, assortment around tailgating, Friday pizza nights and the like. By Randy Hofbauer
It’s the flavor factor that shows why many people are opting to grill throughout the year, even when the weather might not be as ideal.” —Josh Pelham, Acosta Sales & Marketing
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A
lthough summer offers more opportunities for fun in the sun, fall is hardly a time without celebration. From tailgating burgers and beer to pizza and movies at home on Friday nights, Americans have plenty of opportunities to kick back, relax and enjoy comforting eats with family and friends as the months cool down and lead into holiday season. In turn, grocers have a tremendous opportunity to lift sales dramatically by offering the right products and activating creative promotions with their supplier partners. Long known as a popular time for people to get their grill on, summer sees eight in 10 grillers planning to grill outdoors during holidays, new research from Jacksonville, Fla.-based marketing agency Acosta Sales & Marketing reveals. But fall isn’t the time when the urge to grill goes into hibernation: Most of those who grill still plan to do so when the weather starts growing crisper, with seven in 10 grillers expecting to grill in the autumn. “Our research shows shoppers choose to grill
| Progressive Grocer | Ahead of What’s Next | August 2016
for two primary reasons: It provides a better flavor than other cooking methods, and also gives them a chance to enjoy the outdoors,” says Josh Pelham, director of insights and strategy at Acosta. “However, it’s the flavor factor that shows why many people are opting to grill throughout the year, even when the weather might not be as ideal.”
A Time to Tailgate Much of this fall grilling occurs as a result of the beginning of football season, when the national pastime of tailgating takes place. Acosta’s research shows that 61 percent of people who grill bring that experience to tailgating, with 29 percent grilling at a sports stadium or arena, and 40 percent doing so at home. Meat has long been central in the world of grilling, with 45 percent of tailgate grillers choosing hot dogs or sausages, and 46 percent selecting hamburgers. What’s new, though, is the continued growing interest among consumers, particularly Millennials, in foods with higher protein content. This provides retailers with a powerful marketing
lemon lime
grape
cherry vanilla
be a deli celebrity add choices, increase sales
vanilla
Delis offering Coca-Cola Freestyle
are experiencing on average • 5% revenue growth • 3% traffic increases • 5% growth in total beverage sales.*
get in on the action™ cokesolutions.com/freestyle *Source: TCCC Proprietary Research, CCFS Large Store Performance, Dec. 2013
Feature
Although alternative sources of protein continue to expand, meat is still the best source of protein, and we need to be telling that story.” —Christine Tanner, Creekstone Farms Premium Beef
Seasonal Marketing
message, according to Christine Tanner, brand manager at Creekstone Farms Premium Beef, in Arkansas City, Kan. “Although alternative sources of protein continue to expand, meat is still the best source of protein, and we need to be telling that story,” Tanner says. “The story can be told through labeling, but a great strategy is to develop meat personnel as customer consultants to offer information, from cooking and grilling tips for tailgaters to explaining nutritional benefits.” Tanner notes that her company works with retailers to pull together individual marketing plans that spotlight the meat department, raising awareness of different cuts and explaining how they can be prepared. It also serves consumers directly, providing educational support for them via how-to videos on its website. “For instance, during tailgating season, we publish tailgating tips and videos through our social media that our retail partners can utilize as well,” she says. “We also offer a wide variety of products to enhance their assortment.” Educational support for consumers can be critical, as some manufacturers and retailers are experimenting with nontraditional cuts of meat that can require a higher level of cooking skill than that required by basic grilling. For instance, Tracy Sinclair, chief marketing officer of Chicago-based meat wholesaler PRE Brands, sees a rising interest in “elevated peasant fare” that incorporates cuts beyond the classic New York strip and ribeye. “That’s one of the reasons that PRE Brands is introducing two new items — stew meat and chuck roast — perfect for casual tailgate fare like pulled beef and hearty chili,” she says. Both items will be available in stores Sept. 6, in time for autumnal cooking.
Pair Up Side dishes, too, are an important component of tailgating promos and can help develop incremental sales. Acosta data show, in order, the most popular side dishes as chips, pretzels and other salty snacks (67 percent); dips/cheese dips (52 percent); vegetables/veggie trays (51 percent); salads (51 percent); desserts/treats (49 percent); salsas (47 percent); chicken wings (45 percent); fruit/fruit trays (44 percent); and macaroni and cheese (41 percent). “Retailers and brands should keep these occasions and foods in mind when developing seasonal displays and creating meal solutions for shoppers,” Pelham says. Promotionally, franks and beef also pair sur-
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| Progressive Grocer | Ahead of What’s Next | August 2016
prisingly well with breakfast foods. For instance, beef pairs well with bacon, and franks make a great match with ready-to-eat cereal, notes Sarah Schmansky, director of account services at Schaumburg, Ill.-based market research firm Nielsen. Several of these products, such as veggie trays, certain salads and fruit trays, tend to be more healthful than some of the more traditional tailgating foods, which can be high in calories, sodium and fat. Retailers looking to support such foods in their merchandising should play up the healthand-wellness factor, as consumers today are more interested than ever in eating better. “Familiarizing yourself with the consumer on a store-level basis is key to understanding whether or not they’ll be seeking healthier options during tailgating season,” Schmansky says. But no matter what the product, merchandising should focus on making the shopping trip quick and easy, she advises. Retailers and their suppliers should work to provide displays where shoppers can grab all of the products or ingredients they need for popular recipes or to feed large groups, and place them in conveniently located spaces in the store.
Prime Time for Pizza Of course, fall selling season is about more than just football and grilling. With summer and the vacation mindset over, kids and parents are hard at work in school and at the office, respectively. This often means less time for dinner preparation. Additionally, with cooler temperatures, families are more likely to turn on their ovens than they would in warmer weather, suggesting that frozen pizza could be a quick, easy and warm solution to fall family meals. And while it might not be as strong a tailgating food as burgers and hot dogs, frozen pizza can be an ideal meal while watching football at home. “Between ‘Friday Night Lights’ — high school and local games — and more days of the week airing football games — for example, mid-tier conferences playing during the week [and] NFL games playing Thursday, Sunday and Monday — there are ample opportunities to eat pizza and watch football,” says Tracy
Feature
Seasonal Marketing
Tailgating by Percentages* Most popular tailgating grilling meats:
Familiarizing yourself with the consumer on a store-level basis is key to understanding whether or not they’ll be seeking healthier options during tailgating season.” —Sarah Schmansky, Nielsen
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Fleischhacker Quigley, senior marketing manager at Schwan’s Consumer Brands Inc., the frozen food division of The Schwan Food Co., in Marshall, Minn. With pizza consumption, in general, on the rise — the average U.S. consumer eats pizza four times a month, and Millennials eat it even more than that — pizza is still a “very relevant meal,” Quigley insists. Further, as Millennials’ buying power grows, it’s important for retailers and manufacturers to work together to help the frozen pizza category capture some of those meal occasions. Nearly half (48 percent) of frozen pizza consumption takes place on weekdays (Monday through Thursday), while more than half (52 percent) takes place on Friday, Saturday and Sunday — Friday being the single largest frozen-pizzaconsuming day, with 24 percent occurring then. This suggests that while retailers and pizza manufacturers could see some success promoting frozen pizza any day of the week, Friday clearly marks the sweet spot. Many Midwestern grocers, in particular, could see better success with frozen pizza promos: Chicago, Milwaukee, Minneapolis and St. Louis are the four biggest frozen-pizza-consuming markets in the country.
| Progressive Grocer | Ahead of What’s Next | August 2016
Hamburgers Hot dogs/sausage links
Five most popular tailgating sides: Chips, pretzels, other salty snacks Dips/cheese dips Vegetables/veggie trays Salads Desserts/treats
46% 45% 67% 52% 51% 51% 49%
*Percent of tailgating grillers cooking this product Source: Acosta Sales & Marketing
Appealing to football fans, Red Baron frozen pizza, a Schwan’s brand, historically has executed unique football-themed packaging graphics; funded a national beer partnership; supported consumer engagement tactics such as a website with games, promotional activities, recipes and more; and provided direct-store-delivery teams with in-store signage to help build displays. Additionally, the brand has a fully integrated marketing campaign that encompasses national television, digital and social media, public
ADVERTORIAL
Tecate Light is one of the fastest growing imported light beers in the U.S. Progressive Grocer: What brands does Heineken import into the United States? What role does authenticity play in Heineken’s brand and messaging? Heineken USA: HEINEKEN USA imports Heineken, Amstel Light, Newcastle Brown Ale, Strongbow Hard Cider, the Dos Equis, Tecate, Sol, Indio, Carta Blanca, Red Stripe and Bohemia into the U.S. market. Today’s consumers put a high value on authenticity and seek brands that reflect that through and through. To this day, all HEINEKEN USA brands are brewed and shipped from their homelands, making them authentic import brands. PG: How does Tecate’s heritage influence its relationship with Hispanic consumers? HU: Tecate Light was the first light beer introduced in Mexico and today, represents 80% of the franchise. In the U.S., Tecate Light is one of the fastest growing imported light beers. The brand’s full-bodied taste and Born Bold programming represent the spirit and inner drive of the brand’s bicultural consumers. PG: Who is the Tecate consumer and how are changing demographics impacting Tecate?
HU: Among light beer offerings, Tecate Light indexes the highest with bicultural consumers who are 42% more likely to watch soccer3. Our Chivas Born Bold soccer program brings to life messaging that reflects our fans’ bold lifestyle and connects with the traditions that surround their Chivas soccer viewing occasions. Tecate is the official sponsor of Chivas de Guadalajara, the most popular Mexican soccer team, with 5 MM fans in the U.S. For the more than 11 million Mexican-Americans in the U.S., these games are a valued connection with their Mexican heritage. PG: Where is Tecate currently available? What are its plans for national expansion? HU: Tecate has had great success in the U.S. Sunbelt region. In 2016, we will expand Tecate Light nationally andsupport the expansionwith National TVC, a bold new package design and Born Bold programming that celebrates our Boxing and Soccer partnerships. 1
Nielsen, FDCM+,52 weeks ending 6/16 Nielsen, FDCM+,52 weeks ending 6/16 3 2015 Euromericas Sport Marketing Study, Nielsen Spectra National Behaviors Report – L52 w/e 1.19.16 2
HU: Tecate’s consumers are millennial, bicultural men who view themselves as ‘realistic men.’ They are confident, fluid in their duality,and do not want to compromise flavor when drinking a light beer. The influence of growing multicultural/Hispanicconsumer segmentis profound and is impacting all aspects of American culture from food and beverages to music, sports, film, fashion and more. Tecate is committed to providing content that resonates with this vibrant and growing consumer segment. PG: To what do you attribute the impressive growth of Tecate? HU: The Tecate franchise is up 10% YTD1, while Tecate Light is growing+39.1%YTD2. Tecate’s success is based on several factors: it is positioned as a true Mexican import while priced competitively with domestic premium lights, its full flavor is preferred over the watered down taste of domestics, Tecate consumers shop more frequently, and the Tecate franchise delivers the highest percentage lift when promoted. PG: How does Tecate’s Soccer programming connect with its Hispanic and multi-cultural viewers? What traditions does it speak to? August 2016 | progressivegrocer.com |
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Feature
There are ample opportunities to eat pizza and watch football.â&#x20AC;? â&#x20AC;&#x201D;Tracy Fleischhacker Quigley, Schwanâ&#x20AC;&#x2122;s Consumer Brands Inc.
Seasonal Marketing
relations and additional components, which helps drive trial and awareness of the category and brand. â&#x20AC;&#x153;We are focused on maximizing our shopper marketing budget dollars by plugging into retailer-led game-day activations, rather than trying to create our own,â&#x20AC;? Quigley says. â&#x20AC;&#x153;This enables retailers, Red Baron and consumers to get the best activation; by plugging into retailer programs, we help those programs feature grocery store traffic-driving brands at a great price value for consumers.â&#x20AC;? Bulk packaging and BOGOs also are critical during the fall season. With tailgating events, consumers are focused more on group entertainment versus individual entertainment, with a similar mindset prevailing during the ensuing holidays, according to Alicja Spaulding, director of marketing with Aurora, Colo.-based baked goods supplier SROriginals. Larger pack sizes help lift sales, while BOGOs help products stand out. Both communicate value. But such products and promos for the fall
shouldnâ&#x20AC;&#x2122;t be focused on just savory courses â&#x20AC;&#x201D; thereâ&#x20AC;&#x2122;s a place for sweets, too, particularly seasonal ones. Here, colorful, seasonal colors â&#x20AC;&#x201D; such as those of autumn or local sports teams â&#x20AC;&#x201D; help attract shoppers and generate sales lifts. Party packs with a variety of flavors also help. As an example, Spaulding points to a recent partnership between the Kroger Co.â&#x20AC;&#x2122;s King Soopers banner in Colorado and SROriginals, which produced a bakery program catering to Denver Broncos fans. â&#x20AC;&#x153;So you would see cake balls in the colors of orange and blue â&#x20AC;Ś and Broncos cookies,â&#x20AC;? she recounts. â&#x20AC;&#x153;Things of that nature are really bringing that customization and fandom to what people are eating and consuming. And really, the only market we played in with that was Colorado, but it did exceptionally well. That probably has a lot to do with the team doing really well.â&#x20AC;? PG
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| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | August 2016
Back-to-school Merchandising
Grocery
Heads of the
Class
In-store approaches take creative turns, focus on BFY foods. By Bridget Goldschmidt
W
ith school starting again in a matter of weeks, parents are girding for a flurry of activities related to that time of year, among them meal planning to enable busy students to grab a quick bite — or something more substantial — amid lessons, homework, team sports, band practice and any other scholastic obligations. Smart grocery manufacturers are making sure that their products are top of mind to help harried back-to-school shoppers make easier decisions. One key insight from a major CPG company was to tie the occasion to an exciting event occurring at roughly the same time. “As kids head back to school this year, Team USA will be heading to Rio for the 2016 Olympic Games … and Kellogg’s will be on the bus and on the medal stand,” asserts Dave Jones, VP, industry initiatives at Battle Creek, Mich.-based Kellogg Co. “Our back-to-school programming will capitalize on the excitement and energy around the Olympic Games — which started with the announcement of Team Kellogg’s in April, 100 days out from the Games.” Adds Jones: “Like the athletes in Rio, consumers will also be encouraged to ‘Win Gold’ through on-pack messaging and in-store displays. The promotion will give thousands of moms the chance to instantly ‘win gold’ — a $100 Visa rewards gift card — to help get their kids what they need for backto-school through specially marked packages of cereal and Pop-Tarts. Specially marked packages of snack products, including Keebler cookies, Nutri-Grain bars August 2016 | progressivegrocer.com |
65
Grocery
Back-to-school Merchandising
and Pringles will give 25 lucky families the chance to win $10,000 in Visa rewards cards to help build an even brighter future for their children.”
Meeting Natural Demand At Omaha, Neb.-based ConAgra Foods, the watchword for back-to-school is “natural.” According to Associate Brand Manager Aamna Farooq: “Snack Pack Naturals offer the same great taste of Snack Pack and are made with all-natural ingredients like real milk, cocoa and sugar, and nothing artificial. As with the original Snack Pack, there’s
Back-to-school ‘Secrets’ Revealed In late July, New York-based Ruby’s Naturals, Inc., parent company to Ruby Rockets, whose products include NonDairy Fruit & Veggie Blends, a shelf-stable yogurt alternative, launched its first fully integrated marketing initiative to engage with U.S. families. Connecting with mothers at various community events across the country and opening up a dialogue with them across Ruby Rockets’ social channels, the company got key influencers to ask their fans to spill their favorite “shareworthy secrets” associated with such key parenting moments as planning healthy family meals, balanced eating while on family vacations, and making after-school snacks fun and nutritious. “Navigating parenthood today requires creativity, confidence and endless resourcefulness; however, it’s not all challenging terrain,” notes Ruby’s Naturals Marketing Director Nicole Felix. “Ev-
66
no preservatives reservatives and no high-fructose corn syrup. Snack ck Pack Naturals are available in three flavors: Vanilla, lla, Chocolate and Chocolate Vanilla Swirl.” Farooq arooq notes that the new additions, introduced in June, ne, “satisfy a growing consumer demand for natural ral snack options. Thirty percent of Snack Pack consumers umers said they wanted a more natural pudding.. The product is especially appealing to Millennial moms with children in the 6-to-9 age range.” In n the realm of merchandising, she notes, “Support for Snack Pack will include mix-ins-focused instore displays and a national FSI,” explaining that “mix-ins x-ins are combinations or recipes to reinforce simplicity, plicity, customization and fun.” The fun pudding recipes pes to be featured in this year’s back-to-school promotion motion include Easy S’mores Pudding Cup and Dirt Cup, both of which Farooq describes as “created from the hottest food trends,” adding, “This approach oach will build on last year’s momentum.” Additionally, Snack Pack will employ “social media activation and targeted media buys executed by our shopper marketing team,” she notes.
All’s Well That Ends Well Healthier back-to-school fare is also important to smaller companies. “Snacks that provide kids with a great-tasting product and benefits like added protein or vitamins are on trend for the back-to-school season,” affirms Nola Martin, VP marketing and innovation at Calgary, Alberta-based Go Gourmet, which offers “superfood snacks” through the Slammers line.
ery mom uses shortcuts to navigate parenthood. We want to identify her biggest road bumps related to healthy eating and help her find solutions.” The Shareworthy Secrets campaign will extend into the back-to-school season through a partnership with Trekaroo, an online resource for traveling with kids. Regarding the partnership with Trekaroo, Felix says it “will showcase how to connect kids with real food through fun destinations, recipes and art projects. We believe, like Ruby Rockets, Trekaroo is a ‘shareworthy secret.’” Although timed with the back-toschool occasion, Shareworthy Secrets will serve as an ongoing resource for mothers looking to make healthy eating simpler. “Our hope is that Ruby Rockets can be Mom’s ultimate ‘shareworthy secret’ — her creative solution in getting her kids to eat more fruits and veggies,” adds Felix. www.rubyrockets.com
| Progressive Grocer | Ahead of What’s Next | August 2016
The company’s latest offering is Slammers + Protein Creamy Banana Chocolate, which Martin calls “a fantastic combination of fruits, and vegetables, [with] 7 grams of protein. This new variety continues to provide school-aged kids with the fuel they need, in a delicious, creamy pudding-like snack.” For the back-to-school occasion, given the brand’s current niche positioning, she notes: “Our in-store merchandising will be focused on leveraging end displays to drive awareness of our line.” Go Gourmet’s approach also includes collaborating closely with grocers. “There are so many products to choose from, and back-to-school is such a busy time for families, that we work with our retailers to participate in their programs,” explains Martin. “Most retailers create distinct programs around this theme to drive traffic, and with our size, it makes the most sense to collaborate with them to feature our products.” Additionally, Go Gourmet has “determined that sampling is really important for our brand,” says Martin, “and to support in-store merchandising, we provide the families that sample our products with a list of retailers where they can buy Slammers.” Joe Lupica, of North Haven, Conn.-based SuperSeedz, which provides several varieties of no-shell pumpkin seeds, says that “the back-to-school period is an important time for us because SuperSeedz
is allergen-free and a healthy snack — two characteristics consumers [say] are currently very relevant to parents. We will continue to roll out our 5-ounce Maple Sugar & Sea Salt and our 1-ounce Mini Pouches in select retailers. The 1-ounce Mini pouches will give consumers an on-the-go option to drop in lunches.” He sees the rise of plant-based foods like pumpkin seeds and of natural foods in general as positive developments, observing, “The shift really points to the on-the-go lifestyles of families, a growing awareness of the benefits of plant-based foods, diet and the availability of goodtasting, nutritious natural snacks. Never before has there been such a good selection. It is very exciting.” When it comes to preferred placement, SuperSeedz’s back-to-school strategy bears some similarity to Go Gourmet’s. Lupica notes that “we typically tryy to leverage end cap space and tie into fall themes. For us, it is important to leverage our inherent nutritional tritional virtues as well as the allergenfree benefits. s. … Typically, we overlay some social media and media relations activities highlighting the natural and allergen-free benefits. We also try to coordinate te retail demo events.”
Year-round d Inspiration Of course, one of the best ways to drive back-toschool grocery ery purchases is by having as many complementary tary products as possible displayed side by side, thereby ereby offering greater convenience for time-pressed essed parents. As Go Gourmet’s Martin points out, “Making it easy for Mom too buy healthy lunch and snack options together will maximize back-to-school sales for retailers.” Still, it’s not just about the start of the school year. Whatever the season, supermarkets and suppliers alike should be looking to spark in families a creative approach to food. While noting, ng, “Back-to-school foods inspire funfilled action in meal planning and incentivize entivize in-store purchases,” ConAgra’s Farooq rooq also emphasizes, “Shoppers are seeking ing lunchbox and snacking solutions throughout ughout the year.” PG
There are so many products to choose from, and back-toschool is such a busy time for families, that we work with our retailers to participate in their programs.” —Nola Martin, Go Gourmet
August 2016 | progressivegrocer.com |
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Refrigerated & Frozen
Eggs
Hatching a Plan
Achieving branded-egg success requires some strategy. B y LLynn P By Petrak k
P The selection has multiplied to such an extent that it is common in many stores that most of the facings are value-added.” —Jay Berglind, Davidson’s Safest Choice National Pasteurized Eggs Inc.
68
utting all of your eggs in one basket may go against general life advice, but when it comes to actual eggs, there are certainly more types going into today’s shopping baskets. After decades of dominance by private label and commodity products, branded eggs are cracking open the marketplace, so to speak, with new offerings and packaging. “Value-added eggs were nonexistent in most markets 20 years ago, and as little as 10 years ago, more than 90 percent of sales were commodity,” notes Jay Berglind, director of marketing for Davidson’s Safest Choice National Pasteurized Eggs Inc., in Lansing, Ill. “The selection has multiplied to such an extent that it is common in many stores that most of the facings are value-added.” Jasen Urena, director of specialty eggs for Denverbased NestFresh Eggs Inc., agrees. “There is definitely a growing trend in branded items, especially in the more unique types of eggs, like pasture-raised, freerange and non-GMO eggs,” he affirms. “Brands are getting out there with these new segments and really pushing innovation in the egg category.” Among the latest branded egg suppliers to begin transitioning to cage-free product is the category leader, Malvern, Pa.-based Eggland’s Best, which has pledged to do so by 2025.
| Progressive Grocer | Ahead of What’s Next | August 2016
Adds Scott Marcus, spokesman for Vital Farms, in Austin, Texas, “We see an increase in consumers’ interest in eggs today, driven by both nutrition and animal welfare concerns, leading to an opportunity for brands to educate consumers and differentiate offerings.” As brands are bringing innovation to the egg category, they’re reaching out to consumers who are increasingly knowledgeable. “I think branded eggs are a trend, and that we’ll see more and more of it,” says Jenni Danby, chief marketing officer for the Happy Egg Co., which has U.S. offices in San Francisco. “Consumers have more power, with the explosion of social media and the internet, to do more research on products and understand that it’s not just reading labels in the store — it’s doing research about brands. As brands, you have to be honest and transparent and deliver what you say you will deliver.”
For Goodness’ Sake Just as other categories, including commodities, have grown to include more products for today’s discerning consumers, the success of the egg category has been propelled by variety. An egg is an egg, of course, but today’s eggs reflect consumer demands for betterfor-you and better-for-the-planet choices, leading, as mentioned earlier, to more cage-free, free range, organic, non-GMO and pasteurized offerings.
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At every turn.
Refrigerated & Frozen
As brands, you have to be honest and transparent and deliver what you say you will deliver.” —Jenni Danby, The Happy Egg Co.
Eggs
Many egg producers specializing in these types of eggs report burgeoning inter interest and sales. The Happy Egg C Co., for its part, continues to expand expa its free-range product into new markets across the country, after strong growth in the company’s U.K. home base. “We’ve grown our retail expansion this year, and that continues to be a big part of plans for the future — to make our eggs available to everyone at an affordable price and make sure we’re in mainstream supermarkets,” asserts Danby. Such growth is also noteworthy because consumers are paying more than the commodity prices that they’ve become accustomed to over the years. “Back a handful of years ago, there were people in the industry who said that no one would pay $3.99 for cagefree eggs, because they are used to 99 cents,” notes NestFresh’s Urena. “Now you see people paying $7.99 and $8.99 for eggs like pasture-raised eggs.”
Brand Moves To distinguish themselves in the fresh egg category with products that are healthier — for individuals, the earth, hens or a combination thereof — brands
often begin with a name that consumers will remember. The Happy Egg Co. is one example. “It absolutely helps,” agrees Danby. “It [evokes] that emotional connection with the consumer to what they are buying, and for them to look at what we are doing differently.” At NestFresh, the product name is also evocative. “We love the name — we’re a little biased, I guess,” laughs Urena. Another way to differentiate branded eggs is through packaging, including the carton and graphics. “When we launched, [we] tried to drive innovation with bright-colored packaging,” notes Danby. “Anything you can [do to] interrupt the shopper at the shelf, to get a couple of seconds when they are at shelf deciding what to buy, helps do that. We have education messages inside the package as well.” Visuals on the packaging can also help tell the story of the brand, adds Urena. NestFresh introduced new packaging a couple of years ago, adding photos that showcased pasture-raised eggs. “You
ADVERTORIAL
Q&A
Talking with…
Matthew O’Hayer Founder & CEO, Vital Farms
Progressive Grocer: Over the past 12 months, growth of Pasture-Raised eggs has been over 10 times the total egg category growth. So let’s start at the beginning what is Pasture-Raised, and is it just a new marketing term? Matt O’Hayer: In a nutshell, Pasture-Raised refers to a farming technique that allows for egg laying hens to spend their days outdoors on fresh pastures – not cooped up in cages or crowded in cage-free aviary systems. Due to the rigorous standards that define Pasture-Raised, consumers can shop confidently that they’re getting the most humanely-treated and besttasting eggs in the market. At Vital Farms, we take it a step further. When we started our first farm back in 2007, we simply wanted to raise hens in the best way possible - as our grandparents might have done. We figured if we provided our hens with a healthy, varied diet with plenty of sunshine and fresh air, they’d lay the most delicious and nutritious eggs imaginable. It was immediately a difference our friends and customers could taste! From there, we added more hens, sold at more markets, and slowly added more farms to our network. As we grew, it was crucial to establish and adhere to vigorous farming standards. With help from Humane Farm Animal Care (HFAC), who regulate the Certified Humane program, we figured out the fundamentals, including everything from providing our hens with adequate vegetation to ensuring the pasture they are on is properly rotated to flock density. That magic number, which correlates with European soil studies, comes to a density of 1,000 birds per hectare, or just over 108sqft per hen. That is why you’ll see that number on every carton of eggs we sell today. It’s a shorthand way of describing what is a well-thought out and managed farming method. PG: Why do you think the Pasture-Raised segment has grown so much faster than any other? MO: The growth is a result of a combination of factors. For starters, there is an upward trend of consumer migration toward better quality products.
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Products with cleaner ingredients, greater sustainability, and meaningful humane production methods - where Pasture-Raised stands out. In addition, public awareness of farming practices, from documentaries and social media campaigns, is higher than ever. Even wide-spread initiatives by restaurant chains and retailers to abandon caged-eggs has pushed conscious consumption to the forefront. PG: What differentiates a truly-pastured egg from all others? MO: The single greatest difference between PastureRaised eggs and all other kinds (from caged to free-range) is that the birds are genuinely outdoors year-round, foraging, dust-bathing, and behaving as chickens should. Despite what many consumers still believe, cage-free and even many free-range hens get little to no outdoor access, and what little they get is typically on very restricted, barren dirt. By comparison, our Pasture-Raised girls get room to roam, forage, socialize and breathe, which makes them happier (yes, you really can tell!) and healthier. These benefits get passed onto the consumer in the superior quality of the egg, both in the richer taste, and in proven nutritional differences. No other egg even comes close. PG: Can you see growth continuing at this rate? MO: Absolutely! We believe we’ve only just scratched the surface of where this movement is going. There’s an enormous untapped market for consumers who are looking for ethical products, but who are still understandably confused as to what terms or labels genuinely reflect that proposition. As we continue to educate and share our message, we’re confident that more and more consumers will choose eggs with the highest standards. In anticipation of this growth, Vital Farms has built an amazing network of like-minded, family farmers, and a support team to look after each farmer, hen and egg.
| Progressive Grocer | Ahead of What’s Next | August 2016
A
Our consumers are loving the superior taste, nutrition & truly humane welfare standards of our pasture-raised eggs. Our retailers are enjoying segment growth, velocity and profitability. Our girls just love being outdoors on grass! SEGMENT MARKET SHARE*
GROCERY SEGMENT GROWTH† 250%
28%
PASTURE-RAISED SEGMENT
sales@vitalfarms.com | www.vitalfarms.com
*SPINS All Channels 12-weeks ended 3/20/16. †SPINS MULO; 52-weeks ended 3/20/16
PASTURE-RAISED
ALL OTHERS
FREE-RANGE -
VITAL FARMS
CAGE-FREE E
72%
ALL E EGGS
Vital Farms pioneered today’s pasture-raised standards back in 2007, and now, with over 100 farms across the US, we continue to be the leaders in innovation, quality and sales. As more and more customers flock to better quality eggs, isn’t it time you did too?
200% 150% 100% 50% 0
Refrigerated & Frozen
You see people paying $7.99 and $8.99 for pasture-raised eggs.” —Jasen Urena, NestFresh Eggs Inc.
Eggs
see terminology like ‘cage-free’ and ‘free-range,’” he says. “Consumers don’t always understand what all of that means, because there aren’t standard definitions. We wanted to put pictures on our packaging that represent the type of production and environment that these eggs are coming from, and the environment that the hens are living in.” Urena adds that NestFresh cycles pictures to show more of the farms and farmers supplying their eggs. Even the egg itself can be branded. Davidson’s Safest Choice brand, for example, marks its pasteurized eggs with a blue “P” emblem to signal to the consumer that the eggs are pasteurized for safety. While packaging and visual emblems point to differences from commodity-style eggs, producers of eggs deemed organic, cage-free, pasture-raised and the like also build their brands through education messages across a variety of channels. “Based on the litany of claims and descriptors in the egg set, it’s critical that Vital Farms demonstrate how different our eggs truly are from the rest,” points out Marcus. “‘Pasture-raised’ is a new farming term that most consumers are not yet familiar with, although it delivers on the expectation of hens foraging on pastures ...
PREMIUM EGG DRIVES SALES
associate[d] with other egg types. We leverage our package design, [and] a newsletter in each carton, along with social media to help educate consumers on pasture-raised eggs.” For raising brand awareness and engaging with consumers, social media is key, concurs Berglind. “Like most brands, we promote on price regularly,” he says. “What distinguishes Davidson’s is the social media content we generate and deliver. We offer hundreds of recipe options, culinary techniques, training videos and more to emphasize the way a sage egg can liberate you in the kitchen.” According to Happy Egg Co.’s Danby, education across many formats is part and parcel of product and packaging for branded fresh eggs. “We have educational messages on packaging, but it goes beyond that — generating awareness and giving people the tools and information they need to make informed decisions,” she says. “We try to deliver education through messaging, social media, public relations and events, to make it easier.” PG For more about branded eggs, visit progressivegrocer.com/brandedeggs.
