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November 2022

Volume 101, Number 11 www.progressivegrocer.com



Retailer Deep Dive: Costco Leverages Loyalty to Drive Growth

WORLD OF FLAVORS In-store bakeries go global INCLUSION MATTERS Retailers discover strength in diversity ONLY CONNECT The Internet of Things lets grocers streamline ops

How Fidji Simo CEO, Instacart

plans to help grocers build the store of the future

Ready for the ‘Groceryssance’

November 2022

Volume 101, Number 11 www.progressivegrocer.com


LE GRUYÈRE AOP.

THE ORIGINAL.



Contents 11. 22

Volume 101 Issue 11

18

COVER STORY

Ready for the ‘Groceryssance’ Instacart CEO Fidji Simo wants to help grocers build the store of the future.

Features 28 RETAILER DEEP DIVE

36 SOLUTIONS

Keeping the Faith

Meat Shoppers Polarize Choices

How Costco Wholesale Corp. rides the loyalty factor for robust sales and growth.

Amid rampant inflation, consumers want aggressive pricing or all-out convenience, with branded items often fulfilling the latter at the expense of the former.

28 Departments

14 NIELSEN’S SHELF STOPPERS

Baking Supplies

10 EDITOR’S NOTE

A Sign of Things to Come

15 MINTEL GLOBAL NEW PRODUCTS

Plant-Based Proteins

12 IN-STORE EVENTS CALENDAR

January 2023

6

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16 ALL’S WELLNESS

Snacks Versus Meals

64 EDITORS’ PICKS FOR INNOVATIVE PRODUCTS 66 AHEAD OF WHAT’S NEXT

A Decade of Blue Apron


TO THE #1 BRAND OF EMPANADA DOUGH IN THE U.S.*

Get in on the empanada trend by giving your shoppers authentic, ready-to-use empanada dough from the leader in Latin foods- GOYA®. The category is rapidly growing*, and GOYA® offers varieties for both baking and frying. Your shoppers will love the authenticity and high-quality of GOYA® when they make their empanadas at home.

Contact your GOYA representative or email salesinfo@goya.com | GoyaTrade.com * Nielsen Answers on Demand, Total U.S. (All Outlets Combined), Dollar Sales, 52 Weeks Ending: 7/16/22 ©2022 Goya Foods, Inc.


Contents 11.22

Volume 101 Issue 11

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

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42

42 PERIMETER

Global Inspiration

BRAND MANAGEMENT BRAND DIRECTOR John Schrei 248-613-8672 jschrei@ensembleiq.com

The time is right for supermarket bakeries to step up their international dessert assortments.

EDITORIAL EDITOR-IN-CHIEF Gina Acosta gacosta@ensembleiq.com MANAGING EDITOR Bridget Goldschmidt bgoldschmidt@ensembleiq.com SENIOR DIGITAL & TECHNOLOGY EDITOR Marian Zboraj mzboraj@ensembleiq.com

45 CENTER STORE

SENIOR EDITOR Lynn Petrak lpetrak@ensembleiq.com

Lifting Holiday ‘Spirits’

MULTIMEDIA EDITOR Emily Crowe ecrowe@ensembleiq.com

After two restrictive COVID winters, consumers are eager to raise a glass (or two) with more family and friends this festive season.

CONTRIBUTING EDITORS Angelika Engl, Debby Garbato and Jenny McTaggart ADVERTISING SALES & BUSINESS ASSOCIATE PUBLISHER, REGIONAL SALES MANAGER (INTERNATIONAL, SOUTHWEST, MI) Tammy Rokowski 248-514-9500 trokowski@ensembleiq.com

50 OPERATIONS

Places to Belong

REGIONAL SALE MANGER Theresa Kossack (MIDWEST, GA, FL) 214-226-6468 tkossack@ensembleiq.com

Retailers are embracing the idea that diversity makes workforces more productive.

BUSINESS DEVELOPMENT MANAGER Lou Meszoros 203-610-2807 lmeszoros@ensembleiq.com ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com AUDIENCE LIST RENTAL MeritDirect Marie Briganti 914-309-3378 SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES Toll Free: 1-877-687-7321 Fax: 1-888-520-3608 contact@progressivegrocer.com

45

PROJECT MANAGEMENT/PRODUCTION/ART SENIOR CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com

50

MARKETING MANAGER Rebecca Welsby rwelsby@ensembleiq.com SUBSCRIPTION SERVICES LIST RENTAL mbriganti@anteriad.com SUBSCRIPTION QUESTIONS contact@progressivegrocer.com

54 TECHNOLOGY

CORPORATE OFFICERS CHIEF EXECUTIVE OFFICER Jennifer Litterick CHIEF FINANCIAL OFFICER Jane Volland CHIEF PEOPLE OFFICER Ann Jadown EXECUTIVE VICE PRESIDENT, CONTENT & COMMUNICATIONS Joe Territo EXECUTIVE VICE PRESIDENT, OPERATIONS Derek Estey

IoT and the Connected Store

The Internet of Things is changing the game at food retail in more ways than one.

54

59 EQUIPMENT & DESIGN

Building the Next Generation of Food Stores

U.S. retailers can learn from some of the pioneering fixtures and formats already established in Europe and Canada.

