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EXCLUSIVE STUDY: Grocery retailers increasingly leveraging tech SUSTAINABILITY SURGE Grocers, trading partners team for a greener world FUTURE SHOP Figuring out what’s in store for center store GROWING YOUR GROCERANT OPERATIONS Summit highlights and more

2018 CATEGORY CAPTAINS

COLLABORATION

NATION More transparency between retailers and suppliers means better shopper solutions that drive sales.

Novmeber 2018 • Volume 97, Number 11

$10 • www.progressivegrocer.com


Real Potatoes REAL EASY

SLOW-COOKED TASTE

IN MINUTES BRINGING INNOVATION TO DRY SOUPS


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Contents 11.18

Volume 97 Issue 11

Features

A SPECIAL RIS/PROGRESSIVE GROCER REPORT 3RD ANNUAL

GROCERY

22

STUDY

2018 Digital Transformation Accelerates

Collaboration Nation

More transparency between retailers and suppliers means better shopper solutions that drive sales.

Departments 8 EDITOR’S NOTE

Full and Equal Partners 10 IN-STORE EVENTS CALENDAR

January 2019 12 CONSUMER INSIGHTS

Holiday Sweets … Part 2

Digital Transformation Accelerates

TECH TRENDS

COVER STORY PROGRESSIVE GROCER’S 2018 CATEGORY CAPTAINS

51 PG/RIS GROCERY TECH TRENDS STUDY 2018

Grocers embrace the evolving role of technology as a tool that optimizes decision-making, learns as it goes, recommends next-best actions and reacts faster than ever before.

Grocers embrace the evolving role of technology as a tool that optimizes decision-making, learns as it goes, recommends next-best actions and reacts faster than ever before.

51

PRESENTED BY

SPONSORED BY

14 MENU TRENDS

20 ALL’S WELLNESS

Dressing Salads Up With Flavor Trends

Center Store Delivers on Good Health

16 NIELSEN’S SHELF STOPPERS

96 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS

Alcoholic Beverages 18 MINTEL GLOBAL NEW PRODUCTS

Fish, Meat and Poultry

98 TECH TALK

Think Like a Tech Company

PROGRESSIVE GROCER November 2018

5


Contents 11.18

Volume 97 Issue 11

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

www.ensembleiq.com

58 FEATURE

Partners in Sustainability

Grocers and trading partners are key allies in furthering this worthy cause.

58

PRESIDENT, CANADIAN DIVISION & NORTH AMERICAN GROCERY Jennifer Litterick jlitterick@ensembleiq.com BRAND DIRECTOR John Kenlon jkenlon@ensembleiq.com EDITORIAL DIRECTOR OF GROCERY CONTENT Joan Driggs 224-632-8211 jdriggs@ensembleiq.com

64

EDITORIAL DIRECTOR James Dudlicek 224-632-8238 jdudlicek@ensembleiq.com MANAGING EDITOR Bridget Goldschmidt 201-855-7603 bgoldschmidt@ensembleiq.com

64 GROCERY

DIGITAL & TECHNOLOGY EDITOR Randy Hofbauer 224-632-8240 rhofbauer@ensembleiq.com

Front and Center

SENIOR EDITOR Kat Martin 224-632-8172 kmartin@ensembleiq.com

Grocers and other food industry figures contemplate the future of center store.

CONTRIBUTING EDITORS D. Gail Fleenor, Kathy Hayden, Jenny McTaggart, Lynn Petrak and Barbara Sax ADVERTISING SALES & BUSINESS SOUTHEAST ACCOUNT EXECUTIVE Larry Cornick (NEW ENGLAND, SOUTHEAST) 224.632.8248 lcornick@ensembleiq.com

74

74 FRESH FOOD

Health and Taste

SENIOR MARKETING MANAGER Judy Hayes (CA, PACIFIC NORTHWEST) 925-785-9665 jhayes@ensembleiq.com

Winter produce provides plenty of both, and savvy grocers can make the most of that.

SENIOR MARKETING MANAGER Theresa Kossack (MIDWEST) 214-226-6468 tkossack@ensembleiq.com WESTERN REGIONAL MARKETING MANAGER Rick Neigher (SOUTHWEST) rneigher@ensembleiq.com 818-597-9029 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 EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several eseveral@ensembleiq.com VICE PRESIDENT, EVENTS Michael Cronin mcronin@ensembleiq.com

81 GROCERANT SOLUTIONS

MARKETING MARKETING MANAGER Carly Kilgore 201-855-7601 ckilgore@ensembleiq.com

Insights From the Grocerant Solutions Summit

AUDIENCE ENGAGEMENT DIRECTOR OF AUDIENCE ENGAGEMENT Gail Reboletti greboletti@ensembleiq.com

The event also introduced the first-ever Chef Solutions Challenge.

AUDIENCE ENGAGEMENT MANAGER Shelly Patton 215-301-0593 spatton@ensembleiq.com LIST RENTAL MeritDirect Elizabeth Jackson 847-492-1350, ext. 318 ejackson@meritdirect.com

81

89 FOCUS ON THE HEALTHY SHOPPER

Hy-Vee Opens 1st Free-Standing HealthMarket

SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES 978-671-0449 or email at EnsembleIQ@e-circ.net PROJECT MANAGEMENT/PRODUCTION/ART VICE PRESIDENT OF PRODUCTION Derek Estey destey@ensembleiq.com CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com

Also, Raley’s rebalances snack, treat offerings.

REPRINTS, PERMISSIONS AND LICENSING Wright’s Media ensembleiq@wrightsmedia.com 877-652-5295

92 NONFOODS

Consumers of Note The digital generation’s affinity for traditional greeting cards is driving category sales.

CORPORATE OFFICERS EXECUTIVE CHAIRMAN Alan Glass CHIEF EXECUTIVE OFFICER David Shanker CHIEF OPERATING OFFICER & CHIEF FINANCIAL OFFICER Richard Rivera PRESIDENT, PATH TO PURCHASE INSTITUTE Terese Herbig

92 6

progressivegrocer.com

CHIEF INNOVATION OFFICER Tanner Van Dusen CHIEF DIGITAL OFFICER Joel Hughes CHIEF HUMAN RESOURCES OFFICER Jennifer Turner


Holiday Baking means Brown Sugar Sweetening. Stock Your Shelves with the Quality of Domino® and C&H® Brown Sugars. Consumers start early with seasonal baking of gingerbreads, cakes and cookies for gift-giving. And when baking for special occasions, they rely on the highest quality ingredients for the best results. Wherever consumers are, Domino® and C&H® are the brands they trust. Domino® Light Brown and Dark Brown Sugars are key to adding moisture and a delicious molasses flavor to baking, as are C&H® Golden Brown and Dark Brown Sugars. Be prepared for volume sales by providing holiday bakers the best in class.

Expanding our Portfolio

Creating Innovative Products

ASR-Group.com

Meeting Consumer Needs


EDITOR’S NOTE By Jim Dudlicek

Full and Equal Partners “We must, indeed, all hang together or, most assuredly, we shall all hang separately.” —Benjamin Franklin

s the deadline for this column stared me in the face, I found myself at the inaugural GroceryShop conference in Las Vegas, on the first of three days that promised a deep dive into the transformative forces impacting retail, with a host of content-rich concurrent sessions bound by the common thread of shopper experience. Yet one of the first presentations I attended noted a crucial lapse that came as a surprise, not at its existence, but that efforts to remedy the deficiency don’t seem to be accelerating: retailer-supplier collaboration. Retailers reportedly still have limited confidence in CPG companies’ capabilities within traditional channels, and even less confidence in digital channels. That’s according to Art Ash, principal for consumer products corporate strategy and growth leader at Deloitte Consulting, citing research from Deloitte’s 2018 Voice of the Retailer survey. Ash recommended five major actions to address this: Growth areas and priorities: Develop a unified approach across both digital and physical channels. Consumer insights and data sharing: Generate and continuously share consumer insights and analytics. Supply chain: Integrate supply chain and forecasting capabilities. Assortment, promotions and packaging: Partner on channel-optimized assortment, merchandising and promotions. Marketing content: Partner on the creation and delivery of relevant content across channels. Retailers and their partners stand to benefit from “significant opportunities” in these five areas to better serve customers, Ash said. Indeed, the improvement of retailer-supplier relationships is being urged in many circles. Strategists James McDonnell and Oliver Rowson wrote this past August in U.K.-based Supply Management, the official publication of the Chartered Institute of Procurement and Supply: “Intense competition from discount stores and ongoing channel 8 progressivegrocer.com

shifts are putting grocery retailers and suppliers under significant margin pressure. To stay competitive and access new sources of value, they must change the nature of the retailer-supplier relationship, moving away from the traditional, adversarial model to more transparent and collaborative partnerships.” And this year’s annual retail collaboration study by retail business network Trace One reported that, to sell on-trend products and seize new opportunities, many retailers recognize a need to change suppliers but find the process daunting. Nearly half (47.5 percent) of survey respondents said that they find it hard to achieve expected benefits and improved product quality, 35 percent find it time-consuming, and 30 percent find it difficult to build a trusting relationship.

Retailers and their partners stand to benefit from significant opportunities in five key areas to better serve customers. Progressive Grocer’s annual Category Captains contest, featured in this issue starting on page 22, seeks to recognize retailer-supplier collaborations that are successfully driving sales not only in a particular category, but also across the whole store through customized promotions and need-state-based solutions. Most of our CPG entrants are restricted from speaking publicly about their retailer partnerships, and we respect those confidences by not publishing certain specifics. It’s far more important that the partners are fully open with one another, and we applaud their efforts to break down these traditional industry silos. There’s clearly still more work to be done, however, and disruptive pressures demand swift action. As Ben Franklin’s revolutionary observation at the head of this column suggests, working together more effectively is the right course to avoid a descent into irrelevance and oblivion. Jim Dudlicek Editorial Director jdudlicek@ensembleIQ.com Twitter @jimdudlicek


Ireland’s dairy industry. Your sustainable source. Origin Green, Ireland’s national food and drink sustainability program is our commitment to a safe, secure food supply far into the future. Central to Origin Green, is the Sustainable Dairy Assurance Scheme (SDAS), the first national dairy sustainability scheme of its kind, an independently audited and internationally accredited program. Ireland’s temperate climate, abundant rainfall and tradition of family farming have resulted in a grass-fed system with cows grazing outdoors for the majority of the year. Ireland’s dairy farmers participate in the SDAS program, where consistent audits and continuous improvement ensure a sustainable supply of quality milk. So make sustainability key to a reliable dairy supply for your business. Visit OriginGreen.com/Dairy to learn more. Bord Bia is the Irish Government agency responsible for the development and promotion of Ireland’s food and beverage industry.

The world’s first national food sustainability program


IN-STORE EVENTS

Calendar S

01.19

M

T

1

New Year’s Day

W

2

National Cream Puff Day

National Hangover Day

National Bloody Mary Day

6

Epiphany National Shortbread Day

7

Orthodox Christmas Day

National BlackEyed Pea Day

National Buffet Day

8

9

National English Toffee Day

National Tempura Day

National Slow Cooker/Cooking Month Wheat Bread Month Egg Month

National Hot Tea Month National Soup Month National Oatmeal Month

Run specials in the bakery for pastry products that honor National Apricot Day.

T

3

Get rid of a leftover holiday special by offering a promotion for Fruitcake Toss Day.

F

4

5

11

12

National Spaghetti Day

Winter Fancy Food Show begins today and continues through the 15th. National Gluten-Free Day

National Whipped Cream Day

National ChocolateCovered Cherry Day

10

National Bittersweet Chocolate Day

As it’s both National Hot Toddy Day and National Milk Day, make sure to feature on social media hot toddy recipes that include milk.

National Bean Day

13

S

National Glazed Doughnut Day National Marzipan Day National Curried Chicken Day Kiss a Ginger (Redhead) Day

14

Orthodox New Year National Hot Pastrami Sandwich Day. Offer specials on this deli favorite.

15

National Fresh-Squeezed Juice Day National Strawberry Ice Cream Day

16

Create displays of flavorful products for International Hot and Spicy Food Day.

17

18

19

24

25

26

National Hot Buttered Rum Day

Create displays and run specials in the coffee shop for National Gourmet Coffee Day.

National Popcorn Day

National Fig Newton Day

National Peach Melba Day

20

National Cheese Lover’s Day

21

Martin Luther King Day For Tu BiShvat, focus on ecoawareness in-store.

National Chocolate Cake Day

10

Ask customers for some recipes of their favorite comfort foods for National Southern Food Day.

National Granola Bar Day

National Blonde Brownie (Blondie) Day

28

29

National Buttercrunch Day

27

22

National Blueberry Pancake Day

progressivegrocer.com

National Corn Chip Day

23

National Pie Day celebrates all types of pies, but today is also National Rhubarb Pie Day.

National Peanut Butter Day Lobster Thermidor Day

National Irish Coffee Day. Bottoms up!

National Peanut Brittle Day National Green Juice Day National Pistachio Day

30

National Croissant Day

31

Gather all the fixings to create the best hot beverage for National Hot Chocolate Day.


T H E

A R T

O F

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

T M

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


CONSUMER INSIGHTS

Market Research

Holiday Sweets ‌ Part 2 Age plays a role in how consumers purchase holiday candy. Older consumers are less likely to go to mass merchandisers, but are more likely to make their purchases in warehouse-type retailers. Older shoppers also consume less candy than younger consumers; however, older consumers are more likely to snack on candy. Overall, the number of different varieties purchased declines as shoppers get older (Millennials: 2.55, Gen X: 2.49, Boomer: 1.96, Mature+: 1.80), as all key formats of holiday candy see a steady decline in general. Progressive Grocer, along with sister company EIQ Research Solutions, interviewed 500 consumers who have household responsibility for grocery shopping to find out how they shop for holiday candy. Survey respondents were sourced via ProdegeMR, reinventing the market research process by taking a respondent-first approach. Visit www.prodegemr.com/ensembleiq for more information.

As Shoppers Get Older, Holiday Candy Shopping Behaviors Change Mass Merchandiser Supermarket Drug Warehouse Dollar Limited grocery

Candy Purchase Location 80% 70 60 50 40 30 20 10 0 Millennial (n=324)

80%

Generation X (n=296)

Baby Boomer (n=319)

Mature/Silent (n=76)

As a snack As a gift For a party As a decoration For dessert In a recipe

Candy Purchase Consumption

70 60 50 40

Use of holiday candy also changes as shoppers get older. While most uses decline, especially as a dessert, shoppers are more likely to consume the candy as a snack as they get older.

30 20 10 0

80%

Millennial (n=324)

Generation X (n=296)

Baby Boomer (n=319)

Mature/Silent (n=76) Bag of mini Loose candy Box of individual Individual King-size

Candy Purchase Format

70 60 50 40 30 20 10 0 Millennial (n=324)

Generation X (n=296)

Source: Progressive Grocer market research, 2018

12

While mass merchandisers are the top choice for where to purchase holiday candy, habits change as shoppers get older. Notably, there’s a general decline in the mass-merchandiser channel (primarily between Gen X and Boomers), while there’s growth in the warehouse channel.

progressivegrocer.com

Baby Boomer (n=319)

Mature/Silent (n=76)


©2018 Foods, ©2018 GoyaGoya Foods, Inc. Inc.

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Contact your GOYA sales representative or email us at salesinfo@goya.com


MENU TRENDS

Research & Analysis

Dressing Salads Up With Flavor Trends SAL AD DRESSINGS ARE AN E XCELLENT VEHICLE TO HIGHLIGHT FRESH FL AVOR. At Datassential’s recent Foodscape event in September, “Trendologist” Mike Kostyo shared new flavors in a presentation he called “Inception with a Dose of Ubiquity.” Inception and Ubiquity are the first and last of Datassential’s four Menu Adoption Cycle (MAC) stages. Food trends start in Inception (on fine-dining and ethic menus) and end in Ubiquity (the ingredient or dish is everywhere). Kostyo used this to highlight “safe experimentation,” that is, taking flavors not familiar to most consumers and introducing them using a familiar food (i.e., sauce on a burger). Salad dressings are an excellent way to introduce lesser-known ingredients to customers — a way that you can be creative in showcasing fresh flavor in your grocery salad bar or when deciding what to put on shelves. The following are four flavors from the first two stages (Inception and Adoption) of the MAC on salad dressings and oils:

1

Blood Orange Vinaigrette MAC stage: Inception — Ethnic markets, ethnic independents and fine dining Trends start here and exemplify originality in flavor, preparation and presentation.

Trends start here and exemplify originality in flavor, preparation and presentation.

Orange vinaigrette is already an established food trend on menus. Using blood oranges adds a sweeter, berry-like flavor. Blood oranges themselves are a trend, on 11 percent of menus, up 65 percent over the past four years. On <1% of U.S. restaurant menus/Up 67% on U.S. restaurant menus 

This tart Japanese sauce is made with rice vinegar, rice wine, bonito fish flakes, seaweed and yuze (a type of Japanese citrus). It’s growing alongside interest in authentic Japanese cuisine. On 5% of U.S. restaurant menus/Up 24% on menus over the past four years

Menu Example SPIN! Neapolitan Pizza, Kansas City, Mo Sonoma Salad Box Lunch Red leaf and spinach with grapes, raisins, apples, goat cheese, chopped glazed pecans, blood orange vinaigrette

14

2

Ponzu MAC stage: Inception — Ethnic markets, ethnic independents and fine dining

progressivegrocer.com

22% of consumers know it/ 11% have tried it Menu Example Iza Asian Restaurant, Missoula, Mont. House Salad Mixed greens, napa, edamame, fresh herbs, sprouts, scallions, carrot and nori crisps with your choice of wasabi ponzu or gluten-free miso ginger vinaigrette. Dairy-free, vegan, gluten-free with miso vinaigrette

3

Green Goddess Dressing MAC stage: Adoption — Ethnic aisle at supermarkets, casual independents, fast casual Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. This creamy salad dressing, originally big in California and used on California-inspired salads, is made from mayonnaise, chervil, chives, tarragon, vinegar and pepper. It’s also being used as a dip or sandwich spread. On 2% of U.S. restaurant menus/Up 172% over the past four years 43% of consumers know it/ 23% have tried it Menu Example Burger Jones, Minneapolis BJ Cobb Salad BBQ-glazed burger with crisp romaine, bacon, avocado, bleu cheese, tomatoes, egg, cheddar and an onion ring with green goddess dressing

4

Apple Cider Vinaigrette MAC stage: Adoption — Ethnic aisle at supermarkets, casual independents, fast casual Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. With a tart yet sweet flavor, this vinaigrette is made with apple cider vinegar in place of wine vinegar. Apple cider vinegar is trending on its own, as it is thought to have a wide range of health benefits, from aiding in digestion to supporting a healthy immune system. On 1% of U.S. menus/Up 26% over the past four years 77% of consumers know it/ 51% have tried it Menu Example Governor’s Restaurant, Old Town, Maine Farmhouse Salad A blend of romaine and spinach tossed with apple cider vinaigrette and topped with beets, roasted butternut squash, crumbled feta cheese and toasted pumpkin seeds


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FRONT END

Shelf Stoppers

Shelf Stoppers

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

(52 weeks ending April 2, 2016) Alcoholic Beverages

Beyond the Bottle

Top 5 Wine Types’ Dollar Percent Growth Latest 52 Wks - W/E 07/14/18

Wine is being sold in a variety Consumers chose frozen broccoli over of packaging alternatives for have types. Which aoutperformed variety of reasons: this year?

$300,000,000 250,000,000 200,000,000

12%

150,000,000

because it’s quick and easy

100,000,000 50,000,000

10%

Canned wine has seen becausegrowth it tastesthis impressive year, up great 58 percent in dollar sales, leading other packaging types.

0 52 Wks - W/E 07/14/18 Wine-Based Cocktail

Flavored Beverage Wine

52 Wks - W/E 07/15/17

Sake/Plum

Sangria

Spotlight on Frozen Broccoli

9%

Nonalcoholic Wine

because it’s healthy and nutritious

Total U.S. xAOC (All Outlets Combined) + Convenience, Military and Liquor Plus WHEN ARE EATING BROCCOLI? This includes traditional grocery, warehouse clubsCONSUMERS (excluding Costco), and massFROZEN merchandisers Source: Nielsen Retail Measurement Services, Beverage Alcohol Broccoli as an ingredient is most commonly consumed at dinner, followed by lunch.

