PG_0521 by ensembleiq

EXCLUSIVE: 88th ANNUAL REPORT AND THE PG 100 CANDY & SNACKS Top treat trends CENTER STORE Ice cream innovations SUMMER GRILLING Grate ideas for seasonal success FOOD SAFETY Exclusive retailer insights

GROCERY OUTLET GAINS MOMENTUM CEO Eric Lindberg on the company’s innovative approach

Plus! Dollar General Expands Food Access Choice Market Redefines Convenience

May 2021

Volume 100, Number 5 www.progressivegrocer.com

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Contents 05. 21

Volume 100 Issue 5

36 Features

18 88TH ANNUAL REPORT & THE PG 100

COVER STORY

What’s Next For America’s Grocers

36 Grocery Outlet Gathers Momentum A unique approach to ownership, entrepreneurship and retail operations has the retailer on track to surpass 400 locations during its 75th anniversary year.

42 RETAILER DEEP DIVE

How Dollar General Is Disrupting Grocery

Aggressive merchandising moves and unprecedented expansion are a potent combination.

The food and consumables industry enjoyed record sales growth in 2020 as consumer behavior shifted dramatically due to the pandemic.

50 RETAILER PROFILE

Choice Market Redefines Convenience

30 88TH ANNUAL REPORT & THE PG 100

The Pandemic-Fueled Record Growth in 2020

The hybrid retailer offers an innovative approach in Colorado, with the potential for 50 stores.

12 MENU TRENDS

16 ALL’S WELLNESS

In Queso You Were Wondering About Cheese

Current CBD Trends

An unprecedented year on many levels saw sales surge to new heights.

Departments 8 EDITOR’S NOTE

Grocery Isn’t Fair for Whom?

96 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS

14 NIELSEN’S SHELF STOPPERS

Household Care

98 AHEAD OF WHAT’S NEXT

15 MINTEL GLOBAL NEW PRODUCTS

Be Like McKim’s

10 IN-STORE EVENTS CALENDAR

July 2021

Still and Sparkling Water

12 4

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Contents 05. 21

Volume 100 Issue 5

52 SPECIAL REPORT

If It’s Not Safe, It’s Not Food

Leading retailers discuss the keys to keeping food safe during the COVID-19 pandemic. 56 SOLUTIONS

Grate Expectations

Retailers expand and elevate offerings as peak grilling season arrives.

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

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72 FROZEN & REFRIGERATED FOODS

Chill Factor

Inventive offerings keep the ice cream and novelty category cool — and growing. 75 CONSUMER TRENDS

More to Enjoy

Retailers should take heed of major trends in the sweet treat categories.

GROCERY GROUP PUBLISHER John Schrei 248-613-8672 jschrei@ensembleiq.com GROCERY GROUP EDITORIAL DIRECTOR Mike Troy 813-857-6512 mtroy@ensembleiq.com EDITORIAL EXECUTIVE EDITOR Gina Acosta 813-417-4149 gacosta@ensembleiq.com MANAGING EDITOR Bridget Goldschmidt 347-962-9395 bgoldschmidt@ensembleiq.com SENIOR DIGITAL & TECHNOLOGY EDITOR Marian Zboraj 773-992-4405 mzboraj@ensembleiq.com SENIOR EDITOR Lynn Petrak 708-945-0415 lpetrak@ensembleiq.com CONTRIBUTING EDITORS Mike Duffy, Jenny McTaggart and Barbara Sax ADVERTISING SALES & BUSINESS SENIOR SALES MANAGER Bob Baker (NEW ENGLAND, MID-ATLANTIC SOUTHEAST US, EASTERN CANADA) 732-429-2080 rbaker@ensembleiq.com SENIOR SALES MANAGER Theresa Kossack (MIDWEST, GA, FL) 214-226-6468 tkossack@ensembleiq.com

64 FRESH FOOD

Best Practices in Produce Presentation

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

Time-tested strategies remain in effect, while pressures challenge execution.

ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com

68 FROZEN & REFRIGERATED FOODS

EVENTS VICE PRESIDENT, EVENTS Michael Cronin mcronin@ensembleiq.com

CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com

EVENTS DIRECTOR Karen Mahoney 952-467-8592 kmahoney@ensembleiq.com

Here Come the Disrupters

MARKETING BRAND MARKETING MANAGER Rebecca Martin 773-992-4407 rmartin@ensembleiq.com

Plant-based alternatives are changing the face of dairy departments.

AUDIENCE LIST RENTAL MeritDirect Marie Briganti 914-309-3378

80 PG PET

92 SOCIAL SUSTAINABILITY

Pets Are People, Too

The Inclusivity Imperative

There are three major trends driving post-pandemic category growth.

Food retailers are taking innovative approaches to advancing an equity agenda.

86 OPERATIONS

Taking the Pulse of America’s Grocery Workers A new survey highlights opportunities for retailers to improve training programs. 88 SUPPLY CHAIN

94 TECHNOLOGY & INNOVATION

Google and the Future of Grocery Shopping

A top exec at the tech giant discusses its groundbreaking partnership with Albertsons, and more.

Straight to the Sourcing with its latest certification program, Whole Foods Market is making it easier for shoppers to feel good about what they buy.

90 MERCHANDISING/MARKETING

Grocers of All Sizes Can Win With Personalization A new definition of convenience is key to engaging with shoppers and driving data monetization.

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SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES Toll Free: 1-877-687-7321 Fax: 1-888-520-3608 contact@progressivegrocer.com PROJECT MANAGEMENT/PRODUCTION/ART VICE PRESIDENT OF PRODUCTION Derek Estey destey@ensembleiq.com CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com REPRINTS, PERMISSIONS AND LICENSING Wright’s Media ensembleiq@wrightsmedia.com 877-652-5295

CORPORATE OFFICERS 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.

EDITOR’S NOTE By Mike Troy

Grocery Isn’t Fair for Whom? THE CHANGING NATURE OF FOOD RE TAIL COMPE TITION IS E VIDENT IN THIS YE AR’S PG 100 R ANKING. he PG 100 is a unique resource in the grocery world. It’s a ranking that takes an expansive view of industry-leading retailers that shoppers can choose from to purchase food and consumables. It recognizes that shoppers have a growing number of choices, and that those choices extend to many types of retailers beyond traditional grocers. For this reason, many of the companies included on this year’s PG 100 list don’t fit the traditional definition of “grocer” previously based on store size and core product offering. Instead, companies are included on The PG 100 if a key element of their value proposition involves offering food and consumables. This approach adds a degree of subjectivity and difficulty to compiling an industry ranking that aspires to be the definitive source of the 100 largest retailers of food and consumables in North America. That’s a good thing, however, because the intent of The PG 100 is to reflect new and evolving marketplace realities, not outdated notions of trade channels that were never as relevant to shoppers as they were to those in the industry. What’s relevant to shoppers are retailers that appeal to lifestyles and sensibilities that are very different from decades ago, when the distinctions between classes of trade were clearer. It’s all very blurry today, with food and consumable products sold seemingly everywhere, by all types of retailers and innovative startups with new physical and digital approaches. The changing nature of competition in the food and consumables industry is fascinating, tumultuous, unpredictable and filled with unrelenting competition. This state of competition has led some smaller retailers to raise questions of fairness and whether a level playing field exists. It’s easy to see why when looking at The PG 100 and the billions in sales some of the largest companies have added. The rising tide of demand caused by the pandemic has lifted all retailers, but it lifted some more than others. There are a lot of reasons for that — too many to get into here — but suffice to say that scale comes with advantages. Suppliers are going to treat larger retailers that account for a bigger percentage of their sales differently from smaller retailers, just as retailers with loyalty programs provide preferential treatment to their best customers. That being the case, how can retailers that 8

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aren’t among The PG 100 compete? For starters, they can embrace the advantages that the large retailers exploited when they were small. Despite how nimble a company like Walmart, Kroger or Amazon may claim to be, a smaller retailer will always be able to move faster and act more decisively than a large retailer. Smaller retailers with single- or multi-state operations are also able to avoid the regulatory complexity of a nationwide operation. Further leveling the playing field are affordable retail technology solutions that give smaller retailers access to the same powerful capabilities as larger organizations. Being on The PG 100 list is no guarantee of future success. In fact, the ranking isn’t able to account for subjective measures such as innovation and the potential to disrupt the marketplace. Companies that possess these attributes are undeterred by any real or imagined lack of fairness. They’re intent on capitalizing on their size to exploit the vulnerabilities of lumbering legacy competitors, which hardly seems fair to members of The PG 100 that don’t realize they’re at risk.

The intent of The PG 100 is to reflect new and evolving marketplace realities, not outdated notions of trade channels that were never as relevant to shoppers as they were to those in the industry.

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

IN-STORE EVENTS

Calendar

07.21

National Grilling Month Independent Retailer Month National Baked Bean Month National Horseradish Month

National Hot Dog Month National Ice Cream Month National Blueberry Month National Picnic Month

S M T W T F S

National Creative Ice Cream Flavors Day

National Anisette Day. Raise a toast to this aniseflavored liqueur.

National Gingersnap Day

Independence Day National Barbecued Spareribs Day

National Graham Cracker Day

National Apple Turnover Day

National Fried Clam Day National Chocolate Wafer Day

National Fried Chicken Day. Hold a special in the deli for this all-American picnic staple.

National Strawberry Sundae Day

National Freezer Pop Day. Inform shoppers that if they buy one box, they can get one free.

National Sugar Cookie Day. Publish in your e-newsletter a family-friendly recipe to whip up a batch.

National Piña Colada Day

National Blueberry Muffin Day

National Pecan Pie Day

National Beans ’n’ Franks Day

National Rainier Cherry Day

National Sour Candy Day. Try not to make a face when the flavor grows too intense.

National Wine and Cheese Day

Eat Your Jello Day

National Daiquiri Day

National Bagelfest Day. Remind shoppers to order their nosh at the deli however they want it — we’ll take ours with a schmear.

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National French Fry Day

National Lollipop Day. Offer one free to every child coming into the store, and don’t forget to provide sugar-free options.

National New Jersey Day. Show some love for the Garden State by calling out its native culinary delicacies, starting with salt water taffy.

National Mac & Cheese Day. Have a contest to discover which of your customers makes the best homemade version.

National Junk Food Day. Everyone deserves some time to indulge.

National Hamburger Day

National Tapioca Pudding Day. Given the continuing trendiness of boba tea, Grandpa’s preferred dessert is due for reassessment.

National Penuche Fudge Day. Tell customers all about this unique confection with a maple-like flavor.

National Chicken Wing Day. Shuffle off to Buffalo for the best-known variety of this anytime appetizer.

National Corn Fritters Day. Ask shoppers to share how they make these fried cakes from scratch.

National Vanilla Ice Cream Day. This perennial variety never goes out of style.

National Cheesecake Day. Let customers know about all of the varieties available at your in-store bakery.

National Lottery Day. Stores that offer this amenity should be sure to promote it.

National Amelia Earhart Day. On the aviation pioneer’s birthday, run a contest for kids to write essays about the famous women who have inspired them.

National Avocado Day. How many ways can this delicious but good-for-you fruit be used? Start counting.

EVERY MEAL, EVERY CUSTOMER. EVERY. DAY. ANGUS. E o Fo USD ’

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MENU TRENDS

Research & Analysis

In Queso You Were Wondering About Cheese Cheese is a universal offering that has been adapted to every menu part, even including beverages like cheese tea. Even though cheese is a ubiquitous ingredient, there has been tremendous growth in the category as unique varieties and formats have become more prevalent on menus. According to Datassential’s FLAVOR database, cheddar, mozzarella and parmesan are the most loved cheese varieties, helping their use across many different menu categories. Consumers looking for highprotein foods or good sources of calcium may also look toward eating more cheese. Yet, based on Datassential’s recent Cheese & Dairy Keynote Report, “only 5% of consumers say the health benefits are the top reason they eat cheese, versus 43% who eat it for taste.” With all of these trends in mind, operators have introduced menu options with global, rare and uniquely aged cheeses. Chihuahua MAC stage: Inception – International markets, global independents and fine dining. Trends start here and exemplify originality in flavor, preparation and presentation. This cheese hails from the northern Mexican state of Chihuahua, but is also known as “queso menonita.” Crafted by using pasteurized or raw cow’s milk, the cheese has a semi-soft texture and is braised. Chihuahua is characterized as having a buttery taste and slightly sharp notes like cheddar cheese. It’s a good melting cheese, making it perfect for burritos, queso fundido and quesadillas. On 2.3% of U.S. restaurant menus Up 6% over the past four years 21% of consumers know it/11% have tried it/6% love or like it Menu Example Kimchi Grill Kimchi Goat Cheese Quesadilla Goat cheese, Chihuahua cheese, sautéed kimchi in a flour tortilla topped with fresh kimchi, pico de gallo, kimchi chipotle aioli and green onion, drizzled with miso crema

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Burrata 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.

Smoked Gouda MAC stage: Proliferation – Proliferation-stage trends are adjusted for mainstream appeal. Often combined with popular applications (on a burger, pasta, etc.)

Mozzarella’s cousin is the creamier fresh-cheese version made from a mix of cow’s milk and/or buffalo mozzarella and cream. On the outside, burrata has a thin outer shell, but once cut, it oozes out with a buttery texture and mild taste. This indulgent cheese has appeared on menus in adult versions of mozzarella sticks, as a pizza topping or accompanying a tomato-based salad.

“How-da,” as the Dutch locals say, originated in the city of Gouda. It’s not a surprise that affinity for gouda is high in The Netherlands, giving rise to many variations of the popular cheese, like smoked gouda. To create this version, the cheese is smoked in an ancient brick oven over hickory chips, imparting a complex flavor to the buttery cheese. More than a quarter of smoked gouda pairings are with burgers, as it can take on bold flavors and textures like barbecue sauce, pear and horseradish.

On 6.7% of U.S. restaurant menus

On 5.4% of U.S. restaurant menus

Up 51% over the past year

Up 25% over the past four years

25% of consumers know it/14% have tried it/9% love or like it

78% of consumers know it/55% have tried it/42% love or like it

Menu Example Longman & Eagle Fried Burrata Mozzarella Burrata mozzarella, classic marinara sauce, olive oil, basil

Menu Example Social 37 Antelope Burger 8-ounce antelope patty, plancha grilled; smoked gouda; arugula; crispy onions; creamy mushrooms with sage.

Bleu Cheese 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. Bleu cheese is one of the most polarizing flavors on menus: 17% of consumers say that they hate bleu cheese, according to Datassential’s FLAVOR database. Bleu cheese can be created using cow’s, goat’s or sheep’s milk, and is aged with cultures of the mold Penicillium. There are many varieties of bleu cheese, varying by milk, location and amount of time allowed for aging. Varieties span the world and include types such as gorgonzola, stilton and Yorkshire blue. On 44.7% of U.S. restaurant menus Up 3% over the past four years 88% of consumers know it/62% have tried it/42% love or like it Menu Example Regionale New York Buffalo Cauliflower Sandwich Potato bun, breaded cauliflower, truffle buffalo, arugula, tomato, onion, house-made blue cheese dressing

BIG FLAVOR. B I T E-S I ZED C R U M B L ES.

FRONT END

Shelf Stoppers

Household Care

Basket Facts

Total Department Performance Latest 52 Wks W/E 3/27/21

Household Care

$65,987,648,821

Latest 52 Wks YA W/E 3/28/20

Latest 52 Wks YA W/E 3/30/19

$60,893,316,079

$56,822,718,705

Top Household Care Categories by Dollar Sales Bath Tissue

Laundry Detergent

Paper Towels

Disposable Dishware

Multipurpose Cleaners

$10,000,000,000

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

8,000,000,000

6,000,000,000

$12.01

on all household care products, up 7.8% compared with a year ago

4,000,000,000

2,000,000,000

Latest 52 Wks W/E 3/27/21

Latest 52 Wks YA W/E 3/28/20

Latest 52 Wks YA W/E 3/30/19

Source: Nielsen, Total U.S. (All outlets combined) – includes grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and military commissaries (DeCA) for the 52 weeks ending March 27, 2021.

Household care products became a newsmaker in 2020 as consumers flocked to retail stores in record numbers during the initial lockdowns. Stockpiling and preparing the home was the initial consumer motivator, with sales increasing 7%, fueled by bath cleaners, up 13%; paper towels, up 10%; and all cleaners, up 19%. This growth trend continued into 2021 (latest 52 weeks to March 3, 2021), with sales continuing to report record increases of 8%. Ongoing concern over COVID-19 shifted away from stockpiling to the new household essentials such as multipurpose cleaning products, which increased an impressive 35%. With more consumers and families staying at home, we naturally see larger households fueling the record consumption shift. As we continue to open up more out-of-home services, we can expect sales to normalize or potentially decline. As consumers shift more of their meal occasions to foodservice, paper towels, cleaning products and other complementary usage will soften.”

$3.93

on dish soap, up 12.1% compared with a year ago

$6.01

on disposable dishware, up 6.4% compared with a year ago

—Carman Allison, VP Consumer Intelligence, NielsenIQ

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

$7.89

on trash bags, up 6.9% compared with a year ago Millennials

Gen Xers

Boomers

The Greatest Generation

$5.85

$5.92

$5.75

$5.10

Source: Nielsen Homescan, Total U.S., 52 weeks ending Feb. 20, 2021

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Source: Nielsen Homescan, Total U.S., 52 weeks ending Feb. 20, 2021

MINTEL CATEGORY INSIGHTS

Global New Products Database

Still and Sparkling Water Market Overview

Total U.S. packaged water sales increased 8% in 2020 as the market benefited from initial panic purchases and general elevated consumption among consumers drinking more water at home, due to COVID-19.

Sparkling water sales increased 118% from 2015 to 2020, rising 21% from 2019 to 2020 alone, making sparkling water one of the fastest-growing nonalcoholic beverage categories. In addition to private label water, sales of enhanced/functional water brands as well as premium water brands also increased, reflecting consumer interest in waters that provide benefits along with hydration, as well as brands that align with their lifestyles.

Key Issues

13% of consumers are purchasing less bottled water due to environmental concerns, and 60% of Gen Z consumers agree that bottled water is terrible for the environment. Many consumers are not yet sparklingwater drinkers, and brands face opportunities to bring new consumers to the market through flavor innovations. As the pandemic fades, bottledwater brands will benefit from consumers emerging from quarantine to once again socialize and travel. However, slow pandemic and economic recoveries will result in slow bottled-water sales.

of consumers are loyal to their preferred brand of sparkling water, and 48% are loyal to their preferred brand of unflavored bottled water.

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

What Consumers Want, and Why Beverage companies must develop packaged water products that appeal to younger consumers and invest in nonpackaged water solutions. Consumers believe that bottled water is a necessity: Among consumers who purchased more bottled water in 2020, 45% said that they were buying more water to have in case of emergencies, and 80% of consumers agree that it’s important to keep bottled water stocked for emergencies. Only 33% of consumers drank a flavored sparkling water in the past three months, and relative to bottled water, sparkling-water consumers are significantly less likely to keep sparkling water stocked at home at all times; brands therefore have opportunities to bring new consumers into the market and spur consumption frequency among existing category users. PROGRESSIVE GROCER May 2021

ALL’S WELLNESS By Karen Buch

Current CBD Trends DESPITE A PANDEMIC-REL ATED SALES SLOWDOWN, THIS EMERGING CATEGORY IS STILL RIPE FOR GROW TH. BD, or cannabidiol, is a naturally occurring chemical compound derived from the cannabis sativa plant that imparts a feeling of relaxation or calm. CBD is popular both in mainstream media and on retailer shelves. However, the CBD market as a whole has been affected by the COVID-19 pandemic, resulting in disrupted CBD production and distribution, and a temporary slowdown in sales growth. Once predicted to reach $22 billion by 2022, a scaled-back market forecast by Brightfield Group now suggests that the hemp CBD market is expected to reach $16 billion by 2025.

Quality Assurance Enhancements

A 2017 research study published in the Journal of the American Medical Association (JAMA) reported that 26% of the 84 CBD products tested contained doses that were lower than stated on the packaging. Increasingly, customers will look for reputable certificates of analysis or verifications of third-party testing to authenticate potency claims. Brands will look for ways to differentiate themselves and gain consumer trust by communicating on country of origin, pesticide-free growing practices, avoidance of extraction solvents such as butane and hexane, dose consistency, specific cannabinoid and terpine content profiles, full-spectrum cannabinoids versus CBD isolate, and other markers of CBD quality.

CBD Customer Insights

A recent Invisibly poll of more than 1,000 consumers found that most people (62%) have never tried a CBD product, suggesting that a sizable opportunity remains for grocery retailers to acquire new customers who may not be aware of CBD’s benefits. Today’s users of topical and ingestible forms of CBD are largely women, outpacing male and nonbinary users by two to one. Those who say they would consider taking CBD name stress, anxiety and pain relief as top reasons to give it a try. Perhaps one of the most effective ways to introduce new customers to CBD is to point them toward CBD-infused gummies. Why? High Yield Insights data suggests that six in 10 new CBD customers try CBD gummies before delving into other forms of CBD.

Product Segmentation Growth

Increasingly, product segmentation will attempt to address specific needs such as stress, anxiety and pain relief. This may prove difficult for manufacturers, however, due to regulations restricting the use of health claims. Scientific research currently supports the use of CBD to combat a variety of ailments and conditions, including sleep disorders, inflammation, seizures, IBD/IBS, and dozens of other conditions. The body of available research evaluating the safety and efficacy of CBD is expected to grow rapidly to keep pace with industry and consumer interest in these products.

CBD Category Expansion

Expect growth, diversification and innovation among the various delivery modes of CBD. Soft-gel capsules, tinctures, creams, topical ointments and salves, suppositories, sprays, sublingual strips, edibles, infused beverages, chewing gums, and pet products are all available today. The challenge will be to help consumers understand which delivery modes and doses to choose to meet specific therapeutic needs. For example, a soft-gel capsule may provide up to eight hours of relief, while sublingual options may offer faster relief for shorter periods of time. Edibles offer the greatest variability due to wide ranges of CBD content and individual differences in digestion and metabolism. Although CBD products are largely marketed as supplements, users may experience side effects or medication interactions, and therefore should discuss CBD use with a health professional.

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Expect growth, diversification and innovation among the various delivery modes of CBD. Educate, Educate, Educate

Research suggests that 58% of Americans don’t understand the difference between CBD and THC (the intoxicating component of cannabis sativa). The biggest opportunity to capture sales of CBD lies with retailers that can effectively educate shoppers on the uses, safety, efficacy and dosing of CBD. Retailers should offer advice about CBD from experts trained to evaluate available scientific research, including in-store pharmacists and retail dietitians. Providing accessible, reliable education can help drive consumer awareness, confidence and trial of CBD products. Karen Buch RDN, LDN, is a registered dietitian/nutritionist who specializes in retail dietetics and food and culinary nutrition communications. One of the first supermarket dietitians, she is now founder of, and principal consultant at, Nutrition Connections LLC, providing consulting services nationwide. You can connect with her on Twitter @karenbuch and at NutritionConnectionsLLC.com.

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100

UNDERWRITTEN BY

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By Mike Troy, Gina Acosta and Bridget Goldschmidt

The food and consumables industry enjoyed record sales growth in 2020 as consumer behavior shifted dramatically due to the pandemic. The effect of COVID-19 is evident in the performance of every company on this year’s PG 100 ranking. What’s next for America’s grocers is less clear, however. As the pandemic begins to wane and vaccination rates move well past 50% this summer, a great reopening of the world’s largest economy will unfurl, bringing known and unknown changes to the world of food and consumables. As this era of uncertainty arrives in the second half of 2021, it brings new challenges and opportunities, blended with intensifying trends, all of which is overlaid by the rapid advancement of technology and shifting shopper behaviors and product preferences. These themes are explored in Progressive Grocer’s 88th Annual Report. PROGRESSIVE GROCER May 2021

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 nnual reports typically serve a few purposes for companies. They’re an opportunity to review prior-year accomplishments, reinforce strategic priorities and share a vision of how the company plans to grow. This approach has a lot in common with Progressive Grocer’s 88th Annual Report. We revisit a year unprecedented in the annals of retailing, which was filled with notable developments, and look toward the future to share insights and perspectives consistent with Progressive Grocer’s “Ahead of What’s Next” brand vision. This was the same aspiration we had about this time last year, when we published our 87th Annual Report. The big difference between now and then was that COVID-19 was just beginning to grip the nation, whereas today, there’s finally light at the end of the pandemic tunnel. Go back to March 13, 2020, when a national emergency was declared and reflect on the reaction of Americans and retailers. A food shopping frenzy left grocers’ shelves bare; Americans were scared, unsure about what measures to take to protect themselves, and adjusted their lifestyles accordingly. Home became the center of everything — work, school, entertainment — as previously normal activities, such as eating at restaurants, going to movies or sporting events, or even having elective surgery, were suddenly off-limits. Retailers found ways to maintain operations, despite the unprecedented circumstances, and displayed tremendous ingenuity to keep customers and associates safe while working closely with suppliers to ensure the availability of products. It wasn’t pretty at times, but grocers got the job done as the pandemic increased its grip on the nation. It was against this backdrop of swirling chaos, barely a month into the pandemic, that Progressive Grocer published its 87th Annual Report in April 2020. The goal at the time was to embrace our mantle of leadership by peering into the future and identifying key ways that the world of food retailing would change forever. It was a challenging exercise, given that many issues related to COVID-19 were still in flux, most notably the severity and duration of the pandemic. Despite this handicap, some of the prognostications made at the time proved more accurate than we could have imagined as the pandemic dragged on. They’re worth revisiting, because many are still relevant. For example, we described the advent of touchless commerce and the acceleration of e-commerce. “Every aspect of food retailers’ operations will be impacted by this aversion to surfaces, ushering in the age of touchless commerce,” we wrote of this emerging new reality. As for e-commerce, we noted that “COVID-19 has served as the ultimate catalyst to accelerate innovation around the shopping experience of the future.” Other predictions of enduring change related to heightened interest in supply chain efficiency and enhanced sanitation protocols, the death of self-service, and a sustained shift to at-home cooking. Perhaps the most prescient of the lasting changes highlighted in the prior year’s Annual Report related to labor issues and the need to revamp hiring and training. We opined: “Grocers will need to accelerate investments in automation as labor becomes more expensive and consumers demand pickup and delivery options that drain profits. Operating costs will remain under pressure for a long time.” 20

progressivegrocer.com

Revisiting events from the prior year and predictions about lasting changes brought on by a pandemic is a useful way to pivot toward conversations about the current environment and the road ahead. In many respects, the future seems clearer now that it did a year ago at this time. For starters, multiple highly effective vaccines were developed in record time. By the midpoint of the year, roughly half of the nation will have been immunized, helping the nation achieve escape velocity to break free from the lifestyle-altering forces of a pandemic. This shift isn’t necessarily good news for food retailers for a couple of reasons. At a high level, it means that the displaced demand that flowed to food retailers from restaurants that were shuttered or operating at reduced capacity due to social-distancing restrictions will now flow back to foodservice operators. How much

Estimated sales lost by the restaurant and foodservice industry, with roughly 8 million employees laid off or furloughed. Source: National Restaurant Association, “2021 State of the Industry”

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88 TH ANNUAL REPORT & THE PG 100 of it and how fast is unclear, but the negative effect in 2021 is likely to be as profound as the positive effect was in 2020, when the combination of reduced access to restaurants and pantry loading led to sales gains that were well into the double digits. Already, major publicly held retailers are forecasting flat to declining same-store sales for the duration of 2021 as they lap extraordinary gains in 2020. One way to assess the potential negative effects of a COVID-19 recovery on grocery this year is to look at the extent of pain and suffering felt by the restaurant industry last year. The National Restaurant Association (NRA) described the pandemic as a devastating force that put the industry through the worst business conditions in history. The restaurant and foodservice industry lost an estimated $240 billion in sales and roughly 8 million employees were laid off or furloughed. As of Dec. 1, 2020, Washington, D.C.-based NRA estimates in its “2021 State of the Industry” report that more than 110,000 eating and drinking establishments completely closed for business temporarily or for good. So, while the pendulum swings back toward food and away from food at home, the fact that there are fewer foodservice operators in business suggests that grocery won’t give back all of the share-of-stomach gains it realized during the past 14 months. NRA concedes as much in its annual report, noting, “Although restaurant and foodservice sales are expected to post double-digit growth in 2021, it won’t be nearly enough to make up for the substantial losses experienced in 2020.” Even so, there will be enough of a restaurant rebound that food retailers will feel a COVID-19 sales hangover. This issue of where the pendulum settles between food at home and food away from home will be a major overhang on the industry in 2021, but there are plenty of other issues where uncertainty abounds and opportunity beckons. As was the case last year, we peer into the future for our annual look at the key changes, trends, new realities and shifting societal expectations affecting the world of food and consumables. Our hope is to provide a clear-eyed view of what’s next for America’s grocers. 22

progressivegrocer.com

A common statement heard during the digital age relates to how an accelerating pace of change is causing disruption and transformation. While true generally, excessive usage left the phrase sounding trite. That’s no longer the case after the pandemic hit, when it became common to hear retailers talk of compressing five years of change into five weeks. This was especially true in the area of e-commerce, where aversion to physical spaces led to rapid adoption of grocery delivery and pickup services, which many retailers scrambled to implement and expand, experiencing triple-digit growth rates in the process. The newfound sense of urgency that grocers discovered during the pandemic came to life in other areas as well, from rationalizing assortments to coping with supply chain issues to quickly implementing enhanced safety protocols in stores.

