__MAIN_TEXT__

Page 1

Shelf-stable Solutions

Green Growth

Supplying Demand Forecasting

Page 56

Page 73

Page 95

Center store’s alternatives to meal kits

Annual produce survey reveals optimism

Omnichannel world requires new approach

2017 Retailer of the Year

Helpful Smiles, Evolving Aisles Page 26

October 2017 • Volume 96 Number 10

Visit us at the all-new

ProgressiveGrocer.com!

$10 • www.progressivegrocer.com


AmaZING Sweetener Sales.

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Organic. Perfect sweetness. Born Sweet Zing Organic Stevia Sweetener is a victory for alternative sweetener shoppers who seek a zero calorie sweetener made with only real ingredients – nothing artificial – and a delicious, clean sweet taste. Stock shelves and let customers experience the taste of amaZING! ™

Expanding the Category

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he vast grocery shopping landscape continues to fragment and evolve, but there’s one constant: Consumers are looking for a frictionless experience.

T

While mobile and online grocery shopping methods are not yet widespread in the industry, retailers and consumers alike are increasingly adopting these frictionless experiences. According to new research from American Express, shoppers say a crucial part of being “frictionless” is having a faster, easier checkout process that includes recognized payment capabilities such as mobile wallets and retailer/merchant mobile apps. While the percentage of shoppers who say they currently use mobile wallets or retailer/merchant apps to pay for groceries is small, these two payment options have the highest percentages of shoppers saying they will use them more in the next year, according to the American Express research report “State of Grocery Retail: Frictionless Customer Experience.”

Shoppers who plan to use payment method more in the next year

Shopper checkout preferences by age 63% Ages 18-34 Ages 35-54 Ages 55+

35%

36%

67%

31%

27%

19%

55% Prefer to check out with a cashier

21% Mobile wallet

Retailer/merchant app

Credit card

17% Debit Card

Shoppers opt for a frictionless shopping experience with “alternative” payment methods because they enable a faster, more convenient checkout experience: Mobile wallet users estimate their checkout takes less than 1 minute, versus 1.5 minutes using a debit card and 2.8 minutes using a check. With five people in line, that half-minute time savings for each person can be huge. “Everyone is familiar with the frustrating experience of waiting in long lines at the grocery store checkout,” says Stephanie Crean, Vice President & General Manager, Everyday Spend at American Express. “As shoppers see how much better their checkout experience is with these new payment methods, the movement toward a frictionless checkout experience will only intensify.” Demographics will also play an increasingly important role in the drive for more frictionless shopping. Younger consumers are already experimenting more with new payment technologies and placing much more importance on hassle-free checkout experiences that leverage technology.

Prefer self-checkout

In addition, while “hassle-free checkout” is a major factor in where consumers choose to grocery shop, the checkout satisfaction rate for younger shoppers is lower than that of older shoppers. According to the American Express research, only 61 percent of those ages 18 to 54 are satisfied with the checkout experience at the place they shop for groceries most frequently, compared with 69 percent of the 55-plus age group. And of all the groups surveyed, millennials place the highest value on having access to multiple payment options (59 percent), and are most likely to choose where to grocery shop based on the payment options that are available. The trend is clear: Younger consumers moving into their peak grocery spending years won’t be content with the slower, lower-tech checkout options that may satisfy their older counterparts. Retailers need to begin laying the groundwork now in order to offer frictionless shopping experiences with substantially more emphasis on mobile and digital options.

Report: State of Grocery Retail: Frictionless Customer Experience EnsembleIQ Research Solutions surveyed 1,000 consumers to understand their overall front-end shopping experiences, including perception around omnichannel commerce. The survey was conducted online in the United States June 12-19, 2017; margin of sampling error is ± 4 percentage points at the 95% confidence level.

REPORT JOINTLY PRODUCED BY ENSEMBLEIQ AND AMERICAN EXPRESS


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Contents

10.17 Volume 96, Issue 10

26

COVER STORY Progressive Grocer’s 2017 Retailer of the Year

Forward Thinking, Forward Doing

Hy-Vee is evolving at every level to be a retailer for the future. 56 / Meal Solutions Off the Shelf With fresh meal kits rapidly catching on, manufacturers hasten to remind consumers of convenient, inexpensive center store alternatives.

92 / Nonfoods Smoke Signals Despite barriers to category growth, manufacturers and retailers forge ahead.

65 / Frozen & Refrigerated Foods

73

Get Fresh With Frozen Integration with the perimeter can melt obstacles to purchase.

COVER PhOTO bY ViTO PalmiSanO hy-Vee CEO Randy Edeker is flanked by Savage, minn., store personnel (from left) Jennifer mcneil, Starbucks manager; malick Toure, deli clerk; Roberto Gomez, meat specialist; Erika miller, bakery clerk; Emmalee Tse, asia Express manager; Jackie Schuster, salad bar clerk; and Oksana Oleksyszyn, beauty manager.

73 / Progressive Grocer’s 2017 Retail Produce & Floral Review

Prevailing Produce Survey shines light on the good, the bad and the ugly fruit.

October 2017 | progressivegrocer.com |

5


Contents

10.17

570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com

95 95 / Technology What’s the Forecast? As more grocers adopt an omnichannel approach, they’ll also have to rethink how they forecast demand. 99 / Supply Chain Legal Ease Working with the new administration, industry trade groups hope to see more commonsense regulations that could help with supply chain efficiency.

105 105 / Equipment & Design Encouraging Signs Innovation is the keyword in today’s supermarket signage.

SVP, Brand Director Katie Brennan 201-855-7609 • Mobile: 917-859-3619 kbrennan@ensembleiq.com EDITORIAL Managing Director of Content Strategy Joan Driggs 224-632-8211 jdriggs@ensembleiq.com Editorial Director James Dudlicek 224-632-8238 jdudlicek@ensembleiq.com Managing Editor Bridget Goldschmidt 201-855-7603 bgoldschmidt@ensembleiq.com Digital & Technology Editor Randy Hofbauer 224-632-8240 rhofbauer@ensembleiq.com Senior Editor Katie Martin 224-632-8172 kmartin@ensembleiq.com Senior Editor Anna Wolfe 207-773-1154 awolfe@ensembleiq.com Contributing Editors Bob Ingram, Jenny McTaggart, Lynn Petrak, Barbara Sax and Jennifer Strailey

ADVERTISING SALES & BUSINESS Southeast Account Executive Larry Cornick 224.632.8248 lcornick@ensembleiq.com Midwest Marketing Manager Angela Flatland (AR, CO, IL, IN, IA, KS, KY, MI, MO, NE, ND, OK, SD, TN, WI) aflatland@ensembleiq.com 224-229-0547 • Mobile: 608-320-4421 Senior Marketing Manager Judy Hayes 925-785-9665 jhayes@ensembleiq.com Senior Marketing Manager Theresa Kossack 214-226-6468 tkossack@ensembleiq.com Western Regional Marketing Manager Rick Neigher (CA, OR, WA) rneigher@ensembleiq.com 818-597-9029 Northeast Marketing Manager Mike Shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@ensembleiq.com Account Executive/ Classified Advertising Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com

EVENTS SVP, Events & Conferences Maureen Macke 773-992-4413 mmacke@ensembleiq.com CUSTOM MEDIA VP/Custom Media Division Pierce Hollingsworth 224-632-8229 phollingsworth@ensembleiq.com General Manager, Custom Media Kathy Colwell 224-632-8244 kcolwell@ensembleiq.com MARKETING VP, Marketing & Communications Bruce Hendrickson 224-632-8214 bhendrickson@ensembleiq.com

AUDIENCE DEVELOPMENT Director of Audience Development Gail Reboletti greboletti@ensembleiq.com Audience Development Manager Shelly Patton 215-301-0593 spatton@ensembleiq.com List Rental The Information Refinery 800-529-9020 Brian Clotworthy Subscriber Services/Single-copy Purchases 978-671-0449 or email at EnsembleIQ@e-circ.net

8 / Editor’s Note The Choice of a New Generation 12 / PG Pulse 14 / In-store Events Calendar December 2017 16 / Nielsen’s Shelf Stoppers/Spotlight Dairy 20 / Mintel Global New Products

Fruits and Vegetables

6

22 / All’s Wellness Wellness on Ice 24 / NEW Horizons How to Avoid a Midcareer Slump 110 / What’s Next Editors’ Picks for Innovative Products 114 / Independent Thoughts Exploit Advantages of Being Small

| Progressive Grocer | October 2017

ART/PRODUCTION Director of Production Kathryn Homenick khomenick@ensembleiq.com Advertising/Production Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@ensembleiq.com Art Director Bill Antkowiak bantkowiak@ensembleiq.com REPRINTS, PERMISSIONS AND LICENSING Wright’s Media ensembleiq@wrightsmedia.com 877-652-5295

CORPORATE OFFICERS Executive Chairman Alan Glass Chief Operating Officer/ Chief Brand Officer Richard Rivera Chief Financial Officer Len Farrell Chief Business Development Officer & President, EnsembleIQ, Canada Korry Stagnito President of Enterprise Solutions/ Chief Customer Officer Ned Bardic Chief Digital Officer Joel Hughes Chief Human Resources Officer Greg Flores


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Contact Kathy Morris today at 856-423-8353 kathy.morris@ipaper.com or visit IPretaildisplay.com

Retail Packaging and Display


Note By Jim Dudlicek

The Choice of a

New Generation

“P It’s not about selling stuff — it’s about selling solutions, ideas and ideals.

eople will crab about Millennials. I personally think they’re amazing.” So says Randy Edeker, chairman, president and CEO of Hy-Vee Inc., talking with me during a recent visit to one of the Iowa-based retailer’s newest stores in its growing Twin Cities market. “I wish I was that smart when I was that age,” Edeker told me. “I wish I would have asked the questions that they ask. Back in the day, I would run through a wall if somebody told me to do it. Today, they’ll ask you why and want to understand it.” We were talking about what the industry needs to do to change the perception of grocery retailing as a career of choice for younger generations. “I don’t think you really address it as an industry. I think you address it as a company,” Edeker said, describing a career day that Hy-Vee hosted for 1,500 college-age young adults who were most interested in learning about the company’s philanthropic and wellness outreach initiatives. “They want to make a difference in life, have a purpose. For us to be an industry that is strong and a place that people want to go, we have to give them the opportunity to feel like they’re making a difference,” he said. “It’s amazing to me: The week following [the event,] I got so many emails from young people who wanted to talk to me about their future. They expect you to be personally involved with helping them. That’s what I think we’re going to have to do as an industry, to really embrace them. Then I think they’ll come in and they’ll help you build.” It’s this focus on the future that drove our decision to make Hy-Vee PG’s 2017 Retailer of the Year. As you’ll discover in the article starting on page 26 and in accom-

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

8

| Progressive Grocer | Ahead of What’s Next | October 2017

panying online coverage, Hy-Vee’s achievements with innovative store formats and merchandising concepts, fresh prepared foods, customized meal solutions, wellness initiatives, business diversification, and corporate citizenry have positioned the company well to run headlong into the sea changes the industry is facing. Hy-Vee understands that it’s not about selling stuff — it’s about selling solutions, ideas and ideals. “If you love to help people solve problems, that’s what I think our whole industry is,” EVP/COO Jay Marshall told me. “It’s about making lives easier. [Consumers] don’t know what they want, and you help them find what they want. They don’t know how to cook; you help them learn how to cook. So if you’re a problem solver, this would be a great industry for you. This would be a place to come and stay a long time, because the grocery industry will change. We’ll always be in the food business, but we’ll sell in different ways over the next 50 years, 100 years. We’ll sell food more differently than we ever did.”

We’ve Got What You Need Our team is quite proud of PG’s redesigned website that we launched a few weeks ago. It features all of the latest industry news and trend information that you’ve come to rely upon, now better organized, more easily searchable and better optimized for viewing on mobile devices. New to the site are solutions-focused pages featuring best practices, research and products for dayparts and special occasions, reflecting the new wave of grocery merchandising; perimeter category pages, with information on key categories like deli/ prepared foods, produce, meat and seafood, and grocerant; blog pages featuring viewpoints from PG editors and guest contributors; enhanced newproduct listings; and a multimedia repository of video and podcast content. Of course, you’ll still find our industry-leading coverage of news, technology, regulatory affairs, equipment and design, sustainability, and mergers and acquisitions, as well as PG’s extensive collection of special reports and research on the issues shaping the grocery market. If you haven’t already, please check out the new and improved progressivegrocer.com — just one of the many ways we’re keeping you ahead of what’s next. PG


T H E

A R T

O F

M E R C H A N D I S I N G

T M

HOOKS | SHELF & COOLER MERCHANDISING | LABELING WWW.TRIONONLINE.COM/ART | 800-444-4665 ©2015 Trion Industries, Inc.


Thai Inspired

Coconut Chicken & Noodle Bowl A zesty bowl of ramen noodles, chicken and vegetables in a coconut curry broth with lemongrass and cilantro. Chicken Raised without antibiotics

Chicken Ramen Bowl A comforting bowl of ramen noodles, chicken and vegetables in a flavorful chicken broth with soy sauce and ginger. Chicken Raised without antibiotics Gluten Free

Asian Inspired

Vegetable & Rice Bowl A creamy coconut curry broth with lemongrass and cilantro packed with Asian vegetables like cabbage and bamboo shoots. Vegan | Gluten Free


Nood le & Rice Bowls Introducing Blount’s delicious Asian Inspired Noodle and Rice Bowls featuring premium ingredients. Just heat and serve A must for the millenial consumer! OFFER ALL FOUR ASIAN INSPIRED VARIETIES TO INCREASE SALES & PROFITS!

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Sweet and roasted flavors of garlic, ginger, red onion and red peppers, simmered with tomatoes, chicken and rice.

New

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3

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What’s trending on progressivegrocer.com …

Hard discounters, click-and-collect, meal kits and continued news on the AmazonWhole Foods Market deal — four of the hottest topics in grocery right now — were among the most-read stories during the Aug. 16-Sept. 15 time period on progressivegrocer.com. Taking the top spot was a guest piece that offered a contrarian view to the doomsday fears surrounding Amazon’s recent purchase of Whole Foods, giving reasons that traditional grocers today should be more concerned about German hard-discounters Lidl and Aldi expanding stateside. Meanwhile, Kroger and Walmart’s click-and-collect partnership with the eMeals meal-kit service garnered considerable attention, as did news about The Fresh Market’s new chief. Rounding out the remaining top six items were news about grocers nationwide providing aid to victims of Hurricane Harvey, which pummeled the Houston area in late August; a report about grocery’s speedy and impressive growth; and a piece examining price cuts at a Chicago Whole Foods on the chain’s first day under Amazon ownership.

“Over the past decade, we’ve provided millions of weekly meal plans to consumers across the country, which naturally led to our expansion into the meal-kit space.” —Forrest Collier, eMeals CEO

5 Reasons Lidl, Aldi Will Win the Grocery Game http://bit.ly/2wtxaOx

Kroger, Walmart Offer Pickup for eMeals Kit Service http://bit.ly/2wJmpaO

“I am committed to re-energizing all that sets The Fresh Market apart as a great brand and retail store.” —Larry Appel, The Fresh Market president and CEO

Food Retailers Join to Aid Harvey Relief http://bit.ly/2wgm4O9

“We recall several years ago, we went through similar events, and our thoughts and prayers go out to the affected.” —Nicholas Peterson, assistant store director, Rouses store, Baton Rouge, La.

“Retailers that are focusing on the customer experience, investing in better training of associates and integrating IT systems across channels will continue to succeed.” —Greg Buzek, IHL president

Grocery among Fastest-Growing Retail Segments: Report http://bit.ly/2x94uNd

Larry Appel Becomes The Fresh Market President, CEO http://bit.ly/2f5nmCx

12

Whole Foods Makes Good on Price-Slashing Promise http://bit.ly/2wcVpSg

| Progressive Grocer | Ahead of What’s Next | October 2017

“Everybody should be able to eat Whole Foods Market quality — we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.” —Jeff Wilke, Amazon Worldwide Consumer CEO


A C ASE-READY PARTNER THAT’S

LEADING THE PACK. Smithfield conducted a technical analysis of case-ready programs to develop a tool that can help optimize your case-ready business. That, combined with our category experience and variety of offerings, makes us the ideal partner.

Š2017 Smithfield Farmland Sales Corp. All Rights Reserved.

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For more information about how a Smithfield Fresh Pork customized case-ready solution can help boost your bottom line, contact your Smithfield Sales Representative or Stephen Melton at smelton@smithfield.com.


December 2017 is... National Egg Nog Month National Fruit Cake Month National Stress-free Family Holiday Month Universal Human Rights Month

S

M

T

W

T

F

1

2

World AIDS Day

3

S

Plan a day to pre-wrap gift baskets for graband-go gift purchases. Choose a selection of shelf-stable foods and housewares.

4

5

6

7

8

9

ECRM Candy Planning: Halloween, in St. Pete Beach, Fla., begins and continues through Dec. 4.

In honor of National Cookie Day and National Cookie Cutter Week, host a cookie-decorating contest. Share the winners on Instagram.

10

11

12

13

14

15

16

Advent begins.

National Lager Day. Highlight your assortment.

UNICEF’s birthday (1946). Give a percentage of your sales this week for the world’s children.

National Comfort Food Day. Survey your customers on their favorite prepared foods.

Chanukah begins.

Make sure your stores are adequately stocked on all the holiday essentials.

National Popcorn String Day

Set up and stock your gift-wrapping station for the holidays.

Ten more shopping days after today.

National Poinsettia Day

National Brownie Day. How many recipes can you post on Facebook?

National Cupcake Day. Make sure your store is adequately stocked on baking ingredients and other holiday essentials.

Distribute easy entertaining recipes using puff pastry in honor of National Pastry Day.

Help your customers have a stress-free holiday season. Highlight your store’s catering services online and with in-store signage.

17

18

19

20

21

22

23

24

25

26

27

28

29

30

National Maple Syrup Day. Create a breakfast-centric display showcasing the versatile sweetener.

Christmas Eve

Share your staff’s favorite holiday entertaining tips on Facebook.

Christmas

National Oatmeal Muffin Day. Offer a complimentary one to early-bird shoppers.

National Candy Cane Day

National Egg Nog Day Kwanzaa begins today and ends on Jan. 1.

National Sangria Day

Set up New Year’s Eve decorations and collect all of the Christmas-themed items for a postholiday clearance.

In honor of the Winter Solstice, the longest night of the year, showcase hotdrink mixes.

Nail down your game plan for the New Year’s Eve deli rush.

National Date Nut Bread Day

Thank all of your employees for a successful year.

It’s time for Festivus, the nondenominational holiday celebrated by the Costanzas on “Seinfeld.”

Bacon Day. Don’t you wish this was every day?

31

New Year’s Eve and National Champagne Day. Toast to a successful year, and to an even better 2018.

14

| Progressive Grocer | Ahead of What’s Next | October 2017

Email your calendar submissions to awolfe@ensembleIQ.com


Front End

Market Intelligence By The Numbers

Shelf Stoppers Shelf Stoppers

Frozen Vegetables

Dairy TOTAL FROZEN VEGETABLE SALES REACHED

Basket Size Drivers among the top-grossing dairy categories, which command the largest basket size (average spend per trip)?

ToTal dairy sales reached $68 billion in The pasT year, $2.974 BILLION IN lasT THEyear. PAST YEAR down percenT from

(52weeks weeks ending (52 ending July 29,April 2017)

2, 2016)

Top 5 dairy categories $20,000,000,000

The average American household spends:

18,000,000,000 16,000,000,000

Consumers chose frozen broccoli over alternatives for a variety of reasons:

14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000

$6.23

4,000,000,000

on cheese

12%

2,000,000,000

because it’s quick and easy

0 52 wks - w/e 07/29/17

52 wks - w/e 07/30/16

cheese

milk

52 wks - w/e 08/01/15 yogurT

52 wks - w/e 08/02/14

refrigeraTed Juice drinks

52 wks - w/e 08/03/13 eggs

“it’s been a struggle for the dairy department, contracting by over 4 percent in dollars this year. in these tough times, it’s important to highlight and ultimately maximize activation around key segments that are performing. Take the milk category, for example. on the whole, milk is in decline, but opportunity exists within milk substitutes and specialty milks (such as lactose-free varieties), growing at 3 percent and 12 percent, respectively. Taking that a step further, asian and hispanic households are largely overindexed in their spend on these milk alternatives, so despite top-line contraction, opportunities still abound within dairy.”