59 8

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PROGRESSIVE GROCER (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631. Single copy price $14, except selected special issues. Foreign single copy price $16, except selected special issues. Subscription: $125 a year; $230 for a two year supscription; Canada/Mexico $150 for a one year supscription; $270 for a two year supscription (Canada Post Publications Mail Agreement No. 40031729. Foreign $170 a one year supscrption; $325 for a two year supscription (call for air mail rates). Digital Subscription: $87 one year supscription; $161 two year supscription. Periodicals postage paid at Chicago, IL 60631 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to brand, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631. Copyright ©2022 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.


Want to fuel growth in your dairy category?


EDITOR’S NOTE By Gina Acosta

A Sign of Things to Come THE KROGER-ALBERTSONS MERGER MAKES SENSE OPER ATIONALLY. o properly sort through the debate over The Kroger Co.’s proposed merger with the Albertsons Cos., it helps to travel back in time to 1999. That year, Rodney McMullen was CFO at Kroger, leading a $13 billion acquisition of Fred Meyer, a mass-market chain founded in 1922 in Oregon. The deal created the giant supermarket chain we know today as Kroger, with 2,800 stores in 35 states. At the time, analysts said that the combined businesses would create a “too powerful” company that could hurt shoppers and workers alike. Other experts said that such a merger would make it tough for independent grocers to compete on price, marketing and real estate. What actually happened? As McMullen told CNBC in October, shortly after the $24.6 billion Kroger-Albertsons merger news broke: “Several years ago, we merged with Fred Meyer, and Fred Meyer has been an awesome merger, and if you look at some of the things that Fred Meyer had with the marketplace store and that, we’ve been able to scale it across all Kroger.” McMullen is no stranger to taking big risks, whether it’s multibillion-dollar mergers or investing billions in digital grocery by opening robotic fulfillment centers in places where the company has few or no stores. Yes, there were some layoffs as a result of the Fred Meyer transaction, If the deal closes as but there were also a lot of price cuts, investments in technology, loyalty proexpected in early gram innovation and other actions that 2024, the merger helped Kroger compete better with would make Kroger a Walmart and other food retailers. Kroger’s sales surged in the following years. $200 billion company Today, the grocery industry is with more than 5,000 bogged down by skyrocketing costs, stores, 700,000 shrinking margins and a new business model predicated on the notion workers, and an that e-commerce will be profitable — instant footprint eventually. According to Euromonitor, in the Northeast. 25.2% of all dollars spent on groceries in the United States last year went to Walmart, while Kroger got 8.1% and Albertsons 4.8%. Numerator puts Walmart’s share at 21% and Kroger’s at 10%. In an interview with Reuters in October, McMullen said that the savings provided by the deal would allow the chains to cut prices for consumers. He cited $500 million of “cost savings from synergies” that the new entity could use to lower prices. McMullen added that the combined entity could better compete head-to-head with “larger, non-union” grocers. To continue to compete against Walmart and now players such as Ama10

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zon, grocers also need better buying power and more capital to invest in things like retail media, private brands and more fulfillment centers. A big part of the Kroger-Albertsons deal is about creating a truly national retail media network that can compete with Walmart, Amazon and Google for ad revenue. Another benefit for Kroger is it gets Albertsons’ seven micro-fulfillment centers to complement the total of 17 customer fulfillment centers (CFCs) that it plans to open within the next couple of years. In revealing the deal on Oct. 14, Kroger CFO Gary Millerchip said that the retailer expects to save about $1 billion a year in costs as a result of the merger. Of course, it remains to be seen whether the merger will pass regulatory muster amid questions about geographical overlap, store divestitures, union objections, and whether pressures related to competition and inflation are even enough to warrant such a transaction. I know, however, that Rodney McMullen has done his homework. If the deal closes as expected in early 2024, the merger would make Kroger a $200 billion company with more than 5,000 stores, 700,000 workers, and an instant footprint in the Northeast. The Kroger-Albertsons merger will no doubt overhaul the competitive landscape in the $811.5 billion grocery market. And the way things are going with the economy, it’ll be only the beginning of a wave of consolidation-related transformation in the industry. Gina Acosta Editor-In-Chief gacosta@ensemleiq.com


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ACTIONABLE INSIGHTS & CONNECTIONS POWERING BUSINESS GROWTH EnsembleIQ is the premier resource of actionable insights and connections powering business growth throughout the path to purchase. We help retail, technology, consumer goods, healthcare and hospitality professionals make informed decisions and gain a competitive advantage. EnsembleIQ delivers the most trusted business intelligence from leading industry experts, creative marketing solutions and impactful event experiences that connect best-in-class suppliers and service providers with our vibrant business-building communities. To learn more about our brands, visit ensembleiq.com

PROGRESSIVE GROCER November 2023

11


IN-STORE EVENTS

Calendar S

1

For New Year’s Day, suggest that shoppers observe Apple Gifting Day to get 2023 off to a healthy start!

01.23

M

2

Swiss Cheese Day. Run a promotion in the deli for this holey delicious favorite.

National CBD Month National Hot Tea Month National Oatmeal Month

T

3

International Mind-Body Wellness Day. Emphasize the connection between these two in an online seminar for shoppers and associates.

