EXCLUSIVE: 73rd Annual Consumer Expenditures Report Powered by IRI DRINK UP Keep beverage profits flowing DEEP CLEAN Retailers’ new pandemic-proof store strategies THE COVID-19 DIET How the center plate is changing
Aldi Rolls On CEO Jason Hart on being America’s fastest growing grocer
Volume 99, Number 8 www.progressivegrocer.com
Making restaurant quality Mexican meals at home easy. We did the hard work, so consumers don’t have to. In today’s modern life, consumers are balancing between speed, convenience & taste. That’s why our mission at Del Real Foods is to provide families with traditional Mexican meals that are fast and easy to make at home in minutes. Our lineup of authentic Mexican heat and serve products includes base proteins like Carnitas, Barbacoa, and Shredded Chicken, to side dishes like rice and beans, to traditional Salsas de Molcajete, and sustainably wrapped Mexican tamales. To learn more about our retail products, visit us at: https://delrealfoods.com/retail-sales or email us directly at: firstname.lastname@example.org
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Contents 08. 20
Volume 99 Issue 8
PROGRESSIVE GROCER’S 73rd ANNUAL CONSUMER EXPENDITURES STUDY POWERED BY IRI
22 Upheaval and Opportunity
In an extraordinary year, food and consumables retailers saw plenty of both.
Departments 6 EDITOR’S NOTE
Having surpassed 2,000 stores in July, the retailer continues to refine a unique operating model that has made it one of America’s fastest-growing and most disruptive grocers.
Drinks all Around
Consumer beverage trends provide guidance for grocers.
Supporting Women of Color
8 IN-STORE EVENTS CALENDAR
16 ALL’S WELLNESS
What Should a Balanced Meal Look Like?
18 NEW HORIZONS
14 MINTEL GLOBAL NEW PRODUCTS
Spice up Your Produce Offerings With Exotic Fruits
Campbell Soup Co. exec Toby Johnson traces her leadership journey from combat to corporate America to the COVID-19 crisis.
12 NIELSEN’S SHELF STOPPERS
Beware the Swinging Food Pendulum
10 MENU TRENDS
30 Aldi Rolls On
Household Paper Products
80 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS 82 AHEAD OF WHAT’S NEXT
Will COVID-19’s Influence Outlive the Pandemic?
8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 773-992-4450 Fax: 773-992-4455
www.ensembleiq.com GROCERY GROUP PUBLISHER John Schrei 248-613-8672 email@example.com
GROCERY GROUP EDITORIAL DIRECTOR Mike Troy 813-857-6512 firstname.lastname@example.org
More Than Meat
Vegetables and plantbased items are poised to dominate the plate.
EDITORIAL EXECUTIVE EDITOR Gina Acosta 813-417-4149 email@example.com MANAGING EDITOR Bridget Goldschmidt 347-962-9395 firstname.lastname@example.org SENIOR DIGITAL & TECHNOLOGY EDITOR Abby Kleckler 773-992-4405 email@example.com
50 FOOD TECHNOLOGY
SENIOR EDITOR Thad Rueter 773-418-8975 firstname.lastname@example.org
Gene Editing Meets Supermarket Shelves
With science and technology comes the potential for a wealth of innovation.
CONTRIBUTING EDITORS D. Gail Fleenor, Jenny McTaggart, Lynn Petrak and Marianne Wilson ADVERTISING SALES & BUSINESS SENIOR SALES MANAGER Nella Veldran (NEW ENGLAND, SOUTHEAST) 201-937-7972 email@example.com SENIOR SALES MANAGER Theresa Kossack (MIDWEST, GA, FL) 214-226-6468 firstname.lastname@example.org SENIOR SALES MANAGER Tammy Rokowski (INTERNATIONAL, SOUTHWEST, MI) 248-514-9500 email@example.com
53 EQUIPMENT & DESIGN
Store Design of the Future
JUNIOR ACCOUNT MANAGER-GROCERY GROUP Natalie Meehan p 773-992-4410 m 619 823-4926 firstname.lastname@example.org ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 email@example.com
Seven experts weigh in on how retail experiences will change.
CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 firstname.lastname@example.org EVENTS VICE PRESIDENT, EVENTS Michael Cronin email@example.com
60 EQUIPMENT & DESIGN
EVENTS DIRECTOR Karen Mahoney, 952-467-8592 firstname.lastname@example.org
Shoppers expect more than clean cart handles and plexiglass partitions.
MARKETING BRAND MARKETING MANAGER Rebecca Martin 773-992-4407 email@example.com AUDIENCE LIST RENTAL MeritDirect Marie Briganti 914-309-3378 SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES Toll Free: 1-877-687-7321 Fax: 1-888-520-3608 firstname.lastname@example.org
65 SUPPLY CHAIN
All the Right Moves
What’s Next for Food Retail Self-Checkout?
RPCs and other reusable transport packaging are helping retailers tackle key supply chain challenges.
More affordable, often off-the-shelf technology is on the way as the offering grows in importance.
PROJECT MANAGEMENT/PRODUCTION/ART VICE PRESIDENT OF PRODUCTION Derek Estey email@example.com CREATIVE DIRECTOR Colette Magliaro firstname.lastname@example.org ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 email@example.com ART DIRECTOR Bill Antkowiak firstname.lastname@example.org REPRINTS, PERMISSIONS AND LICENSING Wright’s Media email@example.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
Reusable packaging for consumer products and reusable containers for food retailers reflect continued interest in sustainability, even in a pandemic. 74 EQUIPMENT & DESIGN
The New Point of Purchase
A massive shift in shopper behavior has transformed retailers’ parking lots into a highly influential path-topurchase touchpoint.
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). 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 ©2020 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
Beware the Swinging Food Pendulum he phrase “foreseeable future” gets used a lot in the retail world when executives share views of market conditions and strategies to capitalize on them. It’s always been a throwaway sort of statement in the vein of “to tell you the truth.” The “truth,” especially lately, is subject to interpretation. We’ve now got fact checkers checking fact checkers, and then all concerned looking to distort information for political gain or various causes. It’s not a great situation for the country to be in as we try to extricate ourselves from the COVID-19 pandemic. That process hasn’t gone well. We are seemingly no closer to a resolution of COVID-19 than we were six months ago, when a national emergency was declared. This point was driven home last month, when retailer after retailer announced that they would require all customers entering stores to wear some type of face covering. This is definitely not the future most of us foresaw back in March, April or May. We’re Americans, dammit! We were going to get through this together, flatten the curve and get on with life. The curve went where it wanted, and the future that people wanted to foresee never materialized. Foreseeing the future is incredibly challenging right now, and so uncertain that efforts to describe it have resulted in unprecedented use of the word “unprecedented.” We’ve seen this uncertainty show up in the sales and profit guidance that retailers of food and consumables share with investors. They’ve stopped doing so, even though many reported record sales and profits, despite the U.S. economy recording a 34.3% decline in second-quarter GDP — the largest drop ever recorded.
Those on top of their foodservice game, with convenient meal solutions, will be best equipped to cope with the inevitable rush of consumers back to restaurants. This steep and self-imposed decline has clouded our view of the path forward, but there are some fairly widely held truths about consumers and the retail industry that make the future a little more foreseeable. Amazon founder and CEO Jeff Bezos offered 6 progressivegrocer.com
his version of the truth on July 29 in prepared remarks provided to a congressional subcommittee exploring the business practices of Amazon, Google, Facebook and Apple. “The range of retail competitors and related services is constantly changing, and the only real constant in retail is customers’ desire for lower prices, better selection and convenience,” Bezos said. There are a few exceptions to Bezos’ constants. Low prices matter, but not always, as some customers are willing to pay more for certain attributes. Better selection is subjective, because better doesn’t always mean more. Amazon provides a vast assortment, but some of the most popular and fastest-growing retailers — Aldi, Costco, Trader Joe’s — have business models rooted in the operational efficiencies that come with a limited assortment. Convenience is the most constant of Bezos’ constants, because there’s universal appeal to simpler and faster, as opposed to slower and aggravating. If ever it were appropriate to invoke the “foreseeable future” card, convenience would be it. It’s hard to imagine any future scenario where convenience will matter less to people. We’ve already seen what a huge impact a desire for convenience and the avoidance of physical stores has had on food retailers during the pandemic. Many struggled to keep pace with shoppers’ massive shift to digital fulfillment methods, as they were the beneficiaries of the displaced demand that COVID-19 caused the foodservice industry. But beware of the swinging pendulum when the nation’s restaurants fully reopen and convenience-minded consumers rush back to those who prepare food for them. Food retailers are going to feel this impact in a big but hard-to-quantify way. Those on top of their foodservice game, with convenient meal solutions, will be best equipped to cope with the inevitable rush of consumers back to restaurants. How far the pendulum swings in the other direction will be determined by retailers’ foodservice innovation efforts.
Mike Troy Editorial Director, Grocery Group mtroy@ensembleIQ.com
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American Cheese Month Eat Better, Eat Together Month Halloween Safety Month National Apple Month
National Bake and Decorate Month National Chili Month National Cookie Month National Dessert Month
S M T W T F S
National Homemade Cookies Day. Get shoppers to post their best recipes online, along with mouthwatering pics.
National Cinnamon Bun Day National Taco Day
National Sausage Pizza Day. Promote your takeout menu, with this signature offering prominently called out.
National Apple Betty Day. Shoot a video showing how to make this no-crust pie.
Columbus Day. Explore ways to mark this occasion that address the sensitivities of indigenous and minority peoples.
National GermanAmerican Day National Noodle Day
National ChocolateCovered Pretzel Day. Make this tasty snack the grand prize for an online trivia contest.
National Fluffernutter Day National Pierogi Day
National Produce Misting Day
National Fried Scallops Day
National Poetry Day. Have shoppers share their favorite verses — no naughty limericks, please.
John Lennon’s Birthday (1940). Hold an essay contest in which kids can “Imagine” a better world.
National CakeDecorating Day National Angel Food Cake Day
National Dessert Day
National Yorkshire Pudding Day
National Cheese Curd Day. Highlight this notoriously squeaky delicacy in the cheese case, since it’s not just for Wisconsinites.
World Food Day. Promote your international offerings in the center store.
Sweetest Day. Ask shoppers to record and share any random acts of kindness they may witness.
National Chocolate Cupcake Day. Remind customers to pick up a box as a treat for the whole family.
Sourest Day. Create a display of the sourest candies you sell, and ask shoppers to share images of their faces as they try them.
National Seafood Bisque Day. Reel in customers by cross merchandising all of the necessary ingredients for this creamy soup.
National Pumpkin Day National Mincemeat Day
National Brandied Fruit Day. Provide instructions on how to prepare this item in advance of fruitcake season.
National American Beer Day. Hold a virtual taste test of U.S. brews only.
National Check Your Meds Day. Offer consultations with in-store pharmacists on possible drug interactions.
National Chocolate Day. Milk or dark? Let your shoppers decide which they like best.
National Nut Day
National Oatmeal Day. Whether slow-cooked on a stovetop, chilled overnight or microwaved in minutes, this classic breakfast food deserves to be spotlighted on the shelf.
National Boston Cream Pie Day. Let customers know that this famous baked good is on sale in the bakery department.
National Candy Corn Day. Be sure to showcase this iconic candy in its various flavors, since tomorrow is ...
National Bologna Day. This often overlooked lunchmeat is due for a reappraisal.
Halloween. Run a best-costume contest for your hard-working associates.
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Research & Analysis
Spice up Your Produce Offerings With Exotic Fruits Tropical fruits are trending across the menu — whether they’re in a superfood smoothie, a trendy cocktail or a tropical-inspired entrée. Not only adding flavor, tropical fruits often feature vibrant, contrasting colors, making them highly Instagrammable. Make sure your perimeter offerings match these trends by incorporating new fruits that have gained significant traction on menus in recent years. Source: Datassential MenuTrends 2020 and FLAVOR
Dragon Fruit/Pitaya MAC stage: Inception – International markets, global independents and fine dining. Trends start here and exemplify originality in flavor, preparation and presentation. Dragon fruit (also known as pitaya) is a tropical fruit and nutrient-packed superfood with a unique, slightly sweet taste. Its magenta skin with green scales gives the fruit its name, while its white pulp contains black seeds, resulting in a striking appearance. Dragon fruit is most often blended into smoothies or smoothie bowls, giving them a vibrant pop of bright-pink color. On 1% of U.S. restaurant menus
Blood Orange MAC stage: Adoption – Ethnic aisle at supermarkets, casual independents, fast casual. Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. Blood oranges have a darker red flesh than regular oranges, producing a sweeter flavor with hints of berry. They’re often used to flavor beverages like margaritas, sodas and mimosas, and food items such as desserts, seafood dishes and salads. On nearly 12% of U.S. restaurant menus
Tangerine MAC stage: Proliferation – Proliferation-stage trends are adjusted for mainstream appeal. Often combined with popular applications (on a burger, pasta, etc.). Tangerines, related to mandarin oranges, taste sweeter and less sour than oranges. They can be eaten alone as a snack, added to salads, or used to flavor beverages or create savory sauces — for example, they can serve as a substitute in Chinese orange chicken or orange beef. On nearly 4% of U.S. restaurant menus Up 31% over the past four years
Mango MAC stage: Ubiquity – Ubiquity-stage trends have reached maturity and can be found across all sectors of the food industry. Mangoes, tropical stone fruits with sweet orange flesh inside, have been especially embraced by Millennials. Extremely versatile, mangoes appear across the menu, flavoring smoothies, cocktails, desserts and savory dishes, and often chopped and added to salsas, salads, sushi, and poké or smoothie bowls. Mangoes can also serve as the base for flavorful sauces with an exotic flair. On nearly 40% of U.S. restaurant menus
Up 113% over the past four years Up 59% over the past four years 65% of consumers know it/ 30% have tried it/ 23% love or like it Menu Example Roxberry Juice Dragon Berry Bowl Organic pitaya, pineapple juice, strawberries, mangoes and pineapples, topped with granola, honey, strawberries, bananas and blueberries
72% of consumers know it/ 47% have tried it/ 38% love or like it Menu Example Pabu Roasted Beet Salad Blood orange, hazelnut, yuzu miso vinaigrette
93% of consumers know it/ 84% have tried it/ 72% love or like it Menu Example Yuko Kitchen Chinese Chicken Salad Teriyaki chicken breast, crispy wonton, tangerine, apples, walnuts, greens, sesame sauce
Up 16% over the past four years 95% of consumers know it/ 79% have tried it/ 65% love or like it Menu Example Greens & Proteins Healthy Kitchen Ahi Tuna Tacos Cumin coriander black peppercrushed ahi tuna, mango, avocado salsa and a sriracha grape vinaigrette, in a corn tortilla or lettuce shell
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Frozen Vegetables TOTAL FROZEN VEGETABLE SALES REACHED $2.97 BILLION IN THE PAST YEAR
(52 weeks ending April 2, 2016)
Total Category Performance Latest 52 Wks W/E 5/23/20
Latest 52 Wks YA W/E 5/25/19
Latest 52 Wks 2 YA W/E 5/26/18
Top 5 Beverage Categories by Dollar Sales Fresh Meat
Fully Cooked Meat
How much is the Consumers chose average American frozen broccoli over alternatives for household a variety of reasons: spending per trip on various meat products versus 12% it’s thebecause year-ago quick and easy period?
because it tastes great
Spotlight on Frozen Broccoli WHEN ARE CONSUMERS EATING FROZEN BROCCOLI?
Broccoli as an ingredient is most commonly consumed at dinner, followed by lunch.
Latest 52 Wks W/E 5/23/20
Latest 52 Wks YA W/E 5/25/19
Frozen broccoli is most often used in a side dish, followed by as a main entrée. 3% Latest 52 Wks 2 YA W/E 5/26/18
Source: Nielsen, Total U.S. (All outlets combined) – includes grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and military commissaries MEAL ITEM (DeCA) for the 52 weeks ending May 23, 2020OCCASION 29% TYPE CLASS 62% 35% 61% Meat sales continue to grow year over year, with annual sales through the end of May up 10%. The double-digit growth this year has been influenced by pantry stocking at the height of COVID-19 exposure in the United States. Despite demand DINNER LUNCH OTHER SIDEincreased DISH MAIN ENTRÉEas OTHER consumers prepare more of their meals at home, meat sales could face challenges ahead such as potential breakdowns in the supply chain. In fact, COVID-19 has prompted the shutdown of some plants, due to concerns of virus transmission among workforces. These closures could affect what consumers are able or are willing to buy as shortages occur and prices fluctuate. Shoppers may look for alternative sources of protein in seafood or meat alternatives, up 8.8% and 37.1%, respectively, in dollar growth compared to a year ago.”
because it’s healthy and nutritious
on meat products, up 3.7%
because it’s low in calories, fat and sugar
$9.39 on all beef, up 4.3%
$6.69 on chicken, down 3.7%
—Katie Hazlett, associate manager - global client delivery, Nielsen
Generational Snapshot Which cohort is spending, on average, the most per trip on chicken?
The Greatest Generation
Source: Nielsen Homescan, Total U.S., 52 weeks ending April 25, 2020
$5.18 on packaged lunchmeat, up 2.2% Source: Nielsen Homescan, Total U.S., 52 weeks ending April 25, 2020
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MINTEL CATEGORY INSIGHTS
Global New Products Database
Household Paper Products Marketing Overview
Mintel estimates that the household paper market grew by 4.4% in 2019; looking ahead, Mintel projects that the category will add another $1.14 billion to reach $20.3 billion by 2024.
Private label brands accounted for 68% of sales. Facial tissue and napkins are losing relevance: 43% of paper towel users and nearly half of those ages 35-44 use paper towels as napkins. Parents are especially fond of paper towels for cleaning their childrenâ€™s hands and faces, with 52% of parents of children age 5 and under using towels as a more convenient and economical napkin substitute. 35% of toilet paper/paper towel users use paper towels or toilet paper instead of tissue.
Toilet paper and paper towels accounted for an estimated 83% of sales in 2019, and will contribute more than 90% of category growth over the next five years.
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What Does It Mean? For the foreseeable future, consumers will continue to be driven more by cost than next-generation household paper performance. Private label shows no signs of slowing down, and the quality gap with name brands will continue to decline. The use of paper towels as napkins and toilet paper to blow noses suggests a need for fewer paper products that take on more usage occasions. For many consumers, that will be the epitome of convenience and simplicity.
Speaking with… PAUL KAMHOLZ,VP Sales & Marketing — North America, Schoeller Allibert
HOW TO POWER-UP PROFITS FROM ONLINE GROCERY PICKUP AND ETAIL With OGP experiencing what has been called “exponential growth” (a recent survey forecast 40% growth in 2020, amounting to $38B in online food and beverage sales1), Progressive Grocer asked Paul Kamholz, Schoeller Allibert’s vice president of sales & marketing — North America, to weigh in on how the company’s reusable transit packaging (RTP) solutions can help grocery retailers optimize fulfillment and grow their share of the OGP/eTail pie. Progressive Grocer: Things have changed so rapidly in the world of online grocery pickup. How has the COVID-19 crisis escalated consumers’ move to this format? Has anything surprised you? Paul Kamholz: Globally, Schoeller Allibert has been focused on this space for years. But the future arrived much more quickly than predicted with the pandemic! Grocers who were evaluating OGP and various forms of automation have moved those projects to the front of the list—and we share their new sense of urgency. I was surprised when good friends shared that they started ordering groceries online when COVID-19 started—and they are in their mid-80’s! As much as they’d prefer to shop in-store, they felt ordering online was necessary for their health. They’ve used both curbside pick-up and a well-known delivery app and they are very happy. That’s a significant shift! PG: What role can Schoeller Allibert play in helping grocery retailers manage that shift? How can you help them navigate the road to OPG/eTail success? PK: Schoeller Allibert has been the leading solution provider for RTP in Europe for decades. But we’re really in our infancy here in North America.We work with great partners like IFCO, a leading supplier of reusable
plastic containers, to design solutions that exceed expectations. For example, we offer a variety of plastic totes that help improve efficiency in manual pick and automated fulfillment applications.
PG: What challenges lie ahead in the OGP/ eTail space?
Our Maxinest® is the primary tote grocery retailers use for manual fulfillment of online orders. It allows store associates to efficiently pick products, utilizing dividers and bag holders in the tote to segregate items. An associate can pick and scan items a customer has ordered, drop them into the bags in the Maxinest® tote, take the tote out for curbside pickup, load the bags into the customer’s car, then return the tote to the store. The totes are designed to be stacked when full and nested when empty to occupy as little space as possible.
