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I AM High turnover High impact Your frontline associates are your competitive advantage

In an era where agility is the must-have survival skill for grocers, you need your frontline people to be ready for anything. So they need meaningful, right-fit support that works with the unique way they work. Support them right, or get left behind. axonify.com


When you give your frontline the tools to succeed, your business does too Axonify delivers frontlinefirst communications and training that’s fast, personalized and accessible on the devices associates use every day. And it’s designed to make critical information stick, to get your associates doing the right things to drive the business results you need.

Grocers and retailers get results with Axonify:

%

5-10

$

reduction in employee turnover per month

saved per year in reduced safety claims

%

2M+

83

$

of users log in 2—3x per week

saved per employee from a 30% reduction in onboarding time

1,500

Give your associates the support they need to stay safe and productive. Learn more at axonify.com


RETAILER DEEP DIVE: KROGER’S FRESH PERSPECTIVE ON GROWTH TREND WATCH Flavors of the world spice up store offerings ALTERNATIVE PROTEINS How to maximize plant-based sales MICRO FULFILLMENT Retailers race to meet online demand

URBAN

INSPIRATION Inside The Giant Co.’s new Philly flagship with CEO Nick Bertram

April 2021

Volume 100, Number 4 www.progressivegrocer.com


Contents 04. 21

Volume 100 Issue 4

20 Features COVER STORY

20 Urban Inspiration Giant Co. CEO Nick Bertram details the company’s new growth strategy.

30 RETAILER DEEP DIVE

48 SPECIAL REPORT

Kroger’s Fresh Perspective on Growth

Alternative Proteins Make Meat Inroads

How the retailer plans to gain a greater share of a $1.4 trillion market.

Plant-based popularity surges as animal proteins set new sales records.

40 TREND WATCH

Flavors of the World

When it comes to ethnic cuisine, consumers are demanding traditional foods, niche items and regional favorites.

Departments

14 NIELSEN’S SHELF STOPPERS

18 NEW HORIZONS

Health and Beauty Care

Creating a Pipeline for Success

8 EDITOR’S NOTE

Winning Back the In-Store Shopper

15 MINTEL GLOBAL NEW PRODUCTS

10 IN-STORE EVENTS CALENDAR

16 ALL’S WELLNESS

June 2021

Traditional Versus Plant-Based Dairy

12 MENU TRENDS

Fresh Take on Fruit 4

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48

Cheese

80 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS 82 AHEAD OF WHAT’S NEXT

Netflix Reels Them In

16


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Contents 04. 21

Volume 100 Issue 4

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

52 SOLUTIONS

GROCERY GROUP EDITORIAL DIRECTOR Mike Troy 813-857-6512 mtroy@ensembleiq.com

Putting a Wedge in the Dairy Perimeter

EDITORIAL EXECUTIVE EDITOR Gina Acosta 813-417-4149 gacosta@ensembleiq.com

As part of a reinvigorated or possibly reimagined department, the cheese category is lifting sales.

MANAGING EDITOR Bridget Goldschmidt 347-962-9395 bgoldschmidt@ensembleiq.com

52

58 SPECIAL REPORT

SENIOR SALES MANAGER Bob Baker (NEW ENGLAND, MID-ATLANTIC SOUTHEAST US, EASTERN CANADA) 732-429-2080 rbaker@ensembleiq.com

After a tumultuous period of pandemic disruption, key grocery categories face an uncertain outlook for consumer demand.

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 JUNIOR ACCOUNT MANAGER-GROCERY GROUP Natalie Meehan p 773-992-4410 m 619 823-4926 nmeehan@ensembleiq.com

64 CPG INNOVATION

New Flavors and Functionality Transform Iconic Categories

ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com EVENTS VICE PRESIDENT, EVENTS Michael Cronin mcronin@ensembleiq.com

58

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

66 SUPPLY CHAIN

SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES Toll Free: 1-877-687-7321 Fax: 1-888-520-3608 contact@progressivegrocer.com

Space Wars

The country’s largest retailers are in a race to fulfill online orders as quickly as possible using micro fulfillment, and now a growing number of regional players are joining them.

PROJECT MANAGEMENT/PRODUCTION/ART VICE PRESIDENT OF PRODUCTION Derek Estey destey@ensembleiq.com CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com

66

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

72 OPERATIONS

78 TECHNOLOGY & INNOVATION

Redesigning the Grocery Workplace

How Retailers Can Conquer Coupon Fraud

Axonify CEO Carol Leaman details labor priorities for the post-pandemic food retailer.

New payment processes and technology emerge to solve a $100 million problem.

74 MERCHANDISING & MARKETING

Make In-Store Promos More Effective Here are three strategies for brands and retailers to delight shoppers and overcome traffic challenges.

74 6

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CONTRIBUTING EDITORS Debby Garbato, Jenny McTaggart, Lynn Petrak and Peter Moustakerski ADVERTISING SALES & BUSINESS

Beyond COVID-19

How a 95-year-old company maintains its innovation edge.

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

ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com 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.


EUROPEAN MEAT – IT’S SIMPLE!

The “Meat of European Quality” campaign, run until 2020, resulted in a noticeable increase in the presence and sales of meat and meat products from the EU in the United States. Such successful business relationships must be maintained, that is why we are continuing our activities in 2021 and 2022. When we offer meat from the European Union, we say: it’s simple! When you choose meat and cold cuts from Europe, you get a simple product, free from unnecessary ingredients and residues: antibiotics and hormones, artificial additives, excess fat, water or salt. We use traditional recipes, tested over centuries, creatively developing them to create a product that is tasty and at the same time meets high food safety and sanitary safety standards. We say “it’s simple!” - because we know how to do it. We have centuries of experience under our belt. We finally say “it’s simple!” - because American consumers today can easily reach for European products. Trade cooperation between the European Union and the US, including European meat exports, is developing every year. And US customers can see for themselves the rich range of products offered by European companies. - The United States is a key producer and exporter of meat. At the same time, it also imports significant quantities, and European meat plays a special role in that trade. European producers supply a wide range of high-quality meat products, from valued hams, to other dried and preserved meat products, to fresh and frozen beef, veal and pork. There is special demand for pork belly for bacon and lean beef for ground meat and processed products, as the internal, domestic demand exceeds US production capacity, - says Laurie Bryant, former Executive

Meat from Europe

Director of the Meat Import Council of America (MICA). The promotional activities of the “Meat of European Quality” campaign have a definite positive impact on strengthening this trade. The “Meat of European Quality” campaign is continued under difficult circumstances. In line with the objectives, it focuses on direct contact and consensus-building between European and American professionals. In 2020, due to the unprecedented global epidemic, we were forced to cancel all activities based on face-to-face meetings. However, we hope that 2021 will prove to be a kinder year! In particular, we are planning a trip to the SIAL Canada trade fair in September. We look forward to meeting with Canadian and American partners in Toronto in September! In addition, as soon as regular intercontinental travel is resumed and domestic restrictions are lifted, we will organise study visits to Poland for meat industry professionals and journalists from the US and Canada. We had to cancel them on dates previously planned in 2020 and 2021. During the visits, our guests will be able to experience first-hand the rules and standards that regulate the European meat sector. Seminars and workshops are planned, as well as – or above all – visits to leading production plants and meetings and talks with producers and exporters of pork, beef and meat products. Journalists from branch media will be offered a study visit of a similar nature. We will be happy to show you our farms and processing plants and arrange meetings with the people responsible for the success of the European meat sector. See you soon!

www.meatfromeurope.eu

The content of this promotional campaign reflects only the views of its author and is subject to its sole responsibility. The European Commission is not responsible for any possible use of the information contained in the campaign.


EDITOR’S NOTE By Mike Troy

Winning Back the In-Store Shopper FOOD RE TAILERS HAVE A UNIQUE OPPORTUNIT Y TO REGAIN LOST SHOPPER TR AFFIC.

elf-inflicted wounds are the worst kind, especially in food retail. The industry is competitive enough without a lack of planning or poor operational decisions creating additional pressures. A recent store visit and an overheard conversation put this reality in focus. Picture this: A young girl and her father are pushing a cart toward the checkout of a major national chain. This retailer, like many others in recent years, has added numerous self-checkout stations, so many that it can be hard to locate the one or two checklanes staffed by an actual person. As the pair approaches the entrance to the corral of self-checkout stations and I pass in the opposite direction, the young girl lurches toward shoppers who are busy scanning items at colorful, brightly lit stations. Most are using handheld devices that resemble game controllers and emit frequent beeps of approval. It’s easy to see how a young child would be drawn to these sights and sounds and the appearance of people having fun. But then Dad ruins the moment with a reminder that “we have to wait in line.” I was beyond earshot to hear whether the young girl asked why, but that would be a typical reaction of a curious child, and the father may have even wondered the same thing. In fact, millions of shoppers standing in line to use self-checkouts are surely wondering, “Why, after trudging through a store to pick out my own products, and then being denied the opportunity to check out in a familiar manner with a cashier, am I waiting in a line to scan my own purchases?” Why, indeed? Especially since an alternative exists for shoppers to select items from a mobile device while resting on the couch, and have someone else trudge through the store to select the products so they can swing through the parking lot at a convenient time to take possession of their goods. Or they can have the purchases delivered within two hours after ordering. At no charge! I can imagine a childhood taunt sounding like: “My dad is smarter than your dad because Grocer X delivers our food and your dad waits in line at the store.” To which the other child replies, “Oh yeah, well, Grocer X has heightened its strategic focus on store experience by rolling out the new XYZ1000 contactless payment terminals featuring expanded scan detec8

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tion range and easy fresh-item lookup to accelerate checkstand throughput.” Whose dad is smarter now? Retailers will have an opportunity to show how smart they are in the back half of this year by taking advantage of a rebound in store traffic following a period of dramatic e-commerce growth that’s costly to execute. Throughout the pandemic, retailer after retailer reported that shoppers visited stores less frequently and made larger purchases per visit, with a large number of those visits occurring in the parking lot. Things are changing, though. The weather is getting nicer in northern states. The rollout of the vaccine is accelerating, and within a few months, more than half of the U.S. population age 18 and older will be fully vaccinated. Americans are clamoring to get out and return to familiar patterns, one of which is grocery shopping in stores. Don’t disappoint them by offering an unpleasant in-store checkout experience that will have young children questioning their parents’ intellects.

Retailers can show how smart they are in the back half of this year by taking advantage of a rebound in store traffic following a period of dramatic e-commerce growth that’s costly to execute.

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


IN-STORE EVENTS

Calendar

06.21

LGBTQIA Pride Month Men’s Health Month National Fresh Fruit and Vegetables Month

National Candy Month National Country Cooking Month National Dairy Month National Ice Tea Month

S M T W T F S

1

National Olive Day. Whether used as a garnish or eaten straight from the jar, this cured fruit deserves its own celebration.

6

National Applesauce Cake Day. Clue your customers in on this incredibly moist baked good with a classic recipe.

7

National Chocolate Ice Cream Day. Tell shoppers that when they buy one pint of their favorite brand, they get another free.

8

National Best Friends Day. Besties who show up to shop together earn a discount on their combined order.

2

National Rotisserie Chicken Day. Hold a sale on this prepared food perennial.

9

National Strawberry Rhubarb Pie Day. Have your in-store bakers re-create this classic.

3

4

National Chocolate Macaroons Day

National Doughnut Day

10

11

National Egg Day

National Herbs and Spices Day. Provide meal hacks using these items to add flavor, not calories, to dishes.

National Cheese Day

National Corn on the Cob Day National German Chocolate Cake Day

5

National Veggie Burger Day. Suggest the perfect toppings for this hot plantbased item.

12

National Peanut Butter Cookie Day National Red Rose Day

13

14

15

16

17

18

National Take Back the Lunch Break Day

Juneteenth. Put up work by local African-American artists around the store for this occasion marking the emancipation of enslaved people in the United States.

20

21

22

23

24

25

26

27

28

29

30

National Children’s Day. Welcome pintsized customers with their own kidoriented circular/ activity sheet.

Father’s Day. Advise customers to get their grill on in honor of dear old Dad.

National Sunglasses Day. Direct customers to your selection of snazzy shades for optimal eye protection on sunny summer days.

10

National Strawberry Shortcake Day. Feature this favorite in the bakery section.

National Arizona Day. Highlight products from the Grand Canyon State throughout the store.

National Alaska Day. Shine the spotlight on The Last Frontier with a salmon-fest in the seafood department.

progressivegrocer.com

National Smile Power Day. Remind your associates that a cheerful attitude is their greatest asset.

National HVAC Tech Day. Take the time to pay tribute to the person who keeps these critical store systems in peak working condition.

National Almond Buttercrunch Day. Share a foolproof recipe to make this toffee treat.

National Fudge Day. If customers have no time or inclination to make their own, offer an attractively displayed readymade option.

National Hydration Day

Social Media Day. Commit to up your game across your company’s various online platforms.

National Eat Your Vegetables Day. Don’t forget to market this occasion to produce-shy adults as well as reluctant youngsters.

National Pralines Day. Unfamiliar with this famous Southern confection? Commission an article about it for your in-store magazine.

National Leon Day. Only six more months until Christmas! (“Leon” is “Noel” backwards.)

19

Summersgiving. Help shoppers start a new tradition by introducing them to an occasion that combines all of the fun of summer with favorite Thanksgiving foods.


International Food Fair

fieramilano 22-26 October 2021

Adding value to taste #BetterTogether


MENU TRENDS

Research & Analysis

Fresh Take on Fruit Plant-based eating has become more than a lifestyle choice for vegetarians and vegans, with carnivores, herbivores and everyone in between now following the trend. In the past four years, use of the term “plant-based” has grown by more than 3,000% on restaurant menus in the United States, according to Datassential’s MenuTrends database. The market for plant-based continues to evolve as manufacturers and operators begin to think beyond plant-based beef and more toward chicken and pork substitutes. In 2019, KFC paired up with Beyond Meat to create the first nationwide plant-based chicken dish. While many consumers aren’t onboard yet for meat alternatives, other restaurants have skewed toward “plantforward” menu items, in which vegetables and fruit are the stars of the plate. Jackfruit MAC stage: Inception – International markets, global independents and fine dining. Trends start here and exemplify originality in flavor, preparation and presentation. As Americans search for plantbased alternatives to traditional meat, jackfruit has risen to the occasion. This tropical fruit from Southeast Asia may be green, spiky and bumpy on the outside, but on the inside, it has a meaty texture with a slightly sweet flavor. In the past few years, operators have used it as a substitute for pulled pork and other shredded-meat dishes. While it isn’t widely available fresh, many grocery stores carry it canned – making the fruit a quick plant-based option. On fewer than 1% of U.S. restaurant menus

Plant-Based Burger 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. Plant-based burgers have exploded on menus, so much so that even national burger chains couldn’t resist adopting this trend. These new items have a similar taste and texture to a “real” burger. When plant-based burgers first hit restaurants, operators stuck with classic toppings, but now eateries are incorporating other trending ingredients like flavored aioli, artisanal cheese and savory jams. On 9% of U.S. restaurant menus

Up 58% over the past four years 48% of consumers know it/18% have tried it/11% love or like it Menu Example Lazy Dog Restaurant & Bar Black Bean Jackfruit Tostada Topped with charred corn, avocado, feta, pickled jalapeños, roasted tomatillo salsa, shredded cabbage, fresh radish, cilantro and spicy crema

12

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Up 1,150% over the past four years 78% of consumers know it/37% have tried it/24% love or like it Menu Example Winking Lizard Cali Plant Based Burger The Nestlé plant burger is served on a multigrain roll with cucumber salad, alfalfa sprouts, avocado and roasted-tomato aioli

Chickpeas MAC stage: Proliferation – Proliferation-stage trends are adjusted for mainstream appeal. Often combined with popular applications (on a burger, pasta, etc.) While most Americans were introduced to chickpeas with hummus, these legumes have continued to prove their versatilility: Even the water from the can is usable! Aquafaba may not sound appealing, but once it’s whipped, it becomes light and fluffy, similar to egg whites. This has created some unique plant-based options, from meringue to a whiskey sour.

Mushrooms 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.

Up 15% over the past four years

There is a world beyond cremini and portobello mushrooms. Each variety of mushroom has its own flavor and texture — from truffles, which are musky and pungent, to delicate chanterelles, which taste like apricots. Operators have long used mushrooms as a substitute for meat, most recently blending them with ground beef for the consumer who wants the best of both worlds. Many mushrooms are described as having an umami flavor, which, combined with their meaty texture, makes for a ubiquitous meat alternative.

84% of consumers know it/61% have tried it/41% love or like it

On more than 78% of U.S. restaurant menus

Menu Example Roti Spicy Feta Hummus Creamy hummus made from organic chickpeas, garnished with our spicy red s’hug sauce and feta

Flat growth for the past four years

On more than 16% of U.S. restaurant menus

94% of consumers know it/81% have tried it/60% love or like it Menu Example Tortas Frontera Roasted Mushroom Torta Cremini, shiitake plus oyster mushrooms; smoky garlic mojo; poblano rajas; goat cheese; black beans; wild arugula; and lime


2021

2021


FRONT END

Shelf Stoppers

Health and Beauty Care

Basket Facts

Total Department Performance Health and Beauty Care

Latest 52 Wks W/E 1/30/21

$99,186,432,511

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

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

$94,275,311,696

$91,866,960,208

Top Health and Beauty Care Categories by Dollar Sales Soap

Body Wash

Antiperspirant and Deodorant

Shampoo

Facial Cleanser

$3,000,000,000

How much is the average American household spending per trip on various health and beauty products versus the year-ago period?

2,500,000,000

2,000,000,000

$16.06

on all health and beauty products, up 7.2% compared with a year ago

1,500,000,000

1,000,000,000

500,000,000

$5.92

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

on deodorant, up 8.8% compared with a year ago

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.

Health and beauty care sales are up from last year. Cleanliness continues to be a main concern during the ongoing pandemic, with sales of soap and body wash jumping significantly versus previous years. Similarly, as they are likely spending more time outside, we see families spending significantly more than expected on sun care products, especially those households with children.”

$10.80

on face cosmetics, down 4.0% compared with a year ago

—Eric Brown, Manager - Global Content Workstreams, NielsenIQ

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

$6.60

on nail polish, up 12.7% compared with a year ago Millennials

Gen Xers

Boomers

The Greatest Generation

$7.51

$8.39

$8.08

$7.51

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

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


MINTEL CATEGORY INSIGHTS

Global New Products Database

Cheese Market Overview

After years of slow growth, the cheese category got a bump in sales in 2019. COVID-19 then provided growth in 2020, but most of the gains won’t be sustainable going forward. Sales are expected to decline 10.5% in 2021. 74% of cheese consumers enjoy trying new cheeses, and 60% enjoy trying artisanal cheeses.

Key Issues

Strong cheese sales growth during 2020 is a result of increased at-home eating and a higher priority placed on groceries, but that could change as consumers acclimate to a pandemic world and settle into new patterns, including potential extended conservative spending. The percentage of consumers that cite COVID-19 as a reason for their increased cheese consumption.

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

Diminished social gatherings, an important occasion for premium, unique, indulgent cheeses, will challenge brands to find new, more casual and everyday occasions for cheeses of all types. More than a quarter of consumers have increased their cheese consumption compared with last year, with nearly the same percentage citing increased use in both snacking and mealtimes as the reason for doing so. This indicates a significant need for product versatility. Consumers are looking for more than affordability in cheese choices, prioritizing health, protein and flavor, indicating that the value in cheese is delivered through a combination of features.

What Consumers Want, and Why Highlighting how different types of cheese fit into a consumer’s day with meal plans, recipe content and pairing recommendations can help consumers experiment with new types, forms and uses. Cheese consumers note that premium innovations like unique flavors, all-natural ingredients, regional and imported varieties, and high-quality ingredients would motivate them to try a new cheese. Current cheese snack offerings are mostly smaller, individually wrapped versions of standard varieties. Expanding cheese snack formats and types, or simply positioning more exciting premium options as snacks, may help increase snacking among consumers 18 to 34 years old, who currently are some of the least likely to reach for cheese as a snack.

PROGRESSIVE GROCER April 2021

15


ALL’S WELLNESS By Diane Quagliani

Traditional Versus Plant-Based Dairy NUTRITION COMPARISONS ARE A TOUGH NUT TO CR ACK. lant-based dairy alternatives — running the gamut from milk, yogurt and cheese to creamer, sour cream and dips — are continuing their upward trajectory in the marketplace and contributing to declines in traditional dairy sales. Some factors driving this trend are consumer concerns about the environment and animal welfare, perceptions that plant-based options are more healthful, and general interest in consuming a more plant-based eating pattern. Despite the popularity of plant-based dairy, however, traditional dairy is still very much on the table, according to a study by USDA’s Economic Research Service (ERS). The ERS researchers used household panel data to examine purchases of cow’s milk versus plant-based alternatives and found that cow’s milk remains a staple even among shoppers who bought plant-based alternatives. For example, at some point during 2017, 92% of American households bought cow’s milk, as did 90% of households who also bought plant-based alternatives, suggesting that most consumers find room for both options in their households.

Because of the standard of identity, consumers can expect a cup of cow’s milk to supply certain amounts of nutrients like protein, calcium, vitamin A and potassium. Plant-based alternatives aren’t required to meet a standard of identity, however, and may vary widely in nutrition content, depending on ingredients and whether they’re fortified with vitamins and minerals.