W

4

National Spaghetti Day. Ask shoppers to share online their most inventive dishes featuring this always popular pasta.

National Slow Cooking Month National Soup Month National Sunday Supper Month

T

5

National Keto Day. Your retail dietitian can instruct curious shoppers on how to follow this trending eating regime.

F

6

Epiphany Three Kings Day

S

7

National Tempura Day. Offer an instore tutorial on the best way to achieve that light, crispy batter.

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

National Winter Skin Relief Day. Publish an e-newsletter article on lotions that can protect skin from harsh weather.

National Fresh Squeezed Juice Day. Post signage in the produce section by the oranges to remind shoppers that they can use them as a beverage as well as a snack.

Chinese New Year. Solicit the help of local groups to help you celebrate the occasion respectfully and accurately.

Kansas Day. Highlight the food and beverage products created in the Sunflower State.

12

National Apricot Day. Create recipes that keep this tasty tree fruit’s flavor front and center.

National Quinoa Day. Enumerate the health benefits of this seed — not a grain — which can be used as a substitute for rice, potatoes or other starchy sides.

National Rhubarb Pie Day. They may not be able to make it like Great-Grandma, but customers can rediscover this oldtimey recipe with your help.

National Croissant Day. What continental breakfast is complete without one?

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National Houseplant Appreciation Day. Provide simple tips for how customers can keep their leafy companions healthy.

National Hot Heads Chili Day. Hold a chili-eating contest at your store(s) to see how spicy the winner can stand this beloved Tex-Mex dish.

National Peanut Butter Day. A classic PBJ would hit the spot right now.

Eat Brussels Sprouts Day

National Milk Day. Sounds like a good buy-one-get-onefree opportunity,

National Gourmet Coffee Day. Encourage customers to trade up their brew to something a little more high-end.

National Fish Taco Day. Advise customers to make Taco Night more interesting by swapping beef or chicken for fresh tilapia.

National Curried Chicken Day. Develop a recipe that will make this dish a weeknight family dinner staple.

Get to Know Your Customers Day. Conduct a shopper survey to find out what you’re doing right, and what could use improvement.

National Green Juice Day. Instruct health-conscious consumers on how to whip up their own betterfor-you concoctions using plenty of fresh produce.

National GlutenFree Day. Make your shoppers aware of all the gluten-free options available across the store with signage and special displays.

National Cheese Lover’s Day. Present a cheese tasting to introduce customers to some more adventurous varieties.

National Have Fun at Work Day. Who says you can’t enjoy your job? Inquire how your associates keep things entertaining while still getting stuff done.

National Hot Pastrami Sandwich Day. Direct shoppers to the in-store deli for this classic to go.

National BakersCrafters-Makers Day. Highlight all of the local homestyle offerings in your instore bakery.

Data Privacy Day. Let shoppers know everything you’re doing to keep their information safe.



FRONT END

Shelf Stoppers

Bakery Supplies

Basket Facts

Total Department Performance Latest 52 Wks W/E 10/08/22

Bakery Supplies

Latest 52 Wks YA W/E 10/09/21

$6,076,889,791

Latest 52 Wks YA W/E 10/10/20

$5,809,677,262

$6,164,184,718

Top Bakery Supply Categories by Dollar Sales Flour and Meal

Nuts

Baking Chips

Cake Decoration

Pie Filling

$1,200,000,000

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

1,000,000,000

800,000,000

$5.57

600,000,000

on all baking supplies, up 7.3% compared with a year ago

400,000,000

200,000,000

0

Latest 52 Wks W/E 10/10/20

Latest 52 Wks YA W/E 10/09/21

Latest 52 Wks YA W/E 10/10/20

$5.04

on baking chips, up 4.2% compared with a year ago

Source: Nielsen, Total U.S. (All outlets combined) — includes grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and military commissaries (DeCA) for the 52 weeks ending Oct. 8, 2022

Cross-Merch Candidates

Wine

Vitamins and Supplements

GI Care

Lighting

Spirits

Batteries and Accessories

Eye Care

Oils, Butter and Margarine Spreads/ Substitutes

Packaged Coffee

Nuts and Seeds

Generational Snapshot

$4.45

on flour and meal, up 11.5% compared with a year ago

$2.01

Which cohort is spending, on average, the most per trip on frosting?

on baking cups, up 8.6% compared with a year ago Millennials

Gen Xers

Boomers

The Greatest Generation

$2.71

$2.58

$2.51

$2.30

Source: Nielsen Homescan, Total U.S., 52 weeks ending Oct. 1, 2022

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Source: Nielsen Homescan, Total U.S., 52 weeks ending Oct. 1, 2022


MINTEL CATEGORY INSIGHTS

Global New Products Database

Plant-Based Proteins Market Overview

The plant-based meat alternative (PBMA) market hasn’t expanded upon its pandemic-driven bump, signaling that consumers aren’t necessarily buying PBMAs after the initial trial and that PBMAs are an occasional purchase rather than an everyday protein option. One-third of U.S. consumers (29%) eat PBMAs multiple times per week, compared with the 61% of consumers who eat poultry multiple times per week.