PK: Our grocery retail partners performed magic with how they’ve responded to the challenges that blindsided them with the pandemic. They’ve managed health concerns for customers and coworkers, supply issues, and consumers’ increased demand for alternative shopping options.Their earnings speak to their success: Albertson’s, for example, recently announced a 27% jump in year-over-year revenue and a 276% jump in digital sales! To build on this eTail momentum, the next challenge will be conquering that “last mile”— getting product, ambient and cold, from the store to a customer’s home efficiently. I wouldn’t be surprised if that solution was right around the corner.
Our ASRS/SASI totes allow automated systems to pick and fulfill orders. Imagine a two-story stainless steel cage with square cubbies. A retailer can use the ASRS/SASI totes to store product that a robot can pull to fill an order. Because these totes are automated, they not only allow for easy replenishment but also ensure efficiency— which is more important than ever today!
For the most part, our totes now remain within the store. But the evolution of the “last mile” will likely require a system that allows totes to go to and come back from customers. The “last mile” has always been a challenge for retailers—and it’s particularly tough for grocery because temperature-controlled totes present a unique challenge. Schoeller Allibert, together with our industry partners, is prepared to help retailers successfully meet OPG and eTail challenges—those they face today and those on the horizon. 1
Coresight Research, US online grocery survey, May 2020
To discover how Schoeller Allibert can help your business, call (623)233-7823 or email firstname.lastname@example.org.
ALL’S WELLNESS By Molly Hembree
What Should a Balanced Meal Look Like? WITH A LIT TLE INSTRUCTION, GROCERS CAN HELP THEIR SHOPPERS E AT BE T TER. alance. It’s such a fundamental word, but it often gets lost in the weeds in regard to nutrition. Unfortunately, many of the customers I meet are confused about what balance means when it comes to building their plate. And you can’t blame them. Do an online search for the keyword “food,” diet” or “nutrition,” and you receive around 13 billion hits. How to make sense of the clutter? Let’s break down what we know about good nutrition to ease the decision-making when it comes to putting together a healthy, delicious meal. The Dietary Guidelines for Americans 2015-20 is the nutrition benchmark that aims to simplify eating well. These guidelines account for the numerous food choices that we make each day, while still recognizing our own unique eating styles. The USDA Center for Nutrition Policy and Promotion released a tool called MyPlate in 2011 (replacing its predecessors, the 1992-2004 Food Guide Pyramid and the 2005-10 MyPyramid), which is used as a visual representation of how we can strive to eat for most meals. It identifies five food groups, fruits, vegetables, protein, grains and dairy, and provides direction on how to include one serving of each per meal.
In a seismic shift from the way many of us currently eat, fruits and vegetables should be making up half of our plate. Fruit intake should ideally be from whole foods, and not drinks or processed products “containing fruit,” which rid the fruit of most of its fiber. As “nature’s candy,” fruit can draw crowds seeking something juicy and refreshing, especially during warmer months. Put a pop-up fruit-tasting station in your store to garner attention for such interesting summertime fruits as gold kiwis, stone-fruit hybrids like pluots or apriums, or golden Dewlicious honeydew melon.
Great vegetable choices include a variety of not only fresh, but also canned (preferably without added salt) and frozen versions. Enlist the help of your dietitians to educate shoppers about using all forms of vegetables to achieve customers’ health goals while making mealtime quick and easy.
Most consumers hear “protein” and think meat. However, interest in plant-based eating, fueled by preference, religious restrictions, health or to protect animals, continues to mount. Adjustments should be made at your retailer to include protein options, from the freezer case to the bulk bins, that include lean meat/poultry, fish and eggs, as well as meat substitutes, beans, soy, nuts and seeds. Offer digital coupons alongside product-specific recipe inspiration on your website or social media channels that entices customers to pick up the next can of garbanzo beans, bag of lentils or container of walnuts they see.
We can think about food choices as placed in health “tiers.” A bottom-tier grain would be a sweetened cereal or doughnut, while a midtier grain might be white rice or enriched bread, and a top (best) tier for grains would be quinoa or whole grain pasta. The goal is to make at least half our grain choices whole grain. Amp up excitement about whole grains with easy swaps at your deli counter, from white sandwich buns to whole grain bread slices, or move from white enriched pasta to buckwheat soba noodles at your Asian made-to-order station.
GREAT TIP! Offer digital coupons alongside product-specific recipe inspiration on your website or social media channels that entices customers to pick up the next can of garbanzo beans, bag of lentils or container of walnuts they see.
The rule of thumb for dairy is to make it lowfat. This means fewer high-fat creams and cheeses, with more low-fat cottage cheese and yogurt. Fortified nondairy alternatives work here, too. Offer up breakfast ideas on recipe cards in the pancake mix or cereal aisle that include products like fat-free Greek yogurts, low-fat cottage cheese cups, or soy milk. With just a few tweaks, grocers, working with their in-store dietitians, can help steer shoppers toward the healthier choices that make for more balanced meals.
Molly Hembree, MS, RD, LD, is a registered dietitian coordinator for The Little Clinic and Kroger.
COMING IN SEPTEMBER!
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Sales - Florida/Georgia/ Pennsylvania/Midwest U.S. 214-226-6468 tkossack@ensembleIQ.com
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NEW HORIZONS By Sarah Alter
Supporting Women of Color NE W OFFERS RESOURCES FOR COMMUNITIES OF COLOR IN AN UNPRECEDENTED TIME.
If there’s a bit of sunlight shining on this unprecedented year, it’s a renewed focus on dismantling the racism that permeates American culture. 2020 has become a reckoning point for so many, a moment when the country has at last acknowledged that being anti-racist, rather than simply “not racist,” is the key to an equal future for all of us. I am reminded how vulnerable we feel this year. As we live through a global pandemic that has hit Black, Indigenous and people of color (BIPOCs) hardest of all, the real suffering it has brought has permeated the bubble of privilege that those of us who are white Americans have been living in. When pain comes to our doorstep, we are more understanding of the pain of others — awakened to the suffering they feel. And many are now waking up to the need for concrete action.
NEW’s Support for Women of Color
NEW’s mission is to Advance All Women. Whatever has happened in 2020, we haven’t changed — it has always been our goal to transform workplaces for equality. Instead, the culture around us has changed. There’s now a tailwind behind us and the work we do. When NEW published our study “Advancing All Women,” we found that, without intervention, the number of women of color in senior positions would drop over the next 10 years. Dismantling the systemic racism that has held women of color out of our boardrooms will take work, and that’s exactly the sort of work that NEW is here to support. This year, we released our “Latinas in Corporate America” study, which showed a real disconnect between Latinas and their mostly white male superiors. This lack of understanding of the unique value that Latinas bring to corporate environments, of the lived history and cultural experiences they bring to bear, is a key pain point keeping Latina women out of c-suite roles. “Latinas in Corporate America” was the first in a series of studies that NEW will conduct into the experiences of women of color in our workplaces. We can’t resolve these issues without real research into the roots of the problem, conducted by listening, first and foremost, to the women they directly affect.
We can’t resolve these issues without real research into the roots of the problem, conducted by listening, first and foremost, to the women they directly affect. We Keep Working
NEW’s resources for women of color are strong and continue to grow. Our powerful “NEW Action for Women of Color” workshop offers organizations a comprehensive solution for addressing bias
in the workforce. While it’s typically offered on site, it will now also be offered virtually — because the issues facing women of color in the corporate world haven’t ended since your organization made the shift from offices to Zoom calls. We offer dozens of learning and development webinars, both from our headquarters and from NEW’s 22 regions around the country. Our vast library of past webinar content is a treasure trove of insight, and is available via our website. For more information on NEW’s resources for workplaces tackling bias, you can visit newonline.org/wocresources. NEW has always been here for women of color. This year, we can all feel the hope in the air that the tide is turning for people of color in America. NEW will continue to be a part of that fight until our work is no longer needed — a day we can all look forward to. Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing 12,400 members in 22 regional groups in the United States and Canada. Learn more at newonline.org.
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PROGRESSIVE GROCER August 2020
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Safety & Foodservice Innovations Retail foodservice will never be the same in a post-pandemic world where altered customer expectations will create new operational challenges and opportunities. Our Day Two speakers will provide their unique perspectives on an evolving market and the type of problems retailers need to be thinking about today to solve tomorrow.
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73 Annual Consumer Expenditures Report rd
In an extraordinary year, food and consumables retailers saw plenty of both. By Mike Troy he year 2020 will be remembered as a year unlike any other for retailers of food and consumables, and it’s not even over. The year began in fine shape with a robust economy, a strong labor market and reasonably priced fuel bolstering shoppers’ ability to drive retail sales. But then a change happened that was unlike anything that retail and consumer goods companies had ever seen. The outbreak of COVID-19 arrived in the United States in January, and the declaration of a national emergency in March prompted a shopper feeding frenzy as Americans sheltered in place, learned to work remotely, sought to protect themselves and rediscovered cooking. The surge in spending and new lifestyles for millions of Americans stressed supply chains, caused rampant out-of-stocks, disrupted promotional activity and led some suppliers to adjust production lines to focus on core assortments. When the dust settled from all of the panty loading and lifestyle changes, it was common to see retailers report same-store sales growth in key grocery categories of 30% or more. Then another major behavior shift happened as COVID-19 intensified and daily news reports informed the nation of mounting case counts and death tolls. Amid the toxic information environment, scores of shoppers sought to avoid stores, which by May and June had been equipped with numerous protective measures and enhanced cleaning protocols. The result for retailers was rapid shopper adoption of digital grocery, most noticeably the “buy online, pick up at store” model. From the largest chains to single-store operators, growth in digital grocery was universal, with fewer but larger transaction sizes the norm. 22
TOTAL STORE SALES OF EDIBLE, NONEDIBLE AND PERIMETER CATEGORIES INCREASED
BILLION EDIBLE DEPARTMENT SALES INCREASED
BILLION NONEDIBLE DEPARTMENT SALES INCREASED
BILLION PERIMETER DEPARTMENT SALES INCREASED
For food retailers, the bizarre set of circumstances that beset the nation this spring proved to be a case of being in the right place at what was the wrong time for almost every other retail sector and the entire foodservice industry. Retailers deemed essential enjoyed record sales, while nonessential retailers and foodservice operators that were forced to close saw their sales evaporate. The rising tide of consumer demand, a large portion of which was caused by Americans’ inability to eat out, lifted the sales of nearly every category in essential retailers’ stores, according to data provided by IRI Worldwide for Progressive Grocer’s 73rd Annual Consumer Expenditures Study. IRI provided sales data for a wide range of food and consumables categories among multioutlet U.S. retailers in the convenience, grocery, drug, mass-market, military, club and dollar channels, from the beginning of the year through July 12. Those dramatic growth numbers are highly uncharacteristic of the mature food and consumables retail sector, a place where single-digit gains tend to be the norm and are often dependent on food price inflation. Now, as retailers look to the remainder of the year and beyond, the question of “What’s next?” is pervasive, because COVID-19 isn’t over and shopper behavior remains unsettled. Those factors have benefited retailers’ sales of food and consumables — and will continue to do so — but the gains have come at a huge cost to the nation and Americans’ way of life.
Total Store Sales
Edible Nonedible Perimeter
Edible, Nonedible and Perimeter Categories $50,000,000,000
4 Weeks Ending 01/26/20
4 Weeks Ending 02/23/20
4 Weeks Ending 03/22/20
4 Weeks Ending 04/19/20
4 Weeks Ending 05/17/20
4 Weeks Ending 06/14/20
4 Weeks Ending 07/12/20
General Food Refrigerated Beverages Frozen Liquor
Top 5 Categories by Dollar Sales $20,000,000,000
4 Weeks Ending 01/26/20
4 Weeks Ending 02/23/20
4 Weeks Ending 03/22/20
4 Weeks Ending 04/19/20
4 Weeks Ending 05/17/20
4 Weeks Ending 06/14/20
4 Weeks Ending 07/12/20 General Merchandise Tobacco Heath Beauty Home Care
Top 5 Categories by Dollar Sales $8,000,000,000
4 Weeks Ending 01/26/20
4 Weeks Ending 02/23/20
4 Weeks Ending 03/22/20
4 Weeks Ending 04/19/20
4 Weeks Ending 05/17/20
4 Weeks Ending 06/14/20
4 Weeks Ending 07/12/20
Produce Meat Deli/Prepared Bakery Floral Deli Meat Seafood Deli Cheese
Top 5 Categories by Dollar Sales $5,000,000,000
4 Weeks Ending 01/26/20
4 Weeks Ending 02/23/20
4 Weeks Ending 03/22/20
4 Weeks Ending 04/19/20
4 Weeks Ending 05/17/20
4 Weeks Ending 06/14/20
4 Weeks Ending 07/12/20
73 Annual Consumer Expenditures Report rd
FOOD SALES SOARED, DOUBLE-DIGIT GROWTH COMMON
ears from now, behavioral psychologists will look back at the pandemic-induced shopper behaviors of 2020 and attempt to make sense of it all. Good luck. In times of crisis, panic buying begets panic buying, and that was certainly evident earlier this year, when shoppers bought certain categories because everyone else was. Spending in edible grocery departments was also driven by the realization that with foodservice establishments forced to close due to social-distancing concerns, Americans would be eating nearly all of their meals at home. The result was a market-share shift of epic proportions between the two large areas of “food at home” and “food away from home,” with the former being what are generally thought of as food retailers and the latter being restaurants. In recent years, food away from home had gradually overtaken food at home to account for more than half of total food sales. However, when the
Dollar sales for egg substitutes rose by a massive 200%.
Liquid Drink Enhancers
Tea-Instant Tea Mixes
Milk Flavoring/Cocoa Mixes
Corn on the Cob
Salty snacks saw $124.5 billion in sales.
Edible Categories (Highest-Volume)
Fresh Bread and Rolls
Top 5 Categories by Dollar Sales
GENERAL FOOD Salty Snacks
GENERAL FOOD DEPARTMENT SALES INCREASED
REFRIGERATED DEPARTMENT SALES INCREASED
BEVERAGE DEPARTMENT SALES INCREASED
FROZEN DEPARTMENT SALES INCREASED
LIQUOR DEPARTMENT SALES INCREASED
pandemic hit and Americans could no longer eat out, there was a sharp divergence between food at home and food away from home. The shift in behavior that had taken two decades to unfold was undone in two months, with a striking impact on the sales of edible categories in IRI’s measured channels. Never in the history of food retailing has so much change been thrust upon shoppers — and retailers — in such a condensed period of time. The result was wild gyrations in sales among major edible departments and key categories, where it took a sales increase of 30% or more to be ranked among the top 10 fastest growers. Looking ahead, there are two great unknowns affecting the future of food retailers’ sales: The first is the severity and duration of COVID-19, and the second is the outlook for retail foodservice. If, and to what extent, the displaced demand that benefited food retailers the past seven months flows back to restaurants, food retailers could experience a boomerang effect. As retailers cycle against extremely challenging comparisons next year, and restaurants regain share-ofstomach sales in categories that enjoyed robust growth earlier this year, retailers of food and consumables could see sales in many categories turn negative.
PROGRESSIVE GROCER August 2020
73 Annual Consumer Expenditures Report rd
SLOW OVERALL GROWTH RATE CONCEALED SALES VOLATILITY
verall sales of the broad mix of categories designated as nonedible increased 7%, to $175.6 billion, for the year-to-date period ended July 12, compared with the same period the prior year. Thatâ€™s a solid growth rate, although un-pandemic-like compared with the gains seen in the edible and perimeter areas. Digging deeper into the department- and category-level performance, it becomes clearer why the overall nonedible growth rate was somewhat muted. Within each of these areas, there were pockets of dynamic growth influenced by COVID-19 and the wide range of new shopper behaviors it created. In the general merchandise area, categories reflective of a stay-at-home, work-from-home lifestyle showed the largest percentage gains. Those trends were best reflected in the home care department, where top-performing sales categories revealed that Americans took cleaning their homes as seriously as retailers took cleaning their stores. Sales of household cleaner cloths, bleach and
The personal thermometer category experienced 90.5% dollar sales growth.
Nonedibile Categories (Fastest-Growing)
Foils and Wraps
Home Health Care Kits
Other Health Care Products
External Analgesic Rubs BEAUTY
Hand and Body Lotion
Household Cleaner Cloths
Sponges and Scouring Pads
Floor Cleaners/Wax Removers
Pet food saw $48.7 billion in dollar sales.
GENERAL MERCHANDISE DEPARTMENT SALES INCREASED
TOBACCO DEPARTMENT SALES INCREASED
HEALTH DEPARTMENT SALES INCREASED
BEAUTY DEPARTMENT SALES INCREASED
HOME CARE DEPARTMENT SALES INCREASED
Top 5 Categories by Dollar Sales
household cleaners increased 66.2%, 43.9% and 40.3%, respectively, during the yearto-date period ended July 12. However, during the fourweek period ended March 22, sales in each category was up triple digits compared with the prior year. Americans’ desire for cleanliness extended to personal hygiene as well, with soap and moist towelettes the biggest percentage sales gainers in the beauty department, up 45.6% and 27.5%, respectively, during the yearto-date period. Where pandemic-driven spending behaviors in nonedible categories surfaced in a big way was in the health department. While this area’s overall sales gain was limited, thermometer sales increased 90.5% and home health care products increased 80.8% during the year-to-date period. A big cause of the gain was a surge in purchase activity that began in May and peaked during the four weeks ended July 12. Sales of thermometers increased 178% and home health care products increased 237% during the most recent four-week period, suggesting that Americans remain vigilant about monitoring their health as fears of COVID-19 have yet to abate.
Food and Trash Bags
Cups and Plates
Baby Care Accessories
Hand and Body Lotion
HOME CARE Laudry Detergent
Household Cleaner Cloths
PROGRESSIVE GROCER August 2020
73 Annual Consumer Expenditures Report rd
SALES PAIN AND GAIN ON THE PERIMETER
t a 30,000-foot level, the broad collection of fresh departments collectively referred to as the perimeter appear to have fared well during the first seven months of the year. As a whole, sales increased 10.4%, to $84.1 billion, in the combined perimeter departments of produce, meat, deli/prepared foods, bakery, floral, deli meat, seafood and deli cheese. However, on closer inspection, itâ€™s apparent that the pandemic caused uneven gain and pain throughout the perimeter, along with an uneven sales cadence among the growers and decliners. For example, three of the eight categories tracked (deli/prepared foods, bakery, floral) saw sales decline for the measured period, with deli/prepared foods the top decliner, having experienced a 16.9% drop. At one point, as food retailers were forced to curtail deli and prepared food operations, sales declined 40.3% during the four weeks ended April 19. Business has rebounded since then, or at least declined less sharply, down 32.4%, 24.4% and 19.6% in the successive four-week periods following the big drop in April.
Perimeter Categories (Fastest-Growing)
Perimeter Categories (Highest-Volume) CATEGORY PERIMETER
Meat was the fastestgrowing perimeter category, rising $23.2% to $25.6 billion in dollar sales.
Top 5 Categories by Dollar Sales PRODUCE DEPARTMENT SALES INCREASED
MEAT DEPARTMENT SALES INCREASED
DELI/PREPARED FOOD DEPARTMENT SALES DECREASED
BAKERY DEPARTMENT SALES DECREASED
FLORAL DEPARTMENT SALES INCREASED
The powerhouse of the perimeter is the produce department.
Conversely, the stars of the perimeter were the meat and seafood departments, posting gains of 23.2% and 22.7%, respectively, for the entire measured period. Upon closer inspection, meat sales spiked 41.4% in the four weeks ended March 22, the height of pantry loading, and remained elevated during subsequent four-week periods in April and May, advancing 32.9% and 42.9%, respectively, causing some retailers to restrict sales in certain protein categories, due to the combination of strong demand and supply disruptions caused by COVID-19 outbreaks at processing facilities. At the time that meat sales were beginning to moderate, seafood sales took off. After growing relatively slowly during the first four months of the year, seafood sales shot up 45.7% during the four weeks ended May 17, and in the four weeks ended July 12, they grew nearly 50%. The powerhouse of the perimeter is the produce department, accounting for nearly 45% of perimeter sales of $84.1 billion. The produce department saw sales advance 10.7%, to $37.6 billion, with a key driver of the gain being shoppersâ€™ desire to eat healthier as a means to boost immune-system strength. Produce sales spiked 18% during March and pulled back slightly in subsequent months, but maintained a double-digit growth rate through the measured period ended July 12.
Data in the 73rd Annual Consumer Expenditures Report was provided by IRI Worldwide and examined a range of key food and consumables departments and categories from the beginning of the year through July 12. The measured retailers reflected in the data include multioutlet U.S. operators in the convenience, grocery, drug, mass-market, military, club and dollar channels. IRI is a leading provider of Big Data, predictive analytics and forward-looking insights that maintains the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand, cloudbased technology platform.
PROGRESSIVE GROCER August 2020
Aldi's growing presence in new and existing markets makes it a force to be reckoned with as it resets shoppers' expectations of value.
i d l n O A s l l o R Having surpassed 2,000 stores in July, the retailer continues to refine a unique operating model that has made it one of America’s fastest-growing and most disruptive grocers.
