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Store of the Month: Hy-Vee ups prepared food selection, rethinks grocery aisles Page 44

Sustainable Progress Envisioning a healthier planet, grocers embrace initiatives to achieve that goal Page 25

November 2017 • Volume 96 Number 11

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Contents

11.17 Volume 96, Issue 11

25

Corporate Responsibility

Sustainable Visions

Helping the environment has become a key part of grocers’ CR platforms.

35 / 2017 Grocery Tech Trends Study Embracing Digital Transformation Fast-moving market forces light a fire among grocers to increase the pace of their omnichannel and technology investments.

44

66 / Fresh Food Winter Wonderland Consumer demand for local, color and quality in the produce department is redefining what’s in season.

75 / Refrigerated & Frozen Culture Shift In search of the next Greek-style success, yogurt manufacturers look to new ingredients, packaging.

44 / Store of the Month Eat Street Hy-Vee ramps up food court offerings while testing upscale center store concepts. 59 / Meal Solutions Match Game Grocers must consider values, variety, common goals and more when looking to partner with meal-kit services.

November 2017 | progressivegrocer.com |

5


Contents

11.17

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

81

81 / PG Pet Pet Parenting Takes Flight The humanization trend is a boon for grocery retailers.

84 / Supply Chain Fashionable Thinking Global-minded clothing retailers can offer supply chain inspiration for U.S. grocers.

91

91 / Equipment & Design Put it There Mobile merchandisers are becoming more versatile and important, especially during the holidays.

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 Kathleen Furore, Bob Ingram, Jenny McTaggart, Lynn Petrak 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 Even Disruptors Get Disrupted 10 / PG Pulse 12 / In-store Events Calendar January 2018 14 / Nielsen’s Shelf Stoppers/Spotlight

Alcoholic Beverages 18 / Mintel Global New Products Meal Kits, Sandwiches and Salads

6

20 / All’s Wellness Sides Can Shine, Too 22 / Industry Events Mapping Grocerant Success 94 / What’s Next Editors’ Picks for Innovative Products 98 / Tech Talk Is it Time for Grocers to Adopt VR?

| Progressive Grocer | November 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


AmaZING Sweetener Sales.

The Secret to

Organic Stevia Sweetener. 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!

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Note By Jim Dudlicek

Even Disruptors

Get Disrupted

T They say the only constant is change. That’s never been more true for grocery.

hey say the only constant is change. That’s never been more true for grocery, but perhaps we can further refine that statement: The only constant is disruption. Among the industry’s disruptors is Lidl, the German limited-selection hard-discounter whose ability to gobble up market share abroad is expected by many pundits to carry through similarly in the United States. But Lidl is finding that, in this business, nothing is a sure thing. As reported by The Wall Street Journal, in June, Lidl was drawing 11 percent of consumer visits to traditional grocers in nine markets in Virginia, North Carolina and South Carolina, according to data that Los Angeles-based shopper marketing consultancy InMarket shared with WSJ. Within two months, Lidl’s share of that traffic fell below 8 percent, even as the retailer was opening more stores in those states, and the indigenous players have recovered their market share. “With the quick falloff, I’d be concerned if I was them,” Cameron Peebles, InMarket’s chief marketing officer, told WSJ. Even after the honeymoon period, those are still not terrible results for a newcomer in a highly competitive area. But it indicates that perhaps Lidl was a bit overconfident. Call me a cynic, but I get suspicious of any company that’s so confident of victory that it’s shopping for real estate halfway across the country before it’s even opened the doors

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

8

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

of its first locations, which happen to be in some of the most competitive, overstored grocery markets in the country — a country where Lidl’s biggest historic rival, Aldi, has had a 40-year head start. I was in Greenville, S.C., in June, visiting a new store opened by native Carolinas grocer Lowes Foods the same week that a Lidl store was opening across town. The difference between the stores was night and day. Lowes was a veritable Disneyland of sights, sounds and aromas, from its quirky rustic decor to extensive prepared food offerings to an onsite microbrewery. Lidl was Spartan by comparison — limited assortment, price-driven, yet somehow mildly upscale. I remember thinking that Lidl was like Aldi if Whole Foods had designed it. And the Lidl store was jammed. In an area where one had to pass a host of other stores, including Aldi, Bi-Lo, The Fresh Market, Publix, Walmart and at least one sister Lowes location, folks were flocking to the new chain in town. But it seems that the novelty may have worn off. As of this writing, Lidl has opened 37 stores in five states, with plans for up to 100 along the East Coast by next summer. “This is designed for us to learn and adapt and be nimble,” Lidl spokesman Will Harwood told WSJ. “It’s not about whether our model works in a market, but what we do to adapt to that market.” Lidl will have to start adapting quickly if it intends to live up to the lofty expectations thrust upon it in the months leading up to its U.S. launch. Most traditional grocers have already been adapting to better compete with Lidl, Aldi (which aims to be as big as Kroger in five years), Walmart, Amazon, dollar and c-stores, and even restaurants, along with their mainstream supermarket peers down the street. The company is already making changes: Lidl is tapping Shipt to offer online ordering and delivery in the Greenville area, interestingly at the same time that southeastern regional favorite Publix is launching Shipt service in neighboring Spartanburg. Even the disruptors get disrupted, providing a lesson for everyone to stay on their toes. PG


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What’s trending on progressivegrocer.com …

H-E-B has a Millennial fan base like almost no other, not to mention a heart as big as the Lone Star State, which made for the hottest story on progressivegrocer.com during the Sept. 16-Oct. 15 time period. We took a look at how CEO Charles Butt’s own modest upbringing and strong values led him to be such a great philanthropist and advocate for the shopper, down to donations to support public education and relief aid for victims of Hurricanes Harvey and Irma. Coming in at Nos. 2 and 5 were stories of another good community and customer servant — Hy-Vee — which Progressive Grocer named its 2017 Retailer of the Year and with whose executives Editorial Director Jim Dudlicek sat down to discuss its unique operations, shopper-centricity and family-like culture. Rounding out the remaining top-six stories were two speculative pieces — suggesting grocers should take Walmart’s recent partnership with Google and its voice-assistant technology seriously and Lidl’s expansion stateside with a grain of salt — and one summing up the voices of several technology gurus at a recent conference, who concurred that no matter what the innovation, idea or plan, the future belongs to those who can execute or implement it fast.

What Fuels Millennials’ Love for H-E-B?

“[Charles Butt’s] lifelong mission was to make people’s lives better, and H-E-B’s current slogan – ‘No store does more’ – really epitomizes the success of Charles’ mission.” —Burt P. Flickinger III, managing director, Strategic Resource Group

http://bit.ly/2xJgh4E

Hy-Vee: PG ’s 2017 Retailer of the Year

“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, president and CEO, Hy-Vee

http://bit.ly/2yuqHpx

“Leaders who can best manage change in their organizations will be able to seize opportunities as they emerge — and this will be the key differentiator.”

2017 Retailer of the Year: Hy-Vee’s Executive Team http://bit.ly/2ysSOVs

—Matthew Gutermuth, former president and CEO, Safeway.com

The Google-Walmart Deal is Bigger Than You Think http://bit.ly/2zvrLHM

10

“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.” —Kristen Williams, EVP and chief health officer, Hy-Vee

Grocery and the Need for Speed http://bit.ly/2xwGe7U

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

No Surprise That Lidl’s Not a Sure Thing http://bit.ly/2x0KzNy

“Everyone has weaknesses, even Amazon. Learn them. Exploit them. Make the competition do what it doesn’t want to do.” —Evan Anthony, former VP of marketing, advertising, loyalty and research, Kroger


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January 2018 is... National Hot Tea Month National Oatmeal Month National Slow Cooking Month

S

M

1

New Year’s Day National Bloody Mary Day

T

W

2

3

Celebrate National Buffet Day with a display of serving pieces, flatware and dinnerware. Don’t forget the Sterno.

National Chocolatecovered Cherry Day

National Cream Puff Day

Review travel plans for the first quarter.

T

4

For National Spaghetti Day, create a display with pasta, sauce, cheese and wine.

National Soup Month National Bread Machine Baking Month

F

5

National Whipped Cream Day. Offer discounts on ready-made and DIY whipping cream.

S

6

For National Bean Day, share your favorite vegetarian and vegan recipes on Pinterest. National Shortbread Day

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National Tempura Day. Feature batterfried items in the prepared food area.

National Hot Pastrami Sandwich Day. Run a special in the deli department.

Celebrate National Hot Tea Month by offering samples of traditional and herbal teas.

Martin Luther King’s Birthday (Jan. 15, 1929) observed.

For National Oatmeal Month, share on your Facebook page ways to use oatmeal as an ingredient.

International Hot and Spicy Food Day. Ask customers to pin their favorites to your Pinterest page.

National Bittersweet Chocolate Day. Demo how to DIY hot chocolate.

National Hot Buttered Rum Day

National Hot Toddy Day. Set up a display to make apple hot toddies — apple cider, honey, lemons, cinnamon sticks and cloves.

For National Gourmet Coffee Day, sample your favorite local roast.

National Glazed Doughnut Day

For National Popcorn Day, create a Pinterest board of your staff’s favorite popcorn recipes.

For National Gluten-free Day, promote gluten-free snacks and baked goods.

Invite a local cheesemaker to sample his/her cheeses for National Cheese Lover’s Day.

National Strawberry Ice Cream Day

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28

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30

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National New England Clam Chowder Day. Sample this perfect cold-weather pleaser.

ISM, the Future of Sweet and Snacks begins in Cologne, Germany, and continues through Jan. 31.

12

Plan a cooking class to promote National Southern Food Day today.

National Corn Chip Day. Feature corn chips, salsa, guacamole and other dips.

National Pie Day — make sure your baking section is well stocked.

National Croissant Day. Bake them early — the aroma will draw customers in.

National Peanut Butter Day

National Hot Chocolate Day. Demo milk frothers and how they transform powdered hot chocolate.

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

Invite customers to warm up with free samples that celebrate National Soup Month.

Make sure that your Valentine’s Day inventory and promotions are ready to go.

National Chocolate Cake Day

Email your calendar submissions to awolfe@ensembleIQ.com


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Front End

Market Intelligence By The Numbers

Shelf Stoppers Shelf Stoppers

Frozen Vegetables

Basket Drivers

Alcoholic TOTAL FROZEN Beverages VEGETABLE SALES REACHED

ToTal wine sales reached billion in sales in The pasT year, $2.97 BILLION IN THE$16PAST YEAR

The average American household spends:

up 3 percenT from The previous year

(52 weeks ending April 2, 2016) Top 5 Wine Categories

Table wine sparkling wine

Dollar Sales 52 Weeks Ending 8/12/17

Dollar Percent Change Year Ago

Percent Share

Dollar Percent Change Year Ago

$13,789,630,707

2.7%

85.9%

-0.3%

1,545,753,640

7.2

9.6

0.4

flavored beverage wines

239,681,296

2.3

1.5

0.0

sangria

195,424,100

2.0

1.2

0.0

dessert wines

116,892,219

-2.6

0.7

0.0

“The wine category continues to grow, albeit at reduced rates compared to the last couple of years. online sales have likely contributed to this slowdown, both because some consumers are buying wine online and not in stores, and because overall online shopping is taking some consumers out of a store environment altogether. This has reduced the possibility of a wine impulse purchase that might have happened if the shopper had been in a store. within the category, some trends have stood the test of time — for instance, consumers continue to trade up as dollar growth rates are rising faster than volume growth. additionally, sparkling wine continues to be a leading growth segment, increasing significantly faster than table wine. There are some new headline-grabbing trends that are driving impact in the short term — for instance, the explosion of the rosé wine segment and the introduction of the canned-wine segment to the market.” —danny brager, svp beverage alcohol practice, nielsen

Spotlight on Wine Comparison Products

125

medications, remedies and health aids

94.2

116

fresh produce

96.8

Broccoli as an ingredient is most commonly Frozen broccoli is most often used in a side coffee 76.7 116 consumed at dinner, followed by lunch. dish, followed by as a main entrée. 3% 115

MEAL ITEM

which GeneraTional on wine? 29% TYPE Group 62%is spendinG The mosT per TripCLASS 35%

$20.22

boomers spend the most per trip on wine, spending on average,

DINNER

LUNCH

$18.46

Greatest Generation spend, on average,

OTHER

$18.23

Generation X spend, on average,

SIDE DISH

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

61%

$15.15

via pure-play online electronic retailers

8%

$29.44 in warehouse clubs

millennials spend, on average,

MAIN ENTRÉE

Source: nielsen homescan, Total u.s., 52 weeks ending aug. 26, 2017

14

10%

in liquor stores because it tastes great

because it’s low in calories, fat and sugar

9%

Generational Snapshot OCCASION

$35.60

$31.37

nuts 80.2% EATING 128 FROZEN BROCCOLI? WHEN ARE CONSUMERS 82.7

12%

because it’s quick and easy

because it’s healthy and nutritious

Index

vitamins

$37.25

9%

Spotlight on Frozen Broccoli Percent Penetration

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

OTHER

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


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Mintel Global New Products Database Category Insights

Meal Kits, Sandwiches and Salads MarKet Overview North America has higher-thanaverage innovation activity for meal kits, more than double the launches for salads and sandwiches/wraps. Although chef inspiration is less notable in meal kits compared with the ready-meal category, some do feature the names of well-known chefs, and more such endorsements are possible in the future. Vegetarian foods are no longer bought just by dedicated vegetarian consumers. Many consumers are choosing to reduce the amount of meat in their diets for health or ethical reasons, and this is creating more opportunities for vegetablebased meal options.

Making claims of environmental friendliness is important in most packaged goods markets, largely to reassure consumers who increasingly expect brands to follow sustainable or eco-friendly practices. In the United States, 39 percent of shoppers believe that packaging should be more environmentally responsible. Highlighting how packaging can be recycled is one of the ways that brands highlight their commitment to environmental responsibility. In North America, consumers tend to distrust genetically modified ingredients, and some meal-kit providers choose to promote the absence of these ingredients, with 9 percent of product launches from August 2016 to July 2017 making a no-GMO ingredient claim, the highest incidence of such claims in the world.

High protein is a key concern when buying meal kits, with one-third of U.S. shoppers indicating that “high in protein” is a priority attribute when selecting what to purchase.

Key iSSueS Convenience is the main reason that consumers buy into these subcategories. Meal kits are popular with consumers who want to cook from scratch but are looking for short cuts.

18

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

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

Meal kits can look to the readymeal category for recipe and flavor inspiration, as consumers who have tried a new recipe of prepared foods may be tempted to cook the same recipe using a kit. Meal-kit providers can highlight how they make it easy for consumers to try a more exotic or complicated recipe than they’re used to. Meal kits can tap into parents’ interest in seeing a greater range of ready meals aimed at children and can play a role in teaching kids how to prepare meals.


All’s By Diane Quagliani

Sides Can Shine, Too Main-dish mates can serve up good taste and nutrition.