ADVERTORIAL
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Refrigerated & Frozen
Yogurt
Shaken and
Stirred
New styles of yogurt gain in popularity in the wake of Greek’s success.
S
By Bridget Goldschmidt
ure, Greek yogurt’s had a good run, but nothing lasts forever, so grocers and manufacturers alike are looking ahead to other types of yogurt likely to take off, and coming up with some potential winners. “It seems like ‘fatphobia’ is slowly dying down, and so we are seeing more interest in full-fat varieties of yogurt, which is fantastic, as these yogurts usually have less sugar and the fat helps facilitate the absorption of the fat-soluble vitamins and phytonutrients,” says Jonathan F. Clinthorne, Ph.D., Nutrition Education Department specialist supervisor at Lakewood, Colo.-based Natural Grocers, which operates 120 stores — and counting — in 19 states. “It also seems like with the discovery of how nutritious Greek yogurt is, more people are willing to try some atypical varieties of yogurt like Australian or Icelandic styles, or new unique flavors,” he notes. “Yogurt produced from the milk of pasturebased cows also seems to be gaining momentum; we are seeing much more interest in products made from grass-fed animals — likely because it results
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| Progressive Grocer | Ahead of What’s Next | August 2016
in a more nutritious product, and, since these animals aren’t being kept in confinement-style dairy operations, products produced in this fashion have major animal welfare implications.” Adds Clinthorne: “Another big trend in yogurt is inclusion of live- and active-culture varieties.” As for the kinds of product carried by the chain, “Natural Grocers only sells yogurt from pasturebased dairy,” he explains. “This means that the animals are given the opportunity to graze for the entire grazing season. We do not sell dairy products from confinement dairies, and we don’t allow bovine growth hormones.” In terms of sales, “yogurt and kefir drinks are the fastest-growing subcategory, with approximately 20 percent growth in the past year,” notes Clinthorne. “We’re also seeing an increase in sales for nondairy yogurt products.”
Fat and Flavor City Many of Clinthorne’s observations are borne out by suppliers on the stirring edge — so to speak — of the yogurt category. “Full fat is back, and here to stay,” affirms Koel Thomae, co-founder -founder of Bellevue, Colo.-based Noosa Finest st Yoghurt, which makes a premium Australian-style style product. “As we discover the benefits — and deliciousness — of full-fat dairy, more people ople are embracing it, which is sparking more full-fat ll-fat innovation in the category.” Noosa’s a’s latest innovation, introduced in July, is a line of “sweet heat” products that blends sweet fruits with h a kick of heat from a range of peppers. The varieties es are Raspberry Habanero, Pineapple Jalapeño, Blackberry ckberry Serrano and Mango Sweet Chili, all available in 8-ounce sizes. “These flavors were inspired ed by a taste trek I took across the U.S. and Europe,” recounts Thomae. “I saw and sampled mpled a lot of sweet-and-spicy combinations, ns, and was inspired to try it alongside thee creamy, velvety foundation of Noosa. … So far, consumer reactions have been great, and it’s t’s gotten a lot of love from men, who say the flavor has brought them back to the category.” Two further ther new flavors from the company are
HOW WE’RE CHANGING THE YOGURT CATEGORY Let’s start with some facts: Yogurt smoothies are growing like crazy, at +12.2%*, even outpacing their spoonable cousins. LALA is showing great momentum, with over 35% sales growth versus last year*. We’re accelerating sales by launching new items, including LALA Curb and LALA 100 Calorie Smoothies. And we’re supporting these efforts with a media campaign in early 2016, with national TV, digital, and social efforts, achieving over 4 billion impressions. We know shoppers are on the move more than ever and our campaign is just about that. #YOGURTING is that moment when you’re drinking a yogurt smoothie at the same time you’re doing one of the million things life brings your way every day. Simple, right? By turning yogurt into a verb, a movement has been created. Join us. Stock your store.
*Source: IRI, MULO 52 Weeks Ending 7/10/16
Refrigerated & Frozen
Yogurt
Mexican Chocolate, in 4-ounce 4-packs, and 8-ounce Bhakti Chai Noosa. “Mexican chocolate is exciting because it joins salted caramel as one of our only truly indulgent flavors, and people have been asking for chocolate since we started out,” notes Thomae. “Bhakti Chai Noosa came to life as a collaboration between Brook Eddy, a friend of mine and fellow Colorado female entrepreneur and founder of Bhakti Chai. I’m a huge chai drinker, and what better way to pay homage to my favorite favor drink than to pair it with Noosa?” Continues Thomae: “The entire category has seen big growth over the past five years as interest in yogurt has grown. The premium yogurt category is driving more than its fair share of growth as consumers look for options outside of just Greek yogurt. Our
Fridge-free Yogurt Imagine a product “So Cool It Doesn’t Have To Be Cold.” That’s just what New York-based Materne North America Corp. did when it launched GoGo SqueeZ YogurtZ, a shelfstable snack made with real yogurt and fruit, and the inspiration for that memorable tagline. Introduced this past February at traditional grocery and mass-market locations, the line comes in three SKUs — Strawberry, Berry and Banana — available in 4-count packages, with the club channel soon to offer a larger-format GoGo SqueeZ YogurtZ product. Additional flavor variants and larger pack sizes are in development for 2017 and beyond, promises Materne North America Chief Marketing Officer Philippe Harousseau. The product is merchandised alongside Materne’s GoGo SqueeZ Applesauce On The Go. ”As such, our primary job is to help consumers find our product in store, because it is not where they would think to find a yogurt product,” says Harousseau. “We have employed several shopper marketing programs to draw consumer attention to our shelf/aisle, including shelf talkers, shelf strips, cart signage and floor decals. We work closely with our retail buying and merchandising teams to secure both store-owned display space and shipper vehicle placements. We are confident that once consumers try, they will want to buy, so we are constantly trying to ensure the product is easy to find in stores.” He adds that the company “anticipate[s] that consumers will embrace the idea of a [shelf-stable] yogurt,” adding, “Who said yogurt has to be refrigerated, anyway? With GoGo SqueeZ YogurtZ, we are proving to consumers that you can have a scrumptious-tasting yogurt, with the benefits of protein, calcium and vitamin D, with no fridge needed, making it the first truly portable yogurt that goes wherever and whenever. That, for us, is goodness on the go.”
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| Progressive Grocer | Ahead of What’s Next | August 2016
research has told us that premium shoppers spend more per trip and make more trips per year, resulting in 32 percent greater annual yogurt spend.”
Grazing in the Grass “Consumers continue to look for yogurt products with enhanced nutritional value,” asserts Nicole Mydy, brand innovation manager at Organic Valley, a La Farge, Wis.-based cooperative of dairy farmers. “Currently, grass-fed organic yogurt is growing 3.6 times faster than organic yogurt without the grass-fed claim,” she adds, citing figures from Schaumburg, Ill.-based SPINS. “Full-fat yogurts are also gaining in popularity with consumers as they become increasingly aware of the benefits of full-fat dairy and migrate away from lower-fat options.” In September, Organic Valley, which already makes the No. 1-selling and most widely distributed grass-fed multiserve yogurt in mainstream grocery, according to SPINS, will add to its Grassmilk Yogurt line 6-ounce single-serve cups in Vanilla, Plain, Wild Blueberry and Strawberry varieties. “The Wild Blueberry and Strawberry varieties will be fruit on the bottom, and all will be creamon-top, similar to our original 24-ounce tubs of Grassmilk Yogurt,” notes Mydy. In promoting the product, the cooperative has concentrated on the stores that stock it. “As Organic Valley Grassmilk yogurt is a new launch in a highdemand category, we have focused our promotional activity at the retail level, driving trial and awareness by supporting the product on shelf, as well as by driving our current Grassmilk milk consumers to these new products made with the same 100 percent grass-fed milk,” says Mydy. “Product acceptance by both our retail accounts and consumers has far exceeded our Year 1 expectations.” Merchandising, meanwhile, depends on the retailer. “Our in-store merchandising plan is to get these products placed by other super-premium yogurt products, whether organic or conventional,” explains Mydy. “Placement varies across the dif-
ferent retail accounts, with some having dedicated organic and natural sets, while others have highly integrated yogurt sets as part of their mainline dairy coolers. As organic dairy continues to gain momentum and consumer interest, we expect more integration in mainstream grocery.”
Smoothie Sailing “Greek yogurt was huge and continues to be popular, but the yogurt smoothie category is fast-growing and is shown to be outpacing blended-cup yogurt,” says Desiree Johnson, director of marketing at Dallasbased Lala, a Borden Dairy brand. “This is because
yogurt smoothies are a well-rounded product that meets consumers’ s’ three key demands of nutritious, utritious, great-tasting and d portable. Right now, yogurt gurt smoothies are really on-trend trend with Millennials especially, cially, who are driving much of the growth in better-for-you ter-for-you snacking because of their desire to eat healthier and find products that hat are convenient.” Acting on those insights, Lala has augmented its lineup of on-the-go yogurt smoothies with two new products. Billed as the first-ever portable hungercurbing yogurt smoothie, Lala Healthies Curb contains 10 grams of protein and 8 grams of whole grain that aim to keep cravings at bay and sustain energy throughout the day. Available in Wild Strawberry, Toasted Pecan and Orange Pineapple flavors, the item comes in 4-packs of 6.7-ounce bottles. The other line, Lala 100 Calorie, offers consumers a portion-controlled, convenient option. Made with real fruit, the product is available in
With the discovery of how nutritious Greek yogurt is, more people are willing to try some atypical varieties of yogurt like Australian or Icelandic styles, or new unique flavors.” —Jonathan F. Clinthorne, Natural Grocers
Let’s talk trash at Booth #222!
Refrigerated & Frozen
Right now, yogurt smoothies are really on-trend with Millennials especially, who are driving much of the growth in better-foryou snacking because of their desire to eat healthier and find products that are convenient.” —Desiree Johnson, Lala
Yogurt
Wild Strawberry, Mountain Blueberry and Cherry Vanilla varieties in 4-packs of 7-ounce bottles. “We are excited about the growth coming from this segment and encouraged to see other manufacturers jumping in with unique offerings to help expand the drinkable category,” notes Johnson. “As this category expands and consumer interest grows, we believe it will be important for retailers to highlight their drinkable yogurt offerings. Retailers leading the growth in drinkable yogurt are moving towards clearly defined drinkable segments incorporating multiple styles, sizes and brands of adult drinkable yogurt.” In turn, Lala has evolved the way it merchandises these products. Citing 2015 Simmons Consumer research indicating that among consumers purchasing drinkable yogurt, 36 percent buy only drinkable SKUs, Johnson observes: “These
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shifts in the marketplace and consumer lifestyles have fueled the need for a different way of looking at the once standard yogurt set. As such, we have partnered with several large chains to implement ‘drinkable only’ sets within their yogurt sections. This began about six months ago and is now in market at some of the major retailers. It truly represents an easy way to attract Millennials and others to the category by highlighting drinkables with their consumer benefit of ‘hyperconvenience.’”
Endless Opportunities All of these emerging trends in the aftermath of Greek embody consumers’ desire to get more out of their yogurt products. “As the knowledge pool about the benefits of probiotics continues to grow, interest in utilizing yogurt as a functional food should drive sales,” predicts Natural Grocers’ Clinthorne. “It will be exciting to see what new types of probiotics are discovered and incorporated into different yogurts to make them supportive of different aspects of health.” “Yogurt consumers will continue to demand elevated nutrition from their yogurt, whether it’s in the form of 100 percent grass-fed dairy, full fat, minimal processing, specialized probiotics/ gut health or high protein levels,” agrees Organic Valley’s Mydy. “We also anticipate yogurt usage occasions will continue to broaden beyond breakfast, as it quickly becomes one of the top foods consumed during snacking occasions.” This multi-daypart view is shared by Noosa’s Thomae, who enthuses, “As people look to yogurt as a snack, dessert, and even as a marinade or sauce, the flavor opportunities are endless!” Perhaps Johnson puts it best, however, noting that further success in the category “means continuing to deliver [at] the intersection of good-for-you, convenience and taste.” PG For more about yogurt merchandising and new products, visit progressivegrcer.com/yogurt.
GMO Special Report
Feature
Rise of the
Unknown Non-GMO demand soars despite lack of consumer understanding. By Randy Hofbauer
R
ecent years have seen steadily rising demand for products without genetically modified organisms (GMOs). Sales of food labeled “non-GMO” grew more than $8 billion between 2012 and mid-2016, reaching $21.1 billion, according to supermarket scan data from Schaumburg, Ill.-based research firm Nielsen. But what’s driving such dramatic growth? Carl Jorgensen, director, global thought leadership with Stamford, Conn.-based Daymon Worldwide, says the cause is simple: GMOs are a “stand-in” for Big Government, Big Agriculture and Big Food. And consumer distrust of these three institutions is skyrocketing. “Consumers may not understand exactly what GMOs are,” he notes, “but they have an instinctive aversion to the idea of genetically engineered food.” In fact, consumers are losing trust even in the face of expert opinions on the matter. According to a 2015 Pew Research Center study, 57 percent of U.S. consumers consider eating genetically modified foods “generally unsafe,” even though only 11 percent of scientists with the American Association for the Advancement of Science feel the same. Additionally, a February 2016 report from Rockville, Md.-based market researcher Packaged Facts found that 26 percent of U.S. adults believe that non-GMO labeling is an especially important factor when choosing what foods to eat. “Consumers want their foods to be more natural,” Jorgensen adds, “and GMOs are seen as not natural.” Further, while no one really knows the effects of altering the DNA of organisms in food products, cancer incidence is on the rise, along with many food sensitivities and allergies, all of which are arousing suspicion. “Only 20 percent of diagnosed cancers have known origins, and food allergies are growing at lighting speed, which leads one to think that maybe what we are altering in our food may be altering our health,” says Mary Vandewiele, co-owner of The Better Health Markets, in Novi, Mich. Of all generations, Millennials are leading the demand for labels calling out GMOs. So whether GMOs are actually harmful, Millennials’ growing purchasing power means money does — and will continue to do — the talking here. “The Millennials were the first generation to grow up with [the] awareness and knowledge [of GMOs], and will be leading the charge
We give higher consideration to potential new products that have the non-GMO label present on the package.” —Mary Vandewiele, The Better Health Markets
August 2016 | progressivegrocer.com |
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Feature
GMO Special Report
on cleaner products,” Vandewiele explains. explains “This will invariably put more pressure on companies to add m more information to their labels or lose traction in the market. market.”
Just as the organic label became increasingly important to retailers and consumers in recent years, we’re now beginning to see a similar demand for the non-GMO label, one that is only likely to increase over the next year.” —Lou Biscotti, WeiserMazars
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Retailers, Manufacturers Respond Lou Biscotti, partner with Chicago-based research firm WeiserMazars and leader of its it food and beverage national practice, has see seen demand for such information grow. In the same way that retailers such as Austin, TexasTexa based Whole Foods Market and Monrovia, Calif.-based Trader Joe’s have focused marketing mark efforts on their extensive organic offerings, many retailers today are pushing suppliers for non-GMO non products, understanding their profitability. Whole Foods, for instance, found in 2015 that the 130 brands that actively supported Califor California’s and Washington state’s GMO labeling initiat initiatives collectively saw sales rise almost 13 percent, Jo Jorgensen notes. Meanwhile, brands that opposed the labeling la were down almost 10 percent in sales. Overall, Overall sales of Non-GMO Project Verified products were up 21 percent for more than 7,000 items, and sales oof products that were both organic and Non-GMO Project P Verified were up 17 percent. True, Whole Foods customers are more likely than those at more traditional retailers to consciously conscio avoid GMOs. However, this data reflects mainstream mainstr retailers’ sales data and not Whole Foods’, as the grocer didn’t share scan data with Nielsen over that time period. “Just as the organic label became increasingly increasing important to retailers and consumers in recent years, we’re n now beginning to see a similar demand for the non-GMO label, lab one that is only likely to increase over the next year,” Bisc Biscotti explains. The Better Health Market has, for the past pa few years, been making such a push. The retailer active actively educates its customers and sends a message to its business busines partners that its philosophy is to embrace foods that are natural, n organic and minimally processed to promote better health h and prevent disease. Natural and organic labels aare cleaner than conventional ones, and with the passage of the t Safe and Accurate Food Labeling Act of 2015 — called by some GMO labeling advocates “the DARK (Denying Am Americans the Right to Know) Act” — no one can be certa certain that the foods they put in their carts don’t contain GMOs. Therefore, labeling is critical for the retailer and its customers. custome “We give higher consideration to potential potent new products that have the non-GMO label present on the th package,” Vandewiele asserts. “In response, we see more mo and more products now have this certification. Suppliers understand u that this gives them easier entry as a new product.” Other grocers aren’t having to nudge their thei business partners as much. Heather Isely, EVP of Lakewood, Co Colo.-based Natural Grocers, says her company hasn’t had to pressure vend vendors because they’re responding directly to consumer demand for transparency transpa and higher quality in their foods. For instance, all of the retailer’s retailer produce is 100 percent USDA Certified Organic, which requires it to t be non-GMO. “Because we offer a large assortment of organic food options in our
| Progressive Grocer | Ahead of What’s Next | August 2016
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Feature
GMO Special Report
From a retailer perspective, there is nothing to fear from GMO labels, and every reason to encourage non-GMO labels for the sales lift they provide.” —Carl Jorgensen, Daymon Worldwide
stores, we are able to significantly reduce the percentage of GMO-containing foods when compared to traditional grocery retailers,” she says. However, traditional grocers have been cautious when it comes to educating about GMOs and non-GMO products via in-store merchandising, Jorgensen notes. Instead, they’ve been happy to let individual brands make their own non-GMO claims on packaging, and some retailers — as the Cincinnati-based Kroger Co. is doing with its Simple Truth brand — are experimenting with non-GMO labels on their store-brand products.
Labeling for GMOs As for labeling that communicates that a product does contain GMOs, the Roberts-Stabenow Biotech Labeling Act, which President resident Obama recently signed into law, will require most food products ducts to carry a text label, symbol ymbol or QR code indicating ting whether they contain in GMOs. Originallyy proposed by Sens. Debbie bbie Stabenow (DMich.) ich.) and Pat Roberts (R-Kan.), R-Kan.), members of thee Senate Committee on Agriculture, Nutrition and nd Forestry, the new law nullifies ullifies Vermont’s own recently cently passed GMOlabeling law aw by closing what the federal legislators egislators called “glaring loopholes” es” in the Vermont law. Manufacturers will ll have two years before they have to adopt the labeling, as the rules behind the law still must be written. Many industry associations praised the speedy signing of the bill into a law, including Food
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| Progressive Grocer | Ahead of What’s Next | August 2016
Marketing Institute, the Grocery Manufacturers Association and the National Grocers Association. Additionally, for the most part, many manufacturers and retailers have already been moving toward the labeling now being formalized by the legislation. One major reason for the praise is the fact that the bill will keep food manufacturers from having to navigate a plethora of varying state laws, which would force a choice between tailoring labels by state — a pricey proposition — or pulling products altogether from retailers in that state. However, the legislation situation has been in such a state of flux that it’s difficult to assess how retailers’ relationships with suppliers are being affected, Jorgensen notes. In general, retailers haven’t seen any problems with sales of products labeled as containing GMOs, such as those from Campbell’s and Mars. In fact, a study released by the University of Vermont in late 2015 found that, contrary to the arguments of labeling opponents, GMO labeling wouldn’t act as warnings that scare consumers away from buying products with GMOs. “I would say that from a retailer perspective, there is nothing to fear from GMO labels, and every reason to encourage non-GMO labels for the sales lift they provide,” Jorgensen says. It would be ironic if the pending law stimulated the non-GMO market even further, he adds. Because it allows for “considerable lack of transparency” in the labeling, the level of consumer trust could be exacerbated, further burnishing the natural halo of non-GMO products. But the more demand grows for non-GMO products, the more potential for trouble exists down the line. A major issue that retailers and manufacturers must worry about is maintaining steady supply, as agriculture hasn’t kept up with demand for non-GMO products, meaning that manufacturers must take extra precautions to source and secure reliable quantities of non-GMO ingredients. Strategies include long-term contracts and dealing with specialty identity-preserved grain dealers. Ultimately, the trend of non-GMO products is here to stay. Whether we’ll continue to see nonGMO claims on more products, however, won’t depend solely on consumer demand — it also will depend on how confident manufacturers are that they’ll have access to a steady supply of non-GMO ingredients. PG
Fresh Food
Produce
Hungry for
Half the Plate The produce industry adopts a sophisticated approach to increasing fruit and veggie consumption. By Jennifer Strailey
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hile shoppers choose where to buy groceries based on the freshness and quality of the produce department, the vast majority of them are still falling short of consuming the recommended daily servings of fruits and vegetables. In “The Power of Produce 2016: An In-depth look at Produce Through the Shoppers’ Eyes,” Food Marketing Institute (FMI) found that most shoppers readily admit to not eating enough fresh produce, and 75 percent report that they’re trying to eat more fruits and vegetables. The study, published by Arlington, Va.-based FMI and prepared by San Antonio-based 210
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Analytics, reveals tremendous opportunities in the fresh produce business. To seize those opportunities, grocers, suppliers and industry organizations alike are becoming increasingly sophisticated in their efforts to drive greater consumption of fruits and vegetables. “We have a job ahead of us, if we’re ever going to get to half of the plate — our goal,” says Kathy Means, VP of industry relations for the Produce Marketing Association (PMA), in Newark, Del. “We’ve got a long way to go. But we look at it as an opportunity. What other food can say you should double consumption?” Means, who sees many reasons for optimism when it comes to boosting fruit and veggie intake, points to the success of a number of high-profile marketing campaigns in the fresh produce industry. “We often think about produce as a monolith, but it isn’t,” she asserts. “We’re in an industry where we’re competing against soda, chips and candy. It requires marketing to sell it.” One of the industry’s notable branding efforts has been the “Sesame Street” Eat Brighter! campaign, introduced by Sesame Workshop and PMA in 2013. The program, which has about 60 supplier participants and 60 retailers (representing 30,000 stores) licensed to use the “Sesame Street” assets, will run through 2018.
#JUSTSMILE WITH CHIQUITA © 2016 Chiquita Brands LLC. Chiquita and Chiquitalogo are trademarks of ChiquitaBrands LLC.
Fresh Food
Pre-cut and sliced veggies always help, plus easy menu ideas at point of sale.” —Karen Caplan, Frieda’s Produce
Produce
According to PMA, suppliers report sales are up consistently by 3 percent year over year. But Eat Brighter is just one of a number of highly successful campaigns in fresh produce. “We continue to see greater sophistication in marketing from the produce industry,” affirms Means, who points to the campaigns of brands like Wonderful Halos, Cuties, Wonderful Pistachios, and Avocados from Mexico with its 2016 Super Bowl commercial. Means also applauds the Irvine-based California Avocado Commission for promoting avocados at breakfast, thereby expanding the fruit’s eating occasions. “Even established brands like Sunkist, Del Monte and Chiquita are placing greater emphasis on ad tie-ins and social media — all of those things are important to growing the industry,” she says.
Big-budget Success Los Angeles-based Wonderful Co. made produce history when it committed to spending $100 million over five years in support of its Wonderful Halos brand. According ording to Adam Cooper, er, VP of marketing and insights for Wonderful nderful Citrus and Wonderful nderful Pistachios & Almonds, the companyy spent more than $100 0 million across the Wonderful nderful portfolio last year, and will surpass that investment this year. New ew “360 campaigns”” including print, television, publicc relations, billboards,, digital g mediaa and free-standing inserts (FSIs) will debut in October for both Wonderful Halos and Wonderful Pistachios. “We’re now in year three of the Halo campaign,
Bananas for Bananas Grocers can boost sales even of household favorites like bananas with innovative promotions. “At Del Monte Fresh, we are constantly creating promotions focused on expanding fresh produce sales and reaching new consumers, as well as increasing usage frequency by current consumers,” says Dionysios Christou, VP of marketing for Del Monte Fresh Produce, in Coral Gables, Fla. One campaign designed to increase the consumption of Del Monte premium bananas is its annual Go Bananas! Halloween Costume Giveaway. In an effort to encourage healthy eating and living during the autumn holiday, Del Monte’s Go
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and it continues to be the No. 1 brand in the category,” says Cooper, adding, “Wonderful Halos has helped to make mandarins an over-a-billion-dollar category.” He attributes the campaign’s success in part to the company’s in-store support, including a variety of POS and merchandising bins, which reinforce the national advertising campaign at the store level. “Wonderful has transformed everyday commodities into household brands through creative marketing on TV and in-store,” asserts Dominic Engels, president of POM Wonderful. For the second consecutive year, POM Wonderful has sponsored the “American Ninja Warrior” television program. “While we can’t directly attribute sales spikes to our involvement with ‘American Ninja Warrior’,” says Engels, “our 100 percent juice products are up 24 percent in all channels.”
Educational Campaigns That Sell When Salinas, Calif.-based D’Arrigo Bros. wanted to raise awareness for its Andy Boy Broccoli Rabe, it hired a PR firm, ad agency, celebrity chef and nutritionist to position the superfood as the next kale. The next thing the company knew, The Wall Street Journal had picked up the story, and broccoli rabe has been gaining momentum ever since. The impetus for the campaign was the realization that most broccoli rabe customers were older, and it had an old-school image. “We realized that if we wanted to stay popular, we needed to market to Millennials,” says Claudia Pizarro-Villalobos, marketing and culinary manager for D’Arrigo Bros. D’Arrigo thus created a convenient value-added broccoli rabe SKU that’s washed, chopped and ready to eat in an 11-ounce bag. While the first year of the campaign was focused on education about the health benefits and versatility of broccoli rabe, the second year will take a more grass-roots approach at the retail level, notes
Bananas! campaign promotes bananas and other fruits as alternatives to traditional Halloween treats. The sweepstakes gives consumers the chance to win a Del Monte branded banana costume to wear during Halloween festivities. “The promotion is supported throughout the U.S. and Canada with secondary banana stickers, point-of-sale materials to liven up banana displays for Halloween, in-store life-sized banana photo opportunities, and social media activations,” explains Christou. “Last year’s promotion received over 44,000 entries and over 300,000 page visits.” Del Monte expects this year’s fifth -annual promotion, set to take place Sept. 1-30 at www.freshhalloween. com, to be its biggest to date.
| Progressive Grocer | Ahead of What’s Next | August 2016
Fresh Foods
Produce
Pizzaro-Villalobos. Frieda’s Produce Inc., based in Los os Alamitos, Calif., has encouraged ged the greater consumption of produce, roduce, from the exotic to the everyday, veryday, for decades. To move the needle on fresh produce roduce consumption, Frieda’s President and CEO Karen Caplan believes elieves that convenience is key. “Pre-cut Pre-cut and sliced veggies always help, plus easy menu ideas at point of sale,” she advises. “Another vises. “Another way to increase the sales is to group all the precut convenient items near checkout or in the ‘takeout’ section of the store, to make it easy for the shoppers.”
Upping Eating Occasions Campaigns that encourage consumers to eat a particular produce item at more meal occasions can help nudge the nation closer to half the plate. With that in mind, the National Watermelon Promotion Board, in Winter Springs, Fla., is currently promoting the Watermelon Every Day
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program, and features the many uses of watermelon year-round on its website. “In retail, we partnered with the shopping app Ibotta in 2015, and our campaign partnership with them resulted in over 200,000 completed engagements and over 5 million impressions in three weeks,” says Juliemar Rosado, director of retail operations and international marketing. In addition to its annual retail display contest in July and August, the board is running a #100daysofwatermelon consumer contest on Instagram. “So far, the response has been great to both,” notes Rosado. “Social media enhances our ability to reach more individuals.” In-store, sampling watermelon is one of the most effective ways to entice consumers to purchase. “Using them in recipes showcases their versatility,” adds Rosado, who says that the entire watermelon can be consumed. To prove it, the board offers a tasty recipe for slaw made from the rind.
Culinary Convenience Inserra Supermarkets, which owns and operates 22 ShopRite stores in New Jersey and New York, is taking a multifaceted approach to encouraging its
customers to eat more fruits and vegetables. Its new Meal of the Week program aims to help people serve nutritious meals more often. Stores feature a different, easy-to-prepare recipe weekly, and then merchandise all of the ingredients together in a refrigerated case. Inserra has introduced the program in more than a dozen of its stores, with plans for further expansion later this year. “We’ve had a lot of positive customer feedback for Meal of the Week,” says Dana McLaughlin, the retail dietitian for Inserra’s ShopRite in Wallington, N.J. “They really appreciate the diversity of the recipes, and we make sure that there’s two different vegetables in each recipe, and different proteins.” Vegetarian recipes are also popular. “Convenience is the biggest factor,” notes McLaughlin. “Customers can purchase all the ingredients in one area, and often the produce may already be partially prepared, like an onion that’s diced.” In the Wallington store, coolers featuring the Meal of the Week ingredients are stationed between the produce and meat departments. “The No. 1 comment we hear from customers is their lack of time to prepare produce, particularly with vegetables,” says McLaughlin, one of a team
of dietitians who work at 10 Inserra ShopRite stores. “A big part of changing that is education and encouraging simple ways to include fruits and vegetables in their diet.” Inserra ShopRite stores also demo a Produce Pick each week. “We feature a fruit or vegetable in the ShopRite circular and offer handouts that we give to customers looking for new ideas,” explains McLaughlin. The handouts offer tips on purchasing, preparing and storing a different fruit or veggie each week. “Our goal with customers is to get them to try one new fruit or vegetable each week,” says McLaughlin. “It’s a very reachable goal and encourages a gradual increase in consumption.” PG For more about increasing fresh produce consumption, visit progressivegrocer.com/freshproduce.
Show love for our peppers and the earth. At Wholesum Harvest, our peppers are sustainably grown using responsible farming practices. We turn our depleted plants into nutrient-rich compost, use mechanical weed control and apply natural, integrated pest management. We see farming as a stewardship, leaving the planet better than we found it.
Wholesum Harvest | PO Box 7348, Nogales AZ 85628 Phone: 520.281.9233 | Fax: 520.281.4366 | wh.farm | contact@wh.farm Wholesum Harvest is proudly certified organic by QAI, San Diego, CA.
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August 2016 | progressivegrocer.com |
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Fresh Food
Produce Category Spotlight
Bite-size Bliss
Snacking, greenhouse-grown and organic top the trends in fresh tomatoes. By Jennifer Strailey
Greenhouse growing will become increasingly more important now as we prepare for a world where in 2050, there will be more people than the food and resources needed to survive.” —Michael Joergensen, NatureSweet
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hile snacking has become a daily practice for most Americans, a growing number of consumers are looking for healthier options when they nosh between meals. This trend has many turning to tiny, tasty tomatoes. “Consumer demand for fresh, easy, ready-to-use ingredients continues to be on the rise, so we’re seeing a host of new products expanding the category in an attempt to meet these demands,” says Michael Joergensen, VP of marketing for San Antoniobased NatureSweet. “Small-tomato usage u continues to increase as consumers focus more on o salads and other healthy, on-the-go products.” NatureSweet’s Constellation package packa offers a medley of tomatoes for different occ occasions, including slicing, salad and snacking varieties. The 24-ounce easy-open resealable package pa is 100 percent recyclable. “Some of the latest trends we’re seeing see include variety packs that offer several different d varieties of tomatoes together in one package,” p adds Joergensen. “There is also the increased inc desire for a guaranteed ‘best if used by’ by date on products. Consumers are becoming savvier about the different tastes and flavor of tomatoes, so the ability to t guarantee the freshest, tastiest product produc
| Progressive Grocer | Ahead of What’s Next | August 2016
remains front and center.” At Kingdom Fresh Produce Inc., in Donna, Texas, General Manager Guillermo Martinez sees small and flavorful tomatoes taking the category by storm. “The real trend in the tomato category is flavor,” he affirms. “That is why the snacking tomato category has been growing so much in the last years.” Seed companies are creating new tomato varieties with high-sugar profiles and big flavor, observes Martinez, who adds, “They have been more successful with small bite-size tomatoes.” Kingdom Fresh recently launched an organic line,
Boom Tops in tomatoes. When you need a steady supply of high-quality produce
picked at the peak of ripeness, Del Monte delivers. As a leading grower, re-packer and marketer of tomatoes in the US—and a go-to for a wide range of whole and fresh cut fruits and vegetables—we provide the consistent quality you depend on to keep your customers happy. Plus, our proven experience and category management capabilities can help your business boom.