Spotlight on Frozen Broccoli

rost, Vp consumer insights WHEN ARE CONSUMERS EATING FROZEN—Jordan BROCCOLI?

Broccoli as an ingredient is most commonly consumed at dinner, followed by lunch.

Spotlight on Dairy

Frozen broccoli is most often used in a side dish, followed by as a main entrée. 3%

consumers purchasing dairy producTs are also mosT likely To purchase: Percent Penentration

Index

OCCASION desserts, gelatins and syrups 29% TYPE 62% breakfast food

77.7%

115

77.4

MEAL ITEM CLASS 114 35% 61%

pasta

83.4

113

prepared food-dry mixes

90.4

113

cereal DINNER

Source: nielsen

16

LUNCH

OTHER

93.0

112 SIDE DISH

9%

because it’s healthy and nutritious

$3.86

8%

on milk

because it’s low in calories, fat and sugar

9%

Comparison Products

10% $5.04

because it tastes ongreat yogurt

$2.57 on eggs

MAIN ENTRÉE

| Progressive Grocer | Ahead of What’s Next | October 2017

OTHER

source: nielsen homescan, Total u.s., 52 weeks ending July 29, 2017


Mintel Global New Products Database Category Insights

Fruits and Vegetables Market OVerView In the past 12 months, the United States accounted for more than half of the product innovations in the fruit and vegetable category. Conveniencerelated claims appeared the most in the category, mostly driven by microwaveable products. As consumers try to increase their fruit and vegetable intake, they confront the reality that preparing meals with raw, bulk and unprocessed produce requires a significant time investment that directly conflicts with their evershrinking time resources. Indeed, 41 percent of U.S. consumers find that planning and making healthy meals is too time-consuming, according to “Diet Trends-U.S., October 2015.” Nearly all (94 percent) of U.S. consumers ate at least one form of fruit in the past month. The core consumers of fruit (parents, women, Baby Boomers and older consumers in general) appreciate fruit’s wholesome value and feel that it’s superior to other variations, like 100 percent fruit juice or even vitamins/ supplements. Moreover, its natural sugar is largely regarded as healthier than other sugars. Grains, beans and pasta are being incorporated into convenient vegetable-rich side dishes that eliminate the need to serve a vegetable and a starch separately. Some of these side dishes can also function on their own as a plantbased meal option, complete with protein, for consumers who are interested in moving toward plantbased diets.

and vegetables to recipes when cooking. Products targeting athome smoothie preparation have enjoyed success. More than a quarter (27 percent) of Millennials (and the same proportion of parents with children under 18 years old in the household), claim to buy prepared versions of vegetables that are easy to incorporate into recipes, compared with just 19 percent of non-Millennials and 19 percent of nonparents. This suggests that these cohorts are likely to be attracted to ready-to-use vegetable blends and pre-seasoned vegetables that target familiar recipes and favorite international/ethnic foods. Fresh fruit is often perceived as being less processed and more natural than other formats such as frozen and canned. Only 4 percent of consumers associate fresh fruit with being processed, while 17 percent perceive frozen and 46 percent perceive canned fruit to be processed. In North America, the well-developed fruit category is moving into value-added products that deliver health along with convenience. New products targeting smoothie applications have been driving value growth through a raft of innovative at-home preparation blends.

key issues The quest for healthy convenience is driving consumers to seek out food with high vegetable content and to look for convenient, flavorful options for adding fruits

20

For more information, visit www.mintel.com or call 800-932-0400.

| Progressive Grocer | Ahead of What’s Next | October 2017

Innovation targeting product “swaps” that support specific diet objectives, such as reducing carbs, can offer broader appeal to consumers who are trying to eat more vegetables. Given that smoothies in general have a fairly healthy reputation, versions made at home with fresh or even frozen fruit allow consumers the opportunity to customize their beverages.


Keep the P∂M P∂MS in the berry cooler. And keep the extra profits wherever you like.

Arils sales soared last pomegranate season, and P∂M P∂MS dominated with 80% market share and 30% sales growth.1

Now we’re investing $3 million in marketing support to help these little red hotcakes fly off your shelves.

For maximum profits, stock both the 4.3oz and 8oz SKUs in the berry cooler and healthy snacking section.

The season starts in October, so call 877-328-7667 to order now.

© 2017 POM Wonderful LLC. All Rights Reserved. POM, POM WONDERFUL, POM POMS, POM POMS WONDERFUL and the accompanying logos are trademarks of POM Wonderful LLC or its affiliates. PA170824-10 1 In all U.S. grocery, POM POMS outsell all Arils competition combined by more than 3x (Source: IRI, US Grocery, Arils category sales, 10/2/2016–2/19/2017). POM POMS has 4x the distribution of competitors (Source: IRI, US Grocery, POM POMS & Arils competitors, Average weekly ACV, 10/2/2016–2/19/2017).


All’s By Molly Hembree

Wellness on Ice Frozen foods can provide better-for-you alternatives for shoppers.

D

o you think of the freezer have made a valiant effort in the marketplace Encourage aisle first when you think of to decrease sodium and use of preservatives to patrons to good nutrition at the grocery control shelf life without additives. take a fresh store? As emerging evidence Many frozen convenience food companies, look at frozens suggests, the answer to that such as Lean Cuisine, Healthy Choice, Luvo, through question should lean toward “yes.” Thanks to Amy’s and Cuisine Adventures, have made unique events, it a priority to offer more nutritious on-theimproved nutrition, ingredient decks, shelf life, marketing quality and cost-effectiveness, frozen items may go frozen options, often with certain dietary campaigns, be the perfect supplement to the health-conconcerns in mind. social media scious consumer’s grocery cart. engagement, The common belief that “fresh is best” is chalStart Spreading the News lenged by a recent two-year study published in the The American Frozen Foods Institute (AFFI) in-store Journal of Food Composition and Analysis (JFCA) and the Frozen Food Foundation are helping cooking last year, and a 2014 study found in the Journal of to spread the good news. The AFFI recently demos, store Agricultural and Food Chemistry (JAFC). The JFCA released a Supermarket Dietitian Toolkit to tours or crossstudy compared folate, vitamin A and vitamin C merchandising illustrate how to plan wholesome meals that content in broccoli, cauliflower, corn, green beans, help meet the USDA Dietary Guidelines opportunities. green peas, spinach, blueberries and strawberries for Americans 2015-2020 while being built that was purchased fresh and “fresh-stored” (left around frozen foods. The guide lays out seven five days in the refrigerator, which mimics typical days of meals for real-world application. consumer storage patterns), and their frozen The toolkit also demonstrates budgetcounterparts. According to this friendly frozen meal planning, which study, five days of refrigerated storincorporates variety and balance that age has a negative association with doesn’t stretch the food dollar, at nutrient concentration, compared around $8.52 a day, or $59.66 a with frozen samples, and some week, leaving more room in confrozen foods have higher levels of sumers’ wallets for purchasing foods folate, vitamin A and vitamin C wall-to-wall in the grocery store. than their fresh counterparts. Encourage patrons to take a fresh The JAFC study, meanwhile, look at frozens through unique events, looked at spinach, carrots, broccoli, marketing campaigns, social media enblueberries, peas, green beans, strawbergagement, in-store cooking demos, store ries and corn at six total intervals: fresh (day tours or cross-merchandising opportunities. 0, day 3, day 10) and frozen (day 0, day 10, day For instance, Wenatchee, Wash.-based fruit 90). This study evaluated calcium, magnesium, supplier Stemilt offers retailers a chance to borrow zinc, copper, iron, fiber and phenolics (healthful its “blender bike” to garner excitement in the aisles, compounds in plant foods), finding that all nutrients were well enabling customers to pedal toward health while mixing up retained in frozen products, and in some frozen foods, such as frozen and fresh ingredients for a favorite smoothie. corn and spinach, higher phenolic activity was observed when Consider using hashtags like #CenterYourFocus and compared with fresh. Both studies invite us to consider center #HowFreshStaysFresh to start the conversation on your aisles, not just store perimeter, as a produce destination. retailer’s social media platforms. Partner with your retail dietitian to elevate the look of frozens through new recipe ideas, in-store educational materials and guides, and nutri‘Nature’s Pause Button’ tion events geared toward imparting to consumers a posiImproved manufacturing processes and supply chain tive perception of frozen foods. PG management have elevated the experience of frozen foods. Acting as “nature’s pause button,” frozens often maintain their quality for months and present a look, taste, and Molly Hembree, RD, LD, is a registered dietitian texture to rival the experience of fresh. Furthermore, frozen coordinator for The Little Clinic and Kroger. prepared grains, entrées, breakfast items, sides and desserts

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| Progressive Grocer | Ahead of What’s Next | October 2017


Š2017 Goya Foods, Inc. *Top selling coconut milk SKU (in grocery outlets) Source: Nielsen Strategic Planner, Total US (unit sales), 52 weeks ending 6/3/17.


NEW By Nancy Krawczyk

How to Avoid a

Midcareer Slump Strategies for putting your professional life back on the fast track.

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omen in the retail and consumer goods industries who have been putting the pedal to the metal, but still find their careers going nowhere fast, should keep their eyes on the road — and take a quick look at the rearview mirror. Midcareer women often give much less thought to their careers than they did earlier in their work lives. Midcareer, a role can become rote, and women may fall into the trap of thinking if they’re doing their jobs well, they’ll be promoted. “When women reach a point midcareer, they can stall out if they don’t have clarity,” says former Safeway and Jamba Juice executive Christy Consler, founder and CEO of Sustainable Leadership Advisors. Asking yourself the hard questions can make even a slight shift in your thinking a significant one — and help put you back in control of your career. Consler tasks her global clients with a list of queries, chief among them:

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What do I want, and how do I get there? What are my skills? What am I passionate about? Where are those opportunities, and how can I make them happen? “It requires knowing yourself well and what’s important to you and your values,” she says. Here’s one caveat when considering your place in your organization, opportunities for advancement, and other career options: Be sure to keep the emphasis on you. “Women tend to do the comparison game, and that can be dangerous,” notes former Starbucks and PepsiCo Inc. executive Cecilia Carter, founder of The Strategy Chick coaching firm. “Plan for yourself, your unique situation, your life.” A midcareer slump often coincides with “the sandwich years,” that stage when caring for children or elderly parents takes precedence, Carter observes. “We use all of our energy to address those external challenges and fail to address our own.” An outside perspective can help. Carter’s mentor, Ann Fudge, former chairman and CEO of Young & Rubicam Brands, and one of the first African-American women to run a major corporation, was instrumental in how Carter took control of her career. “I was a single parent with two young girls and struggling with all that I had to manage; emotionally, I wasn’t in a good place,” Carter recounts. “Ann said to me, ‘You can have it all; you just can’t have it all at the same time.’” That candor gave Carter the permission she needed to step off the corporate ladder for a while before remaking her career in retail and consumer goods. “I never stopped working,” she says. “I just worked differently. I decided to follow my passion and took a job in the music industry. That change allowed me to build my skills, while giving me the flexibility I needed to care for myself and my little ones.”

| Progressive Grocer | Ahead of What’s Next | October 2017


“Midcareer women can stall out if they don’t have clarity.”

I started my career at McCormick & Co., Rev Up Your Interpersonal Skills and spent years in brand management and Outside mentors can be career-changing, but equalsales strategy at Campbell Soup Co. Along the ly vital is having a network of supporters inside your way, I learned that you can’t accelerate your organization. Don’t think of internal networking as career if you’re not aligned with your compawasting time — it’s valuable to your career and your ny’s values, goals and culture. A good starting team’s success. For Consler, learning this lesson —Christy Consler, place is setting smart goals with your boss. early in her career was invaluable. “My first boss out Sustainable Also, don’t be afraid to look to the new, of business school told me I’d never get promoted Leadership Advisors younger talent coming in. “When you’re just for doing my job; I needed to add value beyond midcareer, you’ve been in the same mindmy job description,” she explains. set for a while and can benefit from a fresh Consler saw that her being of greater value perspective,” Carter counsels. to him enabled him to meet his goals. “From the very In bridging the generation and knowledge gaps, you come beginning, be proactive about learning and growing,” she out ahead. “To be a leader, you have to lift up others,” she adds. advises. “Add to your professional toolkit constantly.” “Take your energy and focus it on someone else. By elevating My own career has been driven, in part, by fostering your top talent and concentrating on their development, you relationships with key stakeholders. My advice? Learn what strengthen your own leadership style and effectiveness.” PG they need from you. Carter, for example, recommends developing a communication strategy for each person one level up and one level down. What you don’t want to do is create a dynamic that Nancy Krawczyk is VP, corporate partnerships and engagement for the Network of Executive Women, Retail feels forced and unnatural. “Seek to make a genuine conand Consumer Goods, a learning and leadership community nection,” Consler recommends. “Be focused and make representing more than 10,000 members, 950 companies, it easy for them to say ‘Yes.’ Have a specific question or 109 corporate partners and 21 regional groups in the United request for stakeholders at the ready, such as ‘How did you States and Canada. Learn more at newonline.org. make the move from sales to marketing?’”


Forward

Thinking, Forward doing Hy-Vee is evolving at every level to be a retailer for the future. By Jim Dudlicek

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Photos by Vito Palmisano

TEAM EFFORT CEO Randy Edeker is quick to praise the efforts of Hy-Vee’s family of associates for the company’s success, including these team members at the Savage, Minn., store (from left): Chip Lim, hibachi chef; Stephanie Liang, pastry chef; Malick Toure, deli clerk; Nyla Gosen, salad bar clerk; Oksana Oleksyszyn, beauty manager; and Hannah Hoeppner, Starbucks manager.

ife for traditional grocery retailers seems to get more challenging by the minute. Changing shopper habits, the rise of ecommerce and an increasingly splintered marketplace threaten to make “my grocery store” an outdated expression. And the commitment of etailing giant Amazon to the grocery channel with its purchase of Whole Foods Market — arguably the year’s biggest industry story — has observers in a tizzy, with worst-case scenarios tolling the bell for supermarket shopping as we know it. The Amazon-Whole Foods deal is certainly a game-changer, but it certainly doesn’t mean the demise of the traditional grocer. Quite the contrary — Progressive Grocer believes it to be a wake-up call for grocery operators who’ve been up to now resisting innovation and change. To be sure, the industry’s leaders were making great strides in many key areas even before Jeff Bezos decided to don a white apron and direct folks down his endless aisle. “I think you have to focus on experience and service, and not try to be Amazon,” says Randy Edeker, chairman of the board, president and CEO of West Des Moines, Iowa-based Hy-Vee Inc. “I tell all our folks this: We don’t have to be Amazon to the world. We have to be Amazon to Dubuque and to Iowa City. What we own is the relationship right now.” October 2017 | progressivegrocer.com |

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DEAR FOOD INDUSTRY PARTNERS:

THANK YOU! Food companies are driving transformational changes in how animals on farms are treated. Your companies are switching to cage-free eggs; you’re switching to more humane pork products. And in recent months, dozens of the largest food retailers—including Burger King, Subway, Jack in the Box, TGI Fridays, Boston Market, Sonic Drive-In, Aramark, Sodexo, Compass Group, Focus Brands and many more—have announced plans to ensure their chicken suppliers switch to healthier breeds of birds, provide animals better living conditions, and transition to a more modern processing system. Your work has already led major poultry providers, like Perdue Farms and Wayne Farms, to make similar animal welfare announcements of their own. You’re setting the stage for a more humane food supply and more humane society. Thank you.


Hy-Vee, with 240 stores across eight Midwestern states, has proved itself to be an innovator and leader in key areas of importance: different store formats to better serve diverse markets, investment in click-andcollect services, chef-inspired prepared foods, in-store dining, health and wellness, and diversification in products and services — all toward the overarching goal of serving consumers at the highest level by delivering customized solutions for every need state. These are among the reasons that PG has selected Hy-Vee as its 2017 Retailer of the Year. Hy-Vee last received this honor in 2003. Much has changed over the intervening years, and Hy-Vee has demonstrated its ability to become what changing times need it to be. “We know these people: They want to shop different, and I think that you have to go into it and be willing to learn, and not just play off your assumptions, because a lot of our assumptions have not

played out to be true,” Edeker told me during a recent interview with members of the Hy-Vee management team. “People will tell you that people don’t want to buy perishables online. That is not true — our top 10 items are perishables. I think you’re going to see a continued growth in ecommerce. I think it’ll be very strong in certain markets, and that’s what we’re seeing. Certain markets with certain demographics, we see that is the right spot to build a fulfillment center, and that’s what you’ll see us do.”

3 Pillars Hy-Vee’s business philosophy, handed down through several generations of senior management, is to follow the lifestyles of its customers. “Just pay attention to the direction they’re heading, and try and get there at the exact right time when they want us to be there,” Edeker says. “That’s easier said than done, and sometimes hard to predict,

“I think you have to focus on experience and service, and not try to be Amazon. I tell all our folks this: We don’t have to be Amazon to the world. We have to be Amazon to Dubuque and to Iowa City. What we own is the relationship right now.” —Randy Edeker, chairman of the board, president and CEO

October 2017 | progressivegrocer.com |

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Image courtesy of Hy-Vee

About Hy-Vee In 1930, Charles Hyde and David Vredenburg opened a small general store in Beaconsfield, Iowa. That store grew to become Hy-Vee, an employee-owned company that encourages each of its more than 82,000 employees to help guide the company. Its slogan, “A Helpful Smile in Every Aisle,” expresses the foundation of the company’s operating philosophy. Hy-Vee is a touchstone for its customers’ desire for information on diet, nutrition and wellness topics. The company’s commitment to healthy lifestyles is evidenced by ever-growing HealthMarket departments featuring natural and organic products, the consulting services of in-store dietitians and chefs, and consumer and employee wellness programs. The company also sponsors the annual Hy-Vee Road Races during Drake Relays weekend at Des Moines’ Drake University, and five Hy-Vee Pinky Swear Kids Triathlons across the Midwest that raise money for children with cancer and their families. With sales of $9.3 billion annually, Hy-Vee ranks among the top 25 supermarket chains and the top 50 private companies in the United States. Its more than 240 stores are located in eight Midwestern states: Iowa, Illinois, Missouri, Kansas, Nebraska, South Dakota, Minnesota and Wisconsin. Distribution centers are in Chariton and Cherokee, Iowa, with a third perishable operation in Ankeny, Iowa. Hy-Vee’s corporate office is located in West Des Moines, Iowa. www.hy-vee.com

240 StoreS Eight StatES

82,000+ EmployEES 30

| Progressive Grocer | Ahead of What’s Next | October 2017

but I think it just takes a lot of time studying the industry, studying life’s trends and life stages. For all retailers, that’s challenging. We’re obviously in an evolutionary time.” Hy-Vee is driven by three platforms that grow and sustain the business: service and experience, health and wellness, and culinary excellence and expertise. “Customer service has to be very customized,” says Donna Tweeten, EVP, chief marketing officer and chief customer officer, providing an example of its evolution. “We have always had this policy that if a customer couldn’t find something, and they approached you in the store and said, say, ‘Where is the Velveeta?’ we didn’t just tell them ‘Aisle 4,’ we walked them there. It didn’t matter if you were in the produce section and you had to walk all the way across — you took them to where it was.” Younger consumers, however, “don’t want to speak to anybody,” Tweeten notes. ‘But they still want to know where the Velveeta is. So we have to create new technology — call it ‘Hy-Vee Siri,’ for lack of a better term ... and the database will pull it up and answer back. That kind of customer service has to be layered on top of still walking the customer to the product. You have to do both. An 85-year-old isn’t going to want to talk into their phone. And in towns where everybody knows everyone, they’re going to want a different personal and customized experience.” Similarly, the concept of health and wellness has evolved. “It’s not just pharmacy anymore — it’s the dietitians, it’s the clinics, it’s Amber Pharmaceutical, our specialty pharmacy,” Edeker says. “All play into that whole cycle of health and wellness, then tied back with our chefs to create food that’s not only good for you, but tastes good.” Kristin Williams, SVP and chief health officer, says that Hy-Vee’s customers “see us as a one-stop location where they can not only get their groceries, but they can meet with a dietitian, visit a health clinic, eat a healthy meal and enjoy many other convenient services.” To achieve these goals, Williams explains, Hy-Vee uses a multipronged approach that includes its retail pharmacy staffs, individualized care, retail dietitians to encourage lifestyle changes, and health clinics at more than 60 stores to provide convenient,


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affordable access to medical services. The third pillar, culinary excellence and expertise, is perhaps most visible in Hy-Vee’s latest store launches, which have expanded the chefdriven selections of its full-service Market Grille restaurants into an enhanced perimeter food court that’s setting the bar higher for quality, selection and customization of tastes.

