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RETAILER DEEP DIVE: WALMART DISRUPTING GROCERY AGAIN

PROTEIN REPORT How to keep seafood sizzling SUMMER BEVERAGES Beer, ciders, seltzers GENERAL MERCHANDISE Housewares are hot!

HOW

HY-VEE PLANS TO GROW

CEO Randy Edeker shares his post-pandemic strategy

March 2021

Volume 100, Number 3 www.progressivegrocer.com


Mexican, Asian and Mediterranean flavors total nearly 3/4 of Amy’s single serve frozen entrée sales, growing even faster than American favorites.* As a leader in category volume and growth,* offering delicious meals made with high-quality organic ingredients, we keep shoppers coming back with one of the highest repeat rates in the category.**

LEARN MORE AT TRADEINSIGHTS.AMYS.COM

*SPINS/IRI Total US MULO YTD WE 11.29.20 **SPINS Consumer Panel 52 WE 6.21.20


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Contents 03. 21

Volume 100 Issue 3

28 Features

20 SPECIAL REPORT

42 PROTEIN REPORT

COVER STORY

A Whole New World

Seven ways the COVID-19 pandemic has changed food retailing.

Seafood’s Next Wave

28 How Hy-Vee Plans to Grow

CEO Randy Edeker shares how the pandemic has shaped the Midwestern grocer going forward.

As the pandemic winds down, retailers should focus on education to keep sales flowing.

38 RETAILER DEEP DIVE

Day One At Walmart

How the nation’s largest retailer is reimagining its business model in ways that were once unthinkable.

On the Cover: Randy Edeker, chairman, CEO and president of Hy-Vee Inc., in Hy-Vee’s corporate history pavilion and conference center.

Departments 8 EDITOR’S NOTE

The Great Shakeout Awaits 10 IN-STORE EVENTS CALENDAR

May 2021 14 MENU TRENDS

Navigating the Seas of Seafood 4

progressivegrocer.com

42 16 NIELSEN’S SHELF STOPPERS

18 ALL’S WELLNESS

Prepared Foods

Focus on Frozen Foods

17 MINTEL GLOBAL NEW PRODUCTS

84 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS

Nonchocolate Confectionery

86 AHEAD OF WHAT’S NEXT

12

The Women Who Fed America


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EXTENDED SHELF LIFE • Reduces shrink & out of stocks • Increases assortment & sales

TysonFreshMeats.com/Protein-Innovation

M


Contents 03. 21

Volume 100 Issue 3

8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 773-992-4450 Fax: 773-992-4455

www.ensembleiq.com GROCERY GROUP PUBLISHER John Schrei 248-613-8672 jschrei@ensembleiq.com

50 FRESH FOOD

Worth the Shopping Trip

50

Value-added produce lives up to its name.

GROCERY GROUP EDITORIAL DIRECTOR Mike Troy 813-857-6512 mtroy@ensembleiq.com EDITORIAL EXECUTIVE EDITOR Gina Acosta 813-417-4149 gacosta@ensembleiq.com MANAGING EDITOR Bridget Goldschmidt 347-962-9395 bgoldschmidt@ensembleiq.com

52 RETAIL FOODSERVICE

SENIOR DIGITAL & TECHNOLOGY EDITOR Marian Zboraj 773-992-4405 mzboraj@ensembleiq.com

Placing Bets in Baking

CONTRIBUTING EDITORS Mike Duffy, D. Gail Fleenor, Jenny McTaggart, Lynn Petrak, Barbara Sax and Greg N. Simpson

Center store ruled in 2020, but the perimeter is ready to rebound.

ADVERTISING SALES & BUSINESS SENIOR SALES MANAGER Bob Baker (NEW ENGLAND, MID-ATLANTIC SOUTHEAST US, EASTERN CANADA) 732-429-2080 rbaker@ensembleiq.com SENIOR SALES MANAGER Theresa Kossack (MIDWEST, GA, FL) 214-226-6468 tkossack@ensembleiq.com SENIOR SALES MANAGER Tammy Rokowski (INTERNATIONAL, SOUTHWEST, MI) 248-514-9500 trokowski@ensembleiq.com

56 GROCERY

56

Sunny Days Ahead The outlook for beer, cider and seltzer this summer is excellent.

JUNIOR ACCOUNT MANAGER-GROCERY GROUP Natalie Meehan p 773-992-4410 m 619 823-4926 nmeehan@ensembleiq.com ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com

60 NONFOODS

64 GROCERY

Housewares Remain Hot

Consider the Alternative Nontraditional better-for-you snacks are gaining favor with more consumers and retailers.

At-home food consumption and new meal preparation methods continue to create opportunities to boost sales and profits in general merchandise.

EVENTS VICE PRESIDENT, EVENTS Michael Cronin mcronin@ensembleiq.com EVENTS DIRECTOR Karen Mahoney 952-467-8592 kmahoney@ensembleiq.com MARKETING BRAND MARKETING MANAGER Rebecca Martin 773-992-4407 rmartin@ensembleiq.com AUDIENCE LIST RENTAL MeritDirect Marie Briganti 914-309-3378 SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES Toll Free: 1-877-687-7321 Fax: 1-888-520-3608 contact@progressivegrocer.com PROJECT MANAGEMENT/PRODUCTION/ART VICE PRESIDENT OF PRODUCTION Derek Estey destey@ensembleiq.com CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com

67 SOLUTIONS

76 TECHNOLOGY INNOVATION

Plans for a Cleaner Future

ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com

Envisioning a Frictionless Future

ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com

Retailers are adopting new technology and sanitation protocols to assure their shoppers that safety will continue to be top of mind.

Acceleration of selfcheckout and the advent of microservices signal a new era for retail tech.

71 SUSTAINABILITY/ SOCIAL RESPONSIBILITY

78 TECHNOLOGY

Dealing With Digital Payment Innovation

Waste Not

Retailers are making commitments to be part of the solution when it comes to lessening their environmental impact.

As grocery e-commerce grows, digital payment options are expanding, and retailers need to keep up.

75 EQUIPMENT & DESIGN

The Store Experience of the Future

Here are four things every grocer needs to think about.

6

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78

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

CORPORATE OFFICERS CHIEF EXECUTIVE OFFICER Jennifer Litterick CHIEF FINANCIAL OFFICER Jane Volland CHIEF INNOVATION OFFICER Tanner Van Dusen CHIEF HUMAN RESOURCES OFFICER Ann Jadown EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several SENIOR VICE PRESIDENT, CONTENT Joe Territo

PROGRESSIVE GROCER (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631. Single copy price $14, except selected special issues. Foreign single copy price $16, except selected special issues. Subscription: $125 a year; $230 for a two year supscription; Canada/Mexico $150 for a one year supscription; $270 for a two year supscription (Canada Post Publications Mail Agreement No. 40031729. Foreign $170 a one year supscrption; $325 for a two year supscription (call for air mail rates). Digital Subscription: $87 one year supscription; $161 two year supscription. Periodicals postage paid at Chicago, IL 60631 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to brand, 8550 W. Bryn Mawr Ave. Ste. 200. Copyright ©2021 EnsembleIQ All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.


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EDITOR’S NOTE By Mike Troy

The Great Shakeout Awaits FOOD RE TAILERS FACE A NE W T YPE OF DISRUPTION AS THE NATION REBOUNDS FROM COVID-19. t’s been a year. That statement has a different meaning depending on how one says it. As a simple observation about the passage of time, it’s been one year since the outbreak of COVID-19 prompted former President Donald Trump to declare a national state of emergency on March 13, 2020. Said with a tone of relief and exasperation, however, the sentence describes a 12-month period that was challenging and unprecedented on many levels. As we enter the second year of the pandemic, it promises to be as unprecedented as the first, but for a variety of reasons. For starters, our world remains disrupted by COVID-19-related restrictions and lifestyle changes that affect how people shop and where they eat, with rules on dining out varying by state, which then affect at-home food consumption and food delivery. The number of deaths in the United States attributed to COVID-19 recently topped 500,000, but other data shows cases and death rates declining. Meanwhile, multiple vaccines now exist, and roughly 15% of the population had been inoculated as of the end of February. There is cause for optimism that this summer will mark the beginning of a return to normal, but the same thing could have been said last summer. Recall that the curve had been flattened, but then we got a resurgence of positive cases and deaths in the fall, leading to renewed uncertainty. All of this makes for a challenging situation for an industry that likes planning so much that it invented the discipline of category management. Food retailers forecast demand, plan promotions and make purchase decisions a year or more in advance based on insights into consumer trends. Larger retailers are known to develop joint business plans with trading partners that extend years into the future. While many unknowns remain, the coming months will offer an interesting look at consumer behavior and the potential for a great shakeout in food retailing once greater balance is restored to the food-athome and -away-from-home equation. For example, we know that last year’s surge in pandemic pantry loading benefited retailers mightily. Samestore sales last year increased 13.8% at Ahold Delhaize USA during its quarter ended March 29, 2020; 10% at Walmart during its quarter ended April 30, 2020; 21.7% at Dollar General during its quarter ended May 1, 2020; 10.8% at Target during its quarter ended May 2, 2020; 19% at The Kroger Co. during its first quarter ended May 23, 2020; and 26.5% at Albertsons Cos. during its first quarter ended June 20, 2020. Those aren’t normal numbers. These companies and others in the industry are now lapping 8

progressivegrocer.com

a prior-year period in which a once-in-alifetime driver of demand enabled them to achieve much stronger sales than normal. This powerful effect extended throughout 2020, and so pretty much any retailer with exposure to food and consumables categories was able to achieve stronger sales than they would have, based purely on the merits of their respective value propositions. Eventually though, the COVID-19 tide will recede and marginal operators who were provided temporary cover by pandemic-driven demand will face preCOVID-19 challenges. How soon this happens and the pace at which it occurs are currently great unknowns, but it’s something that can be planned for as the second year of the pandemic unfolds and the nature of industry disruption evolves. In the coming environment, food retailers will need the same type of resolve, ingenuity and agility they displayed at the onset of the pandemic as they compete in a world free from distorted demand, where foodservice operators are able to more fully rejoin the share-of-stomach battle.

While many unknowns remain, the coming months will offer an interesting look at consumer behavior and the potential for a great shakeout in food retailing once greater balance is restored to the food-at-home and -away-from-home equation.

Mike Troy Editorial Director, Grocery Group mtroy@ensembleIQ.com


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THE BIGGEST QUESTION OF THE YEAR! HOW HAVE YOUR CUSTOMER RELATIONSHIPS AND EXPECTATIONS CHANGED IN THE PAST 12 MONTHS? Online Shopping

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IN-STORE EVENTS

Calendar

05.21

American Cheese Month National Asparagus Month National Barbecue Month National Egg Month

National Hamburger Month National Salad Month National Salsa Month National Strawberry Month

S M T W T F S

1

Kentucky Derby, which is held on the first Saturday of the month. National Chocolate Parfait Day

2

National Lemonade Day

3

National Raspberry Popover Day

4

National Star Wars Day. May the fourth be with you.

5

6

7

8

12

13

14

15

National Hoagie Day

National Orange Juice Day

9

Mother’s Day

10

National Shrimp Day. Offer a raft of online recipes starring this beloved crustacean.

11

National Eat What You Want Day. Ask customers what they’d choose.

National Limerick Day. Run a contest for the best (clean) verse extolling the virtues of your business.

National Crepe Suzette Day. Run a virtual demo showing how to make this famous dessert.

National Crouton Day

National Roast Leg of Lamb Day

National Brioche Day

National Apple Pie Day

Stamp Out Hunger Food Drive Day. Urge your shoppers to contribute food, money or time to this worthy cause.

National Armed Forces Day. Salute those who serve(d) with a special discount at checkout.

National Fruit Cocktail Day

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

National Barbecue Day

National Taffy Day. How far can you stretch it?

National Water a Flower Day. Hold a sale on blooming plants.

10

National Walnut Day. Remind shoppers of the many ways that they can enjoy this versatile nut.

National Wyoming Day. Rocky Mountain oysters? Bison burgers? Make the most of delicacies from the Equality State.

Memorial Day. Post respectful in-store signage and website messaging to mark this solemn occasion.

progressivegrocer.com

National No Dirty Dishes Day. That can only mean a trip to the prepared food section!

National Wine Day. We’ll drink to that — at a virtual tasting.

National Devil’s Food Cake Day. This rich indulgence is worth going over to the dark side.

National Senior Health & Fitness Day. Provide tips to keep the elders in your community strong.

National Quiche Lorraine Day. Let shoppers know how they can reheat leftovers.

National Grape Popsicle Day. Why not?

National Pizza Party Day. Inform potential revelers that your brick-oven pies are available for takeout.

National Brisket Day. Send shoppers to the meat case for the main ingredient in a nostalgic Sunday dinner.

National Vanilla Pudding Day. Even the instant kind makes a tasty dessert.

National Coq Au Vin Day. Recommend the perfect “vin” from your beverage alcohol department to make this celebrated French dish.


MODERNIZE YOUR MERCHANDISING

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n Cuts over 1 hour/day labor for restocking. n Allows rear restocking and proper date rotation. n Dramatically increases sales in the same space. n Adjusts to accommodate various package widths.

Trion Industries, Inc. TrionOnline.com info@triononline.com 800-444-4665

* Based upon average 8’ run by 5’ high peg candy gondola installations. Your results may vary. ©2020 Trion Industries, Inc.


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MENU TRENDS

Research & Analysis

Navigating the Seas of Seafood Ever-changing restaurant restrictions have given consumers the opportunity to test their home cooking skills, and maybe even try something new — like seafood. According to Datassential’s Seafood Keynote, 43% of consumers see seafood as a protein for special occasions. With ample selection at grocery stores — from regionally specific species like Coho salmon all the way to the ubiquitous cod — consumers have numerous varieties to choose from. While sustainability has had a high profile in recent years, it’s not yet a major part of seafood purchasing decisions. Many consumers still consider price and format to be the most important purchase attributes; however, the term “sustainable” on restaurant menus has grown by nearly a third over the past four years. Sustainable fishing practices like line-caught or avoidance of overfishing can ensure that we can all enjoy that sushi for years to come. Branzino MAC stage: Inception — International markets, global independents and fine dining. Trends start here and exemplify originality in flavor, preparation, and presentation. This mild white fish that hails from the Mediterranean Sea is ubiquitous in Italian cuisine. Branzino is traditionally roasted whole and served with lemon – it has a delicate, sweet, flaky quality that lends itself to citrus and fresh herbs. Some American operators have featured branzino on their menus beyond the usual preparations of seasoning it with a dry rub, and then grilling or baking it. Since it’s in the inception stage, branzino is considered a premium ingredient often found at finedining restaurants. On 2.4% of U.S. restaurant menus

Octopus MAC stage: Adoption — Global foods aisle at supermarkets, casual independents, fast casual. Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. This eight-tentacled mollusk has started to trend as consumers become more adventurous. Octopus is a staple in many global cuisines, including Spanish, Greek and Italian, as well as in Asian fare like Japanese, where it is served in takoyaki (a ball-shaped fried snack made of a flour-based batter and cooked in a special molded pan). Dishes with octopus require a lot of prep, either braised low and slow, or massaged until tender. It’s a blank-canvas protein that sucks up whatever flavor it’s cooked in.

Up 39% over the past four years 21% of consumers know it/9% have tried it/5% love or like it

On more than 8.7% of U.S. restaurant menus Up 9% over the past four years

Menu Example Perry’s Steakhouse and Grille Whole Bandera Branzino Presented tableside. Encased in a salt dome, roasted to steamed perfection and served with agrodolce sauce

14

progressivegrocer.com

81% of consumers know it/33% have tried it/20% love or like it Menu Example Slurping Turtle Takoyaki Octopus fritter, bonito flakes, mayo, nori, tonkatsu sauce

Ahi Tuna MAC stage: Proliferation – Proliferation-stage trends are adjusted for mainstream appeal. Often combined with popular applications (on a burger, pasta, etc.) Ahi tuna has a mild flavor with a very firm texture that lends itself well to marinating in bold flavors like soy sauce and rice wine vinegar. This fish is often eaten raw in sushi, sashimi or poké, or lightly seared in tacos and sandwiches. On 9.7% of U.S. restaurant menus Up 10% over the past four years 66% of consumers know it/39% have tried it/29% love or like it Menu Example Gott’s Roadside Ahi Poké Crispy Tacos Ahi poké (Hawaiian-style raw, marinated sushi-grade ahi tuna); sliced avocado; green cabbage; cilantro; green onion; toasted sesame; and spicy mayo, in crispy taco shells

Salmon MAC stage: Ubiquity – Ubiquity-stage trends have reached maturity and can be found across all sectors of the food industry. Though often diluted by this point, their inception-stage roots are still recognizable. Salmon has made its way into America’s heart, not only for its ease of cooking in one-sheet pan meals, but also for its diversity of applications, from sushi to burgers. Wild-caught salmon has become increasingly popular as consumers have become more aware of sustainability practices. One such sustainable harvesting practice for salmon is line-caught with collection capped, creating a premium price point on the market. On more than 43.4% of U.S. restaurant menus Up 4% over the past four years 94% of consumers know it/75% have tried it/59% love or like it Menu Example Sharky’s Woodfired Mexican Grill Wild Caught Salmon Burrito Grilled wild Alaskan salmon, nori seaweed, brown rice, avocado, cucumber, cabbage, chili sesame aioli, non-GMO whole wheat tortilla


FRONT END

Shelf Stoppers

Prepared Foods

Basket Facts

Total Department Performance Latest 52 Wks W/E 1/30/21

Prepared Foods

$53,066,744,164

Latest 52 Wks YA W/E 2/01/20

Latest 52 Wks YA W/E 2/02/19

$47,366,696,969

$46,667,670,987

Top Prepared Food Categories by Dollar Sales Complete Meals

Sandwiches

Soups

Salads

Potatoes

$6,000,000,000

How much is the average American household spending per trip on various prepared foods versus the year-ago period?

5,000,000,000

4,000,000,000

$9.29

3,000,000,000

on all prepared foods, up 9% compared with a year ago

2,000,000,000

1,000,000,000

0 Latest 52 Wks W/E 1/30/21

Latest 52 Wks YA W/E 2/01/20

Latest 52 Wks YA W/E 2/02/19

Source: Nielsen, Total U.S. (All outlets combined) – includes grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and military commissaries (DeCA) for the 52 weeks ending Jan. 30, 2021

Prepared food sales overall are up 12% from last year, with complete meals and salads seeing declines. As COVID-19 forced people to go out for food less and eat at home, it likely played a significant role in the strength of prepared foods. Simultaneously, the lack of large celebrations likely resulted in prepared food categories such as party platters, salads and appetizers seeing a decline in volume. As long as consumers are unable to gather in large groups, retailers should reduce focus on large offerings and instead think about products that make life easier for consumers looking to limit monotonous meal prep with a la carte options.”

$7.02

on appetizers, up 6.6% compared with a year ago

$5.45

on salads, up 0.6% compared with a year ago

—Eric Brown, Manager - Global Content Workstreams, Nielsen

Generational Snapshot Which cohort is spending, on average, the most per trip on mustard?

$7.19

on sandwiches, up 8.2% compared with a year ago Millennials

Gen Xers

Boomers

The Greatest Generation

$5.10

$5.20

$5.16

$4.80

Source: Nielsen Homescan, Total U.S., 52 weeks ending Jan. 23, 2021

16

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Source: Nielsen Homescan, Total U.S., 52 weeks ending Jan. 23, 2021


MINTEL CATEGORY INSIGHTS

Global New Products Database

Nonchocolate Confectionery Market Overview

While nonchocolate confectionery sales growth outpaces other snack categories, year-over-year gains are modest.

The COVID-19 pandemic spurred consumers to turn to candy for pleasure and comfort.

Key Issues

Among consumers who have reduced their nonchocolate confectionery consumption in the past year, 55% cite a desire to reduce sugar consumption and 39% point to a desire to cut back on calories.

There has been a decline in the number of households with children, which suggests that nonchocolate confectionery’s primary audience is slowly slipping away. Nonchocolate confectionery’s strongest association is with snacking. Candy doesn’t stack up, however, compared with other sweet snack options. Attracting fewer than a third of U.S. adults, nonchocolate confections have the weakest association with the snack occasion.

