2019 OUTLOOK: What’s next for the tech effect on grocery retail? SELL MORE STUFF Experts name 5 ways to boost grocery biz POWER TO THE PEOPLE Bashas’ renovated Diné Market aims for healthy profits SMARTER SUPPLY CHAINS Grocers strive to strengthen weak links
Akin Akanni Houston Division CFO The Kroger Co. Age 37
PG’s inaugural GenNext Awards program recognizes industry achievers under 40
Volume 97, Number 12 $10 • www.progressivegrocer.com
Leadership. Innovation. Dedication.
At The J.M. Smucker Company, we are focused on driving long-term growth through our #1 and emerging, on-trend brands. We are proud to be #1 in 7 categories*. We’re passionate about keeping the right brands in-stock to meet the needs of shoppers and enhance your proﬁtability.
©/TM/® The J.M. Smucker Company or its subsidiaries. © 2018. DD IP Holder LLC (as to Dunkin’ Donuts and all other trademarks, logos and trade dress of DD IP Holder LLC) used under license. Keurig, Keurig Hot, K-Cup, and the K logo are trademarks of Keurig Green Mountain, Inc., used with permission. * Source: IRI Unify Multi-Outlet – 52 Weeks Ending September 9th, 2018; SPINS Reports data ending September 9th, 2018.
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Volume 97 Issue 12
42 TECHNOLOGY OUTLOOK 2019
2018 was the year grocers truly upped their tech game like never before. Expect even more next year. 54 STORE OF THE MONTH
COVER STORY PROGRESSIVE GROCER’S 2018 GENNEXT AWARDS
Up and Coming Introducing the inaugural class of our latest awards program, which recognizes exemplary industry achievers under the age of 40.
Departments 8 EDITOR’S NOTE
Why Go to the Store? 12 IN-STORE EVENTS CALENDAR
February 2019 14 CONSUMER INSIGHTS
The Truth About Nutrition Facts
Bigger, Bolder, Better
By the People, For the People
Revamped Bashas’ Diné Market offers daily staples, traditional favorites and guidance for healthier living.
16 MENU TRENDS
24 ALL’S WELLNESS
Cheesy Trends to Bite on
Helping Shoppers With New Year’s Resolutions
20 NIELSEN’S SHELF STOPPERS
Baking Supplies 22 MINTEL GLOBAL NEW PRODUCTS
Feminine Hygiene and Sanitary Protection Products
26 NEW HORIZONS
Advancing All Women 88 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS 90 INDEPENDENT THOUGHTS
Independents’ Value Proposition PROGRESSIVE GROCER December 2018
Volume 97 Issue 12
8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 800-422-2681 Fax: 978-671-0460
PRESIDENT, CANADIAN DIVISION & NORTH AMERICAN GROCERY Jennifer Litterick email@example.com
Selling More in 2019
BRAND DIRECTOR John Kenlon firstname.lastname@example.org
Retail industry experts offer five ways to grow business.
EDITORIAL DIRECTOR OF GROCERY CONTENT Joan Driggs 224-632-8211 email@example.com
71 FRESH FOOD
Forum for the Future
EDITORIAL DIRECTOR James Dudlicek 224-632-8238 firstname.lastname@example.org MANAGING EDITOR Bridget Goldschmidt 201-855-7603 email@example.com DIGITAL & TECHNOLOGY EDITOR Randy Hofbauer 224-632-8240 firstname.lastname@example.org SENIOR EDITOR Kat Martin 224-632-8172 email@example.com
Food safety, talent, innovation lead discussions at PMA Fresh Summit, while expo showcases snacking and meal solution opportunities for fruits and vegetables.
CONTRIBUTING EDITORS Bob Ingram, Jenny McTaggart and Barbara Sax ADVERTISING SALES & BUSINESS SOUTHEAST ACCOUNT EXECUTIVE Larry Cornick (NEW ENGLAND, SOUTHEAST) 224.632.8248 firstname.lastname@example.org SENIOR MARKETING MANAGER Judy Hayes (CA, PACIFIC NORTHWEST) 925-785-9665 email@example.com SENIOR MARKETING MANAGER Theresa Kossack (MIDWEST) 214-226-6468 firstname.lastname@example.org WESTERN REGIONAL MARKETING MANAGER Rick Neigher (SOUTHWEST) email@example.com 818-597-9029 ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 firstname.lastname@example.org
CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 email@example.com EVENTS VICE PRESIDENT, EVENTS Michael Cronin firstname.lastname@example.org
75 SUPPLY CHAIN
‘Artificial’ Ingredient Retailers are testing smarter technology to shore up weak links in their supply chains. 78 NONFOODS
Changing Places To make their nonfood sections true destinations, retailers may have to rethink them.
MARKETING MARKETING MANAGER Carly Kilgore 201-855-7601 email@example.com AUDIENCE ENGAGEMENT DIRECTOR OF AUDIENCE ENGAGEMENT Gail Reboletti firstname.lastname@example.org AUDIENCE ENGAGEMENT MANAGER Shelly Patton 215-301-0593 email@example.com LIST RENTAL MeritDirect Elizabeth Jackson 847-492-1350, ext. 318 firstname.lastname@example.org 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 email@example.com CREATIVE DIRECTOR Colette Magliaro firstname.lastname@example.org ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 email@example.com ART DIRECTOR Bill Antkowiak firstname.lastname@example.org
83 EQUIPMENT & DESIGN
REPRINTS, PERMISSIONS AND LICENSING Wright’s Media email@example.com 877-652-5295
Supermarket shelving is evolving along with the retail grocery industry.
CORPORATE OFFICERS EXECUTIVE CHAIRMAN Alan Glass CHIEF EXECUTIVE OFFICER David Shanker CHIEF FINANCIAL OFFICER Dan McCarthy CHIEF DIGITAL OFFICER Joel Hughes
CHIEF INNOVATION OFFICER Tanner Van Dusen EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several
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EDITOR’S NOTE By Jim Dudlicek
Why Go To the Store? saw a few jaws drop during a session at the recent inaugural Groceryshop conference, when a presenter questioned the need for physical stores. The speaker was Pradeep Elankumaran, co-founder and CEO of San Mateo, Calif.-based pure-play digital grocer Farmstead. I thought the question was particularly timely, considering our 2019 outlook of the omnichannel world, starting on page 42 of this issue. I mean, most surveys seem to indicate that, while consumers are increasingly embracing online grocery shopping, they also express a desire and affection for the experience delivered by a trip to the store. So I reached out to Elankumaran to elaborate. “Grocery stores make up about 92 percent of the $800 billion U.S. grocery space, with online groceries making up the other 8 percent, so they are not going away tomorrow,” he acknowledged via email. “However, it’s also very true that the act of grocery shopping — driving to a supermarket, picking out good produce, walking all over the rest of the store, then waiting in line and then driving back home — is not very relevant or necessary in 2018, or 2019 for that matter. We get everything besides perishables delivered to our doorstep, and there are companies like Farmstead making perishables dropped off at your doorstep cost only as much as what you normally pay at the store, with no delivery fees.” Elankumaran pointed out that supermarkets and their distribution centers have expensive cost structures — costs that retailers, of course, have perennially striven to drive down. “Add food waste to the mix, along with high-turnover store workers, and you have low-margin businesses,” he said. “The crux of the problem here,” Elankumaran continued, “is that stores have a ton of forward-deployed inventory sitting inside, and picking for ecommerce inside just cannot support the customer experience that’s required to turn that 8 percent adoption of buying groceries online to 92 percent. We need a new ecommerce-centric operating model. While the stores won’t disappear next year, they inevitably will be smaller and more focused on ecommerce and delivery, more akin to a warehouse than a standard customer-focused store. Click-and-collect is a temporary state — when delivery is free, why go to the store?” As someone who enjoys going to the grocery store (and I think there’s a few of us left), I’d argue that
Change is not only coming, it’s spewing forth from a fire hose.
for true lovers of food — those who embrace the eating experience as one of life’s pleasures and don’t just view calories as fuel — the experience of seeing, smelling, touching and tasting trumps the cold, drab process of mouse-clicking weekly rations to one’s door. And as retailers are working on last-mile solutions and seamless experiences across all platforms, they’re also investing in the savory tangibles of the physical store. But I recognize that change is not only coming, it’s spewing forth from a fire hose. Elankumaran’s near-future predictions include: Online grocery will grow from 8 percent to roughly 20 percent as consumers get a lot less anxious about buying produce online. Grocers will try to move to pure ecommerce models to handle the rapid growth, and will be stymied by existing unionized labor requirements. Grocers will scale out their private label on any channel they can get their hands on. Indoor farms will become increasingly prominent, putting out higher quality at lower cost for a year-round supply of fresh produce. On-demand freshly prepared meals delivered in under 30 minutes will see aggressive growth. “The innovator’s dilemma is currently real for every grocer on the planet, many of whom don’t understand the nuances of technology-driven marketing,” Elankumaran said. “Not many existing supermarkets are prepared for the impact, even though they are doing their best to adopt as much tech as they can. Unfortunately, we’ve found that margin improvements required to win online groceries mean that they will probably have to be technology companies, applying data and code to stitch together a new way to build for the next hundreds of millions who have really started to dislike shopping at stores.”
Jim Dudlicek Editorial Director jdudlicek@ensembleIQ.com Twitter @jimdudlicek
solutions for a great holiday season.
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INSIGHTS Holidays are important to your shoppers and they want leading brands like Campbell’s to make their favorite holiday recipes a success!
SOLUTIONS Many of our brands consistently rank as #1 favorites within their respective categories. With our preferred holiday brands and beloved recipes, we offer stress-free solutions for your shoppers.
GROWTH Building baskets & inspiring shoppers is critical to winning the season. We can help you drive holiday sales with delicious pairings like Swanson ® Broth & Pepperidge Farm ® Stuffing and Green Bean Casserole made with CampbellÕs ® Cream of Mushroom Soup.
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Look for our other new flavors this season!
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Southwest Corn Chowder 16 oz Cup
For more info, contact your Blount sales representative at 800.274.2526 or visit blountfinefoods.com for all Panera has to offer. To see what clean means to Panera, visit PaneraAtHome.com
ÂŠ 2018 Panera Bread. All Rights Reserved. Blount Fine Foods, Inc. Exclusive Manufacturer & Partner of Panera Retail Soup, Mac & Cheese, Chili, and Stew.
Asiago Mac & Cheese with Fire-Roasted Tomatoes 12 oz Bowl
Canned Food Month National Chocolate Lovers Month National Cherry Month National Grapefruit Month
National Snack Food Month National Potato Lovers Month Return Shopping Carts to the Supermarket Month
National Baked Alaska Day National Cake Pops Day
Groundhog Day National Tater Tot Day
National Dark Chocolate Day
National Carrot Cake Day
National Homemade Soup Day
World Nutella Day
National Peppermint Patty Day
National Plum Pudding Day
National Tortellini Day
National “Eat Italian Food” Day
National Indian Pudding Day
Presidents’ Day National “Drink Wine” Day
National Chocolate Mint Day
National Cherry Pie Day
National Bagels and Lox Day
National Gumdrop Day
National Almond Day
National Cream-Filled Chocolates Day
National Pancake Day
National ChocolateCovered Peanuts Day
National Pistachio Day
National Strawberry Day
National Kahlua Day progressivegrocer.com
National Chewing Gum Day
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National Clam Chowder Day
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National Pizza Day
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Pork Rind Appreciation Day
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National Chopsticks Day National Frozen Yogurt Day
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National Banana Bread Day
National Chocolate Soufflé Day
The Truth About Nutrition Facts It’s widely accepted that more shoppers are looking at and understanding how to read nutritional labels; however, only half are actually purchasing product based on the Nutrition Facts panel. While shoppers are buying fewer of the less nutritional items, they’re not necessarily buying more of the “good” stuff. Purchasing habits did change when they had access to calorie counts, but they simply purchased less both monetarily and in food amounts, especially in the prepared food department. Consumers are aware of calorie counts, with half saying that they consume too many calories. Progressive Grocer, along with sister company EIQ Research Solutions, interviewed 500 consumers who have household responsibility for grocery shopping to find out how they use nutritional facts in the prepared food department of the grocery store. Survey respondents were sourced via ProdegeMR, reinventing the research process by taking a respondent-first approach. Visit www.prodegemr.com/ensembleiq for more information.
Shopping Behavior I purchase food based on the Nutrition Facts panel
I review the Nutrition Facts panel before purchasing
I’m actively trying to lose weight
Daily Calorie Recommendation and Consumption Reported by Respondents Recommended
1,793 Moderation isn’t enough to eat healthy
I’ll pay much more for healthy food
Stores/restaurants are responsible to help me eat healthy
Perception of Actual Calorie Consumption vs. Recommended Calorie Consumption 49% 40%
30 20 10 0
14% 2% Not nearly enough
5% Barely not enough
Source: Progressive Grocer market research, 2018
A little too many
Way too many
KEY TAKEAWAYS Label checking is prevalent with only around half of shoppers, despite some thoughts that shoppers are much more in tune with the nutritional content of the foods that they’re purchasing.
KEY TAKEAWAYS Despite the fact that shoppers are consuming only slightly more calories than they perceive to be the recommendation (fewer than 4 percent more), nearly half indicate that they’re consuming too many calories. This is especially prevalent among females: 17 percent indicate consuming “way too many” calories, versus 10 percent of males.
Are confident this is correct
29% “Just guessed”
19% Actual consumption
Research & Analysis
Cheesy Trends to Bite on FOLLOW THEM TO ADD VARIE T Y TO THE DELI DEPARTMENT, GROCER ANT AND MORE. As ubiquitous as cheese is, there’s always something new to add to your menu or retail selection. The cheeses and cheese categories below only scratch the surface of today’s wide world of cheese trends. Lesser-known, lesser-menued cheeses are an excellent way to introduce customers to new flavors, whether by including a cheese in a ubiquitous dish or marketing a new cheese and providing samples. Your store may even offer a new cheese of the week or month. Following are four cheeses or cheese categories from Datassential’s Menu Adoption Cycle (MAC), which tracks food trends from when they are first born (Inception) to when they show up virtually everywhere (Ubiquity).
Teleggio MAC stage: Inception — Ethnic markets, ethnic independents, and fine dining Trends start here and exemplify originality in flavor, preparation, and presentation. This cave-aged cheese is from the Lombardy region of northern Italy. It’s a soft cheese with a pungent smell and mild flavor. It works well melted in hot sandwiches, on pizza or in cheese fondue. Add it to items in the grocerant and the prepared food section, or make it a “cheese of the month” on its own.
On 2% of U.S. restaurant menus/ up 11% over the past four years 15% of consumers know it / 6% have tried it Menu Example Siena Tavern, Chicago Prosciutto Pear Pizza Roasted garlic cream, taleggio, mozzarella, baby arugula
Mexican Cheeses 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. Mexican cheeses are the go-to topping for chefs looking to add authentic ingredients to dishes. For example, expect to see Oaxaca replace Cheddar in quesadillas at more mainstream restaurants nationwide. Oaxaca: On <1% of U.S. restaurant menus/up 31% over the past four years Mexican Cheeses: 76% of consumers know them/63% have tried them Menu Example Mendocino Farms, Los Angeles Peruvian Steak Sandwich Spicy aji amarillo-marinated steak with Oaxacan cheese, herb aioli, red onions, tomatoes and shredded romaine on a paninipressed torta bun
Gouda MAC stage: Proliferation — Grocery deli, casual chains, QSRs
Proliferation-stage trends are adjusted for mainstream appeal. Often combined with popular applications (on a burger, pasta, etc.), these trends have become familiar to many. This semi-hard cow’s milk cheese is from the Netherlands, and becomes harder and more flavorful with age. It’s sometimes used to add an upscale element to comfort foods, as with gouda mac and cheese. Expect gouda to become a staple at all mealparts, along with common cheeses like Cheddar and Swiss, in the near future. On 7% of U.S. restaurant menus/ up 27% over the past four years 79% of consumers know it / 54% have tried it Retail Menu Example The Fresh Market, Greensboro, N.C. Red Pepper & Smoked Gouda Bisque, 16 ounces, from the deli department
Blue Cheese MAC stage: Ubiquity — Available everywhere — convenience stores, cafeterias, family restaurants, etc. Ubiquity-stage trends have reached maturity and can be found across all sectors of the food industry. Blue cheese has a strong smell and a sharp, salty taste, and has had cultures of the mold Penicillium added, resulting in blue spotting or veins. Expect bolder varieties like Stilton and Roquefort to also gain familiarity. On 45% of U.S. menus/up 3% over the past four years 87% of consumers know it/ 58% have tried it Retail Menu Example Jewel-Osco, Itasca, Ill. Blue Cheese Cole Slaw
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*Nielsen, xAOC, Beiersdorf $ Volume, 52weeks through 5/13/2017. Hand & Body Lotion Category, Dollar Share
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Frozen Vegetables TOTAL FROZEN VEGETABLE SALES REACHED $2.97 BILLION IN THE PAST YEAR
(52 weeks ending April 2, 2016) Baking Supplies
Top Baking Supply Category by Dollar Sales $700,000,000
Compared with other Consumers chose generations, Greatest frozen broccoli over Generation households alternatives for spent the most per trip a variety reasons: on bakingofsupplies, baking mixes and baking staples. But among baking supplies, baking mixes because it’s and bakingquick staples, which do and easy they spend the most on per trip on average?
600,000,000 500,000,000 400,000,000
300,000,000 200,000,000 100,000,000
0 Latest 52 Wks 2 YA W/E 10/01/16 Nuts
Flour and Meal
Latest 52 Wks YA W/E 09/30/17 Baking Chips
because it tastes great
Latest 52 Wks W/E 09/29/18
Spotlight on Frozen Broccoli
Total U.S. xAOC (All Outlets Combined) – includes grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and military commissaries
because it’s Nuts healthy and nutritious
WHEN ARE CONSUMERS EATING FROZEN BROCCOLI?
Source: Nielsen Retail Measurement Services, Total Food View 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% This year, It’s been a mixed bag of performance for baking products across America. baking mixes and baking staples have struggled to see growth, declining by 1.7 9% percent and 1.0 percent, respectively, while baking supplies — inclusive of decorating kits, mixing bowls, measuring cups and more — have seen upwards of 3.1 percent in dollar growth. This points to a growing trend of DIY home bakers, who are willing to forgo the convenience of pre-mixed goodies and opt for a customizable set of ingredients, accessories OCCASION MEAL ITEM and decorations. Not all baking supplies have cocoa, CLASS baking powder 29% TYPEstruggled, 62% with flour, baking35% 61% and yeast all seeing growth. That, coupled with the strong performance of cake decorations, points to a desire for personalization in baking.”
because it’s low in calories, fat and sugar
Flour and Meal
—Lauren Fernandes, Manager - Strategy & Analytics, Nielsen DINNER
Demographic Spotlight Among baking supply consumers, households with children are spending more than expected on this category, while households without children are underindexing. Households with three or more members also spend more than expected on baking chips. Not surprisingly, given their household size, startup families, younger bustling families and older bustling families also overindex in purchasing baking chips. Nuts have a much older demographic, with empty nesters and senior couples purchasing more than expected in this category. Baking Supplies
$ / HH Index Product
Flour and Meal
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
$ / HH Index Product
HH Index Product
Household Size Aggregated
5 or more Members
Source: Nielsen Homescan, Total U.S., 52 weeks ending Sept. 29, 2018
Source: Nielsen Homescan, Total U.S., 52 weeks ending Sept. 29, 2018
MINTEL CATEGORY INSIGHTS
Global New Products Database
Feminine Hygiene and Sanitary Protection Products Market Overview
Aging consumers, a declining tampon market and the use of birth control for menstrual suppression are all contributing to slowed growth in the U.S. feminine care category. Sales in the tampon category are declining not only because more women have health concerns related to these products, but also because menstrual cups are making inroads with consumers, and pads and liners are getting better at controlling leaks.
Total U.S. retail sales of feminine hygiene and sanitary protection products grew just 0.6 percent in 2017 to reach an estimated $3.8 billion.
The percentage of women who say they use sanitary protection products declined from 71 percent in 2016 to just 66 percent in 2017. As the sanitary protection market slows, older consumers will create new opportunities. In fact, U.S. women are slightly more likely to be in menopause (39 percent) than to be menstruating monthly (37 percent), indicating that incontinence products could be the categoryâ€™s best opportunity for sustained growth as consumers age. More than three in four women age 18-24 have tried, or are interested in trying, period-tracking apps, compared with 48 percent of women age 25-34 and just 20 percent of women age 35-44.
FOR MORE INFORMATION, VISIT WWW.MINTEL.COM OR CALL 800-932-0400
What Does It Mean? Considering that post-menopausal women are the fastest-growing age group, brands can sell products across the life-stage continuum, such as incontinence products, supporting products for cleansing, and items to heal incontinencestressed skin. It will also become essential for sanitary protection brands to ensure that products for light bladder leakage are seamlessly integrated into feminine care portfolios to encourage usage as consumers age. Period-tracking apps can help the feminine care market overcome its low-innovation commodity status to increase consumer engagement, ultimately resulting in increased sales.