“I think personalization and customization of food is the biggest trend,” Edeker says. “The restaurant culture, the Food Network culture, has driven this knowledge base, and the accessibility of great food in unexpected places is an amazing thing. The expectation here is we’re going to be knowledgeable and we’re going to customize food to exactly the way that I want to eat my food today.”

Hy-Vee Diversifies on Customer Experience Hy-Vee has entered into two strategic partnerships designed to strengthen its commitment to bringing customers increased access to culinary expertise, health-and-wellness choices, and new customer experiences. As part of this effort to diversify its business model while reinforcing its mission of making customers’ lives easier, healthier and happier, Hy-Vee plans to build, own and operate 26 Wahlburgers restaurants, nearly doubling the brand’s current locations. Hy-Vee will also add select Wahlburgers menu items in all of its in-store Market Grille restaurants. In addition, Hy-Vee will partner with Orangetheory Fitness to provide customers with convenient access to an intensive group-fitness program in or adjacent to Hy-Vee stores. “These unprecedented collaborations reinforce our company’s longstanding commitment to health and wellness, culinary expertise, and customer experience,” says Hy-Vee Chairman, President and CEO Randy Edeker. “However, they also represent a bold step to deliberately evolve our business to meet the change in our customers’ lifestyles and spending

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habits. These partnerships keep us on the leading edge as the retail grocery industry evolves.” The first Hy-Vee-owned Wahlburgers will be located in the retailer’s headquarters city of West Des Moines, Iowa, and is slated to open in mid-2018. “Hy-Vee has been a great partner for us with our Performance Inspired Nutrition line. Their commitment to quality and innovation shows in everything they do,” says Mark Wahlberg, actor, producer and co-founder of Wahlburgers. “I can’t think of a better fit for Wahlburgers to introduce our family’s hospitality to the Midwest.” Orangetheory Fitness is a program offering an intensive group-training workout. With 750 studios open nationwide, the company is on track to open 1,500 in the next two years. As well as teaming with Orangetheory to offer customers a fitness experience in or adjacent to Hy-Vee stores, the grocer will direct its dietitians to work with Orangetheory members to offer dietetic services, provide samples of nutritional products and lead store tours to showcase items that align with member needs. This partnership creates an integrated fitness component to bolster Hy-Vee’s focus on health and wellness, which also includes in-store dietitians, HealthMarkets, chefs, fresh and organic produce, and pharmacies. The first Hy-Vee Orangetheory Fitness location will open in 2017 in Minnesota’s Twin Cities, a significant growth market for the retailer. “Orangetheory is a revolutionary fitness experience, which, combined with Hy-Vee’s health offerings, creates a one-stop shop for wellness,” says Orangetheory Fitness Chief Brand Officer Kevin Keith. “Like our members, we know that many Hy-Vee customers are looking for more convenient ways to access fitness and healthy-eating options in one location — this partnership solves that need.” Innovation has become especially important to Hy-Vee as customer lifestyles and attitudes toward retail shift. In addition to these partnerships, Hy-Vee will continue to explore new ways to evolve while maintaining its core focus. “At Hy-Vee, we are committed to meeting our customers where they are — whether that is in a retail grocery environment, restaurant or online through our Aisles Online program,” notes Hy-Vee EVP of Strategy and Chief Merchandising Officer Jeremy Gosch. “These partnerships are just another example of Hy-Vee listening to the needs of our customers.”

| Progressive Grocer | Ahead of What’s Next | October 2017


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This trend is further evident in recent statistics showing that, for the first time ever, food purchased away from home has surpassed food consumed at home, leading Hy-Vee as well as other retailers to invest more resources in fresh prepared foods, as well as solutions such as meal kits aimed at making “What’s for dinner?” a simple question for consumers to answer. “We’re going to continue to work on foodservice,” says Jeremy Gosch, EVP of strategy and chief merchandising officer. “We’re going to continue to dive into food away from home with our restaurants, and expand and open restaurants and get them into stores that they’re not in today. We’ll continue to work on meal solutions for customers, to make it easy to cook and to solve your nighttime meal.”

Diversification Hy-Vee’s latest venture, announced not long before this story went to press, encompasses two of its three pillars: the retailer has entered into strategic partnerships with casual dining chain Wahlburgers and fitness concept Orangetheory (see sidebar on page 32). Diversification at Hy-Vee runs deep, from the wide variety of prepared foods and meal solutions, to upscale beauty and clothing concepts at its newest stores, to a variety of store formats in various stages of implementation, all aimed at addressing specific consumer needs and making shoppers’ lives easier. A year ago, Hy-Vee launched its first F&F clothing boutique, a 3,000-square-foot department in one of its Des Moines-area stores. F&F, a brand of U.K. retailer Tesco, offers men’s, women’s and children’s clothes,

Where They’re Coming From The folks running Hy-Vee don’t just have deep roots in grocery, they also have a keen grasp of what consumers want and how to shoot well above their expectations. Their long industry experience on multiple levels of their company has influenced their vision of where Hy-Vee needs to be as a leader, an innovator and a survivor of the revolution currently taking place in retail. EVP and COO Jay Marshall started working for Hy-Vee on his 16th birthday, 35 years ago, in between his high school and college commitments. “Then I just started on the ladder of responsibility, worked through all the management roles in the store, became a store director, ran two stores,” he recalls. “Ran a district of stores, and then moved into the office. I’ve had responsibilities all over the office, from merchandising, marketing [to] now operations.” Marshall notes the unique diversity of Hy-Vee’s marketing territory: “We’re in big cities of 3 million people, and then our smallest store is in a town of 800 people. So the store size and the client base is very diverse. We have real small towns, and then big cities, but we’re also spread out; we’re in eight states. So we’re pretty diverse across our chain. I think that’s pretty unique.” What does Marshall admire most about Hy-Vee? “We know we’re a big company, but we think like family and we always want to put our employees and our customers first, and that really serves us well,” he says. “That ends up getting us more dollars in the till at the end of the day.” Similarly, Jeremy Gosch, Hy-Vee’s EVP of strategy and chief merchandising officer, started working in his hometown’s small grocery store at age 15, and then joined Hy-Vee when he went to college in 1995. “I’ve spent most of my working years in the grocery store, worked my way up,” he says. “I was a store director for about 11 years, and then I became a district

VP, and then I moved into the office almost four years ago.” Gosch also appreciates Hy-Vee’s “small-big” feel. “We all know each other well; we have a lot of great relationships throughout the system. We still really work hard to take care of our customers and our employees at the same time,” he says. “I think our autonomous structure — letting stores run and make decisions at store level, and do the right thing for their markets and for their customers — is something that’s unheard of in our industry. I think those are all things to admire.” Kristin Williams, EVP and chief health officer, likewise began as a cashier at a Hy-Vee drug store while in high school in 1993. “It was a wonderful first job that helped instill the fundamentals of Hy-Vee at a young age. Eventually, I landed a position as the pharmacy clerk, a job in which I learned about the central role pharmacists play in the lives of their patients,” she explains. Continued on page 37

“We’re going to continue to dive into food away from home with our restaurants, and expand and open restaurants and get them into stores that they’re not in today. We’ll continue to work on meal solutions for customers, to make it easy to cook and to solve your nighttime meal.” —Jeremy Gosch, EVP of strategy and chief merchandising officer

October 2017 | progressivegrocer.com |

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contemporary designs in a setting meant to evoke trendy mall stores. Hy-Vee has been gradually rolling out the F&F concept at additional stores, including in the Twin Cities suburb of Savage, Minn., earlier this year. The Savage store is the first in the Twin Cities to include Hy-Vee’s Basin beauty concept, which offers all-natural bath and beauty products in a 2,200-square-foot department reminiscent of a spa environment. These destination concepts are Hy-Vee’s way of generating new excitement in center store while delivering on additional consumer needs for convenient shopping. Of course, food remains the key driver. “Almost everything we do

Where They’re Coming From Continued from page 35 Williams became a Hy-Vee pharmacy manager three years after earning her doctor of pharmacy degree, and then in 2006 was named a pharmacy supervisor for Hy-Vee stores in Nebraska, South Dakota and western Iowa. “Over the years, I’ve served as a director of pharmacy education and training; assistant VP, where I oversaw the new centralfill pharmacy operation; and VP of health and wellness.” In addition to overseeing more than 250 retail pharmacies, including an expansive immunization program, and pilot initiatives in value and performance, Williams has responsibility over seven specialty pharmacies, more than 200 dietitians, 60 clinics, nine Healthy You mobile units, and wellness initiatives for more than 85,000 Hy-Vee employees.

“A decade ago, you marketed to the masses. Today, everyone wants it personalized. They want it on their phone and they want it in the mailbox. You have to market to them both ways for it to work, so you just have to figure out which one works for them.” —Jay Marshall, EVP and COO

ClOThEs Call hy-Vee’s F&F clothing boutiques aim to bring a mall experience into the grocery store and to make fashion more convenient.

“This company knows its employees are their greatest asset, and it gives each of them the autonomy and freedom to make the best decisions and implement processes to better meet the needs of our customers.” —Kristin Williams, EVP, chief health officer

“What I respect most about Hy-Vee is its strong history of showing employees how their thoughts and ideas matter,” she says. “This company knows its employees are their greatest asset, and it gives each of them the autonomy and freedom to make the best decisions and implement processes to better meet the needs of our customers.” Interestingly, Randy Edeker didn’t plan on becoming Hy-Vee’s CEO when he began his grocery career; instead, he aimed to become a store director. “I took a store that hadn’t made money in its history, and we made money the first quarter I was there, and so that kind of launched my career,” Edeker recounts. “That’s what I set out to do. The rest of this has just kind of happened. I’m not one of those guys who walked in Continued on page 40

October 2017 | progressivegrocer.com |

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in perishables is about ready-to-eat now. It’s about prepared meals and ready to take home. It’s about chef-inspired meals,” Edeker says. “People have really high expectations of food today. So all those things are driving the evolution of the store that you see, and really causing us to get off into areas like Basin, like F&F, that really drive trips and drive a different feel in the store than we’ve had in the past.”

Edeker goes on to describe another store, now being built in the Minneapolis suburbs, “that has three on-floor dining spaces with TVs, a nice atmosphere. It is really an international food court. It’s all chefinspired; it’s all made fresh in front of your eyes; it’s all natural, fresh ingredients; and it’s personalized, customized. It creates this community atmosphere that a family can come in and they can each pick something different that they want for that night. That’s really what we’re trying to create with a lot of our food endeavors out on the floor.” Hy-Vee also offers Simple Fix, which started as a dietitian program to help people prepare healthier meals for specific wellness needs, but has evolved into a chef-driven program that allows folks, from individuals to families, to come in and prepare meals for the week, and make a whole evening of it. “All these things are about solving what’s for dinner tonight. It’s about having the opportunity for that diverse customer base who wants to do it a different way,” Edeker explains. “This is for folks that want to cook themselves, and cooking tonight might be warming it up. Tomorrow night, it might be actually assembling it, depending on the time I have tonight.” Again, customization is key. “A decade ago, you marketed to the masses. Today, everyone wants it personalized,” notes Jay Marshall, EVP and COO. “Kind of like a food court area, everyone wants food personalized and specialized and made just for them, and we have to learn that people want marketing that way. They want it on their phone and they want it in the mailbox. You have to market to them both ways for it to work, so you just have to figure out which one works for them.”

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| Progressive Grocer | Ahead of What’s Next | October 2017

Twin Cities, Multiple Formats With stores in diverse areas, from urban centers to rural towns, Hy-Vee has been making a major push into the Twin Cities, where the retailer now has eight stores, with plans for more. Edeker is pleased with their success to date. “It takes time to grow, but we’ve been thrilled with the results so far. They’ve all opened big; we’ve held our share well, and we’re just building the way we always build, steady and consistent. We’re not trying to


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Collaboration and creativity were the goals when Hy-Vee leadership set out to build the company’s new Helpful Smiles Technology Innovation Center, in Grimes, Iowa. Opened in May 2017, the 100,000-square-foot open-office environment brings the IT and marketing departments together to capitalize on the alignment of customer data and idea sharing. From standup and traditional office desks to small-group seating areas and technology-rich conference rooms, there’s a workspace to fit every work style and meeting need. Inspired by visits to Silicon Valley social media giants Pinterest and Twitter, the center aims to recruit and retain the best employees that Hy-Vee can find throughout the country. Amenities include a fitness center, a basketball court, a running/walking track, a Starbucks coffee shop, and snack areas on each end of the building.

Where They’re Coming From Continued from page 37 the room and said, ‘Hey, someday I’m going to be the CEO.’ “I love what I do, and I work hard at it, and my people work hard,” he continues. “Other than that, I don’t know that I’m that different than most. I spend a lot of time reading and studying and researching. I feel like if there’s anything that you have to be today, you have to be a constant student of the game. Always.” Donna Tweeten, the retailer’s EVP, chief marketing officer and chief customer officer, says she admires the philanthropic spirit that drives Hy-Vee, as well as “how progressive and innovative the organization is. When you think about grocery retail, even as much as things are changing and evolving, it’s ... an industry that’s very traditional in its ways. You don’t really think of grocery retail as being innovative — really not till, quite frankly, the last few years. But I think Hy-Vee, it’s really out there.” Tweeten’s background differs a bit from most of her front-office colleagues: She brings a background in advertising and marketing rather than grocery, having started her career working for an ad agency. “One of the agencies I worked for became a subsidiary of Hy-Vee,” Tweeten notes. “Hy-Vee was my personal account

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and my largest client. Eventually, after Hy-Vee purchased the agency, I ended up becoming president of the firm. Then they asked me to join the corporate office.” That’s not necessarily what Tweeten envisioned herself doing. “I always said there were two things I would never do: One was drive a minivan, and the other one was work in corporate America,” she quips, adding, “So here I am at Hy-Vee, and I love it.” But she still doesn’t have a minivan.

| Progressive Grocer | Ahead of What’s Next | October 2017

“We’re going to help you with lifestyle questions and provide solutions. We’re going to give you ideas for how to feed your family on a budget. We’re going to give you ideas on how to make your Thanksgiving table more special, how to wrap your Christmas presents in a much more unique way, how to decorate your house — everything.” —Donna Tweeten, EVP, chief marketing officer, chief customer officer

Image courtesy of Hy-Vee

Talent Center

take over Minneapolis-St. Paul, we’re trying to just have awesome stores, one at a time. We’ve got eight stores; there’s other [retailers] that have 6070 stores up here.” What are Hy-Vee’s longrange plans here? “In this market, you could easily have 20 to 25 stores,” he observes. “But we’re not going to build 10 next year; we just don’t do that. So we’re going to stay slow and steady. I think also there’s a real call to look at the diversification of store size. We’ve really looked at that, and we’ve got some projects in the works, looking at some smaller-format stores.” Hy-Vee has been a leader in experimenting with store formats. Beyond its standard 95,000-square-foot supermarket, the retailer has convenience-size markets and a smaller urbanformat store in downtown Des Moines, part of a multi-use development called Fourth+Court, and


2017 Retailer of the Year A well-deserved congratulations to our partners.

Š 2017 Hallmark Licensing, LLC


Images courtesy of Hy-Vee

fourth+court hy-Vee’s new store in downtown Des Moines is a restaurantcentric urban format.

is working on other formats, including a wellness concept store that would include a fitness center, and a click-and-collect pickup store that would include groceries and prepared foods. All of these ideas address personalization of need. “I was just in our downtown Des Moines store, and people were surprised — ‘This seems like way more restaurant than it does store,’” Edeker recounts. “That’s what the people that live there gravitate towards. The groceries still get shopped, but

people are shopping for meals. We’re really trying to make sure we’re not just building a one-size-fits-all, that we’re focused on where the right format fits.” And that’s a challenge, considering the diversity of Hy-Vee’s marketing area. “We’ve servicing towns from small-town Iowa to big stores up here in Minneapolis,” notes Gosch. “That gives us some opportunities to really approach the customer completely differently across the breadth of our company.” Marshall takes up the theme next: “When you

S p o n S o re D C o n T en T

Making the right impression with today’s consumers Appearance matters, so much so that a third of consumer purchases are made solely based on packaging. As product offerings continue to evolve and broaden, retailers today are faced with the constant need to adapt. To truly stand out in a crowded marketplace, modern brands face increasing pressure to present their products in an eye-catching and compelling way that quickly captures the attention of consumers. More than half (52 percent) of U.S. food shoppers are drawn to packaging with unusual or eye-catching designs, says a study by Mintel. This tall order means brands are faced with creating compelling, appealing brand visuals at an incredible rate of speed. Luckily, modern technology has evolved to help meet these needs. Drawing on a history of over 75 years of innovation and extensive experience in the food packaging industry, Sealed Air offers a suite of printing services to help brands navigate the ever-changing consumer landscape and remain competitive.

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Sealed Air’s printing offerings include High Impact printing on rollstock, highquality digital printing capabilities and even 3-D rendering options. These services evolved to help allow brands to quickly update graphics, print short test runs or customized visuals, and create eye-catching standout graphics without breaking the bank. Take customization for example: brands are now able to print limited run graphics for special events or customize packages with consumers’ names or locations, allowing them to better engage with customers and build brand loyalty. Whether it’s print or graphic support, Sealed Air’s fully integrated team is equipped to continually help brands meet the challenges of the modern marketplace. Mike Rosinski, Marketing Director of the Cryovac Division at Sealed Air

| Progressive Grocer | Ahead of What’s Next | October 2017


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set that big 95,000-square-foot building down, you can only put so many of them in a town. We’ve realized there’s pockets that you can’t serve. The customer of today can’t go to that big store every time

Behind the Scenes To support its retail operations, Hy-Vee has established a distribution system that secures merchandise and transports it quickly and efficiently to customers. In addition, Hy-Vee has acquired or developed several subsidiaries to deliver on other parts of its mission:

Amber Pharmacy

Hy-Vee Construction

Specialty pharmacy Omaha, Neb. www.amberpharmacy.com

Des Moines www.hy-veeconstruction.com

Beverage Distributors of Iowa Full-service liquor delivery Des Moines Bdi-wholesale.com

D&D Foods Inc. Fresh salads, dips and meat specialties Omaha

Florist Distributing Inc. Flowers, plants and florist supplies Des Moines www.fdionline.net

Lomar Distributing Inc. Specialty foods Des Moines

Midwest Heritage Bank Banking, investments and insurance West Des Moines www.mhbank.com

Perishable Distributors of Iowa Ltd. Meat, fish and seafood Ankeny, Iowa www.contactpdi.com

they need groceries, and they’re telling us they’re willing to pick it up. So we put a smaller-footprint store here, and we put a meal store there, or we put a health-focused store there because we might not have a pharmacy close to that area. Those are the things that are creating niche marketing in those areas where they still come to the big store maybe on weekends or twice a month, but they stop at that small store seven times a month for a quick pickup and do click-and-collect. So each one of those has a different way to look at it and a different marketing tool to reach those customers.” Referring to Hy-Vee’s Savage store, Marshall explains that “[w]e brought a group of Millennials up here to tour this store to tell us what they think. And they said, ‘Absolutely love it, [but] I don’t know that I’d come here more than once a month.’ They said the transaction time is too long here. They want to come and experience Basin, they want to do all of those things, But they want the experience to be quicker. They don’t want to give up all that time.”

Ecommerce Online shopping is helping to expedite shopping for consumers who don’t have time for the experiential every time they need to stock their cupboards. “Ecommerce is solving a convenient need for the customer. A lot of our customers are doing both,” Gosch says of Hy-Vee’s Aisles Online service. “They’ll continue to complement each other well. We have very few shoppers that are just solely relying on ecommerce right now; they’re really shopping at our stores and online. There’s things people want to shop for and enjoy doing the shopping, and there are some things they just want to have come to their house. We’ll make it easy to get the things that aren’t necessarily fun


to shop for, and when you want to come to the store for a treasure hunt or a fresh experience, we have that for them as well.” Edeker adds, “The growth cycle was a lot faster than we thought at first. It’s kind of plateaued a little bit, so ... I think it’s going to take a fulfillment center to really drive that business forward. It’s too cumbersome and costly to do it in a traditional grocery store. I think if that’s the end game for retailers, they’re going to struggle with it. It has to be much more efficient, and that’s why Amazon is the machine that they are. They have the efficiencies of their program that are there.” How can traditional retailers best compete against digital upstarts? “You have be willing to change and adapt yourself, because the same leadership skills five years ago aren’t the same as they are even today,” Edeker counsels. “It is about the show and theater. People want to see the fire of the oven and the flame — it’s what makes it special and different. And just think about when you walk through that first aisle, the diversity you see around that food court — that’s awesome. Those are the things that get me excited.”