W

Coborn’s fall line of meal kits features healthier, hen planning a meal, people usually on-trend versions of Midwest comfort food favorites, focus on the main dish. But sides can including side dishes. According to Parshine, too, especially from ent, popular offerings are Apple Cinnamon a nutrition standpoint. Many fall Pork Chops with a brown rice, quinoa The 2015-2020 Dietary short on fruits, and vegetable medley, and Pesto Crusted Guidelines for Americans identify several foods vegetables, Salmon with a fall-inspired salad containthat many Americans fall short on, such as whole grains ing butternut squash veggie spaghetti, dried fruits, vegetables, whole grains and legumes. cranberries, pumpkin seeds, quinoa and Side dishes serve up the perfect opportunity to and legumes. balsamic dressing. “We’re are always lookadd more of these foods to one’s diet. Side dishes ing for creative, trendy and practical ways to “Sides dishes can be an excellent way to serve up help incorporate more food groups into our get in not only more food groups, but also the perfect meal kits,” she notes. more nutrients,” says Emily Parent, registered opportunity dietitian for Minnesota-based Coborn’s and to add more of CobornsDelivers, the grocer’s online delivery Side Shopping Made Simple these foods to service. “Oftentimes, we see the center of our Beyond meal kits, shoppers can stock up one’s diet. meals consisting of a protein source. If we add on side dishes that are convenient, nutriside dishes, whether they be a single item such tious and delicious. Parent recommends as brown rice or steamed broccoli, or a comfast options like microwavable pouches and bination of items such as a quinoa cups of whole grains such as brown rice salad with dried fruit, chickand quinoa, and frozen vegetables. peas, spinach and balsamic Also, canned beans are an vinaigrette, we are creating easy way to add texture a well-rounded meal and and protein to salads. adding flavor.” Good bets from the deli are steamed or sautéed vegetables, Meal-kit Sides a and salads made with Major Opportunity vegetables and/or Many retailers are whole grains. Parent jumping into the bursuggests choosing salads geoning meal-kit market with oil-based dressings with offerings that include over creamy versions, which creative and nutritious side may be high in saturated fat, dishes. sodium or added sugar. Coborn’s To the Table Fresh Finally, don’t overlook the salad bar. Meal Kits, available through CoIt’s not only a go-to spot to customize bornsDelivers, offer several Dietitian’s a nutrient-packed salad, but also an exChoice meals that make the most of cellent source of recipe-ready chopped sides in terms of nutrition, ease of and sliced fruits and vegetables to speed preparation and taste appeal. up side-dish prep. PG “When creating our To the Table Fresh Meal Kits, our ultimate goal was to create a balanced plate. Most of our items contain a source of Diane Quagliani, MBA, RDN, LDN, specializes in nutrition protein, along with whole grains, veggies, legumes and/or communications for consumer and health professional audiences. She has assisted national retailers and CPGs fruit for added fiber,” says Parent, who helped develop the with nutrition strategy, web content development, trade kits. “We know that protein and fiber help provide staying show exhibiting, and the creation and implementation power, which means that these meals contain reasonable of shelf tag programs. portion sizes, but will also provide satiety.”

20

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


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Industry Events

Grocerant Summit Recap

Mapping Grocerant Success Grocerant Summit offers solutions for all tiers of fresh prepared programs.

SoluTIoN SET Retailers found solutions for all dayparts at Grocerant Summit.

It’s produce first in the store, and prepared foods are hidden. All the important purchases have been made by the time I discover items I could take home for dinner.” —Tyson Foods consumer panelist, Grocerant Summit

22

N

early 70 retail banners attended the third Grocerant Summit in late September in Rosemont, Ill. This year’s agenda provided a deeper dive into the business implications of grocerant offerings, including pricing, operational technology, and competition from traditional foodservice. Progressive Grocer’s director of strategy, Joan Driggs, kicked off the event with proprietary research that mapped out four tiers of grocerants, and retailer attendees were able to self-gauge their banner’s position on the spectrum. Regardless of tier, all retailers stand to benefit from focusing on fresh, becoming a destination that offers unique offerings and atmosphere, placing a new focus on technology and service, and upping personal interactions with shoppers.

Place and Price Tyson Foods offered a unique look at consumers and how they approach fresh food offerings. Eric Le Blanc, director of marketing – deli at Springdale, Ark.-based Tyson, hosted a panel of the company’s Unconventional Shopper Community, which is providing deeper consumer responses that will help retailers and suppliers prepare for how consumers will shop in the future. Members told attendees that they were stunned at the disconnect between their own self-reporting and what they really buy and why. The shoppers also noted that because of the way stores are laid out, most purchases are made before they get to the fresh prepared offerings. According to one panelist: “It’s produce first in the store, and prepared foods are hidden. All the important purchases have been made by the time I discover items I could take home for dinner.” Pricing is another issue retailers should address,

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

said Bob Donofrio, SVP of consulting services at Tampa, Fla.-based Revenue Management Solutions, who provided insight into foodservice pricing that should be adopted for retail. The average fresh prepared item at retail is $4.22, versus $7.92 at foodservice. Retailers have the advantage of transactional data regarding what items are being bundled together, which can lead to more solutions for shoppers. Donofrio recommended leveraging the menu board both to drive customer satisfaction and to encourage more profitable choices. On the subject of menus, Jack Li, managing director at Chicago-based Datassential, encouraged retailers to adopt the traditional foodservice strategy of using the right language to “captivate” shoppers and offer “safe experimentation.” He gave the example of Mexican loaded fries, which was more compelling to shoppers than salsa verde poutine, although they’re essentially the same dish.

Keep it Clean, and Get Set to Grow Another menu board win is to call out even small healthy messages, according to Jamie Phillips, director, scientific affairs at Schaumburg, Ill.-based SPINS. Healthier dressings, toppings and even cooking oil can make a big impact, Phillips said, advising retailers also to consider using such tags as non-GMO, preservative-free, organic and clean. Nearly two-thirds of primary grocery shoppers consider clean eating synonymous with healthy eating, noted David Portalatin, VP, industry analyst, food sector at The NPD Group, based in Port Washington, N.Y., and younger shoppers are adopting healthier eating at an earlier age than older generations. Portalatin observed that Millennials seek healthier options, global cuisines and solutions throughout the day. Eddie Yoon, author of “SuperConsumers: A Simple, Speedy and Sustainable Path to Superior Growth,” reported that opportunities for grocerants are immense, given that the desire and wherewithal to cook is declining. Yoon reported that cooking may go the way of sewing – from a necessity to a “hobby”: Just 10 percent of the population likes to cook, while the remaining 90 percent is split between those who will cook and those who hate the activity. Based on the “superconsumer” model, if a product ascends from “I like it and want it” all the way to “it changed my life,” then the product or service will be successful. Layer in a retailer’s ability to create something unique to its banner, and the product’s being desired by 20 percent of shoppers in the top 20 local markets, and it’s a winner. PG


Quick and Healthy Turkey Chili

©2017 Goya Foods, Inc.

Your shoppers find this and other great recipes at goya.com


Corporate Responsibility

Cover Story

T

hese days, it isn’t enough for a company just to do business — it has to conduct itself as a responsible corporate citizen. A growing number of consumers and prospective employees want to know that a company doesn’t just make money, but that it also helps make the community, region and country in which it operates a better place. Along with traditional philanthropic causes, sustainability has increasingly become a corporate responsibility priority for grocers. For instance, at SpartanNash, local products serve several purposes. “A key component of our corporate responsibility (CR) is providing a ‘local

Sustainable Visions Helping the environment has become a key part of grocers’ CR platforms. By Bridget Goldschmidt

flavor’ in our stores whenever possible, because we understand that locally grown and produced items travel fewer miles to store shelves, which improves quality and reduces the product’s environmental footprint,” explains Meredith Gremel, VP, corporate affairs and communications at the Grand Rapids, Mich.-based retailer and distributor, and executive director of the SpartanNash Foundation. “At SpartanNash, we are passionate about supporting local farmers and food businesses, and are dedicated to helping them succeed through merchandising opportunities in our stores.” Adds Gremel: “This also strengthens our relationship with the communities we serve, which is a key focus of our corporate responsibility programs.” All of this is set in motion, she points out, by the fact that “customers have a growing appetite for locally grown items.” These objectives are in keeping with the grocer’s “corporate responsibility 2017 dashboard [that] includes both environmental sustainability and social November 2017 | progressivegrocer.com |

25


Cover Story

Corporate Responsibility

responsibility initiatives,” she points out. “On the environmental side, our key initiatives are waste and energy reduction.” Another way that SpartanNash champions sustainability is through Earth Week donation drives in partnership with Goodwill Industries, which the grocer has held for the past seven years at 80 of its corporate-owned stores in five states. “Since 2011, SpartanNash associates and store guests have diverted more than 211,000 pounds of materials from landfills, and Goodwill has converted these donations into approximately 45,275 hours of workforce redevelopment training for people in their local communities,” notes Gremel, adding that in 2017, the grocer rewarded anyone who dropped off a donation at a participating Goodwill organization with a coupon for $10 off a $25-or-more purchase at one of its stores. “The Earth Week coupon successfully engaged customers in our recycling efforts, as more than 2,100 customers redeemed the coupon,” she says. What’s more, the company is able to leverage the occasion to encourage even greater shopper and employee participation. “In addition to our Goodwill donation drives, our Earth Week campaign employs a number

DefenDerS of The earTh Spartannash teams with Goodwill Industries for earth Week donation drives that divert materials from landfills.

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of creative ways to involve both store guests and SpartanNash associates in our CR efforts,” observes Gremel. “Leading up to Earth Week, we held a reusable-bag design contest and asked our store guests, associates and communities from across the U.S. to submit digital designs that represent local state pride in Nebraska, North Dakota and Michigan. Three winners were chosen, and their winning designs [were] featured on limited-edition reusable grocery shopping bags sold in SpartanNash corporateowned stores this [past] fall. The reusable bags contain up to 20 percent recycled material, and feature our CR message and information about the winning artist on the sides.” Further, she notes: “Many of our stores’ bakeries also participated in an Earth-themed bakery contest, displaying their creative — and delicious — homages to the environment. The items were for sale to our store guests as well.” SpartanNash was pleased by the response to these contests, according to Gremel: “Both of these efforts engaged our associates and our customers in our sustainability efforts — and brought in an eleFTZ_Susty 1 10/23/17 11:12 AM ment ofAd_Print.pdf friendly competition.”

Read aLL about it in common with Giant eagle, SpartanNash uses signage such as this door cling decal to inform shoppers of energy efficiency measures implemented in its stores.

Licensed to Chill — and More For its part, Pittsburgh-based Giant Eagle endeavors to attain the highest sustainability standards to demonstrate its commitment to aiding the environment. “We … work diligently to ensure operational sustainability in all retail locations throughout the company’s footprint,” says company spokeswoman Jannah Jablonowski. “For example, recent efforts to continue to reduce our refrigerant emission rate have resulted in a leak rate that is well below the industry average and recognized with multiple GreenChill achievements.”

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©2017 FETZER VINEYARDS, MENDOCINO COUNTY, CALIFORNIA USA.

Clean air. Rich soil. Plentiful water. They


Cover Story

WaSte MaNaGeMeNt Jerry Campbell serves as the produce lead for SpartanNash’s food waste recycling pilot program, which rolled out last year.

Food waste is a big concern in our country — and being in the grocery industry, we have a real opportunity to reduce food waste, minimize damage and divert products.” —Meredith Gremel, SpartanNash

Corporate Responsibility

The grocer’s sustainability accomplishments don’t end there, however. “Giant Eagle was the third grocery chain to enroll all of their stores in the Grocery Stewardship Certification (GSC) program,” after Hannaford Supermarkets and Weis Markets, notes Peter Cooke, GSC program manager at Plymouth, Mass.-based nonprofit organization Manomet. “In an effort to improve team member engagement in the management of store-level sustainable practices, Giant Eagle began working toward chain-wide Grocery Stewardship Certification in 2015. Through their work with the GSC, each Giant Eagle supermarket location has designated a sustainability coach and completed our workbook-based program designed to foster continuous improvement and increase accountability.” As a result of its participation in this program, in which more than 700 grocery stores nationwide are enrolled, Manomet estimates that Giant Eagle annually saves nearly 6,000 tons of waste from going to landfills; more than 45 million gallons of water from being used; and about 260,000 tons of greenhouse gas from being released. Beyond what she deems “‘behind-the-scenes’ initiatives” like the above, Jablonowski notes that “we also understand the need to provide a robust assortment of locally and sustainably sourced and organic offerings to our customers. For example, we work with Sustainable Fisheries Partnership and other nongovernmental organizations to ensure our customers can be confident that the seafood they purchase in Giant Eagle or Market District has been sourced from fisheries and organizations that take every measure to lessen their environmental impact.” In common with SpartanNash, the company features sustainability as a key pillar of its corporate responsibility agenda. “At Giant Eagle, we are committed to making socially and environmentally responsible business decisions that have a positive impact on the communities we serve,” says Jablonowski.

Waste Not, Want Not In its ongoing mission to promote sustainability, SpartanNash has identified a key issue. “Food waste is a big concern in our country — and being in the grocery industry, we have a real opportunity to reduce food waste, minimize damage and divert products,” notes Gremel. “We have employed a number of innovative programs and partnered with local food banks and pantries in all of the communities we serve. … Our merchandising teams also donate display products from our food shows to local food banks and pantries. This is product that would have otherwise gone to the landfill, but through these partnerships, we are giving food a second life,

28

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

fighting hunger and reducing our food disposal costs.” Additionally, in 2016, 10 SpartanNash grocery stores — five in Michigan and five in Nebraska — rolled out a food waste recycling pilot program “with the goal of diverting as much produce, bakery and dairy waste as possible into the foodrecycling dumpster instead of the trash dumpster,” recounts Gremel. “Our partner collected the material, partnering with local cattle farms in Kennard, Neb., and Webberville, Mich., where the watermelons, carrots, cupcakes, bananas and other produce were blended down to a smaller ration size and mixed with grains, corn, wheat and other nutrients to create the final cattle-feed product.” Along with food waste, Gremel predicts, “Sustainable packaging and sustainable food sources will … continue to gain traction” as issues that grocers address through corporate responsibility efforts. “Our category managers study the continuously changing market, trends and consumer preferences, so they have the knowledge and expertise about how to best get the right products onto store shelves,” she adds. “We will continue to work with them to advance our corporate responsibility efforts and messages, so our customers are able to find the products they need and can feel good about their purchases.” Giant Eagle, meanwhile, has in recent years begun “partnering with fresh food rescue programs, like 412 Food Rescue in Pittsburgh, that enable us to donate products that conventional food banks cannot accommodate, to meet an immediate need in the area and reduce overall food waste,” observes Jablonowski.

Getting the Word Out SpartanNash has found signage to be particularly effective in making customers aware of its ecofriendly efforts, including the in-store signs, photos and information it uses to highlight local products and farmers across its store footprint. “In September, we celebrated the grand reopening of our Forest Hills Foods store in Grand Rapids, Mich., showcasing [among other things] our commitment to local flavor … and a focus on environmental sustainability programs,” says Gremel. “Store guests can … learn about Forest Hills Foods’ energy-efficiency improvements and savings and recycling options


EXPLORE EXPLOREOO

EEO O

HEES HEES

T ROTH HEES OTH


Cover Story

LoCaL Hero SpartanNash deploys signage highlighting its local produce offerings, and the farmers who produce it, as part of its commitment to sustainability.

as we have noted increased customer interest in sustainability touch points, we strive to engage customers with strategically integrated signage throughout the store.” —Jannah Jablonowski, Giant eagle

30

Corporate Responsibility

from signage throughout the store.” These improvements, which include the installation of LED interior and exterior lighting, lights that dim to 50 percent when there’s no activity nearby, glass doors on produce cases, and energyefficient entry and exit doors, should enable the store to reduce its annual energy consumption by 1.4 billion BTUs — equivalent to the greenhouse gas emissions created annually by 38 homes’ electricity use, or 592 barrels of oil consumed. “As we continue with store remodels, we will increase our corporate responsibility signage,” asserts Gremel. “By sharing our corporate responsibility messages with store guests and associates as they shop the store, we can demonstrate how our efforts are having an immediate and lasting impact on our local communities and on our environment.” The grocer also published an inaugural corporate responsibility report last year, highlighting its commitments and accomplishments in this area. Giant Eagle is a proponent of similar methods. “As we have noted increased customer interest in sustainability touch points, we strive to engage customers with strategically integrated signage throughout the store,” says Jablonowski. “In our Market District locations, local purveyors and farmers are highlighted with dedicated displays and callouts above their products, and highlighted in the monthly newsletter and in proactive media outreach. Energy Star and LEED-certified buildings have specific callouts, and locations that are fitted with dairy doors have vinyl cling decals on the doors to educate customers on the energy-saving benefits. Additional information about many of our sustainability initiatives are publicly available on our website, and details are in our annual corporate social responsibility report.” The important thing is for grocers to publicize their sustainability strides — and dry published statistics may not be the best way to do that. “When it comes to sustainability, the consumer need to feel a connection can be particularly powerful,” notes Andy Harig, senior director for sustainability, tax and trade at Arlington, Va.-based Food Marketing Institute (FMI), in a blog post published on the organization’s website last April. “Grocers are committed to improving lives outside of their stores by dedicating time and resources to enhancing their communities through sustainability efforts, but many retailers seem sheepish about sharing these efforts, or hide them away in annual sustainability reports that very few consumers access.” According to Harig, consumers “want to see behind the numbers to what these efforts really mean. Data is always impressive, but how food retailers tell the story of sustainability to consumers matters more than ever. … Successful businesses depend on

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

the ability to tell a story that compels organizations forward and harnesses the authentic connection between a brand and a customer. Strategic storytelling transcends company narratives and has become a powerful skill that can better frame and impart experiences and knowledge to others.” He believes that “telling this story can be a powerful tool that transcends marketing and educates consumers about the kind of company you are today and aspire to be tomorrow.”