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

Up 2 percent in dollars and 9% flat at +0.2 percent in volume, wine in the United States is growing, albeit at a slower pace than we’ve seen historically. On the one hand, access to wine is being stimulated via the growth in retail outlets selling wine both on and off premise. With the emergence of things like experiential venues, the discovery process OCCASION MEAL ITEM has never been more accessible, which interesting for Millennial consumers, who are 29% is particularly TYPE CLASS 62% 35% 61% often all about that discovery of something new. This openness and connectedness to the world of food and drinks has resulted in a shift in alcohol consumption habits. Today, there are fewer ‘exclusive-category drinkers,’ which means consumers often move seamlessly across the world of adult beverages, making choices on an occasion-by-occasion basis.” DINNER

LUNCH

—Danny SVP DISH Beverage Alcohol Practice OTHER Brager, SIDE MAIN ENTRÉE OTHER

Demographic Spotlight Household Size Aggregated

TOTAL ALCOHOL DEPARTMENT

TOTAL WINE

BEER/FMB/CIDER

TOTAL SPIRITS

HH Index Product

$ / HH Index Product

HH Index Product

$ / HH Index Product

HH Index Product

$ / HH Index Product

HH Index Product

$ / HH Index Product

HH Index Product

Single Member

82

86

80

83

80

78

89

88

58

64

2 Members

138

107

145

113

128

109

142

116

158

121

3-4 Members

86

106

83

103

93

110

79

99

85

110

5 or more Members

70

99

62

95

86

101

58

83

76

104

Consumption of alcoholic beverages appears to be a couples affair. As can be seen in the data, two-member households are spending more than we would expect across alcoholic beverage purchases. They spend 45 percent more on wine; 28 percent more on beer, ciders and flavored malt beverages; 42 percent more on spirits; and 58 percent more on alcoholic beverage mixers. Conversely, average spend per household is underindexed across single-member homes, as well as those with more than two members. progressivegrocer.com

Plastic-packaged wine sales are up 12 percent compared with a year ago.

ALCOHOLIC BEVERAGE MIXERS

$ / HH Index Product

16

8%

because wine it’s low in are Tetra-packed sales fat and sugar up calories, 16 percent compared with a year ago.

Boxed wine sales are up 6 percent compared with a year ago.

Source: Nielsen Retail Measurement Services, Total U.S. xAOC (All Outlets Combined) + Convenience, Military and Liquor Plus, 52 weeks ended July 14, 2018, versus year-ago


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MINTEL CATEGORY INSIGHTS

Global New Products Database

Meat, Fish and Poultry Market Overview

Commodity prices and a pronounced drop in the frequency of meat consumption have led to sales declines in the U.S. packaged red-meat category since 2016. Since 2015, the U.S. poultry market has experienced marginal growth, but as prices rebound and product innovation increases, the category is expected to grow at a faster pace over the next five years.

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

Key Issues

While red meat can play a role in a healthy diet, many consumers are choosing other protein options, with 26 percent of Americans saying that theyâ&#x20AC;&#x2122;re eating more protein from other sources.

Ethical and environmental claims grew to 55 percent of new fish/shellfish launches in the United States in 2017, up from just 41 percent in 2013.

Sales in the U.S. fish and shellfish market are growing after a decline in 2016, driven by the fresh fish/ shellfish segment. As poultry is known for its taste, health and affordability, U.S. poultry consumers are using it in place of red meat to eat healthier (49 percent) and save money (22 percent).

18

progressivegrocer.com

What Does It Mean? Merging a good-for-theenvironment message with better-for-you claims on fish/shellfish products can help brands appeal to more consumers, while also reassuring those who are concerned about the health and safety of consuming them. Poultry brands can focus on product development of affordable options that are easy to swap in for red meats, or even fish and shellfish, to encourage more consumers to use poultry instead. As many consumers are reducing their frequency of red-meat consumption because of health and nutrition concerns, meat brands can combat this by communicating meatâ&#x20AC;&#x2122;s healthful benefits and inherent nutrients, and by positioning healthier red meats as a natural, better-for-you choice.


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ALL’S WELLNESS By Diane Quagliani

Center Store Delivers on Good Health RE TAILERS CAN HELP CONSUMERS DISCOVER AN INNER WORLD OF NUTRITIOUS FOODS. hen it comes to making healthful choices at the grocery store, common advice is to “shop the perimeter,” where fresh foods like produce, dairy, lean meats and seafood reside, and to avoid the center aisles, where packaged foods that are high in saturated fat, sodium and added sugar lurk. But shoppers who avoid the center store are shortchanging themselves on some of the most nutritious foods around, including several that most Americans don’t consume enough of for good health, according to the 2015-20 Dietary Guidelines for Americans. Examples are vegetables, fruits, whole grains, legumes (beans and peas), seafood, and oils. In fact, center store options can be more nutritious than fresh. For instance, some frozen foods may contain more vitamins and minerals than their fresh counterparts, because freezing preserves nutrients, according to www.eatright. org, the website of the Chicago-based Academy of Nutrition and Dietetics. And while it’s true that foods with high amounts of saturated fat, sodium and added sugar are found in center store, perimeter foods also contain their fair share of these components.

Sorting it Out

How can you and your shoppers sort it all out? Your retail dietitians can help promote healthful offerings in every aisle through nutrition messaging, promotions, social media, store tours and more. Meanwhile, below are just a few examples of the many nutritious foods stocked in center store: Like fresh produce, frozen, canned and dried fruits and vegetables may protect against cardiovascular disease and some types of cancer, as well as supply fiber, potassium, vitamins A and C, and much more. Frozen fruits and vegetables are picked at peak ripeness and often frozen within hours, locking in nutrients and flavor. Whole grain foods span several aisles and include cereals such as shredded wheat and oatmeal, whole wheat bread and pasta, popcorn, brown rice, and “ancient” grains like quinoa, amaranth and farro. Eating whole grains may reduce risk for cardiovascular disease and is associated with lower body weight. Whole grains also offer a host of nutrients, including fiber, iron, zinc and B vitamins.

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Shoppers who avoid the center store are shortchanging themselves on some of the most nutritious foods around. Both canned and dry legumes, such as kidney beans, chickpeas, lentils and split peas, are excellent and economical sources of fiber, protein, potassium and folate. Like other protein-rich foods, they also provide iron and zinc. Frozen and canned seafood, (fish and shellfish) are protein-packed sources of omega-3 fatty acids, which are linked to cardiovascular health, reduced risk for obesity, and healthy pregnancy outcomes. The Dietary Guidelines recommend consuming about 8 ounces of seafood per week. Salmon, mackerel, albacore tuna, lake trout and sardines are among the best sources of omega-3s. Oils (often called “healthy fats”) are found throughout the center aisles in foods such as nuts, seeds, peanut butter, olives, seafood, and, of course, cooking oils like olive, canola, peanut, sesame and avocado. Oils contain a high proportion of unsaturated fats and are major sources of essential fatty acids and vitamin E. Replacing saturated fats (found in foods such as meat and poultry fat, whole milk, butter, and palm kernel oil) with unsaturated fats may help reduce blood levels of both total cholesterol and LDL (“bad”) cholesterol. Diane Quagliani, MBA, RDN, LDN, specializes in nutrition communications for consumer and health professional audiences. She has assisted national retailers and CPGs with nutrition strategy, web content development, trade show exhibiting, and the creation and implementation of shelf tag programs.


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COVER FEATURE

2018 Category Captains

More transparency between retailers and suppliers means better shopper solutions that drive sales. By Jim Dudlicek, Bridget Goldschmidt, Randy Hofbauer and Jenny McTaggart

are is the grocery shopper who’s looking for just one thing. Or, perhaps better stated, looking for just one item. Increasingly, the one “thing” they’re looking for is a solution — something that solves their need for breakfast, lunch, dinner, snacking, special occasion, etc. It’s up to retailers and their supplier partners to join forces and find the best ways to guide, steer, curate, bundle, illustrate — in other words, present that solution to the consumer to make them them perceive your store, whether accessed physically or digitally, as essential to their basic needs. “Every day and at every turn, new disruptive competitors and increased expectations from customers are challenging tried-and-true industry practices and our customary ways of operating. But we have choices,” Leslie G. Sarasin, president and CEO of the Arlington, Va.-based Food Marketing Institute, recently blogged. “We can either let others upset our apple carts on their terms, or we can work with our supplier partners to upend our own apple carts in order to see things in new ways, making the needed adjustments to create the more agile marketplace our shoppers want.” Progressive Grocer’s annual Category Captains awards recognize the best examples of such partnerships of the past year. CPG companies that seek to leverage the whole store, rather than just the aisle full of their own branded products, are the partners most valuable to grocers. Our editorial team reviewed dozens of nominations for the most compelling examples of new programs, technologies, business systems, merchandising schemes and promotional tactics that played a key role in driving sales through shopper-centric solutions that address key consumer need states. We looked for collaborations that addressed retailer needs specific to regions and markets, effective leveraging of shopper insights, strategic adjacencies between store departments, and evidence of impact on overall category and sales growth. Entries selected as Category Captains delivered on these criteria at the highest level; those designated Category Advisors (honorable mention) showed promise for further development and success. Read the results on the following pages ...

PROGRESSIVE GROCER November 2018

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GROCERYFOOD & BEVERAGES

COVER FEATURE

2018 Category Captains

GROCERY-FOOD & BEVERAGES

CANNED MEAT & MEALS CATEGORY CAPTAIN

BAKING INGREDIENTS CATEGORY CAPTAIN

Pinnacle Foods

The baking ingredient category has been in decline due to shoppers seeking more natural ingredients and solutions that don’t require a lot of time, so Pinnacle Foods figured out a solution: It was time to throw out the oven. In February 2017, the company launched Perfect Size for 1, a line of clean-label baking mixes that can bake into a single-serve cake inside a mug in just a minute. For 2018, the team embarked on an in-store initiative to help drive sales to the new segment of the baking aisle by creating a destination called the Bake Shoppe, intended to make it easy and quick for consumers to find their favorite items with minimal effort, and to improve shelf efficiency. Virtual shelving ensured that Pinnacle had strong propositions against relevant needs for shoppers and retailers. The initiatives resulted in positive feedback and are turning around the category, far exceeding expectations and driving highly incremental results for retailers.

CANDY & GUM CATEGORY CAPTAIN

Mars Wrigley Confectionery

Mars Wrigley Confectionery recently partnered with many leading retailers to implement customized solutions under its Path to Purchase program. One top grocer it partnered with to understand whether tapping into shoppers’ emotions in the candy aisle would spark engagement and drive sales. The company leveraged the retailer’s shopper data for the past three years and tested various attributes to emotionalize the aisle, which led to a full design of the candy aisle, including navigational cues and reamped signage to connect with shoppers in new ways. This resulted in the highest category growth for both the retailer and the manufacturers. The company worked with another retailer to develop a new e-checkout that featured impulse items at checkout and further streamlined the front end. When consumers saw the customized e-checkout, basket size increased and strongly drove confection purchases.

CANDY & GUM CATEGORY ADVISOR

The Hershey Co.

Many retailers add self-checkouts to save labor and reduce shoppers’ time in the store, but an unintended consequence of installing self-checkouts without merchandising is a decline in impulse sales. After Hershey shared shopper insights and test results from adding merchandising back to this space, a retailer agreed to a three-store test for merchandising at the self-checkouts. The test stores saw a nearly double-digit increase in sales on those items versus control stores. The retailer then expanded the solution to 58 stores, with another 18 locations to be added in 2019. By leveraging data and consumer insights, Hershey helped another retailer drive Easter sales. Understanding the powerful role that brands play during the season, the retailer dedicated a beacon end cap featuring Cadbury items for four weeks ahead of the holiday. The brand grew by double digits and the retailer experienced a sales increase, while the rest of the market was down.

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Hormel Foods

Despite the perception that center store is declining and fresh is dominant, Hormel Foods has delivered canned meat and meal category growth at retail. Insights derived from a consumer decision-tree analysis allowed the company to simplify segments within the category, based on shoppers’ purchase experiences at the shelf. Additionally, insights based on consumer demographics led to a microwave convenience set that expanded the demographic footprint, pulling in a larger household penetration. Several key retailers implemented Hormel's recommendations, generating higher category sales, as well as increased basket size and overall store sales, and more retailers have agreed to implement planogram resets.

COMMERCIAL BAKED GOODS CATEGORY CAPTAIN

McKee Foods

Over an 18-month period, the McKee category insights team began a systematic continuous-improvement initiative to automate best practices. Manual data pulling took too long, so the company shortened it by identifying failures in reporting practices, which it fixed by identifying benchmarks for each phase of the insight development process, and then methodically trimming waste and improving upon the benchmarks. As a result of this initiative, McKee has been able to save 600-plus hours just on pulling data. Because data is now easily accessible, the team can quickly identify trends and better inform its retail partners, several of which have reported growth in areas ranging from category sales to repeat buyers and purchase size per trip.


COVER FEATURE

2018 Category Captains

COOKIES & CRACKERS CATEGORY CAPTAIN

Kellogg Co.

Individual snacking products are the fastest-growing segment in the on-the-go cookie and cracker category, and Kellogg Co. is helping its retailer partners capitalize on this interest. With its strong portfolio of brands, Kellogg was outpacing the category with a 5 percent growth rate and driving 2 percent share growth in a recent 26-week period. The company is helping retailers manage the rapid proliferation in assortment by conducting broad category research and optimal aisle testing. It went through a detailed market structure to identify groupings based on household consumption, find key attributes that differentiate product groups, and identify unmet needs. It also conducted behavioral research to better understand shoppers’ mindsets. Armed with this knowledge, Kellogg developed aisle flow testing that resulted in significant growth for sandwich crackers. It also recognized the benefits of vertical blocking when creating an aisle flow.

DRY PACKAGED POTATOES CATEGORY CAPTAIN

Idahoan Foods

The packaged potato category is growing in both dollars and unit sales for the first time in five years, thanks in large part to share leader Idahoan Foods. Idahoan is investing its marketing and research dollars toward growing household penetration, which should help bring more valuable shoppers to the category. Meanwhile, the company is driving growth in the microwavable cup segment with the introduction of 4-pack cups. Cup segment dollars are up 20 percent at retailers that have added the new product to their assortment. Idahoan also introduced two new flavors of mashed potatoes, and has continued to work with perimeter protein categories in cross-merchandising efforts. Its specific work with retailer partners includes reassessing category assortment and planogram flow. One retailer that worked with Idahoan grew its category by 4.8 percent, while private label grew 25 percent.

DRY PACKAGED SOUPS CATEGORY ADVISOR

Idahoan Foods

Idahoan Foods has driven excitement and growth in the struggling dry-soup category through product innovation, cross-merchandising programs and category-builder retailer recommendations. In the past year, Idahoan’s Steakhouse Soup brand has risen 21 percent, while the hearty dry-soup category has grown 7.6 percent. The company launched a line of microwavable soup bowls to meet the needs of on-the-go shoppers. In one example of cross-merchandising, Idahoan worked with a retailer partner and a cracker manufacturer on an eye-catching end cap that doubled sales during the three weeks it was on display. Idahoan continues to bring its insights about drysoup shoppers to its retailer partners, helping them understand how these shoppers differ from wet-soup shoppers. The retailers that have followed Idahoan’s recommendations have seen significant growth, with one major chain experiencing a 14.6 percent increase in dry-soup sales.


COVER FEATURE

2018 Category Captains

GROCERYFOOD & BEVERAGES

ETHNIC FOODS CATEGORY CAPTAIN

Hormel Foods

MegaMex Foods, a joint venture of Hormel Foods and Herdez del Fuerte, invested in Mexican food aisle research to better understand shoppers and how they interact with Mexican foods. Based on this research, MegaMex’s recommendations focused on product adjacency solutions at the consumer level. At most Midwest and East Coast retailers, the authentic set is in the international aisle. MegaMex’s research revealed that when authentic Mexican items are moved from the international aisle, sales for these items increase by double digits due to higher awareness. The company also recommended moving out-of-scope items like Hispanic religious candles, dried peppers, pasta, rice and raw beans out of the set, as consumers expected to find such items in their “home locations.” Through the implementation of MegaMex’s Mexican aisle recommendations, retailers are experiencing overall category growth. Additionally, Herdez guacamole salsa accounted for 6 percent of the brand’s total growth just six months after launch.

MEAT SNACKS CATEGORY CAPTAIN

Jack Link’s

Meat snacks have grown 9.3 percent over a recent 52-week period, and Jack Link’s continues to lead category management best practices to help advise retailers about this fast-growing segment. In the past year, the company worked with a national grocer to grow its category sales. Through analyzing micro snacking trends, meat snack trends, consumer segmentation and sales trends, Jack Link’s was able to recommend that the retailer expand space within the set and optimize its assortment. The new set included optimal placement for larger jerky-bag sizes, which have gained popularity, as well as consumer segmentation and best-in-class planogram flow. Since implementation, the meat snack category has grown 16.5 percent. Almost all brands in the reset have experienced growth, and Jack Link’s has increased sales by 19.6 percent.

NATURAL & ORGANIC FOODS CATEGORY ADVISOR

General Mills

To capture share in the burgeoning organic and natural food segment, General Mills is providing retailers with shopper and shelving recommendations to drive awareness, advising that its retail partners integrate natural and organic into the mainline set. In a dual-placement test on mac and cheese, a key retailer saw the number of households shopping for Annie’s Mac and Cheese double, and a double-digit increase in dollar sales. Along with winning in store, it’s important that retailers win natural and organic shoppers online. Shopper profiles are similar, and key categories overindex in their share of online sales. General Mills’ ecommerce team is working with retailers on a best-in-class digital shelf by improving assortment, image accuracy and findability to attract and retain shoppers. Natural and organic growth is driving total store growth. General Mills is helping its retail partners succeed by looking holistically at categories through both a traditional and natural/ organic lens.

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PACKAGED COFFEE CATEGORY CAPTAIN

Massimo Zanetti

After single-serve options caused massive gains in coffee, retailers and manufacturers sought to understand the next place in which to find growth. Massimo Zanetti commenced a comprehensive coffee category and shopper insights study to determine the next growth drivers and how to leverage them with retailer partners, pinpointing four key areas: identification of heavy coffee shoppers and how to drive loyalty with them based on their behavior; capitalizing on trends toward understanding the new “value equation,” where value is often influenced by convenience, quality and “price I’m willing to pay”; understanding and catering assortment to Millennials; and leveraging the premiumization trend that's pervasive across food and beverage categories. Feedback from retailers resulted in several wins, among them implementation of recommended shopper marketing tactics, demonstrating high-double-digit growth of one brand due to increases in same-store sales and distribution gains, as well as sales growth in the premium-bag segment at one retailer partner.

PORTABLE WHOLESOME SNACKS CATEGORY ADVISOR

Kellogg Co.

Kellogg Co. views portable wholesome snacks as a crucial category for center store productivity, as the products in this segment reach 81 percent of households. The company has invested heavily in research for the past few years to understand the migration of shoppers and their personal reasons for engaging in the category. Its qualitative and quantitative research has revealed key pillars for growth, including widening the entryway for shoppers, retaining the core, and extending the runway of health to keep consumers in the space longer before they graduate to the healthier store perimeter. Kellogg has been collaborating with retailers to focus on these growth pillars and evolve together toward a future aisle solution. It is currently testing a new shopper-led shelf concept.


NEW!

OFFERING INNOVATION & CONVENIENCE


COVER FEATURE

GROCERYFOOD & BEVERAGES

2018 Category Captains

SPREADS CATEGORY CAPTAIN

READY-TO-EAT CEREAL CATEGORY CAPTAIN

Kellogg Co.

Category leader Kellogg Co. has continued to spur product innovation, along with thought leadership, to help retailers drive traffic to the cereal aisle. Its newest items, designed to meet consumers’ desires for health benefits and convenience, include Happy Inside whole grain cereal and joyböl Crunchy Smoothie Bowls. The company also launched Special K Nourish Berries & Peaches with Probiotics, as well as Chocolate Frosted Flakes. Demonstrating its category management prowess, Kellogg conducted an in-store test of an aisle concept designed to reinvent the cereal-shopping experience and lead to increased category sales by addressing shopper barriers. The test met its objectives and has inspired Kellogg to consider new shelving and display recommendations in the future. Kellogg also did shopper-based research on how retailers can improve their package assortment, and used the latest technology to enable virtual shopping applications.

SNACK BARS CATEGORY ADVISOR

General Mills

The total bar category encompasses grain bars, commonly in the cereal aisle, and nutrition bars, commonly in the pharmacy or natural/ organic section. With all-day snacking on the rise, the category shows strong growth potential. To help retailers capitalize on this opportunity, General Mills brought capabilities and excitement to the category through such avenues as product innovation and variety, and a 16-foot grain bar set featuring Adult, All Family and Kid subsections that outperforms all other configurations. Outstanding retailer partnership is a critical component in General Mills’ overall category management strategy. Through those relationships, the company was able to execute critical shelf-set tests and assist with nutrition/wellness integration. Additionally, General Mills aggressively pursued “test-and-learn” opportunities regarding new products and pack sizes across channels to improve its speed to market. Through category research and consumer insights, shelf enhancements, and new products, General Mills has positioned its retail partners for bar category growth.

SOFT DRINKS CATEGORY CAPTAIN

The Coca-Cola Co.