Congratulations!

Progressive Grocer’s 2017 Retailer of the Year

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| Progressive Grocer | Ahead of What’s Next | October 2017

Image courtesy of Hy-Vee

one steP Among Hy-Vee’s philanthropic efforts is digging wells in areas without clean drinking water.


How prioritizing your pet department can make you more relevant to this lucrative generation. illennials may be waiting longer to get married, buy houses, and have children than past generations, but they are getting a leg up on them on one attribute: the age they become pet parents.

M

According to a report by Wakefield Research, Millennials are, on average, getting their first pets by age 21, compared with the typical Baby Boomer, who waited until age 29.

with 82 percent of them telling Wakefield that having a pet is preparation for having kids. It’s a viewpoint that, coupled with their bigger-than-theBoomers’ buying power of $3.39 trillion, is driving this generation to cater to their pets like no other before. Where are they spending it?

Add to that the fact that this younger generation is getting ready to eclipse Boomers in their spending power in 2018, and it’s no wonder why the stars are shining bright for the $63 billion pet category.

On better nutrition, for starters. A 2015 Nielsen Global Health and Wellness Survey found that Millennials are spending a premium for healthier foods that is 1.5 to 2x the rate of Baby Boomers. And it’s an expectation that’s extending to their pets.

Of course, consumers of all ages have been spending generously on their pets for years now, triggering more than $2.5 billion in annual growth for the category since 1994, according to the American Pet Products Association (APPA).

For instance, Wakefield’s research found that 86 percent of Millennial pet owners feel natural pet foods, those without artificial flavors or preservatives, are essential.

And their value hasn’t just been limited to a single department: Pet owners (all ages) tend to shop generously across the entire store—spending 31 percent more per trip, store-wide, than non-pet owners, according to Nielsen Channel Facts. But Millennials, generally defined as those born between 1984 and 2004, are an even more promising prospect. For one, Millennials are now the largest generation of pet owners, surpassing Baby Boomer ownership by three percentage points in 2017, and accounting for 35 percent of all pet parents now, according to APPA. What’s more, 35 percent of Millennial pet owners say they intend to get another pet in the next 12 months. Their attachment to their pets is also unprecedented. While Baby Boomers were the first to treat their pets like family, Millennials take it a step further,

Discretionary spending is also big on the list. Millennials are simply more likely to spend on what former generations viewed as optional. In Wakefield’s study, 76 percent of Millennials said they were more likely to splurge on a luxury item for their pets than for themselves, (compared with just 50 percent of Boomers who said the same). Given their population numbers, impressive buying power, and their dedication to their pets, it’s no secret that Millennials are priming the pet category for continued growth. The question is, is your pet department set to connect with and capture one of the largest generations in history, with money to spend, and a love for their pets that knows no bounds? Is your focus on pet where it should be? If you don’t understand what Millennials are looking for—and meet their needs—somebody else will. n


Images courtesy of Hy-Vee

for all sEasons Hy-Vee engages consumers through publications, social media, mobile apps, websites and blogs.

Engaging Consumers and Communities Hy-Vee takes corporate responsibility seriously and has led initiatives ranging from responsible procurement to sustainability to charitable giving. In particular, the company has been at the forefront among grocers in promoting physical fitness and healthier living — beyond employing retail dietitians in each of its stores to promoting good health and exercise on a grand scale. Among these programs is the youth-focused KidsFit, for which Iowa native and NBA player Harrison Barnes is spokesman. Edeker says that KidsFit “isn’t for the great athlete that stands in the front row, it’s for the little kid ... that stands in the back and never gets picked. I want them

to have access to this positive influence that says, ‘Look, you can change how you eat, you can change how you exercise, you can change how you get fit,’ and that will help them forever. I’ve always believed, with a lot of our programs, if you inspire little kids today, they’ll love you tomorrow. You

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| Progressive Grocer | Ahead of What’s Next | October 2017


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It’s no secret that today’s consumers expect personalized, relevant experiences with retailers and brands –

in the aisles, on their mobile devices or at the digital storefront. Amid increasing market disruption from established players and new market entrants alike, companies that don’t meet ever-changing expectations risk alienating their most profitable customers and losing market share. To exceed your customers’ expectations, you first need to understand your customers’ expectations. Better yet, how can you anticipate your customers’ needs to deliver the best possible experience? Enter customer data science.

Amount of extra spending by customers in loyalty programs compared with other retained shoppers Source: dunnhumby, 2014

Vast sources of data are now within easy reach – the media that consumers view, their cellphone GPS data, and even the weather in their local area can provide the starting point for an entirely new level of personalized marketing. Leading retailers and brands harness a myriad of data sources and innovative technologies to zero in on what shoppers are buying, when they’re buying it, and how frequently. Then, they execute data-driven shopper engagement strategies that maintain and grow both their core customer base and shopper loyalty. The end result? Happier customers who shop more frequently and boost basket rings. Let’s take a look at the top four things you can do to gain a solid competitive advantage using customer data science.

S P O N S O R ED CO N T EN T

1


the right time, and tailoring the brand messaging and tone to shoppers’ evolving needs. Lessons from overseas markets go far beyond the European Continent, however, which leads right into our next point: Go global.

2. Adopt the right global trends to create competitive advantage

Plenty of global grocery trends haven’t yet hit the United States full force. But they will – and grocery retailers can use data to make sure they’re ready.

1. Get a jump on market trends and disruptions In the current disruptive retail grocery arena, you can’t rely for long on assets like a historically strong brand reputation. Instead, you need to continuously align your core strengths with marketplace changes – and anticipate what your customers will want next. When new discount competitors like Germany’s Lidl supermarkets come to town, for example, don’t just assume you’ll need to slash prices to compete. Grocery shoppers’ price perceptions have changed, and there’s a new normal. They’re looking for value, not just “cheap,” and seeking out unique products rather than commodities.

The most impactful trend we see is the growth in small and medium size baskets outside the United States. Almost one-third of global baskets have three or fewer products, and many of these shopping missions take place in larger format superstores rather than convenience stores. More than 40% of hypermarket trips are for seven or fewer items, with as much as 50% of hypermarket shopping across the globe for top-up trips to get just one more item, or for tonight’s dinner. So the competitive issues of serving this segment correctly are significant. In fact, capturing the needs of convenience shoppers, no matter what store formats they choose, may be more valuable for grocery retailers than focusing energy pre-

Convenience baskets continue to grow across regions

year-over-year % change in small and medium basket visits

To compete in the escalating grocery price wars, retail grocers have to price smarter. That’s where customer data science provides the edge, enabling you to figure out where you can reduce prices most effectively without losing margin. You can understand optimal assortment, what to keep and what to get rid of without alienating core customers. And you don’t have to start from scratch with every new disruption. You can use data from similar situations in other markets to predict and get ahead of emerging trends. Consider how European food retailers responded when discounter Aldi expanded from its German base throughout the Continent. Our data show that traditional grocery retailers see the majority of sales impact from a discount competitor because of customers visiting their stores less frequently (69%) and putting fewer items in the basket. Retailers can fight back against these behaviors with strategies based on solid customer data: testing and promoting new items and concepts with the right shoppers, triggering personalized defensive communications at

2

Basket visits Units

7%

11%

7%

12%

8%

3%

Asia

2% Europe

Latin America

0% 2%

North America

Source: dunnhumby, October 2016


dominantly on real estate and format. Convenience is not a store size or a location anymore but a fundamental consumer behavior. And that behavior is format-agnostic. Supermarkets that succeed with convenience are deploying strategies that accentuate their strengths, such as focusing on store standards and service, improving private label quality, and optimizing their personalized marketing and promotions to core shoppers. Also migrating from strong footholds in Europe and Asia to the U.S. food retail market are technology-driven trends such as “click and collect,” analytics robots that can move through the store aisles to gather data, innovative mobile payment options and more. A more sophisticated click and collect program will even open up new opportunities for grocery retailers who can adeptly straddle the online and in-store experience. And customer data science can guide personalized online assortments and product substitutions – no small matter when average online baskets are four to five times bigger than in-store baskets. One U.S. grocery chain, California-based Raley’s, has already launched a shelf guide program that helps the retailer deliver on its mission to “infuse life with health and happiness, by changing the way the world eats one plate at a time.” The new labels immediately provide customers with a simple way to select the nutritious products they need throughout the store. Through customer data science, the insights that the program collects can enhance what Raley’s already knows about their customers and provide more relevant shopping experiences to make healthy food choices even easier. Perhaps the ultimate test of personalization, however, is a customer loyalty program. Let’s see how customer data science pushes loyalty programs to deliver more value to both grocery retailers and shoppers.

3. Leverage loyalty programs more effectively Successful loyalty programs need to be much more than discount vehicles. Loyalty is a one-on-one relationship, a conversation between retailer and customer rather than strictly a numbers game. The most sophisticated loyalty programs use customer data science to seamlessly blend innovative loyalty mechanics into an entire loyalty philosophy. It’s all about exploring the customer’s purchase behavior in-depth, then using that knowledge to streamline shopping and buying experiences and personalize rewards. “Will a mobile check-in for loyal customers help them achieve better discounts or experiences?” “Should we offer points toward an iPad purchase when they order online?” California-based grocery retailer Raley’s keeps its Something Extra™ loyalty program simple: 1 point for $1. The platform provides a direct channel for Raley’s to communicate with customers one-on-one to reward them and boost their interactions, such as offering a vineyard tour as a reward for a customer who enjoys suggestions for wine pairings and entertaining. Meijer, a Michigan-based chain of more than 230 supercenters and grocery stores throughout the Midwest, was an early adopter of digital engagement when it launched its industry-leading mPerks digital coupons in 2010. Today the loyalty program has evolved into a multifaceted experience that includes personalized offers, automatic rewards when shoppers scan their phones at checkout, a digital receipt and savings tracker, and digital tools to help more than 4 million users plan entire shopping trips in advance. Grocery retailers that lead in loyalty programs have mastered the art of agility with new technology and data

3


science. They’re not afraid to boldly go where no grocer has gone before. Those qualities are also essential for our final competitive advantage: creating more effective promotions.

Data from past promotions can offer important insights into what your customers respond to and why for different product lines. Sometimes those insights can even be U.S. retail promotions that counter-intuitive, such as a smaller discount outperforming a more are ineffective Make your promotions generous one. The trick is taking a Source: Nielsen Global Trade Promotion Landscape, 2015 work harder tactical approach to get the most for With 71 percent of U.S. retail promotions considered inyour promotion dollars. effective, according to Nielsen data analysis, it’s long past We’re also seeing rapid development in more sophisticated time to up your game. There’s just too much money at methods for measuring promotions success, leading to stake to settle for grocery promotions that don’t resonate more opportunities to develop customized grocery promowith your customer base. tions based on individual shopper preferences and habits. Promotions analytics is complicated but essential to creBy understanding the cadence and frequency of your best ating programs that deliver on time and money invested, customers’ shopping patterns, you’ll ensure your promodriving the correct messaging at the right time and place. tions are tailored to work in sync with each shopper. And because your customers don’t see themselves as “offline” or “in-store” or “online,” your promotions also need to feel seamless across all channels and screens.

4.

Get the edge

It can be daunting to contemplate the personalized experiences that today’s grocery shoppers insist on whether they’re in-store or online. But the same mobile technology that gives shoppers real-time access to their heart’s desires can also give you instant access to data on why your customers do what they do. In an increasingly disrupted grocery marketplace, that’s information you can’t afford to ignore. Customer data science is the key to maximizing this wide array of shopper information sources now available to every grocery retailer. It will help you keep your most profitable customers and build market share no matter what your competitors – new and old – are throwing at you. And it ensures that as the retail grocery marketplace evolves, you will too.

About dunnhumby dunnhumby is a leading customer data science company. We analyze data and apply insights from nearly 1 billion shoppers across the globe to create personalized customer experiences in digital, mobile, and retail environments. Our strategic process, proprietary insights, and multichannel media capabilities build loyalty with customers to drive competitive advantage and sustained growth for clients. dunnhumby employs nearly 2,000 experts in offices throughout Europe, Asia, Africa and the Americas and works with a prestigious group of companies including Whole Foods Market, Tesco, Monoprix, Raley’s, Meijer, Michael Kors, Coca-Cola, Procter & Gamble, and PepsiCo. Learn more at www.dunnhumby.com.

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make them better, and I’m proud of that.” Hy-Vee also started the One Step program, which donates a portion of the proceeds from certain products to planting trees and community gardens, or providing meals and clean drinking water. “We’ve dug 33 wells overseas where people need them,” Edeker notes. “Our marketing folks wanted to market that instantly, but we went over a year not putting a sign up, because I said you can’t go into the world of sustainability and social responsibility with an empty bag. You have to have done something today. So we’ve planted 114,000 trees. We’re giving meals away. We’ve built 700 gardens in cities to help kids get access to fresh produce. We’ve actually done those things.” In the realm of sustainability, Hy-Vee has led in many areas, but particularly with its sustainableseafood program, Responsible Choice, in which select seafood products bear a blue-and-green logo indicating they were sourced responsibly with minimal damage to the environment and other sea life. “We needed to make a lot of changes and really commit to it. Some of it was difficult, because you’re walking away from sales,” Tweeten says. “I’m proud of the company’s ongoing efforts. We’ve been acknowledged by Greenpeace for it. I look at how many electric-car-charging stations are at our stores, all the different things that we’ve been doing to create healthier oceans and a healthier planet. You’ll only continue to see us have more and more programs that fall into that category.” These programs have been growing in importance for consumers, who want their grocer to be about more than just selling things. Keeping tabs on the pulse of those consumers requires a multifaceted approach that includes publications, social media, mobile apps, a company website and blogs. “We do try to integrate all of them. They’re not just sales tools — they’re brand relationship tools,” Tweeten says. Seasons, Hy-Vee’s food magazine, began with that purpose. “It was really developed to let us understand the customer better, and vice versa,” she notes. “Seasons was one of those magazines that certainly showed that Hy-Vee gets you. We’re going to help you with lifestyle questions and provide solutions. We’re going to give you ideas for how to feed your family on a budget. We’re going to give you ideas on how to make your Thanksgiving table more special, how to wrap your Christmas presents in a much more unique way, how to decorate your house — everything.” While Seasons enters its 11th year with its next Christmas issue, Hy-Vee earlier this year launched a health-and-wellness magazine, Balance. “I believe we are the only grocery retailer, maybe the only retailer, to have its own customized health-andwellness magazine,” Tweeten says. “Balance is really quite special. We’ve got Oprah on the November issue [cover] — this was huge. It’s been a great magazine to build relationships with our customers.”

Charitable Giving Hy-Vee’s autonomous structure fosters a spirit of entrepreneurship that allows stores to custom-tailor their contributions to meet the needs of their local communities. The following are among the programs that Hy-Vee sponsors or supports:

Variety, The Children’s Charity Hy-Vee’s participation with Variety, an international organization dedicated to improving the lives of children, began in 1983 during its participation in Cash for Kids, a coupon redemption program to raise funds for children. The grocer has raised more than $14 million for the organization since then.

Juvenile Diabetes Research Foundation (JDRF) Hy-Vee’s involvement with juvenile diabetes dates back to 1921, when company co-founder Charles Hyde’s oldest son, Paul, died from the disease at age 8. Since 1998, the year former Hy-Vee CEO Ron Pearson was corporate chairman for the Central Iowa JDRF Walk for the Cure, the company has raised more than $17 million through a range of corporate and store events, including walks throughout the Midwest and Team Hy-Vee participation in Rides for the Cure throughout the United States.

Hy-Vee Homefront This is an ongoing initiative to increase awareness of, and support for, organizations that serve our nation’s military members, veterans and their families.

Keeping Up with it All Shoppers expect grocers to be food authorities, able to answer questions about the farm-to-fork journey in a store’s curated environment. “There’s a lot more sophistication in our customer base, because they’re so exposed to different flavors and different tastes,” Edeker says. “Culturally, it causes a shift. It calls for us to be the expert, to be able to answer these questions: How do I cook this? Where does this come from? What’s in this? Those are all challenges that we have to meet.” This has influenced how Hy-Vee and other retailers hire new associates. “Today, you’re going to go to a culinary school to recruit produce clerks, meat clerks, deli clerks, because the knowledge base is needed in those areas,” Edeker notes. “That’s one of the things we’ve done in the Twin Cities, reach out to the culinary schools to recruit for the bakery and all different aspects of foodservice. You need someone with that skill set to be able to answer the questions today. Grocery is still crucial to us, but it’s not the same as it was even five years ago. That mix is changing within the October 2017 | progressivegrocer.com |

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Hy-Vee Aisles Online Hy-Vee has been a leader in online grocery shopping, rolling out the Aisles Online click-and-collect and home-delivery service across its network of stores. Visitors to www.hy-vee.com can fill their virtual shopping carts with items from each department and the online weekly circular, earn and use Fuel Saver + Perks loyalty benefits, create customized shopping and favorites lists, and schedule times for pickup or delivery. To support the service, Hy-Vee operates a fulfillment center near its home base, in Des Moines, Iowa, and will soon open additional centers in Minneapolis and Kansas City. Additionally, the retailer is experimenting with additional pickup sites, including a small-format concept store in the works that will include a market, gas station and possibly a quick-serve restaurant.

aisles; the product assortment is changing. There’s a lot of change, even in center store.” The rapid pace of change is also compelling retailers to strengthen their relationships with trading partners to better deliver on consumer need states. “I read a book by Steve Case, the founder of AOL, talking about the ‘Third Wave’ and how we’re entering the third wave of the internet and technology,” Edeker says. “One of the things I learned from that book is how you leverage partnerships and alliances with folks that have a common interest. That’s one of the things you’ve seen us do, and that plays out in the store — in Basin, in our cosmetics department, in F&F clothing, in a hundred different spots in the store, in baby care, we’re working on some things in pet, all through the store. I think it’s important to leverage partnerships with folks that also understand the customers, and then bring that power together to really service the customers in a better way than we ever have before.” With Amazon fully investing in the grocery business, the way people shop and eat constantly changing, and different channels competing for the same piece of the grocery dollar all affecting an economy coming out of an extended deflationary period, what does Edeker foresee as being the most

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Fitness Booster Hy-Vee has led efforts to promote healthy eating and physical fitness in its home state and throughout its marketing area. Programs include:

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This is a fun at-home program designed for kids and families to help promote health, exercise and nutrition as a priority in daily life. The program is designed to be done without workout equipment to make it accessible for everyone. The KidsFit 5-Week Challenge aims to provide a structure for kids to take control of their personal health and fitness. Children can earn trophies and badges for participating in and completing daily activities. www.hy-veekidsfit.com/challenge-information/

Hy-Vee Healthy You Mobile Since 2013, Hy-Vee has brought health-and-wellness services to local communities across its eight-state region. Ever since Hy-Vee’s first Healthy You Mobile bus was introduced three years ago, the demand for the mobile unit has continued to grow. The company now has six Hy-Vee Healthy You Mobiles that allow dietitians and pharmacists to reach customers across the Midwest by offering biometric screenings, flu vaccinations, nutritional information, cooking demonstrations, food samples and much more.