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

Plant-based diets, while trending, remain fairly niche, and meat is a mainstay in consumers’ diets. Consumers view meat as tasty, premium, exciting, and a good source of protein, and meat dishes elicit strong emotional responses from consumers. While the PBMA category is ripe with innovation, the flurry of new PBMA products may have led to consumer confusion, and many new products may have not lived up to consumers’ taste expectations.

Half (49%) of U.S. consumers say that they don’t eat plant-based protein because of taste/flavor concerns.

Key Issues

Rising inflation hinders PBMA market growth. While meat prices are rapidly rising, consumers prioritize familiarity during periods of economic uncertainty, and many PBMA products are still more expensive than their meat counterparts.

Nearly four in 10 consumers, or 36%, eat plant-based proteins such as a plant-based meat substitute, a plant-based poultry substitute, a plant-based seafood substitute, a plant-based egg substitute or plant-based cheese.

What Consumers Want, and Why The development of better-tasting, less expensive PBMAs will make them more appealing to massmarket consumers. Plant-based diets, especially flexitarianism, will gain prominence as consumers reduce their meat consumption for environmental reasons, and demand for PBMA options will grow as Gen Z consumers age and becomes a larger share of the total U.S. population. Natural plantbased proteins such as legumes have a key opportunity to promote their value and versatility during a time when budgetconscious consumers are interested in cooking healthy, inexpensive meals at home.

PROGRESSIVE GROCER November 2022

15


ALL’S WELLNESS

By Karen Buch, RDN, LDN

Snacks Versus Meals

What Benefits Do Snackers Seek?

Snackers report seeking snacks that will boost energy and reduce fatigue; aid weight loss and boost metabolism; manage digestive and gut health; improve heart health; decrease inflammation and manage glucose response; improve sleep quality and immune function; maximize muscle strength, bone health and exercise endurance; improve memory, cognition and mental focus; and prevent cancer.

RE TAIL DIE TITIANS CAN HELP SHOPPERS RE THINK SNACK CHOICES. esearch from the International Food Information Council shows a significant uptick in daily snacking among Americans, from roughly 59% in 2020 and 2021 to 73% in 2022. Compared with meals, snacking contributes more energy than breakfast and slightly less than lunch as a percent of daily calories. Although snacking has increased at all times of the day, late afternoon between 3:00 p.m. and 5:00 p.m. is the most common time to have at least one snack.

Snacking to Fill Gaps

Retailers should consider various opportunities to measurably improve snack quality and fill significant energy, variety and nutrient gaps. Research shows that more than half of dietary nut and seed consumption and 43% of whole fruit consumption come from snacks, while just 18% of whole grain intake and only 8% of vegetable intake come from snacks. Perhaps the largest opportunity lies with increasing total dietary fiber intake; currently, just 5% of Americans get the recommended amount of dietary fiber they need each day.

What Foods Do Snackers Choose?

Morning snackers are more likely to choose fruit or dairy — such as cheese, yogurt or smoothies — while evening snackers often choose savory, salty snacks, followed by chocolate, candy, cookies, cake and ice cream. Selection of nuts and seeds as snacks increased sharply, up double digits. Sweets are still the most commonly consumed snacks in the United States, representing more than one-third of snack energy, while 17% of snack energy comes from chips and crackers. Consumers often compensate for snack energy by increasing energy expenditure through activity or reducing calorie intake throughout the day.

17.8%

23.5%

BREAKFAST

LUNCH

22.6% DINNER

Comparison of Meal Occasion Percent Daily Calories Source: International Food Information Council

Retailers should consider various opportunities to measurably improve snack quality and fill significant energy, variety and nutrient gaps.

Why Do Snackers Snack?

Stress has a strong connection to snacking habits: 29% of those who have been “very stressed” in the past six months snack three or more times a day, compared with just 10% of those who’ve been “somewhat stressed.” Other reasons cited for snacking include being hungry or thirsty; a desire for a treat; the need for energy; the convenient, habit-forming nature of snacking; a specific desire for a salty or sweet taste; or simply to counteract boredom.

16

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Guide Shoppers Toward Personalized Snacks

SNACKS

While the act of snacking has become a ubiquitous part of our food culture, it can be hard for consumers to choose healthy snacks that also fit their budgets, schedules and flavor preferences. Retail dietitians can help shoppers rethink snack choices. For example, point exercise enthusiasts to pre-workout fuel or post-workout recovery to help repair muscle and replenish stored energy. Present busy parents of schoolage children with healthy, portable snacks the whole family will eat. Guide individuals working from home to stock up on mini (100- to 300-calorie) meals they can eat between back-to-back Zoom calls. No matter what consumers want in a snack, grocery retailers have better-for-you, personalized snacking solutions to offer.

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



COVER STORY

T

o understand just how much food and the grocery industry mean to Instacart CEO Fidji Simo, it helps to visit her kitchen in Carmel-by-the-Sea. On a gloriously sunny California afternoon, the French-born Simo, CEO of the 10-yearold e-commerce startup that transformed the grocery industry, is busy juggling meetings, interviews with journalists and baking. Or rather, helping her husband, Remy, test the baked goods. Sitting down to chat in the garden, Simo looks at Remy, who has emerged from the kitchen with a tray of sweets that smell of the boulangeries and patisseries in Europe. It’s a gesture that Simo traces to her roots growing up in a family of fishmongers in southeastern France. “All of the men in my family are fishermen. Food is very deeply rooted in me, and that’s why I was so attracted to the mission of Instacart,” Simo says. “To me, food is an expression of love; it’s how we celebrated everything.” Simo’s love of food, however, was not to be surpassed by another passion: technology. “I was also always fascinated by technology; that’s why I studied business,” she explains.