ALL’S WELLNESS By Molly Hembree
Helping Shoppers With New Year’s Resolutions PR ACTICAL WAYS TO GE T CUSTOMERS E ATING AND FEELING BE T TER IN 2019 AND BE YOND. he “reset” of January feels to many like an opportunity to start new habits or create fresh goals. The next 12 months can mean reinventing several things about your life or focusing on minor tweaks. It’s exciting to know that as a retailer, you are the marketplace for resources that many people will purchase to begin this journey. Many of my customers, when applying these resolutions to health, interpret this as eating better, losing weight or getting more organized when it comes to eating. Eating well ultimately begins with following the MyPlate eating pattern, created with the USDA. The plate identifies five food groups: fruits, vegetables, grains, protein and dairy (or nondairy calcium-fortified alternatives). Individuals can pick foods from each of the food groups, provided there’s variety in the diet and higher-fiber, lower-fat or less-added-sugar selections are made. A common goal is that of weight loss. Current NIH (National Institutes of Health) and CDC (Centers for Disease Control and Prevention) statistics show that 72.3 percent of adult Americans are overweight (body mass index, or BMI, of 25.0-29.9), with 39.8 percent of those being obese (BMI of 30.0 or more). As a retailer, your efforts and product offerings in the fight against overweight/obesity should strike a chord with the majority of your shoppers. At this time of year especially, it would be wise to have foods marketed as “lighter” — defined as at least 50 percent less fat, 50 percent less sodium and/or one-third fewer calories — stocked and refreshed continually.
stress and decision-making. However, keeping it practical is what makes things stick. More importantly, mapping out meal ideas for the week, from food themes to use of leftovers and single-serve brown-bag additions, will meet the needs of a greater audience. Have customers get involved with this season of change by selling stickers for a small fee that benefit a local food pantry or food assistance organization, on which people can write their New Year’s resolutions to hang up in the store. Plug in a blender and show how to make a perfect smoothie, which can be used even to meet snack and meal needs for on-the-go consumers. Team up with local gyms, sports clubs or fitness centers to hand out free one-day passes or discounted memberships with free swag.
As a retailer, your efforts and product offerings in the fight against overweight/ obesity should strike a chord with the majority of your shoppers. Adhere MyPlate window clings to freezer/ fridge cases and shelf tags to show what food groups their contents are fulfilling. Build a create-your-own trail mix station to show how no cooking is needed to make a delicious snack. Recruit your dietitian, chef and pharmacist teams to provide recipes and meal- and goal-planning materials, as well as food hacks that might save customers time, money and calories while increasing nutrition and confidence in the kitchen. The year 2019 brings with it a renewed wellness outlook, positive vibes and increased awareness of health, which all include food. Retailers need to begin the year strong and keep this health-conscious momentum going all year long.
Often, the clients I work with want to develop more control over their eating arrangements, including types and timing of food. More structure regarding food translates to less
Molly Hembree, MS, RD, LD, is a registered dietitian coordinator for The Little Clinic and Kroger.
NEW HORIZONS By Sarah Alter
Advancing All Women WHITE WOMEN AND WOMEN OF COLOR HAVE DIFFERENT WORKPL ACE E XPERIENCES — A SINGLE APPROACH DOESN’T FIT ALL. few months ago, the Network of Executive Women added a tagline under its logo: “Advancing all women. It’s just good business.” The tagline speaks for itself — and our corporate partners recognize the business case for gender diversity and inclusion, and have moved on to efforts to make it a reality. The increased focus on gender equality is shaking up our workplaces, and corporate leaders are rooting out gender bias in their company policies, programs and talent strategies. We’re seeing a greater desire to retain talented women and more investment in women’s leadership development. That’s all good. But in many cases, attempts to provide a workplace where “all women” can succeed have underperformed — or outright failed — because they’re based on the premise that all women’s workplace experiences and barriers to success are the same. That assumption marginalizes the unique experiences and perspectives of women of color. When leaders focus on women as a single group, they perpetuate the women-of-color achievement gap. NEW’s research report, “Advancing All Women: How women of color experience the workplace,” published in partnership with Mercer and Accenture, addresses this achievement gap head on. How wide is that gap? Women of color make up more than 35 percent of the female U.S. population, but just 15 percent of the managers, senior managers and executives at the retail and consumer goods companies we surveyed. Worse, we found that figure will decline over the next 10 years if there are no changes in talent strategies. The good news: Our research found women of color could hold one in four of those roles by 2027 if companies address the very different experiences women of color are having at work, through new hiring, promotion and retention strategies.
“It took me 28 years of proving myself to senior management to get to the VP level. I had the skill sets for the jobs, but I was being passed up for other individuals.” —Hispanic woman, NEW survey respondent
Why They Leave As a group, women of color pointed to two factors influencing their intent to stay with a company: a feeling of belonging, and satisfaction with their ability to achieve long-term career goals. These were the only two factors consistently selected by women across all of the ethnic and racial groups surveyed: white, black, Hispanic and Latina, and Asian. In both areas, companies are falling short, especially for women of color. Only six in 10 women of color reported feeling a sense of belonging, compared with seven in 10 white women. As women of color face conscious and unconscious biases against their gender, race and, for some, religion, they feel pressure to “cover” or hide aspects of their authentic selves at work, leading to greater workplace stress. In many cases, women of color also deal with additional cultural, community or religious demands that make work/life integration even tougher than it is for white women. Nonwhite women also reported less satisfaction with their ability to achieve
their long-term career goals at their company. Forty-seven Here are some of the strategies we lay out: percent of Hispanic women, 41 percent of black women and Set ambitious goals for equality, and enforce them. 38 percent of Asian women said that they feel good about Do not tolerate excuses. Coach those who their ability to reach their long-term goals, compared with 50 are not effective in driving change. percent of white women. Support sponsorship of women of color. As one black woman who participated in our survey pointed out, “Often, promotions are given to the most agreeable in the Train on unconscious bias to help create greater understanding. group, and not the most qualified.” Key factors influencing job satisfaction also differed among Call out bias. Silence can be construed as Asian, black and Hispanic women, our research found. Asian consent or agreement. women reported that opportunities to improve their skills, as Practice conscious inclusion every day, with well as pay for performance, the ability to use their paid time every interaction and communication. off, and a culture with minimal favoritism, influenced their level of engagement and happiness on the job. Most companies still have a long road to travel to As a group, black women placed greater importance on get to workplace equality for women, and an even feeling that they were part of a group; their relationships with farther distance for women of color. their supervisors and level of job stress weighed on their Download the complete “Advancing All Women” intent to stay with a company. Hispanics and Latinas said report at newonline.org/allwomen. that trust in their supervisors and a range of Sarah Alter is president and CEO of the Network of Executive Women, a developmental assignments were key factors learning and leadership community representing more than 12,000 members, in their job satisfaction. more than 830 companies, 110 corporate partners, and 21 regional groups in “Advancing All Women” offers an action plan the United States and Canada. Learn more at newonline.org. to move toward gender and racial equality.
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May 21-23, 2019 PROGRESSIVE GROCER December 2018
Introducing the inaugural class of our latest awards program, which recognizes exemplary industry achievers under the age of 40. he food business possesses a wealth of emerging talent whose ideas and energy will take it into the future with fresh ideas and innovative practices. Some of the business’ most junior members, however, are already making their mark in a major way. That’s why Progressive Grocer has decided to honor these young dynamos with our inaugural class of GenNext Awards. This program recognizes individuals under the age of 40 who have demonstrated a commitment to a career in either the grocery or CPG industries; innovation through the work they’re doing; leadership, including the capacity to inspire and lead others, and a commitment to learn from others; and a commitment to getting involved in the industry — such as through associations — and helping through charities or in the community. We asked for nominations and received more than 160 from across the grocery industry, not just, as expected, the retail and consumer packaged goods sectors, but also marketers, a food brokerage, a certification organization, a distributor and an investment bank, to name a few. Reading through the submissions, we were struck by how much talent exists among the business’ younger cohort; that made narrowing our selection to just 25 honorees extraordinarily difficult. Ranging in age from a tender 22 to a seasoned 39, all of our honorees exhibit an admirable work ethic, an ability to effect real change in their respective organizations, and a sincere dedication to helping not just their own companies, but also the overall business, succeed. With such fine examples as these, the food industry’s brilliant future seems assured. Read on to find out why we chose the 25 extraordinary individuals who comprise PG’s first-ever slate of GenNext Award recipients.
PROGRESSIVE GROCER December 2018
Awards Lizzi Ackerman Co-Founder and CMO, Birch Benders Age 31
Serine Abdelhaq Division Front End Manager, Fry’s Food Stores/The Kroger Co. Age 29 A Fry’s Food Stores employee since high school, Abdelhaq rose through the ranks to her current position, in which she turned the division’s worst-performing district into its firstplace district, a feat her supervisor attributes to her “coaching, direction and willingness to get in there and do the work alongside associates.” Abdelhaq helped a store in a high-socioeconomic area overcome a serious staffing issue. Due to the high income of the nearby residents, it was difficult to attract and retain associates in the store. She extended the range of applicants outside the immediate candidate pool area, including refugee centers in her job fairs. Thanks to her background as an immigrant, she was able to work with case workers to find well-qualified candidates, and offered a one-month bus pass to assist the new associates with transportation for their first 30 days. The store is now fully staffed with dedicated associates. She’s also a member of Fry’s Young Professionals associate resource group and encourages others to pursue leadership opportunities.
Ackerman has been instrumental in creating each of the flavors found in Birch Benders’ extensive lineup of better-for-you pancake and waffle mixes. Recognizing a gap in the market back in 2011, she and her now-husband, Matt LaCasse, with no prior food manufacturing experience, set out to create the market’s first all-natural, just-add-water pancake and waffle mix company. Ackerman spearheaded double-blind taste tests on every ingredient variety, thus ensuring that the mixes were crafted to perfection. Continuously looking for ways to push the envelope, she decided to cater to various diets and consumer trends by creating a Paleo pancake and waffle mix. Paleo is now the brand’s No. 1 SKU and has inspired the creation of additional varieties incorporating the diet plan. As a result of Ackerman and LaCasse’s foresight, Birch Benders is now the fastest-growing brand in the natural category across all channels, available in more than 8,000 retailers nationwide.
Akin Akanni Houston Division CFO, The Kroger Co. Age 37 In the aftermath of Hurricane Harvey, store shelves were empty of product due to the panic shopping of the customers, and many associates were unable to return to work. Akanni ensured that more than $2 million in security wages went to prevent looting and keep customers and associates safe. Because of his actions, the division experienced only about $4 million in product loss and damage, which, given the destructive nature of the storm, could have been much worse. Following Harvey, Akanni activated emergency credit cards for the expenses of volunteers who came from all over the country to help out, and managed more than $100,000 in emergency funds. He also oversaw the finances for two stores that had to be completely remodeled. Overall, the division’s recovery plan resulted in an 11.2 percent net sales increase versus the prior year, due in large part to Akanni’s leadership during Harvey, and his previous and continued efforts to ensure a positive company financial standing for Kroger’s Houston division.
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
Awards Jenna Arkin VP of Innovation, Earth Friendly Products Age 33
Darrell Anhel Division Ecommerce Manager, Fry’s Food Stores/The Kroger Co. Age 34 Anhel has led Fry’s Food Stores through the introduction and implementation of the many ecommerce initiatives introduced over the past three years. In that time, he has grown the banner’s ecommerce business from a single curbside pickup store to more than 60 stores, and led numerous initiatives and partnerships to ensure that online customers enjoy a satisfying shopping experience. Recently, he took an autonomous-delivery partnership from inception to practical use for grocery customers in under three months. Through a partnership with third-party robotics company Nuro, Fry’s was selected as the pilot location for delivery of groceries via fully autonomous robots at its Scottsdale, Ariz., store. The program got off to a successful start, with five deliveries made on the first day. Anhel participates in Fry’s Young Professionals Associate Resource Group and the Division Promise Team, helping to create an appreciative and uplifting environment for all associates at the division office.
The holder of various patents, Arkin uses her unique background in both chemistry and fashion design to innovate safer, more effective formulations and compelling packaging designs for Earth Friendly Products’ Ecos, Baby Ecos, Ecos for Pets!, and Ecos Pro product lines. She also worked closely with EPA on the rebranding, messaging and new logo for its Safer Choice program. As well as being a leader in her field, Arkin serves as an inspiration to girls looking for STEM role models. What's more, she even co-authored a children’s book, “For Love of the Planet and Health of Your Family,” to help educate youth on the importance of green choices in everyday life. Arkin brings a novel combination of passionate scientist and creative professional to solve modern green chemistry problems. Her sharp eye for trends has inspired out-of-the-box thinking, connecting seemingly disparate concepts to move the cleaning industry toward a more sustainable future.
Abby Ayers Manager, Retail Partnerships, Fair Trade USA Age 31 Through Ayers’ efforts, smallholder farmers are receiving hundreds of thousands of dollars more each year by selling their products as Fair Trade Certified. Her leadership and vision has enabled the launch of 1,200-plus new Fair Trade Certified items in the past two years. She’s been instrumental in supporting retailers’ sustainability needs while activating and informing customers and telling the farmers’ stories. Ayers has also forged true human connections among retail buyers, category managers, marketers, and sustainability managers and their supply chain partners, leading many trips for retail partners to see first-hand how their Fair Trade purchases have positively affected people in the communities from which they source products and ingredients. Under her guidance, retailers have seen amazing customer engagement with in-store Fair Trade stories and photos within their broader sustainability communications and regularly scheduled promotions. Active within the broader grocery industry, Ayers is a member of WISE (Women Impacting Storebrand Excellence) and the Network of Executive Women, and is a regular speaker at ECRM.
Justin Comparetto President/Owner, Just Ryt Foods Age 28 Having moved to Florida in 2008 to pursue real estate, Minnesota native Comparetto — an entrepreneur from the age of 10 — eventually co-founded Just Ryt Foods in 2013 with his grandfather and cousin. Today, the company distributes more than 2,500 products to national grocery chains in the Midwest, East and Mid-Atlantic, as well as selling product on Amazon.com. Under Comparetto’s leadership, the company launched its first brand, Giusto Sapore, and is currently in the process of launching a Caribbean brand. He’s committed to creating more organic and non-GMO products. For instance, the Giusto Sapore brand’s recipes contain the most natural ingredients, with many of its products organic, non-GMO and gluten-free. What’s more, the brand uses water- and oil-resistant BOPP labels, making the products durable and appealing. Comparetto has built a corporation that employs 25 people and creates a future for others. Additionally, he and his company support many nonprofits within the community.
Inspiring others and winning big with customers is nothing new for Indianapolis Area Sales Manager Amy Souers.
Amy’s commitment to her customers and her community is an inspiration and a great example of living our Company Purpose each day. CONGRATULATIONS TO AMY AS AN HONOREE IN PROGRESSIVE GROCER’S
2018 INAUGURAL CLASS!
PROGRESSIVE GROCER December 2018
Julie Divis Quality Manager, Pre Brands Age 27 Divis oversees Pre’s entire quality department, holding the brand to high standards and ensuring safe, consistent product quality and a great eating experience for consumers. She singlehandedly introduced new technology to monitor the temperature of perishable product throughout the cold chain — a development that has elevated Pre’s offering. Additionally, Divis has emerged as one of Pre’s key Pre Beef Geek voices, serving as a spokeswoman for food safety, product sourcing and quality, and participates in many industry and marketing events, meeting consumers face to face. Beyond her job, she volunteers with Common Threads, teaching nutrition and culinary lessons to underserved kids and families in Chicago public schools, and volunteers at a local food bank. Through her supply chain mastery and drive to achieve the highest quality, Divis delivers on Pre’s brand promise of transparency. Her wisdom, creativity and innovation have already enabled her to establish herself as a pre-eminent consumer packaged goods leader.
Beth Faught Director of Retail, Crossmark Age 35 In charge of Crossmark’s largest client, Kimberly-Clark, Faught has worked for the past year on expanding her company’s On-Shelf Availability service. Leveraging syndicated and retailer data to identify where out-of-stocks and no-scans occur has led to more efficient deployment of retail resources to correct these issues, and an unprecedented ROI. With other Crossmark directors, she developed monthly team-building events — among them trivia games and scavenger hunts — that ultimately resulted in better collaboration and less stress in the workplace. For her own team, she formed subcommittees to drive results in such strategic areas as store optimization, activity prioritization, and tracking and reporting. Again, her signature collaborative approach increased engagement, delivered faster results to the client, and empowered team members to lead and make a difference. In 2017, Faught championed a new employee resource group to develop young talent, guiding participants to a successful launch. Additionally, her social media work for the Network of Executive Women is an essential aspect of the CPG industry — and of business in general.
Seth Fridley Assistant Director, Health, Wellness and Home, Hy-Vee Inc. Age 22 One of the youngest assistant directors in the entire company, Fridley consistently raises sales in his departments and shows no signs of slowing down. He continually comes up with new ideas for sales, among them using Hy-Vee’s Fuel Saver rewards program for his Fuel your Health HBC event, or constantly refreshing his shelves with the newest, most cutting-edge items available. A dedicated volunteer, Fridley is a recipient of Hy-Vee's Ronald D. Pearson Citizenship Award, which recognizes employees who range beyond the store to build stronger, more vital communities. In an industry headed more and more toward online-to-consumer shopping, he always makes shoppers a priority and is able to keep them coming in the door instead of glued to their computers. Fridley knows almost all of his customers by name and makes them feel like VIPs every time they walk into the Perry, Iowa, Hy-Vee.
Digital Transformation: The rise of autonomous back-of-house technologies
Digital Transformation: The rise of autonomous back-of-house technologies
Just as consumer interfacing technologies are revolutionizing the shopping experience, evolving retail supply chain and back-of-house applications are creating a brave new world behind the scenes as well. The digital transformation of retail is equipping retailers with an array of innovative tools that enable them to compete more effectively in a crowded marketplace. Most of these new applications operate autonomously, requiring little or no human intervention. Some use RFID to monitor stock levels or food freshness. Others apply cutting-edge artificial intelligence (AI) solutions to significantly improve accuracy in crucial areas like assortment planning, space allocation and pricing optimization. Then, there are last mile omnichannel delivery models that provide alternative ways to get merchandise into consumers’ hands. All of these solutions can help retailers be more efficient, competitive and profitable and, most importantly, can improve the customer journey. Aperion and EnsembleIQ have partnered to provide the industry with a common lexicon, best practices, and case studies shaping the digital retail experience. This whitepaper looks at some of the most successful applications being implemented in retail supply chains today, and how retailers are using these tools to digitally—and literally—transform their businesses.
pricing and market demand. This yields far more precise forecasts than the traditional method of running sales numbers for individual SKUs to predict future demand. For store planning, AI has the potential to pull the maximum amount of revenue from every square foot. In the United Kingdom, for instance, Pets at Home uses an AI-driven planning and optimization solution to optimize space in its 440 locations offering pet care products and veterinary and grooming services. The AI solution conducts a detailed SKU-level performance analysis in each store and recommends an optimal space allocation for each category, aisle and department. In one store, this meant reducing merchandising space by 20 percent in favor of expanding veterinary care. A subset of AI called machine learning (the capability of machines to detect patterns from data and learn from experience) is also being utilized to maximize the uptime of critical equipment, such as refrigeration equipment, incorporating elements of time, temperature, pressure, electric consumption, and historical performance models of critical parts. The result: minimized lost sales revenues from inoperable merchandisers.
Artificial intelligence = real planning gains
LAST MILE DELIVERY MODELS
Some of the most exciting supply chain and back-ofhouse technologies to emerge in recent years involve AI, enhanced by the advent of cloud computing and big data that have allowed retailers to implement AI feasibly and efficiently. The AI solutions are automated, save significant time and are far more accurate than many existing processes. AI-enabled machines or systems work by imitating human behavior in intelligent ways, allowing retailers to gather shopper insights in a predictive manner. They can then evaluate and predict consumers’ next actions based on both previous purchasing patterns and future responses to market trends. IDC (International Data Corp.) predicts that by 2019, AI will impact 25 percent of merchants, marketers, planners and store operations personnel in the United States, improving productivity by 30 percent and results by up to 20 percent.1 AI is already playing an important new role in store planning and demand forecasting. It ups the ante in demand forecasting by using mathematical relationships to highlight and explain shoppers’ purchasing behaviors, and then factors in external elements like competitive responses to promotions,
The growth of omnichannel retailing has spurred a number of delivery options that offer shoppers more choices about when, where and how to receive merchandise. For traditional retailers, these delivery services can further meld physical and digital channels and provide a competitive advantage over online-only companies. Here are some of the ways retailers are leveraging new delivery technology.
Digital Transformation: The rise of autonomous back-of-house technologies
AI-optimized pricing and promotions The ability of AI to help retailers better understand shoppers’ desires, motivations and actions makes it particularly useful in creating more efficient personalized marketing and promotion campaigns. Ski equipment supplier Black Diamond, for example, employs AI on its ecommerce site to gather insights from customers’ purchasing histories, which are then combined with weather conditions and other data. The company uses the data to predict consumers’ needs and present them with offers while they shop, significantly increasing sales and decreasing cart abandonment. Natural and organic grocer Earth Fare has implemented a promotion optimization solution that uses AI to help identify which products to promote in its weekly ads to increase shopping frequency and grow individual basket size. Company leadership has reported that the solution drives a meaningful lift in trips and basket size without more margin cost. Machine learning is being used to automatically create predictive pricing models in real time. The models incorporate such elements as seasonality, economic conditions, inventory purchasing histories, product preferences, supply/demand and competitors’
Amazon operates more than 2,000 Lockers across the United States in various stores and other locations. Customers can select any Locker location as their delivery address. Lockers also increase store traffic: Since Amazon acquired Whole Foods in August 2017, short visits (three to five minutes) have increased 11 percent at locations with Lockers, compared with 7 percent gains at locations without Lockers in the same cities.
prices. The resulting pricing engine sorts and compares competitors’ information with a retailer’s own information, factoring in the retailer’s pricing, volume and other goals.