Pinky Swear 5K and Fun Runs Hy-Vee partners with the Pinky Swear Foundation to sponsor several kid-friendly fitness events in cities across the Midwest to raise funds for, and awareness of, the families of children who are suffering from cancer. This year, Hy-Vee supported events in Des Moines, Kansas City, Minneapolis, Omaha and Illinois’ Quad Cities. pinkyswear.org

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| Progressive Grocer | Ahead of What’s Next | October 2017

significant next chapter of the company? “If you haven’t been on a dead sprint trying to stay ahead of change and make calculated decisions, you’re going to be in trouble, because it’s hard to catch up today,” he says. “The reality is there are aspects of our business that can be completely disrupted from areas that you’ve never really considered before. So if you’re behind the ball today, it’s hard to get in front of it. I think you have to be more aggressive about trial and taking risk than you ever have before. “We’re not in the middle of the evolution of change — I think that we’re at the beginning,” he continues. “Steve Case told me he believes that we’re in the bottom of the first inning, or the top of the second, as it comes to change, not just in food, but in all aspects of life. I think we’re at the beginning of it, not the end. It feels like there’s been this massive amount of change, but I think there’s much more to come.” Ultimately, Edeker says, you just have to listen to your customers, because if you don’t, “they’ll leave you, and there’s a million other solutions for food and everything. It’s so diverse, ... where you can shop today, [that] you’ve got to listen to them. “It’s not always easy at first, and some people won’t like it, but you have to follow what the customers want. If you don’t, you’re in danger, you’re not going to make it for a long term. I think today people don’t just stay out of some old sense of loyalty, ... they stay if you do the right thing consistently and you practice what you preach and you’re authentic. It’s not about empty promises or just great marketing. There’s an old saying: ‘The fastest way to kill a bad business is great marketing’ — to go out and say you’re everything, and then not deliver it in reality. So we focus on the reality of how to deliver it, do what’s right and be consistent, and then listen to the customers and move.” Priorities for Hy-Vee in 2018? Prepared foods. Restaurants. Food courts. Customized meal solutions. Experiential center store concepts. Health and wellness. Private brands. Attracting and keeping younger shoppers. And elevating the customer experience to new levels, or, as Tweeten says, “We have to create needs and wants before people even realize that they need or want them.” For Hy-Vee, which has long promised “A helpful smile in every aisle,” that means Helpful Smile 2.0. “I think passion is important,” Edeker asserts. “We have a whole list of simple words — honesty, integrity, caring, sharing, trust, ownership — that have driven us for 87 years. That’s still really important to me, that we maintain the culture of who we are and how we got here, because I think once you lose that, you’re in trouble. My goal is to keep driving Hy-Vee forward to make sure that we reach 100 years.” PG


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Grocery

Meal Solutions

Off the Shelf With fresh meal kits rapidly catching on, manufacturers hasten to remind consumers of convenient, inexpensive center store alternatives. By Bridget Goldschmidt

N What’s for dinner Campbell provides easy recipes for its swanson and Prego brands.

56

o doubt about it: Meal kits are growing in popularity. From their beginnings as items ordered over the internet and delivered to consumers’ doorsteps, they’ve migrated to grocery store shelves, with retailers such as Kroger and Publix offering their own versions. Makers of certain shelf-stable products, however, want shoppers to know that there are other ways to whip up a meal with a minimum of fuss. “The ability to stock up, and to keep product on hand for a quick weeknight meal, is a need that isn’t going away, and meals with brief shelf lives simply can’t help with that,” points out Mike Siemienas, spokesman for Minneapolis-based General Mills, maker of the Helper lines of packaged meals

| Progressive Grocer | Ahead of What’s Next | October 2017

that perhaps collectively represent the granddaddy of shelf-stable meal solution concepts, to which a protein such as beef, chicken or tuna is designed to be added. “Hamburger Helper and other boxed dinners offer consistency and convenience that busy families have come to rely on.” The company continues to improve its Helper and Suddenly Salad offerings, according to Siemienas, by “now using 100 percent real cheese in our Helper cheese varieties, for instance, and all of our top-selling Helper products are free of artificial flavors and colors from artificial sources. Moving forward, we will continue to introduce new flavors and sizes to appeal to a broader range of consumers.” General Mills has also upped its price promotion spending and is working with retailers “to plan more robust display and on-pack offerings,” he says, add-


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Meal Solutions

ing, “We’ve also focused more on social media and experiential marketing to better reach the Millennial consumers, who are increasingly attracted to the reliable flavor and convenience of brands like Helper.”

Keeping it Simple “Many of our Campbell shelf-stable meal solutions are designed for convenience, simplicity and ease, while fresh meal kits may require more engagement with prep, a greater time commitment, and can vary in serving size and investment,” notes Rebecca

Poolman, senior marketing manager, U.S. retail, meals and sauces at the Campbell Soup Co., based in Camden, N.J. The company knows something about the meal-kit space, having recently “entered a strategic partnership with Chef’d, which allows us to partner on fresh meal kits and test and learn with an experienced online meal partner,” as Poolman puts it. That doesn’t mean that Campbell has given up on shelf-stable meal options, however — far from it. The company introduced 11 varieties of Ready Meals for the Prego, Pace and Campbell’s brands in 2016, and launched Organic SpaghettiOs this past August, while its “on-label Prego recipes offer additional inspiration and convenience when creating a family-friendly meal by clearly laying out what’s required [in] ingredients and time,” says Poolman. “Our meal solutions are created to make things as simple as possible for our consumers when they’re trying to plan for the dinner occasion, and we’ve tried to use a similar approach with our merchandising,” she continues. “To aid our customers (retailers), we’ve created a video that provides high-level detail

Coke and a Meal Coca-Cola may be the world’s biggest beverage company, but it’s interested in enhancing all center store sales. “It’s true that meal solutions are key to making busy shoppers’ lives easier while growing basket sizes, but not all meal-bundling solutions need to be found in the perimeter,” says Ron Hughes, senior manager of shopper strategy and innovation at the Atlanta-based soft-drink behemoth. “As large stores fight to remain relevant in an ever-changing retail landscape, The Coca-Cola Co. is committed to helping retailers re-energize the center store. And while the center aisles are declining — research shows an $8 billion dollar gross profit decline from lost trips to the center store — 75 percent to 80 percent of all grocery bottom-line profits are contributed by the center store.” According to Hughes: “To drive more traffic and sell more shelf-stable meals, we first recommend retailers give their center store aisles a face lift. Shoppers, especially Millennials, seek an interactive and personalized experience as they enter retail environments. We ask our [retail] customers to consider how the design of the center store can attract and convert shoppers. Along those lines, research shows that Millennials are always looking for ways to highlight their inner chef, try new recipes and take their meals outside of the box. We recommend creating bundle offers that bring together new flavors and innovative beverages that

Grocery

The ability to stock up, and to keep product on hand for a quick weeknight meal, is a need that isn’t going away, and meals with brief shelf lives simply can’t help with that.” —Mike Siemienas, General Mills

shoppers crave.” Acting on research revealing that 46 percent of shoppers want help from retailers in making simple recipes, Coca-Cola created several kinds of bundle-offer messaging with its retail customers through partnerships with snack and meal providers. “One bundle offer that is ideal for center store is what we call ‘ready-to-create’ meals,” explains Hughes. “These bundles bring together key ingredients and a recipe to help busy shoppers get in and out of the store with a meal they can make at home.” A recent example of this bundle type was a partnership with Horsham, Pa.based Bimbo Bakeries USA to offer Ballpark Hot Dogs and Hamburgers for National Hamburger Month in May and National Hot Dog Month in July. “The merchandising solution included hamburger and hot dog buns, and the products shown to pair well with these meals,” notes Hughes. “In this case, it was Coca-Cola and Gold Peak Tea.” He adds: “As we’re entering this new age of retail, we urge customers to create engaging in-store solutions to drive more traffic. We recommend increasing the amount of well-known brands and making the center store aisle more colorful by positioning products in blocks by their brand. We’ve also seen retailers sell more packages by using unique lighting techniques in the shelving units.” In-store tactics aside, Hughes also cautions that “retailers shouldn’t ignore ecommerce and should consider ways to better integrate with click-and-collect and delivery options.”

October 2017 | progressivegrocer.com |

59


Grocery

Consumers are eager to create a delicious meal for themselves, but have a demand for more convenience.” —Jessica Gilbertson, Kraft Heinz

Meal Solutions

Gilbertson observes that “one insight we know is that consumers are eager to create a delicious meal for themselves, but have a demand for more convenience. We can focus both current portfolio positioning and future innovations to excite the consumer around how our category can play into this need. One example would be a solution that allows consumers to customize their meal at different levels, providing them the option to add more, while also giving them the chance to create something quickly.” Last February, Kraft Heinz launched within its Cracker Barrel brand portfolio the Cracker Barrel Oven Baked product line, which Gilbertson believes “can lead in driving such trends within the shelfstable category.” Featuring hearty macaroni crafted to hold the bold Cracker Barrel cheese sauce, the item allows home cooks to “customize the experience by adding our custom spice mix, placing the dish in the oven and baking the pan to perfection before finishing it off with crispy, crunchy breadcrumbs.” When it came to merchandising, the company

from our consumer research and highlights meal solution options across our entire product portfolio that consumers can access through a variety of ways.” Making a move similar to Prego’s is Fort Worth, Texasbased Renfro Foods, whose salsas, including such specialty flavors as Craft Beer, “come with easy-to-use recipes on the label [and] add value to healthy meal preparation, serving as a flavor booster and saving consumers time and money,” according to President Doug Renfro. He adds that the company “has been using coupon machines, smartphone coupon apps and, more recently, shelf talkers, as well as an email blast to about 500,000 in the Northeast” to help sell its product line.

Bold Customization In common with most of its CPG counterparts, Chicago-based Kraft Heinz has delved into the prevailing “macrotrends” to understand what consumers require of meal solutions. As a result of this investigation, the company’s head of meals, Jessica

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Grocery

Meal Solutions

opted to be just as bold. “The first strategy we implemented was to create packaging that was truly disruptive on shelf,” explains Gilbertson. “We chose to put the pasta and all of the ingredients in a film bag, compared to traditional boxes typically found in the category. While that allowed the product to pop on shelf, we needed to ensure consumers’ continued interest in the shelf-stable meal aisle. To do this, we samPlE salEs Cucina & amore spurs trial of its shelf-stable meal solutions by holding in-store product tastings.

utilized shelf talkers to catch shoppers’ eye when they were in store, and couponing to drive trial.”

Eat on the Go Another important consideration is that it’s not just about the dinner occasion: Center store meals can go anywhere and be eaten anytime. “Shelf-stable meal solutions like our Quinoa Meals are convenient because you don’t have to worry about refrigeration,” says Laila Banejad, director of media relations at Richmond, Calif.-based Cucina & Amore. “You can keep it in your desk at work or in your pantry, and eat it when it’s most convenient for you, rather than secondguessing … whether or not it’s still good to eat.” This autumn, the brand is adding three varieties of Farro Meals, featuring a combination of cooked farro and red and white quinoa, to its lineup. Banejad offers the opinion that “shelf-stable meal solutions can compete by offering healthy, all-natural ingredients that taste delicious without extra preservatives and unnecessary additives, and by [being] affordable.” In fact, despite the rising prevalence of fresh meal kits at ecommerce and now in supermarkets, manufacturers are optimistic about further demand for nonperishable options. General Mills’ Siemienas says that “by continuing to find ways to offer easy dinners at an affordable price, shelf-stable meals will stay relevant for the foreseeable future,” and Kraft Heinz’s Gilbertson notes, “While we recognize that kitchens are evolving, [there] will always be a place for shelf-stable meal solutions with a variety of households and consumers.” PG

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| Progressive Grocer | Ahead of What’s Next | October 2017


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Cross-Merchandising

Frozen & Refrigerated Foods

Get Fresh with Frozen Engagement with the perimeter can melt obstacles to purchase. By Lynn Petrak

N

o category is an island. Sometimes, however, creating an island of products in another category can be a bridge to higher overall sales and greater intrastore integration. When mulling over ways to cross-promote the frozen aisle with the fresh perimeter, for example, grocers might consider bringing some frozen products to the fresh department. “That can be a simplistic and advantageous way to cross-promote fresh and frozen,” remarks Jonathan Raduns, consulting partner at MerchandiseFood.com, in Cherry Hill, N.J. “The produce department is better situated to have a mobile freezer, and it’s a way to accentuate a frozen item by surrounding it with

fresh components.” When it comes to departmental interplay, merchandising fresh items in the frozen section is a harder go. “Shoppers may think it’s weird that they are tripping over fresh food in the frozen aisle,” admits Terry Roberts, president of Merchandising by Design Inc., in Sarasota, Fla. “Seasonality is the most reasonable way to do it, and it can make sense to shoppers. For example, if you have bushels of peaches that come in, you can put a bushel by the ice cream, with recipes for peach cobbler a la mode. Or, during succotash season, you could place baskets of zucchini and squash in the frozen area near other ingredients, like frozen lima beans.” Roberts adds a food safety caution: “You have to be October 2017 | progressivegrocer.com |

65


Frozen & Refrigerated Foods

Mix and Match By placing a frozen pie display in the perimeter, for instance, grocers can stimulate sales in both categories.

Cross-Merchandising

careful with things that do and don’t need refrigeration or freezing.” That care extends to other aspects of physically co-merchandising fresh and frozen items, Roberts adds. “It requires planning and management,” she advises. “You need to sit down with a seasonal calendar, planning what comes in and out — and that includes meat and seafood — and how to do promotional activity accordingly.”

Make it a Meal Other grocery analysts agree that marrying frozen and fresh items warrants consideration due to logistics and food safety, given temperature requirements. “To actually do cross-merchandising — putting product where other product is — could be difficult,” notes Stockton, Calif.-based produce consultant Ed Odron. “But there are ways to increase sales in both departments.” One way to do that, according to Odron, is through price promotions. “You can do crossmerchandising by price point — for example, if you buy a produce item, you get ‘X’ amount off a frozen food, or if you buy a frozen food, you get ‘X’ amount off a fresh food,” he says. “You can put

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| Progressive Grocer | Ahead of What’s Next | October 2017


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Cross-Merchandising

signage by fresh strawberries and, in the frozen section, by the Cool Whip, with that kind of offer. Or you could do a similar price enticement with apples and frozen pie shells.” Such offers allow consumers not only to save money, but also to fulfill their interest in making quick meals that they can have some ownership in serving. “Frozen pizza can be a great item, topped with fresh basil and fresh peppers that you can add on your own,” Odron notes. Raduns agrees: “There is a trend of pulling different elements into one meal. Millennials are looking for the speed of being able to produce more flavor-focused entrées and menu items quickly, but with the capability to customize them.” At a time when delivery services like Blue Apron and others are garnering interest among consumers, stores can provide real meal kits with ingredients that cut across frozen and fresh departments, as well as virtual meal kits, with suggestions and recipes for combining ingredients into a meal. “We are seeing an uptick in retailers offering meal kits and solutions that resemble kits, and I think an opportunity exists for people to begin to include frozen along with fresh in combination in a meal kit that answers the question, ‘What’s for dinner?’ to make meal planning and execution easier and more convenient,” observes Bill Bishop, chief architect and co-founder of Brick Meets Click, a consulting firm in Barrington, Ill.

Frozen & Refrigerated Foods

chunks, which are always available and at peak quality, no matter the season.” Meanwhile, as part of NFRA’s Real Food. Frozen PR campaign, consumers are targeted with messages like how to assemble meals using frozen foods along with from-scratch fresh items. Another way to leverage the strength of the fresh perimeter and the frozen section — and to

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Embracing Innovation Julie Henderson, VP of communications for the Harrisburg, Pa.-based National Frozen & Refrigerated Foods Association (NFRA), agrees that providing consumers with ideas on how to combine fresh and frozen ingredients can lift sales in both categories, and suggests employing such elements as signage, sampling and social media. “There can be opportunities to cross-merchandise frozen foods with other departments in the store, including fresh produce, with a little creativity,” she says. “For example, encourage shoppers to up the wow factor of their salads any time of year by adding frozen edamame, frozen peas or frozen mango

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Frozen & Refrigerated Foods

An opportunity exists for people to begin to include frozen along with fresh in combination in a meal kit that answers the question, ‘What’s for dinner?’ to make meal planning and execution easier and more convenient.” —Bill Bishop, Brick Meets Click

70

Cross-Merchandising

provide solutions to busy shoppers looking for ideas — is to create a display that ties in both areas. “You could have a frozen end cap with ice cream, and put ice cream cones and sundae toppings around it, and merchandise that with fresh ingredients like berries or bananas, for an innovative merchandising approach,” Raduns recommends. Other industry innovations may lead to a greater fusion between the fresh perimeter and frozen. Burt Flickinger, managing director of New York-based Strategic Resource Group, points to work that Cornell University is doing for a major food company on hydroponically grown produce. “Retailers can cross-merchandise hydroponic produce and flash-frozen foods to stimulate sales,” he notes, adding that innovations in product development and merchandising are spurred by competition from many parts of the grocery and retail sector. “We are seeing from analyses of Lidl in the

| Progressive Grocer | Ahead of What’s Next | October 2017

U.K. that they are aggressively and progressively working in this area,” he observes. “And … the talent that Amazon is hiring, along with Whole Foods, will make it a bigger player in that, too.” Ultimately, leveraging seemingly different but potentially complementary categories provides shoppers with solutions for their meals, snacks, desserts and other need states, and tracks with grocers’ goals. Asserts Roberts, “The benefits can be enormous in customer satisfaction and basket ring.” PG


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2017 Retail Produce & Floral Review

Prevailing Produce Survey shines light on the good, the bad and the ugly fruit. By Jennifer Strailey

P

roduce industry decision-makers are embracing the challenges of the day as they jockey to cultivate customer loyalty and grow sales in a highly competitive market. That’s a common theme that emerged among the compelling revelations in Progressive Grocer’s latest annual Retail Produce & Floral Review, which taps the insights and expertise of nearly 100 grocery retailers across the United States. About 43 percent of survey respondents are grocery owners, CEOs and executives, while store managers, merchandisers and buyers comprise the balance.

“This business is not for the faint of heart,” notes one respondent. “The demands and challenges in produce are what make produce such a great career,” says another. The stakes are high in the often unpredictable fresh produce landscape. Nielsen estimates that fresh produce reached $68.7 billion in annual sales in 2016, and reports continued growth this year. The market researcher’s latest fruit and vegetable trend data show that both dollar and volume growth occurred across all categories of produce for the 52 weeks ending July 29, 2017. PG’s 2017 Produce & Floral Review participants also Continued on page 78

October 2017 | progressivegrocer.com |

73


2017 Retail Produce & Floral Review Latest 52 weeks

PrOduce dePartment

Increase in average retail price had a positive effect on fruit sales.

dOllar share

trend cOmParisOn — current Vs. Year-agO

Both dollar and volume growth was seen across all categories of produce.

Produce, Total U.S., 52 Weeks Ending 07/29/17

2.8%

Other PrOduce

3.3% 1.3%

Vegetables

Volume Growth

Except vegetables, average retail price increased across the board.

43.1%

0.9% 1.8% 2.0%

Fruits

tOtal PrOduce

46.9%

10.1%

0.8%

Latest 4 weeks

100%

1.6%

Produce gained dollar and volume sales by 2.8% and 0.3%, respectively. Except fruits, volume sales grew across the board.

Dollar Growth

Source: Nielsen Perishables Group FreshFacts®; Fresh Coverage Area

ADVERTORIAL

Q&A

Talking with…

Dionysios Christou Vice President Marketing, Del Monte Fresh Produce N.A., Inc.

Progressive Grocer: Del Monte Fresh offers a variety of fresh produce. What role do bananas play in your overall produce offering? Dionysios Christou: Bananas are an important part of Del Monte Fresh’s volume and business offer. They also represent a high percentage of the produce department sales globally. Bananas allow Del Monte and their customer partners to use economies of scale to promote this important category while cross promoting other Del Monte fresh or fresh cut items on an annual basis. PG: Why is it so important for retailers to offer a variety of bananas in their produce departments? DC: Del Monte Fresh Produce offers a full line of organic and specialty bananas. The organic component of the banana category has continuously seen positive growth. There has also been growth in specialty bananas like plantains, reds, and manzanos. Consumers have developed more sophisticated tastes and as trends in healthy eating and interest in new tropical foods continue to grow, so does the demand for exotic and specialty bananas. In order to ensure that our specialty products appeal to consumers, Del Monte Fresh Produce is always working towards developing new packaging or new banana products to bring to market and service the different channels in the industry. We also offer our Del Monte® single finger bananas packed in our proprietary CRT™ (Controlled Ripening Technology) packaging. The 100% natural, individually packaged CRT™ bananas are designed to satisfy consumer demand for premium quality

Del Monte® bananas in the non-traditional retail channels. These bananas experience less scarring and bruising and retain moisture that gives them a brighter, shinier yellow color for an extra day or two, which made for the perfect product to take on the road, or even the trip back home. PG: Do you have any merchandising and marketing tips for retailers who want to boost sales of bananas during the Fall selling season? DC: There are several merchandising techniques to drive incremental banana sales. One technique is cross merchandising, which allows retailers to increase banana sales and sales of related products. Different ideas for cross merchandising include pairing bananas with other tropical fruit, ice cream, cereal, salads, chocolate dips, and peanut butter. Placing recipe cards or nutritional information by a banana display can encourage banana purchases as well. We also encourage retailers to develop secondary banana displays at check out. Placing bananas in a retailer promotional calendar is another important technique. When a retailer supports and promotes a product, it helps motivate impulse purchases and drives incremental sales.