Retailers that thought they moved fast and were early adopters of innovation prior to the pandemic gained a new appreciation for what an accelerated pace of change and true disruption really looks like. It may have taken a pandemic, but many in the grocery industry quickly developed a more solid digital footing that will serve as an accelerant of continued change and more rapid adoption of products and services demanded by shoppers.

The future of physical retailing is the subject of much debate. That was the case before the pandemic, but it has intensified as shopper traffic has declined, sales have shifted online and transaction sizes have increased. Stores increasingly functioned as highly inefficient fulfillment centers for pickup and delivery orders throughout the pandemic, but now what? Consumer surveys on the issue of resuming physical shopping are conflicting and inherently flawed, because stated intentions tend to differ materially from actions. This leaves most retailers in a broad middle ground, convinced that stores will still matter, but that they’ll be used differently by shoppers as ever larger volumes and food and consumables sales are digitally enabled. It’s a safe position to take, and there’s ample evidence to support the view, considering the success that many retailers have enjoyed by adopting a seamless mindset.

Retailers will continue to embrace all things digital, which is important because that’s what shoppers want. However, efforts need to be made to help shoppers regain an appreciation for the joy of food shopping and exposure to the aromas of freshly prepared offerings, beautifully merchandised produce and the random discovery of new items in the center store. Doing so will do wonders for financial results, because the pandemic caused shoppers to shift to the highest cost-to-serve model imaginable. Retailers should have strategies ready to entice shoppers back into physical stores when the pandemic is officially declared over, which for many shoppers will mean the ability to ditch their face coverings in stores without visual cues of lurking danger, such as hygiene barriers and big jugs of hand sanitizer.

B YO D

I NITE 21+

y b

BEER

33%

of category growth is from Hard Beverages, driven by Seltzers, Canned Cocktails & Canned Wine. Source: IRI MULC FY 2020

M O

z m

, .

DID YOU KNOW?

S LTZ RS 82% f S

b ULTRA S z

Bringing unique, elevated ﬂavors like Spicy Pineapple, Cucumber Lime & Peach Pear 30+ co-ed crowd.

. novelty, ﬂavor variety,

d brands they recognize

L m

With 99% brand recognition, Bud Light Seltzer is winning with unique Seltzer demographics including 27% of Hispanic shoppers d 38% of African American shoppers

At only 17% household penetration, seltzers still have a ton of room for growth. Recognizable brands like Bud L d Michelob ULTRA are perfect for enticing new shoppers into Seltzers.

Source: IRI Seltzer Purchase String Analysis Jun 20; IRI Panel All Outlets 02-21-21; Morning Consult weekly t survey (n = 6,000 total alc drinkers) // Remesh Live Consumer Session (n=200 light beer/seltzer drinkers) // GameChanger At Home Usage Survey (n = 282 21-29 seltzer drinkers) Jun’20

RTD COCKTA LS

C d - d R D cocktails, with over 1,000 awards and counting!

RTD The convenience of RTD C k more occasions. occasions As a result, RTDs are segment, up 123%.

+192% +33%

C m spend more for the convenience.

$3.00

Price Per Serving

$0.84

RTD Cocktails

Spirits

Place canned cocktails adjacent to spirits, 20–25 SKUs across 5–7 brands. 8 RTD Cocktail growth is accelerating

Source: IRI MULC 02-21-21; IRI MULC FY20

RTD

B b

+57% Singles make up 60% dollar share share, with 64% of RTD Wine dollar sales being Rosé & White. R D

+16% C

Babe is the most d on Instagram, with the number of repeat buyers being 1.8. 75% of purchases are incremental.

Place canned wine adjacent to bottle wine; separate singles and multi-packs, while keeping brands together, 10–16 SKUs per store across 4–5 brands. Source: IRI MULC 02-21-21; IRI MULC FY20; IRI Panel SOV All Outlets CY20

T m progressivegrocer.com/anheuser-busch-ignite.

Lead Future Growth, Together.

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 Investors earlier this year handed online food retailing startup Misfits Market $200 million in additional funding, valuing the two-and-a-half-year-old company at more than $1 billion. Delanco, N.J.-based Misfits got its start as an online seller of surplus produce, but recently its assortment expanded to include packaged goods and meat. Fellow startup Imperfect Foods, a San Francisco-based grocery delivery service similar to Misfits, secured $95 million in new funding earlier this year, bringing its total amount raised to more than $700 million. Meanwhile, Burlingame, Calif.-based online e-grocer Farmstead recently secured $7.9 million, bringing its total funding to roughly $15 million, which it plans to use to enter 14 new markets in 2021. What these companies have in common is that they perceive traditional grocers as market share donors to their new approach. Farmstead describes itself as “the first online grocer to offer fresh, high-quality groceries, delivered for free, at better prices than local supermarkets.” Misfits takes a similar tack, asserting that “it delivers fresh organic produce, sustainably sourced pantry staples, and other grocery items straight to your door at up to 40% off grocery store prices.”

A large, mature market that has been slow to adopt technology and largely unwilling to disrupt itself presents potential challenges to incumbent food retailers. The good news is that much of the startup activity involves technology solutions from innovators that help food retailers operate more efficiently; optimize pricing, promotion and assortment decisions; improve order accuracy; and reduce food waste. Other good news from the retailers’ standpoint: Cheap money continues to fuel risk-taking in the startup world as investors seek outsized returns by helping potential disruptive companies grow.

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• Coupons

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This was a callout in last year’s annual report, but it’s worth highlighting again this year, and that will be the case next year and beyond. That’s because, as successful retailers and suppliers know, the supply chain is everything in food retailing, an industry with the most complex supply chain of all retail sectors. The pandemic exposed some vulnerabilities, if that’s what out-ofstocks associated with frenzied shopper behavior can be called. By and large, however, supply chains functioned at a high level, with product supply interruptions falling into the classification of first-world inconveniences. Where supply chains were particularly stressed was in the area of the so-called last-mile fulfillment of online orders, whether delivered or picked up at the store. This is an area of vulnerability as grocers are racing to get digital right.

The path forward with the optimalfulfillment method for online grocery should gain some clarity in 2021. Huge bets have been placed on micro- and macrofulfillment solutions. On the one hand, there’s The Kroger Co., which, through its partnership with U.K. online grocer Ocado, is building massive fulfillment centers filled with robotic picking technology. Two of 11 planned facilities, both measuring 375,000 square feet, are now operational near Kroger’s hometown of Cincinnati and outside Orlando, Fla. Meanwhile, micro-fulfillment technology is attracting major investment. Japan’s SoftBank recently spent $2.8 billion to acquire a 40% stake in European micro-fulfillment leader AutoStore. The investment values AutoStore at nearly $8 billion, a tidy sum to pursue growth in the online grocery world.

Japan's SoftBank has acquired a 40% stake in European microfulfillment leader AutoStore.

Between appreciation bonuses, hero pay and routine hourly wage increases, 2020 was a year unlike any other from the standpoint of hourly employees. In addition, front-line employees qualified to receive multiple stimulus payments from the federal government. After receiving windfalls of varying degrees over the past 14 months, front-line workers could be in for another boost. Legislation introduced in January called Raise the Wage Act of 2021 would effectively double the federal minimum wage to $15 an hour. More recently, President Joe Biden signed an executive order requiring federal contractors to pay a $15 minimum wage “to hundreds of thousands of workers who are working on federal contracts.” This was dismissed by some as largely symbolic because of the small number of people affected, but the optics of an action tend to matter more in Washington, D.C., than the actual impact. Either way, retailers will be facing increased expense pressure as the wage floor moves up.

55.5

EMPLOYEES 16 and older are paid an hourly wage.

1.5 %

of those are paid the federal minimum. Source: Bureau of Labor Statistics

The perennial challenge for the retail industry overall, and food retail in particular, is having a fact-based conversation that balances the hourly wages paid with the opportunity afforded by the industry. For example, Bureau of Labor Statistics data for 2020 shows that 55.5% of workers age 16 and over are paid an hourly wage, but only about 1.5% of those are paid the federal minimum, and workers under age 25 account for about half of those who earn the minimum wage. Food retailing and foodservice are industries where many of the nation’s youth first gain an appreciation for the fundamentals of business and the importance of taking care of customers. Retailers value front-line workers, which is why it’s hard to find any that pay the bare minimum. That said, the industry has an opportunity to do a better job of sharing facts about pay and the career potential that exists for punctual, dedicated employees who display initiative and provide exemplary customer service.

PROGRESSIVE GROCER May 2021

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 Environmental, social and governance (ESG) considerations have been foundational aspects of food retailing long before anyone knew to apply the ESG label to such efforts. Indeed, the business models of some retailers were founded on one or more aspects of ESG. However, the past year saw matters related to ESG become elevated to unprecedented levels, especially when it comes to racial equity and climate issues. Companies are being far more aggressive in regard to sharing details about policies established and actions taken to advance racial equity and overall diversity and inclusion. The same is true regarding climate change, an issue often described in the direst of terms, including “ emergency,” “crisis” or “existential threat.”

Being a regenerative retailer is the next big thing in the ESG world. It used to be enough for a retailer or a supplier to focus on sustainability with initiatives on reducing or avoiding the usage of certain types of materials, or embracing alternative energy sources. Sustainability gave way to the more expansive concept of ESG. In a new shift, the focus has now turned to becoming a regenerative enterprise. Major retailers and suppliers whose operations have a larger environmental footprint have moved from simply doing less harm, to regenerative actions deemed to have a positive impact on people and the planet.

In a year when many categories in food retailing were on fire due to increased at-home consumption of food, the plant-based industry continued to gather momentum. A broad collection of plant-based products in protein, dairy and shelf-stable categories increased sales by 27% to $7 billion, according to the New York-based Plant Based Food Association and The Good Food Institute, based in Washington, D.C. The outsized growth isn’t just a pandemic anomaly: Plant-based products are seeing increased household penetration and repeat purchase, with the organizations highlighting a household penetration rate approaching 60%.

Forecasting more growth for plant-based products may not be the boldest of predictions, but it’s worth noting that food retailers are on the leading edge of a trend with larger long-term potential. That’s because plant-based products are perceived as more healthful alternatives that are also better for the environment, a powerful combination of attributes that resonates with younger shoppers in particular. While there are valid arguments to support continued growth of plant-based products, a real risk is that marketers’ excessive use of the plant-based claim diminishes or even delegitimizes its value as a driver of consumer spending.

Increase in sales for plant-based products Source: Plant Based Foods Association and The Good Food Institute

progressivegrocer.com

A pandemic, heightened supply chain issues, sustainability concerns and persistent food safety difficulties proved to be a powerful combination to advance the indoor-gardening/vertical-farming industry. New facilities came online, key hires were made and companies went public. Traditional agricultural practices, especially relating to leafy greens and other types of produce, are being disrupted throughout the United States by companies such as 80 Acre Farms, Shenandoah Growers, AppHarvest, Plenty Unlimited and newly public AeroFarms.

Whether it’s called indoor farming or vertical gardening, the merits of growing produce in climatecontrolled facilities that use a fraction of the water of traditional agriculture while offering a host of supply chain efficiencies will be an irresistible value proposition for food retailers. Newark, N.J.-based AeroFarms contends that it’s serving a $1.9 trillion addressable market globally.

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 There’s always a lot going on in food retail, and that’s never been truer than today. While not every change, disruption or new trend is touched on in Progressive Grocer’s 88th Annual Report, we would be remiss not to acknowledge the following notable issues on our radar:

Robots are coming to retailers in larger numbers and performing tasks that humans don’t like and aren’t particularly good at. Outside of the store, major pilot programs remain underway to prove the use case for autonomous delivery vehicles, including drones. When even Bentonville, Ark.-based Walmart realizes that it needs a loyalty program, the world of retail has clearly turned. Membership programs aren’t new, but competing and winning in the future will require retailers to have ever more granular detail about shoppers. Providing a feature-rich program, including more relevant promotions served through retail media platforms that shoppers want to belong to, remains the best way to accomplish that goal.

progressivegrocer.com

Instacart, Uber, Shipt and DoorDash continue to jockey for dominance of the food delivery world. The competition among the platforms is a good thing for food retailers, but eventually the platforms could become competitors — at least that’s an undercurrent of concern among food retailers. They continue to grow in importance at retail. Again, not a new phenomenon, but with many retailers already at penetration rates of roughly 30%, the future of national and regional brands is a source of concern for suppliers. Ultimately, shoppers will decide what the optimal penetration rate is for private brands, assuming that they can discern between retailers’ own brands and those of CPG companies. The pandemic introduced a wide range of challenges to providing shoppers a pleasant store experience, including when it comes time to check out. An increasingly rare sight at some retailers has become a checkout lane staffed by a real live person. Expansion of self-checkout systems hit an all-time high in 2020, and that trend is continuing in 2021.

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EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 Some other key considerations when reviewing The PG 100 include: Progressive Grocer takes an expansive view of the competitive set for food and consumables. Distinctions between types of retailers are blurry, with food and consumables representing a key element of the value proposition for many nontraditional grocers. This expansive philosophy applies to geography as well. The PG 100 includes companies based in Canada and Mexico that may have operations in the United States, and the same is true of U.S. companies that operate north and south of U.S. borders. Companies seeing the strongest growth maintained store expansion during 2020 while also receiving a boost from pandemic-driven demand.

An unprecedented year on many levels saw sales surge to new heights.

By Mike Troy

ouble-digit rates of growth were common among companies on this year’s PG 100 ranking of North America’s largest retailers of food and consumables. The onset of a pandemic in early 2020 caused dramatic shifts in every aspect of American life, most notably the purchase of food. As a result, an overwhelming number of PG 100 companies experienced record rates of sales growth, which meant that the combined sales of PG 100 constituent companies increased 11.6% to $2,112 trillion, compared with $1,892 trillion last year. For perspective, the food and consumables industry would normally consider a good year to be one in which a modest degree of inflation and increased consumption amid a strong economy produced a low single-digit gain. There were some companies that grew more slowly in 2020, but those situations tended to be caused by company-specific issues, rather than the overall demand environment, which benefited greatly from displaced demand from the foodservice industry. This once-in-a-lifetime phenomenon helped good retailers look great and great retailers look fantastic.

progressivegrocer.com

Retailers with exposure to fuel sales suffered as fewer people traveled, and when they did so, paid lower average per-gallon prices for fuel. Retailers for which prepared foods are a key aspect of their strategy were also challenged due to pandemic-related restrictions, which hindered operations. Finally, it’s worth noting that creating a list of this type is an inexact science, due to large numbers of privately held companies that restrict access to the most basic details of their operations. A similar caveat was shared last year to highlight the inherent challenge in forecasting. To compensate, we rely on public and private sources, independent research, and proven forecasting techniques common in the financial world. The result is an annual ranking intended to serve as the definitive guide to the 100 largest retailers of food and consumables in North America.

THE LIST

Company

Fiscal Year End Sales (In Millions Dollars U.S.)

Prior Year

Percent Change

Store Count

Walmart U.S.

$369,963

$341,004

8.49%

4,743

Amazon, NA retail, ex Whole Foods Market

$220,058

$153,581

43.28%

The Kroger Co.

$132,498

$122,286

8.35%

2,743

Costco (U.S.)

$115,788

$106,092

9.14%

552

Walgreens Boots Alliance (U.S retail)

$107,701

$104,532

3.03%

9,021

Rosalind Brewer, CEO

Target Corp.

$93,561

$78,112

19.78%

1,868

Brian Cornell, Chairman and CEO

CVS Health

$91,198

$86,608

5.30%

9,962

Karen Lynch, President and CEO

Albertsons Cos.

$69,690

$62,455

11.58%

2,277

Vivek Sankaran, President and CEO

Sam's Club (U.S.)

$63,910

$58,792

8.71%

599

Kathryn McLay, President and CEO

Ahold Delhaize USA

$51,838

$44,841

15.60%

1,970

Kevin Holt, CEO

Publix Super Markets

$44,864

$38,116

17.70%

1,264

Randall T. Jones Sr., CEO

Loblaw Cos. Ltd.

$41,388

$37,716

9.74%

2,439

Galen Weston, Executive Chairman

H-E-B

$36,816

$29,700

23.96%

354

Alimentation Couche-Tard (U.S., Circle K)

$36,680

$38,999

-5.95%

7,283

Dollar General

$33,746

$27,753

21.59%

17,177

C&S Wholesale Grocers

$31,450

$28,500

10.35%

7,700

Bob Palmer, CEO

Walmart de Mexico y CentroAmerica (Mexico only)

$28,664

$26,517

8.10%

2,634

Guilherme Loureiro, President and CEO

Meijer Inc.

$24,157

$20,350

18.71%

256

Rite Aid

$24,043

$21,928

9.65%

2,510

Heyward Donigan, President and CEO

Costco (Canada)

$21,185

$19,502

8.63%

101

Pierre Riel, SVP/Country Mgr. Canada

Walmart Canada

$19,991

18,420

8.53%

408

Horatio Barbeito, President and CEO

Empire Co. Ltd. (Sobeys)

$18,934

$17,904

5.75%

1,547

Michael Medline, President and CEO

Wakefern Food Corp.

$18,300

$16,650

9.91%

363

Aldi U.S.

$17,056

$15,486

10.14%

2080

Jason Hart, CEO

7-Eleven Inc. (U.S. only)

$16,749

$20,874

-19.76%

9298

Joe DePinto, CEO

Amazon (Whole Foods Market, U.S. and Canada)

$16,006

$16,960

-5.63%

514

John Mackey, Co-Founder and CEO

BJ's Wholesale Club

$15,430

$13,190

16.98%

221

Bob Eddy, President and CEO

Rank

Top Executives John Furner, President and CEO Jeff Bezos, Founder and CEO Rodney McMullen, Chairman and CEO Craig Jelinek, President and CEO

Charles Butt, Chairman and CEO Brian Hannasch, President and CEO Todd Vasos, Chairman and CEO

Rick Keyes, President and CEO

Joe Colallilo, Chairman and CEO

Source: Company reports, Progressive Grocer research, industry and analyst estimates PROGRESSIVE GROCER May 2021

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 Rank

Company

Fiscal Year End Sales (In Millions Dollars U.S.)

Prior Year

Percent Change

Store Count

Top Executives

Trader Joe's Co.

$14,100

$13,000

8.46%

530

Metro (Canada)

$13,453

$12,534

7.33%

1,601

Eric R. La Fleche, President and CEO

Dollar Tree

$13,265

$12,507

6.06%

7,805

Michael Witynski, President and CEO

Marathon Petroleum (Speedway)

$12,303

13,963

-11.89%

3,839

Michael Hennigan, President and CEO

Family Dollar

$12,243

$11,102

10.28%

7,880

Michael Witynski, President and CEO

Wawa Inc.

$11,900

$12,500

-4.80%

901

Chris Gheysens, President and CEO

Hy-Vee Food Stores Inc.

$11,150

$10,200

9.31%

275

Randy Edeker, Chairman and CEO

Wegmans Food Markets Inc.

$10,695

$9,700

10.26%

105

Colleen Wegman, President and CEO

Associated Wholesale Grocers

$10,634

$9,666

10.01%

3,200

Giant Eagle Inc.

$9,850

$9,350

5.35%

488

Laura Karet, CEO

RaceTrac

$9,350

$9,800

-4.59%

552

Max McBrayer, CEO

Source: Company reports, Progressive Grocer research, industry and analyst estimates

Dan Bane, Chairman and CEO

Dave Smith, President and CEO

THE LIST

Rank

Company

Fiscal Year End Sales (In Millions Dollars U.S.)

Prior Year

Percent Change

Store Count

Top Executives

SpartanNash Co.

$9,348

$8,536

9.51%

156

Casey's

$9,175

$9,352

-1.89%

2,207

Darren Rebelez, CEO

EG America (C-stores)

$8,425

$8,950

-5.87%

1,730

George Fournier, President

Costco (Mexico)

$8,180

$7,605

7.56%

Southeastern Grocers LLC

$8,033

$6,667

20.49%

419

Anthony Hucker, President and CEO

WinCo Foods Inc.

$7,795

$6,858

13.66%

131

Grant Haag, CEO

Soriana

$7,618

$7,554

0.85%

795

Ricardo Martin Bringas, CEO

Alimentation Couche-Tard (Canada, Couche-Tard)

$6,739

$7,155

-5.81%

2131

Brian Hannasch, President and CEO

United Natural Foods Inc. (Independent sales only)

$6,699

$5,536

21.01%

N/A

Steven Spinner, Chairman and CEO

Sprouts Farmers Market

$6,468

$5,634

14.80%

362

Jack Sinclair, CEO

Big Lots

$6,199

$5,323

16.46%

1,410

Tony Sarsam, President and CEO

Jaime Gonzalez, SVP/Country Mgr. Mexico

Bruce Thorn, President and CEO

Source: Company reports, Progressive Grocer research, industry and analyst estimates

EXCLUSIVE

88 TH ANNUAL REPORT & THE PG 100 Fiscal Year End Sales (In Millions Dollars U.S.)

Prior Year

Percent Change

Store Count

Demoulas Super Markets Inc. (Market Basket)

$5,600

$5,200

7.69%

The Save Mart Cos.

$5,250

$4,600

14.13%

206

H-E-B (Mexico)

$5,184

$4,500

15.20%

Save-On-Foods

$5,142

$4,368

17.72%

181

Darrell Jones, President

Stater Bros. Markets

$5,119

$4,507

13.58%

170

Pete Van Helden, CEO

Ingles Markets Inc.

$4,610

$4,202

9.71%

197

James Lanning, President and CEO

Golub Corp. (Price Chopper/Market 32)

$4,334

$3,860

12.28%

131

Scott Grimmett, CEO

Save A Lot/Onex Corp.

$4,175

$4,014

4.01%

1,000

Grupo Commercial Chedraui (Mexico only)

$4,146

$3,872

7.08%

325

Jose Antonio Chedraui Eguia, CEO

Smart & Final Inc.

$4,141

$3,601

15.00%

254

Dave Hirz, President and CEO

Weis Markets

$4,112

$3,543

16.06%

196

Jonathan Weis, Chairman, President and CEO

Raley's Supermarkets

$3,975

$3,470

14.55%

124

Keith Knopf, President and CEO

Brookshire Grocery Co.

$3,714

$3,258

14.00%

181

Brad Brookshire, Chairman and CEO

Defense Commissary Agency (DeCA)

$3,900

$3,700

5.41%

177

Bill Moore, Director and CEO

Schnuck Markets Inc.

$3,450

$3,100

11.29%

112

Todd Schnuck, Chairman and CEO

Alex Lee Inc. (Lowes Foods)

$3,350

$3,050

9.84%

113

Brian George, President and CEO

Tops Markets LLC

$3,260

$2,937

11.00%

162

Frank Curci, Chairman and CEO

Bodega Latina Corp. (El Super/Fiesta)

$3,159

$2,577

22.58%

123

Carlos Smith, President and CEO

Dollarama

$3,150

$2,963

6.31%

1,356

Grocery Outlet Inc.

$3,134

$2,559

22.47%

380

Eric Lindberg, CEO

Brookshire Brothers

$2,759

$2,440

13.07%

127

John Alston, President and CEO

99 Cents Only

$2,700

$2,405

12.27%

391

Barry Feld, CEO

Farmacias Benavides

$2,631

$2,922

-9.96%

1,165

Associated Food Stores

$2,620

$2,400

9.17%

403

HelloFresh

$2,546

$1,258

102.38%

The Fresh Market

$2,487

$2,241

10.98%

159

Rank

Company

Source: Company reports, Progressive Grocer research, industry and analyst estimates

progressivegrocer.com

Top Executives Arthur Demoulas, President and CEO Nicole Pesco, CEO Fernando Martinez, Director General

Kenneth McGrath, CEO

Neil Rossy, President and CEO

Macedonio Garza Hernandez, CEO Robert Obray, President and CEO Dominik Richter, CEO Jason Potter, CEO

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WonderBar Trays ®

Containers Well Contained

Cooler Capable AMT

Neatly and effectively display cooler and C freezer items, yogurt, ll ll AAincluding dd jj aa cc ee n C rr oo ss ss SS ee ice n cc ii ee ss dips, Cpuddings, r o s s S e l l cream, A d j a c single-serve encies foods, and more. Our small Adjustable Merchandising Tray fits from a range After one item is (AMT) removed our After one item is removed from our After itemcups; is removed our of 4- to one 6-ounce the medium AMT auto-feed, adjustable dual lanefrom trays, the auto-feed, adjustable dual lane trays, the auto-feed, adjustable dual lane the organizes mid-range and the next product moves offerings; right intotrays, position. next product moves right into position. nextAMT product moves right into position. large gives ice cream lovers pause Each lane can be individually adjusted to Each lane can be individually adjustedto to lane be individually adjusted to browse and choose a pint of their aEach range of can widths to maximize cross-sell aarange of widths to maximize cross-sell range of widths to maximize cross-sell favorite flavor (hmmm ...why not get both opportunities. In addition, you can choose opportunities. youcan canchoose choose opportunities. In In addition, addition, you Cherry Vanilla andforRocky This the push strength either Road?). lightweight or the push strength for either lightweight or the push strength for either lightweight or manual-feed that products heavy items. tray Dual ensures Lane Trays give you the heavy Traysgive giveyou youthe the heavyitems. items.Dual Dual Lane Trays remain faced and accessible. to ability to customize displays to Time suit your ability to suit suityour your abilityto to customize customize displays displays to re-stock? lift out and refill. Add Clear inventoryJust offerings. inventory inventoryofferings. offerings. Scan Label Holder, and you’re finished! Call®800-444-4665 | TrionOnline.com

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Zip Track EndlessMerchandiser Baskets

Endless Baskets

each track together. ZIP Track® offers

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Fast and Easy

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Cooler Capable AMT Attached-Back Hooks Attached-Back Hooks

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Inc.