With the diet sparkling soft-drink (SSD) category facing significant headwinds in recent years, Coca-Cola saw an opportunity to restore growth to the category through its two leading brands, Diet Coke and Coca-Cola Zero Sugar. By leveraging these brands and homing in on current consumer preferences for less sugar, smaller portions, new flavors and exciting experiences, Coke helped reinvigorate the diet SSD category and drive sales for retailers. Coke mounted a relaunch of Diet Coke with four new flavors, sleek packaging and a new brand image, and Zero Sugar with a new name and formula. The company worked with retailers through multiple shopper marketing strategies, including colorful instore signage, banners, shelf displays and deli bundles. Coke also aggressively expanded the availability of 10- and 6-packs of mini cans in the large-store channel. The results were an accelerated portfolio and a reversal of sales declines.

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Hormel Foods

In the past year, Hormel Foods worked with two regional grocers to reassess their spread sections and help grow sales. At one retailer’s division, peanut butter sales had been declining, and Skippy sales were flat. Hormel invested in a multifaceted program that leveraged pricing insights and helped lay out key growth promotional opportunities. The company also introduced a program that allowed shoppers to participate in a philanthropic event by purchasing peanut butter. During the donation period, Skippy's total basket penetration grew to 76 percent, 12 points higher than the prior year. At another retailer, Hormel aimed to grow the category through assortment and shelf adjacencies. The set was converted to a 60:40 peanut-butter-to-jelly ratio to better serve consumer demand. The retailer subsequently increased sales on its more profitable items and better incorporated its private label items.

TOASTER PASTRIES CATEGORY ADVISOR

Kellogg Co.

Kellogg Co.’s Pop-Tart toaster pastries are the No. 1 point-of-entry brand for the mega-category of portable wholesome snacks. The brand is also a favorite among teenagers. Kellogg has been leveraging teen-relevant social media platforms to build on this popularity, and has continued to introduce tempting new flavors such as Strawberry Milkshake. The company is now in the process of launching two innovation platforms to address shopping barriers and assortment opportunities. As some households perceive Pop-Tarts to be unhealthy, new Pop-Tarts Crisps will deliver a whole grain, less-sugar, fewer-calorie and lessfat offering. Pop-Tarts Bites, meanwhile, will address the on-the-go eating trend while carrying the brand over to the snacking occasion. Kellogg’s category management team has also been leveraging the latest technology to help retailers improve the shopping experience. In one example of its work, Kellogg found that when private label products are merchandised horizontally on the top shelf, toaster pastries’ dollar sales increase 2 percent to 3 percent.


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COVER FEATURE

FROZEN FOODS

2018 Category Captains

FROZEN FOODS BREAKFAST CATEGORY ADVISOR

Kellogg Co.

WAREHOUSE SNACKS CATEGORY CAPTAIN

Kellogg Co.

Kellogg Co. developed a warehouse snack category story to bring all of its category solutions into one simple package. The document highlights the importance of warehouse snacks and the differences compared with DSD salty. In terms of specific recommendations, Kellogg has rolled out a vertical-ribbon merchandising strategy to help draw new attention to its iconic Pringles brand. Since 2017, more than 1,500 stores in multiple retail banners have gone vertical, and the sales gain on average is 4 percent for the category and 4.3 percent for Pringles. Kellogg also developed a gravity-feed system to improve overall shopability, and so far, retailers implementing the new solution have experienced on average 2 percent category growth and 9 percent growth for Pringles. The retailers that have combined the benefits of vertical-ribbon merchandising and gravity feed are seeing outstanding category growth of 6 percent, fueled by gains of 13.7 percent.

WINE CATEGORY CAPTAIN

E&J Gallo Winery

With almost 250 new SKUs of rosé — the fastest-growing varietal segment in the wine category — introduced last year, many retailers sought guidance on providing and promoting the right items for shoppers. Gallo’s category solution, Rosé Your Way, inspired confidence in purchases via digital media and retail promotions. The company also leveraged InMarket proximity ads on consumers’ mobile devices to help drive purchases in the wine department and from out-of-department displays. At one retailer, the program resulted in triple-digit growth, a big increase in total store wine trips, larger total basket revenue via the cross-merchandising displays, and a considerable increase in new wine buyers to the category. Other retailers that supported the program saw similar results.

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Kellogg Co.’s strategy for frozen breakfast leadership in the past year focused on getting the fundamentals right. The company worked with its retail partners to ensure that the right assortment, at the right price, is available to meet shoppers’ needs. Now considered the seventh-largest category in frozen foods, frozen breakfast is enjoying mid-single-digit growth. Kellogg made sure retailers are making the most of this growth by offering shelving advice and by identifying an opportunity to drive inflation in the category. The company created an Eggo premium-price-promoted group and reduced the depth of discount on an Eggo core-price-promoted group. It also relaunched the Thick & Fluffy Waffles line as a premium product, complete with updated packaging. Year to date, Thick & Fluffy Waffles are growing 12.5 percent in dollars and 1.9 percent in units. What’s more, they have been 62 percent incremental to the brand and have brought in 8.6 percent new buyers to the category.

BROTH CATEGORY ADVISOR

Bonafide Provisions

Bone broth is an emerging food trend, and Bonafide has been carving out a new subcategory for it in the frozen aisle. Convinced that a frozen product is superior to a shelf-stable product that could be merchandised with traditional soups, the company worked with several natural retailers to establish a new frozen destination. Its frozen bone broths are driving incremental sales (as a unique product, it’s not cannibalizing other frozen products from shoppers’ baskets). In addition to growing sales, Bonafide leveraged digital and social media to build awareness of the role of frozen in supporting a “real food” diet, garnering Millennial fans who posted images of their grocery carts filled with Bonafide products on their social media channels. The company has also partnered with retailers to drive off-shelf displays that bring visibility to the category and drive new purchase occasions for the category.

MEAT SUBSTITUTES CATEGORY ADVISOR

Kellogg Co.

With a more than 50 percent share of the frozen meat substitute category, Kellogg’s MorningStar Farms brand is well positioned to help grow the category and engage shoppers. In the past year, the brand removed artificial colors and flavors and changed to non-GMO soy across the burger and poultry segments. It also introduced two new burgers and a new flavor of Chik’n Nuggets, as well as Veggie Chorizo Crumbles. Meanwhile, the category management team commissioned a virtual test to determine the optimal aisle adjacency for meat substitutes. The results indicated that there’s significant benefit to the category and department when meat substitutes lead the aisle. In addition, frozen vegetables make for an ideal complementary adjacency. The test resulted in a 36 percent increase in sales, so Kellogg is now working with retailers to apply these changes.


COVER FEATURE

2018 Category Captains

VEGETABLES CATEGORY ADVISOR

Pinnacle Foods

Understanding that traditional French fries are falling out of favor with today’s health-conscious consumers due to their perceived lack of nutrients, Pinnacle Foods introduced Birds Eye Veggie Made Fries, which replicate the taste and texture of traditional fries but include a full serving of veggies without preservatives or artificial flavors and colors. Pinnacle knew that consumers want to get more vegetables in their diets, so it sought to make it easier through the product. It also realized that packaging the fries in a stand-up bag would increase shelf efficiency for retailers. The fries have been well received by customers and delivered strong results to retailer partners, bringing elusive Millennial families to both the category and the department. The product line has resulted in highly incremental sales, significantly higher basket performance, and category growth.

NONFOODS/HEALTH, BEAUTY & WELLNESS ADULT NUTRITION CATEGORY CAPTAIN

Abbott Nutrition

An aging population is making this billion-dollar category even more important to the supermarket channel. Abbott seized an opportunity to increase its partnership with a value retailer partner to elevate nutrition products and improve awareness of the retailer as a health-andwellness destination. The company leveraged demand among aging consumers for additional protein to preserve muscle mass, elevated nutritional products and boosted awareness of the retailer as a wellness destination in a rural community underserved by health care providers. Abbott identified a better mix of products for the target audience and more productive space use, drove awareness with out-of-aisle promos, developed tools to assist shoppers along their wellness journey, and created vertical blocks of nutrition and vitamins to enhance shopper engagement and ease findability of relevant products. As a result, dollars are up by double digits year to date, with Ensure sales doubled, and stores adopting the expanded nutrition set saw marked improvement.

BABY CARE CATEGORY CAPTAIN

Abbott Nutrition

Abbott partnered with a retailer to identify opportunities to align aisle by baby age, expand the formula footprint, broaden assortment, increase category engagement and enhance the shopping experience to recapture consumers shopping the baby aisle less often. The company aimed to further the perception of the retailer as meeting baby needs at every life stage, improve shopability and deepen consumer engagement. Abbott expanded the formula section to boost facings of high-velocity items and reduce out-of-stocks, and improved category adjacencies by aligning aisle by baby age to encourage cross-category purchases and lengthen aisle engagement. The result: Total baby and brand growth, with lifts in household engagement, visits, units and dollars. With this success, the retailer is implementing Abbott’s recommendations chainwide.

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NONFOODS/HEALTH, BEAUTY & WELLNESS

INFANT/TODDLER NUTRITION CATEGORY CAPTAIN

Abbott Nutrition

A regional retailer working with Abbott recognized the growth potential within the oral electrolyte category and looked to expand consumption through additional merchandising locations throughout the store. Abbott advised placement across the store and greater category space within the toddler/baby aisle. Convenient store location and ease of finding products quickly are the top reasons for purchasing Pedialyte; most shoppers will leave the store if they can’t find it. The retailer created permanent shelf space for Pedialyte in the pharmacy, placing the item both there and in the baby care aisle. As a result, the category is up double digits in dollars and units, with a boost in trips and households buying.

ORAL CARE CATEGORY CAPTAIN

GSK Consumer Healthcare

Oral care provides consistent sales and profit results for manufacturers and retailers, but consistent category growth has been difficult to find. GSK invested in new shopper research and retail activation exploration to reshape how brands and retailers leverage this mature category. Learning initiatives yielded insights identifying a new consumer segmentation, explored how shopping expectations varied by condition, and tracked path-topurchase dynamics by trip type and oral health condition. All of this culminated in a redefinition of the role of oral care, more directly connecting it to consumers’ healthy-living goals and integrating it with retailers’ health-and-wellness initiatives. The multiyear effort has so far seen total GSK oral care brands grow 5.4 percent, accounting for more than half of the total category’s 1.5 percent uptick.


Perk up beverage sales by leveraging the singlecup coffee segment

S

erved up with cream and sugar or just plain and strong, coffee is a beverage with enduring appeal. While growth in other center store categories has stalled, coffee continues to be one of grocery’s bright spots, driving nearly 1 billion retail trips per year.1 And this power category is home to a singularly powerful segment—single-cup coffee. The single-cup pod has morphed from ‘what’s that?’ to ‘have to have it’ in under a decade, racking up more than $3.9 billion worth of sales in the past 12 months alone.2 Single-cup coffeemakers play an important role in driving and expanding shopper traffic to food retailers: Consumers need coffee products that are compatible with their appliances, and new users are automatically brought into the market as coffeemaker sales increase. American homes with a Keurig brewer have grown to 20 percent,3 driving even more traffic and sales of hot beverage pods at food retailers. And there are vast opportunities to expand single-cup brewer penetration even further. It’s an annuity stream between appliance and grocery that’s uncommon even within the coffee category, where sales growth in traditional coffeemakers and drip coffee has stagnated.4 Let’s take a look at how single-cup pods have transformed the hot beverage landscape and how retailers can drive even more growth.

Sponsored Content


Warming up the category

Coffee is a reliable basket builder, boosting average trip spend by more than $10.

Coffee is officially Americaâ&#x20AC;&#x2122;s beverage of choice. In 2016, U.S. consumers drank more mugs of java than soda, tea and bottled water combined.5 The morning staple that has grown to become a 24/7 occasion represents a $9.5 billion market and a reliable basket builder, boosting average trip spend by more than $10.6 Although the hot beverage category as a whole has seen growth slow down, coffee remains an anchor, responsible for 76 percent of hot beverage sales.7 And while coffee has helped people get up and go for centuries, the past decade has seen the category inundated with innovation. Single-cup coffee products represent one of the biggest game-changers. Single-cup beverages enjoyed a 22 percent compound annual growth rate (CAGR) in dollar sales between 2013 and 2017, the highest among the total grocery Top 20 categories.8 By comparison, uncooked meat increased by 14 percent, and the remaining 18 grocery categories by 4 percent or less.9 Whatâ&#x20AC;&#x2122;s more, single-cup coffee has been growing incrementally, bolstering rather than cannibalizing sales of related products.10

Top grocery categories CAGR dollar change, 2013-2017 Single-cup beverages Uncooked meat Bacon Bottled water Ice cream Dinner sausage Natural cheese Yogurt Cookies Source: IRI, 52 weeks ending December 31, 2017

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A number of trends indicate that the single-cup coffee market will only get hotter. For one thing, U.S. consumers are still catching up to pod-loving coffee drinkers in other parts of the world. Several European countries, including France and the Netherlands, have three times the U.S. household penetration of single-cup coffee products.11 But Americans are on track to narrow the gap. Increasing interest in healthy yet convenient energy boosts and high-quality beverage experiences, as well as demand for digital innovation across every touchpoint, all augur well for single-cup coffee’s continued popularity.12 So do market forecasts: Single-cup is poised to be the biggest category in coffee by 2019. Together with ready-to-drink coffee, it’s projected to fuel 90 percent of net category growth during the next five years.13

Single-cup is poised to be the biggest category in coffee by 2019.

Crowded shelves

In the meantime, the single-cup category is getting crowded. Close to 200 brands and more than 2,000 SKUs have hit the market since 2010,14 yet a handful of brands command the majority of category sales. These brands are not only fueling growth, they’re maintaining a pipeline of new and innovative single-cup beverage products that keep the category fresh and the consumer coming back for more. How can retailers sort through the growing abundance of single-cup coffee pods to maximize sales among shoppers who may be a little overwhelmed by it all? Smarter shelving, assortment and merchandising strategies are the keys.

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3 ways to boost

single-cup coffee product sales 1. Give power brands space to shine

With an exploding category and limited shelf space, retailers need to be selective in terms of the single-cup brands they offer and strategic in terms of where these products are placed. After all, the Top 10 coffee brands generate 72 percent of all coffee sales.15

Top 10 U.S. coffee brands Starbucks

Folgers

Maxwell House

Dunkin’ Green Mountain Coffee®

$ Dollars (millions)

Peet’s

McCafe

Nescafe The Original Donut Shop Gevalia

% Households buying

$ Dollars per trip

Source: IRI, Total U.S. Multi-Outlet, 52 weeks ending Aug. 12, 2018

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Allocate segment space based on contribution share and the importance of the brand variety. Prioritize optimal space and location for power brands, shelving them at eye level or within the strike zone of the set. Then, use specific brands to “signpost” the segment or aisle, and secure multiple facings for the top 20 percent of items segment.


If you build it . . . Consumers used to purchase a coffeemaker as a purely functional appliance or for the distinct coffee brewing method it offered, such as espresso making. But increasingly, consumers are looking for a single brewer that can create a multitude of flavors and drinks with a variety of brewing methods, blurring the lines among conventional segments. As ownership of multi-function coffeemakers has grown, so have consumer expectations for the appliance. Today’s home-brewed coffee connoisseurs put speed and convenience at the top of their priority list, yet they refuse to sacrifice quality in the name of efficiency. At-home brewers seek premium beans and drinks that look and taste just as good as the beverages they would buy at a specialty coffee shop.16 What’s more, they want brands that support sustainability, such as Keurig’s commitment to offering fully recyclable Keurig K-cup pods by 2020. And because a coffeemaker is an investment, consumers stick with brands they know and trust. Keurig and Mr. Coffee enjoy far greater brand awareness than their competitors, with consumers three times more likely to be familiar with category-leader Keurig than runner-up brands.17 Roughly half of consumers are familiar with Keurig and Mr. Coffee, but consumer recognition drops off sharply for such brands as Black & Decker (16 percent), Cuisinart (13 percent), Hamilton Beach (12 percent) and others.18

Because a coffeemaker is an investment, consumers stick with brands they know and trust.

2. Optimize merchandising and assortment

Coffee is a crowded yet brand-loyal category. Consistent shelf placement is important given the routine approach most consumers take to buying single-cup coffee brands. Most shoppers are likely to buy the same brand they bought last time, even in the face of deals, discounts or ads.19

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Having top brands in stock is also essential. Single-cup coffee consumers are so brand loyal that they’ll walk if their favorite brand—or even their favorite flavor— isn’t on the shelf, underscoring the importance of optimized merchandising.20 Take a strategic approach to assortment that simplifies the shopping process by using the shelf as an intuitive navigational tool. Coffee shoppers identify first with the segment, then the pricing tier and then the brand. A strong brand block is critical, organized by premium, mainstream and value price points. Within brand blocks, merchandise similar roast profiles together and create distinct sections for flavor and decaf.

Single-cup merchandising principles Reallocate segment space Allocate segment space based on contribution share and importance of brand variety.

Brand is beacon

Prioritize optimal space and location— the “strike zone”—for power brands. Utilize specific brands to signpost the segment or aisle. Secure multiple facings for top 20% of items segment.

Leads set

Optimize the flow Organize and flow segments: Premium > Mainstream > Value. Brand block with power brands at “strike zone.” Merchandise similar roast profiles together within brand blocks. Create distinct flavor and decaf sections within brand blocks.

Emphasize large counts Drive trade-up, maximizing distribution on large count packs. Allocate 30% of the shelf to large count packs. Merchandise large packs adjacent to like frequency pack within brand blocks.

Single-cup merchandising guidelines

Ends set

PRIVATE LABEL

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Premium

Mainstream

Value


Pack size represents another key component of assortment, and single-cup coffee sold in 24- to 54-count boxes generates the biggest lift.21 Food retailers can get in on the growth by elevating large packs from bottom-level shelves and merchandising them next to their equivalent frequency packs within brand blocks to drive up trade. One study showed that retailers saw upwards of 7 percent category lift after giving large packs more desirable real estate.22

Keurig drives coffee innovation A proprietary insights engine, coupled with extensive technical resources, enables the brand to continually launch game-changing new coffee products as well as innovative appliances. The K-Elite brewer is one of the new high-end coffeemakers with contemporary styling, premium materials and finish and expanded functionality; it delivers the most beverage customization of any Keurig single-cup coffeemaker. Key features include a Strong Brew option that increases coffee strength and intensity, a brew over ice setting, a wide range of brew sizes from 4 to 12 ounces, and an extra-large 75-ounce water reservoir. In fact, it’s currently the highest-ranked model on Keurig.com. Two new coffeehouse brewers have also launched: the K-Café and the K-Latte brewers. Each brews coffee and has a milk frother. The K-Café also makes concentrated coffee “shots” for authentic-tasting café-style beverages.

Keurig has introduced a steady brewer innovation pipeline.

Keurig has introduced a steady brewer innovation pipeline and increased investment and creativity across the company’s marketing efforts, strengthening its win-win partnerships with retailers and coffee brand partners as a result. As the pioneer in single-cup coffee innovation, Keurig’s integrated ecosystem and expansive coffee development toolkit allows for endless co-creation and collaboration. Keurig has demonstrated a proven ability to create and maintain mutually beneficial, long-term coffee brand partnerships, offering the strong equity and recognition of the Keurig

7


The Keurig advantage Keurig is the No. 1 single-cup coffee brewing system in the United States24 and is now part of the new Keurig Dr Pepper, which is the seventh-largest food and beverage company in the United States.25 Keurig Dr Pepper offers a diverse brand portfolio with beverages that meet consumer needs at any moment throughout the day.

3. Promote experimentation to expand the category

Coffee may be an I-know-what-I-like category, but there’s still room to spotlight experimentation and expand category sales. When it comes to spur of the moment purchases, the single-cup segment performs better than roast and ground coffee, which suggests savvy retailers should reserve impulse-oriented shelf space for pod products. In this case, fueling category expansion requires thinking outside of the coffee aisle: Shoppers are more likely to make impulse purchases at end caps and island displays.23

Lifting single-cup sales

Driven by expanding sales of single-cup brewers, single-cup coffee has given new life to an age-old category. What’s more, it has been a boon for multiple industries, boosting sales in both the grocery and home appliance sectors. Retailers have an enormous opportunity to both support and benefit from the continued growth of single-cup coffee pods and single-cup brewers. By leveraging strategic merchandising, shelving and assortment strategies, retailers can heat this coffee category to the boiling point.

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IRI Panel, Total U.S. All Outlets, 52 weeks ending Aug. 6, 2017 IRI Multi-Outlet, 52 weeks ending Aug. 27, 2017 KDP At-Home Omnibus Study, July 2017 IRI, 5-year CAGR, 2012-2017 Euromonitor, Sept. 29, 2017 IRI Panel, Total U.S. All Outlets, 52 weeks ending Aug. 6, 2017 IRI Multi-Outlet, 52 weeks ending Aug. 27, 2017 IRI, 52 weeks ending Dec. 31, 2017 Ibid. IRI Total U.S. Multi-Outlet, 52 weeks ending Oct. 1, 2017 Euromonitor, 2016; LSA; Royal Dutch Tea and Coffee Federation; German Coffee Association Kantar Retail, November 2016 Mintel, based on IRI, InfoScan Reviews, U.S. Census Bureau, Economic Consensus IRI Multi-Outlet, calendar 2017 vs. 2010 Euromonitor, 2016; LSA; Royal Dutch Tea and Coffee Federation; German Coffee Association IRI Total U.S. All Outlet Panel, 52 weeks ending Dec. 25, 2017; KGM Omnibus ‘17; KGM Awareness Study ‘16 Kantar Millward Brown, coffeemakers quarter 4/quarter 2 tracking update 2017 Ibid. Kantar Retail, November 2016 Ibid. Ibid. Ibid. Ibid. NPD All Channels, by category dollar sales, 52 weeks ending May 5, 2018 IRI Multi-Outlet, 52 weeks ending Dec. 31, 2017 (Note: KDP includes owned and licensed brands only.)