Not many companies get to lead their industry for 125 years. Our secret? We’re fresh-produce fanatics. And supply-chain fanatics. And innovation fanatics. And quality fanatics. Sustainability fanatics. Food-safety fanatics. And fanatics about growing your business along with ours. So, hopefully, one day, you can celebrate 125 years, too.

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SEASON’S EATINGS


2017 Retail Produce & Floral Review What percent of your fruit sales are ... Random-weight

What percent of your vegetable sales are ... Unbranded

Packaged/Value-added/Fresh-cut

current

Store Brands

current

40.6%

16.6%

52.9%

47.1%

National Brands

42.8% year ago

62.2%

year ago

18.5%

37.8%

34.9%

46.6% Source: Progressive Grocer Market Research, 2017

Source: Progressive Grocer Market Research, 2017

Continued from page 73

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| Progressive Grocer | Ahead of What’s Next | October 2017

cite growth. Sixty-four percent report that their company’s total produce sales increased for the first six months of the year ending June 2017, while 22.5 percent say that sales remained the same. Just 13.5 percent note a decline. Nearly 63 percent of respondents expect same-store produce sales to increase for the entire year. While trends in produce-based snacking, home meal preparation and healthy-lifestyle aspirations have helped make the produce department an important destination for shoppers, the industry isn’t without its obstacles. When asked to rank the most challenging issues facing today’s produce department, from “not serious” to “extremely serious,” 72 percent of survey respondents note that “profits” are a serious to extremely serious issue. Competition from other supermarkets, which interestingly ranked low among challenges in PG’s 2016 survey, is the second-highest serious issue in this year’s study, with 70 percent of respondents calling it a serious to extremely serious challenge. Of course, when it comes to besting the competition, the produce department is a grocer’s front line of defense.


omers prefer own Pr Meet the Demand with California Ripe Olives 75% of surveyed U.S. grocery shoppers prefer to buy products grown in the United States* and because nearly all domestic ripe olives are grown on multi-generational family farms in California, they’re a great choice for your customers. *Based on results from a 2013 survey with 1,000 grocery shoppers across all 50 states and the District of Columbia.

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2017 Retail Produce & Floral Review image, and in most cases is the first product that is seen when entering the store.”

“The produce department sets the stage for the entire store,” asserts Jeff Cady, director of produce/floral for Williamsville, N.Y.-based Tops Markets LLC. “Bad-quality produce equals a bad store, regardless of the condition in the rest of the store,” he continues. “Produce sets the freshness

Labor of Love Hiring, training and retaining good people are challenges long faced by grocers. Rising labor costs and shrinking budgets add to the challenge. Friendly and knowledgeable employees, however, are essential to remain competitive in today’s marketplace. When asked to rank the most serious issues facing produce/floral departments today, 60 percent of respondents indicate that labor/ recruitment costs is a serious to extremely serious issue. Additionally, more than 50 percent of respondents say that employee training is also a serious to extremely serious issue. “High labor costs are going higher; couple that with lower retails, and something has to give,” observes Cady, who adds that Tops is revisiting its training program from an efficiency perspective. “We need to perform tasks as efficiently as possible, without compromising customer service or quality,” he explains. Encouraging employees to feel invested in the company and compensating them for outstanding work may also

Call our sales team for more information Jessica Peri Cindy Elrod Mindy VanVleck 775-463-6326 775-463-6318 775-463-6313

80

| Progressive | Ahead PSF Prog Groc - PINK 2017 1/2 pgGrocer horizontal Ad.indd 1

of What’s Next | October 2017

Monique Blajos 775-463-6325

8/14/17 3:01 PM


produCe operationS Current year

year ago

3,461.4

3,800

29,619.8

30,600

perCent of total Store

16.7%

12.4%

groSS margin perCent

31.8%

34.0%

net profit perCent

20.7%

25.8%

average produCe department (square feet) average total Store (square feet)

Compared with a year ago, SaleS of organiC produCe ... Increased

Decreased

Stayed the Same

Current

70.8%

28.1%

1.1%

Source: Progressive Grocer Market Research, 2017

provide a path to elevating the industry’s labor force. “Somehow, we have to raise the status and the pay of our associates,” asserts Steve Pohl, produce director for Sullivan’s Foods, a family-owned and -operated retail grocery business with 12 stores in Illinois. “Training and cross-training would add to that goal, and promoting from within will give a sense that there is a way to advance in this industry.” Sullivan’s employs several initiatives to help hire and retain qualified employees, including a grocery discount program, scholarships for associates, employee events and outings, contests, and employee recognition picnics and dinners. “We try to hire and promote from within our organization, to keep a consistent environment for our consumers and employees,” notes Pohl. “We are always looking at ways to promote the industry’s positives.” The bottom line: Well-trained employees increase sales. At Portland, Ore.-based Fred Meyer, part of the Cincinnati-based Kroger Co., a consistent and thorough training program on subjects such as cross-contamination and proper handling has resulted in a significant sales bump in organic produce, among other categories. “The produce team has learned how to take care of organic produce, and customers are looking for that,” says Eric Otis, senior grocery clerk for Fred Meyer in Bremerton, Wash. “We’re supporting a culture that’s taking place with organics, and we’re getting clientele from [high-end neighboring supermarkets] to shop with us instead.” “You have to establish consistency in training and messaging, so that every employee can run the department the same way,” continues Otis. Fred Meyer’s protocols and standards for each department are clearly indicated on signage in the employee area. “They give you the answers to the test,” he says. “It’s all right in front of you.”

year ago

32.6%

67.5%

Source: Progressive Grocer Market Research, 2017

October 2017 | progressivegrocer.com |

81


2017 Retail Produce & Floral Review

Produce SaleS by Segment

Department Drivers Which categories within produce are driving shoppers to a particular store? For Tops, they’re organic and local produce, value-added, and “new and exciting items like Cotton Candy Grapes and Amaize Sweet Corn,” according to Cady. Can these categories make or break a store? “Short term? 9.7% No. Long term? For sure,” he says. “Retailers need to get those 37.6% categories locked down quickly, or the customers will gravitate to the retail outlets that can take care of their needs.” 7.7% When it comes to the hottest trends in fresh produce, organic and local are still sizzling. This year’s Retail Produce & Floral Review found that, on average, 23.8 percent 7.0% of fruit and vegetable sales are organic products. More than 70 percent of survey respondents report that sales of organic produce were up this year as compared 5.7% with 2016, 28 percent note no change in sales, and only 1 percent say that they experienced a decline in VegetableS organic produce sales. “I think that orFruitS ganic will eventually nutS 32.3% be how we will sell Premium JuiceS most produce,” says reFrigerated Salad dreSSingS and diPS Pohl, of Sullivan’s. all other (including exotics, mixes, etc.) Source: Progressive Grocer Market Research, 2017 “It still has to become

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| Progressive Grocer | Ahead of What’s Next | October 2017


2017 Retail Produce & Floral Review

Produce sales change Increased

Decreased

Stayed the Same

Increased

first 6 months 2017 vs. year ago 22.5%

Decreased

Stayed the Same

Projected total 2017 62.9%

23.6%

64.0%

10.8%

8.1%

net change (%)

net change (%)

13.5%

13.5%

Source: Progressive Grocer Market Research, 2017

Promoting Produce in the Produce/floral dePartment

elsewhere in the store crossPromotion

social/ digital media

don’t use

88.8% 76.4 80.9 61.8 41.6 32.6

48.3% 32.6 43.8 34.8 32.6 39.3

60.7% 32.6 46.1 18.0 42.7 24.7

7.9% 18.0 10.1 25.8 30.3 40.4

signage for weekly sPecials country-of-origin signage “local” signage samPling signage for meal/eating suggestions cooking/new Produce demonstrations

Source: Progressive Grocer Market Research, 2017

sustaining interest a growing number of grocers are investing in greener pastures — in the form of energy-efficient lighting and refrigeration, “ugly” produce, composting and the donation of unsold produce. survey resPondents’ recent green investments Percent energy-efficient lighting energy-efficient chill cases “ugly” Produce comPosting donation of unsold Produce Source: Progressive Grocer Market Research, 2017

84

48% 30 27 26 49

a mission for our growers to sustain this momentum in organic so prices are close to that of commercially grown produce. Organics, especially in the Midwest, is still a hard sell in smaller communities, where price is a higher priority.” In addition to organics, shoppers are looking for fruits and vegetables harvested closer to home. Grocers are responding with multifaceted merchandising and marketing strategies that spotlight locally grown produce. More than 80 percent of survey respondents feature local signage in the produce department, and more than 46 percent call out local offerings through social media. “Locally grown has become very popular and helps distinguish your organization from others in the marketplace,” agrees Pohl, who longs for the anticipation that seasonal produce inspired before year-round offerings of peaches, grapes and more. “Now, we can get things year-round from the Southern Hemisphere, and that excitement has gone away from the produce department,” he observes. “By tying local farmers, who live and work in the community, to a great eating experience — only once a year — we recapture that atmosphere.”

| Progressive Grocer | Ahead of What’s Next | October 2017


2017 Retail Produce & Floral Review Investment Plans for Produce/floral

sIgnage Portable bIns energy-effIcIent lIghtIng mobIle merchandIsers donatIon of unsold Produce energy-effIcIent chIll cases comPostIng floral dIsPlays/bIns total dePartment renovatIon “ugly” Produce

recently Invested

Investment wIthIn the next 1-2 years

future Investment

wIsh lIst

no Interest/ no resPonse

58.4% 38.2 48.3 34.8 49.4 30.3 14.3 39.3 33.7 27.0

13.5% 24.7 14.6 12.4 9.0 19.1 1.3 10.1 14.6 16.9

12.4% 5.6 13.5 14.6 7.9 14.6 3.9 15.7 18.0 9.0

5.6% 10.1 12.4 13.5 11.2 14.6 3.9 7.9 16.9 9.0

13.5% 23.6 13.5 28.1 23.6 22.5 76.6 28.1 21.3 39.3

Source: Progressive Grocer Market Research, 2017

Fast Friends Convenience seekers are hungry for more than ever before from today’s produce department. According to the latest data from Nielsen, packaged salad continues to claim the

86

dominant dollar share of the vegetable category, at 18.8 percent. Meanwhile, value-added vegetables is the fastestgrowing subcategory among the top five vegetables. “Customers are looking for something quick and easy to prepare, and we are trying to make more of those items available,” says Larry “Junior” Lovell, store manager of Appleseed IGA, in Arlington, Ohio. “I believe we can sell more if we look outside the box, because the consumer is looking for us to help them make their lives easier.” Simplifying meal preparation and increasing produce consumption are also top of mind at Sullivan’s. “We have always done well with packaged cut vegetables and cut fruit, but in the last three to four years, it has exploded, and we continue to have very good success with these convenience-type items,” observes Pohl. The 2017 Retail Produce & Floral Review found that grocers are also looking to offer convenience in the form of “vegetable butchers” that cut produce to order, and meal-kit programs in which fresh produce is featured. Thirty-seven percent of respondents offer a meal kit program, while more than 25 percent either offer a vegetable butcher or plan to add one in the foreseeable future. “Produce is going to become much more exciting and a bigger contributor of total store sales as the convenience desires and health concerns of the population are realized,” predicts Pohl.

| Progressive Grocer | Ahead of What’s Next | October 2017


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2017 Retail Produce & Floral Review CliCk and ShoP online ordering with home delivery and/or store pickup is changing the way many americans shop for groceries. What role will fresh produce play in the new grocery landscape? Does your store offer a home delivery/groceryordering (with store pickup) service?

31%

Have you expanded these services in the past year?

69%

YeS

YeS

Has the service increased produce sales?

If you don’t currently offer home delivery/ store pickup, do you plan to add the service in the next year?

26%

60%

YeS

YeS

Source: Progressive Grocer Market Research, 2017

Floral SaleS Change in PaSt Year Increased

Decreased

Stayed the Same

Do not sell floral in produce department

25.8%

36.0%

14.6% net Change (%)

29.2%

Vacuum Marinating Enhances Taste and Adds Value

Md. VTS-46

Md. VTS-44

Md. VTS-42

Biro Manufacturing Company Marblehead, oH 43440-2099 USA 419-798-4451 Fax 419-798-9106

www.birosaw.com

224RB-6-13

9.0%

Source: Progressive Grocer Market Research, 2017

Flower Power Nearly half of all Retail & Floral Review Survey respondents who sell floral in the produce department report an increase in floral sales over the previous year. Fred Meyer’s total remodel of its Bremerton location created a new destination floral department, leading to dramatic results. “We revamped floral, and now sales are going through the roof,” says Otis. The remodel, which was completed a year ago, offers a bounty of bouquets, seasonal items, and a prep station in the center of the department, which is located at the store entrance. “It’s a better fresh presentation as soon as customers enter the food area,” he notes.


2017 Retail Produce & Floral Review Rating PRoblems Facing PRoduce/FloRal dePaRtment Rated on a scale of 1-6, where 1=not serious through 6=extremely serious

cuRRent YeaR

YeaR ago

PRoFits

4.43

5.39

comPetition FRom otheR suPeRmaRkets

4.43

4.01

QualitY oF PRoduct

4.33

5.34

comPetition FRom otheR outlets (FaRmeRs’ maRkets, natuRal Food stoRes, etc.)

4.20

3.78

PRice PeRcePtion oF FResh PRoduce

4.13

4.90

how to incRease consumPtion

4.13

4.71

laboR/RecRuitment costs

4.10

4.68

shRink/sPoilage

4.09

4.40

emPloYee tRaining

3.94

4.62

wholesale PRices

3.94

4.50

comPetition FRom walmaRt

3.74

3.22

PRoduce/FloRal dePaRtment oveRhead (building uPkeeP, eneRgY costs, etc.)

3.71

4.13

tRansPoRtation costs

3.70

4.41

leveRaging PRoduce as snacks

3.63

3.74

tRaceabilitY (Point oF oRigin)

3.36

4.30

outbReaks/Recalls

3.21

4.16

Source: Progressive Grocer Market Research, 2017

Also helping to fuel floral sales are the 65 hours a week of labor allocated to the department, up from 30 hours prior to the remodel.

Fresh Take on Produce A remarkable number of produce departments around the country are investing in everything from new lighting to energy-efficient chill cases to signage to total department remodels, according to the 2017 Retail Produce & Floral Review. Nearly half of respondents say that they recently invested in energy-efficient lighting, while another 15 percent plan to invest in the next one to two years. More than 30 percent recently invested in energy-efficient chill cases, and another 19 percent plan to invest in the next several years. A healthy 34 percent report that their produce departments recently underwent a total renovation. An additional 15 percent indicate that they plan to invest in a total department renovation in the next one to two years. Fred Meyer’s store renovation at its Bremerton location reinvigorated the produce department with all-new refrigeration, new flooring, a redesigned floral department, and more. “Produce got all-new refrigeration. It was a big part of the remodel budget, but it helped increase sales. If you keep the produce fresh, customers will buy it,” asserts Otis, who adds that weekly sales are up more than 65 percent in the department following the remodel. PG

®


Nonfoods

E-Cigarettes

Smoke Signals Despite barriers to category growth, manufacturers and retailers forge ahead. By Barbara Sax

T

he electronic cigarette category will face fewer hurdles than expected, due to a delay in the enforcement of regulations extending the Food and Drug Administration’s regulatory authority to electronic nicotine delivery systems (ENDS) and nicotine gels. While the regulations, passed last year, still ban the sales of those products to anyone under 18 and require a photo ID check of anyone who appears to be under the age of 27 and wishes to purchase the products, and prohibit manufacturers from distributing free samples of e-cigarettes and nicotine gels, Trump administration officials have asked for an extension on the enforcement of other aspects of the regulations, which would

92

| Progressive Grocer | Ahead of What’s Next | October 2017

require all packaging, as well as advertisements for e-cigarettes, other ENDS and nicotine gels, to carry a health warning statement. The new regulations meant that the FDA would require electronic cigarettes to meet health review standards, and the agency planned to give manufacturers a limited time to keep their products on the market while they submitted new tobacco product applications. Now, all bets are off on when — or if — those additional regulations will take effect.

Center of Controversy Controversy has surrounded electronic cigarettes ever since the products appeared on the market. Supporters claim that the products are less harmful than traditional combustible cigarettes and can help transition cigarette smokers away from smoking, while critics say that e-cigs or vape products attract new users to tobacco use. Especially troublesome to naysayers is the concern that flavored gels are particularly appealing to younger consumers who might not otherwise use tobacco products of any kind. A report from the Centers for Disease Control and Prevention revealed that while teen cigarette smoking has radically decreased, adolescents’ experimentation with, or use of, e-cigarettes has increased 900 percent, with e-cigarette use spiking from 1.5 percent to 16 percent among high school students from 2011 to 2015. Tighter restrictions on the sale of the products have the potential to give online vendors, which already own 56 percent of category sales, an advantage in the market, but many brick-and-mortar retailers say that they don’t see much downside to the more stringent rules, since they already have policies prohibiting the sale of the products to anyone under 18 and are accustomed to having employees check IDs at the point of sale.


“We’re already making sure we’re not selling tobacco to anyone under 18, so we’ll just communicate the new rules to our store managers,” says Scott Zahrn, sales manager at Rigby, Idaho-based Broulim’s Fresh Foods, which operates 10 stores in Idaho and Wyoming. “We can assign a register class to products so that at point of sale, cashiers are required to enter a date of birth before purchase. It’s pretty easy to comply, so I don’t see any problems.” The impact of these rules will be felt most keenly among manufacturers and should stack the deck against the smaller players that pioneered the category. Since the Big Tobacco companies moved in, they’ve dominated the category, and FDA’s new regulations will make it more difficult for smaller players to navigate the approval process, thereby creating more barriers to entry in the category. Competition is already fierce in a category that’s seen a number of brand failures and consolidation. Zahrn says that he’s narrowed offerings to four or five brands, noting, “It’s a lot of money tied up in inventory if product doesn’t sell.”

Coupon Crunch All-channel e-cigarette dollar sales increased an impressive 53 percent, according to data from Chicago-based Information Resources Inc., driven by strong pricing and volume. British American Tobacco’s Vuse maintained its dollar share leadership at nearly 30 percent, the result of strong pricing that offset soft volume. The London-based company acquired the brand from Reynolds American in July. Wells Fargo analysts expect the category to grow 5 percent in the coming year, although couponing may erode profits as competition in the category grows. “We continue to hear of significant ‘coupon drops’ driving sales of MarkTen XL, and similar tactics employed by Logic and Vuse,” says Bonnie Herzog, managing director for tobacco equity research at Charlotte, N.C.-based Wells Fargo Securities. “Couponing is really important to the category, and we’re seeing a lot of $1-off coupons sparking trial,” contends Zahrn. “Whether consumers make repeat purchases is another thing.” Couponing isn’t as important at Oklahoma Citybased Crest Foods, however. “The category has been down, with some movement for the Vuse brand, but very little activity in the MarkTen brand,” notes Carl Wheeler, the grocer’s buyer for the category. Quality Counts Product innovation should stabilize the category. “Manufacturers need to deliver against the quality consumers demand, rather than artificial volume growth through deep coupon discounts, to ensure the category remains sustainably in growth,” advises Wayne Jones, SVP, sales operations at Charlottebased Fontem Ventures US, maker of Blu.