Extend Your Revenue Super Hooks! E x t e n d Y o u®r R e v e n u e

Pegboard Extenders WonderBar Hooks Pegboard Extenders

Extend your opportunities to WonderBar® Displays are the versatile increase revenue with Trion’s Extend your opportunities to heroes of the Trion product family, pegboard Use E x t e n dextenders. Y o u r Rwith e v ethem n u e to increase revenue coming to the rescue when youTrion’s need E display x t e nextenders. d surfaces Y o u r Rsoe vyou e n u eto layer pegboard themcan muscle and good looks to Use merchandise simultaneously show tall and layer of display surfaces youshort can items all sizes. Barso Hooks can Extend your These opportunities to items. Commonly used to merchandise simultaneously show tall and short lift heavy loads in their capable arms. Extend your opportunities to increase revenue with tools Trion’s mops, brooms, long handled and items. Commonly used to merchandise Display or Scan, Saddle Mount or Trion’s Plug increase revenue with pegboard extenders. Use them to more, with cross sells and accessories mops, brooms, long handled tools and in,pegboard there are Trion WonderBar Hooks extenders. Use them layer display surfaces so you canto directly in front. Pegboard extenders more, with cross sells and accessories for everydisplay need. show layer surfaces so you can simultaneously tall and short extend your merchandising reach. directly in front. Pegboard extenders simultaneously show and short items. Commonly used to tall merchandise extend your merchandising reach. items. Commonly to merchandise mops, brooms, longused handled tools and mops, brooms, long and handled tools and more, with cross sells accessories more, with cross sells and extenders accessories directly in front. Pegboard directly in merchandising front. Pegboard extenders extend your reach.

Pegboard Extenders Pegboard Extenders

extend your merchandising reach.

HOOKS | lAbElING | SHElF & COOlER MERCHANDISING HOOKS || SHElF HOOKS || lAbElING lAbElING SHElF&&COOlER COOlER 800-444-4665 | info@triononline.com MERCHANDISING MERCHANDISING .triononline.com/Art 800-444-4665 800-444-4665 || info@triononline.com info@triononline.com .triononline.com/Art .triononline.com/Art HOOKS | lAbElING | SHElF & COOlER HOOKS |MERCHANDISING lAbElING | SHElF & COOlER

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T R HE OF ME T H H E E A A R R T T O O FF M M EERCHANDISING R C C H H A A N N D D II S S II N N G G TE H H E E A TR R T TO O O F FMM M ER R RC C CHH H AA A NN ND D III S S II N N G HT A RA F EE N G G D S Create Your Own Merchandising Masterpiece Your Masterpiece with Trion Create YourOwn Own Merchandising Masterpiece with Trion Fixtures T H E A Create R T OMerchandising F M E R C with H Trion A Fixtures NFixtures D I S I N G

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you useout Trion’s Air insign coolers. ck out products, the benefits ourFlow promotional Check theof benefits ofBaffle ourto promotional and you’ll want up! to fixture needs. Use plastic to fit fit your your fixture needs. Use plastic Product temperature can beto difficult to products, and you’ll want sign up! sign holders are multi-purpose ducts, Extruded and you’ll want to sign up! pushbuttons to attach signs to pegboard. pushbuttons to attach signs to pegboard. maintain at the front of a cooler. This Extruded sign holders are multi-purpose to fitholders your fixture needs. to Use plastic TM uded sign areTM multi-purpose Use FISH Tip hooks Use FISH Tip hooks to position position Air Flow Baffle ensures that cold air is to fit your fixture needs. plastic pushbuttons to attach signs toUse pegboard. it your fixture needs. Use plastic outboard on pegboard, slatwall and outboard on pegboard, slatwall andmore. more. forced forward to hooks keep items at their TM pushbuttons to attach signs to pegboard. Use FISH Tip to position These sign holders make it easy to define hbuttons to attach signs to pegboard. These sign holders make it easy to define ideal temperature. Use as part ofmore. your Use FISH Tip TM update hooks to and position on pegboard, slatwall product categories price specials, product categories update price specials, FISHoutboard Tip TMoutfitting hooks strategy, to position cooler along with outboard on pegboard, slatwall and more. These sign holders make it easy to define highlight product features, and highlight product features, and offer offer board on pegboard, and more. ® slatwall WonderBar Bar Merchandisers and These sign holders make it price easy Extruded to define product categories update specials, special to your customers. specialdeals deals to your customers. Extruded TM se signhooks, holders make it easy to define EWT Expandable Wire Tray product categories update price specials, highlight product features, and offer sign are in heights and sign holders holders are offered offered in 44Clear heights and ® duct categories update price specials, System, and cooler capable Scan highlight product features, and offer special to your customers. Extruded almost any Staggered rear mounts almostdeals anylength. length. Staggered rear mounts hlight sign product features, and offer label holders. special dealsare to your customers. Extruded holders offered in 4 heights and allow positioning at heights. allow positioning at 44 different different heights. cial deals to800-444-4665 your Extruded Call | TrionOnline.com sign holders are offered in 4 rear heights and almost any customers. length. Staggered mounts Call 800-444-4665 || TrionOnline.com Call 800-444-4665 TrionOnline.com holders arepositioning offered inat4Staggered almost any length. rear mounts allow 4heights differentand heights. ost anyCall length. Staggered rear mounts allow positioning at 4 different heights. 800-444-4665 | TrionOnline.com w positioning at 4 different| heights. Call 800-444-4665 TrionOnline.com

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Tool Tool Displayers H a r d Displayers Working Tool Displayers Tool WonderBar EWT Large ToolDisplayers Displayers

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ScanLock ScanLock Hook Hook Locks Locks Cooler Capable AMT ScanLock Hook Locks team for when Scanlock team for aa long long lunch lunch when Scanlock ScanLock Hook Locks Neatly and effectively display cooler Thief! Send lossjob. prevention V e Stop! rScan d i cHook t: G u i lare tyour yon ! the Locks The Scan Hook Locks are on the job. Thegreat great ®®

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® and freezer items, including yogurt, Stop! Thief! Send your loss prevention team long Scanlock ® aaasteal price is in itself, but let price for is steal inlunch itself,when but don’t don’t let the the ® dips, puddings, ice cream, single-serve team for a long lunch when Scanlock Scan Hook Locks are on the job. The great deal deal fool fool you. you. These These locks locks secure secure most most foods, and more. Our small Adjustable Scan Hook Locks are on the job. The great price is a your steal itself, but let the p! Thief! Send loss prevention common scan hooks and can common scanin hooks anddon’t can retrofit retrofit Merchandising Tray (AMT) fits a range price is lunch ahooks. stealThese inChoose itself, but don’t the fool you. locks secure most ® let existing your preferred m for adeal long when Scanlock existing hooks. Choose your preferred of 4- fool to 6-ounce cups;locks the medium AMT deal you. These secure most common scan hooks and can retrofit lock-up: the locks alone lock-up: purchase the locks alone or or n Hookorganizes Locks arepurchase on the job. The great mid-range offerings; and the common scan hooks and can retrofit existing hooks. Choose your preferred choose full lock-and-hook combinations. choose full lock-and-hook combinations. e is a steal in itself, but don’t let the large AMT gives Choose ice the cream lovers pause existing hooks. your preferred lock-up: purchase locks alone or Open hooks when customers request, Open hooks whensecure customers request, fool you. These locks mostof to browse and choose a pint their lock-up: purchase the locks alone or choose full lock-and-hook combinations. then items and re-lock without then replace replace itemscan and re-lock without mmon scan hooks and retrofit favorite flavor (hmmm ...why not get both choose full for lock-and-hook combinations. Open hooks when customers request, the need the key. Even the lock the need for and the Rocky key. Even the This lock Cherry Vanilla Road?). ting hooks. Choose your preferred Open hooks when customers request, then items re-lock without itself is as ititand stays in while itselfreplace is secure, secure, asensures stays in place place while manual-feed tray that products -up: purchase the locks alone or then replace items and re-lock without the need for the key. Even the lock items are accessed by These locks items are accessed by staff. staff. These remain faced andcombinations. accessible. Timelocks to ose fullitself lock-and-hook the need for theit key. Even thewhile lock is secure, as stays in place have been rightly accused of protecting have been rightly accused of Add protecting re-stock? Just lift out and refill. Clear itself is secure, as it stays in place while en hooks when customers request, items are accessed by staff. These locks merchandise of while merchandise of all all types types while protecting protecting ® Scan Label Holder, and you’re finished! items are accessed by staff. locks have been rightly accused ofThese protecting n replace items and re-lock without your profits. Verdict: guilty! your profits. Verdict: guilty! Call 800-444-4665 | TrionOnline.com have beenkey. rightly accused of protecting of all types while protecting need merchandise for the Even the lock Call || TrionOnline.com Call 800-444-4665 800-444-4665 TrionOnline.com merchandise of allintypes while protecting your profits. Verdict: guilty! f is secure, as it stays place while your profits. Verdict: guilty! Call 800-444-4665 | TrionOnline.com

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ms are accessed by staff. These locks Call 800-444-4665 TrionOnline.com e been©2019 rightly accused of |protecting ©2019 Trion Industries, Inc. ©2019 Trion Industries, Inc. Inc. Trion Industries, Trion Industries, Inc. ©2021 chandise of all types while protecting ©2019 Trion Industries, Inc. r profits. Verdict: guilty!

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Scan Scan Hooks Hooks for for Grid Grid WonderBar Hooks Scan Hooks for Grid or flatgrid scan hooks for that. Flip or flatgrid scan hooksare forthe that. Flip or or WonderBar Displays versatile Scan Hooks for Grid Slat flat! Industries B get eTrion s tyour S echoice l e c t makes iofolabel n slatgrid clip, of holder clip,oryou you get your choice label holder ®

heroes of the Trion product family, Slat or flat! Trion slatgrid or flatgrid scan Industries hooksflatback formakes that.metal, Flip or styles. Choose or styles. Choose from flatback metal, or coming to thefrom rescue when you need or flatgrid scan hooks for that. Flip or clip, you get your choice of label holder open wire backplates prong, open wire backplates in single prong, muscle and good looksin tosingle merchandise clip, you get your choice of label holder styles. Choose from flatback metal, or Slat oritems flat! Trion Industries makes slatgrid loop, or scan fronts. You then have of allhook sizes. These Bar can loop, or scan hook fronts. YouHooks then have styles. Choose from flatback metal, or open wire backplates in single prong, or aaflatgrid scan hooks for that. or choice of label holder styles. The entire lift heavy loads in their capable arms. choice of label holder styles. TheFlip entire open wire backplates in single prong, loop, or scan hook fronts. You then have ", range of 11 or 3" and 4" surfaces are Display Scan, Saddle Mount Plug ",your clip, you get choice of labelorholder range of 3" and 4" grid grid surfaces are loop, or scan hook fronts. YouThe then have asupported. choice of label holder styles. entire IfIf slatwire or gridwall is your in,Choose there are Trion WonderBar Hooks supported. slatwire or gridwall is your styles. from flatback metal, or a choice of label holder styles. The entire ", range of 1 3" and 4" grid surfaces are for every need. display surface, your hook choice should display surface, your hook choice should open wire backplates in single prong, range of 1 ",If 3" and 4"orgrid surfaces are supported. slatwire gridwall is your be be Trion. Trion. loop, or scan hook fronts. You then have supported. If slatwire or gridwall is your display surface, your hook choice should a choice of label holder styles. The entire display be Trion.surface, your hook choice should range of be Trion.1 ", 3 " and 4 " grid surfaces are

Scan Hooks for Grid

supported. If slatwire or gridwall is your display surface, your hook choice should be Trion.

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For the Bulky Stuff Oversize? No Problem!

AirDual FlowLane Baffle Mini Trays Sforecast t a g i n isg aAcold r e acooler s B ufront i l t when In The This mini tray leads to maximum revenue, you Trion’s Air FlowBeverage Baffle Hooks in coolers. Foruse Grab-and-Go Sales Pin-Stop Waterfall because it allows complimentary items to

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Zip Track Beverage System

great, wait till you meet itsneatly big brother! them and using Mirror,attractively mirror on the wall. You can be Oversized just like some of your front fencing and dividers to display customize the most difficult item to of products, this weightlifter stays strong the and create all. display Clever space merchandisers useunique large on both metalofand open shelves presentations similar or wire related items. literature holders for three-dimensional, and bar. One-piece installation means This cross-selling approach makes awkwardly sized items like mirrors, you can drop this right into shopping easier forbad theboy customer and framed art, clocks, and more. Available place, adjust as needed, and watch more profitable you. Select from in a range of sizes,for gauges, and weights, the revenue Theoutfitting EWT takes aTrion’s range of increase. other Trion to large literature holders can be over from there, automatically feeding maximize selling space from the base spaced horizontally to accommodate all product to the front and billboarding deck to the top shelf and beyond. ® manner of product sizes. merchandise for maximum visibility.

® Product temperature can be difficult be featured together.downward-canted Dual lanes adjustto to These strong, maintain at the front of a cooler. This fit narrow hooks merchandise sizes as small as waterfall lift more weights than Merchandise allensures size drinks fromair mini Air Flow Baffle is 1a3⁄personal features a that separate pusher 4 ". Each lane Ready for cold a workout, ® trainer. ® Red Bull cans to oversized Gatorade forced forward to keep items at their paddle to keep products and Trion Industries’ hooks forwarded display heavy ® bottles. ZIP Track is the most versatile ideal temperature. Use part your faced. Feature items of as different widths products, like free weights in of multiple and cost-effective Grab-and-Go system cooler outfitting strategy, along with via asymmetric configurations. Cross sizes, with bothlane sales and safety in mind. ® available on the Merchandisers market. Use actual WonderBar Bar merchandise a variety of products with Your customers can easily browseand 3the TM lane width from 2" to 3 /4 ". productEWT to set hooks, Expandable Wire Tray ease. Trays install without tools and out merchandise, which is held in lift place ® Reset lane width on set-upClear in less than System, and cooler Scan for restocking or product rotation. by quick built-in pins capable to keep product

30 seconds. Shelf-based and coolerlabel holders. Full includes and oversize fromline shifting or standard falling. Exercise your ready, this anchored system billboards trays, and display, and pusherrelated hooks. Call 800-444-4665 | TrionOnline.com opportunity to scan cross-sell product for easy selection and fast sale. products and keep your bottom line in Call 800-444-4665 | TrionOnline.com ZIP Track® forwards and faces product at Createutility Your shape! Of course these waterfall all times. Quickly add lanes with this easy hooks are perfect for more than hand®

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to install and adjust system. ZIP Track weights. Give them a try. offers a wide range of adjustability for Merchandising Masterpiece with Trion Fixtures Create Your Own Call ever-evolving 800-444-4665beverage | TrionOnline.com this category and changing package designs.

Over 450 Profiles C o n t a i n e r s ®W e l l C o n t a i n e d

Clear Scan Label Holders Cooler Capable AMT ®

Storewide solutions for any labeling need. Available in a variety of profiles Neatly and effectively display cooler S St taagg ii nn gg A Ar er aesa Bs u B iI ln t I n i lu tlabel (shapes), these bright,including clear holders and freezer items, yogurt, are easily positioned in single-serve all standard dips, puddings, ice cream, S i g n U p ! as well as C-channel configurations, These strong, downward-canted foods, andstrong, more. Our small Adjustable These downward-canted waterfall hooks lift more weights than displays metal, glass, wood, Merchandising Tray fits a range waterfallincorporating hooks lift (AMT) more weights than a personal trainer. Ready for a workout, wire baskets, wire shelving, wire fencing, of 4to 6-ounce cups; the medium AMT a personal trainer. Ready for a workout, What you want your customers to Trion do Industries’ hooks display heavy and scanning hooks. Plain paper labels organizes mid-range offerings; and the products, liketo free weights in multiple Trion Industries’ hooks display heavy know? Want promote great prices or drop inwith behind a clear flexible PVC front, large AMT gives ice cream lovers pause sizes, both and safety inin mind. products, like sales free weights multiple unique product features? Add wall tags Your customers can the their allowing labels beeasily changed quickly and to browse andtochoose abrowse pint sizes, with both sales and safety in mind. to your displays faster than youof can say merchandise, which is held in place inexpensively without messy adhesive favorite flavor (hmmm ...why not get both Your customers can easily browse the “sign Wall tags to mount by up!” built-in pins to allow keep you product backing. Adhesive label holders and Cherry Vanilla and Rocky Road?). This merchandise, which is held in place fromproduct shifting or falling. Exercise your your and price separately on strips also available if isrelated your need. manual-feed tray that to ensures cross-sell byopportunity built-in pins tothat keep product vertical display surfaces, forproducts cleaner products and keep your bottom line in boost Save time, increase visibility, and remain faced and accessible. Time to from shifting or falling. Exercise your overall shape!presentation. Of course these waterfall utility sales with this storewide labeling system. re-stock? Just lift out and refill. Add Clear opportunity to forcross-sell related hooks are perfect more than hand Call®800-444-4665 | and TrionOnline.com Cooler capable, color, built-in promo Scan Label Holder, and you’re finished! products and keep your bottom line in

Pin-Stop Waterfall Hooks Pin-Stop Waterfall Hooks Versatile Wall Tags

An Open and Shut Case P l a c e a L a b e®l A n y w h e r e TM o o k s ! Super H ®

Flip-Scan Hooks Scan-It Scan Arms WonderBar Hooks

Flip-Scan hooks are ® an open and shut case for ease of use. The articulated Scan-It do this? Scan-It do that? label holder ®lifts up and out ofversatile the way WonderBar Displays Scan-Its doare it the all! Scan-Its for easy product access, then falls back heroes ofmake the Trion product family, it easy to label and G the eviewing t rescue Crea t i v e you for product andneed price to when G e t C r eto acoming tvertical ive price products, regardless of info. Our unique label holder flexes open muscle and good looks to merchandise plan-o-gram fixture layout, so items plainofpaper labels can inserted all sizes. These Barbe Hooks canor unusual product shape, Mirror, mirror on theMirror, wall. You can be mirror on the wall. You can be effortlessly. Available with shortarms. label lift loads in their capable the most difficult item toheavy display of spaced displays. the most tightly difficult item to display of all. Clever merchandisers use large holders oror full length label strips and Display Scan, Saddle Mount Plug you need a or flexible all. CleverWhen merchandisers use large literature holders forconstructed three-dimensional, of long-life materials, these in, thereaid are Trion WonderBar to label and priceHooks items awkwardly sized items like mirrors, literature holders for three-dimensional, durable, attractive scan hooks can outfit for every need. quickly and conveniently, turn to framed art, clocks, and more. Available awkwardly sized items like mirrors, all display surfaces, including pegboard, in a range of sizes, gauges, and weights, this Swiss Army knife of outfitting. framed art, clocks, and more. Available slatwall, crossbar, and corrugated. Trion’s large literature holdersgrid, can TM be Scan-It is available in a range of in a range of sizes, gauges, and weights, spaced horizontally to accommodate all Fully compatible with the Clear Scan® back plate sizes and label can holder Trion’s large literature holders be manner of product sizes. Label Holder System for C-channel, configurations. horizontally to accommodate all Call 800-444-4665 shelf |spaced TrionOnline.com edge, wire basket, and refrigerated manner of product sizes. areas storewide.

Literature Holder Literature Holder

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Clip label strips available. shape! Ofholders courseand these waterfall utility Call 800-444-4665 | TrionOnline.com Call 800-444-4665 | TrionOnline.com Call 800-444-4665 | TrionOnline.com hooks are perfect for more than hand weights. Give them a try.

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Scan-It Scan Arms

Scan-It do this? Scan-It do that? Scan-Its do it all! Scan-Its

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Create Your Own Merchandising Masterpiece with Trion® Fixtures Create Your Own Merchandising Masterpiece with Trion Fixtures

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ZIP Track Merchandiser

product front-to-back to “ZIP” each traditionalists —even |product literature. Call Call800-444-4665 800-444-4665 |TrionOnline.com TrionOnline.com ® offers a wide track together. ZIP Track Call 800-444-4665 | TrionOnline.com range of adjustability for changing merchandise selections.

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Holders Strips on Hooks Cooler & Capable AMT Holders Strips on Hooks Holders && Strips Label Holders when youon seeHooks how easily and freezer items, including yogurt, Holders & Strips onClear Hooks You’ll behooked hooked onthese these Clear Scan theybe accommodate drop-in plain paper You’ll on Scan dips, puddings, ice cream, single-serve ®

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Label Holders when yousee see how easily ® labels. Promote product and price or You’ll be hooked on these Clear Scan Label when you how easily foods,Holders and more. Our small Adjustable they accommodate drop-in plainpaper paper features andwhen benefits sosee customers can Label Holders you how easily they accommodate drop-in plain Merchandising Tray (AMT) fits a range labels. Promote product and price or choose easily. . product . and so can you! Make they drop-in plain paper labels. price or of 4-accommodate toPromote 6-ounce cups; the and medium AMT features and benefits so customers can your Promote selection of so Clear Scan Label labels. product and price or features and benefits customers can organizes mid-range offerings; and the choose easily. . .variety and so so customers can you! colors Make Holders from profiles, features and benefits can choose easily. . a. and so of can you! pause Make large AMT gives ice cream lovers your selection of add Clear Scan Label and lengths, then them to hooks choose easily. so can you! Make your selection of Clear Scan to browse and. . and choose a pint of Label their TM Holders from a variety of profiles, colors withselection flip-front or Clear FISH-Tip mounts. your of Scan Label Holders from variety of profiles, colors favorite flavora(hmmm ...why not get both and lengths, then add them to hooks Skip the mess of sticky adhesive labels Holders from athen variety ofthem profiles, and lengths, to colors hooks Cherry Vanilla and add Rocky Road?). This TM with flip-front or FISH-Tip mounts. and trade up to easy-to-use plain paper TM and lengths, then add them hooks with flip-front orensures FISH-Tip mounts. manual-feed tray that to products Skip the mess of sticky adhesive labels TM label holder with flip-front orsticky FISH-Tip mounts. Skip the mess systems. of adhesive labels remain faced and accessible. Time to and trade up to easy-to-use plain paper Skip the mess ofeasy-to-use sticky adhesive labels Call 800-444-4665 | TrionOnline.com and trade up to plain re-stock? Just lift out and refill. Addpaper Clear label holder systems. ® and upHolder, to easy-to-use plain paper label holder systems. Scantrade Label and you’re finished!

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THE LIST

Rank

Company

Fiscal Year End Sales (In Millions Dollars U.S.)

Prior Year

Percent Change

Store Count

Top Executives

Big Y Foods Inc.

$2,466

$2,190

12.60%

Bashas' Markets Inc.

$2,381

$2,185

8.97%

118

Edward Basha III, CEO

Giant Tiger (Canada)

$2,350

$2,150

9.30%

260

Paul Wood, President and COO

K-VA-T Food Stores Inc. (Food City)

$2,320

$2,133

8.77%

136

Steven C. Smith, CEO

Bozzuto's Inc. (Wholesale)

$2,300

$2,010

14.43%

N/A

Michael Bozzuto, President and CEO

Fareway Stores Inc.

$2,166

$1,952

10.96%

124

Reynolds Cramer, President and CEO

Houchens Industries Inc.

$2,150

$1,950

10.26%

425

Dion Houchins, Chairman and CEO

Piggly Wiggly Midwest

$1,631

$1,470

10.95%

Paul Butera, Chairman and CEO

Rouse Enterprises LLC

$1,587

$1,408

12.71%

Donny Rouse, CEO

Woodman's Food Markets Inc.

$1,519

$1,381

9.99%

Phil Woodman, President

Coborn's Inc.

$1,511

$1,400

7.93%

120

Chris Coborn, President and CEO

Lowe's Pay-N-Save Inc.

$1,464

$1,343

9.01%

146

Roger Lowe Jr., CEO

Village Supermarket

$1,458

$1,250

16.64%

Robert Sumas, CEO

H Mart

1,455

$1,275

14.12%

Il Yeon Kwon, Founder and CEO

Marc Glassman Inc.

$1,353

$1,230

10.00%

Marc Glassman, Chairman

Vallarta Supermarkets

$1,311

$1,209

8.44%

Enrique Gonzalez Jr., President and CEO

99 Ranch

$1,299

$1,209

7.44%

Alice Chen, CEO

La Michoacana Meat Market

$1,155

$1,050

10.00%

159

Sedano's

$1,135

$1050

8.10%

Natural Grocers

$1036

$904

14.60%

159

Kemper Isley, Chairman, Director and Co-President

Lidl US

$1025

$779

31.58%

125

Michal Lagunionek, President and CEO

Fresh Thyme Farmers Market

$1007

$940

7.13%

Gerald Melville, President

Superior Grocers

$865

$787

9.91%

Mimi Song, President and CEO

Festival Foods

$845

$736

14.81%

Mark Skogen, CEO

Northgate Gonzalez Market

$711

$656

8.38%

Miguel Gonzalez Reynoso, President and CEO

100 Total

$2,112,434

$1,892,554

Charles D’Amour, President and CEO

Rafael Ortega, Owner Agustin Herran, President and CEO

11.6%

Source: Company reports, Progressive Grocer research, industry and analyst estimates PROGRESSIVE GROCER May 2021

FEATURED RETAILER

Grocery Outlet

GROCERY OUTLET GATHERS MOMENTUM

A unique approach to ownership, entrepreneurship and retail operations has the retailer on track to surpass 400 locations during its 75th anniversary year. By Mike Troy 36

progressivegrocer.com

etailers are a creative lot, and there are many unique approaches to serving shoppers evident throughout the industry. However, there aren’t many companies as unique as Emeryville, Calif.-based Grocery Outlet, or that have as bold a vision for growth. As the name implies, Grocery Outlet is an offprice retailer of food and consumables focused on delivering value to shoppers. It operates small-format stores where shoppers can find a limited assortment of predominantly branded merchandise, about half of which has been purchased opportunistically, offered at prices that the company refers to as “shocking values.” Elements of the company’s strategy are evident in the operations of retailers such as Big Lots, 99 Cents Only, Save-A-Lot, Trader Joe’s and Costco. But no one does it quite the way that Grocery Outlet does, as evidenced by the company’s approach to ownership, entrepreneurship, operations and accountability, which in turn drives the company’s financial performance and supports the long-term view that the United States could support nearly 5,000 Grocery Outlet stores. The likelihood of that happening revolves around

Store Count by State Store State Count the fact that the company doesn’t have store managers; instead, it has independent owner-operators. “The best way for anyone to understand what we do is just walk into a store and ask for the operator and talk to them,” says Eric Lindberg, CEO of Grocery Outlet. “It is the difference between managing a store and owning a business. We think we are providing the American dream in the form of running a business, with the best of two models coming together.” Grocery Outlet does things that the independent owner-operators, known as IOs, can’t do, such sourcing merchandise, managing the supply chain and maintaining robust technology systems, Lindberg explains. “The IOs provide for us the things that we can’t do centrally, which is hire and manage locally, give back to the community in a way that is unique and authentic, live in the community, and make decisions at the point of intercept with the customers,” he notes. That’s what Grocery Outlet refers to as “small business at scale,” and it has proved to be an effective combination with accelerating momentum. The company ended last year with 380 stores after adding 35 new locations. The combination of new stores and a full-year same-store sales increase of 12.7% — the company’s 17th consecutive annual increase — enabled the company to grow overall sales by 22.5% to $3.13 billion. This year, plans call for between 35 and 38 new stores spread between Grocery Outlet’s core West Coast markets and its newer northeastern market. It’s part of a strategy to expand by 10% annually in existing and contiguous markets, while also entering new areas. Grocery Outlet went public in June 2019, and since then has maintained the view that it can open 1,900 stores in existing and contiguous states. Over the long term, the company believes that the market potential exists to establish 4,800 locations nationwide. Produce is a signature department in Grocery Outlet’s newest store design, shown below at a recently opened location in East Norriton, Pa.