Inventory management with RFID and IoT Maintaining appropriate retail stock levels is vital to improving turns, margins and profits, and it requires tracking items at store level along with monitoring other conditions. Increasingly, this tracking is being done using RFID (radio frequency identification) and IoT (internet of things). In fact, the global RFID market is projected to reach $27.5 billion by 2023, rising at a market growth of 14.1 percent CAGR during the forecast period.2 The global connected retail market, which is mainly driven by growing adoption of IoT across retail industries, was valued at $19.46 billion in 2017 and is expected to reach $82.31 billion by 2025.3 RFID uses radio waves, chips and readers to identify tagged objects. Retailers wield handheld readers to instantly obtain information on stock levels, expiration dates, model numbers, item locations, colors, sizes, manufacturers and other criteria. IoT, which frequently involves RFID, employs a series of wireless technologies to connect mobile devices to sensors, cameras or
Walmart.com orders. The vending machine-style kiosks use robotics and simple conveyers. Shoppers scan their receipts, and their online orders are ready to retrieve in under a minute. Walmart plans to install 700 Towers in stores by the end of 2018, making them available to almost 50 percent of the U.S. population. l
Walmart has installed Pickup Towers in several hundred stores for customers to use to retrieve their -
Walmart has also been experimenting with different last mile delivery models for online orders placed through individual stores. In September 2018, it announced a deal with Spark Delivery, a crowdsourced in-house delivery company. Components of Spark are powered by Bringg, a delivery logistics provider that gives Walmart information on order flow. Walmart’s current combination of resources is close to bringing last mile delivery to 100 metro areas covering 40 percent of U.S. households. Target has announced plans to acquire online same day delivery company Shipt Inc., expanding the service to 180 markets reaching 80 million households by the end of 2018. An annual Shipt membership provides free, same-day delivery on orders of $35-plus, sometimes within one hour.
Digital Transformation: The rise of autonomous back-of-house technologies
other devices. Retailers can remotely monitor inventory levels as well as temperatures, people and product movement and other variables. Perishable foods, which account for 53 percent of revenues for retail grocers,4 are ideal candidates for reaping the increased benefits of RFID and IoT monitoring. Midwestern grocery chain Hy-Vee was a pioneer in using RFID in its tracking system to ensure perishables are transported and stored in optimal conditions to maintain freshness. RFID tags record time and temperature at pre-set intervals, and then readers send data to servers, where algorithms analyze it on a per product basis so goods can be evaluated according to temperature guidelines. Depending on the data feedback, the 240-store chain may refuse product from suppliers, investigate merchandise or decide if it should be discounted due to shorter expected shelf life. RFID has helped Hy-Vee achieve 100 percent cold chain monitoring and management capabilities—both inbound and outbound—from suppliers, subsidiaries, distribution centers, carriers and stores.
Virtual inventory As e-commerce continues to explode, retailers are finding increasingly innovative ways to meld channels and drive consumer traffic across them. Virtual inventory systems can facilitate this expansion by showing retailers all of their products wherever the items are—stores, back rooms, online, warehouses or even in transit via truck or sea cargo. If a shopper’s desired item, size or color is unavailable in one location, new solutions can enable associates to quickly locate it and ship it to the customer. Some virtual inventory systems also provide suppliers’ inventories so employees can order out-of-stock items directly
from a vendor for shipment to customers. Specialty apparel chain Vineyard Vines’ real time virtual inventory system, for example, is powered by a cloud-based personalization and CRM platform. In addition to using it to search Vineyard Vines’ 100 stores and warehouse and online inventories, employees can even access shoppers’ past purchases and other data. AI can also help boost inventory solutions to new levels of effectiveness. Panasonic’s Arimo Behavioral AI, for example, can predict demand for different SKUs at different locations by incorporating the implications of marketing activity, regional events, and economic and weather changes to help retailers better manage inventory levels. To decrease shrinkage, Everseen’s AI software integrates directly into stores’ existing cameras at checkout to detect non-scans. Then, it sends an alert to a store’s security team via any mobile device. Over time, the software “learns” so that it can identify inconsistencies specific to a store’s checkout space. This provides a dual benefit of improving inventory accuracy as well as reducing shrink.
No more guessing games Many emerging back-of-house and supply chain technologies have already moved well beyond the experimental stage, and retailers are seeing tangible results and highly predictable outcomes that positively impact their bottom lines. Taking the place of hunches and best guesses are meticulously calibrated answers that can be delivered and acted on quickly and efficiently. For retailers with the foresight and expertise to take full advantage of these technologies, the digital transformation of retail is the pathway to a bright new future.
1 IDC FutureScape: Worldwide Retail 2017 Predictions 2 “Global Radio Frequency Identification Technology Market Analysis (2017-2023),” ResearchAndMarkets.com 3 “Connected Retail Market-Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2017-2025,” Transparency Market Research 4 Food Marketing Institute/Progressive Grocer, 2016
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.
Jessica Harris Senior Marketing Innovation Manager, Earthbound Farm Age 37 Harris has helped establish shopper and customer marketing within the produce industry, working with retailers across the country to bring path-to-purchase programming to the produce department and rolling out successful cross-promotions focusing on health and wellness. She is the president of Ag Against Hunger, a food rescue organization working with Salinas Valley growers and shippers to distribute excess produce to food banks and school programs, and has given her time to advise younger staff members as well as to formally mentor colleagues through the PMA Center for Growing Talent’s Career Pathways program, choosing to focus on students from her alma matter, Chico State, as there wasn’t previously a lot of produce industry influence there. Harris has also emerged a as a voice for women in the produce business through her participation in the center's Women’s Fresh Perspective committee, helping to found a conference that brings together women of all backgrounds and helps them navigate their way through the industry.
Vincent Kitirattragarn Founder and CEO, Dang Foods Age 34
Diana Haussling Director, Shopper Engagement and Activation, The Campbell Co. Age 36 A values-driven, visionary leader, Haussling has driven unparalleled results through unprecedented leadership, full immersion in the industry, and a commitment to the growth and mentorship of her colleagues and community. At Campbell, she championed the transition to an agency model, improving efficiency by shifting 30 percent of lower-priority work to focus internal teams on delivering higher-priority projects, resulting in $2 million in cost savings. She also developed channel-specific core item assortment strategies and distribution growth targets, resulting in significant distribution and new item gains totaling more than $35 million across focus retailers, and a holistic, cutting-edge support model for omnichannel. What’s more, she’s committed to empowering, developing and uplifting others as chair of Campbell’s Black Resource Group (BRG) affinity network. Dedicated to understanding the intersections between technology and food, consumer and retailer, for a shopping experience that meaningfully engages and connects with consumers, Haussling successfully taps into those diverse, often complex needs in thought-provoking, innovative and uniquely personalized ways.
Since Dang Foods’ launch in 2012, Kitirattragarn been instrumental in growing its revenue from zero to eight digits in just under five years. Dang debuted the first nationally available brand of toasted coconut chips in the United States, carving out an entirely new category in the snacking aisle. The company subsequently launched a line of Sticky Rice Chips, solidifying its status as a leader and innovator for imported natural Asian snacks. The brand is now sold in more than 10,000 retail stores across the country. Overseeing an inclusive workplace, Kitirattragarn hopes to instill a deep engagement with Asian culture and celebrate diversity with his employees through such efforts as flying them to Thailand to learn more about how Dang snacks are made and the people who inspire them. Dang is meeting the need for more diverse and globally inspired snacks the in better-for-you food space, helping to fulfill Kitirattragarn’s goal of connecting consumers to different cultures through food.
PROGRESSIVE GROCER December 2018
Category Analyst II, Giant Food Age 30
Health and Wellness Pharmacy Practice Coordinator, The Kroger Co. Age 39
Knox’s drive and ambition has propelled him from a position in store-level customer service to a career in category analysis. His analysis of sparkling water has informed decisions regarding assortment, placement and pricing that have contributed to growth in the category. Knox is driven to discover local products, introduce them to his team and community, and increase distribution of unique and high-quality locally made products. Shortly after joining Giant Food, he created and distributed a list of 50-plus local suppliers, descriptions of their products, and contact information to both fresh and nonperishable category managers and directors. At a time when major grocery players threaten to overtake the market with autonomous distribution and seamless multichannel merchandising, it’s crucial for regional retailers to double down on their strengths and focus on the consumer. Knox’s category and retail analysis pinpoint opportunities that improve Giant Food’s service and selection for shoppers, and ultimately boost the profitability of the business.
Focusing on patient-centered strategies to improve health outcomes for her customers with chronic diseases, Lester creates and implements programs that simplify health care and help people live healthier lives. She also developed the area’s naloxone-dispensing protocol to help assuage the nation’s opioid crisis, worked to make the yellow fever vaccine available even when the vaccine was no longer obtainable through traditional paths elsewhere in the United States, and was appointed to the Texas Medicaid Drug Utilization Review Board. Additionally, Lester has served as the community outreach co-chair of the Kroger’s Women's EDGE group, helping to attract, develop and strengthen women by creating opportunities to grow valued leaders. Her accomplishments enable her to understand the changing health care needs of the community and maintain the critical skills necessary to be a trusted clinical resource and to promote the practice of Kroger’s pharmacies as health care industry reimbursement shifts from a fee-for-service to a value-based model.
Lindsay Koch President, Koch & Associates Age 34 Having worked in the CPG space since she was 15 years old, Koch took the helm of her family’s business in 2017, with a specialty in small, upscale brands. In addition to managing the largest independent grocery brokerage in the Southeast, she has spent weekends completing her executive MBA at Georgia Tech, from which she’s on track to graduate this month. Last year, Koch decided to build and support brands that really stood for something. She brokered a partnership with Orchids Paper Products, The Kroger Co. and the Georgia chapter of the ALS Foundation to feature the ALS logo on Orchids products carried by Kroger, as well as to secure an annual $25,000 donation to the foundation. Through her background, drive and education, she has positioned Koch & Associates, its principals, and customers for dynamic growth over the next 40 years with new and exciting products in global markets.
Patrick Mateer Founder and CEO, Seal the Seasons Age 25 Despite his young age, Mateer has already founded his own multimillion-dollar food brand in the challenging frozen category and brought its products to almost 3,000 conventional grocery locations. His company, Seal the Seasons, is on a mission to support local family farms and bring their products to more grocery stores. After starting out in his home state of North Carolina, he led the scaling of Seal the Seasons from a startup to a brand sold across the country; the company now sells locally grown produce from South Carolina, New Jersey, New York, Michigan, Ohio, Wisconsin, Oregon and Washington in those and surrounding states. In his spare time, he mentors North Carolina entrepreneurs to launch their own startup food brands throughout the United States. By introducing local food to the frozen category and connecting local family farms to grocery store distribution, Mateer is keeping the frozen food department relevant. His vision of localized supply chains is filling an unmet need in the frozen industry.
Congratulations David Mell RBC Capital Markets congratulates David Mell in being selected for the inaugural class of GenNext Award winners. We are proud to recognize David’s dedication, leadership and charitable endeavors in the grocery, distribution and consumer packaged goods industries.
rbccm.com This advertisement is for informational purposes only. ® RBC Capital Markets is a registered trademark of Royal Bank of Canada. © Copyright 2018. Used under license. Member SIPC. All rights reserved.
PROGRESSIVE GROCER December 2018
Awards T. Bliss Pierce Global Consumer Insights Expert, General Mills Age 31
David Mell Managing Director, RBC Capital Markets Age 38 A trusted adviser to large national grocers, independents, wholesalers, co-ops, and ecommerce and delivery players in the sector, Mell provides valuable and differentiated insights while listening to the needs and strategic challenges faced by CEOs and their boards of directors. His accomplishments include multiple strategic transactions and financings for which he originated and led the execution, advising such companies as United Natural Foods, Supervalu, Associated Grocers of Florida, Bodega Latina and Associated Wholesale Grocers. Further, his position has enabled him to leverage his network of industry leaders to help drive food and monetary donations to Feeding America, where he sits on the executive advisory council. Given the accelerating pace of change in technology as well as in consumer behaviors and preferences, the advice and perspectives that Mell has provided to organizational leadership, boards and business owners have helped them navigate this new environment and position themselves to compete more effectively.
Already a 10-year veteran of the CPG industry, Pierce currently advocates for the voice of the consumer to drive growth through innovation, renovation and communication strategies. Committed to getting involved in the industry and helping out with charities or in the community, she conducted three pro bono projects through General Millsâ€™ Goodworks program, which supports community nonprofit organizations, and Partners in Food Solutions, which aims to improve food security, nutrition and economic development in Africa. She also developed a campus case study program in partnership with business and marketing professors to increase awareness of, and exposure to, careers in grocery and CPG. Pierce has received various industry honors, including the 2013 Network of Executive Women Scholarship for showing exemplary leadership and determination in building a successful industry initiative. Additionally, sheâ€™s a recruiting partner at the National Black MBA Association annual career fair to increase diversity among CPG executives.
Jordan Poff Cincinnati/Dayton Division Ecommerce Manager, The Kroger Co. Age 28 Poff oversees all facets of the largest and most successful ecommerce department at Kroger. His department encompasses 90-plus curbside locations, 100-plus home delivery locations, and the newest ship service covering all 109 stores in the division. In less than a year, Poff led his team to standardize and simplify all ecommerce reporting and processes by developing job tools, department standards and reporting standards that are now used across the enterprise. He also developed, introduced and trained division and store leaders on a new ecommerce department labor model to improve efficiencies and help cut wasted labor. From new ways to pick up orders to innovative ways to deliver groceries to customers, Poff is always on the lookout to provide a best-in-class experience that sets Kroger apart from all other competitors. In addition to his success in his current role, he has led the Young Professionals associate resource group for the Cincinnati/Dayton division for the past three years, among other professional and community affiliations.
Awards Kevin Schnell Store Director, Skogen’s Festival Foods Age 36
Cara Pratt VP Customer Communications, Product Strategy and Innovation, The Kroger Co. Age 37 Pratt is a grocery industry innovator, leading the development and launch of new high-impact, integrated media platforms for CPGs and delivering more relevant offers and content to Kroger customers. In fall 2017, she led the development and launch of Kroger Precision Marketing (KPM), which harnesses best-in-class data and analytics from wholly owned Kroger subsidiary 84.51° to power the targeting and measurement of off-site digital display and video advertising, social/influencer campaigns and on-site digital media channels used by CPG brands. Under Pratt’s guidance, KPM has delivered industry-leading returns on ad spend for CPGs and new revenue streams for Kroger, all while maintaining the high level of personalization and relevance that the company’s customers expect. Innovation such as this is elevating Kroger as a multichannel media platform that complements its retailer heritage. KPM is also providing sources of revenue for the grocer that can be invested back into the Kroger customer through lower prices and unique services.
Having joined the company as a meat clerk in 2003, Schnell had risen to the role of store director by 2011. At the previous stores he managed, as well as at his current location in Madison, Wis., Schnell partnered with city officials and neighborhood leaders, bolstering the partnership between Festival Foods and the local community while also growing sales. For his unique location, which, in a first for Festival Foods, features a bar/dining deck on its second floor, Schnell developed a blueprint regarding bar operations — for example, modifying the pricing structure for happy hour specials. He also makes the most of every square foot, advocating for a larger natural/organic department and a smaller center store, placing seasonal display locations in high-profile areas, and moving categories for a better shopper experience. As the company evolves its grocery stores and offerings, Schnell is an excellent role model for sticking with what works and not being shy about changing things when they don’t.
Bo Sharon Founder and CEO, Lucky’s Market Age 39 In 2003, Sharon and his wife, Trish, purchased a small independent grocery store and set about finding new suppliers, designating new supply chains, transitioning customers from conventional to natural foods, and adopting a business model that allowed for high-quality products at low prices. The business has since grown to 33 stores in 13 states, with plans to open 10 to 12 new locations annually for the foreseeable future. Sharon also began the Lucky’s Community Project, an ongoing endeavor to create lasting change in the company’s local communities. In 2017 alone, the effort helped 2.6 million people through programs focused on healthy communities, sustainability, youth and education, and resilience. Additionally, Lucky’s stores are more fun and enjoyable to shop than many other supermarkets, with an emphasis on experience and discovery. That philosophy, combined with various products made from scratch daily in the in-house kitchen, has created a unique atmosphere enabling the company to succeed.
Amy Souers Area Sales Manager Combo, Coca-Cola Consolidated Age 30 Souers has done a spectacular job working with her customer base to identify their needs, provide solutions, mutually agree on what execution looks like and finally execute. One example: Discovering that her mass-channel customers were looking at ways to drive incremental sales purchases without tying up additional space, she successfully designed a rack that holds carry baskets near the store entrance that can also display five shelves of product while staying within the footprint of the current holder. Souers also created a program called Make A Difference Monday, designing a calendar that allocates $50 each Monday to employees. The employees can use the money over the course of the week to help others within the company’s established four pillars: military/veteran, homeless/shelters, youth education/physical awareness and hunger. Due to Souers’ remarkably consistent approach, her accomplishments always tie back to her unwavering support of important priorities for her retailer/customer or community.
Stacy Vossberg VP of Innovation, Insignia Systems Age 34 As leader of the innovation team at in-store and digital marketing services provider Insignia Systems, Vossberg has used her experience in CPG sales and retail buying to develop a series of product innovations solving industry problems for brands and retailers. Leveraging the insights that consumers shop the produce department once a week or so but may venture into the center store only once a month, where they often struggle to identify family meal solutions, she and her team created freshADS, an advertising solution within the produce department that promotes brands and incentivizes shoppers through recipes, coupons and meal solutions with ingredients from around the store. She’s also an active mentor at the University of Minnesota College of Food, Agriculture and Natural Resources. Vossberg’s ideas and execution have helped fulfill industry needs, demonstrating not only her understanding of changing industry needs and the pain points of brands trying to drive growth and secure market share, but also her success in tackling these challenges.
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2018 was the year grocers truly upped their tech game like never before. Expect even more next year. By the Progressive Grocer Staff
BIGGER, BOLDER, BETTER
rocers have long been the laggards in the retail technology game. That’s understandable, given the channel’s longtime traditional nature, narrow margins and reluctance to make huge investments in risky areas. Take a look at what’s happened over the past year, however, and you’ll see that grocers have made tremendous strides and are laying the foundations for further technological advances in the coming year. This year alone saw several tremendous innovations adopted, including, but not limited to:
Cashierless, Scan-Free Shopping
Amazon debuted the Amazon Go format to the public in Seattle and has since expanded it to several stores in such cities as Chicago and San Francisco, with 3,000 locations planned to open over the next few years. The chain uses “just walk out” technology,
which employs computer vision, sensor fusion and deep learning to automatically detect when products are removed from, or placed back on, shelves. Shoppers scan in via a dedicated app, just walk out upon taking everything they wish to buy, and then receive a digital receipt afterward. Other similar grab-andgo stores that have opened in recent months include Standard Market, powered by artificial-intelligence company Standard Cognition, and a concept powered by the Zippin checkout-free software platform, both in San Francisco.
Midwestern grocer Schnuck Markets expanded to at least 15 locations its in-store autonomous-robot pilot in which Tally, an innovation from Simbe Robotics, traverses the store to detect out-of-stocks, pricing errors and even hazards. This frees up time for in-store associates to handle more important, customer-facing tasks. Other grocers employing similar technology include Ahold Delhaize USA at its Food Lion, Giant and Martin’s stores, and Target.
The Albertsons Cos. revealed a plan to automate and save ecommerce fulfillment costs by embracing robotics and artificial intelligence (AI). The grocer is partnering with Waltham, Mass.-based grocery technology company Takeoff Technologies to help simplify the online grocery shopping experience through a “hyperlocal” automated fulfillment center, which also helps lower order-assembly and last-mile costs. The news follows similar announcements from the Kroger Co. and Walmart.
Autonomous Delivery Vehicles
Kroger began piloting a grocery delivery program that uses autonomous vehicles to fulfill online orders, teaming with autonomous-vehicle provider Nuro to make the convenience of grocery delivery accessible and affordable for customers everywhere. Through the partnership, which began in Scottsdale, Ariz., customers using Kroger’s ClickList grocery ecommerce system and Nuro’s mobile app place same-day delivery orders, which are fulfilled by the latter’s fleet of on-road autonomous vehicles. Other grocers entering the autonomous delivery space include Walmart, through a partnership with Ford; AI-powered Bay Area “micro-grocer” Farmstead; Oklahoma City grocer Buy For Less; and Robomart, another Bay Area ecommerce grocer. This short four-point list doesn’t even include what grocers have been doing in terms of developing, employing or expanding mobile-centric shopping experiences; voice ordering; shoppable recipes; boosted searches for CPG partners; and more. Simply put, in 2018, there was far more news in the field of grocery technology than ever before. That means there will likely be even more news in 2019. While we can’t tell you every single activity to expect from each grocer, Progressive Grocer’s editors have picked five key areas to keep close watch on, so you’re ready for when the big stories do arise. Read on to learn more …
PROGRESSIVE GROCER December 2018
Seamless 2.0 Omnichannel retailing will become increasingly automated. By Jim Dudlicek rocery retailers playing in the physical and digital realms aspire to deliver a seamless shopping experience that provides consumers with a real-time view of stores and their contents, regardless of whether shoppers enter through a brick-and-mortar or mobile portal. Retailers headed in the right direction include Albertsons, which recently launched a new ecommerce platform that leverages digital to enhance its physical operations, and Kroger, whose partnerships with Ocado and Instacart, adoption of voice-assisted ordering technology, and piloting of autonomous delivery vehicles have made the company an industry leader. But what still needs to be done to streamline the omnichannel experience? What’s coming in 2019 that’s yet to be revealed?