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COVER FEATURE

2018 Category Captains

NONFOODS/HEALTH, BEAUTY & WELLNESS

OTC UPPER RESPIRATORY CATEGORY CAPTAIN

Bayer HealthCare

OTC DIGESTIVE HEALTH CATEGORY CAPTAIN

GSK Consumer Healthcare

Comprising many segments, conditions, symptoms and products, the digestive health category can be hard for consumers to shop. GSK decided to take a new approach to this challenge by making a significant investment in new shopper insights and shopper marketing strategies though a more direct focus on integrating digestive health into consumers’ health-and-wellness goals. One of the largest investments in digestive health research in the company’s history was therefore launched, including both qualitative and quantitative elements. The research identified an entirely new consumer segmentation from which innovative strategies and tactics could be developed along the digestive- health shopper journey. A new initiative, Connections, launched early this year and is continuing to make an impact as the GSK team and its retailer partners collaborate on solutions linking health and wellness to digestive health. As a result, GSK is not only outpacing category performance in many areas, but also driving category growth.

OTC SMOKING CESSATION CATEGORY ADVISOR

GSK Consumer Healthcare

There are currently 15 million people who smoke, but the smoking cessation industry is, as GSK notes, on a “path to zero.” Due in large part to the company, smoking cessation has become one of the fastest-growing OTC categories. GSK’s shopper research found that inconsistent category placement, unrelated adjacencies, limited access and less-than-motivating educational messages were presenting barriers to those trying to kick the habit, so it created a new go-to-market strategy with four key pillars: quit motivations, in-store execution, shopper targeting and continuity initiatives. As this strategy rolls out to retail, concrete merchandising changes are occurring and category momentum has continued. Even more exciting, the pace of growth is accelerating as the new approach is implemented. GSK realized that the retail environment had to change from being another reason not to quit to being a partner in a successful quit. The results show that its efforts are paying off.

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Upper respiratory is the largest category within OTC health, with annual sales nearing $10 billion annually. Bayer identified three challenges that retailers and manufacturers need to address: declining trips, innovation and ancillary segments such as homeopathic remedies. Research led to the realization of four pillars of consumer perspective in the category: freedom to breathe more freely, regain control of symptoms, rest and recuperate, and plan and prepare. A second strategy aimed to enhance the shopping experience with a consumer-driven shelf layout, aligning communication based on consumer needs and allocating space to maximize sales of key segments. The strategy has been embraced by Bayer’s retailer partners: Total dollars and dollars per trip have made significant gains. In a category as broad and fragmented as upper respiratory, retailers appreciated the commitment of time and resources to provide a framework for future growth.

PET CARE CATEGORY CAPTAIN

Freshpet

As consumers shift more and more of their pet food purchases online, growth is difficult to come by, and consumer traffic to the pet aisle is in decline. The brick-and-mortar retailers that are winning are putting fresh first throughout the store, and the pet aisle should be no exception. Freshpet helped grow pet aisle sales with a refrigerated product that has high velocity, high frequency and high profitability. Most importantly, since Freshpet is highly perishable and difficult to ship, it’s not readily available to purchase online. Detailed analysis found that stores stocking Freshpet saw higher growth across all dog food segments: wet, dry, treats and supplies. With an increasing number of consumers choosing to buy more healthful foods for themselves and their family members — including the furry, four-legged ones — Freshpet will continue to see exponential growth.

PET CARE CATEGORY ADVISOR

Nestlé Purina PetCare

The pet category is rapidly evolving, and Nestlé Purina PetCare has seen impressive results working with retailer partners to grow sales and the category overall. For its retailers, the company employs enhanced household strategies: localization and assortment tools, along with rich shopper insights, which are used to find the right balance of space and assortment in the category. Understanding the draw of online for pet products, Nestlé Purina implemented a focused ecommerce category team to help retailers win in the pet category across different ecommerce models, merging ecommerce best practices with pet category insights to capture pet households and drive retailer loyalty. Another strategy looked at products within the category: With pet owners willing to pay for higher-quality products — and small increases in price per pound driving significant category growth — Nestlé Purina introduced several line extensions that offer natural hallmarks or unique benefits across different price tiers at a higher price per pound than the mainline offering.


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COVER FEATURE

2018 Category Captains

NONFOODS/HEALTH, BEAUTY & WELLNESS

SUN CARE CATEGORY ADVISOR

Bayer HealthCare

Bayer HealthCare’s Coppertone brand is reshaping how retailers manage the sun care category by establishing a new foundation for success based on identified, validated and quantified growth drivers such as natural and health-oriented products. This Future Category Vision (FCV) aims to drive success via three strategic goals: Drive market basket transactions by influencing shoppers to make incremental purchases Increase ring by getting shoppers to trade up to more premium items Spur penetration by encouraging new shoppers to enter the category Additionally, Coppertone provided turnkey shopper activation for key retailer partners to help shoppers find the best products along the path to purchase, based on the category growth pillars and enablers. Sun care has reversed its declining sales over the past two years and is now showing 1 percent growth, while Coppertone’s household penetration is growing at twice the rate of the category as Bayer’s strategies and tactics resonate with shoppers.

VITAMINS & SUPPLEMENTS CATEGORY CAPTAIN

Pharmavite

According to Pharmavite, retailers using it as an advisor for the vitamin and supplement category have grown dollar sales several percentage points higher than those of retailers it doesn’t advise. Pharamvite has helped in several ways, one being the launch of five new products in 2018 — two needstate items, two high-strength probiotics, and an enhanced heart-healthy multivitamin for men. Moreover, understanding that most users consume vitamins and supplements in the early morning with breakfast, the manufacturer is advising retailers to tie vitamins and supplements into breakfast-occasion themes in circulars and in-store displays. It took a similar tack for cough and cold season, advising retailers to use circulars and displays to drive multidimensional need-state transactions through vitamins and supplements, as well as other categories. Additionally, Pharmavite segmented heavy and light buyers in the category, sharing insights with retailers to help develop corresponding merchandising strategies.

VITAMINS & SUPPLEMENTS CATEGORY ADVISOR

Bayer HealthCare

A $6.9 billion category with nearly $700 million in growth over the past five years, the nutritionals category is challenging to manage due to its size, number of items, segments, brands, and dependence on consumer, shopper, retailer and category trends. Bayer set out to deliver a category strategy rooted in the insight that nutritionals is in a “new era” by focusing on extensive shopper targeting. Bayer’s strategic roadmap includes expansion to drive category growth, retention of current high-needs shoppers, and attracting Millennials via shopper-targeting strategies. Collaborating with key retailers to enact this new-era program, the initiative is driving year-over-year category growth as well as positive movement in Bayer’s One A Day brand.

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WRAPS & FOILS CATEGORY CAPTAIN

Reynolds Consumer Products

Reynolds Consumer Products commissioned a study on consumer segmentation and shopper mission, with a specific focus on purchase behavior, in the cooking/baking category. Learning who is buying (affluent Millennial males) and how and when people are buying, Reynolds found the intersection of these two factors to help retailers devise an optimal strategy for their shopper base and ensure optimal merchandising. Aided by this research, one retailer combined product displays with feature ads to build awareness and drive conversion, and then ensured inclusion of foil/parchment ads in Q4 circulars, with placement near key food items. As a result, aluminum foil sales rose by double digits compared with a year ago, and additional categories benefited immensely from the halo effect. In the end, the total category grew double digits.

PERIMETER DAIRY-CHEESE CATEGORY CAPTAIN

V&V Supremo Foods

While dairy is one of the top three categories purchased by Hispanic shoppers, these consumers often make dairy purchases outside traditional grocery stores. V&V Supremo Foods discovered that Hispanic shoppers either aren’t aware that a retailer carries items they’re seeking or can’t find them in the store. The supplier educated buyers with a “Hispanic Cheese 101” category overview at an off-site location, where a presentation shared Hispanic population and spending trends, category trends, product sampling and more. Through V&V Supremo's educational program, quality products and merchandising strategies, the retailer saw incremental category sales and profit growth.


COVER FEATURE

PERIMETER

2018 Category Captains

DAIRY-MILK CATEGORY ADVISOR

Dean Foods Co.

As a heritage brand in the dairy aisle, Dean Foods aimed to elevate consumer credibility, lead with innovation and drive shoppers to the store via the dairy department. Dean’s DairyPure national conventional whitemilk brand and TruMoo refrigerated chocolate milk have helped lead the revitalization of a fractured and commoditized category. Clean labels, purity and transparency have driven premium-priced rings where lowest-priced products once ruled. The company’s DairyPure Mix-ins cottage cheese with fruit and nuts and TruMoo After Dark flavored milk aimed at adults targeted trends in snacking and indulgence. Dean also helped retailers build baskets beyond the dairy category with targeted multimedia campaigns, food bank partnerships and investments in loyalty card data. The company expects that strong investments at the shopper level with key retailer partners will continue to highlight and grow the category.

DAIRY-YOGURT CATEGORY ADVISOR

General Mills

The highly dynamic yogurt category has traditionally grown due to the introduction of new segments. Increasingly variety-driven consumers are now seeking more wellness options as they migrate from the mature Greek segment. General Mills created two product lines for consumers in search of “simply better” products highlighting taste and health — authentically crafted Oui by Yoplait and low-sugar, high-protein YQ by Yoplait, respectively, both boasting clean ingredient decks — while maintaining focus within the core traditional and kid yogurt segments to stabilize the trends with affordable options that fulfill a taste/value proposition. The company launched a communication campaign that leveraged a network effect strategy, reaching audiences at intersections of influence — points where social networks and passion points connected. A robust digital media plan relied on key partnerships, including sponsored workouts through Popsugar, ads on UnderArmour’s My Fitness Pal app, and posts by trending fitness influencers.

DELI/PREPARED FOODS CATEGORY ADVISOR

Blount Fine Foods

Blount Fine Foods helps empower retailers to offer restaurant-quality prepared foods to consumers, when they want them, how they want them. Its customizable noodle and rice bowls, to which consumers can add their choice of proteins and vegetables, are driving growth in the grocerant category. Blount’s focus on soups, sides and entrées has allowed grocers to elevate their games, helping them steal back share of wallet from restaurants as spending on food consumers outside the home grows. Blount has improved the ways that its products are cross-promoted with other departments: a quart or two of soup to accompany the rotisserie chicken offering, or prepared components as part of pre-assembled meal kits. Blount also refined its technology so that it better interfaces with retailers’ systems to ensure a smoother ordering process. Deli foodservice orders are growing year over year, with grocers the beneficiary of higher rings, and shoppers rewarded with convenient, wholesome meal solutions.

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DELI/PREPARED FOODSCHILLED MEALS CATEGORY ADVISOR

Hormel Foods

A national retailer wanted to reduce overall space for chilled meals in favor of refrigerated pasta and sauces, without compromising sales. Hormel developed planograms to display products in vertical blocks of subcategories, placing entrées toward the top and middle of the sets to create the best opportunities for universal adjacencies. As a result, overall total household penetration rose from last year. The refrigerated entrée subcategory had the highest penetration growth, and total basket dollar size grew while average prices remained flat. Further, the flow and adjacency changes eased the shopping experience and provided onsumers with a simpler total mealtime solution.

DELI/PREPARED FOODSPARTY TRAYS CATEGORY CAPTAIN

Hormel Foods

Hormel Foods’ research revealed that party trays and premade deli items are seasonal and perform better during key timeframes on display, that party and snack trays serve different occasions, and that snack trays can be placed with other snacking items. The company created destinations for Hormel Gatherings items in the club and military channels, and grew the presence of Hormel Gatherings party trays at grocery stores. Within the club channel, party trays were shown to be incremental to the existing entertaining-focused assortment, since few completely pre-made solutions existed. In the military channel, display space boosted total category sales considerably. One retailer placed Hormel Gatherings snack trays in the refrigerated meat-snacking section and Hormel Gatherings party trays in the deli set, thereby ensuring that shoppers could find the most relevant items in the right space. These moves encouraged the departments to work together to find the best space for the items.


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COVER FEATURE

PERIMETER

2018 Category Captains

DESSERTS CATEGORY CAPTAIN

Rich Products

Ice cream cakes are delicious, but too many shoppers associate them with birthdays. Rich Products’ solution: developing a hybrid with the Carvel Cookie Cake. The introduction and marketing of the new product focused on partnering with retailers to create in-store demand for the ice cream cake category, and included various marketing campaigns to engage shoppers outside the store. The launch plan included a ramp-up of activities kicking off in the key ice cream cake season and leading into the holiday season. The culmination of these efforts represented a high-double-digit percent of increased performance for the Carvel line. The cookie cake launched in the market alongside a Carvel brand refresh, which was created to evoke nostalgia. The revitalized brand was brought to life across Rich’s customer portfolio through new packaging and freezer graphics, ensuring that all were in place when the new Carvel Cookie Cake launched in June.

MEAT CATEGORY CAPTAIN

Pre Brands

At a time when people are eating less meat, Pre has been working over the past 12 months to be the fastest-growing company in beef and the category leader by evolving alongside consumer demands and shopping patterns. In addition to ensuring a consistent, unparalleled eating experience with strong nutrition and 100 percent transparency, Pre has helped grow sales and the category by introducing 11 high-velocity, fixed-weight high-quality UPCs that are strongly incremental to one another across consumer usage occasions; an engagement strategy targeting consumers where they live, socialize and shop — as well as educating online, where it has experienced more than 220 million media impressions, year to date; and 360-degree customer support, which involved seizing early adopters of burgeoning digital marketing and shopping platforms such as Instacart, Ibotta and retailer-specific ecommerce platforms, with the result that average weekly Instacart sales nearly tripled year over year.


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COVER FEATURE

2018 Category Captains PACKAGED LUNCHMEAT CATEGORY CAPTAIN

Hormel Foods

Several regional grocers called on Hormel Foods to help optimize their refrigerated meat selections, including lunch meats, breakfast meats and snack/lunch kits, after being impressed with the manufacturer’s category research. Hormel made recommendations to develop a dedicated natural/organic set, as well as a dedicated snacking set within the retailers’ refrigerated meat sections. The company also suggested a few changes in the retailers’ product assortment and adjacencies with other categories in the set. By changing the flow and layout of the set, Hormel helped improve shopability, allowing consumers to more easily find and purchase value-, mid- and premier-tier products in the same area. During its most recent review with one retailer, Hormel learned that sales in the total side-case set were up 2 percent, the natural/organic set was up 9 percent, and the snacking set was up a whopping 82 percent.

PRODUCE-BANANAS CATEGORY CAPTAIN

Chiquita Brands

Chiquita continued to invest in research and to identify unique ways to engage with banana consumers. Through in-store testing and campaign tracking, Chiquita was able to determine the most successful and innovative ways to engage consumers and drive category sales. The company implemented a secondary-display test in one division of a national retailer for three months. Displays were placed in the checkout area, the dairy section, or both. Test stores brought more volume growth and basket penetration than non-test stores. Additionally, Chiquita continued its successful year-long secondary display rollout with another national retailer, delivering a year of volume growth. Chiquita also collaborated with retailers to determine the best mix of conventional versus organic product without cannibalizing core products. Best success was achieved by classifying conventional bananas as best value to drive trip volume while deploying organic at premium value for portfolio diversification. Social media campaigns further engaged consumers to raise product awareness and inspire new consumption.


COVER FEATURE

PERIMETER

2018 Category Captains PRODUCE-BANANAS CATEGORY ADVISOR

Dole Food Co.

Dole’s strategic focus to maximize the elements for success (shopper insights, consumer demand and retailer initiatives) drove the company’s efforts regarding three key initiatives: delivering strategic merchandising to meet consumer demand, using creative marketing to maximize consumer engagement, and identifying the conventional banana consumption decline versus growth in organics. Dole identified strategic merchandising opportunities to connect with shoppers and maximize performance, e.g., adding organic bananas as the primary product on impulse displays. Further study in the decline of conventional sales gave Dole’s category management and shopper marketing teams the opportunity to deliver solutions to re-energize the category. One retailer partner, using a center store cross-purchase promotion, delivered a double-digit sales increase in conventional bananas without reducing prices. Additionally, Dole restructured its marketing department to better design unique campaigns with social/digital components to benefit brand loyalists and retailer partners.

PRODUCE-MUSHROOMS CATEGORY CAPTAIN

Monterey Mushrooms

As a true partner, Monterey Mushrooms prides itself on understanding how each retailer customer wishes to use the category. For example, one customer wanted to see what it could accomplish by allowing Monterey to define assortment, everyday pricing, promotions and store sets. It also wanted to expand organics. After a plan was put in place that included fewer SKUs, a new everyday-pricing strategy, a revised promotional strategy, and store sets that focused on turns, the retailer posted an organic category share rise from single to double digits, double-digit growth in overall category units, and double-digit growth in overall category sales. Another example: One customer approached Monterey to help with its over-SKUed section. Across the whole section, the mushroom provider performed SKU rationalization, including item turns, sales, shrink, markdowns and net profit. The results were cross-referenced with available space, and new store sets were provided.

PRODUCE-PINEAPPLES CATEGORY CAPTAIN

Dole Food Co.

Through deliberate account planning, retailer collaboration, aggressive support and abundant supply, the pineapple category reached new highs in 2018. Dole was strategic in driving the category via three central propositions: leveraging insights from retail partners to catapult the category into increased importance, elevating the category to a destination to protect store traffic and offset produce department declines, and employing new proprietary category management capabilities to incorporate consumer preferences into assortment strategy. Understanding that there’s a measurable difference between banana and pineapple brands, Dole used quantitative analysis to determine whether retailers that partner with Dole perform better than those that don’t. The result: overall Dole retailers outperform nonDole stores. An aggressive category plan helped to redefine pineapples as a destination category, which increased promotional activity and sales. Additionally, partnering with Nielsen to create the largest custom database in produce drove more data-based insights to better target consumer preferences.

PRODUCE-PACKAGED SALADS CATEGORY CAPTAIN

Dole Food Co.

Dole focused on three key category initiatives: driving new consumers into the category, expanding the category through innovation and going to market differently, and maximizing retailer performance through pricing optimization. The company partnered with Nielsen to identify the source of Dole Chopped Kits volume growth. While new shoppers have helped gain the most traction, shoppers trading up from lower-tier segments and competitive same segments have also contributed. Last April, Dole introduced Slawesome! Kits, which reinvent traditional coleslaw with extra-flavorful dressings and seasonings to create a tasty side dish or topper, tapping the fastest-growing subsegment within packaged salads. Dole worked with a Southern retailer to test shelving the kits in the cut-vegetables section, resulting in significantly higher sales velocity. Additionally, understanding that a retailer’s organic salad shopper is the least price-sensitive within the category, Dole identified a sweet spot to drive dollar sales; a test brought double-digit increases. Dole’s three-pronged focus is driving enhanced results for its retailer partners.

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COVER FEATURE

PERIMETER

2018 Category Captains REFRIGERATED DRESSINGS CATEGORY CAPTAIN

Litehouse Foods

Litehouse’s regular collaborations with retailers and other partners on strategic marketing campaigns and promotions have helped grow basket size and the category, with dressings seeing a generous double-digit increase in unit sales when on promotion. Notably, over the past two years, the brand has spearheaded a retailer program to help shoppers build a better salad, which has resulted in double-digit growth for the promoted brands. Litehouse shared the learnings from this promotion — including info on dollar sales lifts and repeat purchases of participating brands — with other retailers, leading to new opportunities for retailers to drive sales and grow basket sizes. Beyond a promoted price, retailers used secondary displays for cross-promoted products, deploying shelf talkers and display clings to educate consumers on pairing opportunities, and retailer mobile offers and advertising apps to increase trial.

REFRIGERATED MEAT SNACKS CATEGORY CAPTAIN

Hormel Foods

Hormel Foods went au naturel with its refrigerated snacking line and helped attract new shoppers to the category. The company transitioned its Hormel REV brand to Hormel Natural Choice and recommended that its retailer partners merchandise the products within their traditional refrigerated-snacking sets. This allowed shoppers to see the greater variety offered and also created a brand block within the set. Since the launch, the refrigerated meat snack category has increased dollar sales by 31 percent, according to Hormel, with its Natural Snacking line contributing 20 percent of that growth. Meanwhile, the new line is bringing new users into the category and indexing highly among consumer groups, including Millennial, Gen X, health-conscious and organic-seeking households. Perhaps most impressive, one national retailer that added the new line experienced a 30 percent increase in existing sales, while cross-brand promotions drove basket sizes up 45 percent.