Why Do it? For retailers that undertake sustainability programs, the benefits can be substantial. “Most customers prefer to purchase products or shop at retailers where sustainability is a key part of the corporate strategy and brand,” says Manomet’s Cooke, while FMI’s Harig echoes in his blog post, “Consumers … want to feel like the store where they shop and where they get their favorite things shares their broader values.” Highly prized as it is, shopper good will isn’t the only advantage, though. “Additionally, improving operations and efficiency through sustainable operating practices can reduce costs and dramatically shrink environmental footprint,” observes Cooke. “When approached purposefully, these efforts engage employees and help attract and retain talent, thus increasing productivity and reducing recruitment costs. Food retailers who have integrated sustainability into corporate strategy have also reduced material business risk and improved their company reputation.” Despite the challenges inherent in living up to their sustainability commitments, grocers are firm believers in the worth — in more ways than one — of such endeavors. Referencing SpartanNash’s investment in fleet efficiencies, which increased the company’s miles per gallon and reduced its fuel consumption — “very important when the fleet travels more than 55 million miles per year” — Gremel notes, “Our environmental initiatives to reduce energy and fuel consumption are not only good for the planet — they also [positively] impact our bottom line.” PG For more about corporate responsibility at retail, visit progressivegrocer.com.


TM

In fact, 88 percent of consumers surveyed say they buy hot food items at the grocery store at least once a month, and 96 percent anticipate their purchase level will stay the same (77 percent) or increase (19 percent) during the next year.

As an emerging driver of supermarket sales growth, prepared foods accounted for 58 percent of the $25 billion in deli sales in mid-2016, according to FMI, with 69 percent of retailers reporting 5 percent or higher growth levels in their prepared food departments. Helping to power this sales surge are hot bars, which are widely popular across all shopper groups and fill a variety of consumer needs, suggests new research from EnsembleIQ.

Grocery retailers looking to maximize their prepared food sales can’t afford not to boost and expand their hot bar business. Let’s take a look at the current hot bar market and where the most promising growth opportunities lie.

SHOPPERS WHO PURCHASED A HOT SOUP, HOT SIDE, HOT ENTRÉE OR OTHER HOT ITEM FROM A HOT BAR IN THE PAST MONTH

40%

MILLENNIALS

30%

BABY BOOMERS

27%

GENERATION X

4%

MATURE/SILENTS

Source: EnsembleIQ 2017

sponsored research findings

1%

GI GENERATION


Hot Bar Purchase Demographic Trends PLANNED:

IMPULSE:

• Males • Older • Working

• Females • Millennials • Not working

FOR SELF ONLY:

TO BE SHARED:

EAT AT HOME:

EAT ON THE GO:

• No children at home • Singles • Millennials

• Children at home • Coupled • Generation X

• No children at home • Older • Not employed

• Children at home • Millennials • Employed

Source: EnsembleIQ 2017

ANATOMY OF A HOT BAR CUSTOMER Men currently tend to make more hot bar purchases than women do, with 12 percent of men going several times a week compared with 7 percent of women. Millennials are the top purchasers among the generations, along with married consumers and those employed full time. Hot bars supply consumers with solutions to meet a wide range of day-to-day needs, from last-minute side dishes for dinner at home to complete lunches on the go. Purchases at the hot bar tend to be for dinner (74 percent) more often than lunch (54 percent), planned (58 percent) more often than impulse (42 percent), consumed at home (76 percent) more often than elsewhere, and almost equally for the shopper only (52 percent) or to be shared (48 percent).

DELIGHTING HOT BAR CUSTOMERS The supermarket hot bar already has a built-in fan base: The majority of consumers say they are completely or mostly satisfied with their grocery retailer’s hot items, with convenience rated as the top attribute. The

most satisfied customers also cite delicious taste, freshness and being made daily as prime reasons for their positive attitude about buying hot bar items.

Millennials are more likely than older shoppers to describe their hot food purchase as “appetizing.” But less satisfied hot bar shoppers point to offerings they say are too salty, too bland or cold. Lack of variety also drives away some customers—not surprising because variety ranks highest in importance to all hot item shoppers. Consumers’ wish lists of what they would value and appreciate most in their supermarket’s hot bar include: • menu rotation • daypart-based items • seasonal ingredients and recipes • locally sourced ingredients • convenient packaging, such as microwaveable to-go containers

Top Hot Bar Item Features MEAN RATINGS, SCALE=1 (NOT AT ALL) TO 7 (EXTREMELY) IMPORTANCE

SATISFACTION

VARIETY OF CHOICES

5.8

5.4

CONVENIENCE OF PURCHASE PROCESS

5.5

5.4

ITEMS THAT WOULD TAKE ME A LONG TIME TO COOK ON MY OWN

5.2

5.3

CUSTOMIZABLE SIZING

5.1

5.3

OFFERING “MEAL DEALS”

5.1

5.0

Source: EnsembleIQ 2017


• items that they don’t know how to cook on their own • small sizes and large/family sizes

6 WAYS TO DRIVE HIGHER HOT BAR SALES Setting up a hot bar that offers customers the foods they want and need is critical, of course, but retailers can also maximize the potential for hot item sales by taking time and initiative to:

1. KEEP HOT BARS CLEAN AND

The Hottest Items at the Hot Bar Hot items shoppers who say they typically purchase:

81% CHICKEN ENTRÉES 47% MASHED POTATOES

WELL-STOCKED Most stores are doing an adequate job of keeping the hot food area of the store clean, according to the EnsembleIQ research, but there’s room for improvement in maintaining the hot bar itself. Putting time and money into the labor needed to present a fully stocked, sparkling clean hot bar is a smart investment.

36% VEGETABLES 32% CHICKEN NOODLE SOUP 22% RICE 22% BEANS

Consumers who say the hot bar is well-maintained at the store where they most frequently buy hot items 54%

21% BEEF ENTRÉES 20% VEGETABLE SOUP 16% CLAM CHOWDER 14% TOMATO SOUP 14% PORK ENTRÉES 13% FISH ENTRÉES

Source: EnsembleIQ 2017; % Top 2 box

2. STEP UP SAMPLING Half of hot foods shoppers say they would buy additional items from the hot bar if they could try them first, so keep customers coming back for more (and more) by adding or increasing in-store demos at the hot bar.

3. PROMOTE THE VALUE Boost shopper interest in the convenient value of hot bar items by featuring a promotion at least three times a week, and preferably every day. Fifty-one percent of hot foods buyers say more meal deals and

12% TURKEY ENTRÉES 10% SWEET MASHED POTATOES 8% SHRIMP ENTRÉES 6% LOBSTER BISQUE 25% OTHER Source: EnsembleIQ 2017


Here’s what topped the lists of “most recent hot item purchases” for EnsembleIQ’s new hot bars research survey:

about them too. Only 36 percent say the store where they most frequently buy hot items does a good job of advertising hot bar sales and promotions. Don’t forget to crosspromote with in-store communications and pairing deals.

ENTRÉES • • • • •

And no matter how often promotions are offered, always display regular in-store prices clearly so shoppers don’t have to guess.

Chinese foods Pizza Pasta dishes Meatloaf Ribs

4. BRANCH OUT BEYOND STAPLE ITEMS

SIDES • • • •

Baked beans Mac and cheese French fries/wedges Cheese sticks

SOUPS • • • • • • •

Broccoli and cheese Beef barley Beef lentil Corn Chili Mushroom Potato

bundling would motivate them to increase their purchases, and 22 percent say that would be the top reason for putting more hot items in their shopping carts. But it’s not enough just to create feature promotions—customers need to know

Add more interesting, innovative and appealing foods that customers can’t easily make at home, such as Blount Truffle Polenta or Broccoli Rabe & White Bean side dishes— and promote them regularly. Offer a new twist on old favorites like mashed potatoes or mac and cheese by introducing trendy or seasonal flavor variations. On the soup side, aim for as wide a variety as possible with both broth- and cream-based items, incorporating seasonal products too. Rotate seasonal and other specialty offerings to provide a wider array of products without sacrificing core offerings.

5. THINK LOCAL Personalize the selection with popular regional items that set the hot bar apart from those at competing retailers.

6. BOOST STAFF TRAINING Educate store associates so they’re fully prepared to teach customers about the different hot bar products and how to best reheat dishes at home.

ABOUT BLOUNT FINE FOODS Blount Fine Foods, a family-owned and operated company based in Fall River, Mass., with plants in McKinney, Texas and Warren, R.I., has been processing food since 1946. Blount produces more than 900 premium products for restaurants, institutions, retailers and club stores in all 50 states. Blount manufactures more than 600 proprietary soup recipes, including 75 varieties of clam chowder alone. Blount’s premium soups and specialty foods are made with the finest and freshest ingredients, locally sourced whenever possible, and handcrafted in small batches by a dedicated team through unparalleled customer collaboration.

TM

Contact: Blount Fine Foods 630 Currant Road Fall River, MA 02720 (774) 888-1300 www.blountfinefoods.com


2nd AnnUAL Grocery Tech Trends sTUdy

Embracing Digital Transformation Fast-moving market forces light a fire among grocers to increase the pace of their omnichannel and technology investments.

PRESENTED BY

SPoNSoRED BY


2017 Grocery Tech Trends Study EdITOR’S NOTE

Retail’s New Technology Leader No segment in retail has been more affected by the pace and depth of disruption than grocery. A multi-front war in food and consumer goods retailing has shaken the pillars that grocers have based their businesses on for many years. Hyper-competition is triggering a dramatic shift in the grocer’s approach to technology. Formerly conservative in setting tech budgets, grocers today are rapidly adopting new business models, new customer services, and innovative digital technologies. Uncovering current and future trends in grocery’s newly aggressive embrace of technolgy is the focus of this benchmark study, which was created through a unique collaboration between Progressive Grocer and RIS News. The key themes and takeaways uncovered in the study include: • How and why technology budgets are increasing • Identifying services and technologies that reach omnichannel shoppers and provide a competitive edge • How to respond to the big challenges of employee engagement, food safety and Amazon • Recommended tech purchases that improve management of labor/workforce, store systems, merchandise management, supply chain, analytics and digital commerce The study polled 50 grocery and supermarket chains, including Costco, H-E-B, ShopRite, Kroger, Ahold Delhaize, Hannaford Bros., IGA, Bashas’ and Lowe’s Markets. All respondents were headquarters executives and no field or store personnel were included. Polling took place in September 2017. One out of three respondents (31%) have revenue greater than $1 billion. Of these, 13% have revenue greater than $5 billion. Seven out of 10 have more than 50 stores (71%). Of these, 68% have more than 100 stores. Once known for its cautious approach to technology, grocery is now retail’s biggest tech investor and an emerging marketplace innovator.

Joe Skorupa Editorial Director, RIS News

36

Figure 1

Number of Stores 10-50

29%

50-100

4% 48%

100-250

8% 12%

250-500 >500

Figure 2

Annual Revenue <$500 million

33%

$500-$1 billion

38%

$1 billion-$5 billion

15%

$5 billion-$10 billion

6% 8%

>$10 billion

No grocer reported it was cutting its IT budget year over year, making it the only segment in retail that can make this claim, which is confirmed in this report and other RIS research. Figure 3

Year-Over-Year Change in IT Budget No change

17%

Increase 1%-5% Increase 5%-10%

31% 44%

Increase >10%

8%

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


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2017 Grocery Tech Trends Study

Embracing Digital Transformation Fast-moving market forces light a fire among grocers to increase the pace of their omnichannel and technology investments. By JOe skOrupa People need food; people need stores to buy food. Sounds simple and easy, but it isn’t. Many grocers have struggled with challenges in recent years that range from price wars to shrinking margins, and from aggressive new players entering the marketplace to omnichannel shoppers demanding costly new conveniences. Still, the basic principles remained clear for many years and cash registers kept ringing for fast followers who evolved with just the right speed to avoid letting competitors sprint too far ahead. However, Amazon’s recent purchase of the Whole Foods brickand-mortar chain signaled those days were over. While it is true that other digital disruptions had occurred before, the shock of Amazon’s blockbuster deal to acquire a national supermarket chain tore a hole in the fabric of the universe that grocers once felt they knew. Fortunately, the impact of the omnichannel shopper had been exerting a growing influence in grocery for several years and many had already begun making a digital transformation of their legacy customer-facing and back-end business practices. However, the pace of change lacked urgency, which was due to the belief that web-based revenue had minimal impact on the overall financial health of the enterprise. But Whole Foods + Amazon signaled the game had changed overnight and the digital transformation of grocery took on a new sense of urgency. In the second annual Grocery Tech Trends Study, created in collaboration between RIS News and Progressive Grocer, changes in the grocery ecosystem are examined in detail and next steps identified as grocers rapidly shift to the next phase of their digital transformation.

Challenges and OppOrtunities As noted, grocery is a fundamentally strong business model that serves a basic consumer need. As such, many of its biggest challenges are timeless issues. These include food safety (52%) and cybersecurity (52%), which head the list of challenges that grocers say are driving technology investments over the next 18 months. (See Figure 2.) Also falling into this timeless category is the challenge of improving employee engagement, which was chosen by 46% of grocers, and a lack of senior-management vision (42%). The latter could explode into a major concern in the age of Amazon + Whole Foods. The big anomaly on the list of challenges is global retailers entering the U.S. market, which was chosen by 50% of grocers. In fact, twice as many grocers chose this challenge over competition from Amazon (25%). Why? No doubt, the aggressive entry of global retailers like Lidl and Aldi are disrupting the U.S. market and the threat is aimed directly

38

Figure 1

Opportunities that drive tech investments Over the next 18 Months Developing digital capabilities (online, mobile, omnichannel, etc.)

85%

Store upgrading & growth

65%

New payment alternatives

58%

Expanding into new products/services categories

56%

New/proprietary product development

48%

Becoming fully omnichannel to shoppers (online, mobile and in-store)

33%

Analytics-driven decision-making (predictive modeling, etc.)