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

What Consumers Want, and Why

Flavor and format innovation in the chewy and seasonal segments has kept the category afloat, pointing to the importance of fun, indulgence and excitement. Nonchocolate confectionery brands will need to align with the snack interests of adults to spur future household usage. While candy is a treat, the majority of consumers think that there’s room to rein in sugar content. PROGRESSIVE GROCER March 2021

17


ALL’S WELLNESS By Karen Buch

Focus on Frozen Foods THE Y CAN PL AY A BIG ROLE IN HELPING CONSUMERS GE T BACK ON TR ACK TO A HE ALTHIER LIFEST YLE. major shift toward eating at home during the COVID-19 pandemic has prompted consumers to stock up on ingredients and meal solutions that offer longer shelf life, affordability and convenient ease of preparation. Social distancing has disrupted personal fitness routines and prompted some to overindulge in comfort foods. As a result, many Americans face unwanted weight gain. Yet scientific evidence suggests that keeping the body healthy is one of the first-line defenses against severe health risks related to the novel coronavirus. Frozen foods can play a big role in helping consumers get back on track to a healthier lifestyle. Research suggests four hours of meal preparation time can be saved simply by using three frozen entrées a week — that’s good news for stressed and time-pressed consumers. Supermarket retailers can use themed educational selling promotions to help customers make healthier food choices, while driving foot traffic and sales within the frozen category. During the month of March, consider two distinct but complementary promotional themes: Frozen Foods Month, designated by the Harrisburg, Pa.-based National Frozen & Refrigerated Foods Association (NFRA) and National Nutrition Month, designated by the Chicago-based Academy of Nutrition and Dietetics. NFRA offers its members a promotional toolkit geared to promote the frozen category to consumers in-store, online, and through traditional, digital and social media, as well as through community events across the country. The campaign is intended to increase sales and consumption of frozen foods and enhance overall positive sentiment regarding the frozen category. Retailers can invite consumers to participate in the Easy Home Meals $10,000 consumer sweepstakes and coupon giveaway, while competing themselves in the national Golden Penguin Awards, which recognize food industry promotion, marketing and merchandising efforts within multiple categories. Throughout the campaign, retail dietitians can highlight specific ways to incorporate frozen ingredients into nutritious meal solutions. The March National Nutrition Month 2021 campaign, Personalize Your Plate, can be used concurrently to help consumers take the stress out of meal planning and create nutritious meals that meet both cultural and personal food preferences. Supermarkets can highlight diverse offerings throughout the store, including in the freezer case. A variety of convenient, time-saving frozen ingredients and meal solutions can support a healthy lifestyle. Retail dietitians can use print, digital platforms or virtual classes to help consumers assemble nutritious meals that incorporate frozen foods as ingredients, while demonstrating specific culinary techniques that maximize flavor

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without adding excess calories. Engage with customers by hosting a social media “personalize your plate” contest that challenges customers to post photos showing how to use one or more frozen ingredients to make nutritious meals or snacks. Beyond March, retailers can share the messages of the 2020-25 Dietary Guidelines for Americans (DGs) as part of a long-range health-and-wellness education campaign. In ads or via social media, retail dietitians can share ways to select and prepare nutrient-dense frozen foods, suggest tweaks to traditional recipes that call for frozen ingredients, and demonstrate how to use frozen foods within healthy dietary patterns. A few more frozen insights: Nearly 90% of the U.S. population do not meet the recommended intake of vegetables (2½ cups for those eating 2,000 calories a day). Flash-frozen vegetables can be kept on hand year-around for use in entrée recipes, soups or sides. Research shows that a diet rich in fruits containing vitamins A and C supports immune health. Frozen fruits are often packaged without added sugars and can be used in smoothies, as oatmeal toppers or as part of better-for-you dessert recipes. Currently, 98% of consumers eat fewer whole grains than recommended, while 74% exceed limits on eating refined grains. Frozen brown rice, whole grain breads and quinoa add convenience while boosting whole grain intake. The DGs recommend choosing lean cuts of meat, poultry or other plantbased meat alternatives, and eating two or more servings of seafood per week. These recommended foods can all easily be found in the freezer case.

Karen Buch RDN, LDN, is a registered dietitian/nutritionist who specializes in retail dietetics and food and culinary nutrition communications. One of the first supermarket dietitians, she is now founder and principal consultant at Nutrition Connections LLC, providing consulting services nationwide. You can connect with her on twitter @karenbuch and at NutritionConnectionsLLC.com.


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SPECIAL REPORT

COVID-19

A Whole New World SE VEN WAYS THE COVID-19 PANDEMIC HAS CHANGED FOOD RE TAILING. By Gina Acosta

n hindsight, salad bars and touchscreens were always kind of icky. Even before the pandemic, giving shoppers the opportunity to stick their fingers in the ranch dressing of a salad bar or press a button on a grimy screen at self-checkout was probably a bad idea. Now, as we enter the second year of the COVID-19 era, the self-service food stations and greasy self-checkout touchscreens that have long played a key role in grocery stores are poised to become vestiges of 2020, replaced by pre-packaged containers and contactless checkout methods. Some of these changes instituted temporarily as a result of COVID-19 are likely to become permanent — and they are just a few of the ways that food retailing will evolve forever. “The impact of COVID-19 will be felt by countries, consumers and businesses around the world for years to come,” affirms David Rawlinson, CEO of Chicago-based NielsenIQ. “As countries ease restrictions in an effort to restart their economies, the evidence of significant economic, employment, structural change and policy adjustments will manifest in permanent, altered consumer behavior. Manufacturers and retailers will need to consider the long-term implications today in order to reconfigure their strategies for the future.” One year after COVID-19 hit America, it’s difficult to count the long-term implications for food retailing. But here are seven key changes and challenges for food retailers and suppliers navigating the new world.

Consumers say they are eager to return to strolling through grocery stores, but the availability of vaccines, the new strains of COVID-19, and other factors will play a role.

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Key Takeaways Some of these changes instituted temporarily as a result of COVID-19 are likely to become permanent. To lure shoppers back to physical stores after the pandemic and keep them there, a strategic focus on omnichannel capabilities is essential; that means creating a shopping experience for a consumer who wants all of the options: click-and-collect, delivery or shopping in-store. Retailers should also bring forward shopper-driven category designs, cater to consumers shifting much of their spend to home projects and home-based activities, maintain sanitary practices instituted during the pandemic, deploy digital workplace technology, and prioritize or even rebuild their grocery infrastructure.


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SPECIAL REPORT

COVID-19

1

The ‘Revenge Shopper’

The theory of the Revenge Shopper goes like this: Once the pandemic is over, people will flock to physical stores and spend more as “revenge” for being physically restricted for so long. A new shopper survey may end up proving that theory correct. Skaneateles, N.Y.-based ChaseDesign, which helps retailers build better commerce experiences, has published new research showing that 78% of shoppers plan to shop in-store more in 2021, after a year of having trips to retailers curtailed by the coronavirus. Other key data points from the ChaseDesign research include the following: 63% of shoppers said that their No. 1 motivation for shopping in a physical store is “to get out of the house”; 47% of shoppers said that what they miss the most about shopping in person is same-day availability of items; and 67% said that their favorite in-store technology is self-checkout. “Looking forward, in-store experience will be hugely differentiating,” says ChaseDesign President Joe Lampertius. “In our survey, the No. 1 thing people miss about stores is the ‘inviting in-store atmosphere.’ Tie that to the fact that 63% of people just want to get out of the house, [and] you’re going to see a return to retail as the pandemic recedes. It’s in-store experience, combined with shopping convenience, that will provide retailers — and brands — with their strongest levers in creating differentiation.” So what can retailers do to attract more of these Revenge Shoppers in 2021? “A strategic focus on omnichannel capabilities is essential to keep consumers engaged in the long term,” Rawlinson suggests. “COVID-19 accelerated e-commerce adoption, and we should expect some of these online shopping and purchasing behaviors will become ingrained among consumers who have learned the ease of use and convenience of online shopping, while others will relish the ability to leisurely stroll through grocery stores, discovering new products and interacting with staff.”

2

Battle for the Omnicustomer

If we weren’t already in the omnichannel age for grocery shopping, we certainly are now, and that’s only going to accelerate, according to Rawlinson. “Nearly one year later, that early reliance on e-commerce has expanded into a fundamental dependence on still-evolv-

Many shoppers say that their No. 1 motivation for shopping in a physical store is “to get out of the house.” Other consumers say that what they miss the most about shopping in person is sameday availability of items.

ing omnichannel shopping experiences,” he says. But grocery retailers looking to drive growth will have to create a shopping experience that delights the consumer who wants all of the options: click-and-collect, delivery or shopping in-store. “We’ve seen a significant shift in customer behavior, with a greater dependency on on-demand delivery — not only same-day, but ASAP deliveries — bolstered by people who are working from home and companies who have extended stay-at-home working conditions,” notes Tom Fiorita, founder and CEO of Greenwich, Conn.-based Point Pickup, which offers a mobile app that matches drivers already on the road with same-day delivery orders. “We expect this growth to continue as companies and people prepare for a long pandemic, even beyond the year ahead.” Of course, the challenge for grocery retailers is how to create omnichannel shopping experiences and supply chains that deliver customer service seamlessly and profitably. For now, building out this omni-fulfillment infrastructure is the most significant headwind for food retailers going forward. In February, Canadian grocery chain Loblaw Cos. reported that growth in e-commerce sales had dragged down its operating income by $78.5 million during the fourth quarter. “The shift from in-store to online is expected to be a headwind to profitability over the medium term,” noted Galen Weston, CEO of Brampton, Ontario-based Loblaw Cos., when the quarterly financials were released. The company’s annual report noted that it will improve its profitability on e-commerce “over time” as the system grows in scale and becomes more efficient. In the United States, Walmart, Target and Kroger are employing best-practice efficiencies when it comes to weaving digital and physical grocery, according to Lampertius. “The most innovative approach is what we’ve seen with Target, where the store has become a total commerce Many shoppers have grown accustomed to having their groceries delivered and aren't eager to return to stores. Food retailers will have to cater to these shoppers, as well as those who want a mix of digital and physical.

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SPECIAL REPORT

COVID-19

hub,” he says, “but the [grocery omnichannel] model will go through a huge evolution in the next six to 12 months to be sustainable. Many retailers were already working on thin 2%-3% margins, so the extra resources put toward curbside services caused retailers to lose money. Worse still, shopper satisfaction levels have dropped close to 30% from November 2020 to January 2021, and progress is needed.”

3

Center Store Revival

The pandemic has brought the center store back to life, with consumers returning to previously unfashionable categories such as canned meats, boxed milk and frozen vegetables as a way to save money or even relieve pandemic stress. Over the past year, sales of powdered milk shot up 82%, according to new research from St. Petersburg, Fla.-based Catalina, while baking/biscuit mixes were up 64%, breakfast drink mixes jumped 61%, flour increased by 55%, brownie/cookie mixes were up 45%, and canned pork and beans jumped 45%. At the same time, frozen food sales grew in both dollars (up 21%) and units (up 13.3%), with nearly all types of frozen foods seeing double-digit sales increases, according to the “Power of Frozen 2021” report from the American Frozen Food Institute (AFFI) and FMI — The Food Industry Association. “Constrained spenders will continue seeking out cheaper alternatives to the product options they would normally buy, opting for more value offerings and private label products, at least for their everyday staples,” Rawlinson says. “Meanwhile, brands and retailers have an opportunity to continue to deliver on the needs of consumers whose incomes remain unchanged by the pandemic and may even have more disposable income in 2021 after deferring the travel, dining and entertainment costs they anticipated in 2020. From higher-priced, sustainability-focused products for insulated consumers who are reinvigorated to follow eco-friendly practices, to premium specialty goods for those who want to treat themselves and others, 2021 presents opportunities for sustainability and premiumization.” Retailers should also look at their perimeter departments to reimagine fresh and convenience, which has a different definition for the 2021 shopper. “As many consumers took to working from home and cooking more, quick trips to the local grocery store deli have fallen,” Rawlinson observes. “In fact, meal combos (down 21.3%), deli pizza (down 15.9%) and prepared foods (down 9%) all saw substantial declines.” Many retailers have also closed or shut down their cold and hot bars due to sanitation concerns, and masked-up consumers still wary of coronavirus germs aren’t in a hurry to return to getting their own mashed potatoes or salad from self-service food stations. Lampertius suggests that retailers lean into new categories such as plant-based meats and dairy products. “For example, 48% of shoppers find plant-based meats a confusing category to shop,” he says. “This remains an opportunity for grocers to bring forward shopper-driven category designs.”

4

Home Is Where the Heart Is

The pandemic consumer is getting used to being at home, mostly alone, and not spending money on travel, restaurants, theme parks or even Fourth of July celebrations featuring a big barbecue. New McKinsey & Co. research shows that four out of 10 Americans

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Many shoppers have fallen in love with the center store again after perishables such as fresh meats were seen as too expensive, too hard to find or too difficult to store during the pandemic.

believe that their finances won’t return to normal until the latter half of 2021 or 2022 and beyond. Only about 24% of Americans feel safe engaging in “normal” out-of-home activities. Consumers have also adopted many in-home alternatives, and many of these activities, such as online streaming and cooking regularly, are expected to stick post-COVID-19, according to New York-based McKinsey. These huge societal and cultural shifts — working out at home, cooking at home, working from home, celebrating holidays at home — are expected to become permanent as consumers realize the convenience and financial benefits of not commuting. In addition, the American consumer is on a home-sprucing spree. More than 76% of homeowners in the United States have carried out at least one home improvement project since the start of the pandemic, according to a survey by Seattle-based home improvement website Porch. Additionally, 78% said they plan to undertake at least one home improvement project in the next 12 months. Finally, 61% of homeowners said that gardening or patio work was part of the project. Food retailers should be looking to leverage the opportunities in shoppers shifting much of their spend to home projects and home-based activities.

5

Permanently Enhanced Sanitation

Early on, most grocery retailers moved quickly to implement enhanced sanitation protocols to keep employees and shoppers safe. Nell Alverson, director of channel marketing at Greenville, S.C.-based technology solutions firm ScanSource, says that grocers should be looking at self-checkout, and if they already have it, they need to increase the number of stations. “It’s important to accommodate the store layout to allow for the use of self-checkout and self-service kiosks, especially in areas like the deli and bakery where consumers now expect a much more contactless, self-service experience,” Alverson notes. “This is an expectation we will see for quite some time – if not permanently – and retailers


SPECIAL REPORT

COVID-19

and grocers alike need to adapt to stay competitive.” Designing the grocery store of the future might also entail social-distancing best practices such as wider aisles, wider shelves and physical barriers, as well as hand-washing stations, heavy-duty air filtration and other measures. Finally, the use of mobile entry or payment devices — Amazon One’s palm recognition innovation is one example — to decrease touchpoints or face time with employees is the future, so retailers should plan ahead now.

6

The New Workforce

Even drug chains such as Walgreens Boots Alliance have started offering curbside pickup to attract multichannel shoppers during the pandemic. Many consumers prefer pickup due to its low cost and immediacy.

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A year since the beginning of the pandemic, one of the biggest challenges retailers face is anticipating the employment and staffing needs of an omnichannel business model, according to Will Eadie, chief revenue officer at Montreal-based WorkJam, a digital workplace platform. “Organizations must create a direct line of communication from the head office to front-line workers if they want to react quickly to change,” Eadie says. “Continual communication, on-demand resources and real-time mobile training are no longer nice-to-haves; they are fundamental to protecting margins.” Fortunately, technology has caught up to the de-

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mands of the workplace, according to Eadie. “Digital workplace technology enables organizations to communicate with their workforce in an instant – targeting employees by role, geo-location and a number of other identifiers,” he notes. “If we’ve learned anything, it’s that businesses must know how to prepare for black-swan events of the future. They must build a foundation to mitigate the critical impact on the business by keeping close tabs on operations, communication, staffing and compliance.” In five to 10 years, retailers may see the need to train staff on augmented-reality/virtual-reality shopping experiences and automated curbside pickup. Other workforce challenges may include refocusing the workforce on complementary tasks to automation, having the accurate driver capacity for delivery, and training employees on customer service in a virtual environment. As a result, retailers should turn to new technologies to quickly and efficiently train new and existing front-line associates to deliver exceptional customer experiences under these new business models, Eadie advises.

7

Grocery Infrastructure of Tomorrow

Before COVID, when consumers picked which food retailer to shop, that choice used to be centered on work hubs and transit routes, but the pandemic has pushed grocery spend out of busy city centers to residential areas, according to NielsenIQ data.

“This seemingly small shift has tilted the retail landscape,” Rawlinon asserts. “Today, some of the world’s highest-revenue grocery store chains are experiencing significant changes in demand across their network.” This means that retailers need to consider taking permanent action to prioritize or rebuild retail infrastructure in areas that will matter most to the remote-working consumer of tomorrow. In addition, American consumers aren’t just prioritizing new neighborhoods when they shop, Rawlinson points out. “Store-level sales trends indicate that consumers may be prioritizing their local food stores to fulfill a wider assortment of needs,” he says. “Across U.S. cities analyzed, we see food channel sales driving growth to local stores. In postal neighborhoods that are experiencing overall sales declines, consumers have relied less exclusively on grocery stores to meet their shopping needs.” It’s clear that many of these “temporary” shifts in food retailing are here for the long haul. As the second year of the COVID-19 epoch continues to challenge grocery retailers, the companies that put innovation and customer service first will achieve long-term growth and success in a post-pandemic world.

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2/4/21 2:51 PM


COVER STORY

Retailer Profile

CEO Randy Edeker shares how the pandemic has shaped the Midwestern grocer going forward. By Bridget Goldschmidt

y-Vee is on the brink of major expansion. The West Des Moines, Iowa-based grocery store chain, which operates more than 275 stores across eight Midwestern states and has sales of $11 billion annually, is emerging from the uncertainties of the COVID-19 pandemic in a stronger place than ever. “This year is the biggest capital budget that we’ve ever had, by a long shot,” asserts Chairman of the Board, CEO and President Randy Edeker, who didn’t disclose the actual amount. “We have a new format that we’re building called Dollar Fresh. We have a dozen of those built. We’ve kind of just done it quietly.” For 2021, the company has a total of 14 Dollar Fresh stores — its answer to deep discounters like Aldi — which measure around 30,000 square feet and provide a high-quality product assortment at low prices in smaller communities, including a full selection of groceries, fresh baked goods, a dollar section, a Wall of Value and readyto-eat meals, in its budget, as well as 12 Hy-Vee stores and 11 small-format Fast & Fresh convenience stores, which Edeker refers to as “our meal store.” All told, Hy-Vee has 40 new retail units in the pipeline this year. It’s also planning a state-of-the-art warehouse in the Des Moines metro area. “We have a company we call Lomar, which is gourmet specialty imported foods,” explains Edeker, “and so we’re building a brand-new automated facility to expand it. And then we’ll also pull off some of the slower movers from our other DCs once it’s up and going. … So yeah, budget-wise, there’s a lot happening.” To execute the company’s most ambitious growth strategy in years, Edeker is viewing Hy-Vee’s opportunities with a new mindset influenced by the pandemic and his company’s response to it. As Hy-Vee looks to execute this strategy, however, it does so against a backdrop of increased competition from familiar retailers and emerging threats. Hy-Vee has long held its own against Walmart and the onslaught of supercenters and of Batavia, Ill.-based Aldi US, which honed its operating model in Iowa in the 1970s. More recently, Hy-Vee has faced increased competition from Minneapolis-based Target and one of the nation’s top c-store foodservice chains, Ankeny, Iowa-based Casey’s, as well as Goodlettsville, Tenn.-based Dollar General, which recently revealed plans for a fresh food distribution center in Blair, Neb., and Seattle-based Amazon, which is working on various new fulfilment centers in Hy-Vee’s trading area. “From a competitive standpoint today, we’re competing with Target, Walmart [and] Amazon in a way that the world is so totally changed that it really makes it just a different landscape to compete with,” notes Edeker.

‘Acceleration on Steroids’

Edeker isn’t a man given to overstatement, so his description of how overwhelmed company officials and associates felt when initially responding to the pandemic back in March 2020 is all the more striking. 28

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“I think we have created habits for a lifetime now that are going to continue on.” —Randy Edeker, Chairman of the Board, CEO and President, Hy-Vee


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help manage employee communication,

texting plays?

when the order is being fulfilled, grocers

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Brendan Moore: We found that 70%

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1

Grocery Digital Maturity Benchmark, 2020, Incisiv

WANT TO LEARN MORE? For more info or to schedule a free demo, text or call 206-299-1392, or visit Zipwhip.com.


COVER STORY

Retailer Profile According to Edeker, “it was like drinking from a fire hose. You’re just trying to gather information from the CDC, from the government resources, health and human services, and local officials, and just take everything that we knew at that moment and then start to adapt to protect both our customers and our employees as best we could.” As well as closing down in-store foodservice sections and bulk sections, the company moved to install plexiglass barriers at checkstands, supply shoppers and associates with hand sanitizer, instituted rigorous cleaning procedures, limited the number of people allowed to enter a store, purchased cart sanitizers, and ramped up its existing e-commerce program, Aisles Online. E-commerce had, of course, been gathering pace for several years, but “COVID really put that acceleration on steroids,” quips Edeker. “I think once the pandemic hit, it became such an enormous part of our business overnight,” he adds. “One of the things that we did ... was we built pickup stations in the parking lots of 150 of our largest stores. We actually bought 150 shipping containers ... because we needed an overnight solution to be able to do e-commerce at the next level. And now we’re building pickup stations in all of those 150 stores. We actually have 116 being [constructed] this year.” The retailer’s e-commerce expansion didn’t involve only groceries. “We’ve launched our Mealtime app for family meals to do curbside pickup,” says Edeker. “DoorDash has been one of our biggest partners through all this, both with grocery delivery and with foodservice deliveries.” Edeker believes that this massive migration to online shopping, while accelerated by the pandemic, is definitely here to stay. “Digital effectiveness has been key,” he points out, “and most [of these] things won’t go away [after the pandemic]. I think we have created habits for a lifetime now that are going to continue on. I’m sure they will evolve. There’ll be some new players, I’m sure, that come into some of these spaces. But your digital business today is a mainstay, and one that you’re going to keep investing [in,] and [that] will continue to evolve how we do business moving forward.” Beyond online shopping itself, “store design is changing because of e-commerce,” adds Edeker. “We’re changing our customer services, departments are drive-up, centers for e-commerce are changing those. How we structure the back rooms [is] changing because of the e-commerce selection processes. We’re working to bring our digital experience into the

“One of the changes that I made instantly was I started talking to all of our store directors, store managers, every single day.” —Randy Edeker, Chairman of the Board, CEO and President, Hy-Vee

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Hy-Vee's in-store attractions include a reimagined produce department with educational signage (top) and a mouthwatering Candy Shoppe department.

store and really recreate that. ...We’re [also] hiring 11,000 people right now because of the influx of e-commerce and delivery, and how it works. “ Other technological advances are likewise transforming the supermarket, he notes: “Self-check is changing the front end, [and] we’re testing scanand-go technology [at one] store coming up.”