Getting Up to Speed
“CPG companies and grocery retailers may want to think about next-generation capabilities that converge digital and physical marketing and online/offline purchases,” says Andrea Bell, principal with New York-based Deloitte Consulting. Deloitte research found that one-third of people surveyed feel that digital tools make grocery shopping easier, versus 42 percent across
Kroger began piloting grocery delivery that uses autonomous vehicles by Nuro to fulfill online orders.
other retail categories, Bell notes. “But there is an upside for the grocery retailers who take the lead in building the interaction and experience that people already expect from other categories,” she says. “Another reason to create more interaction points along the customer’s journey is that people who use their devices tend to spend more than those who don’t, making this an attractive segment for retailers to pursue.” Elevating the human experience, the desire for greater levels of convenience in our lives, and the convergence of accelerating technology will frame the “what’s next?” for retailers, according to Steven Duffy, VP of grocery for Boston-based design firm Cuhaci & Peterson. “Next steps include digital interfaces through omni-consumer engagement, including mobile-friendly interconnectivity, gamification of the retail experience, personalized mobile apps, increased use of video/information-rich-based content, e-learning/m-learning or short nuggets of info consumed on the go, in or outside of the store,” Duffy says. “Many ‘future-gen’ grocery elements are now operational in Asia, chiefly China’s adoption of mobile technology that is the primary means to deliver on this new experience. Both Hema and 7-Fresh are noted as leaders illustrating myriad artificial intelligence (AI)-enabled technologies not yet operational in the U.S. They include advances such as barcoding products, smart shopping carts, co-bots to assist and robotics for logistics.” Pallab Chatterjee, chairman and CEO of Dallas-based Symphony RetailAI, suggests that grocers could learn a lot from other industries delivering a seamless experience, such as food delivery or ride-sharing services. “Right now, the click-and-collect experience of getting groceries delivered to your home is not as user-friendly or continuous,” Chatterjee asserts. “With an app like Uber, you can actually see the car’s relative distance on the app as it heads your way. Similarly, with Grubhub or DoorDash, you have an expectation that food will be delivered within the next hour or so, and can track your order as the food is prepared, picked up and brought to you.” Notifications and real-time updates are key to a seamless user
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Mobile commerce is an evolutionary next step for ecommerce. It acts as an accelerant to convenience, and convenience equals conversion.” —Steven Duffy, Cuhaci & Peterson experience, he notes, “and grocery needs more of this. In grocery delivery, there are still uncertainties of when a click-and-collect order will be ready, which obviously has negative implications for certain fresh or frozen items. Given this, retailers must be able to provide continuous, precise updates and offer regular connection with the order along the way.” Mark Hardy, CEO of Chicago-based InContext Solutions, says that the first thing retailers need to do is stop thinking about digital and physical commerce separately, a perspective usually driven by their internal corporate structure. “Retailers need to look at the commerce experience from the eyes of the shopper, where there is no division between the two, and look to facilitate the easiest and most engaging path to purchase,” Hardy observes. “This will require that retailers have the right technology solutions in place to make sure both the online and in-store experiences are aligned, agile and personalized. This means understanding what shoppers are looking for and being able to incorporate that seamlessly into other channels. Fast changes, test and learn, and introducing innovation are easy and low-risk online, but are costly and time-consuming to do in physical stores. Solving for this challenge in brick and mortar changes the competitive nature of the retailer.” To get there, retailers should adopt “mixed reality,” which encompasses both virtual-reality (VR) and augmented-reality (AR) technologies, “because it truly is the way the world is headed,” Hardy says. “In addition to the many customer-facing applications that are finding success in brick-and-mortar retail, such as AR apps, the business-facing side of mixed reality is really taking off,” he continues. “Current physical processes applied in areas such as category management only allow us to review categories once — maybe twice — a year; you have to schedule time in the innovation center, Retailers should adopt “mixed reality,” which encompasses both virtualreality (VR) and augmentedreality (AR) technologies.
and maybe run an in-store test to provide limited sales data from which retailers have to make a go/no-go decision. Mixed-reality technologies allow rapid simulations and testing with real shoppers that quantify the impact on sales and shopper experience.” Integration of physical and digital platforms is a must, Symphony RetailAI’s Chatterjee says. “The critical element here is the ability to have inventory and price visibility across all channels,” he says. “Secondly, retailers need the technology to support pickers or transporters having their own version of a digital app. You see this with Uber, as the drivers have a different interface than what customers can see. That part of the technology for grocers is not enabled in most of the digital experiences today.”
What the Near Future Holds
What can we expect omnichannel to look like in 2019 and beyond? “In the next two to five years, we’ll see roughly 70 percent of grocery shopping done through mobile or digital channels,” Chatterjee asserts. “Although the percentage of shoppers doing this now is quite small, its growth will be very, very fast. And ultimately, the digital delivery experience will dictate which retailers will win.” Additionally, subscription services will grow to perhaps half or more of total digital orders, Chatterjee predicts. “Amazon does a lot of this, but others are not realizing the opportunity yet,” he says. “That needs to change.” InContext Solutions’ Hardy predicts expanded use of head-mounted devices (HMD) for VR beyond Amazon’s recent Prime Day mall kiosk tests. “Next year, HMD are expected to have self-contained processing power, which allows them to be untethered from a PC and sold at lower price points,” he says. “This makes the hardware more affordable and portable for consumers, which should be the tipping point for adoption.” Cuhaci & Peterson’s Duffy says that in less than two years, both large and limited smaller grocers will have operational digital stores. “Mobile commerce, or m-commerce, is an evolutionary next step for ecommerce. It acts as an accelerant to convenience… [and] convenience equals conversion,” he says. “Fully autonomous and reliable deliveries in all conditions won’t occur any sooner than three to five years.” Micro fulfillment, according to Duffy, is “an excellent example of jumping to the next curve. It harnesses enhanced robotic picking through AI-enabled computer vision, machine learning and advanced sensors, reducing human labor. While still in the early stage of development, it holds the promise of a rapid means to transform the image and function of conventional grocery. … Leveraging robotics for an array of stocking, scanning and logistics needs will become more prevalent in the backof-house and sales area, and will enable the enhanced use of human labor for the sales experience.”
Craking the Code to Ecommerce Profitability Retailers are diving headfirst into this technology. By Jenny McTaggart
n 2018, a handful of grocery retailers looked to be potentially cracking the code of how to make ecommerce profitable — by testing automated order fulfillment in their stores, in an effort to lower both order-assembly and last-mile delivery costs. In August, Walmart revealed a partnership with North Billerica, Mass.-based Alert Innovation to launch Alphabot, a robot that assists in the order-picking process, starting in its Salem, N.H., supercenter. A few months later, Takeoff Technologies, based in Waltham, Mass., made headlines by creating the so-called “world’s first automated hyperlocal robotic supermarket” with Miami-based Hispanic retailer Sedano’s. Albertsons and Ahold Delhaize banner Stop & Shop have also begun working with Takeoff. Kroger is taking a slightly different tack by testing automated order fulfillment and other technologies via an exclusive partnership with U.K. ecommerce provider Ocado. The grocer is reportedly looking to build three new fulfillment centers for this purpose in 2019, including one in Monroe, Ohio. While their strategies differ somewhat, there’s no doubt that retailers are diving headfirst into this new technology, and you can expect the trend to pick up even more in 2019. Look to see additional grocers testing the waters, as well as drug stores and other mass merchandisers that want to ramp up their ecommerce operations. Brittain Ladd, an adviser for Takeoff Technologies who is a consultant and contributor to Forbes magazine, wrote in the publication in October that Takeoff
In October, Miami-based Hispanic retailer Sedano's worked with Takeoff Technologies to create what's billed as the “world’s first automated hyperlocal robotic supermarket.”
is currently working with five regional and national retail chains in the United States, and has several sites in development to deploy in 2019. He predicted that “consumers can expect to see a massive increase in the use of robotics to fulfill grocery orders in distribution centers and in micro distribution centers.” He also noted that when he met with senior executives from Takeoff in 2018, he advised them to pursue Walgreens, CVS and several convenience store chains for new business. Peter Leech, partner and director of digital and ecommerce at The Partnering Group, based in Cincinnati, also expects this type of technology to continue to grow in the coming year. “Grocers are proactively lining up partnerships with automation, robotics, and AI or machine learning,” he says. “Automation was pioneered in ecommerce fulfillment centers using tools like Kiva Systems. Today, providers like Alert, Takeoff and Commonsense Robotics are bringing small-footprint mini fulfillment centers that can be placed within an existing store. This is enticing because it offers a bricks-and-clicks option just as grocery click-and-collect ramps up in the market.” Leech notes, however, that such a significant change in retailing will present big assortment and space reallocation decisions, as well as new store operation processes, which retailers will have to figure out. “Grocers and mass retailers are just starting the journey,” he observes, “but it’s the right path toward reducing the cost impact of ecommerce as a channel.”
Today, providers like Alert, Takeoff and Commonsense Robotics are bringing smallfootprint mini fulfillment centers that can be placed within an existing store.” —Peter Leech, The Partnering Group
PROGRESSIVE GROCER December 2018
Apps are changing the shopping experience. By Kat Martin
obile apps are the epitome of blurring the lines between physical and online shopping,” says Tory Gundelach, VP of retail insights at Kantar Consulting, in Boston. “Shoppers are no longer willing to accept one experience in store and a different experience online, and apps are one of the best ways to bridge that gap.” In a little more than a decade — the launch of the iPhone in 2007 took the on-the-go connectivity out of the businessperson’s hands and put it into everyperson’s hands — the smartphone and its resulting applications, or apps, have completely revolutionized the shopping experience for consumers. No longer do they need to wait until they get home to do a price comparison or look up a product’s details. They can do it while shopping in your store’s aisles. “As the app-shopping experience becomes more seamless, it will inherently help shoppers make decisions,” Gundelach adds. “Imagine a world where shoppers have at their ﬁngertips detailed and relevant product information, in-stock and store location information, a personalized price, and connection to their social network — shoppers will have all of the resources they could need to make purchase decisions. For retailers, we are already seeing them integrate apps into store operations to show shoppers in-stock and location information. Even extended aisle offerings can help retailers tailor assortments while minimizing inventory.” Gundelach notes that one trend to watch is the gamiﬁcation of shopping apps. “Whether it be about tracking points or about playing an AI game, apps are expanding outside of purchasing,” she observes. Chieh Huang, founder and CEO of New York-based Boxed, calls these types of apps “science projects.” They have a lot of really cool
Augmented reality (AR) apps allow for more transparency on how foods are sourced and marketed.
features like augmented or virtual reality, but “the reality is a signiﬁcant portion of the population is not going to use AR/VR to buy toilet paper or celery,” he notes. “That’s not to say that won’t be huge in the future, but right now, they are more like science projects and just making sure we are understanding cutting-edge technology and where the future could go.” A few recent app launches are experimenting with the technology’s direction. For instance, Chiquita recently partnered with London-based Shazam to allow “customers to ‘peel back’ and see the actions behind our Blue Sticker to produce, ship and provide the best fruit possible,” says Jamie Postell, international director of sales, North America at Fort Lauderdale, Fla.-based Chiquita Brands. Shoppers use the Shazam app to scan specially coded Chiquita stickers to take them on a virtual tour of the banana’s journey, from the farmer who raised it, to sustainability and harvesting practices. Postell notes that 16 percent of users “Shazamed more than one banana.” In the United States, 69 percent of those “Shazaming” the bananas were Millennials. “There is a unique opportunity for retailers to leverage new technology to drive more consumers in store, but also to create unique experiences in store to help them discover and learn more about various brands,” Postell adds. “Now more than ever, consumers want transparency of their food. They also want to know what companies are doing to make the world a better place. Retailers can work collaboratively with brands to strengthen programs that address shopper concerns and provide added value to the shopping experience.” Francesco Rinaldi pasta sauces, from LiDestri Food and Drink, also recently debuted an AR app that brings the brand’s spokeswoman, Mrs. Rinaldi, to life. “I knew we had to disrupt the category and that we had to do something that was really unique, but really current,” says Mary DeMarco, creative and branding director for the Fairport, N.Y.-based company. Shoppers download the Francesco Rinaldi AR app, and depending on which pasta sauce variety they’re pointing their phones at, Mrs. Rinaldi comes to “life” and speaks about the attributes of that
The Francesco Rinaldi AR app offers shoppers pasta sauce with a side of sass, in the form of virtual brand spokeswoman Mrs. Rinaldi.
particular sauce. “She’s got a little bit of sass and a really awesome accent,” DeMarco notes. “I thought she’d be super-engaging for consumers.” As for what the future may bring when it comes to digital integration into the shopping experience, Boxed’s Huang thinks it will be along the lines of “that Netflix experience. Netflix is wonderful because it doesn’t care if you’re on your iPhone and your family members are on their Android, and maybe the kids are
on their PlayStation. It doesn’t care where you are, but it knows who you are and delivers content however you want it, whenever you want it. Something so simple as that for food doesn’t exist. You’re starting to see more buy online, pick up in store via apps. You’re starting to see scan and go. You’re starting to see more use cases because everyone is running towards that final experience, which is that Netflix-style experience for the customer.”
Imagine a world where shoppers have at their fingertips detailed and relevant product information, in-stock and store location information, a personalized price, and connection to their social network — shoppers will have all of the resources they could need to make purchase decisions.” —Tory Gundelach, Kantar Consulting
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Ecommerce Bridged Endless aisles are making the leap to in-store solutions. By Joan Driggs
etailers are feverish about creating their point of differentiation and an improved in-store experience. But for shoppers, delightful design and warm hospitality are diminished when the products they seek aren’t on the shelves, either due to dreaded out-of-stocks or because slow-moving items were removed. Endless aisles online are becoming the norm, with shoppers blissfully unaware that items they obtain through a retailer’s website might not be items that retailers typically carry and are delivered by a third-party vendor. Grocery isn’t immune from the new age of 24/7 shopping and the expectation of next-day — or less — delivery, and it’s increasingly viewed as their opportunity to offer one-stop shopping. When done well, endless aisles provide valuable data on the habits and preferences of shoppers, which can shape online and in-store assortment. The concept can also act as a catalyst for discovery, introducing shoppers to complementary or specialty products. In store, endless aisles can help the retailer keep shopper dollars and the shopper’s satisfaction.
Getting it Right
Endless aisles haven’t been without challenges, however, according to Bill Bishop, chief architect at Brick Meets Click, a Barrington, Ill.-based consultancy. “If not done well, and especially if retailers cede fulfillment to a third party who is
not on the same page as the retailer, it can create greater frustration than the original disappointment of not finding the right product in the store.” “The retailer’s success with endless aisles is with the right fulfillment partners that can deliver on the back end,” says Helen Baptist, chief customer officer of Chicago-based ItemMaster, which works with retailers and their supplier partners to provide consistent quality across search, sort and select. One challenge that Baptist sees with instore endless aisles is that the ecommerce team might not have anything to do with the in-store ordering mechanism, such as a kiosk, touchpad or via the store app. “All content should reside in one place, regardless of source, and it should be consistent with the specifications the retailer has identified as ideal for the customer experience,” she advises. According to Scott DeGraeve, COO and founder of Denver-based Locai, an ecommerce platform that manages retail and fulfillment partnerships, the emergence of more chief digital officers who manage across online and physical stores demonstrates that “retailers are striving to be more omnichannel.” As retailers move more of their center store to a digital platform, they must have a digital strategy that blends across all channels, DeGraeve adds. The technology to enable retailers to offer added assortment and collaborate with fulfillment partners that can ship directly to the consumer’s home is getting better, in his opinion. “Technology platforms enable integrating additional SKUs into a retailer’s offering,” he notes. “It’s attractive to retailers, because they don’t have the bandwidth to do this on their own; it’s a low-risk opportunity to bring added satisfaction to customers, and there’s some margin for the retailer.” An added bonus: The data belongs to the retailer and can help it shape in-store and online assortment. One such fulfillment partner is Brooklyn, N.Y.-based L&R Distributors Inc., specializing in “longtail” nonfood items such as beauty and general merchandise, which are SKU-intensive and slow-moving. CEO Marc Bodner says that endless aisles, especially in-store endless aisles, are still so new that every retailer has its own strategy. “Everyone is trying to figure it out,” he admits. “We want to help our retail customers capture or
recapture sales that were leaving the physical store.” Bodner continues, “We take the complexity out of endless aisle for retailers” by partnering with companies such as ItemMaster for content, and companies like Locai, which integrates the retailer’s website with fulfillment.
Endless in Store
Under the leadership of SVP of Digital Narayan Iyengar, Boise, Idaho-based Albertsons Cos. is approaching 2019 like an incubated technology startup, notes Jon Fahrner, head of Marketplace at the grocer. “By setting it up as a lean and fast-moving startup, we can do some things quickly that are beneficial to the entire organization and our shoppers, versus being part of a bigger department. “Our high-level goal is to allow our millions of shoppers to get anything they want any way they prefer, and to have it show up as quickly as possible,” Fahrner adds. “Physical barriers will go away. We’ll extend our assortment through digital and in-store experiences.” The company just launched its Digital Marketplace, but in store is not far behind. “We’re able to leverage the power of digital to serve our shoppers further with items we don’t carry in store,” he points out. “The endless aisle isn’t intended to conflict with the physical store, but to provide a bridge to things like artisan foods and natural and organic household items.” Ahold Delhaize is experimenting with in-store kiosks throughout its concept store in Belgium, providing shoppers the ability to digitally tap into thousands of items for next-day delivery to home or the store. Store personnel are trained to encourage and help shoppers use the endless-aisles offering. “Ahold Delhaize has intentionally put together warehouses of slower-moving products,” says Brick Meets Click’s Bishop. “The likelihood of losing control is much less.” Locai’s DeGraeve thinks this model is the future. “More electronic stimulus will show up in the aisles to prompt shoppers to see what’s available,” he predicts. “[In-store kiosks or touchpads] will take longer for shoppers to migrate to than online, where there is already more familiarity for both retailer and shopper with endless aisles. But in the future, you’ll see more of what Ahold is offering.” Just knowing that the service exists might be reason enough for shoppers to visit a store. Even if they can’t find what they’re looking for on the shelf, they’ll walk out knowing that they’ll have their items of choice delivered in good time.
Our high-level goal is to allow our millions of shoppers to get anything they want any way they prefer, and to have it show up as quickly as possible. Physical barriers will go away. We’ll extend our assortment through digital and in-store experiences.” —Jon Fahrner, Albertsons Cos.
Where the Future is Now Through the Hema and Tmall retail concepts, Chinese tech giant Alibaba is already demonstrating what tomorrow’s commerce looks like. At Hema, shoppers marry their mobile app with in-store QR codes to unlock endless-aisles screens for online ordering and instore product recommendations. All products throughout the store have digital codes that provide background information on a product, from where it was grown or raised, to processing and nutritional information. Meanwhile, Alibaba’s Tmall has partnered with Swiss sporting goods retailer Intersport to create a tech-driven experience that melds the best of online and offline shopping. The concept is Alibaba co-founder and Executive Chairman Jack Ma’s vision of “New Retail” that erases the lines between offline and online shopping. One key feature is the “cloud shelf,” a large touchscreen display that features products available in store or online. The online app allows shoppers to sync their favorites from the screen to their phones and make a purchase when and where they want. In the sports shoe department, for instance, each shoe is equipped with a sensor; when pulled from the shelf, the sensor initiates a digital screen that demonstrates the shoe’s features. Further, a “magic mirror” in the store provides recommendations for any product placed in front of it. All purchases, whether online or in store, can be delivered within two hours to shoppers living within 5 kilometers of the store.
At Alibaba's Hema stores in China, shoppers marry their mobile app with in-store QR codes to unlock endless-aisles screens for online ordering and instore product recommendations.