Retail Dietitians Sort It Out

Retail dietitians are ready to help shoppers sort out the vast array of choices and understand that swapping traditional dairy for plant-based dairy — or swapping among different types of plant-based dairy — isn’t necessarily a one-to-one trade from a nutrition standpoint. Dietitians can show shoppers how to read labels to spot relevant nutritional differences. For instance, traditional dairy and other animal products are key sources of vitamin B12 in the diet. Vegans, who don’t eat animal foods, must take care to include B12 from fortified foods or supplements. However, some — but not all — types of plant-based dairy are fortified with B12. Then again, some plant-based dairy Retail dietitians are ready to help products contain mostly shoppers sort out the vast array of “heart-healthy” unsatchoices and understand that swapping urated fats and maybe traditional dairy for plant-based even a few grams of fiber, dairy — or swapping among different compared with some traditional dairy prodtypes of plant-based dairy — isn’t ucts that contain mostly necessarily a one-to-one trade from saturated fat and no fiber. a nutrition standpoint. Both examples show the importance of comparing Nutrition Facts labels to find the best options for each shopper’s circumstances. Dietitians can also customize recommendations for shoppers with health concerns like lactose intolerance or milk, soy or nut allergies. These professionals can also consider shoppers’ general eating patterns, taste preferences and budgets, given that plant-based options often cost more than traditional dairy.

Which is More Nutritious?

It’s difficult to compare the nutritional value of traditional dairy products with plant-based alternatives made from diverse ingredients like almonds, soy, oats, cashews, macadamia nuts, sesame seeds, peas, rice, hemp, flax and others. One reason is that traditional dairy products like cow’s milk must follow standards of identity, which legally define the composition of certain food products listed in the United States Code of Federal Regulations.

16

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Diane Quagliani, MBA, RDN, LDN, specializes in nutrition communications for consumer and health professional audiences. She has assisted national retailers and CPGs with nutrition strategy, web content development, trade show exhibiting, and the creation and implementation of shelf tag programs.


NEW HORIZONS By Sarah Alter

Creating a Pipeline for Success IN THE EFFORT TO FURTHER WOMEN’S E XECUTIVE CAREERS, IT SHOULD BE ALL HANDS ON DECK.

n 2020, just 37 executives of Fortune 500 companies were women – a record high, but still far too low. While many vocal advocates have called for more women to advance into the c-suite, one thing is certain: no one makes it to the c-suite in a day. Women need support at every level of their careers to reach the heights of business leadership, and that means fixing a pipeline that, at the moment, has leaks and cracks all along the way.

Where Are the Cracks?

The cracks where women “leak” out of the leadership pipeline come in many forms. A massive hole was created, for example, by the COVID-19 pandemic, and this loss of women from our workforce – 100% of net job losses in December 2020, according to Forbes – will affect the number of women in leadership positions for years to come. If anything “good” can be said to have come from this, the pandemic exposed just how vulnerable women still are to the pressures of caring for children and other dependents in comparison with men, who simply didn’t fall out of the workforce in numbers anywhere near those of women. Talented leadership candidates also fall out of the pipeline due to workplaces inhospitable to them. That might be represented by a lack of support for up-and-coming female leaders, of course, but more insidiously, that may be due to unconscious bias, microaggressions and an environment that makes women of color in particular feel unwelcome.

How Do We Patch the Pipeline?

Patching the pipeline for female leaders must start from the bottom up. At NEW, we’re committed to Advancing All Women, and companies must commit to doing the same. A recent study by Pinsight found that men were three times more likely to be identified as candidates with leadership potential. Demolishing bias in promotions takes work, and for the companies willing to do so, NEW is here to help. We’re piloting a program designed to create male allies in workplaces, “Beyond Allies,” to ensure that women have support at every level of their career journeys. Male allies are critical in supporting women as sponsors and mentors and by helping clear the path to success of the barriers of bias.

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Support for Women of Color

That support needs to be all the stronger for women of color. NEW’s own 2018 research study, “Advancing All Women,” found that women of color could hold one in four manager, senior manager and executive roles by 2027 if companies implement strategies that address hiring, promotion and turnover challenges that affect their workplace experiences. We know that many companies simply lack the cultural and infrastructural support to ensure that women of color get a fair shake. Creating architectures of understanding and eliminating unconscious bias can pave the path forward. Only systemic action, along with education to create understanding of the unique challenges faced by women of color, will help. NEW recently launched the DEI Workshop Series for this precise reason, to help our partners ensure that women of color in their workplaces can bring their


When women are confident in their ability to lead, and the barriers in their way have been removed, a brighter future awaits us. whole selves to work. With greater understanding, businesses will not just be more welcoming to women of color, they’ll also be poised to take advantage of the unique strengths and experiences these employees bring to the table.

Creating Strong Leadership

Education and training for management are key steps, but helping women upskill and gain confidence in their leadership potential is also of critical importance. At NEW, we also offer numerous opportunities for women to self-assess their strengths and weaknesses, and to bolster the critical skills they need to shine as leadership candidates. When women are confident in their ability to lead, and the barriers in their

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way have been removed, a brighter future awaits us. Companies that create welcoming environments for women and provide them with career support will find themselves with more women in leadership positions, and can help to patch the career pipeline from the ground up. By building male allies to sponsor women’s careers, supporting women of color and providing women with the leadership development support they need, we’ll create a path to success that will serve women long into the future.

Sarah Alter is president and CEO of the Network of Executive Women (NEW), a nonprofit learning, leadership and gender equality advocacy organization of 13,500 members representing nearly 900 organizations, 300-plus national and regional corporate partners, and 22 regional groups in the United States and Canada. NEW advances gender equality and diversity in the retail, consumer goods, financial services and technology industries. Alter joined NEW in 2017 and has wide-ranging experience in the markets that NEW represents.

800-837-2881

Over 80 Base Sizes PROGRESSIVE GROCER April 2021

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COVER STORY

The Giant Co. hen it comes to new grocery concepts, there’s plenty of elements in the new Giant store on North 23rd Street in Philadelphia that take your breath away, from the produce department featuring unique items such as gift-wrapped pink pineapples, to the bakery case full of fruity pastry from a local patisserie, to the fresh-churned gelato near a breezy outdoor terrace. But for Giant Co. President and CEO Nick Bertram, the most beautiful feature of his new 65,000-square-foot urban flagship just might be the employee break room. “You’ve never seen a break room like this,” says Bertram, sitting proudly among smiling employees for an exclusive interview with Progressive Grocer on grand-opening day in March. “It makes me happy to see our team smiling. They’re the heartbeat of this thing. It’s a beautiful store. It’s great products, but most of all, we wanted them to have this.” The nearly 700 square foot break room is spectacular, with a floorto-ceiling glass wall offering employees gorgeous views of the Schuylkill River flowing through the Logan Square neighborhood of Center City Philadelphia. For those workers who’d rather watch TV, flatscreens streaming the in-house TV network, GTV (launched internally two years ago), are also available. The big break room with beautiful views at the Riverwalk store is just one of the ways that the new store brings to life The Giant Co.’s self-described “modern, fun and caring culture,” which made the new Philadelphia format possible. “Our 98-year heritage has been an amazing foundation to build on, and we have proudly evolved into a purpose-led organization,” Bertram says. “Connecting families for a better future is what unifies us, what challenges us, and what guides all of our strategic, commercial and talent ambitions. It led us to our brand promise, designed for the way families live now, which is what shows up in our employee and customer value propositions.”

URBAN INSPIRATION Giant Co. CEO Nick Bertram details the company’s new growth strategy. By Gina Acosta

Giant Co. CEO and President Nick Bertram started out at the company as a part-time stocker. Today, he leads a food retailer experimenting with innovation on the road to sustained long-term growth.

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Growth Spurt

The value proposition for Carlisle, Pa.-based Giant which operates 187 stores in the Mid-Atlantic region under the Giant, Martin’s, Giant Heirloom Market, Giant Direct and Martin’s Direct banners, has been evolving quickly since at least 2019. That’s when the company began experimenting with smaller formats in Philadelphia. That’s also when the grocer launched its new e-commerce brands, Giant Direct and Martin’s Direct, offering grocery pickup and delivery. In early 2020, the company changed its name from Giant Food Stores to The Giant Co. as it looked to distinguish itself from sister chain Giant Food, based in Landover, Md. (both chains are operated by Dutch firm Ahold Delhaize USA, which last year had annual sales of $88 billion). A few months later, Giant rolled out a new strategy and brand platform: For Today’s Table. Building on the new company name, For Today’s Table mapped out a course for the company’s growth. “For Today’s Table is grounded in our strong belief that gathering around the table for a meal with your family to make meaningful connections is now more important than ever,” Bertram explained at the time. Since then, the pace of change at Giant has only accelerated. The grocer has expanded e-commerce services, pushed into new merchandise categories, overhauled its store design, and implemented technol-


PROGRESSIVE GROCER April 2021

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COVER STORY

The Giant Co. ogy ranging from mobile pay to robots. According to Bertram, Giant’s latest store concept in Philly is a showcase of the next evolution of the retailer’s operational strategy. “The beauty of this store is that it has brought category innovation, technology innovation and operational innovation,” he says.

Wedding Venue

When it comes to inspiration for the new format, Bertram says that his team visited chains such as H-E-B’s Central Market, Mariano’s, Publix, and even the flagship Whole Foods Market in Austin, Texas, for ideas. The team also looked at its own customers and teams through various research groups and weekly visits. Giant borrowed from some of its strongest formats in the suburbs and rural areas as well. “We brought those elements in, but then added innovation on the format side, on the technology side, on the operational efficiency side, on the product side,” Bertram explains. “And then we really just wanted this to be a space to be, to dwell; it’s a spot now. The two-level, 65,000-square-foot Giant store in the Logan Square neighborhood of Philadelphia features a Starbucks cafe, an outdoor terrace overlooking the Schuylkill River, a gelato bar, several restaurants, a beer garden, and even a VIP elevator for residents who live in the residential tower above the store.

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“Our 98-year heritage has been an amazing foundation to build on, and we have proudly evolved into a purposeled organization. Connecting families for a better future is what unifies us, what challenges us, and what guides all of our strategic, commercial and talent ambitions. It led us to our brand promise, designed for the way families live now, which is what shows up in our employee and customer value propositions.” —Nick Bertram, President and CEO, The Giant Co.


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COVER STORY

The Giant Co.

The new Giant store is ready for when consumers are back to socializing, with a tap wall offering more than 40 draft beers. Next to the wall are several aisles of specialty wine, including many local brands. Elevated stools near the tap wall look out over the Schuylkill River and outdoor seating area.

Somebody’s going to get married out on the terrace one day.” Finally, the grocer leveraged the resources available to it from Ahold Delhaize. “We look to our sister companies in Ahold Delhaize USA, to our sister brands in Europe and Indonesia, and, of course, stay abreast of emerging technology and innovation through industry share groups like FMI,” Betram notes. He believes that the format will work well in urban areas, but there are elements from this store that he can see being implemented in non-urban stores. For example, the location features a oneway checkout lane similar to those seen at off-price stores. It also offers self-scanning, mobile checkout, electric vehicle charging, a VIP elevator for residents who live in apartments above the store, and a 450-SKU plant-based set. “First time we ever did that was at our first Giant Heirloom Market,” Bertram recounts. “We were overwhelmed with the response. So we took that and we applied it across dozens, if not 100, stores in our company, as we did remodels. And now that particular department is growing. This set is the biggest that we’ve ever done.” The Giant team spent a lot of time mulling the perfect spot in the store for plant-based SKUs. That department is now on the perimeter, where it flows naturally from produce to the meat department. The new format also boasts one of the largest produce departments in the chain, according to David Lessard, VP of fresh merchandising for Giant. “We’re labeling them Garden,” Lessard observes, “and obviously, we have a focus on local. Even when we’re not in 24

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season, we still have over 60 local items because of our relationships with local farms and growers.” Lessard points out that Giant’s new Garden department is set up by zone. “This is our local zone,” Lessard notes as he leads a tour of the store’s departments. “We have an organic zone, with more than 170 items. And local is not seasonal: It is year-long, or a 52-week program. You’ll see it in produce, in floral — throughout the store.” At Giant, product is the hero, Lessard emphasizes, and that’s what the grocer tries to highlight. At the new Philly store, the merchandising team, made up of Lessard; John Ruane, SVP of omnichannel merchandising; and Rebecca Lupfer, VP of center store merchandising, detail the company’s “discovery program.” “It’s really creating that treasure hunt for our customers,” Ruane says. “So you see the Sumo oranges over there, pink pineapples here.” The pink pineapples are from Del Monte and come in a pink gift box with a bow; Giant was the first grocer on the East Coast to stock these. “You’ll see white strawberries here, Aloha peppers over there,” Ruane continues. The Florida-grown white strawberries taste like a cross between a strawberry and a pineapple. “Our teams really, really work hard with our suppliers and growers to try to find the best varieties out there, the most unique items for discovery,” Lessard adds. “We want people to see things that they haven’t seen.” The produce department also offers a value-added program with fruit cut in-store, a gelato bar,

Shoppers can place orders for sliced Boar's Head meats and cheese on the touchscreen kiosks in the full-service deli. The department also includes a charcuterie station and a mozzarella station featuring cannoli and more from Spring Grove, Pa.-based Caputo Brothers Creamery.


ADVERTORIAL

BY JOE TOSCANO, Vice President, Trade & Industry Development at Purina

For more than 90 years, Purina has been guided by the belief that pets and people are better together. I can attest that my own dog, Stew, has made my life better, and I cannot imagine having to choose between his safety or my own. Unfortunately, that decision is being made every day by domestic violence victims who want to leave but can’t because there is no safe place to go with their pets. According to the National Coalition Against Domestic Violence, 71% of pet owners entering domestic violence shelters report that their abuser had threatened, injured or killed family pets. This is why nearly half of survivors will delay leaving abuse if they cannot take their pets with them. As few as 10% of domestic violence shelters in the United States accept pets, and we want to change that. We envision a world where no one is trapped in abuse because they can’t take their whole family with them. The inspiration for what developed into the Purple Leash Project came nearly seven years ago when one of our associates read about the difficult decision that many domestic violence

Help Us Keep Domestic Violence Victims and Their Pets Together Purina’s Purple Leash® Project survivors with pets were being forced to make. It didn’t seem fair that pets, who may be the only source of unconditional love and support for a victim, weren’t being considered when it came to sheltering survivors. So, we decided to help. After working to support New York’s largest domestic violence shelter for many years, in 2019 Purina took the step to make a national impact by creating the Purple Leash Project. In partnership with the national nonprofit RedRover®, our goal is to raise awareness of the issue and increase the number of pet-friendly domestic violence shelters in the United States.

And we have committed nearly $1,000,000 to support the cause. In addition to offering grant support for shelter upgrades, Purina is donating pet food, supplies and other resources for pet owners escaping abuse. We’re also advocating in D.C. for more federal resources for domestic abuse survivors with pets. Since 2019, Purina and RedRover have gifted 21 grants totaling more than $375,000 to help equip domestic violence shelters to receive and care for pets, leaving survivors with more options when trying to flee a dangerous situation. Now, 48 of the 50 U.S. states have at least one pet-

friendly domestic violence shelter. The Purple Leash Project team hopes to work with domestic violence service providers in Hawaii and Rhode Island to close the gap. In the meantime, Purina and its associates are working to bring more awareness to this issue and increase the number of pet-friendly shelters across the country, and I invite you to join us. Here are three ways you can help us raise awareness of the need for more pet-friendly domestic violence shelters across the country: › Use your social media platform to support survivors with pets using #PurpleLeashProject and highlighting one of the many sobering stats I’ve mentioned to start a conversation. › Visit PurpleLeashProject. com to receive updates and learn more ways to get involved with the cause. › Retailers can make an impact during the months of May and October by carrying special Purple Leash Project merchandising shipper units designed to drive attention and awareness for the cause and sales of Cat Chow®, Tidy Cats®, Beggin’® and Beneful® for our retail partners. Purina trademarks are owned by Société des Produits Nestlé S.A. Any other marks are property of their respective owners.

Contact your Purina sales rep to learn more. SPONSORED CONTENT FROM OUR PARTNER PURINA BRAND


COVER STORY

The Giant Co. Giant has gone to great lengths to localize each department, and that includes produce, which is called the Garden department. Locally sourced produce is highlighted at the front of the department, and is available year-round.

store-made guacamole and a kombucha tap. Finally, sustainability is always top of mind when it comes to produce. “What we have done is where we have packaged produce, we’ve looked for ways to eliminate a lot of the packaging,” Lessard says. “Biodegradable trays, less plastic. We’re always looking, as part of the category teams working with the suppliers, to stretch it to the next step.”

Sushi by the Piece

When Giant looked at how to do foodservice at the new format, the team wanted to create a food hall experience, and that’s exactly what they ended up with. The foodservice stations don’t seem like parts of a grocery store: Each eatery feels like its own space, or part of a hip food hall, albeit with high-tech touchscreen ordering. Giant’s catering to shoppers’ love of local products is especially felt here, where Philly faves Mission Taqueria and Saladworks have spots. There are also made-to-order hoagies (heroes or subs to non-Philadelphians), pizza, and sushi by the piece, something no other grocer on the East Coast offers.

“If sushi by the piece works here, then we will put it in our other stores that have the same demographics,” Bertram says, “but sushi is on fire across the whole company.” There’s also a smokehouse, with smoked meats such as ribs and brisket offered daily. “We’ll have it in probably at least 10 stores in a couple months,” Lessard predicts. “It’s a really great growth category for us.” Giant also recently reopened its hot foodservice bars, after customers asked for them despite ongoing pandemic worries. Then there are the beer garden and pub, with more than 40 varieties of beer and wine on tap. After grabbing a meal and a beverage, shoppers can head out to an open-air terrace overlooking the Schuylkill to linger by a fire pit.

Local Flair

The local Philly flair is felt strongly at Giant’s new store, and that isn’t something exclusive just to that store, or even to the city or the region’s Giant locations. Emphasizing local is an aggressive company strategy. Locally made products can be found in every department of this new format, from One Village Coffee to High Street on Market bread to Caputo Brothers Creamery cheese. In the bakery, shoppers can buy Italian pastries made locally (not in-store). “We’ve spent a lot of time in the last three years really focusing on local and making sure that what we get in every store is not just demographics and Coffee lovers are able to stay local with Giant's new One Village Coffee station in the center store of the Riverwalk store. The brand is based in Souderton, Pa. The store's other local brands include Philabundance’s Abundantly Good cheese label, High Street on Market bread, Asher’s Chocolates, Isgro Pastries and Caputo Brothers Creamery artisan cheese.

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COVER STORY

The Giant Co. what people want locally,” Ruane explains. “It’s not just Philadelphians or urban dwellers who want local. Everybody wants it. We have a business meeting every year with 500-plus local suppliers to talk about our strategy and where we’re going and what our goals are with local.” This local flair also extends to the center store, where Giant has introduced curated destinations. “We have also spent a lot of time focusing on how we curate the right assortments,” Ruane says. “We also spent a lot of time in the international aisle. It doesn’t seem big, but it’s extremely important to our customers. It’s kosher, it’s ethnic. So it’s really saying, ‘Hey, who are the people in the community and what do they want?’” Additionally, Giant has created destinations in the center store that speak to the hottest consumer trends, such as natural foods and natural beauty. The natural food and organic department is adjacent to the produce department, so there’s an easy transition there for the shopper. There are also such new company features as natural lighting and lower shelving. Checkout is an omnichannel shopper's dream at the new store. Self-checkout and full-service checkout are available, as are various types of self-scanning and mobile checkout using Giant's Scan It technology.

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Giant has created destinations in the center store that speak to the hottest consumer trends, such as natural foods and natural beauty. The natural food and organic department is adjacent to the health and beauty department. There are also such new company features as shelving that is lower and lighted.

“We have lighted shelving in natural and organic and health and beauty because we’re trying to highlight and showcase those sections as stores within a store,” Lupfer says. “Lower gondolas, lighting — all of that really makes it feel like you’re shopping a natural foods store.”


Localizing Private Brands

to innovate more than we have. We have some really good innovation, but we want to do more of that. We really want to do more around meals. We also want to be able to provide a very good value for the customer, so when they come in and they see our label, they know they’re going to get the same great quality as the national brand, or better, at a much better price every day.” The new Giant Riverwalk store clearly shows just how far The Giant Co. has come in its nearly 100 years, and where it’s going: a grocer that has transformed itself from being just a place to buy food to a physical and digital community destination that offers something for every kind of shopper.

Transforming the Business

still has room to grow inside of Philadelphia specifically, as well as in Pennsylvania. “We’re [also] very strong in Maryland,” he adds. “Our store of the year is in Keyser, West Virginia. And so there’s communities with our Martin’s brand, with our Giant brand, with our Giant Heirloom Market brand and our Giant Direct brand. Between all of those brands, we have a lot of different ways to play, but we also have channels that we haven’t really fully exploited yet, like business-to-business. So if you think about an extension of our e-commerce prop, there’s another to explore.” Bertram is aware of the intense competitive climate, but he looks more at what the customer wants than what the competition is doing. Last November, Ahold Delhaize revealed plans to launch an “endless aisles” online marketplace across store banners and pilot a subscription membership program at Giant, encompassing its Giant and Martin’s supermarkets. The Choice Pass annual membership plan offers unlimited free delivery and pickup for less than $100. “We’re lucky because we have Peapod Digital Labs as a sister company, we also have Retail Business Services as a sister company, and now Supply Chain Services,” he says. “We’re really positioned well, because I can just look to the left at my colleagues who are presidents in those companies, and we do things together and we have the skill.”