27%

Localized products/assortments

25%

Developing personalized marketing capabilities

21%

Figure 2

Challenges that drive technology investments Over the next 18 Months Food safety 52% Cybersecurity

52%

Global retailers entering U.S. market

50%

Employee engagement

46%

Lack of senior-management vision

42%

Discounting/price deflation

38%

Customer data security

37%

Amazon (innovations, new initiatives, blockbuster deals) 25%

at brick-and-mortar stores, which are the source of the vast bulk of sales and profits. Grocers clearly see this as more of an immediate existential threat than that of Amazon + Whole Foods, which is still largely viewed as a web-based power play. This may prove to be a false assumption. Despite downplaying the immediate threat of Amazon, a huge majority of grocers (85%) clearly believe that developing their own digital capabilities should be placed at the top of their tech investment priority list. (See Figure 1.) Improving digital capabilities (i.e., online, mobile, omnichannel, etc.) actually outpolls investing in store

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


2017 Grocery Tech Trends Study

POS is the core of the store for grocery retailers (and other retail segments, too). It not only manages checkout and keeps a record of transactions, it also connects the information to dozens of other essential enterprise applications such as accounting, supply chain, merchandising, marketing, analytics and labor management. Traditionally, POS hardware and software dominate the lion’s share of a grocer’s IT budget and this trend continues with 42% of retailers reporting they will start a major upgrade of their POS hardware and software within the next 12 months. (See Figure 3.) However, this high level of activity is surpassed by the 47% of

grocers who plan to invest in click-and-collect technology (in-store pickup of web orders) in the next 12 months. Click-and-collect is the ultimate blending of bricks and clicks and a pure expression of grocery’s rush toward digital transformation. This high level of investment is one of the most significant takeaways in the study, because click-and-collect tech not only surpasses POS investment plans, but it also emerges as the top investment choice among all 58 technologies tracked in this study. Another impressive number in the store systems category is the grocer’s focus on home delivery of web orders, which has a huge number reporting they have actually started a major upgrade (47%). Is omnichannel just a buzzword? Is digital transformation and the blending of brick-and-mortar with online shopping fake news? Not according to the large number of grocers who are investing in them. Examining merchandise management plans, we see a more traditional approach emerging. For example, the top three merchandise management technologies planned for the next 12 months are trade promotion management (selected by 42%), replenishment (39%) and allocation (33%). Each of these has omnichannel crossover, but they are essentially the basic blocking and tackling of the retail business model. (See Figure 4.)

F i gur e 3

Figure 4

Status of in-Store technologies

Status of merchandise management technologies

upgrades and growth initiatives (65%), which is a grocer’s primary revenue source and can never be neglected without financial peril. Two other important investment strategies cited by grocers are rolling out new payment alternatives (58%) and expanding into new products and services categories (56%). If grocers are looking for a roadmap to shape their IT strategies, these four should top the list: improving digital capabilities, upgrading store capabilities, deploying new payment alternatives, and expanding into new products and services.

58 SolutionS that make a difference

Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

WiFi for customers

73%

8%

8%

2%

10%

Category management

54%

19%

12%

4%

12%

Home delivery of web orders

33%

47%

4%

4%

12%

Price management

42%

25%

19%

4%

10%

(signature pads, printers, etc.)

33%

12%

20%

27%

8%

New product or private label development

42%

22%

16%

6%

14%

POS hardware

33%

12%

42%

10%

4%

POS software

31%

12%

42%

12%

4%

Assortment planning

22%

32%

16%

14%

16%

Mobile devices for managers

28%

24%

22%

14%

12%

Allocation

16%

22%

33%

12%

18%

Self-checkout terminals

28%

20%

22%

8%

22%

Item master data management

14%

41%

27%

8%

10%

Shopper tracking

24%

32%

20%

14%

10%

SKU/product management

12%

35%

35%

8%

12%

22%

16%

47%

10%

6%

Enterprise resource planning (ERP)

10%

26%

26%

14%

24%

18%

12%

35%

16%

20%

Product lifecycle management

10%

26%

20%

22%

22%

Replenishment

POS peripherals

Click-and-collect (in-store pickup of web orders)

Real-time store monitoring of KPIs Location-based marketing (beacons, geofencing, etc.)

Self-shopping (scan and bag)

40

12%

24%

28%

24%

12%

Trade promotion management

8%

32%

20%

8%

32%

Space planning (planograms)

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

10%

31%

39%

8%

12%

8%

16%

42%

16%

18%

8%

27%

25%

24%

16%


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2017 Grocery Tech Trends Study Part of the reason that many merchandise management technologies do not have high future investment numbers is that they have been the beneficiary of steady investments over time. For example, the following technologies show high numbers for being currently up to date: category management (54%), price management (42%) and new product or private label development (42%). Also, many others show heavy activity in the “started major upgrade” column, which means they will be up to date soon. Supply chain systems are so critical to grocers that most technologies have high numbers for being up to date or they are currently being upgraded. (See Figure 5.) The one big exception is fulfillment, where 40% of grocers say they will begin a major upgrade within the next 12 months. Fulfillment, especially omnichannel fulfillment, is a critical component of click-and-collect services and home delivery of web orders, both of which show strong investment this year. To fulfill web purchases and ensure customer satisfaction, IT systems need to be able to manage individual orders accurately, reliably and profitably. Most grocers cannot accomplish this with the technology they currently have in place. The strongest analytic investment areas uncovered in the study are for price optimization (39%), in-store shopper tracking (38%), market basket analysis (37%) and, interestingly, machine learning/ artificial intelligence (34%). Grocers are rightfully skeptical of investing in technology for technology’s sake, but it is clear that if one out of three are making plans to invest in machine learning and artificial intelligence within the year, then these technologies are not just buzzwords or fake news. In the area of labor and workforce technologies, the highest investments are going into real-time store employee monitoring (34%), employee engagement (31%), and recruitment and onboarding (27%). Employee engagement (both managing and monitoring) has become a major concern for grocers who want to ensure shoppers have satisfying experiences in stores that lead to more sales, loyalty and return visits. (See Figure 7.) The final pieces of the IT investment puzzle are web and digital technologies. (See Figure 8.) Retailers who want to keep pace with fast-moving marketplace trends should note the top investment areas are remarketing (39%), content management (33%), social media marketing (29%) and digital coupons (29%). The second tier of investments also posted strong numbers, such as product catalog management (27%), ecommerce platforms (25%), chatbots (25%) and customer reviews and ratings (25%). As noted, this section of the study tracks buying intentions for 58 separate technology solutions and combined, they produce a comprehensive picture of IT prioritization plans that grocers can benchmark themselves against. If the goal is to keep up with leaders in the marketplace, then grocers should focus on the top five (out of 58) investment priorities: click-and-collect (47%), POS hardware (42%), POS software (42%), trade promotion management (42%) and fulfillment (40%). A strong secondary list of investment priorities includes replenishment (39%), price optimization (39%), remarketing (39%) and instore shopper-tracking analytics (38%).

42

Figure 5

Status of Supply Chain Technologies Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

Warehouse/DC management

40%

12%

25%

6%

17%

Logistics

48%

17%

15%

4%

15%

Fulfillment

20%

14%

40%

10%

16%

Real-time inventory management

29%

29%

18%

14%

10%

Order management

35%

16%

27%

10%

12%

Sourcing

12%

28%

28%

14%

18%

Transportation management

14%

22%

30%

8%

26%

Figure 6

Status of Analytics Technologies Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

Competitive analysis

47%

10%

22%

10%

12%

Promotion optimization

30%

32%

18%

4%

16%

In-store shopper-tracking analytics

30%

22%

38%

4%

6%

Campaign analysis and forecasting

22%

18%

36%

12%

12%

20%

20%

39%

8%

14%

Space optimization

14%

18%

22%

22%

24%

Market basket analysis

10%

33%

37%

12%

10%

Predictive analytics

8%

30%

24%

20%

18%

Machine learning/artificial intelligence

8%

26%

34%

4%

28%

Price optimization (modeling for pricing elasticity, sales & margins)

CuSTomer-FirST CommerCe Despite being hit by a tsunami of marketplace disruption, grocers enjoy a slight advantage — they have seen it happen first in other retail segments such as apparel (where a bubble has burst) and department stores (where everyone is struggling, with a few exceptions).

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


2017 Grocery Tech Trends Study F i g ur e 7

Figure 9

Status of Labor/Workforce Technologies

Sales Through Website/Digital Programs

Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

13%

Education and training

51%

27%

14%

2%

6%

Task management

47%

16%

12%

8%

16%

Labor scheduling

29%

29%

27%

12%

4%

Human resources and benefits

29%

33%

24%

0%

14%

Real-time store/employee monitoring

24%

28%

34%

8%

6%

Recruitment and onboarding

22%

31%

27%

12%

8%

Mobile workforce and/or HR applications

18%

20%

24%

18%

18%

Employee engagement management/ monitoring

16%

24%

31%

12%

18%

F i gur e 8

Status of Website/Digital Technologies Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

Product recommendations

35%

31%

13%

8%

13%

CRM/ personalization

33%

20%

24%

8%

16%

Ecommerce platform

29%

29%

25%

10%

6%

Social media marketing

27%

33%

29%

6%

6%

Product/catalog management

25%

25%

27%

13%

10%

Customer reviews/ratings

25%

25%

25%

15%

10%

Digital coupons

19%

35%

29%

12%

6%

Community

18%

22%

22%

24%

16%

Content management/ repository

17%

17%

33%

15%

17%

Remarketing

10%

24%

39%

10%

18%

6%

8%

25%

24%

37%

Chatbots

<1%

1%-5%

5%10%

10%-15%

15%- >25% 25%

23%

8%

44%

6% 4%

Figure 10

Online Shopping Services Strategy Internally managed click-and-collect

74%

Internally managed home delivery

62%

Manage dedicated fulfillment centers/locations

56%

Use a third party (such as Instacart)

26%

Click-and-drive-through centers/locations

12%

Dark stores (used for fulfillment and not open to public)

10%

Figure 11

Sales From Loyalty Program <1%

1%-5%

5%-10%

6%

12%

29%

10%-15%

15%- >25% 25%

29%

4% 4%

Also, website or digital shopping is still a relatively small part of overall revenue for grocers â&#x20AC;&#x201D; 44% say it is less than 10% of sales (See Figure 9.) Although small, it is a growing segment and smart grocers realize they need to stake out their claims today. As noted earlier, there are five technology solutions (among the 58 tracked in the study) that grocers are heavily investing in (and another four in the second tier). Still, it is far from clear how the winning playbook for digital transformation will take shape. In the rush to become omni-everything, grocers are carrying the load themselves and absorbing higher costs. For example, nearly threequarters (74%) say they manage their own click-and-collect services and 62% manage their own home delivery. In addition, 56% manage their own dedicated fulfillment centers and locations. (See Figure 10.) As digital transformation matures, will retailers continue doing everything themselves, or will they shift to third-party services like Instacart (26%), click-and-drive-through centers (12%), or dark fulfillment stores that are not open to the public (10%)? These numbers appear small today, but they could significantly grow as an ecosystem of service suppliers springs up to fill a needed gap. At the heart of todayâ&#x20AC;&#x2122;s digital transformation is an attempt by grocers to successfully blend the benefits of brick-and-mortar stores (immediate gratification) with web-based shopping (24/7 and clickable convenience). In part, this shift has been driven by Amazon, which has emerged as a dominant player in grocery, retail and the overall economy. However, grocers are resilient and even though Amazon has many resources at its disposal, there are still many opportunities where grocers can compete and win. These doors of opportunity are still open for grocers who pick their digital transformation battles wisely and move at the speed of retail to seize them. PG

November 2017 | progressivegrocer.com |

43


Store of the Month

Hy-Vee ramps up food court offerings while testing upscale center store concepts. By Jim Dudlicek Photos by Vito Palmisano

44

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

y-Vee Inc.’s new supermarket in the Twin Cities suburb of Savage, Minn., embodies several of the retailer’s key initiatives, including continued development of fresh prepared food offerings and innovative center store concepts. The $28 million store, Hy-Vee’s sixth location in the Twin Cities market since the West Des Moines, Iowa-based grocery chain began its push there in 2015, features an expansive food court in addition to a full-service Market Grille restaurant, the trend-aware F&F clothing boutique, and Basin, a 2,200-square-foot bath and beauty department.


“We have a lot of unique destinations in this store,” says Nick Haidar, store director of the 98,000-square-foot market. As part of those destinations, Hy-Vee — Progressive Grocer’s 2017 Retailer of the Year — is investing heavily in its Aisle One offerings, where shoppers will find a vast array of customizable cuisines. The round-the-clock store features Asian, Mexican and Italian options, as well as deli, smokehouse and comfort food selections. “Customers have realized they want a sitdown dining experience some days, and then

the very next day, they need fast casual,” says Jay Marshall, Hy-Vee’s EVP and COO. “They need to be able to pick it up and either take it with them in the car, or sit down at a table in the aisle and dine that way.” Meanwhile, Marshall continues, “Center store really is under siege … [because of] people who would rather buy those things online, yet it’s still such an important part of the grocery store experience and a revenue generator. You have an area that’s not exciting but you need it, so how do you make it better?”

fresh panorama shoppers entering the savage, minn., store are greeted by a sweeping vista of prepared foods, colorful produce and a decadent sweet shop.

November 2017 | progressivegrocer.com |

45


Store of the Month

Hy-Vee, Savage, Minn.

cuStoM counterS the food court features a range of ethnic cuisines offering made-to-order selections.

customers have realized they want a sit-down dining experience some days, and then the very next day, they need fast casual.” —Jay Marshall, eVP and coo

46

Fresh First The view for shoppers entering the Savage store is nothing but fresh, a 180-degree panorama sweeping from the Market Grille, across the food court, through the produce section and into the sweet shop, a showcase of colorful bakery confections. “When we came to Minneapolis, we didn’t see this in grocery stores,” Marshall says during a tour of the store. “The specialty shops had it, and we had to have it.” The front end glass bakery counter greets early risers with fresh-made doughnuts every morning, along with fancy pastries and custom cakes. In produce, Hy-Vee excels in variety, Marshall notes, with more than 1,300 items in each store: “We’ve led with produce for 25 years, and continue to do so.” Conventional and organic items are

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

merchandised alongside each other, which Marshall says allows for comparison shopping better than when the products were segregated into Hy-Vee’s destination HealthMarket. Gaining traction is Hy-Vee’s Misfits program selling so-called “ugly produce” — perfectly edible and wholesome items considered cosmetically unappealing. “We were shocked” by the program’s reception by shoppers, Marshall remarks. “People are really interested in it.” There’s also a juice and smoothies bar, and a produce butcher who will cut fruits and vegetables to order at no extra charge. Just outside the Market Grille’s front door is the food court, extending along Aisle One’s perimeter, starting with Hibachi (Asian) and


Store of the Month

Hy-Vee, Savage, Minn.

Surf and Turf Both the seafood and meat departments offer a growing number of value-added selections that offer ready-tocook simplicity for time-starved shoppers.