Ready for the ‘Groceryssance’ Instacart CEO Fidji Simo wants to help grocers build the store of the future. By Gina Acosta After finishing business school, Simo started her career in Silicon Valley at eBay and “really fell in love with what technology could enable.” She later moved to Facebook, where she spent 10 years developing platforms, led the mobile monetization strategy and “made video a critical part of the Facebook experience.” Then, for her last two years at the company, she “was leading the flagship Facebook app, which was the privilege of a lifetime.” Now Simo, who was named CEO of Instacart in August 2021, is tasked with leading the next phase of growth for an estimated $13 billion company that’s preparing to possibly go public at a turbulent time not just for the stock market, but also for the grocery industry and the economy. The question on everyone’s mind: Does Simo’s plan to grow Instacart involve it becoming a retailer? She has thoughts on the matter — but more on that later. For now, Simo says that she’s focused on fine-tuning Instacart’s 18

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“We want to be the tech backbone of the industry to really help retailers address all of these challenges. We really want to make sure that retailers have the tools that they need to compete, whether it’s against Gopuff, Amazon or whoever. What we’re trying to do is design all of the technologies that enable the grocery store of the future, where online and offline operate together, with the best of online, which is personalization, etc., coming to offline, and the best of offline, which is discovery, coming to online. We want to make sure that journey is completely seamless.” —Fidji Simo, CEO, Instacart

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COVER STORY

Instacart's new Out of Stock Insights helps retailers provide automatic real-time alerts to associates when items are running low or out of stock. For retailers, this can result in fewer missed sales opportunities; for customers, it increases the chances they can find exactly what they want.

business model to be more of a grocery technology company than a grocery delivery/pickup company, a partner to grocers that understands the challenges they’re facing and helps them thrive, no matter the obstacle. “We want to be the tech backbone of the industry to really help retailers address all of these challenges,” she asserts. “We really want to make sure that retailers have the tools that they need to compete, whether it’s against Gopuff, Amazon or whoever. What we’re trying to do is design all of the technologies that enable the grocery store of the future, where online and offline operate together, with the best of online, which is personalization, etc., coming to offline, and the best of offline, which is discovery, coming to online. We want to make sure that journey is completely seamless.”

10 Years of Instacart

It’s hard to believe that Instacart has already been around for a decade. For many retailers, Instacart was the first e-commerce lifeline at a time when many in the grocery industry weren’t even familiar with terms such as “pickers,” “fulfillment centers” or “substitutions.” The pandemic supercharged growth at the San Francisco-based company, which saw order volumes surge more than 300% in early 2020, and then drove record volume and revenue in 2021, helping it become the dominant grocery technology company in the United States. Today, Instacart partners with more than 900 national, regional and local retail brands to facilitate online shopping, delivery and pickup services from more than 75,000 20

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FoodStorm's order management system aims to help retailers manage orders for items such as baked goods, hot items and deli sandwiches while customers are shopping.

stores across 13,000-plus cities in North America. But digital grocery sales have moderated due to shoppers returning to physical stores, and price sensitivity around inflation; in October, the monthly Brick Meets Click/Mercatus Grocery Shopping Survey showed that total U.S. online grocery sales in September declined 3% year over year to $7.8 billion, although third-quarter online grocery sales for 2022 gained nearly 4% to $24.1 billion compared with 2021. Meanwhile, grocery e-commerce competitors have bubbled up and grocers have started launching their own digital solutions as they look to keep more of the power of consumer data to themselves. According to Simo, the best way to navigate “rough waters,” whether it’s inflation, competition or finicky consumer behavior, is by aligning with a mission and getting your employees really motivated for the vision. “The main thing I wanted to do to mark our anniversary was get the company together for a day and use that time to connect with the team on


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COVER STORY

the vision for the next 10 years,” she says. “So we really laid out what the next 10 years could look like, the real at-scale problems that we could solve for the industry. People reacted very well and were super-excited. When you’re very clear on where you’re going, you can lead the team through it, and so that’s something I always double down on.” Instacart filed a confidential draft registration statement with the Securities and Exchange Commission in May. Simo won’t comment on the timing for an IPO, but she says that the company is busy adding solutions for retailers that focus on the three pillars of the business: the Instacart App, the Instacart Platform and the advertising arm. “In all three of these areas, we’re developing a lot of innovation that can drive our growth,” she notes. “On the Instacart App side, we are continuing to increase the number of retailers that we work with. We now have retailers that represent 80% of the U.S. grocery market. We’re also continuing to expand our use cases — not just grocery, but also convenience, pickup, ready meals and catering. We’re driving online adoption through partnerships and marketing as we go from about 10% online penetration today to an estimated 20% to 35% of sales within the next five years. And we’re doing a lot to make the grocery experience less about pure utility and more about inspiration.” This year, Instacart launched its Connected Stores suite, which features six new Instacart Platform offerings: the Caper smart cart, Scan & Pay, Lists, Carrot Tags, FoodStorm Department Orders, and Out of Stock Insights — modular technologies that help retailers connect online and in-store experiences. Simo says that the company launched the suite

Eversight, which Instacart acquired in September, aims to help brands and retailers be more agile and consumer-centric with their pricing and promotions strategies. The AI-powered platform enables CPG brands and retailers to continuously test customized pricing and promotions directly with their individual customers.