California 221 Washington 67 Oregon 56 Pennsylvania 19 Nevada 9 Idaho 8 Total 380 Source: Company Reports, as of Jan. 2, 2021

Expansion Eastward and Beyond

Grocery Outlet is largely a West Coast phenomenon, but going forward, it expects considerable growth to occur in the Northeast, a market it entered via a small acquisition a decade ago. There are currently 19 Grocery Outlet stores in Pennsylvania, but over time Lindberg foresees 150 to 200 stores in that state, as well as in nearby New Jersey, southern New York, Maryland, Delaware, West Virginia and Virginia. “Then we have an opportunity to go north into New England, and we can go into the Southeast,” Lindberg says. “We think the Southeast would be a fabulous market for us to penetrate, and we’ve already done some work going west into the Pittsburgh and the Ohio Valley area.” As the company penetrates eastward, it relies on what Lindberg calls a very robust supply chain, consisting of nine facilities: five dry facilities, and four other facilities operated by Atlanta-based Americold. To make it all run and take the company to the next level, in January Grocery Outlet named former Sobeys executive Tim Scott its chief supply chain officer. “As we grow and expand, we think Tim is our guy for the next 15-plus years as we look at our supply chain supporting the East, continued growth in the West and probably a new geography yet to be identified,” Lindberg notes. Wherever the company grows, it looks to lease space for stores in the 15,000-square-foot to 20,000-squarefoot range. Often, finding a good location will trump size, and the company will make the space work, which has led to some variability in sizes. “We take a lot of second- and third-generation boxes, but we like the 15,000-square-foot store because it requires discipline, in particular with the SKU count,” Lindberg observes.

Not For Everyone

A familiar narrative in the grocery industry has long centered on three key areas; it’s an intensely competitive industry with low margins, where scale is essential. The industry is challenging enough that it’s PROGRESSIVE GROCER May 2021

FEATURED RETAILER

Grocery Outlet

Clever expressions of how Grocery Outlet saves shoppers money appear on perimeter store walls above signature departments.

hard for multibillion-dollar retailers to compete with one another. Why, then, would someone want to become an owner-operator of a food retailing concept with the word “outlet” as part of its brand identity, and how many people would find that opportunity appealing? Plenty, is the short answer. Grocery Outlet shares with investors that it fields 20,000 inquiries annually from people interested in becoming an IO. According to Lindberg, the number is actually higher than that, because during the pandemic, the company began fielding more inquiries from outside of the grocery industry. However, the big number at the top of the funnel gets whittled down quickly as people go through a self-assessment to determine whether they have the right mindset to be successful in the grocery business and as part of the Grocery Outlet system. “It takes two things to be successful in Grocery Outlet,” Lindberg explains. “One is the mindset of being an entrepreneur, waking up every day and chasing a dream, working hard, with no one really telling you what to do. The other is the skillset. We

A Special Year Grocery Outlet is all about presenting “shocking values” to customers, and it plans to turn up the heat on that aspect of its value proposition this year. The Emeryville, Calif.-based company, founded in 1946 by Jim Read, a pioneer of the opportunistic purchasing strategy, turns 75 in 2021. “This year is going to be a really special year,” asserts Grocery Outlet CEO Eric Lindberg. “We are going to have some deals that harken back to prices old. We are going to have some Diamond Deals that are 75% off.” The company plans to leverage social media, with independent owner-operators communicating directly with shoppers via Facebook Live, and a variety of other unique and quirky activities during the summer. “We are going to have fun with it,” says Lindberg, a 21year veteran of the company who became CEO in January 2019 after a previous stint as co-CEO. “It doesn’t happen very often that you have one of these milestone years, so we are going to make the most of it.”

progressivegrocer.com

can teach the skillset, but we cannot teach the mindset. I would take mindset 10 to one over the skillset.” To make that determination, aspiring IOs go through a 40- to 60-hour assessment. They spend time in stores, where they’re encouraged to grill other independent operators about the pros and cons of the company and its approach. The process is designed to make sure that aspiring owners are entering into a potentially lifelong commitment with their eyes wide open. “We want people who are willing to put in the sweat equity and live and work the model,” Lindberg says. “We don’t want to have a partner in the system that is wrong. We have a big responsibility to make sure people know what they are getting into. We are only looking for 15 or 20 people a month, so there are more than enough out there [for us to] be very, very selective.” Once candidates are selected, the process becomes more rigorous. Applicants enter an Aspiring Operator in Training program, where they’re stationed in a store to work and learn what it’s like to run a Grocery Outlet location. They become part of a cohort that goes through a four- to six-month training program that also includes classroom work. Upon completion of the training program, applicants submit business plans to apply for new stores as they become available. Based on the strength of their business plans, which include a competitive analysis of the local market, operational strategy, marketing actions and projected financial performance, IOs are selected for new stores.

A Hands-Off Approach

By the time that a potential IO has completed the rigorous screening process and gone through the extensive training, Grocery Outlet has sufficient confidence in the individual that it doesn’t en-

gage in heavy-handed oversight. This approach is also somewhat unique in retail, where most conventional retailers have a familiar hierarchy of store, district and regional managers. Also, depending on the size of the organization, there may be additional layers of SVP and EVP roles all running retail operations with a tight fist to ensure compliance with centrally designed strategies. Grocery Outlet, meanwhile, doesn’t even have planograms. “There is a bright line between what we manage and what the independent operator manages,” Lindberg notes. “What we agree on is the brand standard, and that is something we determine.” The brand standard relates to a base-level set of expectations that shoppers will find Grocery Outlet stores clean, bright, well merchandised, fully stocked and well signed. The independent owners have the ability to control all of the variables related to store experience, because they control the labor budget. IOs order merchandise and manage inventory, market locally, and hire and train employees.

Low prices on brands, many of which are opportunistically purchased, is a hallmark of the Grocery Outlet value proposition, called out above.

NATURE’S YOKE Now 100% Free-Range, Certified Humane & Plastic Free

THE EGG CONSUMERS HAVE COUNTED ON FOR DECADES IS SPEAKING TO THEM IN FRESH WAYS, AND BECOMING A BIGGER PART OF THEIR LIVES. ORGANIC FREE-RANGE BROWN

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Our new look conveys why we spell “Yoke” the way we do and, through it, we’re inviting consumers to celebrate their connection to what matters most to them. Here’s what our new cartons look like — each made from 100% post-consumer paper. Bye-bye plastic. And there’s a special egg for every person (in many sizes and 6 pks).

IT’S ALL PART OF PROVING TO CONSUMERS THAT WE UNDERSTAND WHAT THEY WANT — AND THAT YOU DO TOO. NOT ONLY IN AN EGG, BUT IN LIFE.

NATURESYOKE.COM PROGRESSIVE GROCER May 2021

FEATURED RETAILER

Grocery Outlet

Grocery Outlet employs classic elements of a treasure-hunt merchandising strategy by showcasing extreme values on limited quantities to create a sense of urgency.

“We have spans of control that are much larger,” Lindberg says, referring to the company’s field reporting structure. “Our district managers are DSMs, and the S is for sales. Instead of overseeing 10 stores, they have more like 35 to 40 stores. We are selling ideas, coaching, asking questions, and taking the best of what we are seeing and sharing, and we have robust systems to do that. It is very different than regular retail. We are really letting the independent owners do what they think is best for their customer and their community. They are using the tools that we give them, and we all agree what the brand standard is.”

‘Shocking Values’

With connection to the community a key aspect of the Grocery Outlet value proposition, IOs make store-level merchandising and assortment decisions, but they benefit from centralized buying. Heather Mayo, EVP, chief sales and merchandising officer for Grocery Outlet’s East region, calls the model “buy centrally and deploy locally.”

An Aversion to E-Commerce Most grocers saw explosive growth of e-commerce during the past year, but not Emeryville, Calif.-based Grocery Outlet. “It is still not part of our strategy,” says Eric Lindberg, the company’s CEO. “We watch it. We stay close to it. We spend time talking to some of the partners out there. Could we turn it on? Yes.” The prospect of doing so isn’t appealing to Grocery Outlet, however, because of the added cost. Digital grocery is currently heavily subsidized, and larger retailers are able to look the other way on profits, according to Lindberg, who maintains that the magic of off-price retail and the treasurehunt sense of discovery is in the brick-and-mortar store. “Right now, our customers today are not telling us they are willing to substitute the value they get for the delivery of the product,” he notes. “We think we’ve got a lot of growth without having to go to the complexity of the e-commerce world.”

progressivegrocer.com

Mayo, a former Sam’s Club executive, occupies a hybrid role at Grocery Outlet, essentially functioning as an overall manager of her designated region, with a large span of control and passion for store operations and merchandising. “We have a great buying team that has just come together on the perishables side,” Mayo says. “We hired three people across produce and meat that combined have more than 100 years’ experience.” That experience paid off recently, when merchants were able to procure vacuum-sealed beef loins and offer them at $5.99 a pound, for a price point above $25. “We wanted to test a higher price point and really drive excitement for the customers,” Mayo recounts. “We started out with that item to test it. We didn’t know if it would work or not — we thought it might, but it did so much better than we ever expected [that] we have made it an everyday item.” The role of merchants at Grocery Outlet is to discover value and present a curated assortment, a point Mayo and Lindberg both emphasize, especially since stores typically carry 5,000 items. That means the best merchants have to be hunters, according to Mayo. “They are looking for great deals and new items,” she notes. “They understand what’s hot in the marketplace and what’s on trend. They are attending trade shows so they know what the latest products are coming onto the market, and they are looking at innovation.” That can mean visiting competitors’ stores to identify interesting products, but it’s also about developing relationships so when branded suppliers have inventory, they call Grocery Outlet first. This approach works well enough that Grocery Outlet is able to secure branded goods at such attractive prices that the company has very limited exposure to private brands. “We have been able to find branded product we can purchase opportunistically that we put on the shelf at prices below what we can find and control ourselves with private label,” Lindberg says. “Private brand will probably not be a 30% penetration rate for us, but it could be 10%.”

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RETAILER DEEP DIVE

Dollar General

HOW

DOLLAR GENERAL

IS DISRUPTING GROCERY Aggressive merchandising moves and unprecedented expansion are a potent combination. By Gina Acosta

About 76% of Dollar General's fiscal 2020 sales of $33.7 billion came from consumables. The company plans to continue expanding its Dollar General Market format, with around 16,000 square feet of selling space and lots of perishables.

progressivegrocer.com

n April, a team of Yale University public-health professors published a 34-page study that explained how to end the pandemic in America. The researchers’ conclusion? Dollar General. The Goodlettsville, Tenn.-based retailer is now the closest grocery store for millions of U.S. consumers; 75% of Americans live within 5 miles of a Dollar General. So far, Dollar General hasn’t said whether it’s joining the federal Retail Pharmacy Partnership Program, which includes Kroger, Walmart, Costco and a number of other food retailers. For Dollar General, which has more U.S. stores than Kroger, Walmart and Costco combined, retail health would be another new frontier, in addition to grocery and e-commerce. But the fact that Yale and the CDC would select Dollar General as the ideal retailer for vaccine distribution, as opposed to Walmart or CVS, speaks to the company’s position of power in the food retail industry, a position that will strengthen as it deploys several new strategic initiatives ideally suited for the post-pandemic economy of 2021 and beyond.

I AM your employee your competitive advantage

Your frontline associates make or break your success In an era where agility is the must-have survival skill for grocers, your frontline people have to be ready for anything. So they need meaningful, right-ﬁt support to safely perform, learn and thrive at work every day. It's the right thing to do for them and you. Because when you give your frontline the tools to succeed, your business does too.

Support them right or get left behind. axonify.com

RETAILER DEEP DIVE

Dollar General Since 2019, Dollar General has been expanding its grocery assortments, including international products, as traditional grocery chains have consolidated and closed locations.

Historically, the more stores the company opens, the more profit and revenue it generates, and the more it can keep opening additional stores. And Dollar General isn’t stopping at 18,000 or even 20,000 stores. During the company’s latest earnings report, Dollar General COO Jeff Owen said that the retailer is looking at a possible 34,000-plus store footprint. Much of the store base will remain rural, but the company has a new focus on the suburbs as a result of the pandemic-related exodus from urban areas. “Through a combination of our growing relevance with customers, format innovation, an evolving retail landscape and leveraging new technologies, we estimate a total of approximately 17,000 new store opportunities available across our format types, which we believe represents a long runway for new unit growth,” Owen said. Beyond opening new locations at a frenetic pace, Dollar General is also experimenting with more new formats. The company has its traditional store format (around 7,300 square feet), plus newer designs such as the DGX urban format (around 4,000 square feet) and the Dollar General Market format (around 16,000 square feet), all of which the company plans to keep growing. In March, however, the company said that it’s making “key changes to its development strategy,” including plans to build on the success of its Dollar General Plus Store, or DGP, format, and the introduction of two more formats, which the company began testing in 2020. “Similar to our larger-footprint DGP concept, the first new format has selling space of approximately 8,500 square feet, which compares to about 7,300

Supersized Footprint

It’s no secret that the pandemic has turbo-charged growth at many food retailers. But perhaps no retailer has benefited more from pandemic-related consumer behavior trends than Dollar General. Even before COVID, the retailer was already taking advantage of economic recessions, retail consolidation and a new fondness among consumers for frugality (and discounters) to amass impressive revenue and expansion over the past decade. Now, post-COVID, the company is planning to leverage momentum from the pandemic to keep aggressively opening stores, become even more of a grocery store than a dollar store, ramp up digital capabilities and hire tens of thousands of new workers to help drive all of that new growth. In 2020, Dollar General opened more than 1,000 new stores, and remodeled another 1,670 locations. This year, Dollar General plans to open 1,050 new stores, remodel 1,750 and relocate 100, representing 2,900 real estate projects in total. With a current footprint of 17,266 stores, Dollar General is riding a wave of favorable socioeconomic conditions to a projected 18,227 locations by the end of 2021.

The Road to 34,000 Stores 20,000

18,227

15,000 10,000 8,362

8,828

9,372

9,937

10,506

11,132

11,789

12,483

13,320

14,534

15,370

16,278

17,177

(EST)

5,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Dollar General financial reports

progressivegrocer.com

RETAILER DEEP DIVE

Dollar General

Dollar General’s cooler expansion program continues to be the retailer's most impactful merchandising initiative, CEO Todd Vasos said. In 2020, the company added more than 62,000 cooler doors.

square feet of selling space for our traditional store,” CEO Todd Vasos said. “Beginning later this year, this new format, along with our DGP concept, will become our base prototype

progressivegrocer.com

for nearly all new stores, replacing both our traditional and higher cooler-count DGTP format, allowing for a more optimized assortment and room to accommodate future growth.” Vasos noted that the second new format is even larger — about 9,500 square selling feet — and will be deployed opportunistically across store relocation and remodel opportunities. “On average, our DGP and new store formats are outperforming the chain on a comp-sales basis and have considerably higher sales volumes compared to both the traditional and DGTP store, which bodes well for the future as we look to increase their unit counts in the years ahead,” he said. For the fourth quarter ended Jan. 29, Dollar General reported that same-store sales increased by 12.7% on a year-over-year basis, and operating profit was up 21% to $872 million; revenue increased 17.6% to $8.4 billion. For fiscal 2020, Dollar General’s same-store sales were up 16.3% and its operating profit grew 54% to $3.6 billion; revenue increased 21.6% to $33.7 billion. The retailer did forecast, as have others in the industry, such as Albertsons Cos. and Grocery Outlet, that it expects a same-store sales decline of 4% to 6% in fiscal 2021. However,

on a two-year stack basis, the company projects that it will see comps increase 10% to 12% when compared with the company’s performance in 2019. Vasos said that the company is seeing increased market share in highly consumable product sales, as well as new subsets of customers. “These new customers continue to skew younger, higher-income and more ethnically diverse, underscoring the broadening appeal of our value and convenience proposition,” Vasos noted. “We continue to be encouraged by the retention rates of new customers, and we are working to drive even higher levels of engagement with more personalized marketing and continued execution of our key initiatives.” The larger market share and new customers can most likely be attributed to the retailer’s other key initiative for growth: fresh food.

The New Corner Store

Since 2019, Dollar General has been expanding the availability of fresh food at its stores as grocery chains consolidate and close locations, and as more consumers seek a nearby one-stop shop for healthy perishables and essentials. That year, the retailer launched its DG Fresh initiative aimed at adding fresh and frozen food products to store assortments and enhancing distribution of those cold-chain consumables. At the end of 2020, around 1,100 Dollar General locations offered perishable grocery, including many of its Dollar Gen-

We operate in one of the most attractive sectors in retail. And in an environment where customers continue to seek safe and convenient experiences, we believe our unique store footprint, further enhanced through our multiyear initiatives, provides a distinct competitive advantage and positions us well for continued success." —Todd Vasos, CEO, Dollar General

eral Market stores. The company plans to add produce to approximately 700 more stores in 2021, bringing the total number of stores that carry produce to more than 1,800. “DG Fresh continues to be the largest contributor to the gross-margin benefit we are realizing from higher initial markups on inventory purchases, and we expect this benefit to grow as we continue to scale this transformational initiative,” Vasos said. Another important goal of DG Fresh is to increase sales in the fresh food categories, he added. “We are pleased with the success we are seeing on this front, driven by higher overall in-stock levels and the introduction of new products in select stores being serviced by DG Fresh,” Vasos observed. In 2021, Dollar General plans to further accelerate

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RETAILER DEEP DIVE

Dollar General

In addition to the gross-margin benefits associated with the retailer's DG Fresh and Non-Consumables initiatives, the company continues to pursue additional opportunities to enhance gross margin, including improvements in private-brand sales, global sourcing and supply chain efficiencies.

the rollout of additional fresh offerings, including both national and private brands, as the retailer looks to further optimize its assortment while increasing its relevance with customers. In total, Dollar General’s replenishment network is now distributing to more than 16,000 stores from 10 facilities. Dollar General plans to open two new DG Fresh distribution facilities this year, and add tens of thousands more cooler doors to stores. “Our cooler expansion program continues to be our most impactful merchandising initiative,” Vasos said. “During 2020, we added more than 62,000 cooler doors across our store base. In total, we expect to install more than 65,000 cooler doors in 2021 as we continue to build on our multiyear track record for growth in cooler doors and associated sales.” At its traditional stores that have been remodeled with 22 coolers, the company typically sees a 4% to 5% rise in same-store sales. At its larger stores, where there’s room for 34 higher-capacity coolers, there’s a 10% to 15% rise in same-store sales. In addition to the margin benefits associated with DG Fresh and the retailer’s Non-Consumables Initiative, the company continues to pursue additional opportunities to enhance gross margin, including improvements in private-brand sales, global sourcing and supply chain efficiencies. “Our plans for 2021 include further expansion of our private fleet, which accounted for more than 20% of our outbound fleet at the end of 2020,” Vasos said. The company’s

These new customers continue to skew younger, higher-income and more ethnically diverse, underscoring the broadening appeal of our value and convenience proposition." —Todd Vasos, CEO, Dollar General

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private fleet program has grown from 80 tractors at the end of fiscal 2017 to more than 700 tractors and more than 550 drivers in spring 2021. Dollar General has recently embarked on a hiring spree to support all of these initiatives. In April, the company said that it’s planning to hire up to 20,000 new employees this spring to support efforts across its store, distribution, transportation and corporate operations. It also revealed an employee training partnership with Waterloo, Ontario-based Axonify to enhance business learning and development for its more than 157,000 front-line, supply chain and corporate employees. For the time being, the retailer is seeing increased labor productivity as a result of its Fast Track initiative, an in-store replenishment program that optimizes operations at the warehouse to speed up shelf stocking and decrease out-of-stocks. The second component of Fast Track is self-checkout, which was available in more than 1,600 Dollar General stores at the end of 2020. The company is on track to have self-checkout in the majority of its stores by the end of 2022.

More New Territory

As a mature retailer in growth mode, Dollar General is laying the groundwork for future initiatives the company believes “will unlock additional growth opportunities as we move forward,” in Vasos’ words. One of those future initiatives is the expansion of digital, an area where Dollar General has lagged. The retailer’s strategy has been to build a digital ecosystem tailored to provide its core customers with a more convenient, frictionless and personalized shopping experience. How’s that going so far? “We made significant progress in 2020, highlighted by the accelerated rollout of DG Pickup, our BOPIS offering, to more than 17,000 stores,” Vasos said. “We also saw continued growth in customer engagement across our digital ecosystem, including our digital coupon offering, shopping list feature, cart calculator shopping and budgeting tool, e-commerce site, DG Go! mobile checkout, and our mobile app, which ended the year with nearly 4 million monthly active users.” Dollar General will focus on offering an even more personalized digital offering, with the goal of driving higher levels of customer engagement and loyalty. The company also intends to expand its FedEx pickup and drop-off service, now available in 8,500-plus stores, to more than 9,500 stores by year-end. “We operate in one of the most attractive sectors in retail,” Vasos noted. “And in an environment where customers continue to seek safe and convenient experiences, we believe our unique store footprint, further enhanced through our multiyear initiatives, provides a distinct competitive advantage and positions us well for continued success. We feel very good about the underlying business, and I’m excited about the opportunities that lie ahead.”

RETAILER PROFILE

Choice Market

CHOICE MARKET

REDEFINES CONVENIENCE The hybrid retailer offers an innovative approach in Colorado, with the potential for 50 stores. By Mike Troy

hoice Market is redefining convenient food retailing near downtown Denver with a firstof-its-kind technology-fueled format that CEO Mike Fogarty believes could expand to 50 locations in five years. The company’s growth aspirations stem from what Fogarty sees as a void in the market for the unique brand of food retailing that Choice Market offers and the company’s purpose-driven mission to make good food accessible and convenient for all. This approach is evident inside the company’s recently opened 5,000-square-foot store at 939 Bannock Street, which combines elements of convenience retailers known for their foodservice operations, such as Wawa or Sheetz, with the limited assortment of a Trader Joe’s, the better-for-you offerings of a Whole Foods Market and the technological capabilities of a cashierless Amazon Go. “We are a convergence of business models,” Fogarty tells Progressive Grocer. “We are a scratch kitchen surrounded by grocery in the size of a convenience store. We think we’ve built a new type of business model focused on quick, convenient and healthy food.” What makes the experience quick and convenient at the Bannock Street location is the introduction of the Choice Now mobile check-in and cashierless checkout technology. Shoppers walk in, scan a QR code at a check-in zone near the entrance, and a network of 200 ceiling-mounted cameras captures a shopper’s selection so they can be sent a receipt after leaving the store. “The addition of the Choice Now platform makes this very much a frictionless store,” Fogarty says. “It wasn’t until recently that the technology was truly commercially viable. The cameras are getting less expensive and the processing

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power required is getting less expensive. We are on the leading edge of it, but it is coming in terms of large-scale deployments and the transition of more retailers to this type of checkout experience.”

A New Way of Shopping

Founded in 2017, Choice Market now has four locations clustered in and around downtown Denver, but Fogarty sees the concept working well in other markets as the proof of concept is further refined in the Mile-High City. “We think Choice Market is reinventing convenience,” Fogarty says. “It is a new model, but it is in alignment with how people are shopping. Our customers are shopping multiple times a week, they are shopping for prepared foods and grocery items, and they are digitally enabled, so they are ordering ahead for pickup or for delivery. Our percentage of sales from prepared foods is roughly 50%, so we are very much a restaurant.” This emphasis on foodservice, along with local assortments of better-for-you foods, and fueling choices at locations where appropriate, gives Fogarty and recent additions to his senior leadership team confidence

The Choice Market senior leadership team (from left), Chief Brand Officer Darcy Rae Johnson, CEO Mike Fogarty and COO Ben Kipfer, at the opening of the retailer's new prototype store in Denver.

that the Choice Market concept can travel well to other markets. “Over time, we think having 40 to 50 Choice Markets in five years is certainly within the realm of possibility across five or six markets,” he notes. “We don’t want to scale too quickly, but we also see a pretty big opportunity in between a c-store and large-format grocery. In general, we are looking to grow in the western half of the U.S. We think there is a pretty large opportunity in markets like Denver in states like California, Texas and Washington.” To help make that growth a reality, Choice Market recently hired Darcy Rae Johnson as chief brand officer to oversee growth of the brand, marketing, visual identity and Choice Matters, the company’s philanthropic arm. In January, Ben Kipfer joined the company as COO after spending the prior 11 years with Dublin, Ireland-based Accenture, working with some of the world’s largest retail brands on large-scale transformation programs covering technology and store operations. “I really believe in the brand and the vision that Mike had laid out for growth,” Kipfer says.

A key element of that vision is flexibility and adapting operations to specific locations and the communities served. For example, Fogarty describes 5,000 square feet as the company’s sweet spot for an urban format, but notes that in certain communities, a larger format may make sense. “Some communities may need a larger store, because the nearest grocer is 5 or 6 miles away,” he explains. “We are going to design the stores and the experience based on the need of the community we serve. We want to make good food accessible and convenient for all.” The community served by the company’s newest store is unique in that the store is located on the bottom floor of an upscale apartment complex called Parq on Speer. Described as being “at the intersection of everything,” the 16-floor residential project boasts views of the city and the mountains, and offers the convenience of an indoor/outdoor dog park on the third floor. The addition of a Choice Market at street level helps round out the value proposition to tenants and will give Fogarty’s team new insight into the types of locations that are suitable for future growth. PROGRESSIVE GROCER May 2021

SPECIAL REPORT

Food Safety

If It’s Not Safe, It’s Not Food LE ADING RE TAILERS DISCUSS THE KE YS TO KEEPING FOOD SAFE DURING THE COVID-19 PANDEMIC. By Marian Zboraj

he U.S. Centers for Disease Control and Prevention estimates that each year, 48 million Americans get sick from a foodborne illness, 128,000 are hospitalized and 3,000 die. This is a significant public-health burden that the food industry, including the retail sector, is taking steps to prevent. Besides continuing to make sure that their food was safe from foodborne illnesses, food retailers over the past year had the added responsibility of keeping their employees and customers safe from COVID-19. To ensure that they didn’t compromise on food safety, retailers collaborated with manufacturers, suppliers, the agriculture industry, governments and many others to help maintain a safe food supply during a heavily disrupted time. Some of the top food retailers recently came together for the virtual GFSI Conference, the premier annual event of the Global Food Safety Initiative, part of The Consumer Goods Forum, to share their approaches to ensuring the safety of their food operations during the past year.