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2018 Grocery Tech Trends Study EDITORâ&#x20AC;&#x2122;S NOTE

Why Digital Transformation Matters The role played by technology in the grocerâ&#x20AC;&#x2122;s digital transformation is evolving and accelerating. It is moving beyond its traditional role as an underlying support system for effectively managing highvolume, large-scale, high-revenue businesses. In the modern grocery enterprise, technology has evolved into an advanced tool that optimizes decision-making, learns as it goes, recommends next-best actions, and moves at a faster speed than ever before. Unlike prior years, when technology was viewed as a necessary evil, grocers are embracing tech investment today as a hedge against fastmoving competitors and a catalyst for growing revenue and earning the loyalty of omnichannel shoppers. A big reason for the embrace of technology today is the growing maturity of off-the-shelf solutions, especially in such areas as merchandise management, the supply chain and labor management. Another reason is that cloud options offer grocers a new delivery model that can be less expensive and less burdensome to deploy for the IT department. However, the biggest reason for the embrace of technology is that omnichannel and in-store technologies are proven tools to drive new revenue and, on the flipside, protect revenue from going to innovative competitors. This is the third annual Grocery Tech Trends Study, created in collaboration between RIS News and Progressive Grocer, and once again we benchmark the status and future investment plans for 59 essential technology grocery solutions. By looking at the data in the study about up-to-date technology in place, grocers can compare the status of their tech stack against their competitors. Just as importantly, they can also look at the investment data for all 59 solutions and determine if their tech stacks are ahead of the competition or falling behind. (See charts at right for who responded in the study.) Like last year, the major theme that emerged from the findings is the grocerâ&#x20AC;&#x2122;s embrace of digital transformation, a term that refers to a large multiphase, multi-year process. Although much work has already been done, much more work lies ahead as grocers seek to grow their businesses in a highly competitive environment and meet the rising expectations of their customers.

Joe Skorupa Editorial Director, RIS News 52

progressivegrocer.com

Methodology FIGURE 1

Number of Stores 10-50

>500

37%

26%

250-500

8%

100-250

50-100

21%

8%

FIGURE 2

Annual Revenue >$10 billion

10%

<$500 million

28%

$5 billion $10 billion

13%

$1 billion $5 billion

28%

$500 million $1 billion

21%

FIGURE 3

Year-Over-Year Change in Revenue Increase >10%

10%

Decrease

0%

No change

31% Increase 5%-10%

15%

Increase 1%-5%

44%


2018 Grocery Tech Trends Study

Digital Transformation Accelerates GROCERS EMBRACE A NEW OPENNESS TOWARD ADOPTING ADVANCED SOLUTIONS AND INNOVATIVE TECHNOLOGIES AT AN ACCELERATING PACE

You don’t window shop at a supermarket. You go with an I-need-it-right-now mission. To effectively serve laserfocused shoppers, supermarkets need to get it right – right products, right prices and right store experiences. Each of these goals is heavily dependent on strong technology that enables grocery chains to succeed. The role of technology is critical now and its influence is growing, especially as grocers roll out new services that touch customers in the store and, in some cases, extend all the way to the shopper’s home. Moreover, the role played by technology is evolving and accelerating. It is moving beyond the traditional role of managing high-volume, large-scale, high-revenue businesses. In the modern enterprise, technology is becoming an advanced tool that learns as it goes, recommends nextbest actions, and moves at the speed needed to respond to rapidly developing shopper trends, competitive forces, and unforeseen opportunities that suddenly emerge. In the third annual Grocery Tech Trends Study, created in collaboration between RIS News and Progressive Grocer, the evolution of the technology landscape in grocery retailing is examined in detail and next steps identified that will help grocers set strategy for 2019, close gaps to avoid falling behind, and jump-start competitive advantages to consolidate leadership and seize new opportunities. The major finding in the study is that grocers clearly recognize the importance of digital transformation as critical to the financial health of their businesses and are adopting essential technologies at an accelerating pace. 2018 Challenges and Opportunities Repeating its No. 1 position on the list of top business opportunities that are driving tech investments is advancing digital capabilities (chosen by 51%). (See Figure 1.) The umbrella term “digital opportunities” specifically refers to a grocer’s web presence and online sales at a bare minimum. It also includes such capabilities and technologies as mobile apps, social media management, WiFi in stores for customers, shopper tracking in stores, mobile devices used by associates, shifting to the cloud, and more. The pursuit of upgrading and expanding stores also

FIGURE 1

Top business opportunities driving tech investments in 2019 Advancing digital capabilities

51%

Store upgrading & growth

46%

Analytics-driven decision-making

41%

Developing personalized marketing capabilities 38% Developing mobile capabilities

31%

Localized products/assortments

26%

New store formats

26%

Subscription ordering for home delivery

26%

Meal-kit services

23%

New/proprietary product development

21%

FIGURE 2

Top challenges driving tech investments in 2019 Employee engagement

47%

Discounting/price competition

34%

Cybersecurity

34%

Customer data security

24%

Amazon (innovations, blockbuster deals, etc.)

24%

Food safety

24%

Lack of senior-management vision

21%

repeated its position on the opportunities list, where it appears in second place. However, several big jumps on the list are worth calling out. The two big movers are analytics-driven decisionmaking, which jumped up to third place (chosen by 41% of grocers) from seventh place last year (when it was chosen by just 27%) and developing personalized marketing capabilities, which jumped to fourth place (chosen by 38%) compared with ninth last year (21%). Looking at this year’s top challenges list, we see much more volatility than on the opportunities list. In a strong economy with low unemployment, the labor pool tightens up, and this puts a squeeze on a grocer’s ability to keep staff and make new hires. As a result, employee engagement (47%) is in the top spot on the challenges list. Cybersecurity repeats the second-place ranking it PROGRESSIVE GROCER November 2018

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2018 Grocery Tech Trends Study earned in 2017; however, this year it tied with discounting/price competition, which jumped from sixth place last year. (See Figure 2.) Interestingly, the threat of global grocers entering the U.S. market, which was serious enough in 2017 to place third on the challenges list, has been dropped as a big concern this year. Seven key strategic recommendations emerge from the 2019 opportunities and challenges lists that grocers should focus on: digital transformation, analytics-driven decisionmaking, personalized marketing, cybersecurity, employee engagement and price optimization. Top Technology Solutions for 2019 In last year’s study, we saw a surge in POS investment activity set to begin within 12 months, and this year’s study confirms this prediction was on target. We see this in the numbers recorded for POS hardware currently up to date, which rose to 38% compared with 33% last year. This

indicates some of the planned work by grocers was actually completed. The number for up-to-date POS software rose to 38% compared with 31% last year and for POS peripherals, it rose to 45% compared with 33% last year. (See Figure 3.) These numbers do not account for all the upgrade work that was planned in last year’s report. To account for the rest, we should look at the numbers for work begun but still not completed. Here we see the number for POS hardware jumps to 21% this year versus 12% last year. For POS software, it jumps to 21% versus 12% last year, and for POS peripherals, it jumps to 21% versus 12% last year. With so much POS work completed or underway, it is logical to assume that future POS investments will tail off, and the numbers confirm this. The numbers for grocers planning to upgrade POS software within two years is 29%; for POS hardware, it is 26%; and for POS peripherals, it is 19%. These numbers still show a high degree of future activity. Other in-store technologies that show high levels of upgrade activity within two years include location-based

F I G UR E 3

FIGURE 4

Status of in-store technologies

Status of merchandise management technologies

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

POS peripherals

45%

21%

16%

3%

16%

42%

16%

21%

0%

21%

Delivery of web orders management

Item master data management

41%

10%

8%

13%

28%

Category management

41%

26%

5%

8%

21%

POS software

38%

21%

21%

8%

13%

38%

21%

18%

8%

15%

41%

23%

5%

8%

23%

POS hardware

SKU/product management

WiFi for customers

Allocation

36%

23%

10%

5%

26%

39%

18%

3%

5%

34%

39%

21%

11%

5%

24%

Mobile devices for managers

Price management

33%

18%

21%

5%

23%

Assortment planning

38%

18%

5%

8%

31%

Shopper tracking

32%

13%

18%

16%

21%

38%

23%

8%

0%

31%

Real-time store monitoring of KPIs

New product/ private label development

28%

10%

15%

10%

36%

Replenishment

36%

28%

8%

0%

28%

Self-checkout terminals

21%

38%

Trade promotion management

33%

23%

5%

3%

36%

33%

Space planning (planograms)

31%

33%

3%

0%

33%

31%

21%

8%

5%

36%

29%

18%

5%

5%

42%

13%

23%

5%

Click-andcollect management

18%

Locationbased marketing

13%

13%

16%

18%

39%

Product lifecycle management

Self-shopping (scan and bag)

8%

18%

10%

10%

54%

Enterprise resource planning (ERP)

54

progressivegrocer.com

21%

18%

10%


2018 Grocery Tech Trends Study FIGURE 6

marketing to power personalization (34%), shopper tracking (34%), click-and-collect management (28%), self-checkout terminals (28%), and mobile devices for managers (26%). Many of the merchandise management applications tracked in the study have reached a solid level of technological maturity, and data in the study shows grocers have invested steadily in them over time. We see this in the high numbers recorded for grocers who have up-to-date merchandise management applications in place. (See Figure 4.) For the 12 merchandise management applications tracked in the study, the numbers recorded for up-todate technology in place are between 29% and 42%, which is on the high end of the range. This makes merchandise management the second most up-to-date technology group in the study. Since we uncovered a few strong numbers for planned investment in merchandise management solutions in last year’s study, we see correspondingly high numbers for upgrade work that was started but not yet finished in this year’s study. This group includes space planning (33%), replenishment (28%), and category management (26%). Looking ahead 12 months, the merchandise management solution with the strongest planned investment level is item master management, for which 21% say they will begin an upgrade in 2019. Another area of technology that shows steady investment by grocers is in the supply chain. All of the solutions in this group fall into the mature category as measured by up-to-date technology in place. The range of numbers runs from 44% to 38%, which makes it by far the most upto-date group in the study. (See Figure 5.) That said, there is still quite a bit of supply chain work that has been started but not yet finished, such as in realtime inventory management (26%) and order management F I G UR E 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

Order management

44%

23%

10%

3%

21%

Transportation management

41%

15%

10%

0%

33%

Warehouse/DC management

39%

16%

16%

5%

24%

Logistics

39%

18%

11%

5%

26%

Fulfillment

39%

16%

13%

0%

32%

Real-time inventory management

38%

26%

10%

5%

21%

Sourcing

38%

13%

13%

0%

36%

Status of analytic technologies Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

Price optimization

42%

13%

13%

5%

26%

Market basket analysis

36%

23%

23%

5%

13%

Competitive analysis

36%

13%

21%

5%

26%

Campaign analysis and forecasting

36%

18%

13%

8%

26%

Promotion optimization

28%

26%

13%

5%

28%

Predictive analytics

26%

26%

18%

8%

21%

In-store shopper tracking analytics

26%

18%

21%

5%

31%

Space optimization

24%

18%

18%

5%

34%

Machine learning/ Artificial intelligence

15%

15%

15%

8%

46%

(23%). Looking ahead, warehouse/DC management shows the highest level of investment interest over the next two years, at 21%. Last year, grocers indicated they needed to close a gap in their analytic capabilities and forecast big plans for upgrading. Data in this year’s report confirms they have carried out these plans. (See Figure 6.) For example, when looking at up-to-date technology in place, machine learning/artificial intelligence jumped to 15% versus 8% last year. Other solutions where grocers achieved up-to-date technology status include predictive analytics (26% this year versus 8% last year), space optimization (24% this year versus 14% last year), campaign analysis and forecasting (36% this year versus 22% last year), and market basket analysis (36% this year versus 10% last year). Analytic solutions that show strong investment interest within two years include market basket analysis (28%), competitive analysis (26%), in-store shopper tracking analytics (26%), and predictive analytics (26%). Today’s tight job market has inspired grocers to follow through on investment plans for labor and workforce solutions predicted in last year’s report. (See Figure 7.) By checking the numbers for up-to-date technology in place, we see that employee engagement management and monitoring, perhaps the most important solution in a PROGRESSIVE GROCER November 2018

55


2018 Grocery Tech Trends Study tight labor market, has jumped to 26% this year versus 16% last year. Other solutions making big jumps in up-to-date status include recruitment and onboarding (39% this year versus 22% last year), and human resources and benefits (46% this year versus 29% last year). Labor and workforce technologies that show strong levels of planned investment in 2019 include human resources and benefits (28%), and labor scheduling (20%). Just about every solution in the online tech group shows big year-over-year gains compared with last year in the upto-date technology status (See Figure 8.). The biggest movers include community (42% this year versus 18% last year), digital coupons (42% this year versus 19% last year), social media marketing (42% this year versus 27% last year), content management/repository (34% this year versus 17% last F I GUR E 7

Status of labor/workforce technologies Up to date

Started major upgrade

Will start upgrade within 12 months

Will start upgrade within 12-24 months

No plans

13%

10%

10%

10%

Labor scheduling

56%

Human resources and benefits

46%

15%

18%

8%

13%

Education and training

39%

34%

5%

8%

13%

Recruitment and onboarding

39%

26%

8%

11%

16%

Task management

35%

22%

14%

5%

24%

Employee engagement management

26%

26%

5%

8%

34%

Mobile workforce and/or HR applications

24%

26%

8%

13%

29%

Real-time store/employee monitoring

24%

21%

11%

11%

34%

FIGURE 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

Community

42%

13%

16%

0%

29%

Digital coupons

42%

16%

26%

3%

13%

Social media marketing

42%

26%

5%

11%

16%

Product/ catalog management

34%

29%

16%

3%

18%

Customer reviews/ratings

34%

29%

11%

8%

18%

Content management/ repository

34%

18%

24%

3%

21%

Ecommerce platform

32%

24%

24%

5%

16%

Product recommendations

29%

34%

3%

5%

29%

Remarketing

26%

29%

8%

3%

34%

CRM/ personalization

24%

18%

24%

11%

24%

Chatbots

11%

21%

24%

11%

34%

year), and remarketing (26% this year versus 10% last year). The top website and digital technology solutions that show strong levels of investment for next year are CRM/personalization (35%), chatbots (35%), digital coupons (29%), and ecommerce platforms (29%). The investment numbers targeted for website and digital technology solutions implementations are the highest of any group tracked in the study, and for good reason. Digital sales for grocers are booming: More than a third of grocers (36%) say online sales represent more than 10% of sales, and 13% say it accounts for more than 15% of sales. As grocers embark on large-scale, multi-year transformation projects, they are investing in a well-defined group of solutions that will increase their omnichannel capabilities, drive new business opportunities and meet the expectations of increasingly demanding customers.

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FEATURE

Corporate Social Responsiblity Key Takeaways Sustainability is an increasingly important issue addressed by collaborations between grocers and their trading partners.

Partners in Sustainability GROCERS AND TR ADING PARTNERS ARE KE Y ALLIES IN FURTHERING THIS WORTHY CAUSE. By Bridget Goldschmidt

ith sustainability a top-of-mind issue for consumers and businesses alike, it makes sense that retailers and trading partners would collaborate in initiatives to make the world a greener place. Suzanne Lindsay-Walker, director, sustainability for North America at Alpharetta, Ga.-based CHEP USA, a pallet and container-pooling services company, notes that “over the last 10 years, we’ve seen an increasing desire for collaborative efforts on sustainability, particularly among retail and CPG vendor partners.” Lindsay-Walker attributes this activity to a few factors: “First, their stakeholders — investors, customers and employees — are increasingly holding retailers and CPG companies accountable for nonfinancial metrics; second, one company can’t solve big,

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Causes relating to sustainability include reducing food waste, championing eco-friendly farming and manufacturing practices, and aiding local businesses that espouse such methods. Grocery cooperatives have proved especially passionate about developing inventive collaborations with trading partners to effect positive social change in this area.

shared challenges alone.; [and] lastly, sustainability is a topic that is ripe for pre-competitive collaboration.” As for the kinds of sustainability teamups that work best, she replies: “One-onone retail-CPG collaborations — like joint business-planning partnerships — can be effective. This is where retailers look for value-added creation, such as freight collaboration (which aims to reduce empty miles in shared lanes), while simultaneously reducing cost and carbon emissions. This type of initiative can only be realized through collaborative efforts, which require trust and transparency among partners. [CHEP parent company] Brambles has leveraged this type of partnership with our retail and CPG customers to meet shared goals.”

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PG 058-063 Corp Responsibility bgJIMcap.indd 58

11/28/18 10:09 AM

Ense


FEATURE

Corporate Social Responsiblity

National Sustainability Program Unites Retailers, Suppliers on Common Goals By Jim Dudlicek

I

reland enjoys a strong reputation as a source of high-quality food and ingredients, and, with its temperate climate, is in a strong starting position for sustainable food production. Recently, as a guest of Bord Bia, the Irish Food Board (the marketing arm of Ireland’s agriculture ministry), I had the opportunity to learn more about the island nation’s sustainability efforts and how retailers, suppliers and the government work together to create a system of transparency that boosts public confidence in Ireland’s food supply. With farming that’s almost exclusively grass-based for meat and dairy, and an output that produces exponentially more food than the 32,000-squaremile country of 4.6 million people can consume itself, Ireland is well positioned to export food products to other nations like the United States, where “natural,” “grass-fed” and “sustainable” are on trend and in demand. Launched in 2012, Origin Green is a national sustainability program for Ireland’s entire food and beverage industry, and a key delivery of the Irish government’s globally focused agrifood strategy, FoodWise 2025. It’s the only food and beverage sustainability program in the world operating on a national scale, uniting government, the private sector and food producers through Bord Bia. Working across all levels of the supply chain, this independently verified program enables Ireland’s farmers, food producers, and retail and foodservice operators to set and achieve measurable Livestock, like these beef cattle sustainability targets: to reduce environin Donegal, Ireland, are tagged at birth so food products can be mental impact, serve local communities traced from farm to fork. more effectively and protect the rich natural resources that Ireland enjoys. Under the Origin Green Charter, food producers make commitments under three key areas: raw material sourcing, manufacturing processes and social sustainability. The charter enables food manufacturers to set and achieve measurable sustainability targets that help them reduce environmental impact, achieve efficiencies in the daily operation of their businesses, and improve their impact on society and their overall bottom line as a business. As the program has evolved, additional target areas have been included. Health and nutrition is now a key focus area within the Origin Green Sustainability Charter and is a mandatory target area within all Origin Green plans. A range of target areas can now be considered under this pillar, including reformulation; nutrient profiling and labeling; reduction of saturated fat, trans fats, sugar or salt, or artificial additives; marketing and education; and promotion of a healthy lifestyle. Bord Bia’s quality assurance auditors inspect farms every 18 months and compile data on their sustainability performance. Livestock are tagged at birth, with DNA samples taken, so food products can be traced from farm to fork. Similar to manufacturers, retail and foodservice companies participate in Origin Green through ambitious, measurable and time-bound targets as part of a multiannual sustainability action plan. www.origingreen.com

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progressivegrocer.com

Lindsay-Walker is quick to point out, however, that “[m]ulti-company collaborations are also effective. Take the CE100, for example. Managed by the Ellen MacArthur Foundation, this network serves as an innovative enabler for those that are already willing to collaborate. Some of the world’s largest retailers and CPG companies participate in these accelerator workshops and actively seek collaborative opportunities to tackle shared challenges around transitioning to the circular economy” — that is, a system based on designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.

Waste Not

Sustainability encompasses the issue of food waste, which, along with food loss, accounts for about 3.3 gigatons of greenhouse gas emissions, according to a study by the UN Food and Agriculture Organization. The Kroger Co. and Apeel Sciences are seeking to ameliorate this problem by bringing to market avocados that stay ripe twice as long, so less of the fruit is wasted. Kroger’s decision to carry the produce item is particularly meaningful, as Michelle Masek, head of marketing at Goleta, Calif.-based Apeel, points out, because “[f] ruits and vegetables are the healthiest items in the grocery store, yet they’re discarded at a higher rate than other goods because of their perishability.” Adds Masek: “Kroger supported the launch with in-store signage at all retail locations carrying Apeel avocados. … The response has been extremely positive from Kroger shoppers across all demographics.” Noting that her company is “looking forward to bringing Apeel produce to communities and families across the United States,” Masek observes that “Kroger’s scale is particularly helpful in this regard, offering opportunities to reach shoppers across its family of stores, and thus supporting Kroger’s Zero Hunger | Zero Waste program to put a meaningful dent in the food-waste crisis.” And while it’s doing that, the grocer could well be boosting its bottom line: Masek cites a 2018 analysis by Berkeley, Calif.-based nonprofit ReFED showing that food waste represents $18.2 billion in lost profit for U.S. grocery retailers.