According to the merchandising team, Giant is only at the beginning of its private-brand strategy. With a more aggressive focus on local, Ruane says that the retailer aims to use more local suppliers for its private brands. “We are evolving with our private-brand strategy,” he continues. “It is very important to us. I would think that right now, we are doing a good job, but I think we aspire to do a great job.” And that means a few things, Ruane points out, among them leveraging the company’s scale. “We have a lot of stores in the organization, and we have to make sure we’re aligning on the right products, the right product specifications and getting all that correct,” he says. “That’s kind of a work in progress. As we evolve, we’re really looking

As for what’s next for The Giant Co., Bertram says that he’s focused on supply chain, IT upgrades and e-commerce to shore up deficiencies and capitalize on opportunities. During the pandemic, “our weakness has been supply chain,” he admits. “We’re in the middle of bringing back our supply chain at Ahold Delhaize. We’re also investing in an automated frozen facility with a third party called Americold. That’s going to change so much for us — automation and fulfillment, but also in logistics and third party. It’s necessary just to have better predictability, better reliability.” Giant’s new Riverwalk store in Center City Philadelphia features a new cold box that has made forecasting and replenishment a lot easier not just for in-store restocking, but also for e-commerce pickers. “We had our industrial engineers working on this to make it easier to replenish,” Bertram notes. “We have a dairy box; we’ve never done one of those on the sales floor before. It’s built for efficiency.” It also allows e-commerce pickers to walk into the cooler if something is out of stock on the shelf. He says that most of Giant’s 2021 cap ex budget will go toward IT improvements, “behind-the-scenes-upgradesin-the-back-office stuff, but also in the commercial stuff. We have fulfillment upgrades that we’re doing. We have the Island Avenue facility that opens later this year.” The company plans to open two stores this year, according to Bertram. Giant currently has five EFCs, or e-commerce fulfillment centers. The company intends to open its largest EFC later this year in South Philly. The Giant Direct facility, located at 3501 Island Avenue and set to make its official debut in November, will use robotic picking technology from Norwegian company AutoStore in conjunction with grocery-specific software and pick stations supplied by Swisslog, which will install the system in the 124,000-square-foot fulfillment center. “That will significantly change our capacity, because our e-commerce has grown faster than the industry average, which we’re proud of, but we’re running out of capacity, which is a great problem to have,” Bertram says. “We have a third-party relationship with Instacart in areas where we don’t have delivery, but Giant Direct as a brand has just taken off. It’s growing. It’s still growing — I think [it’s] tripled. It’s just crazy what’s happened.” Speaking of growing, Bertram notes that the company

Giant Co. CEO and President Nick Bertram says the grocer's e-commerce operation has grown faster than the industry average and Giant Direct as a brand has "just taken off." Below, a Giant Direct department in a Giant store in Pennsylvania.


RETAILER DEEP DIVE

Kroger

Key Takeaways Digital sales of $10 billion are forecast to double by the end of 2023. Kroger has a 10% share of the food-at-home market and sees huge upside. The addition of Ocado-powered consumer fulfillment centers will enable Kroger to serve 75% of the U.S. population. Its portfolio of 15,000 Our Brands products generates sales of $26.2 billion.

By Mike Troy

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Kroger’s newest automated fulfillment center, near Orlando, Fla., measures 375,000 square feet and is capable of generating the sales equivalent of 20 stores.

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RETAILER DEEP DIVE

Kroger

Hundreds of robotic pickers inside Kroger's CFCs enable the massive facilities to fulfill the same volume of roughly 20 stores with 60% less labor.

“Leading with fresh and accelerating with digital” is a phrase that the food retailing industry will be hearing a lot from The Kroger Co. this year and beyond. It’s a simple message that works equally well when communicating with investors or associates to describe how Kroger is thinking about its potential to grow and gain market share in an industry that it values at $1.4 trillion. It’s not like the company is deficient in fresh or digital. Quite the opposite: Sales of fresh products, which Kroger defines as consisting primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared foods, increased 13.6% last year to nearly $33.5 billion, representing 27.4% of the company’s merchandise sales, excluding fuel. As for digital, thanks to an aggressive rollout of grocery pickup in 2018 and 2019 as part of its Restock initiative, Kroger was well prepared when the pandemic hit and shoppers wanted to avoid coming into stores. The availability of pickup service at more than 2,200 stores enabled the company’s digital sales to double in 2020 to exceed $10 billion. Additionally, thanks to a 20-year-old loyalty program with strong engagement, Kroger was able to serve 500 billion personalized offers to digitally engaged shoppers and generate $150 million in incremental operating profit from its retail media group, Kroger Precision Marketing (KPM). 32

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The Ocado Effect

Date Announced Location November 2018 March 2019 July 2019 September 2019 November 2019 January 2020 September 2020 January 2021

Monroe, Ohio Groveland, Fla. Atlanta Dallas Pleasant Prairie, Wis. Frederick, Md. Romulus, Mich. Phoenix

Size (Square Feet) 335,000 375,000 375,000 350,000 350,000 350,000 135,000 200,000

Note: Kroger has indicated that it will open a 300,000-square-foot CFC in the West and a 200,000-square-foot CFC in the Pacific Northwest, but had not disclosed locations as of April 2. Source: Company Reports


RETAILER DEEP DIVE

Kroger

“Leveraging Kroger’s unique strengths in fresh food, combined with our increasingly profitable digital business, creates an unmatched combination that positions us better than anyone to continue to win share in a highly fragmented $1.4 trillion market,” noted Kroger Chairman and CEO Rodney McMullen on how the company is thinking about the future, during an annual investors conference on March 31. “Today, we have a 10% share of food at home, with No. 1 or No. 2 market share positions in the vast majority of the major markets in which we operate, which makes the opportunity for growth ahead of us incredibly exciting.”

The Source Of Excitement

The most significant development of the past two decades in food retailing is beginning to unfold, and Kroger is at the center of it. The company’s digital sales last year doubled to more than $10 billion, and by the end of 2023, Kroger CIO Yael Cosset, speaking at the same investors conference, said that digital sales are forecast to double. If that target is achieved, a key reason will be the result of a strategy that Cosset, McMullen and other Kroger leaders revealed in early 2018. That’s when the company committed to an unprecedented deal with online grocer Ocado to open as many as 20 robotic customer fulfillment centers (CFCs). Few retailers in the United States were familiar with the U.K.-based company prior to the deal with Kroger, but now the U.S. food retailing world could be turned on its head as Kroger’s new CFCs become operational over the next two years. To date, specific details on the location of eight facilities and their sizes have been revealed, with approximate details provided for two others. Collectively, these facilities encompass roughly 3 million square feet, and each is capable of fulfilling online orders equivalent to the sales volume of 20 stores, but with only 60% of the capital and labor required. The first new facility, in Kroger’s hometown of Cincinnati, became operational in March, and a second facility, near Orlando, Fla., went live in April. The combination of a growing network of CFCs, blended with a store base of more than 2,700 locations, is setting up Kroger to be a more disruptive force than it already is in the markets where it operates, as well as in new ones. For example, according to Gabriel Arreaga, the grocer’s SVP of supply chain, 45% of the U.S. population is within reach of a Kroger store, most within a few miles, but that situation will change. “We’re rolling out our new CFCs, which will enable even more customers to access more products even faster and in more markets,” Arreaga says. “Our customer fulfillment centers will create an opportunity to serve 75% of the U.S. population within a 90-mile radius.” This is where Kroger’s approach to digital grocery differs from other retailers that have opted for a mi34

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cro-fulfillment approach, with smaller automated facilities adjacent to stores or integrated into existing footprints by repurposing space. “In my experience leading supply chains in different economies and geographies, reach matters in creating an ecosystem that captures rapid market share and lowers operational cost aggressively,” Arreaga explains. “That is why we invest in CFCs that cover a vast population with one single building, versus other competitors that invest in hundreds of facilities. We will scale faster.” In addition to CFCs, Kroger is counting on Ocado’s technological sophistication in other ways. The companies expanded their relationship last fall to leverage Ocado’s in-store fulfillment (ISF) capabilities, which include proprietary software that supports employees’ efforts to assemble orders by making it easier and more efficient to find products when fulfilling pickup orders.

Pulling Levers, Widening Moats

As Kroger scales its unique grocery e-commerce approach in the next several years, it expects to be in the right place at the right time to capitalize on trends that will endure after the pandemic. The

“Building upon the foundation established by our Restock Kroger transformation, and leveraging key learnings from operating during the pandemic, our strategy of leading with fresh and accelerating with digital is designed to convert our industry’s near-term tailwinds into long-term competitive advantages.” —Rodney McMullen, Chairman and CEO, The Kroger Co.


RETAILER DEEP DIVE

Kroger

growth of e-commerce, cooking at home and prepared meals to go are all areas that benefited from the shift to spending more time at home and eating less at restaurants. Those trends will endure, according to McMullen, and drive company results — it just won’t appear so in the near term. Following dramatic growth last year, which resulted in fullyear identical-sales growth of 14.1%, Kroger has cautioned analysts that identical-store sales this year could decline between 3% and 5%. That’s why the company is encouraging investors to look at sales on a two-year stacked basis to even out the huge deviation in performance caused by the pandemic. “Building upon the foundation established by our Restock Kroger transformation, and leveraging key learnings from operating during the pandemic, our strategy of leading with fresh and accelerating with digital is designed to convert our industry’s near-term tailwinds into long-term competitive advantages,” McMullen says.

Private Brands and Personalization

Leading with fresh and accelerating with digital to deliver a seamless shopping experience made for a good headline following Kroger’s meeting with investors. However, as the company begins to put more meat on the bones of how it expects to achieve total shareholder returns of 8% to 11%, two other key areas stand out as having an impact on Kroger suppliers. The company is intent on growing its Our Brands business, which already consists of 15,000 items that generated sales last year of $26.2 billion. One of its newer brands, Simple Truth, launched only five years ago, recently surpassed $3 billion in annual sales. The company’s next billion-dollar brand, according to Stuart Aitken, Kroger’s chief merchandising and marketing officer, will be Home Chef. Acquired in June 2018 for $197 million, the meal solutions brand saw a sales increase last year of 118%, according to Kroger. Our Brands are a major competitive advantage for Kroger, but as the retailer continues to expand these brands’ presence, it creates new competi- Kroger's CFCs will rely on tive pressures for branded suppliers. While a fleet of purpose-built this dynamic has existed since the advent vehicles to deliver orders within a 90-miles radius.

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of private brands, Kroger is elevating the pressure on brands while it also gives them powerful new tools to engage more effectively with shoppers. KPM is a retail media platform that’s best in class in the industry and also part of a major trend of changing how brands connect with shoppers. Led by SVP Cara Pratt, KPM is helping brands capitalize on the shift to digital purchase behaviors while also serving as a meaningful new alternative revenue stream. “Media mix investment follows consumer behavior, and e-commerce is in the early stages, particularly grocery and particularly in the United States, of an upward trajectory,” Pratt says. “Brands want to get closer to influence purchase, and recognizing that more than ever, consumers are making decisions in a digitally constrained shelf.” Pratt notes that 85% of the top 500 keyword searches on Kroger’s site are for unbranded search terms, making the case that the retailer has become Google-like in its role as a search vehicle. “There is an incredible change happening in the media ad tech landscape and, frankly, the entire media supply chain,” she observes. Privacy regulations and changes to the use of third-party data sources make the use of first-party data such as Kroger’s more valuable, because of the direction and connection it affords shoppers. “Now more than ever, it is critically important to leverage Kroger as the No. 1 digital grocery destination, as measured by Comscore, to allow brands to drive food inspiration, and ultimately bring more performance to the media supply chain,” Pratt says.

Power of the Platform

One trend in the retail industry is that retailers increasingly refer to themselves as “platforms,” as opposed to retailers. Doing so helps convey a broader set of capabilities that are intertwined and mutually reinforcing to create a flywheel effect of accelerating growth. That’s the situation at Kroger, whose platform is seen as positioning the company well to win in a post-COVID world. “Our four competitive moats of seamless, personalization, fresh and Our Brands are stronger today than ever before, reinforcing our confidence in our ability to grow sales and market share,” McMullen affirms. As the company executes strategies in each of those areas, it’s looking at the size of the market share prize differently from some others. Kroger considers the market it serves to be valued at $1.4 trillion, because it believes in a share-of-stomach point of view. McMullen introduced that concept when the original Restock Kroger plan was introduced three years ago. In essence, Kroger competes with anyone that offers food to consumers, including foodservice operators satisfying meal occasions that could be served by Kroger.


RETAILER DEEP DIVE

Kroger

By Mike Troy

commitment to the fresh department comes to life in a variety of ways, among them making fresh as fresh as possible. While every food retailer knows the critical role that fresh categories play in consumers’ choice of where to shop, execution of a fresh program can vary considerably. Kroger’s chief merchant and marketing officer, Stuart Aitken, contends that the Cincinnati-based grocer is operating from a position of strength and is focused on distancing itself from competitors as part of the “leading with fresh and accelerating with digital” strategy shared with investors. “We are going to build on our success and grow fresh in 2021 and beyond,” Aitken asserts. “We look at the entire process, starting with sourcing supply chain all the way to the shelf, and at every step along the way, to make sure our customers are getting the freshest product. We’re increasing days of freshness for the customer. We’re doing this by optimizing assortment, reducing days of supply in our distribution centers and our stores, expediting transit time, and strategically aligning with suppliers who share our vision for quality and freshness.” Four categories in particular — bananas, berries, tomatoes and bagged salads — are getting a lot of attention, according to Aitken, because they generate 28% of fresh department sales. “When we deliver even higher quality and freshness in these areas, we will earn even more customer loyalty and additional sales,” he predicts. One way to achieve freshness is to leverage local, but local has taken on a new look due to the advent of highly productive indoor-farming facilities. Kroger recently committed to sourcing product from a new 70,000-square-foot indoor farm and three other smaller facilities all operated by 80 Acres Farms and serving 316 Kroger locations across Ohio, Indiana and Kentucky. 38

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A strategy of "fresher than fresh" is coming to life at Kroger, which has relationships with indoor-farming and hydroponic growers such as Infarm (top) and 80 Acres Farms.

The four facilities have the capacity to grow 10 million fresh produce servings annually. That level of production is aided by the use of grow benches that are arranged in a 10-foot-by-10foot configuration and stacked 10 levels high to maximize efficiency. In addition to proximity to the point of sale, another advantage of 80 Acres Farms’ approach is that products can be grown pesticide-free all year long and with 97% less water than is used in conventional farming, helping Kroger achieve its sustainability and freshness goals at the same time. “Consumers are looking for more nutrition from their diet and want to trust that their food is safe and chemical-free and it will last longer in their refrigerators,” said Mike Zelkind, CEO and co-founder of Hamilton, Ohio-based 80 Acres Farms. Kroger has been experimenting with indoor-farming partnerships for several years. In late 2019, the company partnered with Berlin-based Infarm on a first-of-its-kind initiative to install live produce fixtures inside select stores in the Northwest. It doesn’t get any fresher than grown in-store, but a close second is grown a few miles away at an indoor facility dedicated to specific stores.


Consumer expectations continue to evolve – whether it is greater convenience or how demand for safety increases the need for touchless commerce and the future of frictionless stores. The ELERA™ Commerce Platform accelerates this journey to ensure you’re ready for what’s next.

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TREND WATCH

Ethnic Cuisine

Flavors of the World WHEN IT COMES TO E THNIC CUISINE, CONSUMERS ARE DEMANDING TR ADITIONAL FOODS, NICHE ITEMS AND REGIONAL FAVORITES. By Debby Garbato ot so long ago, consumers’ interest in ethnic foods revolved largely around Americanized dishes like spaghetti and meatballs and General Tso’s chicken. The growth of social media and online influencers has since opened their eyes to the real thing. However, with the onset of COVID-19 and the resulting decline in restaurant visits, interest in social media and foreign foods spiked. Now, shoppers are combating the doldrums of everyday home recipes with more authentic cuisine, niche ingredients and regional flavors. Olive oils from Sicily, Puglia and other regions of Italy — each with a unique flavor profile — are gaining retail space. In soy sauce, there are now different varieties to suit various cooking applications. Myriad types of hot peppers from around the world are cropping up, each providing a unique tongue-searing experience. In desserts, exotic flavors like boba (Taiwan), garam masala (India) and churro (Mexico) are differentiating the sector. Driven by COVID-19 fears, there’s also heightened interest in functional herbs, botanicals and so-called superfruits from distant shores that are perceived by shoppers as immunity enhancers. “While there’s a long tradition of Italian food in the U.S., there were few specialty items,” says Antonino Laspina, New York trade commissioner and U.S. coordinator for the Italian Trade Agency. “Today, ‘original’ products are important to consumers, who are more demanding. They’re not seeking staple foods to satisfy basic needs. There’s more authentic and niche products and growing awareness of foods’ specific qualities.” Learning about ethnic cuisines has become a journey of discovery for many shoppers. “It’s the unfamiliar places and nuances,” notes Denise Purcell, VP of education and content at the New York-based Specialty Food Association (SFA). “They want regions and flavors of India, not just Indian food.” This phenomenon is evident throughout the store. For example, in the baked goods area, one of the hottest product segments is brioche. The bread’s French origin and unique flavor profile have helped the segment triple in sales to $300 million in the past few years, according to Paul Baker, founder of the Manchester, U.K.-based St. Pierre brand, which is synonymous with brioche. “Our research found that there was also a desire to explore new flavors and upgrade in order to re-create restaurant quality at home,” continues Baker. “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.”

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Key Takeaways Due to COVID-19, hordes of consumers have turned to social media to learn about ethnic foods. Shoppers who are educated about exotic ingredients and flavors will often pay more for them than less adventurous shoppers will. It remains to be seen whether consumers will continue to be exposed to the same trends they’re seeing online once restaurant visits and travel return to pre-pandemic levels.


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TREND WATCH

Ethnic Cuisine Powered by Social Media

Historically, shoppers explored new cuisines at restaurants or when traveling, or they may have discovered interesting new flavors in the aisles of local grocers that infused their assortments with niche items. However, with COVID-19 restricting activities, hordes of consumers have turned to social media for their culinary education. Seeking to savor new flavors at home, they’re viewing virtual cooking classes, influencers’ product picks, and online recipes and articles. “Social media is the largest influencer today, and that has only increased during the pandemic,” asserts Sydney Cromwell, marketing analyst at the Taste & Wellbeing division of Switzerland-based Givaudan. “Consumers are tired of home recipes and see ethnic cuisine as adventurous. They want cuisine experiences that previously may have come through travel. Now, experiences are achieved through ‘virtual travel.’ They learn about trends, [and] then buy products in pursuit of that international food experience. Restaurants used to lead this, but COVID has stifled that a lot.” Consumers who follow chefs and influencers are extremely loyal. “There’s influencers with millions of followers who love to cook and experiment,” affirms Phil Kafarakis, former president of the SFA and senior adviser to boards, CEOs and government organizations. The good news for retailers is that shoppers educated about new ingredients and flavors will often pay more for exotic ingredients than less adventurous shoppers will. “Before, specialty products weren’t options because ingredients weren’t as accessible and people wanted to pay less,” explains Christophe Desplas, trade commissioner of Chile and director of ProChile in New York. “This tendency [toward specialty ingredients] has accelerated with the COVID crisis.”

“People care where an ingredient comes from.” —Joseph DeCicco Jr., DeCicco & Sons


Centuries of Italian Cheesemaking

In regional cuisine, tradition plays a significant role and food preparation practices can stretch back centuries. They’re tied to what’s raised or grown in an area, as well as to denizens’ lifestyles, and, in some cases, historical events. Hence, consumers feel that they’re consuming far more than food. “They now see food as culture,” says Laspina. Regionality is particularly important in Italy, which wasn’t unified until the 19th century. In addition to local olive oils, shoppers are interested in local Parmesan cheeses, preserves and other items. There’s also a demand for gourmet pastas made from ancient grains. “Consumers now understand it’s not just Parmesan; it’s centuries of cheese-making,” notes Laspina. Preserves, he adds, come from Rome, Sicily and Tuscany. “They’re not mass-produced,” he emphasizes. “They’re specific foods from specific people.” U.S. Italian food imports, he points out, totaled $3.2 billion in 2020. DeCicco & Sons, a Pelham, N.Y.-based specialty chain, focuses on Italian foods such as whole and crushed Calabrian chiles. Packed in oil, these hot peppers, which can be used in sauces and pastes, are from the eponymous Italian city from which the DeCicco family originally hails. “Much of Calabrian cuisine features them,” says Joseph DeCicco Jr., partner/head of purchasing. “They’re made in a historical way. People care where an ingredient comes from. These ingredients have stood the test of time. That’s what people want.” The peppers are merchandised with Italian condiments and antipastos. In DeCicco’s deli department, they’re a suggested sandwich ingredient. The grocer is also using social media to educate consumers on the peppers’ uses. Other retailers are tapping into this regional trend via in-store offerings: Trader Joe’s serves up Calabrian chile tomato dump-

Regionality is instrinsic to Italian cuisine, particularly with respect to Parmesan cheese and olive oil.


TREND WATCH

Ethnic Cuisine Mainstream American shoppers can now purchase locally produced fresh ramen at retailers like Wegmans.

ling soup; Target has introduced a tomato, garlic and Calabrian chile spread under its Good & Gather label; Whole Foods Market has rolled out Calabrian chile pepper and extra-virgin olive oil; and Wegmans Food Markets carries Calabrian chile-flavored spicy marinara sauce under the Mezzetta brand.