Communication Counts

In addition to its outward-facing operations and practices, however, one key change that Hy-Vee made was to its internal communications. “The pandemic really caused us — me — to soul search,” explains Edeker. “You know, I thought that I was a good communicator as a CEO ... until I realized I was really bad at it and I didn’t talk to the 86,000 people of Hy-Vee every week. … One of the changes that I made instantly was I started talking to all of our store directors, store managers, every single day.’” Facilitating that resolve to communicate better and more regularly with those on the front lines was the company’s adoption of software from San Francisco-based Retail Zipline. Hy-Vee’s use of the communications solution “came about because I realized that as a retail


COVER STORY

Retailer Profile grocer, we weren’t structured well to be able to speak to our people on a daily basis,” says Edeker. “I also learned right away that video was better than voice, that if they could see me say it, our people liked it a lot better than just hearing me say it. So, in the initial days, I was leaving voice messages that were 10, 15, 20 minutes long each night, telling everybody that we’re going to be OK. And then I evolved to video on my cell phone. ... And then Zipline came along as a way that we could easily get it to everyone instantly.” As for the effect that Retail Zipline has had on his ability to share information with associates, Edeker, who’s been CEO for 10 years, wishes “I would have had it year one. We would be such a better company if we had, because I could just tell everybody every week what’s really going on. … For the most part, we are such a better company because of how we communicate today.”

All In on Events

When asked how Hy-Vee was addressing the unusual spikes in sales seen last spring that it’s now cycling against, Edeker admits: “We try to always look a year out and start working on what

To Be the Best When it comes to the associate experience at West Des Moines, Iowa-based Hy-Vee Inc., Chairman of the Board, CEO and President Randy Edeker doesn’t mince words. “I want Hy-Vee to be the best place to work in America,” he says, “and then I realized that that’s not going to just happen by saying it. We’ve got to analyze every practice that we have and become better at it. … We started tearing apart our benefits; we started looking at everything people were doing. We have a massive list of things that we have changed, benefits that we’ve added. Tuition assistance: You know, you can get $10,500 to go to school each year. We have 100 of those that we give away. Every employee can get $3,500 to go back to school every single year. We went in, we expanded part-time benefits, added parttime insurance in many areas. We expanded our 401(k) to make it richer and better. We removed insurance waiting periods.” Another key associate benefit is in the area of discounts. “One of the things that we added was a 10% discount for groceries for all of our employees across the board,” notes Edeker. “And I throw in a 20% discount for holidays like Thanksgiving [and] Christmas. The Super Bowl, I threw a 20% discount out for our employees.” On Feb. 22, to mark the occasion of Supermarket Employee Day, the grocer offered associates 40% off on all foodservice so they could treat themselves and their families to a ready-made meal. The company has also spent “millions and millions” of dollars on bonus pay for employees, according to Edeker, and not just during the darkest days of the pandemic. “We’ve put in a department-head bonus structure,” he

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In addition to groceries, six Hy-Vee stores in the Twin Cities area feature DSW shop-in-shops.

we’re going to do a year out. ... And so at this point, we’ve planned lots of category sales, breakfast sales, stock-up sales, those type of things, to try and offset some of that. But in some ways, you’re just not going to offset a three-month-long snowstorm panic. You’re

explains. “We already had a part-time bonus structure in place. My goal for our full-time people in the company is our bonus structure’s based off their results of their stores that they will all get a 10% bonus every quarter on top of their wage, on top of incentive pay.” Further, Hy-Vee has instituted premium pay for holidays. All of these offerings, although they predate COVID-19, have become even more important in light of it as the company continues to evolve its culture. “That’s the thing I’ve been trying to get us to focus on, is how do we culturally shift?” muses Edeker. “I want us to be the best place to work. And so I think benefits are part of it, I think giving our employees a voice and letting them hear from us. So it goes back to communication. I think all those things will stay in place because they were happening not because of the pandemic; they were happening because we’ve chosen to change those things anyway.” On the contentious subject of raising the federal minimum wage, he observes: “My hope personally is that everybody can make $15 an hour. I mean, who doesn’t want that, right? But we have to be able to afford it, and it has to be able to work into the system. There’s just [the] sheer economics of it that when you increase costs in the grocery business with very slim margins, then cost gets passed off. That’s just the reality and economics of retail. And so, yeah, I want everybody to have everything they want and to be taken care of. … I hope that we can pay everybody $15 an hour. We just have to figure out economically how we’re going to do that. And then I think for cities to step in and just mandate it to one retail sector and not to another — I just don’t think that’s the role of government to pick winners and losers.”


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COVER STORY

Retailer Profile just not going to offset that, and it doesn’t make good business sense to try to, in some ways. So we’ve ramped up planning for event sales and those things somewhat, but I wouldn’t say that we’re going crazy trying to duplicate those dollars. I just think that’s going to kind of be impossible to do.” Edeker believes, however, that the company's improved communication has made it a better merchant. “That’s probably the best sales tool that’s come out of this is just that we have more of an all-in mentality on event planning and the big ideas,” he notes. “The way our team and our retailers, ’cause we’re very autonomous, were able to merchandise across the whole of the company, that’s the thing that will help us the most moving into these kind of big pandemic numbers.”

Reliable Sources

Another growth opportunity for the company came from dealing with a supply chain that “was challenged on all sides,” as Edeker puts it. “I think that there were a lot of lessons we learned about supply chain, just in timed inventories in some categories [that] were detrimental to not just us, but other big players around the country,” he notes. “We really analyzed where we need to have safety stock and what we need to have on hand.” In fact, when there was talk of a resurgence of the pandemic, Hy-vee managed to invest about $40 million in safety stock inventory in preparation for such a contingency. “We [also] became much more creative with sourcing and trying to go out and find new avenues to get product,” observes Edeker. “We’re way better at local sourcing, finding people that are making products right in our backyard that we need to strengthen relationships with.” Among the relationship-based sourcing measures taken by Hy-Vee was to ship in meat from a foodservice supply company that couldn’t sell to restaurants under lockdown orders.

90 Years of Success

Yet another challenge overcome was how Hy-Vee would mark its 90th anniversary, which occurred amid the pandemic. According to Edeker, what saved the day was, not surprisingly, communications technology. Using remote technology, the company held a 90th anniversary

Changing of the Guard When the time comes for a major leadership transition, West Des Moines, Iowa-based Hy-Vee Inc. is ready. “We have great leaders on hand,” notes Hy-Vee Chairman of the Board, CEO and President Randy Edeker. “I mean, great people that can run the company and keep us going. It’s about the evolution. That’s what I see. It is changing constantly. It’s not enough to have great leaders with what we’ve done. It’s really having great leaders that can see what we need to do next.”

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“We’re way better at local sourcing, finding people that are making products right in our backyard that we need to strengthen relationships with.” —Randy Edeker, Chairman of the Board, CEO and President, Hy-Vee

giveaway during which it ended up presenting a total of $1.5 million in gifts to employees every week throughout the month and a half of the anniversary celebration. “It’s not what we planned, but it’s what we adapted to,” says Edeker. “We were still able to celebrate in the stores ... through signage and our ads and so forth,” he adds, “but ... the people that care most about [the anniversary are] the people that work for you, so we wanted to make sure that they celebrated.” In terms of in-store promotions, “we’re still very promotionally focused, but we’re much more focused on internal store conditions, sales, freshness, quality,” explains Edeker, “and we think that then our customers are going to continue to flow to us.” While how long the changes wrought by COVID-19 will endure “depends on how much the customer has changed permanently,” he ventures to predict, “I think many of the things that we’ve picked up and adapted will stay.” Asked what he’s learned about his associates during this extraordinary time, Edeker responds: “Our people do amazing things without being asked. We’ve had so many stories of employees going above and beyond to do the extra things, solve the problem, get the question answered, take care of people in their town, travel. Probably sometimes you get caught up in all of the business stuff. But in our case, our people just do amazing things.”

One key effort that Edeker is working on, however, would make the company more inclusive. “I think the biggest push that I see for Hy-Vee right now, really, with the social climate, is just really how bad we’ve been at diversifying our company,” he admits. “We just aren’t as good at that as we should be. ... And it’s not that we haven’t worked at it. We just haven’t gotten it done. ... I mean, that’s the biggest thing that we have to do. The reason is because it culturally changes who we are, it will make us stronger, it will help us understand our customer better moving forward, and so with succession planning, that’s the biggest thing that I need to do right now is change the make of our company. And so I’m focused on that.”


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RETAILER DEEP DIVE

Walmart

Day One At Walmart How the nation’s largest retailer is reimagining its business model in ways that were once unthinkable. By Mike Troy radical transformation is underway in Bentonville, Ark. Walmart senior executives are pursuing a growth strategy that leverages the retailer’s unique collection of assets and brand equity with elements of Amazon’s approach, and a dash of Kroger and Albertsons. “Think about it as a flywheel that’s spinning, powered by a mutually reinforcing set of assets” is how Walmart President and CEO Doug McMillon describes the business model that he sees emerging in the years ahead. “We’re starting to drive the top and bottom line in more expansive ways. Our bottom line is becoming more diversified, which will enable us to generate more operating income growth over time.” Diversification means that Walmart plans to make money in ways that would have been seen as heresy just 10 years ago. To get investors excited about the growth prospects for a $560 billion global business, however, requires fresh thinking about new sources of revenue. So Walmart is focused on scaling businesses such as its marketplace and fulfillment services, advertising, financial services, data monetization and last-mile delivery, even as it increases the productivity of its existing selling space. A spinning flywheel with mutually reinforcing assets doesn’t have quite the same ring to it as the productivity loop, a concept Walmart spent decades refining and highlighting as the driver of its success. The concept was simple and involved aggressive expense control, which enabled everyday low prices, which simplified the supply chain, which improved in-stock levels and drove sales, which enabled expenses to be leveraged to drive growth. Adherence to the concept of expense control, simplified operations and low prices proved to be a powerful combination. Walmart gained market share and transformed the complexion of the retail industry, and then the food retailing industry, with the expansion of its Supercenters. A flywheel is another matter entirely and represents more of a longterm vision of where Walmart sees itself and the potentially disruptive role it will play in various businesses. According to McMillon, who, along with other top executives, shared their vision of Walmart’s evolving business model in conjunction with the release of the company’s fourth-quarter results in late February, 2020 was a confirmation of that new vision. “We feel emboldened and are now moving with even more speed and aggressiveness,” McMillon said at the time. “We’re scaling new capabilities and 38

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businesses and designing them to work together in a mutually reinforcing way. As we imagine the future, we believe our customers will want an even better value for their money; a merchandise assortment that is relevant to their life and seems limitless; services that help them save time, save money, and get or stay healthy; an experience that is easy and enjoyable. And the knowledge that the company they do business with can be trusted to treat everyone in their supply chain well and take actions that strengthen our planet.” The vision that McMillon shared is the boldest since he assumed leadership of the company in early 2014. He believes that shoppers will value compelling store experiences while e-commerce continues to grow, but for an increasing number of customers, Walmart will be viewed as a service. “Customers will think of us as the merchant that serves their wants and needs, but in ways that take less time and effort,” McMillon said. “We won’t just be utilitarian for them. We’ll serve up items and ideas that are relevant and exciting. We’ll reach them directly and through other platforms.” Those other platforms, health and wellness and financial services, for example, are things that Walmart can weave together in a seamless way, McMillon contends. “We’re in an early stage of building a new business model that will

Key Takeaways Diversification means that Walmart plans to make money in ways that would have been seen as heresy just 10 years ago. The retailer is focused on scaling businesses such as its marketplace and fulfillment services, advertising, financial services, data monetization, and last-mile delivery, even as it increases the productivity of its existing selling space. Part of the shift in philosophy to make money in ways other than the sale of products involves data monetization.


Walmart Ends Era of Store Expansion Store count by format SUPERCENTER

enable us to serve people how they want to be served in any particular moment, and thrive in the next generation of retail. We believe the big winners in retail will be those that deliver a unique interrelated ecosystem.” Between talk of mutually reinforcing flywheels and interrelated ecosystems, one can lose sight of the fact that for the immediate future, Walmart is primarily an operator of physical stores that generates roughly 60% of its sales from food and consumables. It ended last year with 3,570 Supercenters and 698 Neighborhood Market stores, and offers same-day delivery and pickup service from more than 3,000 locations.

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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Walmart has experienced its share of challenges during the pandemic, most SAM'S CLUB notably with supply-chain disruptions 800 leading to in-stock challenges that 750 caused the company to lose market 700 share, according to some analysts. Nev647 632 ertheless, Walmart’s U.S. sales increased 650 611 655 660 7.9% to $99.6 billion in the fourth 600 620 quarter and increased 8.5% to $370 597 599 599 599 550 billion for the full year. Those aren’t 500 huge percentage increases, but when a 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 single-digit increase comes on top of an already massive sales base, the additionSource: Company Reports al volume can be substantial. For example, Walmart added $7.3 billion in sales We’re building a new during the fourth quarter, and for the full year, it added nearly $29 billion in sales, a figure that customer-centric business model. would rank it No. 1 on The PG 100, ProgresOur customers welcome us serving sive Grocer's 2020 list of the nation’s largest them in new ways, and our assets and retailers of food and consumables. The top-line growth flowed through to capabilities are being monetized in the bottom line, too, even with pressure from ways we haven’t tapped into before.” a wide range of COVID-19-related costs, —Doug McMillon, President and CEO, Walmart putting Walmart in a position to increase investments. Its fourth-quarter operating profits for the U.S. business increased 17.4% to $5.2 billion, Biggs, who said that the focus will be on and full-year operating profits supply chain, automation, technology and increased 10% to $19.1 billion. a broad category described as customWith that kind of momentum, er-facing initiatives. Walmart plans to increase its “Over the next few years, we expect capital expenditure budget by [capital expenditures] to be around 36% this year to roughly $14 2.5% to 3% of sales,” Biggs said. billion, compared with levels “While this is higher than the past few the past five years between years, it is far below the cap ex peak of $10 billion and $11 billion. 4% to 5% of sales during the period of The bulk of the increase heavy Supercenter growth.” will be spent in the United That heavy growth period came during States, according to CFO Brett a five-year period that began in 2003, when

PROGRESSIVE GROCER March 2021

39


RETAILER DEEP DIVE

Walmart

Walmart added more than 200 Supercenters annually. The peak occurred in 2006, when 276 Supercenters were added and Walmart’s cap ex budget was $15.7 billion. In recent years, the number of Supercenters has remained flat as Walmart shifted its cap ex budget to areas that improve efficiency and technology. For example, the company is currently doing about 1.5 million deliveries each week from stores, a seven-fold increase from the prior year, according to John Furner, president and CEO of Walmart U.S. However, to make money in digital grocery, Walmart and other retailers are racing to deploy automated solutions that improve picking processes. Walmart is betting on a concept called “market fulfillment centers,” or MFCs, which are capable of storing and picking refrigerated and ambient items. “Market fulfillment centers make the [picking] process significantly faster and more profitable,” Furner explained. “They move a significant amount of the picking off the sales floor, allowing us to do more within the box. We’re now moving to scale these locations, and we expect to have over 100 of these within the next couple of years. And in some stores, we’ll carve out existing space for them; and at others, we’ll add on; and in some cases, we’ll build stand-alone units.” In addition to MFCs, which are referred to by others in the industry as micro-fulfillment centers, Walmart plans to invest in conventional distribution centers and e-commerce fulfillment centers, but didn’t elaborate on what portion of its resurgent cap ex budget would be allocated to those areas.

Market fulfillment centers make the [picking] process significantly faster and more profitable. They move a significant amount of the picking off the sales floor, allowing us to do more within the box." —John Furner, President and CEO, Walmart U.S.

Becoming Amazon

Listening to Walmart executives talk about future growth opportunities and even use the word “flywheel” is a lot like listening to Amazon. Walmart is focused on providing a high-quality experience for those who join its Walmart+ membership program, and McMillon said that the retailer plans to enhance the offering of benefits over time. The company is intent on expanding its marketplace business by bringing more sellers onto its platform, and plans to make money offering Amazon-like “fulfilled by” and other seller services such as the Walmart Connect advertising platform. 40

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“Five years from now, we expect to be well within the top 10 advertising platforms in the U.S., ahead of big players like Hearst, Fox and Twitter,” noted Furner. Another big alternative opportunity, according to McMillon, that is part of the shift in philosophy to make money in ways other than the sale of products involves data monetization. “Data is obviously really valuable, and we’ve got a history of giving our data away to suppliers,” McMillon said. Walmart did so because it helped improve in stock, and it also empowered suppliers to develop sales-generating initiatives, since they weren’t being charged for access to data. “Some portions of our data will continue to be free because we need [suppliers’] help serving our mutual customers, but there are other aspects of our data that are really valuable and can be put to work in ways that we haven’t before. The concept of building digital products that we can use internally and also monetize outside is a really exciting prospect.”

Day One at Walmart

Before Amazon founder and CEO Jeff Bezos used the phrase “day one” in annual letters to shareholders to reinforce the company’s startup mentality, employing a day-one mindset was a Walmart thing. Specifically, it was Walmart founder Sam Walton’s thing. He had a knack for disrupting the company’s operations before competitors could. Each of Walton’s successors, from David Glass to Lee Scott and Mike Duke, maintained a similar view, but no one expressed it as forcefully as McMillon, who sees opportunity in areas that could have Walmart looking like a very different company within the decade. “I’ve been a part of Walmart for more than 30 years now, and I can’t remember a time when there was so much exciting change happening inside our company,” McMillon said. “In the 1990s, I remember [Glass] telling us repeatedly that the company was just getting started. Every time I’d hear him say it, I would think, really? We were already large by then, and so much had already happened.” Today, McMillon shares a similar message of future opportunity, if Walmart can become more aggressive, go faster to capitalize on its financial strength and momentum, and drive sales and profits in more expansive ways. “We have the talent, the culture and the assets to thrive in the next generation of retail and to invent it,” McMillon asserted. “We’re building a new customer-centric business model.”


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PROTEIN REPORT

Seafood

Seafood’s Next Wave AS THE PANDEMIC WINDS DOWN, RE TAILERS SHOULD FOCUS ON EDUCATION TO KEEP SALES FLOWING. By Bridget Goldschmidt

t’s no secret that seafood sales skyrocketed during the COVID-19 pandemic. But once readily available vaccines and improved treatments have mitigated the threat of the coronavirus, enabling consumers to eat out safely again at their favorite seafood restaurants, will they continue buying items to prepare at home? “I foresee great 2021 sales strength for seafood,” asserts Anne-Marie Roerink, principal and founder of San Antonio-based 210 Analytics. “Whereas many departments have seen sales growth on a slow march back to normal, both frozen and fresh seafood gains are holding strong.” Roerink believes that trends such as the following will help maintain seafood success: the awareness of seafood as a healthy, nutritious choice; the growing desire of consumers to explore different species; the rise of e-commerce; and shoppers’ increasing concerns regarding sustainability and traceability. Beyond those currents in seafood purchasing, “I would love to see the seafood department go after major and secondary holidays,” notes Roerink. “Pandemic celebrations are smaller and at home. That means people are looking for smaller proteins, and seafood has a huge opportunity to step in.” Of course, seafood isn’t just for special occasions. “On the everyday side, it’s important for retailers to support meal planning and execution,” counsels Roerink. “Americans aren’t used to cooking at home this much — dinner plus all the other meals to boot. The ‘golden oldies’ are overused by now, and the initial enthusiasm for scratch cooking has worn off. The more retailers can help with meal planning, bringing a varied protein offering while shoppers are in-store to cover the entire week, the better, and seafood can be a big part of that.” The best way to keep seafood sales buoyant, according to Roerink, is to create more knowledgeable shoppers. “Now is the time to educate more than ever before,” she advises. “People are cooking, and people are tired of the same-old. That means a wide-open door for seafood to drive additional engagement to the category and across different items. Driving home all the pluses that seafood has to offer will be a great way to With frozen seafood items from companies such as Gorton's, consumers can be assured of high quality.

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Key Takeaways The best way to keep seafood sales buoyant is to create more knowledgeable shoppers through education. The consumer perception that frozen seafood products are inferior to fresh is changing; in fact, frozen seafood sales actually outgrew fresh during the pandemic. The availability of farm-raised and wild-caught seafood at retail shouldn’t be framed as an either/or choice for consumers; both options can be equally sustainable and high in quality when sourced responsibly, and shoppers interested in such claims-based items are willing to pay more for them. do so. [There’s] the online opportunity, but I have also seen more retailers use some space in the circular to write more on the story of seafood. Others have program-wide sustainability and animal welfare efforts. Yet others post all the seafood nutritional facts in the department. [These are all] great ways to highlight the goodness of seafood.” “At Natural Grocers, education plays a key role in helping our communities make an informed purchasing decision,” notes Christie Zimmerman, product standards manager, food at Lakewood, Colo.-based Natural Grocers at Vitamin Cottage. “We believe that consumers do not need to be ‘told’ what to do — we only need to present materials in an


easily understood manner so that they can feel empowered to make a decision based on facts, data and transparency. Labels can be confusing, so we’ve worked hard to condense a lot of complex industry jargon into about 10 seconds at the point of purchase in stores.”