Co-op Connections

Grocery cooperatives, perhaps because they not only serve their communities, but are also literally composed of often ecologically aware community members, seem especially interested in collaborating with trading partners in aid of a range of issues relating to sustainability, including farming and manufacturing practices, and nurturing local businesses that espouse such methods. For instance, National Co+Op Grocers (NCG) and Argentinean wine cooperative La Riojana are partners in what they call a “co-op to co-op” wine program, with NCG co-ops being the exclusive U.S. retailer of Riojana brand Fair Trade wines. In 2016, the partnership expanded to include Riojana’s Fair Trade organic olive oil; later that same year, NCG also worked with some of the other cooperatively owned brands on its shelves to raise funds to cover the costs of organic certification for Riojana’s smallholder farmers. “With just a single month-long promotion, we managed to raise enough to cover the cost of certification for two

Kroger and Apeel Sciences have joined forces to reduce food waste with a longerlasting avocado.

entire villages of their farmers!” enthuses Ben Nauman, senior director of purchasing at St. Paul, Minn.-based NCG. The venture has paid off in more ways than one. “In 2015, the first year NCG started working with Riojana nationally, our co-ops sold just over $200,000 a year in their wines,” notes Nauman. “Today, we sell over 10 times that amount, and in the first year where they exported their olive oil to us, we sold roughly $600,000 in their olive oil. In just three years, we’ve grown their business so that they are [our] No. 1 brand, with category share more than three times higher than the next-largest brand, and in one of our top five categories. Eight of the top 10 wines we sell come from La Riojana.” Still, he believes that the most important result of the program is its positive impact on the lives of the growers. “The biggest advantage of this sort of collaboration is that in a world where brands make all kinds of label claims and we’ve seen proliferation in new certifications, we can point to direct and tangible evidence that we are making a difference,” says Nauman. Meanwhile, at Seattle-based PCC Community Mar-

PROGRESSIVE GROCER November 2018

61


FEATURE

Corporate Social Responsiblity

kets, an NCG member, sustainability efforts include the forthcoming launch of a private label line of humanely raised pastured eggs; an exclusive baguette made from organic whole wheat from a Salmon-Safe and PCC Farmland Trust-conserved sustainable farm; and a nonprofit partnership with Ventures, a local organization that equips low-income entrepreneurs for success, to which the co-op provides financial support for classes that help the nascent businesses scale up. “Consumers are asking us to provide ways for them to vote for a better world with their dollars,” says Brenna Davis, PCC’s VP of social and environmental responsibility. “When we provide our shoppers with opportunities to eat local, sustainably and deliciously, they take that opportunity. Eggs raised by chickens who spend their days in the sun foraging for bugs are the right thing to do, and they taste better. A baguette made from organic wheat raised by a local farmer rounds out a home-cooked meal, and is good for the local economy. Giving low-income entrepreneurs space on our shelves grows the local economy, supports equity, and gives our shoppers access to new and fresh products.” Whether at huge corporate entities or neighborhood co-ops, sustainability-based partnerships between food

Riojana brand wines are big sellers in National Co+Op Grocers stores, thanks to a "co-op to co-op" program.

retailers and their trading partners look set to endure. “These types of collaborations will continue as long as consumers continue to embrace good causes in their everyday lives and the ROI stays strong for retailers and suppliers,” asserts Megan Strand, director of communications at Rye, N.Y.-based Engage for Good, which provides best practices, tips and trends for organizations that want to engage consumers and/or employees on social issues. “It does take a village to move the needle on important social issues, and the more collaboration around these important causes, the better.”

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GROCERY

New Appoaches

Front and Center GROCERS AND OTHER FOOD INDUSTRY FIGURES CONTEMPL ATE THE FUTURE OF CENTER STORE. By Lynn Petrak

f a grocery store layout is like a geometry problem, solving for the perimeter seems to be more important than focusing on the midpoint. Indeed, the right angle for grocers when it comes to floor and shelf design may be less about the center store and more about the area around it. While retailers, CPGs and other suppliers and industry experts aren’t in lockstep yet on how to address this issue, they do agree that there will be changes to the center store as consumers shop more fresh and perishable items and as ecommerce, from a grocer’s or other site, continues to grow. “Here’s what we know: There are categories in the center that aren’t being shopped anymore, yet we are still building them and putting them in,” points out Bill Bishop, chief architect and co-founder of Brick Meets Click, in Barrington, Ill. “You have circumstances where significant blocks of the center … are functionally not being shopped.” John A. Clevenger, SVP and managing director, strategic advisors for Acosta Sales and Marketing, in Weston, Conn., notes that what to do with the center store is, in fact, front and center among grocers. “Shrinking center store — and guidance on how to manage the change — is a very hot topic among our clients, including manufacturers and retailers, right now,” affirms Clevenger. “In addition to the longstanding shift of space to the perimeter to accommodate fresh as well as prepared foods, we also see

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Key Takeaways The shrinking center store is a hot topic, with varying strategies for managing the change. Strategies to reinvigorate the section include developing innovative smaller formats, rationalizing SKUs, leveraging ecommerce and increasing the experiential aspects of in-store shopping. Developing an internal plan, incremental testing and collaboration are necessary to proceed with a center store reset.


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GROCERY

New Appoaches

Making center store aisles a destination through a unique product mix and special events is one way to reinvigorate that part of the store. Wegmans Food Markets, for example, offers samples in its international food aisles.

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retailers trying to increase back-store space as staging areas for click-andcollect. Add to that the trend towards smaller stores overall, and you have a lot of pinching of center store space.” As a result of discussions about reformatting or cutting center store, there are a lot of thinking caps being put on as 2019 looms on the horizon. “Yes, a holistic reconsideration is required. Rethinking the entire store format with an emphasis on center store is mandatory,” says Steven Duffy, VP of grocery, for Boston-based Cuhaci & Peterson Architects, Engineers and Planners, who cites a range of marketplace drivers that have affected center store appeal and purchases. “The center of store as a percentage of store sales continues to erode based on the drivers of change,” adds Duffy. “These factors necessitate a new format driven by technological transformation as well as leveraging and responding to the


Digital Transformation: Moving toward frictionless commerce

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Digital Transformation: Moving toward frictionless commerce

From one-click shopping on a mobile phone to in-store apps with instant answers, frictionless commerce is no longer an idea ahead of its time. The frictionless future is here, thanks to a digital transformation of retail that enables increasingly immediate gratification for consumers. The next two years, in fact, could see a brick-andmortar customer experience—especially in smaller store formats like convenience or grocery—become far more intelligent and connected.1 While many of the tactics, tools and techniques for frictionless commerce are already out there, the key going forward is harnessing them into one integrated package of services, making it easier than ever for consumers to shop online or in-store. Aperion and EnsembleIQ have partnered to provide the industry with a common lexicon, best practices, and case studies shaping the digital retail experience. In this paper, learn more about how digital transformation is helping to both enable and expand the frictionless retail shopping experience.

Hyper-personalized messaging The ability to communicate on a one-to-one level truly makes it possible to remove friction from the relationship between shopper and retailer. And digital technology is turning personalized messaging and customer feedback into business as usual for retailers. Mobile phones, smart watches, smart carts

and other devices are ready and able to connect shoppers to retailers via synced-up loyalty programs. Software in retailers’ apps and social networks can communicate with technology providers to execute highly personalized programs. Ads can be delivered to mobile phones with hyper-personalized messaging based on the shopper’s location, loyalty card information, buying history, time of day, and even what sports team he or she roots for. Even displays can now provide targeted promotions to specific types of shoppers. Panasonic, for example, uses video-based people recognition to distinguish the number, gender or age of a person in front of an instore display screen. Based on that information, it’s then possible to change the content of the screen. Mobile advertising firms with platforms and networks that activate a brand’s or retailer’s mobile ads can now analyze first-party and third-party retail data to promote ads to shoppers based on location (such as ZIP code), delivering personalized coupons, promotions and offers related to purchase history and more. These sorts of partnerships have been growing among retailers as consumers have been using mobile phones more, but combined with artificial intelligence (AI), they will enable retailers to continue pushing out a more personalized omnichannel experience. Knowing how to execute and correctly communicate a personalized message, however, may actually be

THE STORE OF THE NEAR FUTURE EnsembleIQ’s Store 2020 concept integrates technology into the traditional store setting in a fluid way. The frictionless commerce experience at Store 2020 begins in the parking lot, with beacons serving up information to an approaching shopper based on frequent store visits. Inside the store, personalized coupons are provided to the shopper through her smart device via digital signage connected through IoT (Internet of things) technologies. Smart shelves, smart packaging, smart sensors, smart price tags and smart shopping carts continue to enable the shopper’s connected journey. As she shops, robots with touchscreens are rolling the aisles to help her browse inventory or find products. Augmented reality (AR) and virtual reality (VR) will be featured in dedicated rooms for more engagement and buying opportunities. RFID will track inventory. And one scan of a bar code will provide contactless checkout for items picked from the smart shelves.

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RFID solutions to track inventory

Smart shelves Smart mirror Scan bar code for product info Contactless checkout

Beacons serve up information on frequent store visitors


Digital Transformation: Moving toward frictionless commerce

the tough part: McKinsey & Co. studied mobile diaries of 60 shoppers to understand what they wanted in a message,2 and found that maintaining relevant offers that surprise shoppers and talking to them when they’re in a shopping mode work best.

Seamless omnichannel shopping anytime, anywhere The essence of being frictionless is effectively serving the shopper wherever that shopper is and then integrating the overall experiences. The shopper can make a purchase on a retailer’s app while commuting home from work, for example, and have groceries ready for pickup by the time she gets to the store. When she shops in-store and finds that her product is out of stock, she can buy it on the retailer’s app and have it meet her at home in 30 minutes or less via autonomous delivery truck, Uber car or, in the future, even by drone. Perhaps the ultimate in-store frictionless experience is cashierless shopping. Amazon Go is leading the way with its three stores in Seattle and more to come. At the store, a consumer armed with the Amazon Go app checks in with her phone and puts it back in her pocket. A mix of smart sensors, artificial intelligence and computer vision technology then tracks and tallies the shopper’s trip, with an automated, cashierless payment executed at the end.

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Software that enables seamless and instant communication between shoppers’ online and in-store actions, including relevant and/or personalized in-store content

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A digital shelf edge that allows two-way communications and digital signage to execute integrated programs and AI in-store Cashierless shopping through a mix of smart sensors, AI and computer vision technology

Activity-based suggested products (AR/VR) Smart robots Robots with touchscreens for browsing inventory Smart shopping carts Smart price tags

Smart packaging

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Retailer apps that execute highly personalized programs on shoppers’ mobile devices

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Quick scan using smartphone or a wearable device

Smart sensors monitor quality

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ways to enable frictionless commerce through digital transformation

5

Forecasting systems that use AI to more accurately anticipate shoppers’ needs

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Chatbots that simulate human conversation with shoppers

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In-aisle digital assistants that answer shoppers’ questions instantly

IoT-connected digital signage Personalized digital coupon upon entering the store

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Digital Transformation: Moving toward frictionless commerce

For the roughly two-thirds of shoppers who don’t have loyalty apps but want a frictionless brick-andmortar experience, a digital shelf edge can bridge the gap. It allows consumers to be more in control of what information they access, when they access it, and how they interact with both retailers and brands in a physical store. Additionally, the digital edge can enable a simply integrated scan, bag and go program, providing convenience and control to the omnichannel shopper.

AI-enabled anticipation of customer needs Deep learning is a subset of AI machine learning— the capability of machines to detect patterns from data and learn from experience. It’s a concept that is revolutionizing retail data, making it possible to provide frictionless commerce in completely new ways. Deep learning gives retailers the capacity to much more accurately forecast what and how much should be stocked in a local store, and to anticipate new items or types of products that meet shoppers’ needs before they even ask for them. In addition to offering advantages to store operations behind the scenes, deep learning can also be put directly to use in the form of store robots that use facial recognition to perceive shoppers’ emotions. This type of usage is just in its infancy, but SoftBank Mobile in Japan has already put small Pepper robots in 140 SoftBank Mobile stores to welcome, inform and amuse customers.

Instant answers to shopper questions Hunting around for someone to answer a question in-store, or waiting for a response to an email online, can spoil an otherwise excellent shopping experience. Chatbots—AI that can communicate in a way that simulates human conversation—increasingly are helping shoppers immediately get the information

they need in a quick back-and-forth manner. Most chatbots operate through a messaging app like Facebook Messenger or WhatsApp, but chatbots are making some inroads into brick-and-mortar stores too. Lowe’s, for example, is testing Lowebot, an in-aisle robot with a touchscreen that can answer shoppers’ questions or help them find products in-store. Shoppers can also talk to a digital assistant in-aisle to get answers to their questions. This kind of voice activation is being tested in-aisle at a New York City liquor store through The Mars Agency’s Bottle Genius skill for Alexa. There, customers can talk to an Amazon Alexa at a merchandiser in the whiskey aisle to learn about and find the perfect curated bottle of whiskey.

The evolution continues Friction means resistance—and the days of shoppers putting up with any kind of resistance along their path to purchase are gone. Consumers expect a frictionless retail shopping experience, and retailers with vision now have the means to give it to them. It will require retailers to adopt a radically different approach to how they use technology, an understanding of how new and evolving digital tools can be integrated with each other to achieve frictionless commerce. But it will also open up new worlds of opportunities for retailers to explore as they shape their own frictionless futures.

1 “Omnichannel Is Dead. Long Live Omnichannel,” Forbes, March 2017 2 “What Shoppers Really Want from Personalized Marketing,” McKinsey & Co., October 2017

Are you ready for the digital transformation of retail?

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Aperion is helping to create the future of food retail through digital transformation. We focus on shoppers, what they buy, and the environments in which they buy. Our strategists, innovators and technology integrators come together to enable retailers to not only effectively compete, but to continuously drive tangible bottom line results that positively impact loyalty, revenue and profitability.


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GROCERY

New Appoaches

You need to figure out a way for the center store to have an ‘endless aisle’ component to it, so the customer has a chance to shop from a range of products that is substantially larger than a physical store can accommodate.” —Bill Bishop, Brick Meets Click

Leading food brands make excellent decisions.

convergence of marketplace change drivers.” So what, exactly, would that new approach — and store format — look like? As with other aspects of the industry, there’s no one answer, which opens the door to various innovations.

From Starting Over to Scaling Down

One school of thought has the entire store format essentially starting again from scratch. In this scenario, a store would be laid out by shopper-driven solutions such as fresh products, prepared foods and pantry staples, instead of the traditional perimeter/center store format. This type of format has been effective for retailers that have

A virtual assistant, which can provide offers that pop up on customers' phones as they shop, is a tool to engage consumers when they're in or near the center store.

© 2018 OSI Group, LLC


made a name for themselves with fresh and often specialty and prepared foods. Fresh Thyme Farmers Market, based in Downers Grove, Ill., is one example. “We’ve intentionally kept the store format small so it’s easy to navigate and is approachable for our consumer,” explains Mark Doiron, Fresh Thyme’s chief merchandising and marketing officer. “The warm, bright lights and colors and lower gondalas add an ease and a welcoming feel to the shopping experience.” According to Doiron, the layout directly correlates with shopper interests and demands. “Our consumers want to incorporate more fresh produce and less-processed items into their diets, and they know the good stuff is on the outer edges and in the center of the store,” he says. “The bonus with our stores is that 60 percent of our store’s footprint is fresh, and that we carry a very wide variety of natural, organic and healthier-for-you products down our aisles.” Such formats may run into challenges in existing stores, though. “‘Blowing up’ the conventional format is viable when implementing a ground-up store or in high-sales-volume markets,” observes Cuhaci & Peterson’s Duffy. “However, the core challenge is how to implement an entirely new format within existing chains ranging from large to small and independent stores.” He notes that stores facing hurdles in center store may not be able to feasibly start over, but can benefit from new thinking that emphasizes fresh and experiential environments. Another approach is to build smaller physical stores that CM

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GROCERY

New Appoaches

We carry a very wide variety of natural, organic and healthier-for-you products down our aisles.” —Mark Doiron, Fresh Thyme Farmers Market provide necessities and creative food and lifestyle solutions, with an ecommerce counterbalance. Grand Rapids, Mich.-based Meijer, for example, recently opened a new small-format grocery store in its home city; the 37,000-square-foot location offers fewer selections within categories, focuses on fresh and locally sourced foods, and sells baked goods from nearby bakeries, all in a self-checkout format. “Small is the new big,” asserts Duffy. Shopping within a 30,000-square-foot-or-smaller store addresses the easy-in/ easy-out demand from consumers, he says, while opening up excess square footage to be devoted to functions like in-store mini-distribution. That works for chains that can use some stores as micro-fulfillmnet hubs and for independents that need

Fresh Thyme Farmers Market keeps its center store smaller and more approachable through less linear displays with such features as bulk-product barrels.

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to cut space to stay competitive. Duffy cites Sodano’s, a Hispanic grocer in the Miami market that has teamed up with a robotic e-grocery company called Takeoff to implement micro-fulfillment within its stores. “This commitment will drive convenience and help differentiate their market position,” he predicts. A more tempered approach, in which the center store is scaled down after viable product and purchase analyses, likely will become more common. Some stores may choose to eliminate certain products and categories altogether, like pet food or personal care, while others may carry those items only in their online inventories. At Chicago-based market research firm IRI, SVP of Strategic Accounts Chris DuBois says that the industry has been talking about the disappearing center store for a long time now, and that the reality is closer to that measured approach noted above. “We see prepared foods and value-added products continue to expand. It gets more space, but isn’t taking over the whole store,” he says, adding that the contraction effect comes into play in center store packaged foods with fewer SKUs, which affects players that aren’t the top brands in certain segments. “In the past, a brand like that could buy shelf space, but in the in future, they may not be as visible. Ecommerce is shaking thing up as well.” To that point, ecommerce has both spurred and allowed for that change to center store. “An analogy for the center of the store of today is that it’s now forced to go on an ecommerce ‘diet,’” remarks Duffy. “The conventional grocery median building-area size today is 41,000 square feet, contracting for the last 15 years by approximately 20 percent, while food market share has decreased by 50 percent since 1990.” Brick Meets Click’s Bishop agrees that SKUs in center store are being offloaded to ecommerce. “You need to figure out a way for the center store to have an ‘endless aisle’ component to it, so the customer has a chance to shop from a range of products that is substantially larger than a physical store can accommodate,” he notes. Meanwhile, to reinvigorate the center store, grocers must attract consumers to aisles that contain a variety of ingredients and staples. According to Acosta’s Clevenger, retailers recognize why shoppers visit brickand-mortar stores for experiences such as immediate gratification, experiential

shopping and expert advice. “They are responding with their full toolbox in select parts of center store, including increased assortments, solution-based displays, secondary merchandising, sampling, seminars, increased usage of educational signage, and more staffing,” he says, noting that Keasbey, N.J.-

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GROCERY

New Appoaches

based Wakefern Food Corp., for instance, has placed beauty consultants in select stores to help shoppers select and use higher-end cosmetics. Technology is also pivotal in enhancing the center store experience and, ultimately, satisfaction. “Consumers can get a personalized promotion in the store — when you are walking down that aisle in the center store, you get a promotion designed for you,” observes Bishop. “We’re on the edge of that, and it will take people to an experiential level.”

Creating Change

When making any fundamental changes to store layout and product selection, Duffy advises a thoughtful mindset, adding that incremental testing is important in building a successful transformation. Partnerships with CPG companies are also important to revamping center store, where brands play a key role, and finally, while the pace of change is rapid and definite, that doesn’t mean that consumers will never want items found in the center store. In fact, many prefer options when shopping in a physical store, so be cautious when cutting SKUs.

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A display of natural bath products at Wegmans encourages touch and smell — mirroring the approach used by Lush, the upscale mall chain.


FRESH FOOD

Produce

Health and Taste WINTER PRODUCE PROVIDES PLENT Y OF BOTH, AND SAV V Y GROCERS CAN MAKE THE MOST OF THAT. By D. Gail Fleenor

inter is coming with its own produce and foods such as hearty soups and savory stews. Some of the most nutritious vegetables and fruits are available during the coldest time of year, and some just taste better when harvested in winter. Educating customers about winter produce, including its health benefits, uses in recipes, and taste profiles, can bring produce departments bonus sales. Winter produce is more than items cooked for holiday events like Thanksgiving, Hanukkah and Christmas.

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Key Takeaways Since many vegetables are sweeter or less bitter in winter, let your customers know about seasonal taste profiles via signage and sampling. Offer recipes with new ways to cook winter vegetables, and consider offering a produce butcher or soup station where customers can get vegetables prepared to cook at home. Provide information about the health benefits of winter produce.