By Mike Troy t’s easy to view Aldi as a lesser competitor when compared with some of food retailing’s most highly regarded operators. Its stores are small, the assortment is limited, merchandising is utilitarian, and service departments such as deli, bakery and prepared foods aren’t present to wow shoppers. Those elements of store experience are what typically distinguish some of the industry’s most popular operators. While Aldi’s stores will never be confused for Wegmans, H-E-B, Publix, Meijer or Hy-Vee locations, they’re special places in their own right. It’s a different brand of special, though, and something of an acquired taste for shoppers. Aldi stores have a typical sales floor of just 12,000 square feet and offer roughly 1,400 products, more than 90% of which are store brands. There are five wide aisles in a typical layout, and products are merchandised in cut-case displays designed to go from the back room to the sales floor with minimal handling. A large section in the interior of the store is dedicated to “Aldi Finds,” an assortment of opportunistically purchased goods lending a treasure-hunt feel to the store and sparking impulse purchases. Cashiers sit on stools at checkout, and customers bag their own groceries. And then there’s the process of inserting a quarter into the handle of a cart to use it in the store. Most shoppers return their carts to the store entrance to get their quarters back. The approach isn’t for everyone, but it is for a huge number of
American shoppers who’ve become converts to the Aldi way and made the company worthy of the distinction of America’s fastest-growing grocer. With the planned addition of 70 stores by year’s end, Aldi will have added 623 stores during the past five years, and it’s poised to accelerate growth following two recent announcements. The first of those will see Aldi continue the westward expansion it began in 2016 with its entry into Southern California and the planned openings of its first locations in the Phoenix market later this year. Then, in 2021, the opening of a distribution center in southern Alabama will facilitate expansion into new markets along the Gulf Coast. As it does so, Aldi rigidly adheres to a supply-chain-driven approach to operations and a minimalist approach to merchandising that enable it to charge rock-bottom prices. Customers appreciate the business model, but its elegant simplicity often isn’t fully appreciated by competitors and industry analysts. It doesn’t help that Aldi tends to be less vocal than other retailers about communicating the finer points of its business model, which Progressive Grocer estimates generated 2019 annual sales of more than $15 billion.
“For us, we’re less focused on self-promotion and more focused on serving our customers. Today’s Aldi appeals to a wide range of demographics — we’ve seen success in all markets, from rural areas to big cities,” says Jason Hart, CEO of Batavia, Ill.-based Aldi USA. “Our loyal shoppers serve as our ambassadors to help spread the great news there is to share about Aldi — from our amazing lineup of products to the incredible savings they can find at our stores. The Aldi business model is intentionally different by design, and everything we do is in order to offer our shoppers the lowest prices possible, every day. Whether it’s our purposeful store design, our vast selection of private label products or how we merchandise our goods, our primary goal is to create savings and pass them along, which allows us to provide the items shoppers want at unbeatable prices, no matter what.” Aldi has come a long way in recent years, thanks to multibillion-dollar investments in remodeling efforts and enhanced PROGRESSIVE GROCER August 2020
presentation of key perimeter departments. The operationally efficient merchandise strategy is still evident throughout Aldi’s new stores, whether it’s cut-case displays on warehouse-style shelving or pallet presentations in high-velocity categories, but stores have been prettied up with colorful lifestyle signage on outer walls, coupled with end cap signs that educate shoppers about key elements of the Aldi value proposition. “We’re always evolving our brand, our stores and our product selection to appeal to more customers,” Hart says. “As you know, a few years ago, we announced a 40% increase of our fresh food selection, with a focus on new produce, meat and organic options, as well as easy-to-prepare foods. We’re also in the middle of a more than $5 billion nationwide initiative to modernize existing stores and open new locations so that we can bring the Aldi experience to even more people.” For example, the company has rolled out online grocery services at nearly all stores and is intent on growing its e-commerce offerings, according to Hart. Aldi recently extended curbside pickup to 600 stores and is on track to reach 700 locations by year’s end, Hart says. In addition, grocery delivery is already available in more than 10,000 ZIP codes. Aldi doesn’t give much away when it comes to specifics about its future efforts, and so it is with the company’s digital efforts. Asked whether Aldi’s plan is to offer pickup at most of its locations, Hart replies, “We’re continuously exploring new ways to bring convenience, quality and value to even more communities with online grocery offerings.”
Opportunistic purchases of products, promoted as “Aldi Finds,” are a key element of the retailer's merchandising strategy and provide a treasurehunt aspect to the store experience.
Coast to Coast
—Jason Hart, CEO, Aldi USA
While the opening of Aldi’s 2,000th store was a notable accomplishment in July, it was also a milestone that the company had expected to achieve 18 32
months earlier. The 2,000-location goal had been set in December 2013, when Aldi had just 1,269 stores and disclosed plans to open 650 new locations by the end of 2018. When Aldi ended 2016 with only 1,608 stores, the 2,000 target seemed unlikely to be attained. Even so, in early 2017, when a $1.6 billion remodeling and store-expansion program involving 1,300 locations was announced, Aldi maintained its target of nearly 2,000 locations by the end of 2018. By mid-2017, when it was trending well short of its goal, the company increased its store count goal to 2,500 units and extended the timeline to achieve it to the end of 2022. It now appears that Aldi is also unlikely to achieve this revised goal, barring a dramatic acceleration of store expansion in 2021 and 2022. With the July announcement of 70 new stores opening in the back half of 2020, Aldi is on track to end the year with 2,070 stores, which means it would need to add 430 locations over the next two years, a feat that seems unlikely, given that the most stores that Aldi has opened in one year over the past decade was 161 units in 2016, the same year that the company entered Southern California with roughly 45 stores. Asked about the 2,500-store goal and whether it will be achieved, Hart says that he’s extremely proud to be part of one of the fastest-growing re-
Whether it’s our purposeful store design, our vast selection of private label products or how we merchandise our goods, our primary goal is to create savings and pass them along, which allows us to provide the items shoppers want at unbeatable prices, no matter what.”
Where’s Aldi? Store State Count
tailers in the United States. “The Aldi business has evolved since we set forth our first growth milestone in 2017, and so have our goals,” Hart notes. “We’re growing by more than just store count — we’re expanding into new areas of the country, broadening our product range and scaling our Curbside Grocery Pickup operations, to name a few examples. While we’re growing on all these levels and the specific number of stores we’re targeting may shift, Aldi is pleased to still be on pace to become the third-largest U.S. grocery retailer by store count by 2022.” Earlier this year, Aldi surpassed Ahold Delhaize USA’s 2019 store count of 1,973 locations, and unless Albertsons embarks on a more aggressive store-opening program, it will be overtaken
Illinois 205 Florida 151 Ohio 144 Pennsylvania 133 Texas 120 New York 114 Michigan 87 Missouri 82 North Carolina 82 Indiana 80 California 78 Wisconsin 78 Minnesota 73 Virginia 68 Georgia 66 New Jersey 53 Maryland 52 Tennessee 51 South Carolina 41 Iowa 32 Alabama 30 Oaklahoma 27 Connecticut 26 Kansas 26 Kentucky 23 West Virginia 15 Montana 14 Arkanas 10 Nebraska 10 New Hampshire 9 Rhode lsland 9 Delaware 5 Mississippi 4 South Dakota 3 Vermont 3 District of Columbia 1 North Dakota 1
Aldi shoppers have gained a fresh perspective on the retailer, thanks to a multibilliondollar investment program that enhanced the presentation of its produce.
Source: AggData information as of July 28, 2020. AggData maintains a database of current location information on more than 7,500 retail, restaurant, hospitality, medical and industrial/nonconsumer companies, and also operates the Retail Opening & Closing System.
Aldi’s Growth Trajectory
(An increased pace of expansion will be needed for the next two years if Aldi is to achieve a goal set in 2017 to operate 2,500 stores by 2022.) 2,500
Number of Stores
240* Units Added
* Estimated number of stores needed to reach goal Source: AggData, company reports and Progressive Grocer estimates
PROGRESSIVE GROCER August 2020
Featured Retailer an organization where expense control and consistent execution of a proven operating model remain top priorities. “Our primary goal is to offer shoppers the lowest prices, no matter what,” he affirms. “We look at every part of the business in order to create savings that we can pass on to our customers, and our unique model — from close supplier relationships to our instore operations — is focused on simplicity and efficiency in order to deliver on that goal. Everything we do at Aldi is to provide our customers with the products they want at prices they love, all in an experience they enjoy.”
Value and Sustainability
next. Albertsons ended 2019 with 2,252 units, and its primary focus is on improving the performance of existing stores, rather than opening new ones. Based on its limited expansion, Aldi should overtake Albertsons’ store count at some point in late 2021 or early 2022. That will leave Kroger and Walmart as the only grocers that are larger, operating 2,757 and 4,756 units, respectively, at the end of 2019. As Aldi comes closer to 2,500 locations, don’t be surprised to see the company unveil a new longterm growth target, if for no other reason than to convey to employees that Aldi is an employer that offers growth potential. The company already references a coast-to-coast expansion goal, and there are numerous markets where it doesn’t yet have a presence or remains underpenetrated when compared with the operations of others. For example, Aldi entered Southern California four years ago, and it has grown its store base there to 78 locations. By comparison, Kroger operates more than 300 Ralphs and Food 4 Less stores, which tend to be larger than Aldi locations. Florida is another good example of an existing market that would appear to offer more growth potential. The state currently has the second-highest concentration of Aldi locations, with 151 stores, but that’s roughly the same number of stores that Aldi operates in the greater Chicagoland area, one of the company’s more established markets. If Aldi were to pursue a similar penetration rate in the Sunshine State, it could come closer to rivaling the 813 stores operated there by Publix. The future is guaranteed to no retailer, something Hart knows well as a 27-year veteran of 34
Despite limiting the total store assortment to roughly 1,400 items, Aldi provides a selection of meat that is adequate for many shoppers.
The approach is working, presumably from a financial standpoint, or Aldi wouldn’t continue to invest capital in store expansion, but also from an industry recognition standpoint. Aldi regularly receives accolades from external groups and ranks high on attributes that are central to its value proposition. For example, Aldi was identified as the topranked company in the value segment of a national poll conducted by Market Force Information. It was the 10th consecutive year that Aldi has received that distinction. Aldi is also the top-ranked company for price in dunnhumby’s annual Retail Preference Index. Additionally, the retailer has received recognition for its efforts in sustainability. Aldi has a broad slate of initiatives in place regarding sustainability, and is committed to making 100% of its private label packaging, including plastic packaging, reusable, recyclable or compostable by 2025. According to Hart, the company is well on its way to meeting that goal, but he stops short of quantifying the degree of progress. “We’re also committed to increasing energy efficiency, decreasing our carbon footprint and improving our green building standards across all our stores and operations,” Hart continues. “We’re in this for the long haul, and we know fostering sustainability is not an overnight task. We’re partnering with our suppliers and buyers to honor this commitment, and are proud of the progress we’ve made thus far.” That progress ties in with the company’s overall business model, and is consistent with an approach to reduce costs by minimizing waste and passing savings along to shoppers. That formula, consistently executed over time, continues to serve Aldi well.
Aldi (and Others) Face Lidl’s East Coast Encroachment Armed with an underused distribution system and fresh academic research that documents its favorable impact on food prices, Lidl is poised to accelerate U.S. expansion and challenge its fellow German deep discounter, Aldi. Lidl has been quite deliberate about its U.S. growth strategy, but that could soon change. The global operator of more than 11,000 stores across 32 countries opened its U.S. headquarters near Washington, D.C., in 2015, and debuted its first U.S. stores in Virginia, North Carolina and South Carolina in 2017. It named Johannes Fieber CEO in early 2018 and late that year acquired 27 Best Market stores in New York and New Jersey. Since that time, the first batch of remodeled Best Market locations has opened, and in May, Lidl attained a milestone when it opened its 100th U.S. location, near Atlanta. While 100 locations is a notable achievement, Lidl’s more significant activity to date has involved the development of a supply-chain infrastructure that is currently underused. The company’s three existing distribution centers, in Fredericksburg, Va.; Mebane, N.C.; and Perryville, Md., encompass roughly 2.5 million square feet. A fourth location, to be built in Covington, Ga., will be Lidl’s largest facility, at 925,000 square feet. Any one of these facilities would be able to meet the replenishment needs of between 300 and 400 stores, based on the experience of other food retailers that operate stores of similar size and sales volumes. With each of its DCs requiring an investment in the neighborhood of $100 million, Lidl will eventually need to ramp up store expansion to generate a return on its supply-chain investment. As it does so, the retailer, whose business model bears many similarities to that of Aldi, has a good story to tell communities that it targets for expansion. That’s because Lidl commissioned the University of North Carolina Kenan-Flagler Business School to conduct a study that found its entrance into the Long Island, N.Y., market caused competitors to lower prices significantly. The study, led by Katrijn Gielens, a professor of marketing at the business school, examined prices of 47 store-brand products prior to the COVID-19
Lidl’s Expanding Supply Chain Distribution infrastructure in place to support growth FACILITY LOCATION
SIZE IN SQUARE FEET
Source: Company reports and Progressive Grocer research
outbreak and determined that Lidl’s arrival prompted competitors to reduce their prices by as much as 15%. The study noted that Lidl’s prices were about 45% lower than Trader Joe’s and more than 30% lower than other national retailers on Long Island. Gielens analyzed the prices at retailers such as Aldi, BJ’s Wholesale Club, Costco, King Kullen, Stop & Shop, Target, Trader Joe’s, and Walmart during 27 store visits between April 2019 and March 2020. “Given that U.S. households are facing the fastest-rising rise in food prices in a generation and a looming recession, understanding how supermarket competition can keep grocery prices at bay is more important than ever,” she notes. “Lidl’s competitive price-cutting effect is continuing to pressure other retailers to drop their prices. The data shows the effect is greater than Walmart’s entry in a new market reported by previous academic studies.” The recent findings are similar to the results of a prior study Gielens conducted, which showed that Lidl put significant pressure on top retailers to reduce their prices soon after the retailers first opened stores in the United States.
Lidl recently surpassed 100 stores, but it has the distribution capacity to support more than 1,000 locations.
That fact that a study commissioned by Lidl produced results beneficial to the retailer doesn’t change the fact that Gielen’s work showed some meaningful price gaps. For example, Lidl’s food prices were about 45% lower than Trader Joe’s, 39.6% lower than King Kullen, 33.8% lower than Stop & Shop, 18.5% lower than Target, and 10% lower than BJ’s. However, Aldi, Costco and Walmart offered comparable prices. Lidl seized on the findings to tout its entry into a market as the “Lidl Effect,” and the research highlights the fact that that Lidl’s impact was greater than that of Walmart when it entered a market. The price-cutting action after Lidl’s arrival was greater than that seen when Walmart entered and the most that prices declined was 5%. The recent study found that Aldi cut its prices by 15% and Walmart by 9% after Lidl’s entry; Stop & Shop and King Kullen dropped their prices by an average of 5.3% to 3.8%, respectively; Costco responded to Lidl’s entry by slashing prices by 8.3%; and Target and Trader Joe’s each lowered their prices by 4%. PROGRESSIVE GROCER August 2020
Battle Tested CAMPBELL SOUP CO. E XEC TOBY JOHNSON TR ACES HER LE ADERSHIP JOURNE Y FROM COMBAT TO CORPOR ATE AMERICA TO THE COVID-19 CRISIS. By Gina Acosta efore Toby Johnson spent her time rising through the ranks of the consumer packaged goods industry, she rose through the ranks of the U.S. Army – all the way to flying an attack helicopter during Operation Iraqi Freedom. Johnson, 43, served in the army for seven years as an aviation officer and Longbow Apache helicopter pilot, achieving the rank of captain, and was deployed to Iraq as part of the 2003 invasion. Fast-forward to 2020, when Johnson was named SVP of sales at Campbell Snacks in July. Johnson says that many people ask how her military experience prepared her to be a leader in corporate America, and specifically in the fast-evolving CPG industry. “My military experience was my foundation in learning how to motivate people, how to lead,” explains Johnson, who recently joined Camden, N.J.based Campbell after a 13-year tenure at PepsiCo. “I learned about types of people, including about myself, and being able to make mistakes and grow as a leader. And then certainly, the transition through business school helped me a lot in trying to figure out how do you take that foundation and translate that to corporate America.” Johnson’s journey to executive leadership roles in the CPG industry includes a stint at Harvard Business School for an MBA, and a philosophy degree from the U.S. Military Academy at West Point. “I had my first direct report as a sophomore in college at West Point,” she says. “It was a gift to lead early in life and to really figure out who I was authentically as a leader.” After the military, Johnson started out as an intern at Purchase, N.Y.-based PepsiCo and ended up holding a variety of roles before rising to region VP of the company’s Frito-Lay division. While there, she says that she amassed strategic experience in direct-to-store delivery and execution excellence in snack foods.
I definitely believe in the principle of servant leadership. As a leader, if you can remove obstacles for your team and allow them to shine, that is the best way to operate. You have to build a team of complementary skills. You want people to have different experiences, that have different strengths. And there’s a huge power in connecting people to the things that they are passionate about and love doing and are excellent at.” — Toby Johnson, SVP of Sales, Campbell Snacks
“PepsiCo is a company that values its people, and seeing how you can put leadership principles into practice in one of the best-run companies in the world was an incredible chapter in my development,” Johnson notes.
The Soup Surge
There’s no question that Johnson has joined Campbell at probably the most pivotal and transformational time for the iconic American company. Before the pandemic, Campbell had been in the throes of a multiyear turnaround plan. A new CEO and CFO had been installed over the past two years. The company’s board had been refreshed with the addition of three directors with extensive CPG and marketing expertise. And now, the pandemic has presented Campbell with an unprecedented opportunity to supercharge that turnaround plan for growth. “When you look at the business, the opportunities and the brands that Campbell’s has assembled are absolutely incredible,” Johnson asserts. “The amount of change and transformation that a 150-year-old company has gone through in the past couple of years is amazing. The ability to be agile, to evolve and even leapfrog where the rest of the industry is positioned right now is very exciting, especially with the way the business is positioned.” What she means by “positioned” is poised for turbo-charged growth.
make enough of, since they’re selling so well. But being able to look around the corner from a supply-chain standpoint is critical. What’s the positive possible range of growth that you could experience? And then having those candid conversations with your retail partners. This is what we can deliver.” Johnson adds that the company is ramping up production of some core snack products, such as its Goldfish brand, in anticipation of more sales spikes as the pandemic persists. Prior to her CPG career, Toby Johnson served in the U.S. Army as a helicopter pilot and took part in Operation Iraqi Freedom.