Key Takeaways To ensure that they didn’t compromise on food safety amid the pandemic, retailers collaborated with manufacturers, suppliers, the agriculture industry, governments and others. Among various innovative solutions, predictive analytics has the potential to be used widely in the area of food safety. Certifications from GFSI and other organizations have played a key role in maintaining food safety.

Predicting Food Safety Risk

Published last year, the U.S. Food and Drug Administration’s A New Era of Smarter Food Safety Blueprint emphasizes embracing predictive analytics to help find the root causes of problems and avoid identified risks. When thinking about predicting food safety risk, Carletta Ooton, VP product assurance, risk and security at Seattle-based Amazon, points out that there are three factors to consider.

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Food Safety

Americans get sick from a foodborne illness, 128,000 are hospitalized and 3,000 die. Source: CDC

“The first is ensuring the predictive models used are actually accurate,” says Ooton. “With predictive modeling, Amazon is able to calculate lowest-risk predictions before the first units are shipped. It allows us to remove potentially harmful products before customers can get them, which gives us confidence in the billions of items we have in our catalog. The second is speed — the notion around how do we take the action proactively before it negatively impacts customers, and are we doing it fast enough? Speed matters when it comes to food safety. The third is, are we getting smarter? Are we continuously retraining our models to maintain that high performance, but are we also improving that high performance and further driving accuracy for customers?” Amazon’s Customer Feedback Monitoring program allows Amazon to listen to customer reviews; customer return comments, questions and answers; and customer service department contact, all of which help drive its food safety and compliance processes across all product lines. “We have models that are monitoring and analyzing continuously more than 67 million pieces of feedback every week,” says Ooton. “We take the appropriate actions based on that reactive-feedback standpoint. We use that data to train our predictive models so they get even better. We use machine learning to calculate the relative distance between the products that we sell and any products that we ever received a safety-related concern [about]. Where there is a positive correlation, we can predict the severity of a potential issue and the likelihood of similar occurrences. We treat a prediction from the data as an actual action that something has happened. We don’t treat them any differently than a signal that was embedded in an actual piece of feedback. That’s the power of the data.” How far in advance can predictive analytics be used? Ooton notes that she was able to use predictive analytics to find a trend on an item several weeks before the product was recalled. She has confidence that predictive analytics has the potential to be used even further.

Food Safety Compliance

At the height of the pandemic, food retailers had to implement increased routine cleanings, many of which are still in place today. This includes sanitizing high touchpoints like doors, plexiglass shields and carts to prevent the spread of COVID-19. These stepped-up cleaning protocols, which are also vital to food safety, have pushed compliance issues to the forefront. More often than not, poor safety compliance is linked to employees not fully understanding the importance of certain practices. For example, when consumers touch contaminated shopping carts and baskets, they can spread the pathogens and germs on their hands to anything they put in their carts – or pick up to examine and then put back on the

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shelf. For fresh fruits and vegetables, or items that aren’t cooked before eating, this increases the risk of consumers ingesting these dangerous germs. “Food safety compliance is generally expected by customers,” says Caroline Easterbrook, Amazon’s head of food safety for Europe, Middle East and Africa. “You don’t get bonus points for not harming somebody.” As Sara Mortimore, VP, global food safety at Bentonville, Ark.-based Walmart Inc., points out, education is an investment worth making to ensure a committed workforce. “We’ve done a whole bunch of things this year, like augmented-reality headsets for training, and a ton of messaging, like posters,” observes Mortimore. “We also used a lot of videos that are very short, very immediate, teaching people how to do something, why we do it, making it very relevant to people. We recognize that food safety culture is incredibly important.” Walmart is also trying to keep compliance simple. For instance, its Bring Your Own Device Program enables some of its operative associates to use their own devices to analyze compliance data, with no additional high-tech, labor-intensive instrumentation needed. Mortimore also stresses keeping the lines of communication open with Walmart’s essential workers when it comes to training. Associates sometimes have a better notion of how to make compliance easier and may have suggestions on better safety protocols, since they’re on the front lines and know what procedures work and which don’t. Meanwhile, when home chefs grew weary of cooking meals during lockdown, many turned to meal kits like those from HelloFresh. To ensure the safety of its in-demand products, HelloFresh increased hygiene processes and hired additional quality assurance teams to keep its food safety procedures from being disrupted. “We’ve learned we can deliver more while still ensuring that food safety is not compromised,” says Janet Cox, associate director of food safety and compliance at Berlin-based HelloFresh.

Whether it’s fresh or processed foods, we tell vendors right up front, at the point of sourcing, what our expectations are going to be.” —Tony Heredia, Target

Keeping the Supply Chain Safe

Last year, food retail had to become more agile to keep food safe while the supply chain was in flux. “When the pandemic was biting and stores were empty, we kept it safe,” asserts Howard Popoola, VP of corporate food technology and regulatory compliance at The Kroger Co., in Cincinnati. “We deserve to give ourselves a pat on the back.” At Minneapolis-based Target, Tony Heredia, SVP, compliance and ethics, credits the strong relationships that the retailer has with its vendors to ensure that they understood its food safety standards. “Whether it’s fresh or processed foods, we tell them right up front, at the point of sourcing, what our expectations are going to be,” he explains. “We also have specialized teams who go out to the fields or production facilities and meet personally with the growers or producers to help them understand what our expectations are, what we look for and how we can help them meet those expectations, as early in the process as possible.” Once product enters its facilities, Target relies on technology. “We check temperature logs to make sure it was never out of the temperature threshold,” says Heredia. “We double-check those temperature logs with a physical, certified calibrated probe, and then we immediately invoke it into our own control facilities, whether it’s ambient-cooled or frozen food, within specific standards and temperature thresholds.” Specialists in the distribution warehouses determine how long product can stay within the facility before quality deteriorates. “It’s a very complicated model [of] understanding consumer trends, making real-time adjustments to our forecast models, but then equipping the specialists in those buildings, who manage both safety and quality and minimize waste, with the tools they need to understand, on a daily basis, when we might have more days of product in a facility than we think we can sell, given our current observations of sales trends and consumer patterns,” says Heredia. When product arrives in its more than 1,800 stores, Target empowers its food specialists with localized control. They can monitor how much product they have on hand, whether they’re getting too much or too little based on their localized consumer trends, and accelerate velocity through promotions or special offers. This is done through Target’s personalization technology to ensure that the product is usable before quality and safety concerns arise. Meanwhile, Canadian supermarket chain Loblaw Cos. Ltd. was able to avoid major supply chain disruption during the pandemic, due to its well-structured crisis management team that worked with senior-level executives, enabling fast decisions. Strong relationships with industry associations and authorities also helped the retailer take proactive steps in a timely manner. Vaneska Mattos VP, food safety, quality assurance and regulatory affairs for Brampton, Ontario-based Loblaws, also cites GFSI certification in helping the retailer secure the safety of its food supply chain. Loblaws sources products from across the globe, so proper certification is key to ensure food safety. “Our program is heavily GFSI-based,” notes Mattos. “The POs are GFSI-based, so if a vendor is late on their GFSI certification, we can’t buy from that vendor. GFSI certification is critical for us.” Gillian Kelleher, VP of food safety and quality assurance at Rochester, N.Y.-based Wegmans Food Markets Inc., agrees that the certification has played a key role in maintaining food safety throughout the pandemic. “We see GFSI as a best practice,” affirms Kelleher. “We fully embrace it for Wegmans suppliers.”

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Give Food Safety a Hand Although each type of food retail has its own food safety issues as well as risk management options, good hygiene and sanitation practices are important in all food-sector activities. Viruses like norovirus, the most common cause of foodborne illness in the United States, are often first transmitted in retail food and foodservice establishments via employees’ hands to surfaces like restroom doors or faucet handles. Viruses are then transmitted to other employees when they touch these common surfaces, which then leads to cross contamination of food, even in situations where the food handler is wearing gloves. In fact, according to the Centers for Disease Control and Prevention, cross contamination is a major contributing factor to foodborne outbreaks in retail food establishments. Hal King, Ph.D., managing partner at Active Food Safety and founder of Public Health Innovations, both based in Atlanta, emphasizes frequent and proper hand hygiene as a major aspect of any food safety plan. This includes mandating frequent handwashing with soap and water for 20 seconds or longer for employees handling food, providing handwashing stations with soap and water for guests and employees, and providing alcohol-based hand sanitizers to guests and employees when soap and water aren’t available. Additionally, while cleanliness matters to grocery store customers, it’s also essential to food safety. King recommends that retailers should continue elevating their sanitation practices post-pandemic, including disinfecting common touchpoints that can harbor bacteria and viruses, like restrooms, door handles/entrances, conveyor belts, and shopping carts and baskets. Product choice matters as well — when possible, choose science-based disinfectants with short kill claims for eliminating targeted organisms. And as always, make sure that sick employees stay home to help stop the spread of germs and foodborne illness. PROGRESSIVE GROCER May 2021

SOLUTIONS

Summer Grilling

Grate Expectations RETAILERS EXPAND AND ELEVATE OFFERINGS AS PEAK GRILLING SEASON ARRIVES. By Lynn Petrak

echnically and, increasingly in practice, grilling season extends all year. The Hearth, Patio and Barbecue Association (HPBA) reports that 75% of grill owners cook outside in the winter. Still, May is the typical start of grilling season. According to the Arlington, Va.-based HPBA, 68% of American grill owners plan to cook out on the Fourth of July, while 56% grill out on Memorial Day and Labor Day, and 42% fire it up outside for Father’s Day. 2020 was a particularly hot summer for the pastime, as stuck-at-home consumers grilled more meals and often upgraded their grills, grilling accessories and outdoor living spaces. According to a new report from The NPD Group, consumers spent nearly $5 billion on grills, smokers, camping stoves, accessories and fuel last year. Another study conducted by Port Washington, N.Y.-based NPD in 2020 showed that consumers between the ages of 35 and 54 were more likely than their counterparts in other age groups to own two or more appliances.

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Key Takeaways Consumers are placing a widening and often elevated array of foods on their grills. There are opportunities to move more premium meats and seafoods, and to encourage the use of plant-based proteins, for summer grilling. The season is also a good time to promote such grilling go-withs as rubs, barbecue sauces, beer, rolls and snacks.

“Camping vacations, Friday-night pizza, trying a new roast recipe and smoking the Thanksgiving turkey are the kinds of activities helping to fuel growth beyond the core gas and charcoal grill options,” says Joe Derochowski, home industry advisor at NPD. “Consumers have turned pandemic-driven boredom

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SOLUTIONS

Summer Grilling Consumers have turned pandemicdriven boredom into an opportunity to experiment with cooking, and the wide range of grilling and outdoor cooking options are helping them do it.” —Joe Derochowski, The NPD Group into an opportunity to experiment with cooking, and the wide range of grilling and outdoor cooking options are helping them do it.” So what should retailers expect this year? Although visits to restaurants are expected to swing up, many consumers are continuing the pattern of dining at home. Further, thanks to loosening restrictions and accelerated vaccinations, it’s expected that people will be entertaining friends, family and neighbors using some of that newer equipment. What, exactly, they’ll be putting on those grills is a widening and often elevated array of foods.

Meat Meets Grill

Of course, brats, burgers and hot dogs are summer grilling staples and among the comfort foods that consumers often turned to during the pandemic year. As this year’s grilling season arrives, new versions of these favorites are rolling out. Examples include grass-fed hot dogs from Coleman Natural Foods that reflect growing

NEW L

T IONS

interest in more natural and sustainable products, and new Ball Park Fully Loaded Nacho Cheese Franks that speak to the desire for nostalgia and indulgence. Basic brats and sausages are also getting a boost in flavor, such as limited-time queso bratwursts made with pepper jack cheese from Johnsonville Sausage, new cotija cheese and fire-roasted poblano smoked beef sausage links from the Aidells brand, and co-branded Budweiser brats from Coleman Natural Foods. Although traditional proteins will always be part of backyard barbecues, consumers’ newfound or rediscovered interest in cooking and more adventurous palates are raising the bar for grilling. According to a report on anticipated summer 2021 trends from Kroger Precision Marketing and 84.51°, both divisions of The Kroger Co., based in Cincinnati, there’s an opportunity to move more premium meats and seafoods like steak and lobster for summer grilling. That report notes that units of lobster sold in the week leading up to Father’s Day jumped 194% from 2019 to 2020. In addition to choosing and grilling more premium cuts of meat, poultry and seafood, shoppers are experimenting with different recipes and preparation methods. Kroger’s report points out that the number of households that bought meat and regionally flavored rubs on the same trip rose from 14% to 24% from 2019 to 2020. As shoppers browse the meat case and frozen and refrigerated cas-

Ball Park Fully Loaded Nacho Cheese Franks speak to consumers' desire for nostalgia and indulgence.

es for summer grilling products, food retailers may have to deal with some supply issues for fresh meats. Hog shortages that began at the onset of the pandemic have continued, according to a recent report from Business Insider, and that’s expected to drive prices for pork and pork-based products higher as demand surges during grilling season.

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SOLUTIONS

Summer Grilling Where There’s Smoke, There’s Plants

Given the proliferation of plant-based alternatives over the past couple of years, plant-based proteins can be added to retailers’ summer grilling programs. Plant-based alternatives like patties from Impossible Burger and Beyond Meat have almost become stalwarts in the market and can be effectively merchandised for outdoor grilling. This year, alt-meat Planterra Foods recently added frozen OZO Smokehouse Burgers brands are introducing to its plant-based portfolio. a spate of new products in time for the grilling kickoff in May. For example, Field Roast, a plant-based meat brand from Elmhurst, Ill.-based Greenleaf Foods, has come out with a new vegan stadium hot dog. Lafayette, Colo.-based Planterra Foods recently added frozen OZO Smokehouse Burgers to its portfolio of plant-based meals. The fully cooked, gluten- and soy-free products can be heated up and charred on the grill. “This year has changed the way so many of us enjoy and consume our meals,” says Planterra CEO Darcey Macken. “The OZO expansion into frozen plant-based proteins offers more opportunities for flexitarian consumption through high-quality foods with positive protein solutions.” Blends of animal- and plant-based proteins are other options for consumers who want to split the difference. Bridgewater, N.J.based Applegate Farms, a subsidiary of Hormel Foods, recently introduced Well Carved, a line of frozen organic blended burgers made with meat and whole vegetables, legumes and grains. Varieties include a grass-fed organic beef burger made with cauliflower, spinach, lentils and butternut squash, and an organic turkey burger blended with sweet potato, white bean, kale and roasted onion. In addition to alt-meat products, plant foods in other forms can be promoted for grilling season. In a recent blog on his popular Barbecue Bible website, author and barbecue expert Steven Raichlen put vegetables first on his list of 2021 barbecue and grilling trends. “2022 will be the year of the grilled vegetable,” he predicts. Beyond standbys like corn, peppers and zucchini, Raichlen says that all kinds of vegetables are grill-worthy, such as okra, Brussels sprouts on the stalk, and whole cauliflowers that can be spit-roasted like chickens. “Hardcore carnivores will grill veggies for their health benefits and as killer accompaniments for our favorite grilled meats,” he writes. “Vegetarians and vegans will grill vegetables for the smokiness and supernatural sweetness live fire imparts to plant and dairy foods.” In its recently released “Power of Produce 2021” report, Arlington, Va.-based FMI — The Food Industry Association confirms new opportunities for cooking vegetables. The report reveals that 78% of shoppers

have changed their meal preparation with regard to vegetables and fruits, trying different cooking methods, including grilling, and experimenting with different varieties of produce, seasonings and sauces.

Accompaniments and Accoutrements

Meat and vegetables may be the center-of the-grill, center-of-theplate attractions, but accompaniments are an important part of summer grilling — and help lift basket sales. Here, too, produce items are often promoted as side dishes for backyard barbecues and picnics, from fresh fruits and vegetables to value-added items. In time for the 2021 grilling season, several consumer brands are introducing products that go with grilled fare. In the sauce category, for example, Chicago-based Sweet Baby Ray’s is adding to its line of no-sugar-added sauces with a new Ray’s Sweet and Spicy BBQ sauce and Ray’s honey mustard-flavored dipping sauce. “The response to Ray’s No Sugar Added sauces has been outstanding,” says Tom Murphy, the company’s VP, brand marketing. “We focused first on making sure that our sauces would taste great — no synthetic flavors or runny texture allowed — then ensured that everyone around the table, whether watching sugar intake, following a keto-friendly eating plan, or looking for plant-based and gluten-free options, could enjoy them,” Atlanta-based fast-food chicken chain Chick-fil-A is also introducing new products that pair well with grilled foods. Chick-fil-A sauces in Barbecue, Garlic Herb Ranch, Honey Mustard and Polynesian varieties will be available in 15 states at such banners as Food Lion, Harris Teeter, H-E-B, Publix, Target, Walmart and Winn-Dixie.

In time for grilling season, Sweet Baby Ray's has come out with two more no-sugar-added barbecue sauces.

SOLUTIONS

Summer Grilling Gearing Up for Grilling Season Food retailing operations that also carry grills will heavily spotlight those items in summer. It’s been a good time for those departments: More than 14 million grills and smokers were sold between April 2020 and February 2021, according to a new report from The NPD Group, based in Port Washington, N.Y. While many of those items were traditional gas and charcoal grills, sales of products with specialized uses, along with smaller-scale products like pizza ovens and portable grills, also spiked in 2020. Given last year’s strong performance and an overall growing interest in grilling and barbecuing, equipment manufacturers are adding new models to their portfolios. Palatine, Ill.-based leading manufacturer Weber, for its part, is offering four new “smart grills” for 2021, with a builtin digital tech package that provides real-time food temperatures and readiness countdowns. Fellow big houseware brand Cuisinart, based JBS_Right to Roam Ad-final-print.pdf 1 4/28/2021 2:04:50 AM

Cuisinart is among the manufacturers coming out with high-tech grills designed for avid barbecuers.

in Stamford, Conn., is debuting a pellet grill and smoker with features like a large viewing window and sliding racks. The system allows home cooks to smoke, grill, bake, sear, char-grill, barbecue, braise and roast on one unit, and also includes a backlit LCD control and Wi-Fi remote monitoring via a Cuisinart app. Tech is a growing part of the grilling and barbecue market. Salt Lake City-based Traeger Grills, known for its wood-pellet grills, came out with a new Apple Watch app that allows users of WiFIREcompatible grills the capability to monitor and control their grilling from their Apple Watch. Likewise, there are more options in grilling supplies. Oakland, Calif.-based Kingsford, a brand practically synonymous with summer grilling, is introducing 100% hardwood pellets this season, made with all-natural ingredients and no fillers, preservatives or binders. The pellets are available in five flavors: a classic blend of hickory, oak and cherrywood; a blend of mesquite, oak and cherrywood; 100% hickory wood; 100% cherrywood; and 100% maple wood.

Buns and breads that go with grilled meats and produce are also elevated beyond the basics. Reichlen spotlights brioche buns and breads on his list of 2021 barbecue and grilling trends. “Use them to upgrade your burgers, sliders, sausages and hot dogs, not to mention brisket sandwiches and pulled pork,” he suggests. Many brands have gotten into brioche offerings, including Sara Lee, Bakerly and Nature’s Own. Meanwhile, the Los Angeles-based King’s Hawaiian brand is teaming up with celebrity chef Guy Fieri for a summer grilling campaign that directs shoppers to its sweet buns and rolls. The campaign launches in May and includes a sweepstakes.

Direct Heat: Promotions and Merchandising

The King’s Hawaiian campaign is one of many examples of promotions developed by CPGs and others for the four-month peak grilling season, ranging from beers to potato chips to condiments. As with other seasonal periods and holidays, grilling offers many opportunities for cross merchandising. Grocers can spotlight complementary products such as baked beans, coleslaw and a broad spectrum of beverages, including nonalcoholic drinks and adult beverages. These promotions can extend throughout the physical store and online. Although COVID-19 restrictions in some parts of the country have limited sampling and on-site grilling in parking lots or sidewalks, retailers can get creative with in-store displays, social media posts and smaller-scale events. Any kind of communication can also include helpful tips on food safety and grilling safety.

FRESH FOOD

Produce

Best Practices in Produce Presentation TIME-TESTED STR ATEGIES REMAIN IN EFFECT, WHILE PRESSURES CHALLENGE E XECUTION. By Mike Duff est practices are a means for grocers to maintain the favor and confidence of consumers, but, at a time when shoppers are reconsidering how they’re purchasing food, and issues such the expansion of home delivery and the growth of labor costs are having an effect, any retailer carrying fresh fruits and vegetables should consider revisiting fundamental standards as they address a rapidly changing marketplace. Basic standards that form the foundation of best practices haven’t changed, but circumstances have. Therefore, grocers need to understand what sells region by region and store by store, adjusting product flow to ensure that everything moves at a velocity that doesn’t result in fruits and vegetables past their prime remaining in displays. At the same time, the presentation should build on the inherent qualities of the products offered to catch the eye and drive purchasing beyond the shopping list. In addition, retailers need to allocate sufficient labor to maintain displays, ensure sanitation and engage with shoppers. COVID-19 has shaken up consumer engagement with grocery, so getting the basics right is critical. Many consumers have been bringing new considerations

Produce presentation should build on the inherent qualities of the products offered to catch the eye and drive purchasing beyond the shopping list.

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Key Takeaways Grocers must align merchandising practices to shopper concerns such as wellness and ease of shopping, while coping with rising labor costs. Produce consumers are interested in new fruit and vegetable varieties, existing items they haven't tried yet, and value-added products. Packaged produce can help with shrink and allow a grocer to offer shopping convenience.

such as wellness to bear in deciding where to shop, according to Scott Wiggans, produce director for Santa Barbara, Calif.-based Lazy Acres Market, a Good Food Holdings banner, with organic produce, for instance, becoming more popular. At the same time, grocers need to recognize that even as they seek out previously unexplored produce options, consumers still make decisions about where to shop based largely on fundamental standards such as sanitation. “I think customers are going to be more adept than ever in searching out clean shops,” says Wiggans. However, adjusting to evolving consumer preferences comes at a cost, and among the considerations that grocers need to ponder today is how they align practices to shopper concerns while coping with the rising labor costs many confront. “Managing labor costs is top of mind for grocers right now as they juggle wage pressure, hazard pay mandates and increased COVID-related costs,” says Amanda Lal, senior manager at Chicago-based consultancy McMillan Doolittle. “In addition, food and energy commodity inflation is expected to increase 11% in FY21, so grocers must make selective price increases and tighten operations with the anticipation of rising food costs. Earlier on in the pandemic, retailers were concerned about the need for more promotional pricing strategies, due to fears of a recession, but the economy is faring better than anticipated, and grocers can focus on balancing increasing labor and food costs.”

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FRESH FOOD

Produce

According to Joe Watson, VP of member engagement/retail and foodservice SME at the Newark, Del.-based Produce Marketing Association, and former director of produce at Thibodaux, La.-based Rouses Market, much of what has been true of best practices in produce merchandising hasn’t changed with the evolution of the market before and during the COVID-19 pandemic. However, adds Watson, this is a good time for grocers to review their best practices and accommodate new realities. As regards underlying standards in produce departments, during his retail career, he learned the three Is: impact, impulse and incremental, as in incremental sales. So, even as factors such as sanitation, rotation and presentation are critical to consumer confidence and sales in the produce department, labor is equally important. “The people part of it, sometimes in best practices, gets overlooked,” notes Watson. “As a retailer, you are so focused on selling. Sometimes you don’t spend enough time developing the people who are going to help you sell. So, developing basic principles on training in best practices can be your best asset out there to represent your organization and to carry on what you want to accomplish. It’s one of the modules in PMA’s new FreshEd Academy for retail training called Customer Focus and Interaction. It’s something we feel strongly about.” Lal points out: “In looking at labor costs in produce, grocers aren’t necessarily looking at cutting labor costs, even if sometimes that’s a necessity, as an investment in labor can pay off. She adds that produce sales have recently gained “as the global pandemic piqued consumer interest in healthier eating habits and home cooking. Increased sales have led to faster inventory turns and reduced shrink in the produce department, making it more important than ever to have produce well stocked and properly rotated.” Labor, how it can be best employed and the costs involved, fits into executing off best-practice considerations everywhere, but it takes on different dimensions in different markets. In many cases, labor costs have forced tough choices on retailers. Marc Goldman, produce director for Bronx, N.Y.-based Morton Williams Supermarket, says: “The biggest challenge right now, especially in New York, is the rising minimum wage. It went up $6 over three years.” The reality is, Morton Williams can’t absorb that cost and make money. So it has reduced labor hours, forcing hard decisions in employee deployment at a time when consumers are more interested in purchasing fresh produce, including new fruit and vegetable varieties, existing items they previously haven’t tried, or value-added products. “It trickles down to everything, if people want to admit it or not,”

Produce consumers still make decisions about where to shop based largely on fundamental standards such as sanitation.

As a retailer, you are so focused on selling. Sometimes you don’t spend enough time developing the people who are going to help you sell. So, developing basic principles on training in best practices can be your best asset out there to represent your organization and to carry on what you want to accomplish." —Joe Watson, VP of member engagement/retail and fooservice SME, Produce Marketing Association

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observes Goldman. “Someone may have something worthwhile, but my guys don’t have time to unload another truck. I might have an idea about a vegetable or cut-fruit item, but we don’t have time to do this.” Although produce merchandising often calls to mind massive, colorblocked table and waterfall displays of produce, with presentations of seasonal products such as watermelon and corn merchandised in bins and crates to emphasize harvest freshness, produce departments today take a wide variety of approaches to balancing such factors as attractiveness, ease of shopping and labor costs. Arlington, Va.-based Lidl, for instance, uses labor in support of a produce merchandising strategy that’s lately been changing, at least to a degree, with the introduction of more packaged and, especially, bagged fresh produce. Lidl assigns a dedicated employee to support a produce section, Ysberand Aukes, Lidl regional VP for New York’s Long Island, said at a recent store opening in Merrick, with a limited selection focused on popular items, supported by daily delivery. As such, Lidl drives sales through a limited space and leverages its costs so it can deliver lower prices to customers versus competing grocers. Lately, the company has been developing new produce merchandising with fixtures that are tiered upwards from bulk to packaged items. The fresh presentation allows Lidl to put more product into the limited produce department confines and present it so that consumers can gather what they need and go quickly, with easy-to-grab packaged product presented at eye level for particularly swift consideration and capture. The merchandising supports a greater assortment, with Lidl introducing such new items as Super Sweet Blackberries to generate additional consumer demand and keep sales volume swift enough to hold down prices. In addition, bagged and clamshell products help Lidl with shrink caused by spilled bulk items and reduce labor costs at checkout, as packaged produce scans quickly and doesn’t require weighing, noted Aukes. According to Steve Howard, SVP of merchandising at Good Food Holdings banner Bristol Farms, based in Carson, Calif., packaged produce can allow a grocer

to offer shopping convenience, particularly when consumers have confidence in an operation like Howard’s that focuses on high quality and high merchandising standards. “We have small branded tote bags,” he says. “Certainly, our customers are comfortable grabbing them. They trust the Bristol Farms brand.” Packaged produce has emerged in response to consumer demand, but also as a way to weigh the balance in the produce department between offering shoppers a more attractive presentation, one that addresses changing shopper priorities, and keeping labor costs reasonable. One qualification is that sustainability concerns may weigh against continued growth for consumers concerned about the environmental impact of plastic packaging. “Retailers are investing in more packaging options,” Watson notes. “In some cases, that trend is softening a little bit and consumers are more willing to go back to bulk, while other retailers are saying we’re pushing a lot more product into packaged. We’re going to cross a time when especially single-use plastics are going to hit a ceiling.” Still, packaging does offer a range of advantages that may make it more popular for its labor-saving value and other advantages, such as ease of ordering online versus bulk, where buying by the pound may be difficult and confusing for consumers. In addition, packaging ensures that no one has previously handled produce items whether they’re shopped on the sales floor, or ordered for delivery by personnel of the store or third-party services. Packaging could become even more attractive, as it can

provide critical information on produce nutrition and preparation while also featuring in promotions. Zespri, a New Zealand-based horticultural company and major kiwifruit supplier, is introducing Taste It To Believe It, the first-ever marketing campaign for its SunGold Kiwifruit. The promotion includes a bright stand-alone satellite display of stackable packaged kiwifruit featuring product information, supported by social, email and online video marketing. Sarah Deaton, Zespri’s shopper marketing manager in the United States, says that the packaging offers suppliers flexibility in messaging and informing consumers about produce items, especially when not everyone is thoroughly informed about qualities and the various ways that they can prepare a product. At the same time, Zespri is addressing potential consumer sustainability concerns to ensure that it can focus on the advantages rather than the disadvantages. Deaton cites research from Cleveland, Ohio-based Freedonia Group indicating that fresh produce packaging demand, including for pouches, bags and rigid plastic containers, will increase 3.7% annually per year through 2024, as evidence that produce shoppers will want packaged fresh produce, particularly as suppliers address environmental concerns.