PROGRESSIVE GROCER December 2018
Keeping Commerce in Context
Everyday activity and grocery ecommerce will connect in a big way in the new year. By Randy Hofbauer
he year 2018 was when some of the nation’s top grocers really began to dip their toes in the waters of contextual commerce — the concept of supermarkets’ making it possible to purchase products through everyday activities. For instance: Kroger launched voice-assistant ordering across a number of its banners; Amazon and Whole Foods got “plugged in” to smart ovens; and Walmart, Albertsons and other grocers began connecting their ecommerce programs with shoppable recipes. So it’s right to expect that as food retailers continue to invest further in technology and their omnichannel strategies, 2019 will be a very big year for contextual commerce. Arguably, browsing via voice assistants will be one of the chief areas that grocers will address with contextual commerce in the new year, given that the process of shopping online is visual, and shopping via voice assistants is anything but. Repeat orders are easy enough, but the grocery industry was designed on the browsing model and orchestrating sales through careful placement, argues Ben Lamm, founder and CEO of Austin, Texas-based machine-learning and artificial-intelligence (AI) company Hypergiant. Grocers have only just begun to find ways to expand choice and simulate browsing through contextual commerce. “I think recommendations for upselling and cross-selling in grocery are a huge area of opportunity that would have a direct benefit for consumers — and something we’ll see much more of in 2019,” Lamm says. “Imagine ordering a pasta and being recommended a specific sauce or wine to pair. This would potentially reinvent the grocery shopping experience and provide a great deal of value to the customer.” Additionally, contextual commerce will evolve from making the shopping experience more convenient for consumers to outright empowering them to get the best possible deal at any time, forcing grocers to ensure that they’re always working to provide the best price possible. For example, any shopper can find a recipe online that, when clicked, allows them to purchase ingredients directly from local grocers. However, as more grocers get on board with shoppable recipes, there will be stronger competition to offer the best prices in a given market, offers Jonathan Cherki, CEO of ContentSquare, a user experience (UX) strategy company based in New York.
But empowerment won’t be limited to price comparisons. Lamm notes that one of the greatest benefits of contextual commerce in the grocery industry will be better information for consumers. “If we can develop systems that contain information on food origins, nutrition information and other valuable data for consumers, it can transform how we shop and think about food,” he explains. Then there are several in the industry who go as far as to say that in 2019, smartphones will be smart enough to identify, through the snap of a picture, not only an individual product, but also the products that make up a larger meal. “By the end of 2019, I predict that people will be able to see food that someone is carrying — or even food in a restaurant — [and] take a picture of that food on their smartphone for the phone to analyze the exact food type and ingredients,” says Stacy Caprio, founder of Chicago-based digital consultancy Accelerated Growth Marketing. “Then the phone will be able to place the order for those ingredients or food, and the person will be able to walk home and have the grocery box with those food items sitting at their doorstep.”
Imagine ordering a pasta and being recommended a specific sauce or wine to pair. This would potentially reinvent the grocery shopping experience and provide a great deal of value to the customer.” —Ben Lamm, Hypergiant
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Store of the Month
By the People, 54
Bashasâ€™ DinĂŠ Market Window Rock, Ariz.
Revamped supermarket offers daily staples, traditional favorites and guidance for healthier living. By Jim Dudlicek Photography by Vito Palmisano
For the People PROGRESSIVE GROCER December 2018
STORE OF THE MONTH
Bashas' Diné Market
elping folks on the Navajo Nation make healthier food choices is a no-brainer for Bashas’. After all, the Chandler, Ariz.-based grocery chain has basically been the official supermarket for Native Americans in the Grand Canyon State for nearly four decades. So when it came time for the retailer to remodel its store in the Navajo Nation’s capital of Window Rock, Ariz., a focus on supporting a healthier lifestyle was part of the package. Shoppers can still get authentic Navajo fry bread, mutton stew and other staples that are part of the native diet. But the Bashas’ Diné Market store in Window Rock, which has served its community since 1989, now features enhanced organic food offerings and a new shelf-tag system to better call out healthier food selections. That, plus a décor package that showcases the work of local artists, as well as the first-ever Starbucks coffee shop on the Navajo Nation, results in a brand-new shopping experience. “There has been a big focus on increasing health-and-wellness options within the Navajo Nation during the past few years, and our Bashas’ Diné Markets continue to step up to the plate in providing education, access and support of healthier eating and active-lifestyle choices,” explains Johnny Basha, VP of special projects for Bashas’ Family of Stores. Last year, the retailer launched its Diné Healthy labeling program, which easily identifies nearly 400 better-for-you food 56
The Window Rock store's leadership team includes (from left) Corrine Mitchell, store director; Harold Arviso, meat cutter; and Sasha Gilmore, Starbucks manager.
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STORE OF THE MONTH
Bashas' Diné Market
options in each department through store signage. “Additionally, we remerchandised the store to provide extra visibility of these healthier items, and encouraged healthy living through community partnerships with COPE’s [Community Outreach and Patient Empowerment] Fruit & Vegetable Prescription Program,” Basha says. Those moves are part of Bashas’ overall goal to create a more pleasant atmosphere for shoppers, enhance its focus on fresh and healthy foods while continuing its commitment to serve the Navajo community, and honor their culture through design, art, and product and service offerings.
‘A True Revitalization’
The Window Rock revamp is one of the latest projects in an aggressive store remodel strategy that began in 2015 targeting all of the banners within Bashas’ Family of Stores throughout Arizona, including Bashas’ Supermarkets, AJ’s Fine Foods, Food City and Diné Markets. By the time of the Window Rock store’s grand reopening, nearly half of Bashas’ roughly 100 stores had been remodeled. “While we had addressed things on and off over the years, it was time for a true revitalization of the store and its offerings — not only for customers, but also for our members,”
Basha says of the Window Rock store. And Bashas’ business relationship with the Navajo Nation goes deeper than simply building stores and selling groceries. “Product selections and merchandising strategies have always been the result of a cooperative effort between community residents, community leadership and Bashas’, and the selections we make together are culturally based rather than by measurable demographics, as would be typical,” Basha explains. Product and merchandising strategies also reflect the shopping habits of large extended families
From the moment shoppers step through the doors, they are welcomed by the new look and feel of the store.” —Corrine Mitchell, Window Rock store director
who visit the store biweekly or monthly, he says. “The Navajo language is more oral than written, so the interior of the store is more visual. Native design, symbols and decorative art [are] prominent throughout the store,” Basha notes. Even the name — Diné, meaning “the people” — was reflective of the fact that the stores were created by and for the Navajo people. The Diné Market in Window Rock now prominently displays 21 pieces of art from local Navajo
artists. Part of an interior designed by Tammy Fontaine, director of the Eddie Basha Collection, an archive of native and western art gathered by the retailer’s late former CEO, the featured artists include Baje Whitethorne, a Reed clan member who is known for colorful landscapes depicting the Navajo Reservation, as well as portraits of his people; Larry Yazzie, whose sculpture works of women symbolizing strength are highly sought after by collectors; and trailblazer Oreland Joe, whose work captures his Ute and Navajo heritage. “The moment you step into the Bashas’ Diné Market in
Interior design elements include department names in Navajo as well as in English, and artwork created by native artists, features that make the store more welcoming to shoppers.
PROGRESSIVE GROCER December 2018
STORE OF THE MONTH
Bashas' DinĂŠ Market
112 AZ-264 (Highway 264 and Navajo Route 12) Window Rock, AZ 86515
Original store opening year:
1989 Grand reopening date:
Nov. 8, 2017 Size:
Total square footage
28,255 square feet
7 Checkouts Hours: Monday-Saturday, 7 a.m. to 10 p.m.; Sunday, 7 a.m. to 8 p.m. Store designer: Interior by Tammy Fontaine, director of the Eddie Basha Collection; exterior by the Navajo Nation Shopping Centers 60
PROGRESSIVE GROCER December 2018
STORE OF THE MONTH
Bashas' Diné Market
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In addition to scratch doughnuts and Bashas’ popular crusty bread, the bakery makes tortillas and Navajo fry bread.
Window Rock, you can see and feel the difference,” Basha says. “The store has some of the same offerings as a traditional Bashas’ supermarket, such as variety; however, in this store, you will find department signage written in both English and the native Navajo language. The store design includes colors that are representative of the natural land around the Window Rock community.” What’s more, ceremonies, dances, rodeos and other uniquely Navajo events require specific foods. “As a result,”
There has been a big focus on increasing health-and-wellness options within the Navajo Nation during the past few years, and our Bashas’ Diné Markets continue to step up to the plate in providing education, access and support of healthier eating and active-lifestyle choices.” —Johnny Basha, VP of special projects
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Basha explains, “our meat department carries large slabs of mutton and other products that reflect the Navajo tradition of using every part of an animal. Our deli serves mutton stew. Ten-pound tubs of Clabber Girl baking powder, 5-pound bags of Mama Lola’s Dry Corn, 50-pound sacks of Blue Bird Flour and 20-pound sacks of Brothers Corn Meal are stacked high in the aisles. The product selection is all a reflection of brand awareness and preferences that were developed more than 100 years ago at trading posts.” A full array of fruit and vegetable options are also a must, Basha adds. “Squash, corn, beans and potatoes are diet staples. We make them available in large quantities. And cooking fuel, firewood, and tack and livestock feed are as essential to Navajo life as the food they consume.”
Honoring the Community
“From the moment shoppers step through the doors, they are welcomed by the new look and feel of the store,” says Corrine Mitchell, Window Rock store director and member of the Navajo Nation. “Our goal was not only to honor the community through traditional Navajo décor, colors, signage and local artwork, but [to] deliver a larger selection of healthy, easy-to-identify food options.” Organic and other healthy food items have been added throughout the store. Diné Healthy shelf tags and aisle sig-
The service bakery sports new cases, perfect for displaying the talents of the store’s lead decorator, who turns out Navajothemed creations as well as specialoccasion cakes.
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PROGRESSIVE GROCER December 2018
STORE OF THE MONTH
Bashas' Diné Market
Traditional Navajo fry bread is made by hand from dough cooked in cast-iron pans; it's one of the native favorites created daily at the store, along with mutton stew.
nage help shoppers easily identify better-for-you foods — about 300 in all — many located in prime locations at the center and front of the store. “We’ve seen a significant rise in sales of products with those tags,” notes Ashley Shick, Bashas’ director of communications and public affairs. Two surprise hits among new products: aloe beverages and coconut water. Shoppers “jumped in and responded to it very well, from the grand opening,” says Karen Adams, director of operations. The store additionally features a new energy bar section, an organic snack area, and a bigger variety of teas and healthy drinks. The Window Rock store is also now home to the first Starbucks Coffee shop on the Navajo Nation, led by Starbucks Manager Sasha Gilmore, who’s fluent in Navajo. On Starbucks’ opening day, the line for coffee stretched out the door, starting at 5 a.m. The coffee shop features a reading nook stocked with books that patrons can borrow. The store’s deli department has new steam tables loaded with fresh home-
Lines were out the door on opening day for the Window Rock Starbucks, the first-ever location on the Navajo Nation.
style meal options, open deli cases, more ovens and, here as well, an increased selection of healthy food offerings. Along with sandwiches made fresh daily, wall cases hold a variety of new items, from cold cuts and cheeses to dips and spreads. Hot options include rotisserie chickens, turkey, meatloaf, pork and mutton, regular items like pizza and fried chicken, and local favorites like Navajo tacos made with fry bread. The in-store service bakery sports new cases, perfect for displaying the talents of Malcolm Willie, the store’s lead cake decorator, who turned out some special Navajo-themed creations on the day of PG’s visit. In addition to scratch doughnuts and
Bashas’ popular crusty bread, the bakery makes traditional Navajo fry bread from handmade dough cooked in cast-iron pans; the same dough is used to make tortillas. The remodeled meat department offers greatly expanded meat, pork and chicken offerings. The store will also grill mutton and hamburgers on weekends. Family meal boxes feature several kinds of meats in one bulk package for around $25. “Many people have to travel far [to shop], so we offer items in bulk and variety,” Mitchell says. Native American Beef — “grown locally, Navajo-raised” — was rolled out a year ago and has been very well received. The produce department sports new wet racks and dry cases, offering a larger variety of fruits and vegetables, including organic options. ‘We’ve seen a big uptick in grab-and-go salads since we launched Diné Healthy,” Adams says. In addition to raw and roasted corn meal, traditional Navajo steamed corn, made from a special plant harvested once a year, is exclusive to this store and carried year-round; it’s used for mutton stew, a staple native dish. “We sell more pomegranates on the Navajo Nation than anywhere else in the chain,” Shick notes of the fruit, known in these parts as Indian apples. Besides the many new food offerings, the store launched its first Dickies work apparel section, as well as a variety of bulk- and value-priced items. The store offers many items not carried by other Bashas’ stores, because there’s a demand for them in the agrarian community, such as chicken feed, salt licks and calf feeder buckets. “It’s been an ongoing process listening to the community and bringing in items they need,” Adams says.
An Enduring Friendship
The Bashas’ Diné store in Window Rock has come a long way, as has the community; when it opened, the store was one of the few locations in the area with electricity and plumbing. But Bashas’ has demonstrated that it doesn’t just build stores, it also helps build communities. “We had our fair share of challenges in opening this store back in 1989,” Basha recalls. “We learned early on that the amount of time consumed in planning, permit gathering, architectural renderings and actual construction was significantly greater than anticipated. However, the Navajo Nation and Bashas’ were determined to work through them to obtain a common goal. And because of it, I believe we both got more: an enduring friendship. We turned challenges into opportunities and stumbling blocks into stepping stones.”
Chandler, Ariz.-based Bashas’ Family of Stores — the family-owned grocer that operates Bashas’, Food City, AJ’s Fine Foods and Eddie’s Country Store — was founded in 1932 by brothers Ike and Eddie Basha Sr. The company operates more than 100 grocery stores under its various banners. Since opening its first Diné Market 35 years ago, Bashas’ has been a collaborative member of the Navajo Nation, supporting education, nutrition, art, and health and wellness through community programs and partnerships. At least 95 percent of store employees are Native American, and each store location gives back a percentage of its profits to the Navajo Nation. Bashas’ is one of very few non-Native-American retailers with stores on the Navajo Nation. In 1982, the grocer opened its first reservation store, in Chinle, followed by Tuba City in 1983; Kayenta in 1985; Window Rock in 1989; Crownpoint, N.M., in 1990; Pinon in 1993; and Dilkon in 2002. An eighth store, in Sanders, is anticipated to open in 2018. Bashas’ also operates three other stores on other tribal reservations across Arizona. The retailer is a supporter of the Navajo Nation Parade, which takes place annually in September, to promote and encourage physical activity. “Healthy communities are strong communities,” says Edward “Trey” Basha, CEO of Bashas’ Family of Stores. “We’re collaborating with Navajo Nation leadership to bring fresh ideas, new offerings and novel programs that will help families to live their best lives.” www.bashas.com
The response from the Navajo community has been most rewarding, Basha says. “It’s a privilege to be a part of the fabric of the Navajo Nation, and our relationship is truly one of a kind. Our Diné store directors are some of our best.” With no other large-format grocery stores on the Navajo Nation reservation in Arizona, Bashas’ holds a unique position in the community. The retailer’s relationship with the nation includes giving back to the community for every dollar spent in the store. “A portion of our sales goes directly back to the Navajo Nation every month,” Basha explains. “The profit-sharing arrangement has contributed upwards of $12 million for educational scholarship and economic development projects, and the Navajo Nation has received nearly $25 million in rent and percentage rent. We also provide jobs, training and support to the people of the Navajo Nation through workplace training programs and a commitment that every store on the reservation has a workforce that is 95 to 98 percent Navajo.” Perhaps most significantly, Basha adds, the retailer has invested more than $200 million in labor and benefits for all Bashas’ Diné Market employees, a workforce that’s approaching 400 people earning nearly $8 million in wages. “Some of the original individuals we hired to work in our Bashas’ Diné Markets in the 1980s remain with our company today,” Basha notes. “A few have gone on to other commercial ventures, and we take pride in that — it means that the goal of helping the tribe develop entrepreneurially is being met.” PROGRESSIVE GROCER December 2018
Selling More in 2019 RE TAIL INDUSTRY E XPERTS OFFER FIVE WAYS TO GROW BUSINESS. By Barbara Sax
he retail landscape is more competitive than ever, and shopper loyalty continues to be elusive for many retailers. For supermarket operators to increase sales in the coming year and beyond, they’ll need to focus on driving traffic, boosting basket size and building shopper loyalty in new ways. Following are five areas on which grocers can concentrate to up their store game:
Elevate the Customer Experience
“It is increasingly important for retailers to understand what is important to their core shoppers, as well as those shoppers that they are leaking to competitive outlets,” says Colin Stewart, SVP, Center of Shared Business Intelligence at Jacksonville, Fla.-based sales, marketing and services company Acosta. Notes Thom Blischok, chairman and CEO of The Dialogic Group LLC, in Phoenix: “With 40 percent of the center store going away by 2023, retailers will have to
Digital Transformation 101: A guide to the new retail revolution
Digital Transformation 101: A guide to the new retail revolution
Digital Transformation 101: A guide to the new retail revolution
DIGITAL TRANSFORMATION. It sounds like an event of massive proportions—and it is. The digital retail revolution taking place right now is a complete business transformation, a radical reassessment of how retailers apply technology to add value, improve efficiency and drive revenue. It involves fundamentally rethinking models, processes and environments that touch every area of a retailer’s organization, from supply chain to pricing to how a shopper gets her questions answered when she’s browsing the aisles. Already, worldwide spending on digital transformation technologies is
projected to reach almost $1.3 trillion in 2018, an increase of 16.8 percent over the $1.1 trillion spent in 2017.1 In 2021, spending should nearly double to more than $2.1 trillion.2 Millennials are driving much of this shift. Weaned on technology, they expect digital conveniences to characterize almost every experience, including shopping. While traditional marketing vehicles like brochures and in-store ads may appeal to older consumers, millennials are plugged in to mobile and social shopping—not just for buying, but for making price comparisons, researching products and seeking others’ opinions. In fact,
TOP TECHNOLOGIES DRIVING RETAIL DIGITAL TRANSFORMATION Digital transformation involves both new technologies and evolving technologies that did not exist in their current forms or applications. These technologies are providing levels of business connectivity, flexibility, process tracking and attention to detail that have never before been possible. In many cases, the technologies allow digital commerce to blur the lines between physical stores and e-commerce, creating seamless omnichannel experiences and opportunities. The most important underlying technologies powering the current wave of retail innovation include: Cloud computing Cloud computing involves a network of remote servers hosted on the internet that store, manage and process data as an alternative to a local server or personal computer. Cloud computing can help reduce operating expenses because the cost of upgrades, new hardware and software can be included in the service provider’s contract. In 2017, the global retail cloud market totaled $13.24 billion, and it is expected to hit $40.75 billion by 2023.4 Internet of things (IoT) IoT relies on a series of wireless technologies to connect a variety of devices to an array of sensors or other equipment, allowing retailers to remotely
millennials are more than twice as likely to believe that user-generated content is authentic (53 percent), compared with brand-developed content (25 percent).3 Aperion and EnsembleIQ have partnered to provide the industry with a common lexicon, best practices, and case studies shaping the digital retail experience. This comprehensive guide to digital transformation explores how it can help retailers serve consumers faster, offer more choices and increase efficiency across every business juncture, along with specific applications being used to enhance in-store, online and omnichannel shopping experiences.
monitor movement, performance and preferences of products, equipment and people, among other variables. The global connected retail market was estimated at $19.46 billion in 2017, with projections that it will skyrocket to $82.31 billion by 2025.5 Big data Big data refers to the study and application of data sets that historically have been too large and complex to be adequately processed by traditional data-processing application software. Today’s advanced data analytics tools, however, can automatically examine millions of varied data points (“big data”) to uncover patterns, correlations, market trends and customer preferences in real time, helping businesses make informed decisions. The big data analytics market in retail is projected to be $9.01 billion by the end of 2023, up from $2.85 billion in 2017.6 RFID (radio frequency identification) RFID uses radio waves, chips and readers to identify tagged objects. With fixed and/or hand-held readers, retailers can instantly access information on stock levels, expiration dates, model numbers, item location, color, size, manufacturer and other criteria. By 2023, the global RFID market is predicted to top $27.5 billion, rising at a rate of 14.1 percent CAGR (compound annual growth rate) from 2017-2023.7
Digital Transformation 101: A guide to the new retail revolution
Artificial intelligence (AI) AI-enabled machines or systems utilize complex algorithms to sort through myriad data points. They imitate human behavior in intelligent ways—for example, allowing retailers to gather shopper insights in a predictive manner. That means retailers can evaluate and predict consumers’ next actions based on both previous purchasing patterns and future responses to market trends. This year, retailers will increase AI spending on average by 7 percent, with leaders (retailers whose sales are growing at a rate of 5 percent or higher) boosting their IT spending by 20 percent or more.8 By 2022, the overall worldwide market for cognitive/AI software platforms is forecast to approach $9.5 billion, at a CAGR of 36.7 percent from 2018-2022.9
CUSTOMER-FACING INNOVATIONS When it comes to driving store traffic, price and product are key motivators. But turning shoppers into repeat customers can require much more, and that’s where digital transformation is helping retailers make enormous strides both in-store and online. Loyal shoppers want a superior in-store experience that includes being able to find products quickly, with assistance readily available if needed. They also want to avoid irrelevant promotions and slow checkout lines. These evolving technologies are enabling retailers to deliver a more streamlined and personalized experience for in-store shoppers: Smart shelves Smart (connected) shelves keep customers satisfied by making sure the items they’re seeking are always in stock, alleviating lost sales. They help retailers measure shrink and manage costs through a wireless inventory control system that monitors quantities of products on shelves in real time. Associates and back-end systems are notified when product levels decline, a theft is detected or items are misplaced. Because employees can access stock information remotely via handheld devices, they are free to perform other tasks such as customer service.