The Nature of the Best
freshdelmonte.com | 1-800-950-3683 | fruits.com
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Fresh Food
The real trend in the tomato category is flavor. That is why the snacking tomato category has been growing so much in the last years.” —Guillermo Martinez, Kingdom Fresh Produce Inc.
Produce Category C Spotlight
beginning with wit snackfriendly grape tomatoes. “This is completely c new to the com company, and we are foc focusing on expanding ou our offerings in organics,” M Martinez says. The com company also redesigned its packaging and website to better bet communicate the farming practices p and people behind Kingdom Kingd Fresh tomatoes. NatureFresh Farms, in LeamingNatureFre ton, Ontario, believes so strongly in the traction of the snacking tomato subcategory that it recently launched an entire line of Tomz Snacking Tomatoes. The line includes red, yellow and orange grape tomatoes, as well as red cherry, sweet cocktail and medley varieties. “Our snacking tomato line has been expanding each year as we continue to bring new varieties to market,” notes Retail Account Manager Matt Quiring. “As a vertically integrated grower and marketer, we are able to maintain a greater level of quality in what we pick, pack and ship to our customers.”
Bases • Fixtures Displays • Merchandisers
www.masonways.com
The company mpany is grouping its snacking tomatoes omatoes under one distinctive brand with consistent messaging, aging, in an effort to build brand nd awareness across multiple varieties. rieties. NatureFresh Farms’ introduction of the Tomzz line has been made possible by the he expansion of the greenhouse acreage at its Delta, Ohio, facility. The family-owned wned concern currently operates 130 acres in Leamington and 15 acres in Ohio, with 30 additional onal acres expected to be operational at the latter facility ility soon.
Greenhouses Yield Growth Offering a multitude of benefits, from energy and resource efficiencies to climate control to year-round growing consistency, greenhouse-grown tomatoes are redefining tomato cultivation. “The biggest trend is that greenhouse production is outpacing field options, which allows for year-round production, and the yield is higher,” says Jessie Gunn, marketing manager for the Nogales, Ariz.-based Wholesum Harvest. “This spells a year-round win for retailers.” In the Sonora high desert, Wholesum Harvest tomatoes are grown in greenhouses, where the plants are fed rich, organic compost teas that provide beneficial micro-organisms. The organic produce supplier also uses a European technology to reduce and reuse water in its greenhouses. “Greenhouse growing will become increasingly more important now as we prepare for a world where in 2050, there will be more people than the food and resources needed to survive,” asserts Joergensen, of NatureSweet. “In this reality, the future of produce is dependent upon sustainable practices, including hydroponic and containerized growing.” NatureSweet tomatoes are greenhouse-grown in a controlled environment to ensure yearround consistency. Its greenhouse facilities are located in warm, dry climates that are ideal for providing vine-ripened tomatoes during any season, even in the colder months. Kingdom Fresh Produce is another supplier experienced in greenhouse growing. Its tomatoes are hydroponically grown in greenhouses in Torreon and Puebla, Mexico. “The advantage of greenhousegrown product is the ability to control temperature, light, humidity and nutrients,” notes Martinez. “With this, growers can produce more with less — less water and less acreage — but much higher yields. “The ability to reclaim irrigation water in controlled environments like greenhouses also makes [greenhouse-grown] very desirable to growers,” he adds. “This also has a positive impact on the environment.”
Spotlight on Florida-grown Tomatoes Organic and Fair Trade With organic produce growing at a rate of approximately 15 percent year over year, Wholesum Harvest has seen a steady increase in sales of its organic hothouse tomatoes. “I see organic tomatoes as becoming hugely important,” says Gunn. “Our successes in year-round tomato production allow us to price competitively to conventional, so the tiny price gap between conventional and organic means consumers will not only shop in alignment with their health values, but it’s a straight value shop in the organic sector.” The company’s Organic Espresso Tomato on the Vine features a chocolate outer skin and a rich flavor that lends itself to cooking and salads. The certifiedorganic tomato, along with Wholesum Harvest’s entire selection of fresh produce, is on the verge of an additional distinction: Wholesum Harvest is the first U.S. farm to apply for Fair Trade certification. “We are fully expecting to be the first domestic Fair Trade-certified farm by October of this year,” reveals Gunn, who says that the social responsibility of farming is just as important as the environmental component. “We’ve learned the value of supporting our work-
“Florida consistently leads the nation in fresh-market tomato production values,” notes the Florida Department of Agriculture and Consumer Services’ Division of Marketing and Development. In 2014, Florida produced 34 percent of the U.S. supply in terms of tonnage of fresh-market tomatoes, which accounted for 39 percent of the U.S. value. In 2014, Florida’s tomato crop led the vegetable, melon and berry category for the state and was valued at more than $453 million dollars. “Florida farmers continue to plant new cultivars that have better flavor and have higher disease resistance,” notes a representative of the Florida Department of Agriculture. “New cultivars like Tasti-Lee and Crimson Queen allow for tomatoes to be vineripened. Cherry and grape tomatoes are increasingly popular with consumers and are grown extensively in Florida.” Most of the state’s tomato production concerns rounds, which are grown from early October until late June. Cultivation is centered in the Ruskin/Palmetto area; however, south Florida counties are also home to widespread production. In terms of trends, the Florida Department of Agriculture also sees snacking tomatoes increasing in popularity, including grape and cherry tomatoes in 1-pint clamshells and kid-friendly snack packs.
ers in building their own communities,” he explains, “while we work hard to pay a fair wage and provide training and employee-focused operations.” PG
Grown to shine.
Happy customers. That’s what we want for you. So, we build greenhouses to protect our tomatoes, we handpick them off the vine when they’re ripe and juicy, and we ship them in temperature-controlled trucks. That way, each bite will brighten everyone’s day.
© 2016 NatureSweet Tomatoes
2016 Retail Pharmacy Review
T
here was a time when the idea of going to the grocery store’s pharmacy section meant little more than picking up a bottle of aspirin, a hot-water bottle and, perhaps, a prescription. Fast-forward to 2016: The Affordable Care Act has added 20 million (and counting) to the number of insured Americans. Retailers have stepped up and now the in-store pharmacy trip may include getting required school immunizations for kids, a state-of-the-art blood pressure checkup for you, and even a biometric exam for the entire family that’s part of a complete wellness program. Call it Wellness 2.0, which is taking place at a growing number of grocery store pharmacies, according to an exclusive Progressive Grocer survey of retail pharmacists, category executives and pharmacy managers who operate and/ or oversee in-store grocery pharmacy departments nationally. The survey, which was fielded in July 2016, is based on proprietary research from PG and provides supermarket industry executives and grocery store managers a unique window into the past, present and future of the industry. In particular, these survey results offer
Wellness 2.0 ‘Complete care’ underscores in-store pharmacies’ increasing role of one-stop convenience. By Bruce Horovitz
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DID YOU KNOW? Nature Made® is recommended by Pharmacists in more categories than any other vitamin and supplement brand.*
Nature Made® buyers spend significantly more each year in Pharmacy ($349) than the average VMS category buyer ($293)
Pharmavite Customer Value Proposition
VMS/Health &Wellness Affinity
Profitable Commitment Supply Shopper Innovation Volume To High Chain Engagement/ Growth Quality Excellence Activation
*Based on US News & World Report - Pharmacy Times Survey, Nature Made is the #1 Pharmacist Recommended Brand in Nine Categories - Letter Vitamins, Omega-3/ Fish Oil, Coenzyme Q10, Flaxseed Oil, Herbal Supplements, Cholesterol Management-Natural, Garlic, Diabetic Multivitamins and Mood Health Supplements † These statements have not been evaluated by the Food and Drug Administration. These products are not intended to diagnose, treat, cure or prevent any disease.
VMS/ Pharmacy Affinity
2016 Retail Pharmacy Review Are In-Store PhAArmAAcIeS PAArt of LArger WeLLneSS DeePArtmentS? 54.2% YeSS
45.8% no
Source: Progressive Grocer Market Research, 2016
an unusual peek into the grocery store industry’s burgeoning pharmacy sector and the recognition that good food complements the complete health and wellness landscape.
Focus on Health More than half (54 percent) of survey respondents reported that their in-store pharmacies are actually part of a larger “wellness department.” Many are expanding the size and scope of their offerings in a bid to offer one-stop convenience to consumers — particularly Millennials — who want to make each shopping trip quick but deliberate. As a result, the world of in-store pharmacies coast to coast is being turned upside-down and inside-out as chains quickly respond to consumer demand for better, health-focused alternatives. “It used to be about getting the prescription
as fast as you can,” says Marcus Hurst, pharmacy supervisor for the eight Broulim’s Fresh Foods stores in Idaho and Wyoming that include pharmacies. “Now it’s moving towards complete care and complete evaluation of health, as opposed to putting pills in bottles and getting them out the door.” This evolution is taking place at mom-and-pop grocers as well as many of the nation’s largest and most successful chains. Take Minneapolis-based Target, for example, which recently sold its pharmacy business to CVS, based in Woonsocket, R.I. Now, under a rebranding, CVS stores have begun to open inside Target stores — most of which already have full grocery departments. Under this scenario, shoppers can get their food, clothes and wellness needs served at a single location. But even chains as small as Broulim’s — with 10 stores in two states, including the eight with pharmacies — are racing to improve their pharmacy departments. Perhaps the most significant change is the addition of space, as consumers seeking personal information on health and wellness also are requesting privacy. As a result, some grocery store pharmacies are adding private counseling space. Roughly half of the Broulim’s stores have added private counseling space — and the other half eventually plan to, according to Hurst. At one location, for example, the magazine rack area was shortened, as was a tiny portion of the pharmacy’s retail area. At another location, the size of a storage room was reduced to add an area for counseling.
PLAn nS to chAnge number of PhAArmAAcIeS oPerAAteD D In next 3 YeAArS 62.4% 31.3% net chAnge:
+5.7
neW PhAArmAAcIeS Per comPAnnY Among thoSSe thAAt PLAn to IncreASe number
6.3% Yes, we plan to increase the number of pharmacies we operate Yes, we plan to decrease the number of pharmacies we operate No change planned Source: Progressive Grocer Market Research, 2016
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Pharmacists Working With outside Providers for extra customer service 66.7% Yes
33.3% no
Source: Progressive Grocer Market Research, 2016
“We’ve moved to a point where consumers are specifically looking for these rooms,” notes Hurst. “There’s a lot of media attention to patient privacy, and we want to do the best we can to serve our customers.” Consumers expect these private rooms, Hurst says, because they want more and more advice not just on prescription drugs and over-the-counter drugs, but on lifestyle choices, too. Now, he notes, they’re also seeking advice on everything from immunization and vaccination to information on medically related travel precautions. Increasingly, he adds, they also want advice on everything from vitamins and supplements to treatment of ailments such as diabetes, high cholesterol and high blood pressure. It’s no surprise that these counseling rooms are gaining traction as wellness becomes a hot topic. Perhaps that also explains why almost onethird of respondents report plans to increase the number of pharmacies they operate, at an average of 5.7 new pharmacies over the next three years, according to the PG survey. Some grocery store chains have even been recognized for the patient care options in their pharmacies. Two years ago, The Kroger Co., which operates more than 2,100 pharmacies in 34 states, was a Pinnacle Award honoree from the American Pharmacists Association, in recognition of the grocer’s contributions to patient care. Health services at every Kroger pharmacy include vaccinations, medication therapy management and a variety of health screenings. Many Kroger locations offer everything from diabetes and healthyheart coaching to smoking cessation clinics.
To accomplish this, Cincinnati-based Kroger partners with various universities, health systems and foundations. “Collaboration has been a key to our success,” says Jim Kirby, Kroger’s clinical coordinator. Across a number of its banners, Kroger provides myriad health services through nearly 200 Little Clinics, which are staffed with nurse practitioners and/or physician assistants who can diagnose, treat and write prescriptions for common illnesses. Sixty-seven percent of those surveyed by PG noted that their in-store pharmacies work with outside providers such as hospitals, colleges and registered dietitians.
More Services In-store pharmacies are also big on a growing number of services. Ninety-four percent offer flu shots, and more than 87 percent offer vaccinations. Surprisingly, upwards of one-third (36 percent) said they offer biometric screening. Some 38 percent offer nutritional counseling, while 31 percent offer health-and-wellness counseling. Another 21 percent offer smoking cessation, and 12 percent offer weight management. Sometime in the future, Hurst says he’d like to see pharmacists and doctors truly working collaboratively. For example, if the patient comes to the drug store when the doctor’s office is closed — complaining of specific symptom familiar to the
August 2016 | progressivegrocer.com |
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2016 Retail Pharmacy Review ServiceSS Offered by Supermarket pharmacieSS Multiple responses accepted
94.2%
86.7%
Flu shots
Vaccinations
37.0%
38.1%
In-store health clinic
Nutrition counseling
61.4%
Discounted/free medication programs
26.4%
Financial and/or insurance administration assistance
50.1%
61.0%
Store tours
30.5%
Health-and-well-ness counseling
35.8%
Medical therapy management
Biometric screenings*
20.9%
12.2%
Smoking cessation counseling
Weight management programs
*(total lipid panel, glucose, blood pressure, weight/body mass index, osteoporosis, depression, chronic obstructive pulmonary disease, peripheral arterial disease, etc.) Source: Progressive Grocer Market Research, 2016
doctor — the pharmacist might be able to prescribe and dispense an antibiotic right then and there. Beyond the wellness offerings, however, Millennials in particular are demanding something else: easy access to health products and information via social media. Hurst asserts that his chain is increasingly eager to provide more ways for customers to use their cell phones to order prescriptions. At the same time, they also want instant notifications on their phones when their prescriptions are ready. That’s why Broulim’s recently began to work with a third-party media company that manages its Facebook and Snapchat accounts, according to Hurst. It’s no surprise, however, that rising health care costs and the expanding costs of medication and health insurance remain top concerns of most pharmacy customers, the PG survey notes. One pharmacy executive noted, however, that the main concern of his in-store pharmacy customers goes to the very heart of why he’s there for them, and why drug stores keep expanding further into the field of health and wellness: trust. PG
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tOp cOncernS O f Supe pharmacy Oper rmarket atOrS
Access to phar macy due to re stricted pharmacy netw orks Continuum of care — ability to choose provider s, and cost con trol of what’s provi ded Co-pay Cost of insuran ce
Cost of medicat ion
s increasing
Customer serv ic
e
Trust
Health, Beauty & Wellness
Nonfoods
Counter
Balance
Grocers can expect incremental gains as more prescription drugs transition to OTC. By Barbara Sax
P
rescription drugs switching to over-the-counter (OTC) status represent a huge opportunity for consumers and retailers. For consumers, the opportunity to bypass a physician’s visit and safely self-medicate with a product once available only by prescription is a big plus in a market where selfcare is a growing trend. For retailers, newly switched products offer an opportunity to capture prescription consumers as well as to attract new users to specific OTC categories. “Rxto-OTC switches introduce new molecules to existing categories [and] create new categories in the OTC market, so they bring new users into that space,” says David Spangler, SVP of policy at the Washington, D.C.-based Consumer Healthcare Products Association (CHPA). Spangler adds that switches can have a huge impact on the category. “Growth of the OTC category overall is up around 4 percent,” he notes. “The upperrespiratory segment, which has seen a number of switches over the past few years, is up 8 percent.” “Switches have the potential to drive significant value to the OTC category,” affirms Bob Sanders, EVP and practice leader at Chicago-based IRI. “Blockbuster switches Nexium and Flonase each contributed $300 million in sales to the OTC category. It’s hard to develop that kind of growth though any other mechanism.” Laura Mahecha, industry manager for health care at Parsippany, N.J.-based Kline & Co., says that while the industry is not seeing as many switches, the products that do make the switch are significant. “There’s a huge investment required for
switch approval, so companies are choosy about what they put forward,” she observes. That means that, more often than not, switched products become significant drivers in their categories.
Opportunity for Growth For retailers, particularly in the food and mass channels, switched products provide an opportunity to gain incremental business. “Since switches give retailers one big chance to grab a disproportionate share of the business in that segment, their goal right out of the gate should be to grab those consumers by creating buzz and awareness in the store even before the product is on the shelf,” says Sanders. But while some supermarket retailers do a great job giving recent switches a front-and-center position, he asserts, others view the OTC category overall as a convenience rather than a strategic category, and so miss an opportunity to bring new consumers to their HBW aisles. “With OTC and nutritional products growing at August 2016 | progressivegrocer.com |
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Health, Beauty & Wellness
four times the rate of other categories in the supermarket, committing to the OTC business busine and focusing on switches in a strategic way can ca allow these retailers to really grow their busin business,” notes Sanders. “Making sure they get their share sh of products like Nexium and Flonase, which were w billion-dollar businesses as prescriptions, are b big opportunities they should not miss.” While there weren’t any blockbuster switches swit in 2016, although Bayer Group launched a ne new OTC product, Clairspray, in 2016 that contains contai the same ingredient as Flonase and taps into tthe Claritin brand franchise, the active allergy category saw one new Rx-to-OTC introduction, Johnson & Johnson’s Rhinocort, in February 2016. The launch joins a category that has seen plenty of action with Sanofi’s Nasacort switch in 2014 and GlaxoSmithKline’s going the OTC route with Flonase in 2015. “The switch of those nasal sprays created a new subclass of products in the allergy category, so they had a big impact on the category,” points out Kyle Lentz, HBC category analyst at Waukesha, Wis.based Hamacher Resource Group. Rather than cannibalizing sales of existing allergy products, the new products created a lift for the entire category. “When the nasal spray switches entered the market, unit sales did not decline,” says Lenz. “The new products opened up additional sales in the category.”
Since switches give retailers one big chance to grab a disproportionate share of the business in that segment, their goal right out of the gate should be to grab those consumers by creating buzz and awareness in the store even before the product is on the shelf.” —Bob Sanders, IRI
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Building Awareness Retailers that support these launches quickly win big. “It’s crucial that retailers build awareness and excitement for these products in the critical first six months of distribution, when all the marketing and couponing is taking place,” asserts Lentz. “Retailers need to have the product on shelves from day one to secure that customer.” Critical point-of-purchase materials usually include “ask your pharmacist” signage — a key element for effective merchandising of these products. “A lion’s share of sales of these products occur in locations with a pharmacist, making effective selling a challenge in locations that don’t have a pharmacy,” says Lentz. Quick-response codes that direct consumers to educational web pages when scanned or on-shelf videos are one solution. “Quick-response codes, apps and interactive onshelf materials are all product-plus concepts that are going to be more important going forward,” notes CHPA’s Spangler. Those in-store educational tools and the availability of a pharmacist to answer consumer questions could be important for several prescription products that are considered candidates for a switch. According to IRI’s Sanders, switches such as Nexium, the proton pump inhibitor that switched in 2014, and others that launched prior, like Prilosec, proved that the products were safe and
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effective, and that consumers could self-select when it came to treating chronic conditions. “That That was a real departure for the FDA and should pave the way for other drugs,” he says. “The future of switches has got to include new categories.”
What’s Next? An innovations-in-pharmacy study designed to determine which prescription drugs pharmacists feel have safety profiles that warrant a switch to OTC status revealed that among the pharmacists surveyed, oral contraceptives were the most frequently cited category, followed by the asthma drug albuterol and Mylan’s epinephrine autoinjector epi-pen for the treatment of anaphylaxis. While the switch of oral contraceptives represents a huge market, it would be fraught with political challenges. The switch of the lifesaving drugs albuterol and epinephrine would be more likely. Erectile dysfunction (ED) drugs are another category that may be poised for switched status. Eli Lilly’s Cialis loses patent protection in 2017, Bayer Group’s patent on Levitra expires in 2018, and Pfizer’s Viagra loses protection in 2020. While switched status for ED drugs could be a challenge due to contraindications in men with heart disease and concerns about inappropriate use of the products, the medications represent multimillion-dollar potential if switched. “ED drugs are the biggest potential market for switches,” affirms Sanders. The bladder control drug oxybutynin, which was partially switched in 2013 as an OTC transdermal patch marketed by Merck as Oxytrol for Women, is another drug that’s being discussed. While the transdermal patch failed to gain traction, a pill delivery system supported with adequate pharmacist and consumer education and a strong marketing and advertising program could succeed where the earlier product failed. “Bladder control continues to be an unmet need, with many consumers affected and few products to address the problem,” observes Sanders. Other categories likely to see switched products in the near future are drugs used to treat acne, eczema, migraine and sleep issues, as well as topical analgesics such as Novartis’ Voltaren. PG
PG’s Retail Dietitian Symposium
Industry Events
The Future
of Wellness
Forum explores value of RDs for retailers, reveals results of annual survey. By Jim Dudlicek
P
rogressive Grocer’s annual Retail Dietitian Symposium, held May 23-24, offered ideas on how to connect with shoppers in search of guidance on the best choices at the grocery store for health and wellness, outlined the latest food and shopping trends, and honored RDs for their innovative consumer outreach efforts. More than 180 people attended the two-day symposium, held at Chicago’s Fairmont Hotel, including more than 50 dietitians from leading supermarket retailers, along with a host of suppliers of better-for-
you products and services. Among the general-session topics on the first day were consumer segmentation, food traceability, farm-to-fork stories and diet plans. Additionally, results of PG’s annual retail dietitian survey were revealed at the event.
rD nETworkIng Clockwise from lower right: Pg columnist karen Buch emceed the symposium, which generated great audience participation. kendall College Chef Tom Masse conducted a cooking demonstration; suppliers offered rDs samples of better-for-you products.
Shopper Trends John Essegian, EVP at Palm Beach Gardens, Fla.based TNS Landis, offered insights on key consumer segments, their motivators, and how the retailer industry can address them. According to Essegian, consumers can be divided into four broad categories along the food-health relationship continuum: August 2016 | progressivegrocer.com |
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Industry Events
REtaIl WEllNESS (left to right) Meijer’s Sheri Steinbach, Marsh’s Mary Snell and Kroger’s Eileen Myers led a panel discussion.
PG’s Retail Dietitian Symposium
Nonchalant: Health-satisfied folks, including “On the Run Grazers,” motivated by speed and convenience but lacking cooking prowess, and “Do As I Pleasers,” motivated by control and contentment. Satisfied: Encompassing “Healthy
Foodies” (adventurous cooks) and “Busy Belongers” (adventurous noncooks who crave convenience). Striving: Folks not satisfied with their health and weight, including “Wellness Activists” (cooks aiming for personal improvement) and “Habitual Pragmatists” (noncooks seeking familiarity and to remove guilt). Struggling: “Comfort Cravers” (adventurous cooks seeking pleasure) and Tired Survivors (unadventurous noncooks seeking stress relief). Kristin Hoddy, health and wellness director at Schaumburg, Ill.-based SPINS, and Kora Lazarski, SPINS’ strategic alliance manager, discussed the retail departments experiencing the most disruption from changing consumer demand. Identified as mega-trends driving growth across most grocery categories: organic, glutenfree, vegan and Paleo. Noting that shoppers aren’t waiting for research to validate their beliefs, the speakers advised RDs to use sales data to understand what’s top of mind for shoppers. Consumers are willing to pay more for products boasting traceability, observed Tejas Bhatt, director of the Global Food Traceability Center at the Institute of Food Technologists, in Chicago. Driving the desire for traceability, according to Bhatt: conscious consumers wanting more information about health; “citizen science,” driven by social media and beliefs over facts; individualized needs; and technology. “The food system today is a global supply chain,” he said. “Almost nothing is truly local.”
Retail Health and Wellness Evolves A panel of executives discussed the changing retail landscape, shifts in wellness priorities, the impact of consumer trends, and the evolving roles and career paths of RDs. The panel consisted of Sheri Steinbach, nutrition manager at Meijer Inc.; Mary Snell, director of nutrition and wellness at Marsh Supermarkets; and Eileen Myers, VP of retail dietetics at Kroger, and was moderated by symposium emcee Karen Buch, of Nutrition Connections LLC, and PG wellness columnist. How do RDs support their company’s goals? At Grand Rapids, Mich.-based Meijer, it’s about
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“focusing on the customer first,” Steinbach said, as well as including associates “and empowering them to know about our health-and-wellness resources so they can be spokespeople.” According to Snell, the objective of Indianapolis-based Marsh is to be “the health-andwellness leader of the community,” while Myers noted that Cincinnati-based Kroger is committed to improving community health through strategic partnerships such as its acquisition of Little Clinics for in-store wellness services. Shifts in retailers’ wellness strategies include more RD access to departments across the store and RDs’ influence on selection through working with category managers and buyers. “We’re doing more to help the consumer understand food,” Myers said. Other sessions focused on fact versus myth on artificial sweeteners, how to guide consumers on FODMAP diet plans (avoiding foods with shortchain carbohydrates that cause digestion problems), and telling farm-to-fork stories to better help shoppers connect with the food they buy.
Honoring Outreach Second-day highlights included PG’s first Outreach Innovation Awards, honoring programs that included initiatives from store tours to sampling, website messaging and community outreach, all aimed at creating value for their customers, retail associates and banners. Marsh Supermarkets’ Snell was recognized for her Fresh Ideas for Education and Guiding Stars programs (www.freshideasforeducation.com, www.marsh.net/nutrition/guiding-stars/). Alicia Jerome, health-and-wellness manager for the United Family of Stores, in Lubbock, Texas, accepted on behalf of her team for its Color Your Basket program (www.marketstreetunited.com/ Tags/Color%20Your%20Basket). Alyson Fendrick, corporate dietitian for Edmond, Okla.-based Homeland Stores, was
Industry Events
PG’s Retail Dietitian Symposium
honored for the Get Healthy Challenge (www.homelandstores.com/homeland-gethealthy-challenge/). Additionally, PG has joined forces with the Retail Dietitians Business Alliance, whose president/CEO, “Supermarket Guru” Phil Lempert, presented its RD of the Year Award to Stacy Bates, of San Antonio-based H-E-B.
Industry Trends Impacting RD Growth Harry Stagnito, board member of PG parent Stagnito Business Information + Edgell Communications, presented this session focusing on the ongoing transformation of the retail grocery industry and highlighting issues illustrating the advantages RDs bring to their companies. Key to the future of RDs: The Store of Tomorrow: Industry consolidation,
RD HonoREES From left: Homeland Stores’ Alyson Fendrick, United’s Alicia Jerome and Marsh’s Mary Snell won PG’s first outreach Innovation Awards, while H-E-B’s Stacy Bates received RDBA’s RD of the Year Award.
with the corporate mission, and working with category managers and pharmacists on common goals.
RD Survey Results Lempert and PG Editor-in-Chief Jim Dudlicek led an audience discussion of the highlights from PG’s latest annual retail dietitian survey. The lively exchange examined “what’s next” as RDs shared their experiences with positioning their role, creating return on investment (ROI) for their banners, and how they connect with shoppers, store associates and communities. Key points of the survey include: Half of responding retailers report that their company has RDs, with an average of 25 per company. Among those not reporting an RD position, 19 percent say they had other nutrition positions, and 4 percent say there were plans to add the position in the next year.
upscale regional retailers, products catering to local demographics, thematic stores with chef-driven prepared foods, and health-and-wellness centers.
The most frequently reported methods used to promote health, wellness and nutrition: company website, signage, circulars and product sampling.
Wellness Isn’t Health: The difference between health (science and function) and wellness (mind, body and spirit). Stagnito urged retailers to “understand how to promote health and wellness” to control the discussion amid the conflicting information flooding mass and social media, noting that shoppers make decisions “by emotion supported by logic.”
RDs have the greatest impact through individual and group counseling, in-store consultations, in-store clinics, and tours. Most popular wellness class topics are basic nutrition, weight management, and heart-healthy and gluten-free eating.
Practical Insights and Technology: Personalization and interactivity through such vehicles as social media, shopper insights and loyalty programs. Internal Collaboration: Aligning health and wellness
Most-reported RD responsibilities: answering consumers’ questions, working with community partners, and employee nutrition education. In terms of progress of RD programs, 37 percent say they’re “in the game, see the merits and continue to build the program”; 21 percent are “just getting started”; and 15 percent are “very advanced” so customers associate their banner with healthy products and support. Among retailers operating more than 50 stores, RDs are located mostly at headquarters (50 percent) or at both HQ and store level (41 percent). Among smaller operators, the position is more likely to be located at store level. As part of the ongoing evolution of this relatively new position, grocers still struggle with exactly where to place the RD position within their operations. According to survey results, RDs most frequently are included in health and wellness (57 percent), followed by pharmacy (20 percent), and marketing/merchandising (13 percent). The RD position is administered most frequently at the corporate level (48 percent) or at both the corporate and store level (37 percent). A vast majority of respondents — 86 percent
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Industry Events
Chat Room Supermarket Guru Phil Lempert and PG Editor-in-Chief Jim Dudlicek led a discussion of PG’s latest RD survey.
PG’s Retail Dietitian Symposium
— said their RDs were responsible for establishing or maintaining community relationships, most frequently with schools and hospitals/clinics. Retailers are making inroads in involving RDs in purchasing decisions; 84 percent of respondents report that their RDs work with product managers. Fortysix percent report that they are working with product managers on promotions, 45 percent on new product decisions, and 42 percent on advertising/signage. As far as corporate decisions are concerned, RDs reportedly influence mainly the areas of employee health programs and decisions to carry or delete specific product categories.
Successes and Challenges The most frequently mentioned measures of RD success or ROI are customer satisfaction, program participation, social media impressions and general volume of customer engagement. Among challenges faced in dealing with customers or management, most frequently mentioned by survey respondents are customer awareness/acceptance, getting corporate understanding/ acceptance, proving value/ROI and needing more dietitians to execute wellness strategies. As outlined above, retailers continue to make progress in advancing dietitian programs, and as consumers continue to seek out more information about what and how they’re eating, RDs should prove to be a valuable asset to retailers seeking to secure shopper loyalty and present a point of differentiation in an increasingly competitive retail marketplace. Additional findings included: 36 percent of survey respondents say their RD program has been in place for three years or
PG’s RD Survey Progressive Grocer designed this study to explore how health, nutrition and wellness are promoted in grocery retail, the position of the retail dietitian, and their role in promoting health, wellness and nutrition. The sample of respondents for this third annual study was drawn from the PG database. The study was conducted by email, fax and phone during March and April 2016. The obtained sample encompassed 151 total respondents, which included 100 supermarkets, along with drug, mass, club and specialty/gourmet retailers. Among individual retailers, there were 32 responses from single-store operators, 55 responses from those operating two to 50 stores, and 64 responses from retailers operating 51 or more stores.