Boba and Fresh Ramen

Like Italian food, Asian cuisine has long been popular in the United States. Consumers’ interpretation has moved way beyond the local Chinese takeout, however. Whether cooking at home or buying prepared entrées, shoppers want everything from traditional fruits and spices to condiments and specific rice varieties. “When people thought about Asian food, it was often [Americanized] orange chicken or Panda Express,” recounts Taiwan-born Melissa Lee, chief entertainment officer at Framingham, Mass.-based Cooking BeautifuLee, an educational lifestyle brand that offers live and virtual Asian cooking lessons and events. “Now, they want to know about the food, culture and what people in a specific region enjoy. They’re open to more flavor profiles.” Wegmans offers many authentic products, according to Lee. “The Asian aisle is very specific,” she adds. “Choices include locally produced fresh ramen, frozen

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coconut chicken and miso broths, Thai rice noodles, various curries, sushi vinegar, and seasoned rice vinegar.” Also getting attention are dark (for meats and stews) and light (vegetarian and lighter fare) soy sauces, notes Lee, along with sushi rice, goma (a type of sesame seed), boldly flavored Chinese chives and yuzu. Used to flavor Japanese food, yuzu is a tart, fragrant fruit. “It’s like [a cross between] a lime and a grapefruit, and it boosts flavor profiles,” explains Kafarakis, the former head of the SFA. In desserts, Asian ice creams are trendy, including mochi (a Japanese invention containing rice flour) and an ice cream that combines Taiwanese boba (used in “bubble tea”) with chewy tapioca pearls. Costco is offering traditional mochi, while Trader Joe’s features Asian-inspired mochi cake mix and spicy mochi rice nuggets.

South of the Border

Growth of the Mexican-American population has caused Mexican flavors to infiltrate more foods. One popular flavor is churro. Traditionally, it involves fried dough covered with crystalized cinnamon sugar. Now, it’s flavoring ice creams and cookies. “Chefs are taking the dish and ramping it up,” says Rebecca Shurhay, marketing analyst at Downers Grove, Ill.-based Flavorchem. Meanwhile, horchata, a traditional Mexican beverage made from rice, milk, vanilla and cinnamon, is appearing as a flavor in cakes and pastries, and as an accompaniment to chocolate. “Pairing an exotic flavor with something familiar is a great way to introduce it in grocery,” notes Shurhay.

The flavor of churro, a traditional Mexican food consisting of fried dough coated in crystalized cinnamon sugar, has now migrated to ice creams and cookies.

In spices, McCormick’s most recent “Flavor Forecast” discusses the growing popularity of recados. Originating with the Mayans, this sour orange-and-annatto-flavored Yucatan spice paste is used in marinades for hearty dishes like pulled pork.

Some Like It Hot

Hot peppers from many cultures are appearing on their own and as ingredients in condiments and other foods. The peppers are more than just hot, however: Their complex flavors combine “heat” with other nuances. This

PROGRESSIVE GROCER April 2021

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TREND WATCH

Ethnic Cuisine More Healthy News COVID-19 has heightened interest in health and wellness, prompting consumers to explore every corner of the globe for products that are purported to prevent or cure mental and physical woes. The list of antioxidant citrus and “superfruits” keeps growing. At the same time, honey from unique parts of the world is gaining attention, while herbs and florals are appearing in everything from ice cream and yogurt to jams, snacks and baked goods. “The pandemic has changed how customers shop,” asserts Paul McClean, chief merchandising officer at Stew Leonard’s, a Norwalk, Conn.-based Northeastern specialty chain. “They want great taste. They also want immunity-boosting foods. We’ve seen huge growth in mood-lifting citrus flavors, and spices packed with anti-inflammatory properties.” Honey has long been used as both a food and a topical remedy. According to WebMD, honey protects against damage from bacteria. Honey’s anti-inflammatory properties also ease pain and inflammation. Issaquah, Wash.-based Costco is credited with introducing Convita’s manuka honey to consumers. Produced in Australia and New Zealand, manuka is made by bees that pollinate the native leptospermum scoparium bush, or tea tree. Catherine Armstrong, brand ambassador at Melville, N.Y.-based Comax Flavors, describes it as “sweeter and thicker” than other honey varieties, with “some floral notes.” Adds Armstrong: “It’s used in many ways in New Zealand. Health foodies have been talking about it, particularly during COVID, on social media.” Comax developed a manuka honey flavor that it showcases in a gummy bear. According to Armstrong, the flavor could work well in yogurt, cereal, ice cream or powdered drinks. Chile is known for sea bass and the tons of produce it exports to the United States annually. Most of its produce exports are fairly basic. The country also offers many organic products, however, including ulmo honey, which is made by bees pollinating the hierba azul plant. Marketed by Chilean brand Terra Andes, ulmo has a light, clean taste with a floral bouquet. The honey — and other Chilean products — carry a Fairtrade stamp and international organic certification, “giving consumers a clear idea of where it comes from and how it’s processed,” points out Christophe Desplas, trade commissioner of Chile and director of ProChile in New York. Continues Desplas: “It’s loaded with nutrients that help our immune system, fighting allergies and infections, improving skin, bones, etc. Many grocers are putting these type [of] products in special displays highlighting functional ingredients. Producers are communicating storytelling more than product descriptions on their websites and social media platforms. Education is key.” Newly popular superfruits include Chilean maqui berries, according to Desplas. The antioxidant fruit is said to reduce inflammation, lower “bad” cholesterol and control blood sugar. Another antioxidant fruit grown in Chile, passion fruit, is a good sauce of fiber and may help prevent cancer, support heart health and reduce anxiety.

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moves hot food beyond the “mild, medium and hot” parameters with which most Americans are familiar. “The heat index has become more sophisticated, involving what the pepper is, where it’s from and what it does to food,” explains Kafarakis. Calabrian chiles, for example, have a spicy, mildly fruity taste and aroma, adding color and medium-spicy heat. “It’s not just pure heat,” notes DeCicco. In seasonings, Purcell, with the SFA, cites several Asian spice blends that combine “heat and sweet.” Many come from different regions of Thailand. She also points to Cambodian chile paste, which can spice up Asian and non-Asian dishes alike. Another spice, aji amarillo from Peru, is made from chile pepper with an intense fruity flavor and less heat than other peppers. It works well on grilled fish and on the rim of a margarita glass. In sauces, Shurhay brings up Mexican chamoy. Made from pickled fruit and chiles, it has a salty, sweet/sour taste. She also singles out Korean gochujang, a paste containing miso, honey, chiles and rice vinegar. A regional favorite, salsa macha from Veracruz, Mexico, is made with various dried peppers, nuts and oil, and has a slightly spicy and nutty taste, with some tanginess. The sauce is used as a topping for quesadillas and tacos; it’s not served with tortilla chips.

A Different Era

The COVID-19 pandemic has dramatically altered everyday life, including how consumers eat, shop and learn about products. In the case of international flavor trends, independent social media influencers — not major companies — are popularizing many products. When restaurant visits and travel return to pre-pandemic levels, however, will consumers be exposed to the same trends they’re seeing online? In-stock positioning is another issue, with many retailers having to substitute items, particularly when it comes to imported goods. This sometimes makes it difficult to stay on trend. When this changes, retailers can send more consistent brand messages. But will shoppers still be loyal to their online hosts? These and other aspects of the future remain to be seen. One thing is for sure, though: Retailers are searching high and low for the next sriracha.


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SPECIAL REPORT

Plant-Based Proteins

Alternative Proteins Make Meat Inroads PL ANT-BASED POPUL ARIT Y SURGES AS ANIMAL PROTEINS SE T NE W SALES RECORDS. By Mike Troy

lant-based proteins enjoyed tremendous growth in 2020, and the category saw a record level of investment activity, outpacing the rate of growth in the overall meat category. After several years of securing distribution and generating trial through aggressive promotion and merchandising tactics, the plant-based meat category was in the right place at the right time during 2020. Shoppers stocked up on proteins at the outset of the pandemic, and plant-based products found their way into more shopping carts, and onto more dinner plates, when Americans were forced to eat more meals at home. Coupled with ongoing trends toward flexitarian diets, the result was that plant-based meat sales increased 45% to $1.4 billion during the 52-week period ended Dec. 27, 2020, according to a report from The Good Food Institute (GFI), The Plant Based Foods

Association (PBFA) and SPINS. This growth was especially evident in the performance of market leader Beyond Meat. The El Segundo, Calif.-based company, whose products are sold at 28,000 U.S. retail outlets, saw sales in its U.S. retail segment increase 104.1% to $264 million, during its fiscal year ended Dec. 31, 2020. Those gains were offset by sales declines in foodservice, which caused total company sales to increase 36.6% to $406.8 million. “Our ambition is to build Beyond Meat into a global plant-based protein company similar in scale to the largest animal protein companies today, and notwithstanding near-term headwinds precipitated by the pandemic,” the company’s CFO, Mark Nelson, told investors when the results were released. There are plenty of other companies with similar aspirations, whether they’re pure-play plant-based companies such as Impossible Foods or major CPG companies with plantbased brands such as Kellogg (MorningStar Farms) Conagra Brands (Gardein), Kraft Heinz (Boca Burger) and Hormel Foods (Happy Little Plants). Major retailers have entered the fray, too, including The Kroger Co., which launched its Simple Truth Emerge brand of plant-based meats in January 2020.

The Power of Plant-Based

Meat consumption, whether animal- or plant-based, looked very different in 2020, driven by a combination of evolving attitudes toward eating meat and the massive volume of displaced demand from foodservice operators as a result of the pandemic. For example, 19% of consumers are now self-described flexitarians, meaning that they eat mostly a plant-based diet with occasional meat and/or poultry, compared with 10% in 2019, according to the 16th annual “Power of Meat 2021” report, released in March. The major research initiative was conducted by San Antonio-based 210 Analytics on behalf of FMI — The Food Industry Association and the

An increasing number of retailers are calling out their plant-based offerings with prominent signage.

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BRAV

F


SPECIAL REPORT

Plant-Based Proteins Meat Institute’s Foundation for Meat and Poultry Research and Education, and released during the American Meat Conference. Meanwhile, the share of self-described meat eaters decreased from 85% in 2019 to 71% in 2021. The share of vegans/vegetarians remains relatively low, at 6%, according to “The Power of Meat 2021.” Roughly three-fourth of those surveyed agree that meat and poultry belong in a healthy, balanced diet, while 34% of shoppers want to reduce their meat/poultry consumption, citing concerns about the healthfulness of red meat and the presence of antibiotics/hormones as the top reasons. The insights were obtained from a survey of 1,500 U.S. meat shoppers conducted Jan. 7-13. The report, based on data from Chicago-based IRI, showed that refrigerated plant-based meat alternatives remain a small but growing niche, with household penetration slightly less than 10%. IRI data shows that 2020 sales in the category increased 83.9% to $475.3 million. Due to differences in how IRI defines the category compared with the GFI

Key plant-based food sales metrics, 2020

Total U.S. plant-based food dollar sales and dollar sales growth by category, 2020

Note: The data presnted in this graph is based on custom GFI plant-based categories that were created by refining standard SPINS categories. Due to the custom nature of these categories, the presented data will not align with standard SPINS categories. Source: SPINS Natural Enhancer Channel, SPINS Conventional Multi Outlet Channel (powered by IRI), 52 Weeks Ending Dec. 27, 2020

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and PBFA report based on SPINS data, IRI showed the category as smaller but growing faster. Either way, plant-based meat remains a tiny segment of the larger meat department, which experienced tremendous growth in 2020. Sales increased 19.2% to reach $82.5 billion, and were driven by more shopping trips for meat and greater spending on meat per trip, according to “The Power of Meat 2021.”

Investors Taste The Future

The expectation that plant-based proteins will gain market share in the overall meat category has investors throwing money at the space. A record $3.1 billion — more than double the $1.4 billion plant-based meat sales figure from Chicago-based SPINS — was invested in alternative proteins in 2020, according to GFI. That figure is broader than meat, and also includes egg and dairy, cultivated meat, and fermentation companies devoted to alternative proteins. The $3.1 billion in disclosed investments in 2020 is more than three times as much as the $1 billion raised in 2019 and four and a half times as much as the $694 million raised in 2018. Alternative-protein companies have raised almost $6 billion in invested capital in the past decade, and more than half of that was raised in 2020. GFI executives have assigned great significance to those numbers.


Annual alternative-protein invested capital and deal count

The Bill Gates Burger

Alternative-protein investment summary,

Source: The Good Food Institute

“The investor community is waking up to the massive social and economic potential of food technology to radically remake our food system,” says Sharyn Murray, a senior investor engagement specialist with Washington, D.C.-based GFI. “Early trendsetters like Impossible Foods, Beyond Meat, Memphis Meats and Mosa Meat continue to perform well, and there are more and more entrepreneurs who see the potential of alternative proteins to succeed in the marketplace while having a positive global impact on food sustainability and global health.” GFI’s director of corporate engagement, Caroline Bushnell, contends that even more investment is needed because plant-based companies are playing a key role in solving an urgent crisis. “A large-scale shift toward alternative proteins will be critical to mitigating the environmental impact of food production, meeting the Paris Climate Agreement and sustainably feeding a growing global population,” asserts Bushnell.

A large-scale shift toward alternative proteins will be critical to mitigating the environmental impact of food production, meeting the Paris Climate Agreement and sustainably feeding a growing global population.” —Caroline Bushnell, The Good Food Institute

Plant-based protein providers have made eating meat alternatives a key element of their brands’ value proposition, an approach that appeals to many consumers and climate activists. The most notable of these is Microsoft co-founder Bill Gates. In a February MIT Technology Review article discussing his new book, “How to Avoid a Climate Disaster,” Gates spoke about the meat industry and the role it can 2010-2020 play in eliminating greenhouse-gas emissions. “I do think all rich countries should move to 100% synthetic beef,” Gates noted. “You can get used to the taste difference, and the claim is they’re going to make it taste even better over time. Eventually, that green premium is modest enough that you can sort of change the [behavior of] people or use regulation to totally shift the demand.” Although conceding that the politics of food regulations and product labeling are challenging, Gates misjudges consumer behavior by suggesting that climate change will trump taste when it comes to deciding among plant-based, lab-grown or conventional meat. If plant-based protein providers can get their flavor profiles right and achieve greater price parity with conventional meat producers, then further share gains are likely. Impossible Foods CEO and founder Dr. Patrick Brown made that point recently, when the company revealed a 20% price cut. “Our plan is to reverse global warming and halt our planet’s extinction crisis by making the food system sustainable,” Brown said when the price cut made news in February. “To do that, we need to make meat better in every way that matters to consumers — taste, nutrition, convenience and affordability. With economies of scale, we intend to keep lowering prices until we undercut those of ground beef from cows.” Lower prices should help, but the data suggests that there’s work to be done on taste. For example, the repeat purchase rate for plant-based meat, according to the recent GFI/PBFA report, is currently 63%. Products sales benefited from expanded distribution, promotional incentives and unprecedented retail demand in 2020. Increasing the repeat purchase rate in 2021 through great taste will be the best indicator of the enduring popularity of plant-based proteins. PROGRESSIVE GROCER April 2021

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SOLUTIONS

Dairy

Putting a Wedge in the Dairy Perimeter AS PART OF A REINVIGOR ATED OR POSSIBLY REIMAGINED DEPARTMENT, THE CHEESE CATEGORY IS LIF TING SALES. By Lynn Petrak

s the dairy perimeter, including the cheese case, ripe for change? Following a year that upended shoppers’ lifestyles, the retail dairy department has been buoyed by strong sales and faces an opportunity for further growth through evolution and innovation. “It took a lockdown for us as a country to remember we had a love affair with dairy,” says Al Dejewski, VP of marketing at Washington, D.C.-based MilkPEP, which represents U.S. milk processors. “Dairy was up at retail for the first time in 10 years, and we are incredibly excited by that, especially knowing that there are alternative channels emerging.” There were many plus signs throughout the dairy sector in the past year. The department added $7 billion in 2020, rising from $54 billion to $61 billion, according to information from the Madison, Wis.-based International Dairy Deli Bakery Association (IDDBA). The most recent “What’s

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Key Takeaways Cheese is an overall driver of growth in per capita dairy consumption. To help consumers learn how to cook with dairy products, manufacturers and retailers can work together to provide inspiration, tips and recipes. As grocers rethink their fresh perimeters, they can also consider different ways to merchandise dairy products.

in Store 2021” report from IDDBA reveals that sales of refrigerated dairy milk rose 8.2%, while natural dairy cheese grew 18.7%, dairy processed cheese climbed 15.9%, and dairy refrigerated creams and creamers were up 14.2% in the past year.


Within the cheese category, dairy natural slices led increases, at 13.9%, followed by natural shreds, at 13.4%, and natural chunks, at 5.3%. Deli specialty cheeses rose 13.7% in volume sales, while deli grab-and-go cheeses increased by 21.2%, according to research published in “What’s in Store 2021.” Recent data from the USDA Economic Research Service (ERS) points to cheese as a driver of overall growth in per capita dairy consumption. In the past decade, per capita consumption of cheese has risen 19%, according to Washington, D.C.-based ERS. Moving ahead, although the pace of volume and sales increases in the fresh dairy perimeter may not stay the same as during the height of the pandemic, many shifts may be longer-term in nature. “Last year was a bit of an anomaly, but even as there is a desire to go back to restaurants, people have discovered a love of cooking at home, and dairy and cheese are a part of that,” observes Eric Richard, industry relations coordinator for IDDBA.

What’s Cooking

To Richard’s point, in addition to ready-to-drink and readyto-eat products, dairy-based ingredients have propelled the recent surge in dairy. “From a fluid-milk perspective, we saw the resilience and cultural relevance of milk as it relates to the consumer as creator,” says Dejewski. “Milk is a fundamental ingredient in many recipes, whether it’s for cakes or whipped coffee.” The latter item is just one example of a recipe that’s

gone viral. Another is a recipe for baked feta cheese pasta that went gangbusters on TikTok and spread to other social media platforms earlier this year. To help consumers learn how to cook with dairy products, manufacturers and retailers can work together to provide inspiration, tips and recipes. Heinen’s Fine Foods, based in Cleveland, Ohio, regularly posts recipes on its website, including recent ones for a chicken parmesan sandwich and cheesy beef rolls. In the Midwest, the Mariano’s chain, a banner of Cincinnati-based Kroger, is another example, recently sharing customer-favorite recipes for One Pot Tuscan Macaroni & Cheese and Savory Cheddar Bread Casserole, among others. While providing recipes and serving tips to shoppers isn’t new, grocers can use digital platforms and other technologies to make sure that ideas get to consumers just People as they’re making have decisions on what discovered a love of to buy and serve.

cooking at home, and dairy and cheese are a part of that.” —Eric Richard, IDDBA

PROGRESSIVE GROCER April 2021

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SOLUTIONS

Dairy

On Boarding

The popularity of charcuterie might have reached an apex during this past holiday season, when charcuterie gingerbread houses took social media by storm. Even before the pandemic, charcuterie was trending. For the past few years, CPGs and retailers have shared ideas and created displays dedicated to building charcuterie boards, with cheese often playing a starring role alongside cured meats. Similarly, cheese trays and boards have taken off. ”I think what has most benefited the artisan cheese category over the past year is the booming interest in composed cheese boards,” notes Janet Fletcher, publisher of the Planet Cheese blog and the author of several books on cheese. “Instagram has egged people on and made creating cheese boards almost a competitive sport.” Ready-to-build and -serve charcuterie and cheese boards are enlivening the cheese category, appealing both to consumers who are still sticking close to home and those who are starting to entertain again. For instance, Columbus Craft Meats, a brand of Austin, Minn.-based Hormel Foods, now offers a prepackaged tasting board featuring Italian dry salami, Calabrese salami, white cheddar cheese slices, olives, dark chocolate-covered cranberries and multigrain crackers. The popularity of charcuterie has also turned the spotlight on cheese flights. Fairfield, N.J.-based Schuman Cheese recently introduced ready-to-serve Cello Cheese Flights, refrigerated trays that include a flight of Copper Kettle, Pepper Jack Goat and Creamy Dill Rubbed Fontal cheese, and a flight of Asiago, Cabot Clothbound Cheddar, and Dijon and Herb Rubbed Fontal. On par with charcuterie and cheese flights, Hormel is focusing on the experiential enjoyment of cheese with a new Natural Choice Wine Pairing line. The single-use trays feature uncured salami, mozzarella cheese and dark chocolate-covered almonds

For a food as ancient as cheese, there are still many new takes on the form, including flavored varieties like Saputo Cheese USA's Jalapeño Honey Montchevre, seen here incoporated into a recipe.

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The popularity of charcuterie has turned the spotlight on cheese flights, such as this product line from Schuman Cheese.

that pair with white wine, and uncured sopressata, havarti cheese and dark chocolate-covered cherries designed to go with red wine.

Try One On

One of the most fun things about the cheese category is the plethora of products, spanning varieties of fresh cheeses (soft, semi-soft, hard and blueveined, among others) as well as processed cheeses in a range of formats and flavors. For a food as ancient as cheese, there are still many new takes on the form, from flavored varieties like Lincolnshire, Ill.-based Saputo Cheese USA’s new Jalapeño Honey Montchevre to a recently introduced line of lactose-free soft-ripened Briette cheeses from Englewood Cliffs, N.J.-based Champignon North America Inc. That said, while the expansive world of cheese is fun for foodies and those in the cheesemaking and retail industries, it can be overwhelming for some shoppers, especially those who are new to cooking. When it comes to artisanal cheese, the retailer serves an important role. “Grocers have to invest in their staff to do a good job selling specialty and artisan cheese,” advises Fletcher, who is currently working on a training session for cheese counter associates at one Midwest grocery chain. “They need compelling signage and staff who are


SOLUTIONS

Dairy

The ongoing popularity of keto and Paleo diets also allows dairy products to shine. Grocers can provide suggestions to shoppers following such eating plans and expand stores’ keto-friendly offerings with innovative products like a line of cheese wraps from Minnetonka, Minn.-based Crystal Farms Dairy Co. that can be used in place of sliced breads or tortillas. Ultimately, and as always, messages and merchandising need to be impactful. “It comes down to highlighting the attributes of a product – calling out local, calling out protein, calling out flavor,” notes Richard. “Especially with people shopping online, in-store signage is still important.”