We want them to know that ‘a helpful smile in every aisle’ is a motto we live by every day. Our hope is that customers see our motto is mirrored in the way we interact with them.” —nick Haidar, store director

48

continuing with Cocina Mexicana (Latin), Dia Pida (Italian “street food”), Hickory House (barbecue and comfort food), and the Long Island Deli (sandwiches). All offer customizable options to suit everyone’s personal tastes. “The food court is a main draw,” Haidar says. “Hibachi is a Mongolian grill concept where you choose your meat, fresh vegetables and sauce. The Market Grille is an awesome destination, a full-service restaurant with a bar inside the store. Customers, before they go shopping, can sit at the bar, eat — have appetizers or a threecourse meal — or when they finish shopping, they can come in and enjoy. “We offer a lot of meal solutions for our customers,” Haidar continues. “Everybody’s starved for time. We prepare a lot of meals to go — all customers have to do is heat them up. There’s a lot of healthy choices. We take a lot of prep time out of the meal.” Future stores will bring seating areas closer to each food court station, Marshall says, noting that

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

Hy-Vee offers the only 100 percent sustainably sourced sushi in the nation. Cocina Mexicana creates fresh burritos, while Dia Pida features “anything you’d see from a street vendor or food truck,” Marshall notes. “This is really new for us — sales are good.” Hickory House offers “all the foods you grew up with, with some attitude — feel-good food” like smoked meats, sausage and fried chicken. “Sales on this are crazy,” he says, adding that although Hy-Vee increasingly caters to the health-conscious, “this type of food is still important.” Long Island Deli, with its corned beef and pastrami, is “styled after Katz’s Deli in New York City … [and] doing really well,” Marshall observes; meanwhile, charcuterie is “a third of our deli volume.” With the sweet shop up front, the bakery in back has become a destination for an artisan bread program, developed with guidance from a noncompeting retailer, Marshall explains. “Bread sales are dramatically higher,” he says. Nearby, a separate bagel counter hawks custom cream cheese schmears blended in the deli with ingredients pulled from the produce section.

Surf and Turf “For years, our seafood and meat [departments] were joined at the hip,” Marshall says. “We pulled seafood out completely, to give it its own feel.” Selections are flown in daily, and “every lot is inspected by the USDA,” Marshall asserts. Each


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Hy-Vee, Savage, Minn.

Store of the Month

in Style new concepts F&F (left) and Basin (below) aim to offer trendy clothing and beauty items typically found in trendy boutiques and mall stores.

item complies with Hy-Vee’s much-promoted Responsible Choice sustainable-seafood procurement program. “This is where we excel at making seafood easy,” Marshall says of the case dedicated to value-added seafood items, including flavored and marinated selections. More value-added items are found at the meat counter. “The closer you can make it to homeprepared, the more you’re going to sell,” Marshall remarks. “Our meat department folks love to take produce items and drive sales in meat.” Among the more popular items are chicken grillers — skewered meats, some seasoned, some baconwrapped, all ready for cooking. Dry-aged beef, held for 28 days, is also a big seller: “Our biggest problem is we can’t keep up with it,” Marshall says. Between the seafood and meat counters is the Chef ’s Grill, a cooking station where the store’s culinary team whips up items from both departments. The grill sits opposite displays of wine, spices and cookware, offering additional inspiration for home cooks.

High Middle Ground The Savage store highlights several of Hy-Vee’s initiatives to generate excitement in center store. International products are featured prominently, with imports on islands surrounded by popular eth-

nic brands. “We’ve started sending folks to Europe to bring back products,” Marshall notes. This has led to the development of exclusive items, among them Gustare Vita, a line of pastas, sauces, breadsticks and crostini created with cooperation from the Italian Trade Commission. “This is what we’re doing to create destinations within center store, to make it vital,” Marshall says. Further examples: The pet department is a double-wide aisle featuring many specialty products; it’s an area that continues to be developed, with the aim of rivaling the specialty pet channel. According to Marshall, Hy-Vee is looking at similar November 2017 | progressivegrocer.com |

51


Store of the Month

Hy-Vee, Savage, Minn.

“This department has experienced doubledigit growth every year, and we’re bringing new categories in,” Marshall says. Hy-Vee is hoping for similar success with its latest nonfood concepts: F&F, a 2,700-square-foot clothing boutique, and Basin, a luxury-feel beauty and fragrance department featuring the category’s top brands. Inspired by British retailer Tesco, F&F aims to offer consumers a mall-shopping experience with greater convenience. “It’s mainly focused on moms and kids — she’s shopping with kids and can’t get to the mall,” Marshall explains. Similarly, with Basin, he notes, “We’re hoping you feel like you’re at the mall, like a Sephora or Ulta.” Basin’s licensed cosmetologists, who perform makeovers and give beauty consults, “give us credibility,” Marshall adds. The store’s resident retail dietitian, Melissa Bradley, offers further gravitas, directing wellness programs from her office in the pharmacy. “Health is a huge initiative for us,” Marshall notes. Between pharmacy and F&F, a glass wall offers shoppers a glimpse of the wine and spirits shop next door, which by local ordinance must be separate from the grocery store. Of course, the Market Grille restaurant The World Standard For Destratification features a full bar offering more than a dozen local beers on tap.

enhancements in its baby aisles. Meanwhile, Hy-Vee’s HealthMarket is a destination of better-for-you products — as many as 7,000 items encompassing organics, free-froms, sports nutrition, supplements and protein drinks, as well as the Performance Inspired line of whey protein bars and powders developed exclusively for Hy-Vee by well-known actor and restaurateur Mark Wahlberg.

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52

303.772.2633

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

Being the Solution All of the features of the Savage store are designed to offer the greatest level of service and convenience to shoppers, with a multitude of solutions that anticipate consumers’ every need. From traditional grocery selections and ready-to-cook items to fresh prepared foods and in-store dining, solutions abound for all. There’s even Simple Fix, which lets consumers be an active part of their own solutions. With the tagline “Make. Take. Enjoy,” Simple Fix brings together “five families who pick five recipes, and each makes one recipe for all the families,” creating meals for a whole week, Marshall explains. “Our dietitians started it for folks looking for healthy meals. Then our chefs got a hold of it,” he recounts. “A lot of folks make it a Continued on page 56


Store of the Month

Hy-Vee, Savage, Minn.

Savage Hy-Vee 6150 Egan Drive Savage, MN 55378 Grand opening: Feb. 21, 2017 Total square footage: 98,260 Selling area: 59,200 square feet SKUs: 61,000, including 6,500 specialty, 6,500 HealthMarket, and 1,189 fresh produce (186 organic and 57 Homegrown) Employees: 620 total (177 full time) Checkouts: 10 full checklanes, three express checklanes, three self-checklanes, plus checkouts in several individual departments Hours: 24 hours a day Designer: Hy-Vee Construction

54

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | November 2017

Store map courtesy of Hy-Vee


November 2017 | progressivegrocer.com |

55


Store of the Month

Hy-Vee, Savage, Minn.

to your health Wellness services include a pharmacy, managed by Brittany Baldry, as well as a dietitian.

Continued from page 52

night out — buy glasses of wine while they cook — and they leave with meals for the week.” It’s one of the many things that make the Savage

supermarket, in Haidar’s words, “a very unique store.” And here in Savage and elsewhere around the Twin Cities, Hy-Vee has proved itself a crowd-pleaser. “Hy-Vee is very grass-roots and deeply embedded in the community,” Haidar says. “The community here has really opened its arms to us.” What impression does Hy-Vee want the Savage store to make on customers? “We want them to know that ‘a helpful smile in every aisle’ is a motto we live by every day,” Haidar replies. “We want them to know we’ll take care of them today, tomorrow and [in the] the future. Our hope is that customers see our motto is mirrored in the way we interact with them. We live our motto daily, whether it’s the variety that we carry or how we handle ourselves in the community.” PG


Meal Kits

Meal Solutions

Match Game Grocers must consider values, variety, common goals and more when looking to partner with meal-kit services. By Randy Hofbauer

M

eal kits are a big business, rocketing to $5 billion in sales today, according to market researcher Packaged Facts. And the Rockville, Md.-based firm expects solid continued growth in the space. But with an oversaturated market for delivery services and grocers rolling out kits of their own — along with Amazon introducing its own kits and likely to sell them at Whole Foods Market, which it now owns — it’s becoming vital for delivery services to seek added exposure and captive audiences inside brick-and-mortar stores, especially as shoppers seek to purchase products wherever, whenever and however they desire. This has made the market ripe for acquisitions.

In September, Boise, Idaho-based Albertsons Cos. acquired meal-kit service Plated, advancing a shared strategy to reinvent the way consumers discover, purchase and experience food. Additionally, the CEO of Green Chef has said that he’s open to accepting offers for his company, while another service, Home Chef, has hired bankers to explore a possible sale, signaling an opportunity for it to be snatched up by an interested retailer. Further, Blue Apron recently shedding 6 percent of its workforce has left industry speculators wondering if it, too, will soon be scooped up. However, more strategic partnership deals between grocers and meal-kit services have been inked in recent times, including Southern California grocer Gelson’s with Chef ’d, and Whole Foods with Blue Carrot (the latter of which wound

BetteR togetHeR Purple Carrot, which makes kits for plant-based meals, and Whole Foods Market complemented each other’s better-foryou image by partnering to sell the kits in Whole Foods stores.

November 2017 | progressivegrocer.com |

59


Meal Kits

Meal Solutions

Store SpeCialtieS SoCal grocer Gelson’s chose to partner with Chef’d due to Gelson’s focus on high-quality gourmet foods, and Chef’d’s partnership with renowned chefs and organizations to develop kits for gourmet meals.

down earlier this year). Moreover, eMeals — which doesn’t individually package portioned ingredients in kit format, but still essentially functions as a meal-kit service — has added Walmart, Kroger and AmazonFresh to its list of grocers willing to offer click-and-collect (and, in AmazonFresh’s case, delivery, too) shopping for its meal-building program.

Consider Carefully But with so many meal-kit services out there to choose from for a partnership, how should grocers know which one to team up with? “It’s … critical for grocers to realize that while they may see similarities in looking across mealkit brands, there are critical differences that can materially alter the customer experience,” says Rich DeNardis, chief revenue officer of Chicago-based meal-kit service Home Chef. When looking to partner with meal-kit services, food retailers should look for these six things:

1 The common, clear goal of a partnership:

Working with a meal-kit service can’t be a one-way street. For the partnership to be successful, both parties must get something out of it to make everything worthwhile. These goals will usually reside in the driving of either revenue or profit, says

Mike McDevitt, CEO of Baltimore-based mealkit provider Terra’s Kitchen. Understanding what’s expected of a partnership — for example, how one defines success — helps ensure that all parties are heading in the same direction. Additionally, “the left hand needs to understand what the right hand is doing, and look for ways to assist and learn from that process while allowing each party to focus on, and be accountable for, their core competency,” McDevitt notes.

2 Their own fresh program: Arguably, the

most important quality of a meal kit is its freshness. Therefore, the grocer must first be trusted to have a top-notch fresh program, says Nicole Peranick, director of global thought leadership with Stamford, Conn.-based brand strategy and consulting firm Daymon. “The success of a meal-kit program is closely linked to the overall strength and reputation of fresh foods at the retailer,” she stresses. “If I don’t trust the freshness of your meat or produce, I’m going to be very leery of a meal kit.”

3 The service’s ability to provide choice:

Michael Lippold, founder and CEO of FreshRealm — a Ventura, Calif.-based platform November 2017 | progressivegrocer.com |

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Meal Solutions

It’s … critical for grocers to realize that while they may see similarities in looking across meal-kit brands, there are critical differences that can materially alter the customer experience.” —Rich DeNardis, Home Chef

Meal Kits

that helps grocers deliver fully prepped meals and meal kits online or in stores — notes that he has seen how important choice is to consumers in driving success and retention of meal-kit programs: As people begin to adopt meal kits as a regular part of their lives, they want variety in the menu to maintain interest and avoid product-selection fatigue. “In addition, consumer tastes vary season by season, region by region, even community by community,” he observes. Bring special diets and allergies into the mix, and variety is even more necessary. eMeals prepares recipes with ingredients necessary to create meals that are diabetic-friendly, hearthealthy and vegetarian. But when a grocer partners with a service that offers many choices, it must make sure that the service has the requisite sophistication in its infrastructure and supply chain to be sustainable. Many current meal-kit companies offer limited to no choice in their menus, due to this complexity.

4 The service’s ability to keep things simple:

When a grocer looks at a meal-kit service’s offerings, ingredients shouldn’t be too many; recipes

shouldn’t be too vague or complicated; and the dish that results should reflect its picture and description. Additionally, if a grocer is one that truly seeks to empower its customers — even those who aren’t kitchen-savvy — then it needs to make sure

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 | November 2017


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Meal Solutions

Meal Kits

that the service offers kits that can be prepared by anyone, regardless of skill level. For example, Home Chef ’s DeNardis notes that his company engineers its recipes for easy preparation and appeal to cooks of all capabilities. “As convenience is critical to the meal-kit customer, a great deal of effort is required to test and hone recipes that are sure to be easy to execute,” he says.

5 The service’s experience with making

retail-ready kits: Making meal kits for brick-and-mortar retail differs from making them for a subscription mail-order service, notes Kyle Ransford, founder and CEO of El Segundo, Calif.based Chef ’d. From tiny things such as creating barcodes and SKUs, to greater things like inventory management, making meal kits to sell at retail can be more difficult to plan. “Most of the people in the mealkit space have very limited inventory management, because they bring it in on a Monday, they package it up on Wednesday, and they ship it out in that cadence,” Ransford explains. “They don’t inventory that stuff. If it’s left over, they send it to the food bank or throw it away.” They also have to have the ability to continually look at and manage the meal-kit category at store level according to what’s selling well and what isn’t. For instance, while a kit with meatballs might sell well at one store, one with tuna might sell better at another location. “Retailers should be looking to continually change, update and refresh what is in this category, and they should be thinking about it [in] a store-level way,” Ransford suggests. “Therefore, do they have a fulfillment partner that can help them there?”

6 Similar values and culture:

Successful companies often have their pillars, the promises they make to their customers that they’ll always fulfill, Terra’s Kitchen’s McDevitt notes. Each party must understand and agree with its partner’s pillars. “At Terra’s Kitchen, we promise health, convenience and sustainability,” he asserts. “This is what our customers expect of us, and this is what we would look for in a partner to be able to enhance these values for both brands’ customer base.” Another example is Gelson’s partnership with Chef ’d. The Encino, Calif.-based supermarket chain, already known for its gourmet, foodie-focused model, chose to work with Chef ’d because of the service’s commitment to providing gourmet meal kits with recipes developed by renowned chefs and organizations. PG

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


Fresh Food

Produce

Winter

Wonderland Consumer demand for local, color and quality in the produce department is redefining what’s in season. By Jennifer Strailey

GrowinG SaleS a colorful display of BrightFarms greens attracts attention.

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V

ibrant colors, fresh flavors and locally sourced may not sound like wintertime in the produce department, but that’s what today’s consumer expects, and what progressive grocers are determined to deliver. Traditionally, the vast majority of the country’s winter produce has come from California and Arizona, but the rise in urban farming and greenhouse cultivation is dramatically changing the industry, allowing supermarket retailers and their supplier partners to create a destination for fresh — and increasingly local — produce year-round. “All of the data we’ve collected in the last year indicates that demand for local has become even more important than that for organic, and that demand for local is outpacing supply,” says Paul Lightfoot, CEO of BrightFarms, a New York-based greenhouse farmer, financier, builder and operations expert. “Demand for local is every bit as significant as

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

demand for organic, if not more so,” affirms Steve Jarzombek, VP of produce merchandising and procurement for Mariano’s Fresh Market, in Chicago. Thanks to a partnership with BrightFarms, local greens, herbs and tomatoes are now everyday items in Mariano’s Illinois stores and most Pick ‘n Save locations in Wisconsin (both banners are wholly owned subsidiaries of the Cincinnati-based Kroger Co.). “Consumers want to make sure that farms in their own backyard are prospering,” says Jarzombek. “They feel an allegiance to local farmers who grow food in their home state.” It’s an emotional attachment, he explains, and one that doesn’t cool with the season’s first frost. To deliver year-round peak-of-freshness product in less time, BrightFarms partners with grocers to build greenhouse farms near the retailers’ store locations. Inaugurated last year, the BrightFarms Chicagoland Greenhouse, in Rochelle, Ill., provides more than 1 million pounds of salad greens, herbs and tomatoes annually to the Kroger-owned grocery chains. “There’s also a perception of freshness and quality with something that was picked yesterday,” asserts Jarzombek, “and it’s true: The product does taste better.” Greens picked at the Rochelle greenhouse can reach a Mariano’s produce case in under 24 hours. “I don’t know how much more fresh you can get,” Jarzombek muses. “If you cut out four to five days of travel on the product, the quality is far superior, and customers recognize that.” “High-quality local produce jumps out at you in a way that nothing else does,” Lightfoot concurs. “When retailers have a properly merchandised local salad program, it brings consumers into the salad category who weren’t there before.” Mariano’s offers five to six local BrightFarms salad blends on any given day. It also carries BrightFarms Basil, and will add Wheat Grass and a leaf lettuce blend in the near future.