Instacart's newly redesigned Caper Carts are equipped with scales, sensors, touchscreens and computer vision that powers scanless technology, so that customers can navigate the store and check themselves out without manually scanning items. The new model of the Caper Cart is slimmer and lighter than the previous version, with 65% more capacity.

based on feedback from grocers that are having tech challenges on their own properties. “We’re basically taking all the innovations that we’re developing for our marketplace, and we’re building them in a way so that we can put them in the hands of retailers,” she continues. “A lot of technology partners are addressing just one particular piece of the grocer’s tech problem. But we look at the entire ecosystem, and what grocers are telling us is that they like that we’ve already tested our technologies with the consumer. So we know what works, because it’s already been proven on our marketplace. That’s something that other technology partners cannot provide.” The other advantage to the Connected Stores suite, Simo points out, is that grocers’ technology teams don’t have to piece together various disparate solutions. Rather, Instacart’s offering “is a set of technologies that are modular, so if you have your own thing in some areas, and you just want a piece of our platform to enhance your existing experience, you can have that in a modular way,” she explains. “But if you want a whole thing brought together, you can also get that.”

Growing the Pie

In the past few months, Simo’s team has been on an acquisition spree as it looks to become a one-stop grocery technology shop for grocers. In early September, Instacart acquired Ithaca, N.Y.-based Rosie, a premier e-commerce platform for local and independent retailers and wholesalers. Rosie, founded in 2013, offers independent grocers branded e-commerce websites and mobile app capabilities that power order flow, fulfillment and customer insights. Its product features include 22

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• Promote your platform. Store-based retailers have the unique opportunity to meet shoppers when and where they choose to shop. Share with them – both in-store and in aisle – that you have an online platform. Because shoppers are moving online, it’s important to let them know you can meet their needs allowing them to stay with your franchise and increasing their loyalty to you as an omni-channel retailer. • Prioritize top selling products and brands. Think about your online platform as a mirror of in-aisle selection. Position your best-selling brands prominently on your pet landing pages, and feature engaging brand content, such as product photos, video and ratings and reviews. Add large sizes or bulky items online for shoppers to fulfill when there isn’t enough shelf space in store.

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COVER STORY

shoppable weekly ads, store loyalty and rewards program integrations, third-party fulfillment logistics integrations, and payment processing, all developed for local and independent grocers. With this acquisition, Instacart has debuted new e-commerce solutions built specifically for local and independent retailers that complement the company’s existing Instacart Platform offerings. In May, Rosie helped Dash’s Market, a family-owned grocery chain with four locations in and around Buffalo, N.Y., launch Supplemental Nutrition Assistance Program (SNAP) online payments. Dash’s Market was Rosie’s second independent retailer partner to go live accepting SNAP payments online, just weeks after Davis Food & Drug, in Utah, launched such a program. The Rosie deal marked Instacart’s fourth acquisition in the past year. Instacart also acquired Palo Alto, Calif.-based Eversight, an artificial intelligence-powered pricing and promotions platform for CPG companies, in August. Through Eversight’s experimentation-based platform, CPG brands and retailers can continuously test customized pricing and promotions directly with their individual customers, at scale. This automates processes that have traditionally been highly manual and time-consuming, and lets brands and retailers engage in shopper-centric optimization. Eversight’s CPG offerings will be part of the Instacart Ads product and technology suite, which provides CPG brand partners with measurable advertising opportunities and insights capabilities. For retailers, Eversight’s retail technology will be part of the Instacart Platform, a suite of enterprise-grade solutions that enhances and digitizes grocery retail to create an omnichannel experience for customers. “The idea with these two acquisitions is really to take companies that have developed a strong expertise in one part of the market — Eversight in pricing, Rosie with independent grocers — and connect them with our ecosystem so we can give them scale,” Simo said. “In the case of Eversight, we’re really excited about the fact that it will result in a win-win for all partners by making the experience more affordable for consumers while also helping retailers and CPGs find their pricing sweet spot to optimize margins, which is going to be really important during this time.” Last year, Instacart acquired smart cart maker Caper AI for $35 million and catering software firm FoodStorm; both companies are based in New York. In September, Instacart debuted a new version of 24

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Over the past two years, Instacart has pioneered the EBT SNAP retailer onboarding process, which has enabled EBT SNAP payments nationwide with 70-plus retailers spanning more than 8,000 stores across the country.