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FRESH FOOD

Produce

“There is a resurgence in cooking vegetables such as carrots, cabbage, cauliflower and Brussels sprouts,” affirms Craig Carlson, CEO of Chicago-based Carlson Produce Consulting. “Consumers are seeing new ways of cooking vegetables in restaurant dishes and are inspired to do the same.” He notes that innovative retailers can capitalize on this trend by offering creative ways to prepare vegetables. Customers who want to “cook healthy” may not be aware of the benefits that produce such as winter squash can provide. This nutrient-rich vegetable comes in a variety of shapes, sizes and colors but, more importantly, delivers a bounty of vitamins and minerals. Winter squash contains large amounts of immune-supportive A and C vitamins, dietary fiber, minerals such as manganese and potassium, and nutrients like omega-3 fatty acids, according to Harvard’s T.H. Chan School of Public Health. Hosting a health fair in the produce department with the company dietitian or chef can draw attention to winter produce benefits for those with diabetes and arthritis, as well as customers seeking guidance in heart and digestive health. Add a sampling of cold-weather produce dishes and watch sales grow. Produce departments have come to expect the wide variety of winter squash available for display and sales. “In winter, hard squash gets more space in our departments, as do cooking greens, but overall, it does not change in the department like it did five to eight years ago,” notes Jay Schneider, produce director for Malvern, Pa.-based Acme Markets, in the greater Philadelphia area. Some customers may avoid winter squash because the rind is usually harder than that of summer squash. Melissa’s offers an answer for those shoppers: Peeled & Steamed Butternut Squash in the produce department refrigerated section. “We offer four varieties of squash year-round and over a dozen from late August through December, including butternut, sweet dumpling, red kuri, turban green acorn, kabocha, spaghetti and a variety of pumpkins,” says Robert Schueller, public relations director for Melissa’s/World Variety, in Los Angeles. In its ready-to-eat produce section, Food City/K-VA-T Food Stores Inc. offers cut vegetables such as rutabagas and butternut squash that are diced and ready to cook. The pre-cut hard-rind vegetables do well, according to Bucky Slagle, produce and floral director for the 100-plusstore chain based in Abingdon, Va. The offering appeals to those who might have trouble with the thick rinds, those who are unsure about preparation, and Millennials, who want their meals in a hurry. Merchandisers might consider providing information for customers about preparing winter

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Focus on Produce for Chinese New Year Winter is the time to celebrate in the produce department. Chinese New Year (CNY), based on the lunar calendar, will occur on Feb. 5 in 2019, the Year of the Pig. The festival is celebrated by a quarter of the world and can be observed in produce departments across the United States. Food is important to the occasion, especially produce. Los Alamitos, Calif.-based specialty produce wholesaler Frieda’s offers six reasons that retailers need CNY promotions: Boost winter sales: the festival is all about fruits and vegetables Unique in-store experience: an event online shopping can’t duplicate Produce showcase: a refrigerated display of CNY items Halo effect: Other items may be purchased in other departments A food holiday for all: Not just for Asian shoppers Attract growing Asian population: Build a relationship with these shoppers Fruits play a central role in the holiday, during which specialty citrus items like kumquats, pummelo and mandarin oranges are given as gifts. One of the strangest-looking produce items, Buddha’s Hand Citron, is associated with CNY. Used for zest in recipes, the fruit has long segments resembling fingers. Both Frieda’s and Los Angeles-based Melissa’s/World Variety offer items for CNY. “Thousands of our retailers use Melissa’s Asian New Year signage and recipe cards to promote the event, which in the coming year occurs after Super Bowl weekend,” says Robert Schueller, public relations director for Melissa’s. He recommends four special promotional displays: stir -fry vegetables such as bok choy, gai lan and lo bok; value-added items, including won ton, egg roll wrappers and kimchi; a tofu section featuring all varieties; and fresh noodles, including Chinese, yakisoba and udon. “With Frieda’s merchandising and strong sources of supply with the big CNY items, we are planning on ads featuring ginger, Shanghai bok choy, kumquats and select Asian vegetables,” says Sophia Jackson, marketing associate for Frieda’s. She suggests putting together a complete display in the refrigerated section of the produce department, including symbolic citrus items, cooking vegetables, and complementary items like egg roll wrappers, kimchi and noodles.


FRESH FOOD

Produce

gourds. Squash can be baked, roasted, microwaved, stewed, mashed and boiled with a variety of spices. More information is available at www.hsph. harvard.edu/nutritionsource/food-features/winter-squash/. Schueller notes that butternut remains the most popular winter squash, with “trendy varieties like delicata, sugar pie pumpkins, carnival and mini pumpkins … some of the most popular when in season, mainly due to their smaller sizing — small-softball sizing for smaller households.”

Traditional Vegetable Holiday Favorites

Shoppers are already thinking about what they’ll serve at their holiday gatherings, according to “Seasons Greenings” by Molly Tabron for Robinson Fresh at C.H. Robinson Worldwide, based in Eden Prairie, Minn. Since September, some shoppers have been using search engines and social platforms to look for recipes that use traditional ingredients in healthier or inventive ways. Even though the trend overall of retail volume growth slows down in November and December, Tabron concedes, some produce commodities increase their share of sales, such as asparagus and cooking greens (collard, mustard, and turnip greens). Asparagus can be used as a side dish or appetizer. Erin Wright, owner of Little House Green Grocery, in Richmond, Va., includes seasonal produce in meal kits at her store. Providing recipes featuring traditional holiday dishes that are healthier or include new items is a popular merchandising tool at Wright’s store. She likes to promote produce items with recipes printed on hard gift-card stock to draw attention, make the recipes more special and feature

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the produce prominently. Wright and her staff also teach classes on seasonal dishes featuring produce. “We bring baskets of squash and greens to class, talk about herbs and spices and simple-to-prepare dishes,” she says. Potatoes are a staple during the holidays for many, but they offer more than tradition. “As more consumers gravitate to a gluten-free, vegetarian or vegan diet, produce merchandisers should highlight potatoes as a satiating vegetable that meets these dietary restrictions,” advises Rachael Lynch, global marketing manager for Denver-based Potatoes USA. Thanks to a long shelf life, potatoes are popular with retailers, she notes. MountainKing Potatoes, based in Houston, recently debuted “baby” versions of its yellow and red potatoes, available separately or combined. The potatoes don’t need peeling and should appeal to parents and especially Millennials. To keep consumer interest in potatoes alive, merchandisers can show customers how to spiralize potatoes and create potato noodles or share best practices for preparing potatoes in an Instant Pot or crockpot. Heirloom potatoes such as purple, Yukon Gold, fingerling and petite are gaining in popularity. Encourage shoppers to try a variety of potato types and hues for colorful mashed potatoes. Fingerling and Yukon Gold potatoes have increased by double digits in the past four years as popular foodservice items, Lynch observes, adding that Potatoes USA is rolling out a new campaign to show how the vegetable fuels athletic performance, featuring the importance of eating well versus just training.

The Fruits of Labor

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When customers walk through the door of Little House Green Grocery, they’re greeted with seasonal fruit such as apples and pears. “We include signage about the six local apple varieties we sell, letting customers know the apple name; what it is best used for, such as baking; and what flavor type it is,” Wright observes. December is National Pear Month, and the fruit is in season. Stemilt Growers


FRESH FOOD

Produce

LLC, based in Wenatchee, Wash., is in the second full year of its Operation Flavor program for pears. “Pears have been mishandled in our industry, and Stemilt has a vertical program to change the course and concentrate on the ripening process,” asserts Roger Pepperl, the company’s marketing director. The change starts in the orchard, following a detailed program that ends in shoppers’ carts. Pears are available in regular and organic varieties in the Lil Snapper kid-sized program. Lil Snapper has been a successful program with apples, which continue to show big sales increases, according to Pepperl. New for winter 2018-19: A new juice called It’s Red. “This new apple juice has super-clean ingredients and only apples,” Pepperl enthuses. “It is [made from] 50 percent Stemilt Red Wave apples, which are red inside, and 50 percent white apples.” Acme’s Schneider notes that his planograms are changed in the fall and run through spring featuring cut vegetables and fruit, apples, and potatoes. This follows the ripeness schedule of winter produce. He adds that two categories of items continue to gain popularity in winter. “Compared to the past, we get a good supply

of berries and grapes, big-demand items mostly in the winter,” Schneider points out. Citrus displays brighten many shoppers’ days and baskets. Keeping displays full and fresh-looking will keep sales growing and going during cold months. Some retailers like to include other citrus besides navel oranges, tangerines and regular grapefruit in departments. Also, clementines are now available year-round, Schneider says, with variety and supply almost seamless to customers. “In winter, we will have a citrus sampling with oranges from California, Halo mandarins and heirloom oranges,” says Food City’s Slagle. Different citrus options for display and sampling include heirloom navel oranges, which have low acidity and are thin-skinned and very juicy; cocktail grapefruit, sometimes called a mandelo, which isn’t really a grapefruit but instead a cross between a mandarin and a pomelo, and is sweeter and less acidic than a regular grapefruit; and pomelo or pummelo, a distant relative of the grapefruit that's sweeter, firmer and less juicy. Merchandising with displays and events during winter can generate extra interest and extra sales.

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Show Recap / Ask an Expert

Insights From the Grocerant Solutions Summit THE E VENT ALSO INTRODUCED THE FIRST-E VER CHEF SOLUTIONS CHALLENGE.

ecently, Progressive Grocer hosted the fourth annual Grocerant Solutions Summit, a gathering focused on the retail foodservice sector, in Minneapolis. Held in conjunction with sister event Path to Purchase Expo, the summit was a combination of educational sessions, one-on-one meetings with industry suppliers, and a newly introduced chef challenge. During the inaugural Chef Solutions Challenge, chefs Josh Croson, of Coborn’s; Dave Histed, of Giant Eagle; and Neal Meier, of Hy-Vee, competed in two challenges to

In the inaugural Chef Solutions Challenge, Hy-Vee's Chef Neal Meier won the Best Easy Weeknight Family Meal for his Chicken Fajita Mac & Cheese.

create a Best Special Occasion Meal using fire-braised chicken thighs from Hormel Foods, and a Best Easy Weeknight Family Meal using white cheddar mac and cheese from Nestlé Professional. Histed won the Best Special Occasion Meal with his Korean Chicken with Turmeric Rice, and Meier won the Weeknight Meal Challenge with his Chicken Fajita Mac & Cheese. The educational component of the retail foodservice event covered topics ranging from category trends to diversity hiring to attracting superconsumers. Here are 13 of the top takeaways from the sessions: PROGRESSIVE GROCER November 2018

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SHOW RECAP

Grocerant Solutions Summit

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1

Key consumer trends to be aware of in your prepared food program are the rise of snacking, personalization, customization, and health and wellness, noted Angela Bozo, of the International Dairy Deli Bakery Association.

2

A focus on cooking methodology is just as important as flavor trends, Bozo added. Offer products that can be made at home in a range of cooking options like slow-cooker meals, sheet-pan meals (baked in an oven) and electric pressure-cooker meals.

3

Seafood is a rising trend, and along with that is the introduction of “seacuterie,” a seafood version of the charcuterie board that uses the whole fish, from fin to tail, Bozo noted.

4

Disruption is a fact of life, and retailers need to have a plan for the five drivers of change: technology, including unattended checkouts and robotic production; convenience, which is often combined with technology, as in the Amazon Go model; local, which means that retailers need to let consumers know from where they’re sourcing the products/ingredients; fresh food, or "hyper-local," where the food can even be grown on-site, as with hydroponic tomatoes; and experience, which may be the most critical and is a convergence of all of the other drivers, combined with the atmosphere of the space that emphasizes the uniqueness of the brick-and-mortar

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Clockwise from left: Attendees taste-tested all of the meals prepared in the Chef Solutions Challenge; PG Editorial Director Jim Dudlicek interviewed Giant Eagle's Chef Dave Histed; Hormel's Fire-braised chicken thighs.

store, noted Lewis Shaye, of Grocerant Design Group, and Steven Duffy, of Cuhaci & Peterson.

5

To create a unique retail foodservice experience, retailers must use a discovery process to ideate the concept, said Shaye and Duffy. Then comes the definition phase, in which the core of the concept is fleshed out. This is followed by the design phase, the beginning of the concept’s being brought to life. In the delivery phase, those design concepts are implemented in the physical space by such means as signage and lighting. The last is the direct phase, when everything is set in motion and retailers must continually assess the concept to ensure that it’s meeting customers’ needs.

6

Food waste reduction has emerged as a standard of excellence and an expectation, noted Steven Finn, of LeanPath. To help reduce food waste, weekly waste


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SHOW RECAP

Grocerant Solutions Summit

summaries and detailed daily reports can focus the conversation on the greatest opportunities for prevention.

7

We have now entered the 3.0 version of healthy eating, which is focused on functional foods, driven by performance, superfoods and positive nutrition, noted Erin Murray, of Datassential. Some of the ingredient trends of this healthy-eating version include chia seeds, flax seeds, kombucha, cold-pressed juices and turmeric.

8

Datassential predicts that the 4.0 version of healthy eating will be more personalized nutrition, Murray said. For example, there are now several companies that offer a breakdown of what a person should be eating based on his/her DNA and what he/she wants to accomplish with nutrition.

9

Ethnic cuisine will continue to influence menu trends as the makeup of the American consumer becomes more diverse, Murray noted. While Asian, Latin American and, increasingly, Middle Eastern flavors are influencing menus, the wave of the future will be ethnic dishes themselves, rather than the flavors and spices used to create them.

10

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Meal kits are best placed in the produce department at the front of the store, because consumers shopping for meal kits don’t know what they want to eat for dinner, noted Jody Barrick, of Supervalu, who spoke during a panel discussion that included Kathryn Fealtman, of Giant Eagle, and Dan Koch, of Associated Wholesale Grocers. Meal kits don’t really work in the meat department – at least for consumers – because customers who go the meat department already know what

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Clockwise from left: Gerry Fernandez spoke about the importance of cultural intelligence; IDDBA's Angela Bozo highlighted key consumer trends, capturing the attention of attendees.

they want for dinner and may not be swayed enough by the meal kits to purchase them.

11

Managers in the grocerant space need to have cultural intelligence, or the knowledge, skills and abilities necessary to effectively and appropriately engage people from different cultural backgrounds to deliver better results, noted Gerry Fernandez, of Multicultural Foodservice & Hospitality Alliance. By leveraging cultural intelligence, managers can increase employee engagement, increase motivation and flexibility, and improve customer service.

12

Meal kits are the right idea, but they currently have the wrong execution, noted Eddie Yoon, of Eddie Would Grow. For many, the recipes are too complicated.

13

Yoon also noted that a grocerant shouldn’t try to replicate traditional foodservice operations, but instead, leapfrog over foodservice to introduce the next best “thing.”


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CULINARY TRENDS

Q&A

Ask a Chef: Krista Anderson VEGGIE-CENTRIC OPTIONS ARE FRONT AND CENTER IN NE W SE ASONS MARKE T'S PREPARED FOOD PROGR AM. By Kathy Hayden

s assistant program and category manager, prepared foods at Portland, Ore.-based New Seasons Market, chef Krista Anderson works with local suppliers to source ingredients for the three-state chain’s prepared food program. Focusing on chef collaboration, menu planning and recipe development, Anderson has been a crucial player for 17 years in the expansion of New Seasons’ prepared food offerings, recently helping to launch the grocer’s meal kits. Her passion for vegetables shines through in many fan-favorite dishes packed with fruit, greens, grains and other hearty, satisfying ingredients.

Progressive Grocer: What are some of this year’s on-trend produce items, and how are they being used in new ways? Krista Anderson: It’s not exactly new, but I’m loving fennel right now, and I think more customers need to know about it. We are at the tail end of developing our own meal kits, and fennel came up often in our R&D process. It has a unique, sweet flavor when roasted. It’s great on its own, and it blends well with roasted root vegetables or the brassicas, which are another current favorite of mine, especially parsnips and Brussels sprouts. Cut thinly and served raw, these vegetables add a lot of crunch to a salad and are also great roasted and marinated.

PG: Some vegetables are so popular, they can be overused on menus. How can chefs keep things like kale fresh and interesting to consumers? KA: Kale doesn’t have to be the only green in a salad. Because it is a strong green, it plays well with others, especially some more tender, lighter greens. It works well with so many other ingredients, like in a salad with shredded carrots and a dressing with Asian flavors – ginger, tamari and rice wine vinegar.

PG: How can chefs make humble, everyday ingredients — like carrots, onions and potatoes — into something unique, irresistible and craveable? KA: Especially as we move into fall and winter, vegetable gratins are a great option, and chefs can get really experimental with ingredients. Instead of layering dairy, you can try some of the alternative milks, like nut milks and vegan cheeses. ... And there are so many great colors and shapes of potatoes, carrots and winter squash. I also like roasting vegetables like tricolored potatoes or sweet potatoes, and using some stronger spices like smoky paprika or turmeric to bring new interest.

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PG: What’s new in plant-based proteins that can help create filling and comforting dishes? KA: A Seattle-based company called Field Roast is doing great things with grains, vegetables and legumes to make plantbased meat and cheese substitutes. They have sausages, deli slices, crumbles, even a full “roast” that makes a great meatless holiday meal option. We did the “roast” in puff pastry, which is a really great special dinner. They also make a fermented tofu “cheese,” which helps cooks expand vegan cooking options.

PG: Can you provide some advice for upgrading typical deli department salad bars with a few easy, unexpected steps? KA: Often, just mixing up the salad greens with some baby kale or chicory can make a big difference because they are hearty and stay fresh for longer. Shaved vegetables also make a great difference and add some healthy crunch. Try Brussels sprouts, fennel, celery root and beets. For some smoother textures, I like marinated chickpeas and olives. We also like to group ingredients together so that customers can put their own salad Niçoise together from the deconstructed components. For dressings, make sure you have some of the expected balsamic and creamy dressings, but also take some chances. We have a lemon-tahini dressing that we can’t take out of our rotation; harissa-honey is another favorite. Likewise on the yogurt bar – make sure the predictable fruits and granola are there, but also try some savory toppings like cucumbers, olive oil and nuts.

PG: What is your all-time favorite vegetable entrée, and what makes it so great? KA: That is such a tough question, and my favorite changes with the season. I can’t get enough asparagus when it’s in season. Eggplant, when it’s cooked really well, is a favorite, and I like it with Asian flavors. Chanterelle mushrooms, pasta and a fresh local cheese make a simple and delicious dish. I love winter squash stuffed with kale and grains like farro, barley or wild rice. I could keep going forever!


Especially as we move into fall and winter, vegetable gratins are a great option, and chefs can get really experimental with ingredients.â&#x20AC;? â&#x20AC;&#x201D;Krista Anderson, New Seasons Market

Presided over by Krista Anderson, New Seasons Market's prepared food program showcases fruit, greens and grains, among other hearty, satisfying ingredients.

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Hy-Vee Opens 1st Free-Standing HealthMarket MIDWEST GROCER OFFERS WEEKLY NUTRITION TOURS

A

n expansion of an in-store department, the new free-standing Hy-Vee HealthMarket opened this summer in the retailer’s home base of West Des Moines, Iowa. The 15,700-square-foot store offers many of Hy-Vee’s original store-format features, including fresh produce, high-quality meat and seafood, dairy and frozen food items, and Aisles Online pickup lockers, as well as health-related amenities such as a full-service pharmacy, a health clinic and hearing aid center, and a sports nutrition area.

17.6M in U.S. Have Limited Access to Healthy Food

A

The store also features a hydration station that includes nitro coffee, kombucha and Bevi infused waters, along with an adjacent Orangetheory Fitness center, thanks to a partnership developed last year. Products from Basin, a beauty brand specializing in all-natural bath and body products, will also be prominently featured. All told, the store will offer more than 11,000 items. As a free-standing store, HealthMarket is about three times larger than the in-store department that inspired it. “This is a trial run,” Hy-Vee CEO Randy Edeker told The Des Moines Register at the time of the store’s opening. “I already see some things I’d do different.” The company plans to open up to 60 HealthMarket stores, with two being added next year in the Kansas City area, and in Madison, Wis. Chain-wide, Hy-Vee’s 190 stores have started offering free nutritional tours conducted by retail dietitians.

Rhode Island, Pennsylvania and Wisconsin were identified as the top three states where LSA areas are disproportionately located in lowincome areas; minorities are also disproportionately concentrated in LSA areas in these states.

ccording to an updated analysis by Reinvestment Fund, a community development financial institution, 5.6 percent of the U.S. population has limited access to supermarkets carrying healthy food. In spite of some improvement over the past decade, 17.6 million U.S. residents — 5.6 percent of the population — still live in Limited Supermarket Access (LSA) areas, Reinvestment Fund’s recently updated LSA analysis of urban and rural communities found. But this represents a decline of 15 percent, or 3.1 million fewer people, from 2010. “For more than a decade, we have worked to ensure that all Americans have equitable and adequate access to healthy food,” says Don Hinkle-Brown, president and CEO of Philadelphia-based Reinvestment Fund. “The LSA has been at the core of our evidence-based approach to solutions that bring improved access to healthy food as well as economic opportunity to communities across the country.” The LSA analysis gauges access to healthy food by determining which areas are well served by supermarkets and which have relatively limited access. Reinvestment Fund’s analysis goes beyond just identifying areas with limited access, however, also measuring the extent to which LSA areas can support new or expanded food retail. PROGRESSIVE GROCER November 2018

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FOCUS ON THE

According to the updated analysis, while access to healthy food in the United States has grown overall in the past decade, progress has been uneven, with improvements in food access followed by setbacks in some areas, and even substantial declines in certain communities. Among the top 10 states where healthy-food access has improved, the number of people living in LSA areas declined by more than 30 percent from 2010 to 2016, with North Dakota, Idaho and Iowa experiencing significant declines in underserved populations. By contrast, Maine and Nevada saw considerable increases in their LSA populations from 2010 to 2016. While most states’ LSA populations declined, many lagged behind the national decrease of 15 percent, including states that experienced substantial population growth, such as Florida and Arizona.