Planting Ahead Products featuring both plant- and dairy-based foods, among them The Laughing Cow Blends cheese spread line, are extending the dairy category.

trained and informed. It pays off because knowledgeable and confident employees will sell more cheese.” One drawback of the global health crisis is the elimination of sampling programs that would otherwise entice people to try different products. “It’s tough, because you can’t sample in an environment in which you are wearing a mask,” admits Richard. In lieu of sampling, he suggests, a retailer might set up tables in an outside setting. Another idea is to create smaller sample packs that can be shared in store or via e-commerce. “There are some manufacturers working with retailers who are including individually wrapped pre-packaged samples with online orders,” says Richard. “It’s a great way to expose consumers to new varieties.”

Miscellaneous Merchandising

As grocers rethink their fresh perimeters in the wake of fundamental changes in the way people shop and eat, they can also consider different ways to merchandise dairy products. “We need to change the conventional thinking,” agrees Dejewski, who points out that many dairy products are still commodity-based and private label. “There are brands that offer a unique point of view, and retailers can also think of other ways [to reach consumers], like creating secondary displays.” For milk, a secondary display may have flavored milks, organic milks or grab-and-go milk products. The specialty cheese case is an example of a secondary display that can become an attraction within the store. A specialty or artisanal cheese section can be curated in an e-commerce platform, too. A grocer could also dedicate a small case to locally produced dairy products. Shoppers who like supporting local farmers and producers would appreciate the story behind some of these products, told through point-of-sale signage or online profiles. Merchandising initiatives like signage and promotion can also highlight dairy products that fit with shopper demand for products geared toward diet, health and wellness. Dairy foods and beverages are typically rich in nutrients, and some new products are made with ingredients that further enhance health and wellness. Chicago-based Bel Brands USA, for example, recently introduced Babybel Plus+ functional dairy snacks, consisting of Babybel Plus+ Probiotic and Babybel Plus+ Vitamins varieties.

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Widening the appeal of the traditional dairy department may mean redefining it somewhat. As dairy alternatives like plant-based milks, creamers, cultured products and cheeses continue to gain inroads among consumers, the dairy department can benefit from signage that directs shoppers both to dairy foods and beverages and their nondairy counterparts. That market is only expected to expand, with sales of dairy alternatives projected to reach $41 billion by 2025, according to a report from San Francisco-based Grand View Research. Already, several traditional dairy brands have developed plant-based alternatives to enhance their portfolios and reach consumers who are, if not exactly going vegan, embracing more flexitarian eating habits. Blends of plant- and dairy-based foods are also extending the category, withnew items like The Laughing Cow Blends cheese spreads from Bel Brands USA. Underscoring the potential of plant-based products as part of the dairy/dairy alternative mix, Organic Garage, a leading independent organic grocer in Toronto, recently acquired a manufacturer of plant-based dairy alternative foods. The anticipated growth of the plant-based cheese market was a catalyst for the acquisition of The Future of Cheese Co., also based in Toronto.

Although cheese is already rich in nutrients, some new cheese products are made with ingredients that further enhance health and wellness, like Babybel Plus+ functional dairy snacks.


SPECIAL REPORT

Post-COVID Review

BEYOND COVID-19

After a tumultuous period of pandemic disruption, key grocery categories face an uncertain outlook for consumer demand. By Mike Troy period of reckoning has arrived for the food retailing industry. After the onset of the pandemic more than a year ago caused a massive spike in sales, there was a steady deceleration in the rate of growth throughout 2020. The new year began the same way, but now, as retailers are in the midst of lapping the great pantry-loading period of 2020, sales comparisons have become extremely challenging and the growth outlook for the remainder of the year remains murky. To review, total perimeter department sales increased 11.2% to $161.3 billion, during the 52 weeks ended Feb. 21, 2021. The two biggest constituents of the perimeter, produce and meat, grew 12.9% to $70.9 billion and 21.9% to $48.3 billion, respectively. The overall deli department’s once-in-a-lifetime growth numbers were held back somewhat by challenges in the deli prepared area, where sales declined 16.6% to $13.8 billion. However, the full-year figure doesn’t tell the true story of a section that appears poised for a rebound in the second half of 2021. The deli prepared area saw sales declines of 30% or more during the early months of the pandemic, but then retailers figured out how to modify their operations and resume sales. Declines persisted as fewer people ventured inside stores, with low double-digit declines becoming the norm in late 2020 and the start of 2021.

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The big winner of all of the perimeter departments during the pandemic was seafood, with sales advancing 30.5% to $6.2 billion. However, the trajectory of sales in seafood appears to have been driven somewhat by supply chain disruptions early on in the pandemic that caused in-stock challenges in other protein categories. For example, meat sales surged 41.3%, 32.9% and 42.8% during March, April and May, respectively, before falling back to Earth somewhat to grow in more of the 15%-to-20% range. By comparison, shoppers showed little interest in seafood during the early days of the pandemic, with sales rather muted in March and April. Then the category caught fire in May, June and July, growing more than 40% each month, with sales maintaining a near, or above, 30% monthly rate of growth through the 52-week period ending Feb. 21.

Optimism Prevails Among Some

Despite what’s expected to be a challenging year for sales growth, CEOs and consumer and retail companies are very optimistic. Worldwide financial consultancy KPMG recently surveyed 60 CEOs at global consumer and retail companies with revenues in excess of $1 billion, and 90% said that they’re confident or very confident in their company’s growth prospects over

Perimeter Categories (Fastest-Growing)

PERCENT CHANGE

DOLLAR SALES

PERIMETER

11.2%

$161,257,324,659

Produce

12.9%

$70,908,225,330

Meat

21.9%

$48,303,016,302

CATEGORY

Deli/Prepared Foods

-16.6%

$13,775,077,600

Bakery

-6.4%

$6,767,802,023

Deli Meat

11.2%

$6,648,653,138

Seafood

30.5%

$6,177,493,605

3.3%

$5,761,939,827

12.8%

$2,915,116,834

Floral Deli Cheese

Perimeter Categories (Highest-Volume)

DOLLAR SALES

PERCENT CHANGE

$161,257,324,659

11.2%

Produce

$70,908,225,330

12.9%

Meat

$48,303,016,302

21.9%

Deli/Prepared Foods

$13,775,077,600

-16.6%

CATEGORY PERIMETER

Bakery

$6,767,802,023

-6.4%

Deli Meat

$6,648,653,138

11.2%

Seafood

$6,177,493,605

30.5%

Floral

$5,761,939,827

3.3%

Deli Cheese

$2,915,116,834

12.8%

Source: IRI Market Advantage-TSV PROGRESSIVE GROCER April 2021

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SPECIAL REPORT

Post-COVID Review Edible Categories (Fastest-Growing)

PERCENT CHANGE

DOLLAR SALES

GENERAL FOOD

12.6%

$233,929,849,459

Egg Substitutes

174.2%

$9,138,471

Pizza Products

49.3%

$228,282,173

Asian Food

38.5%

$1,363,988,734

Spices/Seasonings

35.7%

$5,786,138,939

Bread Crumbs/Batters

35.5%

$529,598,778

Dry Beans/Vegetables

33.8%

$807,613,289

Pancake Mixes

33.6%

$713,501,725

Flour/Meal

33.3%

$1,452,021,578

Baking Needs

32.6%

$2,969,199,073

Evaporated Condensed Milk

31.6%

$677,985,991

REFRIGERATED

16.2%

$128,890,511,241

Seafood

32.5%

$944,927,224

Dough/Biscuit Dough

32.0%

$2,447,610,233

Ham

29.0%

$33,281,776

Pasta

27.9%

$535,274,676

Tortilla/Egg Roll/Wonton Wrap

26.8%

$169,954,043

Lard

26.2%

$7,105,739

Pickles/Relish

25.7%

$457,189,519

Breakfast Meats

25.0%

$8,519,062,697

Whipped Toppings

24.7%

$1,507,186,334

Dinner Sausage

24.3%

$4,546,561,654

BEVERAGES

9.6%

$109,103,506,448

Powdered Milk

56.3%

$117,680,627

Cocktail Mixes

39.1%

$420,314,103

Liquid Drink Enhancers

27.3%

$465,912,726

Instant Tea Mixes

22.5%

$304,612,974

Milk Flavoring/Cocoa Mixes

21.2%

$653,024,455

Tea-Bags/Loose

19.0%

$1,543,141,200

Coffee Filters

14.5%

$245,592,622

Nonfruit Drinks/Single-Serve

13.5%

$1,101,854,015

Sports Drinks

12.2%

$7,976,298,015

Coffee

11.9%

$11,108,823,772

FROZEN

23.9%

$73,304,407,804

Seafood

42.9%

$7,464,095,652

Other Snacks

41.2%

$26,080,639

Fruit

36.1%

$1,545,861,033

Processed Poultry

34.3%

$4,463,972,525

Baby Food

32.8%

$735,172

Meat

32.5%

$3,838,829,266

Juices

32.2%

$308,305,904

Potatoes/Onions

32.0%

$2,401,209,495

Appetizers/Snack Rolls

27.5%

$3,175,148,038

Poultry

25.2%

$5,163,800,597

CATEGORY

Source: IRI Market Advantage-TSV

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Egg substitutes soared in popularity during the pandemic as consumers rediscovered home baking and set about adapting ingredients to their dietary needs.

the next three years. Another 92% said that they’re confident or very confident in the sector’s growth prospects over the next three years. These business leaders also indicated that the pandemic has served as a catalyst to accelerate ongoing transformation efforts while sparking new types of change. This phenomenon was widespread throughout the industry, with 68% of those surveyed by KPMG indicating that the pandemic has accelerated the creation of new digital business models and revenue streams. Another 55% said that the pandemic has accelerated the creation of a seamless digital customer experience. A further thing that the pandemic did was to heighten the vulnerability of supply chains to cope with a demand surge of epic proportions. While the spike in demand was an anomaly, the supply chain was identified by 43% of CEOs as the top risk to their organization’s growth over the next three years. “The challenges in the supply chain are numerous from demand predictability, production capacity constraints, port delays, carton and driver shortages, as well as higher input and transportation costs,” says Matt Kramer, KPMG’s national sector leader for consumer and retail. “Ensuring products are efficiently delivered through the supply chain to customers with greater transparency will be both a challenge and significant focus in 2021.” Regarding transparency, retailers continue to take unusual actions to manage shopper expectations regarding product availability in key categories that aren’t yet back to normal. Among the most notable of these are household cleaning and paper products. For example, in March, Lakeland, Fla.-based Publix Super Markets was still displaying shelf edge signs in the household cleaning section alerting shoppers that “[i]tems in this section have limited availability due to supplier production issues.” Issaquah, Wash.-based Costco took things a step further by posting a member notice near its Kirkland Signature brand paper towels to let shoppers know that it had reduced the size of the roll. “Due to industry-wide demand for paper towels, we have reduced the number of sheets per roll from 160 to 140 in order to provide better supply to our members,” the warehouse club retailer informed customers.


We Just Aren’t Sure

Since most Americans have never lived through a pandemic before, it’s hard to know when it’s over and what normal looks like on the other side. It’s harder still to forecast shopper behavior and demand for key categories. At a high level, vaccine rollouts have contributed to a decline in overall anxiety levels among shoppers in the United States and globally. In the United States, 64% of shoppers surveyed in January said that they felt safe going inside stores, compared with 51% during December, according to a survey of 1,000 shoppers that multinational professional services network Deloitte conducts monthly. The firm began conducting the survey at the onset of the pandemic to better understand the interplay between personal safety and economic vulnerability as a driver of purchase decisions and consumer behavior. While reduced anxiety is a good thing, Deloitte contends that “consumers are balancing near-term optimism with longer-term expectations. Consuming at home and avoiding crowds are likely to remain after the health crisis has passed.” The way this plays out from a food industry perspective is that 55% of global consumers surveyed plan to continue cooking more at home than pre-pandemic; 38% plan on ordering more takeout or delivery than pre-COVID, rather than eat in-person at a restaurant; and about 40% of respondents plan to eat at restaurants less frequently. The other behavior change that Deloitte has identified is a permanent shift in shopping behavior. Half of those surveyed plan to do more shopping online, but it’s the shift in their motivations for doing so that’s telling. For example, last April, safety was the top reason cited by consumers for using click-and-collect. In recent surveys, however, safety has been replaced by “cheaper and faster than delivery” as the primary motivation. Deloitte sees that as a sign that a permanent trend has taken hold. “Consumers won’t necessarily snap back to old habits,” affirms Stephen Roger, executive director of the Deloitte Insights Consumer Industry Center. “As consumers learn more and experience more, we’ll gradually get back to traveling, or mingling among large groups, Homebound consumers indulged more often in salty snacks.

Edible Categories (Highest-Volume)

DOLLAR SALES

PERCENT CHANGE

$233,929,849,459

12.6%

Salty Snacks

$28,455,782,849

10.1%

Fresh Bread and Rolls

$15,367,059,152

13.4%

Chocolate Candy

$15,326,803,658

4.9%

Cookies

$9,791,609,459

7.0%

Cold Cereal

$9,369,669,657

9.4%

Crackers

$8,190,462,210

7.0%

Nonchocolate Candy

$7,980,081,981

2.8%

Soup

$7,288,005,854

23.0%

Snack Bars/Granola Bars

$6,023,166,945

-8.5%

Spices/Seasonings

$5,786,138,939

35.7%

CATEGORY GENERAL FOOD

REFRIGERATED

$128,890,511,241

16.2%

Milk

$17,002,106,444

9.9%

Natural Cheese

$16,624,773,857

21.9%

Breakfast Meats

$8,519,062,697

25.0%

Yogurt

$7,639,839,328

4.1%

Juices/Drinks

$7,500,708,510

15.6%

Meat

$7,019,674,922

24.1%

Fresh Eggs

$6,915,811,301

20.6%

Luncheon Meats

$6,514,665,125

12.7%

Creams/Creamers

$4,891,021,894

16.2%

Dinner Sausage

$4,546,561,654

24.3%

BEVERAGES

$109,103,506,448

9.6%

Carbonated Beverages

$32,006,364,824

11.1%

Bottled Water

$19,304,988,028

6.8%

Energy Drinks

$14,327,523,374

6.0%

Coffee

$11,108,823,772

11.9%

Sports Drinks

$7,976,298,015

12.2%

Bottled Juices

$7,745,943,602

11.1%

Ready-to-Drink Tea/Coffee

$7,309,060,172

6.6%

Tea-Bags/Loose

$1,543,141,200

19.0%

Aseptic Juices

$1,450,740,187

5.5%

Canned Juices

$1,347,504,541

-1.9%

$73,304,407,804

23.9%

$10,777,081,245

14.5%

Ice Cream/Sherbert

$8,114,428,634

17.9%

Seafood

$7,464,095,652

42.9%

Novelties

$6,748,784,801

19.1%

Pizza

$6,450,671,485

24.8%

Poultry

$5,163,800,597

25.2%

Processed Poultry

$4,463,972,525

34.3%

Breakfast Food

$4,345,835,885

19.8%

Meat

$3,838,829,266

32.5%

Plain Vegetables

$3,216,780,896

20.2%

FROZEN Dinners/Entrées

Source: IRI Market Advantage-TSV PROGRESSIVE GROCER April 2021

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SPECIAL REPORT

Post-COVID Review Nonedibile Categories (Fastest-Growing)

PERCENT CHANGE

DOLLAR SALES

GENERAL MERCHANDISE

10.6%

$94,045,037,019

Cloth Dye

72.5%

$26,117,303

Fire Log/Firestarter/Firewood

41.3%

$422,330,397

Gloves

41.2%

$792,122,006

Candles

39.6%

$1,968,237,738

Matches

33.4%

$24,461,656

Charcoal

32.6%

$1,043,322,593

Culinary

27.1%

$3,873,893,146

Paper Towels

25.3%

$7,026,059,729

Coffee/Espresso/Tea Makers

24.1%

$865,483,659

Water Filters/Devices

23.6%

$436,401,400

CATEGORY

HEALTH

6.4%

$75,439,761,246

Home Health Care Kits

197.5%

$3,053,102,117

Personal Thermometers

117.9%

$505,059,557

Other Health Care Products

48.2%

$605,965,744

Sleeping Remedies

30.9%

$1,370,012,619

Vitamins

20.7%

$9,817,635,119

External Analgesic Rubs

15.7%

$1,083,285,160

First-Aid Treatment

14.5%

$1,779,080,022

Family Planning

13.0%

$401,444,793

Baby Wipes

10.2%

$1,588,692,738

8.7%

$1,394,675,623

Gastrointestinal-Liquid BEAUTY

3.9%

$44,072,365,936

Soap

47.8%

$7,815,714,709

Moist Towelettes

23.8%

$925,458,266

Cosmetics-Nail

19.0%

$1,699,830,681

Electric Shavers/Groomers

14.9%

$588,759,491

Bath Products

12.7%

$403,670,626

Hair Conditioner

8.0%

$2,462,421,961

Bath Scrubbers/Massagers

7.7%

$365,273,366

Hand and Body Lotion

7.1%

$2,300,859,576

Hair Coloring

7.0%

$1,716,295,220

Hair Appliances

3.4%

$646,201,892

HOME CARE

19.9%

$32,154,512,747

Household Cleaner Cloths

79.6%

$1,624,043,170

Household Cleaners

43.1%

$5,011,737,991

Bleach

40.9%

$1,003,985,242

Dish Detergent

27.4%

$3,596,640,537

Floor Cleaners/Wax Removers

22.7%

$296,660,010

Laundry Care

20.7%

$1,901,921,843

Sponges and Scouring Pads

19.6%

$707,339,095

Cleaning Tools/Mops/Brooms

17.3%

$2,822,448,916

Air Fresheners

13.9%

$3,917,863,733

Furniture Polish

13.2%

$140,112,386

Source: IRI Market Advantage-TSV

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No doubt spurred by numerous quarentine projects, cloth dye became a hot purchase.

but it likely won’t be at the pre-pandemic levels. Other shifts are more systemic, such as working, cooking and streaming from home, and convenience through online commerce. They are likely here to stay.”

Why We’ll Keep Eating at Home

Americans’ kitchens have never been so well equipped, a fact that bodes well for a continuation of the cooking-athome trend. While consumer surveys point to optimism and a desire for pre-pandemic behaviors, shoppers continue to purchase housewares at a blistering pace, according to The NPD Group, a market research firm. Dollar sales of small appliances and housewares grew 46% and 38%, respectively, in January. Those gains follow a year in which sales of those categories surged 25% to $53 billion. “Consumers have been spending more time at home than ever before, and that continues to be true through much of the first quarter of 2021,” says Joe Derochowski, home industry advisor at Port Washington, N.Y.-based NPD. “As we mark the first anniversary of the COVID-19 pandemic, there is optimism that we’ll be able to return to some semblance of normalcy soon. Looking ahead, the home industry’s challenge of driving continued growth can be supported by helping the consumer adjust to the next phases of at-home living.” According to NPD, the top categories based on dollar sales growth in 2020 were cookware, air purifiers, air fryers, toaster ovens, robotic vacuums and deep carpet cleaners.

Knowing What’s Next

It can be incredibly hard to forecast future shopper demand as a result of the uncertainty caused by the pandemic. That’s one of the reasons that most publicly held retailers suspended sharing financial guidance with investors during the pandemic, and that many remain reluctant to do so. “Post-pandemic, many shoppers will continue with the new habits they’ve developed, particularly those who have changed the most,” was the assessment of Acosta, a full-service sales and marketing agency in the CPG industry, after surveying shoppers around the first of the year. In a report, “COVID Consumer Journey: Passive to Panic,” the Jacksonville, Fla.-based firm broke down


changes in shopping behaviors among four distinct consumer segments: Staying the Course, skewing toward younger, employed males; Social Distancers, skewing toward employed Millennials and/or Millennials with children; Hunkering Down, leaning toward older and retired or unemployed individuals; and Panic Button, more likely to be Gen Xers with children, or older individuals with no children. “While we’ve seen significant growth in the number of consumers stocking up, shopping less and buying more online, our research indicates COVID concern level directly corresponds with changing shopping habits,” notes Colin Stewart, EVP of business intelligence at Acosta. “In fact, 94% of the individuals in our Panic Button segment, which reported the highest COVID concern level of 8.6 out of 10, stocked up on groceries, while only 30% in the Hunkering Down segment, with a lesser concern level of 7.4, did so. Similarly, 63% of the Panic Button segment shopped more online during the pandemic, while only 25% of the Social Distancers, with a concern level of 7.7, changed this behavior.”

No Shortage of Surveys

The great uncertainty regarding shoppers’ future behaviors has led to a surge in efforts to assess their intent based on the continuation of new behaviors adopted during the pandemic. For example, a survey of 2,017 respondents, conducted in March by NCSolutions, affirmed what sales data showed. There was a 14% increase in American household grocery spending since the start of the pandemic, 47% of respomdemts said that they’re eating healthy food, and 32% don’t plan to go back to pre-pandemic rates of cleaning. “The big question on everyone’s minds is: Which of these newly formed behaviors will stick? Looking back at history, we see numerous examples of behaviors changing post-crisis,” says Linda Dupree, CEO of New York-based NCSolutions. “After the excesses of the Roaring Twenties and the poverty of the Depression, for instance, many people became extremely cautious about money. Some went as far as to save money in their mattresses – behavior that lasted for decades. We expect Americans to sustain their higher interest in CPG products and activities that foster self-care and well-being – both physical and emotional — for some time.”