Frozen Assets

One interesting effect of the pandemic on seafood sales was the growth of the frozen segment. “In looking at both meat and seafood, it is very interesting to see how frozen was long seen as a negative in meat, whereas in seafood, fresh and frozen are equally big,” notes Roerink. “In fact, they were equally big at the start of the pandemic, but frozen seafood actually outgrew fresh.”

In the recent past, while consumers may have purchased frozen products for their convenience, they didn’t necessarily believe they were making the best purchase from a quality standpoint. That perception appears to be changing. “Going into the pandemic, consumers were already embracing frozen seafood, in line with a resurgence of frozen foods in general as consumers realized that frozen foods are generally as nutritious, if not more, than their fresh counterparts,” observes Megan Rider, domestic marketing director at the Juneau-based Alaska Seafood Marketing Institute. “The pandemic has only strengthened this trend, with more people wanting to stock up on frozen foods in order to limit trips to the grocery store. According to a 2020 FMI report, 82% of consumers are likely to purchase frozen fish.” “Not that long ago, ‘fresh’ was viewed as the preferred choice to frozen seafood,” admits Chris Hussey, PROGRESSIVE GROCER March 2021

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PROTEIN REPORT

Seafood

VP of marketing at Gloucester, Mass.-based Gorton’s Seafood. “Now consumers increasingly value frozen for its ability to naturally preserve the taste, texture [and] nutrients of seafood, and to reduce food waste. As consumers are making fewer trips to the grocery store and stocking up their freezers, frozen seafood offers a high-quality, convenient, easy-toprepare and stock-up-friendly alternative.” “2020 was a great year for frozen seafood,” affirms Bluzette Carline, director of corporate marketing at Jacksonville, Fla.-based Beaver Street Fisheries Inc., maker of the Sea Best brand. “Frozen seafood has typically been given a bad rap, as many shoppers preferred fresh over frozen. But out of something bad came something good for our industry. While Americans were faced with stay-at-home orders, many needed to stock their freezers with healthy frozen proteins to carry them through till the next trip to the store. This blessing in disguise was a great way to overcome the stigma around frozen seafood, and many quickly learned that frozen can taste just as fresh and delicious as fresh.” According to Hussey: “Frozen seafood is finally starting to get the love it deserves, so we recently launched Gorton’s It’s Seafood Time campaign to inspire consumers to reimagine seafood and how it fits into their daily lives, while reinforcing all the real benefits it offers. Oftentimes, the best things in life, including seafood, go overlooked — it’s full of omega-3s and protein, tastes fresh, is incredibly versatile, etc. — and we want to change that.” The brand is promoting the message via its multidimensional marketing support. “As part of an integrated plan spanning shopper marketing, TV, digital video, digital display and a partnership, we use social media and influencer marketing to teach consumers about the health benefits of eating seafood,” explains Hussey. “During a time when the public is looking for recipe inspiration and new, easy meal ideas, we want them to know that they can depend on us and the options we can provide to their households.” The pandemic “has presented an ideal opportunity for our industry to take advantage of the current discovery [of] frozen seafood by consumers,” notes Carline. “The perfect time is now to educate and establish a comfort and familiarity with seafood that may change consumer perception for the future.” There’s also the notion of what “frozen” seafood actually means.

Among Sea Best's products is a line of frozen seafood dips in on-trend flavors.

“Most consumers assume fresh means ‘fresh,’ not ‘previously frozen, [and] now thawing at your local butcher counter,’” says Natural Grocers’ Zimmerman. “Certainly, some ‘fresh fish’ sold is truly fresh, but in general, the rule is that fish is only fresh for about two days. The farther one is away from the source of where the fish was caught, the less likely it is that the ‘fresh fish’ was only caught two days ago. It’s more likely to assume the fish was frozen, shipped and then taken out of the freezer to sell as ‘fresh.’ In reality, shoppers are mostly paying for someone else to thaw out their fish for them. “On the flip side, there is a misperception that ‘frozen’ means old or bad in some way, and that is simply not true,” continues Zimmerman. “A large portion of commercially sold fish are frozen right on the boat or at a processing facility nearby. This means when consumers buy frozen fish, they can actually enjoy fresh fish — if they are willing to plan enough time for the fish to thaw out at home. It gives the consumer more control to know that the fish has not been sitting out on a butcher counter for four days before being sold to them. This is one of several reasons why Natural Grocers does not have a fresh fish or meat counter in our stores, and why we predominantly sell frozen fish.”

$ Growth Fresh and Frozen Seafood 2020 vs. Comparable Week in 2019 100% 90 Fresh Frozen

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Reel in the Shoppers

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PROTEIN REPORT

Seafood

The Value of Added-Value Seafood Along with the fresh and frozen segments, value-added seafood has a key role to play in swelling overall category sales. “I’ve noticed a lot of innovation in the ready-to-cook packaging options, whether trays or bags that include items such as shrimp, salmon or cod, with sides and veggies,” says Anne-Marie Roerink, principal and founder of San Antonio-based 210 Analytics. “To me, those are a brilliant way to offer smaller one-person options for lunch or dinner. Or make them a little bigger for two- or multi-person families. Others have had great success in a variety of marinades, some even with a nod to the seasons. Even when people have overcome the cooking barrier, marinating seafood is different than marinating meat, so this is where retailers can be a helping hand. Cross-merchandising popular seasoning and marinades is another great way to boost the basket.” “Within this space, we have seen an increase in marinated foods and packets to marinate protein in,” agrees Anne-Kristine Øen, director U.S. at the Norwegian Seafood Council, whose American office is in Boston. “Additionally, kabobs and other ready-to-cook meals are growing. There is a recent push for convenience and making foods such as seafood more accessible and easier to cook for consumers. This helps take the guesswork out of it and enhances confidence in the kitchen.” Adds Øen, “Consumers have responded well to these types of products, and we anticipate a continued push for these products within the retail space.” Noting the potential appeal of such items for a particular demographic, Roerink points out that “the advancement in value-added seafood bringing fun and exotic flavors is another great way to boost engagement among younger shoppers.” Indeed, value-added items can inspire even as they offer much-needed culinary shortcuts. “While consumers continue to cook at home more than ever, they are simultaneously grappling with a continued desire for food exploration and burnout, so retailers can offer a variety of prepared seafood items to give shoppers a welcome break from scratch cooking,” observes Megan Rider, domestic marketing director at the Juneau-based Alaska Seafood Marketing Institute. Also highlighting this consumer tendency toward varied food adventures without too much effort, Bluzette Carline, director of corporate marketing at Jacksonville, Fla.-based Beaver Street Fisheries Inc., maker of the Sea Best brand, affirms that retailers able to meet these concurrent needs “are seeing nice growth in value-added seafood items.” Shoppers eager to “explore new items that expand on their current knowledge” may well also gravitate toward meal kits containing seafood, according to Øen, who notes, “The flavor and texture combinations within meal kits from grocery stores or online services provide new energy within the seafood category.”

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One thing for retailers to bear in mind, though, is the kind of shopper they’re marketing to. “It’s important to point out that the frozen seafood shopper and the fresh seafood shopper are very different demographically,” cautions Roerink, “but importantly, from an opportunity point of view, both areas see a huge lack of engagement among Millennials and Gen Z. Narrowing the engagement gap between younger shoppers and Boomers would provide a huge boost for sales, and I think many retailers are on the right path to do just that. The cook-inbag type of packaging that allows shoppers to buy a fully prepared meal that just requires some time in the oven or microwave will take away many confidence barriers.”

Farm-Raised and Wild-Caught

Another aspect of seafood ripe for educational opportunities is the promulgation of claims such as farm-raised and wild-caught, which leave many consumers perplexed as to which items designated as such are best. “Much like grass-fed versus grain-fed, or the USDA beef-grading system or many other claims used around the stores, there is a lot of confusion out there among the average shopper” regarding seafood claims, acknowledges Roerink. “People create their own definitions in their heads, which may be right or wrong. For claims-based seafood to be a true advantage, it is important that people understand what those advantages are. Are they health-related? Planet-related? Animal welfare-related? The more people can take educated purchasing decisions, the more the claimsbased offering will actually make an impact.” “Consumers unfamiliar with farm-raised seafood likely assume that it is all bad, and certainly there are operations that are overstocked — too many fish in a small area — or in unclean water filled with fecal waste or non-circulated water,” explains Zimmerman. “However, there are also some great farm-raised operations that carry appropriate sustainability certifications protecting against those concerns, and in the case of our farmraised shrimp, are certified organic and sustainably Grocers are posting clear signage on the origin of their seafood, as at this Stop & Shop fresh seafood department, which also offers value-added prepared items for time-pressed customers.


certified. Most consumers still prefer wild-caught, and we do, too, as long as it is done in ways that do not overfish delicate ecosystems or endanger the environment.” Supermarket customers “can understand the difference between farm-raised or wild-caught by simply looking for the label ‘farm-raised’ or ‘wild-caught,’ and the geographic location of where the seafood was caught,” she notes. “This type of labeling is required on fresh and frozen seafood products under Country-of-Origin Labeling (COOL) by the Agricultural Marketing Service (AMS USDA). At Natural Grocers, we only carry wild-caught fish, which we clearly label at the point of purchase with our Gold Ranking shelf tag on the Seafood Ranking chart on the freezer door.” The retailer’s Seafood Ranking System designates each individual frozen seafood SKU/UPC as Silver or Gold, with a corresponding chart on seafood department doors and more information on the Natural Grocers website, in the Sustainability/Standards section.

“The key is to understand the issue of sustainability and know which species are more at risk, and when it is smart to choose farm-raised over wild-caught,” says Beaver Street Fisheries’ Carline. “There are reasons to and not to on both sides. It all comes down to being an informed and educated shopper.” “Many consumers look for wild-caught over farmraised because they perceive it to be healthier, as the seafood is in its natural habitat,” observes Gorton’s Hussey. “However, other consumers prefer farm-raised due to concerns about overfishing. Both wild-caught and farm-raised can be equally sustainable and high quality when sourced responsibly.” Ultimately, the availability of farm-raised and wildcaught seafood at retail shouldn’t be framed as an either/or choice for consumers. “There are great as well as horrible farm-raised seafood operations globally, and there are great as well as horrible wild-caught seafood operations globally,” emphasizes Dick Jones, CEO of Kailua-Kona, Hawaii-based Blue Ocean Mariculture, the exclusive producer of Hawaiian Kanpachi, a premium yellowtail responsibly raised using environmentally sustainable farming methods. “As a supermarket buyer for 14 years, having led both Whole Foods Market and H-E-B grocery seafood departments, it is clear to me

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PROTEIN REPORT

Seafood

that the responsibility that retailers share is to develop strict procurement policies and procedures that promote quality, consistency, clarity of message, and transparency. Consumers want high-quality seafood that is good for them and their family, and [grocers] are looking for a solution, grounded in truth, as to how we get the consumer to eat more seafood, whether wild or farm-raised, and how we get the seafood departments at retail as profitable as they can be while increasing the sales.”

Next Steps

What’s ahead in the journey of what has become the United States’ second most-preferred protein, behind chicken? “Given the significant climb in seafood sales this past year, grocers are relying on access to a stable seafood supply more than ever,” points out Hannah Heimbuch, senior consultant at public affairs firm Ocean Strategies and an Alaskan commercial fisherman herself. “Domestic fisheries are of course a vital piece of that security. We have an opportunity now to nurture this growth as an industry — as a seafood supply chain that is increasingly valuable to the American economy. Sustaining that growth is going to rely in part on policies that promote fisheries resilience. Fishing and processing operations continue to weather the costs of COVID-19; Congress is looking to reauthorize the Magnuson-Stevens Act, the nation’s fisheries law; we have an executive order that could seriously impact access to federal fishing grounds; and we have a call to action to permanently protect Bristol Bay from the proposed Pebble Mine — centered in the watershed producing the world’s largest source of wild sockeye salmon. America’s diverse seafood industry is fully up to these challenges, and the consumer trends we’re seeing make it a clear priority.”

For claims-based seafood to be a true advantage, it is important that people understand what those advantages are. ... The more people can take educated purchasing decisions, the more the claims-based offering will actually make an impact.” —Anne-Marie Roerink, 210 Analytics “Socially conscious certifications, like Fairtrade or other groups attesting to the boats, ships and processing plants being safe working environments for employees,” are also important going forward, maintains Zimmerman, of Natural Grocers. “For years now, we have been asking our vendors for more transparency when it comes to their social impact. We are finally starting to see other seafood companies catching up and opting in for certification that reflects that no children or forced labor has been used. We’ve been ahead of this trend and are glad to see it getting broader attention. It is a much-needed change to ensure people are being treated with dignity and respect.” With so many issues to illuminate for shoppers, education at the point of purchase and beyond becomes more crucial than ever before. Luckily, grocers are up to the task. “Retailers are getting better at supporting education on seafood in the store,” says Carline. “Whether it be talking to the employee at the seafood counter, picking up related material to take home [to] learn and prepare seafood, or online marketing and recipe support, more

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and more retailers are understanding how imperative it is to create an informed shopper.” It’s the online piece that’s particularly exciting to Roerink. “On pack and in-store, we only have so much real estate to educate consumers before it turns into clutter,” she points out, “but online, we have endless opportunity to tie back to recipes, educate about the provenance, educate about the claims, etc. This is a big opportunity for retailers to drive added-margin items” such as claims-based items, which tend to be sold at a price premium. As Roerink notes, “Shoppers who have a high interest in claims-based products are often willing and able to pay the price differential.”

Point-of-Sale Seafood Selling Tips The key to maintaining robust seafood sales is to hook your customers and reel them in, time and again, but what are the best ways to do that? “Shoppers today want a lot from their food,” asserts Anne-Kristine Øen, director U.S. at the Norwegian Seafood Council, whose American office is in Boston. “They want to buy products that are tasty, nutritious, sustainably sourced and foolproof to prepare. ... There are several opportunities to have the resources and tools necessary right at the point of sale, such as the freezer or fresh case.” Øen provides the following suggestions:

Presentation: Place recipes at eye level or an

easy place for shoppers to see when shopping. Alert your staff that the recipe cards are available, and train associates to hand the cards to shoppers or point shoppers toward them.

Level Up: Near the seafood counter, display a

shopping basket of all of the nonperishable ingredients that the recipe requires, so that shoppers can visualize what they’ll need to purchase. With simple recipes, create a display for shoppers to put all of the ingredients in their carts. Help online shoppers plan meals by providing the option for website visitors to click on a seafood recipe and easily order all of its ingredients online.

Cross-Promote:

If a shopper decides against the purchase of fresh fish, recommend looking at fish in the frozen section to see whether it meets the shopper’s needs better. And don’t forget the frozen section — place a display or recipes in a holder near that department, too.

Knowledge: Many shoppers have ques-

tions about seafood, including about different species, preparation methods, storage practices, flavor profiles and even how it’s produced. Ensure that your staff members are knowledgeable about seafood to help consumers.


FRESH FOOD

Produce

Worth the Shopping Trip VALUE-ADDED PRODUCE LIVES UP TO ITS NAME. By D. Gail Fleenor alue-added produce is a multifaceted product. For families that are planning a meal including vegetables, the pre-cut items for salads or stews are a time-saver. For other shoppers, value-added can be an impulse item. Whether it’s pre-cut fruit that looks much more mouthwatering with its interior showing or butternut squash with its bright-orange insides on display, customers will be tempted to grab a package of value-added produce. Annual sales for fresh produce are approaching $61 billion in traditional channels alone, with household penetration almost 100%, according to Arlington, Va.-based FMI — The Food Industry Association. Increasing spend per buyer and per shopping trip and rising buying frequency holds promise for even more dollars. Conventional produce sales grew 1.1% in 2019 and organic grew 2.6%. Value-added produce has above-average growth, at 3.5%, with vegetables having the higher household penetration. “Homebound” customers are choosing such value-added produce items as pre-cut veggies with dip for snacks as the pounds from eating chips and candy become apparent. Retailers should ensure that they have enough department real estate for the biggest produce change in years, which looks like it’s here to stay.

Value-Added Adds Up

“At first it nosedived, but has since turned around and is outpacing our produce sales trend significantly,” says Jeff Cady, director of produce and floral for Williamsville, N.Y.-based Tops Markets LLC. He’s speaking of value-added fruit and vegetables, which, without value-added lettuce, make up 12.5% of total nationwide produce sales, according to FMI. Retailers have to look for space in coolers and racks for new value-added items. Produce department real estate has always been an issue, admits Cady, who adds that “as items come in, we have to rethink our allocations and lineup, and SKU rationalize to make things work.” Top sellers in value-added produce vary from area to area and store to store. According to Cady, Tops Markets’ top sellers in value-added are cut fruit, sliced peppers and onions, beans, and butternut squash. Meanwhile, at Wholesome Farmers Market, in Barre, Mass., Produce Director Rob White says that his top sellers are broccoli florets, cauliflower florets, broccoli and carrots, and green beans, with some items in microwaveable packaging. The price differential between conventional produce and value-added is the largest barrier to pre-cut sales, according to FMI’s “Power of Produce 2020” report. One of the most important factors in purchasing this product is when it was prepared,

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which is even more important than where it’s from. According to FMI, prompts that could drive more purchases are improved shelf life, food safety confidence and assortment. Improvements in packaging, so that the box is entirely closed, with no fold-over holes, are very important to shoppers who are spending more money for a product. However, current purchases predict that they will continue to buy and increase their purchases of value-added produce. “Customers want convenience,” notes White, so value-added meets their needs. Younger shoppers are core value-added produce shoppers. Sales of value-added fruits and vegetables are continuing to skew toward younger shoppers, FMI has found. This group is usually health conscious, on the go, more open to new ideas, and many have children who need healthy snacks. Snacking in particular is one key area within the category that has seen significant growth as a result of the pandemic, with 35% of shoppers saying that they snack more than they did a year ago, observes Andrew Moberly, director category solutions at Stamford, Conn.-based Daymon. Also, many in the Millennial group aren’t accustomed to cooking from scratch. “There is a new generation who are used to eating at fast-food restaurants but

Key Takeaways Retailers should ensure that they have enough department real estate for the biggest produce change in years — the move toward value-added products — which looks like it’s here to stay. While the price differential between conventional produce and valueadded is the largest barrier to precut sales, prompts that could drive more purchases are improved shelf life, food safety confidence and assortment, according to FMI. Greater customer acceptance has allowed retailers to become more innovative in offerings from meals to snacks in the pre-cut produce segment.


Produce Every Week of the Year haven’t during the pandemic,” says Louis Scudere, principal at Riverbend Retail Consulting, who is based in Tennessee. “They are learning to cook and using value-added produce for two main reasons. First, they are not that familiar with using knives to peel and cut produce. Second, value-added produce minimizes the waste they have when buying conventional produce.” With a continued consumer focus on healthy eating, value-added produce is in the unique situation of being an “every-meal necessity,” while also helping shoppers meet their wellness goals. “Even as a slow return to eating outside the home occurs, we anticipate seeing a continued shopper dedication to cooking, with 60% sharing they plan to continue preparing more meals at home than pre-pandemic,” notes Moberly. “This, in turn, supports continued success for categories like value-added produce.”

Value-Added Salads?

Salad bars still provide cut fruits and vegetables in some stores. But there’s inconsistency in availability, and every community has different regulations regarding salad bars, according to Scudere. In some locations, the salad bar has been removed; in others, pre-packed value-added produce is set in the salad bar. “Some stores require that gloves be worn to use the tongs at salad bars, while other stores do not,” he notes. “There is no consistency.” Salad bars, like much of the self-serve deli, have seen significant challenges over the past year. To combat this, many retailers have shifted focus to prepackaged options. “While salad bars as we know them may eventually come back, it’s more likely that shopper and retailer preference will continue to shift towards prepackaged,” predicts Moberly. “Some salads can be enough for two people, so they can spend less than if they purchased the ingredients for a salad separately,” says Scudere. Packaged salad sales grew 2.0% for the 52 weeks ending Nov. 3, 2019, according to multioutlet data from FMI and / Chicago-based IRI. The real supermarket innovators in produce offer an upgraded quality of pre-made salads, he adds. Customers are getting more innovative with cut fruit like grapes and are becoming more accepting of product quality as they gain experience with packaged fruits and vegetables, notes Scudere. This has allowed retailers to become more innovative in offerings from meals to snacks in the pre-cut produce segment. Customers can purchase smaller sizes of value-added produce, for example, for more convenience. Larger supermarket companies that are more centralized can purchase produce that’s already pre-cut and enjoy economies of scale and labor, he observes. One example of this is Castroville, Calif.-based Ocean Mist Farms’ value-added department, which includes the Season & Steam line. The microwavable steam package makes cooking fresh vegetables easy and convenient. Each Season & Steam package of fresh vegetables is cleaned and ready to use. Customers can pre-season vegetables, reseal and steam by microwave all within the same bag, says Diana McClean, senior marketing director at Ocean Mist. The resealable bag is available for artichokes, sweet baby broccoli, broccoli, cauliflower, vegetable medleys, and three Brussels sprouts items (SuperShreds SuperFood, Quick Cook Sprouts and Microwavable Wholes), adds McClean. There’s ample room for retailers to encourage greater value-added sales, FMI notes in its report, with six in 10 shoppers being occasional value-added users at best.