Nielsen data for the 52-week period ending Aug. 12 place Reynolds American’s Vuse as the category leader, with a 35 percent dollar share and a 40 percent unit share of category sales. “We expect further gains as new Vuse formats [Vuse Vibe and later Vuse Port] start to hit store shelves,” says Herzog. Vuse Vibe, a pre-filled, closed vapor-tank system with a rechargeable battery, rolled out nationally last November in four styles: Original, Melon, Mint and Nectar. This year, Winston-Salem, N.C.-based Reynolds American launched Vuse Port, a “next-generation” product combining the performance and satisfaction of a tank with the simplicity of a “cig-alike” product. The company has also expanded the Vuse line with four new flavors — Crema, Chai, Berry and Mint — and introduced Vuse Fob, a cartridge-storing device that can display battery and cartridge status levels, while Vuse Port is a liquid-tank system that uses a dock-and-lock system to refill the device. Vuse’s closest competitor is Richmond, Va.-based Altria’s MarkTen XL, with a 16 percent dollar share and 22 percent unit share, followed by Blu, with a 15 percent dollar share and 13 percent unit share. “We’ve turned around a continuous decline in our disposable range and continued to deliver growth in our Blu Plus+ refill range,” asserts Jones. Blu’s online business allows the company to test sales of products as the company brings them to market. “That ensures that new products hitting retail have the high consumer demand that’s required for a successful stock turn,” he explains. Going forward, Wells Fargo Securities’ Herzog expects consumers to shift from e-cig/vapor products to next-generation reduced-risk products, led by IQOS, from New York-based Philip Morris. The product, which features superior heat-not-burn technology and has a strong sales record in Japan and Italy, where it’s currently marketed, is awaiting FDA approval as a “modified-risk tobacco product.” It’s expected on the U.S. market in late 2017 or 2018. PG

Manufacturers need to deliver against the quality consumers demand, rather than artificial volume growth through deep coupon discounts, to ensure the category remains sustainably in growth.” —Wayne Jones, Fontem US

October 2017 | progressivegrocer.com |

93


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Demand Forecasting

Technology

What’s the Forecast? As more grocers adopt an omnichannel approach, they’ll also have to rethink how they forecast demand. By Randy Hofbauer

C

onsumers desire to shop more ways than ever. As a result, omnichannel is on the rise. More than half of U.S. grocers now offer omnichannel services, according to Progressive Grocer’s 84th Annual Report of the Grocery Industry, published this past April. But only 12.2 percent of grocers have a “fully integrated strategy” for omnichannel retail, which is necessary for today’s shoppers. “Consumers are migrating to new selling channels as fast as digital players can make them, and it’s a challenge for traditional grocers to keep up and build out their capabilities quickly enough,” says Brian Baker, managing director in the products practice at Accenture, a Chicago-based technology services company. Times are changing, though. Some 34.1 percent of grocers said that they have a strategy they’re executing, and slightly more (36.6 percent) said that they’re just getting started. One of the most daunting parts of starting and executing an omnichannel strategy, however, is maintaining proper supply, no matter what the channel. Grocers previously had only their brickand-mortar stores to take into account, but now many more channels must be considered.

Where Demand Lies Johanna Småros, co-founder and CMO of RELEX Solutions, a Helsinki, Finland-based retail-planning company with U.S. headquarters in Atlanta, notes how demand forecasting in grocery, especially fresh food, is tricky due to the need to examine at a granular level — store-SKU-day — sometimes even within the day. “This level of detail is needed to accurately match available stock with demand that fluctuates daily throughout the week to ensure good product availability and minimize costly waste,” she says, noting that shelf life needs to be added to the equation for the freshest products, such as meat and fish, and the impact of promotions and price changes must also be factored in. “Omnichannel accentuates these challenges, as the consequences of poor product availability are more immediately visible to the online consumer in the form of the ordered products

having to be replaced with substitutions. Online consumers are also highly sensitive to ‘best-before’ dates and freshness of products delivered.” Before grocers can start understanding demand forecasting in an omnichannel environment, they first must tackle the greatest challenge: understanding the new, omnichannel consumer. “In order to build the seamless omnichannel experiences that today’s consumers demand, retailers and FMCG marketers must first understand how and why shoppers engage across all channels and platforms,” says Sneha Uppal, VP of advanced analytics with Schaumburg, Ill.-based Nielsen. “Without this core understanding, a retailer will never gain a clear view into who their true competitive set may be. In a world where a one-size-fits-all approach will not work, this is a must-solve issue.”

Understand Categories, Inventory When forecasting demand for omnichannel grocery, retailers must first determine which categories have disproportionately high online share. For instance, nonfoods naturally perform far better online than foods do, according to Dr. Kurt Jetta, CEO and founder of Shelton, Conn.-based TABS Analytics. However, certain foods, such as protein powders, are a major exception, getting almost 20 percent of their sales online.

Consumers are migrating to new selling channels as fast as digital players can make them, and it’s a challenge for traditional grocers to keep up and build out their capabilities quickly enough.” —Brian Baker, Accenture

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Technology

In order to build the seamless omnichannel experiences that today’s consumers demand, retailers and FMCG marketers must first understand how and why shoppers engage across all channels and platforms.” —Sneha Uppal, Nielsen

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Additionally, real-time inventory visibility at the store level is mandatory for van delivery and clickand-collect, offers Danny Silverman, SVP of customer success at Boston-based Clavis Insight. Without it, substitutions can result in an underwhelming shopper experience. “The biggest challenge we’ve seen relates to time of day for restocking shelves,” he says. “If this is primarily a morning activity, by the afternoon high demand and fresh items may be low or out of stock, increasing the likelihood of disappointing impulsedriven shopping trips.” Moreover, substitutions must have a clear and consistent strategy that follows the shopper decision tree for a given category, Silverman adds. In some categories, substituting with the same brand but a different size will be better received by shoppers than the same size but a different brand. Another area critical for proper omnichannel demand forecasting lies in linking online sales to the right fulfillment channel. For instance, online orders picked in a regular store must be included in the demand forecast driving replenishment to that store, even though actual sales transactions belong to the online channel. However, simply lumping regular store sales together with online orders to form the basis for forecasting doesn’t suffice, RELEX’s Småros cautions. “On many occasions, online orders follow a different sales pattern compared to regular store sales,” she explains. “We have, for example, noticed that easy price comparison online often drives even more pickup for promotions. Also, for major holidays, the timing of purchases may differ between physical stores and online. … Separate forecasting of online sales is needed to accurately account for the sales channels’ varying demand patterns.”

| Progressive Grocer | Ahead of What’s Next | October 2017

Dealing With Data It’s true that grocers have to deal with mountains of data due to the vast number of SKUs they sell and their large number of daily transactions. However, forecasting in the grocery channel actually is often hampered by a lack of data. For instance, estimating the effect of price changes can be surprisingly complicated, thanks to a limited amount of relevant price changes in the past, Småros explains. “In brick-and-mortar retail, it is quite onerous to test different approaches to, for example, pricing, promotions and assortments, as it requires a lot of manual work such as updating shelf labels, producing promotional material and rebuilding shelf displays,” she says. “This means that the business is more static than one would think. Electronic shelf labels make changes easier, but online stores still offer a much better opportunity to run lean experiments on a limited scale.” Systematic testing allows omnichannel retailers to better understand, for example, consumer response to assortment width or price sensitivity in different product categories and for specific items, Småros says. This kind of testing and analysis enables continuous optimization of the online offering, but is also highly likely to provide insights that can be used in brick-and-mortar stores. Workforce Optimized In the end, demand forecasting in an omnichannel environment isn’t just about product stock — it’s also about workforce. In traditional brick-andmortar retail, store personnel forms 14 percent of sales, the largest operational cost, according to Småros. In this case, shoppers do a lot of work picking their products. Online, retailers need to perform order picking, which is labor-intensive, whether in regular stores, distribution centers or dark stores. Multichannel grocers need to forecast picking volumes and their timing accurately to fulfill lead-time promises made to customers, without excess labor cost. For instance, if online orders are picked in a regular store, a grocer needs three separate forecasts to optimize rosters: the in-store sales forecast taken down to the 15-minutes level, which is the driver for checkout work and customer service; the forecast of daily incoming deliveries, which is the driver for in-store goods and handling work; and online order lines to be fulfilled within a certain timeframe, which is the driver for order-picking work. “Through smart optimization of the timing of work tasks, retailers can, for example, move personnel from the checkouts to order picking when business is slower in the store,” Småros asserts. “Planning for this in advance means that excellent service is possible while keeping costs in check.” PG


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Regulatory Issues

Supply Chain

Legal Ease

FreSh DeBaTe Tom Verhagen, owner of Larry’s Piggly Wiggly (second from left), discusses business issues with rep. Mike Gallagher, r-Wis. (third from left).

Working with the new administration, industry trade groups hope to see more commonsense regulations that could help with supply chain efficiency. By Jenny McTaggart

W

hen’s the last time you invited a politician to serve up a slice of pizza in your supermarket deli? This type of real-life relationship building with representatives from Washington is already taking place at some of the country’s independently owned grocery stores, and it might be happening more often now that communication channels seem to be opening up more under the new administration in the nation’s capital. With traditionally business-friendly Republicans in charge of Washington, the time is ripe for the industry to pursue significant changes in business — think tax reform — along with revisions of outdated, redundant and sometimes out-of-place regulations. President Donald J. Trump’s executive order 13771, “Reducing Regulation and Controlling Regulatory Costs,” is a key driver that’s already encouraging government agencies to take a fresh look at the current regulations on the books, including the somewhat controversial menu-labeling rule. The industry’s leading trade groups are seizing

the day to make their voices heard. “The conversations we’re having now with the new administration, and with Congress, are, how do we set up a process so that in the future we do regulations in a smart way?” says Greg Ferrara, SVP of government relations and public affairs for the Arlington, Va.-based National Grocers Association (NGA). “Some of our frustration in the past has been when a federal agency issues regulations, let’s say in the meat department, but they don’t understand how the majority of supermarket meat departments operate in this country. Before you go and write a regulation or a proposed rule, why not educate yourself and meet with the industry?” In recent years, NGA has been encouraging its members to conduct more face-to-face meetings with their elected officials. NGA, Food Marketing Institute (FMI) and the Food Industry Association Executives (FIAE) schedule a Day in Washington every spring, during which senior-level retail and wholesale executives fly to Washington to meet with government officials. Additionally, NGA is advocating for more store visits throughout the

We’ve had members of Congress get behind the deli and slice meat, or make pizzas, or work the registers — and it’s not just for a photo op.” —Greg Ferrara, NGa

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Supply Chain

Day in D.C. Tres Lund, chairman and CEO of Lunds & Byerlys (left),and Chris Coborn, president and CEO of Coborn’s (center), were among the execs who flew in for the 2017 Day in Washington.

Regulatory Issues

year. Over the past summer alone, more than 12 members of Congress and the Senate have walked its members’ stores and distribution centers to learn first-hand about supermarket operations. “We’ve had members of Congress get behind the deli and slice meat, or make pizzas, or work the registers — and it’s not just for a photo op,” continues Ferrara. “They really remember that hour or so they spend in a facility, and then they can relate back to it when they’re dealing with legislation that relates to our industry.”

Changes on the Menu Perhaps one of the best examples of regulations that need retooling is menu labeling. Originally designed under President Barack Obama’s Affordable Health Care Act to compel restaurants to share information about calorie content, the legislation ended up being interpreted to include supermarket operators, which prepare and present food in their stores in a much different way from that of traditional chain restaurants. “Under menu labeling specifically, I’d say the new administration under the Food and Drug Administration and the Department of Health and Human Services is much more in tune to the indus-

try’s concerns,” notes Ferrara. “For a law that was originally passed to cover chain restaurants, and then was expanded to include supermarkets, and trying to have a supermarket comply with regulations that were written for chain restaurants, it’s been difficult. It’s like trying to fit a square peg in a round hole.” Arlington-based FMI’s chief regulatory officer and legal counsel, Stephanie Barnes, concurs. “In the supermarket, not only is there a ton of variability in the recipes and types of food you might be using, but those changes can alter the entire nutritional profile,” she notes. “Additionally, a lot of the items that are offered in a supermarket aren’t sold on a menu or menu board, so having to essentially create from scratch some other type of signage with the nutrition information is particularly challenging. Third, there are still a lot of questions we’re working

A D VE RT O RIA L

Talking with Eric Frank President & CEO, Tosca Progressive Grocer: Reusable Plastic Containers (RPCs) for eggs are a relatively new packaging alternative to corrugated. Why was the container introduced Eric Frank: Reusable containers are an established packaging solution in Europe and have proven to be a better packaging alternative for most perishable items. Eggs are one of the most fragile items in a grocery store, and many are damaged long before they even make it to the customer’s shopping cart, creating substantial losses for retailers. To address this problem, a prominent grocery retailer asked Tosca to develop a packaging and supply chain solution for this issue.

more durable shipping platform, reducing markdowns and damage by 50%. And, our unique one-step SmartWall™ design also simplifies the re-stocking process for store associates, when the RPC is used on display. We’re thrilled that our advanced reusable container drives efficiencies throughout the entire supply chain, resulting in substantial business benefits and a better overall customer experience.

PG: What is the value of reusable containers EF: The egg RPC’s strong construction and protective features provide a much

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| Progressive Grocer | Ahead of What’s Next | October 2017

PG: If a retailer or supplier has not used reusable containers before, how would they transition from one-way packaging to reusable containers EF: Packaging is a critical component of the supply chain, which is why Tosca built the Supply Chain Optimization Model. This comprehensive tool allows users to understand all facets of a packaging conversion – before making a single change. Once the decision is made to implement reusables, Tosca works closely with the retailer to make it a seamless transition. We've created customized training material and conduct DC and store visits to make sure every step in the supply chain is ready for the change. Reusable containers provide an opportunity to take your supply chain to a better place which not only creates value for you, but more importantly, for your customers.


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Supply Chain

Regulatory Issues

through in terms of the scope of the items covered.” The good news is that under the new administration, FDA has essentially reopened the docket to accept comments on ways it can potentially revise the regulation to make it more workable, particularly for those establishments that aren’t operating like a traditional restaurant. The agency hasn’t set a specific timeline for changes, but as of now, comments are being considered, and the compliance

Indies on the Hill Several independent retailers made their way to Washington, D.C., last month to speak up about issues important to their business. During a Sept. 7 hearing held by the House Committee on Small Business Subcommittee on Economic Growth, Tax and Capital Access, Carlos Castro (pictured), president of Woodbridge, Va.-based Todos Supermarket, spoke of the overwhelming number of regulations that keep small businesses from growing. He discussed how independents have ended up having to reallocate resources that were once earmarked for store improvements, additional staff and expanded offerings. Castro also cited a National Grocers Association (NGA) member survey that found the average independent grocer spends between $40,000 and $50,000 yearly on regularly compliance. On Sept. 14, Jimmy Wright, a single-store operator of Opelika, Ala.-based Wright’s Market, testified on behalf of NGA on issues retailers face while administering SNAP benefits. He outlined how the SNAP Online Purchasing Pilot program is expected to help supermarkets offer a full variety of fresh meat and produce in communities that typically lack access due to supply chain issues. The pilot program was mandated in the 2014 Farm Bill to test the feasibility and implications of allowing food retailers to accept SNAP benefits through online transactions. “For small businesses — like Wright’s Market — to successfully innovate in food retail, we need the government to keep up the pace with our ambitions,” he said. “When USDA transitioned from paper vouchers to EBT cards, our SNAP customers benefited and our store achieved new efficiencies. Implementing this pilot will be an important step in the right direction, much like the EBT transition.” In addition to outlining the importance of kicking off the pilot program, Wright highlighted the need for lawmakers to create a more streamlined and efficient SNAP license application program for existing retailers in good standing, while also giving extra attention to stores opening in food deserts. He went on to urge members of the committee to reject any proposal that would add new regulatory burdens on retailers that accept SNAP, such as restricting what foods participants can purchase with their benefit.

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date is still set for May 7, 2018. FMI and its members submitted almost 30 pages of “really extensive comments” to FDA, according to Barnes. “We discussed all the challenges our members have faced in implementing the menu-labeling regulation in their stores, and potential ways that we think FDA should revise or amend the rules to make them more workable in the grocery store setting,” she notes. Another food-related piece of legislation that has been closely watched by the industry is the Food Safety Modernization Act (FSMA), but at this point, six of the seven regulations have gone into effect, so the industry doesn’t expect to see any changes under the Trump administration. Only the adulteration rule, which is often referred to as “food defense,” remains, but it mostly affects manufacturers. Barnes is pleased with how retailers have stepped up in the past few years to make sure they’re FSMA compliant. “Our members have done a good job of developing their food safety plans, both domestically and on the foreign-supplier verification piece for those who are importing food from abroad,” she says. With FSMA in good standing, a wait-and-see issue coming down the pipeline is genetic-engineering mandatory disclosure, which comes out of the GMO bill that was passed last summer. “This is something we’re going to be working on over the course of the next year, as we see proposed regulations in terms of what that mandatory disclosure is going to look like,” explains Barnes. “This is definitely an area that will need to be fleshed out through the rulemaking.” NGA’s Ferrara says his group appreciates that the federal law “gives a solution to the supply chain” while supporting transparency to consumers by using technology.

Tax Reform on the Horizon Two government-related issues that aren’t directly related to food, but definitely impact the retailing business in general, are the U.S. Department of Labor’s (DOL) overtime rule and tax reform. The overtime rule, which updated the salary threshold for white-collar exemptions to $47,476 annually, was set to go into effect on Dec. 6, 2016, but it was met with several lawsuits from states and pro-business groups. A federal court in Texas ended up granting an injunction, and then later ruled that the DOL exceeded its rulemaking authority in issuing the new rules, essentially ending the litigation. Now the DOL has put out a request for information, and both FMI and NGA are submitting comments. “We think the salary threshold does need to be increased,” reasons Ferrara, “but we think it needs to be done in a more moderate and phased-in fashion, and not with automatic updates that don’t take into account what’s going on in the economy.” He points to


past salary updates in which lawmakers looked at the whole country and came up with a blended average. As for tax reform, the industry is eagerly watching to see whether the tax code will finally be updated. “This is important, because we’re a high-tax industry,” notes Andy Harig, senior director of sustainability, tax and trade at FMI. “Our effective tax rate is close to the top marginal income tax rate, in the 30 percent range. So grocers are not on a level playing field, and that impacts their business every day, including being able to compete with each other and

pass along savings to their customers. It’s difficult to plan ahead with such a large tax rate over your head.” He is optimistic that some type of tax reform will be achieved, ideally with retailers’ effective tax rates lowered to the mid- or even low-20 percent range. “This would be a huge boon for the industry,” he maintains. As NGA’s Ferrara sees it, tax reform could be a lifeline for some independents. “For an independent grocer, a privately owned business, taxes have a major impact on operations,” he says. “That’s something we’re pushing really hard, whether it’s tax relief, tax reform or simplifying the tax code, but also ensuring that we don’t do tax reform just for the big international companies. “The reality is, if you stop and look at our economy, I’d say the economic drivers are local businesses — the guys who have been there for 50 years, or even 100 years,” he continues. “When the big companies shut down offices and move out, the local grocer or distribution is still there, supporting local American jobs. That’s where we think we need to be focused on with tax reform. How do we empower the local companies and give them the resources they need so that they can continue investing in their local communities?” PG

Our members have done a good job of developing their food safety plans, both domestically and on the foreign-supplier verification piece for those who are importing food from abroad.” —Stephanie Barnes, FMI

October 2017 | progressivegrocer.com |

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Signage

Equipment & Design

Encouraging Signs Innovation is the keyword in today’s supermarket signage. By Bob Ingram

ApplEs AnD EthnIcIty Blanc Display Group provides a signature series for apples (left) and an Ethnic series (below).

A

s food shoppers have become more sophisticated and adventurous in their product choices, so have the signs that guide them both outside and on their in-store travels. According to Didier Blanc, president of Blanc Display Group, in Dover, N.J., “The trend in signage is in providing consumer education as well as ethnic-related merchandise.” His company has responded to this trend by introducing the Signature Series and World of Produce Buyer’s Guide headers and ethnic category signage, inspired by cultural awareness and the consumer’s desire to learn and experiment. “We have also seen a surge in the popularity of our Hispanic-related signage and our ‘Organic’ and ‘Local’ product lines,” Blanc notes. “The spikes correlate to industry trends.” The company’s Marketplace Chalk line is increasingly popular, creating a farmstand feeling within a store. “We introduced signage inserts with QR codes,” Blanc notes, “that, when scanned via a free app, offer item information like nutrition, selection and storage tips, recipes, and more, in one convenient location.”