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less. These respondents are most likely to say that store involvement and more dietitians are needed to be more effective. 32 percent of respondents say that their program has been in place for four or more years. These respondents are most likely to say that their priorities have changed in terms of focus on programs with broader reach, more community involvement and more store-level involvement.
Research Conclusions The RD’s role, or potential role, is quite broad, including working on employee health benefits, marketing and merchandising, community relations, and all aspects of customer healthand-wellness relationships. In larger chains, role specialization and decentralization of the position tends to narrow the scope of the dietitian’s role to areas where a dietitian’s input could be quite useful, for example, involvement with promotions and advertising, working with community partners, or contributing to the design of in-store nutrition efforts. Many feel that the role isn’t well understood by either customers or the company. They report that goals are set for them, but they often don’t know by whom. At the store level, RDs sometimes feel that customers and managers aren’t aware of their potential service. The source of this lack of understanding may be found in the very breadth of a role that moves rapidly between tasks and assignments at both the corporate and store levels. Newer RD programs can best grow by focusing on store-level activities and employing the dietitians necessary to fully execute these programs. These newer programs can also evolve by focusing on programs with broader reach — for example, general consumer education as opposed to one-to-one counseling. To have their role better defined and better appreciated, RDs need to play a more proactive role in goal setting, performance evaluation, and communications both at the corporate and store levels. Importantly, RDs will often need to explain their role, its usefulness and how it can be aligned with other departments’ and overall corporate objectives. PG
Roundtable
Animal Instincts Retailers discuss future of the category and how to attract pet parents back to grocery. By Jim Dudlicek
P
rogressive Grocer, ECRM and Ainsworth Pet Nutrition hosted a roundtable discussion of thought leaders in the pet category on April 25 near Chicago. The discussion ranged from consumer trends, including the “humanization” of pets, to the growth of super-premium pet foods, to the conversion of pet specialty shoppers to the grocery channel, to future disruptors in the category. Retailers on the panel were Kerian Adamo, pet treats and vet diet buyer for Plymouth Meeting, Pa.-based Pet360 Inc.; Scott Brackney, GM category manager, and Jan Winn, director of HBC/GM, for Springfield, Mass.-based Big Y Foods Inc.; Jessica Calvillo, own brands buyer, Martha Cantú, buyer,
and Veronica Sanchez, business development manager, for H-E-B Mexico; Toby Nelson, president of Altoona, Iowabased R.T. Nelson Sales and Marketing; and Becky Shipp, pet category manager for Carlisle, Pa.-based Ahold USA. Also participating were Drew Clarkson, VP of channel sales; Walt Wdowiak, VP of innovation; and Steve Joyce, VP of marketing, with Meadville, Pa.-based Ainsworth Pet Nutrition. The session was moderated by Jim Dudlicek, PG editorin-chief, and Meg Major, PG chief content editor. The following is an edited transcript of the discussion: Dudlicek: The humanization of pets really has been a strong
trend. Pet owners have become pet parents — they are constantly looking for ways to treat their animals more like members of the family.
pet patrol From left: Steve Joyce, ainsworth pet Nutrition; Becky Shipp, ahold USa; Kerian adamo, pet360 Inc.; Scott Brackney, Big Y Foods; toby Nelson, r.t. Nelson Sales & Marketing; Jann Winn, Big Y Foods; Drew Clarkson, ainsworth; Jessica Calvillo and Martha Cantú, H-e-B Mexico; Walt Wdowiak, ainsworth; Veronica Sanchez, H-e-B Mexico.
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Roundtable “We try to do an end cap every week in as many stores as we can … to remind the customer we’re in the business. We’re just trying to change that perception that we’re just a grocery store pet aisle.” —Scott Brackney, Big Y Foods
Clarkson: I think we will see that trend increasing. When you look at what’s driving segment growth these days, with higher nutrition for premium brands, [shoppers] are coming into the category at the high end. We’re seeing human food trends continue into pet food: zero grain, limited ingredients. People consider diet much differently than they used to — now it’s all about healthy eating, not just cut the calories and cut the weight. We’re seeing those trends also in pet food. Wdowiak: We’re not seeing a lot of [demand for non-]
Adamo: We’re not seeing this bigger growth in value brands. We’re under the assumption that they’re going to grocery to pick up their Friskies or Fancy Feast. We’re definitely seeing more growth in the specialty, freeze-dried, dehydrated, really following the humanization of trends, the superfoods. Winn: I think customers really are looking for natural,
organic, local — it’s huge. Not only in pet food, but in general. I can’t imagine that trend will reverse itself. Regarding Millennials — I’ve heard they’re into cats more than dogs. They’re young, they’re just getting married, they’re just starting to have families. Brackney: They’re waiting to have children, and they’re
feeling that need with the pet, and they have more disposable income as they get older, and they’re willing to spend the money on their pet. It’s their child, really. Adamo: I have been told by my big manufacturers that [the trend toward] small dogs [is] really, really growing. I just keep thinking that that’s taking tons out of the business, which scares me. Dry dog [food] is going to be harder to grow, because [small dogs] just eat less. At some point, I feel like that’s going to hurt us. We’re also not seeing growth in ultra-premium cat food.
GMO … We have seen a lot of interest with superfoods and different types of grains, simple things that have very specific health benefits that are becoming very popular among pet owners as well.
Major: I just find cats are so picky with what they eat. They’re not interested in a gourmet experience. But I think concerns for aging cats are a trend as well.
Winn: We’ve sort of seen that in grocery. … We have to
determining special needs for specific health purposes.
develop a [private label] super-premium brand. I challenged our pet group to develop one … I think, like for humans, organic is huge and growing. I think we have to develop a brand and promote it. Shipp: I think the biggest opportunity is the perception
of customers right now, because customers believe, and I believe, that healthy ingredients take care of healthy weight. I think that’s how specialty’s done such a good job. Customers just think that that’s where they have to go in order to get the right items and the right ingredients. Customers don’t understand that they can come to grocery stores to get good brands. There’s this whole perception that we have to get through — it’s a big problem. Nelson: Stores that I call on are very progressive in the pet
area. I have stores that will put up $3,000 to $6,000 end caps — it surprises the heck out of me. … What I have proven is by having a lot of the lines that they carry and helping the stores understand that you don’t need to undercut them significantly, but they can make a very nice margin — we’re talking $6 to $10 a unit — it will still be well below PetSmart or Petco. When it comes to all-naturals, I do a lot. In fact, I have hand-decorated dog cookies, I have a store that goes through 1,200 every month.
Dudlicek: I think that’s relevant for other species as well, Adamo: I think [manufacturers] haven’t nailed that down yet as far as getting the right ingredients for cats. Cantú: It’s a very similar story [in Mexico]. We are starting
to see the trend toward natural and super-premium food. There is also a trend in Mexico for pet clothes. They’re very good quality; you’d think they were for kids. And they’re having birthday parties for dogs.
“Customers really are looking for natural, organic, local — it’s huge. Not only in pet food, but in general. I can’t imagine that trend will reverse itself.” —Jann Winn, Big Y Foods
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Roundtable Adamo: Yes, we sell dog cookies and birthday hats. We actually just had an email go out last week about National Pet Parent Day. Dudlicek: What do you see as the biggest opportunity for
the pet category? Calvillo: The premium brands right now, they’re really
growing. We’re developing some of our own brands. One of the initiatives that we’re working is having a vet in the pet aisle, so the doctor can explain things to the customers, because I think that they really don’t know about the benefits or the nutrition. I think maybe that will help them. Clarkson: I would say the biggest opportunity is around space allocation and setting the shelf up for next year and two years from now. I think that we talked a lot about the brands that are in decline, the premium and value brands that are falling. Yet if you look at a lot of stores, a lot of space is dedicated to those brands. It’s not just items and brands, but sizes, too. [Food retailers] have drawn a lot of shoppers out of pet specialty with some of the things they’ve done, but they’re not coming, because the sizes aren’t there — they’re big-bag shoppers. Joyce: That’s one of the advantages of pet specialty — the customer is going to walk out with a bag of dog food, maybe something else. At the grocery store, they’ve got eggs, groceries — some of those really big sizes just won’t fit [in the cart]. Nelson: As people perceive value in the expensive specialty
brands, I also think there are some things that people are willing to invest in. So I’m going to buy cheap mustard, but this dog is my baby and I’m not going to buy that crappy value brand — I want something I perceive to be better. Dudlicek: How do you as a retailer ensure that you’re stay-
ing ahead of purchasing trends, and how do you decide which of the brands that are declining still warrant any space in your store?
“Customers don’t understand that they can come to grocery stores to get good brands. There’s this whole perception that we have to get through — it’s a big problem.” —Becky Shipp, Ahold USA
Shipp: I use space to sales. Adamo: We do regular reviews. All brands like to think that
because we’re e-commerce, we can list an infinite amount of SKUs, but we still have a warehouse with space issues. Dudlicek: Are you letting these trends sort of play out or-
ganically, or are you actively trying to get consumers to trade up from these other brands to the super-premium brands? Shipp: We definitely try to get them to trade up, because that’s where we make our margins. You don’t make margins on the value brands. Adamo: We’re all trying to do the same thing, no matter what channel you’re in. It sounds like everybody has the same problems, and everybody’s just trying to keep the paying customer, because I think there are just so many options for them now. You have grocery stores, you have online, and then you have pet specialty, and everybody’s struggling. Dudlicek: How are you deciding what new brands to bring
into the store? Calvillo: It depends on the economic cluster. In lower clusters, we are looking for good product with good price and brand name, and in the other ones, we are looking for premium products, and that’s the problem, because they don’t want to sell those like that. … We want to do some experiments in our highest stores with some very good brands and show off that part, like healthy and organic.
“[The trend toward] small dogs [is] really, really growing. I just keep thinking that that’s taking tons out of the business, which scares me. Dry dog [food] is going to be harder to grow, because [small dogs] just eat less. At some point, I feel like that’s going to hurt us.” —Kerian Adamo, Pet360 Inc.
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Winn: Brands and our own brand have to tell a very compelling story with the package. It’s got to scream “no grain” or whatever the benefits of the food are. That, I think, has to become more prominent, because those are the buzzwords customers are looking for, and I think that will help us give customers a chance to try something. Clarkson: Are you thinking about off-shelf displays? Either end caps or other parts of the store to draw attention to those brands?
Brackney: We try to do an end cap every week in as many stores as we can, just again to remind the customer we’re in the business, and we’re just trying to change that perception that we’re just a grocery store pet aisle. … We’re driving them down the aisle using items that aren’t so sensitive, like GM items, something they wouldn’t mind going down the grocery pet aisle to get, but then they see something else, something that changes [what] they might get in the aisle. Dudlicek: Looking ahead five years from now, what’s the pet category going to look like compared to what it looks like now, based on what you’ve been seeing? Clarkson: Better, I think. Brackney: I’m sure we’ll see dollars. Hopefully, we’ll be up, driven by super- and ultra-premium [offerings], which will be the driver for the core customer. We’ll still have to meet the needs of the value customer, but not in as big a way as we have in the past years. Clarkson: I agree. I think, in most retailers, five years from now, the majority of the shelf space will be dedicated to super-premium brands; today, it’s fewer than 50 percent in most cases.
Calvillo: We also have opportunity in our e-commerce channel; we’ve been working on it. We’ve done special emailings with offers only online, and we are focusing on the big sizes that people don’t want to buy in the stores because it’s too difficult. It’s growing, but it’s small. PG
“We’re seeing human food trends continue into pet food: zero grain, limited ingredients. People consider diet much differently than they used to — now it’s all about healthy eating, not just cut the calories and cut the weight. We’re seeing those trends also in pet food.” —Drew Clarkson, Ainsworth Pet Nutrition
Adamo: I think it’s going to keep shifting around between channels, too, and I think that if we can get some of these channels into the data, because, you’ve got to remember, we lose a lot of data, too, so we talk about trends, but we don’t have them all captured. It would be interesting if we could get everybody into the data to really get a capture on the trends. Dudlicek: How actively are you pursuing the conversion of specialty pet food shoppers to get them in the grocery channel? Brackney: We look very closely at the aisle and adjacencies, just a way to drive the number that we have [in] pet food and grocery. They’ve got to buy their groceries somewhere, [but] they’re bypassing the aisle. We’ve got to figure out how to get them down the aisle. Winn: From our experience, a lot of mainstream retailers are very focused on that, and pet specialty shoppers are very vulnerable right now. They are looking to make the switch. The whole notion of one-stop-shopping convenience, of buying for my entire family, including my pet, at one location, is a big deal, and just making them aware of quality and products that mainstream has in their aisles is huge. Dudlicek: How big of a part is the pet category playing in your e-commerce sales? Adamo: We have a lot of opportunity. It’s growing, but we have a lot of assortment. My vendors just need to spend time on assortment, pulling people, because we just don’t offer enough to our customers.
Get Your Products Off the Floor!
www.masonways.com
Technology
E-coupons
Trouble Brewing for
Digital Coupons As distribution grows, so does fraud. By John Karolefski
D
igital coupons are a small part of overall coupon distribution and redemption, which is dominated by free-standing inserts (FSIs). Digital is increasing its share, however. Unfortunately, digital fraud is growing at the same time, and that presents a new challenge for grocers. How much of a problem is digital coupon fraud? That depends on which type of “digital” coupon: internet print-at-home (PAH) coupons or download-to-card/phone incentives. Most experts say the former is a major problem,
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while the latter is an emerging one, but opinions vary. “Part of the issue with digital coupons is that everyone has a different definition,” says Cheryl Black, CEO of You Technology, a Brisbane, Calif.-based digital coupon network provider that Kroger acquired in 2014. “But if you include coupons printed from the internet, which is really just another form of paper, or coupons delivered one at a time via a bar code scanned from a phone, then fraud is rampant,” adds Black, whose company has ongoing partnerships with grocers such as ShopRite, Big Y, Raley’s and Shop ‘n Save. Andrew Coleman, president of Winston-Salem, N.C.based marketing consultancy Rogue Two, contends that true paperless digital coupon fraud is difficult to measure, due to the “closed-network” nature of most digital platforms. “Vendors may report clips and redemptions, but standard campaign reporting still has a ‘take our word for it’ feel,” notes Coleman. “At least paper coupons can be counted and cross-counted. Digital vendors send each other redemption files, but what is the audit procedure without a paper marker left behind by the customer to prove the valid redemption to ensure the files are accurate?”
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Technology
E-coupons
Facing the Challenges “The challenges and the financial impact of fraud associated with PAH coupons are increasing,” affirms Bud Miller, executive director of the Coupon Information Center (CIC), pointing out three general categories of fraudulent activities associated with PAH coupons:
If you include coupons printed from the internet … or coupons delivered one at a time via a bar code scanned from a phone, then fraud is rampant.” —Cheryl Black, You Technology
Creative Counterfeiting: The quality of counterfeit coupons imitating PAH coupons ranges from poor-quality, amateurish cut-and-paste examples to very high-quality counterfeits that attempt to mimic the security features of legitimate PAH coupons. There are a number of commonly available templates and other means to create such counterfeits, which are made and distributed by technically skilled hackers. Such counterfeits have cost industry participants many millions of dollars. Federal investigations, which have been assisted by CIC and other industry participants, have led to a number of convictions, the most recent of which resulted in a 41-month prison sentence and other penalties. Basic Counterfeiting: This form of counterfeiting can include simple photocopying, screen captures and variations. While less sophisticated than hackers’ efforts, these activities can be costly if proper security procedures aren’t followed. Evading Print Limits: There has been a recent increase in the number of individuals selling multiple sets of PAH coupons on social media. CIC is working closely with industry participants to identify and terminate such activities. Miller gives the example of an image obtained from a social media channel. “The author is apparently offering to sell PAH coupons in .pdf format with a 24- to 48-hour turnaround time,” he explains. “The person includes an invalid disclaimer stating that the purchaser is paying for ‘my time and service, not’ the coupons. This person posted numerous examples of such coupons for sale. CIC contacted the appropriate industry participants on this matter. In turn, the PAH coupon vendor issued a take-down notice to the social media channel and the coupon seller.” Rogue Two’s Coleman notes that internet printable coupons face all of the dangers that other paper coupons face, such as bar code adulteration, misredemption and malredemption, but with additional discovery perils like ease of sharing — whether a .pdf, instructions or simply word-of-mouth activity on coupon blogs — that can alert other shoppers to CPG coupon mistakes they can exploit.
Truly Digital Fraud Meanwhile, fraud involving digital, paperless (loadto-card) coupons is virtually nonexistent, according
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to John Ross, president of Winston-Salem-based Inmar Promotion Network. “The fact that these coupons never manifest as paper, along with the requirement that shoppers acquire these coupons by attachingg them to registered, g uniquely q y identified accounts, eliminates the possibility of physical duplication and/or sharing of these types of offers,” he says. “In addition, systematic clip limits help prevent unintended multiple redemptions by a single individual while guarding against general over-redemption.” Black, of You Technology, agrees that fraud is virtually nonexistent for true direct-to-unique-ID coupons that don’t involve any paper or bar code on a phone except as an identifier of the person. “Those coupons are secured and processed within the retailer systems and point of sale,” she notes. Black goes on to temper her comments slightly, however, by noting that the only types of fraud that can exist for truly digital coupons are: Hacking: In rare cases, hackers can intercept messages between the browser and the back-end system and clip coupons targeted to someone else to their own card. This can only occur if the messages aren’t secured or encrypted, or if security is breached. Even if there’s no security, this is still difficult to do because the hacker needs to know that the targeted coupon exists and also needs to know the unique ID of the coupon. The net result of this type of hack is that the hacker can purchase a product and get a discount intended for someone else. Return Fraud: A shopper can use a coupon to purchase a product and then return that product. If the receipt isn’t required, or if the system doesn’t track the transaction ID and back out the coupon, the shopper may get the full price of the product returned, instead of the discounted price. CIC’s Miller lists two other possibilities ripe for digital coupon fraud: Shopper Cards: Potential challenges can include multiple cards held by an individual, identification verification, multiple addresses, burner phones and simply false information. Mobile Receipt Marketing: Potential challenges can include counterfeit receipts, submitting claims for products other than those intended by the incentive, obtaining the incentive funds and then returning the product, receipt reuse/sharing, and stacking. “Stacking is when the consumer uses various manufacturer and retailer coupons from different vehicles to purchase a product for far less than what
the manufacturer intended,” explains Andy Rumpelt, president of Albany, N.Y.-based Price-Trak National Promotion Reports. “Imagine putting out an FSI and having retailers also offer a digital load-to-card incentive. Say the in-store price is already discounted with a feature, and most of the consumers would buy the product anyway. A percentage are using all the incentives to get the product for pennies on the dollar. That costs the brand significant profitable revenue, but it is happening far more than you may think.”
Taking Action What can grocery retailers do to combat the growing problem of digital coupon fraud? The simple course of action, advises Rumpelt, is to educate cashiers and continue to implement programs that kick out expired coupons at checkout. “Grocers might consider adopting a universal framework for digital coupon redemptions that would allow universal standards and ubiquitous redemption across banners,” suggests Coleman, of Rogue Two. “Currently, retailers are reluctant or unwilling to share or cooperate on digital data, which is understandable, given the competitive landscape, but it results in a fractured cottage industry where vendors are in control and use retailers against one another. Again, all very understandable, but it limits the growth potential overall.” Black, of You Technology, says the best thing grocers can do is to shift budget and technology to implement truly end-to-end digital coupons that “offer no chance of replication or unintended distribution. These systems should secure messages between the browser and the back-end system, and should use transaction IDs from the receipt for processing returns.” CIC has a number of programs in place to assist grocery retailers in addressing counterfeit coupons. Miller urges retailers to visit CouponInformationCenter.com and to attend the center’s annual CIC Industry Leadership Summit (retailers can send a representative to the event free of charge). He further urges grocers to take the following specific actions: Program coupon management levels in the POS system to alert customer service managers to potential fraudulent activities. Exercise extreme caution when a consumer attempts to use any free product or numerous highvalue PAH coupons. Employ the full benefits of the GS-1 Databar, and be sure to read all fields and validate the products purchased to the coupon language. CPGs have added exclusionary copy to offers (sizes, sub-brands, etc.) and updated family codes for their products to make the scanner do the approving, versus the cashier.
Review and implement voluntary best practices. For example, there are few, if any, free product coupons distributed via PAH coupons.
Grocers might consider “One approach to address retailer compatadopting a ibility issues is to create digital coupon programs universal aligned with individual retailers rather than being framework for distributed through a dedicated coupon website digital coupon and their network of affiliated websites,” says Dan redemptions Kitrell, VP, accounts solutions at London-based that would Kantar Media. “A digital coupon distributed allow universal on a retailer website may be designed to align standards and with that specific retailer’s POS technology and ubiquitous coupon-processing systems. Additionally, improved coupon-handling practices and increased redemption awareness of valid coupons distributed each week across banners.” on the retailer’s own website may reduce issues related to improper redemption and the potential for other forms of fraud.” PG
—Andrew Coleman, Rogue Two
Coupon Collaboration Grocers and manufacturers can jointly take a number of steps to combat coupon fraud. For example, trading partners can collaborate under the guidance of the Coupon Information Center (CIC) to identify best practices for mitigating fraud. CIC urges manufacturers to work with coupon processors to review any coupons that don’t match the database artwork file. Also, review monthly redemptions of all coupons, with a focus on redemptions versus number circulated, not printed. CIC President Bud Miller urges companies to “monitor social media coupon blogs for anything out of the ordinary. If couponers start talking about a ‘moneymaker’ or a ‘glitch,’ make sure that the coupons in question are legitimate.” There are measures that manufacturers can take specific to PAH coupons to help reduce the use of fraudulent coupons at checkout. By following some basic guidelines and adhering to industry standards for good coupon design, manufacturers can make counterfeiting coupons more difficult while making them easier to detect, says John Ross, president of Winston-Salem, N.C.-based Inmar Promotion Network. Inmar recommends that manufacturers do the following: Control viewing and limit access for online coupons. Coupons shouldn’t be displayed online in a format that provides uncontrolled access or capture. Coupons should never be distributed online as .pdfs or Word documents. Manage promotion values. High-value offers and coupons for free products are popular targets for counterfeiters. If these kinds of promotions are to be distributed, consider issuing a load-to-card coupon as an alternative. Use consistent coupon design standards. Consistent branding and use of industry-standard design — including use of legal copy — requires those individuals wanting to counterfeit coupons to work harder to produce coupons that appear to be compliant. —John Karolefski
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Operations
Supply Chain
Driven by
Demand
Rethinking strategies can help grocers shore up weak links and prepare for multichannel retailing. By Jenny McTaggart
A
The weakest links in the supply chain are the systems, processes and thoughts that keep retailers and wholesalers from moving to a demand-based supply chain — ordering for the supply chain from retail needs, and total supply chain inventory.” — Eric Smith, Supply Chain Optimization LLC
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ny modern-day discussion about the food retailing supply chain is likely to include such hot topics as out-of-stocks, food safety and security, and transportation challenges, just to name a few. It’s easy to imagine how retailers could quickly become overwhelmed by all of the “weak links” that need to be addressed. Yet several supply chain experts who spoke to Progressive Grocer are urging companies to look for the forest beyond the trees, so to speak, and embrace a move toward a demand-based supply chain, if they haven’t already done so. That change of mindset could help them not only shore up their weakest links, but also ultimately prepare them for f a new era of retailing that requires well-planned mu multichannel execution. “The weakest links in the supply chain are the systems, processes and thoughts thoug that keep retailers and wholesalers from moving movin to a demand-based supply chain — ordering for the supply chain from retail needs, and total supply chain inventory,” advises Eric Smith, president presiden of Supply Chain Optimization LLC, in Winterset, Win Iowa. Smith, a former Hy-Vee V VP of MIS, urges retailers to “harness the power pow of pointof-sale data” to replenish items item in their supply chains. Mike Griswold, a research researc VP for the consumer value chain team te at Stamford, Conn.-based rese research and advisory firm Gartner Inc., has h a similar viewpoint, calling forecastfo ing the “biggest” weak link for f food retailers. “Many of them don’t possess pos a point-of-sale-based forecasting forecas tool or automated replenishment,” he notes. He would like l to see more retailers implement implem a system akin to sales and ope operations planning (S&OP) to better b
| Progressive Grocer | Ahead of Wh What’s Next
align planning and execution activities across the organization.
Demand-driven Model Not coincidentally, Gartner has published hundreds of documents for more than a decade to promote the “demand-driven” concept. This philosophy applies to multiple industries, not just retailing. What does it mean to have a have a demanddriven supply chain? According to Gartner: “The model is characterized by an understanding of customer value, with processes and metrics that enable business trade-offs to deliver products and services profitably. Companies that work toward the DDVN [demand-driven value network] ideal use demand management as a key differentiating capability, so they can plan, sense and shape in a way that brings profitable balance to the business.” One retailer that appears to be moving along the
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Operations
Supply Chain
demand-driven continuum is Bentonville, Ark.-based Wal-Mart Stores Inc. Gartner lauds the company for its “continued push into e-commerce channels in 2015, with more than $1 billion in new investments.” Global revenue in that channel increased 22 percent to $12.2 billion in the past year, the firm reports. Walmart set up large, dedicated online fulfillment centers to support its U.S. e-commerce business. Meanwhile, by stocking product centrally, it simultaneously increased assortment by 60 percent to more than 10 —Angela Fernandez, million items, according to Gartner. GS1 US About 75 percent of Walmart’s online sales come from nonstore inventory, providing a source of growth outside of brick and mortar. Gartner’s Griswold urges retailers to envision how they can make the most of e-commerce opportunities, even within physical locations. “In-store multichannel execution is one of the weak links in the supply chain,” he notes. “The ability to understand store fulfillment capacity — how many orders you can process — along with how many associates you can use, are real gaps for many retailers.”
“The need for improved supply chain visibility is becoming more critical to ensure the accurate identification of products, as well as the delivery and tracking of safe food to all areas in the store.”
An Ounce of Prevention An essential part of any successful supply chain management strategy is to be prepared for unforeseen disasters — no matter how big or small. Progressive Grocer recently spoke with two innovative companies that have homed in on specific solutions to help retailers deal with unexpected turbulence:
Viking Cold Solutions, based in Houston, is helping retailers reduce energy consumption while also reducing operational risk. Its Thermal Energy Storage (TES) solutions, used in cold-storage distribution centers and supermarkets, allow thermal energy to be stored for use later, when peak demand charges are high, thus reducing energy consumption by up to 35 percent. Once the TES cells are charged, they can be used for up to 12 hours to mitigate product loss. The thermal backup protection allows retailers to maintain safe temperatures and food quality during power outages or equipment failure, reducing business interruption and perishable food losses. In one example cited by the company, Viking Cold’s TES system maintained food quality for 12 hours without power during a power failure in a grocery store in Texas.
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He further encourages grocers to link their multichannel strategies with longer-term real estate and site selection processes: “The stores we need in [the future must] account for multichannel activities that will be happening in the stores.”
Visibility and Food Safety In a different but equally important part of the business, food safety and security can benefit from the inventory visibility that ideally comes with a more demand-based supply chain. Angela Fernandez, VP of retail grocery and foodservice at Lawrenceville, N.J.-based GS1 US, notes that “the need for improved supply chain visibility is becoming more critical to ensure the accurate identification of products, as well as the delivery and tracking of safe food to all areas in the store.” The GS1 US Retail Grocery Initiative, which began about two years ago, now has a specific workgroup dedicated to the topic of supply chain visibility, and the members of the group have made recent progress in creating a dashboard to measure the implementation of GS1-128 bar codes for caselevel traceability processes, according to Fernandez. GS1 US is also working with retailers to improve operational efficiencies and data accuracy, which certainly impact the retail supply chain as well. Changes like these won’t happen overnight, but with a more demand-driven perspective that includes a focus on visibility, retailers will only continue to improve their supply chain strategies. PG
Impact Power Technologies (IPT), in Braintree, Mass., is a privately owned engineering group with one goal: to make batteries that make a difference. The company, which was chosen as one of the Best New Solutions at NRF 2016, aims to provide the most powerful and longest-lasting batteries for hand-held bar code scanners and two-way radios for retail and public safety. It also offers batteries for portable printers, UPS systems and custom orders. “A weak link anywhere in the supply chain can be costly for retailers,” notes Ken Murphy, COO of IPT. “Bar code scanners are responsible for helping record inventory levels at every point in the supply chain, from the warehouse to the shelves. If the scanner’s power supply fails, it can result in inaccurate data that leads to out-of-stocks and/or surplus.” IPT’s technology uses the highest-quality cells and a proprietary battery management system, according to Murphy. Its batteries are guaranteed to last for an entire shift. In one case, IPT custom-built a special battery to fuel a national supermarket customer’s backup power supply. “We were able to help them save money upfront, as well as in future potential losses due to outages,” Murphy says.
| Progressive Grocer | Ahead of What’s Next | August 2016
October 25–26, 2016 • Chicago
Building the Grocerant Experience Progressive Grocer invites retailer executives to learn more about strategies and solutions for fresh prepared food and how it can boost store loyalty and profits. • Participate in an assessment of shopper insights, the competitive landscape and case studies • Learn about key trends plus operational and tactical concerns
Presenting Sponsor
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• Network with other retailers who share your interest in grocerant opportunities For more information, contact Jeff Friedman at JFriedman@stagnitomail.com or at 201-855-7621.
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Silver
Equipment & Design
Store Design Services
New Directions
in Design
Store sizes, building materials and digital input are all being influenced. By Bob Ingram
A
s the nature of food marketing changes, so are the designs of the stores that present the industry’s offerings. “There is a move to serve specific neighborhoods with smaller-format markets that have ‘basic’ offerings,” says Deborah Leigh English, founder and president of Los Angeles-based DL English Design Studio, “but some major brands are opening both large and small stores and steering shoppers to their more regionally located largeformat stores with enhanced offerings and varied shopper experiences such as full-service restaurants and bars.” For larger stores, English’s company breaks down the mass and creates “zones of intimacy” — highly social spaces that lessen shoppers’ sense of being overwhelmed by varying lighting effects, fixture types and configurations.