Consumers can have fresh fruit 52 weeks a year, with items like table grapes becoming available year-round. This trend is driven by consumer preferences as shoppers seek out healthy food options all months of the year, according to Andy Higgins, CEO of International Fruit Genetics (IFG), based in Bakersfield, Calif. IFG is one of the world’s largest fruit-breeding operations. “There is a renaissance happening in the world of table grapes,” asserts Higgins. “The generic offering of red, green and black grapes is being replaced by varieties sold by name, with each having a characteristic recognized by the consumer.” Some varieties simply eat better – being juicy, sweet or crunchy — while others offer different eating experiences through enhanced or special flavors, colors, textures and shapes. Retailers can create value-added displays that tie together the variety and consumer benefits of the grapes to provide a value-added experience. “We look to the apple world for clues,” observes Higgins. “Nearly all apples today are sold by variety name, and these rotate through the season. Many consumers now have preferences for their apples, and it is not simply ‘red and green.’” “We recognize that changing up the offering creates a sense of seasonality, impulse and interest,” continues Higgins, noting that there’s less emphasis on year-round production for his company’s specialty varieties, and more emphasis on having sufficient supply at certain times of the year. Allowing retailers to rotate the offering creates interest. “For Cotton Candy grapes, for example, consumers would be delighted to see it in-store 30 weeks of the year, but might lose interest if [it were] available 52 weeks,” he advises. Grapes are more of a staple today than 20 years ago, according to Higgins. Year-round supply in multiple countries and growing regions provides continual access to fresh fruit without the need for long-term storage. The result: Consumers benefit from having access to fresh fruit, and retailers benefit by having more choices to drive recurring sales and traffic.

Andy Higgins, CEO of International Fruit Genetics, notes that table grapes are now sold by variety rather than by color.

PROGRESSIVE GROCER March 2021

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RETAIL FOODSERVICE

Bakery

Placing Bets in Baking CENTER STORE RULED IN 2020, BUT THE PERIME TER IS RE ADY TO REBOUND By Mike Troy s with many areas of food retailing, the bakery category experienced dramatic growth and shifting demand patterns throughout the pandemic. Some of the changes were predictable given the shift to at-home food consumption that lifted sales throughout the store, but others were less obvious and affected the baking category in the center store and on the perimeter in surprising ways. Most notably, shoppers experimented with new product types and brands and exhibited different food-at-home behaviors. As a result, the category saw dollar sales grow much faster than unit sales, due to a decline in promotional activity, coupled with increased demand for more premium products as shoppers sought to create more upscale in-home meal occasions. One of the beneficiaries of the trends was the brioche segment. This bread of French origin was a relatively sleepy segment of the overall baked goods category as recently as 2018. At that time, total sales of brioche were about $108 million, according to Paul Baker, founder of Manchester, England-based St. Pierre Groupe, which entered the U.S. market in 2014 and is now the market share leader in the segment. By the end of 2020, the brioche sector had tripled, with sales of

Key Takeaways As shoppers experimented with new types and brands of baked goods and exhibited different food-at-home behaviors during the pandemic, the brioche segment experienced soaring sales. Branded baked goods sales also rose, but demand potentially shifting to food away from home and a perimeter rebound are seen as sources of center store pressure. Retailers can keep consumers purchasing baked goods by offering high-quality products, as well as highlighting authenticity; crossselling with breakfast, brunch and snackingoccasion products; and clever merchandising.

nearly $300 million, according to Baker. That kind of growth attracts a crowd, so other brands, most notably Sara Lee, Bakerly and Nature’s Own, have since introduced brioche brands to capitalize on further expansion of the segment. “As shoppers were asked to stay at home, new deciding factors came into play,” Baker explains. “Our research found that 43% of consumers considered brioche to be versatile, and more than a third agreed it suited every meal occasion. There was also a desire to explore new flavors and upgrade in order to recreate restaurant quality at home. Forty percent of U.S. shoppers are spending more on their regular food shop than pre-pandemic, and 48% have actively looked to recreate restaurant dishes at home.”

Brands Are Big in Center Store

St. Pierre isn’t the only company to have success with baked goods brands. Thomasville, Ga.-based Flowers Foods, the company behind Nature’s Own, Dave’s Killer Bread, Wonder,

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RETAIL FOODSERVICE

Bakery

Canyon Bakehouse and Tastykake, saw a 23% increase in branded product sales during its fourth quarter ended Jan. 2, 2021. Branded products accounted for 66% of the company’s total fourth-quarter sales of slightly more than $1 billion, while its store-brand products saw sales decline 3% to represent 13% of total fourth-quarter sales. This growth was driven by a shift to branded products during the pandemic, new product introductions, improved promotional efficiency and a reduction in product returns, according to the company. Storebrand sales suffered as a result, and Flowers Foods also sought to implement a price increase, which resulted in some lost business. Meanwhile, according to Grupo Bimbo, parent company of Horsham, Pa.-based Bimbo Bakeries USA, operator of 60 facilities nationwide, its North American sales in the fourth quarter increased 11% when the Mexico City-based company accounted for the favorable effects of currency translation. Bimbo is best known in the United States for brands such as Sara Lee, Entenmann’s, Thomas, Bays, Arnold, Ball Park, Mrs Baird’s and Boboli. Bimbo and Flowers Foods, the biggest players in center store, both have concerns about 2021 growth compared with the unprecedented gains of 2020. Demand potentially shifting to food away from home and a perimeter department rebound are seen as sources of center store pressure.

The Bifurcation of Baking

The at-home food preparation trend is what Sally Lyons Wyatt, EVP and practice leader, client insights at Chicago-based IRI, views as consumers getting in touch with their inner chef. With 81% of meals being prepared at home and people cooking for occasions throughout the day, Wyatt notes that “baking saw an incredible increase.” Just how incredible was evident in category insights that Wyatt shared during a presentation at BakingTECH 2021, an event organized by the Kansas City, Mo.-based American Society of Baking. Baked goods in the center store and perimeter combined grew 60% during the peak COVID-19 stockpiling period she defined as March 8, 2020, through April 26, 2020. However, during the period Wyatt called “the path ahead,” ranging from May 3, 2020, to Nov. 29, 2020, she observed that baked goods sales moderated to a still robust 25% growth rate. “When you think about the fact that there were restrictions on the bakery for portions of the year — you couldn’t do tastings, there were services that weren’t able to be offered, there were some ingredients that couldn’t be found — the fact that there was growth is a big testament to the value of the department,” Wyatt said during the presentation. That value took many forms during the “path-ahead” period Wyatt described. During the May 3-through-Nov. 29 time frame, the total baked goods category was valued at $22.2 billion, with dollar sales up 3.7% but unit sales down 5.5%, due in large part to a less promotional environment. The biggest driver of the growth was bread and rolls, accounting for $11.4 billion of the total sales of $22.2 billion, according to IRI data, with dollar sales up 9.9% but unit sales down 0.8%. Drilling down further, Wyatt noted that center store bread and rolls sales of $9.7 billion far outpaced perimeter sales of $1.8 billion. The perimeter was hit hard, with dollar sales up a meager 1.2% but unit sales plunging 25.3%. “When you look at select bakery categories in the path-forward period, they had more buyers, higher basket size, higher basket rings

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After overcoming pandemic operational challenges, perimeter bakery sales are poised for a rebound in 2021, especially for retailers committed to the department, such as Detroit-area independent Nino Salvaggio.

and more trips, so bakery is a valuable category to be investing in,” Wyatt said. “However, you need to maximize assortments to meet shifting behaviors and shifting types of needs that consumers have, and customize the in-store experience as well as bring the bakery experience online as best you can.” A key reason for doing this is the real phenomenon of at-home meal fatigue, combined with the pent-up demand among consumers to eat out again and rediscover restaurants that will be unleashed as COVID-19 vaccines become more broadly available. “Consumers are going to start to get out to more restaurants as restrictions ease and the pandemic eventually subsides, but some consumers may stick with their new habits of cooking,” Wyatt cautioned. “You need to find a way to keep them in the store.” One way is through elevated quality, which shoppers of all income levels demonstrated a willingness to pay for during all phases of the pandemic. Bakery manufacturers appear confident that they will continue to do so in the year ahead. “With consumers looking to try something new and willing to put their hands in their pockets for quality that transports them to a favorite restaurant or overseas holiday, retailers have a unique opportunity,” says St. Pierre’s Baker. “By highlighting authenticity; cross-selling with breakfast, brunch and snacking-occasion products; and clever merchandising to capitalize on shoppers’ desires to try new experiences in the only way they currently can, retailers can maximize sales and basket spend.”


GROCERY

Beverage Alcohol

Sunny Days Ahead THE OUTLOOK FOR BEER, CIDER AND SELT ZER THIS SUMMER IS E XCELLENT. By Lynn Petrak

Key Takeaways As COVID-19 ebbs, seltzers, ciders and beers, which are available in an increasing number of varieties and formats, could grow even more popular this summer. After suffering pandemic-related sales declines, beer companies of all sizes are lining up to leverage what will likely be a much better summer for imbibing.

he fact that this year’s Super Bowl broadcast didn’t include a Budweiser ad but did have a much-talked-about spot for new Bud Light seltzer lemonade speaks to the success and potential for the hard seltzer market. The commercial for Bud Light seltzer lemonade — which jumped from the 17th to the seventh best-selling hard-seltzer item after that weekend — was also designed to make viewers think about summer when most of the country was still in deep freeze. As COVID-19 outbreaks and restrictions ease, this could be the summer of love for already popular seltzers, ciders and beers, which are available in an increasing number of varieties and formats.

On the Bubble

Hard seltzers in particular are poised for a Roaring ’20s kind of run, with a semi-return to normalcy, or at least to more away-from-home drinking and dining and larger gatherings. According to a recent survey of distributors conducted by New York-based Goldman Sachs, the hard-seltzer market is expected to reach about $30 billion by 2025. While the primary and well-known brands of White Claw, from Dublin-based Mark Anthony Brands, and Truly, from the Boston Beer Co., have the lion’s share of the category, venerable companies like New York-based Anheuser-Busch InBev and Victor, N.Y.-based Constellation Brands have gotten into seltzer as well and are stirring things up. Summer is prime time for these fizzy and often fruity drinks. Accordingly, new hard seltzers are starting to hit the market this spring. New seltzer products include different varieties from existing brands, novel lines from new or startup brands, and fused beverages that combine seltzer with other beverage types. The latter segment — hard seltzer hybrids — looks to be a notable area of new development and potential growth as warmer weather approaches. Lemonade and seltzer go together like, well, summer and sunshine. Bud Light’s new seltzer lemonade line that garnered so much attention during the Super Bowl broadcast includes an original lemonade flavor, along with strawberry,

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Despite a lot of activity in fizzy adult beverages and in ciders, other types of hard beverages are gaining ground, like hard coffee.

black cherry and peach varieties. Besides White Claw, Mark Anthony Brands has just introduced a seltzer version of its Mike’s Hard Lemonade. That perennial summer beverage, iced tea, is also part of the move toward seltzer hybrids. White Claw is introducing new iced-tea seltzer this season in peach, lemon, raspberry and mango flavors. Meanwhile, another seltzer brand, Boston Beer Co.’s Truly, is adding a new iced-tea line to its seltzer portfolio, in strawberry, lemon, raspberry and peach varieties. In addition to nonalcoholic mixers like lemonade, iced tea and fruit juice, other seltzer fusions are fashioned with seltzer and spirits. Chicago-based Molson Coors is combining spirits, fruit juice and seltzer in a new line of Proof Point Spirited Seltzers, including varieties like vodka seltzer with lime and rum seltzer with mango-pineapple. In addition to beer brands, various other beverage companies are unveiling hard seltzers in time for the peak drinking season this summer. Coca-Cola is launching Topo Chico Hard Seltzer, its first foray into alcoholic beverages in nearly 40 years; the Atlanta-based soft-drink giant is teaming with Molson Coors on distribution. Additionally,


2021

2021


GROCERY

Beverage Alcohol

Woodbury, N.Y.-based AriZona Beverages, known for its iced tea, has developed a new Sunrise Hard Seltzer for a 2021 introduction. As portion sizes rise again after a year of social distancing, variety packs of hard seltzers are also expected to be hot this summer. White Claw is coming out with its third version of a variety pack, comprising blackberry, pineapple, mango and strawberry hard seltzers, and Constellation is set to debut a new variety pack featuring tropical flavors of Corona hard seltzer. Underscoring the widening appeal of seltzers, some brands are amping up the alcohol content of seltzers as 2021 continues. White Claw’s version is the Surge, with 8.0% ABV in a bigger can, while Truly is coming out with Truly Extra Hard Seltzer, also 8.0% ABV and in a larger can. Meanwhile, in the COVID-19 era and at a time of overall concern for health and wellness, Molson Coors is offering a product with a better-for-you twist. Its Vizzy line of hard seltzers claims to contain antioxidants and vitamin C from acerola cherries. For consumers seeking organic ingredients, Michelob Ultra has developed a new low-ABV organic hard seltzer that’s USDA certified organic and contains just 80 calories per can.

Hop to It

While the hard-seltzer category is booming, the beer market has been impacted and reshaped by the events of the past year, mostly due to a pullback in parties and gatherings. That pullback significantly affected smaller, regional and local craft brewers that relied on traffic for sales and the ability to distribute their product at grocery stores. Still, when polled about their favorite type of alcohol, a majority (19.2%) of U.S. male respondents in a suvery conducted last year by London-based GlobalWebIndex (GWI) chose regular beer, versus 7.1% of U.S. women, with craft beer coming in at 15.3% for men and 6.8% for women. GWI also found that Millennials drink the most regular and craft beer. This year, beer companies of all sizes are lining up to leverage what will likely be a much better summer for imbibing. For example, following a prolonged period of at-home indulgence — overindulgence for some — light beers may gain a new lease on life as swimsuit season rolls around. Low-calorie beers are now available from Lagunitas, Yuengling and Goose Island, among other brands. Beers with lower net carbs, like Corona Premier, along with low-carb offerings from several craft beer

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brewers, also appeal to those seeking the lighter side of drinking. On the flip side of that coin, however, are beers with a dessert flavor. Not yet widely consumed but still attracting notice as a trend, such beers span sweet flavors beyond fruit. Examples include a series of pastry-inspired stouts from The Bruery, in Placentia, Calif. and Cotton Candy Haze, from Holland, Mich.-based Big Lake Brewing.

The Core of Ciders

Ciders tend to do well in late summer and early fall as temperatures change, due to the natural association with apples and other late-harvest fruits. Still, there are options for lighter summer drinking, like Angry Orchard’s new Peach Mango and Strawberry Hard Fruit Ciders and its light Rosé Cider, said to be similar to a semi-dry wine but with an “apple-forward” flavor. “As the biggest innovation driver within the cider space, fruit cider is a rich territory for Angry Orchard to bring some ongoing variety to the category,” says Lesya Lysyj, chief marketing officer of The Boston Beer Co., which offers the brand. The market for fruit ciders, including those with a summery taste and vibe, remains ripe. According to data from Chicago-based IRI, fruit ciders are the fast-growing style within the cider category. That overall category is pretty healthy, too. For the last 52 weeks ending Jan. 24, 2021, sales of alcoholic ciders rose 12.5%, for a category total of nearly $500 million, IRI notes.

In Other Hard News

While there’s a lot of activity on the fizzy side of adult beverages and in ciders, other types of hard beverages are popping up in grocery shelves at a time when shoppers are seeking cold, refreshing drinks. Milwaukee-based beer staple Pabst Blue Ribbon’s new PBR hard coffee offering is a testament to that. Regardless, food retailers can reap the rewards of a popular summer season for beer, cider and seltzer. The GWI survey participants also said that they frequently buy alcohol at the supermarket, with 41.3% of men and 36.6% of women identifying it as their main destination for such purchases during April, May and June last year. Finally, grocers also know by now that the e-commerce market for beer, cider, seltzer and other alcoholic drinks is likely here to stay long after at-home orders caused a surge in delivery services like Boston-based Drizly and via many retailer curbside pickup and delivery programs. Now, as shoppers stock up on fun new varieties, many might be doing it with a click instead of a beer run.


NONFOODS

General Merchandise

Housewares Remain Hot AT-HOME FOOD CONSUMPTION AND NE W ME AL PREPAR ATION ME THODS CONTINUE TO CRE ATE OPPORTUNITIES TO BOOST SALES AND PROFITS IN GENER AL MERCHANDISE. By Mike Duff

he dramatic shift in at-home food consumption that drove unprecedented growth throughout 2020 has extended into 2021. Families continue to prepare meals at home and experiment with new recipes and preparation methods, fueling ongoing demand for housewares products that offer high margins and boost transaction sizes. The pandemic has created opportunities for grocers to augment and tailor housewares assortments to become more competitive in a category with surprising potential. Doing so requires some creative thinking with merchandising. For example, the Stop & Shop division of Ahold Delhaize USA has added sliding panels to in-aisle kitchenware assortments to add substantially more products without taking space from other categories. The novel technique has helped Quincy, Mass.-based Stop & Shop increase its offering at a time when food retailers represent a viable housewares destination for many shoppers.

Smart retailers are deploying carefully considered merchandising strategies in their housewares sections.

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Key Takeaways The pandemic has created opportunities for grocers to augment and tailor housewares assortments to become more competitive in a category with surprising potential, requiring creative merchandising. Some grocers are editing to fit space as well as lifestyles that were evolving even before COVID-19 hit. Suppliers that do significant business in the grocery channel saw big gains in 2020 and believe that those will carry forward.

Stop & Shop isn’t the only grocer that has employed clever, carefully considered merchandising. Rochester, N.Y.-based Wegmans Food Markets is known for big housewares presentations in its full-sized stores, but it also delivers a solid assortment of housewares basics at its smaller stores. At its location in Brooklyn, N.Y., Wegmans tucks a 12-foot presentation of cookware and kitchen products behind an end cap near the checkstands. The visible location can prompt impulse sales while reminding shoppers that it’s a destination for key housewares items. The store also added a display of Cuisinart bean grinders just as remote workers were consuming more coffee at home. In addition, the Brooklyn Wegmans places displays of housewares items adjacent to key perimeter departments. For example, there are cheese planes and knives adjacent to cheese, and near seafood there are skewers and tongs. In both cases, the assortment is called out with signage that reads “Prep & Serve Essentials.” The food retailer also scatters items such as salad dressing shakers/pourers throughout produce. Some grocers are editing to fit space as well as lifestyles that were evolving even before COVID-19 hit. For example, at Raley’s O-N-E, a store concept in Truckee, Calif., that’s focused on organic and natural food, there’s a selection of housewares products geared toward the active, outdoor lifestyle of its core shoppers, including items such as water bottles and food storage products that are free from BPA or phthalates.


With stimulus checks and changing consumer needs throughout the year, we have the potential to beat 2020 with innovation and agility in products and marketing.” —Joe Derochowski, The NPD Group

“Our goal with household goods is to offer high-quality products that enhance a customer’s lifestyle, create convenience and minimally impact the planet,” says Robin Gutridge, a category manager at West Sacramento, Calif.-based Raley’s. “Wherever possible, we offer sustainable products that incorporate renewables and recycled plastic, or are compostable, biodegradable or recyclable. For example, our Meri Meri Eco party plates are made from bamboo, wood fiber and sugarcane pulp, and dyed with water-based ink. Meri Meri offers a line of children’s dolls made of organic knit cotton as well.” Other retailers such as Albertsons Cos. have found a way to make buying housewares a seamless experience. The Boise, Idaho-based grocer has instituted contactless pickup with temperature-controlled lockers stationed outside stores, but those same lockers can be used for general merchandise. Albertsons lets customers order housewares through the locker system, and has included contingencies in product delivery so that even items not sized appropriately for the lockers can still make it into an order. If a customer order includes a broom — something that won’t fit in a locker — Albertsons spokesman Andrew Whalen explains that “the oversized items will be held in the store as an exception. Upon pickup, the customer will be notified that some of their items are in the store and to wait for an associate to come out with their items.”

Wegmans Food Markets' store in Brooklyn, N.Y., displays housewares items adjacent to key perimeter departments.

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General Merchandise

Opportunity Keeps Cooking

The trajectory of sales in 2021 may inevitably slow compared with the prior year, but the long-term trend remains favorable, depending on how one looks at the category, according to Joe Derochowski, VP and home industry adviser at The NPD Group, based in Port Washington, N.Y. “We are forecasting unit sales to be down this year versus 2020, but up versus 2019,” notes Derochowski. “With stimulus checks and changing consumer needs throughout the year, we have the potential to beat 2020 with innovation and agility in products and marketing.” Suppliers that do significant business in the grocery channel saw big gains in 2020 and believe that those will carry forward. “Overall, we have seen strong business with our grocery partners,” affirms Ross Patterson, president of Buffalo, N.Y.-based Robinson Home Products, which makes a wide range of food prep items and gadgets, as well as barware. “During the retail shutdowns that occurred

last year, there was certainly a lot of evidence that grocery and mass picked up the volume that others lost. In many cases, a new focus on those categories seemed to create a permanent lift, and I assume the market share gained will be long-lasting, as consumers are now more aware they can buy quality housewares in the grocery channel.” Commerce, Calif.-based Gibson Overseas, which offers tableware, cookware and related categories, and has long supplied the grocery channel, also experienced sales lifts at food retailers when the pandemic hit. “Naturally, grocery stores held an advantage over the majority of retailers during the shutdown orders brought on by the pandemic,” says David Nicklin, Gibson’s SVP of marketing and licensing. “Consequently, we experienced an influx of orders from grocery retailers. We were actually struggling to keep up with the unprecedented demand.” As the pandemic forced closures of some stores, many housewares vendors were able to shift gears and move goods to those retailers that continued to operate, Garden City, N.Y.-based Lifetime Brands among them. “The supermarket/grocery channel saw dramatic sales and traffic increases proportionate to the population staying, working, schooling and dining at home,” observes Mike Doyle, the company’s EVP sales. “Lifetime Brands adapted and pivoted quickly to service our customers in new ways,

II'S GRILLING SEASON, II'S GRILLING SEASON, ARE YOO READY? ARE YOO READY?