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Fresh Food

FrESh From thE cIty Lunds & Byerlys encourages customers to “eat local” with Urban organics.

consumers want to make sure that farms in their own backyard are prospering.” —Steve Jarzombek, mariano’s Fresh market

Produce

“It’s so cool to have a grower and a retailer working together, because you have different ideas about how to bring a product to market,” notes Jarzombek. “We say, ‘Here’s what our customers are asking for — can you grow it?’ And they do!” BrightFarms, which produces 2 million pounds of mostly salad greens a year, currently operates three greenhouse farms: the Illinois location, as well as facilities in Virginia and Pennsylvania. Seeking to build a national brand of local produce, BrightFarms plans to build 10 to 15 more greenhouses over the next three to four years.

Endless Summer This summer, Lunds & Byerlys, of Minneapolis, became one of the first customers of Urban Organics, a line of aquaponically grown organic greens. The St. Paul, Minn.-based grower currently supplies 10 Lunds & Byerlys stores with five varieties of greens. Urban Organics’ pioneering approach to indoorgrown produce allows Lunds & Byerlys to offer customers locally sourced organic greens all year long. “As a locally owned company ourselves, we always try to support our local businesses and communities that we serve,” says Rick Steigerwald, VP, fresh foods for Lunds & Byerlys. “With the Urban Organics line, we can offer the freshest product available, reduce food miles and — as an added benefit — [offer greens that] are certified organically grown. “While we have not had the line during the winter months as of yet, I do believe the product will do even better during the winter, as customers start missing that summer-fresh salad,” he continues. With promising initial sales, Lunds & Byerlys

Pear Industry Eyes Avocados With the year-round availability of berries, grapes and other fruits grown around the world, competition in the fruit category, even in the winter, is fierce. “There’s been such an influx of new product items,” observes Brianna Shales, communications manager at Stemilt Growers, in Wenatchee, Wash. “Berries have exploded, there are many new apple varieties — there’s so much more competition, and pears are definitely feeling the impact of that.” Hoping to renew shopper confidence in the category, Stemilt recently launched an Operation Flavor initiative that looks at how pears perform throughout the supply chain, following a decade of pear category decline in the produce department. From maturation to ripening protocols, to

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plans to introduce Urban Organics greens to its remaining stores as supplies become available. Urban Organics launched in 2014 with an 8,500-square-foot facility inside an old St. Paul brewery complex, and recently expanded its operations with the opening of an 87,000-squarefoot facility inside the former Schmidt brewery. When the new indoor farm reaches full capacity later this year, it will provide 275,000 pounds of fresh fish and 475,000 pounds of produce per year to the surrounding region. Part of what makes the vertical farming model so revolutionary is the flexibility and speed with which it can respond to changes in customer demand. “We can change out a crop and have a new one in production 28 to 35 days later on most crops,” explains Dave Haider, Urban Organics’ co-founder. Currently, Urban Organics offers nine varieties of organic greens packed in clamshells. At Lunds & Byerlys, the Twin Kales blend has been the best seller. “Urban farming is becoming more prevalent all over the country,” observes Steigerwald. “The category has grown considerably over the last few years, and there are many new offerings that will become available in the near short term.”

partnering with retailers that also want to elevate the pear category, Stemilt is examining its entire supply chain. Shales explains, “We’re asking ourselves, ‘Are we delivering that awesome pear experience?’” The program is still in its infancy, but Stemilt expects the initiative to bring positive change over the course of the next several years. “We use the avocado industry as an example of where we’d like to see this go,” says Shales, referring to that category’s focus on selling ripe fruit. “Proper ripening is really important, as we go into the holidays, with Anjou pears,” she adds. “It’s the way to ensure that you are selling a full-flavored pear.” Signage and knowledgeable employees are also critical to increasing holiday pear sales, according to Shales. “Tell customers to check the neck,” she advises. “If it yields to pressure, it is ready to go.”

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


We’re number W∑ nderful. · #1 fastest-growing snack brand: W∑ nderful Pistachios1 · #1 citrus brand: W∑nderful Halos 2 · #1 premium juice SKU: P ∂ M Wonderful 3 4

Over 50% of U.S. households choose W∑ nderful brands. With an annual ad budget over $100 million, $200 million invested in sustainability research and innovation, and double-digit sales growth, we’re the partner you want in your corner—or, preferably, the middle of your floor.

© 2017 The Wonderful onderful Company LLC. All Rights Reserved. WONDERFUL, POM, POM POMS, HALOS, PURE GOODNESS, ANTIOXIDANT SUPERPOWER, the accompan accompanying logos and all other trademarks are owned by The Wonderful Company or its affiliates. 1 Brands with over $310MM in dollar sales, IRI T Total US MULO, 52 weeks ending 6-11-17. 2 IRI latest 52 weeks ending 7-2-17 Total US MULO. 3 IRI 52 weeks ending 6-25-17 Total US MULO. 4 IRI 52 weeks ending 6-11-17. WF170928-16


Fresh Food

CloSe To home Signage tells shoppers that little leaf lettuce is grown nearby.

Produce

The Inside Scoop Little Leaf Farms is another indoor grower undergoing rapid expansion in response to skyrocketing demand for local produce year-round. Just two years after launching a technologically advanced greenhouse for hydroponically grown baby lettuce in its headquarters of Devens, Mass., the company is doubling its operations, expanding to 220,000 square feet. “We are changing the game in regards to freshness, taste and quality,” asserts Paul Sellew, founder and CEO of Little Leaf. “Our product is harvested and in the store within 24 hours, which gives the retailers much more time to sell the product.” In addition to packages featuring the “Massachusetts Grown” message, Little Leaf works with grocers

New Potato Study Spotlights Sales Drivers Potatoes are an important year-round staple, as well as a holiday season must-have. Offering the right mix, however, can mean the difference between sales or no sales, according to a new study from Denver-based Potatoes USA. With the goal of helping retailers optimize the potato category and drive sales, the study, conducted in partnership with Norwalk, Conn.-based Kantar Retail, overlaid 52 weeks of Nielsen data with data from 50 million frequent shoppers. It found that an overwhelming 93 percent of all fresh potato dollar sales at retail are from bagged or bulk potatoes. “We’ve seen a tendency in the marketplace to switch attention to single wrap, trays, microwavable steamers, etc., and while these are also important, some retailers have forgotten how many dollars are attributable to the bagged and bulk segment,” says Ross Johnson, global marketing manager for Potatoes USA. “There’s an opportunity to drive growth with areas they’ve long depended on, if they allocate shelf space accordingly.” Looking at SKU share or IPC codes across the United States, the study found that the small convenience-potato category (under 4 pounds) represents 63 percent of shelf space, but only 30 percent of dollar sales. Meanwhile, the industry has seen a significant reduction in shelf space devoted to larger pack sizes. “The 10-pound bag takes up 5 percent of shelf space, but it represents 12 percent of dollar incremental sales,” notes Johnson. What’s more, the study revealed that when grocers don’t stock 10-pound bags, 12 out of every 100 customers

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to promote how far away from a particular store its product is grown — often less than 30 miles. Already offering green leaf, red leaf and arugula, the company is currently exploring romaine, kale and spinach. It distributes to all of the northeastern states, with a particular focus on the Boston market. “Indoor hydroponically grown product is earning its place in the market,” notes Sellew. “It allows yearround locally grown product in areas that have harsh winters, like New England, but the bottom line is that you have to produce a great product and be competitively priced [to have a] place in the market.”

Farming Futures Is produce grown indoors the way of the future? Most observers agree that it will play an increasingly

won’t buy potatoes at all. “Ten-pound bags are even more important during the holidays,” asserts Johnson, adding that customers aren’t inclined to buy two 5-pound bags instead. The disappearance of larger potato-pack sizes in some grocery stores is shifting buyers to club stores, Johnson continues. The total U.S. performance of the fresh potato category shows that 10-pound bags were up 11.5 percent in volume in July 2017, and up 13.6 percent in volume in August 2017. Eye-catching potato displays in multiple and high-traffic areas of the store can help drive sales during the holidays and beyond. With this in mind, Houston-based MountainKing Potatoes has created a host of colorful merchandisers, as well as highgraphic packaging, to increase sales. “Potatoes are traditionally merchandised in a destination location, where you have to go look for them,” observes John Pope, VP of marketing for MountainKing Potatoes. “They’re tucked away in a corner of the grocery store.” He continues: “We’ve discovered that the use of secondary displays, displayready cases and sleeves — when properly located in produce or in another area of the store where customers are shopping for center-of-the-plate protein — results in an increase in sales. It’s about making potatoes an impulse purchase rather than a destination.” Usage suggestions are also critical to increasing potato sales. Through its custom-designed tags, packaging and high-graphic bins, MountainKing offers seasonal and holiday suggestions such as a quick and simple recipe for stuffed Jumbo Russets in October, classic Butter Gold mashed potatoes in November, and roasted Butter Reds in December.

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


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Fresh Food

tractor Pull Wonderful Halos’ cart-stopping tractor display suggests fruit fresh from the grove.

Produce

important role in our food supply, particularly when it comes to highly perishable products like greens. “We have a huge population living east of the Mississippi, while most of the food is grown west of the Mississippi,” says Jarzombek, of Mariano’s. “People have also begun eating a lot more produce in the last five to 10 years, and they will eat a lot more in the next five to 10. Growing in more parts of the country is good for the future of the produce business.”

Healthy Holidays There’s a bounty of anxiously awaited produce grown in the great outdoors that will be in season and on trend this winter, and The Wonderful Co., of Los Angeles, is ready to celebrate with colorful campaigns for the holidays and beyond. “We bring a lot of color to the produce department — the green of Wonderful Pistachios, the orange of Halos, and the red of pomegranate arils and juice,” says Adam Cooper, VP of marketing for The Wonderful Co. At presstime, Wonderful Halos was poised to launch Grove of Goodness, its biggest ever in-store POS program. Featuring a display tractor that holds boxes of Wonderful Halos, the program also

includes a smaller-footprint grove tree display for secondary placements in the lobby and checkout. This year, The Wonderful Co. is anticipating its best-selling holiday ever. “Our five biggest selling days a year are the five leading up to Christmas,” notes Cooper. “We had record Christmas sales last season with Halos and Pistachios, as people use both for entertaining and stocking stuffers, and we expect to exceed those sales this year.” Snowy sled creative is ready for a December Halos push, while equally colorful programs are slated for January (the most important month for premium juice sales), football season, the Super Bowl, Valentine’s Day, Easter and beyond. PG

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


ALOE MEETS YOGURT New ďŹ&#x201A;avors launching early 2018! Alove Japanese-style aloe vera yogurt has been in stores since July, and now thereâ&#x20AC;&#x2122;s a whole lot more to Alove. After launching this past summer, the Alove marketing machine is driving full speed ahead, covering all of the important touchpoints from advertising to in-store displays to events, sampling and more. And the consumer response has been phenomenal! As a result, Morinaga Nutritional Foods, Inc. will launch new Alove ďŹ&#x201A;avors in early 2018, increasing the SKUs and providing more ways to delight consumers with silky-smooth, Japanese-style aloe vera yogurt. To learn more about how the Alove sales & marketing team is supporting retailers like you, please contact us at 310-787-0200 or cs3 @ morinu.com.

Online video campaign tells the Alove story.

In-store sampling creates interest at just the right moment.

Mobile sampling tour introduces the Alove experience.

In-store attention-grabbers make Alove even more irresistible.

Social media campaign engages with new Alove fans.

aloveyogurt.com

Alove is the first aloe vera yogurt in America, combining aloe vera with a silky-smooth, Japanese-style yogurt.


Yogurt

Refrigerated & Frozen

Culture Shift In search of the next Greek-style success, manufacturers look to new ingredients, packaging. By Lynn Petrak

T

he term “live and active” may just as easily apply to innovation in the yogurt category as it does to living organisms used in the product’s fermentation process. On the heels of continual expansion and innovation — which started several years ago with kid-centric yogurts and has continued over the past few years with Greek yogurts — the marketplace remains intriguing both for those on the R&D side and those who consume yogurt. That innovation, according to some experts, arises from the proverbial necessity of invention. “Yogurt is an interesting segment right now, because after two decades of growth in consumption, there is some plateauing,” observes Darren Seifer, food and beverage industry analyst for The NPD Group, based in Port Washington, N.Y. “Yogurt is looking for a pocket of growth that they can latch onto, and that leads to a question in Greek and

traditional yogurts: ‘What do we do next?’” Industry research bears out a certain leveling off within the category. According to data from Chicago-based market research firm IRI, total sales of yogurt reached just over $7.4 billion for the last 52 weeks ending Sept. 10, a 2.12 percent decline from the previous year. Within the category, Greek yogurt remains strong: Greek-style yogurt sales are projected to grow 9 percent globally, with moderate growth in the U.S. market, according to a recently released report on yogurt from London-based Technavio.

Yogurt is looking for a pocket of growth that they can latch onto, and that leads to a question in Greek and Beyond Sweet traditional One pocket of potential growth may be in yogurts yogurts: that aren’t flavored with traditional sweet ingredi- ‘What do we ents like fruits. “Some manufacturers are trying to do next?’” get into savory, and there are good reasons for that, because Americans are concerned about their sugar intake,” notes Seifer. “Seventy percent of adults say they want to cut back on sugar consumption.” He

—Darren Seifer, The NPD Group

November 2017 | progressivegrocer.com |

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Refrigerated & Frozen

Yogurt

cautions that a gradual introduction may be needed for real growth to take off, given the fact that savory yogurts are so different in taste from sweet varieties. Niche brands have already introduced savory items to the market. Blue Hill Yogurt, a brand that sprang out of the Blue Hill Restaurant in New York City, offers vegetable-based yogurts in carrot, sweet potato, beet, butternut squash, tomato and parsnip varieties, made with milk from 100 percent grass-fed cows. Meanwhile, Sohha Savory Yogurt, also of New York, which temporarily

halted production last summer, is planning to get “back up and running in 2018” with a product line including such flavors as tangy sea salt, according to co-founders Angela and John Fout.

Global Inspirations Another take on nontraditional yogurt flavor comes from Torrance, Calif.-based Morinaga Nutritional Foods, which has introduced an aloe-flavored yogurt called Alove. The first yogurt of its kind sold in the United States, the Japanese-style product combines yogurt with the tender parts of the aloe vera leaf. The brand offers basic aloe yogurt as well strawberry aloe and blueberry aloe varieties. “As the novelty of Greek yogurt fades and other ethnic varieties take the spotlight, such as Icelandic, Australian, French, etc., we find ourselves in a great place to capitalize not only on a cultural variety like Japanese-style, but also the innovative addition of aloe vera cubes suspended in the less viscous yogurt base,” says President and CEO Hiroyuki Imanishi, who adds that the product is uniquely positioned to


WHY YOUR DAIRY CASE CAN BE YOUR KEY TO PROFITABILITY The Milk Case Is an Unrealized Profit Potential Dairy milk outperforms on space, delivering 18 percent of profit from just 10 percent of space. Not only does milk drive trips, it drives profit — baskets with milk are 23 percent more profitable than those without. And, there’s a risk to limiting its space on shelves. You could lose up to $3,000 per shelf by converting the last milk shelf to milk alternatives.1

Milk Is Driving Customers to Shelf Milk is on-trend with today’s consumer needs for wholesome products. There’s also more than $90MM in national advertising and marketing programs centered around the shopper, which drives moms in store to buy more milk — more often.