An uptick in animal adoptions during the pandemic kept pet food tops in nonedibale dollar sales.

Nonedibile Categories (Highest-Volume) CATEGORY GENERAL MERCHANDISE

DOLLAR SALES

PERCENT CHANGE

$94,045,037,019

10.6%

Pet Food

$12,863,823,060

0.9%

Toilet Tissue

$11,070,234,654

19.5%

Paper Towels

$7,026,059,729

25.3%

Food and Trash Bags

$5,260,694,349

13.8%

Pet Supplies

$5,131,024,925

10.7%

Cups and Plates

$4,865,869,469

11.3%

Pet Treats

$4,069,756,938

10.8%

Culinary

$3,873,893,146

27.1%

Kitchen Storage

$3,787,362,342

13.0%

Batteries

$3,476,040,119

14.1%

HEALTH

$75,439,761,246

5.5%

Vitamins

$9,817,635,119

20.7%

Diapers

$4,876,486,282

-2.1%

Cold/Allergy/Sinus Tablets

$4,631,264,592

-8.8%

Weight Control

$4,618,469,776

4.5%

Internal Analgesics

$4,538,149,345

2.2%

Gastrointestinal-Tablets

$3,493,588,867

1.4%

Toothpaste

$3,449,634,643

2.0%

Home Health Care Kits

$3,053,102,117

197.5%

Sanitary Napkins/Tampons

$2,902,567,978

-0.1%

Toothbrush/Dental Accessories

$2,843,094,718

0.4%

BEAUTY

$44,072,365,936

3.9%

Soap

$7,815,714,709

47.8%

Skin Care

$4,352,840,215

2.2%

Shampoo

$3,325,822,562

1.1%

Deodorant

$3,220,157,344

-4.8%

Hair Conditioner

$2,462,421,961

8.0%

Hand and Body Lotion

$2,300,859,576

7.1%

Blades

$1,841,537,723

-6.4%

Cosmetics-Eye

$1,743,739,058

-15.1%

Hair Coloring

$1,716,295,220

7.0%

Cosmetics-Nail

$1,699,830,681

19.0%

$32,154,512,747

19.9%

HOME CARE Laudry Detergent

$8,112,993,587

5.8%

Household Cleaners

$5,011,737,991

43.1%

Air Fresheners

$3,917,863,733

13.9%

Dish Detergent

$3,596,640,537

27.4%

Cleaning Tools/Mops/Brooms

$2,822,448,916

17.3%

Fabric Softener

$2,276,744,490

5.7%

Laundry Care

$1,901,921,843

20.7%

Household Cleaner Cloths

$1,624,043,170

79.6%

Bleach

$1,003,985,242

40.9%

$742,021,748

10.7%

Rug/Upolstery/Fabric Treatment Source: IRI Market Advantage-TSV

PROGRESSIVE GROCER April 2021

63


CPG INNOVATION

Company Profile

New Flavors and Functionality Transform Iconic Categories HOW A 95-YE AR-OLD COMPANY MAINTAINS ITS INNOVATION EDGE. By Mike Troy

ourth-generation family-owned consumer goods companies don’t have a reputation for innovation or risk-taking, but don’t tell that to Ken Wegner, president of Jel Sert. The 95-year-old Chicago-based company is in the midst of its largest new product launch ever with the introduction of SLIQ Spirited Ice, an alcohol-infused freezer pop gaining widespread distribution just in time for peak demand during the summer. “We’ve been working on SLIQ for two years and are putting a tremendous amount of manufacturing capability and marketing support behind it,” Wegner says of the new brand, which features a rum, vodka or agave base, with three flavors of each. “We think the brand is going to do tremendous things. We have a very large marketing program behind it this year with iHeartRadio and Barstool Sports.” The brand, while new, isn’t far removed from Jel Sert’s core competency of making freezer pops such as the Fla-Vor-Ice and Otter Pops brands. To bring the new brand to market, however, the company had to establish new distribution relationships and adjust manufacturing capacity to create lines dedicated to packaging a product that will be 8% alcohol by volume. “We established a national distribution network, which is pretty amazing to do in the first year,” Wegner says. “Most companies that launch an alcohol brand do so regionally and build on it for years. We decided to go national on day one. This is our business. We’ve been making freezer pops longer than anyone in the world.”

“Our mission and vision for this business is very similar to what it was in the 1920s. It is about making the highestquality food and beverage products in the marketplace, but to make them at a value to the consumer.” —Ken Wegner, President, Jel Sert

The Origin of Innovation

Jel Sert is an outlier in a consumer goods world dominated by global branded players. Founded in 1926 by Charles and Lillian Wegner, the company is now on its fourth generation of family leadership and carrying on a legacy of value to shoppers and service to the trade. “From a consumer perspective, the company isn’t well known, but from a trade perspective, we are well known because of the way we do business, and our service levels,” Wegner explains. “It goes back to my grandparents, when they started the business in their kitchen, making gelatin dessert mixes and

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experimenting with gelatin items.” Charles Wegner survived the front lines of World War I while serving in the U.S. Army in France. Upon returning home, he married Lillian in 1922, and the pair founded the company by combining the words “jelly” and “dessert.” “My grandfather worked at the Cracker Jack Co. here in Chicago, and he worked on the Campfire Marshmallow brand, and they used gelatin in the marshmallow process, and that’s how he learned to work with gelatin,” Wegner recounts. “Our mission and vision for this business is very similar to what it was in the 1920s. It is about making the highest-quality food and beverage products in the marketplace, but to make them at a value to the consumer. That’s always been important for us.” Early on, the product offering consisted of desserts, but in 1963, Jel Sert bought the Pop-Ice company, which was making a new type of product called a freezer pop. In 1969, the Fla-Vor-Ice brand was introduced, and in 1996, the Otter Pops brand was acquired, establishing Jel Sert as the leader in the category. The success of freezer pops and the familiarity that consumers have with the popular treat are key reasons for Wegner’s optimism that SLIQ will be a hit. Unequivocally not a children’s treat, SLIQ will be heavily merchandised on feature displays throughout the late spring and summer to generate trial and capitalize on seasonality.


version of a passion fruit drink, has introduced a watermelon lemonade under the Wyler’s brand, and is also launching a lemon ginger tea. “Ginger is an ingredient people are interested in,” Wegner observes. Beyond flavors, functionality is having a major impact in many categories, with immunity being a key benefit. “We are taking functionality into the dessert mix category with All Sport and Super C,” Wegner points out. “No one else has done it. Functionality has encroached into so many categories; we looked at the dessert mix category as a white space.”

Passing the Torch

Jel Sert's business consists of its own brands, as well as an array of well-known licensed brands.

Innovation Takes Other Forms

The anticipated success of SLIQ promises to change the composition of Jel Sert’s business by increasing the portion of sales that comes from the company’s own brands. That figure is currently about 70%, but Jel Sert also has a contract manufacturing unit that accounts for 20% of revenue, with private-brand products representing another 10%. “All of the areas are growing, but SLIQ is going to change the ratio,” Wegner asserts. “Our business is unique in that we have our owned brands, such as Fla-Vor-Ice, Otter Pops, Wylers and Royal, and we also have our functional brands, such as All Sport, Super C and Pure Kick. On top of that we do a tremendous license business with brands from Mars Wrigley, like Skittles, Starburst and Dove; from Hershey, like Jolly Rancher; and from Coca-Cola, we license Hi-C.” As a matter of fact, Jel Sert has a major licensed product launch right now with Coca-Cola: a freezable form of Power-Ade. When the company does license brands, it turns loose its research and development team and testing lab to get formulations right, leverage its manufacturing capacity, and work directly with retailers on sales and merchandising initiatives. “No one hands us a secret formula and says, ‘Use this in your product,’” Wegner notes. “We literally are buying products and flavor matching. We are as good as any R&D lab in the world at being able to flavor match.” When it comes to flavors, Jel Sert looks for those that are trending up, which is the same approach it takes with licensing. “When we look at licensed opportunities, we look at brands that are becoming increasingly relevant,” Wegner says. For example, Hi-C was a big brand that was doing well, but it wasn’t growing significantly. However, it enjoyed a resurgence after McDonald’s began serving it in restaurants as its orange drink. Jel Sert is now working with Welch’s on a powdered

Wegner is 58 and has been president of Jel Sert for about 15 years. A fourth generation of the Wegner family, sons Gavin, 27, and Spencer, 26, lead other key areas of the business and are poised to follow a path similar to their father. Gavin leads marketing efforts for SLIQ, and Spencer works in the marketing department on licensed programs, at the family-owned company with roughly 1,000 employees. “We’ve been very blessed that we’ve all gotten along very well,” Wegner says about working with his own brothers from the age of 25, after his father’s unexpected death at the age of 58. “Businesses can be very tense and difficult, but we all have the same desires and goals. We are very passionate about this business, because it has been in our DNA, and we are very focused on the service levels we provide customers, whether they are a single store or a major chain.” Jel Sert has high expectations for its newest brand, the SLIQ line of alcohol-infused freezer pops.

PROGRESSIVE GROCER April 2021

65


SUPPLY CHAIN

Micro Fulfillment

Space Wars THE COUNTRY’S L ARGEST RE TAILERS ARE IN A R ACE TO FULFILL ONLINE ORDERS AS QUICKLY AS POSSIBLE USING MICRO FULFILLMENT, AND NOW A GROWING NUMBER OF REGIONAL PL AYERS ARE JOINING THEM.

Ahold Delhaize USA's Peapod Digital Labs recently announced a microfulfillment pilot with The Giant Co. in the Philadelphia market. The center, shown in this rendering, will incorporate AutoStore technology empowered by Swisslog's SynQ software, as well as Peapod's manual picking capabilities, and is expected to fulfill 15,000 online orders per week for delivery to customers' homes.

By Jenny McTaggart

n just a few short years, micro fulfillment has moved from being a promising experiment into a full-fledged part of omnichannel strategy for major grocery retailers such as Walmart, Ahold Delhaize USA, Kroger and Albertsons. As retailers have found themselves competing with Amazon’s enviable two-hour delivery offer, and after going through last year’s transition to survival mode during the outbreak of COVID-19, their search for the fastest, most efficient way to fulfill online orders has become a top supply chain priority — and, in some cases, a competitive advantage. Look for 2021 to be a year of further progress for micro-fulfillment centers (MFCs) as leading technology providers continue their partnerships with a growing number of grocers, including regional players with a smaller selection of stores. Bentonville, Ark.-based Walmart has smartly been testing micro fulfillment with a number of different companies, including Alert Innovation, to widen its learnings. The world’s largest retailer said in a blog post in January that it will “scale the number of stores that will also serve as local fulfillment centers,” with dozens of loca-

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Key Takeaways This will be a year of further progress for micro-fulfillment centers (MFCs) as top technology providers continue partnerships with more grocers. An industry expert predicts that some form of the technology will become widespread among food retailers. Key challenges facing grocers that adopt micro-fulfillment solutions include space.


Instacart’s Interest in Micro Fulfillment tions already selected and “many more to come.” Walmart has said that it plans to have more than 100 MFCs within the next couple of years, with some of these so-called “local fulfillment centers” using existing store space, while others will be added on to its buildings. In some cases, the company will even build stand-alone units. Ahold Delhaize USA is in the thick of a number of forward-thinking pilots, including its latest micro-fulfillment project with The Giant Co. in the Philadelphia market. The retailer’s digital, e-commerce and commercial engine, Peapod Digital Labs, is leveraging a solution by Swisslog that includes the AutoStore storage and retrieval system. (In late March, H Mart also teamed up with AutoStore on micro fulfillment.) The system will combine Swisslog’s SynQ software for automation with Peapod’s proprietary manual picking capabilities. The location is expected to fulfill approximately 15,000 online orders per week for delivery to customers’ homes, according to Ahold Delhaize USA. The company also noted that it will continue other micro-fulfillment tests, such as a multishuttle pilot with its Stop & Shop banner and Waltham, Mass.-based Takeoff Technologies in the Hartford, Conn., market, and others that will be revealed in the coming months. “As we continue to transform the supply chain for the future, we’re doing so with the lens of creating a truly omnichannel supply chain, there for customers whenever, wherever, however they want to shop,” said Chris Lewis, EVP, supply chain for Retail Business Services, Ahold Delhaize USA’s services company, at the time of the pilot rollout.

The greatest challenge for grocers relative to MFCs is the cost and getting a strong return on investment.” —Gary Hawkins, The Center for Advancing Retail & Technology

Out west, Boise, Idaho-based Albertsons Cos. is moving forward with more Takeoff pilots itself. Albertsons CEO Vivek Sankaran noted during Citigroup’s Retail Madness virtual conference in March that the grocer is planning to add seven more MFCs in 2021, aiming to provide twohour deliveries in all of its markets. Meanwhile, Sankaran envisions a time in the not-too-distant future when digital sales could account for 20% of the retailer’s business. The Kroger Co., through its exclusive partnership with U.K. e-grocer Ocado, is advancing more of a “macro-fulfillment” approach with regional stand-alone automated warehouse facilities that measure up to 375,000 square feet. Its first customer fulfillment center (CFC) recently became operational near its Cincinnati headquarters, with nine more locations planned in regions throughout the country. Meanwhile, Kroger

After serving as a lifeline to many grocers that needed help picking online orders during the surge of e-commerce usage last year, it seems that Instacart is now exploring micro fulfillment as a new service for its customers, as the company looks to further solidify its growth. A recent report in The Financial Times revealed that San Francisco-based Instacart has sent requests for proposals and has been in talks with micro-fulfillment companies, including Alert Innovation and Fabric, in the past year, reportedly with plans to build as many as 50 automated facilities across the country. Some industry watchers even speculated that Instacart is moving toward becoming an online retailer itself, similar to DoorDash’s launch of DashMart. Contacted by Progressive Grocer, Instacart spokeswoman Dani Pietro neither confirms nor denies the report, but she maintains that Instacart isn’t interested in becoming a retailer. Instead, she reiterates the company’s dedication to its retail partners: “While we have no updates to share today, we’re constantly evaluating our services in deep partnership with the nearly 600 retailers we work with. Instacart’s entire product and model is predicated on being a chief ally to our retail partners. We’re not a retailer, and our business is only successful when we’re driving value for our partners. Our goal [is] to ... give retailers of all sizes an edge in an increasingly competitive industry. We’re committed to supporting our brick-and-mortar partners and continuing to invest in and explore new tools and technologies that support the needs of their customers and further enable their businesses to grow and scale over the long term.” It makes sense that Instacart might be considering such an action. The company is on the verge of going public; launching fulfillment operations either for itself or for other grocers would signal the kind of evolutionary growth that would make investors happy. Then again, competing with its retail partners could adversely affect those relationships. Industry watchers are mixed on their opinions about whether supermarket companies would want to outsource micro fulfillment. Marc de Speville, partner, e-commerce at the Partnering Group, in Cincinnati, says that while “it makes sense for Instacart to look for ways to get more involved in fulfillment,” retailers might not be so willing to align with the company in this way. “I’m not sure it makes sense for them to do it from an operational, financial or strategic perspective,” he adds. Meanwhile, Joe McMenamin, director of e-commerce for KPS Global, based in Fort Worth, Texas, believes that the idea has legs. “With Instacart’s recent cash influx from another round of fundraising, combined with their portfolio of customers, the thought of Instacart reshaping the supply chain seems virtually a lock,” he notes. “Instacart’s technological approach disrupted the industry, and now they have leverage. If you were a gambler, the odds look pretty good for this bet.” PROGRESSIVE GROCER April 2021

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SUPPLY CHAIN

Micro Fulfillment

30 40 %

%

In a report called “The Future of Grocery and CPG,” global research and advisory firm IHL Group predicts that only about 30% to 40% of the online customers seen in 2020 will continue with services at the same level by 2022.

is working with Ocado to roll out in-store fulfillment capabilities in some of its stores beginning this year. Regional chains involved in micro-fulfillment tests or deployment include H-E-B (with Swisslog/AutoStore), Meijer (with Dematic), and Big Y, Sedano’s and Wakefern/ShopRite (with Takeoff). “While Walmart is making headlines, several regional players are becoming aggressive with their e-commerce grocery strategies,” observes Joe McMenamin, director of e-commerce for KPS Global, a cold-storage provider based in Fort Worth, Texas. “We see the anticipated changes to more MFCs connected to sites, while dark stores take a back seat to long-term plans. While a lot of this movement has not been in the news, rest assured: It is happening both discreetly and relatively quickly.” Gary Hawkins, CEO of the Walnut, Calif.-based Center for Advancing Retail & Technology — called CART for short — maintains that there won’t be a “one size fits all” approach. “Some retailers, like Walmart, are going to deploy MFCs inside or alongside the store,” Hawkins notes. “Other retailers are looking at MFC tech for local or regional fulfillment servicing multiple stores. Yet others are exploring how a centrally located MFC might provide grocery fulfillment and fulfillment from other noncompeting local companies like hardware.” Hawkins goes on to observe that some retailers are advancing their in-store fulfillment using technology like augmented-reality smart glasses to guide the picker, fulfilling orders at night when stores are closed, or using dark stores. At the end of the day, while he believes a “significant number” of retailers will be using MFCs in the next five to 10 years, the technology is best suited for larger retailers that are able to invest in it and have the space within or alongside their stores. He sees smaller grocers using less capital-intensive approaches to fulfillment. “The greatest challenge for grocers relative to MFCs is the cost and getting a strong return on investment,” Hawkins advises. “There’s no doubt that the MFCs are more efficient than manually picking an order from within the store, but to justify the investment and get a good return on investment, the retailer needs to be doing a good volume of online orders.” He adds that the upfront investment for these solutions includes integration with the retailer’s e-commerce solution, along with having the right space, including square feet, high enough ceilings, reinforced concrete floors and heavy

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electrical service. “All those costs add up,” he cautions. John Lert, founder and CEO of Billerica, Mass.-based Alert Innovation, is quite bullish on the future of micro fulfillment, so much so that he maintains that “some form of ‘micro fulfillment’ will become nearly universal.” “The advantages of e-commerce compared to self-service in terms of convenience and time savings will be more greatly felt in food retail than in any other retail vertical, because of the amount of time consumers spend shopping for groceries,” Lert reasons. “As consumers increasingly choose to order their groceries digitally, nearly all food retailers will need to be able to sell their products online in a way that is sustainably profitable and preserves the value of their stores in order to survive competitively. We believe that automating the fulfillment process at store level is the only way this can be done.”

Key Considerations in Micro Fulfillment

As retailers consider which path to take for online grocery fulfillment, there are a number of important factors to consider, and some of those may change, triggering refinements to the overall plan, notes David Bishop, partner at Brick Meets Click, in Barrington, Ill. According to Bishop: “Grocers need to think about where they operate stores, how many locations operate in a specific trade area, how many orders they are doing today and how many they expect to do within five years, the mix of fresh foods in the orders, ways customers can receive their online orders, and how cycle times play into their competitive positioning.” Colman Roche, VP of sales and consulting, e-commerce/retail, Americas at Swisslog, says that his company has learned a lot since entering the micro-fulfillment market for grocery in 2018, and now has more insights to share with potential customers. “We’ve really tightened up our designs and have figured out how to get more and more out of the equipment,” Roche says, adding that Swisslog is routinely meeting its customers’ requirements for net present value, return on capital and payback periods. In recent months, Swisslog, whose U.S. headquarters is in Newport News, Va., has been in talks with an increasing number of smaller retailers, including those with maybe 20 to 30 stores, he adds. “For some people, it’s a question of trying to get ahead if they feel there’s an advantage, and others are defensive strategies,” Roche explains. “Also, the ratio of micro fulfillment to stores has been coming down rapidly, particularly with COVID.” Grocers also have to think about how much home delivery they want to provide versus click-and-collect, and where the pickup locations will be — and some of that will change as more people go back to work in offices, he observes. Also, the coveted evening pickup times will become more attractive once that happens, which could change retailers’ existing plans and make more order consolidation necessary. Another key challenge facing retailers that are exploring micro fulfillment is space, Lert and others point out.


The latest in automated delivery The last mile of delivery will remain a sticking point for retailers, especially if consumers’ interest in in-store pickup wanes in the future, as some have predicted. A number of grocery chains, including Walmart and Albertsons, have been experimenting with the latest in drone technology and/or autonomous vehicles to see how these tools might aid them. In the drone market, new opportunities seem to be opening up. “Recently, we’ve seen a dramatic push toward the rapid integration of drones into our airspace,” observes Beth Flippo, EVP of Florham Park, N.J.-based Telegrid, the parent company of Drone Express, a new package delivery service that aims to work with large supermarket chains. “Since COVID-19, we have also seen the public perception of drones shift from overly cautious to incredibly positive and favorable.” Flippo notes that the U.S. Federal Aviation Administration is a “big proponent” of the drone industry and is actively working to ensure the technology’s safe integration into the National Airspace System. She explains that Drone Express’ heavy-lift drones will provide “low-cost, seamless integration between store order management systems and last-mile delivery,” adding that the company’s analysis suggests that large chains with a considerable store footWalmart is using Gatik's Autonomous Box Trucks (below) to move customer orders between a dark store and a Neighborhood Market in Bentonville, Ark. Meanwhile, in drone news, Telegrid has launched Drone Express (bottom), a service for retailers.