© Burke Brands LLC • For for more information contact: tmoynihan@burkebrands.com


Legal Notice

7 Ways to Sell More Housewares Sales of housewares benefited from a pandemic-driven shift to at-home eating and experimentation with preparation methods, which often required new tools. To keep the momentum going, leading suppliers and others with extensive category knowledge believe that grocers can boost housewares sales by doing the following: 1 Make housewares displays more prominent though location and signage, and enhance them with category-related secondary fixtures. 2 Incorporate housewares into seasonal displays that include a broader range of product categories. 3 Feature housewares in digital presentations and promotions, including for delivery and curbside pickup. 4 Leverage fixture innovations that allow for greater assortment density in comparable space. 5 Ensure that housewares are regionally and locally relevant. 6 Promote housewares items that support consumers’ at-home entertainment and entertaining needs. 7 Recognize that sustainability concerns factor prominently into many shoppers’ purchase decisions, and plan assortments appropriately.

through virtual meetings, while changing our own work rules and habits to protect our associates. Lifetime was able to continue shipping at record capacities to support the volume increases in the channel.” Chicago-based market research firm IRI registered gains in multiple housewares categories in the food retail channel for the 52-week period ended Dec. 27, 2020. In the household plastics category, sales increased 13.9% and units increased 3.2%. The stovetop cookware segment saw a 28.9% advance in dollar sales and a 16.6% increase in unit sales. The nonelectric kitchen tool segment saw a 26.4% advance in dollar sales and a 13.1% increase in unit sales. Drinkware enjoyed a 21.4% increase in dollar sales and a 1% gain in unit sales.

Looking to the Future

Consumers invested in their homes during the pandemic to make them better suited for work and play. As they begin socializing again and COVID-19 becomes less of a threat, many consumers are expected to remain close to home and use their new skills and equipment to entertain. They may start out on a small scale, using the garage for get-togethers, as has already happened in some cases, as well as transitioning to patios and backyards when weather permits. This sets the stage for what could be a second surge in housewares purchasing for everything from serving platters to coolers to shatterproof cocktail glasses. Meanwhile, Millennials and others who have recently shifted from cities to suburbs will especially need to purchase entertainment-related housewares items they didn’t need while living in small apartments and socializing outside the home. Even as they begin engaging in pre-pandemic behaviors, consumers will be making decisions about purchasing, based on new concerns. “As consumers gain more comfort being back in groups, we will see an increase in kids’ activities and going back to the office to work,” says NPD’s Derochowski. “How we speak to consumers will change, as well as what attributes and features will be important, will change throughout the year. The agility to change the marketing message or assortment accordingly will be a key success factor for 2021.”

If you bought butter or cheese directly from a National Milk Producers Federation Cooperatives Working Together Program Member between December 6, 2008 and July 31, 2013, you could receive a payment from a $220 million settlement. What is the lawsuit about? A $220 million settlement has been reached in a class action lawsuit brought against National Milk Producers Federation, Agri-Mark, Inc., Dairy Farmers of America, Inc., and Land O’Lakes, Inc. (collectively “Defendants”). The lawsuit claimed that an effort known as Cooperatives Working Together (CWT) operated a Herd Retirement Program that was a conspiracy to reduce milk output that violated the law. The Defendants deny doing anything wrong. The Court has not decided who is right. On April 27, 2020, the Court granted fnal approval of this $220 million class action settlement and issued a Final Judgment. The settlement is no longer subject to appeal because the period for appeals has passed. On April 27, 2020, the Court approved a Plan of Distribution and set a deadline of April 23, 2021 for claims to be postmarked or received by the Administrator. Who is included? The Court decided that the Class includes all persons and entities in the United States that purchased butter and/or cheese directly from one or more Members of Defendant, Cooperatives Working Together and/or their subsidiaries, during the period from December 6, 2008 to July 31, 2013 who did not timely opt-out of the Class. Those that are included are called “Class Members.” To be a Class Member who could be eligible for a payment, you must have purchased butter or cheese made by a CWT Member.If you are a consumer, you must have purchased butter or cheese made by a CWT Member at one of the dairy co-op stores. Go to the website for a list of CWT Members along with their store names and locations. The Settlement does not include Milk purchases. What does the settlement provide? The settlement provides that payments to Class Members will be allocated: 37% to the Butter Sub-Class, and 63% to the Cheese Sub-Class. Total payments will be $220 million plus interest, minus: attorneys’ fees and expenses; payments to the Named Plaintiffs; notice and administration costs; and taxes. What are your options? If you would like to claim purchases of butter and/or cheese made from Defendants, you must complete and submit the Submitted Documented Claim Form with proof of your purchases. If you do not have documentation to show your butter and/or cheese purchases, please complete the Undocumented Claim Form. Both claim forms can be found online at www.ButterandCheeseClassAction.com. Claim Forms must be signed and verifed by the claimant or a person authorized to act on behalf of the claimant and must be postmarked no later than April 23, 2021. Claim Forms should be addressed to: Butter and Cheese Class Action Administrator, P.O. Box 4290, Portland, OR 97208-4290. Do not send Claim Forms to the Court or to any of the parties or their counsel. Complete only one Claim Form covering all of your qualifying purchases. Do not submit more than one claim, and do not submit duplicate claims. Detailed information and copies of the relevant Court documents are available at the website and toll-free number listed below.

1-855-804-8574 www.ButterandCheeseClassAction.com


GROCERY

Salty Snacks

Consider the Alternative NONTR ADITIONAL BE T TER-FOR-YOU SNACKS ARE GAINING FAVOR WITH MORE CONSUMERS AND RE TAILERS. By Barbara Sax onsumers want a lot from their snacks. They want a steady stream of new flavors to keep them engaged, and increasingly, they want more nutritionally dense versions of traditional chips, pretzels and puffs. Manufacturers have been happy to comply with a slew of “alternative” better-for-you snacks in a variety of new flavors. Plant-based snacks are a significant source of growth in the category and, while they still represent a small percentage of overall category sales, growth in the segment is outpacing that of traditional snacks. “According to the FMI/The Hartman Group’s ‘U.S. Grocery Shopper Trends COVID-19 Tracker’ report, 44% of consumers say they are eating healthier during the pandemic,” says Rhasheda Boyd, senior marketing director at PopCorners, which markets that brand as well as soybean and cassava-based Flex Protein Crisps and Flourish Veggie Crisps gluten-free air-popped snacks. “Moreover, The Hartman Group’s recent ‘Snacking: Emerging, Evolving and Disrupted’ report indicates that 48% of all food and beverage occasions are snacking occasions. This tells us that the better-foryou snack category is here to stay and is only increasing in demand.” Category giant PepsiCo, which has already acquired PopCorners as well as Bare Snacks, maker of baked fruit and veggie chips, recently revealed a joint venture with El Segundo, Calif.-based meat-substitute manufacturer Beyond Meat Inc., a move that will likely lead to even more action in the segment.

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Key Takeaways In response to consumer demand for more nutritious snacks, manufacturers have introduced myriad “alternative” better-for-you options in a range of new flavors. Along with a boom in plant-based snacks, protein- and cheese-based offerings are growth segments. Beyond the mainstream and “better-for-you” snack sections, alternative snack products are finding homes in a variety of locations in the store. “Now more than ever, consumers are looking for more nutritious, environmentally conscious products and increasingly turning to plant-based protein — a trend that we believe will only grow in the coming years,” says a representative of Purchase, N.Y.-based PepsiCo. “The plant-based market trend is on fire,” affirms Deb Holt, chief marketing officer at Fairfield, N.J.-based Real Food From The Ground Up. “Snacking, already a rapidly


increasing behavior, has only accelerated as consumers spend more time at home. With more mindful snacking happening at home, consumers are paying closer attention to the snacks they are eating.” Real Food From the Ground Up, which makes cauliflower-based swaps for pretzels, tortilla chips and puffs, recently expanded distribution of its cauliflower-based versions of the classic potato chip, now available in four flavors. Later in 2021, the company will also launch a Cauliflower Snacking Cracker and a Purple Carrot Cracker. “We’ll keep innovating until there’s a plant-based cauliflower snack offering for each salty snack subcategory,” says Holt. “People have been turned off by starches, and that behavior is not changing,” observes Steve Kneepkens, SVP of sales and marketing at Fairfield, Calif.-based Harvest Snaps. He anticipates higher sales for plant-based snacks over the next five years. Harvest Snaps snack crisps, made from green peas, red lentils and black beans, are delivering a nutrient-dense, crunchy chip option for consumers avoiding starches. This May, the brand is launching a tortilla chip featuring a blend of almond and cassava flours for a more nutritious chip. Cassava root is also the base ingredient for Plant Snacks products. Dave Eisen, CEO of the Boston-based company, believes consumers are looking for a reason to try something new, and Plant Snacks products, which are grain- and gluten-free, check the right boxes for consumers. “What a product contains is just as important as what it doesn’t contain,” says Eisen. Available in a variety of vegan flavors, such as beet with vegan goat cheese, and vegan cheddar, the brand recently launched a larger 8-ounce-size version of its sea salt-flavored chip. Younger consumers in particular are tuned into products that are

also good for the environment. “Our chips were born from the idea that you can have still enjoy healthy snacking with reimagined vegetable chips, and be kind to yourself and the planet while enjoying them,” notes Stephen Williamson, CEO and founder of San Francisco-based Forager Project, maker of such plant based-snacks as Super Greens (kale and spinach blended with ancient grains) and new Cassava Cashew chips.

Beyond Plant-Based

Protein- and cheese-based items are also growth segments. “We’re seeing shoppers looking for new options that provide the same flavor, comfort and nostalgia as snack favorites like chips and crackers,” says Allison Schuman, SVP of sales at New York-based Whisps. “We’re going to continue to see brands reimagine these flavors with premium spices and other natural ingredients to deliver the same taste in a cleaner format. Whisps meets their needs with a nutrient-dense single-ingredient option, [featuring] 100% artisan cheeses exclusively made for the brand.” Whisps recently launched three new chip-inspired flavors and is currently rolling out a Garlic Herb flavor. “We are also exploring fun brand moments, such as the Valentine’s Day pack of single-serve Whisps pouches, cheesy stickers and cards,” adds Schuman. “We’re exploring how our brand can show up during other holidays as a snack and activity as well.” Protein-enhanced options are likewise on the rise. “A recent report from The Hartman Group says that 60% of consumers are adding or increasing protein in their diet, and 36% of consumers indicated that they are

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Salty Snacks adding more plant-based proteins to their diet,” says PopCorners’ Boyd. “This is exciting for [the] Flex brand, which contains 10 grams of protein in every serving.” Linda Zink, chief marketing officer of El Segundo, Calif.-based Quest Nutrition, believes that the quality of protein is also important to consumers. “We provide consumers with a complete protein for a full amino acid profile, and we use ingredients that have metabolic advantages,” she explains. “We will continue to see this category grow, and as consumers continue to get smarter about snacking, these attributes will become even more important.” The brand recently introduced a Spicy Sweet Chili flavor.

Taste Still Drives Choice

Some retailers, including Wegmans Food Markets, call out betterfor-you attributes like gluten-free in their snack aisles.

Meanwhile, Boston-based Biena Snacks recently launched Keto Puffs, a snack with a texture similar to a cheese puff, but with a lower carb count and higher protein content. Understanding that consumers will never sacrifice taste for open for anybody to shop,” says Kneepkens. Rochesa healthy halo, manufacturers are offering both attributes to ter, N.Y.-based Wegmans Food Markets, for example, consumers and are tempting them to expand their snack horizons merchandises gluten-free snacks in a dedicated aisle, but with new flavor profiles. merchandises plant-based better-for-you snacks in its “Today, consumers expect their better-for-you snacks to achieve main aisle and calls out specific product attributes, such delicious taste, real food ingredients and nutrition,” says Poorvi as vegan, in sections within the snack set. Patodia, CEO and founder of Biena Snacks, which makes roasted Secondary merchandising options are hugely importchickpeas and chickpea puffs. ant to this growing category. “Snacking items are often “There’s been a major shift in global flavors to African- and an impulse purchase, so having end caps and shippers Asian-influenced flavors,” notes Kneepkens. “Peanut-based prodthroughout the store helps to drive awareness and ucts are an easy way for consumers to add protein. With a shift to purchase,” advises Forager Project’s Williamson. “Kroger snacking as meal replacement, we’re seeing more meal-flavored does a great job at expanding their offerings as well as products, like Turkey Dinner or California Roll.” implementing a national shipper program to capture the Sweet-and-salty combinations are also becoming more common. impulse/convenient purchases throughout the store.” Frito-Lay’s Do Us a Flavor competition has spawned CotPlant Snacks is working with Wegton Candy and Dill Pickle versions of the classic chip, and mans on a pallet program, and its shipalt snacks are following the company’s lead: For instance, per program with West Des Moines, With a shift Harvest Snaps has introduced a Cinnamon Sugar Pea Iowa-based Hy-Vee has delivered great to snacking as Snap and is working on some new flavors for 2021. results, according to Eisen. “A presence meal replacement, Some alternative snack companies are tailoring on the perimeter of the store can be a their assortments for their retail partners. Plant Snacks great volume and awareness driver for we’re seeing more launched this fall in Bentonville, Ark.-based Walmart customers who are looking for somemeal-flavored products, and Austin, Texas-based Whole Foods Market with thing new,” he says. different flavor profile programs, since the Walmart cus- like Turkey Dinner or Nontraditional snack products are California Roll.” tomer tends to be less experimental with new flavors. finding homes in a variety of locations “We’re executing our program in different ways for difin the store. While Harvest Snaps is —Steve Kneepkens, Harvest Snacks ferent retailers, and we’ve been successful in different currently merchandised in the produce parts of the store,” says Eisen. “A number of retailers, aisle, Kneepkens is looking at merchansuch as Publix, have introduced mindful=snacking sets. We also like dising opportunities in the snack aisle, as well as in the deli, to be in the main snack aisle as a better-for-you adjacency.” with a shipper program. Whisps started as a deli brand and For her part, Quest Nutrition’s Zink would like to see a low-carb has performed well when merchandised over the deli case lifestyle section in retail. “As consumers become increasingly aware or salad bars. The brand’s growth has propelled it into adabout carbs and sugar and want to make smarter choices, bringing ditional locations throughout the store, including the cookie/ these brands and product offerings together in a designated space will cracker aisle, where it outperforms some well-established only bolster their performance and promote trial and awareness while heritage cheese snacks, according to Schuman. creating a more convenient shopping experience,” she observes. While traditional snack products still drive a hefty percentage of category sales, new products offer the variety that consumers crave, appeal to younger shoppers and Outposting Boosts Sales While most alt snack brands are happy to have placement in glulift category sales overall. As Zink notes, “In launching ten-free sets or on the perimeter of the store, most agree that the best our chips, we learned that merchandising drove not only place for these brands is in the mainstream snack aisle. “A gluten-free incremental volume to our brand, it drove impactful sales set is always a good idea, but the snack category should be wide that were incremental to the whole category.”

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SOLUTIONS

Sanitation

Plans for a Cleaner Future RE TAILERS ARE ADOPTING NE W TECHNOLOGY AND SANITATION PROTOCOLS TO ASSURE THEIR SHOPPERS THAT SAFE T Y WILL CONTINUE TO BE TOP OF MIND. By Jenny McTaggart y the end of February, Americans were starting to see a light at the end of the pandemic tunnel as vaccine development was ramping up and rolling out. Unfortunately, the country also met a grim milestone of 500,000 confirmed deaths due to COVID-19, and experts cautioned that safety measures may need to remain in place for longer than anticipated, particularly as new, aggressive variants of the disease have been detected. For grocers and other retailers, the enhanced store sanitation measures that they’ve adopted during the pandemic will also likely remain in place, at least for the foreseeable future and possibly far beyond. While it’s unknown how long the American psyche will be affected by what the country has been through in the past year, business leaders are hedging their bets that customers will continue to demand visibly clean, safe stores. “While vaccines are a critical breakthrough for fighting the pandemic, it will take months for most people to be vaccinated, and even longer before we return to ‘normal,’” predicts Chris Wright, VP of sales at Brain Corp., a San Diego-based firm that makes software for robotic floor scrubbers. “Even then, the changes to retail operations from COVID-19 are here to stay. We might see minor changes, such as the removal of plastic barriers at checkout counters or less frequent sanitations between shoppers, but the pandemic has altered people’s perceptions and expectations of cleanliness. Cleaning is no longer just a job — it’s now a brand value.”

Key Takeaways Retailers’ enhanced store sanitation measures that they adopted during the pandemic are likely to remain in place. Certifications, advanced technology and specifically engineered cleaning equipment can help boost consumer confidence that retailers are doing everything necessary to keep stores sanitary. There are even now cleaning systems for previously overlooked areas of the store such as the checkout belt.

Some retailers agree that providing clean, safe stores is not only a responsibility, it’s also a competitive advantage. Dennis A. Host, VP of marketing at Coborn’s, tells Progressive Grocer that his customers have expressed appreciation for what the company’s stores have been doing to stay safe since last spring, and he believes that some of them choose Coborn’s because of its commitment to cleanliness.

A UVC light fixture (top left) hangs over shopping carts at a Sentry Foods store to sanitize them when not in use. Sentry Foods also uses blue light in its meat departments to kill pathogens such as listeria and salmonella (bottom left). Coborn's (right) cleans its carts throughout the day using electrostatic sprayers. PROGRESSIVE GROCER March 2021

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Sanitation

“We have always taken great pride in offering a safe and clean environment for our guests — that’s part of the experience we deliver,” he says. “The pandemic has heightened our awareness of those protocols as we’ve put more rigorous processes in place.” The St. Cloud, Minn.-based regional chain of 59 stores has taken an impressive number of steps to protect customers and employees during the pandemic. In addition to requiring employees to wear masks and strongly recommending its customers do so, the grocer has introduced electrostatic cleaning and sanitizing of its shopping carts throughout the day, and has stepped up cleaning practices of frequently touched areas and throughout its stores. According to Host, his company views the safety protocols it has adopted as likely being “longer term.”

Certifiably Clean

In fact, in an effort to further step up its commitment to safety, Coborn’s recently became Ecolab Science Certified by St. Paul, Minn.-based Ecolab, joining the ranks of other regional operators, including Ingles Markets, Brookshire’s Food & Pharmacy, Cub Foods, and Bristol Farms and Lazy Acres, as well as larger chains. The certification recognizes a retailer’s commitment to rigorous cleaning protocols, training and audits, and now includes guidelines specifically related to COVID-19. According to some of Ecolab’s proprietary research conducted in January, even after a vaccine is distributed, 95% of consumers surveyed said that they want to see as much or more cleaning and sanitation practices at the places they eat, stay and shop. Eighty percent said that they wanted businesses to follow “strict cleaning protocols.” The pandemic Adam Johnson, VP and general has altered manager of Ecolab’s general global food retail business, notes, “In the people’s perceptions current environment, customers are and expectations of looking for visual reassurance that cleanliness. Cleaning is the stores they’re shopping in are no longer just a job — it’s committed to advancing cleaner, safer practices and addressing current now a brand value.” and future pandemic concerns.” — Chris Wright, Brain Corp. Ecolab’s Science Certified program provides food retailers, restaurants and hotels the “science-based products, programs and protocols needed to help prevent the spread of germs — and give consumers confidence that businesses are taking steps to deliver a higher level of cleanliness,” he says. These products include hospital disinfectants and food-contact sanitizers proven to kill the COVID-19 virus. A key part of the program is the audits that Ecolab provides, continues Johnson. “The audit provides retailers feedback that helps them continue to improve their operations based on key metrics, and ensure public-health and food safety best practices are followed,” he notes, adding that as well as addressing risks related to hand hygiene, social distancing, illness policies and disinfection practices, Ecolab’s audits focus on food safety challenges that the industry continues to face pre- and post-pandemic.

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The Badger UV Disinfect robot is capable of disinfecting surfaces with more than 99% efficacy in 40,000 square feet in around two hours, according to Badger Technologies.