Caper’s smart cart that comes equipped with scales, sensors, touchscreens and computer vision technology. The screen helps shoppers navigate the store, and unlike self-checkout terminals and other smart carts, the proprietary scanless technology means that shoppers don’t have to manually scan items. They can just drop them in the cart, bag groceries as they go, and check out right from the cart. According to the company, the new Caper Cart is slimmer and lighter, holds 65% more than the previous version, and will be rolling through the aisles of retailers such as Keasbey, N.J.-based Wakefern Food Corp. in the coming months. It’s the only smart cart on the market to offer stacked charging, which means that grocers don’t have to charge carts individually or swap out batteries. “In-store tech is a big opportunity for us,” Simo notes. “FoodStorm has kiosks where customers can do the ordering inside the store for catering, but they can also order online, and the Caper carts reduce lines at checkout and make store operations more efficient. If you have smart carts inside the store with personalization on the screen of the cart, it enhances the store experience dramatically.”

Fighting Inflation

In September, the consumer price index increased 0.4% for the month, more than the 0.3% Dow Jones estimate, according to the Bureau of Labor Statistics. On a 12-month basis, so-called inflation was up 8.2%, off its peak of around 9% in June, but still hovering near the highest levels since the early 1980s. With inflation persisting at a 40-year high, Simo says that she’s working to help grocers overcome the inflationary challenges affecting consumer behavior. “Right now, a big thing that we’re focused on is making the service more affordable,” she observes. “One of the things that we’re doing is making deals and discounts more accessible to people, which is why we created the Deals Tab. We can onboard value retailers that are on the more affordable end; that’s why we created a dollar hub. Then, when it comes to our membership, we want to continue providing more value, so with Instacart+, we relaunched it and we added the ability to have what we call family accounts.” Another inflation-fighting focus for Simo has been expanding SNAP. Over the past two years, Instacart has pioneered the EBT (electronic benefit transfer) SNAP retailer onboarding process, which has enabled EBT SNAP payments nation-


“So many people tell us that they’re saving time, they’re saving money on transportation costs, they’re managing their budget better. They can also start making healthier choices.” —Fidji Simo, CEO, Instacart

wide with more than 70 retailers and banners spanning more than 8,000 stores across 49 states and Washington, D.C. Today, the company has a goal of expanding EBT SNAP payment access to all Instacart grocery partners by 2030. Simo says that Instacart customers three years ago tended to be much more affluent than the average U.S. population, “whereas right now, if you look at our split of consumers, we actually map very closely to the U.S. population in terms of income, which to me is incredibly important.” It’s a metric that she tracks very closely because she wants to make sure that online grocery is something that’s accessible for all. “So many people tell us that they’re saving time, they’re saving money on transportation costs, they’re managing their budget better,” Simo says. “They can also start making healthier choices.” Instacart’s SNAP efforts are part of its new health initiative that aims to increase nutrition security, make health choices simpler for consumers and expand the role that food plays in improving health outcomes. The initiative launched in coordination with the White House Conference on Hunger, Nutrition and Health in September. “America’s health problem is actually a food problem,” Simo explains. “That’s why we launched Instacart Health, because we think health starts with good nutrition. And that’s why we’ve developed technologies for providers, nutritionists and dietitians to prescribe food in the same way as they would prescribe medicine.” In terms of grocery e-commerce consumer trends, Simo says she’s “seeing people just want a lot of different things and have different needs, even across the same week. We are continuing to seize the need for convenience. Our convenience business is a segment of consumers who on occasion are ready to pay more to have their deliveries delivered faster, and it’s part of the business we’re continuing to see expand.” She notes that people “always ask her whether quick commerce is dead,” now that so many entrants and innovators in that space seem to be foundering, but the reality is a bit more complicated than that. “Quick commerce as a single use case is not sustainable on its own, but what we want to offer is all the possible options priced the right way,” Simo says. “So, yes, if you want to pay more for faster delivery, by all means. Sometimes we need something urgently, but there’s going to be other times where you’re just ordering your weekly shop, and it’s totally fine if it arrives within an hour.” Grocers are telling Simo that options are what they want, because they want to capture all of these opportunities.

“They want to be there for their customers, no matter how their customers want to shop,” she affirms, “and so, if they have a technology partner that can help them provide all of these options, it’s great for them.”

Pipeline for the Future

Earlier this fall, the city of San Diego revealed that Instacart had agreed to pay a $45 million settlement to resolve claims that the company misclassified more than 300,000 of its delivery workers, which Instacart calls “shoppers,” as independent contractors over a period of five years. Instacart has denied any wrongdoing and continues to maintain that it has at all times correctly classified its delivery workers. According to Simo, however, the company has been listening to its workers and making some changes. “When I first got into the job, I spent a number of months really listening to what the shoppers needed,” she notes. “We addressed the biggest pain points. Ratings were generating a ton of anxiety, as they were worried that their ratings would impact their access to work. We’ve