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Refrigerated & Frozen

Yogurt

“disrupt and challenge” the yogurt category. To help introduce the product to consumers, Alove has created POP materials and is focusing on in-store demos. Like this Japanese-inspired yogurt and, before that, Greek-style yogurt, other global yogurt styles are emerging in the U.S. retail market. This past summer, the Yoplait brand, from Minneapolis-based General Mills, launched a line of French-inspired — and -named — Oui yogurt. The artisanal thick yogurt is cultured and sold in French-made glass pots. “We wanted to bring something special to our U.S. consumers — something we have been enjoying during visits with our French colleagues for many years, but [which was] hard to replicate in large quantities here in the U.S.,” said David Clark, president of U.S. Yogurt at General Mills, at the time of the launch. While the glass pot is used to protect the While they delicate texture of the yogurt, Yoplait has also are not dairy, touted the opportunity for consumers to “upcycle” the pot in creative, Pinterest-like ways.

we believe plant-based yogurts will continue to be a high-growth segment within the yogurt category.” —Michael Neuwirth, DanoneWave

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Plant-based Products, and More The widening of the category includes yogurts made with plant-based milks. One example is the Silk brand line of almond and soy milk yogurts, available in flavors like strawberry almond, dark chocolate coconut almond, peach and mango soy, and tropical pineapple soy. “While they are not dairy, we believe plant-based yogurts will continue to be a high-growth segment within the yogurt category,” notes Michael Neuwirth, senior director, external communications for Denver-based DanoneWave, adding that the company’s “plantbased yogurts, Silk and So Delicious, grew 60 percent year over year from 2015 to 2016.” Another example of alternative-milk yogurt comes from Boulder, Colo.-based Good Karma Foods, which has unveiled dairy-free yogurts made with flaxmilk. Those yogurts are also marketed as free from major

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

allergens, including dairy, soy and tree nuts. On another front, mix-ins may not be new to the category, but the types of ingredients stirred in with yogurts, and the type of packaging, have changed a bit. The Norwich, N.Y.-based Chobani brand, which made its mark in Greek-style yogurt, has continued to add to the line of Chobani Flip snacking yogurts, which now spans 20 varieties. Yoplait, for its part, recently added Yoplait MixIns, featuring items like Very Berry Crisp, Salted Caramel Pretzel, Key Lime Crunch and Cherry Chocolate Almond, to name just a few. Some yogurt formats also remain potential expansion areas. “While growth in the traditional yogurt category has slowed due to the stabilization of Greek yogurt and the underperformance by a few yogurt makers, we are seeing growth in the drinkables format,” observes Neuwirth, citing Oikos Nonfat Yogurt Drinks and Wallaby Organic’s drinkable kefir. Finally, as a look at the retail yogurt case reveals, yogurt’s health halo extends to ingredient sourcing. Neuwirth notes that organic yogurt category sales have grown 12 percent from 2014 to 2016. “Regarding other non-nutritive areas, we hear that consumers increasingly want to know what’s in the products they buy and how they’re made, and many are looking for organic or non-GMO options,” he points out, adding that DanoneWave’s portfolio of Non-GMO Project Verified products is growing, in addition to its organic brands such as Horizon and Earthbound Farm. The push for wholesome ingredients may also be fueling the rise of whole-milk yogurts. The Oregonbased Tillamook County Creamery Association recently launched a whole-milk Farmstyle Greek Yogurt, with 4 percent milkfat, in flavors such as Raspberry Fig, Clover Honey and Meyer Lemon Pear. DanoneWave, meanwhile, now sells Dannon Whole Milk yogurt, which Neuwirth says has become the brand’s second-highest product in trial and repeat purchases. PG


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Pet Parenting Takes Flight Humanization trend is a boon for grocery retailers. By Kathleen Furore

room For one more Sophie, a cockapoo, enjoys a motorcyle ride with her “parents,” Dale and Kris moore.

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hen Dale and Kris Moore, of Kalamazoo, Mich., head out for a spin on their HarleyDavidson motorcycle, a third rider is often on board. Outfitted in a special harness and pink goggles called “Doggles,” Sophie — the Moores’ cockapoo — often hits the open road with her “parents.” “Our boys have been away from home for 10 years now, and Kris and I were getting a little lonely,” Dale Moore says of the decision to bring the furry family member — who has a standing appointment for a spa treatment, bath and haircut every six weeks — into their home about seven years ago. “She has been a real blessing to our family and has partly filled that nurturing void for both of us.

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

We treat her in many ways like a child.’” The Moores are hardly alone. Nearly 80 million households in the United States own a pet, and 80 percent of those pet owners say they treat their animal companions like children, according to “The Pet Parenting Boom,” a recent Hot Topic report from Jacksonville, Fla.based Acosta Sales & Marketing. “The pet category is an important one, as its total sales surpass popular categories such as dairy and candy,” says Colin Stewart, SVP at Acosta. “Fortunately for brands and retailers, the two largest generations — Baby Boomers and Millennials — also represent the two biggest age groups for pet ownership, which means we can expect continued growth in this category, especially since Millennials are just now entering their prime spending years.”


Pet Care Strategies That’ll Have You

Leading The Pack

Key strategies to help grow your standing in the lucrative pet care category

I

f you’re wondering how to better engage shoppers and boost sales in this difficult climate, prioritizing pet care should be an obvious path forward.

Accelerate tailored nutrition. Another important

At $63 billion strong, the category has been averaging $2.5 billion in annual growth for decades, and proving itself as a draw for shoppers who drive total store sales.

While such tailored products can drive higher revenue per pound, they’re surprisingly under-used. Take the case of small dogs: While half of dog-owning households actually have small dogs, just eight percent of dry dog food sales come from small dog formulas.

So, how can you tap that opportunity? Here are some straightforward strategies to help you do just that.

Trade up to super premium. A good start is with super premium pet food, which features best-in-class ingredients and nutrient-dense formulations. Such offerings, which include brands like Beyond, Purina One and Rachel Ray Nutrish, have seen an annual upsurge of about 10 percent in both mass and grocery channels for the past three years, according to The Cambridge Group. Cambridge says the shift to super premium spans income levels, and shows no signs of slowing, which speaks to your prospects for converting the one-third of pet food shoppers who say they’re likely to trade up.

Revitalize anchor brands. There are also good opportunities in the “premium” segment, the bedrock of the pet food category, which is populated with anchor brands like Dog Chow, Beneful and Pedigree. One good approach is to embrace the segment’s expansion into natural and grain-free, which fills a void for health-minded consumers who are unwilling or unable to trade up. These natural-minded offerings can still drive premiumization among your core pet shoppers by encouraging a lateral switch across their existing brand.

path to growth is in specialized nutritional formulas for pets of different life stages, special needs, and breed sizes.

Consumer education, good merchandising and an optimized assortment can help fill this white space for more tailored offerings.

Expand shopper basket. Beyond driving up the price per pound in pet foods, there are also opportunities to drive growth through incremental sales—especially with items that highlight pet owners’ relationships with their pets. Treats are a prime example. According to a report released by Mintel in August, treats are not only used to reward good behavior, they’re also a way for pet parents to show their love or address health concerns (like dental care) in their four-legged friends. And while sales of treats have already been booming, there’s still room for growth because usage remains relatively low: just 47 percent of pet owners give their pets treats on a daily basis, Mintel found. To be sure, there are very real opportunities in the pet category these days. But to really capitalize on them, you’ll need to shift from a traditional category perspective to a more refined “store within a store” approach that can turn pet into the department—and the real growth driver—that it deserves to be. n


space wisely by highlighting these uncommon products and encouraging consumer trials,” Stewart says. Convenience. Convenience can engender shopper loyalty. Stewart recommends that retailers offer to help shoppers carry heavy items like large bags of pet food to their cars. Another idea: “Offer an endless aisle that lets shoppers digitally access a wide variety of products not featured on shelves and have them shipped directly to their homes” to compete with online retailers, he advises.

“Boomers consider toys and treats nonessentials, while Millennials — who are more likely to splurge on pet fashion — think of them as necessities.” —Acosta Sales & Marketing

An Opportunity and a Challenge Pet food and pet products represent an estimated $30 billion industry, according to Acosta. That number is only expected to grow: Data from Chicago-based Mintel, cited in the Acosta report, show that spending growth is expected to top $38 billion in those segments by 2020. Capturing a share of that pet care pie, however, won’t come without challenges for grocery retailers, especially since grocery stores ranked fifth — behind Walmart, PetSmart, Amazon. com and Petco — as consumers’ No. 1 choice of destinations to shop for pet products other than food. However, as Stewart notes, “There are several key drivers behind pet shoppers’ purchases that provide opportunities upon which grocery retailers can capitalize.” Those include: Price. “For pet owners, price is the primary motive for selecting a particular retailer. But rather than trying to beat the costs of specialty stores — which can lead to price wars — offer to match your competition’s prices instead,” Stewart suggests. Products. Unique and specialty pet items can help differentiate your store. “Use your limited shelf

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

Ecommerce. “Ecommerce and home delivery of pet products continue to grow,” Stewart observes. “Auto-replenishing staple items, as well as driving incremental sales of treats and pet accessories, should be part of a grocery retailer’s pet aisle growth strategy.”

Appealing Products for Pet Parents Understanding just who your customers are, and then adding pet products that meet their demands, will be key to succeeding in the category. “When it comes to spending for pet owners, the well-being of their animals plays an important role — but so does their own definition of necessities,” the Acosta report notes. “Boomers consider toys and treats nonessentials, while Millennials — who are more likely to splurge on pet fashion — think of them as necessities.” Retailers are increasingly targeting pet owners by amping up efforts to drive traffic to the pet aisle. Examples include offering in-store education related to pet care, special signage and premium end caps, according to Stewart. “They’re driving awareness inside and outside the aisle with signage, circulars and their websites,” he notes. “Another strong tactic we’ve seen is a retailer partnering with an on-site pet grooming service to drive traffic and store loyalty.” Those retailers are targeting customers like the Moores, whose feelings about Sophie echo what many of today’s pet parents feel. “I realize that she is a dog, but she is certainly great company and truly a very large part of our family,” Dale Moore says. “She is truly like a kid!” PG


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Supply Chain

Other Retail Channels

Fashionable

Thinking Global-minded clothing retailers can offer supply chain inspiration for U.S. grocers. By Jenny McTaggart

F

ashion-forward European-owned clothing stores may be the last places that most supermarket executives would look to for inspiration. It turns out, however, that some of these retailers are right on point with their supply chains — especially in the areas of analytics, planning and ecommerce execution. Two multinational clothing companies — Inditex, which owns the Zara brand, and H&M — were featured in the 2017 Supply Chain Top 25 list of retailers published earlier this year by Stamford, Conn.-based Gartner Inc. (Walmart and CVS were the only groceryrelated companies to show up in the top 10). Spainbased Inditex was recognized for bringing product to market in as little as two weeks, as well as for its improved omnichannel demand-planning capabilities, while Sweden’s H&M was lauded for its embrace of automation and warehouse management technology. Mike Griswold, a research VP at Gartner, tells Progressive Grocer that these clothing companies, as well as the other nonfood retailers that were recognized by Gartner, are doing several things that supermarkets can most definitely learn from. At the most basic level, the top performers have recognized that their supply chains are vehicles to support company growth. Beyond that commitment, though, there are other important areas on which they’ve focused. Perhaps most importantly, these leading retailers are embracing the use of data to drive their decisions, notes Griswold. He urges food retailers to follow suit and “strive for advanced analytics capabilities” themselves. “With the wealth of data that food retailers possess — POS transaction data, loyalty data, etc. — they are in a unique position to gain very granular understandings about their shoppers,” he says. “This can drive incredible opportunities in personalization of promotions, prices and assortments.” Echoing Griswold, David Marcotte, SVP of retail insights at Boston-based Kantar Retail, says that he believes there’s an untapped amount of data that grocers could be taking advan-

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


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Supply Chain

Other Retail Channels

budget of the company,” he continues. “In grocery, that linkage between an activity in the supply chain directly to the P&L doesn’t exist.” Although he points out that merchandise planning is a skill typically taught in college retailing programs that have little to do with the grocery business, Marcotte says that supermarket operators would do well to think more along those lines.

what’S in StOrE h&M and Zara are ramping up their omnichannel strategies by letting customers pick up or return online purchases in-store, as well as accepting mobile payments.

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tage of, especially in relation to improving their business planning. “Understanding data flows and being able to correct triggers against it, which has been a big part of the last 20 years of supply chain management, definitively needs to step up again,” he advises. In fact, Marcotte has been taking a page from the fashion industry himself, telling his grocery clients that they should be looking harder at what he refers to as “formalized merchandise planning.” “Merchandise planning in the CPG context is seasonal,” notes Marcotte. “It means asking, ‘What are we going to do for Easter? We’ll spend X amount on candy, and at the end of the season, we’ll reduce the price, and then if it’s still on the shelf, we’re going to reduce the price by 90 percent.’ Merchandise planning in apparel goes all the way back to Bangladesh, to the type of fabric the manufacturer is using, the type of weave, the quality standards they’ve established — what’s called a bill of material. “The reason I keep advising this as a supply chain alternative is because in a formalized merchandiseplanning scenario, every step of the supply chain matches up directly to a line item in the actual

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

Planning for Curveballs One reason to be more closely focused on every step of the supply chain is that nowadays, business planning has become even more complex, notes Marcotte. In grocery distribution, it’s difficult enough to deal with unpredictable traffic snarls or a sudden summer storm that dampens a retailer’s promotions around July 4th cookout plans. Yet other factors that may not be on retailers’ radar — such as climate change and even politics — can really throw a curveball into shortand long-term planning, he says. In these instances, a broader, global outlook (like the ones taken by multinational fashion chains) could benefit U.S.-based retailers, according to Marcotte. “The supply chain is not limited to the United States,” he observes. “Given the amount of product that comes in through seaboard and in container traffic … if companies don’t have some understanding of that, their ability to function properly is limited.” Additionally, politics can play into trade agreements, as currently seems to be the case. “Mexico has cut back on their futures orders for corn, meat and pork, not so much because they’re angry with the U.S., but because they can’t predict what 2018 is going to look like,” explains Marcotte. “A whole host of new trade agreements are being arranged, basically powered off of what’s going on in Mexico, that are changing how food product is moving globally. It’s serious.” Politics also came up as a hot topic in Gartner’s top 25 ranking. Stan Aronow, a research VP at Gartner, noted in the accompanying report that “today’s supply chain leaders face a much different business environment than just 12 months ago. A general trend toward protectionism, as evidenced by Brexit and the policies of the current U.S. administration, have caused some companies to shift supply chain network design decisions and create contingency plans in anticipation of new trade policies. Continued investment in innovative supply chain capabilities will be required to meet this changing landscape.” Omnichannel Execution Aside from politics, omnichannel execution remains a key theme among the leading supply chain innovators. The chairman and CEO of Inditex, Pablo


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Supply Chain

Other Retail Channels

Isla, said earlier this year that his company seeks to have “full integration of the brick-andmortar stores and online businesses, with store openings that are increasingly more relevant.” The company has chosen to close some of its smaller units and focus on flagship stores instead, and shoppers can easily return items purchased online in its stores or make online orders in-store with associates’ assistance. Meanwhile, Gartner’s Griswold urges grocers to “ramp up their unified commerce execution capabilities at store level as quickly as possible.” Store-level fulfillment will continue to grow as retailers strive to shorten fulfillment windows and work toward more same-day and next-day capabilities, he asserts. Last but not least, Griswold says that grocers need to figure out

88

With the wealth of data that food retailers possess — POS transaction data, loyalty data, etc. — they are in a unique position to gain very granular understandings about their shoppers.”

their talent requirements and move quickly to “fill the gaps. Food retailers would be smart to strengthen their partnerships with colleges and universities that have strong supply chain programs,” he advises, “and they need to recognize that as they look to build their analytics capabilities, they —Mike Griswold, will need to rely on more data Gartner Inc. scientists and data engineers.” Kantar Retail’s Marcotte concurs. “You can use third parties for technology, data and the ability to create first-line analytics, but if you don’t have a skill inside the box that understands what that is, what that produces and what impact it has inside your company, you won’t get that from a third party,” he notes. “In the better retailers, executives sometimes notice that talent from within, and quickly move the right person from aisle A to the office.” PG

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


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Mobile Merchandisers

Equipment & Design

Put it

There Mobile merchandisers are becoming more versatile and important, especially during the holidays. By Bob Ingram

T

he movie “Field of Dreams” produced the famous line, “Build it and they will come,” and the same statement might apply to the use of mobile merchandisers by food retailers that want to put product and build displays where their customers can notice them. Placing product strategically is becoming easier as mobile merchandisers become more varied and versatile. “Shoppers are looking for unique experiences from their shopping journey, so retailers need to find new products, new applications and new merchandising solutions to hold their shoppers’ interest and keep them coming back to their stores,” says November 2017 | progressivegrocer.com |

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Equipment & Design

We tell our clients all the time, ‘A folding table is not a merchandising strategy.’” —Harry Newton, Structural Plastics Corp.