In June, the company reported booming sales during its third quarter on massive consumer demand during the COVID-19 crisis. Net sales at Campbell increased more than 14%, from $1.953 billion in the prior-year quarter to $2.238 billion for the quarter ended April 26. Profit tripled to $156 million, versus $53 million during the same period in 2019. Also, the company says that it’s seeing pandemic-related demand increase its household penetration by 6% year over year. Thanks to this sales boom, Campbell raised its guidance for the 2020 fiscal year, from a -1% to 1% increase in sales to a 5.5% to 6.5% increase. Now the company is focused on keeping many of these consumers, who are getting used to a “new normal” of remote work and meals mostly consumed at home. Johnson will lead the Campbell Snacks division, where net sales for 2019 were $3.784 billion. The portfolio includes power brands such as Goldfish, Pepperidge Farm, Kettle Brand Chips, Cape Cod, Lance, Snyder’s of Hanover, Late July, Pretzel Crisps, Emerald Nuts and Pop Secret. “I think the consumer’s been changing for a while and the relationship with snacking has been changing,” Johnson says. “During the pandemic, there’s been a change in pack size with people at home, where they may not need as many on-the-go sizes. The role of snacking in people’s lives is also evolving, so instead of having three large meals, the ‘snackification’ of how consumers eat has continued.” Johnson observes that the pandemic, specifically, is presenting consumers with more opportunities for snacking. Many consumers are working from home, more hours, all online, and they take more breaks that require smaller meals. “Those breaks become even more important with the intensity of online communication all day,” she points out, “and that getaway becomes a moment where you can take a break and enjoy a snack. You may not have the time to prepare a full meal. You might be able to do some quick scratch cooking. But the accessibility of snacking is becoming a more important part of people’s lives.” According to Johnson, Campbell is looking at adding more manufacturing capacity to meet demand. The company has been holding meetings with retailers to try to determine what shoppers’ needs are now and six months from now, as well as how much they’re buying. “Across the CPG industry, keeping up with supply is the challenge that everyone is facing,” Johnson admits. “In a way, it’s a great problem to have, if you have product that you’re making that people want to buy so much of, and [you’re] not sure you can
Time for Leadership
With a raging pandemic, an economy in recession and unprecedented levels of stress for workers, leadership is more important than ever in the CPG business. So how does Johnson plan to support and lead her team during this time of profound change? She says that she goes back to what she learned flying those missions for the army: the philosophy of servant leadership. “As a leader, if you can remove obstacles for your team and allow them to shine, that is the best way to operate,” Johnson notes. “As one person, you can’t accomplish all the things that you can with an extremely capable and empowered team. So if you, as a leader, have a team that operates where your role is to remove obstacles and make them successful, you have really high standards and are deeply devoted to your team’s ability to achieve them, that’s very powerful.” She adds that these principles are especially critical during the time of crisis facing the food industry. “People are relying on food brands and the entire industry that supports that, all the way through that value chain,” Johnson observes. “It’s so important right now to people for a sense of normalcy, connection, comfort, quality. Everyone has their challenges they’re facing right now, but that challenge also has huge opportunity in the relationships that we are strengthening with our consumers and our retailers as we work through this and really deliver something valuable to people in their homes every day.” Value will likely play an increasingly important role for American consumers going forward, and Campbell’s products historically have been highly relevant in moments of recession or economic pressure. But that value proposition also increasingly includes e-commerce. That’s why Campbell is boosting spending on e-commerce and focusing on its core products to retain new households. “The growth of e-commerce and other things are going to continue to evolve very rapidly over the next three to six months,” Johnson notes. “In this time of pandemic and [the] tumultuous nature of our environments, I feel like there’s a big opportunity for me to have a positive impact as a leader, and if I can look back on this experience and feel like I had an impact, that will be really rewarding.” PROGRESSIVE GROCER August 2020
Drinks All Around CONSUMER BE VER AGE TRENDS PROVIDE GUIDANCE FOR GROCERS. By Bridget Goldschmidt
Key Takeaways The shift toward functional beverages and increased in-home consumption of coffee and alcohol are major trends likely to outlive the COVID-19 pandemic. Retailers should consider carrying larger beverage sizes and multipacks and promoting items more strategically to accommodate consumers shopping in stores less frequently. Emerging trends include high-protein plant-based beverages, the mainstreaming of CBD beverages, and sustainable packaging innovation.
o matter what’s going on in the world, to paraphrase an old saying, people still have to eat — and drink. Paying attention to how beverage trends have been affected by the COVID-19 pandemic, and how they’re likely to remain, even after the current situation has passed, can help grocers plan accordingly to keep category profits flowing. Unsurprisingly, given the ongoing concern about getting sick, health and wellness is a key long-term trend identified by various industry observers. “Health has become top of mind for consumers throughout the pandemic, and consumers will continue to focus on overall well-being in the future,” observes Julie Terrazzino, senior category manager at Naperville, Ill.-based KeHE Distributors, who is responsible for the soda, water, shelf-stable RTD coffee/tea and juice categories. “The products that are coming out now that help boost immunity are not yesterday’s chalky or horrible-tasting products. The products we are seeing are ... delicious, imaginative, beverages that also have clean, natural ingredients, in gorgeous packaging.” For retailers looking to capitalize on this trend, Terrazzino advises: “Adding an
PROGRESSIVE GROCER August 2020
For retailers looking to capitalize on this trend, Terrazzino advises: “Adding an end cap display of beverages with added functionality gives the consumer the solution they are looking for: beverages that taste good and help build their immunity. With most of these items being a single sell, give consumers an easy place to find their immunity-boosting solution.” “The macro-trend in beverage is all about functionality,” notes Kimberly Senter, EVP of analytics, insights and intelligence for Irvine, Calif.-based Advantage Sales. “Consumers are seeking multiple benefits in a bottle, especially for immediate-consumption products. Product attributes and ingredients that promote health and wellness and/or include life-enhancing ingredients, i.e., probiotics, vitamins, protein, antioxidants, kombucha, electrolytes and sustained energy, combined with a great taste, will remain in demand. Also, lower sugar content is another major trend as people have adopted dietary regimens that focus on low carbs/ sugar. This will lead to the continued growth in energy, RTD coffee and sports drinks, whereas carbonated soft drinks, bottled juices and iced tea may continue to decline.” “Health-and-wellness-focused beverages, including the use of functional ingredients, will outlast the pandemic,” asserts Michael Taylor, president of Stamford, Conn.-based private-brand consultancy Daymon. “Closely linked with the demand for enhanced functionality, consumers are continuing to shift away from overly processed and artificially enhanced beverages. Currently, over 80% of consumers are focusing on what they consume as part of taking care of themselves, with 77% of consumers looking to lead a healthier life than pre-pandemic. As a result, 35% of consumers are preferring to add functional ingredients through their diet by way of inherently functional beverages. Successful innovative beverage offerings must align with more general health-and-wellness aspirations, including natural and clean ingredients [and] transparency, as well as the desire for higher-quality experiences.” Noting that “[t]he time is now for retailers to take advantage of the accelerated growth within the functional space, providing
of consumers are focusing on what they consume as part of taking care of themselves, with 77% of consumers looking to lead a healthier life than pre-pandemic. Source: Daymon
Consumers are seeking multiple benefits in a bottle, especially for immediateconsumption products.” —Kimberly Senter, Advantage Sales
communication around the end benefits of various functional claims,” Taylor advises that “private brands must innovate within functional beverages to maintain or outpace competition, [and] have the opportunity to lead growth. Top growth categories for retailers to consider when developing private-brand products with functionality include coffee, tea and fermented drinks as consumers shift away from traditional sugary beverages such as soda and juice.”
Not all such sales are lost, however. “Multipacks and larger sizes are driving growth for beverages in the marketplace,” says Terrazzino. “The increase in sales comes from consumers limiting the frequency of their shopping trips, along with the closures of restaurants, bars, events, schools and other gatherings, forcing consumers to eat and drink at home. Water and soda have been the biggest winners in this trend, with their gallon or multipack sizes.” That being the case, she continues, “Creating a mass display of multipacks or large sizes, like sparkling water, noncarbonated water, soda and juice, will help the consumer fill their basket quickly with products that they want and will keep the retailer in stock while reducing labor and touchpoints.” A similar strategy applies to beverages that need to be prepared, like most people’s morning go-to, coffee. “Retailers should consider allocating more permanent shelf space, or secondary locations, to larger pack sizes, in coffee in particular,” suggests Senter. “Coffee shoppers are adapting to preparing their own coffee and are seeing the value in more affordable coffee versus away-from-home premium prices.”
SPEAKING WITHÉ Matt Ingemi, Chief Strategy Officer/ VP-Business Development, Jel Sert In February The Jel Sert Company — an industry leader in the freezer bar category known for Fla-Vor-Ice, Otter Pops, and Wyler’s Authentic Italian Ices — made news with the debut of SLIQ Spirited Ice, a premium alcoholic freezer bar that plays off the popularity and success of readyto-drink and hard seltzer beverages. Progressive Grocer reached out to Matt Ingemi, Jel Sert’s chief strategy officer and vice president of business development, to discover the strategy behind the launch and why grocery retailers should consider alcoholic freezer bars an important component of their merchandising and marketing plans. Progressive Grocer: What made Jel Sert decide to launch SLIQ? Did you see the alcoholic freezer bar category as ripe for growth? Matt Ingemi: Alcoholic freezer bars are gaining in popularity. SLIQ aligns with current drinking trends and consumption behavior — consumption is up 22 percent vs. YAGO in the overall freezer bar category 1. It is a perfect complement to the growing hard seltzer and RTD categories. We launched with three separate spirits — vodka, agave, and rum — each packaged in convenient variety packs. There really is something for every taste preference. The vodka-infused pack includes Lemonade, Blue Raspberry, and Cranberry & Grapefruit freezer bars; the agave-infused pack includes Classic Margarita, Mango Margarita, and Strawberry Margarita bars; and the rum-infused pack includes Coconut & Lime Daiquiri, Pineapple Daiquiri, and Strawberry Daiquiri flavors. SLIQ gives retailers the opportunity to capture sales in a burgeoning category with shelf-stable products. And because our freezer bars ship unfrozen, they can be taken in and out of the freezer as needed — which means they don’t take up a retailer’s valuable freezer space.
alcoholic freezer bar category and be the brand that defines it. We have proven we know how to make novelty items mainstream with our Fla-Vor-Ice and other freezable products. And because Jel Sert is a proven leader in the category, no competitor can match our scale of production. Accelerating the impact this category can have means not only developing the right products but also producing and delivering those products quickly and efficiently. Because we make SLIQ in our state-of-the-art manufacturing facility in West Chicago, Illinois, using the latest in food and beverage technology, SLIQ is the only brand capable of doing both. PG: What kind of support can grocery retailers who decide to bring SLIQ into their stores count on from Jel Sert? MI: We invest in our brands — which means we create on-going promotional partnerships and offer continuous marketing support to ensure category success. We’ve done everything from in-store sampling to event marketing, at-shelf advertising, coupons, local promotions, and more. And we will continue to offer support and innovate as needed as the grocery marketplace evolves during and after the current crisis.
PG: There are other alcoholic freezer bars on the market. What makes SLIQ a better option for retailers who want to introduce or expand the inventory of these products?
We value our partners. As a company built to manage our own mainstream retail product development and sales, we have an unmatched understanding of what our partners need and expect from us. Our ability to deliver exceptional service and provide turn-key solutions and transparency to our partners has earned us the trust of some of the largest brands in the world.
MI: Low calorie count, innovative packaging, convenience, premium alcohol, and portability are growth drivers in the industry — and SLIQ delivers on them all! We’re confident SLIQ will propel the
SLIQ alcoholic freezer bars deliver on many fronts for both retailers and consumers. But the bottom line is that they deliver what’s most important for consumers — flavor above all! 1
Neilson, 13-wk, dated 6/13/20
To discover all of the benefits SLIQ can deliver, contact Matt Ingemi at email@example.com
MOR MEETS TH
of coffee drinkers say their ideal coffee would have antioxiants, promote brain health (37%), help with relaxation (37%), or have high caffeine (28%). Source: Daymon
Coffee, Tea and Hybrids
In fact, Senter sees the coffee segment in general as ripe for growth. “Increased at-home coffee consumption is likely to sustain beyond the pandemic as more of the population adapts to a remote work environment,” she predicts. “It is estimated that 25%-30% of the workforce will be working remotely at least partially on a permanent basis by the end of 2021, and in-home beverage consumption will be impacted by this shift. Expect categories often supplied in an office environment or school to benefit most over the long haul.” Taylor, meanwhile, as noted earlier, has identified the celebrated bean as ripe for a functional upgrade, along with its leafy counterpart, tea. “The inherent functionality of coffee and tea has made this category an easy-to-adopt vessel to provide consumers with enhanced functionality,” he points out. “RTD varieties are in the spotlight as manufacturers develop new ingredient profiles that provide more benefits than ever before, i.e., protein, antioxidants, healthful herbal infusions, plant-based alternatives. From a consumer standpoint, coffee drinkers say their ideal coffee would have antioxidants (44%), promote brain health (37%), help with relaxation (37%) or have high caffeine (28%).” The best way to capture these consumers’ dollars? Hybrid beverages, which “offer opportunities for private brands to innovate via combining more challenging categories with beverage categories where private brands drive growth, i.e., water, coffee,” recommends Taylor. “While sugar content is a major consumer concern in categories such as juice, hybrid drinks offer an avenue to enhance functionality while decreasing sugar content.”
Meanwhile, consumers purchasing in larger quantities could mean a boost for certain soft-drink concepts, while the product shortages especially prevalent at the beginning of the pandemic have influenced what consumers are drinking. “COVID ... reoriented cooking and eating behaviors, as about 30% of people plan to cook at home, which will be
affecting buying decisions, from buying in bulk to buying more online than in store,” says David Stone, managing partner and principal at The New England Consulting Group, in Westport, Conn. “For beverages, this trend will likely affect companies [such] as SodaStream, which offer build-yourown solutions for home consumption.” With regard to beverage choice, “COVID has accelerated the trend towards more basic drinks such as seltzer and club soda, and because of poor supply-chain issues, many retailers have focused more on core brands and SKUs,” notes Stone. “The impact of this in the short term is to limit market access of newer and smaller brands.” That’s not the only obstacle facing upstart suppliers, though. “Conversely, demand for customized or personalized concepts of SKUs will make it difficult to gain retail access, and more innovative brands will likely increase DTC [direct-to-consumer] efforts to go directly to consumers with expanded assortments, in addition to larger-case sales offerings,” he observes. Although bigger product packaging may be hot, Stone contends that “[s]maller sizes will continue to expand to manage consumption intake and price-level issues,” noting that Coke and Pepsi are offering 7- or 8-ounce options, and that energy drink shots are growing in popularity. Also, despite soft drinks’ less-than-healthy halo, Chicago-based Nielsen, at least, sees opportunities for growth amid a landscape of better-for-you beverages,
noting in January that “as soft drink manufacturers and brands continue to evolve to meet healthier lifestyles (with reduced-sugar, healthier and premium options), the opportunity to effectively and strategically engage both ... regular and occasional [alcohol] abstainers will continue to grow.” The market research firm also identifies the use of soft drinks such as cola, club soda and ginger ale as premium mixers in popular alcoholic beverages as a growth spot. “Soft drinks sit at the crux between health-conscious abstaining and premium mixing,” Nielsen notes. “The onus is on U.S. retailers, suppliers and manufacturers to maximize a sizable revenue opportunity.”
Raise a Toast
It’s no secret that these days, Americans are imbibing more often on their own premises. “Another trend we expect to outlast the COVID-19 pandemic is at-home alcohol consumption,” says Terrazzino. “While everyone is anxious to get back out to bars and restaurants, the at-home experience has allowed many people to creatively reconnect to family and friends while enjoying a cocktail. Zoom Happy Hour meetings, back-of-the-car/-van parking lot get-togethers, and family game nights will continue, in some fashion, in a post-COVID era.” Boston-based alcohol e-commerce platform Drizly reveals similar findings in its “2020 Consumer Report,” released in June. “Even as states reopen and allow for some form of on-premise consumption, those who became accustomed to imbibing more frequently at home are likely to keep at it,” the company notes. “70% of respondents said they are planning to continue to drink less away from home, and 30% are poised to do so more at home … for the remainder of the year, at least.” Further, more than half (52%) of the consumers surveyed by Drizly said that they’ve made more cocktails at home during the past three months, and 54% predicted that they’ll continue to do so. The company has seen a sharp uptick in sales of cocktail ingredients since mid-March, with mixers, syrups and bitters becoming the fastest-growing category on the platform. This new-found love of do-it-yourself cocktails extends even to low- or no-alcohol options mimicking favorite mixed drinks, while a certain beverage alcohol segment is on course for a meteoric rise. Predicting that “the beverage alcohol mashup will continue as ‘mocktails’ with low/no ABV,” Stone also acknowledges that hard seltzer brands like “White Claw and Truly are rewriting new approaches to reach the consumer.”
8 out of 10 shoppers would buy AHA monthly* Speaking of 8... AHA’s 8 unique, satisfying flavor duos with 0 sweeteners make it a top choice in the fastest growing beverage category. With 2 caffeinated varieties available, it’s up to you to choose the flavors to liven up your day.
drinkaha.com of consumers surveyed said that they’ve made more cocktails at home during the past three months, and 54% predicted that they’ll continue to do so. Source: Drizly
* Kantar Concept Study April 2019 & Nielsen BASES Quick Predict June 2019 ©2020 The Coca-Cola Company
The at-home experience has allowed many people to creatively reconnect to family and friends while enjoying a cocktail.” —Julie Terrazzino, KeHE Distributors
This observation aligns with Nielsen’s recent assessment of the beverage as “the most resilient alcohol segment in the U.S.,” due to “its correlation with health and wellness, convenience, and an intriguing variety of flavors.” Additionally, with grocery e-commerce on the increase — a trend accelerated by COVID-19 — more consumers than ever are buying their booze online. According to Drizly, 71% of its current users and 50% of non-Drizly users anticipated that at least 50% of their alcohol shopping would take place online, versus in store, in the next year. Exactly what alcoholic beverages are shoppers purchasing from home? Chicago-based Grubhub, in its recent “State of the Plate” report, identified wine as the top food and beverage item searched during the pandemic (beer came in fourth), with Pinot Grigio the most-ordered alcoholic beverage, followed by hot sake, rosé, light beer, IPA, Merlot, frozen strawberry margarita, and Chardonnay. Also noting the runaway popularity of wine, followed by cocktails and beer, Stacy DeBroff, founder and CEO of Boston-based social media and digital marketing firm Influence Central, urges marketers of alcohol brands and services to capitalize on the growing momentum of online grocery and pickup. A major factor in the rise of in-home consumption of alcohol, as with such old standbys as hot cocoa or favorite sugar-laden beverages from childhood, is the need for simple comforts in difficult times. Terrazzino observes that these offerings “have become a stress reliever and brought feelings of well-being during COVID-19.” Once discovered — or rediscovered — such seductive solaces often prove hard to relinquish, even when times improve, so these beverage choices may well persist beyond the current health crisis.
Step it Up
Something else that retailers need to bear in mind is how often to promote beverages to shoppers who are making fewer in-person trips to the store. According to Terrazzino: “[P]eople are not shopping as often, which means promotion frequency may be more strategic than depth of promotion. Frequency not only assists the consumer, but also reduces the mass amounts of products needed to fill deep
promotions, reducing out-of-stocks.” “Retailers should consider the frequency of promotions and merchandising support to meet consumer needs for the balance of the pandemic, especially in light of imminent recessionary pressures,” advises Senter, who adds: “In store and online, beverage brands of all types should offer promotions that encourage shoppers to stock up. Two-for-ones, BOGOs and XX% off can be effective incentives for shoppers who are making fewer but larger stock-up trips in store, and online shoppers will also appreciate the value proposition of these discounts. Retailers should maintain displays of popular beverages and new innovation at end caps and stand-alone PDQs, as these remind buyers to purchase them, even if they don’t venture down the aisle.”
What’ll it Be?
The beverage industry observers also spotlight emerging trends that retailers should keep an eye on. Within the functional segment, Taylor points to solutions for the aging population and parents with kids, as well as to beverages as meal or snack replacements. Speaking of the latter, he notes, “High-protein plant-based alternatives represent one option that is highly sought out by a growing number of consumers moving towards flexitarian lifestyles, with four out of 10 U.S. consumers trying to add more plant-based food substitutes into their diet.” Senter similarly forecasts that “plant-based beverages will see tremendous growth in the beverage category as consumers adapt to these offerings, as we’re currently witnessing with food.” Functional beverage ingredients expected to rise in popularity include adaptogens, healthy fats like MCT oil, nootropics, global spices and botanicals, BCAA (branch-chain amino acids), and superfoods like turmeric. For his part, Stone believes that “CBD beverages will come of age as FDA approval will happen, and especially as they will be formulated for lower impact per serving,” and that “[a] very high priority will focus on innovative packaging, as seen by the recent flurry of renewable packaging, especially from sustainable pulp sourcing, as brands [such] as Diageo, Unilever and Nestlé lead the way.”
Plant-based burgers are generating lots of consumer interest.
More Than Meat VEGE TABLES AND PL ANT-BASED ITEMS ARE POISED TO DOMINATE THE PL ATE. By D. Gail Fleenor he center of the plate in the United States has usually featured a hefty beef roast or grilled pork chops, or maybe seafood, or even hamburgers and hot dogs. The days of predictable meals of meat and two vegetables are changing, however, with plant-based entrées, vegetable dishes, value-added meats and exotic fare taking over center position. Demand for alternative proteins is being driven by people who love eating meat but also are open to a diet that includes plant-based proteins.
Key Takeaways Customers searching for healthy alternatives to meat, poultry and seafood are snapping up plant-based meats and cultivated seafood. Other trends expanding typical center-of-plate fare include valueadded meat-and-veggie combos, “veg-centric” dishes with meat serving as a flavor accent rather than the main dish, and soybeanbased tofu and tempeh in various textures and flavors. People aren’t necessarily looking to stop eating meat entirely, but are interested in incorporating plant-based products into their diets and trying new foods. PROGRESSIVE GROCER August 2020
A Field Roast Grain Meat Co. veggie roast can take the place of animal protein as a holiday main dish. Parent company Greenleaf Foods plans to build North America's largest protein manufacturing facility, in Indiana.