Albertsons banner Safeway is piloting "the Safeway cart," a remote-controlled delivery cart from Tortoise, in northern California. The cart can hold up to 120 pounds of groceries in four lockable containers.

print and a technology-friendly philosophy are its ideal partners. Rian Whitton, senior analyst at Oyster Bay, N.Y.-based ABI Research, thinks that delivery drones will mostly be used in rural areas and for facility deliveries, as opposed to residential delivery. “There are real challenges around privacy, safety and the ability of an unmanned traffic management system to track hundreds of thousands of small, low-flying systems,” he observes. “This market will also require remote ID to be implemented, which could take years.” Drones are already being used more frequently in warehouses and other indoor environments, however, as they can reach areas that place humans at possible risk, Flippo points out. As for autonomous vehicles, Whitton observes that “the autonomous car space has been saturated with investment without the requisite payoff in commercial value,” and that autonomy will still need to be managed by humans. “That said, the scaled-down autonomous pods that are delivering groceries are certainly gaining traction in well-defined, structured areas like university campuses,” he adds, citing San Francisco-based Starship Technologies as a good example. Gary Hawkins, CEO of the Walnut, Calif.-based Center for Advancing Retail & Technology (CART), predicts that self-driving delivery vehicles will become the most popular last-mile solution over time. “Customers will place their order online, the order will be fulfilled and placed into the van, and then the van will self-drive to their driveway and text them when it has arrived,” he envisions.

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SUPPLY CHAIN

Micro Fulfillment “Relatively few stores are either large enough to be able to repurpose existing floor space to house an automation system and remain viable as a self-service store, or can be expanded to add space,” Lert says. “Ultimately, we believe that the solution will be a new store format that combines an optional checkout-free fresh market with a fully automated center store that fulfills all orders of packaged goods, which are placed electronically by customers either in the store or remotely.” This concept, which Alert Innovation calls “Novastore,” conveniently encompasses Alert’s Alphabot technology.

A robot can be faster, more efficient and more accurate. But if you already have an out-of-stock problem, it will just be exposed much more quickly.” —Jason Wirl, Itasca Retail Information Systems

Eyeing Out-of-Stocks

Retailers have been challenged with higher than usual out-of-stock rates since the pandemic began, and this is an area that they want to master as much as possible before advancing their micro-fulfillment strategies, according to the experts. A report from New Yorkbased IHL Group called “The Future of Grocery and CPG” estimates that overall, there were $505 billion in sales lost due to out-of-stocks amid the pandemic, and that $75 billion was newly discovered simply due to the rise in digital orders for store fulfillment that were previously hidden (the report includes grocery sales in food, drug and mass merchandisers). Jason Wirl, director of solutions consulting and marketing for Itasca Retail Information Systems, notes: “A robot can be faster, more efficient and more accurate. But if you already have an out-of-stock problem, it will just be exposed much more quickly.” Des Moines, Iowa-based Itasca provides computer-generated ordering to 17 grocers, at least one of which is using a dark store to fulfill online orders. Itasca’s customers regularly report that they’re an impressive 95.5% in stock in their stores, and 95% as-ordered with e-commerce orders. Wirl says that Itasca’s systems don’t have to be set up differently to replenish a dark store or fulfillment center. Brick Meets Click’s Bishop recommends that grocers anticipate some out-of-stocks and have a plan to make the substitution process as seamless as possible. “We’d advise retailers to ensure that their customers have the ability to determine not only which products they’re willing to accept as a substitute if the item ordered isn’t available, but also the ability to select what alternatives they consider acceptable,” he counsels.

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Robots Are Everywhere Robotics are proving to be a key part of micro fulfillment, as they can carry out certain tasks much more quickly and safely than humans can. We’ll also continue to see robotics used in a wide range of other activities throughout the retail and warehousing environments, whether it’s cleaning spills, checking inventory or applying UV light to sanitize the indoor environment. One robot is even making salads for customers: Reasor’s, in northeast Oklahoma, is the latest retailer to test the automated kiosk developed by Hayward, Calif.-based Chowbotics and simply known as Sally, the Fresh Food Robot. Rian Whitton, senior analyst at Oyster Bay, N.Y.-based ABI Research, notes that Brain Corp, based in San Diego, has scaled up to thousands of deployments for its automated scrubbers. He also expects autonomous forklifts to gain in popular- Sally, the Fresh Food Robot, assembles made-to-order fresh ity over the next few years, salads and bowls on the spot. noting that major players Retailers including Heinen's and Reasor's are testing the like Toyota, Hyster-Yale solution, which is made by and KION Group are well DoorDash-owned Chowbotics. underway in their automation strategies. A type of robot that’s more likely to “transform retail,” according to Gary Hawkins, CEO of the Walnut, Calif.-based Center for Advancing Retail & Technology (CART), is the software robot in the form of business process automation. He recalls spending grueling hours analyzing loyalty card data back when he was a practicing retailer, whereas today, artificial intelligence-powered software robots can automate processes like this. Jack Holt, director of logistics operations for Ahold Delhaize, recently noted during a Reuters Events webinar on optimized logistics planning that his company’s Retail Business Services arm has been using robotic process automation for manual tasks such as creating delivery schedules. “In the past, this would take us weeks to manually key in,” Holt said. “If you apply robotic process automation, it takes only a matter of minutes.” In addition, the company has been piloting UV robots by Cambridge, Mass.-based Ava Robotics in two of its distribution centers. “They can visit the facility without a human having to be there,” he noted.


PRINT & DIGITAL

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OPERATIONS

Labor Management Strategies

Redesigning the Grocery Workplace A XONIF Y CEO CAROL LE AMAN DE TAILS L ABOR PRIORITIES FOR THE POST-PANDEMIC FOOD RE TAILER. By Gina Acosta s the pandemic enters year No. 2, the question of how grocery workers should be supported by their employers is making national headlines. Cities across the United States have passed new ordinances requiring food retailers to provide bonus pay to grocery workers. Retailers are pushing back against the trend by filing lawsuits, closing stores and raising prices. But the public battle over wage mandates eclipses even larger workforce challenges unfolding behind the scenes at food retail, according to Carol Leaman, CEO of Waterloo, Ontario-based Axonify, which offers modern training solutions to Walmart, Heinen’s, Longo’s and other food retailers. Leaman says that food retailers looking to win the next evolution of the pandemic will have to focus on five key workforce areas: turnover, pace of change, training, communication and employee rewards. “The grocery space is seeing more turnover because people are afraid, frankly, to work in the stores,” Leaman notes, “so grocers have challenges with turnover and constant recruitment that I think were unexpected.” Even before the pandemic, turnover for hourly retail workers was already at its highest rate since the Great Recession: 65%. According to WorldatWork, a Scottsdale, Ariz.-based nonprofit association for human resources professionals, only 33% of the 1,154 North American employees surveyed expected to stay at “This is not the only time their jobs in 2020, we’re going to be going which is down from through [a pandemic]. the 47% who said It won’t surprise me [if] they were staying in 2019. 10 years from now, The WorldatWork we’re all doing exactly survey shows that the same thing with the the perception of next COVID.” leadership’s commitment to communi—Carol Leaman CEO, Axonify cation, training and employee experience declined also, with only 23% of employees surveyed saying that senior leaders are “very committed” or have “more than average” commitment, compared with 31% who said the same in 2019.

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Key Takeaways Future-proof your workforce by investing for the long term. Focus on communication, training and rewards. Create a career development plan for every worker.

“From a training perspective, it is a whole new world in terms of what you need to get in front of people, how quickly that changes,” Leaman says. “Suddenly, it is critically important for every grocer to know people have understood [their training] and are putting into practice the things that have been trained on.” Leaman adds that the next biggest workforce issue that food retailers are dealing with right now is the pace of change, which she describes as “the pace at which you need to know new things every single day, whether it’s new information about the virus or how people are eating more at home, and what does that mean from an inventory point of view and keeping the shelves stocked, how is it impacting hiring and mental health and the way people are feeling? Just the pace of change of all of


that has taken regular store operations next level.” The new front-line worker may have to enforce mask rules, deploy increased sanitation procedures or bring out grocery orders to car trunks. He or she may have to talk to customers about supply chain issues or delivery issues. Some associates may even be putting vaccines into customers’ arms every 15 minutes as well. “What do you need people to do, and how do you get them to know it in the moment, immediately?” Leaman muses. “How do you disseminate information so quickly that is so rapidly changing and know that you’ve got the mechanism with which to do that?” When it comes to training in 2021 and beyond, Leaman says that grocers need to be thinking of new processes and going back to square one. “Many of them have to go back and understand that you can’t just have a band-aid solution,” she asserts. Leaman observes that food retailers have to think about transforming their processes to access people in the moment at any given time, easily, seamlessly and consistently. “This is not the only time we’re going to be going through this,” she says of the pandemic. “It won’t surprise me [if] 10 years from now, we’re all doing exactly the same thing with the next COVID.” To prepare for that next crisis, Leaman believes that grocers should be laying the foundation now for a future-proof workforce and investing for the long term. That involves asking the following questions: What do we need people to know? How do we need to get it to them? How do we know they’re doing the things we need them to do? And how does that translate into the outcome we’re looking for? One of the innovative approaches that Leaman is seeing grocers adopt when it comes to training includes allowing employees to use their own mobile phones. “The biggest shift is putting learning and training in the moment in the workflow, in the hands of that employee, and not making it an event where you have to carve out time,” Leaman notes. “The growth in the use of technology to achieve that is something we’re seeing rapid adoption of, for sure. And also more receptivity to having the individual learn on their own device versus having it on a kiosk or in a break room.” Leaman is also seeing retailers think through the needs of the job in more detail than they ever have before, and then aligning the training to be more specific and less “one size fits all.” Grocers are now “thinking deeply about job titles and the skills and abilities that roles need to have, which, again, are much more broadened now than they ever have been,” she says. “And then, how do we align our training efforts to achieve a multitude of objectives, which is to get people, keep people and not have them turn over?” Further, Leaman has observed a mindset shift in food retail in which companies are focusing more on career development, including deep, transformational thinking on many levels in career development that

The new front-line worker may have to enforce mask rules, deploy increased sanitation procedures or bring out grocery orders to car trunks. Some associates may even be putting vaccines into customers’ arms every 15 minutes as well. Making sure that employees have the right training to perform these tasks will be more critical than ever before.

should be a best practice industry-wide. “Grocers are thinking about, how do we actually provide a career path for the cashier or the deli associate, and have them stay with our organization long-term and potentially take on new roles?” she observes. “If grocers are able to shift their mindset to investing more in that person, it means that instead of staying four months, they stay for four years. Not having to retrain 30 people in four years to do that one job saves tens of millions of dollars.” Another best practice for food retailers should be communicating in real time with employees regarding store safety and customer service in the COVID era. “Grocers are using video, they’re using micro learning and something we’ve seen, to our great delight over the last year, is this little thing we called broadcast messaging when we built it several years ago,” Leaman points out. Broadcast messaging is a way to communicate with all employees immediately. “When COVID hit, we even saw CEOs of organizations jumping on recording a broadcast message about what they were doing as an organization to keep their people safe, that they would post immediately through the [Axonify] platform,” Leaman says. The tool became a way to deliver a reassuring message of “This is what we’re doing, this is the training that we’re going to give you, etc.,” she asserts. What’s more, Axonify customers were able to leverage modules on whatever was happening with COVID. Axonify is currently working on new communications tools such as a content assistant that uses artificial intelligence to take existing content and immediately create modules, enhancing some of the game mechanics and engagement tools on its platform, and creating a way to distill an employee’s skills into a sort of digital resume within the organization. Finally, as the controversy over wages shows no signs of simmering down anytime soon, Leaman advises that retailers should be recognizing and celebrating their employees after a year of extreme turmoil. “Reward people tangibly,” she counsels. “It starts with how do you put that employee in a position where they love the organization they work for, are rapid brand ambassadors for you, do all the right things, are excited to come to work. What are the pins you need to put in place to achieve that and have them stay long-term and have a career there?” PROGRESSIVE GROCER April 2021

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MERCHANDISING & MARKETING

In-Store Promotions

Make In-Store Promos More Effective HERE ARE THREE STR ATEGIES FOR BR ANDS AND RE TAILERS TO DELIGHT SHOPPERS AND OVERCOME TR AFFIC CHALLENGES. By Peter Moustakerski

hopper traffic to grocery stores remains below pre-COVID-19 levels, and expectations are that it will remain under pressure. This is due to the accelerated migration of shoppers online, especially in categories such as paper products, cleaning supplies and canned foods. These trends put pressure on the sales productivity of brick-and-mortar stores, which in turn means that in-store promotions must resonate with shoppers like never before. The physical store has a unique and powerful role in the shopping journey — one that can’t be replicated online. Consumers visit the grocery store to see and touch the merchandise, discover and try new products, get ideas and inspiration from the vibrant store atmosphere, and take advantage of offers and deals only available in the store. Visiting stores also meets many shoppers’ definitions of convenience. Price promotions and in-store visual displays have long been recognized as powerful and proven tools for CPG brands and retailers to convert store traffic into incremental sales. When deployed effectively, promotions and displays can help drive more customers to the store and, once they’re there, engage and motivate them to spend more. To maximize the impact of their investments in in-store promotions and displays in a post-COVID-19 and increasingly omnichannel world, retailers and CPG brands should pursue three innovative and effective in-store promotion and display strategies:

1

Connect Promotions and Displays With the Omnichannel Journey to Drive Maximum Impact

Too often, marketing campaigns are planned and activated in siloes, with no coordination or integration of the message, the offer or the experience, which target the same consumer across different contexts of the shopping journey. The result is both a disoriented customer and wasteful, low-ROI marketing spend. Instead, marketers should be integrating in-store activations with other campaigns running in the same store and with out-of-store media and promotions. In-store signage and displays have the power to amplify and monetize marketing investments made in other media channels, and vice versa. An example of such innovative coupling of marketing tactics is Mountain View, Calif.-based Quotient’s recently launched Promotion Amplification Tool, which uses a dynamic connection to a retailer’s point-of-sale, loyalty and temporary-price-re-

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duction (TPR) pricing data to programmatically activate digital media campaigns that advertise in-store discounts that are often overlooked by consumers. Another example is the digitally connected merchandising solution that New York-based Barrows created for a leading grocery chain in the United Kingdom. As with all Barrows Connected Store touch points, the unit features attractive visual design and engaging video content, as well as traffic and interaction metrics generated by built-in sensors. Its broadband connectivity enables it to link with the retailer’s other live campaigns and deliver exclusive loyalty messaging and offers. For example, loyalty members can scan a QR code and receive an instant discount for the merchandised products in line with the retailer’s price match campaign, which monitors and matches in real time prices in competitors’ stores.

2

Maximize the Power of In-Store Display to Minimize the Need for Discounts

Price promotions, be it TPRs, coupons or rebates, are effective marketing tools, but they can be expensive and quickly eat away at manufacturers’ and retailers’ already thin margins. The ideal approach is to generate as much consumer interest and purchase intent with other non-margin-eroding tools that deliver a better, more relevant customer experience, and only resort to price discounts as a final push that offers the least amount necessary to convert the customer. The concept of supercharging shopper campaigns using “crossover” tactics that combine promotion with merchandising isn’t new. Instant redeemable coupons (IRC), which are attached to the product or its packaging, are one such vehicle that has been around for decades. While other coupons reach consumers by mail, in a newspaper insert or via digital channels, shoppers discover IRCs at the store during the “first moment of truth” — that is, when

Freeosk's digitally enabled freesample kiosk delivers one-to-one interaction with a consumer through a mobile device or loyalty card.


MERCHANDISING & MARKETING

In-Store Promotions

15%-25% incremental sales lift for the merchandised products. When a promotion — such as a chance to win a cash prize — is layered on, the lift jumps to 30%-35%.

3

Rethink Displays and Promotions, From Tactical Expenditures to Strategic Investments

Barrows and The Livekindly Collective have teamed up on a plant-based food solution center in supermarkets.

they see the product on the shelf. This unique in-store positioning drives the superior performance of IRCs. IRC redemption rates are consistently around 20%, which is typically two to five times higher than that of other popular physical and digital coupon formats. IRCs deliver that kind of performance even though they offer the smallest discounts and require the lowest purchase minimums compared with other coupon types. Brands end up spending a lot less on the IRC promotion to achieve the same or better results, just because they leverage the power of in-store merchandising and engagement. In-store displays and merchandising, especially digitally enabled ones, have been shown to drive significant increase in shopper interest, engagement, trial and conversion, even without an accompanying incentive offer. Barrows’ connected end caps have shown consistently that this innovative digital in-store merchandising technology drives 12-15 seconds of high-quality dwell time by customers who engage, and ultimately results in a

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In-store marketing activations have traditionally been regarded as a tactical, “bottomof-the-funnel” final push to convert shoppers into buyers. They haven’t been treated as a strategic and ongoing component of the brand’s overall conversation and interaction with its target audience. Often, they are executed by shopper teams who aren’t integrated with the central brand teams, and whose budgets are, in many cases, leftover funds from national media activations. As a result, in-store activations, including displays, sampling and promotional events, have been approached with a transactional, temporary, nearterm mindset — which is ironic, given how critical the in-store environment is for brands to engage customers and build long-term relationships and loyalty. The other side effect of this dynamic has been the wasteful, inefficient nature of in-store physical signage, displays and promotions. Retail displays contribute more than 2 billion pounds of cardboard waste each year. “Designing with the end in mind is the only way we can shift our linear ‘take, make, waste and,if you’re lucky, recycle’ economy into a circular, sustainable system,” says Brent Taylor, global CEO of Barrows. “Our displays, both digital and physical, are engineered for continuous reuse and ongoing, rather than temporary, activations. This way, we can truly deliver higher-quality, longer-lasting solutions that cost less and free up resources.” In the area of in-store sampling, Freeosk offers a novel product. The Chicago-based company’s digitally enabled free-sample kiosk delivers one-to-one interaction with a consumer through a mobile device or loyalty card, and has been a welcome solution during the height of the COVID crisis, when in-person interactions with shoppers were impossible or unwelcome. Further, the attractive unit that combines product merchandising with automated sample dispensing has enabled both retailers and brands to make a strategic investment in free sampling as a powerful shopper marketing vehicle and incorporate it in their broader strategic interactions with customers. Another powerful example for making a strategic, long-term in-store investment is the collaboration between The Livekindly Collective, a global leader in the plant-based food sector, and Barrows. The digitally connected plant-based food solution center that


COURT-APPROVED LEGAL NOTICE

If you purchased Broiler chicken directly from a Broiler Chicken Producer in the United States from at least as early as January 1, 2008 through December 20, 2019, you may be eligible for benefits from some class action settlements Barrows created for the category allows The Livekindly Collective to showcase its full brand portfolio and inspire consumers with ideas, recipes and meal solutions. It’s a first-of-its-kind “always on” in-store activation that elevates shoppers’ engagement with this new category; drives consumer education, recipe adoption and new product trials; and ultimately delivers superior results for the brands while growing the entire category. “We made a deliberate decision to establish a strategic presence and a prominent destination inside the store with our pioneering plant-based solution center, powered by Barrows,” says Kees Kruythoff, chairman and CEO of The Livekindly Collective. “The ability to bring it all together and demystify the category, and to engage shoppers with familiar, tasty, convenient and affordable meal solutions is key to achieving our mission, which is to make plant-based living the new norm and shift the global food system to a sustainable one.” Another benefit of brands making a strategic in-store investment is that it enables more flexible, efficient and targeted execution of their promotional tactics. For example, digital merchandising solutions enable brands to offer attractive visuals and engaging digital content, but also turn promotional offers on and off in real time with no additional labor cost, since the digital content is all managed remotely in the cloud. By adopting these strategies, brands and retailers can transform their in-store promotions and displays into better integrated, more efficient and strategically important components of their overarching brand strategy, and drive significantly improved outcomes both in the store and across the omnichannel shopping journey.

Peter Moustakerski is the president and owner of Meteora Group LLC, an advisory and consulting firm focused on corporate strategy, digital transformation, mergers and acquisitions, and strategic business development in the media, martech, financial services, fintech and communication technology industries. He was previously chief strategy officer at News America Marketing.