Virus-Zapping Robots

Along with programs like Ecolab’s, retailers now have a host of new tools at their disposal to enhance their sanitation efforts. Examples include robots that deliver ultraviolet-C (UVC) radiation to eradicate viruses and other high-risk pathogens, blue light, advanced cleaning machines, and even a checkout belt sanitation system. Neu-Tech Energy Solutions, an LED lighting supplier based in Terrace Park, Ohio, is providing blue-light fixtures and UVC lighting to a Sentry Foods store in Delafield, Wis., to make various areas of the store safer. The UVC lighting, which has been linked to inactivating the virus that causes COVID-19, hangs over Sentry’s shopping cart area, while a portable UVC light is placed near the checkout lanes. The lights have their own commercial-grade timers and are only operated at night when the store is closed, since UVC light at direct exposure can harm humans’ skin and eyes, notes Gary Neumann, a partner at Neu-Tech. Additionally, the fixtures have motion sensors on them so that if someone walks into the area where they’re being used, they turn off immediately. Neu-Tech also provides units that can be mounted on the wall or ceiling and can sanitize areas and surfaces, as well as units that can be put into the HVAC system, out of view. Sentry is using the blue lights in its meat department. While this technology is still being tested on the COVID-19 virus to prove efficacy, it has already been shown to kill or deactivate a wide range of bacteria, including MRSA, staph, strep, C. diff, listeria, salmonella and more, when used at a specific wavelength, according to Neumann, who says that his company is in talks with other grocers about implementing its lighting solutions in their stores. UVC light is now also becoming a part of robotic cleaning solutions in supermarkets. Badger Technologies, known for its floor-inspection and shelf-scanning autonomous robots, is pilot testing its Badger UV Disinfect to auto-


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mate cleaning tasks. The Nicholasville, Ky.-based company partnered with UltraViolet Devices Inc. (UVDI) to develop the robot, which is capable of disinfecting surfaces with more than 99% efficacy in 40,000 square feet in around two hours, according to Tim Rowland, CEO of Badger Technologies. For safety reasons, the whole process takes place when the stores are closed to the public, he says. Earlier this year, Retail Business Services, the services company of Ahold Delhaize USA, launched a pilot of UV disinfection robots from Cambridge, Mass.-based Ava Robotics in two of its affiliated distribution centers. Rowland believes that the overall trend toward automation in the industry will continue, especially as “grocers want to ensure safe environments for employees and customers while improving overall shopping experiences.” As robots automate more mundane cleaning tasks in a safer manner, grocery employees will be empowered to deliver better customer service, he adds. Along those lines, it’s likely that more retailers will look for specifically engineered cleaning equipment to keep all areas of their stores cleaner, offers Bob Robinson Jr., VP of sales at Kaivac Inc. Whereas grocers of the 1990s were obsessed with showing off shiny floors, today’s retailers that have experienced the pandemic will look for more deep-cleaning solutions, Robinson observes. Hamilton, Ohio-based Kaivac offers equipment to help retailers more efficiently clean their floors, bathrooms and refrigerated equipment. Its solutions result in time and labor savings, and happier employees, according to Robinson. Retailers operating supercenters and larger multipurpose stores are particularly interested in offering clean restrooms, since they want their customers to stay in their stores for longer times, he notes, adding that he expects this trend to continue once COVID-19 begins to subside.

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company is hoping to provide an easier alternative. FreshBelt Systems, based in Surrey, British Columbia, is offering an automated, continuous way to clean the checkout belt via a stainless-steel piece that can be retrofitted over any checkout belt, accompanied by a chamois cloth attached to a hose. The hose connects to a pump ensuring that the proper amount of disinfectant or cleaner is applied to keep the chamois moist. Retailers provide their own cleaners. “As the belt turns, the device rolls on the conveyor and wipes it,” explains Trevor Hein, CEO and president of FreshBelt. “The pump is automatically triggered every four minutes or so, which keeps the belt moist. Then we set up a motion detector nearby so that it will automatically shut off if the cashier leaves the area.” The FreshBelt solution, which is relatively inexpensive at under $1,000 per checkout, is being tested by several Canadian grocers, and is now ready for prime time. Hein adds that the company is ready to go into test mode with a major U.S. grocer, and that other retailers have expressed interest. In Hein’s view, advanced cleanliness is here to stay, even after the pandemic improves. “Now that we’ve started installing these systems, I don’t think grocers are ever going to go back, honestly,” he says.

Check Out That Checkout

One area of the store that was often overlooked before COVID-19 is the checkout belt. While many cashiers have been given the extra job of continuously wiping down the belts since the pandemic began — arming themselves with paper towels and cleaning solution — a new

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SUSTAINABILITY/SOCIAL RESPONSIBILITY

Recycling

Waste Not RE TAILERS ARE MAKING COMMITMENTS TO BE PART OF THE SOLUTION WHEN IT COMES TO LESSENING THEIR ENVIRONMENTAL IMPACT. By Marian Zboraj

ith a new administration in the White House making environmental issues a big priority, food retail should expect growing pressure to follow suit from regulators (and consumers). One of the areas where the industry can make a big contribution is helping to eliminate waste through recycling and reusable systems.

Regulatory Action

This year, the Washington D.C.-based Consumer Brands Association is focusing its efforts on advancing recycling solutions that will work within the United States. One big challenge it faces, however, is dealing with what the trade group describes as a “patchwork” system. “Every single city has its own recycling system,” explains Meghan Stasz, Consumer Brands’ VP, packaging and sustainability, “so what would be recyclable for

Key Takeaways Industry groups like the Recycling Leadership Council are working with the federal government to modernize and standardize the recycling system across the country. Retailers can build trust and commitment with consumers through transparent reporting requirements for their waste and recycling programs. More than 250 U.S. brands and retailers have committed to increase their use of recycled content in products and packaging; meanwhile, replacing one-off disposable products with solutions like reusable and refillable packaging is also gaining in consumer adoption.

PROGRESSIVE GROCER March 2021

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SUSTAINABILITY/SOCIAL RESPONSIBILITY

Recycling

one grocery store would be totally different for the same store just across the city lines. That’s confusing to consumers and to businesses. Our big priority for recycling this year is offering solutions that address that underlying patchwork of systems to find ways to improve our infrastructure for recycling.” Consumer Brands has already gotten the ball rolling with its Recycling Leadership Council (RLC). The RLC, a broad coalition of stakeholders, was created last year to determine how the federal government can help play a coordinating role in fixing the nation’s recycling efforts and building a circular economy. This past February, the RLC unveiled its “Blueprint for America’s Recycling System” to bipartisan members of Congress. The report lays out policy action on how the federal government can be a positive force in modernizing and standardizing the recycling system across the country. “Having actionable ideas that would make an impact and that would also have broad, wide-ranging industry support is a great place to be so early in the year,” notes Stasz. She also points out that the federal government’s role is only one piece of a big holistic puzzle when it comes to recycling. The Washington, D.C.-based Retail Industry Leaders Association agrees. Its Retail Compliance Center emphasizes that retailers have a role to play in supporting the health of the recycling system by creating demand for recycled materials through commitments and procurement strategies.  According to the association’s recent “Retail Trends: The Waste Landscape and Solutions for the Retail Industry” report, customers want to know where material is going and what it’s made into. Retailers can build trust and commitment with consumers through transparent reporting requirements for their waste and recycling programs. Replacing one-off disposable products with solutions like reusable and refillable packaging is experiencing an upswing in consumer adoption.

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I think 2021 presents a very real opportunity for massive improvements to recycling. Over the past two years, we’ve seen unprecedented stakeholder interest in fixing this problem. This is a bipartisan issue that consumers want, industry wants, and there is political will for, so there’s great opportunity for very real and lasting progress.” —Meghan Stasz, Consumer Brands Association

“I think 2021 presents a very real opportunity for massive improvements to recycling,” says Stasz. “Over the past two years, we’ve seen unprecedented stakeholder interest in fixing this problem. This is a bipartisan issue that consumers want, industry wants, and there is political will for, so there’s great opportunity for very real and lasting progress.”

CPG Innovation

Demand for recycled content is growing rapidly, with more than 250 brands and retailers in the United States committing to increase their use of recycled content in products and packaging. In February, General Mills’ Nature Valley became one of those brands. It launched the first plastic film wrapper designated as store drop-off recyclable by How2Recycle with the brand’s Crunchy granola bar. According to the “Sustainability 2019” report, from The Hartman Group, based in Bellevue, Wash., 70% of the U.S. population wants to decrease plastic waste but don’t know how, yet more than 90% of Americans are within 10 miles of a store drop-off recycling location. That means a potential 295 million people could participate in store drop-off recycling. “Over the last three years, Nature Valley’s R&D scientists worked in collaboration with packaging partners to develop this wrapper technology, because there was not an existing solution that protected the product and was recyclable,” says Brian Higgins, grain snacks business unit director at Minneapolis-based General Mills. “Now there is, and the goal is to implement the wrapper technology across the brand’s entire portfolio of snacks by 2025 and extend to other General Mills brands and products.” The wrapper uses new-to-the-category advanced film processing with unique polyethylene polymers. Once recycled, the materials can be used to create new products like synthetic lumber and decking equipment. This new packaging also offers the barrier needed to preserve the product’s freshness and doesn’t compromise the item’s shelf life.


SUSTAINABILITY/SOCIAL RESPONSIBILITY

Recycling

Nature Valley is purposefully not patenting the wrapper, welAlbertsons Cos., Hy-Vee, Meijer and Walgreens. coming other food brands to apply the technology to their own One of the newest partners is Wakefern Food Corp. product portfolios. While its ShopRite banner already offers reusable bags “We’ve removed two key barriers for others to adopt this wrapfor purchase and provides recycling bins for customers per technology,” continues Higgins. “The first is the technology to return used plastic bags, Wakefern saw the consor— we didn’t have a recyclable packaging option tium as a necessary opportunity to previously. The second is consumer knowledge bring important stakeholders togethon store drop-off recycling programs — in March, er to solve the retail bag challenge. Holistic and we’ll be kicking off a campaign to teach consumers “Holistic and creative strategies creative strategies about what can be recycled and where to find store are critical to be able to effectively drop-off bins near them.” tackle the complex challenge of plastic are critical to be able The newly packaged bars will be available this spring. to effectively tackle waste,” says Robert Zuehlke, manager of corporate social responsibility for the complex challenge Keasbey, N.J.-based Wakefern. Return of the Milkman? of plastic waste.” Recycling alone isn’t the only answer to protecting According to Zuehlke, a “better rethe planet. Replacing one-off disposable products tail bag” entails a number of important —Robert Zuehlke, Wakefern Food Corp. with solutions like reusable and refillable packaging facets, including consumer behavior is experiencing an upswing in consumer adoption. and habits. “Solutions in urban stores This is where Trenton, N.J.-based TerraCycle’s Loop is concentratmay differ from solutions in suburban or rural stores,” he ing its efforts. Loop is a circular e-commerce platform that provides notes, “and solutions at checkout may look different than products redesigned for a waste-free shopping experience. e-commerce pickup or delivery solutions.” As Loop points out, before the 1950s, products were typically Last year, the consortium introduced the Beyond made to be high quality and reusable, and refill models such as the Bag innovation challenge to develop alternatives to the neighborhood milkman were popular. the current plastic bag. This past February, it revealed But we produce and buy more products than we did in the nine winning solutions: 1950s, the majority of which are sold in single-use packaging — ChicoBag: A low- to no-cost reusable think of that carton of milk — which inevitably becomes waste. solution for those prone to forgetfulness. Loop is building a global ecosystem for the reuse movement that maintains the convenience and affordability that consumers have Eon: Powering the connected circular bag come to enjoy with a throwaway lifestyle. with CircularID, creating the systems and The products available on Loop’s platform are packaged in reusable operations to incentivize circularity. glass or metal containers and shipped directly to customers in a speSmartC: A smart tag-and-bag system cially designed tote. The containers are then picked up at no charge, built for the digital generation. cleaned, refilled and reused to create a circular packaging system. According to the company, reusing an object saves energy and Domtar: Strong, light and stretchable — resources, as the object needs only to be transported and cleaned a better paper bag. before it can be cycled again. Fill it Forward: Consumers give back, Some of the retailers partnering with Loop to offer waste-free track their impact, earn rewards and never shopping include The Kroger Co., European grocer Carrefour, forget the bag they already own. Walgreens and Canadian retailer Loblaw Cos. Ltd.

Reinventing the Plastic Bag

One of the major sustainable initiatives accelerating in retail of late is the search for eco-friendly alternatives to the single-use plastic bag. According to the New York-based Center for the Circular Economy at Closed Loop Partners, the short use (as little as 12 minutes) and long lifespan of the single-use plastic bag have led to rising environmental concerns. With fewer than 10% of the estimated 100 billion plastic bags recycled in the United States, these bags are among the top 10 items polluting beaches and waterways. Closed Loop Partners’ Consortium to Reinvent the Retail Bag, through its Beyond the Bag Initiative, is a multiyear collaboration across retail sectors that aims to create sustainable and cost-effective retail bag alternatives. CVS Health, Target and Walmart are founding partners of the consortium. Other partners include Kroger, Dollar General Corp.,

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Goatote: Enabling access to clean,

reusable bags no matter where, when or how consumers shop.

PlasticFri:

The company’s Starch-Based Compostable Bag is made from agricultural waste.

Returnity: Reusable packaging solutions

that scale through smart-system deployment.

Sway:

Seaweed-derived replacements for single-use plastic bags. The consortium will work closely with the winning solutions throughout 2021, supporting design research, prototyping and mentoring toward piloting select solutions in-market.


EQUIPMENT & DESIGN

Post-Pandemic Store Development

The Store Experience of the Future HERE ARE FOUR THINGS E VERY GROCER NEEDS TO THINK ABOUT. By Greg N. Simpson rocers of all sizes have enjoyed large sales increases as a result of the COVID-19 pandemic, and that growth has forced conversations about store design, logistics, supply chains and all points in between. From independents to big-box brands, the success has come during a period when experiences didn’t matter and service expectations were low. As restrictions relax, shoppers’ attitudes are returning to more pre-pandemic thoughts. We need to do a few forward-thinking reality checks that guide the way, build loyalty and form a few considerations for a post-COVID store experience. Foremost, we must realize that people still crave experiences with social interactions that have been denied, specifically those around food, like dining out and casual grocery shopping. That means we can’t talk about any future store practices without recognizing the impact of choice, speed and trust in the conversation. Experiences are everything, and inside these fundamentals are the keys to delivering integrated design, strategy, and innovation for customers. Choice means food options and competition will increase as the economy recovers. The days of fighting over toilet tissue may be over, but the logistics pipeline still has disruptions that need to be addressed. There needs to be significantly more choice — think endless aisle. Grocers must determine how they’ll maintain this increased market share through other mechaWhile some customers nisms, rather than just will bounce back and being essential. Speed return to stores, grocers is mandatory in servicing need to accommodate the customer, who customers’ new need doesn’t have the time states and accept that for anything less. Saving one size doesn’t fit all. time delivers value to the customer while driving operational profitability. Then there’s trust, defined as consistency of service, quality, and the confidence that the freshest vegetables and best cuts of meat will be available without my having to pick them out at the store. Let’s look at four key considerations of the future store experience:

1

We must understand the need states of the customer and how technology can solve them. Whether physical or virtual, stores must become connected with an integral strategy that address-

es accelerated change and customer expectation. That means looking at all the complex factors and bringing them together. Data is currency, and with technology in the background, employees are in the foreground. Grocers must look at information streams to help them deliver on their customer promise.

2

We must realize it’s about the people who provide the service and consume the products and services. Examine how employees are putting the emphasis on the customer, serving as concierges to a great experience. They are your brand ambassadors. Automation enables cost savings, which lead to greater fulfillment accuracy, reducing human error.

3

We must think about the products and the end-to-end logistics, which enhance the choice and the experience. From meal kits that serve as a gateway to customers’ discovery of a new world of cuisine, to the knowledgeable in-store fishmonger, we’ve got to keep redefining the supply chain. Thanks to micro fulfillment, we now have effective ways of tracking and transporting food through an endless aisle where there’s maximum choice and freshness. The idea is to have an end-to-end handling that’s more like a personalized chain of title.

4

We must provide experience. Convenience is a behavior that has become sticky. While some customers will bounce back and return to stores, grocers need to accommodate customers’ new need states and accept that one size doesn’t fit all. Grocers face a host of challenges post-COVID-19. As we move forward, they will need an actionable vision and innovative ways of operating to set them apart. It will be an ongoing transition that will pivot them toward a more resilient and meaningful future.

Greg N. Simpson is a licensed architect and CEO of Maitland, Fla.-based Cuhaci & Peterson, a national architectural, engineering and planning firm.

PROGRESSIVE GROCER March 2021

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TECHNOLOGY INNOVATION

Q&A

Envisioning a Frictionless Future ACCELER ATION OF SELF-SERVICE AND THE ADVENT OF MICROSERVICES SIGNAL A NE W ER A FOR RE TAIL TECH. By Mike Troy ood retailers moved with speed and agility throughout the pandemic to implement safety protocols, cope with supply disruptions and adjust operations. The industry’s response to an unprecedented challenge was impressive, but now what? Progressive Grocer spoke with Rance Poehler, president and CEO of Durham, N.C.-based Toshiba Global Commerce Solutions, about frictionless food retailing, winning with speed and why grocers need to think small. Progressive Grocer: You’ve been in the technology world for 25 years and have seen a lot of change. We often hear about the pace of change accelerating, but how much faster can we go? Rance Poehler: Every day, every month, every year, there’s going to be disruptive technology. It’s just the nature of the space we’re in, but COVID-19 accelerated technology adoption by at least five years. We certainly saw this with high-volume retailers who were in the midst of digital transformation and were much better prepared than those who weren’t even thinking about it and didn’t have a strong e-commerce platform. PG: With the rapid adoption of technology, are there any innovations that you’ve been surprised haven’t caught on, or caught on faster than you thought? RP: There are several related to frictionless experiences, and self-checkout is a good example. We were doing well in self-checkout, but COVID-19 caused a massive acceleration. Shoppers made a decision that if they were going to go in the store, the less contact they have with merchandise or associates, the better. So our self-checkout business saw a huge lift. With the movement to more self-checkout, retailers are seeing increased shrink, but there is a lot of innovation happening to address that. PG: Is the increased shrink intentional or inadvertent? RP: A lot of it is inadvertent, but we are working on how to solve the operational side of shrink by using advanced loss prevention technologies like computer vision to increase accuracy and improve the customer

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experience. For example, we can reduce the checkout time by confirming if an item is the correct item to help customers better identify products to speed up the process and satisfaction with the experience. PG: Rapid adoption of self-checkout continues to have a major impact, but what technology or innovation do you believe will have the most disruptive impact on food retailing this year and in five years? RP: Frictionless will clearly be an ongoing source of disruption. The retailers that have the technology and platforms in place to provide that to the customers are going to benefit. The vision is that other than picking up products, shoppers won’t have to do anything else beyond opening an app that is linked to a payment method. That’s one thing that got me excited about Toshiba: the vision of frictionless. It is a source of ongoing disruption, because there are too many business reasons to not have it happen. PG: You joined Toshiba last November and at the time commented that the company was on the verge of disrupting the industry with intelligent end-to-end solutions. What did you mean by that? RP: In January, we unveiled our ELERA commerce platform, which we describe as a comprehensive, unified commerce platform designed to free retailers to reimagine their businesses without the constraints of traditional retail IT systems. PG: And that means what? RP: It’s a different approach based on the concept of microservices. We’re not telling the customer they’ve got to rip out all their legacy applications. We’re saying deploy the ELERA commerce platform and build upon it over time in areas where you want to improve efficiencies, beginning with 30 to 40 microservices available today. A microservice is essentially an application focused on a particular function that sits on a platform to make the business more efficient and agile. We have ELERA in nearly 15 large retailers at various stages, and we expect it to be highly disruptive. PG: Regarding the 30 to 40 microservices, which ones are most popular? RP: The key for our clients is focusing on solutions that ultimately drive better service and profitability. For example, in self-checkout we have a microservice focused on accuracy realization, and another example would be refund process improvement. Going forward, we'll be driven by our customers. In fact, we’re launching our customer advisory council where we will


have discussions about business challenges and say, “If you could guide us to develop specific microservices on ELERA, what would be your priority?” Our first advisory council will be in early April, and we’re going to use that input to really fine-tune our offering. That is going to have a big impact on our business. Another area where we are seeing growth is with end-to-end, wall-to-wall service agreements. We service all of our own technology, but we’re servicing all the technology that the stores utilize in the space that we’re in. And why is that important? It gives retailers greater access to knowledge about their customers on the ELERA platform, and they also appreciate having one throat to choke when it comes to servicing their stores.

“Frictionless will clearly be an ongoing source of disruption. The retailers that have the technology and platforms in place to provide that to the customers are going to benefit.” —Rance Poehler, president and CEO, Toshiba Global Commerce Solutions

PG: That gets at the issue of unifying data from multiple sources, which is key to making optimal decisions. Why has that data unification piece been so challenging?

data in a data center on premises. Some of our biggest customers today are using the cloud in their IT environment for various operations, but many applications are still run on prem. But retail will move to the cloud, and the medium and smaller retailers will be able to take advantage of that. They’ll be able to use our hardware and services, light up ELERA in the cloud, and then we combine all that as a solution and offer it as a service. PG: When people hear the Toshiba name in the retail technology world, how would you like them to perceive you in the future? RP: As an end-to-end solution provider that is much more than a legacy POS company you know from the past. We have repositioned ourselves as a thought leader in retail and as a solution provider. It is a strategy that will propel us into the future, but we do need to change some perceptions. The biggest retailers in the world are our customers. They trust us, and they are interested in ELERA, but that isn’t as widely known in the industry as we would like.