Centering on Plant-Based Proteins
Along with meals, investment in plant-based options is evolving. For example, 2019 and Q1 2020 have been record periods of investment in companies that create alternatives to conventional animal-based foods. These include U.S. plant-based meat, egg and dairy companies, according to Washington, D.C.-based The Good Food Institute (GFI), an international nonprofit that aims to build a sustainable global food system with alternative proteins. Investment in U.S. plant-based meat, egg and dairy companies in Q1 2020 was almost as much as the complete previous year, with $741 million invested in the quarter, even though COVID-19 was disrupting global markets. An additional center-of-plate component was hot by the end of 2019, when there were 55 cultivated-seafood companies around the globe — a 57% increase over 2018. “We’ve observed that many Americans are considering a different diet in the future, and for most, this includes decreasing their meat consumption,” says Dan Curtin, president of plant-based food supplier Greenleaf Foods, in Elmhurst, Ill. Greenleaf is the owner of Lightlife Foods and Field Roast Grain Meat Co. Curtin notes that people aren’t necessarily looking to eliminate meat from their diets entirely; instead, they’re focused on incorporating plant-based products to round out their diets, or to bring new
The idea of meat in moderation — a flexitarian lifestyle — has expanded the category beyond vegetarian and vegan customers, resulting in innovations throughout the category, and subsequently more interest from consumers as well.” —Dan Curtin, Greenleaf Foods
textures and flavors onto their plates. “The idea of meat in moderation – a flexitarian lifestyle – has expanded the category beyond vegetarian and vegan customers, resulting in innovations throughout the category, and subsequently more interest from consumers as well,” he observes. Plant-based food, according to GFI, refers to products that are direct replacements for animal-based products. This definition includes products that use the biomimicry approach to imitate the taste and texture of meat, as well as products made from plant ingredients such as jackfruit, seitan, tofu and tempeh that serve as functional meat replacements, according to GFI’s “2019 State of the Industry Report.” In addition to suppliers of plant-based products, retailers such as Whole Foods Market and Kroger-owned King Soopers are heavy into plant-based foods and capitalizing on the trend. Whole Foods offers 360 plantbased products on its shelves, while King Soopers offers 410. GFI says that these two retailers offer 50% more plant-based options than most other top retailers. The possibilities of the dishes consumers can make with Lightlife and Field Roast products are endless, according to Curtin. “At Lightlife, our focus is on clean, nourishing health,” he says. “We strive to provide solutions to the balance consumers are seeking, and to provide them complete transparency when it comes to the ingredients in our plant-based products.” For example, Curtin notes that the Lightlife PlantBased Burger is made only with simple ingredients like pea protein, coconut oil, garlic powder and beet powder. Other center-plate dishes using plant-based hamburger include tacos or lettuce wraps. Greenleaf’s Field Roast brand, meanwhile, focuses on big, bold flavors, Curtin observes, and is driven by culinary craftsmanship. “We’re known for our plantbased meats and cheeses, all made using whole-food ingredients like grains, vegetables, legumes and spices,” he points out. “Our Field Roast Sausages, Breakfast Patties, Burgers and Plant-Based Chao Cheese are great when used as a single ingredient in a dish, but when it comes to center plate, some of my favorites are lasagna, loaded mac ‘n cheese, flatbreads, and pot stickers. The Field Roast Celebration Roast is also a must-have for the holidays. Field Roast products are made for kitchen creators and flavor trailblazers.”
A World of New Dishes
Center-of-plate dishes created with vegetables have been readily available for a few years. Items such as pasta or rice created from cauliflower or squash can be used to create spaghetti or vegetable fried rice. A whole head of cauliflower can be roasted and flavored with spices for a unique main dish, and grilled thick slices of cabbage make great steaks. Colored cauliflower from specialty produce purveyors Frieda’s and Melissa’s can
wake up a meal. A sampler dish of winter produce can fill the center of a plate and hungry stomachs alike. Value-added meat-and-vegetable combos are gaining in popularity with consumers. Harried customers are more willing to grab a package that contains everything needed for dinner, from meat to vegetables, than in the past. Many retailers cut beef, pork and chicken for convenience, while others add their own seasonings and marinades. Cut meat and vegetables that are pre-skewered will appeal to consumers seeking kabobs. Noel W. White, CEO of Springdale, Ark.-based Tyson Foods, said in an annual report that his company can meet consumer needs through a broad portfolio of diverse products, including prepared foods and value-added chicken, which are expected to be the most profitable segments. Beef is expected to see continued growth as part of Tyson’s case-ready value-added business. Tyson’s poultry business continues to grow its mix of value-added products via acquisition and new products in the retail and foodservice channels. Some retailers are packaging meat cuts with vegetables for faster dinner solutions, while others are offering pre-marinated meats or heat-and-eat baby back ribs. Veg-centric is another trend in entrées that started in restaurants. It began when foodservice and restaurant customers asked for dishes with vegetables as the main course. “Veg-centricity” features fresh produce, mainly vegetables, as “the star of the plate.” It’s not vegetarian, vegan or flexitarian, according to Gordon Food Service, based in Wyoming, Mich. Veg-centric involves chefs applying small amounts of umami to center-of-plate vegetable dishes to enhance flavor. Developed in Japan, umami is savory and one of the five basic tastes, together with sweetness, sourness, bitterness and saltiness. Umami is characteristic of cooked meats and broths. The flavor and protein of umami are added to vegetable dishes, for example, as bits of country ham, meat broth or crispy chicken skin. There are at least 13 umami additions. These small additions increase the desirable taste and protein of plant-based and vegetable entrées, according to Gordon Food Service chefs. Meat proteins are still part of veg-centric dishes, but they have changed places with vegetables. In these dishes, they serve only as a flavor enhancer, which is a plus for those watching their diets. Other examples include roasted Brussels sprouts with crumbled chorizo, and caramelized cauliflower with balsamic-bacon breadcrumbs.
Tofu and Tempeh
As most people know, tofu is a rather bland, soft, white cheese-like food high in protein and made from curdled soybean milk. Tofu is pressed into blocks, with categories of softness including silken, soft, firm and extra firm. It’s used in a variety of Asian and other dishes, where it soaks up the flavor of the surrounding ingredients and adds protein. Tempeh also comes from soybeans and is a plantbased protein source that
Spring rolls made with soybased tempeh offer vitamins and minerals as well as flavor and visual appeal.
Seafood Isn’t Always From the Sea Plant-based or cultivated seafood is a small sector, but a growing one, according to The Good Food Institute’s “2019 U.S. State of the Industry Report on PlantBased Meat, Eggs and Dairy.” In 2019, there were numerous product launches, including New York-based Good Catch’s plant-based tuna, which debuted at Whole Foods Market, Thrive Market and Fairway Markets. Meanwhile, New York-based Ocean Hugger Foods showcased its own plant-based tuna, Ahimi, and launched a plant-based eel product at the National Restaurant Association show. The new product is created by altering the texture and flavor of eggplant to resemble that of freshwater eel, or unagi. Family-owned Van Cleve Seafood Co., based in Spotsylvania, Va., launched a plant-based line, Wild.Skinny.Clean, with Crab-less Cakes and plant-based pink shrimp. Tyson Ventures’ investment in San Francisco-based New Wave Foods, the first major investment by a conventional meat company in the plant-based seafood space, opened a door for the Springdale, Ark.-based meat company. For a company like Tyson, seafood has been out of reach in the past, because of production systems. Plant-based seafood can be produced in the same facility as other plant-based meat products, however, making it practical for Tyson. —D. Gail Fleenor
originated in Indonesia. Tempeh is made from fermented soybeans that have been formed into a block, though store-bought tempeh often includes additional beans and grains. Tempeh also has a high protein content and offers many other health benefits. For example, it’s loaded with vitamins and minerals such as calcium, manganese, phosphorus and iron. According to a Greenleaf Foods representative, the tempeh segment “is growing like wildfire.” Lightlife currently has the No. 1 tempeh brand in the United States. “We’ve been making tempeh for over 40 years and just introduced a new addition to our tempeh line: Buffalo Tempeh,” the rep says, likening the flavor to buffalo wings — without the wings. Many consumers may be working from home now, but their time is still limited, and the search for a balanced meal is ongoing. These new occupants in the center of the plate create interest while helping to create a healthy diet. PROGRESSIVE GROCER August 2020
Gene Editing Meets Supermarket Shelves WITH SCIENCE AND TECHNOLOGY COMES THE POTENTIAL FOR A WE ALTH OF INNOVATION. By Abby Kleckler
Gene editing has the ability to drive novel varieties into produce departments and kids' lunchboxes.
any customers want to eat better, and CPG companies are constantly introducing new products to align with every new fad and trend out there, from keto to super carb and everything in between. Two statistics, however, are stunning: Just one in 10 adults meets the federal fruit or vegetable recommendations, according to the Centers for Disease Control and Prevention, and the human population is expected to hit 10 billion by 2050, creating challenges of how to sustainably feed this many people. Several companies are working on gene-edited foods — manipulating the genetic material of plants in a way that could happen naturally — to help solve some of these challenges. Although they’re not on supermarket shelves yet, the potential of gene-edited foods in the next couple of years is huge. Durham, N.C.-based Pairwise is working on specialty crops such as berries, stone fruits and leafy greens to make them more snackable, removing seeds and pits, and tastier, eliminating the bitter or pungent flavor of some vegetables.
Key Takeaways As a solution to the issues of getting people to eat more nutritiously and of feeding a rapidly expanding population, the potential of gene-edited foods in the next couple of years is huge. Companies like Pairwise and Amfora hope that their geneediting work will bring greater diversity to supermarket shelves, making produce better-tasting and more accessible, and creating protein-enriched soy that’s less expensive to process. Beyond the advantages to consumers, gene-edited foods offer benefits to the greater supply chain, and the planet as a whole.
“Something that Americans really struggle with is eating enough fruits and vegetables,” says Heather Hudson, head of collaboration for Pairwise. “If we can take some of those barriers away, then hopefully, we’ll start eating more of the better food.” San Francisco-based Amfora is using gene editing to increase the protein content in foods, while also decreasing the starch or carbohydrate content of a crop. Its primary focus right now is on soy, which could have far-reaching benefits for plant-based foods as well as animal feed. “The problem that Amfora is trying to tackle is a two-fold problem: one, to make enough protein to nourish 10 billion people over the next 20 years or so,” says Lloyd Kunimoto, president and CEO of Amfora, “but two, do it in a way that reduces the carbon footprint of food production so that we’re not destroying the planet and we can try to preserve the planet for future generations.”
Most consumers are familiar with the term genetically modified organism — or GMO — to some extent, whether it’s a complete understanding of the scientific process or solely seeing a label on their favorite products at the store marking them “non-GMO.” At a very simplified level, GMOs have been altered in a way that couldn’t occur naturally, while gene-edited foods could all be attained through conventional breeding, but it would take decades or even centuries. Both Pairwise’s Hudson and Amfora’s Kunimoto believe that much of the misunderstanding about GMOs came from a lack of transparency when those products first entered the market, and they hope to take a different approach with gene-edited foods. “I don’t think our expectation is for consumers to really get into understanding the different science aspects of how it differentiates them, but I can tell you, how we’re looking at gene editing is quite different to how GMOs were brought to market,” Hudson says. “We will absolutely share on our website how these products are made.
Consumers are wanting to know the origin stories of their food, where it comes from and how it’s made.” —Heather Hudson, Pairwise
“Consumers are wanting to know the origin stories of their food, where it comes from and how it’s made,” she adds. Another distinction between the two, according to Kunimoto, is that most GMOs were introduced initially because of the benefit for the farmers, but gene-edited science largely centers on making crops better for the consumer. “One of the reasons GMO crops have not been accepted well is that there’s no direct benefit to the consumer that’s easy to understand,” he says. “I think the difference with our product is not necessarily the technology we use to make it — in other words, editing versus GMO — but the fact that our products, at least our high-protein products, have something that the consumer wants.” The U.S. Department of Agriculture announced in June that — under its biotechnology regulations — it doesn’t regulate or have any plans to regulate plants that could otherwise have been developed through traditional breeding techniques, as long as they’re not plant pests or developed using plant pests. This regulation, or lack thereof, includes the genome-editing process, opening doors for companies large and small to get into the space.
Convenience and Variety
Pairwise hopes that its work with gene editing will introduce greater diversity to supermarket shelves than what exists now. For example, there are hundreds of berries out there with great health benefits, but most consumers know only blackberries, blueberries, raspberries and strawberries. “Not a lot of innovation happens in the produce area. I think I read a statistic a few years ago that only 3% of new innovation is in the produce department, and that’s a shame,” says Hudson. “Gene editing has an ability to turn that around, to really add some horsepower to the innovation that they get in their produce department and really drive foot traffic for them.” Hudson spends most of her time and energy on the vegetable side. “While I mentioned that we don’t eat enough fruits and vegetables, we really, really don’t eat enough vegetables,” she notes. “Whether it be flavor or just complexity in the preparation, we’re really trying to find out how we can address some of those obstacles and make them more readily available.” One crop that Pairwise is having great success with is mustard greens, breeding them to have less of the bitey texture and pungent flavor that prevent most people from eating them raw. These greens are likely the first crop that Pairwise will bring to market, according to Hudson. “We’re, I would say, 18 months to 24 months away from having a product in PROGRESSIVE GROCER August 2020
the marketplace that retailers and consumers can try and give us feedback on,” she observes. Pairwise is also working extensively with berries and stone fruits — most predominantly, cherries — to make them more accessible for consumers. Gene editing can potentially eliminate seeds and pits, give them greater year-round availability, promote snacking with smaller sizes, and make them easier for growers to process.
Using gene-edited crops bred with a high protein content can help eliminate some of the capital-intensive concentration processes for plant-based meat companies.
Amfora’s protein-packed soy can also be used as feed to help make processes such as animal protein production, livestock production, dairy production and aquaculture more sustainable and less taxing on the environment. “While top of mind is always consumers, we can fully appreciate that there are other stakeholders in that value chain,” Hudson says. “I think there’s a huge opportunity for growers and retailers, packer-shippers, all through the value chain, to make traits that help create value for them as well.” The future of food no doubt will include technologies such as gene editing, and it’ll largely be up to customers to decide whether the value proposition makes sense to them. Technology is ingrained in everyone’s daily lives with cell phones, laptops, thermostats and so much more, so why not gene-edited food? “One of the things that I think — that I hope — that technologies like ours and products like ours can do is to get the public to realize that science and technology can be forces for good,” Kunimoto says. Only time on the supermarket shelves will tell.
At this time, Amfora is working most intently on soybeans, using gene editing to create high-protein soy, while lowering the starch and carbohydrate content. This work has the potential to change one of the fastest-growing segments in the food industry: plant-based foods. U.S. retail sales of plant-based foods have risen 11.4% in the past year, bringing the total plant-based market value to $5 billion, according to data released by the Plant Based Food Association and The Good Food Institute. During that same period, the total U.S. retail food market grew only 2.2% in dollar sales and was flat in unit sales. Many large companies — Kellogg, Nestlé, Impossible Foods and Beyond Meat, to name just a few — have gotten into the plant-based meat market, and Kunimoto says that protein-enriched soy could further enrich their products. “The raw material that’s currently used in plant-based meat, while it is vegetarian-based, soy-based, it also is very capital intensive and expensive to make,” Kunimoto says. “You can minimally process our soy without having to go through a capital-intensive concentration process, and still get the soy dense enough in proteins so that it can be used in plant-based meat.” For each metric He adds: “We basically relieve the capacton of beef that ity constraint on the Impossible Foods and Beyond Meats in the world by helping them you replace with a plantto be able to have access to the raw matebased meat product, it’s rial without them or somebody else in the like taking 5 million cars supply chain having to put billions of dollars of capital in the ground.” off the road. That’s a Amfora plans to launch an initial product, a really powerful benefit of beta test, at a smaller scale as early as next doing something to year, before introducing and producing edited catalyze the transition lines at a significant scale, starting in 2023.
from animal protein to plant-based protein.”
Although customer advantages are at the core —Lloyd Kunimoto, Amfora of gene-editing science, companies such as Amfora and Pairwise tout the benefits for the greater supply chain, and the planet at large. “For each metric ton of beef that you replace with a plant-based meat product, it’s like taking 5 million cars off the road,” Kunimoto asserts. “That’s a really powerful benefit of doing something to catalyze the transition from animal protein to plant-based protein.”
EQUIPMENT & DESIGN
Store Design of the Future SE VEN E XPERTS WEIGH IN ON HOW RE TAIL E XPERIENCES WILL CHANGE. By Marianne Wilson
redicting anything about the future of retail is always risky, but especially now. The nation and the retail industry continue to be profoundly impacted by COVID-19, and shopping patterns and shopper expectations have changed dramatically. Looking ahead, predicting exactly how COVID-19 will impact retail in the short and long run is fraught with uncertainty. However, there are some key areas where the lasting effects of COVID-19 seem reasonably clear, and one of the most significant relates to store design and the evolving in-store experience. Hereâ€™s what seven highly regarded design experts had to say about how retail experiences will change.
Key Takeaways In a post COVID-19 world, store designers will have to adapt to new consumer priorities, behaviors and expectations.Â Future retail locations will need to leverage technology to power touch-free interactions. Human engagement will still be an important factor in the retail experience, however. PROGRESSIVE GROCER August 2020
EQUIPMENT & DESIGN
Shoppers' aversion to touching surfaces has retailers rethinking in-store processes, but the produce selection process remains a high-touch experience.
Melissa Gonzalez CEO/ Founder, The Lionesque Group, and Partner/Stakeholder, MG2 “Retailers should use clear signage, but don’t forget about brand voice — layer in soothing and comforting tones and elements with instruction copy. Have a queuing management system in place (for both curbside and in-store transactions), and leverage technology
to power touch-free interactions. “We will see stores adapt to a more technologically advanced consumer base. Stores will need to seamlessly be able to serve numerous customer journeys — one that is more transaction-based, where the store serves as a fulfillment channel, one where the in-store experience is more experience-based, and one that satisfies a unified commerce experience where a customer can easily transition from online and offline experiences. “The average front of house may decrease in square footage, while the average back of house will increase and logistical/operational planning will be even more important than it was before. The cash-wrap experience will evolve as checkout becomes more mobile and aspects like augmented reality will be more widely integrated.”
Jamie Cornelius Executive Creative Director, ChangeUp “I see two strategies moving forward: a stop-gap strategy to implement for the here and now, and one of innovating for the future. Looking at the long term, we will need to re-evaluate the moments along the customer journey and adapt to new consumer priorities, behaviors and expectations.
Joseph Nevin SVP, Development, Big Red Rooster (a JLL company)
“There are going to be dramatic changes — a result of overcompensating to accommodate immediate needs — that will overhaul current shopping environments and experiences. Some changes will be temporary as society eventually adjusts to the most effective and intuitive systems, but the need for catering to customers’ sense of safety and comfort will likely remain. Retailers must demonstrate and share their core values to empower both their shoppers and employees while appropriately addressing all touchpoints in the customer journey to ensure long-term future success. “Right now, it’s all about providing visual cues that reinforce retailers’ commitment to safe shopping environments. It’s not enough to tell shoppers what you’re doing — they need to see how the measures are actively being implemented in order to feel comfortable and develop a strong sense of loyalty. Editing assortments and lightening the sales floor to provide an open, intuitive space will be key in retailers’ expressing their editorial point of view across the store environment, products and experience to secure confidence and credibility with their customers.” 54
Merchandising Mayhem Creates
NEED FOR NEW SPACE lthough the retail world was turned upside down by unforeseen events in 2020, there are essential aspects of retail merchandising and operations that remain intact.
No one said retail was easy, but these pandemic era challenges have inspired creativity on the part of fixture suppliers whose products help facilitate the execution of strategies on which many retailers are now reliant. For example, it is one of the fundamental reasons why fixture market leader Uniweb, Inc.’s dynamic corporate value proposition of, “We Create NEW Space,” proves timely in today’s retail environment. Retailers must organize and attractively present merchandise on fixtures that are affordable, durable, attractive, and flexible. That is a lot to ask of a humble fixture, an element of retail that tends to be viewed through a utilitarian lens. Savvy retailers know otherwise, though, and do appreciate fixtures for their ability to enhance brand value, favorably impact store experience, contribute to
supply chain efficiency, and bring in profits. As if those prospects were not lofty enough, fixtures today need to satisfy the latest requirements in an evolving retail world filled with fluid shopper behaviors. Most notably, retailers of all types are focused on reducing store sizes, repurposing space, and taking a more opportunistic approach to expansion, one that is based on real estate availability as opposed to cookie-cutter prototypes. These recent retail realities are in turn creating increased expectations when it comes to merchandising. Store operation teams now must deliver comparable levels of sales productivity from reduced selling space. The basic premise of Uniweb’s philosophy is that retailers can make better use of their existing space by re-imagining their approach to fixturing and employing more profitable types of high-density fixtures. The other key aspect of Uniweb’s value proposition is the company’s domestic sourcing and operations, which allow for a turnkey approach. Made in America means that in a matter of weeks
- as opposed to months — Uniweb designs, builds, ships and installs fixtures that satisfy retailers’ operational requirements and help merchants achieve sales goals. It is a powerful combination that resonates in a changed retail world where speed matters more than ever and ROI expectations have never been higher. Uniweb has gained an appreciation for these expectancies and others over the course of 50 years it has been working with retailers. During that time, the company and its team of seasoned executives and skilled workers have seen many changes in retail formats, expansion strategies and shopper behaviors. Past
changes may have been less dramatic and sudden than what has occurred of late, but the foundation of versatility Uniweb built over a half-century served the company well during the first half of 2020. Going forward, Uniweb and its unwavering philosophy of “creating new space,” manufactures a powerful combination that promises to serve the retail industry well, especially as speed and flexibility in merchandising and operations become more essential to success. For more information, please call 800.486.4932 or visit their website uniwebinc.com
Uniweb Queuing: Adaptable, Functional and Clean
EQUIPMENT & DESIGN
With shoppers viewing the in-store experience as a virtual minefield, designers are reimagining the shopper journey and making adjustments to key touchpoints that convey safety.