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For smaller stores, DL English creates a “hang factor” and the ambiance of a neighborhood market. According to English, a sense of spaciousness can be created by simplified architectural design, lower fixtures, brighter colors, and designing with light to “take an often less-than-optimal space and make it into a highly efficient, effective, compelling place.” She notes that materials are becoming more lightweight and less costly, and that there are many more effective commercial translucent materials available, cautioning, however, that “there are always new products, but not all are advances.” LED lighting, English points out, is the most significant advance in store equipment, and “slowly we are seeing a transition to internet-based in-store messaging and pricing, shopping and marketing solutions. The benefit, from a design point of view, is that the store looks less cluttered, cleaner and more visually consistent.”
| Progressive Grocer | Ahead of What’s Next | August 2016
Equipment & Design
Grocers, while still seeking to manage a prototypical store format, are also focused on site adaptation to local, unique market needs and demography.” —Steven Duffy, Cuhaci & Peterson Architects, Engineers and Planners
Store Design Services
Building an Experience The folks at Orlando, Fla.-based Cuhaci & Peterson Architects, Engineers and Planners see a shift toward buildings with smaller footprints. “Grocers, while still seeking to manage a prototypical store format, are also focused on site adaptation to local, unique market needs and demography,” says Grocery VP Steven Duffy, who works from the firm’s Boston branch. The company’s clients, which are driving this change, have reacted to increased urbanization and generational shifts by showing a preference for walkable communities, Duffy says. “Other corollaries to convenience,” he adds, “are the appropriate deployment of e-commerce and omnichannel options, and the merging of restaurant and grocery formats into the grocerant.” Duffy and his associates believe that one of the main influences in building materials is the increased focus on more natural and sustainable elements. “For example,” he says, “one of our clients uses a composite architectural wood-panel rain screen system for its front-entry façade. These engineered coated-panel systems allow the façade to present as a natural-wood veneer, an extension of the fresh concept that is trending currently.” Cuhaci & Peterson is “designing to build an experience,” Duffy explains, focusing on virtual reality and what is called “mixed reality” or “augmented reality” — computer-generated three-dimensional objects that overlie real-world environments that users can interact with.
loCAl foCuS The prepared food section of a JGA-designed Whole foods Market in Detroit features local fare.
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“We have been using building information modeling (BIM) for 11 years and are leveraging what we’ve learned and building upon that to use it in new and exciting ways,” he observes. Embedded sensors, together with location-based technology like beacons, will bring a new level of shopping experience, Duffy asserts, and managing all of these sensor data and employing tools like deep learning are keys to removing the current friction from design and improving the shopping experience.
Size Matters “When it comes to supermarket size, I think a lot of retail is getting bigger and smaller at the same time,” declares Ken Nisch, chairman of JGA, in Southfield, Mich. Nisch cites Kroger as an example of bigger, noting, “It seems they close a store across the street and open a new store that is two to three times the size of the old store.” The reason? An expansion in general merchandise, hot category growth and more space for customer navigation, Nisch suggests. He also observes that a “growth in their lease-line business, in terms of seasonal products that are displayed outside of the storefront,” is another prevailing trend. Another reason he sees for bigger stores is to compete against the big-box retailers that continue to aggressively grow their food space, as well as to take advantage of some of the real estate opportunities created by the closures of other big-box nonfood retailers. “At the same time, grocery is getting smaller,” Nisch adds. He sees retailers like Trader Joe’s and neighborhood markets being developed, as well as independents that are offering limited, basic grocery but focusing on premium, perishable and prepared foods. Nisch notes a duality in materials as well, with a move toward simplicity such as polished concrete floors, basic shelving, minimalist décor and environmental treatments, which contrast with artisan-driven, unique and often localized statements that support margin, high value and impulse business primarily in the perishable, value-added or prepared areas of the store. Citing stores like Plum Market in Michigan, which feature an in-store See’s Candies department, Nisch points out that these “shop-in-shops” seem to present a more eclectic and contrasting approach to design, with simplicity being the driver. The Human Touch “There is definitely a lot of internal conversation about supermarkets leaning more towards smaller store concepts, and to some degree, we believe this is a wise approach for retail organizations to consider,” says Kevin Kelley, principal and co-founder of Shook Kelley, which has offices in
Charlotte, N.C., and Los Angeles. “Many of our clients are surprised to find out that the numbers for smaller stores often perform a whole lot better than their typically larger storeformat size,” Kelley notes, “but it is very hard for a typical retail organization to let go of their historical ways of doing business.” Once retailers evolve a food philosophy or editing process, he believes, “this will most likely mean smaller stores, a total rethink of center store, a narrower SKU rationale and a lot more experi-
mentation on the edges.” Kelley adds, however, that this doesn’t invalidate the bigbox store approach entirely, just that it won’t be as prevalent in larger metropolitan areas. Trends in building materials, he adds, reflect the same desire for authenticity as seen in the prepared food and grocery aisles, and that exposed concrete, wood, stone and brick are all easily identifiable elements that evoke tangible moments the consumer can relate to. The digital layer of experience in today’s supermarkets, according to Kelley, influences design by adding to the idea of “value added” and convenience, or even personalization, as well as introducing a higher level of consumer knowledge and engagement. He does offer a caveat, however: “Consumers are still going to be looking for the care and love of food that grandmothers put into making their meals, and we have to be careful that technology doesn’t override this level of human-ness.” PG
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August 2016 | progressivegrocer.com |
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Equipment & Design Lighting Trends
A Brighter Today — and Tomorrow Energy efficiency is driving trends in supermarket lighting.
AIslE lIGhts laMar lighting’s NB series of modular lED tubes provides even distribution without glare.
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L
By Bob Ingram
ED technology has been a true game-changer for supermarket lighting in terms of efficiency, versatility, design, creativity and differentiation, translating into reduced energy costs and increased profits and sales for food retailers, according to lighting manufacturers, which predict even more benefits in the pipeline. The future of lighting will be “unique customized spaces which provide greater visibility while creating a special place to visit, one that customers want to come back to,” asserts Michael Lehman, VP of marketing, product development and design at Northbrook, Ill.-based ConTech Lighting. Adds Lehman: “Lighting will help customers navigate to quickly find what they want, while directing them to other items they may want. Lighting will offer control flexibility integrated with store
| Progressive Grocer | Ahead of What’s Next | August 2016
fixtures, and will be able to be integrated with sales numbers to demonstrate ROI.” ConTech’s most efficient lines, according to Lehman, are the Well Designed LED high-bay pendants for general lighting, LED track lights suspended on LuxBeam to highlight produce and end cap areas, LED decorative products to create unique areas for dining, and LED tapelight to add linear wall and sign lighting to enhance visibility and vertical surfaces. These fixtures control glare and “put the light on the intended surface, and not in the eyes of the customer,” he says. At Somerset, N.J.-based Philips Lighting, Ravi Koul, director for retail and hospitality, says that the Philips Day-Brite/Philips CFI LED linear suspended LBX luminaire with Light Balance optics is one of the company’s most versatile products, delivering a vertical gradient of light that ensures
evenly lit merchandise. “Compared to fluorescent lighting, the LBX luminaires are 50 percent more energy efficient,” he notes, “which can reduce energy use by up to 40 percent when combined with Philips control systems such as occupancy sensors and dimming capabilities. With a predicted lifespan of 100,000 hours, it also dramatically reduces maintenance costs.” Supermarkets like H-E-B’s Central Market are using the Lightolier SpotLED, which Koul says is best suited for accenting food areas. Available in lumen configurations from 600 to 3,000, and in spot, narrow flood and flood spreads, the fixture family offers multiple accessories available to customize and further complement the space. With hyper-accurate wall-to-wall indoor positioning solutions that enable retailers to provide personalized location-based services via store app, supermarket lighting has a bright future, according to Koul.
Upgrade Opportunities Jerri Traflet, senior marketing executive at Current, a unit of Cleveland-based General Electric (GE), says the most popular fixtures in grocery stores “are those that support LED and intelligent-lighting controls, delivering tremendous cost savings, as well as a platform that streamlines the technology footprint.” Current’s Albeo and Lumination IS ceiling fixtures support various installations within supermarket ceilings, and the company also offers multiple fixtures for refrigeration display cases, produce displays, and office and receiving areas. Current can couple lighting technology innovation with GE’s cloud-based operating system Predix to deliver real-time analytics and a platform to support unified commerce, Traflet notes. “We see the future of lighting as the integration of the intelligent platform,” she says. “The efficiency and longevity of LED, along with the upgradeability of lighting controls to provide new data from sensors and intelligent devices as they become available, will allow grocers to see benefits from their investments many times over.” West Caldwell, N.J.-based MaxLite offers cooler and freezer lamps that deliver “crisp, bright light” for freezers and walk-in refrigerator cases, according to Amy Silver, corporate communications manager. Silver says the bulbs consume less energy and run longer and cooler than fluorescent freezer bulbs, lowering operating costs and reducing the risk of spoilage. While manufacturers are now offering refrigerated cases with LED lighting already installed, Silver contends that retrofitting existing displays remains the most economical choice. She sees the future of LED store lighting as critical in creating experiences and reasons for shoppers to come to stores as online grocery shopping and automated shipping programs gain traction.
Ledvance (formerly Osram Sylvania), in Willington, Mass., offers for retrofit in various daylight color temperatures SubstiTUBE IPS LED T8 Lamps that are compatible with both instant-start and programmed rapid-start electronic T8 ballasts. Dimmable versions will allow for even more energy savings. Noting that the company’s Sylvania Lightify portfolio can be controlled using apps on a tablet or smartphone to create scenes and change color according to design and branding goals, Keith Pierce, Ledvance’s vertical sales manager for grocery and ESCO, concludes: “Controllability is going to be key for the future of lighting.”
light tOUCh Philips lighting products boast energy efficiency while accenting key areas.
Maintaining Control Bill Plageman, VP of marketing, product management and customer service at Oakland, N.J.-based Amerlux, concurs with Pierce’s prediction. “The future of supermarket lighting will significantly improve and change building management strategies with state-ofthe-art controls,” Plageman affirms, which “will bring the Internet of Things into the supermarket arena.” For aisle and general lighting, Amerlux’s Producer is a linear pendant that, at 10 watts per foot, features a high-efficiency 60- or 80-degree batwing distribution, or a symmetrical distribution for more general illumination applications. Meanwhile, Stelina pendants are a new, narrow design of arched format available in direct, indirect and low-bay styles, Plageman notes, while Nitro LED A16 high-performance, architecturally styled pendants provide ambient and general lighting applications. Chris Conway, director of marketing at Bostonbased Digital Lumens, says his company’s LLE fixtures closely meet the efficiency and form factor sought by the majority of supermarkets, and include onboard intelligence and native sensors for both occupancy and daylight harvesting. Conway sees the future of supermarket lighting going well beyond lighting and energy savings to encompass platforms such as Digital Lumens’ LightRules, which delivers system intelligence and the resulting data. PG August 2016 | progressivegrocer.com |
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Food, Beverage & Nonfood Products
Food Truck Faves
The mobile kitchen craze rages on, so Nestlé USA has teamed with four award-winning food truck proprietors from Los Angeles and Chicago to develop two lines of Hot Pockets products: Food Truck Bites and Food Truck Sandwiches. The Bites varieties are Triple Cheesy Bacon Melt Bites, Smokin’ Bacon BBQ Recipe Burger Bites, Fiery Jalapeño Lime Chicken Rollers and Spicy Asian-Style Beef Rollers. The Sandwiches are Spicy Asian-Style Beef Sandwiches and Fiery Jalapeño Lime Chicken Sandwiches. The frozen microwavable products all are made with 100 percent real cheese and no artificial flavors. SRPs are $5.99 for the Food Truck Bites, which come in 20-ounce bags, and $2.29 for the Food Truck Sandwiches, which come in boxes of two. www.hotpockets.com
Pick a Pickle
Catering to lovers of all things sweet and spicy, Kraft Heinz has introduced its first new flavors of Heinz pickle chips in more than half a century: Sweet & Spicy Pickle Chips and Spicy Garlic Pickle Chips. Available in 16-ounce glass jars with the iconic Heinz keystone logo, the Sweet & Spicy Chips are made with crushed red pepper and Heinz’s secret sweet brine, and the Spicy Garlic Chips are made with garlic and red pepper. The SRP per jar is $2.79. www.kraftheinz.com
Single-serve Spiciness
Consumers can now get their rooster sauce fix anywhere with Pop! Gourmet Foods’ 7-gram packets of The Original Huy Fong Sriracha Hot Chili Sauce. The packets, featuring the deep-red Huy Fong label with iconic white rooster and green-tip bottle, and are SQF- and FDAcertified. The September launch follows Pop! Gourmet Foods and Red Gold’s launch of Huy Fong Sriracha Ketchup, Huy Fong Sriracha Salsa and Huy Fong Sriracha Diced Tomatoes. The SRP is $3.99 per pack of 25 packets. www.POPGourmet.com
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Soup’s On
Giving the soup category a much-needed shot in the arm via inspiration from the cold-pressed juice category, Kitchen22 is adding grab-andgo gazpacho-style soups in bottles. The soups, available in Tomato Watermelon, Carrot Ginger, Leek Potato and Cucumber Mint varieties, come in 8.5-ounce bottles and are made with combinations of vegetables, fruits and herbs. They’re vegan, non-GMO and all-natural, containing no preservatives, additives or artificial ingredients. They’re also made with high-pressure pasteurization (HPP), making them safe to consume while preserving more nutrients than if they were heated or traditionally pasteurized. The SRP is $4.99 each. www.kitchen22.com
Raise the Bar
Knowing that consumers are seeking simpler snacks and creative ways to eat their fruits and veggies, Kind Healthy Snacks has introduced Pressed by Kind, a line of fruit bars made with only fruit and chia, or fruit and vegetables. Featuring no more than five ingredients and no added sugar, each variety contains two servings of fruit. Varieties are Mango Apple Chia, Pineapple Coconut Chia, Pineapple Banana Kale Spinach, Apricot Pear Carrot Beet and Cherry Apple Chia. The bars are dairy- and gluten-free, vegan and a good source of fiber. The 1.2-ounce bars retail for a suggested $1.79 each or in packs of four for $3.99. www.kindsnacks.com
Pretzels With a Twist
Riding the better-for-you snacking trend, Good Health Natural Products has added Veggie Pretzels and Gluten Free Pretzels to its salty snack lineup. The pretzels blend such good-for-you ingredients as Extra Goodness, a mixture of vitamins and real vegetables that deliver powerful nutrition; contain whole grains; and are free of hydrogenated oils, preservatives, trans fat and artificial colors. Veggie Pretzels are thick pretzel sticks sprinkled with Himalayan salt, while Gluten Free Pretzels pretzel twists contain whole grain brown rice flour, bamboo plant fiber and added vitamins. The SRP for either pretzel variety is $3.49 per 5-ounce bag. www.goodhealthsnacks.com
Let’s Talk Turkey
Knowing that consumers are always l looking for cleaner labels — and innovative ways to pack more protein into their diets — Pacific Foods has added a trio of Certified Organic pantry staples to its lineup: a turkey broth and two high-protein chicken stocks. The first-to-market organic turkey broth is made by simmering free-range, organic turkey meat with onions, sea salt and natural flavors; meanwhile, the chicken stocks, available in Unsalted and Original varieties, expand Pacific’s extensive broth and stock offerings, made by simmering free-range, organic chicken mirepoix (onion, carrots and celery), rosemary extract and sea salt. The chicken stocks, which offer 50 percent more protein per serving than other brands, are gluten-free, non-GMO and packaged in BPAfree, shelf-stable 32-ounce cartons. The SRP range is $4.99 to $5.49 per carton. www.pacificfoods.com
Get Fizzy
Today’s on-the-go, health-conscious consumers are looking for ways to get a little more energy and refreshment without all of the calories and artificial ingredients in many carbonated soft drinks (CSDs). In response, Zevia, a manufacturer of zero-calorie, stevia-sweetened CSDs, has added Energy and Sparkling Water to its lineup. Available in three flavors — Mango Ginger, Raspberry Lime and Grapefruit — the Energy line contains 120 milligrams of natural caffeine from coffee extract and no additional supplementation. The SRP is $1.99 per 12-ounce slim can. The Sparkling Water line, meanwhile, is slightly sweet and comes in Lime, Blackberry, Cucumber Lemon and Mandarin Orange flavors. The SRP is $5.99 per 8-packs of 12-ounce cans. Both lines are Non-GMO Project-verified. www.zevia.com August 2016 | progressivegrocer.com |
127
NatureSweet, Ganfer Form Greenhouse Joint Venture San Antonio-based tomato grower NatureSweet Ltd. has entered into a partnership with Ganfer, one of the largest greenhouse vegetable producers in North America, which will add more than 100 hectares of greenhouses to NatureSweet’s production over the next three years. The partnership will enable NatureSweet to increase production of its tomato brands while enabling both companies to advance their respective expansion and growth plans. “We are thrilled to be partnering with an organization that has the expertise of Ganfer,” says Bryant Ambelang, NatureSweet president and CEO. “Our investment in expansion will help to secure our aggressive growth plans.” With initial production beginning Nov. 1, a second phase of expansion is slated to begin April 1, 2017, with additional expansion each year for the next five years. www.naturesweet.com; www.ganfer.com
MasonWays Offers End Cap, Island Display Units West Palm Beach, Fla.-based MasonWays’ easy-to-install bulk end cap and freestanding island displays create a permanent in-store location off the gondola shelf and at the end of aisles to build better product awareness and increase impulse sales. Several sizes and optional colors are available. Durable shelves with molded plastic spacers and bases require no tools to assemble. Complete merchandiser ships are knocked down to save on freight. MasonWays products are produced using recycled and virgin plastics. www.masonways.com
Beaver Street Fisheries Takes Top 2016 Supplier Honors Jacksonville, Fla.-based Beaver Street Fisheries Inc. (BSF) has been selected as Reinhart Foodservice’s 2016 Supplier of the Year. The award was presented at Reinhart’s annual Traditions Sales and Merchandising Conference, along with various other winners in several categories. “For decades, we have built a reputation within the industry as a leader in the import, manufacturing and distribution of quality seafood products,” says James Berger, director of national sales for BSF. “We are honored Reinhart has recognized our hard work and growth in the industry. We have a great team at BSF, and as we continue to push into new regions, we are eager to see the positive impact we will have on the company and its customers.” BSF was also recognized with an award as Rosemont, Ill.-based Reinhart’s Seafood Supplier of the Year. The winners were selected by Reinhart’s leadership team, based on key performance metrics, best practices and alignment with the company’s business strategy. www.beaverstreetfisheries.com
Leap to Lead Business Development at Frieda’s Los Alamitos, Calif.-based Frieda’s Specialty Produce has hired longtime produce industry professional Kevin Leap as its director of business development. “Kevin has a fantastic reputation and a lot of experience building programs and introducing products to both retailers and foodservice operators across the country,” says Karen Caplan, president and CEO of Frieda’s. “Our sales and business development teams are thrilled to work with him in creating more excitement in the specialty category.” Leap was most recently with West Pak Avocado, developing new business programs in both retail and foodservice. Previously, he was director of sales at Dulcinea Farms and sales manager at Ready Pac Specialties. www.friedas.com
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| Progressive Grocer | Ahead of What’s Next | August 2016
advertiser index 5 Generation Bakers Airius Anheuser-Busch Inc. Bay Valley Foods Better For You Foods, LLC Blount Fine Foods Borden Dairy Calbee North America Cheyenne International Chiquita Brands CIP International Inc. Coca Cola NA Creekstone Farms Dairy Farmers Of America Del Monte Fresh Produce NA Inc. Dietz & Watson Inc. Dr. Praeger’s Sensible Foods ECR Software Corporation Emerson - Grind2Energy Emmi Roth USA FleishmanHillard General Mills Inc. Goya Foods, Inc. Heineken USA Inc. Hope Enterprise Corporation IGPS Irving Consumer Products Inc. Jelly Belly Candy Company Kimberly-Clark Co. Loving Pets Products Mars Chocolate NA MasonWays Indestructible Plastics Massimo Zanetti Beverage USA Mercatus Technologies MillerCoors LLC MIWE Mondelez International Musco Family Olive Co. National Pasteurized Eggs Inc. Nature Sweet NBT Cooperative Nestlé Nutrition U.S. New Hope Natural Media Ole Mexican Foods Pharmavite LLC Post Consumer Brands Robbie Flexibles Royal Hawaiian Orchards Stout Beverage The Gourmet Factory TNS / Kantar Tosca Ltd. Trion Industries Inc. Truly Good Foods Tyson Foods USA Pears Unilever Vital Farms Wholesum Family Farms
44 46 Inside Front Cover 42 78 18-19 75 103 113 85 121 59 26 48 91 49 81 7 77 40, 41 15 10-11 13 63 50 (Regional Ad) 117 21 31 Inside Back Cover 108 105 92, 111 42 53-56 4 123 39, Back Cover 37 72-73 93 88 23, Insert 35 83 62 95 17 45 3 61 43 24-25 69 Insert 51 64 9 87 47 70-71 89
www.5generationbakers.com www.airiusfans.com www.anheuser-busch.com www.bayvalleyfoods.com www.better4Ufoods.com www.blountfinefoods.com www.bordendairy.com www.harvestsnaps.com www.cheyenneintl.com/en/get-tropical www.chiquita.com www.cipstyle.com www.cokesolutions.com www.creekstonefarms.com www.dfamilk.com www.freshdelmonte.com www.dietzandwatson.com www.drpraegers.com www.ecrsoft.com www.grind2energy.com www.kindredcreamery.com www.caolive.org www.generalmills.com www.goya.com www.heinekenusa.com www.hope-ec.org/mshfi. www.igps.net www.irvingconsumerproducts.com www.jellybelly.com www.kimberly-clark.com www.lovingpetsproducts.com www.goodnessknows.com www.masonways.com www.kauaicoffee.com www.mercatus.com www.millercoors.com www.miwe.com www.mondelezinternational.com www.olives.com/pearls www.SafeEggs.com/premium www.naturesweet.com www.sweettango.com www.nestle.com www.newhope.com www.olemexicanfoods.net www.pharmavite.com www.postconsumerbrands.com www.RobbieFlexibles.com www.royalhawaiianorchards.com www.stoutbrewingcompany.com www.thegourmetfactory.com www.TNSGrowthPoint.com www.toscaltd.com www.triononline.com www.trulygoodsfoods.com/GC www.tyson.com www.trade.usapears.org www.unilever.com vitalfarms.com www.wholesumharvest.com
Progressive Grocer (ISSN 0033-0787, USPS 920-600) is published monthly by Stagnito Business Information, 570 Lake Cook Rd. Deerfield IL 60015. Single copy price $10, except selected special issues. Subscription: $135 a year; Canada $164 (Canada Post Publications Mail Agreement No. 40031729. Foreign $270 (call for air mail rates). Periodicals postage paid at Deerfield, IL 60015 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to Progressive Grocer, P.O. Box 1842 Lowell, MA 01853. Copyright ©2016 Stagnito Business Information All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.
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advertiSing SaleS & BUSineSS Staff Peter Hoyt President & CEO 773-992-4456 phoyt@p2pi.org Ned Bardic Chief Customer Officer 224-632-8224 nbardic@stagnitomail.com Korry Stagnito Chief Operations Officer 224-632-8171 korrystagnito@stagnitomail.com Jeff Friedman Senior Vice President/Brand Director 201-855-7621 jfriedman@stagnitomail.com John Huff Midwest Regional Sales Manager 224-632-8174 jhuff@stagnitomail.com Rick Neigher Western Regional Sales Manager (CA, OR, WA) 818-597-9029 rneigher@stagnitomail.com Maggie Kaeppel Eastern Marketing Manager 630-364-2150 • Cell 708-565-5350 mkaeppel@stagnitomail.com Mike Shaw Northeast, Marketing Manager 201-855-7631 • Cell 201-281-9100 mshaw@stagnitomail.com Janet Blaney Marketing Manager (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) 630-364-1601 jblaney@stagnitomail.com Mike Weinreich Regional Marketing Manager (DE, MD, NY, TN, AL, DC) 201-855-7609 mweinreich@stagnitomail.com Jackie Batson Advertising Manager 224-632-8183 jbatson@stagnitomail.com United StateS S MarketS Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Multicultural • Green • Technology Hospitality • Apparel
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August 2016 | progressivegrocer.com |
129
the last word
Exploring the Magical Mystery Store
F
ew food retailers have managed to shine as brightly, or become as universally respected, as Wegmans Food Markets, whose 100year heritage as industry trailblazer, community emissary and employer of choice we commemorate in this issue, beginning on page 32. Since Wegmans is one of the most admired — and adored — retailers on the planet, we felt it was only fitting to do something uniquely different for our first-ever formal homage to the Rochester, N.Y.-based retailer on the occasion of its 100th birthday. Accordingly, we chose to focus on Wegmans’ total body of “wow-worthy” work, from both the industry and consumer perspectives. My editorial colleagues — Bridget Goldschmidt, Randy Hofbauer and Jenny McTaggart — and I began our brainstorming session by sharing our professional and personal observations about Wegmans’ wow-worthiness, at which time it was revealed that neither Jenny nor Bridget had ever been inside a Wegmans — that is, until late June and early July, respectively. Jenny opens her narrative, “Seeing Wegmans with a Fresh Set of Eyes,” beginning on page 45, by declaring: “As a trade magazine editor who has written about the grocery industry for more than a decade, I was embarrassed to admit to my colleagues that I had never stepped foot in a Wegmans Food Market. After all, Wegmans is viewed as the crown jewel of grocery stores. The chain enjoys a cult following of loyal shoppers in its core markets, and has earned a superior reputation among retailers, manufacturers and anyone else who knows the inside of the grocery business. “Up until now, though,” she continues, “the only way Wegmans had ‘wowed’ me was through anecdotal observations from the trade and consumers that I gathered through my years of covering the grocery business.” Jenny’s account of her visit to Wegmans’ Woodbridge, N.J., location is preceded by Bridget’s article on page 38, based on her own maiden voyage to Wegmans’ suburban Philadelphia store in King of Prussia, Pa. As Bridget, PG’s managing editor, aptly writes in her “Big Deal” summation, “Part of creating a sense of destination is the grocer’s willingness to blend innovation with the triedand-true,” including such unusual features as a trail-mix bar and an in-store bakery equipped with its own mill to grind locally sourced artisan flours. “For the traditional,” she points upward to “the outer design of Wegmans’ stores, with their familiar clock tower feature meant to evoke a small-town city
hall, or perhaps a church or school, harking back to a semi-mythical American past recalled by your grandparents as a time when life moved at a slower pace and everyone was a little kinder to one another.” To round out our coverage, Senior Editor Randy Hofbauer spearheaded PG’s inaugural efforts to solicit feedback via boosted Facebook posts asking about the various ways Wegmans wows consumers. In a concise timeframe in early July, we received more than 200 comments describing the many ways the social network’s users feel that Wegmans sets itself apart — a robust sampling of which are also peppered throughout our cover story. One Facebook comment in particular served as the inspiration for our whimsical, unconventional cover design: “From the first step inside a Wegmans, I knew I had found MY store. It was magic.” Kudos are consequently in order for our art director, Bill Antkowiak, whose deft hand and creative ingenuity further bring our Wegmans tribute to life with one of the more memorable and inventive PG cover concepts in recent years. **** Over the course of 10 decades, Wegmans has earned a well-deserved place in an elite class of companies that have created highly productive, widely admired, supremely successful brands as a result of family-fostered principles focusing on workplace culture as a competitive tool. In addition to its enlightened approach to harnessing the riches residing in its people, Wegmans’ admirable quest for continuous improvement via calculated risks and a willingness to experiment has unquestionably helped the grocery industry become a better place, thanks largely to the vision of its late chairman, Robert Wegman. The first few lines of a speech that Wegmans’ patriarch delivered in 1967 at a food industry conference in Thailand defined the framework for his company’s operating philosophy, and bears repeating: “I am a merchant, and I have, therefore, my own philosophy about merchandising. That is: To do something that no one else is doing, and to be able to offer the customer a choice they don’t have at the moment.” Legend has it that nearly 50 years later, some Wegmans employees are still known to refer to the “I am a merchant” speech, to keep the foundational inspiration top of mind as the company grows. As well they should. PG Meg Major mmajor@stagnitomail.com Twitter @Meg_Major/@pgrocer
Wegmans’ admirable quest for continuous improvement via calculated risks and a willingness to experiment has unquestionably helped the grocery industry become a better place.
130
| Progressive Grocer | Ahead of What’s Next | August 2016
HELP THEM ROCK THE PARTY &
$0.2B POTENTIAL OPPORTUNITY BY 2020 1
EXPAND ENTERTAINING family and friends consider snacks an important 36% entertain at home instead of going out 54%part of social occasions 2
Sources: 1 Mondelez Volumes Projections Based on Euromonitor Projected Category Growth & Added Value Snacking Landscape Insights 16, 2 State of the Snack Industry, SymphonyIRI Group, 2013
© Mondelēz International group
2
Looking for insights to help drive sales? Need to build shopper loyalty? Look inside for information about our Baby Aisle Path to Purchase Study. We are excited to share the results of our comprehensive research to understand how moms shop the Baby and Toddler Food category.
Gerber Path to Purchase Study ®
What we learned from moms... Research-based guiding principles to help retailers optimize mom's shopping experience. We can help you better understand:
And help you build:
› Shopper Profiles
› Optimized Communication Strategies
› Pre-Store Planning
› More Effective In-Store Executions
› In-Store Shopping Behaviors
› Improved Customer Experience
› Purchase Barriers HOW DO THEY PREPARE TO SHOP?
WHERE DO THEY SHOP?
WHAT DO THEY BUY?
WHAT'S HAPPENING IN-STORE?
Contact your Nestlé Nutrition Sales Representative for more information about our exclusive Gerber® Path to Purchase Study and how we can help you utilize the results to drive sales and build shopper loyalty.
Contact your Nestlé Nutrition Sales Representative for more information about our exclusive Gerber Path to Purchase Study. ®
Gerber® has been providing category expertise and thought leadership in the Baby aisle for over 87 years. We are excited to share the results of our rigorous, comprehensive initiative to understand how moms shop the Baby and Toddler Food category, and how Retailers can improve her shopping experience.
BUILD ING WITH BEER ™
2 016 –17 INDUSTRY INSIGHTS A CO M P R E H E N S I V E L O O K AT U. S . B E E R I N D U S T R Y I N S I G H T S
3 4 6 12 PAG E
PAG E
PAG E
PAG E
Executive Letter
MillerCoors Advantage
Industry Overview
Off-premise 12
30
C -S TO R E S
E - CO M M E R C E
18
32
L I QU O R S TO R E S
D R U G & D O L L A R S TO R E S
24 G R O C E RY
38 PAG E
On-premise 38
46
O N - PR E M I S E OV E R V I E W
C A SUA L D I N I N G
42
48
N E I G H B O R H O O D BA R S
CO N C E SS I O N & C A S I N OS
44
50
S P O R T S BA R S
T R AV E L & L E I SU R E
We’re in a new and exciting era of American beer. You see it every day. More and more adult consumers are interested in beer, in trying different brands and styles, and in learning the stories behind their favorite beers. They’re cooking and pairing food with beer. Retailers who understand the real trends and business drivers of beer in their store – and not just the hype – have a huge opportunity to leverage this growing interest in beer. That’s where this Building with Beer™ Industry Insights Report comes in. This report will give you a look at how beer contributes to the overall success of your business and the satisfaction of your customers. It informs on opportunities and highlights key trends for each specific class of trade. At MillerCoors we are committed to leveraging the MillerCoors Advantage to grow the size and the value of your total beer category. A growing category benefits everyone – including your consumers. This report reflects this commitment. We hope you enjoy Building with Beer™ Industry Insights. To learn more about trends in your business and how MillerCoors can bring you tools and solutions to capitalize on them, we encourage you to reach out to your MillerCoors sales team. Thank you,
Kevin Doyle President, Sales and Distributor Operations MillerCoors
MillerCoors Advantage
Brands
Distributor Services
Innovation Profitable Category Growth
People
Business Building Solutions
M I L L E R C O O R S A D VA N TA G E
The MillerCoors Advantage is the bundle of goods and services we provide to grow the size and value of a retailerâ&#x20AC;&#x2122;s beer category. Brands We have a robust brand portfolio that includes industry-leading Premium American Lagers and Premium American Light Lagers, Crafts, Prestige Imports, Ciders, Flavored Malt Beverages and more.