The analysis also pinpointed states and metro regions in which low-income residents and minorities disproportionately live in LSA areas. Rhode Island, Pennsylvania and Wisconsin were identified as the top three states where LSA areas are disproportionately located in low-income areas; minorities are also disproportionately concentrated in LSA areas in these states. In Rhode Island, for example, 91 percent of the LSA-area population is low-income, versus 44 percent nationally. The 2018 LSA analysis is the second update to the data, which was first issued in 2011. The latest update covers LSA data from 2010 through 2016. The data s available free via the PolicyMap platform.

Raley’s Rebalances Snack, Treat Offerings

snacks and candy should be viewed as a treat. The change is one of many Raley’s has implemented in recent years to help shoppers eat better. Others include:

WESTERN GROCER RE VAMPS OPTIONS AT CHECKOUT STANDS TO INCLUDE NON-GMO, NUTRIENT-DENSE, VEGAN ITEMS

A

s part of its continual quest to help shoppers make better eating choices, the West Sacramento, Calif.-based food retailer has reduced its overall candy offerings at checkout by 25 percent, fully eliminating conventional candy and replacing it with an “enhanced selection of snack options that consider nutritional value, portion control and sugar content.” Citing data from the Food and Drug Administration, Raley’s notes that most Americans exceed the recommended limits for added sugar, which means that placing better-for-you products in high-traffic checkstand aisles enables customers to reduce their intake of added sugar. “We want to make it easier for our customers to make better choices for their personal health journey,” says Keith Knopf, Raley’s president. “We are already seeing customers respond favorably to our improved offering, which supports their ability to act on their own intentions and choose to eat well – whether they’re filling their carts or grabbing a quick bite.” The new selection balances nutritional offerings and indulgence, ranging from protein-powered items and lower-calorie sweets to snacks that are low in preservatives. Receiving exposure will be new products and lesser-known brands, many of which lead the industry in sporting cleaner ingredient decks. Many of the products meet Raley’s Shelf Guide standards, including items that are nutrient dense, non-GMO and vegan. Among the new options available are health-focused bars (Kind, Clif, Tahoe Trail); smaller-packaging candy (Chocolove, Bark Thins, Justin’s); chips; beef jerky; nuts (Blue Diamond); gum and mints; and alternative snacks such as seaweed, rice bars and olives. Along with the rest of the options, these offerings are intended to reinforce the notion that

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Introducing the aforementioned Raley’s Shelf Guide standards

C

M

Eliminating sugar-sweetened soda and reducing overall candy offerings Removing tobacco from stores

Y

CM

MY

Cutting artificial flavors from carbonated soft drinks

CY

CMY

Offering free fruit for kids to snack on while adults shop These and other small decisions are what combine to create Raley’s transparency strategy, noted Raley’s CEO Michael Teel at the 2017 TransparencyIQ event hosted by Progressive Grocer parent EnsembleIQ. Teel observed that Raley’s is a purpose-driven company, and that making one decision leads to making subsequent decisions that all correspond and fall into place, ultimately helping to make a change in the marketplace. Raley’s operates 129 stores under five banners: Raley’s, Bel Air Markets, Nob Hill Foods, Food Source and Market 5-One-5.

Raley's has reimagined its front end to offer more better-foryou options.

K


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NONFOODS

Greeting Cards

Consumers of Note THE DIGITAL GENER ATION’S AFFINIT Y FOR TR ADITIONAL GREE TING CARDS IS DRIVING CATEGORY SALES. By Barbara Sax

onsumer influence is shifting in the greeting card aisle. Boomers, with their multiple purchases and value point of view, have powered the category for decades and remain an important consumer group for the category. Yet Millennials are playing an increasingly large role. Greeting Card Association data shows that for the third consecutive year, Millennials outspent boomers in the greeting card category. “They didn’t buy more units, they spent more money,” says George White, VP of the Washington, D.C.-based association and president of Up With Paper, in Mason, Ohio. Price isn’t the most important attribute for this consumer group, adds White. “Millennials buy cards priced 20 to 25 percent higher than those purchased by older age groups, and it’s not uncommon for a Millennial to spend $5 to $10 on one greeting card,” notes Stacey Howe, VP/general manager of national accounts at Kansas City, Mo.-based Hallmark Cards. Hallmark’s Signature line is the fastest-growing premium greeting card brand, according to Howe. “As consumers look to differentiate card sending from digital modes of communication, they are adopting higher-priced, more uniquely embellished designs,” observes Steve Laserson, SVP of North American sales at Cleveland, Ohio-based American Greetings.

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Key Takeaways Millennials are playing a larger role in powering the greeting card category. As consumers seek to differentiate card sending from digital methods of communication, they're opting for higher-priced, more uniquely embellished card designs. Rolling fixtures and spinner racks are making the category easier to shop in various parts of the store, while space-challenged retailers can bring their card selections online via ecommerce sites.


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NONFOODS

Greeting Cards

When retailers merchandise outside the traditional greeting card aisle with floral, gifts or candy, the consumer is more likely to buy something.” —George White, Up With Paper

‘More Bells and Whistles’

Steven Gimbelman, president of Edison, N.J.-based Designer Greetings, says that consumers want cards with “more bells and whistles.” Embellished cards featuring specialty foils, ribbons, bows and specialty attachments are performing best for the brand, he adds. Other manufacturers are also ramping up their offerings to attract Millennial consumers. For instance, Hallmark will debut Paper Wonder, a high-end crafted care line, this holiday season, and American Greetings recently introduced the Premier Collection, which includes high-quality finishes and elaborate embellishments, to its collection of premier cards. Millennial consumers are also having an impact on how the category is being merchandised. “The traditional waterfall run is not going to catch this consumer’s eye,” warns White. “Unique merchandising and unique cards with distinct embellishments are what gets this consumer to stop.” Up With Paper’s pop-up products, which include mini cards and retail for between $2.49 and $10, are carried by The Fresh Market, Schnucks, Wegmans, and Haggen Food & Pharmacy, and are rolling out to Weis Markets and Albertsons stores. In The Fresh Market, Up With Paper cards are located on spinner racks near floral and adjacent to the chain’s specialty candy section. Parsippany, N.J.-based Kings Food Markets and its Balducci’s Food Lovers Markets sister banner are merchandising cards in the front of the store, adjacent to gifts and floral, to create a total boutique look. “When retailers merchandise outside the traditional greeting card aisle with floral, gifts or candy, the consumer is more likely to buy something,” notes White.

Seasonal Sales

That positioning allows the chain to maximize seasonal opportunities — a critical factor in this category. “We’re seeing a huge growth in our seasonal business,” says White. “We completely change our displays seven times a year so that we’re providing a buying cue for consumers.” Designer Greetings has created a rolling fixture that can be used to outpost seasonal cards in the florist department or to block an unmanned checkout lane to park incremental sales. The brand also offers a full line of boxed Christmas cards, gift tags and stickers. “These are great pickup items for the holidays and boost incremental sales,” asserts Gimbelman. “We also use many corrugated displays for in-and-out seasonal programs.” Meanwhile, Hallmark last year launched a program that placed greeting cards at grocery checkout lanes, particularly during key seasons.

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Designer Greetings' rolling fixture enables retailers to merchandise cards throughout the store.

Key seasons are an ideal time to bring a greeting card display to another area of the grocery store. “A curated selection of Hallmark Signature Thanksgiving cards in the liquor department might be appropriate to remind people who are bringing a bottle of wine to dinner to include a card with their gift,” advises Howe. “Placing cards in the bakery section reminds shoppers to grab a card as they pick up a pie for Thanksgiving dinner.” In more traditional departments, where cards are located in the center of the store, retailers are aiming for that boutique experience by adding plush, candy, gift cards and other ancillary products on floor stands in the greeting card aisle. In addition to gift cards, plush toys and Russell Stover’s “For the Moments That Matter” gift-boxed chocolates, Rochester, N.Y.-based Wegmans Food Markets also devotes an end cap display to Wilton birthday party supplies to give the department a one-stop-shopping profile. “The chain does a great job of differentiating its section with a custom rack of eight spinner racks,” says White. “It gets younger consumers to stop and look.”

Easier Shopping

Hallmark has introduced color-coded signage and messaging to help customers find the cards faster. “New fixtures allow our field service teams to display more of the card, even as we are increasing the number of cards in each section,” notes Howe. “This summer, we introduced the Wow Factor, featuring new PIDs, and perpendicular signs that call out new and exciting product at shelf.” Papyrus-Recycled Paper Greetings is using unique merchandising features, including color, more full-faced product orientation and spinner racks, to make the category easier to shop. “We offer unique solutions for all departments to ‘interrupt’ customer shopping with greeting cards in a number of departments,” observes Tom Kilcourse, VP of U.S. sales for Chicago-based Papyrus-Recycled Paper Greetings. Maximizing space is even more important as retailers trim the


space they give to the category. To offset smaller departments, manufacturers are ramping up their ecommerce play and helping their retailer partners capture sales in that arena. “As our grocery partners navigate the changing retail landscape, we are growing our ecommerce capabilities and partnering with our retailers to bring their greeting card aisles to their online marketplaces with our Click and Collect program,” says Howe.

Brand awareness ads, whether in a circular or even on social media, can help add greeting cards to someone’s shopping list.” —Tom Kilcourse, Papyrus-Recycled Paper Greetings

Driving Purchases

A number of retailers are using promotions to drive multiple purchases. Wegmans offers $1 off the purchase of any three greeting cards when customers use their Shoppers Club Card, and advertises the promotion on signs throughout its department. Malvern, Pa.-based Acme Markets, a division of Supervalu, recently ran a promotion with American Greetings that offered shoppers a $2 savings with the purchase of two cards priced $2.99 and higher. “Brand awareness ads, whether in a circular or even on social media, can help add greeting cards to someone’s shopping list,” says Kilcourse. “Targeted marketing and especially social media are becoming increasingly important, in particular with specialty brands. “ “Increasingly, younger consumers are being influenced by in-store social media and store websites through their mobile devices,” agrees American Greetings' Laserson. “This behavior offers opportunities to connect and inspire them throughout the store.” Laserson's company is focusing on reaching out to consumers pre-shop with original content on its social channels, website, blog and emails, and on sharing creative assets with retail partners for use on their channels. “Research shows that if we can inspire shoppers with relevant content," he says, "we have a much better chance of getting cards and gift wrap added to their shopping list and, ultimately, basket.”

STATEMENT OF OWNERSHIP

PROGRESSIVE GROCER November 2018

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EDITORS’ PICKS

Food, Beverage & Nonfood Products

Plant-Based and Protein-Packed

Plant-based protein continues to be a hot trend as consumers seek to replace animal proteins with leaner, greener alternatives. Now they have another option, as Atlantic Natural Foods LLC has introduced a line of protein-rich, plant-based meals that are also shelf-stable. The Loma Linda heat-and-eat product line is ready after 60 seconds in the microwave and features 10 SKUs comprising a variety of flavors. These include such plant-based-protein meal solutions as Spicy Pad Thai, Thai Green Curry, Tikka Masala, Mediterranean Tomato & Olive, Chipotle Bowl, Hearty Stew, and Southwest Chunky Stew, each of which offers 9 grams of protein per serving; and such plant-based meal starters as taco filling and sloppy joe chorizo, each of which offers 6 grams of protein per serving. SRPs for the products range from $2.99 to $4.49 per package. https://atlanticnaturalfoods.com

Light Indulgences

As the lower-calorie ice cream trend continues to make its mark on the snacking world, Ben & Jerry’s has revealed four additional flavors in its line of Moo-phoria light ice cream. Made with organic milk and cream, as well as non-GMO ingredients, the ice creams have only a fraction of the fat, calories and sugar found in regular ice cream while containing no sugar substitutes or sugar alcohols. The latest varieties are Cherry Garcia with a Twist, a cherry-and-chocolate light ice cream with cherries and fudge flakes, at only 140 calories per half-cup serving; Mocha Fudge Brownie, cold-brew mocha light ice cream with brownies and a toasted marshmallow swirl, at only 150 calories per half-cup serving; PB Marshmallow, peanut butter light ice cream with marshmallow and peanut butter cookies, at only 160 calories per half-cup serving; and Chocolate Cookie EnlightenMint, mint light ice cream with fudge truffles and chocolate cookies, at only 160 calories per halfcup serving. The SRP is $4.89 per pint. www.benjerry.com

Gut-Healthy Honey

A Spin on a Classic

Cauliflower has become a suitable substitute for various carb-friendly dishes, including pizza, in which it can actually help those with a gluten allergy still enjoy a hot slice. But what about its cruciferous cousin broccoli? Just out from Spinato’s are frozen pizzas with crusts made from broccoli, joining the brand’s line of other gluten-free pizzas. The line extension consists of Mediterranean Supreme, Primavera, Margherita, and Aged Asiago, Romano and Mozzarella. The 10-inch pizzas retail for a suggested $8.99 each. www.spinatosfinefoods.com

As consumers grow increasingly concerned about their gut health, more and more foods are incorporating prebiotics into their formulas. Responding to this trend, Capilano Honey Ltd. has debuted Capilano Beeotic Honey, claimed to be the world’s first clinically tested prebiotic honey, in the United States. A specialty honey sourced exclusively from healthy Australian bees, Beeotic Honey is a combination of eight naturally occurring oligosaccharides, complex carbohydrates that serve as naturally occurring prebiotics. Indigestible by humans, these prebiotics can help to nourish the good bacteria that naturally reside in one’s gut. This may assist in balancing the ratio of good to bad bacteria in the gut microbiome and help to support digestive health. Each 13.2-ounce jar or 12-ounce squeeze bottle starts at an SRP of $9.98. www.capilanohoney.com

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ADVERTISER INDEX

UNITED STATES MARKETS • Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Technology • Hospitality • Apparel CANADIAN MARKETS • Convenience • Pharmacy • Foodservice ADVERTIS ING SALES & BUSINES S STAFF

Airius

71

American Greetings Corporation

93

Aperion (a Hussmann company)

Insert 67

Avery Dennison

57

Beaver Street Fisheries

19

Biro Manufacturing

48

Blount Fine Foods

15, Inside Back Cover

Bord Bia

9

Botanical Interests, Inc.

80

Campbell Soup Company

65

EXECUTIVE CHAIRMAN Alan Glass aglass@ensembleiq.com

Chiquita Brands

75

CHIEF EXECUTIVE OFFICER David Shanker dshanker@ensembleiq.com

Consorzio Tutela Del Formaggio Pecorino Romano

83

CHIEF OPERATING OFFICER/CHIEF BRAND OFFICER Richard Rivera rrivera@ensembleiq.com PRESIDENT, CANADIAN DIVISION & NORTH AMERICAN GROCERY Jennifer Litterick jlitterick@ensembleiq.com

Dean Foods Co Del Monte Fresh Produce Inc.

26-27 79

Distant Lands Coffee

66, 72

Dole Foods Company

31

Domino Foods

7

Drink ZYN

88

BRAND DIRECTOR John Kenlon johnkenlon@ensembleiq.com

E&J Gallo Winery

25

SOUTHEAST ACCOUNT EXECUTIVE Larry Cornick (NEW ENGLAND, SOUTHEAST) 224-632-8248 lcornick@ensembleiq.com

General Mills Inc. Goya Foods Inc.

13

SENIOR SALES MANAGER Judy Hayes (CA,PACIFIC NORTHWEST) 925-785-9665 jhayes@ensembleiq.com

Hormel Foods

35

SENIOR SALES MANAGER Theresa Kossack (MIDWEST) 214-226-6468 tkossack@ensembleiq.com

IRI

WESTERN REGIONAL SALES MANAGER Rick Neigher (SOUTHWEST) 818-597-9029 rneigher@ensembleiq.com ADVERTISING MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com

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Enjoy Life Natural Brands, LLC

Idahoan Foods

Inside Front Cover 59

ItemMaster Inc.

91

Jr Simplot Company

67

Juan Valdez Keurig, Inc. Litehouse

48 Insert 35 29

Mars Chocolate NA/ Wrigley

73

MasonWays Indestructible Plastics

62

Massimo Zanetti Beverage USA

50

Monterey Mushrooms, Inc.

42

Nestlé-Purina

33

Organic Valley Family Of Farms PROGRESSIVE GROCER (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631. Single copy price $10, except selected special issues. Subscription: $135 a year; Canada $164 (Canada Post Publications Mail Agreement No. 40031729. Foreign $270 (call for air mail rates). Periodicals postage paid at Chicago, IL 60631 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to Progressive Grocer, P.O. Box 1842 Lowell, MA 01853. Copyright ©2018 EnsembleIQ All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

3 39

OSI Industries

41 68-69

Pfizer Consumer Health

21

Pharmavite LLC

43

Pilgrim’s Pride Pinnacle Foods

70, Back Cover 49

Rich Products Corporation

47

Save-A-Lot

45

The Garlic Company

77

The J.M. Smucker Company Treasury Wine Estates

4 17

Trion Industries

11

UPEMI

44

USA Bouquet Company

78

US Alliance Paper

63

V & V Supremo Foods, Inc.

37

Viking Cold Solutions

85 PROGRESSIVE GROCER November 2018

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TECH TALK

By Randy Hofbauer

Think Like a Tech Company DOING SO COULD BE WHAT TRULY MAKES GROCERY RE TAIL A HOT SECTOR FOR RECENT COLLEGE GR ADUATES IN STEM FIELDS

t was just more than a year ago when, while attending an industry event, I overheard someone make the case that product and service providers today are thinking of themselves less as providers of goods and services and more as technology companies. And while my initial reaction was slight confusion, it’s amazing what a year can do to bring clarity to such a statement. I look at what I use in my everyday life. Uber for ridesharing. Warby Parker for eyeglasses. Blue Apron (on and off, admittedly) for meal kits. This month, I even signed up as both a member of Dollar Shave Club for male grooming goods and a subscriber to Quip for an electric toothbrush and accessories. And while the grocery channel often has been nearly or dead last in adapting to a changing market and adopting innovations, this past year has seen come to fruition what I heard that man suggest a year ago: Grocers are now learning how to become technology companies. Moreover, they’re embracing the opportunity to help put their respective hometowns on the map as the next potential Silicon Valley. Sure, plenty of food retailers have made important hires, expanded ecommerce partnerships and more to improve their omnichannel operations, but several have gone so far as to invest millions in laboratories, digital headquarters and even incubators to really drive technological innovation. Some examples include:

Texas grocer H-E-B, which is opening a facility in East Austin next spring that will be dedicated to innovation and grocery technology. The recently renovated industrial warehouse will become a “creative and collaborative workspace” for Austin-based associates on the San Antonio-based grocer’s digital team, as well as the headquarters for its Favor delivery division. 98

progressivegrocer.com

International grocery company Ahold Delhaize, which is working to increase its focus on the development of artificial intelligence technology by joining with the Innovation Center for Artificial Intelligence, in Amsterdam, to open its first laboratory. Cincinnati-based Kroger Co., whose Kroger Technology division is furthering its technological prowess by building an innovation lab within the University of Cincinnati’s 1819 Innovation Hub. Housed within the Uptown Innovation Corridor, the 1819 Innovation Hub serves as a “beacon of community innovation and impact in partnership with higher education,” and is claimed to be the region’s newest destination for “thinking, making, doing, discovery and delivery.” Kroger also has revealed plans to open a new headquarters in downtown Cincinnati for its digital team, for which it aims to grow headcount from 600 to more than 1,000 over the next three years. Boise, Idaho-based Albertsons Cos., which has partnered with venture capital firm Greycroft to launch an incubator to help grow emerging companies and technologies in the grocery sector. Intended to eventually have $50 million in funds, the incubator will benefit from Greycroft’s investment expertise and connections in the early-stage technology industry and Albertsons’ grocery expertise and coast-to-coast footprint. Several business news outlets are claiming places like Austin, Boise and Cincinnati to be the next big tech hubs, boasting startup-friendly cultures with lower costs of living than the Bay Area or New York, low unemployment rates, and a growing number of amenities. For new college graduates in STEM fields, this not only makes these metropolitan areas hot, but also can do the same for careers in grocery retail. So the question is, then, what are you, as a grocer, doing, regardless of your size or even the size of the initiative, to think a little more like a technology company? If you think about it, that could be what truly makes both your hometown and a career in grocery retail hot commodities for recent graduates.


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Progressive Grocer - November 2018  

Progressive Grocer - November 2018