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FROZEN & REFRIGERATED FOODS

Nondairy Products

Here Come the Disrupters PL ANT-BASED ALTERNATIVES ARE CHANGING THE FACE OF DAIRY DEPARTMENTS. By Lynn Petrak

ike certain species of plants that are introduced to an ecosystem and change the landscape, dairy alternatives derived from plant-based sources are disrupting dairy categories at retail. Whether viewed as invasive or welcome (see the sidebar on page 69), plant-based products have come on strong. Chicago-based market research firm SPINS pegs the total plant-based marketplace at $5.6 billion, with a 29% yearover-year growth rate that’s twice the rate of the overall food and beverage market. Although growth stems from many areas, most plantbased consumers are in the Millennial and Gen Z age demographic, according to findings from Chicago-based market research firm Mintel. According to The Good Food Institute (GFI), a Washington, D.C.-based organization that bills itself as an “international nonprofit reimagining meat production,” the plant-based dairy category has reached $2.5 billion and is the most developed within the plant-based world. GFI cites research showing that dollar sales of plant-based milk grew 20% over the past year and that plant-based milks account for more than a third of the total plant-based market. Mintel confirms growing interest in alt-dairy products, reporting that four in 10 adults in the United States live in a household with a regular consumer of plantbased dairy alternatives. In a webinar on plant-based trends last year, Arlington,

Most consumers of plant-based products, including nondairy milks, are pursuing a flexitarian lifestyle, according to FMI.

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Key Takeaways There’s growing interest in alt-dairy products, with most consumers of these items in the Millennial and Gen Z age demographic. Consumers of plant-based foods tend to be flexitarians concerned about health, wellness and weight management, as well as the environment and animal welfare. These consumers also spend 61% more than the average shopper.

Va.-based FMI — the Food Industry Association noted that plant-based milk is one of the largest categories, along with plantbased meat, and that growth is picking up in plant-based creamers, protein supplements, yogurt and whipped toppings.

The Roots of Category Shifts

There are a lot of dynamics and noise in this sector, but who is today’s plant-based shopper? In its webinar on the topic, FMI shared findings concluding that most consumers of plant-based foods are pursuing a flexitarian lifestyle, meaning that they often eat plantbased foods but also consume animal-based products in moderation. The drivers behind that flexitarian lifestyle are varied, according to FMI. Health, wellness and weight management are key factors. At the same time, growing concern about the environment and animal welfare are contributing to shoppers’ evolving choices. The growth of plant-based products may cause consternation among dairy producers, but research shows that there’s room for both animal- and plant-derived foods and beverages in today’s marketplace. The NPD Group, a market research firm based in Port Washington, N.Y., finds that 90% of those in the Millennial and Gen Z age demographic consume meat and dairy as well as their plant-based alternatives. According to the New York-based Plant Based Foods Association, 40% of households buy both dairy and plant-based dairy alternatives. Whatever motivates them, consumers who purchase plant-based products are valuable. FMI’s webinar revealed that plant-based shoppers spend 61% more than the average shopper.

Coming to Terms With New Segments Case-by-Case Changes

On the ground (and online) at grocery, plant-based alternatives are changing the composition of retail displays and shopping carts. In its published findings, The Good Food Institute, based in Washington, D.C., reports that almond alternatives are the plant-based leaders in the alt-milk category, followed by oat milk. Other plant-based fluid milk alternatives include beverages made from soybeans, coconut, macadamia nuts, cashews, quinoa, rice and hemp. Several plant-based companies are building their brands in the plant-based milk category, including longtime players like Silk, with others growing at a fast clip, such as Elmhurst, Califia Farms and Ripple. There’s room for further innovation — and competition within this dynamic category, too. In January, New York-based direct-to-consumer company Daily Harvest launched a plant-based milk called Mylk, made with “transitional” organic almonds, Himalayan sea salt, and vanilla bean for its vanilla variety. “People are extremely particular about their plant milks, but the options available still leave them wanting,” said founder and CEO Rachel Drori. “Read the labels on any grocery store shelf — previously available options are 98% water and filled with junk. These shelf-stable and refrigerated milks expire quickly and come in one size that does not fit all. We knew we could do better.” Meanwhile, although soy, coconut, almond and oat milks are the top bases for plant-based milks, a line of pistachio milks from the Táche brand has caused some buzz this year. In addition to products from brands based on plant-based profiles, companies that produce traditional dairy products are expanding their lineups to make room for alternatives. The Silk brand was acquired a few years ago by White Plains, N.Y.-based Danone North America. The Kansas City, Kan.-based Dairy Farmers of America cooperative added a blended product, Dairy+, to its Live Real Farms brand; the product is lactose-free and made with a fusion of plant and dairy milk. Another example is Norwich, N.Y.based Chobani, which now offers several oat milks in such varieties as Zero Sugar Plain, Chocolate, Plain Extra Creamy and Vanilla.

What’s in a name? Plenty, when it comes to the labeling of products sold in traditional dairy categories. In April, a bipartisan bill called the Dairy Pride Act was introduced in Congress to prevent the labeling of products derived from plants, nuts and seeds as milk. The proposed legislation calls for the U.S. Food and Drug Administration (FDA) to follow through on its regulations defining milk and cream, and halting the labeling of plant-based items as “milk,” “yogurt” or “cheese.” “Only milk comes from a cow — not an almond or coconut or any other fruit or vegetable,” noted Rep. Mike Simpson, R-Idaho. A similar sentiment was expressed Rep. Peter Welch, D-Vermont, who said, “Dairy farmers, already struggling to survive, are facing a growing threat due to the misleading practice of marketing plant-based products as milk and dairy products.” Dairy organizations have also sounded the alarm about labeling. In a statement supporting the introduction of the Dairy Pride Act, the Arlington, Va.-based National Milk Producers Federation (NMPF) thanked the bill sponsors for putting forth the legislation. “FDA is responsible for the integrity and safety of our nation’s food, medicine and medical devices, and it’s crucial that it enforce its own standards and requirements,” said Jim Mulhern, NMPF president and CEO. “Without enforcement, we are left open to the potential for questionable products, deceptive practices and, in cases such as mislabeled plant-based products that masquerade as having nutritional benefits similar to dairy’s, negative effects to our health.” While recognizing the FDA’s efforts to support consumer choice and market innovations, the Washington, D.C.-based International Dairy Foods Association (IDFA) has also asked the agency to ensure truthful labeling of plant-based products that doesn’t confuse or mislead consumers. Meanwhile, consumers have their own opinions on the subject of terms and names. According to the New York-based Plant Based Foods Association, 78% of those who drink only cow’s milk use “milk” to describe plantbased alternatives, and more than half of consumers prefer the terms “dairy-free or “nondairy” versus descriptions such as “milk alternative” or “milk substitute.” PROGRESSIVE GROCER May 2021

FROZEN & REFRIGERATED FOODS

Nondairy Products

As a testament to the strength of plant-based products in this category, the Swedish plant-based company Oatly filed for an IPO with the U.S. Securities and Exchange Commission this spring. In addition to its oat milk products, Oatly’s product portfolio includes frozen desserts and an alt-yogurt called “oatgurt.” The financials are strong at Mississauga, Ontario-based SunOpta, which recently acquired plant-based beverage brands Dream and Westsoy from Lake Success, N.Y.-based Hain Celestial for $33 million. Further, billionaire entrepreneur Jeff Bezos has gotten in on the act, backing a Latin American food tech company called NotCo. that has developed the NotMilk line of plant-based milks. Beyond milk, other dairy categories are being disrupted by plant-based alternatives as well. In the creamer category, new alt-dairy products abound, such as a new line of Honest to Goodness plant-based creamers from Danone North America, and plant-based creamers with functional benefits from Coffee Mate, a brand of Vevey, Switzerland-based Nestlé.

Virtually every traditional dairy category has been affected by the introduction of nondairy, vegan and plant-based alternatives, including yogurt, ice cream, cheese and butter. While the issue of naming is still contested — as evidenced by the recently proposed Dairy Pride Act — plant-based alternatives are typically merchandised alongside traditional dairy products in grocery stores. With retailers like The Kroger Co., based in Cincinnati, developing its own line of plant-based products that include alternative milk, ice cream and sour cream, such store-brand plant-based products may gain more of a foothold. For its part, Country Pure Foods, an Akron, Ohio-based manufacturer, now includes plant-based milks in its lineup of private label and branded beverage products.

Here we grow. Plant-based almondmilk and oatmilk now available from Country Pure Foods. The same uncompromising commitment to quality that goes into our juices is now found in a line of plant-based milk alternatives. All from a supplier you can trust to deliver it fast, right and ready for your brand. Visit CountryPure.com/plant-based-alternatives to learn more.

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Ice Cream & Novelties

Chill Factor INVENTIVE OFFERINGS KEEP THE ICE CRE AM AND NOVELT Y CATEGORY COOL — AND GROWING. By Bridget Goldschmidt

op Up Grocer, an innovative retail concept that brings a carefully curated selection of products to cities across the United States, carries a range of categories that appeals to consumers regardless of age, ethnicity or socioeconomic status, including ice cream and novelties. “Consumers, broadly, are looking for in frozen treats what they’re looking for elsewhere in the grocery store — better-made versions of the products that bring them joy,” notes Emily Schildt, founder of New York-based Pop Up Grocer. “So, in an ice cream, they want simple ingredients they recognize and understand: milk, cream, sugar. If they follow a nondairy diet or are just looking to explore these options for something different, they might look for a coconut or banana base, or something totally original like Eclipse’s cassava, potato, oat and corn blend. Even [our] diet-friendly options offer higher standards, like Cloud & Joy’s ice creams with organic, sustainably sourced ingredients, and less than 100 calories per scoop.”

Key Takeaways Sales of ice cream and novelties have risen amid the stress of the pandemic, and are expected to remain high. Limited-edition and seasonal flavors, along with plant-based options, are seeing greater consumer interest. Taste, texture and indulgence must remain at the forefront of future offerings, along with new value-added ingredients and functionality.

Taste and texture are always king in this category, but now, more than ever before, we are seeing consumers looking at indulgence through the lens of health and wellness.” —Kailey Donewald, Sacred Serve

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Sacred Serve, a Chicago-based maker of plant-based gelato, is one of the emerging brands featured at Pop Up Grocer during its sojourn in the Windy City this month. “Taste and texture are always king in this category, but now, more than ever before, we are seeing consumers looking at indulgence through the lens of health and wellness,” asserts Sacred Serve founder Kailey Donewald. “As consumers are becoming more educated around ingredients and the health benefits of a plant-based diet, we are seeing a massive shift in buying behavior. Plant-based/nondairy alternatives are popping up quickly to meet this new demand. In both dairy and nondairy sets, there is a continued preference for clean-label, low-sugar and less processed ingredients. Ice cream remains the most popular segment today, but with double-digit growth being seen in the nondairy segment, I anticipate that to flip rather quickly.” Roche Bros.' new premium, locally made private label ice cream According to Donewald, the brand has “found success in pairing comes in 48-ounce containers. temporary price reductions on shelf with geo-targeted digital ads and influencer marketing. We’ve also seen success cross promoting with other brands in-store using instant redeemable coupons on each other’s packaging to catch consumers walking down different aisles of the store strongest,” notes Strauch, adding that “Ben & Jerry’s and directing them back to frozen. As a wellness brand, we believe our expansion of their nondairy varieties has contributed to the core consumer is often not even walking down the frozen desserts aisle, growth.” Tops draws attention to its ice cream and novelty as they are more focused on the perimeter. Anything we can do to get offerings with end cap displays to inspire extra impulse placement or messaging in fresh will be tremendously impactful.” buys, or by offering additional incentives, such as Buy 4, Even at more mainstream grocers, this segment of frozen desSave $4 instantly, or inclusion in a gas points program, to serts has experienced strong growth. “Plant-based and nondairy provide incremental lift over a traditional promotion. continue to be on trend, and we have seen an increase in fruit bars, Like SanGiacamo, Strauch believes that the categonondairy desserts and better-for-you ice cream,” affirms Linda ry’s gains are here to stay. “While more consumers may SanGiacomo, VP marketing at Mansfield, Mass.-based Roche be comfortable going out, many will continue to stay Bros., which relies on digital promotions, in-store end caps and its home,” she points out. “Therefore, we expect sales to weekly ad flier to spur sales of ice cream and novelties. remain strong, but at a slightly lower level than we saw At Williamsville, N.Y.-based Tops Markets LLC, “the novelty cateduring the height of the pandemic.” gory is showing the most growth,” observes Tracy Strauch, category business manager frozen foods at the northeastern regional grocer. By the Numbers “While all novelty segments are growing at a similar mid-20 percentWhat’s occurring at Roche Bros. and Tops is in line with age rate, the adult novelty segment has a slight lead with growth, national trends. As Julie Henderson, VP of communications at 33%. Part of the growth is due to bringing in incremental items at the Harrisburg, Pa.-based National Frozen & Refrigerated during our reset, Yasso being a good example. Their new chocoFoods Association (NFRA), notes: “Traditional regular-fat late-covered [Greek yogurt] bars bring the best of both worlds — ice cream still holds the largest percentage of category better for you with a bit of indulgence.” She attributes sales. As consumers normalize indulgence, the dramatic increase “to more people being home, seeking balance and happiness over sacrifice, Traditional leading to greater snacking.” super-premium offerings are driving growth.” ice cream will However consumers like their frozen desserts Continues Henderson: “Ice cream is — in a bowl, straight out of the package, on a still the largest category in the frozen food remain strong and stick or in a handheld format — sales of these department, accounting for $8.041 billion continue to grow as cold comforts have risen amid the stress of the in sales for the 52 weeks ending March 27, Millennials age.” pandemic, with shoppers often opting for greater 2021, according to Nielsen. Frozen novelties —Tracy Strauch, Tops Markets quantities of their favorite frozen indulgences. is also a top category, with $5.991 billion in “We have seen sales across the category grow sales for the same time period.” versus year-ago,” says SanGiacomo. “As consumers have remained What’s behind such impressive figures? “In general, ice at home throughout COVID, they have looked to ice cream as a way cream is associated with a higher spend,” says Henderson. to treat themselves and their families. In doing so, there has been a “Customers buy it because they like it, it’s new and differshift to purchasing larger sizes (48 ounces) versus pints. We saw this ent, and they don’t mind spending more. Categories like ice especially during the first six months of COVID.” cream and novelties saw growth during the pandemic as Her company anticipates “continued growth of the category, with people were seeking out familiar and comforting foods.” a main contributor coming from our new Roche Bros. private label ice She believes that “limited-edition and seasonal flacream. This is a locally made premium ice cream built on the Roche vors have the opportunity to create interest and boost Bros. quality name, available in a 48-ounce container.” sales, as well as plant-based options, which are driving “As far as ice cream goes, the super-premium subcategory is the innovation in the category.” PROGRESSIVE GROCER May 2021

FROZEN & REFRIGERATED FOODS

Ice Cream & Novelties

The Scoop on Summer and Beyond

Unsurprisingly, ice cream and novelty sales are highest from Memorial Day to Labor Day, according to Henderson, although novelty sales start to spike earlier and see a bigger sales lift during the summer. NFRA’s Summer Favorites Ice Cream & Novelties promotion, which runs throughout June and July, provides retailers and manufacturers with marketing tools and PR opportunities to promote ice cream and novelties and engage consumers in-store and online. Among the products that retailers can promote during that time frame are innovative items from the following manufacturers. The No. 1 ice cream brand in the Northeast, Turkey Hill has launched three brand-new lines in its novelty portfolio: single-serve Layered Sundaes, featuring mix-ins and sauces in a variety of crowd-pleasing flavors; Ice Cream Cookie Sandwiches, offering premium ice cream packed between two soft, chewy double chocolate chip cookies; and Fruit & Cream Bars, made with milk, cream and fruit. “While our core business is 48-ounce ice cream, we know consumers are seeking unique experiences and ways to enjoy ice cream,” observes Kriston Ohm, VP, marketing at Conestoga, Pa.-based Turkey Hill. ”We crafted our new novelties based on the fan loyalty of Turkey Hill classic flavors like Vanilla and Cookies & Cream, and reimagined them in delectable [formats].” Ohm adds that this summer, the new novelties “are being marketed with a full integrated plan, including video, social media and PR. Our advertisements will run on TV, YouTube, Facebook, Instagram and across the web.” “Our top-selling items are the flavors with mix-ins, swirls and chunks,” notes Michael Shoretz, CEO and founder of Bronx, N.Y.based Enlightened, whose ice cream bars and pints include low-calorie, keto and dairy-free options. “It’s apparent that customers are going to the ice cream aisle looking for indulgent flavors that offer sound nutrition without compromising on taste and texture.” The company’s recent introductions include Light Caramel Fudge Pretzel, Keto Ice Cream Cake and Light Salted Caramel

Turkey Hill, the No. 1 ice cream brand in the Northeast, has added to its novelty portfolio three product lines building on the enduring popularity of its classic flavors.

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Plant-based NadaMoo! has launched a nosugar-added frozen dessert line specifically for consumers seeking to lower their sugar intake.

Cookie pints; a Mango + Boost Fruit Infusion bar; and, just this month, a Keto Vanilla Double Dough bar. “This spring, our team launched our very first product line outside of the original core product line,” says Daniel Nicholson, president and CEO of Austin, Texas-based nondairy frozen dessert maker NadaMoo! “It is a no-sugar-added product, which delivers on all the taste and texture, without all the calories and sugar. There are four flavors: Mint Chip, Chocolate, Vanilla and Strawberry. ... Sugar intake is always an issue in our country and globally, so it’s important to us to provide a winning solution to serve the customers who seek to lower their sugar intake.” Building on the success of its aforementioned bars, Boulder, Colo.-based Yasso has recently launched Yasso Sandwiches, offering frozen Greek yogurt between two chocolatey wafers, and its first-ever snackable item, Yasso Poppables (see this issue’s Editors’ Picks, page 97). However, the pandemic has made marketing the new products more difficult, admits Yasso CEO Craig Shiesley. “Without traditional tactics like sampling and demos available this past year to drive trial, we’ve relied on optimizations to our packaging and creative that work hard to communicate our best-in-class taste and nutritionals,” he says. What’s to come in the ice cream and novelty category, once this summer has melted away? “Traditional ice cream will remain strong and continue to grow as Millennials age,” predicts Tops’ Strauch. “As manufacturers continue to innovate with better-for you ice cream/nondairy/novelty items, improving on taste and providing a better mouthfeel will also lead to success and growth of the categories.” “The focus must continue to be on taste and texture and indulgence, with new value-added ingredients and functionality,” advises Nicholson. “If we do not continue to focus on indulgence, though, none of the added value or functionality will matter long-term.”

CONSUMER TRENDS

Sweet Treats

More to Enjoy RE TAILERS SHOULD TAKE HEED OF MAJOR TRENDS IN THE SWEE T TRE AT CATEGORIES. By Barbara Sax Innovation has never been more important to sweet treat categories. In an Instagram-obsessed age, new product launches tempt consumers with unique flavors, textures and colors, and keep shoppers returning to the snack aisles. John Downs, president and CEO of the National Confectioners Association (NCA), notes in the Washington, D.C.-based organization’s “Sweet Insights: State of Treating 2021” report that the confectionery category “is better positioned than ever for sustained growth, and our industry has become more consumer-centric in the way it markets its products.” Here are some key trends that retailers should watch in the sweet treat categories.

Food as Entertainment

The pandemic means that consumers are eating at home more, and that includes consuming more sweet treats. “Confectionery is a strong and important category that offers both inexpensive treats and premium indulgence — which is exactly why it shows strength in good and bad economic times,” says Downs. Confectionery rang up $36.7 billion in sales in 2020 and was the fifth-largest center store category.

Key Takeaways Product launches tempt consumers with unique flavors, textures and colors. In the wake of the pandemic, many new items target at-home living. Fun, premium and licensed products are also seeing greater popularity.

During the past year, food has been a way for consumers to bring entertainment into the home, and manufacturers are creating treats that engage snackers in new ways. That trend is likely to continue post-pandemic. Pennsylvania-based Hershey’s seasonal Build-A-Santa, Build-A-Snowman and Build-A-Bunny bars are a good example of a product that encourages play, enabling kids to break the chocolate bar apart to

PROGRESSIVE GROCER May 2021

CONSUMER TRENDS

Sweet Treats

Ferrara's Tic Tac Toe Funables

build a fun figure. Meanwhile, product features a pouch that Chicago-based Ferrara is now doubles as a game board, shipping Funables, a new fruit and two-sided X and O snack shapes to inspire game play. snack master brand that includes on-pack activities, custom fruit snack pieces and top licensing partnerships. brands are “venturing outside the For instance, Tic Tac Toe norms to keep feeding consumer Funables features a pouch that desire to try out a product, endoubles as a game board, and gage with a brand digitally and two-sided X and O snack shapes share on social media.” to inspire game play; a licensed Products with a wow factor Batman Funables includes an that are perfect for sharing on on-pack comic strip; and the Baby social media are becoming Shark Funables offers snacks in more prevalent. The “fantasy” the shapes of characters on the food trend, which saw a flurry new Nick Jr. show. of unicorn-themed products “Families are looking for snacks launched in 2019, continues. that they can trust, with high-quality Products such as Battle Creek, ingredients, and ones they know their Mich.-based Kellogg’s Mermaid, kids will enjoy,” says Greg Guiddotti, Unicorn and Birthday waffles in general manager, non-chocolate at blue, pink and yellow with rainFerrara. “Funables combines both of bow sprinkles, are an example these elements, fruit snacks that are of a colorful themed launch. delicious and fun for kids to eat and play Ferrara’s Mother’s brand, maker of Circus Animal with at the same time, while providing cookies, recently launched Sparkling Mythical permissible reassurance to parents.” Creature Cookies, a new variety of bite-sized cookies Another example of a new launch aimed at targeting atin four mythical shapes (unicorn, sea serpents, home living is Ben & Jerry’s Netflix & Chill’d, an ice cream line mermaid and dragon) iced in lavender and white and that debuted in early 2020 for snacking during decorated with sparkling glitter sprinkles. streaming sessions. The brand also teamed up in April with Post-pandemic, consumers are likely to the specialty bakery chain Sprinkles for a At-home still want their food to “deliver the fun factor,” limited-edition cupcake timed to launch on indulgences according to the “2021 Baileys Treat Report,” National Unicorn Day (the ninth). from London-based Diageo’s Baileys Irish Cream Licensed products are another opportuare providing an liqueur brand. London-based market research nity to create buzz. “Licenses are very imout-of-home firm Euromonitor’s recent report notes that as portant to the kids’ novelty category,” affirms experience.” manufacturers “look for ways to elevate their Clark Taylor, SVP of sales and marketing —Sally Lyons Wyatt, IRI image while delivering a unique experience at for Louisville, Ky.-based CandyRific. “Kids home,” fun products with a theme will be key for base their candy and snack choices on the snacking occasions that “warrant a slightly higher spend,” eslicenses that they know and love.” A few of CandyRific’s pecially in more indulgent snack categories such as chocolate key licenses are Baby Shark, Disney Princesses and confectionery, ice cream and sweet biscuits. Marvel’s Avengers. With more time on their hands, consumers are also creating “Some of the best promotion opportunities are more sweet treats at home, according to Erica Norton, senior where retailers build a display around a specific age director of consumer insights at The Hershey Co. “For our group and license, such as Paw Patrol or Minions,” business, we see this reflected in increases in making s’mores says Taylor. “These displays will create added exciteand baking,” Norton says. The company has ramped up in-store ment and color blocks in the stores to help create a support to reflect the new trend. “We’re leaning into s’modestination for the consumers.” res specifically by putting out retail displays earlier than ever “It just takes a little creativity to capture extra before,” she adds. “We’ve also increased advertising against sales based on brand tie-ins, movie releases or s’mores and leaned into digital advertising around baking for digital releases,” observes Lou DiMarco, EVP for Kisses and Hershey’s Bars.” King of Prussia, Pa.-based Hilco. “With the advent of COVID-19, consumers re-engaged in at-home bonding and digital parties — all tied into the opportunity The Wow Factor Retailers can expect more high-impact fun launches as brands of purchasing candy. ... New flavors and creativity “push the boundaries of colors and flavors,” according to Euevolved, and retailers who built larger and more romonitor’s report. The market research firm notes that more elaborate displays captured more sales.”

progressivegrocer.com

www.enstrom.com

CONSUMER TRENDS

Sweet Treats

Consumers Happy to Indulge

Flavor Trends Propel Growth

Over the past few years, consumers have shifted toward upmarket Flavor innovation is key to keeping sweet treat treats formulated with unusual and organic ingredients, and the categories exciting. “Consumers continue to love pandemic has only accelerated that trend. new flavor combinations,” says Norton, of Hershey, “At-home indulgences are providing an out-ofwhose Kit Kat brand has launched home experience,” says Sally Lyons Wyatt, EVP of Mocha Duos and limited-edition Birthday client insights at Chicago-based IRI. “Categories like Cake and Apple Pie flavors. Norton adds Consumers ice cream and frozen novelties are contributing to the that Hershey’s salty/sweet combinations, continue to growth of overall snacking.” The “true indulgence” such as Reese’s Big Cup with Pretzels, love new flavor segment of the snacking category has outpaced continue to be fan favorites. growth of other segments, adds Wyatt. Baileys Treat Report predicts combinations.” Brooklyn, N.Y.-based Van Leeuwen Ice Cream, sweet and salty mashups will get —Erica Norton, a brand known for made-from-scratch dairy and even more interesting in 2021. The The Hershey Co. vegan ice creams, recently launched a line of Van report cites an influx of oat-based Leeuwen Ice Cream Bars, and Englewood Cliffs, N.J.-based milk chocolates and ice creams and a crossover Unilever recently repackaged its Magnum ice cream brand and of Japanese indulgence treats as two trends to launched four new products, including Truffle Bars. watch in the coming months. Indulgence extended to the candy category as well, with Experts also say that lighter, crunchier and crispier sales of premium chocolate outpacing regular chocolate, textures are becoming more popular in the sweet treat according to IRI data. “This aligns with premium trends we are segments. Recent launches, such as Kit Kat Thins, seeing in other categories,” notes Wyatt. “During recessionary offering two wafer layers instead of three, and Trolli periods, consumers like to reward themselves and/or family Crunchy Crawlers, gummies with a crunchy coating, members with a premium product that they may not normally are examples of this trend. purchase. It’s a special treat taking the form of specialty shop and/or restaurant quality for home consumption.” Consumers Want More From Brands Flavor innovation alone isn’t enough to promote trial or sustain consumer interest. NCA’s report indicates that shoppers are paying increased attention to package and production claims in categories across the store, including confectionery, and that trend is likely to grow. The “Sweet Insights” report notes that “younger generations in particular want to purchase foods and brands that align with their values and personal goals.” Brands and retailers have elevated their environmental practices and corporate goals to address sustainable sourcing, package and food waste; reduction of water and energy resources; their carbon footprints; and other environmental issues, according to NCA’s report. The study reveals that these platforms are important to about four in 10 confectionery shoppers — especially younger ones: More than half of Gen Z consumers said knowing that confectionery brands engage in waste-focused initiatives influences their purchasing decisions. Also, more than half of shoppers like to buy from companies that give to the community or charities, NCA’s report finds, and 45% reward confectionery brands that match their own values and beliefs through a greater purchase likelihood. “These factors are increasingly important, especially with younger consumers,” Norton advises. “Our company is committed to responsible sourcing, our environmental footprint, and advancing diversity, equity and inclusion.” Hershey is exploring more ways to communicate Mother's, another Ferrara brand, teamed up with specialty bakery this information on packaging and targeted consumer chain Sprinkes on a limited-edition cupcake in honor of National communication. According to Norton, Hershey will Unicorn Day (April 9). expand its Celebrate SHE bar program, which rolled

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out last year, with its retail partners. “In recognition of International Women’s Day, bars were distributed at our Hershey’s Chocolate World locations [Hershey, Pa.; New York; and Las Vegas],” she says. “This served as a moment to celebrate the accomplishments of women, and we also were able to communicate our commitments to gender representation and dollar-for-dollar pay equity for women.” Aiming to empower girls and celebrate diversity, Ferrara’s new licensing strategy with Barbie will feature girls from different backgrounds representing a variety of careers on product packaging. “A portion of the proceeds from these fruit snacks will support The Dream Gap Project initiative, which gives girls resources to break barriers and reach their potential,” notes Guiddotti. Another key trend that Hershey is addressing is consumers’ increased desire for more choice in the better-for-you space. To that end, the company has launched Organic Hershey’s Bars and Organic Reese’s Peanut Butter Cups, among betterfor-you choices rolled out across its core brands. It’s no surprise that NCA’s report shows growth in certifications, since one in five consumers said that they look for certifications and labels when purchasing chocolate and candy. Fair Trade is the most sought-after claim, followed by Rainforest Alliance and Certified Organic/USDA Organic.