Para una notificacion in español, llame gratis al 1-866-552-1178 o visite nuestro website www.broilerchickenantitrustlitigation.com. Two more settlements have been reached in a class action antitrust lawsuit filed on behalf of Direct Purchaser Plaintiffs (“Plaintiffs”) of Broiler chicken. The two new settlements are with Defendants Tyson Poultry, Inc. (“Tyson”) and Pilgrim’s Pride Corporation (“Pilgrim’s Pride”), collectively “New Settlements” with the “New Settling Defendants.” Previous settlements (the “Previous Settlements”) were reached by Plaintiffs with Defendants Peco Foods, Inc. (“Peco”), George’s, Inc. and George’s Farms, Inc. (collectively, “George’s”), Amick Farms, LLC (“Amick”), and Fieldale Farms Corporation (“Fieldale Farms”), collectively the “Previous Settling Defendants.” Together the New Settling Defendants and Previous Settling Defendants are referred to as “Settling Defendants” and the Previous Settlements and the New Settlements are collectively referred to as the “Settlements.” The proposed New Settlements are with the New Settling Defendants only and do not dismiss claims against other Defendants. The Court has appointed Lockridge Grindal Nauen P.L.L.P. and Pearson, Simon & Warshaw, LLP as Co-Lead Counsel on behalf of Plaintiffs and Class Members. WHO IS INCLUDED IN THE SETTLEMENTS? For all settlements except the Fieldale Farms settlement, Class Members include all persons (including businesses and companies) who purchased Broiler chicken directly from any of the Defendants or their Co-Conspirators, or their respective subsidiaries or affiliates, for use or delivery in the United States from at least as early as January 1, 2008 until December 20, 2019. The class period for the Fieldale Farms settlement is January 1, 2008 through August 18, 2017. If you are not sure you are included, go to the Settlement Website, www.broilerchickenantitrustlitigation.com or call toll-free 1-866-552-1178. Specifically excluded from the Settlement Class are the Defendants; the officers, directors, or employees of any Defendant; any entity in which any Defendant has a controlling interest; and any affiliate, legal representative, heir, or assign of any Defendant. Also excluded from the Class are any federal, state, or local governmental entities, any judicial officer presiding over this action and the members of his/ her immediate family and judicial staff, any juror assigned to this action, and any Co-Conspirator identified in this action. WHAT IS THIS CASE ABOUT? The lawsuit claims that the Settling Defendants combined and conspired in restraint of trade, the purpose and effect of which were to suppress competition and allow them and other Broiler chicken producers to charge supra-competitive prices for Broilers during the class period, in violation of federal law. The Settling Defendants have not admitted any liability concerning and continue to deny the legal claims alleged in this lawsuit. The Court did not decide which side was right, but both sides agreed to the Settlements to resolve the case. The case is still proceeding on behalf of the Plaintiffs against all other Defendants who have not settled with the Plaintiffs.

www.broilerchickenantitrustlitigation.com

WHAT DO THE SETTLEMENTS PROVIDE? The New Settlements require the New Settling Defendants to pay up to the following amounts to the Direct Purchaser Plaintiff Class: Tyson $80,000,000; and Pilgrim’s Pride $75,000,000. Together with the amounts paid by the Previous Settling Defendants (Peco $4,964,600; George’s $4,097,000; Amick $3,950,000, Fieldale Farms $2,250,000), total settlements in the Direct Purchaser Plaintiffs’ case are $170,261,600 (the “Settlement Proceeds”). A portion of the Settlement Proceeds has been and will be used by the Settlement Administrator for notice and administration costs, attorneys’ fees/ litigation expenses, and incentive awards. Plaintiffs and Co-Lead Counsel will file a motion seeking amounts not to exceed 33⅓% of the Settlement Proceeds in attorneys’ fees, $4.5 million in current and ongoing costs, and $25,000 in service awards for each of the five Plaintiffs who are serving as Class Representatives. The remainder of the Settlement Proceeds will be distributed on a pro rata basis to Class Members who submit a timely and valid Claim Form and who have not excluded themselves from the Settlements. HOW DO YOU RECEIVE MONEY FROM THE SETTLEMENTS? In order to receive money from the Settlements you must submit a Claim Form by May 17, 2021. Go to www.broilerchickenantitrustlitigation.com to file a Claim Form for payment. You can also request that a Claim Form be sent to you through the Settlement Website or by sending a written request to the Settlement Administrator by mail or by email: Broiler Chicken Antitrust Litigation, c/o JND Legal Administration, PO Box 91343, Seattle, WA 98111 or info@broilerchickenantitrustlitigation.com. WHAT ARE MY OTHER OPTIONS? If you do not request exclusion from the class, you will be bound by the New Settlements. If you want to keep your right to sue or continue to sue the New Settling Defendants about the legal claims in this case, you must exclude yourself by May 17, 2021. If you stay in the New Settlements, you may object by May 17, 2021. Go to www.broilerchickenantitrustlitigation.com for details on how to exclude yourself or object. The deadline to request exclusion from or object to the settlements with the Previous Settling Defendants has already passed. The Court will hold a hearing in this case (In re: Broiler Chicken Antitrust Litigation, Case No. 16-cv-08637) on June 29, 2021 at 9:00 a.m. At this hearing, the Court will consider whether the New Settlements are fair, reasonable, and adequate, as well as Plaintiffs’ motion for fees, costs, and service awards for the Class Representatives. The hearing may be held using telephone, video conference or other means approved by the Court. You or your attorney may ask to speak at the hearing at your own expense, but you don’t have to. The date of the hearing may change, so please check the Settlement Website for updates. This notice is only a summary. For more information, go to www.broilerchickenantitrustlitigation.com or call toll-free 1-866-552-1178. Please do not contact the Court. 1-866-552-1178


TECHNOLOGY & INNOVATION

Q&A

How Retailers Can Conquer Coupon Fraud NE W PAYMENT PROCESSES AND TECHNOLOGY EMERGE TO SOLVE A $100 MILLION PROBLEM. he worlds of payments, shopper loyalty and store experience are intersecting in new ways amid the ongoing transformation of food retailing. In each of these areas, Winston-Salem, N.C.-based Inmar Intelligence has a unique perspective as a leading technology and data science company whose solutions are used by retailers and touch shoppers at numerous points throughout the path to purchase. Leading Inmar’s efforts in several areas prone to the greatest disruption is John Helmle, EVP and president of the company’s fintech division. Named to that role in September 2020, Helmle spoke with Progressive Grocer about the shift to contactless payments, accepting crypto and eliminating coupon fraud by 2024. Progressive Grocer: We’ve been hearing about digital transformation for quite a few years now. What do those words mean to you? John Helme: It means opportunity for retailers and consumer goods companies and shoppers. Digital transformation has allowed the industry to be more efficient, obtain better insights and know customers in ways we never thought possible, which leads to better outcomes for all. And there’s more to come. PG: Where do you think the food retailing industry is with regard to digital transformation, compared with the overall retail industry? JH: Grocers are catching up to other sectors, and COVID-19 has been an accelerant of change. It forced retailers to re-evaluate how they were serving shoppers and how they were leveraging technology. Many of them have responded in a major way with a shopper-first mentality, whether that is with new infrastructure, meeting the customer in new ways through store experience initiatives and process improvements, or adopting new technologies. PG: What are the attributes of a leader when it comes to digital transformation? JH: It’s really about identifying and investing in those areas that represent where the market is headed. Those who are willing to upgrade technology to serve the customer or serve the business will benefit, and those who don’t risk getting left behind, because the world is shifting dramatically, and so is shopper behavior.

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PG: Talk about some of the key areas in the food and consumables universe where you see retailers struggling with digital transformation. JH: Two areas of opportunity include integrating shopper engagement strategies with payments and leveraging technology to eliminate coupon fraud. One engages a broader audience, and the other delivers more savings to shoppers. PG: How big of an issue is coupon fraud? JH: We estimate that it is more than $100 million annually, but beyond the monetary aspect, there is an experiential aspect. Our research shows a high correlation with other forms of illegal activity, out-of-stock issues and slower checkout experiences. PG: Hasn’t the shift to loyalty programs and digital incentives curtailed the use of paper coupons? JH: The paper coupon has faced pressure over the past two decades, and we see that continuing. But there is still a segment of shoppers that values the physical nature of the coupon and ability to redeem in a store of their choosing. That’s a valuable segment of shoppers. As much as the world has evolved in terms of digital technology, there are shoppers who have not adapted at the same rate, and that is where the paper coupon comes into play. PG: How did the surge in grocery e-commerce this year affect coupon fraud and redemption of paper coupons, with many retailers reporting reduced in-store traffic? JH: It has helped. As people go online, they are using more digital coupons, which are more secure and less likely to be manipulated. Even with this shift, paper coupon fraud still remains a challenge and continues to add tension between retailers and suppliers. PG: What are some of the best practices for reducing coupon fraud, either from the standpoint of a manufacturer issuing a coupon or a retailer accepting it? JH: The best practice in the industry from a retailer and a supplier standpoint is to leverage data and technology, specifically point-of-sale technology, to combat this problem. That’s why earlier this year, we launched CNFRM (pronounced confirm), which is a real-time cloudbased counterfeit solution that is embedded at point of sale. Using artificial intelligence and data science, CNFRM stops fraudulent coupons before they can be redeemed and lays the groundwork for electronic clearing. Another best-practice aspect of fraud reduction involves data sharing among CPGs and retailers. PG: What’s been the reaction of retailers to CNFRM? JH: There’s been a lot of interest. We launched


with Schnuck Markets and expect to announce other retailers soon, because the value proposition of the solution is so compelling. We are taking an open approach with CNFRM because we want to help solve a problem that affects our entire industry. This was key in our decision to offer this innovative technology solution for free, and to collaborate with anyone in the industry to tackle this problem. An open approach is the best approach to stopping coupon fraud, because in the end, the shopper wins. PG: How does it work? JH: It accelerates the detection and arbitration of new, unknown offers that may be counterfeit. It does that by instantly identifying valid and invalid offers at the point of sale through a cloud-based decision engine that leverages both positive and negative offer file data. The process is real-time, so cashiers are able to confidently accept or reject manufacturer coupons, based on business rules established by their company, without slowing shoppers down during the checkout process. It is a major improvement from traditional coupon settlement processes that can take weeks because of how physical coupons are processed. With CNFRM, offers can be resolved within hours, which drastically reduces the timeframe in which a counterfeit offer can be redeemed. PG: Coupon usage is intertwined with payments and loyalty, which brings us back to digital transformation and the shift to contactless and frictionless shopper experiences. Will we all just be walking out of stores in a few years? JH: We are seeing a huge shift in demand for contactless payments and omnichannel payment methods. A lot of retailers are investing in frictionless experiences and new payment acceptance technologies. PG: What do grocers need to better understand about where Inmar Intelligence fits into the payments ecosystem? JH: We view ourselves as the first touchpoint to help retailers accept cashless and contactless payments from shoppers at their desired touchpoints. We launched InmarPay in the fall of 2020 to enable secure and frictionless payments in store, online, curbside or mobile.

“Those who are willing to upgrade technology to serve the customer or serve the business will benefit, and those who don’t risk getting left behind, because the world is shifting dramatically, and so is shopper behavior.” —John Helmle, EVP and President, Fintech, Inmar Intelligence

The shopper gets the experience they want, and the retailer is able to do it in a seamless fashion while receiving enhanced data and insights that can inform broader consumer engagement. PG: How so? JH: InmarPay has the ability to identify non-loyal shoppers and turn them into loyal shoppers. Not every retailer has a loyalty program, and not every shopper is signed up at those retailers who offer loyalty programs. But through the use of tokenization, we are able to identify behaviors associated with payment methods and do some interesting things to create exponential value for our retail partners. PG: Can you elaborate on the definition of tokenization? JH: The simplest way to think about it is as a unique identifier. Through our point-to-point encryption from the point of sale to the issuer, InmarPay creates a secure unique identifier. This unique identifier can be matched to a shopper’s payment and purchase history without revealing their personal information. PG: How does InmarPay help retailers address the contentious issue of interchange fees? JH: Interchange fees represent a material expense for retailers, and our solution is able to take an aggressive stance toward reducing interchange fees in a couple of ways. We take a merchant processor-agnostic approach with our solution. A retailer can leverage multiple processors on the same platform to get the best rates. A lot of solutions are typically bundled, so a retailer’s ability to negotiate is negated. In addition, leveraging our 40-plus years of shopper behavior expertise, InmarPay was designed with a workflow that incentivizes the shopper towards the cheapest form of tender, thus reducing interchange fees further. PG: Crypto currencies are in the news a lot lately. How should retailers be thinking about crypto and the need to accept emerging payment types? JH: It is challenging for retailers to stay on top of all the trends in the payments space, but those that evolve will remain out front. Our solution enables retailers to accept crypto, if they are open to it, along with more than 35 other types of tender/wallets. We support shoppers however they choose to pay, and our solutions enable a wide range of capabilities for retailers, to keep them competitive. PG: How can retailers of food and consumables more effectively link their strategies around payments with customer engagement? JH: It begins with taking a shopper-centric approach. Behaviors have changed, the store experience is different, and payment methods and preferences are evolving rapidly. We believe a retailer’s payment strategy is their new consumer engagement strategy. PROGRESSIVE GROCER April 2021

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EDITORS’ PICKS

Food, Beverage & Nonfood Products

Veggie Pasta

Chickpea pasta maker Chickapea has debuted another innovative take on noodles: +Greens. Made with only chickpeas, lentils, kale and spinach, the organic and gluten-free pulse pasta line is available in penne, spaghetti and spiral varieties. Each +Greens serving contains more than two servings of vegetables, 11 grams of fiber and 24 grams of plant-based protein. Additionally, the pasta is a great source of iron as well as vitamins K and B 6. An 8-ounce box of any variety retails for a suggested $5.49. Since 2018, the certified B Corporation and woman-owned natural food company has donated 2% of revenue — not just profit — to feed nutritious meals to needy people and communities. https://chickapea.com/

Quick Bites

An addition to the Hormel Gatherings line, Hormel Foods’ Soft Pretzel Bites with Cheese capitalizes on the growing snack trend, a rise in home-based working and schooling, and the move to smaller get-togethers amid the COVID-19 pandemic. The innovation is the first snack of its kind to be sold in the refrigerated section of the deli. Hormel’s restaurant-inspired offering consists of 4 ounces of soft pretzel bites, 4 ounces of cheddar cheese sauce in a cup, and a packet of sea salt. Created for up to four people, the snack can go from the refrigerator to the microwave to the table in just a few minutes. Hormel Soft Pretzel Bites with Cheese retails for a suggested retail price range of $6.99$7.99. https://www.hormelfoods.com/

Health by Chocolate

Bringing together indulgent chocolate with clinically researched ingredients and botanicals, The Functional Chocolate Co. offers curated confectionery creations that work synergistically to address common health concerns of women. Made with Fair Trade 60% cacao from a cooperative of South American farmers and crafted in the USA, the bars are 100% plant based, vegan, Non-GMO, and cholesterol-, dairy- and gluten-free. Initially, Functional Chocolate bars will take on the four most cited conditions that affect women — Rhythm Chocolate for PMS, Carefree Chocolate for stress and anxiety, Hot Chocolate for menopause symptoms, and Sexy Chocolate for low libido — with additional formulations slated to roll out in the coming months. A 1.75-ounce bar retails for a suggested $7.49, and the item is available in a standard 12-count point-of-sale case. https://funcho.co/

Smokin’ Hot

Greenleaf Foods SPC, owner of the Field Roast Grain Meat Co. and Lightlife plant-based protein brands, has gone to the next level of flavor exploration in the plant-based hot dog category with the launch of premium naturally smoked Field Roast Signature Stadium Dogs. According to Greenleaf, a wholly owned independent subsidiary of Maple Leaf Foods Inc., the product is the first plant-based hot dog to be made from pea protein rather than soy (the item’s protein sources also include brown rice and fava bean), and is the first such product to be sold alongside its meat-based counterparts. Double-smoked using maple hardwood chips and a combination of steam and dry heat to deliver superior flavor and texture, Certified Vegan and Non-GMO Signature Stadium Dogs offer the same amount of protein per serving as most traditional hot dogs while containing less sodium and no added nitrites and nitrates. A 10-ounce package of skinless dogs retails for a suggested $5.99, but will vary by retailer and location. https://fieldroast.com/; https://www.greenleaffoods.com/; https://www.mapleleaffoods.com/

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Anytime Pet Hydration

A first-of-its-kind product, Waggin Water enables pets to partake of 100% filtered water anytime, anywhere. “Humans have clean, safe bottled water, and our pets have [had] nothing up until now,” says Waggin Water founder Drew Whited, a frequent traveler whose dog, Mickey, goes with him everywhere. “Whether it’s for convenience, emergencies [or] everything in between — our pets need water every day. Waggin Water’s mission is to provide pets with access to clean water for all occasions.” The eco-friendly product offers 12-ounce bowls made from BPA-free recycled curbside and ocean plastic that are Certified Plastic Neutral through rePurpose Global, with every single Waggin Water SKU purchased cleaning the environment of double the amount of plastic. The item retails for a suggested price range of $1.49-$1.99 for a single bowl, while a 6-pack goes for a suggested price range of $5.99-$6.99. https://wagginwater.com/

Go Lightly

Litehouse Inc., a 100% employee-owned company and maker of the No. 1 refrigerated salad dressing brand in the United States, has introduced Purely Balanced, a line of Greek yogurt-based refrigerated salad dressings. The thick, creamy gluten-free dressings contain just 45 calories per serving and 0 grams of added sugar, with no high-fructose corn syrup or artificial colors, flavors, preservatives or sweeteners, making them an appropriate choice for consumers trying to meet specific dietary needs without giving up taste and quality. The line is available in five varieties: Garden Ranch, Tzatziki Ranch, Garlic Caesar, Cilantro Lime and Basil Lemon. Carried in the refrigerated produce department, Purely Balanced retails for a suggested $3.49 per 9-ounce squeeze bottle of any of the line’s varieties. https://www.litehousefoods.com/

Breakfast in a Bar

In line with the ongoing “snackification” of breakfast, Over Easy offers a line of simple, nutritious breakfast bars in four morning-inspired flavors — Apple Cinnamon, Banana Nut, Peanut Butter and Vanilla Matcha — in bold, colorful packaging created by global branding agency Jones Knowles Ritchie (JKR). Made with only eight to 10 ingredients, among them organic oats, natural nut butter, cage-free egg whites, and honey, the gluten-, dairy- and soy-free product line contains 8-11 grams of protein and 6-8 grams of fiber per bar, with no artificial flavors or refined sugars. A 1.8-ounce bar of any variety retails for a suggested $2.49. Over Easy will be launching additional breakfast bar flavors and product variations throughout 2021. https://overeasyfoods.com/

Korean Classic

Following years of requests from consumers, fermented-food brand Cleveland Kitchen has finally served up its own take on Korea’s favorite side, kimchi. The company created its version of the famous fermented cabbage dish with the help of local chef Heejung Gumbs, who was born and raised in Jeolla-do, a province renowned for having the best kimchi. The authentic result, consisting of cabbage paired with fresh garlic, greens, crunchy carrots and Gochugaru red peppers, can be eaten daily with eggs, salads, rice bowls, sandwiches and any other dishes requiring a touch of heat. Like every other fermented food from Cleveland Kitchen, Classic Kimchi is gluten-free, keto-friendly and plant-based. Each serving is only 10 calories and contains plentiful gut-healthy probiotics. A 16-ounce bag of Cleveland Kitchen Classic Kimchi retails for a suggested $5.99. https://www.clevelandkitchen.com/ PROGRESSIVE GROCER April 2021

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AHEAD OF WHAT’S NEXT By Gina Acosta

Netflix Reels Them In A DOCUMENTARY SLAMMING THE SEAFOOD INDUSTRY GOES VIRAL. t’s always a good day when you can fly to a great city to talk to the CEO of one of America’s major grocery companies. That’s what I did in late March, when I went to Philadelphia to talk to Nick Bertram, CEO of The Giant Co., about his stunning new urban flagship there. Touring the store with him and his team, I listened as they talked about hot categories, one of them being seafood. U.S. retailers have posted record seafood sales across the fresh, frozen and shelf-stable categories over the past year as consumers have cooked more at home during the pandemic. Frozen seafood in 2020 soared 35% to $7 billion, fresh rose 24.5% to $6.7 billion, and shelf-stable rose 20.3% to $2.9 billion, according to 210 Analytics Principal Anne-Marie Roerink and IRI Worldwide. “This [seafood] category is on fire,” Roerink said at the time that the figures were released. Well, maybe not for long. A week after I got back from Philly, my phone started blowing up with texts about, yes, seafood.

“Today’s the last day I’m eating salmon.” “The only ethical thing to do is to stop eating fish.” “Sustainable seafood is a lie.” My friends were sending me Twitter reactions to the No. 4 movie on Netflix: “Seaspiracy.” Haven’t heard of it? Comments about the movie have flooded Facebook and Instagram, too. The New York Times wrote a generous review. Even Vogue magazine, not exactly known for its extensive cov- With damaging erage of the food industry, published a column publicity like titled “Seaspiracy Will Change Your Thoughts “Seaspiracy,” on Seafood Forever.” grocers who The documentary debuted on Netflix on March offer maximum 24; four days later, it was one of the Top 5 titles transparency about watched on the platform in 32 countries. their seafood Netflix’s official synopsis of the film reads: “From the co-creator who brought you the supply chains are groundbreaking documentary ‘Cowspiracy’ more likely to keep comes ‘Seaspiracy,’ a follow-up that illuminates consumers coming alarming — and not widely known — truths back for more. about the widespread environmental destruction to our oceans caused by human behavior. Filmmaker Ali Tabrizi initially set out to celebrate his beloved ocean, but instead found himself examining the harm that humans inflict upon the vulnerable seas. From plastics and fishing gear polluting the waters to the irreparable damage of bottom trawling and by-catch, to illegal fishing and devastating hunting practices, humanity is wreaking havoc on marine life and, by extension, the entire planet. What Tabrizi ultimately uncovered not only challenges notions of sustainable fishing, but will shock anyone who cares about 82

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the wonders of ocean life, as well as the future of the planet and our place on it.” If that doesn’t sound terrifying, it should: I watched the movie and it was a bloody one-and-a-half-hour indictment of the commercial seafood industry. Tabrizi takes viewers all over the world on a visual journey accompanied by scary music and images of slaughtered marine mammals and deforested seas, and where he ends up is: “Sustainable seafood” is a fraud; “dolphin-safe” labels are dishonest; farmed seafood is a pollution nightmare, and the only way to save the oceans — and humanity — is to stop eating seafood, period. The film even takes on the leading seafood certification group, the Marine Stewardship Council, and concludes that its labeling — used by many food retailers, including Whole Foods Market — is financially motivated and a scam. There’s no question that the aim of this film is to encourage viewers to switch to plant-based diets. Now, grocers who have attracted so many new consumers to the seafood category over the past year will have another obstacle to keeping those shoppers engaged: Netflix. Food retailers hoping to keep their seafood sales jumping would do well to educate shoppers even more about where their fish comes from. With damaging publicity like “Seaspiracy,” grocers who offer maximum transparency about their seafood supply chains are more likely to keep consumers coming back for more. Gina Acosta Executive Editor gacosta@ensemleiq.com


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