“Consider how to use the outside space and entry point more effectively, or even bring the outside in with more natural cues to put shoppers at ease. Rethinking the drive-thru is also a prime improvement opportunity. There’s so much potential for efficiency, experience and contactless payment enhancements, but also drivethru-only locations could unlock even more potential. “Bright lighting will be critical — primarily because dark, moody spaces have the perception of being unclean. Brightly lit areas will play a key role in creating open, more welcoming environments. “Also, expect a boom in post-pandemic materials and finishes born out of necessity. There will be new takes on anti-microbial and hydrophobic surface finishes applied in new ways to new mediums. The key will be a balance of conveying to shoppers that they are in a pristine space, but without feeling sterile. Be intentional about where customers are placing their hands, and rethink how those spaces might come to life with a focus on materiality. “Color and pattern always help bring people out of a funk. Use them to communicate the joy of shopping, infuse personality and get shoppers out of the survivalist mindset.”
Development Director, Dalziel & Pow “There will be some practical elements that brands will need to consider in order to ease anxieties and safeguard the health of customers and staff, and this may mean a more ‘hands-off’ shopping experience. “We may see contactless processes and technologies extended further, self-service wherever possible, the introduction of wider aisles, one-way systems, and more curbside pickup and return options. Touchscreen technology in stores is likely to be reconsidered, perhaps in favor of voice-activated experiences. “Brands will need to innovate and remain agile in order to serve in a safe and secure way whilst still delivering the convenience and magic that consumers are after. “Having said that, consumers are likely to still want some element of a personal experience to contrast the loneliness of lockdown. Having a friendly face to discuss requirements with will arguably be more important than ever, and experiences driven by some form of human connection — perhaps on an emotional rather than a physical level — will be key.”
Emily Albright Miller VP, Strategy and Insights, Big Red Rooster (a JLL company) “The most salient needs that retailers should adjust to now are the consumers’ need to protect their personal space and avoid unnecessary contact with people and things. This requires retailers to rethink traffic patterns inside and outside of their stores, to embrace outdoor spaces, and to optimize for a
Ken Nisch Chairman, JGA
“I’ve heard many people say that COVID-19 marks the end of the experience era. I would disagree. Yes, there will be more precautions. Expectations will rise on operators, whether they be restaurants, museums, theme parks or cruises, to operate under a higher standard, which will increase operating costs. Consumers will want to be reassured by the symbols, if not the realities, of heightened care and responsibility. Simple logistics such as flow control, distancing and separation will be even more scrutinized by guests.” 56
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EQUIPMENT & DESIGN
completely touch-free journey. “Through the implementation of any new solutions, it’s critical that retailers empower the consumer and make them feel in control. The more in control they feel, the more likely they will be to spend again.”
Justin Hill Principal, MG2 “Focus on making shopping fun. Messaging should be in your voice, not simply clinical instructions. Graphics and signage can be encouraging while also informative. Look to create smiles and surprises along the journey. Also, iron out the kinks in your BOPIS and curbside pickup systems. “The pandemic saw retailers of food and consumables spring into action with measures such as social-distancing signs, one-way-only aisles, plexiglass partitions and face-covering requirements. In the short run, these measures helped inspire trust and confidence among shoppers. To keep the momentum going will require rethinking the configuration of store exteriors and entry points, and a decluttering of fixtures to create space that will create a first impression for the shoppers’ experience.”
What’s Your Sign?
Retailers may also want to use digital interactions to be transparent with customers about how busy the store is and optimal times to visit, according to Jamie Cornelius, executive creative director at ChangeUp, with offices in Dayton, Ohio; Los Angeles; and Detroit. “New in-store signage is going to be essential, but don’t become overly reliant on it,” Cornelius advises. “Be sure to not program shoppers to go on autopilot while in the store. Instead, make their experience a breath of fresh air and remind them of the joy of shopping.” Shopping hasn’t been a joy for anyone the past six months, but retailers are a resilient lot, adept at satisfying shoppers’ evolving expectations. That has proved to be the case again as an industry and nation cope with COVID-19, placing new demands on store design experts to create next-generation experiences.
Marianne Wilson is the editor of Progressive Grocer sister publication Chain Store Age, part of the EnsembleIQ family of retail brands. She has covered retail store design trends, format development and retail operations extensively during her 30-year career.
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7/8/20 9:42 AM
EQUIPMENT & DESIGN
Reality Check SHOPPERS E XPECT MORE THAN CLE AN CART HANDLES AND PLE XIGL ASS PARTITIONS. By Gina Acosta ix months after the first case of COVID-19 was diagnosed in the United States, grocery retailers are still grappling with how to “pandemic-proof” their stores. Celebrated food retailers such as H-E-B, Kroger and Publix, all of which have won recent accolades for their response to the crisis, have implemented a slew of social-distancing and sanitation protocols designed to keep shoppers safer. These include floor decals indicating where customers can stand 6 feet apart, checkstand partitions to keep “aerosolized virus droplets” away from cashiers and other shoppers, and teams of deep cleaners spraying down shopping cart handles, seats and doors. But new research shows that many consumers still aren’t persuaded that food retailers are doing everything they can to keep the grocery store from making them sick.
About That Deep Clean
In fact, a new survey shows that 66% of shoppers said they would avoid stores that fail to meet COVID-19 safety expectations. According to fresh data from Missoula, Mont.-based retail solutions provider Cennox, almost half (46%) of consumers believe that the current pandemic safety measures put in place by supermarkets and retail stores have been inadequate or poorly managed, and just 7% said they have “complete trust” that retailers will keep them safe. “The results are clear: If shoppers don’t feel protected, they will vote with their feet,” asserts Cennox COO Nick Cockett. “We know how hard retailers have been working to overhaul their stores in recent weeks and months, but they simply cannot afford to adopt partial measures to keep customers safe.” The Cennox research also reveals how customer loyalty to supermarkets has been affected by the industry’s response to the coronavirus pandemic: Around 69% of the 2,000 consumers surveyed said they would consider switching from their regular supermarket if their in-store safety expectations weren’t met. “Retailers have spent years building intricate loyalty systems to keep shoppers coming back in,” Cockett notes. “These results show us that robust in-store safety is the new gold standard to win the hearts and minds of consumers — at least for the foreseeable future.” Continued on page 64
Key Takeaways With shoppers concerned about staying healthy during the pandemic, robust in-store safety is the new gold standard to win the hearts and minds of consumers. The American Cleaning Institute has a free toolkit enabling food retailers and others to learn more about how to clean and disinfect against the novel coronavirus. Sanitation experts recommend that retailers adopt healthy building strategies such as higher ventilation, better filtration and the use of portable air-cleaning devices. PROGRESSIVE GROCER August 2020
RETAILERS TAKE CONTROL OF CLEAN COVID-19 has rewritten the rules of retail operations. Grocers have been challenged to implement new policies and procedures to ensure stores are clean and shoppers and employees are safe. Enhanced sanitation efforts have extended to restrooms, refrigerated display cases and other high risk environment where new cleaning protocols, technology and employee training are transforming crucial, yet often overlooked, aspects of store experience. Progressive Grocer spoke with Bob Robinson, Jr., Chief Growth Officer from market leading store sanitation solutions provider Kaivac, about the new rules of grocery cleaning in the age of COVID-19. Progressive Grocer: What are you seeing from industry leaders when it comes to best practices for restroom sanitation? Bob Robinson, Jr.: Unfortunately, retail restrooms have largely been neglected over the years, and the telltale signs are noticeable. Things like dirty grout lines, stained baseboards, and stubborn stench, which is a symptom of biological activity, are immediate signs, along with visible debris and trash on the floor, or worse, the presence of a dirty mop and bucket. Shoppers know instinctively that the restroom is neither safe nor healthy. When the restrooms are cleaned hygienically with proper frequency using vacuum extraction technology like No-Touch Cleaning, these problems go away. When customers enter a properly maintained restroom, the environment shouldn’t feel any different than any other space in the store.
PG: Restroom maintenance was a challenging area for many retailers prior to COVID-19 and now it has taken on heightened importance. Talk about innovative approaches you are seeing to address challenges around labor, training and new processes. BR: Restrooms are generally the most costly spaces to clean and maintain in any commercial building. Prior to COVID-19, they were typically cleaned for appearance by a third-party at night. Now, astute retailers recognize the need to clean for hygiene, including throughout the day, in order to keep customers and employees healthy and safe and to earn their trust. It is important to clean frequently, and clean really well, but do it in a way that’s cost and labor efficient. Traditional cleaning processes may appear to be cost-effective, but they’re painfully slow and horribly ineffective. No-Touch Cleaning provides truly hygienic results in a fraction of the time, reducing labor cost by as much as two-thirds.
PG: How do employees learn to use the system? BR: We have an interactive video training system that helps even inexperienced employees become profi cient very quickly and also minimizes the impact of employee turnover. Many retailers are also implementing digital tracking modules on their systems to monitor if, when and where their systems are actually being used.
PG: Retailers are very concerned about worker safety and restrooms are a higher risk environment than other areas of the store. What are some of those risks and what can retailers do to mitigate them? BR: Restrooms are essentially a bio-hazardous waste transfer station. As such, they’re a primary source of disease causing organisms, which is particularly concerning during a pandemic. This puts the workers cleaning them at a higher risk of exposure to contaminated surfaces as well as the chemicals used in the process. No-Touch Cleaning technologies insulate the operators from touching unsafe surfaces while removing 30-60 times more potentially harmful soil than even a brand new microfi ber mop. At the same time, chemicals are automatically metered and injected so that the cleaner is also insulated from unnecessary chemical exposure. Restrooms also have the highest incidence of slips and falls. Using a cleaning system that incorporates vacuum extraction in combination with high quality squeegees not only cleans any slippery soil from the fl oor but also dries them immediately.
PG: What type of technological innovations are you seeing to help retailers achieve their restroom cleanliness goals? BR: At the risk of over simplification, store managers ultimately want to get their restrooms really clean, really fast. Kaivac’s systems incorporate ‘high flow fluid extraction,’ which in addition to improved
Bob Robinson, Jr., Chief Growth Officer, Kaivac
cleaning, result in savings in labor and chemicals and produce a high ROI. To prove the results, many stores are using hygiene measurement tools, such as handheld ATP (Adenosine Triphosphate) meters, to validate that the surfaces are truly clean in seconds.
PG: How does restroom cleanliness impact a retailer’s reputation? BR: Smart retailers ask themselves this question often. There was a recent, but pre-pandemic, study by Harris Interactive that showed 50% of retail customers would stop returning to a store if they encounter a dirty restroom. Post-COVID-19, it’s even more important. The level of cleanliness in a restroom speaks volumes about the business. Shoppers often associate clean restrooms with the overall quality of a store and its ability to deliver food safely. The longer a customer spends in your store the more they spend. Clean restrooms encourage them to linger and return. A dirty one can drive them away, maybe for good.
PG: Are you seeing use cases emerge in other areas of the store where it makes sense to apply Kaivac technologies or operational best practices? BR: One innovation that’s gained tremendous traction is our Cooler Case Cleaner for refrigerated display cases. These are big, expensive assets, and surprisingly, there’s a lack of standards when it comes to cleaning processes and Kaivac® No-Touch Cleaning® Systems frequencies, leaving retailers on their own to figure it out. Often, the cases are only cleaned when they need service and then usually using traditional cleaning methods that are time consuming and ineffective. Dirty or clogged coils can cause the units to operate inefficiently or even fail. Besides early replacement and high energy costs, this can result in wasted food products and lost sales. Proper case cleaning optimizes performance, increases cooler lifespan and ensures food integrity. Cooler cases are also high touch areas. If not cleaned properly and frequently, the shelving and areas behind them can harbor potentially dangerous contaminants, creating a very high risk of biological contamination. Once retailers begin to analyze this area they discover that the ROI is very compelling.
PG: Any other high ROI areas retailers should be aware of? BR: Other areas that benefit from better cleaning technology are perimeter departments such as bakery, deli, meat and seafood. Because of the volume and types of soils, these areas are very difficult to clean and are often unsafe. Spill response is another area of concern. Spills not only pose a slip/fall risk, but current remediation methods are very time consuming and incomplete.
PG: How should retailers who are opening or remodeling stores be thinking about restroom design and fixtures choices to simplify cleaning procedures? BR: There is a growing trend of architecting the restroom with cleaning in mind. For example, some retailers are involving cleaning professionals and facility managers during the design phase of new construction. This very practical step goes a long way in avoiding structures and fixtures that inhibit effective cleaning. For example, mounting fixtures on walls instead of floors facilitates cleaning while removing problem collection points or installing smoothly contoured fixtures with fewer nooks and crannies that trap soil and germs. Open air entrances eliminate unnecessary contact with contaminated door handles as well as facilitate restroom monitoring. Also, heavy-duty, water-safe construction materials generally simplifies cleaning and maintenance. It always makes sense to minimize touch by installing automated faucets, toilets and urinals as well as paper towel dispensers. Beyond being more sanitary, these devices also increase efficiency through controlled dispensing.
PG: What do retailers need to understand about the long-term outlook for enhanced sanitation requirements in a post-pandemic world? BR: The COVID-19 pandemic will forever change the perception and importance of cleaning. Today’s germ-o-phobic public is extremely anxious about harmful exposure to disease-causing organisms and is increasingly aware of the role of cleaning in disease prevention. In fact, the more we learn about disease transfer, the clearer the importance of cleaning becomes.
Call Kaivac today for a free consultation at 800-287-1136 or visit kaivac.com/grocery.
EQUIPMENT & DESIGN
Also, when sanitation experts talk about “robust in-store safety,” In late June, New York Gov. Andrew Cuomo mandatspraying down a shopping cart handle isn’t enough to earn the longed that all of the state’s malls looking to reopen had to term loyalty of consumers whose standards and expectations are install high-efficiency particle air (HEPA) filters that can rising right along with the death toll from the virus ravaging the United filter out the coronavirus, instead of “just recirculating States. Customers expect retailers to deploy the latest antimicrobial the air with the virus.” Cuomo recommended that offictechnology to blast pathogens from every square inch of the store. es and other businesses look into similar options. “When we are talking about enhanced sanitation, whether it’s To meet shopper expectations for clean air, it’s escountertops, high-touch points, restrooms, floor cleaning, etc., it sential that grocery retailers ventilate their indoor spachas to be cleaned right the first time,” says Bob Robinson Jr., VP es with fresh airflow. The easiest thing to keep the virus of business development for Hamilton, Ohio-based Kaivac, which from building up indoors is to bring in more outdoor air. leverages technology to enable touchless cleaning. “When you Another strategy is to kill airborne viruses with boxes walk in with a mop in a men’s restroom, underneath the urinal, it’s that emit short-range UV radiation. Finally, retailers can kind of graphic. You may have a puddle of urine. You can’t take a invest in myriad air cleaners. mop and drag it across the floor and move it from one area to the Carrier recently introduced a Healthy Buildings Pronext, and say, ‘It’s clean.’ No-touch cleaning, which is really our gram, an expanded suite of solutions integrating many of claim to fame in restrooms, has become very, very important, [and] the strategies mentioned above to help deliver healthy, not just from a brand image perspective. Customers want to see safe, efficient and productive indoor environments you cleaning while they’re in your store.” across key verticals, including commercial buildings, To that end, the American Cleaning Institute, based in Washinghealth care, hospitality, education, retail and marine. ton, D.C., has published a free toolkit for food retailers and other “New technologies like microscopic filtration systems businesses looking to learn more about how to clean and disinfect and touchless building controls have gone from nice-toagainst the novel coronavirus. have conveniences to must-have protecThe guidance and checklists are adapted tions,” Gitlin says. “The Carrier Healthy from public health recommendations for Buildings Program can help enable The results are businesses to ensure a safe and successful healthier and safer indoor environments clear: If shoppers indoor environment, as well as to reinforce as we get back to our new normal.” don’t feel protected, they confidence among the workforce and customers through effective cleaning and will vote with their feet. disinfecting best practices. We know how hard The toolkit includes resources such as retailers have been working checklists to help guide internal assessments, to overhaul their stores in posters and handouts to encourage and educate employees on proper disinfecting recent weeks and protocols in shared spaces, and decals for months, but they simply businesses to display reinforcing their dedicacannot afford to adopt tion to cleanliness and health.
It’s in the Air
partial measures to keep customers safe.”
Many retailers are focusing on cleaning —Nick Cockett, Cennox surfaces, restrooms and foodservice areas, and rightly so. Recently, however, the Centers for Disease Control and Prevention updated its guidelines to clarify that touching a surface “isn’t thought to be the main way the virus spreads.” In addition, research showing that the coronavirus spreads easily in indoor spaces without proper circulation is increasing. With that in mind, many sanitation experts recommend that retailers add a new tool to their kit for fighting this virus: healthy building strategies such as higher ventilation, better filtration and the use of portable air-cleaning devices. “COVID-19 has reinforced the important role that buildings play in ensuring and protecting public health,” affirms Dave Gitlin, president and CEO of Palm Beach Gardens, Fla.-based Carrier. “Indoor air quality and safe buildings are of paramount importance. For the economy to successfully recover, people need to have trust in the safety of the buildings they are entering.”
Reusable Transport Packaging
All the Right Moves RPCS AND OTHER REUSABLE TR ANSPORT PACK AGING ARE HELPING RE TAILERS TACKLE KE Y SUPPLY CHAIN CHALLENGES. By Jenny McTaggart ight now, it’s hip to be square or, better yet, rectangular. Reusable plastic containers (RPCs) and other suitably shaped transport packaging are poised for dynamic growth in the years ahead, thanks to the industry’s heightened focus on sustainability, along with a number of other trends pointing toward the need for more resilient supply chains. The Reusable Packaging Association (RPA), based in Tampa, Fla., recently released its first-ever “State of the Industry” report to get a better handle on the growth
Key Takeaways Reusable transport packaging is growing in popularity, thanks to higher interest in sustainability and, particularly amid the COVID-19 pandemic, sanitation, among other trends. Design functionality and technology are driving supply-chain innovations in transport packaging. A huge growth area for reusable packaging providers is in e-commerce, particularly in regard to transporting orders for curbside pickup.
Tosca's reusable grocery totes facilitate the in-store fulfillment process with bag hooks, ergonomic handholds, and a solid base to contain spilled liquid.
PROGRESSIVE GROCER August 2020
Reusable Transport Packaging
and potential of the market. The report estimates that global reusable transport packaging is currently an approximately $100 billion business. Pallets represent 62% of the market, with rigid containers, crates, totes, boxes and RPCs (as a group) accounting for 30% A vast majority of respondents to the survey — 85% — said that they expect the demand for reusable packaging products and services to increase in the next 12 months. It should be noted that the survey was conducted early in 2020, before COVID-19 had reached pandemic proportions. However, experts say that the novel coronavirus’s impact on grocery retailing has only accelerated the movement. “The grocery retail industry is really being inundated, or shaken up, and changing rapidly as a result of the pandemic,” notes Tim Debus, president and CEO of RPA. “This is accelerating trends that were already there, including a focus on longterm supply-chain strategies, as well as words like ‘resiliency,’ ‘digitalization’ and ‘visibility.’ Then you’ve got this acceleration in the use of technology for e-commerce. I think reusable packaging will play a solid role in all this.” Reusable transport packaging has long been appreciated for its sturdy features and precise measurements, which make it an ideal supply-chain tool, along with the obvious fact that reusing materials can save money and precious resources in the long term. Today, design functionality and technology are fueling supply-chain innovations in transport packaging, observes Debus. “One example is the design of an RPC that looks like a wooden crate, like what Walmart
Automation to Boost Reusable Packaging A full 81% of respondents expect automation to increase the demand for reusables, according to the Reusable Packaging Association’s first “State of the Industry” report. Respondents represented various industries, including food and beverage. Survey Respondents’ Expected Impact of Automation on Demand for Reusable Transport Packaging Over the Next 5 Years
Neutral Slightly Negative Very Negative Don’t Know
2% 0% 0% 0% 10% 20% 30% 40%
Source: Reusable Packaging Association
Just the appearance of a plastic crate can change the perspective of how a supermarket wants to retail their products at the point of sale, and what image they want to convey.” —Tim Debus, Reusable Packaging Association
is using,” he says. “Just the appearance of a plastic crate can change the perspective of how a supermarket wants to retail their products at the point of sale, and what image they want to convey.” Another example of functional design is a crate for fresh eggs in which one side folds down to allow direct access into the container, says Debus. “That replaces a system in which workers were taking a knife and cutting into the cardboard box to rip off the side,” he explains, “so not only does it save labor and create a better interface with the consumer, but it’s also protecting the egg cartons better.”