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The Hershey Co. has launched Organic Reese's Peanut Butter Cups and other better-for-you choices across its core brands.

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Over 80 Base Sizes PROGRESSIVE GROCER May 2021

Pets Are People, Too THERE ARE THREE MAJOR TRENDS DRIVING POST-PANDEMIC CATEGORY GROW TH. By Mike Troy he pet category had a fantastic run in 2020, and by all accounts, the momentum is continuing this year. Driving the growth is a unique combination of three factors, including the humanization of a growing pet population and sales of premium products. As a result, for the first time ever, sales in the pet product industry surpassed $100 billion, according to data compiled by the American Pet Products Association (APPA). “We are bullish for the coming year, projecting growth of 5.8% — well above the historical average of 3% to 4%,” says Steve King, president and CEO of Stamford, Conn.based APPA. Based on that rate of growth, sales of pet products, including everything from food and toys for dogs and cats to veterinary services and boarding, will increase to $109.6 billion in 2021 from $103.6 billion last year. “This past year presented a host of challenges that resulted in consumers across the country turning to their pets for comfort and companionship,” King adds. “Interestingly, the product trends we are seeing in the pet care community mirror those of consumers — a desire for a healthier lifestyle, increased focus on fitness, turning to supplements for improved well-being, and technology playing a larger role in everyday life.” Grocers compete primarily in the largest segment of the industry, the $42 billion market for pet food and treats, which APPA data shows increased nearly 10% last year. APPA projects that the pet food and treat segment will grow 5% this year, thanks to pet population increases, with the household penetration rate of dogs and cats now at 63.4% and 42.7%, respectively. Retailers refer to this as an annuity effect that will drive increased demand for products and services for years to come as people care for their pets.

Formidable Competition Intensifies

Strong growth for the pet product category is good news for food retailers, but increased competition will make growing sales challenging.

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The biggest competitive challenge is arguably online retailer Chewy. It grew its customer base 43% last year and full-year sales increased 47% to $7.15 billion, roughly double the level two years ago. The company boasts 19.2 million active customers, 70% of its sales are consumable products similar to those sold by food retailers, and 68% of its sales are to customers who have signed up for automatic replenishment, which the company can deliver next day to 80% of the U.S. population from a network of 13 distribution facilities. Chewy expects to add $1.8 billion in sales this year, according to CEO Sumit Singh, the former head of Amazon’s consumables business who joined Dania Beach, Fla.-based Chewy in 2017. He estimates that the pet market will expand to $120 billion by 2024.

At $7 billion in net sales, Chewy is clearly only scratching the surface of the overall market opportunity in front of us.” —Sumit Singh, Chewy “At $7 billion in net sales, Chewy is clearly only scratching the surface of the overall market opportunity in front of us,” Singh said when the company reported its 2020 results. A key reason for his bullish outlook is the accelerating penetration of e-commerce. “Online penetration rates in the retail food and supplies category are estimated to have grown from 7% in 2015 to 30% in 2020 and are expected to reach 53% by 2025, which is in line with the current online penetration rate of categories like books and electronics,” Singh noted. Another company that believes it, too, is only scratching the surface is San Diego-based Petco. It presents a different

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SUPPLIER PERSPECTIVES

LET SCIENCE-BASED NUTRITION LEAD THE WAY TO PET FOOD GROWTH By Joe Toscano, Vice President, Trade & Industry Development at Purina

As more and more pet owners are becoming actively engaged and informed about the health of their four-legged friends, super premium pet foods with targeted nutrition are growing in popularity. Super premium is the largest price tier within the total dog/cat category, making up more than a third of total dollar sales and growing at 3.5%. Consumers are looking for nutrition that’s not only enjoyable, but also healthy and enables their pet to live their best life.

Retailers carrying Purina ONE turn shoppers into loyal consumers who know they won’t have to look anywhere else to find what their pets need.

In fact, three-quarters of dog owners think it is important to buy food formulated for their dog’s size, breed, life stage or other need. Four out of ten pet owners say they “would pay more for a food that was made specifically for their pet’s nutritional needs.”

• Clean Bowl Club Dogs and cats may be even more eager for mealtime, thanks to meat as the #1 ingredient and the tasty bites in Purina ONE.

At Purina, our innovation and product cycle is guided by research. We have more than 500 scientists, veterinarians and nutritionists on staff, who work tirelessly to uncover breakthrough nutrition that helps dogs and cats live longer, healthier lives. Over the years, Purina ONE has used that expertise to develop formulas that support a pet’s whole body health every day and throughout a pet’s lifetime, with formulas that address changing needs at each life stage. Purina ONE has formulas for puppy/kitten, senior cat/dog, weight management and sensitive system, just to name a few. Purina ONE nutrition is veterinarian recommended and proudly crafted in our own USA facilities.

Purina ONE natural dog food and cat food formulas use high-quality ingredients for nutrition that can lead to visible differences in a pet’s health, and consumers can see these differences for themselves when they join the more than 1.5 million others who have taken the 28-Day Challenge.

• Energy You Can See The purposeful nutrition in every bag of Purina ONE helps support healthy energy. Dogs and cats may

want to play more and may be happier overall. • Bright Eyes and Shiny Coat By the end of the month, owners should see clear, alert eyes and a healthy skin and coat, supported by the omega-6 fatty acids, vitamins and minerals provided by Purina ONE. Consumers who go online to sign up for the 28-Day Challenge will receive a $5 coupon on their next bag of Purina ONE. We are recommending retailers take advantage of the 28-Day Challenge to help them convert shoppers into buyers. Work with your local teams on promoting the challenge and taking the opportunity to satisfy your shoppers and their pets alike.

S P O N S O R E D C O N T E N T F R O M O U R PA RT N E R P U R I N A B R A N D

Purina trademarks are owned by Société des Produits Nestlé S.A.

Pet Ownership at a Glance Percentage of U.S. households with pets

1.6%

Saltwater Fish

1.6% Horse

4.5% Reptile

Humanization of the pet category is evident at Petco stores, where bold signage calls out a premium food offering.

5.4%

Small Animal

type of competitive threat from that of Chewy, because it operates 1,454 stores, which it’s leveraging as online order fulfillment centers in the same fashion as food retailers have embraced click-and-collect. Petco’s sales last year increased 11% to $4.9 billion, and this year, the company expects sales to rise to $5.25 billion or more. “Our category continues to grow, powered by the millions of incremental new pets in households, which is creating an annuity for years to come,” Petco Chairman and CEO Ron Coughlin notes. Meanwhile, the success of another retailer not normally viewed as a grocer y channel competitor highlights the changing dynamics of the pet product categor y. Significant grow th in pet products was cited as a driver of a 38.6% first-quar ter same-store sales increase at Brentwood, Tenn.-based Tractor Supply Co., which operates 1,944 Tractor Supply stores and 177 Petsense stores. As CEO Hal Lawton notes, the pet ownership rate among its customers is higher than the overall U.S. average, with surveys of its shoppers showing that 25% have recently acquired or adopted a new pet. “New companion animal ownership acts as an annuity for our business as these puppies and kittens grow up and have growing life cycle needs,” Lawton told investors recently. “We’re also uniquely positioned to offer a growing menu of services such as pet wash, vet clinics, prescriptions and televet services. Whether it is more food treats, toys, containment and more, the humanization of pet provides us with future opportunities for growth.” Grocers also have future opportunities for growth in a category with favorable trends, but capitalizing on those opportunities has never been more challenging, due to an evolving competitive environment.

Pet Products & Services Market Size Annual Sales in Billions 2021 Category 2019 2020 (Estimate)

Pet Food/Treats Supplies/Live/OTC Meds Vet Care/Product Sales Other Services

$38.3 $19.2 $29.3 $10.3

$42 $22.1 $31.4 $8.1

$44.1 $23.4 $32.3 $9.7

Total

$97.1

$103.6

$109.7

Source: American Pet Products Association

progressivegrocer.com

5.7% Bird

11.5%

Freshwater Fish

42.7% Cat

63.4% Dog

Source: American Pet Products Association

ADVERTORIAL

PRODUCT OF THE YEAR 40,000 Shoppers Can’t Be Wrong March 2020. It’s the month retailing transformed almost instantaneously, as grocery stores pivoted to meet the unprecedented challenges brought by the COVID-19 pandemic. Supply chains were stretched, and CPG companies scrambled to keep up with demand. But the industry successfully tackled those challenges, thanks in part to manufacturers who introduced products to tap emerging trends, according to Mike Nolan, CEO of Product of the Year, the largest consumer-voted award for product innovation

“For all the obvious reasons, shoppers are spending less time in the supermarket than ever, but still crave new and innovative products to light up these difficult times,” Nolan says. “One of the great strengths of Product of the Year is that we react to the market every year. During the pandemic, we saw manufacturers stepping up, trying to do their small part to provide shoppers with what they wanted, and needed,” Nolan recalls. “What’s interesting is that even in this awful pandemic, 70 percent of people still want and pay more for

Join the Product of the Year Family: Enter Now! Products that demonstrate innovations in design, function, packaging, ingredients or marketing and launched after January 1, 2020 are eligible to be entered in the 2022 Product of the Year Awards; the entry deadline is September 30, 2021. For more information on how to enter, visit productoftheyearusa.com.

new and original products.” Forty-one of those new products that showed up on store shelves were 2021 Product of the Year Winners. “This year’s winning products reflect the trends and categories that everyday shoppers care about most as they spend more time at home, from the latest cleaning supplies to CBD offerings and the tastiest snacks,” Nolan says. Research-based Recognition Product of the Year was established over 30 years ago to guide consumers to the best products in their market and reward manufacturers for quality and innovation. What makes the award unique — and so effective — is that winners are determined by the votes of 40,000 consumers in a nationally represen-

tative study conducted by Kantar, a global leader in consumer research.

“Kantar independently finds those 40,000 individuals coast-to-coast, and they vote on the products entered into the awards using criteria such as innovation, recommendation and satisfaction,” Nolan explains. “Research is at the heart of everything we do. We see ourselves almost as an America’s Got Talent for products sold in supermarkets.” A Win-Win-Win The benefits of garnering a Product of the Year Award extend to consumers, retailers and CPG companies alike. “Product of the Year gives shoppers the confidence that each product with our iconic red logo is backed by 40,000 Americans,” Nolan explains. “It

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allows manufacturers, retailers and, so importantly, the shoppers to trust us.” It also builds trust and brand loyalty for CPG companies, and by extension, for retailers who carry the award-winning products. “Product of the Year Award positions CPG companies as the innovative leader in their category,” Nolan says. “It is a powerful merchandising program for marketers proven to increase product sales, distribution and awareness.” Winners get full inclusion in a robust national PR campaign, which generates over 1 billion media impressions across broadcast, digital print, influencer marketing, social media, and more! Winning products are announced in February each year and companies can use the Product of the Year logo in marketing communications for two full years. The results speak for themselves: Data shows that Product of the Year USA winners outperform category sales performance by 38.1%1; that the Product of the Year logo is 25% more effective on a package than the word “New”2; and that coupon redemption consideration increased 24% when the Product of the Year logo was featured in a Free Standing Insert (FSI)3. “There’s just nothing more meaningful than a recommendation from a fellow shopper to help you find the best, most innovative new products on the shelves,” Nolan concludes. 1

Winner’s sales data, 2Kantar, Google Survey

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OPERATIONS

Workforce Management

Taking the Pulse of America’s Grocery Workers A NE W SURVE Y HIGHLIGHTS OPPORTUNITIES FOR RE TAILERS TO IMPROVE TR AINING PROGR AMS. By Gina Acosta

rocery store workers have been on the front lines of a global crisis for a year, and now we have a better idea of how they’re feeling about their jobs when it comes to support and training. A new survey conducted by Chicagobased EnsembleIQ Research Solutions — a division of Progressive Grocer’s parent company, EnsembleIQ — and sponsored by Waterloo, Ontario-based software company Axonify finds that nearly 60% of front-line grocery workers said that they experienced a shift in their role or job tasks during the COVID-19 pandemic. Of the respondents who said that their jobs or roles changed, more than 40% said that they received no training for their new responsibilities. The survey engaged 754 full- and part-time front-line employees age 18 and older from the grocery, mass, dollar and club channels to learn more about their experiences working (and learning) on the front lines during the pandemic.

Job Satisfaction Is High

Many workers said that they received no training for new pandemic roles, yet nearly half of respondents said that they’re highly satisfied with their employer’s training program, and the proportion jumped to 85% who are, at minimum, somewhat satisfied. Among workers who were hired pre-pandemic, most

progressivegrocer.com

maintain similar levels of satisfaction with the training and support provided during COVID-19 compared with before the pandemic. Segments more likely to have higher satisfaction were Millennials, full-time workers, those employed at small operators (fewer than 20 stores) and club employees. At the same time, however, few workers said that they’re highly likely to recommend their employer as a place to work, which resulted in a Net Promoter Score of -4. This low score was driven by specific segments, including women, part-time workers, those working for midsize to large operators, and those working at mass or dollar stores. Despite the low scores, workers said that they trust their capacity to do their jobs even with a lack of training. Among the workers who said that they’re not highly satisfied with their employer’s training program, key improvements that could change their rating include extending the time devoted to training, offering more guidance and improving communication overall. About 12% said that they need longer training time, 11% said that they had to learn on their own, 7% said that they need better communication during training, and 5% said that more time for training should be allotted by their employer. More workers claimed that when they receive training, it teaches them new things. However, nearly half feel that the support isn’t customized, following a “one size fits all” approach instead.

Training Satisfaction Is Lacking

Opinions were across the board on which attributes make training programs old-fashioned as opposed to cutting-edge, but interestingly, Generation X and Baby Boomers were more likely to say that their employer’s program is old-fashioned. The classroom approach, whether virtual, in-person or mixed-method, was less popular for front-line workers, with around 21% saying that their employer uses it. Most respondents said that they receive on-the-job training from peers, with mobile/self-guided online training being the second most popular method. Around 76% of respondents said that they use computers supplied by an employer for online or virtual training. For mobile experiences, workers said that they rely on personal smartphones slightly more often than employer-provided tablets or smartphones. A majority of respondents (80%) said that learning from peers is the most effec-

Current Employer Training Program Performance Scorecard EFFECTIVENESS

I don't learn anything new

17%

31%

32%

14%

Teaches me things I didn't know before

SPECIALIZATION

One size fits all

25%

22%

25%

20%

Personalized for me

More employees claimed that when they receive training, it teaches them new things. However, nearly half feel that the support isn't customized, following a "one size fits all" approach instead.

Likelihood to Continue Working for Current Employer and in the Retail/Grocery Industry

Extremely/very likely

55%

Somewhat likely

27%

30%

Not at all/Not very likely

19% Stay With Employer (Next 2-3 Years)

Not at all/Not very likely

15% Stay in Retail/ Grocery Industry

Despite the uncertainties of what a post-pandemic workplace and job market will look like, more than half of workers are highly likely to continue working for their current employer and, consequently, will remain in the grocery or retail industry for the foreseeable future. Source: Axonify/Progressive Grocer

tive training method, while just under half expect self-guided to be highly effective. It’s important to keep in mind, however, that only 55% have participated in online self-guided methods, so this is likely due in part to lower familiarity. When given the opportunity to redesign their employer’s training program, respondents said that retailers should focus on more hands-on and one-on-one support, as well as improved communication and consideration for different methods. “For my particular position, I would institute more hands-on training,” one respondent said. “I would have a coach — a manager or someone well versed in the position — act out various situations the new employee might have to deal with.”

Communications should also be at the forefront. “I think there needs to be better communication throughout all departments,” another respondent said. “For example, I work in the coffee shop in my grocery store, and I feel like other departments don’t really understand us or care about us as much. I think managers throughout the grocery store need to have an understanding of how the coffee shop runs and do a better job at staffing us.” Across nearly all metrics, the subgroups that expressed more negative training perceptions and experiences tend to be female, Generation Z, parttime, and work at midsize to large operators, and at mass or dollar stores.

Post-Pandemic Workers

Most respondents agreed that employers have taken steps to keep staff and customers safe during the COVID crisis. Compared with Axonify’s summer 2020 workforce survey, workers agreed slightly more that employers are taking actions to keep customers and staff safe during the pandemic, as well as providing timely information to employees. Around 79% said that their employer has taken action to keep their customers safe through this crisis, 75% said that their employer has taken action to keep staff safe through this crisis, 69% said that their employer has provided timely information about its response to the pandemic, 67% said that they feel safe working for their employer in the current environment, and 65% believe that their employer can handle any future crisis/issue because of how it has responded to the pandemic. There’s even more positive news: More than half of respondents (55%) said that they’re highly likely to continue working for their current employer and will remain in the grocery or retail industry for the foreseeable future, despite uncertainties over what the “new normal” will look like. This research was derived from a survey conducted by EnsembleIQ Research Solutions and sponsored by Axonify between March 10 and April 1, surveying 754 respondents who work on the front lines at food retail businesses. PROGRESSIVE GROCER May 2021

SUPPLY CHAIN

Sustainability

Straight to the Sourcing WITH ITS L ATEST CERTIFICATION PROGR AM, WHOLE FOODS MARKE T IS MAKING IT E ASIER FOR SHOPPERS TO FEEL GOOD ABOUT WHAT THE Y BUY. By Jenny McTaggart t seems that living through a global pandemic has made the world a smaller place — and in the supermarket industry, this perspective is playing out with a renewed focus on more sustainable supply chains. Retailers and manufacturers alike seem more eager than ever to do business in a way that considers the long-term well-being of all sectors of the supply chain, and at the same time sends a positive message to consumers (and investors), assuring them that everything from sourcing to packaging has been carefully considered. In one of the latest examples of sustainable sourcing, Austin, Texas-based Whole Foods Market recently unveiled a Sourced for Good seal to help customers identify products that support workers, communities and the environment by providing things like improved wages, health care, student scholarships, and planting trees to prevent erosion. The new program replaces the natural and organic food retailer’s Whole Trade Guarantee, which it launched back in 2007. According to Whole Foods, the upgraded program has raised millions of dollars annually for hundreds of communities across 12 countries, including the United States. Sourced for Good is an exclusive third-party certification program that encompasses more than 100 products throughout Whole Foods stores, including mainly produce items, but also seafood and florals. The products are certified by groups such as Fair Trade USA, Rainforest Alliance, Fairtrade America, Fair Food Program and Equitable Food Initiative. “At Whole Foods Market, our Sourced for Good products not only are good, they do good,” noted Karen Christensen, the chain’s SVP of merchandising for perishables, when the program launched on April 7. “Our

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commitment to equitable trade has funded numerous community projects – from dental clinics to housing facilities to student scholarships to bird sanctuaries. By purchasing select products, customers help us in our goal to make a difference, and now with Sourced for Good, we’re offering shoppers an easier way to find these special products in our stores.”

What’s in a Label?

Indeed, perhaps the most important aspect of this program is the Sourced for Good label itself, which calls attention to products that otherwise may not be so easily noticed by shoppers. According to a study conducted online by The Harris Poll on behalf of Whole Foods, 75% of Americans said that when they’re grocery

shopping, it’s important to them that products are responsibly sourced. Yet 65% of shoppers admitted that they’re confused about how to determine whether a product is responsibly sourced. These findings follow similar research conducted by the International Food Information Council. According to the Washington, D.C.-based council’s “2020 Food and Health Survey Report,” 63% of consumers surveyed agreed that “it’s hard to know whether the food choices they make are environmentally sustainable.” The top two perceived identifiers of sustainability were “labeled as sustainably sourced” and recyclable packaging. Arlington, Va.-based FMI — The Food Industry Association highlights the need for clearer consumer messaging in regard to sustainability in its recently released report, “Sustainability in the Food Industry.” Meanwhile, FMI’s “Grocery Shopper Trends 2020” research finds that 39% of U.S. consumers surveyed said they’re interested in learning more about the sourcing of ingredients, while 36% would like to know more about the production of ingredients. Meanwhile, omnishoppers — or those that make use of both in-store and online

Retailers Step Up Sustainability Commitments A little more than half of grocery retailers surveyed said they have quantified goals in place regarding responsible sourcing, up from 49% the year before, while 52% are committed to providing product transparency.

Does your company have quantified goals and implementation time frames for:

Energy Use Reduction Food Waste Reduction Diversity in Hiring Responsible Sourcing Package Waste Reduction Product Transparency Employee Volunteer Programs Animal Welfare Carbon Emissions Reduction Supply Chain Transparency SmartLabel

YES, IN PLACE

NO, WORKING ON

NO, NO PLANS

72% 68% 67% 55% 53% 52% 38% 34% 32% 31% 22%

20% 22% 25% 14% 28% 20% 17% 14% 19% 25% 18%

8% 11% 8% 29% 18% 28% 46% 52% 49% 44% 60%

Source: FMI – The Food Industry Association, “The Food Retailing Industry Speaks 2020”

shopping — are quite eager to learn more about products through their online research, the trade group notes. FMI and the Consumer Brands Association, also based in Arlington, have begun to address this need by offering the SmartLabel, which provides access to detailed information on hundreds of product attributes that would never fit on a package label. Information from the SmartLabel is accessible through a wide range of device types. In its sustainability report, FMI stresses the “unrealized potential” of this technology that can highlight certifications, much like Whole Foods’ new program is doing.

Aiming High With Certification

Janice Neitzel, CEO of Sustainable Solutions Group, an animal welfare consulting group based in Chicago, observes that programs such as Whole Foods’ Sourced for Good require a great deal of legwork and commitment. “It’s no small feat to create a comprehensive, measurable, transWhole Foods' Sourced parent and auditable certification program,” Neitzel notes. “Whole for Good is an exclusive Foods has the skills to do this because they began decades ago, third-party certification program encompassing developing the highly respected 5-Step Animal Welfare Program more than 100 products from Global Animal Partnership (GAP) for supply chain animal welthroughout its stores. fare. Not only is the 5-Step GAP program used at Whole Foods, it was spun off and is widely available for use.” She adds that she’s hopeful that Whole Foods’ parent company, Seattle-based Amazon, will be undertaking the 5-Step Animal Welfare and Sourced for Good programs. Neitzel continues, “Many retailers across the spectrum have been working on responsible sourcing issues, and it is a matter of undertaking truly credible programs and providing transparency to consumers.” As examples, she cites Kroger’s Zero Hunger | Zero Waste program and Phoenix-based Sprouts Farmers Market’s work on sourcing and food waste recovery, which she considers to be “well done.” Neitzel advises retailers to be cautious of programs that have low criteria and appear to be “green-washing,” however. “Shoppers want clarity, not confusion,” she stresses. PROGRESSIVE GROCER May 2021

MERCHANDISING/MARKETING

Q&A

Grocers of All Sizes Can Win With Personalization A NE W DEFINITION OF CONVENIENCE IS KE Y TO ENGAGING WITH SHOPPERS AND PERSONALIZING THE DIGITAL E XPERIENCE. By Mike Troy

he pandemic has accelerated adoption of all things digital over the past 12 months. The surge of e-commerce created new digital engagement and monetization opportunities for retailers of food and consumables, but also fueled uncertainty about the optimal path forward. To make sense of the rapidly evolving digital world, Progressive Grocer spoke with Randy Crimmins, a 25-year retail loyalty and digital marketing executive who has recently taken on the role of president and chief customer officer at Relationshop, a Houston-based provider of personalized digital engagement and commerce solutions.

“We emphasize to retailers that they can now control and determine what advertising and promotions each customer sees.” —Randy Crimmins, president and chief customer officer, Relationshop

Progressive Grocer: What does it mean to be a provider of personalized digital engagement and commerce solutions? Randy Crimmins: Everyone has a different perception of what personalization means. To us, it’s about how do we make the shopping experience, the digital experience for the shopper, more convenient, more curated, more relevant and more valuable to them as an individual. If we’re not driving value and convenience, then we’re probably not being very effective on behalf of the retailer. We know the metrics important to grocers are sales, transactions and basket size. We make sure that whatever we’re doing and however we define personalization, it’s to support those fundamental metrics.