Beyond that, the Fresh Food 411 Interactive Kiosk is what he calls “information central” for savvy shoppers, presenting instantaneous product information in a consumer-friendly style. Blanc believes that signage will become more and more interactive, differentiating brick-andmortar stores from their online competition. October 2017 | progressivegrocer.com |

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Visit us at the all new ProgressiveGrocer.com The new website provides the lastest industry news and trends along with: • • • • • •

Solutions focused pages Perimeter category pages Blog series New products Industry news bulletins Video and podcast content

KEEPING YOU ‘AHEAD OF WHAT’S NEXT’


Signage

Equipment & Design

FaBRIC FEaTuRE KeithFabry Reprographics’ fabric signs can be swapped out quickly.

Information, Please “Supermarkets are using a lot of fabric” in new store-sign scenarios, because they can be changed relatively quickly and are inexpensive to ship, says Jimmy Keith, president of Richmond, Va.-based KeithFabry Reprographics. The company’s latest innovation is a retractable battery-powered banner system that can be as big as 24 feet by 10 feet. The system allows the changing of large displays monthly rather than yearly, enabling more promotions, which keeps the store more interesting and appealing. Keith observes that quick signs and stanchion signs, as well as magnet signs, are also trending, but that floor graphics “are not as popular as we thought they would be in this industry.” Window clings are very popular, according to Keith, “because they work” as people walk in and see the special of the day. Signs have a lot more information on them today, he notes; as a result, signs are getting bigger. “Better signage changes the environment. It’s not the same place — customer environment — over and over again,” Keith says. “That makes a big difference.” The Howard Co., in Brookfield, Wis., of-

fers digital menu boards and digital signage for inside the store and for drive-through or pickup windows outside, and also provides guidance for placement and content. The content can be changed based on the time of day, with the corporate office having control, says Regional VP Grant Gustke. “If a small to medium chain is not looking at the digital menu boards or outdoor products, they are falling behind the large chains because they are all doing that already,” he warns. “The technology of touchscreen ordering or ordering on an app is coming, too.”

Customized Experiences Customers of San Antonio-based Comet Signs LLC, “continue to focus on significant exterior signage packages providing a consistent brand appearance,” says Business Development Manager Mark Ahrens. “We see growth in both exterior and interior store-wayfinding signage designed to help customers find the products they need quickly.” Ahrens says his company also sees trends to differentiate exterior and interior sign design and messaging, based on microtargeted demographics and research for each location’s trade area. LED sign illumination provides energy savings

Better signage changes the environment. It’s not the same place — customer environment — over and over again. That makes a big difference.” —Jimmy Keith, KeithFabry Reprographics

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Equipment & Design

DiGiTAL DAyPArTS The Howard Co.’s digital menu boards change according to dayparts.

As focus grows on convenience and quickpickup shopping, the customer experience will continue to be enhanced with more custom signage.” —Mark Ahrens, Comet Signs LLC

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Signage

and reduces maintenance costs, he says, and customization by store location and unique materials, and design styles that differentiate a brand from competitors, are also growing. “We find pylon or multitenant signs, channel letter and cabinet signs for buildings, and wayfinding signs are all included in basic sign packages,” Ahrens notes. In addition to “shopping by apps,” he sees as another key piece the use of mapping apps that show not only location, but also allow customers to see the store via programs like Google Maps. “This makes quality exterior signage even more important for branding,” he says. “As focus grows on convenience and quickpickup shopping, the customer experience will continue to be enhanced with more custom signage,” Ahrens asserts.

Measures of Success Erik McMillan, founder and CEO of Shelfbucks, in Austin, Texas, points out that as many as 50 percent of in-store merchandising materials never leave the back room, or aren’t executed in the right way at the right time. Measuring in-store merchandising, he says, “has historically been costly, inaccurate and otherwise impractical. In-store signage has always been a limited, one-way form of communication.” According to McMillan, Shelfbucks’ MEASURE platform addresses these challenges by incorporating sensors into all in-store signage and merchandising, enabling CPGs and retailers to track their campaigns from production through execution by measuring in-store performance with what he calls “unprecedented accuracy.” “Our platform also enables in-store merchandising to engage directly with shoppers’ smartphones, delivering product videos, ratings and reviews, coupons, and other relevant content,” he says. The Shelfbucks platform also gauges key factors like shopper traffic and conversion rates. “After all, you can’t improve what you can’t measure,” McMillan says. The platform is a “pull” model for customer engagement, McMillan explains, meaning that it doesn’t send unwanted spam content to shoppers, but enables them to “pull” the information they want by placing their smartphones next to the

| Progressive Grocer | Ahead of What’s Next | October 2017

sensor-enabled signage and displays. “In the future,” he says, “we believe every instore store campaign will be measurable, adjustable and more effective.”

On-the-job Training Germantown, Md.-based Hughes has been successful in rolling out Breakroom TV and MediaTraining across several large grocery conglomerates, according to Senior Marketing Manager Curtis Campbell, who notes: “I believe digital signage to be in its very infancy when it comes to grocery. Using it for employee communication is just the beginning.” Hughes’ cloud-based, cost-effective solutions use SmartTVs to place employee-facing digital signage screens in areas where associates can see and interact with them often. “Now, grocers can provide key performance indicators to employees, as well as provide real-time and on-demand training at the screen,” Campbell says, “versus sticking associates in a training room for hours on end.” The entire digital signage network can be controlled from a central location and managed from any device with an internet connection. “HR and communications teams no longer need to send stacks of paper fliers to bulletin boards or post endless announcements on an employee portal that no one goes to,” Campbell points out. The Breakroom TV and MediaTraining solutions screens can be integrated with social media so that employees can interact with screens from their personal devices. “A great example of this, particularly within a grocer,” he says, “is employees learning about a recall. Rather than playing the age-old game of telephone, where information is always lost in translation, employees can inform each other via social media, which is then displayed on the screen to drive engagement even higher.” This is yet another encouraging sign of the supermarket times, with even more to come. PG


Speaking with…

Shawn Burcham, Founder & CEO, PFSbrands Progressive Grocer: Offering some sort of foodservice program has become a “must” for retailers who want to successfully compete in today’s grocery marketplace. But many grocers don’t know where to begin. How can PFSbrands help them get started? Shawn Burcham: I can’t say enough about our team. People ask me often how we have consistently grown so fast and I tell them it is definitely attributed to our talented team of employee owners. Our Regional Business Developers have decades of foodservice experience—they act as consultants for your business and are armed with the tools and information to get you on the right path. The real heavy lifting comes after the opening. That’s when our Field Operations Team of Business Advisors help operators improve topline sales and profit margins. If our program isn’t a fit for your location we will be upfront and honest. Sometimes we even suggest a private label approach if helping you create your own brand makes the most sense for your store(s). Being a full-service product and equipment company gives us the flexibility to help create a variety of solutions, from sourcing specific kitchen equipment to training your entire team and creating a promotional schedule for your store. It all starts with that initial business development meeting.

PG: Your company’s motto is “Our Support. Your Success.” What does that mean to retailers? And how does that set you apart from your competitors? SB: How do we help our retailers “win?” We do it with continued training and unparalleled support that lasts the duration of your partnership with us. Our support is available so retailers can be successful not just in the opening week of their SPOnSOrEd COntEnt

program, but for years to come. From creating the perfect limited time offer that will knock it out of the park at your stores, to banking a percentage of your branded product purchases for you to use to market and grow your business, we are here for you! As we work to develop new business, our biggest obstacle is overcoming our prospects’ distrust of the companies they have encountered that “talk the talk, but don’t walk the walk.” At PFSbrands we do what we say we are going to do.

PG: There are so many components of creating and then successfully managing a hot food program—much of it not even related to food! Once a store has launched a foodservice program, can PFSbrands help with the ongoing challenges of billing, training, marketing and the like? SB: Absolutely, that’s what we’re here for. The hardest part of implementing and being successful in foodservice is EXECUTION. We are not in the chicken business selling people, we are in the people business selling chicken. In order to be successful and profitable in the long-term, you must choose the right people and help them to be more successful. Given the multiple layers of support we provide— customer success, field operations, marketing, human resources, accounting, printing and product quality to name just a few—I’m confident we have the support and systems in place to help our retail partners succeed. We also hold monthly Discovery Day sessions at our corporate office where current and potential partners can learn about everything from hiring to marketing and all that’s in between. These are highly engaging sessions where you can ask any questions and get connected to all the resources you have at your disposal working with PFSbrands. There is a short video showcasing the event on our website: http://pfsbrands.com/discovery-days/


Food, Beverage & Nonfood Products

Hydrating Wonder Coconut water has been hot in recent years for its replenishing qualities, as has watermelon juice. Now Frey Farms has added a pressed, blended juice to its Tsamma juice lineup, combining the two and their awesome benefits: Watermelon + Coconut Water blend, said to be the first juice blend of its kind. The beverage offers increased levels of hydration and more antioxidants, as well as essential nutrients such as 15 milligrams of lycopene and 49 milligrams of vitamin C. The SRP is $2.99 per 12-ounce bottle. www.tsammajuice.com

Flavor to Savor Sensible Sandwiches Frozen sandwich pockets have typically been off-limits to those sensitive to gluten, leaving them with yet another food to avoid when seeking a convenient lunch or snack. GeeFree Foods has solved that dilemma with a line of gluten-free, all-natural microwavable sandwich pockets in three varieties: Sausage, Egg and Cheese; Buffalo Chicken; and Cheese Pizza. The frozen puff pastries, featuring microwavable sleeves to make them crispy, come two per box and are free from antibiotics, hormones, nitrates, corn and soy. The SRP is $6.99 per box. www.geefree.com

Bold flavor is an important factor in choosing meat, whether one is grilling a steak or piling high a cold-cut sandwich. Niman Ranch’s prosciutto is dry-cured to intensify its savory flavor, allowing for a satisfying snack from small, independent U.S. family hog farmers who adhere to some of the strictest animal welfare protocols around, including no antibiotics or animal-byproducts feed ever. The prosciutto comes in 3-ounce portions with an SRP range of $5.99-$8.99 each, and in snack packs featuring cheese and other goodies with an SRP range of $4.99-$5.99 each. https://www.nimanranch.com

Cut the Carbs Low-carb alternatives to some of the starchier foods on the market are big with consumers, many of whom want comfort food without the guilt that follows. Enter B&G Foods’ latest Green Giant offering: Veggie Spirals. The spiral-shaped vegetables are a low-carb alternative to pasta and come in three vegetable varieties: zucchini, carrots and butternut squash. Each variety of gluten-free, Paleo-friendly and low-calorie Green Giant Veggie Spirals contains 65 percent to 90 percent fewer carbs than traditional pasta. The SRP is $3.99 per 12-ounce package. https://www.greengiant.com

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Soreness, be Gone Few things ruin a good night’s sleep more than a nasty muscle cramp, and waiting one out can be an excruciating experience. Luckily, Avadim Technologies has launched Theraworx Relief, an easy-to-use, fast-absorbing foam or spray that can be applied daily to prevent muscle cramps and spasms, or as needed to release a cramp quickly and reduce muscle soreness. Available without a prescription in a 7.1-ounce foam or spray bottle, the formulation is made from a blend of safe ingredients that work with the body’s own natural functions to relieve and even prevent cramps and spasms. Safe for daily use, the product doesn’t interfere with medications or other topical products, and is gentle enough to be used by top hospitals, yet powerful enough to be part of the muscle therapy used by elite athletes. The SRP is $19.95 per bottle. https://theraworxrelief.com

Fiery Meets Tangy When looking to snack, Americans are turning more toward lowcarb, high-protein taste sensations, with bold, spicy flavors in vogue. To meet these tastes, Rudolph Foods now offers Southern Recipe Cantina Mix, which combines two flavors – Hot ‘N spicy and Tangy Chili Limon — with its blend of pork rinds, tortilla chips, corn snacks and wheat snacks. The SRP is $1.99 per 5-ounce bag. www.rudolphfoods.com

Double Dose of Mediterranean The Mediterranean diet remains popular with consumers, and hummus’ popularity as a high-protein, healthful snack and condiment is one result of that. You can’t get more Mediterranean than Sabra’s Greek-Inspired Herbs & Olive Oil Hummus, a refrigerated product said to boast an “explosion of flavor” arising from a mix of traditional herbs such as oregano, thyme and mint, as well as black pepper and a punch of lemon. Available for a limited time, the variety is also vegan, non-GMO and gluten-free, and has an SRP of $3.99 per 10-ounce container. http://sabra.com

Chunky and Authentic Authenticity is key when making Italian dishes, which is why R&B Foods now offers Bertolli Rustic Cut Pasta Sauces, designed to deliver a truly chunky sauce for lovers of Italian fare. The sauces come in four varieties: Marinara with Traditional Vegetables, Spicy Marinara with Traditional Vegetables, Roasted Garlic Marinara with Garden Vegetables, and Sweet Peppers with Portobello Mushrooms. Containing no artificial flavors or colors, or added sugar, each sauce has an SRP of $3.99 per 24-ounce glass jar. www.bertolli.com October 2017 | progressivegrocer.com |

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Celebrate the 2017 Top Women in Grocery Now in its second decade, Progressive Grocer will honor the 2017 Top Women in Grocery winners at our signature gala event. November 8-9, 2017 The Westin O’Hare Chicago (rosemont), IL

This year’s event will include: • • • • • •

Wednesday evening welcome reception Leadership Development Program (optional) Daytime activities Gala cocktail reception Gala dinner and awards presentation After-dinner dessert party

After-Dinner Dessert Party Sponsor

It will be a day full of inspiration and celebration! trailblazer Sponsor

Delight Lounge Sponsor

gold Sponsor

Exclusive break Sponsor

Contoured Solutions for

Your Success

breakfast Sponsor

Keynote Speaker Sponsor

To see our full agenda and learn more about the Top Women in Grocery gala visit www.topwomeningrocery.progressivegrocer.com To sponsor, please contact: Katie Brennan kbrennan@ensembleIQ.com 917-859-3619

produced by:

bronze Sponsor

presented by: floral Sponsor


Index Airius American Express Co Apio Arla Foods Avocados From Mexico Biro Manufacturing Bland Farms Blount Fine Foods Boston Beer/Samuel Adams Brewery Tour Line California Olive Committee Campbell Soup Company Celsius, Inc. Columbus Craft Meats CoolSys Crave Brothers Farmstead Cheese, LLC Creekstone Farms CSM Bakery Products Dawn Food Products Inc. Daymon Del Monte Fresh Produce NA Inc. Diva International Inc. DNP Imagingcomm America Corporation Domino Foods Dunnhumby E&J Gallo Emmi Roth USA Forte Products General Mills Inc. Giorgio Foods, Inc. Goya Foods, Inc. Hallmark Cards, Inc. International Paper Retail Display and Packaging Kelloggs Company Kimberly-Clark Co. Litehouse Mars Chocolate NA/ Wrigley Mason Vitamins Inc. MasonWays Indestructible Plastics Mission Produce Nestlé Purina Pet Care New Pig Nielsen Ole Mexican Foods Peri & Sons Farms Premier Nutrition Private Label Manufacturers Association Pro Food Systems - Champs Chicken Quaker Maid Meats Red Gold, LLC Rust-Oleum Sealed Air Smithfield Fresh Southern Glazer’s Wine & Spirits Stemilt Growers, Inc. The Holiday Gift Check Program The Humane Society of the United States The Wonderful Company/POM Wonderful Arils Tony Chachere’s Creole Foods Tosca Ltd. Transcontinental Robbie Trion Industries Inc. Truly Good Foods Unilever North America US Alliance Paper Vestcom Volk Enterprises Zespri International Limited Zumex Usa, Inc.

69 3 85 36 76-77 88 83 10-11, 57 52 79 31 34 46 98 72 33 49 Back Cover   50 74-75   94 104 Inside Front Cover Insert 51   53 63 103 18-19   78 23 41 7 15 Inside Back Cover 91 58 90 84 44 47 55   17 60 80 89 67 61, 109   39 45 4 42-43   13 48 86 68 28 21 62 100-101   38 9, Insert 35 82 64 71 97 70 25 81

Progressive Grocer (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 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 ©2017 EnsembleIQ All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 Phone: 224 632-8200 Fax: 224 632-8266 www.ensembleiq.com United StateS MarketS Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Technology • Hospitality • Apparel

Canadian MarketS • Convenience • Pharmacy • Foodservice

advertiSing SaleS & BUSineSS Staff Alan Glass Executive Chairman 609-276-2842 aglass@ensembleiq.com Richard Rivera Chief Operating Officer/Chief Brand Officer 973-264-4380 rrivera@ensembleiq.com Ned Bardic Chief Customer Officer/President of Strategic Platforms 224-632-8224 nbardic@ensembleiq.com Katie Brennan Senior Vice President/Brand Director 201-855-7609 • Cell: 917-859-3619 kbrennan@ensembleiq.com Larry Cornick Southeast Account Executive 224-632-8248 lcornick@ensembleiq.com Angela Flatland CO, IL, IN, IA, KS, KY, MI, MO, NE, Midwest, Marketing Manager (AR, ND, OK, SD, TN, WI) 224-229-0547 Cell: 608-320-4421 aflatland@ensembleiq.com Judy Hayes Senior Sales Manager 925-785-9665 jhayes@ensembleiq.com Theresa Kossack Senior Sales Manager 214-226-6468 tkossack@ensembleiq.com Rick Neigher Western Regional Sales Manager (CA, OR, WA) 818-597-9029 rneigher@ensembleiq.com Mike Shaw Northeast, Marketing Manager 201-855-7631 • Cell 201-281-9100 mshaw@ensembleiq.com Jackie Batson Advertising Manager 224-632-8183 jbatson@ensembleiq.com

October 2017 | progressivegrocer.com |

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Independent By Katie Martin

Exploit Advantages of Being Small Independents can meet needs larger retailers can’t.

Knowing customers and being attuned to what their communities want are what good independent retailers do, and it’s why they’re such a vital part both of their communities and the industry as a whole.

T

he grocery world, as well as much of the world in general, is watching to see the outcome of Amazon’s purchase of Whole Foods Market, and how it will affect the grocery industry. The latest news, as of press time, is that Amazon is greatly curtailing the influence that local vendors will have at the local-store level by limiting how their products make it to store shelves, and vendor involvement once it’s on the shelf. According to reports, beginning in April, local vendors will no longer be able to pitch their products to individual stores or at the regional level; decisions will now be made at corporate. Local vendors will also no longer be able to go into stores to promote their products or make sure their items are stocked and displayed as desired. This is an incredible opportunity for independents. No one knows their market better than independent grocers, and indies also have the ability to make decisions quickly, without corporate red tape. They also benefit from the added bonus that consumers like to shop small, locally owned businesses, and like it even more when small businesses support other small, locally owned businesses. Amazon may be willing to take the risk of pulling back one of the key elements that had set Whole Foods apart from some of its competition, because the online retailer has found much of its success based on how well it knows its customer. “They can get to know that shopper better than

anyone else, and they can make that shopper’s job easy through simplification” like one-click ordering and pre-paying delivery charges for the whole year, says John Ross, the newly appointed CEO/ president of the Independent Grocers Alliance (IGA). The organization has recently embarked on a plan to individualize the Big Data it’s collecting from its member retailers to create promotions customized to shoppers. The goal is, know customers better than Amazon, Ross notes. Knowing customers and being attuned to what their communities want are what good independent retailers do, and it’s why they’re such a vital part both of their communities and the industry as a whole. Larger retailers often look to what independents are doing both for insight into the community and inspiration. It’s for this reason that Progressive Grocer has always been committed to telling the independents’ story. That seems like as good an opening as any to note that we’re now taking nominations for the sixth annual Outstanding Independents Awards. Nominations must be in by Nov. 1, 2017. You can find the nomination form at www.progressivegrocer.com/2018independentawards.

Are your fresh departments, like produce, meat/seafood, bakery or deli/prepared foods, absolutely superb? Is your center store miles ahead of the industry norm? Do you have particular expertise in technology or sustainability? Let us know how you partner with your community to make it better, or how you wow your customers to stand out from the competition. Tell us whether you do one or more of these things well. From among those stores exhibiting excellence in multiple categories, PG will select the Overall Outstanding Operators — one single store and one multiplestore operator. Winners will appear Katie Martin in the February 2018 issue of PG and Senior Editor be honored during the NGA show kmartin@ensembleiq.com the same month. PG

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Progressive Grocer - October 2017  

Progressive Grocer - October 2017