The AI advantage: Enhanced supply chain planning Retailers traditionally have used historical data to forecast future demand in supply chain planning, but they weren’t able to factor in current economic fluctuations, weather patterns and other variables. Because AI can constantly “learn,” it can forecast according to current market conditions. AI uses machine learning to combine a retailer’s existing data with external information. The process is continuous, with AI looking to “see” which combinations of algorithms and data streams have the most predictive power for different forecasting scenarios. This endless loop constantly monitors and adjusts stock levels in real time. Since it uses current data, AI allows retailers to match actual demand to alleviate underor overstocking, both of which can cause revenue loss and fresh food spoilage.
Electronic shelf labels (ESL) Electronic shelf labels represent a powerful, basic, digital shelf edge. A smart ESL system displays pricing on shelves but can also communicate with shoppers, employees and vendors. Typically, an ESL is attached to the front edge of retail shelving. The modules use electronic paper (e-paper) or liquid-
Digital Transformation 101: A guide to the new retail revolution
crystal display (LCD) to show the current product price and other relevant information, such as customer ratings, promotional items, product attributes, stock information and links to additional product data. . Contactless payments Contactless payments accelerate the checkout process and provide added security for consumers making purchases via credit, debit or smart cards, smartphones and other mobile devices using RFID or near-field communication (NFC). An embedded chip and antenna allows shoppers to wave their cards or devices over a POS reader in close proximity. (Traditional mobile payments use broad area cellular or Wi-Fi networks and do not involve close proximity, making them less secure.) Contactless payments will exceed the $1 trillion mark for the first time in 2018, a year earlier than anticipated, and in-store contactless payments will reach $2 trillion by 2020, representing 15 percent of total POS.10
Connected homes Connected homes, facilitated by IoT, can mean everything from voice-controlled lights and house-cleaning robots to AI-enabled security cameras and appliances that can place shopping orders. In the kitchen, the new LG InstaView ThinQ refrigerator offers streamlined food management through LG’s webOS platform and Amazon Alexa’s voice recognition technology. Grocery shoppers can check the refrigerator contents using their smartphones connected to a camera inside the refrigerator, or order items from home through the refrigerator itself. The ThinQ fridge can also communicate directly with LG’s Wi-Fi-enabled AI oven and dishwasher. Current U.S. household penetration for smart appliances is 14.2 percent, and it’s expected to hit 28.6 percent by 2022. Consumers ages 25 to 34 are the most frequent smart appliance purchasers (47 percent), followed by ages 35 to 44 (28 percent) and ages 18 to 24 (17 percent).11
Experiential shopping Experiential shopping lets shoppers try (virtually) before they buy. These interactive tryouts can simulate the environment a product is meant to be used in, create aspirational experiences, let consumers test different options and put online merchandise in a familiar context. Many use augmented reality (AR) and/or virtual reality (VR), a group of hardware, provider and software additives that enable shoppers to visualize digital surroundings in real time. At Lowe’s, for example, the Holoroom Test Drive offers VR so customers can sense the feeling of holding and using a power tool.
NEW ONLINE RETAIL SELLING MODELS AND THE EVOLVING OMNICHANNEL EXPERIENCE As e-commerce grows, it continues to diversify, giving customers more options and conveniences. Some brick-and-click operations have become fully integrated, providing shoppers with seamless omnichannel experiences. Other e-commerce companies offer specialized features that mimic the in-store experience. And a growing cadre of online subscription services regularly supply consumers with everything from fashionable apparel to dog food.
Staying ahead of the curve: Do’s and don’ts DO keep the customer front of mind. Many factors influence how your customers shop, and their wants and needs change constantly. Keep up with the different ways in which they prefer to shop and receive information, both digitally and offline. Facebook, for example, initially appealed to younger consumers but now skews older, with people ages 18 to 24 attracted to multiple platforms, including Snapchat and Instagram.
DO create a formal digital strategy. Assess your business goals and determine what needs enhancement. Identify elements that add the most value along with their inherent disadvantages. This is where digital tools should first be applied.
DON’T leave gaps in the shopping experience. Eliminating gaps between physical and online shopping experiences facilitates the customer journey and maximizes your use of digital tools. In fact,
DON’T grab every available data source at once. Start by focusing on existing familiar data sources such as POS and loyalty. Figure out how and where
81 percent of retailers plan to offer unified commerce by the end of 2020, and 91 percent plan to provide order visibility across channels within three years.13
Digital Transformation 101: A guide to the new retail revolution
Seamless omnichannel With true brick-and-click integration, customers can access the same information across devices and channels. In Home Depot’s stores, shoppers frequently use its mobile app to check shopping lists, read reviews, see product details and discover merchandise’s physical location. When signed in to the app, in-store customers can also view saved items, pending orders and other details across desktop web, mobile web and app. About 15 percent of Home Depot’s mobile app usage occurs within its physical locations.
categories, particularly apparel, furniture, housewares and accessories. The IKEA Place AR app lets users virtually position furniture in various rooms of the home; the furniture is three-dimensional and to scale so consumers can make informed decisions about size and design. Another growing AR application involves smart (or virtual) mirrors that display a user’s image on a screen as if the screen were a mirror. Virtual mirrors are available as mobile phone apps, with some allowing users to modify their hairstyle, clothing, makeup or accessories.
Last mile delivery Retailers are blurring the lines between channels by using digital technology to link multiple ecosystems for last mile delivery. Ecosystems can include stores, distribution centers, Uber and Amazon lockers. Walmart, for one, has been experimenting with various last mile delivery models for online orders placed through individual stores. In September 2018, it announced a deal with Spark Delivery, a crowdsourced in-house delivery company. Walmart also has last mile agreements with Deliv and Postmates. This resource combination should eventually provide last mile delivery to 100 metro areas covering 40 percent of U.S. households, according to Walmart.
Conversational commerce This emerging technology builds relationships that generate repeat traffic. By using automated customer service interactions, online shoppers receive responses within hours, augmenting conversion and retention. Stitch Fix entered this game early with an algorithm that continuously learns and adapts to customers’ preferences while combining AI with human intelligence. New visitors to the site are asked about sizes, wearing occasions, personal style and other variables before collections are curated for them. After the boxes are sent out, Stitch Fix builds on that information based on what shoppers keep and return.
Virtual rooms and mirrors Some retailers are using online virtual fitting rooms (also called virtual trial or try-on rooms) to let shoppers see how products complement their looks or lifestyle. These trybefore-you-buy apps are most popular in fashion
these sources fit into an overall digital strategy. Then layer on more data, such as demographics and insights from sources like websites, mobile apps, stores and call centers. DO keep what works even if it’s not digital. The latest bells and whistles can entice millennial consumers. But unless you specialize in the fast and faddish, your customers are probably not all young, trendy and digitally savvy. Offering a mobile app but keeping paper coupons, for example, may be the best way to meet everyone’s needs, particularly in a category like food or appliances that attracts very mixed demographics.
PRICING AND PROMOTIONS DONE RIGHT Offering the best prices and promotions at the appropriate times in the right markets can maximize sales conversion and margins. AI and its subset, machine learning, can create dynamic pricing
DON’T be distracted by shiny objects. Digital transformation is less about the newest, coolest technology and more about meeting the needs and expectations of shoppers and the organization. Understand how and why a specific technology will do that before you buy into it. DO tap the expertise of digital transformation partners. Many retailers lack the necessary skill sets to execute digital transformation projects. Partnering with experienced providers can help you better understand the steps involved and how to best execute them on an ongoing basis.
Digital Transformation 101: A guide to the new retail revolution
models that let retailers regularly (or periodically) adjust prices based on various criteria. Those criteria can include supply/demand, seasonality, competitors’ pricing, peak shopping periods, consumer perception/behavior, weather and more. Dynamic pricing algorithms Amazon uses dynamic pricing algorithms to constantly scan competitors’ prices. At the heart of the algorithms is a machine learning model that estimates the impact on revenue for each possible price configuration. It then adjusts prices according to their pricing dynamics. Amazon’s reputation for competitive pricing, in fact, is one reason for its success. Brick-and-mortar retailers that are trying to compete in this space also have options for dynamic pricing. However, the use of pricing algorithms needs to be connected to an efficient and effective delivery mechanism. A smart electronic shelf label is the basic digital shelf edge that enables a traditional retailer to capitalize on the benefits of dynamic pricing. Personalized pricing In some stores, Kroger is testing personalized pricing through interactive shelves. These shelves use sensors and analytics to detect individual shoppers using their mobile app. Kroger then offers tailored pricing on certain products and highlights items
on the shopper’s mobile shopping list. For example, if a customer with a gluten allergy is looking at nutrition bars, he or she will be shown gluten-free options and offers. Beacons Beacons can inform customers about special offers. Often associated with IoT, beacons are small Bluetooth devices planted throughout a store that send alerts to smartphones based on shopper proximity. Customers can receive information on loyalty discounts, special events and other topics. Macy’s beacons, which work through its app, create a true omnichannel experience: Beacons recognize which department the customer is physically visiting and what he or she has viewed online. If a shopper is browsing the cosmetics section, for example, the app will remind her of the makeup brands she liked online.
360-DEGREE CUSTOMER SERVICE Good customer service involves effective communication and the ability to provide information quickly. Growing from foundations such as loyalty apps and shopper engagement platforms, digital innovations like chatbots and natural language processing (NLP) increasingly are replacing humans, eliminating customer wait time and easing labor costs.
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.
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 101: A guide to the new retail revolution
Chatbots Chatbot software can converse with customers within chat platforms like Facebook Messenger, Slack, and SMS. While their capabilities are still limited, chatbots can be programmed to respond to frequently asked questions and show relevant information. Both H&M and North Face use online chatbots that help shoppers choose the right merchandise. The chatbots ask about style preferences, what item the customer wants and other criteria, and then recommend specific products. In-store, Lowe’s is testing the Lowebot, an in-aisle touchscreen robot that answers shoppers’ questions and helps locate products. Natural language processing NLP, a subset of artificial intelligence, can be coded to communicate like a person, using speech or text to answer customers’ questions. On e-commerce sites, NLP helps users find products without having to choose from different options available through static searches, yielding higher cart checkout conversion rates. Online Australian fashion retailer Zimmermann uses an NLP-based solution in its product search engine. If a user enters “ankle shoe,” for example, search results include “ankle boot” and “ankle heel,” which do not contain the term “shoe.” But NLP
Quick scan using smartphone or a wearable device Activity-based suggested products (AR/VR) Smart robots Robots with touchscreens for browsing inventory Smart shopping carts Smart price tags
Smart sensors monitor quality Smart packaging
IoT-connected digital signage
understands that a product with an ankle heel is likely to be women’s footwear, even if that word is not part of the product name or description.
INVENTORY CONTROL AND STORE OPTIMIZATION The digital transformation of retail is also touching technologies that are generally invisible to consumers. Chief among them are applications that monitor stock levels, alleviating costly over- or understocking, and those that help retailers determine appropriate store formats, sizes and locations. Virtual inventory Virtual inventory melds channels by showing all available products in particular stores, stockrooms, online, in warehouses and even in transit via truck or sea cargo. If a desired item, size or color is unavailable in one location, employees can quickly locate it and ship it to a customer. Some virtual inventory systems also show suppliers’ inventories, letting employees order out-of-stock items directly from a manufacturer for shipment to shoppers. Item-level RFID tagging RFID has moved beyond its usage for just tracking warehouse pallets. Item-level RFID tagging is becoming an important component of store-level inventory control, and it is expected to ultimately replace bar codes in applications that require bulk counting. RFID tags hold much more data than a bar code, and information can be changed or updated. RFID also provides greater and more immediate inventory visibility, facilitating granular control. It can help eliminate out of stocks and duplication by showing exactly where items are, including misplaced ones. In fact, 73 percent of respondents to a retail RFID survey said they had either implemented or were currently implementing or piloting RFID, and retailers who measure inventory accuracy related to RFID saw an average 25 percent improvement due to RFID.12 Zara, along with Lululemon and Macy’s, has been a pioneer in item-level tagging in retail stores. Zara’s 2,200-plus locations currently use item-level RFID tagging to closely monitor product performance and maintain lean inventories, introducing small quantities of new items every few weeks to ensure that Zara’s fast fashions do not become fast failures.
Personalized digital coupon upon entering the store
Digital Transformation 101: A guide to the new retail revolution
On-shelf availability Closed-circuit television cameras (CCTV) have been evolving for years. Today, digital CCTV combined with a digital shelf edge and a powerful algorithm can cost-effectively determine if product is available on a shelf and then alert staff to address issues in order of priority. Bio c’ Bon, a leading French organic retailer, has implemented this solution to reduce out of stocks and increase customer loyalty. Click and collect efficiency Providing click and collect options to consumers has shifted labor costs to retailers and outsourced services that previously were absorbed by consumers. In many instances, retailers are struggling to absorb these extra costs while serving the needs of their shoppers. A digital shelf edge allows retailers to digitize their planograms, enabling pickers to optimize their store journeys just as in a warehouse management system. Intermarche, a European food retailer, has experienced 30 percent gains in productivity for selection of click and collect orders using a smart electronic shelf label system. AI-driven planning for stores Artificial intelligence is enabling digital solutions that can help retailers make better use of their space. U.K.-based Pets at Home, for instance, uses an AI-driven planning and optimization solution to optimize space in its 440 stores, which offer pet care products
along with veterinary and grooming services. In each store, the AI solution conducts a detailed SKU-level performance analysis and recommends optimal space allocations by category, aisle and department. AI-powered software is also powering more effective retail site selection. This type of software factors in millions of data points covering everything from prospective cotenants, traffic patterns and other location information to target customer profiles, numbers of prospective shoppers and specific area demographics.
A NEW AGE OF SOLVING AGE-OLD PROBLEMS In the modern retail world, big companies no longer call the shots. The customer is king, backed by mobile and digital technologies that give shoppers unprecedented power and guide their actions in researching, buying and sharing their opinions about retailers and merchandise. Retailers can continue to engage and delight these shoppers by radically rethinking how they use technology too, pursuing new business models and creating highly personalized shopping environments that coordinate seamlessly across channels. It’s all about connecting with customers in ways that go beyond a simple transaction. Digital transformation is a new journey with an age-old goal: making customers happy and creating ongoing relationships.
1 “Worldwide Semiannual Digital Transformation Spending Guide,” International Data Corp. (IDC), 2017 2 Ibid. 3 “Friends and Family Most Authentic Influence,” MediaPost.com, Nov. 10, 2017 4 “Retail Cloud Market,” Mordor Intelligence, April 2018 5 “Connected Retail Market-Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2017-2025,” Transparency Market Research 6 “Big Data Analytics in Retail Market-Segmented by Application,” Mordor Intelligence, March 2018 7 “Demand for Locating, Tracking, and Monitoring Objects,” ResearchAndMarkets.com, 2018 8 “Retail Transformation Study,” IHL Group, October 2017 9 “Worldwide Cognitive/Artificial Intelligence Software Platforms Forecast, 2018–2022,” International Data Corp. (IDC), April 2018 10 “Contactless Payments: Payment Cards, OEM Pay & Mobile Wallets 2018-2023,” Juniper Research, July 2018 11 “Smart Home Report 2018-Smart Appliances,” Statista 12 Kurt Salmon RFID in Retail Study 2016 13 “2018 POS/Customer Engagement Study,” Boston Retail Partners
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improve the in-store experience, which will include grocerants.” Diana Sheehan, director at Norwalk, Conn.-based Kantar Retail, agrees. “The retailers that are going to be successful in driving traffic to the stores will be those that have created compelling service offers to convince shoppers to come in even when they don’t need to buy anything,” she says. “Hy-Vee has done a great job with its dietitians, their foodservice offer and now even connecting to fitness programs like Orangetheory. They are creating a destination store, not just a grocery store.” While shoppers are laser-focused on value, Stewart notes that low price isn’t the only way to deliver value to consumers. “Shoppers often associate convenience with value, so supermarkets win when they focus on areas that provide convenience like foodservice, prepared foods and high-quality meal kits that provide shoppers with convenient solutions,” he points out. Eric Richard, education coordinator at the Madison, Wis.based International Dairy Deli Bakery Association, believes that consumers are looking for their retailers to be a source of information, and that supermarkets can differentiate themselves from other channels by becoming places where consumers can learn about food — or their overall health. “Providing them with information they can’t get elsewhere is becoming extremely important,” he says. “That can mean boosting prepared food departments, providing consumers with ideas for preparing meals, offering samplings or cooking classes.” For other shoppers, value means in-store services, and health-andwellness offerings, cooking classes, wine selection (and tastings), and nutritionists drive more trips and more time in store for shoppers. Frictionless transactions at the front end of the store to expedite the checkout process are an important part of the overall experience and can be a deal-breaker for shoppers. Determining how technology will change the operating model in the store, from robots to cashless checkout, will figure into that strategy. According to Stewart, that includes options like self-checkout, scan and go, “or simply providing great customer service as shoppers complete their trip.” For his part, Blischok stresses the importance of the in-store human touch. “Retailers need to empower employees to do great things,” he advises. “Helping employees realize localization and improve the shopping experience, then rewarding them for doing great things with shoppers, will drive real and profitable growth.”
most effective product promotions are short-term and spark customer excitement. Creating a themed pumpkin patch outside the store, rather than featuring a single bin of pumpkins in the produce department, will generate excitement in regard to purchasing. Jackson observes that some key trends to watch are products with clean and transparent food labels, offerings where taste is as important as health, and the continued focus on social responsibility, leading back to a strong founder story.
Concentrate on Fresh and Natural/Organic
Fresh is an area in which supermarkets have a natural advantage over other channels — especially online. “People want to see, feel and smell fresh products,” says Richard. “Fresh is outpacing center stores in sales, so focusing on that area and finding ways to further engage consumers — like a bakery window that lets customers see and smell fresh bread being baked — is a place [with which] online retail can’t compete.” Retailers should also continue to focus on natural and organic products. “Sales of these products will continue to grow across many categories, and shopper expectations and demand continue to increase, especially amongst younger shoppers,” observes Stewart. “Merchandising natural and organic products helps to enhance shopper perception of the retailer’s focus on health and wellness while trading shoppers up to higher quality and usually higher-priced products.” He recommends leveraging differentiated shelf tags or signage to signal a commitment to natural/organic and other good-for-you products.
Hone the Assortment
The importance of the right assortment can’t be overestimated. “Bringing in the right mix of product innovation and creating new category staples will be essential to driving traffic into the store,” asserts Nicky Jackson, founder and CEO of San Francisco-based RangeMe. “Online channels will continue to expand, and social currency for brands will be part of sourcing decisions to offer more points of access for consumers.” That means paying attention to seasonal sales opportunities. Retailers often miss opportunities for incremental seasonal sales, because of gross-margin goals and concern about being over-SKU’d, so buyers become less willing to take risks by adding seasonal products with short availability windows, according to the Newark, Del.-based Produce Marketing Association (PMA). Some of the PROGRESSIVE GROCER December 2018
Boost Omnichannel Reach
Blischok believes that the No. 1 issue facing retailers is rationalizing how they’re going to implement omnichannel. “There’s a lot of investments being made in shopper engagement, in online data and product information, but we’re in the age of experimentation,” he says. “When Nielsen and FMI did the readiness assessment for omnichannel, only 10 percent of retailers said they were ready, so that’s a huge play. The ability to have a profitable omnichannel strategy is critical.” The second part of that is understanding fulfillment. “How will they make bricks and mortar, clicks and mortar, home delivery, clicks and lockers profitable without having to incur a huge amount of costs and a fundamental shift in the picking model?” muses Blischok. “Being able to think through the issue of cost-effective fulfillment is key.” “Retailers will need to evolve how they are engaging shoppers in a digital universe, from their apps to their emails to their website,” notes Sheehan. “Are they engaging their shoppers in ways that are personalized? Are they targeting shoppers with what they are looking for?” “Basket size increases by 36 percent, from an average of $64 to $87, when the consumer has been digitally influenced,” points out Andrea Bell, principal at Deloitte Consulting, in New York, citing research undertaken by her company. “Retailers need to capture that by determining how to digitally influence their consumers along the path to purchase. This requires creating an emotional connection with the consumer around their experience. Emotional connection is the most important attribute [of] driving satisfaction with a retailer. This likely will require teaming with consumer products manufacturers to create the emotional connection across both the retailer and the brands the consumer is purchasing.” According to Stewart, digital can be integrated into the shopping experience in several ways: Education: Leverage mobile apps to inform shoppers and educate them on everything from where to find products in the store, to nutritional information, to solutions such as recipes. Shopping: Whether via click-and-collect or home delivery, offer an extended assortment of products that aren’t on the shelf. Digital should provide shoppers with options on how they can interact with the brick-and-mortar store or have products delivered to their homes.
—Nicky Jackson, RangeMe
Partnerships: To expedite digital activation, consider teaming with third parties to move quickly into these new digital capabilities. With online penetration set to increase in the United States, Jackson says that exciting new meal solutions and savvy online delivery options will be at the forefront of convenience progressivegrocer.com
Many retailers are focused on improving losses in departmental shrink. As comparable sales are trending up and greater competition is resulting retail price pressures, retailers can develop efficiencies in how product moves through the supply chain and into their stores, according to PMA, which adds that this can be accomplished through efficient data-based ordering. As there’s often a gap in store-level staff knowledge regarding storage and handling, retailers can improve shrink rates through proper best practices, staff education and efficient ordering, thereby creating more consistent on-shelf product-level conditions without adversely affecting sales.