Rigid and Ready for Use
Two leading RPC providers, IFCO and Tosca, are on the cutting edge of packaging innovation, as they work with grocery suppliers and retailers to solve some of the industry’s most nagging problems, ranging from shrink to labor costs. Tampa-based IFCO Systems U.S. manages the pooling of RPCs for about 30 North American retail chains, including Walmart, Kroger, Loblaws, Harris Teeter, H-E-B, Raley’s, Stater Bros. and Wegmans, according to Bryan Tate, VP of product and category development at IFCO Systems U.S. Like Debus, Tate says that he has seen renewed interest in reusable packaging since COVID-19 began. “The idea of transporting things in a clean, freshly sanitized container has probably never been more popular than it is right now,” he notes. “Then, with more consumers eating at home and buying fresh foods — produce in particular — we saw an uptick almost immediately. Another thing we saw with retailers trying to keep people fed and keep food on their shelves, is that the sight of damaged products, or boxes busted up, with food spilled on the ground, hits at a different heartstring now. So we’re starting to see more grocery companies really pay attention to their food waste numbers and what specifically can be done within their supply chains to help eliminate that. Rigid, strong containers have definitely solved that problem at their stores.” Because RPCs are rigid, designers of the containers are able to punch holes in their sides to allow for increased ventilation, which allows for better airflow,
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Reusable Transport Packaging IFCO's 6425N is one of its larger RPCs that can be used for curbside delivery.
observes Tate. “We’ve done supply-chain testing and cooling testing, and we can typically get fresh produce cooled anywhere from 12% to 25% faster,” he says. “So, between not getting banged up and getting cooled faster, you’ll usually find that damage gets reduced anywhere from 4% to 5% in the supply chain.” In addition, IFCO’s solutions can help reduce labor costs inside a store by 50%, according to Tate. While fresh produce is IFCO’s primary focus, the company also provides solutions for case-ready meat and eggs. “We even have some initiatives that have taken us to center store, so we have some irons in the fire over there,” he says. A huge growth area for IFCO and other RPC providers is in e-commerce, particularly in regard to transporting orders for curbside pickup. “Retailers have a lot of work to do around setting up their e-commerce platforms, such as how they want to offer the service to their customers, and all the back-end work,” notes Tate. “But a lot of times, the box they put the order in is the last thing they think about. So we’re there, ready and waiting, and have the solution in place to help them.” For now, retailers are mostly using IFCO’s standard-size crates to transport orders, although the company does have some designs specifically tailored for curbside. The in-store shoppers place components of online orders into IFCO’s crates and can then stack them if needed. The containers have the same length and width as the standard crates, but their heights range from 8 to 33 centimeters. “Some of our retailer customers have optimized their software so that based on what a consumer orders, it tells the in-store shopper how many RPCs they need to pick the order,” observes Tate. He says that technology and data analysis are being incorporated into “everything we do now” at IFCO, noting, “You can take what may seem like a boring plastic box, and if you put the right tech in it, it becomes an amazing device to help retailers understand their supply chains better.” Another area related to technology and e-commerce — auto-
mation — will likely be another growth driver for RPCs, especially since the containers are durable and highly precise in specifications, predicts Tate. Eventually, reusable containers will likely end up becoming a more prominent part of at-home delivery, according to Tate and others in the industry, although for now, American consumers are still warming up to the idea of paying deposits and returning containers. “It’s kind of a cultural shift,” acknowledges Tate. “We have a lot of business in Europe, and culturally, over there it’s pretty common that you take a reusable container and pay a deposit.”
Winning Over Wegmans
In common with IFCO, Atlanta-based Tosca has continued to see increased adoption of reusable packaging, observes Jon Kalin, chief commercial officer. “Reusable packaging outperforms single-use alternatives like corrugated and foam every day when it comes to cost savings,” he maintains. “For example, our egg RPCs can reduce shrink by 50%, and our case-ready meat RPCs are proven to reduce transportation costs by 25%.” He also observes that the “clear environmental benefit” of reusable packaging is becoming more and more attractive in the U.S. market. With all of these obvious advantages, perhaps it’s no surprise that Tosca has been quite busy coming up with new solutions for its retail partners. Early this year, the supplier launched a seafood RPC as an alternative to EPS foam. “Foam is not recyclable and is expensive to produce, so eliminating foam from the seafood supply chain is both a major sustainability win, as well as a cost-savings benefit,” says Kalin. “Initial reaction from
The idea of transporting things in a clean, freshly sanitized container has probably never been more popular than it is right now.” —Bryan Tate, IFCO Systems U.S.
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Reusable Transport Packaging
Wegmans is now shipping most of its salmon products using Tosca's new seafood RPC.
retailers and suppliers has been overwhelmingly positive.” Rochester, N.Y.-based Wegmans Food Markets revealed in June that it’s using the new RPCs to ship most of its salmon products. At the time of the announcement, Jason Wadsworth, Wegmans’ category merchant, packaging and sustainability, noted: “We have been looking for
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a way out of EPS for a while, and thanks to Tosca’s new seafood RPCs, we improve our approach to sustainability. It isn’t every day that you get to make a sustainability change that doubles as a cost-saving change as well.” Wegmans is also using Tosca’s latest packaging solutions for its case-ready meat supply chain. Tosca has even introduced a poultry RPC, which is now “gaining traction as the first reusable option for transporting poultry,” notes Kalin. The waterproof solution eliminates the use of one-way corrugated packaging in the poultry supply chain, while providing sustainability and protection for wet, heavy poultry. Like IFCO, Tosca is hearing a lot more buzz around e-commerce programs from its retail customers. Tosca got a leg up on the competition when, at the end of 2019, it acquired Polymer Logistics, a European company that had already created an e-commerce solution that helped several major retailers in Europe. Tosca has now introduced the e-commerce container, known as a reusable grocery tote, to the U.S. market. “The crate is specifically designed with e-commerce fulfillment in mind and is built to increase efficiency and protection for orders,” notes Kalin. “The containers facilitate the in-store fulfillment process with bag hooks on the top rim, ergonomic handholds, and a solid base to contain spilled liquid. Most grocery stores were not built with the space to operate as a fulfillment center, so Tosca’s reusable grocery totes are strong enough to stack, easy to clean, and conveniently nestled or folded when empty.” The Polymer Logistics acquisition has also given Tosca in-house R&D and manufacturing capability, allowing the company to offer custom solutions to its customers, he adds: “We can help both retailers and suppliers address supply-chain challenges associated with perishable products.”
You can take what may seem like a boring plastic box, and if you put the right tech in it, it becomes an amazing device to help retailers understand their supply chains better.” —Bryan Tate, IFCO Systems U.S.
Through the Loop program from Terracylce, consumers can buy products of various brands in resusable packaging.
REUSABLE PACK AGING FOR CONSUMER PRODUCTS AND REUSABLE CONTAINERS FOR FOOD RE TAILERS REFLECT CONTINUED INTEREST IN SUSTAINABILIT Y, E VEN IN A PANDEMIC. By Lynn Petrak t’s a bit of an understatement to say that health concerns are currently driving consumer behaviors and purchases in today’s marketplace. Research conducted by Paris-based Ipsos in July showed that 85% of consumers are concerned about the COVID-19 outbreak. According to the Washington, D.C.-based International Food Information Council, that same percentage of consumers (85%) reported that they’ve changed the way they eat or prepare food in the wake of the pandemic. While the novel coronavirus is a major, and arguably overriding, worry, that doesn’t mean that people aren’t making decisions based on other timely situations, from social issues to environmental concerns. On the environmental front, research released in July from Chicago-based IRI and the NYU Stern Center for Sustainable Business reveals that products with a sustainability claim have continued to grow during the pandemic. In fact, seven in 10 consumers said that they’re buying as many
Key Takeaways According to research, products with a sustainability claim have continued to grow during the pandemic. Industry insights back up the potential for reusable and/or refillable packages. Current concerns about health, wellness and sustainability will continue to shape choices in products and packaging.
or more eco-friendly products than they did prior to the emergence of COVID-19. Those findings affirm what another study found a few months ago. In a survey conducted by the Chicago-based Kearney consulting firm, nearly half of consumers said that the pandemic has made them even more concerned about the environment, and 11% reported that they’d changed PROGRESSIVE GROCER August 2020
It seems the COVID-19 pandemic has increased the priority for e-commerce, online grocery pickup and returnable packaging.” —Paul Kamholz, Schoeller Allibert purchases in the past year based on environmental claims. CPGs and retailers are continuing with their own sustainability efforts in this issues-dominant year. In July, retailers such as The Kroger Co., Walmart, Target, CVS Health and Walgreens revealed that they’re working with the Consortium to Reinvent the Retail Bag to find alternatives to single-use plastic shopping bags. Sustainable packaging continues to be a focus for many CPGs and retailers. While many innovations have focused on reducing packaging materials and moving to recyclable packaging, reusable packaging and the use of reusable containers to move products through the supply chain represent another aspect of this issue that has caught the attention of those who make, sell and buy goods.
Consumer Packaging Put to Good (Re)Use
Industry insights back up the potential for reusable and/or refillable packages with a consumer base that remains engaged with the goal of greater sustainability. A report from New York-based CB Insights identified reusable packaging as one of 15 growing trends across the food, beverage and household essentials market in 2020. According to research from the New Plastics Economy Global Commitment, one-third of product and packaging companies said that they’re testing durable packages for reuse. The research also confirmed that while the current pandemic has slowed the use of things like reusable shopping bags at supermarkets and reusable personal cups at retail coffee chains, the public health crisis hasn’t halted the growth of all reusable solutions for consumer goods. Paul Kamholz, VP of sales and marketing, North America for Goodyear, Ariz.-based logistics and packaging solutions provider Schoeller Allibert, agrees that current concerns about health, wellness and sustainability will continue to shape choices in products and packaging. “Europe has been ahead of North America in sustainability for a variety of reasons, but the people there are accustomed to the discipline required, and understanding of any potential ‘inconvenience,’” notes Kamholz. “We are seeing a shift, likely driven by both technology and the younger generations, where North American consumers adapt. It seems the COVID-19 pandemThis reusable tote from Schoeller Allibert is used by system integrators in automated warehouses.
ic has increased the priority for e-commerce, online grocery pickup and returnable packaging.” In the current market, forms of reusable packaging vary. Consumers can refill, reuse or return packaging at home or on the go, depending on the product and where and how it’s consumed. One collaboration causing some buzz is the partnership between CPGs and the Loop program, from Trenton, N.J.-based TerraCycle. Through this program, consumers buy products in a durable package from Loop’s website or a partner retailer’s website. After consumers finish the product, they put the empty package in a tote that will be collected by Loop, and then cleaned, sanitized and returned for another use. Earlier this year, TerraCycle revealed plans to make reusable packaging through Loop accessible in brick-andmortar stores, first in Canada and the United Kingdom, and then eventually in U.S. cities. Cincinnati-based Procter & Gamble is one manufacturer that has taken part in the Loop program, designing durable and refillable packaging for several of its brands. Pantene, for example, is launching a bottle for shampoo and conditioner made with lightweight aluminum, Tide plans to sell its plant-based laundry detergent in a stainless steel bottle, and Crest is set to introduce Crest Platinum mouthwash in a sustainable, refillable glass bottle. The Colgate-Palmolive is brand is also part of the Loop, creating a toothpaste tube made of high-density polyethylene. Food products are available through the Loop as well, such as Häagen-Dazs ice cream shipped in a stainless steel double-walled container. Other brands, including niche brands with a sustainability focus, are starting to offer reusable packaging on their own. For example, Lebanon, N.H.-based organic egg company Pete and Gerry’s is testing a reusable egg carton made from recycled BPA-free plastic at coop stores on the East Coast. Consumers may be able to get away from single-use plastics in other areas of the grocery store, too. A recent report on “The Smart Supermarket” from London-based Greenpeace recommends reusable containers for prepared food sold in grocery stores. The report cites a program in Europe in which consumers get a reusable box at the store to fill at the salad bar and then return when they're finished with it. Another model is to allow customers to bring their own containers to buy prepared foods and certain
Frequently used and easily refilled household products can be purchased in reusable containers through TerraCycle's Loop program.
perishables, something that would likely not be ideal during a global pandemic, but might have potential when the marketplace returns to some normality. Meanwhile, the notion of zero-waste stores has moved beyond concept to reality: Various stores, co-ops and markets billed as zero waste encourage shoppers to bring in containers and packaging from home. Kamholz believes that reusability will continue to be embraced by concerned consumers. “In years past, broad adoption of reusable packaging didn’t make financial sense, because the grocery retailers and their suppliers would lose a high percentage of the packaging asset without the commitment and dedication of everyone,” he explains. “We’ve made great strides as a country and believe [in] a more sustainable future where returnable packaging becomes the norm.”
Go With the Flow
While the push to reduce package waste is leading to the development of reusable packaging for consumer products, those in the material-heavy CPG and retail industries are looking at ways to reduce their own environmental footprints. Many containers, trays and pallets on the B2B side of the food production and retail business are already reusable. According to the Tampa, Fla.-based Reusable Packaging Association (RPA), recycled plastic containers (RPCs) are designed to be repeatedly used and cleaned for the transport of items like raw materials and commodities to manufacturers, and for the delivery of foods to distribution centers and warehouses. Improvements in eco-friendly reusable materials are evident in the B2B market. Oconomowoc, Wis.-based Orbis Corp., a subsidiary of Menasha Corp., recently introduced a new recyclable plastic material for reusable packaging as part of its Ocean in Mind initiative. “This initiative takes recycling and reusability a step further by recovering waste from coastlines and repurposing it back into our product,” explains Breanna Herbert, associate product manager and sustainability lead. For its part, Schoeller Allibert is working with customers throughout the retail sector as more grocers adopt automated storage and retrieval systems and make changes to their infrastructures. According to Kamholz, the company offers a variety of storage containers and plastic pallets that provide a range of returnable solutions, including the Optishute, a 100% recyclable and 100% repairable plastic bulk dispenser, and the JumboNest, a container with up to 525 liters and 600 kilograms of capacity that’s stackable when empty.
“We are partnering with a large company that is phasing in returnable transport packaging to replace the current one-way packaging,” he adds. “Conservative estimates indicate this change will result in a 73% reduction in greenhouse gas emissions over eight years.” Kamholz predicts that changing logistics, especially in e-commerce, will continue to drive new uses. “We understand a shift to returnable packaging requires significant change to infrastructure, specifically in reverse logistics,” he observes. “It’s a slow evolution that is slowly picking up traction.” The COVID-19 situation may be facilitating that traction, since the pandemic has accelerated the adoption of grocery e-commerce by consumers. To help grocers save time and materials while picking online orders, North Billerica, Mass.-based Alert Innovation offers an e-grocery micro-fulfillment center solution that automates the process, with features like chilled totes that eliminate the need for temperature-controlled trucks or freezers/ refrigerators. Robots can also be used to drop off small totes to a self-service pickup area outside of a store. On the topic of COVID-19, RPA has reiterated the U.S. Food and Drug Administration’s statement that there’s no evidence of food or food packaging being associated with the transmission of the virus. The organization also emphasizes the effectiveness of sanitation methods for food packaging, including reusable packaging that’s washed and sanitized after each use.
Shampoo and conditioner products are available in reusable packaging that can be picked up and refilled by the manufacturer through TerraCycle's Loop program.
PROGRESSIVE GROCER August 2020
EQUIPMENT & DESIGN
The New Point of Purchase
The growth of grocery pickup has retailers turning to new signing solutions, such as the signs at Publix Super Markets, which incorporate branding elements, aid the shopper’s experience and, when needed, withstand impacts from vehicles.
A MASSIVE SHIF T IN SHOPPER BEHAVIOR HAS TR ANSFORMED RE TAILERS’ PARKING LOTS INTO A HIGHLY INFLUENTIAL PATH-TO-PURCHASE TOUCHPOINT. By Mike Troy etailers’ parking lots have always played an important but underappreciated role in shaping perceptions of the brand. They are places where first impressions are made and expectations of quality and store experience are set. Nothing degrades a shopper’s perception of a retailer quite like an oil-stained parking lot, strewn with litter, untended shopping carts, bent signposts, broken curb stops or countless other visual cues that convey neglect. Books may not be judged by their covers, but retailers are judged by their parking lots, and this is true more than ever, given the dramatic growth of curbside commerce. “The dynamics of retailers’ parking lots over the past 12 to 18 months have changed dramatically,” affirms Dennis Thimm, national sales director with FlexPost, a Holland, Mich.-based supplier of parking lot navigational aids and sign technology. “Retailers are managing a lot of new traffic and new traffic patterns.” That’s an understatement. Order-online-and-pickup-at-store trip volumes were already trending up in recent years as major retailers such as Walmart, Kroger, Ahold Delhaize USA and Albertsons, along with regional chains such as Meijer, H-E-B and Publix Super Markets, aggressively expanded their digital grocery offers. Then came the pandemic, and shoppers’ aversion to stepping inside physical stores led to a dramatic spike in grocery pickup usage. Today, most pickup areas at large grocery store chains will range from two to six spaces, but that figure increases to eight to 12 spaces at larger, higher-volume stores such as a Walmart Supercenter. Those spaces are typically located close to the store’s entrance for the efficient fulfillment of orders. That means shopper traffic coming into the store is exposed to the increased vehicle traffic of those looking to pick up orders. While the incidence of vehicle and pedestrian accidents in parking lots is limited, and serious injuries are reduced because of slower speeds, property damage is a different story. The number of collisions involving cars and signs increased 375%, according to a survey by the Washington, D.C.-based National Parking Association (NPA) that was released in 2019. “People are horrible drivers in parking lots, and it is causing a huge issue for retailers because they are trying to orient people in restricted spaces,” Thimm says. While the NPA study documented a large increase in physical damages, the figure has likely increased further, given the tremendous surge in grocery pickup traffic volume, which saw numerous retailers report triple-digit rates of e-commerce growth in March and April 2020.
It’s a challenge that caught retailers off guard because when site plans were approved for older stores, parking lots weren’t configured to accommodate large volumes of customers picking up orders. Now retailers have entered a
Key Takeaways A retailer’s parking lot is a place where first impressions are made and expectations of quality and store experience are set. Retailers have entered a new optimization phase with regard to parking lots, including the addition of navigational aids and instructional signage to improve the increasingly common pickup experience. It’s now customary for marketing, store design and operations to be involved in parking lot signage, leading to innovations like FlexPost’s interactive tool enabling various parties to meet online to work on design elements.
aren’t made on a timely basis. As retailers look to address this unique confluence of factors, Thimm and FlexPost General Manager John DeYoung believe that their company has developed a solution that represents a new type of industry standard. As the company’s name implies, its flagship product is a flexible post that can get bumped into by careless drivers multiple times and withstand the impacts. “We sometimes have a hard time knowing how effective our product is, because we don’t know how many times it has been hit and is still performing,” DeYoung observes. The way it works is that a steel base is attached to the parking lot with four bolts. An extremely strong spring is attached to the base, and a pole is attached to the spring. The spring apparatus and the base of the pole are concealed by a shroud that creates the look of a steel or PVC pipe filled with concrete, known as a bollard. Such crash-rated bollards are overkill in a grocery pickup application or to identify disabled parking spaces, but are typically used at store entrances to prevent a vehicle, whether accidentally or intentionally, from being driven into a store. “We’ve done extensive testing so that when a FlexPost needs to act like a signpost it will, but it also is going to provide that breakaway, or flex, when someone’s foot slips off the brake or they aren’t paying attention,” DeYoung explains. “Instead of the front bumper of the vehicle meeting a solid pipe sunk into the parking lot, it meets something that gives. The post is OK, the car is OK, the customer is happy their vehicle wasn’t damaged, and the retailer avoids a repair. Everyone has a good day.”
new optimization phase that resembles the process that typically occurs inside a store, in which there is tremendous focus on the touchpoints of store experience. That’s been less of a focus outside the store, but things are changing, and there is recognition that parking lots are a unique environment that requires a special focus. One area attracting a lot of interest now involves navigational aids and instructional signage to improve the pickup experience for a still evolving and rapidly growing aspect of food retailing. “The volume of signposts going into parking lots is growing exponentially,” notes Thimm, “and between 25% to 30% are being destroyed on an annual basis.” That results in added maintenance costs, damaged vehicles, unhappy customers and a bad look for parking lots if costly repairs
People are horrible drivers in parking lots, and it is causing a huge issue for retailers because they have to orient people in a small space.” —Dennis Thimm, FlexPost
Incorporating a powerful spring into the base of a signpost may seem like a low-tech solution, but it’s also one of those things that leaves people wondering why no one thought of it before. Now, as retailers are taking a more holistic view that “store experience” extends beyond the four walls of the building, more stakeholders within retailer organizations are paying attention to parking lots. It’s now common for those in marketing, store design and operations to get involved in matters related to parking lots and the type of signs used, whereas historically, such matters would primarily have been dealt with by those in facilities maintenance, according to Thimm and DeYoung. To accommodate this expanded group of decision-makers, FlexPost developed an interactive design tool where multiple parties from a retailer can meet online to collaborate on design elements. The approach is similar to that seen in consumer-facing industries where digital technology allows a person to configure a new vehicle or see what various paint colors will look like on a house. Retailers can now do the same as they look to envision a parking lot experience of the future, in which an increased percentage of a physical location’s sales is expected to be conducted curbside. PROGRESSIVE GROCER August 2020
Bashas' recently went live with NCR Emerald, a point-of-sale platform offered to grocers via subscription. The technology can enable self-checkout and other tasks, including loyalty. Its deployment took six months.