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PG: Are there other metrics you’re looking at further upstream in the shopper’s path to purchase that are indicators that a retailer is on the right track with sales, transactions and basket size? RC: Customer data is the foundation of personalization. It drives the ability to deliver personalization to the shopper, as well as the ability to ultimately measure the performance and the value of it within the experience. We always try to look at what we are doing in terms of incremental behavior, whether that is an extra item or an extra trip. Overall, we want to understand the incremental impact of a retailer’s digital engagement and personalization activities. Incrementality is the key. PG: Let’s talk more about convenience. How shoppers define convenience can vary widely. How are you thinking about making shopping more convenient?

RC: Traditionally, convenience was about proximity to the store. And if you look at the top reasons why people shop in store, it is convenience and value or savings. Those drivers of consumer choice haven’t really changed. However, the definition of convenience has moved beyond proximity, because in the digital world, convenience is how easy do you make it for me to shop with you? For example, with the mobile apps we design for clients, it is all about creating less friction, whether using the app to shop in store or online. This blended shopping experience is really the new definition of convenience. PG: As an industry veteran, you’ve seen a huge increase in the types of shopper data that is available as well as how it is used, with increased targeting, personalization, being the biggest change. Would you agree? RC: I started out as a direct marketer, and a lot of those fundamentals still apply today. In the pre-digital world, direct mail was the only channel available to reach individual consumers, but the principles — targeting, segmentation, predictive analytics — are still relevant. That has made it easier for direct marketers to transition to the digital world, where we are fulfilling the vision of engaging with shoppers on an individual basis in real time. It is a good time to be a marketer.

osition for the shopper, and say, “If you do this, we’re going to do this, and when we do that, we’re going to be very responsible with how we use your data, and we’re not going to share or sell your data.” Regulated or not, it’s about trust. PG: The retailer as a media platform is a phenomenon that has gained a lot of traction with the surge of digitally engaged shoppers. What’s the opportunity look like for grocers? RC: Grocery is often viewed as somewhat of a laggard when it comes to maximizing digital opportunities, but the sector is quickly catching up. That’s why you are seeing a lot of companies coming into the space, whereas other retail channels have been monetizing their digital footprint for some time. The opportunity for grocers is huge. They are experts at monetizing the in-store experience, shelf space and the weekly ad, but as they’ve moved it to digital, in some cases, there is no monetization at all. We’ve had a lot of conversations with grocers about the opportunity for monetization, and we emphasize that they can now control and determine what advertising and promotions each customer sees. PG: The word monetization can have a negative connotation for suppliers, but what we’re really talking about is driving sales through better targeting, yes?

PG: What if I’m a retailer that doesn’t have an extensive loyalty program or a lot of first-party data? Where do I begin to do the types of things you’re talking about? RC: What we tell retailers when they ask us that same question is to start where you are. Think about all the different ways that you engage with your customers and to what degree you engage with them. Do you have email? Have you started an email opt-in program? Do you have e-commerce? If you have e-commerce, then you have a one-to-one relationship with customers and a way of identifying them individually. You could capture mobile numbers to create a digital account for texts and coupons. PG: A retailer’s ability to personalize is dependent on the data they are able to accumulate about an individual, but the regulatory environment around data collection and privacy is constantly shifting. RC: Retailers have to be very considerate and intentional about how they evaluate privacy concerns. Even without the regulations concerning personally identifiable information, trust and transparency are essential. Retailers have to effectively explain the benefits of sharing information and the value prop-

RC: That’s what it should be about — what makes sense for the customer. Retailers own the digital platform and have the data, just like they own their stores, so it is about leveraging the data and insights to personalize the experience. When we work with retailers, we try to impress upon them that this is a significant opportunity for them to really control their business, to understand it digitally, manage it strategically, and then look for ways to monetize it. PG: If you were at a retailer today, looking at some of new shopping behaviors and the sources of data generated, what would you be most excited about? RC: What I’m most excited about is the opportunity to stitch it all together to gain a truly holistic view of shopper behavior, and then, based on that understanding, engage personally with each customer along their journey in as close to real time as possible. There are so many exciting things happening in this space, and the pandemic accelerated everything, but retailers are at different points along the path. The key is to really understand where you are and what is needed to get to where you ultimately want to go. PROGRESSIVE GROCER May 2021

SOCIAL SUSTAINABILITY

Equity Innovation

The Inclusivity Imperative FOOD RE TAILERS ARE TAKING INNOVATIVE APPROACHES TO ADVANCING AN EQUIT Y AGENDA. By Gina Acosta

ood retailers have been working to create a more diverse and inclusive workforce for decades, but a police officer’s knee on the neck of George Floyd was a turning point. The global protests following the killing of Floyd, Breonna Taylor and other Black Americans suggest that we’re in the midst of the largest equity and social justice movement of our time, one that’s putting unprecedented pressure on consumer-centric businesses to do more to advance equity. Food retailers are seizing the moment as they rush to apply an innovation mindset to their diversity and inclusion strategies. Target, for example, said in April that it will spend more than $2 billion with Black-owned businesses by 2025. “Over the last few years, we’ve listened carefully to our multicultural guests as a whole, and we recognized there was an opportunity to do more for Black guests,” Chief Growth Officer Christina Hennington said during the retailer’s fourth-quarter earnings event. “So we’ve added more brands and products that we know they love. A great example is what we’ve done in the beauty space, with 50 Black-owned and Black-founded brands now available in our industry-leading assortment. But we’re committed to doing even more in key categories through our owned brands and partnerships, building on our progress to ensure that we’re delivering on our purpose of helping all families discover the joy of everyday life.” Target’s blockbuster pledge reflects a trend among retailers that believe a real commitment to change is needed as consumers pay more attention and direct their dollars toward businesses that align with their values. Generation Z — born between 1997 and 2015 — cares more about social justice compared with former generations, according to an annual survey of teens by Minneapolis-based Piper Sandler released in April. Respondents ranked racial equity as their most important political and social issue, followed by the environment and Black Lives Matter. The $2 billion commitment from Target, which is also based in Minneapolis, where George Floyd died, aims to build on the retailer’s progress to increase its network of diverse suppliers and accelerates its efforts to support even more Black-owned businesses. Target says that it’s establishing new resources, including a team dedicated to providing vendors with support and assisting them in growing and successfully scaling their businesses in mass retail. Building off the success of Target Accelerators, a portfolio of programs supporting entrepreneurs to drive innovation and instigate change, the company is introducing a program called Forward Founders. This program will engage Black entrepreneurs

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earlier in their startup journey to help them navigate the critical stages of ideation, product development and scaling for mass retail. Offering increased access to subject-matter experts and educational workshops earlier in the startup process, Forward Founders is designed to help Black-owned businesses increase their potential for long-term success in retail. Through Target Accelerators and events such as the Black-Owned Business Vendor Fair, Target has brought in diverse businesses that have products ready for sale at retail. In some product categories, such as beauty, Target has a strong representation of Black-owned and-founded brands, with plans to continue to grow the assortment. These moves from Target are just one part of the retailer’s innovative approach to advancing social justice and racial equity. Last year, Target established a Racial Equity Action and Change (REACH) committee composed of senior leaders from across the company who represent a diverse range of perspectives and expertise, and guide the retailer’s efforts to engage in the fight to end systemic racism in the United States and drive lasting impact for the Black community. This investment builds on Target’s previous commitments, including $10 million from the company and the Target Foundation to support nonprofit partners focused on addressing the systemic and structural barriers facing Black communities. Target is also promising to increase representation of Black employees across the company by 20% over the next three years. The pledge is part of the company’s “2019 Workforce Diversity Report,” which shows that the retailer’s workforce of nearly 350,000 employees skews white, particularly among its top executives. About 75% of its leadership team is white and 8% are Black. Its overall workforce is 50% white workers, 25% Latino and 15% Black.

In some product categories, such as grocery and beauty, Target has a strong representation of Black-owned and Black-founded brands, with plans to continue to grow the assortment.

Target says that it has doubled representation of non-white company officers in the past five years to nearly 30%. Of that, though, only 5% are Black. The company also touts diversity among its store managers: More than half of its stores are run by women, and a third are managed by people of color. Target’s action plan for improving its diversity metrics includes the following: Leveraging store, supply chain and HQ experiences to provide broader leadership pathways for Black team members to develop and advance. Developing programs to hire and retain Black team members in career areas with low levels of representation, including technology, data sciences, merchandising and marketing. Increasing Target’s network of mentors and sponsors to help Black team members accelerate and advance their careers. Ensuring Target’s benefits and partnerships drive wellness and safety for Black team members. Conducting anti-racism training for leaders and team members that educates, builds inclusion acumen and fosters a sense of belonging. Tying leadership compensation to diversity goals. “The changes we’re making are going to have a meaningful impact on the careers of our Black team members and prospective team members,” says Kiera Fernandez, VP, HR, and chief diversity and inclusion officer. “A diverse and inclusive team at Target is one where there’s equity in how we promote, retain and hire team members. Additional leadership development, training programs and mentorship for our Black team members, along with a focus in areas of the business where our Black representation is not as strong, will offer new career development opportunities for our team for years to come. And we know the support we have for our team helps extend our reach outside our walls, creating a ripple effect that impacts our guests and communities.”

Target isn’t alone in its efforts to inject innovation into the business case for increasing diversity and inclusion. Walmart, Kroger, Albertsons and Harris Teeter have made various pledges to increase spending on racial equity efforts as consumers expect more social responsibility from these brands than ever before. In February, Walmart and the Walmart Foundation revealed the distribution of $14.3 million to 16 nonprofit organizations in the first round of the retailer’s commitment to contribute $100 million over five years through a Center for Racial Equity to help address racial disparities in the United States. The center’s mission is to complement and extend the societal impact of Walmart business initiatives to further racial equity in the nation’s financial, health, criminal justice and education systems. Harris Teeter is also accelerating efforts to identify and increase sourcing from suppliers that are at least 51% owned, operated and managed by people who are disadvantaged, disabled, LGBTQ+, military veterans, minorities and/or women and sell grocery, general merchandise, and/or beauty and personal care products. Kroger says that its Framework for Action: Diversity, Equity & Inclusion (DE&I) plan features both immediate and longer-term steps developed in collaboration with associates and leaders to accelerate and promote greater change in the workplace and in the communities that the organization serves. Kroger’s plan includes the creation of a DE&I Advisory Council, mandating unconscious-bias training, establishing a two-way mentorship and advocacy program between high-potential diverse talent and senior leaders, and increasing spend with diverse suppliers from $3.4 billion to $10 billion by 2030. While there’s no one diversity and inclusion strategy that can be applied to every company, recent efforts from food retailers show the newly critical importance of translating words into actions. PROGRESSIVE GROCER May 2021

TECHNOLOGY & INNOVATION

Omnichannel Experience Q&A

Google and the Future of Grocery Shopping A TOP E XEC AT THE TECH GIANT DISCUSSES ITS GROUNDBRE AKING PARTNERSHIP WITH ALBERTSONS, AND MORE. By Bridget Goldschmidt

lbertsons Cos. and Google recently revealed a multiyear partnership with the goal of making shopping easier and more convenient for millions of customers across the country, merging the Boise, Idaho-based grocer’s broad reach and retail know-how with the tech company’s capacity for customer-centric disruptive innovation. Under the partnership, the two companies are introducing several new enhancements that aim to make the shopping experience easier and more exciting. Among the planned innovations: shoppable maps with dynamic hyperlocal features, artificial intelligence (AI)-powered conversational commerce, and predictive grocery list building via Google Cloud. Shortly before this rollout, Albertsons had adopted Google’s Business Messages, a conversational messaging solution, to help people obtain the latest information on COVID-19 vaccines at the grocer’s pharmacies. To find out more about Google’s vision of omnichannel grocery shopping, Progressive Grocer connected with Carrie Tharp, VP of retail and consumer, Google Cloud at Mountain View, Calif.-based Google. Progressive Grocer: Would you be able to tell us how the partnership with Albertsons came about? The two companies had already been collaborating behind the scenes for about a year before making this announcement. Carrie Tharp: Google has deep relationships and multiyear partnerships with retailers like Albertsons through our ads and shopping organizations. In this case, we were engaging with Albertsons as a new leadership team was coming into play, and saying, “Let’s sit and understand strategically where you want to go from a customer experience and innovation perspective, and then let’s bring

“Many of our grocers say that customers have gone to placing an order today for tomorrow to placing it today for today within 30 minutes. How do you really optimize your operations as a grocer to make that feasible for you?” —Carrie Tharp, VP of retail and consumer, Google Cloud

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the best of Google to you. How can we use cloud and our data platforms as a way to create this integration and innovation?” We came from [a mindset of] “What are your business and strategic objectives, and then how do we leverage our different offerings to help make that happen?” PG: What would these tech improvements mean for the customer? How will online or in-store shoppers at Albertsons experience these innovations? CT: The pandemic accelerated the customer focus to hyperlocal. When we look at Google Search trends from last year, consumer searches for specific items in stock increased 8,000% in the U.S., searches just for in-stock items went up 700%, and curbside went up 3,000%. Doing things like using local actions and providing curbside pickup delivery information in mobile search is reducing the friction in the customer journey, making it easier to get information and understand what the delivery or pickup windows are. Prior to the pandemic, it was a clunky process to find information about pickup options on a retailer’s website, for example, going to Albertsons’ website directly or through a Google search. A lot of times, people are doing their searching in mobile instead of on desktop, or they may even be outside the store. We’re making sure that the path to getting a product is smooth, whether you’re wanting to do that in-store or online.

Pandemic-Driven Shopping Trends

PG: Is natural-language processing (NLP) at the point where a retailer will be able to reliably fill orders entered by voice? What pilot programs has Google done in relation to this technology? CT: Where we’re evolving to is true conversational commerce. We’re already piloting with several large grocers alongside the Google Assistant team, leveraging NLP capabilities that are integrated with Google systems, and we’re seeing good results. From a cloud perspective, we’re now looking at using that capability, which is a combination of several AI components. Google Search for Retail, which is essentially Google Search directly on the retailer’s website, allows retailers to interact with the customer and solve the shopping journey. It’s beyond just processing what the person said, but also the intent. For example, it’s similar to in Google Search, when it types ahead and understands what you’re looking for, but then translates that to product search and using our recommendations [via] AI to actually then say, whether you’ve searched by brand or you searched Source: From "Trends from 2020 defining the future of grocery shopping" © 2021 Google LLC generically, “I need eggs.” This creates an integrated experience that can provide product substitutes, understand previous orders and understand what type of shopping but all of retail concept verticals, and bringing that data it was before. That’s very, very important to all retailers. So we are to the forefront. It’s more predictive and creates more of now right at that tipping point where I think you’re going to see a lot of an agile supply chain. In the past, people had concengrocers [adopting this technology]. trated on more frequent inventories in the stores, and This is a top conversation I have globally with our grocery cussometimes we can step in with AI and data and offer an tomers, because grocery is one of the hardest baskets to build insights-driven approach that can help narrow the gap behind versus the other retail set verticals. We are working to creon issues that retailers are experiencing in stores today. ate this functionality and offer such a good experience that it does begin to take over more search behavior online. It’s an exciting PG: Can you give me an idea of any future time for us, where the capability has really gotten to a point where innovations that are coming down the road, it becomes true conversational commerce. either with Albertsons or any other retailers that you happen to be working with? PG: Besides the customer-facing applications, are there other uses for this type of technology, like in supply chain CT: We’re looking at inventory optimizations; we’re or operations, and what are you doing in those areas? working on early proofs of concept for how to have the right product in the right place at the right time, using CT: Absolutely. Some of these different components I just disAI to improve performances. Another big one for our cussed we use live with other retailers in store operations chatbots. grocers is logistics optimizations, especially the last-mile These help the store team understand what tasks they should be fulfillment and delivery experience. As you know, many doing next, and in what order. That includes helping with pick, pack of our grocers say that customers have gone to placing and ship from store, which is very important. You have this big an order today for tomorrow to placing it today for today inflow of orders, but how do you efficiently make your way through within 30 minutes. How do you really optimize your operthe store, divide up those orders to get them filled and do that in a ations as a grocer to make that feasible for you? timely manner? During the pandemic, a lot of posts were getting by When you think about Albertsons specifically, they’re with reports manually in stores. Now, we’re really looking to AI to very focused on elevating and evolving their customer help with the efficiency of operations, so it doesn’t become overexperience, removing that friction in the journey. We whelming to the store environment or the store employees. expect future innovation [at Albertsons] to include things Also, from a supply chain perspective, we are working on a varilike conversational commerce, predicted shopping lists, ety of solutions using all of these products that we’re talking about or being able to fill that list and the shopping cart more that are founded on data. There’s been a big focus on inventory easily. There’s a set list that the team is working on, but visibility and providing a better view into the supply chain. Better rethe partnership also conveys that we’re evolving as we plenishment is specifically an issue that we see not just for grocery, go and building more advanced experiences. PROGRESSIVE GROCER May 2021

EDITORS’ PICKS

Food, Beverage & Nonfood Products

Street Smarts

Easy Oats

Building on the success of its popular Oatmeal Cups and line of hot cereals, Bob’s Red Mill Natural Foods has introduced gluten-free, single-serve Instant Oatmeal Packets in three flavors: Brown Sugar & Maple, Apple Pieces & Cinnamon, and Classic. Offering a cleaner nutritional panel and lower sugar content than its counterparts, the brand’s latest line aims to satisfy consumer demand for nutritious breakfast options, whether at home or on the go. Featuring Bob’s whole grain non-GMO oats blended with flaxseed meal, the just-add-water, readyin-minutes packets contain fiber, protein and omega-3s. A box of eight 1.23-ounce packets retails for a suggested $4.99. https://www.bobsredmill.com/

More Mindful Eating

Inspired by Indian street food, Café Spice Naan Toasties are described by the brand as “an upgraded version of a grilled cheese sandwich made with authentic Indian flavors, fresh ingredients, gooey melted cheese and traditional naan bread.” Available in the deli section of grocery stores, the handheld items are ready to be eaten in minutes after being crisped up in a toaster oven. The flavorful meals can be enjoyed either at home or on the go, and come in three varieties: Chicken Tikka, creamy chicken and tikka masala complemented by melted cheddar jack cheese; Cauli Tikka (vegetarian), cauliflower roasted with tandoori spices, tossed with a tangy tikka masala sauce and topped with cheddar jack cheese; and Chutney Chicken, pieces of chicken smothered in a tangy cilantro-mint chutney and topped with a layer of sharp cheddar jack cheese. All three were developed by Café Spice Culinary Director Hari Nayak in emulation of one of his all-time favorite foods: an Indian grilled cheese sandwich popularly known as a “Mumbai Toastie.” A 8-ounce sandwich of any variety retails for a suggested price range of $5.99-$7.99. All Café Spice products are made with clean ingredients and humanely raised meats that are free of antibiotics. https://cafespice.com/

Bite Into France

From famed French brand Fromager d’Affinois come gourmet Crispy Brie Bites, consisting of a creamy, brie-filled inside and a toasted outside. The easy-to-prepare snack is ripened over nine days, giving it a mild, buttery flavor, with a sweetness that pairs well with red wine and fresh fruit. Consumers can place the product on a cheese board for texture and warmth, use it as a salad topper for an extra dose of luxury, or add it to a sandwich for a crunchy, creamy bite. Fromager d’Affinois Brie is crafted in the heart of France’s Auvergne-Rhône-Alpes region. A 4.94-ounce package of four Creamy Brie Bites retails for a suggested $9.99. https://www.fromagerdaffinois.com/en/

Driven by consumer demand for its plant-based Mindful Chik’n line, Sweet Earth has launched three additional ready-to-eat seasoned offerings made with globally inspired marinades. The products are all vegan; contain wholesome, nutrient-dense ingredients; and provide at least 13 grams of protein and 4 grams of dietary fiber per serving. Joining the line are Shredded Seasoned Chik’n, tossed in a classic carnitas-style marinade to complement meals, salads and sandwiches; Seasoned Chipotle Chik’n Strips, tossed in a zesty chipotle marinade appropriate for spicing up tacos; and Shredded Korean Style BBQ, tossed in an authentic Korean barbecue marinade that works well in sliders. “Given the rise of consumers cooking from home this past year and their craving for new twists to recipes they know and love, the chik’n options are a key way for flexitarians to incorporate plantbased options into their at-home cooking,” says Sara Wheeler, Sweet Earth general manager. “These latest products are really versatile, in that they can be incorporated hot or cold into a variety of meals, including salads and appetizers, pasta, pizzas, rice bowls, and sandwiches.” Sweet Earth Mindful Chik’n products have a suggested retail price of $7.99 per 8-ounce package. https://www.sweetearthfoods.com/

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A Taste of Lebanon

Striking the right balance between authentic global cuisine and consumer trends toward convenience and eating on the go, Cortas offers ready-to-eat Lebanese-style meals that are plant-based, vegan, all natural, and shelf-stable for 15 months. The product line, which can be eaten hot or cold, consists of Green Beans in Olive Oil with Garlic and Tomatoes, Lentil Rice with Sauteed Onions and Cumin, Eggplant with Chickpeas in a Rich Tomato Sauce, and Bulgar Wheat with Tomatoes and Onions, all made with fresh, clean ingredients used in the Middle Eastern diet. A 12-ounce package of any variety retails for a suggested $4.99. https://www.cortasfood.com/

Pop Goes the Yogurt

Yasso, maker of the world’s first frozen Greek yogurt bar, has now come up with its first snackable offering: Yasso Poppables, creamy frozen Greek yogurt bites covered in a chocolatey coating and sprinkled with quinoa crunch. Available in four flavors — Coffee, Sea Salt Caramel, Vanilla Bean and Mint — the better-for-you snack features live and active cultures, has no artificial ingredients, and contains just 60 calories per bite-sized round piece. A 6-pack of any variety retails for a suggested $6.49. The No. 5 novelty dessert brand, Yasso has also recently unveiled a refreshed Mint Chocolate Chip Bar, reformulating it to feature 25% more mint. Additionally, the company launched frozen Greek yogurt sandwiches last fall. https://yasso.com/

Think Pig

Chicken chip innovator Wilde Brands has now come up with a line of Pork Chips — a first-of-its-kind complete-protein snack made from 100% premium pork meat. Distinct from a pork rind, the item has a thin, crispy texture; contains 10 grams of protein per serving; and is available in four flavors: Golden Mustard BBQ, Sweet Chipotle, Black Pepper Bacon and Chili Lime Verde. Made with a few simple ingredients, Wilde Brands’ keto-friendly, gluten- and grain-free, and Paleo-certified chicken and pork chips deliver all nine essential amino acids. A 2.25-ounce bag of Pork Chips retails for a suggested $4.99. https://www.wildebrands.com/

Cut the Carbs

Those in search of easy-to-prepare foods they can enjoy while following a keto, gluten-free or low-carb diet need look no further than Maria and Ricardo’s Almond Flour Keto Tortillas in Flax & Seeds, Sea Salt, and Everything Seasoning flavors. Able to fit a variety of diet plans, the Keto Certified, Gluten-Free Certified, Paleo Certified, Certified Vegan, Non-GMO Project Verified tortillas contain 4 net carbs per serving; are free of grain, soy, dairy and eggs; feature no artificial ingredients; and can accompany both hot and cold meals. For best results, however, the company recommends heating the tortillas for 30 seconds using a pan, press or griddle. Currently available through UNFI and KeHE distributors and sold to retailers in six-package cases, Maria and Ricardo’s tortillas are baked by Harbar LLC. The suggested retail price for a 6-pack of any of the keto tortilla varieties is $5.99. https://www.mariaandricardos.com/ PROGRESSIVE GROCER May 2021

AHEAD OF WHAT’S NEXT By Gina Acosta

Be Like McKim’s A FAMILY-OWNED GROCER IN INDIANA REDEFINES INNOVATION.

Another grocer known for its live

in-store music decided to live-stream a concert on Facebook with a local musician. One store held a pandemic-friendly

f you think that there’s no such thing as a free lunch, well, then, you don’t live in Mount Vernon, Ind. This beautiful town of 7,000 residents sits right on the Ohio River between Louisville, Ky., and St. Louis, Mo. That’s where McKim’s IGA is located, a family-owned hometown grocer that has proved there is in fact such a thing as a free lunch. Last year, when schools closed due to the coronavirus pandemic, hundreds of children in that community were going without the free meals that they would have normally received in their schools. So McKim’s IGA, a 10,000-square-foot store operated by the McKim family at 1320 Main Street in Mount Vernon, began handing out free lunches until school went back into session. At one point, the store was distributing around 50 free lunches each day to students ranging in age from 8 to 18. Naturally, the free kids’ meals at McKim’s were a huge hit in the local community; customers even started making donations to help the grocery store fund the meals. The program was a shining example of retail innovation at a time of great national crisis. Now, you won’t find grocery stores such as McKim’s IGA in The PG 100 list of America’s top retailers of food and consumables in this issue, but these smaller, independent operators are displaying the kind of innovative thinking that all legacy leaders in grocery should be looking to emulate. I read about McKim’s free lunch program while I was serving as a judge for the National Grocers Association’s Creative Choice Awards Contest, presented by Kellogg’s and Unilever, to honor and recognize the best marketing and merchandising programs in the grocery industry. Winners of the Smaller, Creative Choice Awards Contest gain respect independent throughout the industry and receive nationoperators are al recognition at The NGA Show (scheduled this year for Sept. 19 in Las Vegas). Reading displaying the entries for this year’s contest, I was blown the kind of away by the innovation and resourcefulness innovative shown by so many indie grocers in America thinking that over the past year. all legacy Some of the examples that I saw include: One operator celebrating its 75th anniversary

turned part of the store into a museum, with memorabilia on display for shoppers.

leaders in grocery should be looking to emulate.

Another grocer held Zoom wine-and-cheese classes focusing on

countries such as France and Italy; some were held in conjunction with holidays such as Father’s Day. One store decided to support both pandemic-weary employees and

struggling local restaurants by catering meals for staff from one local restaurant every week. 98

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graduation ceremony (in-person and online) for employees graduating from high school or college and working during pandemic. Another grocer held a food pantry

collection drive in 40-degree weather, raising thousands for those suffering through the COVID-19 recession. When it comes to innovation, many independent operators today may be focused on e-commerce, touchless checkout and automated fulfillment to compete with the big grocery companies. But being an innovator, a leader in food retail in 2021, doesn’t necessarily require having fancy checkouts, contactless payment apps or billions in revenue. Size brings economies of scale, of course, but as we look across the food retail landscape at Progressive Grocer, examples of innovation abound, and often they come from companies that aren’t opening giant robotic fulfillment centers. Much of the innovation in grocery is coming from operators that are less well known — unless, of course, you’re a shopper at McKim’s IGA in southern Indiana. Gina Acosta Executive Editor gacosta@ensemleiq.com

Get Recognized! INTRODUCING THE

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

Share your inspiring story of impact with Progressive Grocer today.

Deadline for nominations is July 1st

To learn how, visit www.progressivegrocer.com/impactaward For questions about nominations contact Mike Troy mtroy@ensembleiq.com 813-857-6512 For information about sponsorship contact John Schrei jschrei@ensembleiq.com 248-613-8672