RP: A lot of it is related to legacy systems and financial constraints. It is hard for companies to rip and replace a bunch of IT architecture to gain more access to the digital footprint of their customer. However, COVID-19 has changed two things. It drove home the realization that you’ve got to understand your customer better, because the ones that did performed better throughout the pandemic. And you’ve got the major impact of Amazon, because they understand everything about their customer. In the past, retailers got access to the bulk of their customer information at the point of sale (POS), but some of that legacy architecture has been in place for 20 or 30 years. Retailers now have so much more information about customers, but they have to be able to tie it all together, and our vision of the way to do that is with a platform approach, like with ELERA, to compete with the largest players in retail. PG: How does the cloud fit into ELERA and the concept of microservices? RP: ELERA is absolutely cloud-enabled, and that’s how we’re deploying it today. But it does have various deployment options, depending on the use case and the particular retailer needs. A lot of traditional legacy architecture revolves around keeping

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TECHNOLOGY

Digital Payment Systems

Grocery shoppers are increasingly opting for touchless in-store payment methods.

Dealing With Digital Payment Innovation AS GROCERY E-COMMERCE GROWS, DIGITAL PAYMENT OPTIONS ARE E XPANDING, AND RE TAILERS NEED TO KEEP UP. By Thad Rueter he way that shoppers are able to pay for purchases is evolving quickly, growing more complex and challenging grocers to keep pace with new developments. It’s a case of bad and good news. While digital payments promise to grow more complicated in the short term, with options expanding dramatically, the changes also create opportunity for retailers able to capitalize on the trends to ensure that shoppers are able to pay on their own terms. Make no mistake: This isn’t just

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Key Takeaways The rise of grocery e-commerce has established contactless payments as a new shopper expectation in a safety-conscious world. The past few months have brought renewed optimism about the use of QR codes in food retailing, since they can nudge shoppers from physical stores onto digital platforms. Grocers need to be on the lookout for fraud, however, and they must engage in strategic planning before committing to new digital payment systems.


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TECHNOLOGY

Digital Payment Systems

about payments. This is about capturing shopper data for the personalization of communications and offers, and endearing shoppers to loyalty programs. “Grocers that successfully leverage shopper data are the ones that will dominate the future of grocery,” asserts Sharat Potharaju, CEO and co-founder of New York-based MobStac, which focuses on using such technology as near-field communication (NFC) and QR codes to make food and other types of retail payments more efficient. QR codes — more about them later — are among the food retail payment technologies growing in importance among grocery shoppers, according to research from Elkhorn, Neb.-based payment services provider ACI Worldwide. In a survey of 2,000 U.S. adult consumers, ACI found that 35% of them would leave their preferred grocers for others that allow them to pay in-store in a touchless manner — a phrase that covers an array of payments, including contactless credit cards and digital wallets. This insight reflects how the rise of grocery e-commerce has established contactless payments as a new shopper expectation in a safety-conscious world. Those payments are certain to stick around after the pandemic eases, considering how entrenched mobile has become. The survey also painted a detailed picture of which digital payments matter most to food retail shoppers, and, by extension, what grocery store operators should be focusing on in 2021 and the coming few years. Contactless credit cards (43%) and contactless debit cards (39%) are the two most preferred touchless payment options for shoppers, followed by digital wallets (30%), cards on

The number of respondents who would leave their preferred grocers for others that allow them to pay in-store in a touchless manner — a phrase that covers an array of payments, including contactless credit cards and digital wallets. —Source: ACI Worldwide


In the wake of the pandemic, a new type of consumer is emerging, one who shops less in-store and represents a quickly growing part of the digital-first economy. For grocery stores, this is a huge opportunity to cater to these consumers by providing digital and contactless payment options.” —Debbie Guerra, ACI Worldwide file (25%) and QR codes (18%). The survey also showed that just over 40% of Millennial and Gen X shoppers are willing to switch to grocery stores that offer touchless payment options. “In the wake of the pandemic, a new type of consumer is emerging, one who shops less in-store and represents a quickly growing part of the digital-first economy,” says Debbie Guerra, EVP at ACI Worldwide. “For grocery stores, this is a huge opportunity to cater to these consumers by providing digital and contactless payment options.”

What QR Codes Tell Us

One of the more interesting payment stories to emerge from the pandemic is the rise of QR codes. Launched in 1994, QR codes have never taken off dramatically. However, the past few months have brought renewed optimism about the technology’s use in food retailing. That’s because QR codes can carry a lot of weight in the larger grocery transaction space. As ModStac’s Potharaju explains, that technology — relatively cheap to deploy, and easy to use by pretty much any consumer with a smartphone — can speed up online transactions by pushing shoppers to an online product page, enabling them to read online reviews or allowing them to build a virtual shopping cart by scanning QR codes. Additionally, use of these codes not only provides granular consumer data to food retailers, but also fuels marketing engagement and even coupon delivery. “Grocery coupon clipping is the oldest tradition in customer engagement and loyalty, and today we’re seeing the couponing experience shift to mobile, and more coupon engagement being driven by QR code integration,” notes Potharaju. “QR codes nudge shoppers from the physical store onto your digital platforms, where you can more easily understand people’s shopping behavior, wants and needs. That creates an opportunity for continued engagement, where grocers learn more about customers and prospects, and can build increasingly sophisticated ways of targeting them.”

The Bigger Payments Picture

None of this is meant to suggest that QR codes will be a main driver of digital payment change in food retail in 2021. Rather, this serves as an example not only of how smaller parts make up the wider digital transaction experience — simply deploying a new payment option is hardly the only job for grocers — but also how those smaller parts can, in turn, serve to deepen the retail ecosystem.


TECHNOLOGY

Digital Payment Systems

The Grocer’s Guide to Cryptocurrency DIGITAL CURRENCIES ARE COMING OF AGE, AND IT’S TIME FOR GROCERS TO HEED THEIR MATUR ATION. In 2021, food retailers need to educate themselves about digital currencies and the looming reality that businesses will eventually need the ability to accept various digital currencies. Already there are currency kiosks in place capable of processing Bitcoin and 30 other digital variants. It can quickly become overwhelming, but knowing how the currencies are mined and tracked — to say nothing of blockchain and associated technologies — is hardly the most important thing for food retailers in 2021, according to Chris McAlary, CEO of Las Vegas-based digital currency services firm CoinCloud. “If they wanted to go down that rabbit [hole] now, they could, but there is no reason,” says McAlary, adding that one doesn’t have to know how mobile phone service works at its technological core to craft a mobile marketing program. What’s more vital is that all age groups are using digital currency — the company’s largest consumer group by volume is women age 45 and older — and that the transaction technology is quickly gaining legitimacy in the financial world. In addition, payment services such as PayPal are enabling digital currency transactions. No doubt, food retail consumers will one day expect such options while buying groceries. That’s not the only positive change, according to McAlary. “Compliance has caught up,” he says about digital currencies in general. “Any company like us has to follow a KYC process.” KYC is an acronym for “know your customer,” and such processes require financial services providers to verify that their customers are indeed legitimate, in hopes of preventing fraud and other illegal activities. For now, though, the main intersection between food retail and these forms of payment involves the location of digital currency ATMs — or, as CoinCloud calls them, digital currency machines (DCMs) — inside supermarkets, which are themselves becoming centers of banking activity. Those machines in turn draw traffic into stores and are paving the way for more adoption of digital currency in the food retail space. “Mass adoption is here,” says McAlary, referring to the company’s base of 1,400 machines in 45 states. “It’s no longer underground. There are a lot of different use cases for these digital currencies — not just investing, but

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payment and smart contracts and gaming.” Further evidence of mass adoption is evident from the growing partnership between Coinstar and Coinme. The companies said last December that their installed base of Bitcoin-enabled kiosks had surpassed 5,000 locations. “The fast-moving expansion of Bitcoin-enabled Coinstar kiosks means that more Americans than ever now have the power to invest in digital currencies and stake their claim in the future of money — even on a quick trip to the grocery store,” notes Neil Bergquist, CEO of Seattle-based Coinme. Meanwhile, CoinFlip says that it grew its ATM network from 441 ATMs in January 2020 to more than 1,400 by the end of that year, with locations in 45 states. The Chicago-based company adds that it saw an average 48% increase in the amount per customer transaction in 2020. According to CEO and founder Daniel Polotsky, a single machine can bring into a store 100 to 200 people who otherwise wouldn’t visit it. What’s more, food retail stores get a cut of that business. As digital currency continues to gain ground, food retailers should, at the very least, start planning their moves by treating Bitcoin and its competitors as another form of alternative payment. “Do your homework and understand on a higher level how it works,” advises CoinCloud’s McAlary, directing retailers to blogs run by companies such as his. “If they are not thinking about it now, they are probably going to be left behind.”

Companies like CoinCloud need to follow a "know your customer" process requiring that financial services providers verify that their customers are legitimate.


Use of QR codes not only provides granular data to food retailers, but also fuels marketing engagement and even coupon delivery.

Other considerations are important, too. “It’s also key to remain vigilant against card-not-present payment fraud, including counterfeit and account takeover,” advises Maureen Elworthy, head of multi-industries wholesale payments for grocery and digital payments at New York-based J.P. Morgan, in a recent blog interview. That may sound obvious, but the growth of grocery e-commerce is providing new opportunities for criminals intent on figuring out vulnerabilities of speedier, more digital transaction systems. Guarding against fraud is a never-ending battle, but food retailers are likely to experience new forms of it — or forms of online fraud already recently experienced by other merchants.

Grocers also need to engage in strategic planning before devoting themselves to new digital payment systems. “Grocers need to create an e-commerce platform that can easily adapt to change through APIs [application programming interfaces] and cloud-based architecture,” counsels Elworthy. More abstractly, she adds, food retailers need to own “their own digital sales channels and [think] of things like mobile apps as core to their business success. There’s also a need to optimize cardnot-present payment performance, from approval rates to managing transaction costs to fraud exposure.” Digital payment opportunities and challenges will continue after the pandemic, Elworthy points out. Among those opportunities and challenges are “optimizing branded online and mobile sales channels to attract, grow and protect revenue and customer loyalty,” she says. “It’s important to create frictionless digital payment experiences by mirroring card-on-file, subscription-type business models.”

BRINGING DIGITAL CURRENCY TO THE GROCERY INDUSTRY

+ SCAN ME

GO.UNFI.COM/COINCLOUD PROGRESSIVE GROCER March 2021

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EDITORS’ PICKS

Food, Beverage & Nonfood Products

Sans Gluten

Three Bakers employs a French-inspired recipe to create its gluten-free brioche line. The rich, golden-brown, buttery and slightly sweet sandwich rolls, breads, baguettes and dinner rolls are made from the finest ingredients to provide an artisanal experience in consumers’ home kitchens. As well as being certified gluten-free, the soyand dairy-free items are a great source of fiber. The suggested retail prices are $5.99 for a 9.3-net-ounce package of sandwich rolls or a 5.3-net-ounce package of dinner rolls, and $6.99 for a 14.1-net-ounce package of bread or a 10.6-net-ounce package of baguettes. https://threebakers.com/

Functional Cheese

To meet increasing consumer demand, Babybel is introducing what it describes as the first-ever functional dairy snack line in the category: Babybel Plus+ in two varieties, Probiotic and Vitamins. In response to the 14% sales growth of products with probiotic or prebiotic claims versus the prior year, Babybel Plus+Probiotic contains billions of live and active cultures of the LGG probiotics strain, with evidence to suggest immune health benefits when eaten as a part of balanced diet and healthy lifestyle. Babybel Plus+Vitamins, meanwhile, provides a good source of vitamins A and B12, which are known to support eye health and metabolism, respectively. Like all Babybel products, Babybel Plus+ contains no artificial preservatives,colors or flavors. A 6-count package of snacks of either variety, wrapped in the brand’s signature red wax, retails for a suggested $4.49. http://www.belbrandsusa.com/

Grounded in Flax

Dairy-, gluten- and nut-free Flax4Life Cookies are the latest sweet treat from a brand known for its allergy-friendly baked goods. The chewy all-natural cookies combine homemade freshfrom-the-oven flavor with the nutritional value of 2 grams of fiber, 2 grams of protein and a whopping 1,030 milligrams of omega-3s, as well as providing a good source of lignans, which may lower the risk of heart disease, among other benefits. Available in Double Chocolate Cherry, Chocolate Chip, Oatmeal Raisin, Lemon Zest, Ginger Snap and Apple Pie flavors, the line retails for a suggested $5.50 for a 12-count 16-ounce container of any variety. https://flax4life.net/

Comfort and Convenience

Baking and gravy mix brand Pioneer, a subsidiary of food manufacturer C.H. Guenther & Son, has added to its portfolio the Comfort Meal Solutions line, which enables consumers to make hearty fare at home in minutes. The perfectly portioned line of seasonings and meal sauces comes in the following varieties: Chicken Pot Pie (1.67 ounces), Chicken and Dumplings (2 ounces), Bayou Jambalaya (0.74 ounce), and Cajun Shrimp and Rice (0.78 ounce). Based on early sales data and positive feedback from consumers and retail partners, Pioneer expects to add two additional varieties to the Comfort Meal Solutions line this year. The suggested retail price per packet is $1.79. https://chg.com/; https://pioneerbrand.com/our-products/comfort-meal-solutions/

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Something’s Brewing

Chobani, already known for its Greek yogurts, oat milks, probiotic drinks, and dairy and plant-based creamers, has now introduced Chobani Coffee, a refrigerated line of ready-to-drink cold-brew coffees featuring the brand’s oat milk and dairy creamers. Crafted from single-origin 100% Arabica beans, the line aims to gain a foothold in the large and growing $1.6 billion ready-to-drink coffee category. The beverages come in four varieties: Cold Brew Pure Black, with no sugar or dairy; Cold Brew with Sweet Creamer and Cold Brew with Vanilla, each made with farm-fresh milk; and Cold Brew with Oatmilk, featuring gluten-free oats. Chobani Coffee provides the caffeine equivalent of a standard cup of coffee, each containing about 85 milligrams of caffeine per serving. The suggested retail prices for the line are $4.49 per 32-ounce multiserve recyclable Tetra Top carton or two for $7 on promotion. http://www.chobani.com

Creative Baking

Inspired by bakeries, social media and baking influencers, Duncan Hines, a brand of Conagra Brands Inc., has launched a collection of baking kits for families to make at home. The kits come in five fun flavors: Fruity Pebbles Cake Kit, Salted Caramel Brownie Kit, S’mores Brownie Kit, Cookies & Cream Cookie Kit, and Cookie Dough Cookie Kit. All of these easy-to-make desserts are created in four simple steps. Further, the colorful Fruity Pebbles Cake Kit helps celebrate the 50th birthday of the beloved cereal brand in 2021. Duncan Hines Epic Baking Kits will be available in the baking section of grocery stores and mass retailers, as well as at select online retailers, in early March 2021. A 32.16-ounce box of any variety will retail for a suggested $5.49.https://www.duncanhines.com/; https://www.conagrabrands.com/; https://www.postpebblescereal.com/

On-the-Go Organic

The popular novelties from Alden’s Organic, America’s best-selling organic ice cream, can now be purchased as three single-serve products, giving retailers and consumers an organic frozen snack option. Available in 24-pack cases and as individual items, the products consist of two dairybased novelties and one dairy free: Classic Fudge Bar (2.5 fluid ounces), featuring real organic cocoa and fresh organic cream, Certified Gluten Free, and containing 100 calories; Old School Vanilla Ice Cream Sandwich (3.65 fluid ounces), creamy organic vanilla ice cream sandwiched between two chocolate wafers, at 170 calories; and Dairy Free Vanilla Bean Round Sammie (3.5 fluid ounces), offering organic vanilla bean frozen dessert flanked by two chocolate cookie wafers, Certified Vegan, and containing 160 calories. All of the single-serve novelties retail for a suggested $1.99 each. https://www.aldensicecream.com

Plant Partners

Eat Just Inc. and Cuisine Solutions Inc., a manufacturer and distributor of sous vide foods, have collaborated on Just Egg Sous Vide Bites as part of an exclusive agreement under which Cuisine Solutions will develop and produce the plant-based product globally. French for “under vacuum,” sous vide is a cooking method in which food is vacuum-sealed and slow-cooked in water at precise temperatures. Available this month in grocery freezer sections, the product line comes in four unique flavors inspired by regional cuisines and whole plants: America (roasted potato, dill, chives, red bell pepper and black pepper); India (curry, broccoli, cauliflower, coconut milk and lemongrass); Japan (portobello mushrooms, yams, togarashi, soy and tamari); and Mexico (roasted poblanos, chipotle chile powder, black beans, corn and lime). As with other Just Egg formats, the key ingredient is mung bean protein. The non-GMO, egg- and dairy-free bites are free of cholesterol, have no artificial flavors, and contain as much protein as or more protein than many animal proteins — 9-13 grams per serving, depending on the variety. What’s more, its ingredients use less water and land and emit less CO2e than animal sources. The suggested retail price is $8.99 for a box of four Just Egg Sous Vide Bites that can be heated in a conventional oven, toaster oven or microwave. https://ju.st; https://www.cuisinesolutions.com PROGRESSIVE GROCER March 2021

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AHEAD OF WHAT’S NEXT By Gina Acosta

The Women Who Fed America THE CORONAVIRUS PANDEMIC HAS ELEVATED WOMEN’S ROLES IN FOOD RETAIL. he other day, I was strolling through the aisles of one of America’s great grocery chains, squeezing the limes and examining the cilantro, when my phone pinged. It was an email from a woman inquiring about the eligibility requirements for Progressive Grocer’s Top Women in Grocery (TWIG) awards program. This is the 15th year for the leading and most prestigious showcase for female talent in the grocery industry (which encompasses retail, vendors, CPG and solution providers), a night of recognition and celebration for women who are thriving, advancing and breaking new ground. As I put the phone back in my handbag and placed the citrus and herbs in my shopping cart, I thought about the email, and began to scan the length of the store. Every single employee around me was a woman, from the produce stocker to the cashiers at the checkouts to the front end manager to the executives walking around, pointing at Easter displays. Suddenly, a thought came to me: So many of these women deserve to be honored for serving as lifelines in our local communities over the past year, making this year’s TWIG awards likely our most important event ever.

As Progressive Grocer looks to receive a record number of TWIG nominations this year, I have unwavering hope that the women in the grocery and consumer packaged goods industries will keep our nation moving forward. One valuable aspect of the coronavirus pandemic has been its part in elevating women’s roles in food retail. Women make up two-thirds of the food retail workforce in the United States, according to the U.S. Commerce Department. No class of essential workers, other than perhaps those in the health care sector, has worked harder and longer during the current national crisis than the people working across the grocery and food industries. Our grocery stores never closed, keeping America fed even as much of the economy was on lockdown. Most of our brave supermarket “sheroes” didn’t get the option to work from home. In fact, most of them had to work longer, harder hours carting grocery pickup orders through the cold and rain, making sure shelves were restocked, and policing customers on mask wearing, no matter how many times shoppers yelled about it. Another silver lining of the past year has been the heightened calls for 86

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social justice and equity, with many companies putting their words into action when it comes to diversity and inclusion. A record 41 female CEOs are now leading Fortune 500 companies, and the three largest U.S. drug chains are being led by women for the first time. Incoming Walgreens Boots Alliance CEO Rosalind Brewer joins Rite Aid CEO Heyward Donigan and CVS Health’s Karen Lynch, who was promoted to CEO this past February after leading the retailer’s health response to COVID-19. Brewer, Donigan and Lynch join other women leaders in food retail, including Sam’s Club CEO Kathryn McLay, Wegmans Food Markets CEO Colleen Wegman, and Indra Nooyi, former chair and CEO of PepsiCo. Women are also making progress in the boardroom, especially in retail. According to the annual Crist|Kolder Volatility Report, the retail industry has the largest percentage of female board members, at 32.8%, and there may be more opportunities on the horizon. Nasdaq has filed a proposal with the U.S. Securities and Exchange Commission to adopt new listing rules related to board diversity and disclosure. The new rules would require all companies listed on Nasdaq’s U.S. exchange to publicly disclose consistent, transparent diversity statistics regarding their boards of directors. Additionally, the rules would require most Nasdaq-listed companies to have, or explain why they don’t have, at least two diverse directors, including one who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ+. The hard work performed by women during the COVID-19 crisis and the disruptive forces reshaping food retail and diversity/inclusion present opportunities for even more women to be put into leadership roles. As Progressive Grocer looks to receive a record number of TWIG nominations this year, I have unwavering hope that the women in the grocery and consumer packaged goods industries will keep our nation moving forward. On Nov. 4 in Orlando, Fla., we will come together at our Top Women in Grocery event to honor these women and celebrate their strength.


Get Recognized! INTRODUCING THE

PROGRESSIVE GROCER IMPACT AWARDS It’s a new era for retailers of food and consumables. Progressive Grocer is leading the way with a fi rst-of-its kind program to recognize outstanding leadership among companies who are improving lives, creating opportunities and positively impacting the planet though actions in the following areas: Sustainability/Resource Conservation Diversity and Inclusion Ethical Sourcing/Supply Chain Transparency Workforce Development Community Service/Local Impact Educational Support/Societal Advancement Food Security/Nutritional Leadership Philanthropic Innovation Entrepreneurial Support/Free Enterprise Enablement

Share your inspiring story of impact with Progressive Grocer today.

To learn how, visit www.progressivegrocer.com/impactaward For more information contact Mike Troy mtroy@ensembleIQ.com 813-857-6512


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