Bringing in the right mix of product innovation and creating new category staples will be essential to driving traffic into the store.”
Motivation: Consumers can be motivated through loyalty programs, especially in customized ways that provide a personalized experience that’s relevant to shoppers.
solutions. And with consumers becoming more confident about purchasing fresh fruits and vegetables online, PMA notes that supermarkets have an opportunity to improve their digital services and boost customer satisfaction with more fresh offerings. “Consumers are consistently shopping in a channel-less environment,” observes Bell. “The same consumer is shopping in store [and] using click-and-collect and home delivery. The key is to understand what your consumers are looking for, focus the value proposition there and identify channels where [there’s] a willingness to pay. We are seeing that one size does not fit all.”
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PMA Fresh Summit Recap
Forum for the Future FOOD SAFE T Y, TALENT, INNOVATION LE AD DISCUSSIONS AT PMA FRESH SUMMIT, WHILE E XPO SHOWCASES SNACKING AND ME AL SOLUTION OPPORTUNITIES FOR FRUITS AND VEGE TABLES. By Jim Dudlicek
he Produce Marketing Association (PMA) is finalizing a turnkey food safety certification program that will be unveiled in the coming months. That was the announcement by Cathy Burns, CEO of the Newark, Del.-based trade group, at PMA Fresh Summit, its annual expo held Oct. 18-20 in Orlando, Fla. Reflecting on recent recalls in the produce industry, Burns called for a proactive approach to food safety. “Consumers are questioning their confidence in us,” she
Summit exhibitors presented innovations in, and vast possibilities for, fresh produce. Next year's expo is scheduled for Oct. 1719, 2019, in Anaheim, Calif.
said during her state-of-the-industry address that opened the conference. “Food safety must be the cornerstone of an organization’s values, character and culture. Food safety is a reflection of your core values. … [W]e must embrace a follow-the-science philosophy.” Burns pointed to tech advancements in the produce arena supported by investments in agrifood tech topping $10 billion, including robotics, app development and plant-based foods. But she cautioned that this last area, which most visibly has focused on meat substitutes and other foods outside the produce section, shouldn’t be allowed to overshadow the importance of fruits and vegetables. “We have our own story — not as a substitute, but because of our own merits,” she said, noting that vegan and PROGRESSIVE GROCER December 2018
PMA Fresh Summit Recap
Canada’s Mastronardi Produce, which sells products under the Sunset brand, displayed new items including its IncREDible Tomato, Shazam! Shishito peppers and Sugar Bombs grape tomatoes.
produce sales growth is outpacing total food and beverage. “Wherever conversations are taking place about the world’s food supply, we need to be there and be leading.” Burns also stressed the importance of providing support to Millennials’ and GenZ’ers’ aspirations in the produce industry, particularly in the areas of leadership, ethics, finance and language. “The role of employer as educator is going to be critically important,” she stressed, predicting a “global renaissance in industry talent.” This year’s Fresh Summit premiered some new features built around the idea of a “Forum for the Future.” Breaks between general sessions featured “Experience Extension” exhibits including blockchain, produce safety, attracting talent, transportation and networking opportunities.
It’s a testament to the power of fresh that the innovation isn’t letting up in the perimeter — that was certainly evident among exhibitors at the expo. Suppliers were focused on solutions for consumers’ every need, from daily meals to snacks to specific dietary demands.
For example, Minnesota-based Robinson Fresh launched Perfect Potatoes, a line of seasoned, microwaveable mini taters that addresses consumers’ desire for convenience, self-preparation and smaller portions than historically available in a sack of spuds. Robinson’s Michael Pastagnetto said that while russet and red potatoes still dominate the market, their volume is dropping, while specialty varieties like fingerlings are growing. “We think potatoes have to do the same thing as apples,” he said, referring to the explosion of designer varieties of the popular fruit. Meanwhile, The Little Potato Co., based in Canada, updated its packaging and added two new varieties to its line of creamer potatoes — three in plastic trays ready for 5-minute prep in the microwave, and three more in foil trays for 30-minute prep in the oven or on the grill.
Wherever conversations are taking place about the world’s food supply, we need to be there and be leading.” —Cathy Burns, CEO, Produce Marketing Association
Little Potato’s Richard Vann concurred that while the overall potato category is declining, creamers are “on fire.” Progressive Grocer agrees that potatoes that are prewashed, come with seasoning and are ready to cook are right on trend. Little Potato is leveraging that trendiness through cross-promotions including placements in the meat department and even at checkout.
The combination of fruit and vegetables with nuts, cheese and other snack bites continues to gain traction. One grower that excels at leveraging this trend is California’s Naturipe, which displayed several of its popular snacking concepts at the summit. Naturipe reports growing distribution for its snack line, which includes 5-ounce ready-to-eat fruit cups, complete with a handy plastic fork; snack boxes with several combinations of fruit, cheese and nuts; and fruit bites featuring blueberries solo and with grapes. With a network that now includes four Fairtrade Certified farms, Naturipe is touting its Fairtrade blueberries and working on more sustainable packaging. Squeeze pouches from Wana Bana are filled with
delicious snackable purées made of fruit and nothing else. The brand’s Catherine Vieira said that the fruit — hand-pollinated and grown using natural pesticides — is processed very close to where it’s harvested in Ecuador. Officially launching at Fresh Summit, Wana Bana has been in the United States since July, at stores in the Miami and Los Angeles areas. With flavors like Banana & Strawberry, Mango, and Banana & Passion Fruit, it also has a great brand story: The company provides employment to women and single moms in its growing region. Continuing to grow by leaps and bounds as a snacking solution is SunGold yellow kiwifruit from New Zealand’s Zespi. Enjoying year-over-year sales growth topping 30 percent, the brand works closely with grocers to create strategic displays to drive incremental growth in the produce section. Zespi stresses the health benefits and convenience of the spoonable fruit, as well as its sweetness and readiness to eat upon harvest, compared with green kiwis. The Wonderful Co. unveiled a new retail merchandiser as a produce department destination for its popular Halos mandarins as part of a new $30 million marketing campaign that’s rolling out through May. “Retailers see the advantage and are doubling down on Halos,” said Adam Cooper, of Los Angeles-based Wonderful. “Mandarins are driving all the growth in citrus.”
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PMA Fresh Summit Recap
Orange, and White Balsamic. Meanwhile, California-based Follow Your Heart displayed its line of vegan dressings and cheeses, including a tangy coleslaw dressing that was one of PG’s 2018 Editors’ Picks. Not quite salad but certainly an ingredient solution is the fresh herb purée launched at the summit by Shenandoah Growers, blended with organic olive oil and including Italian herbs, basil, dill, garlic, ginger and cilantro.
Destinations and Declarations
A highlight of the annual PMA Fresh Summit is the new product showcase, displaying the latest solution-based innovations in fruits and vegetables.
Wonderful additionally displayed its pistachios, including a new line of raw pistachios, as well as its no-shells range, with new flavors coming in 2019. Also a tasty change of pace with a satisfying crunch are new snack mixes from North Carolina-based Truly Good Foods: Key Lime Crunch and Buffalo Stampede, each with a unique blend of seasoned nuts, seeds and dried fruits.
Dole’s booth at Fresh Summit boldly displayed the California-based company’s new corporate logo featuring a green-leaf outline symbolizing a stronger link to the earth. Meanwhile, the brand’s prowess in salads was demonstrated by its new Slawesome cole slaw kits as well as its Spinach Miso Crunch salad. The new products come amid Dole’s latest campaign with the Walt Disney Co., with which the grower is about halfway through a four-year partnership. The companies are focusing on the 90th anniversary of Mickey Mouse via packaging, digital and PR, along with a series of recipes harkening back to each decade of Mickey’s life, but updated for the tastes and health demands of today. Virginia-based Sky Valley Foods rolled out its Organicville line of salad dressings, aiming to create dressings suitable for use with top-selling organic salads at a reasonable price point ($3.99 per bottle). The organic, gluten-free, non-GMO and vegan dressings come in seven varieties: Olive Oil and Balsamic, Greek, Sun Dried Tomato and Garlic, Herbs de Provence, French, Blood
Spain’s Zumex Group demo’d its self-serve fresh-squeezed juice concept designed for grocery stores, intended as a shopper destination to help drive traffic. Canada’s Mastronardi Produce revealed its new partnership with Berry World as the exclusive supplier to North America of its Wow Berries varieties, which are greenhouse-grown for consistent supply. Mastronardi, which sells products under the Sunset brand, also displayed its IncREDible Tomato, designed to be a large thick slice like a beefsteak tomato; Shazam! Shishito peppers, easy to roast or broil and mostly mild, although about one in 10 have some heat; and Sugar Bombs, grape tomatoes on the vine, which are very sweet with a smooth finish. Arizona-based Divine Flavor touted its hydroponic Magnificos as the “sweetest grape tomato out there,” along with mini sweet peppers and cotton candy grapes. “We consider ourselves an innovation company,” Divine’s Carlos Bon said, noting a recent logo and packaging revamp at the family-owned brand. “Produce should be fun.” A cranberry grower since 1934, Massachusetts-based Decas Farms is just this year starting to use the Decas name on retail products to leverage current trends for authenticity and transparency. Decas products include conventional and organic fresh cranberries, baking cranberries, and dried cranberries, including ones containing 50 percent less sugar without artificial sweeteners. British company Fyffes celebtated its 130th anniversary as a supplier of bananas. The company is also the largest grower of free-trade melons and owner of the Highline Mushrooms brand. And the folks at Chestnut Hill Farms extolled the virtues of Costa Rican pineapple, talking up its health benefits, which include cold prevention due to its natural bromelain. Chestnut Hill is promoting pineapple as a year-round fruit rather than a summertime treat, noting that October is its peak season.
‘Artificial’ Ingredient RE TAILERS ARE TESTING SMARTER TECHNOLOGY TO SHORE UP WE AK LINKS IN THEIR SUPPLY CHAINS. By Jenny McTaggart
he weakest links in the supermarket supply chain haven’t changed much over the years — critical areas such as ordering, replenishment and delivery, just to name a few, have persistently caused bumps on the multifaceted journey from farm to fork. But while retailers’ challenges are largely the same today, most observers would agree that there’s a new urgency to address them, as the speed at which consumers expect to get their groceries has accelerated exponentially. In fact, some might call this a critical juncture in supply chain planning. The “2018 State of the Retail Supply Chain Report,” published by the Auburn University Center for Supply Chain Innovation in conjunction with the Arlington, Va.-based Retail Industry Leaders Association, notes that “the industry is at an inflection point where retailers must step back and re-evaluate their age-old ways of doing business.”
Key Takeaways Although supply chain challenges such as ordering, replenishment and delivery have remained the same, there’s a new urgency to address them, and the speed at which consumers expect to get their groceries has accelerated. New technology, including artificial intelligence (AI), is helping businesses better manage their supply chains. Among the available solutions are Symphony RetailAI’s forecasting system and Foxtrot Systems’ AIenhanced route execution. PROGRESSIVE GROCER December 2018
After that vehicle leaves the distribution center, that’s where most of the disruption happens and where most of the opportunity lies in terms of efficiencies today.” —Karl Northrop, Foxtrot Systems
Indeed, some of the “old” methods — such as relying on sticky notes to record information, waiting for vendors to replenish product instead of adopting perpetual inventory, or expecting delivery drivers to navigate the roads based on yesterday’s traffic patterns — are on the way out. In their place is new technology, including the latest tools that not only provide forecasting, but also add artificial intelligence to help businesses make the most informed decisions possible. While artificial intelligence-enabled applications are still in their infancy in U.S. retailing, a handful of supermarket companies are involved in soft launches with technology providers, including Symphony RetailAI, based in Dallas, and Foxtrot Systems, based in San Francisco, to see just how far technology can go toward creating a faster, more efficient supply chain.
Forecasting for the Future
Five companies are currently involved in a soft launch of Symphony RetailAI’s Demand ForecastingAI solution, a forecasting system that has a “machine” component to it, according to Patty McDonald, global solutions marketing director of the retail software division. “We’re seeing some tremendous results so far,” she says, noting that in some instances, retailers’ forecast error rates have been
cut in half. “So, let’s say if 20 percent of the time, you’re missing your forecasting — to change that to 10 percent has a gigantic impact.” McDonald continues: “Sometimes in the market, we find people who might be skeptical to think that forecasting can really be that much better. A lot of the solutions on the market are mature, so people have invested money for good solutions. They wonder if there is really room for much improvement. We believe there is.” In McDonald’s view, some of the “weakest links” in today’s grocery supply chain include timely replenishment of product, especially those that are ultra-fresh and require replenishment on at least a daily basis, new product launches, and collaboration, both internally within the company and externally with suppliers. Collaboration may be the biggest, and broadest, challenge for retailers, in McDonald’s opinion. “There’s a constant flow of information and communication in the supply chain, and it’s important to capture and track all this correctly,” she says. “People are still writing notes instead of having a good tool to provide workflow for good communication.” She points to the potential of blockchain technology as one example of enabling business collaboration with a common technology, and notes that while Symphony RetailAI doesn’t offer a blockchain solution per se, it provides “components” to blockchain with its supply chain solutions supporting specifically the challenging nuances of fresh item management. “At Symphony Retail, we offer a retail supply chain platform, including Master Data Management solutions that help companies keep their data better connected,” explains McDonald. Canadian grocer Longo’s, a family-run company based in Toronto with 32 stores, is one example of a customer that’s using Symphony RetailAI’s technology to achieve better end-to-end collaboration by integrating all of its data from suppliers and warehouses to the stores. While Longo’s isn’t involved
There’s a constant flow of information and communication in the supply chain, and it’s important to capture and track all this correctly.” —Patty McDonald, Symphony RetailAI
in the soft launch of SR Demand ForecastingAI, the company uses Symphony RetailAI’s full suite of supply chain management software. Before that, Longo’s was using fragmented systems and an enterprise retail planning (ERP) solution that was at the end of its life and no longer supported. Alicia Samuel, director of IT business solutions for Longo’s, explains, “We chose Symphony RetailAI because we wanted to have a solution that provided that integrated platform that would help us manage our business, focus on fresh — which is a main differentiator for Longo’s — and would provide enhanced business capability.” In addition to Longo’s, many of Symphony RetailAI’s other customers are also outside the U.S. market, and their adoption of technology seems to be faster than that of U.S. retailers, according to McDonald. “In France, where our company does supply chain development, we have customers that use our allocation and replenishment tools to manage perishables,” she notes. “In North America, you’d see that for toilet paper, but not for produce. Usually North American retailers have someone in the store like a manager manually ordering the product. Some of our French customers are also very big into recording their inventory every day.”
The Last-Mile Link
At the other end of the supply chain — all the way to last-mile delivery — Foxtrot Systems is adding artificial intelligence to route execution, essentially creating a brand-new market for a weak link that many retailers have known existed but could do nothing about, according to Karl Northrop, VP of business development for Foxtrot. His company was created to help delivery drivers, who in a sense are left alone to deal with a highly disruptive environment. Leveraging advances in cloud computing, machine learning and wireless technology, Foxtrot is focused on empowering last-mile fleets to exceed their goals. The company is currently involved in several pilots at retail, whether it be third-party logistics providers, or the retailers themselves that have either expanded into last-mile delivery or home services. “The market is mature, with transportation management systems and route-planning solutions, but what people are starting to realize is that it doesn’t matter how well you plan — after that vehicle leaves the distribution center, that’s where most of the disruption happens and where most of the opportunity lies in terms of efficiencies today,” says Northrop. “In most cases, the daily sequence of their stops will change, whether it be due to traffic, weather, or employee- or store-driven challenges. Most drivers make those change decisions now, and the majority of the time, they’re not
What is AI? Symphony RetailAI explains on its website (www.symphonyretailai.com) that artificial intelligence “uses technology with advanced analytic capabilities like machine learning/ deep learning to do things that previously were thought only humans could do.” Even more intriguing is that the technology actually learns from what it does and can take actions on its own. It’s no wonder that Dallas-based Symphony and other companies are exploring ways that AI can help retailers and CPG companies do tasks faster, improve data analysis and ultimately make better business decisions.
making the right decisions, usually due to a lack of information and/or experience.” AI automates the driver’s decision in real time to close that information or experience gap, while learning over time other valuable information to help drivers determine what their next stop should be, he explains. Because Foxtrot’s solution is flexible, customers can set their top objectives, whether it be controlling variable costs, hitting their time windows, or a combination of both (in the United States, the primary setting always starts with ontime delivery, Northrop notes). Some of the biggest advantages provided by real-time route sequence optimization are creating more efficiency and more predictable delivery times, which ultimately improve service overall, according to Northrop. “If you’re not missing stops, that directly impacts service levels and better onshelf availability,” he observes. “This becomes even more important when you think about how last-mile delivery is ramping up and putting more pressure on a retailer’s supply chain. “Ultimately, though, most of our clients’ long-term goals are to create capacity in their distribution systems to increase asset and driver utilization while maintaining or improving service levels,” he continues. “This is a challenge they’ll continue to face, with the growing driver shortage and rising transportation costs.” PROGRESSIVE GROCER December 2018
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Changing Places TO MAKE THEIR NONFOOD SECTIONS TRUE DESTINATIONS, RE TAILERS MAY HAVE TO RE THINK THEM. By Barbara Sax Key Takeaways
onfood categories are becoming a bigger business at supermarkets as retailers seek to lift sales. “We’re seeing a renaissance of the center store,” asserts John Clevenger, SVP/managing director of strategic advisors at Acosta. “For the past several years, retailers have concentrated on the perimeter of the store. Now retailers are making investments in reinventing the center.” A recent Global Market Development Center (GMDC)/A.T. Kearney survey of more than 100 retailers found that retailers focused on premiumization in traditional general merchandise categories are not only growing their share of nonfoods, but are also capturing some of
Retailers are raising their game when it comes to cosmetics, creating high-ring, highmargin departments that attract and inspire loyalty among upscale shoppers, like HyVee's Basin beauty department.
Nonfood categories are an important part of grocers’ business but, given evolving shopper patterns, retailers need to up their game in these sections of the store. End caps or special sections should be used to highlight new and different products. Better customer service and knocking down departmental silos are also important to the creation of bustling nonfood destinations.
the highest gross margins and increasing their total store sales year over year more than average. “A premium offering is a key differentiator for stores, especially in pet, baby, household, food prep, food storage and cleaning,” says Mark Mechelse, VP of insights and communications at Colorado Springs, Colo.-based GMDC. “GM also attracts high-spending shoppers. Shoppers who buy GM at the average grocery retailer spend an average of $3,549 per year across all products in the total store, which outpaces deli, bakery, frozen food and dairy shoppers.” According to Christina Groth, VP of general merchandise and health and beauty care at The Kroger Co., nonfood categories are critical to the Cincinnati-based retailer. “These are important parts of our business, but the way that the consumer is shopping these categories is different than it was five years ago and is continually changing,” says Groth.
Kroger is using customer insights to help determine which nonfood categories its customers want to shop as destinations at the chain. One such category
Lighting is something customers responded to in the beauty category. When we light up shelves, it creates a fun, exploratory experience.” —Christina Groth, Kroger
is cosmetics. “The customer wants to browse this category; it’s her fun time,” explains Groth. “Cosmetics is one of those areas that supermarkets concentrate on boosting because it’s a highring, high-margin department that’s not as price-sensitive as other areas of the store,” says Clevenger. To create departments that consumers want to spend time in takes a big investment in hardware. For its part, Kroger invests in shelving and lighting in its cosmetics departments. “Lighting is something customers responded to in the beauty category,” notes
PROGRESSIVE GROCER December 2018
Groth. “When we light up shelves, it creates a fun, exploratory experience.” “Retailers may not want to go from zero to 100 right away, and they don’t have to,” advises Clevenger. Personal care products are often viewed as more of a convenience category and may not need the same display treatment as cosmetics. “Retailers can create a destination inside the category with signage in sections featuring high-end salon, natural or ethnic brands, or place those new products on an end cap to make a statement,” he suggests. “You still need to communicate that you’re in this business.” GMDC's Mechelse agrees that end caps or special sections should be used to highlight new and different products. “Use it to introduce new categories, help the shopper save time, showcase distinctive items, and trigger an edgier, one-stop perception of stores,” he says. “The idea is not only to sell items seen on a trip, but to help pull customers into these center store aisles and reinforce that stores are well assorted with on-trend goods to meet many kinds of needs.”
ers with specific needs. “Our departments include a demonstration table for our beauty department experts to connect with customers by offering a variety of services, from cosmetic consultations to product demonstrations,” notes Tina Potthoff, VP of communications at West Des Moines, Iowa-based Hy-Vee. Groth points out that Kroger is testing different service models, such as C PG partners providing staffing, joining forces with a third party or staffing internally. “We haven’t cracked the code yet,” she admits, “but we see value there.” According to Clevenger, featuring cosmetics prominently in circulars is also part of a successful strategy. “Drug stores devote 30 to 40 percent of their circulars to cosmetics, so grocery chains who really want to make a statement can’t get by with a few items featured on inside pages,” he cautions.
Housewares and Seasonal
That may also mean ramping up service in the department. “It’s an expensive proposition to add staff in store even for a few hours a couple of days a week, but you can’t look at ROI for each of these tactics — success depends on all of these factors working together,” observes Clevenger. Hy-Vee, for example, has estheticians or cosmetologists in its beauty locations who can assist custom-
Niche brands and boutique-style merchandising set Hy-Vee's HBC aisles apart from those of competitors.