What’s Next for Food Retail Self-Checkout? MORE AFFORDABLE, OF TEN OFF-THE-SHELF TECHNOLOGY IS ON THE WAY AS THE OFFERING GROWS IN IMPORTANCE. By Thad Rueter ast, easy and helpful — those were some of the early reviews of Walmart’s new experiment with self-checkout, an effort that could help influence the broader future of the transaction method for food retailers. Earlier this year, the chain started to test its latest checkout method at a supercenter in Fayetteville, Ark. The layout isn’t complex. Instead of dedicated checkout lanes, there’s an open, relatively expansive self-checkout area designed to meet consumer demand as it happens. The effort, still only a few months old, comes amid a spike in contactless transactions for food retailers, a trend that existed before the pandemic and has gained fresh steam during the outbreak. According to London-based research firm RBR, in fact, the self-checkout momentum will continue, with global installations expect-
Key Takeaways A fresh wave of innovation in self-checkout and other payment systems appears ready to hit the food retail world. Wegmans, Costco and large other food retailers are helping to lead the self-checkout charge, along with convenience store chains. Retailers should think of selfcheckout as a part of the larger customer journey, and take steps to make shoppers feel confident with new technology.
ed to triple by 2025 to surpass 1.1 million. A fresh wave of innovation in self-checkout — and payments in general — appears ready to hit the food retail world, where younger, tech-savvy consumers are making their desires known, and where new technology is becoming more affordable and convenient for smaller and midsize retailers.
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Self-Checkout Pros and Cons
Bentonville, Ark.-based Walmart provides one idea of how the future of self-checkout might play out. For the experiment in Fayetteville, Walmart set up 34 registers that line the edge of an open area. Each register has a green light that directs employees and customers to available checkout bays, which could save the annoyance of standing in a slow-moving traditional checkout lane. Customers aren’t left on their own, however. Walmart’s self-checkout comes with a certain level of built-in hand-holding: Employees greet shoppers at the entry to the new checkout area and offered help proactively. Early results from a mystery shopping survey, conducted by Fayetteville-based Field Agent, gave reason for optimism. Users liked the number of associates ready to help, and the overall speed of the self-checkout process at Walmart. As for faults with the system, some shoppers were turned off by such issues as “the crowd of shoppers [and] associates,” self-checkout stations “situated too close to one another” and the “impersonal” feel of the process.
Not every retail experience resembles shopping at a Walmart Supercenter, of course, but merchants are best served to take such initial concerns seriously, given the growth of self-checkout generally. According to RBR, global shipments of self-checkout terminals increased 52% year over year in 2019, with that growth driven by the U.S. market, including food retailers. Wegmans, Costco and other large food retailers are helping to lead the charge, with convenience store chains also getting Walmart is testing a self-checkout concept in which employees guide shoppers through the transaction process, and which is designed to reduce checkout congestion. Early results have been promising, with consumers praising the efficiency of the system.
involved. “The COVID-19 crisis will only embolden long-standing and new self-checkout proponents alike to speed up expansion plans, with customers increasingly expecting such solutions as part of a wider array of checkout options,” says Alan Burt, who led the RBR research.
New Wave of Self-Checkout
Walmart and Amazon might get much of the attention when it comes to self-checkout technology — Seattle-based Amazon, of course, for its work on computer vision technology and store sensors to enable grocery shoppers to walk out of the store and have payments automatically deducted from their accounts. But other food retailers are deploying the newest self-checkout technology, even if it’s less sophisticated or futuristic than the technology being used by Amazon. In late July, for instance, Chandler, Ariz.-based Bashas’ went live with NCR Emerald, described as the next-generation, cloud-enabled point-of-sale (POS) platform offered on a subscription basis for grocers. The new system eventually will come to include all software and payments processing for full and self-service checkouts, plus technology for customer loyalty, promotions, merchandising and more. Featuring a cloud-enabled, API-first infrastructure, NCR Emerald integrates with other applications in the retailer ecosystem and promotes consistency of capabilities across physical stores and digital channels. Its subscription pricing model reduces upfront investment, so retailers can reallocate resources to improve the customer experience. The Bashas’ deployment came as Atlanta-based NCR experienced a doubling of shelf-checkout shipments in 2019 and ongoing acceleration in 2020, according to David Wilkinson, president and general manager, NCR Retail. “Even though 2020 has been a year like no other, we still see an acceleration in retailers adopting self-checkout,” Wilkinson says. “Overall, we are seeing increased deployments across all grocery formats large and small, not just limited to the national, global players, but also among independents. As more and more retail segments outside the traditional grocery chains, like convenience and discounters, are adopting self-checkout, we expect this trend to continue in 2021.”
Making Self-Checkout Better
Self-checkout not only helps retailers keep lanes open and business flowing — which in turn can cut down lines or waits during an era of pandemic-inspired store customer limits — but it can also serve as a customer
retention and satisfaction tool. Cambridge, Mass.-based Forrester Consulting, for instance, has found that 97% of U.S. grocery shoppers view long food retail lines as a deterrent — and that 65% of those shoppers are willing to head toward self-checkout machines if staffed checkout lines are too busy. That’s a fair amount of opportunity for food retailers. That said, it’s still too early to detail revenue gains made via the deployment of newer self-checkout technology, but you can bet that numbers will be coming soon enough. Food retailers can’t just put in a few self-checkout lines and forget about them. For various reasons — fraud and age verification among them — a certain amount of friction or shopper reassurance is still needed when it comes to self-checkout, especially as many consumers take their time getting used to the new technology. (Cash still accounts for about a fifth of all U.S. food retail transactions, according to the National Grocers Association and Bankrate — a signal of how relatively old-fashioned many grocery transactions remain.) Retailers must think of self-checkout as a part of the larger customer journey, and take appropriate steps that serve to make shoppers feel confident with new technology. “Our insights also show that customers do want to have the final acknowledgment that payment has been completed,” Wilkinson says. “They do not want to be perceived as ‘stealing.’” That’s not all that food retailers must do to ensure the success of self-checkout and mobile payment innovations, notes Christian Floerkemeier, co-founder and chief technology officer of Zurich, Switzerland-based barcode-scanning technology provider Scandit. Seemingly minor mistakes in data — say, a wrong price — can do much to harm consumers’ trust in new payment technology. Buy-in from store labor and leadership is also key. “If it doesn’t work, consumers won’t give it a second chance,” notes Floerkemeier. “If you don’t have the store manager, the employees on board — if they don’t actually encourage it, but see it as a threat to their jobs — you will fail.”
The coming months and years promise to bring more affordable, often off-the-shelf self-checkout technology to more food retailers such as Walmart, Amazon, and other companies. NCR offers a glimpse of one way that might happen. “Our approach leverages micro-services, AI, [application programming interfaces] and virtualization to fundamentally change the cost curve to deploy new technologies in the store,” Wilkinson explains. “This open approach also allows retailers to leverage innovation from not only NCR, but from in-house development or third parties. When a retailer invests in this architecture, like self-checkout innovation, they immediately have a path towards innovation.” Food retailers are also trying to hold fast to payment and checkout changes made during the pandemic, and turn them into long-term gains. The Kroger Co., for example, is bullish on its own contactless payment efforts, and executives at the Cincinnati-based retailer seem determined to move the ball significantly forward. “We were able to quickly offer and promote on-demand, no-contact delivery and low-contact pickup services” during the crisis, says CEO Rodney McMullen. “We expanded and
of U.S. grocery shoppers view long food retail lines as a deterrent — and 65% of those shoppers are willing to use selfcheckout machines if staffed checkout lines are too busy.
improved contact-free payment solutions like Scan, Bag and Go and Kroger Pay.” Consumers’ smartphones look certain to play a larger role in food retail self-checkout experiences, a result of more movement toward mobile commerce in general, especially among younger shoppers. Such a program could take the form of Meijer’s Shop & Scan technology, for instance. A mobile app enables customers at the Grand Rapids, Mich.-based retailer to shop and bag as they go, letting them avoid lines and personalize their shopping. According to Floerkemeier, Scandit’s barcode-scanning software enables retailers to offer quicker self-checkout payment service without having to invest Amazon-level capital to do so, or to refurbish existing stores when deploying sensors and associated technology. The road to even more contactless food retail payments in the United States remains a long one; after all, the country lagged behind much of the rest of the world in adopting basic contactless retail transactions. “But this crisis, for the first time, exposed many people to contactless payments,” Floerkemeier observes, speaking of the pandemic. “This sort of mind shift, it sticks around.” With its own self-checkout experience, Walmart seems to have grasped that lesson, highlighting the role that its cashiers are playing in this new transaction process, and finding efficiencies there as well. A cashier staffing a traditional checkout lane needs some 40 hours of training before taking over a register, Walmart notes, but only a day for the new self-checkout process. The retailer also touts another benefit for its front-line workers: a brighter mood from interacting with shoppers. “Getting that personal face-to-face conversation, it’s really nice,” says Matt Downing, front end team leader at the Fayetteville store testing the self-checkout system. “I’ve noticed ... that it’s helped me be more positive and more outgoing to new people.” Whether that remains the case won’t be clear for some time, but self-checkout promises to play a bigger role for more food retailers in 2021. PROGRESSIVE GROCER August 2020
Food, Beverage & Nonfood Products
Baked Goods to Go
Iconic doughnut brand Krispy Kreme is bringing its famous treats in bite-size form to retail. Doughnut Bites, a refreshed assortment of doughnut holes offered in Original Glazed, Chocolate and Apple Cinnamon flavors, come in five sleeves of four Doughnut Bites per box, a total of 20 retailing for a suggested $3.97, while the Mini Crullers, an enhanced version of Krispy Kreme’s mini cruller doughnuts offered in Original Glazed and Blueberry varieties, are available in four sleeves of two Mini Crullers, a total of eight retailing for a suggested $3.97, or in a 12-ounce box of treats for a suggested $3.88. www.krispykreme.com/grocery
This Is Bliss
To better connect with the snacking category’s core consumers, Naturipe has rebranded its original Snacks product line as Boost Bentos, featuring updated packaging and fresh ingredients, as well as adding a line of nutritious sweet treats, Bliss Bentos. Pairing fresh-picked fruit with specialty ingredients rich in fiber and iron, the line comes in four flavor combinations: Chocolate Cheer, with blueberries, dark chocolate chunk granola clusters and dark chocolate-covered chickpeas; Vanilla Crunch, with blueberries and grapes, mini vanilla formed granola, and honey-roasted walnuts; Salty Caramelicious, with blueberries, salted caramel granola clusters and salted cashews; and Berry Lemony, with blueberries, lemon coconut granola clusters and yogurt almonds. Bliss Bentos retail for a suggested $2.99 per 3.2-ounce package. www.naturipefarms.com
Good for Kids
Made with cage-free eggs, Eggland’s Best Frozen Omelets offer a convenient, wholesome breakfast made from nutritionally superior eggs, according to the brand. The line’s varieties are Three Cheese, filled with cheddar, Monterey jack and parmesan cheese, and featuring 13 grams of protein; Ham & Cheese, a savory variety packed with smoked ham and cheddar cheese, and featuring 13 grams of protein; and Sausage & Cheese, containing savory sausage and cheddar cheese, and featuring 14 grams of protein. The suggested retail price range is $4.49-$4.99 for a 7.8-ounce package of two omelets. www.egglandsbest.com/
Natural food pioneer Kashi enlisted its Kashi Kids Crew, a group of Gen Z consumers ranging in age from 13 to 17, to create two cereals for its Kashi by Kids line, in which every product is created by kids, for kids. Available in Chocolate and Berry flavors, Super Loops provide 4 grams of protein and contain low-sugar ingredients like berries and cocoa. Instead of using single-grain flour, Kashi uses a blend of diverse superfood ingredients, among them brown rice flour and red lentil flour, that are not only healthier, but also enhance the texture and flavors of the cereals, according to Kashi. Both varieties are additionally Non-GMO Project Verified and USDA Organic. To engage younger consumers, Kashi has placed Mad Libs and other games on the backs of the cereal boxes. The product line’s launch includes the posting on social media platforms of a Kids Crew video in which its young members share their favorite ways to eat the cereals. A 9.5-ounce box of either flavor retails for a suggested $3.99. www.kashi.com/en_US/home.html
With more than half of Americans trying to cut down on carbohydrates, Foster Farms has found a solution for pizza lovers with its frozen Smart Crust frozen pizza. Available in Four Cheese, Uncured Pepperoni and Uncured Bacon Club varieties, the product line contains just 4 grams of carbs per serving while providing 25 grams of protein, thanks to a unique crust made from Foster Farms chicken breast, egg whites and cheese rather than flour. Smart Crust pizza is also gluten- and grain-free and keto-certified. Ready to eat after 15 minutes in the oven, Smart Crust pizza retails for a suggested $5.99 per 8- to 8.5-ounce package. www.fosterfarms.com/products/pizza/
The latest offering from AriZona Beverages is Santa Fé, a line of sparkling waters made with real fruit, among them, according to the company, the first and only sparkling Arnold Palmer (ice tea and lemonade). Featuring fewer than 20 calories per can, the low-carb, gluten-free line comes in four other crowd-pleasing varieties: Lemon, Pink Grapefruit, Raspberry Lime and Orange Mango. “AriZona Beverages always strives to deliver the most ontrend beverages to our consumers,” noted Wesley Vultaggio, chief creative officer of AriZona Beverages. “Santa Fé is designed to delight those looking for healthier options, and is sure to deliver on taste.” The item is available in 16-ounce cans at a suggested retail price range of $1.99-$2.49 each. www.santafesparkling.com; www.drinkarizona.com
There’s the Beef
Known as the category creator of biltong, a form of dried, cured meat from southern Africa, in the United States, Kalahari Snacks has now launched Kalahari Crisps. Made from the brand’s South African-inspired biltong, the crisps are slices of spiced top-round beef that are roasted to achieve a crunchy texture akin to that of a chip. Available in three flavors — Original, Southwest Verde and Rosemary Citrus — the snack is packed with 20 grams of protein and offers the macronutrient benefits of biltong, but contains zero carbs and sugar. With only 100 calories per serving, the keto-, Paleo- and Whole30-friendly crisps retail for a suggested $4.99 per 1-ounce bag. eatbiltong.com
Blood Sugar Solution
Splenda Brand, the No. 1 sweetener brand recommended by health care professionals, has introduced Splenda Diabetes Care Shakes, described by manufacturer Heartland Food Products Group as the first and only no-added-sugar shakes specifically designed to help manage blood sugar and support the needs of people with diabetes and prediabetes. Able to serve as a meal or snack replacement, the smooth, creamy shakes are packed with 16 grams of high-quality protein and key ingredients necessary for diabetes management, including slow-digesting carbohydrates and good-for-you fats, a combination that helps control blood sugar and reduce blood sugar spikes. Splenda Diabetes Care Shakes are also high in fiber, soy- and gluten-free, and suitable for lactose-intolerant individuals. The cleaner-label line comes in three consumer-favorite flavors: Milk Chocolate, French Vanilla and, in another first for the category, Strawberry Banana. A 6-pack of 8-fluid-ounce shakes retails for a suggested $9.99. shop.splenda.com/collections/splenda-diabetes-care-shakes PROGRESSIVE GROCER August 2020
AHEAD OF WHAT’S NEXT By Leslie G. Sarasin
Will COVID-19’s Influence Outlive the Pandemic? A GROCERY OBSERVER OFFERS PREDICTIONS REGARDING FOUR CURRENT TRENDS. f we needed another reminder of how pervasively COVID-19 has influenced everything in society today, the fact that people now casually refer to “life B.C.,” meaning the time before COVID-19, demonstrates that the pandemic has emerged as a defining moment in our history. Unfortunately, we have not yet attained a level of predictable control that allows us to comfortably talk about life after COVID-19; even still, we all remain curious about the contours of the new normal. In food industry circles, this curiosity translates into intense speculation about the COVID-19-influenced food-shopping trends that will stick with us for the long haul, and those that will go by the wayside as quickly as they materialized. Following are four COVID-19 food-shopping trends, followed by my thoughts on whether they’ll stay or go.
Where Consumers Get Their Food
The long-standing rivalry between restaurants and grocery stores as they vie for the consumer food dollar has been neck and neck in recent years. Foodservice has been enjoying a slow 40-year ascent, and a few years ago, it laid claim to the larger piece of the pie. Then home sheltering hit, and everything changed. Grocery stores — representing dollars spent on food eaten at home — saw 40 years of decline erased, and restaurants — representing dollars spent on food away from home — watched all of their hard-earned increases disappear within a matter of days. MY PREDICTION: After some initial celebratory escapes to restaurants, the trend of home cooking will persist; in fact, almost half of shoppers today say that they plan to continue cooking more at home when home-sheltering recommendations are lifted.
How Consumers Get Their Food
In 2019, regular online shoppers hit the 21% mark, but pre-pandemic 2020 saw that number climb to 34%. As a portion of all grocery spending in 2019, online sales accounted for 10.5%; in February 2020, online represented 14.5% of
Unfortunately, we have not yet attained a level of predictable control that allows us to comfortably talk about life after COVID-19; even still, we all remain curious about the contours of the new normal. 82
grocery sales. In March/April, online sales skyrocketed to 27.9%. Six years’ worth of growth in online took place in six weeks, with online sales doubling. MY PREDICTION: Online shopping will continue to ride the crest it’s enjoying. It will settle back to some degree, but too many consumers have gotten the hang of it now to go back. It will enjoy a 50%-60% bump this year.
The Who and Where of Food Procurement
When asked, 90% of surveyed consumers said that COVID-19 had caused them to shift some aspect of their grocery shopping. More than onethird of shoppers made a pandemic-driven change in who grocery shops for their household, and 10% specified their area of change as being the store they shop most frequently. Prior to COVID-19, consumers were channel-surfing freely, hitting 4.1 different channels fairly often and shopping five different banners in a given month. During the pandemic, 40% reported shopping fewer stores and 56% said that they had increased reliance on the grocery channel since the outbreak. MY PREDICTION: As safety levels are elevated and shoppers feel more secure, multichannel/ multibanner shopping will pick back up where it left off, and the co-shopping trend will resume with a vengeance — but with a significant online twist.
Consumer Value-Driven Shopping
Some have speculated that during the pandemic days of panic buying, customers abandoned their values and just went for what was available. Perhaps that’s true to an extent, but it’s not entirely accurate. Before COVID-19, 82% of shoppers reported that they were actively looking for at least one frontof-pack claim, and during COVID-19, 85% say that they still seek the label information they looked for prior to the pandemic. MY PREDICTION: Consumer attention to all manner of social concerns and ethical considerations will escalate. Perhaps most importantly, we will see a renewed interest in health and well-being matters, particularly as they apply to disease resistance. Increased attention will also be given to environmental issues, food waste reduction, fair labor practices and animal welfare concerns as shoppers seek constructive outlets for the pent-up anxiety and fretful energy they’ve experienced living during COVID-19. These will become factors in their store selections and product purchase decisions. Leslie G. Sarasin is president and CEO of Arlington, Va.-based FMI - The Food Industry Association.
Your Back-to-School Snacking Partner DRIVING GROWTH WITH STOCK-UP NEEDS FOR FAMILIES, REGARDLESS OF THEIR BACK-TO-SCHOOL LEARNING PLANS.