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Mobile Merchandisers

Cheryl Beach, marketing communications manager at Bridgeton, Mo.-based Hussmann Corp. Beach notes that grocery stores are using refrigerated mobile merchandisers for cross-merchandising within the prepared food and produce departments to offer shoppers convenience for those last-minute meal decisions requiring prepared foods and pre-made meal solutions. Also, meal kits purchased through a home delivery subscription are growing in popularity (read more about meal kits on page 59), and grocers are starting to promote their own in-store meal kits via mobile merchandisers, she adds. “Many of today’s consumers are making dinner meal decisions within one or two hours of eating,” Beach says. “While more people are cooking at home, they are not necessarily cooking from scratch, but are using prepared and pre-prepped food from the grocery store to help them put a fast dinner on the table.” These shopper behavior trends require refrigerated display cases to be more mobile, flexible and versatile in display configuration, operating performance and design footprints. “Retailers can also consider cross-merchandising opportunities with special promotions for holidays or special events,” suggests Beach. Hussmann’s Q Series product family has been expanded to include several display configurations, from single deck to three decks in 4-, 6- and 8-foot lengths, depending on how and where the merchandisers will be used. All models have a plug-and-play design with casters that allow them to be moved around the store, and adjustable temperature controls make it easy to move from produce to fresh meat.

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

In a small footprint, Beach says, these mobile refrigerated display cases can support fresh produce, packaged sandwiches, salads, fresh meat, sushi and other products as retailers launch new product offerings for their customers. Holiday displays are what Beach considers the perfect application for a 4-foot Q1 or Q2 display, because the flexible product-temperature feature enables retailers to use the unit in multiple departments for cross-merchandising party platters, snacks and dips, and meal kits. Placing the merchandiser near checkout lanes or in front of the store makes it convenient for customers.

Discovering ‘Brand Soul’ Brick-and-mortar grocery is changing at a record pace due to shifts in shopper behavior and demographics, notes Harry Newton, director of sales and marketing at Structural Plastics Corp. (SPC), in Holly, Mich. “Today, there are five generations of shoppers in the marketplace, and the emerging go-to-market strategies are omnichannel marketing and experiential retail shopping,” he says. Top considerations are speed and agility, Newton says, and grocers need to change what he calls “the thousands of large, tired, brick-and-mortar grocery spaces into fun, convenient lifestyle and destination centers designed to meet the needs and desires of today’s shoppers.” Newton notes that SPC helps retailers find what the company calls their “Brand Soul” — the deeper, more meaningful and personal connection a store has with its customers. In other words, it’s the fun, experiential and magnetic personality of the store’s brand. “Grocery retailers must connect with their customers on many levels and give them a reason to come inside their stores,” he emphasizes. “We work with hundreds of grocers of every size and type, and recognize that the perimeter high-traffic areas around grocery stores are prime spaces for connecting with today’s busy, distracted shoppers who simply do not have time to shop large grocery stores built years ago for yesterday’s shoppers.” In Newton’s view, savvy retailers need fresh ideas and strategies to pull products out of the “center store shadows” and into high-traffic, highvisibility perimeter areas to create fresh, new and dynamic Brand Soul connectors. “By putting together what goes together — a recipe-building merchandising strategy — and showing off culinary themes, seasons and events,” he says,


“retailers can connect with and stop shoppers in their tracks. Today, selling space is a stage where product stories play out on a daily basis. This is especially true during the holiday season, when shoppers’ lives are busiest and convenience is in high demand.” According to Newton, SPC Retail creates quick- and easy-to-assemble lightweight mobile displays for retailers, and the company’s “point of difference” is its “Kit of Parts” system used to build thousands of modular displays made from 100 percent recycled plastic. SPC’s most popular mobile merchandiser is its 3-Step Display, which comes in 36-inch, 66-inch and 96-inch lengths. Newton says they’re popular due to their versatility: “They can be used as stand-alone displays indoors or outdoors, and they are also perfectly suited for use with a group of other displays to create unique Brand Soul in key areas throughout the store.” Retailers can use them for temporary holiday, seasonal, promotional and eventdriven displays in front entry areas, perimeter power aisles, departmental focus areas, and even outdoors in parking lots or on sidewalks for pop-up shops. “And, more importantly,” Newton observes, “our displays are a huge improvement on the travesty of folding tables that get pulled out by grocers around the holidays for special promos and holiday displays around the store. We tell our clients all the time, ‘A folding table is not a merchandising strategy.’ In the amount of time it takes to set up a folding table, complete with a tacky plastic tablecloth, a store associate could set up a Brand Soul display that stops shoppers in their tracks.”

use them with frozen shrimp rings and fresh-cut veggies for entertaining. Again, anything fresh and pertinent to the holiday involved.” Broulims uses mobile displays year-round for different reasons, “but they have always produced success if the location and the items are correct for the time of year,” Zahrn says, suggesting that grocers “be creative and have fun.”

Bunker Mentality Grocery retailer Broulims Fresh Foods, in Rigby, Idaho, uses open 4-foot bunkers that “are very easy to move around the facility and get the product into the traffic,” says Sales Manager Scott Zahrn. “We rotate displays from meat, produce and bakery-deli items that are seasonally correct, or new items that we are trying to introduce to our guests. Cut fruit, dips, steaks and ready-made meals are the biggest winners in these bunkers.” Of a recent What’s for Dinner? program, which took some center-of-plate beef items and paired them with a total meal idea, complete with recipes and cooking instructions, Zahrn notes, “This was a very successful promo that we will be doing again.” At holiday time, he adds, “we use these bunkers for cheese balls, seafood and cocktail dips, and specialty cheese. We also move them around and

Cause for Celebration Draeger’s Supermarkets, in South San Francisco, Calif., uses mobile merchandisers “here and there for high-end popsicles, suntan lotion and seasonal stuff like that,” notes buyer Ken Manley, as well as for Hydro Flask insulated water bottles. Draeger’s puts mobile merchandisers of seasonal produce in front of the stores, Manley says, “because you want shoppers to know that you’re a grocery store.” For holidays, mobile displays are used to create a candy shack for seasonal candies, and preexisting rotating end caps are also used, he adds. “It seems like there’s a holiday every two weeks,” Manley observes. The actual frequency of holidays — coupled with manufacturers’ recommendations to merchandise seasonal product as much as possible — makes mobile merchandisers that much more important. PG

We rotate displays from meat, produce and bakerydeli items that are seasonally correct, or new items that we are trying to introduce to our guests.” —Scott Zahrn, Broulims Fresh Foods

November 2017 | progressivegrocer.com |

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Food, Beverage & Nonfood Products

Inspired Infusions An extra boost of unique flavor can enable any food to stand out, making infused sugars useful for creating something bold and fresh in the kitchen. RogersMade now offers a line of premium spice blends under the brand name Siren Spice Co., including a collection of infused organic cane sugars ideal for baked goods, beverages, desserts and more. Varieties include Pink Lemonade, Gingerbread, Pumpkin Spice and Cafe Mocha, with each said to be made from the finest-quality organic cane sugar and all-natural ingredients. The SRP for each variety is $8 per 4.3-ounce bottle. https://rogersmade.com

Plant-powered Treat Plant-based alternatives are growing increasingly popular, even with people who don’t shy away from animal-based foods. Knowing this, Halo Top — which already is beloved by people who want a comforting pint of ice cream without all of the guilt — has introduced seven low-calorie flavors that are both nondairy and vegan-friendly. Made with coconut milk, the product is said to be the first low-calorie ice cream that’s 100 percent natural. Each of the flavors — which include Vanilla Bean, Chocolate, Peanut Butter Cup, Chocolate Chip Cookie Dough and Birthday Cake — ranges from 280 to 360 calories, with only 16 to 24 grams of sugar per pint. Each pint has an SRP range of $4.99 to $5.99. www.halotop.com

Veg Out Healthy snacking is hotter than ever, suggesting that people are more likely to eat their veggies when craving a nosh. Responding to this trend, Gaea has introduced Veggie Snacks, which the company describes as the first-ever shelf-stable vegetable snacks on the market. Made with all-natural ingredients and zero preservatives, the lightly pickled product line is marinated in Gaea extravirgin olive oil and either lemon juice or vinegar. Veggie Snacks consists of three varieties: Carrot, Cauliflower and Gherkin. The SRP for a 2.8-ounce pouch is $2.99. www.gaeaus.com

Hit the Switchel From drinking vinegars to cocktail shrubs, beverages containing the acidic liquid are seeing a resurgence, especially among those seeking to improve their gut health or even enjoy something tart. Up Mountain Switchel is one of the latest to jump on the vinegar bandwagon with the introduction of Original Swizzle, a lightly carbonated take on the company’s awardwinning switchel, in convenient, sustainable aluminum cans. Featuring just four ingredients — water, organic 100 percent Grade A maple syrup, organic raw apple cider vinegar and fresh ginger root — and no added preservatives, Up Mountain Switchel is made from a recipe devised by farmers in the 1700s to promote vitality. The SRP for Original Swizzle is $2.99 per 12-ounce can. https://drinkswitchel.com

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


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Index Airius Arla Foods Avocados From Mexico Beiersdorf USA Blount Fine Foods

52 79 Inside Front Cover 21, Inside Back Cover 16-17, 31-34

Cheyenne International

58

Creekstone Farms

19

Del Monte Fresh Produce NA Inc.

67

Dietz & Watson Inc.

47

Digimarc

41

Domino Foods E&J Gallo

7 50

Earth Friendly Products

95

Emmi Roth USA

29

Fetzer Vineyards

27

Flowers Foods

53

Forte Products

88

Goya Foods, Inc.

23

Hughes Networking

Back Cover

Iovate Health Sciences Int’l Inc.

26

Kimberly-Clark Co

89

Kronos Incorporated

37

Madrona Specialty Foods

73

Magicard

85

Mars Chocolate NA/ Wrigley

65

MasonWays Indestructible Plastics

72

MilkPEP

76-77

Morinaga Nutrional Foods

74

Nestlé Purina Pet Care

81

Nielsen

15

Pfizer Consumer Health

24

Relex Solutions

39

Saltworks Sealed Air Stonefire Authentic Flatbreads Stout Beverages, LLC

87 62-63 71 56-57  

The Happy Egg Company

60

The Humane Society of the United States

49

The J.M. Smucker Company

13

The Wonderful Company

11

The Wonderful Company/Pistachios

69

Tony Chachere’s Creole Foods

64

Trion Industries Inc. United Fresh Produce Association

9 83, 96

US Alliance Paper

4

Vestcom

3

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.

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November 2017 | progressivegrocer.com |

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Tech Talk By Randy Hofbauer

Is it Time for Grocers to Adopt VR? Grocery vet Bob Mariano offers 3 ways that tech boosts back-end efficiency.

I

n recent years, virtual reality (VR) technology has often been associated with consumer-facing entertainment — such as the novel and upcoming film “Ready Player One,” or the Playstation VR system — but it’s finding increased potential to drive back-end efficiency in business, including brick-and-mortar grocery. And while many believe VR is an idea to approach in the future, some see earlier adoption as a way to actually approach the future today. Renowned grocery veteran Bob Mariano — who helmed Chicago-area grocer Dominick’s and Midwestern grocer Roundy’s, and now sits on the board of VR technology firm InContext Solutions — is one of those advocates. Chicago-based InContext offers the ShopperMX flagship SaaS VR platform through HIVE (Hi-Immersion Virtual Experience), which transports users via headset into a virtual store environment. This allows them to interact with products, shelf sets, store layouts and in-store displays to quickly simulate in-store concepts and obtain data-driven insights on customer behavior by testing concepts and simulations with live shoppers using the technology. Mariano sat down with me to offer three areas where VR technology can help grocers improve performance: Shopper intelligence: VR technology can take away estimation about how a new product or concept is going to perform, enabling new ideas and concepts to be tested

98

and even fail without significant time and financial strain. Even a department or store redesign can be tested before anything is changed or removed. “This allows the retailer and the CPG to really put their heads together and come up with iterations, and then determine how the consumer changes behavior most effectively,” so the parties aren’t just repeating what they did the previous year, Mariano said. Category management: As a broad analysis based on logistics, category management has had to do more with shelf supply than anything else. However, it’s only recently that the process is beginning to realize the importance of factoring in the shopper. Using VR gives category and brand managers real-time, accurate data to test real shoppers’ experiences and work toward a reality. “If we’re trying to match a category to give us a 2 or 3 percent increase next year, [and] all we do is look back on what we did … it’s a matter of luck then,” Mariano said. Like Mariano’s experience, the first time I tried the technology, I felt like I was in a real Walgreens store, seeing everything designed as it is in one of the chain’s typical shops. So if the customer feels like she’s in a store she shops, insights into her reactions can be more trustworthy. Planogram improvement: Grocers can determine how best to update their planograms by determining which categories should be adjacent, what customers are seeking and how to get shoppers down the aisle. As an industry, “we really haven’t been doing a lot of work in terms of why consumers go down certain aisles, how heavy they shop, what do they look for,” Mariano noted. “That’s a whole area that is really underdeveloped in terms of knowledge of actually what makes a difference to the customer in terms of adjacency and things across the aisle from other categories.” The major barriers to adoption, however, are twofold: cost and unfamiliarity. But to move into the future and see VR’s potential, grocers will have to “put their foot in the water and try it,” Mariano urged. If VR reveals a way to cut costs, however, it could pay for itself. He points to one InContext client that saved $880,000 testing a concept, as it found a less expensive alternative resonated more with customers. “I think it makes all the sense in the world, given today’s environment in retail, to do it far more scientifically than the old way we always did it,” Mariano asserted. Because ultimately, he warned, if grocers don’t embrace VR to rethink the path to purchase and consumer-centricity, they may never turn the tide of fading center store sales. PG

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


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Progressive Grocer - November 2017  

Progressive Grocer - November 2017