Innovation We drive scalable and differentiated innovation that excites consumers, shapes the category and drives incremental value for your business.
Business Building Solutions We bring a suite of space and assortment, retail marketing, revenue management and other tools to help retailers drive shopper conversion.
People We have the most collaborative, passionate and value-add talent in beer with the skills to meet the needs of our dynamic industry and increasingly sophisticated retailers.
Distributor Services We have a network of entrepreneurial distributors who are constantly looking for new ways to help retailers build their beer business.
I INDUS TRY
OVERVIEW OV VERVIE EW BEER IS STRONG Consumers like i to celebrate and make beer
BEVER AGE ALCOHOL CONSUMPTION BY T YPE
part of their daily lives, as well as part of
Beer remains the alcoholic beverage
family and friend celebrations. Recession-
of choice with 83% of Total Alcohol
inspired trends of home entertainment
Beverage gallons sold, and 51% of TAB
have lasted, though people continue to
servings. 1
dine out and visit bars so the market is filled with beer-drinking occasions. Channels must evolve and stay ahead
BEVERAGE ALCOHOL CHOICE SHARE OF SERVINGS
of trends to meet consumer needs in
BEER
WINE
SPIRITS
different ways, most notably through
2006
56%
15%
29%
packaging and product innovation.
2015
51%
17%
32%
Evolving consumer preferences have changed the types of products and
Serving = 12oz beer, 5oz wine, 1.5oz spirits Internal MillerCoors Analysis, December 2015
packages that beer buyers are purchasing.
GALLON SALES (MIL) BY ALCOHOL TYPE
As a result, distributors, retailers and shoppers are faced with more choice than ever before within the beer category.
BEER
WINE
SPIRITS
This Building with Beerâ&#x201E;˘ Industry Insights
2013
6,400
773
496
Report provides a channel-by-channel
2014
6,400
781
503
breakdown of the shoppers and product
% CHANGE
0.0%
1.0%
1.5%
83.3%
10.2%
6.6%
trends affecting sales and changing the shape of the industry. 1. Internal MillerCoors Analysis, December 2015
% OF TAB
MillerCoors Industry Sales Projections, December 2015
INDUSTRY OVERVIEW
BREWERIES IN THE U.S.
NUMBER OF U.S. BREWERIES
The explosion in craft breweries and brewpubs has resulted in a historically high number of breweries in the U.S.,
6,0 0 0 5,0 0 0 4,0 0 0
nearly tripling in just the past six years.
3,0 0 0 2,0 0 0
• 5,525 breweries in 2015 1
1,0 0 0
• Nearly 75% of legal drinking age
2
T TB AC TIVE BREWER PERMITS BY STATE, 2015 COUNT
S TATE
1
COUNT
S TATE
COUNT
A L A BA M A
28
K EN T U CK Y
45
N O R T H DA KOTA
10
AL ASK A
32
LO U I S I A N A
21
OHIO
167
A R IZO N A
86
MAINE
79
OKL AHOMA
A RK A N SA S
27
M A RY L A N D
66
O REGO N
265
C A L I FO RN I A
714
M A SSACH US E T T S
107
PEN N S Y LVA N I A
256
CO LO R A D O
330
M I CH I GA N
291
RH O D E I S L A N D
15
M I N N E SOTA
127
SO U T H C A RO L I N A
46
CO N N EC TI CU T
2015
2011
20 08
20 05
20 02
Alcohol and Tobacco Tax and Trade Bureau, December 2015
• Nearly 3,000 beer distributors
S TATE
1999
1996
1993
1990
1984
brewery 1
1987
0
adults live within 10 miles of a
50
19
D EL AWA RE
17
M I SS I SS I PPI
11
SO U T H DA KOTA
17
D I S T R I C T O F CO LU M B I A
12
M I SSO U R I
81
T EN N E SS EE
80
FLO R I DA
186
M O N TA N A
71
TE X A S
193
GEO RGI A
50
N EB R A S K A
37
U TA H
25
H AWA I I
23
N E VA DA
38
V ERM O N T
61
I DA H O
54
N E W H A M PS H I RE
57
V I RGI N I A
141
ILLINOIS
180
N E W J ERS E Y
60
WA S H I N GTO N
352
INDIANA
135
N E W M E X I CO
64
W E S T V I RGI N I A
17
I OWA
66
N E W YO RK
294
W I SCO N S I N
177
K A N SA S
32
N O R T H C A RO L I N A
183
W YO M I N G
30
1. Alcohol and Tobacco Tax and Trade Bureau, December 2015 2. National Beer Wholesalers Association, December 2015
TOTAL
5,525
7
2015 Total U.S. Beer Sales SALES BY RETAIL CL ASS OF TR ADE Convenience stores are the leading retail outlet for beer. They fit the beer drinker demographic and are a destination for a broad range of beer occasions and are growing in sales as a result.
• Large format: Opportunity lies
• On-premise: Opportunity to
• Small format: Opportunity
in helping consumers navigate
arises in capturing conversion
manage core items versus
and understand the explosion
of shoppers in-store,
“the long tail” to capture the
of items within the set while
particularly for small-pack
power of velocity.
retaining space for profitable,
occasions, especially singles.
high-velocity brands. 8%
PERCENT OF TOTAL INDUSTRY 2015 (BBL VOLUME) CO N V E N I E N C E
DRUG
G RO C E RY
R E S TAU R A N T
LIQUOR
B A R / TAV E R N
MASS MERCH
OT H E R O N - PR E M I S E
OT H E R O F F - PR E M I S E
4%
8%
29%
2% 3% 3% 20%
23%
MillerCoors Estimates, December 2015
BEER STOCK KEEPING UNITS
A L L OT H E R S K U S
80% OF DOLL ARS
With the explosion in craft brands and flavored malt beverage variety, SKU count has increased more than 70% in the past five years. 1 Despite adding more than 6,900 SKUs since 2010, less than 3% of all SKUs contribute 80% of category dollars. 1
2 012
2 013
2 014
2 015
A LL OTH E R SKUS
11, 673
13 , 5 6 4
15 ,101
16 , 0 3 8
80% OF DOLL ARS
346
3 87
4 07
4 42
1. Nielsen Total U.S. xAOC 4 Years Ending Dec. 26, 2015
• Premium American Light Lager remains the largest segment across all channels with 47% of all beer volume sold. • Craft continues strong growth, but represents less than 10% of beer industry sales. • Flavored malt beverages are a new growth opportunity as legal drinking age millennial consumers seek increased variety in flavor profile.
% OF TOTAL
% CHANGE
PREMIUM AMERICAN LIGHT
47%
-3.1%
SUPER PREMIUM & PREMIUM
14%
-1.0%
TOTAL IMPORTED
14%
5.3%
CR AFT
9%
15.2%
ECONOMY
7%
-3.9%
FMB
4%
6.3%
ICE
3%
-4.2%
MALT LIQUOR
2%
-3.3%
100%
-0.1%
SALES IN CASES (000)
TOTAL BEER
INDUSTRY OVERVIEW
BEER SALES BY SEGMENT
MillerCoors Industry Sales Projections, December 2015
SEGMENT OPPORTUNITIES TO SUPPORT OVER ALL BUSINESS All segments are important and have different opportunities to support overall business.
ABOVE PREMIUM
• Segment with double-digit growth
PREMIUM AMERICAN LIGHT
• Largest volume and revenue driver
ECONOMY
• Economy shoppers exhibit high brand loyalty and will shop elsewhere if their brand
• Innovation is key with millennials and new
• #1 beer choice in all consumer occasions
• Produces more revenue per
consumers, especially in flavored malt beverages
or pack is not available
• Turns quickly and the profit per case it
total distribution point than craft segment
provides gives the • Opportunity to recruit female consumers with
operator substantial cash flow
• Frequent trips and fast turns create high sales dollar volume
relevant products and marketing • High margin/profit
• Increases total basket
• Shoppers buy a 24-pack of
size for the retailer
economy beer on average every eight days
9
Seasonality Beer sales are seasonal. Summer leads in sales volume (May â&#x20AC;&#x201C; August, 37%).
SEASONALITY 269,000
259,000
262,000 255,000
250,0 0 0 242,000 237,000 AVER AGE
238,000
236,000
228,000 223,000
212,000
212,000
209,000
20 0,0 0 0 JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
MillerCoors Industry Sales Projections, December 2015
Summer selling season is imperative. More beer is sold in each summer week than the week leading up to the Professional Football Championship!
KEY HOLIDAY OCCASIONS
150
135 118
120
119
112 104
97 90
89
60
30
PROFESSIONAL FOOTBALL CHAMPIONSHIP 2 W/E 02/07/15
EASTER 2 W/E 04/11/15
0 Nielsen xAOC, December 2015 MillerCoors Industry Sales Projections, December 2015
MEMORIAL DAY 2 W/E 05/30/15
JULY 4TH 2 W/E 07/11/15
LABOR DAY 2 W/E 09/12/15
THANKSGIVING 1 W/E 11/28/15
XMAS/NY 3 W/E 01/02/16
B E E R I S A B E V E R AG E T H AT I S POPUL AR AMONG ALL SEGMENTS O F T H E P O P U L AT I O N .
INDUSTRY OVERVIEW
Beer Consumer Profile
Core beer consumer: MALE
AGES 28-54
WHITE
MODERATE INCOME
Beer consumer opportunity: FEMALE
AGES 28-54
WOMEN CONSUME 17 BILLION SERVINGS OF BEER ANNUALLY.
Conventional wisdom told us
One out of every four
The number of female
that beer must focus tightly
beers in America is
beer drinkers in this
on heavy users. A broader
consumed by a woman.
country is similar in size
perspective is imperative now,
Thatâ&#x20AC;&#x2122;s 17 billion bottles
to all millennial beer
and that includes reimagining
of beer every year.
drinkers and larger than
the role that women play in
the number of Latino
category growth.
beer drinkers.
Multicultural opportunity: LATINOS ARE:
21% OF LEGAL DRINKING AGE MILLENNIALS
90% OF POPULATION GROWTH
40% OF LATINO DRINKING OCCASIONS ARE PREMIUM AMERICAN LIGHT LAGER, NEARLY EQUAL TO IMPORTS, WHICH CONSTITUTE 46% OF OCCASIONS. U.S. diversity has reached a tipping point, resulting in a
Above Premium (mainly Mexican
shift in consumer attitudes, expectations and behaviors.
imports) represent approximately
90% of the U.S. population growth for the next few years
46% of beer volume, however,
will come from the Latino market. By 2023 Latinos will
Latinos also consume Premium
represent 19.2% of total legal drinking age consumers and
American Light Lagers at a
approximately 19.5% of beer volume vs. the current 16.5%.
considerable 40% volume.
Source: US Census Bureau, December 2015, MillerCoors Behavioral Tracking, December 2015
11
CONVENIENCE STORES
CO N V E N I E N C E S T O R E S CO N T I N U E TO GROW IN IMPORT TA ANCE As the primary stop for gas, beverages, cigarettes, snacks and dining on the run, c-stores fit todayâ&#x20AC;&#x2122;s fast-paced lifestyle and deliver an ever-increasing quality experience changing the way people shop in c-stores. Beer is critical to the c-store operator. With more than $16 billion in annual sales, it is a
13.1%
Beer sales as a percentage of total in-store sales (for those selling beer) CSX-NACS 2016 State of the Industry report
BEER AND C-STORES ARE INTERDEPENDENT Beer is the third-largest category in the store. C-stores are the #1 shopper outlet for beer capturing almost one-third of beer industry volume. 2
29%
Convenience stores are the largest retail outlet for beer with 29% of all beer barrel volume, and continuing to grow. 2. MillerCoors Industry Estimates, December 2015
primary destination category for the store. 1 Beer dollar sales are up 2.9% in c-stores in 2015 and have increased more than $1 billion in the past two years. 1 C-stores remain popular with consumers seeking Premium American Light and Economy products, with the primary demographic males between 21-27 years old. 1 1. MillerCoors Behavioral Tracking, December 2015
M O N T H LY S A L E S P E R S T O R E B Y Q UA R T I L E Top-quartile operators captured $16,000 more in beer sales annually compared to bottom-quartile retailers. Top-quartile c-stores drive higher beer sales and traffic with more aggressive margins.
$16,183 $14,834
TO PQU ART ILE MO NT H LY SAL ES
BO TTO MQU ART ILE MO NT H LY SAL ES
CSX-NACS 2016 State of the Industry report
$17.3 BILLION
+
ANNUAL SALES 2015 Nielsen Total U.S. Convenience Year Ending Dec. 26, 2015
3.2%
OV ER 2 014
G ROW TH I N 2 015 WA S D R I VE N BY CO NTI N UE D E X PA N S I O N O F S I N G LE S, M I X SH I F T S A N D PR I CE I N CR E A SE S . G ROW TH I N 2 016 FO R EC A S TE D AT 3. 5% .
3.3
BILLION
CONVENIENCE STORES
Year-Over-Year Growth
3.5% in 2016
MillerCoorsEstimates, December 2015
64%
BEER UNITS SOLD IN 2015
IN DEPEN DEN T CO N V EN IEN CE R E TA IL ER S A R E CR IT I C A L TO T H E
+2.9%
Nielsen Total U.S. Convenience Year Ending Dec. 26, 2015
B EER C ATEGO RY, ACCO U N TI N G FO R 6 4% O F C -S TO R E B EER VO LU M E IN 2 015. MillerCoors Internal Data, December 2015
13
C-Store Sales CONVENIENCE STORE SHOPPING FREQUENCY AND BEER BASKET RING MAKE BEER SHOPPERS SOME OF THE MOST VALUABLE CONSUMERS. Beer shoppers are 2 ½ times as valuable as an average c-store shopper.
Percentage of beer that will be consumed within two hours:
Beer basket $9.44 is almost 60% larger than c-store average of $5.93.
80%
• Single basket $4.76
60% LARGER
• Multi-pack basket $14.24 MillerCoors Profitable Beer Marketing Database, December 2015
C-STORE SHOPPERS ARE “ON THEIR WAY.” Three primary occasions motivate shoppers to purchase beer in c-stores, and cold beer is a necessity! 60% of beer sales occur between
3-8pm
CHILLIN' AT HOME Re-connecting with small group of family/friends
TNS Landis Shopper/Trip Segmentation 2015
BRING THE BEER Beer for small party/fun social gathering
SHED THE DAY Transition from "work time" to "my time"
VAST MAJORITY OF SALES AT C-STORES ARE SMALL PACKAGES. Singles 59%
4-12 packs 33%
Nielsen 52 Weeks Ending Dec. 26, 2015
18-packs 5%
24-packs and larger 3%
Beer Sales by Segment • Convenience is the “Premium American Light Lager” channel, with almost 60% of Premium American Light dollar sales and more than 70% of Premium American Light units across all off-premise retail beer outlets. • Above-premium priced beers lead growth. Imports, craft styles, flavored malt beverages and ciders are all showing double-digit growth.
SIMPLIF Y PRICING
• While craft beer styles have grown rapidly, they still account for only 5% share of c-store beer dollars.
+8.3%
SINGLES DRIVE GROW TH IN C-STORES
92%
Five distinct segments motivate shoppers to purchase singles, and all five are unique and necessary for growth. Merchandising these segments together helps shoppers quickly manage the section. Improving the speed at which a shopper can find their brand increases purchase rate and basket size.
Average singles dollar growth since 2010
of stores growing beer revenue are growing singles
Nielsen, Total U.S. Convenience Year Ending Dec. 26, 2015
SALES BY SEGMENT $441.9
$141.8 $129.1
FLAVORS
$20.6
FASTEST-GROWING SEGMENT; PEAKS ON WEEKENDS • Flavored Malt Beverages • Teas • Hard Sodas • Cocktails 2/$5
$833.8
INDULGENCE
$1,063.3
TRADE UP AND TREAT YOURSELF • Imports • Crafts • Super Premium
$6,323.5 2/$5
$1,111.8
REFRESHMENT
LARGEST SEGMENT; RELAXATION AND REFRESHMENT • Premium American Light
$2,344
$1,361.7 $1,615.9
CONVENIENCE STORES
• The singles shopper buys an average of 1.5 singles. • Leverage ‘2-for’ bundled pricing.
2/$4
VALUE
TRIP DRIVER FOR VALUE-ORIENTED SHOPPERS • Economy
$1,920.3 2/$3
PREMIUM AMERICAN LIGHT
SUPER PREMIUM
IMPORT
CRAFT
NEAR PREMIUM
MALT LIQUOR
PREMIUM AMERICAN REGULAR
ALTERNATIVE
BUDGET
CIDER
FMB
COOLERS
Nielsen, Total U.S. Convenience Year Ending Dec. 26, 2015
THIRST QUENCHER HIGH-VELOCITY SEGMENT; GET MORE FOR LESS • Large-Pack Items, 32 oz. or Larger
2/$6
Maintaining the same ‘2-for’ price on all items on each shelf makes it easier for consumers to identify their desired product.
15
Beer Sales by Package C-store shoppers want cold and quick! Small packs and cold space for beer are critical. Beer is often consumed within two hours of purchase. MillerCoors Research, December 2015
• Beer is under-spaced in most outlets relative to the revenue it creates versus the other categories in the cooler. • More than 85% of all c-store beer units sold are 12-packs, 6-packs or singles. • 12-packs are the highest-selling package in dollar sales. • There were an average of 106 beer items stocked per store in 2015, up 13% since 2012.
• 40 of those items are singles, up 22% since 2012. • Singles drive c-store unit sales and growth! • 92% of c-stores that are growing are growing with singles. • Singles SKUs have increased 31%. (+10 SKUs per store) • Singles segment mix is evolving to include more crafts, imports and FMBs. Nielsen, Total U.S. Convenience Year Ending Dec. 26, 2015
EXPAND SPACE FOR SINGLES • Stores in the top quartile of beer-selling outlets dedicate at least 25% of beer cooler space to singles. MillerCoors Cooler Space Audit, Nielsen, December 2015
• Price shelves at ‘2-for’ pricing for each segment with a single price point for each shelf. • Create a singles destination for shoppers organized by segment. 10 SHELVES
AVERAGE C-STORE SINGLES SHELVES: 5
6 SHELVES
$598/ WK
$809/ WK +$211/ WK
7 SHELVES
SINGLES IN ONE DOOR HAVE A 13% HIGHER VELOCITY PER STORE THAN STORES WITH SINGLES SPREAD THROUGHOUT THE COOLER $907/ WK +$329/ WK
$1,158/ WK +$560/ WK
GENDER
Index
by Purchase Volume
ETHNICITY
MALE
FEMALE
WHITE
BL ACK
L AT I N O
A SI A N /OTH E R
72%
28%
62%
15%
19%
4%
103
94
98
129
110
52
AGE
Index
21–27
28 –34
35 – 44
45 –54
55+
17%
20%
20%
26%
17%
125
127
89
102
74
<$30K
$30 –50K
$50 –70 K
$ 7 0 –10 0 K
$10 0 K+
35%
24%
17%
15%
9%
150
114
98
73
50
O F F - P R E M I S E B E H AV I O R
CONVENIENCE STORE BEER CONSUMER DEMOGRAPHICS
INCOME
MillerCoors Behavioral Tracking, December 2015
FREQUENT SHOPPER:
C-Store Beer Shopper • 12-packs are shopper preferred for versatility, as consumers feel “enough for me and enough to share.”
24
CONVENIENCE STORES
Index
TRIPS PER MONTH
• 6-packs satisfy shoppers’ “personal supply” needs.
DESTINATION: BEER IS THE THIRD-LARGEST GROSS PROFIT GENERATOR AT $2,892 PER STORE PER MONTH, UP 3% FROM 2014.
55
%
OF TRIPS ARE BEER ONLY
CONVENIENCE STORE BEER PROFITABILITY 2015 AVERAGE PER STORE PER MONTH
Due to the decision process and quick
SALES
MARGIN %
GROSS PROFIT
nature of the c-store beer trip, it’s difficult to influence the beer shopper in the store.
Change vs. 2014
$16,317
17.7%
$2,892
3.4%
-0.1%
3.0% CSX, LLC, December 2015
Looking for COLD, QUICK, CONVENIENT! MillerCoors Profitable Beer Marketing Dataset, December 2015
17
LIQUOR STORES
Liquor is a big and important class of
for alcohol, providing a convenient, quick
trade, while also being unique. Liquor
location for cold beer. Regardless of
stores are not all alike. Some are liquor
the format, liquor stores are a primary
destinations — built to explore and
destination for beer. However, there are
experiment across a broad assortment
big opportunities to improve the shopping
of beverage alcohol choices — while
experience and space efficiency to recruit
others act more as convenience stores
beer shoppers back to liquor stores.
8 0 % OF LI QUOR S TORES ARE 3,0 0 0 SQUARE FEET OR LESS. MillerCoors Year Ending 2014 Liquor Space and Display Audits
• #1 In total alcohol experience • 37K+ Total liquor outlets
3.1B
$
• 164M Total shopping trips
CALENDAR YEAR 2015
• 20% Share of total beer sales
Sales at liquor stores grew 3.9% in 2015.
• +3.9% Growth in dollar sales
Nielsen Liquor, 52 Weeks Ending Dec. 26, 2015
7.2
%
TOTAL U.S. HH PE NE TR ATI ON
Nielsen Household Panel Data Through Dec. 12, 2015
20%
Liquor stores are the third-largest class of trade for beer sales at 20% of volume. MillerCoors Industry Estimates December 2015
CONSUMPTION INTENT VARIES BY STORE T YPE: •
destination Preparing for large gathering
•
neighborhood On the way to a party
6% O F VO L U M E
•
corner Personal immediate consumption
Large, warehouse, megastores that have a large selection and specialized staff to help customers with questions
Liquor store eye-tracked shoppers in Minneapolis, Boston and Tampa, July 2013
DE S T I N ATI ON 3% OF OUTLETS
N E I GH BOR H OOD 63% OF OUTLETS
LIQUOR STORES
NOT ALL LIQUOR STORES ARE CREATED EQUAL
NEIGHBORHOOD LIQUOR SEGMENT HAS THE MOST OUTLETS AND DRIVES THE MAJORIT Y OF VOLUME.
71% O F VO L U M E
3%
Medium-sized stores that vary in selection, size and staff to help customers with questions
6%
23%
34%
CO R N E R 3 4% O F O U T L E T S 2 3 % O F VO L U M E Smaller stores with spaceconstrained selection and minimal expectations for staff engagement from customer
MillerCoors STR Data, December 2015
63%
PERCENTAGE OF OUTLETS BU Y ING
NEIGHBORHOOD
71%
PERCENTAGE OF VOLUME
CORNER
D E S T I N AT I O N
MillerCoors STR Data, December 2015
19
34
56
%
%
G ROW T H R AT E FO R FM BS, FA S T E S T- G ROW I N G SEG M E N T
PE RC E N TAG E O F CR AFT & IMPORT SA LE S I N L I QU O R S TO R E S
Nielsen Liquor, 52 weeks ending Dec. 26, 2015
Nielsen Liquor, 52 weeks ending Dec. 26, 2015
BEER SALES BY SEGMENT With the large number
Craft and Import beers
FMBs are the fastest-growing
of brands and packages
dominate the liquor
segment, while Premium
offered, beer shoppers
store experience with
American Light, Premium
in liquor stores place an
more than 56% of
American Regular and Economy
emphasis on variety
dollar and unit sales,
segments have the highest
and experimentation.
and continuing to grow.
velocity per SKU (efficiency).
CR AFT & IMPORT ACCOUNT FOR MAJORIT Y OF SALES
FMBS ARE FASTEST GROWING FMB +34.1
PREMIUM SEGMENTS HAVE HIGHEST $ PER SKU VELOCIT Y
$18,083,944
5% 5% 4% 3% CR AFT +5.5
8% 29%
VELOCIT Y PER SKU DOLL ARS
IMPORT +3.6
19%
SUPER PREMIUM +1.7
27%
$10,197,304
PREMIUM AMERICAN LIGHT +1.2
CR AFT
$7,358,846
IMPORT
$5,893,695
NE AR PREMIUM - 0.1
PREMIUM AMERICAN LIGHT L AGER
$3,239,646 $3,239,646 $3,106,116
PREMIUM AMERICAN REGUL AR PREMIUM AMERICAN REGUL AR -1.0
NE AR PREMIUM
$2,593,865
FMB BUDGET -3.2
SUPER PREMIUM BUDGET Nielsen Liquor, 52 Weeks Ending Dec. 26, 2015
-5%
0%
5%
10%
15%
Nielsen Liquor, 52 Weeks Ending Dec. 26, 2015
20%
25%
30%
35%
PREM. PREM. BELOW SUPER IMPORT CRAFT FMB PREM. AMER. AMER. PREM. LIGHT Nielsen Liquor, 52 Weeks Ending Dec. 26, 2015
CIDER
Beer Sales by Package
• Package mix in liquor stores reflects both variety and value. • Focus on package availability should be on the cold vault, as 93% of beer is purchased cold. • Just two package sizes, 12-packs and 6-packs, make up 53% of dollar volume. • Three package sizes, 12-packs, 6-packs and singles, are more than 80% of unit sales.
SMALL PACKAGES ARE LEADING GROWTH.
28%
13%
23%
TOTAL COMBINED LIQUOR MARKETS 2015 PACKAGE SIZE
$ SHARE 12%
Liquor store eye-tracked shoppers in Minneapolis, Boston and Tampa, through December 2013
25%
12-pack
Singles
6 -pack
Remaining
24/30 -pack Nielsen Liquor, 52 Weeks Ending Dec. 26, 2015
$ VOL % CHANGE VS. YEAR AGO
UNIT SHARE
UNIT % SHARE VS. YEAR AGO
12-pack
2.1
16%
-0.2
6-pack
9.7
23%
4.8
24/30-pack
2.3
9%
0.3
Singles
3.3
44%
2.6
Remaining
3.0
8%
2.0
Nielsen Liquor, 52 Weeks Ending Dec. 26, 2015
LIQUOR STORES
LIQUOR STORES 2015
• Singles and 6-packs provide variety and serve quick-trip occasions.
PREMIUM AMERICAN LIGHT
PREMIUM AMERICAN LIGHT AND PREMIUM AMERICAN REGULAR PROVIDE THE GREATEST SALES POWER PER SKU STOCKED
SKUS ARE 6 TIMES MORE PRODUCTIVE THAN CRAFT ITEMS.
LIQUOR STORES 2015 SEG MENT
PREMIUM A MERIC A N L IGHT
$ SHAR E
SHAR E OF SKUS
18.7%
$ PER SKU
5.2%
$18,083,944
PREMIUM AMERICAN REGUL AR
7.5%
3.7%
$10,197,304
BELOW PREMIUM
8.7%
6.0%
$7,358,846
SUPER PREMIUM
3.6%
3.0%
$5,893,695
IMPOR T
25.9%
25.8%
$3,239,646
CR A F T
27.9%
43.2%
$3,239,646
FMB
5.1%
8.3%
$3,106,116
CIDER
2.5%
4.9%
$2,593,865
TOTA L
100%
100%
$5,013,528
Nielsen AOD – Total Combined Liquor Plus & Total U.S. Food, Calendar Year 2015, Ending Dec. 26, 2015
21
Liquor Space Management Space and Assortment LIQUOR SHOPPERS SPEND MOST OF THEIR TIME AND MONEY IN THE COOLER. Prominent brand/package placement in the cooler will drive conversion.
PE RCE NTAG E O F T I M E COLD
80%
AMBIENT
20% PE RCE NTAG E O F PU RCH A SE
COLD
93%
AMBIENT
7% Liquor store eye-tracked shoppers in Minneapolis, Boston and Tampa, through December 2013
TAKE ADVANTAGE OF THE OPPORTUNITIES FOR EXPERIENCE AND EFFICIENCY IN LIQUOR STORES BY: • Cooler needs to be visible to attract shoppers, 93% purchase cold • Create differentiated points of interest early in the shopping flow • Ambient selection needs to be well-organized and shoppable • Craft SKUs tend not to be consumed until more than 24 hours after purchase which makes them ideal for ambient placement
MillerCoors Behavioral Tracking, December 2015
LIQUOR STORE BEER CONSUMER DEMOGR APHICS GENDER
Index
by Purchase Volume
ETHNICITY
MALE
FEMALE
WHITE
BL ACK
L AT I N O
A SI A N /OTH E R
69%
31%
67%
11%
16%
7%
99
103
105
93
93
84
AGE
Index
21–27
28 –34
35 – 44
45 –54
55+
13%
16%
25%
26%
21%
93
101
107
101
95
<$30K
$30 –50K
$50 –70 K
$ 7 0 –10 0 K
$10 0 K+
18%
16%
19%
19%
28%
78
74
105
96
161
INCOME
Index
MillerCoors Behavioral Tracking 2015
Different formats capture slightly different audiences, thus shopping behavior varies.
O F F - P R E M I S E B E H AV I O R
Shopper Behavior
COLD BEER IS IMPORTANT BECAUSE CONSUMPTION IS NOT FAR BEHIND THE PURCHASE.
Consumption intent varies by store type:
• NEIGHBORHOOD – On the way to a party; consume in less than 12 hours • CORNER – Personal, immediate consumption; consume in less than 4 hours Liquor store eye-tracked shoppers in Minneapolis, Boston and Tampa, through December 2013
6%
of total volume
71% of total volume
23% of total volume
Destination Store Shopper
Neighborhood Store Shopper
Corner Store Shopper
“Megastores,” large warehouse-type outlets
Medium-sized stores with a range of variety, usually in strip malls
Smaller stores with space constrained selection and less shopper expected staff engagement
• Basket ring $51–$100 or more
• Basket ring $11–$50
• Basket ring less than $11
• Shopper is looking for great selection and staff expertise as they take their time exploring the store • Selects multiple brands and packs • Looking for value
MillerCoors Behavioral Tracking Study, December 2015
LIQUOR STORES
• DESTINATION – Preparing for large gathering; consume in less than 24 hours
• Shopper is looking for good selection and staff knowledge, but also needs store to be organized and convenient
• These are routine/ high frequency trips for immediate consumption
• Buys a variety of packages, small and large
• Primarily singles and small packs
• Often price-sensitive, so subject to brand and pack age switching
• Cold is critical
23
GROCERY STORES
Grocery stores are the second-largest
49% of their beer dollars there, while the
class of trade for beer sales, trailing
remaining 51% is lost to other classes of trade. 1
only convenience stores. Beer space in grocery stores has remained the same
The perimeter continues to increase its role,
while SKU choices have exploded. This
and beer is an important contributor to the
has led to cluttered shelves, fewer points
perimeter and the total store. At 3.9% and
of interruption, more out-of-stocks and
growing, beer is the fourth-largest product
a more difficult shopping experience for
category in the grocery store. There are
consumers. As a result this class of trade is
opportunities to simplify the shopping
losing share of total beer dollars.
experience, build baskets through food pairings, and improve conversion to maximize the beer potential in grocery stores.