Retailers are also using exclusive merchandise and enticing displays to create destinations within housewares. “Housewares and seasonal are both vibrant businesses in our stores that customers tell us have become a destination for them,” says Groth. “Exclusive merchandise in housewares is extremely important, since it differentiates us from our competition.” Last year, the supermarket chain launched Dash of That, a competitively priced brand of upscale housewares. Customizing the mix to particular times of year ramps up the appeal of the section. “Seasonal GM and HBW products, especially, go a long way toward engaging shoppers across the center store, perimeter and front end,” affirms Mechelse. Kroger excels at creating seasonal destination departments. “Seasonal is about so much more than decorating the home,” says Groth. “It’s about bringing all of those things together that the customer wants to do during the season. We’re able to provide that one-stop shop for everything seasonal in our stores.” Housewares and GM are impulse categories in the supermarket environment, so it’s key to change end caps and displays often. Since customers’ shopping patterns can vary, moving product and displays to new locations is critical to profitable sales on seasonal items. Hy-Vee, for instance, holds demonstrations with such
housewares as air fryers, mixers and blenders to show their ease of use and versatility. Groth notes that aiming for assortment that “surprises and delights” customers creates an environment that can’t be replicated with online shopping. “The moment you walk into the store, you should know what season it is, and the retailer should be reminding shoppers throughout the store,” agrees Clevenger. In addition to the obvious back-to-school, Halloween, Christmas and backyard barbecue tie-ins, retailers have endless opportunities. “I’ve seen great Cinco de Mayo displays with colorful tableware, paper napkins, margarita glasses, Jose Cuervo margarita mixes and candles that drive impulse sales,” offers Clevenger. Even stores with smaller footprints can boost impulse purchases with gift departments adjacent to floral. “Balducci’s does a great job with soaps, candles and décor,” observes Clevenger. “These are categories that create impulse purchases.” Mechelse stresses that knocking down departmental silos is critical to creating cohesive, solution-oriented stories that feature GM along with other core products. “Fifty-two percent of retail leaders are planning to grow their use of this as a key strategy,” he adds.
Chains are finding opportunity in apparel, baby and toys. HyVee's extended baby department includes toiletries, accessories and exclusive clothing collections.
up to 30,000 square feet. More recently, the retailer has been adding clothing to its Marketplace stores in 5,000-square-foot departments. This September, Kroger launched Dip, a new brand that replaced 14 other Kroger clothing lines. The brand covers men, women, juniors, kids and babies, and 80 percent of the assortment is priced at $19 or under. “Dip is a mix of quality basics with some great collection pieces that allow a customer to put a whole outfit together,” says Groth. The brand already has a high repeat purchase rate. Potthoff notes that Hy-Vee’s clothing departments add excitement with monthly in-store events such as fall fashion shows, and Mother’s Day events with a kids’ coloring page activity that keeps little ones busy while moms shop. The chain’s line is quality- and value-driven, while providing fast fashion to keep the assortment fresh every week with new offerings. “Our merchandising is planned for stores to pull collections together and tie back to the POS in the department,” she says. Kroger is taking advantage of the vacuum left by Toys ’R Us and betting big on toys in its Marketplace and Pacific Northwest stores. “This continues to be a robust business for us,” notes Groth. “We are really excited about our assortment for the holiday season. We’ve gotten behind key items and have hot promotions planned to make sure our customers can be sure to find what they are looking for in the toy aisle while shopping our stores.” Baby care is also booming at Kroger. “The baby business speaks to the target customer, and we’ve created an experience for [Mom] that allows her to get what she needs for Baby,” asserts Groth. “As we offer more options online, baby will be one our key focus categories.”
Ready to Wear, and More
Several grocery chains have also hit home runs with apparel. For years, Kroger’s Pacific Northwest stores have included apparel sections that can span PROGRESSIVE GROCER December 2018
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EQUIPMENT & DESIGN
Top Shelf SUPERMARKE T SHELVING IS E VOLVING ALONG WITH THE RE TAIL GROCERY INDUSTRY. By Bob Ingram
ood retailers are using every possible advantage to compete with both online and brick-and-mortar challengers, and shelving is becoming one of these competitive advantages. “A huge challenge many retailers and brands are facing is that as many as 40 percent of shoppers are only shopping the perimeter,” says James Illingworth, SVP of marketing and business development at Insignia Systems, in Minneapolis. Illingworth notes that Insignia works closely with most major retailers to evaluate their shopper dynamics and develop programs that are designed to leverage the shelf to help inspire shoppers to spend more time in different parts of the store.
Trion Industries' systems have interchangeable parts for easy installation and restocking.
The company’s most recent shelving innovation, FreshAds, is designed for the highest-traffic area, produce, and leverages the twist-tie dispenser there as an extension of the shelf. “Brands can request what area of produce to place advertising, which allows messaging to help inspire shoppers who may be looking for a quick meal solution, need a reminder of an item on their list, or deliver an incentive to try a new item back in center store,” Illingworth explains. Meanwhile, the company’s most popular shelving product is the Insignia Pops, which offers brands the opportunity to bring their advertising campaigns to life in-store PROGRESSIVE GROCER December 2018
EQUIPMENT & DESIGN
by highlighting store-level pricing. “The shelf is a highly effective location for driving incremental purchases, because the audience consists of active shoppers who are receptive to make an immediate purchase,” Illingworth points out. He adds that 50 percent of shoppers use their phones to assist their shopping trips, and that downloading digital coupons is increasingly common, but that most retailer apps have 200 or more coupons. Thus, Insignia offers a printed sign that can be placed at the shelf that notifies shoppers about the coupon, but also integrates with the retailer’s app to allow shoppers to instantly download the coupon to their shopper cards.
Getting Set at Retail
Among retailers, the set management team at Busch’s Fresh Food Market makes suggestions for shelving in new stores and remodels, while the final decision is made by the president and chairman of the board, based on the condition of current shelving, projected sales for the location, number of linear feet, demographics, and location décor. “In most of our locations, we have Lozier shelving,” says Ken Gravitt, category product manager at Ann Arbor, Mich.-based Busch’s, noting that it was the only shelving used until 2015, when Metro shelving was introduced at three locations to expand the perishables section while not losing linear feet in the grocery aisles. “Due to the construction of the Metro shelving, we were able to pick up about 11 inches per run,” Gravitt observes. “This allowed us to maintain the current linear feet in center store.” Metro shelving also allowed for picking up horizontal space.
Insignia Systems' FreshAds leverages produce twist ties.
“We wanted to have an industrial appearance, and using the Metro Copper Hammertone gave us that,” Gravitt notes. He adds that the Metro cost is very reasonable compared with buying custom wood shelving, which Busch’s has in many of its stores. Regarding electronic shelf labels (ESLs), Gravitt says: “We have not considered these yet. With that said, I try to read every article I come across about them. I am intrigued, and if they were proven to work well and there is a good ROI, then I would consider pitching them to upper management.”
According to Tim Campbell, president of Curtis Bay, Md.-based Storage & Distribution Systems, the maker of Metro shelving, Metro’s Drop Mat Display System can increase merchandising space by up to 30 percent because of its one-quarter-inch thickness, as opposed to a gondola shelf, which is typically an inch-and-a-half thick. “An aisle of Super Erecta or QwikSlot shelving with 18-inch wide shelves oriented back to back has a total width dimension of 36 inches,” Campbell notes, “which means
that for each aisle where they are used, 4 inches, or 10 percent of floor space, is typically saved for other productive uses.” Metro’s latest innovation is Appeal, which Campbell describes as perfect for highlighting specialty foods or making a statement in the front of the house. The shelving has a rounded front edge; an open-wire design for full light penetration; adjusts in 1-inch increments, with rounded holes every seventh slot for easy positioning; is chrome-plated in black epoxy; comes in 18-inch-by-36-inch and 18-inch-by-48-inch sizes; and can be optimized with Super Erecta wire accessories. An advocate of online ordering, Campbell adds that Metro has a compartmentalized shelving cart that can make it easy for store associates to collect items that were ordered online and prep them for pickup by customers.
“According to our research with Planet Retail, over two-thirds of shoppers want technologies that enhance their experience in stores,” says Paul Milner, marketing director at U.K.-based Displaydata. Meanwhile, improving pricing and promotional
strategy is a top strategic priority for retailers, Milner notes, but the inability to price match in real time is cited as a contributor to losing customers in-store. “We believe that ESLs [electronic shelf labels] can bridge that gap,” Milner asserts. “Our solution enables the centralized management of any number of ESLs across any number of stores in seconds. Our ESLs can display product, price, promotion, nutritional information, reviews, stock levels, and much more information that’s important to shoppers and store associates.”
Brands can request what area of produce to place advertising, which allows messaging to help inspire shoppers who may be looking for a quick meal solution, need a reminder of an item on their list, or deliver an incentive to try a new item back in center store.” —James Illingworth, Insignia Systems
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EQUIPMENT & DESIGN
This year, Displaydata introduced the Chroma 37, Chroma 125 and Chroma 27 ESLs, which are large enough to rent space to brands, creating a new income stream by allowing them to promote their products and bundles on ESLs. The company also offers Flash and Collect and Scan to Position capabilities. Flash and Collect lets associates identify the location of a product by following the visual flash indication on the ESL associated with that product. When someone scans the barcode of the product using a hand-held terminal, the ESL associated with the product flashes. Scan to Position connects the shelf position with the product and the ESL assigned to it, storing the information in Dynamic Central for accessibility via a hand-held terminal. “The shelf position of a product can be added
Trion Industries' Wonder Bar and Tray systems can be used anywhere.
for new and existing products and their associated ESLs,” Milner notes. “The Scan to Position functionality also allows store associates to complete tasks such as inventory replenishment and online order pickup more efficiently, and helps to improve planogram compliance.” At Powershelf, in Annapolis, Md., CEO John White says, “As retailers continue to level the playing field versus online dynamic pricing, Powershelf’s SRL [Smart Retail Labels] offer instant price changes that systematically deliver accuracy while reducing labor in executing manual price changes or managing date-coded products to reduce spoilage.” Powershelf’s most recent innovation is the incorporation of radio frequency identification (RFID) to allow for more precise asset tracking, theft reduction, direct-to-consumer communication from the brands, and a more efficient supermarket workforce. “Working with our partners at Qualcomm,” White says, “we were able to develop reliable and affordable RFID technology that we’ll be announcing soon.” He adds that the company’s most powerful “product” is the information pulled directly from the store shelves. The system enables both retailers and manufacturers to get real-time data from any devices in the store, including Powershelf’s own sensors and electronic shelf tags. “All available information, including products’ location and inventory on the shelf, pricing, sales, and external information like weather, events and environment, are gathered together and shared on a live dashboard,” White notes.
As retailers continue to level the playing field versus online dynamic pricing, Powershelf’s SRL [Smart Retail Labels] offer instant price changes that systematically deliver accuracy while reducing labor in executing manual price changes or managing date-coded products to reduce spoilage.” —John White, Powerself
While certain shelving vendors zero in on particular solutions, others make a virtue out of versatility. “There is no one trend in supermarket shelving; it all depends on the supermarket’s consumers,” contends Phillip J. Thrash, sales and marketing communications specialist at Wilkes-Barre, Pa.-based Trion Industries Inc. “Some supermarkets are really big on frozen entrées, while others may be selling bagged salad and vegetables nonstop.” He adds that Trion’s Wonder Bar and Tray Systems are used everywhere throughout the store, from meats to candy to dry goods. The trays have interchangeable parts to merchandise almost any product, Thrash
notes, and are easy to install and restock, cutting labor and energy costs. “We look at each company individually and match them with the best-fitting solution,” he says. “No one market is the same, no one store is the same, and no one consumer is the same.” Meanwhile, for some retailers, if it ain’t broke, they don’t plan on fixing it — at least not anytime soon. Jim Fowler, owner and president of Big M supermarket, in Shelburne, N.Y., encountered StorFlex shelving when he moved to a new location eight years ago, having bought the two-year-old shelving from a store going out of business “for a fraction of new.” He says that there doesn’t seem to be any need to replace the shelving “in the near future,” adding that “we looked into electronic shelf labels several years ago and decided it wasn’t for us due to the cost. We still use shelf tags and will continue to do so.”
Powershell's Smart Retail Labels (SRL) offer instant price updates.
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PROGRESSIVE GROCER December 2018
Food, Beverage & Nonfood Products
Good for Teeth — and the Environment
With nearly 5 billion plastic toothbrushes — which aren’t biodegradable — produced per year, there’s strong concern about the impact these products have on the environment when they’re discarded. To that end, the Humble Co. has introduced an oral care product line that promotes sustainability and philanthropy. Currently, the line includes — but isn’t limited to — the Humble Brush, a toothbrush with a handle made from 100 percent biodegradable, sustainably grown bamboo, as well as quality bristles from DuPont; natural toothpaste, an SLS-free, natural ingredient product in several flavors that contains sodium fluoride and comes in tubes made from recycled materials; and dental floss, made of cornstarch and sporting a no-plastic case, with the package functioning as the floss dispenser. In addition to contributions from corporate partners, sales of all Humble products help fund the Humble Smile Foundation, which delivers a growing number of oral health outreach projects across the globe. These help keep smiles on the faces of kids living in the most vulnerable areas around the world. thehumble.com
Still, Yet Spiked
“Spiked” seltzer has been a rising category in recent times as consumers seek lower-calorie and -carbohydrate hard beverages for their imbibing pleasure. But what about still water? That’s what Pura Still claims to be: the first spiked still water. With a splash of coconut water, a hint of natural fruit flavor and zero carbonation, Pura Still comes in three flavors: Blackberry, Mandarin Orange and Mango. The product retails in 6-packs of 11.2-ounce bottles, with each bottle containing only 1 gram of cane sugar and 2 grams of carbohydrates. The SRP range is $8.99-$9.99 per 6-pack. www.purastillbeverage.com
Tater Toast So Fresh, So Green
Less meat, more vegetables and customizability are three hot trends with today’s consumers. Green Giant Fresh’s Vegetable Meal Bowls hit on all three of these trends, combining a 100 percent fresh vegetable base with unique and flavorful sauces and seasoning packets ranging from sweet and tangy to zesty and savory. The vegan-friendly refrigerated bowls are gluten-free and come in six varieties: Buddha Bowl, with crumbled sweet potato, cauliflower, Brussels sprouts, broccoli, roasted chickpeas and tahini sauce; Burrito Bowl, with crumbled cauliflower and ancho-chipotle pepper black bean sauce; “Fried Rice” Bowl, with crumbled cauliflower, carrots, onions, broccoli and teriyaki sauce; Pad Thai Bowl, with carrot noodles and peanut-flavored sunflower butter sauce; Ramen Bowl, with butternut noodles, crumbled cauliflower, carrots, onions, broccoli, roasted edamame and ramen seasoning; and Rancheros Bowl, with crumbled sweet potato, cauliflower, kale and green chili sauce. The microwavable bowls retail for a suggested $3.99 each. www.greengiantfresh.com
Consumers who can’t tolerate gluten have been finding all sorts of alternatives that allow them to eat the products they crave, from pizza crusts made with cauliflower to tortillas crafted from almond flour. Now the same goes for toast: From Vegolutionary Foods, Sweet Potatoasts are a gluten-free alternative to traditional toasted bread. Frozen and ready to make, the sweet potato slices are said to be a suitable source of vitamins A and C, and don’t contain artificial colors, flavors or preservatives. Vegan and Paleo-friendly (with 15 net carbs), the slices can be prepared in a toaster or toaster oven for one to two cycles. www.sweetpotatoasts.com
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 EXECUTIVE CHAIRMAN Alan Glass firstname.lastname@example.org CHIEF EXECUTIVE OFFICER David Shanker email@example.com PRESIDENT, CANADIAN DIVISION & NORTH AMERICAN GROCERY Jennifer Litterick firstname.lastname@example.org BRAND DIRECTOR John Kenlon email@example.com SOUTHEAST ACCOUNT EXECUTIVE Larry Cornick (NEW ENGLAND, SOUTHEAST) 224-632-8248 firstname.lastname@example.org SENIOR SALES MANAGER Judy Hayes (CA,PACIFIC NORTHWEST) 925-785-9665 email@example.com SENIOR SALES MANAGER Theresa Kossack (MIDWEST) 214-226-6468 firstname.lastname@example.org WESTERN REGIONAL SALES MANAGER Rick Neigher (SOUTHWEST) 818-597-9029 email@example.com ADVERTISING MANAGER Jackie Batson 224-632-8183 firstname.lastname@example.org
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Aperion (A Hussmann Company)
Inserts 35 & 67
Blount Fine Foods
Borges USA/Star Foods
Campbell Soup Company
Coca Cola Ltd.
Coca-Cola Bottling Co. Consolidated
E&J Gallo Winery
Enjoy Life Natural Brands, LLC
General Mills Inc.
Goya Foods Inc.
House Foods America
Irish Food Board- Bord Bia
Jack Link’s Beef Jerky
Lactalis USA Inc.
Mars Chocolate NA/ Wrigley
MasonWays Indestructible Plastics
National Confectioners Association
National Grocers Association
Perfetti Van Melle USA Inc.
RBC Capital Markets
Save-A-Lot Smart.Market for Business The J.M. Smucker Company The Kroger Co. The Wonderful Company Trion Industries
4 47 Inside Front Cover Back Cover 23 7
62 PROGRESSIVE GROCER December 2018
INDEPENDENT THOUGHTS By Kat Martin
Independents’ Value Proposition WHAT ARE THE ADVANTAGES, CHALLENGES AND FUTURE OF INDEPENDENT GROCERS? ohn Derderian president and CEO of Allegiance Retail Services/Foodtown, an Iselin, N.J.-based retailer-owned cooperative that provides marketing, advertising, technological and operational support for its independent grocery members, shares some of his thoughts on the current market environment and how the independent grocer is uniquely positioned to thrive in the future.
more toward either side. Hard discounts is a real affinity for those types [of] concepts and models. And for others, it’s all about convenience. … Time is the new currency. We’re trying to help our independents to move to either side, recognizing that conventional supermarkets still have a place in the United States; we just have to make sure that we present the best supermarket.
Kat Martin: While I want to focus mainly on how independents are positioned for success, what are some of the challenges or hurdles that independent grocers are facing? John Derderian: The big [retailers] are getting
KM: What about ecommerce, and how will it affect the stores themselves? JD: It’s not really an impediment for independents,
bigger. With that comes added and enhanced leverage to buy products and services more cost-effectively, whether it’s in sector, like supermarkets buying supermarkets, or drug stores buying drug stores, Walgreens buying half of Rite Aid, that kind of thing. Or it’s kind of out of sector, where Walmart is buying Jet.com and, obviously, Amazon buying Whole Foods. So those acquisitions will lead to some synergies and better purchasing power and moving into a different channel or a different sector. KM: What do independents have going for them? JD: Independents can cater to the local population, by tying it to
community programs and providing superior service and quality to what most of the major chains could do. [Large retailers] can’t really replicate that neighborhood touch, that service touch. But I think it’s not enough just to know Mr. and Mrs. Smith who have been customers for five years, and to know what their cut of meat is that they like. There’s certainly a change in the consumer. They all want convenient offerings, frictionless environment in the stores. Consumers want to be able to order online. We don’t have to see their faces every week. We don’t have to ask how Joey is doing or something like that. We just have to make sure that they’re satisfied. We provide the shopping experience that they want, and it may be different than what their parents want. At Allegiance, we make [independents] aware of what’s going on. Educate them not only on goods, but also on services and the consumer. KM: With this changing consumer, how will this affect the retail landscape for independents? JD: The way I describe it is if you take an hourglass and
you flip it, that’s really what you’re seeing. The conventional supermarkets are in the middle, and the hard-discount and the more meal-solution-type supermarket are on either side. They’re kind of pulling at the center of the conventional supermarkets, and you’re seeing the consumer really gravitate 90
because they can do it. It requires careful planning. It requires resources and capital and commitment from both the store teams and from management. There’s debate as to what percent of sales is going to be online. It’s going to be a static number at some point, and it’ll be higher than it is now. You’re going to see some center store items become routine purchases online. And the store will right-size based on that. The perimeter may not necessarily grow, but as a function of the size of the store, I think it’ll grow just because there’ll be some decrease in the size of linears. If you go down a cereal aisle now, it’s 40 feet of cereal; you really don’t need all of that. You don’t need to devote the time or space to pack it out, the labor, and pay for the selling area.
“We’ve made sure through expanding some of the skill sets here, by adding analytics associates and working with third parties, that we’re now a little more adept and we can better inform our members about the trends that are changing and how to effect change to align with the new consumer.” —John Derderian, Allegiance Retail Services/Foodtown
Congratulations to our GenNext winners! Thank you for your dedication to The Kroger Co. and the communities we serve.
Akin Akanni Houston Division CFO
Serine Abdelhaq Fry’s Division Front End Manager
Darrell Anhel Fry’s Division e-Commerce Manager
Bo Sharon Lucky’s Market CEO
Cara Pratt 84.51˚ VP Customer Comm., Product Strategy & Innovation
Jill Lester Health & Wellness Pharmacy Practice Coordinator
Jordan Poff Cincinnati Division e-Commerce Manager