Beer drinkers who shop grocery still spend
15B
GROCERY STORE TOP 10 CATEGORIES 2015,
$ SALES BILLION
$12.6 $11.8
12B
$11.2
$10.7
$10.1
$10.0
$10.0
9B $7.9 $7.0 $6.1
6B
3B
0
VEGETABLES AND HERBS
CHEESE
SALT Y SNACKS
BEER AND MALT BASED BEVERAGES
SOFT DRINKS
BAKED BRE AD
Meat and Deli segment unavailable within data sort. Nielsen Total U.S. Food Calendar Year 2015 for Weeks Ending Dec. 26, 2015 1. Willard Bishop Grocery Super Study, Profitable Beer Marketing, August 2015; 2. Nielsen, December 2015
MILK
WINE
FRUIT
FROZEN ENTREES
GROCERY STORES
Y E A R - OV E R -Y E A R G R O W T H
$10.7
B I L L I O N YE AR- END SALES 2015
+
4.1% OVER
2 014
1
+
1.5%
34.5
%
TOTAL U.S. HH
UNIT SALES 1.3 BILLION
1
1
PENETR ATION Nielsen xAOC Homescan July 2015
1. Nielsen Total U.S. Food Calendar Year 2015 for Weeks Ending Dec. 26, 2015
25
Beer Sales BEER SALES BY SEGMENT Premium American Light still takes the #1 beer sales spot in
Craft, Import and FMB are close
25%
behind and
grocery with more
leading growth
than 25% of dollar
in the category.
sales, with only 11% of SKUs.
BEER SALES BY SEGMENT SEGMENT
$ SHARE
SHARE OF SKUS
PREMIUM AMERICAN LIGHT L AGERS
25.2%
10.9%
$91,527,233
7.4%
5.8%
$49,939,211
ECONOMY
13.6%
11.2%
$47,794,319
IMPORT
19.4%
18.6%
$41,307,426
SUPER PREMIUM
5.7%
5.7%
$39,247,557
20.9%
33.0%
$25,021,957
FMB
5.6%
10.0%
$21,897,864
CIDER
2.3%
4.8%
$18,714,035
TOTAL
100%
100%
$39,474,071
PREMIUM AMERICAN REGUL AR
CRAFT
Nielsen, Total U.S. Food Year Ending Dec. 26, 2015
$/ SKU
SINGLES AND 6 -PACKS ARE GROWING IN IMPORTANCE AS CR AF TS AND FMBS GROW.
While having a reputation for large packs on sale, grocery stores sell more than 50% of their beer dollar volume and nearly 50% of units in smaller 12-packs and 6-packs. This demands a more balanced approach across packages and segments to meet the needs of a wide array of occasions.
GROCERY STORES
BEER SALES BY PACK AGE
TOTAL U.S. FOOD BEER PACKAGE SALES 2015 $ SHARE
$ VOL. % CHANGE VS. YEAR AGO
UNIT SHARE
UNIT % CHANGE VS. YEAR AGO
12-PACK
29.8%
1.7
21.3%
-0.5
6 -PACK
24.8%
10.2
27.1%
5.9
24-PACK
12.4%
3.1
6.2%
1.3
30 -PACK
9.6%
-1.8
5.7%
-2.9
SINGLES
8.2%
4.5
3.9%
-1.1
REMAINING
15.2%
7.4
35.9%
5.0
PACK AGE SIZE
Total U.S. Food Year Ending Dec. 26, 2015
CHALLENGE:
DISPL AY:
As grocery expands beer variety and cold box space
Leveraging displays to support
remains the same, there is less space for each SKU.
feature activity is critical to
This increases the risk of out-of-stocks!
driving conversion and lift on
• 2010: 192 SKUs
2015: 249 SKUs
• +23% Average SKU count
promoted packs. Display space should be used to support the right brands and packs that
DISPLAY is shrinking, too!
yield the greatest return on the
• Featured items +40%, while
display space used.
display support of feature is flat
Willard Bishop August 2014 Syndicated SuperStudy™
27
Grocery Store Beer Shopper Total trips and beer trips are declining at
However, the beer trip in grocery is very valuable.
grocery, and dollars per buyer are down creating a tough market.
Rebuilding these declining baskets can be accomplished through food pairings and
Beer consumers are coming less often and
encouraging shoppers to purchase in multiple
spending less money when they do!
categories within the store.
THE BASKET VALUE IS
$ SPENT PER SHOPPING TRIP:
54% HIGHER
$67.24 WITH BEER
ON BEER TRIPS VS. NON-BEER TRIPS.
â&#x20AC;¢
$43.68 WITHOUT BEER
This basket drives significant sales and gross profit dollars per week for the average store. Willard Bishop Superstudy, August 2015 and 2014
T YPE OF TRIP:
67%
33%
GENERAL SHOPPING TRIPS WHERE BEER IS ONE OF A NUMBER OF ITEMS BEING PURCHASED
AN ALCOHOLSPECIFIC TRIP
Demographics Grocery shopping for beer occurs across broad demographics: gender, age, income and ethnicity.
GROCERY STORE BEER CONSUMER DEMOGR APHICS GENDER
by Purchase Volume
ETHNICITY FEMALE
WHITE
BL ACK
L AT I N O
A SI A N /OTH E R
Percent
72%
28%
64%
8%
17%
10%
Index
104
91
101
71
100
131
AGE 21–27
28 –34
35 – 44
45 –54
55+
Percent
11%
14%
22%
28%
25%
Index
85
86
96
110
111
<$30K
$30 –50K
$50 –70 K
$ 7 0 –10 0 K
$10 0 K+
Percent
21%
23%
19%
21%
16%
Index
88
109
108
106
90
GROCERY STORES
MALE
INCOME
MillerCoors Behavioral Tracking, December 2015
Shopper Trip Mission & Consumption Occasion Beer shoppers are looking to grocery stores
2. One-Stop Bargain: Shoppers expect
for a variety of trip missions. These top three
a wide variety at low prices. These
trip types illustrate the diverse reasons beer
trips are highly preplanned.
shoppers choose grocery, and how retailers
3. Unique Gourmet: Shoppers seek a
have to meet consumers’ needs in often
welcoming, enjoyable experience
radically different ways.
where they can browse and reward
1. Grab & Go: The need is for a store that
themselves.
offers value, multi-purpose shopping and also access to favorite cold beers.
4. eCommerce: This new trip is emerging via the web. TNS Landis Shopper/Trip Segmentation, 2015
29
eCOMMERCE
eCOMMERCE GROCERY FULFILLMENT HAS EVOLVED.
BEER CATEGORY IN eCOMMERCE STORES
eCommerce in consumer packaged goods
While beer is relatively new in eCommerce,
encompasses all internet sales, whether
it is a significant sales and profit contributor,
delivered to the home or picked up in the store.
and growing rapidly. • Beer is the 15th-largest category in
$24
BILLION I N 2014
+10%
eCOMMERCE SALES WITHIN CPG
A N N U A L LY
INCLUDES FOOD, BEVER AGE, H E A LT H A N D PERSONAL CARE PRODUCTS
60 % BY 2018 TO
60
%
BY 2018
$38
BILLION IN 2018
eCommerce grocery sales. 2 • Online beer shoppers purchase 10X per year. 3 • The average eCommerce beer basket is of significant size, totaling nearly $200, with more than $25 in beer alone. 2 • Average spend on beer increases +23% when shopping online vs. in-store. 2
BASKET RING PER BEER TRIP
Willard Bishop The eCommerce eVolution, November 2014
Based on other consumer sectors, such as travel, music, books and media, the tipping point is likely to be 5% share of market. After that,
$172.34
Other Non-Beer Purchases When Beer Is in the B a s ke t
growth will be exponential, and the laggards will be left behind. 1
Beer
Current trends indicate the tipping point for CPG will occur in three years. Current eCommerce penetration in CPG hovers around 2%. 1
1. Willard Bishop The eCommerce eVolution, November 2014 2. Willard Bishop eCommerce SuperStudy™ April 2015 (Liquor-selling store subset only) 3. SABMiller – Sponsored Consumer Research Study in U.S., July 2015
2
U. S . O N L I N E B E E R S H O P P E R GENDER
42%
FEMALE
AGE
% WITH CHILDREN
eCOMMERCE
MALE
58%
37%
41 AVER AGE INCOME
H O USEH O L D
PER SO N A L
$122,789 % OF ALL GRO CERY D O NE O N L IN E AV ER AGE SPEN D O N B EER IN S TO R E
23% $43.01
$140,567 AVG . SPEN D ON L AST GRO CERY T R IP
$96.09
AV ER AGE SPEN D O N B EER O NL IN E
$52.91
AV ER AGE N U M B ER O F O NL INE S TO R E S USE D FO R GRO CER IE S SABMiller â&#x20AC;&#x201C; Sponsored Consumer Research Study in U.S., July 2015
2.9
31
DRUG STORES & DOLLAR STORES
Drug stores and dollar stores fulfill a critical
beer trips are to meet shopper needs for beer
role for the beer shopper providing a
consumption occasions that support emotional
convenient and pleasant beer shopping
health, such as relaxing alone at the end of the
experience for quick fill-in trips. The majority of
day or connecting with friends and family.
BEER IN DRUG STORES
$1.1
BILLION
DRUG, 2015
OPPORTUNITY Building awareness is critical to beer category growth. Most Drug (88%) 1 and Dollar (96%) 1 beer
#
3
STORE C AT E G O RY Beer/Malt based beverages is the thirdlargest selling food & beverage category in drug stores.
shoppers do not buy any of their beer in these channels primarily because the majority of them are unsure or unaware that drug and dollar stores sell beer. 2 Increasing beer category conversion by one point can grow total beer sales by 8% or more. SOLUTION The top in-store influences for drug shoppers purchasing beer are displays (29%) 1 and beer signage (27%). 1 Executing authorized beer displays and signage is critical to building category awareness and driving conversion. 1. Nielsen Homescan, Annual 2015
Nielsen Total U.S. Drug, Latest 52 Weeks Ended Jan. 23, 2016
2. MillerCoors Shopper Research Study, April 2016
• While craft beer styles have grown,
• Premium American Lights and Imports lead segment sales in drug stores with
they are still just 9% share of drug
57% of dollar sales.
store beer dollars.
DRUG STORES
DRUG STORE BEER SALES BY SEGMENT
TOTAL U.S. DRUG STORE BEER SALES BY SEGMENT 2015 SEGMENT
$ SHARE
SHARE OF SKUS
$/SKU (000)
PREMIUM AMERICAN LIGHT
31.5%
2.6%
$3,462
IMPORT
26.1%
13.4%
$551
PREMIUM AMERICAN REGUL AR
9.0%
2.0%
$1,288
CRAFT
8.9%
60.7%
$42
NEAR PREMIUM
7.6%
3.1%
$696
ECONOMY
7.2%
2.3%
$888
SUPER PREMIUM
4.3%
1.9%
$649
FMB
3.3%
6.3%
$146
CIDER
1.0%
4.4%
$64
MALT LIQUOR
0.7%
1.7%
$119
COOLERS
0.3%
1.2%
$70
ALTERNATIVE
0.0%
0.5%
$7
Nielsen Total U.S. Drug Census Calendar Year 2015, week ending Jan. 2, 2016
33
Beer Sales by Package BEER IN DRUG STORES Drug store shoppers purchase different pack sizes to meet the needs of different trip types and consumption occasions.
38%
Value-driven trips
36.6% Conveniencedriven trips
38% of drug store beer dollars are from 18-packs or larger, driven by price promotions and larger packconsumption occasions.
12-packs lead with 36.6% of beer dollars, driven by conveniencerelated trips and smaller consumption occasion gatherings.
30% Conveniencedriven trips
Singles are an important package for traffic with nearly 30% of unit sales.
TOTAL U.S. DRUG STORE BEER SALES BY PACKAGE 2015 PACK AGE
$ SHARE
$% CHANGE VS. YEAR AGO
UNITS SHARE
UNITS % CHANGE VS. YEAR AGO
12-PACK
36.6%
-6.2%
27.4%
-8.2%
18-PACK
17.6%
-5.8%
11.3%
-5.9%
30 -PACK
14.3%
-8.6%
7.1%
-9.4%
6 -PACK
13.4%
5.1%
15.9%
0.8%
24 -PACK
6.4%
-4.5%
3.3%
-7.3%
SINGLE
5.9%
-3.8%
28.6%
-6.0%
REMAINING
5.8%
1.0%
6.3%
-0.3%
Nielsen Total U.S. Drug Census Calendar Year 2015, Week Ending Jan. 2, 2016
DRUG STORES
BEER ECONOMICS IN DRUG STORES Beer shoppers in drug stores spend
$8.65 more per shopping trip when beer is in their basket.
$ SPENT PER SHOPPING TRIP:
TOTAL BEER MARGIN DOLLARS REMAIN STRONG IN DRUG STORES.
• $37.95 with beer
• 20% gross margin
• $29.30 without beer
• Gross profit $ per week per store = $300 National Drug Retailer Store Space Audit and Shopper Card Data, December 2015
BEER LEADS DRUG STORE CATEGORIES IN REVENUE PRODUCTIVITY CATEGORY
TOTAL SPACE IN FEET (WARM & COLD)
GROSS REVENUE PER LINEAR FOOT
BEER
486
$565
LIQUOR
364
$506
43
$289
DSD SNACKS
208
$97
BEVER AGES
936
$93
1,160
$89
DAIRY
CANDY
National Drug Retailer Store Space Audit and Shopper Card Data, December 2015
35
Dollar Store Channel BEER IN DRUG STORES BEER IN DOLL AR STORES
$173.4
MILLION
CALENDAR YEAR 2015 Nielsen Total U.S. Dollar Channel
Total sales for calendar year 2015 in
0.5% TOTA L
dollar outlets were up a whopping 288% since 2012, thanks to a skyrocketing number of dollar stores selling beer over the past three years. The number of dollar stores selling beer increased 81% since 2012, approaching 7,400. And
U.S. HH
sales per store are up more than 100%.
PE N E T R AT I O N
As volume and sales continue to grow, projections indicate more than 10,000 stores will sell beer. Nielsen Total U.S. Dollar Channel, Annual 2015
Nielsen Homescan, 12 Months Ending June 2015
STORES SELLING TOTAL $ SALES (MM) $ PER STORE
2012
2015
% CHANGE 2015 VS. 2012
$4,066
$7,351
81%
$44.7
$173.4
288%
$11,003
$23,585
114%
DOLLAR STORES
TOTAL U.S. DOLLAR CHANNEL BEER STORES AND SALES
Nielsen Total U.S. Dollar Channel, December 2015
TOTAL ALCOHOL BEVER AGE SHARE • Beer accounts for more than 80% of TAB sales in dollar stores.
• All alcohol categories are growing rapidly in dollar stores.
TOTAL ALCOHOL BEVERAGE SHARE
BEER/CIDER LIQUOR WINE TOTAL ALCOHOL BEVER AGE Nielsen Total U.S. Dollar Channel December 2015
$ SALES (000)
SHARE
% CHANGE VS. YEAR AGO
$173,343.0
81%
28%
$591.0
0%
14%
$39,421.0
19%
21%
$213,355.0
100%
25%
37
ON O N - PREMISE E
OVERVIEW OV VERVIE EW THE STATE STAT TE OF TOTAL ALCOHOL BEVERAGE EVERAGE IN ON-PREMISE: • Alcohol units have declined, while sales are up slightly due to increased pricing. • Beer is the beverage of choice on-premise – about half of all alcoholic drinks served and nearly $50 billion in annual sales. • Consumers spend a majority of alcohol beverage retail dollars on-premise on
2015 ON-PREMISE ALCOHOL BEVERAGE SALES BEER
WINE
SPIRITS
DOLLARS
$48,596
$19,511
$35,771
PERCENT
47%
19%
34%
CHANGE VS. 2014
3%
4%
2%
Technomic, December 2015
beer (47%) and spirits (34%), with wine a distant third at 19%. • Beer is losing share on-premise, with dollars shifting to spirits. Guest Metrics, December 2015
THERE ARE 290,000 BEER-SELLING ON-PREMISE OUTLETS NATIONALLY, CONCENTRATED WITHIN FIVE PRIMARY CLASSES OF TRADE: • Neighborhood Bars • Casual Dining
TAB servings distribution among consumers ages 21-34
15% 13%
30% 48%
72% 23%
• Sports Bars • Concessions • Hotels
1.75 million people are directly employed in the on-premise channel. Beer Servers America Report 2015
SINCE 2008 BEER HAS LOST A POINT OF SHARE PER YEAR TO WINE & SPIRITS
GENERATION X-1999 BEER
WINE
MILLENNIALS-2012 SPIRITS
MillerCoors Research, December 2015
PERCENT OF ALL CONSUMERS THAT HAVE HAD A DRINK ON-PREMISE IN PREVIOUS T WO -WEEK PERIOD —3Q 2015 37%
47% 40%
31% 33%
35% 25% 19%
Technomic Co Pilot September 2015 MEN
WOMEN
TOTA L
21- 2 9
30 -39
4 0 - 49
5 0 - 59
6 0 - 69
BEER IN THE ON-PREMISE CHANNEL
In total, 63% of consumers visited an
• On-premise sales of beer are nearly $50
on-premise establishment in the third
billion annually, generating more overall
quarter of 2015 — the lowest level of
beer profit than off-premise, with far
consumers visiting seen in the last six
greater margins. 1
quarters.
ON-PREMISE
CONSUMER SNAPSHOT
• Premium American Lagers (Light and Regular) continue to be the largest on-premise segment,
While overall on-premise visits have slowed, the share of visits that include
accounting for two of every five units sold. 2 • On-premise remains critical for exploration
at least one drink increased by three
and trial, as Craft brands now account for one of
percentage points in third quarter 2015
every three units sold. 3
and now resides at 38%.
• Today, on-premise drinkers identify the right beer for the right occasion. 80% of
On-premise remains a young adults’
Craft drinkers still consume domestic lagers
destination with consumption incidence
when the occasion fits. 4
declining as consumers age.
1. Technomic Co-Pilot, September 2015 2. GuestMetrics 2015
3. GM 2015 4. Nielsen Survey 2015
39
Consumer Preferences • Top three draft brands are Premium American
• Newer brands may provide increased revenue per keg, however, core brand
Light Lagers — Bud Light, Coors Light, Miller Lite. Their drinkers are two times more
velocity will drive larger volume and
loyal to their segment than craft drinkers.
increased total revenue and profit. 2
1
• New brands on-premise provide on average only 1/10 of the velocity of average
1. Nielsen Homescan, December 2015 2. GuestMetrics
Premium American Light Lager brands. 2
2015 BEER SALES ($MILLION)
ON-PREMISE BRAND CONCENTRATION 2015 $2,908
$1,922
$3,317
TOTAL DINING DRINKING ESTABLISHMENTS
$21,381
HOTELS CONCESSION/CASINO/REC
$19,068
ALL OTHER ON-PREMISE Technomic Co Pilot, September 2015
% OF BEER UNITS SOLD
# OF BRANDS
AVG. UNIT VELOCIT Y PER OUTLET(ANNUAL)
CHANGE IN DIST. VS. YEAR AGO
BASE 70%
59
447
-0.8%
NEXT 10%
139
168
-1.9%
NEXT 10%
673
151
0.8%
NEXT 10%
14,132
94
5.8%
Guest Metrics, July 2015
BEER SEGMENT PREFERENCE While craft styles continue to grow on-premise,
Be aware of putting too much focus against
beer drinkers overwhelmingly prefer Premium
niche styles. Consider aligning assortment
American Light Lagers.
with style ranks.
Guest Metrics, July 2015
$ SHARE OF TOTAL BEER BY S T YLE PREMIUM AMERICAN LIGHT LAGERS INT’L PALE LAGERS IPA/PALE ALE WITBIER AM REGULAR LAGER STOUT CIDER PALE LAGER DARK LAGER AMBER LAGER GOLDEN ALE AMBER ALE SEASONAL FRUIT BEER PORTER BROWN ALE BELGIAN DARK STRONG STRONG ALE SAISON INT’L PALE LAGERS AM REGULAR LAGER
Guest Metrics, July 2015
SOUR 0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
OUTLOOK FOR 2016 return to growth for on-premise food
ALCOHOL BEVER AGE GROW TH EXPEC TATIONS BY CL ASS OF TR ADE:
and beverage:
Project On-premise Consumption Growth Rates
The outlook for 2016 is good, with a
• Growth in restaurant outlets +1.3% BEER
SPIRITS
WINE
3%
4.1%
5.2%
NEIGHBORHOOD/ SPORTS BAR
2.1%
1.7%
4.1%
HOTEL
4.6%
4.2%
7.0%
CASINO
2.2%
3.0%
3.2%
• Overall on-premise food & beverage revenue +6%
CASUAL DINING
• Overall on-premise alcohol revenue +3.5% • 35% of chain restaurant operators expect to raise prices in 2016, vs. 39% in 2015 Technomic Adult Beverage Insights Group, September 2015
Technomic Adult Beverage Insights Group, September 2015
GENDER
ETHNICITY
MALE
FEMALE
WHITE
BL ACK
L AT I N O
A SI A N /OTH E R
62%
38%
70%
9%
16%
3%
ON-PREMISE
BEER CONSUMERS IN ON-PREMISE CHANNELS
AGE 21–29
30 -39
40 - 49
50 - 59
60+
25%
26%
25%
16%
7%
<$25K
$25 – 50K
$ 5 0 –75K
$ 7 5 –10 0 K
$10 0 K+
25%
27%
19%
12%
16%
INCOME
Technomic, September 2015
41
NEIGHBORHOOD BAR BUSINESS
Neighborhood bars are familiar places where
TAB SHARE BY SEGMENT:
guests go to “be themselves.” Their visits are primarily social occasions. For many, they are a home away from home. Alcohol beverages
BEER 48%
41%
S PI R I T S
are the primary product category with food secondary. However, many outlets have
WINE 11%
increased their focus on food offerings, with
Technomic, September 2015
“quality bar food” increasingly available.
• There are approximately 75,000 neighborhood bars in the U.S. 1
NEIGHBORHOOD BAR BEER SALES DOMINATED BY EVENINGS AND WEEKENDS
• 99% of neighborhood bars are independently owned. 1
BAR* BEER $ BY DAY
• Neighborhood bars skew toward the Northeast and upper Midwest with 65% of volume in 12 states.
1
60% of beer dollars are generated Thursday - Saturday
Fri.
Mon. 7.7%
13.5%
Tues.
Sun.
Wed. 10.1%
11.7%
11%
2
• Total Beverage Alcohol is 89% of total Bar/ Tavern sales. 2 • Beer sales are up in drinking establishments, + 1.9% in 2015.
24.5%
Thurs.
• Total food and beverage sales in neighborhood bars are up 4% in 2015.
Sat.
21.6%
2
• Beer sales units are down, but offset by higher
BAR* BEER $ BY DAY PART 70% of beer dollars are generated after 6pm
10pm-2am 26.5%
42.8% 2-6pm 19.1%
prices. 3 1. MillerCoors Internal Data, December 2015 2. Technomic, September 2015 3. GuestMetrics, July 2015
6-10pm
10am - 2 pm 11.6%
*Day/day part data is for all bar types and NOT specific to Neighborhood Bars as defined by MillerCoors GuestMetrics Promotional Study, December 2015
Neighborhood Bar Consumer NEIGHBORHOOD BAR CONSUMER
FORM PREFERENCE
The neighborhood bar guest is older, less
provide both draught and bottle beer across all
affluent than at other on-premise outlets.
beer styles.
To meet consumer preferences, it is important to
45+
More than half are 45+ years of age.
48%
Almost half of patrons have annual income less than $50,000.
52%
Slightly more than half of patrons are blue-collar workers or unemployed.
PREMIUM AMERICAN LIGHT SEGMENT Premium American Light
NO PREFERENCE 8%
BOTTLE 50%
DRAUGHT 39%
drinkers have a strong preference for both draught and bottle, CAN/ALUM. PINT 3%
meaning both forms should be carried.
AGE 21–27
28 –34
35 – 44
45+
15%
16%
18%
51%
CRAFT SEGMENT
DRAUGHT 74% NO PREFERENCE 8%
Craft drinkers prefer draught.
ON-PREMISE
NEIGHBORHOOD BAR GUEST DEMOGR APHICS:
BOTTLE 17% CAN 1%
INCOME <$50K
$ 5 0 –10 0 K
$10 0 K+
48%
37%
15%
E M P L O Y M E N T S TAT U S WHITE COLLAR
BLUE COLLAR
NOT EMPL. FT
48%
37%
15%
MillerCoors BTS Survey, TNS Landis, July 2011
IMPORT SEGMENT Import drinkers prefer
NO PREFERENCE 10% DRAUGHT 48%
BOTTLE 40%
both, with a slight skew toward draught.
MillerCoors BTS Survey, TNS Landis, July 2011
CAN/ALUM. PINT 2%
43
SPORTS BARS
Sports bars are similar to traditional
Sports bar beer revenue is driven by
neighborhood bars, but emphasize the sports-
evenings and weekends, but key game-day
viewing experience. This is typically evident in
viewing windows come first. Major sports
large televisions throughout the establishment,
events are especially critical, including:
and a more open floor and seating plan. Given
• Professional Sunday (Monday & Thursday
that the sports-viewing occasion is longer than
nights secondary)
other on-premise visits, sports bars typically
• College Football Saturday
have significant food offerings.
• March College Basketball tournament • Other key sports-viewing events
• There are approximately 9,000 sports bars in the U.S. 1 • 96% of sports bars are independently owned and operated.
1
• Sports bars skew toward the upper Midwest, with 66% of beer volume in just 12 states. 1 • Total food and beverage sales in sports
BEER FORM PREFERENCE To meet consumer preferences and meal occasions, it is important to provide both draught and bottle beer across all beer styles.
bars are up 4% in 2015. 2 • Beer sales are up 1.9% in 2015. 2
44% 9%
Sports bars are a small, but high-value piece of the on-premise channel. While fewer in
47%
number, sports bars have significantly higher
PAC K AG E
beer sales per outlet, making beer a key
DRAFT
driver of traffic and total sales.
NO PR E F E R E N C E
1. MillerCoors Internal Data, December 2015 2. Technomic, September 2015
MillerCoors Survey, July 2015
Sports Bar Consumer
TOP CRITERIA FOR CONSUMER
Patrons are primarily visiting sports bars
CHOICE OF THEIR SPORTS BAR:
to socialize with a group or “reconnect,”
• Convenience/proximity
representing 60% of sports bar occasions.
• Atmosphere/ambience
MillerCoors Category Strategy National Survey, July 2015
Technomic Co Pilot, September 2015
Often the sporting event takes center stage and the group becomes secondary.
SPORTS BAR CONSUMER
DEMOGR APHICS:
Sports bars attract a more affluent guest.
E M P L O Y M E N T S TAT U S WHITE COLLAR
BLUE COLLAR
NOT EMPL. FT
65%
13%
22%
66%
of patrons have annual income more than $50,000
65%
of patrons are white-collar
ON-PREMISE
SPORTS BAR GUEST
MillerCoors BTS Survey, TNS Landis, July 2011
AGE 21–27
28 –34
35 – 44
45+
17%
16%
25%
42%
SPORTS BAR OPPORTUNITIES • Increase conversion to alcohol purchase in alcohol-appropriate occasions. • Carry the brands with the largest
INCOME <$50K
$ 5 0 –10 0 K
$10 0 K+
34%
46%
20%
MillerCoors BTS Survey, TNS Landis, July 2011
consumer base in order to satisfy your guests’ top beer selection criteria. • Business is booming during major sporting events. Work to build traffic between these high-demand occasions.
45
CASUAL DINING
A casual dining restaurant is a restaurant that serves moderately priced food in a casual atmosphere. Casual dining restaurants typically provide table service. • There are approximately 205,000 casual restaurants in the U.S. 1 • Casual restaurants are about 10% chain, and 90% independently owned and operated. • Total food and beverage sales in casual restaurants are up 5.6% in 2015. 2
ALCOHOL BEVER AGE PRESENCE IN MEAL OCCASIONS
Alcohol Consumed 27.7%
51.6% 20.7%
Alcohol Appropriate
SEGMENT PREFERENCE Premium American Above Premium
TAB SHARE BY SEGMENT
GuestMetrics, July 2015
But Not Consumed
1
• Total Beverage Alcohol is 22% of total casual dining sales. 2
Alcohol Not Appropriate
Light Lagers
43%
& Regular Lagers
55%
Multiple Segments 2%
47%
32%
BEER SPIRITS WINE
20%
GuestMetrics, July 2015
• Casual dining is about the meal occasion, with Above Premium and American Light Lagers both highly relevant depending on the meal and guest preference.
Technomic, December 2015
Total beer is declining slightly in casual dining outlets, down 1.2% in 2015 3, but there is a huge opportunity to convert guests to beer purchase in appropriate occasions.
• Guests prefer Above Premium (including craft and import) in 55% of Casual Meal occasions. 4 There is very little segment shifting within occasion. 1. MillerCoors Internal Data, December 2015 2. Technomic, December 2015 3. GuestMetrics, July 2015 4. MillerCoors Category Strategy National Survey, December 2014
Casual Dining Consumer
FORM PREFERENCE
Casual dining guests are 45+,
To meet consumer preferences and meal occasions, it is important to provide both draught and bottle beer across all beer styles.
PREMIUM AMERICAN LIGHT LAGERS SEGMENT Premium American Light Lager drinkers
9%
BOTTLE 43%
CAN/ALUM. PINT 3%
35 – 44
45+
11%
14%
24%
51%
<$50K
$ 5 0 –10 0 K
$10 0 K+
27%
47%
26%
E M P L O Y M E N T S TAT U S
NO PREFERENCE 7% BOTTLE 19%
CAN/ ALUM. PINT 1%
Craft drinkers prefer draught.
28 –34
DRAUGHT 72%
WHITE COLLAR
BLUE COLLAR
NON EMPL. FT
61%
13%
22%
CASUAL DINING
draught equally creating
CRAFT SEGMENT
21–27
INCOME
prefer bottle and a need to carry both.
CASUAL DINING GUEST DEMOGRAPHICS: AGE
NO PREFERENCE
DRAUGHT 45%
more affluent and in white-collar jobs.
MillerCoors BTS Survey, TNS Landis, July 2011
CASUAL DINING OPPORTUNITIES IMPORT SEGMENT
• Increase conversion to alcohol purchase
NO PREFERENCE 14%
Import drinkers prefer both, with a slight skew
BOTTLE 39% DRAUGHT 45%
• Enable guests to satisfy their appetite for something different.
toward draught.
MillerCoors BTS Survey, TNS Landis, July 2011
in alcohol-appropriate occasions.
CAN/ ALUM. PINT 2%
• Drive traffic and make the most efficient use of limited space to maximize beer category revenue.
47
CONCESSION & CASINOS
CONCESSION Concession venues are primarily found
CONSUMPTION AT CONCESSIONS
in stadiums and amphitheaters. They
• Beer sales are up 2.9% in 2015. 3
service a limited number of occasions
• The average fan consumes 3.8 beers
with a limited duration (sporting events, concerts, etc.), making operational
at an event. 2 • Brand is the most important selection
efficiency essential to their success.
criteria when choosing a beer.
The remainder of concession venues
• 2/3 of concessions beer sales are
are mostly in airports and other public
Premium American Light Lagers. 2 • 60% of consumers stay with a
transportation hubs.
single brand throughout the • There are more than 800 concession venues selling alcohol beverages, an increase of 2.5% in 2015. 1 • Total food and beverage sales in concessions are up 3% in 2015. 2 • Total alcohol beverage sales are 21%
event. 2 • 87% of fans will, or will consider, leaving their section to purchase their preferred brand. 2 1. MillerCoors Internal Data, December 2015 2. MillerCoors Custom Research, July 2015 3. Technomic, September 2015
of concession’s total sales. 2
ALCOHOL BEVER AGE SHARE BY SEGMENT
PACK AGE PREFERENCE Fans choosing cans/bottles often do so because they believe their beer will stay cold longer.
21% 63%
16%
SPIRITS
35% DRAFT
BEER WINE
Technomic, September 2015
65%
C A N S /A L U M I N U M B OT T L E S MillerCoors Custom Research, July 2015
Casinos
CASINOS
GUEST AC TIVITIES
Casinos have 41 million annual visitors,
Assortment varies based on activities — ensuring
with that figure set to grow. Revenue centers include the casino floor, restaurants/ bars, banquets/convention center and pools.
the right brands and form are available is critical.
77.7%
Gaming makes up 37% of revenue, but that is declining. 1
47.1%
40.8%
37.7%
36.4%
Played table games
Watched a stage show or concert
Went to a bar/ nightclub
• Casinos target 21-to 29-year-old patrons as key beer drinkers, who represent 44% of visitors, up 8.7% in 2015. 1 • Total Alcohol Beverage sales are 36% of
BEER CONSUMPTION IN CASINOS • Casino guests generally consume their favorite beer, primarily Premium American Light Lagers, or Premium American Regular
Went to an upscale restaurant
Las Vegas Scarborough 21+ (age) FY 2015, December 2015 Those who visited a casino in last 12 months
% DR ANK IN PAST MONTH 62.5%
Lagers and not Crafts or Imports. 3
55.7%
ON-PREMISE
casinos’ total food and beverage sales. 2
Played slot machines
58.7%
• 2/3 of beer drinkers consumed Premium American Light, the largest beer segment.
17.9%
3
24%
TAB SHARE BY SEGMENT WINE
33%
Premium American Light Lagers
Premium American Regular
Imports
Craft Beer
Las Vegas Scarborough 21+ (age) FY 2015 Those who visited a casino in last 12 months
BEER 43%
SPIRITS Technomic, September 2015
1. Las Vegas Convention and Visitors Authority, December 2015 2. Technomic, September 2015 3. Scarborough Multi-Market, December 2015
49
T R AV E L & L E I S U R E
The travel and lodging industry includes primarily hotels, motels and resort properties. The travel and leisure industry generated $43.5 billion in food and beverage revenue in 2014 with $8.4 billion in alcohol beverage sales. • There are approximately 53,000 hotels in the U.S., which is an increase of 8.5% since 2011. • Hotels are dominated by Economy and Midscale units, but total revenue derives
2 015 B E E R SA LE S
+4.5% $3.3
BILLION
Technomic Lodging Study, July 2015
from midscale and upscale properties.
LODGING BY SEGMENT 2015 60%
50%
55%
52%
SHARE OF LOCATIONS SHARE OF REVENUE
40%
40%
32% 30%
20% 11%
10% 0%
8% 3%
1% LUXURY Technomic Lodging Study, July 2015
UPSCALE
MIDSCALE
ECONOMY
TAB SHARE BY SEGMENT
GUEST OCCASIONS In alcohol-appropriate occasions, guests are primarily visiting to socialize with a group or
33%
“reconnect” with an intimate
40% BEER 27%
friend or their partner. Although less frequent, large events or
WINE
special occasions (e.g., banquets)
S PI R I T S
drive the most alcohol sales. Technomic Lodging Study, July 2015 MillerCoors Category Survey, December 2015
Technomic Co Pilot, September 2015
• There are multiple service areas in hotels, with restaurants, bars/lounges, banquet space, and pool bars driving nearly all alcohol beverage sales. • Total Alcohol Beverage is 19% of total food and beverage sales in hotels.
Top outlet selection criteria: • convenience/proximity • atmosphere/ambience Technomic Co Pilot, September 2015
TRAVEL & LEISURE OPPORTUNITIES • Increase conversion to alcohol
• Beer sales are $3.3 billion, up 4.5% in 2015.
purchase in alcohol-appropriate
• Beer sales: 73% is in Luxury and
occasions.
Upscale hotels, which are less than
• Grow beer sales in new
10% of lodging properties.
opportunity service areas,
Technomic Lodging Study, July 2015
such as lobby carts/kiosks.
Technomic Co Pilot, September 2015 MillerCoors Category Survey, December 2015
ON-PREMISE
Technomic Lodging Study, July 2015
• Ensure the right package mix in each service area. 51
At MillerCoors, we are committed to growing the size and value of the beer category in your business. Our approach is simple: understand your business and your objectives, and then work with you on opportunities to achieve those goals. Our network is ready to share with you the Building with Beer™ suite of channel solutions designed to deliver total category results.
Building with Beer™ On-Premise
Building with Beer™ Grocery
• Leverage the power of Premium American Light Lagers to increase 1) revenue and profits, 2) the time your customers spend in your establishment, and 3) the total size of the check • Optimize brand assortment, ensuring productive mix of national and local crafts • Offer brands in both draught and package to meet your consumers’ needs
• Improve feature, space and assortment mix to drive revenue and trips • Increase basket ring by pairing meal solutions with beer • Optimize display velocity and turns to deliver profitable revenue
Building with Beer™ C-Store
Building with Beer™ Liquor Store (Spring, 2017)
• Optimize cold space across all items to grow overall cooler revenue and profit • Merchandise singles by shopper segments to improve revenue and profit • Simplify singles pricing to drive incremental purchases, revenue and profit
• Recruit routine beer shopper visits by elevating the in-store experience • Grow profitable revenue through a disciplined variety in the cooler • Maximize total alcohol occasions with basket building solutions
PLEASE CONTACT YOUR MILLERCOORS SALES TEAM FOR MORE INFORMATION.
1- 8 0 0 - 6 4 5 - 5376
MILLERCOORS.COM
© 2016 MILLERCOORS LLC , CHICAGO, IL
August 2016
www.progressivegrocer.com
August 2016 | progressivegrocer.com | 3
ADVERTORIAL
History
Offerings & Services
Sagarmatha was founded in 1999 based on the development of a proprietary 3rd generation data mining tool that was purpose built for mass marketing applications. The company grew fast and became a recognized world leader in the field of automated personalization technology in the supermarket and drug-store store industries. With global operations, the company has a physical presence in the US, Canada, and Israel, and is represented by channel partners in Europe and South Africa.
Summit Targeting AutomationTM Our purpose built data mining platform aggregates consumer data from multiple internal sources including transaction histories, web site and mobile app engagement, email and direct mail response rates, social media, and more. Then, at any scale and with any frequency, our targeting engine automatically constructs the optimal set of offers and other content for each shopper and optimizes communications for each channel or touch point, so you can deliver it at exactly the right time. The end result: greater offer relevancy and timeliness that truly impacts share of wallet.
What We Do Sagarmatha develops and markets innovative data-centric solutions that influence the path to purchase and streamline retail marketing decision making. This empowers the retailer to offer every shopper personal attention by targeting each one with the right offer/content, via the right communication channel and at the right time, constantly. The results are measured by immediate lift in basket effect, margin and frequency. In addition, our BI platform - Apex™ empowers retailers and/ or suppliers to access shopper insights and match shoppers needs to the marketing strategy. Users collaborate to identify opportunities, act on them, and analyze the influence on shopper behavior based on mutual marketing objectives.
Apex Insight DiscoveryTM Leveraging state-of-the-art database technology, Sagarmatha’s collaborative campaign platform delivers real-time shopper data insights to both retailers and brand owners, on any scale. With no wait times even for high-data-volume tasks, we monitor, analyze and report on key campaign performance indicators and enable partners to create, monitor and manage personalized campaigns, ensuring optimal performance and highest ROI in both the short and long terms.
Our name is Nepalese for “Mount Everest”, and we’ve been scaling the peaks of advanced per-sonalized marketing for major retailers and global consumer brands for more than 15 years. The experienced Sagarmatha management team brings broad and multidisciplinary experience with proven records of success in consumer, retail and personalized marketing.
Pinnacle Data MarketingTM Leveraging our extensive customer behavior insight capabilities Sagarmatha offers a range of tailored, highly-flexible campaign planning, execution and analysis services. We work closely with retailer and brand marketing teams to define campaign objectives, select relevant target customers, refine messages per channel and optimize campaigns to ensure maximum results for a diverse range of tactical scenarios, including Preventing customer defection or migration, Nurturing potential loyalists, Special segment campaigns (e.g. baby clubs, natural and organic shoppers) etc.
Major Clients
Key Executives
Delhaize USA Shoppers DrugMart Canada Entry Point Communications (EPC) USA Price Chopper USA Homeland USA Super-Sol Israel
Mr. Moty Bank – CEO Mr. Chen Katz – VP Sales and Business Development Mr. Asaf Efrima – VP R&D and Retail Operations Mr. Shmuel Kaplan – VP Technology
Who We Are
Contact Chen Katz – VP Sales and Business Development chen@sag121.com +1 646 934 6149
4 | Progressive Grocer Technology Directory | Ahead of What’s Next
PUBLISHER’S NOTE 570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com SVP, Brand Director 201-855-7621
Jeff Friedman jfriedman@stagnitomail.com
EDITORIAL Editorial Director Joan Driggs 224-632-8211 jdriggs@stagnitomail.com Chief Content Editor Meg Major 724-453-3545 mmajor@stagnitomail.com Editor-in-Chief James Dudlicek 224-632-8238 jdudlicek@stagnitomail.com Managing Editor Bridget Goldschmidt 201-855-7603 bgoldschmidt@stagnitomail.com Senior Editor Randy Hofbauer 224-632-8240 rhofbauer@stagnitomail.com Senior Editor Katie Martin 224-632-8172 kmartin@stagnitomail.com Senior Editor Anna Wolfe 207-773-1154 awolfe@stagnitomail.com Technology Editor John Karolefski 440-582-1889 jkarolefski@stagnitomail.com Art Director Bill Antkowiak bantkowiak@stagnitomail.com Contributing Editors Bruce Horovitz, Bob Ingram, Jenny McTaggart, Lynn Petrak, Barbara Sax and Jennifer Strailey ADVERTISING SALES & BUSINESS Midwest Marketing Manager John Huff 224-632-8174 jhuff@stagnitomail.com Eastern Marketing Manager Maggie Kaeppel 630-364-2150 • Mobile: 708-565-5350 mkaeppel@stagnitomail.com Western Regional Marketing Manager Rick Neigher (CA, OR, WA) rneigher@stagnitomail.com 818-597-9029 Northeast Marketing Manager Mike Shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@stagnitomail.com Regional Marketing Manager Mike Weinreich (DE, MD, NY, TN, AL, DC) mweinreich@stagnitomail.com 201-855-7609 Marketing Manager Janet Blaney (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) jblaney@stagnitomail.com 630-364-1601 Account Executive/ Classified Advertising Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@stagnitomail.com Advertising/Production Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@stagnitomail.com Classified Production Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com
EvEnts • MarkEting • Digital • rEsEarch • circulation VP/Custom Media Division Pierce Hollingsworth 224-632-8229 phollingsworth@stagnitomail.com Production Manager Anngail Norris Corporate Marketing Director Bruce Hendrickson 224-632-8214 bhendrickson@stagnitomail.com Promotion Director Robert Kuwada 201-855-7616 rkuwada@stagnitomail.com Director of Events Pat Benkner 973-607-1330 pbenkner@edgellmail.com Director of Market Research Debra Chanil 201-855-7605 dchanil@stagnitomail.com Audience Development Manager Shelly Patton 215-301-0593 spatton@stagnitomail.com List Rental The Information Refinery 800-529-9020 Brian Clotworthy Reprints and Licensing Wright’s Media 877-652-5295 sales@wrightsmedia.com Subscriber Services/Single-copy Purchases 978-671-0449 or email at Stagnito@e-circ.net CORPORATE OFFICERS Executive Chairman Alan Glass aglass@stagnitomail.com President & CEO Peter Hoyt phoyt@p2pi.org Chief Customer Officer Ned Bardic nbardic@stagnitomail.com Chief Digital Officer Joel Hughes jhughes@stagnitomail.com Chief Operations Officer Korry Stagnito korrystagnito@stagnitomail.com Chief Financial Officer Chris Stark cstark@stagnitomail.org
Top Tech Solutions of Tomorrow Big data, analytics, predictive intelligence and mobile forces continue to reshape the retail landscape. To compete for the customer of the future, top companies in the food and consumables space are managing their business differently and relying on a wide range of innovative solutions providers. Details about new ways of working in the digital future can be found in the Progressive Grocer’s Technology Guide 2016.
August 2016 | progressivegrocer.com | 5
Profiles in Retail Technology • 2016
ADVERTORIAL
It’s not magic. It’s Itasca Magic™ BE AN OSA EXPERT MASTER THE ELUSIVE ART of On-Shelf Availability with Itasca Magic™, the industry’s most effective, proven solution for store inventory optimization. Using a real-time perpetual inventory of merchandise, advanced consumer demand forecasts, and sophisticated ordering algorithms, Magic provides dramatic improvements compared to conventional replenishment methods – while remaining labor neutral. Itasca Magic is a field-proven software solution that optimizes the replenishment and management of store-level inventory.
AT-A-GLANCE Magic™ Ordering Inputs & Outputs Display Collection Order Schedules
Central Data Server
Magic™ Ordering
Demand Forecast
Supplier Order Perpetual Inventory Order Review (optional)
Presentation Value Back Room Inventory SOURCE: Itasca Retail Information Systems ©2015
STOCK LESS. SELL MORE. CONVENTIONAL WISDOM says these are incompatible, unattainable goals. Yet Itasca Magic™ users routinely achieve them day in and day out, with significant financial returns. What would it mean to your bottom line if you could reduce inventory levels by an average of 15% while increasing On-Shelf Availability? How about sales increases of 2-3%? Nine out of ten out-of-stocks are caused by a frustrating combination of antiquated ordering systems plus inadequate shelf management processes. The supermarket industry has been wrestling with these issues for decades.
WHO WE ARE Itasca Retail Information Systems invents and builds industry-leading solutions for Inventory Management, DSD, Computer Generated Ordering (C GO) and associated data management. EXPERTISE Itasca Retail provides full service and support for its clients, including implementation, best practices, process improvement, product training and industry expertise. This includes a full range of professional support, including a full-service client help desk, assistance with software updates and product training. We are steeped in retail industry experience and committed to superior results. PRODUCTS & SERVICES
• You’ve tried upstream supply chain strategies.
• Store-Level Perpetual Inventory
• You’ve tried in-store detection and remediation strategies.
• Store-Level Forecasting
• You’ve tried capital-intensive safety stock strategies.
• Computer-Generated Ordering and Replenishment
• You’ve even tried computer-assisted ordering tools with headquarters control. By now you may well believe that 8.5% OOS is an immovable business barrier.
• DSD automated ordering and electronic receiving
Not for Itasca Retail customers. Every day they prove that OOS below 1% is the new normal.
• Central Data Server enterprise repository for store inventory and demand data
INVENTORY: OPTIMIZED WHEN IT COMES to inventory accuracy, compromise should by now be a thing of the past. It’s time for supermarket operators to put an end to • Low out-of-stocks at a cost of excessive inventory levels on the shelf and in the backroom. • High turns that beget excess labor costs for restocking. • DSD vendors that shoulder the work, but “go their own way” when stocking their sections. • Lean inventories that leave shelves with sparse presentation. • Forecasts that veer off course when promotions are factored in. At Itasca Retail, we identify Five Keys to keeping your inventory on target. Our Gold Paper, “No-Compromise Store Replenishment,” enumerates them and explains how outstanding retailers are succeeding with computer generated ordering. GET IT HERE: http://www.itasca-retail.com/five-keys/
Sales@Itasca-Retail.com
140 S. 68th St, Suite 1103, West Des Moines, IA 50266
6 | Progressive Grocer Technology Directory | Ahead of What’s Next
(515) 223-0045
• Comprehensive Implementation and Support Services KEY CLIENTS Sobey’s Price Chopper Wegmans Times Supermarkets Foodland Spartan-Nash
NEVER PAY FOR INVENTORY AGAIN Sound like nonsense to you? What if we showed you a supermarket chain who routinely reports a negative book value on its store inventories?
No joke. Using Itasca Magic™ they sell through before the invoices are due, freeing up millions in working capital for expansion, marketing, promotion, and customer experience. At Itasca Retail, we’ve been delivering on the Inventory Optimization promise for more than 15 years. Now we’re in more than 1,300 supermarkets across North America, and growing faster than ever. Our methods are proven: True store-level perpetual inventory, accurate store/item level demand forecasting, and dependable computer-generated ordering. All baked into a technology platform that boasts a perfect implementation track record.
It’s not magic. It’s Itasca Magic™
www.Itasca-Retail.com
140 S. 68th St, Suite 1103, West Des Moines, IA 50266
(515) 223-0045
ADVERTORIAL
ENABLING ON-DEMAND CLOUD COMMERCE AND CONTENT IN FOOD, GROCERY, AND CPG Your on-demand grocery experts • www.digitalfoodie.com
CREATE PERSONALIZED, DIFFERENTIATED CUSTOMER EXPERIENCES THAT INCREASE LOYALTY, SHARE OF SPEND, AND OMNICHANNEL PROFITABILITY! Digital commerce is increasingly driving buying decisions for online transactions and influencing conversions across physical locations. By catering to your customer’s digital needs, you can gain new revenues online, increase in-store sales, build customer loyalty, and achieve profitable growth in omni-channel commerce.
DIGITAL FOODIE FOR ON-DEMAND GROCERY Our Digital Foodie solution helps you to launch your on-demand grocery retailing today! Ourwhite label solution provides for home and mobile shopping, recipe management, order man-agement, in-store picking, click and collect at store, and optimized deliveries. This fully configurable SaaS platform powers over1,300 stores from superstores to conveni-ence stores with a proven track record of driving profitability by increasing basket size, visits and loyalty. We help grow your on-demand business while lifting your physical store experiences through mobile experiences including shopping lists and targeted in-store offers and other marketing services. Our feature rich, scalable, enterprise platform has rapidly emerged as the leading solution in North America as it has proven its strength in the competitive European digital grocery market. It includes advanced tools for real-time service monitoring, analytics and content management for targeted campaigns, assortment changes, and delivery slot capacity changes. Additionally, it offers advanced personalization technology with a robust, cloud-based back-end including easy connection points to inventory, POS and other data sources. The entire platform scales from independent stores to multibanner retail chains for a rapid ramp up of online sales.
COMMERCE & CONTENT In April 2016, Digital Foodie joined EnterWorks, the leading software provider of Master Data Management (MDM), Product Information Management (PIM), and Portal solutions. This converged foundation is the first Commerce and Content platform for food, grocery and CPG companies.
8 | Progressive Grocer Technology Directory | Ahead of What’s Next
The Right Content. Enabled • www.enterworks.com
ENTERWORKS ENABLE: YOUR CLOUD FOR CONTENT We enable rich, differentiated experiences across digital and physical commerce while orchestrating content capture and enrichment across Business to Business to Customer (B2B2C) for physical and digital content through trading networks. By linking manufacturers,wholesalers and retailers together, the Enable platform powers personalized digital search with robust narratives, attributes, and images for millions of SKUs. In addition, our B2B2C content network opens up more effective matching of offers to consumers, regardless of the offer source.
MAJOR CLIENTS Our customers include consumer brand manufacturers, food companies, retail chains and inde-pendents across markets in the US, Finland and Scandinavia, the Baltics, Russia, and the UK. Our clients in the U.S. include: S-Group (Finland’s largest chain; stores range from hypermarkets to neighborhood markets) Village Beach Market • Wynn’s Market • US Foods HP Hood • Unilever
KEY EXECUTIVES Rick Chavie, CEO of EnterWorks Holding Company Kerry Young, COO of EnterWorks Kalle Koutajoki, CEO and Co-Founder, Digital Foodie Samuli Mattila, VP Products and Co-Founder, Digital Foodie Kevin Reese, SVP North America Sales and Marketing
CONTACT 46040 CENTER OAK PLZ STE 115 STERLING VA, 20166 - 6611 (703) 466-7000 www.enterworks.com • www.digitalfoodie.com
WE ARE ON-DEMAND GROCERY EXPERTS
Digital Foodie:
Commerce Core Transactional: Web Shopping • Order Management • Fulfillment • Delivery Revenue Generation: Offers & Promotions • Loyalty • Trade Offers/Coupons
Food and Grocery
Home
Consumer Packgage Goods
Health & Beauty Aids
Office
Drug Stores
Other Vertical
EnterWorks:
B2B2C Foundation for Content Networks Product Information Management (PIM), Master Data Management (MDM), Content Lifecycle Management, Omni-channel Analytics, Workflow Management, Portals for Vendor, Sales, and Marketing
Enabling Content and Commerce for retailers and brands in Food, CPG, Pharma and more.
Ranked by digitalfoodie.com
888.242.8356
enterworks.com
The The Grocery Grocery Success Success Company ECRS ECRSprovides providesprofit-building profit-buildingsuccess successtools toolsto toelevate elevatetoday’s today’smodern modern grocery grocery enterprise. enterprise. From facilitating frictionless consumer engagement across all channels, to providing From facilitating frictionless consumer engagement across all channels, to providing powerful powerfulanalytics analyticsfor forexecutive executivedecision decisionmaking, making,no noother othersolution solution on on the the market market today can prepare preparegrocery groceryexecutives executivesfor forthe thecomplex complexgrocery grocerymarketplace marketplace like like ECRS. ECRS.
Store StoreSolutions Solutions Traditional Traditionalcheckout checkoutlanes lanes
Enterprise/Back Enterprise/Back Office Real-time Real-timeexecutive executivedashboard dashboard analytics analytics
Mobile POS Mobile POS
Synchronized Synchronizedmulti-store multi-storemanagement management
®® Accelerated AcceleratedCheckout Checkout
Automatic Automaticdata datareplication replication
Click & &Collect Click Collect2.0 2.0
Online Onlinebackup backupservice service
Self Checkout Self Checkout
Massive Massivereporting reportingsuite suite
EMV, P2PE,PCI-DSS PCI-DSScertified certifiedpayment paymentprocessing processing EMV, P2PE,
OLAPcube cubedecision decisionsupport supportsystem system OLAP
Inventory/SupplyChain Chain Inventory/Supply UniversalProduct ProductDatabase Database(UPD) (UPD) Universal
Loyalty&&Rewards Rewards Loyalty
Automatedmarketing marketingcampaigns campaigns Automated
Productattribute attributecoding codingand andshelf shelflabeling labeling Product
PointsororeCoupon eCoupondelivery delivery Points
Direct StoreDelivery Delivery(DSD) (DSD)tracking tracking Direct Store
Customerdisplay displayreward rewardmoment moment Customer
Perpetualordering ordering Perpetual
Socialmedia mediamarketing marketing Social
DemandFillorder orderforecasting forecasting DemandFill
Self-hostedemail emailcampaigns campaigns Self-hosted
EDI supplierintegration integration EDI supplier Web-basedorder ordertracking trackingdashboard dashboard Web-based
Trigger-basedrewards rewards Trigger-based Reporting/analytics Reporting/analytics
® ®
SpecialtySuccess SuccessSolutions Solutions Specialty Fuel pumpintegration integration Fuel pump Pharmacysystem systemintegration integration Pharmacy
Remotekitchen kitchenticket ticketprinting printing Remote Membershipmanagement management Membership Scale Management Scale Management Gift Card Gift Card
Services Services
SuccessNavigation Navigationprogram program Success U.S.-based,award-winning award-winningtechnical technical support support U.S.-based, Consulting/Projectmanagement management Consulting/Project Onlineand andonsite onsitetraining training Online Web-basedcustomer customerportal portal Web-based
Why ECRS? At-a-glance Reinvesting profits into research and development is a win-win strategy anyway you slice it, and ECRS has faithfully relied upon it, which has largely contributed to their inventive, cutting-edge technology that anticipates the curve and stays ahead of it. Another one of ECRS’ most valuable tools has been keeping a steady pulse on customer feedback, thoughtfully listening to their changing needs, trends and business environments, to help provide direction for the product development team.
Particularly setting ECRS apart from the industry pack, is the innovative, forward thinking that infiltrates their exhaustive, end-to-end retail solutions suite and equally comprehensive in-house services to support and back their solution. From consulting, to project management, hardware, installation services, and award winning technical support, ECRS does not simply deliver a product - they ensure satisfaction and retail success for their customers, by surrounding their product with the supportive structure necessary for its optimal performance.
ECRS was founded in 1989 and has maintained steady growth through its 27 years. Original founder, Pete Catoe, remains CEO and president of ECRS today and is surrounded by an executive team with years of industry experience. ECRS has won numerous awards including three consecutive years as number one on the RIS Software LeaderBoard and two consecutive years on the prestigious INC. 5000 list.
Contacts: Pete Catoe President, CEO, & Founder pcatoe@ecrs.com
Don Edwards Vice President of Business Development, Grocery dedwards@ecrs.com
Otis Flieth VP of Sales oflieth@ecrs.com
Ashlee Weatherman Director of Corporate Communications aweatherman@ecrs.com
www.ecrs.com 800.211.1172 solutions@ecrs.com August 2016 | progressivegrocer.com | 11
Turn Your Data into Competitive Advantage TAKE LOYALTY MARKETING TO THE NEXT LEVEL
ProLogic can help you profile your best customers with an in-depth analysis of purchase data and help you grow your sales through personalized targeted offers. With more than 20 years experience in executing successful loyalty marketing programs, ProLogic makes it simple.
1 2 3
Identify Top Shoppers Reward Top Shoppers Influence Shopper Behavior
“An effective customer loyalty program is the ultimate tie-breaker.” Noah Katz, Co-President PSK Foodtown Supermarkets
It’s easy to learn more at ProLogicRetail.com/PGI Or call (561) 454-7615 for a free consultation.
START BUILDING MORE LOYALTY INTO YOUR BUSINESS. ¨
Loyalty Max: ProLogic’s Full-service Loyalty Marketing Solution
Loyalty Max is ProLogic’s full-service loyalty marketing platform. It’s ideal for retailers that want the highest level of features, support and customization in order to get the maximum results from their shopper data. With Loyalty Max, retailers can design a virtually limitless number of promotions, including continuity programs and sweepstakes, which will enable them to retain and grow their top shoppers. These offers can be targeted down to the level of the individual shopper or groups of shoppers based on any number of specific traits. Retailers also have the option to use the POS printer or a dedicated marketing printer to deliver promotional messages to shoppers including discounts, coupons, loyalty points balance or other information. ProLogic also provides an Account Director which works with the retailers on a daily
basis to design promotions and ensure the optimal usage of the loyalty marketing platform. The Account Director plays a major role in ensuring that the retailer is taking full advantage of the platform’s capabilities. Furthermore, the Loyalty Max platform provides an unlimited number of custom reports. The Account Director works closely with the retailer to design and maintain a suite of custom reports that are tailored to the retailer’s business. Loyalty Max also includes support for Shopper Connect, a ProLogic service which delivers email or text messages to shoppers when certain loyalty criteria are met. For example, a shopper can be notified by email or text that she has just earned a free turkey in a Thanksgiving continuity program. The notification can occur in real time at the instant that the benefit is triggered.
Key attributes of Loyalty Max include: •
Unlimited number of promotions, including complex promotions such as continuities and sweepstakes
•
Easy-to-use tool to enroll members and manage the database of member shoppers
•
Targeted promotions to a specific shopper or groups of shoppers based on attributes such as purchase history, demographics, zip code or peer group
•
Alternate identification (physical loyalty card or telephone number) using the POS terminal
•
•
Fuel programs
•
Digital coupon capability (load-to-card and redemption at checkout)
Option to print loyalty-related messages to shoppers on either the POS receipt or a dedicated loyalty receipt from a ProLogic graphics printer
•
System can trigger customized email or text messages to shoppers when certain loyalty criteria are met.
•
Optional integration with 3rd party promotion services such as ibotta, SavingStar and Upromise
•
Supported POS systems include IBM ACE, NCR ACS, Retalix ISS 45 v8, Retalix ScanMaster, LOC SMS
•
Unlimited number of custom reports via IBM Cognos Query Studio
•
ProLogic Account Director works with retailer daily to optimize the usage of the loyalty marketing platform, including designing and building custom promotions and reports
•
Easy-to-use promotion building tool in addition to ProLogic Account Director support
October 25–26, 2016 • Chicago
Building the Grocerant Experience Progressive Grocer invites retailer executives to learn more about strategies and solutions for fresh prepared food and how it can boost store loyalty and profits. • Participate in an assessment of shopper insights, the competitive landscape and case studies • Learn about key trends plus operational and tactical concerns
Presenting Sponsor
Platinum
Gold
• Network with other retailers who share your interest in grocerant opportunities For more information, contact Jeff Friedman at JFriedman@stagnitomail.com or at 201-855-7621.
your partner in the retail environment
www.progressivegrocer.com/grocerant-summit
Silver
advertiSer index COMPANY
PAGE NUMBER
WEB ADDRESS
Digital Foodie Ltd.
8, 9
www.digitalfoodie.com
ECR Software Corporation
10, 11
www.ecrs.com
Itasca Retail Services
6,7
www.itasca-retail.com
Prologic Retail Services
12, 13
www.ProLogicRetail.com/PGI
Sagarmatha LTD
4, Back Cover
www.sag121.com
Velocity Worldwide
Inside Front, 3
www.dariusforretail.com
570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 Phone: 224 632-8200 Fax: 224 632-8266 www.stagnitobusinessinformation.com
advertiSing SaleS & BUSineSS Staff Peter Hoyt President & CEO 773-992-4456 phoyt@p2pi.org
Maggie Kaeppel Eastern Marketing Manager 630-364-2150 • Cell 708-565-5350 mkaeppel@stagnitomail.com
Ned Bardic Chief Customer Officer 224-632-8224 nbardic@stagnitomail.com
Mike Shaw Northeast, Marketing Manager 201-855-7631 • Cell 201-281-9100 mshaw@stagnitomail.com
Korry Stagnito Chief Operations Officer 224-632-8171 korrystagnito@stagnitomail.com
Janet Blaney Marketing Manager (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) 630-364-1601 jblaney@stagnitomail.com
Jeff Friedman Senior Vice President/Brand Director 201-855-7621 jfriedman@stagnitomail.com John Huff Midwest Regional Sales Manager 224-632-8174 jhuff@stagnitomail.com Rick Neigher Western Regional Sales Manager (CA, OR, WA) 818-597-9029 rneigher@stagnitomail.com
Mike Weinreich Regional Marketing Manager (DE, MD, NY, TN, AL, DC) 201-855-7609 mweinreich@stagnitomail.com Jackie Batson Advertising Manager 224-632-8183 jbatson@stagnitomail.com United StateS S MarketS Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Multicultural • Green • Technology Hospitality • Apparel
Canadian MarketS S • Convenience • Pharmacy • Foodservice
August 2016 | progressivegrocer.com | 15
Summit Targeting Automation™
Apex Insight Discovery™
Pinnacle Data Marketing™
Personalized and optimized content for all customers, via all communication channels.
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