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COVER STORY

been able to make progress on that. We’ve also changed the rules for when a customer is able to change their tip after delivery. That’s a way for shoppers to have more of a guarantee that when they get a tip, it sticks.” The company has also introduced various new benefits and perks for its community of more than 600,000 shoppers this year. In October, Instacart launched peak earning days, a feature providing shoppers with information about certain days that will offer higher earnings opportunities in specific areas, so they can plan for the week ahead. Earlier, in July, the company introduced Cart Star, a new rewards program for shoppers. Every qualifying shopper in the Cart Star program will receive tailored rewards and offerings through third-party partners, as well as directly within the Instacart Platform. Other features that Instacart has added for shoppers this year include new shopper app features and several upgrades to the customer tipping process. As for senior leadership at Instacart, Simo says that she’s thrilled about her newly enhanced executive ranks. “I just have a really incredible management team at this point, and am so very, very excited about that,” she enthuses. “We’ve added roughly 20 VPs in the last year, and we’ve really bolstered the ranks even under that C-suite level. We feel like we’re really well positioned to tackle our bolder vision. I think the most important thing is showing your employees not only that you care, but also that you’re going every step of the way to do the right thing by them.” When she thinks about the future of grocery, however, Simo admits that there’s still a lot of work to do. “Grocers still haven’t solved search technology so that people always can find what they need online,” she says. “They still haven’t solved how to identify the best substitution when they’re out of stock on something, personalization or online merchandising. That’s where we come in.” Her advice for grocers trying to stay ahead of what’s next is the same counsel she follows at her own company: Have a portfolio and start planting seeds for things that you think

“We want to empower retailers with the technologies that we build. We do not want to compete with them. If you look at all of our announcements in the last year, they are all about empowering grocers and taking our secret sauce and making it available to grocers on their own sites, inside their own stores, and really enabling them to compete better in that world.” —Fidji Simo, CEO, Instacart

your customers are going to need in the future. “The way we prioritize innovation is ... we listen to our customers, we listen to our retail partners and we prioritize accordingly,” she observes. “Even on something like advertising, for example. We could see the trend of retail media becoming big. But if you are a grocer, setting up an entire retail media organization on your own is pretty hard. So, if we can take everything we’ve learned about advertising on Instacart and put that in the hands of retailers, that’s pretty powerful. A lot of what we do is we start testing things on our marketplace and we then bring that to retailers.” The major growth drivers for Instacart, according to Simo, include launching new partner services, whether it’s in-store tech, convenience, alcohol, pickup, advertising or retail media. The one thing that won’t be driving growth, though, is becoming a retailer. “We are not planning on becoming a retailer; in fact, our strategy is the exact opposite,” Simo says. “We want to empower retailers with the technologies that we build. We do not want to compete with them. If you look at all of our announcements in the last year, they are all about empowering grocers and taking our secret sauce and making it available to grocers on their own sites, inside their own stores, and really enabling them to compete better in that world.”

Instacart's acquisition of Rosie looks to give more retailers, especially independents, access to tools and technologies that can lead to growth in their businesses and deeper engagement with their customers — all while retaining their unique store experience and brand identity.

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RETAILER DEEP DIVE

Costco Wholesale Corp.

Keeping the

Faith How the membership warehouse operator rides the loyalty factor for robust sales and growth. By Lynn Petrak

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oyalty can’t be bought, even with a membership. That’s something that Costco Wholesale Corp. has learned — and honed to its advantage — over the years. As a result of its business approach and the strategies that support it, the club store chain — which operates 839 warehouses globally and 578 in the United States and Puerto Rico — continually lands in the top tier of third-party polls of both shoppers and employees. Costco ranked first on Newsweek’s recent list of superstores and warehouse clubs, based on a survey of 30,000 customers. In another Newsweek poll of America’s Most Trustworthy Companies, the Issaquah, Wash.-based retailer came in 10th. Some consumers really get into their personal Costco store. A survey released in October by FinanceBuzz shared the states with the highest Costco ratings based on factors like stock, friendliness and cleanliness, and pegged the winner as


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RETAILER DEEP DIVE

Costco Wholesale Corp.

For its fourth quarter ending in late August, Costco reported that its top-performing categories were frozen, bakery, deli, candy, kiosks, tire, lawn and garden, jewelry, and toys.

South Carolina, followed by Ohio, Tennessee, Missouri and Connecticut. A look at social media reveals an array of Costco-centric fan pages. Renewal rates are a solid indication of member loyalty, and to that end, Costco’s membership renewal rate reached 92.6% in the United States and Canada by the end of its recently concluded fourth quarter. The retailer’s latest financial report shows a base of 65.8 million paid household members and 118.9 million cardholders. “We’ve been fortunate in the last couple of years to see new member signups increase at a higher rate and renewal rates to go to their highest levels in history,” Costco CFO Richard Galanti tells Progressive Grocer. “Even for first-year members, when they sign up for year two, those rates are higher than they have been historically.” Likewise, employees give Costco high marks. The company topped Forbes’ prestigious list of America’s Best Em30

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ployers by State in Colorado, Idaho, Nevada and Washington, and placed in the top five in nine additional states. On a global basis, Costco was seventh on Forbes’ latest ranking of the World’s Best Employers. In Progressive Grocer’s own list of the top 100 food and consumables retailers in North America, Costco comes in at No. 3 for 2022. The PG 100 is based on public and private sources, independent research, and proven forecasting techniques.

“We are opening 20 to 25 locations a year worldwide, with two-thirds of them in the U.S. We’re now in 13 countries and will be opening in our 14th: Sweden.” —Richard Galanti, CFO, Costco Wholesale Corp.


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RETAILER DEEP DIVE

Costco Wholesale Corp. Trust the Numbers

Issaquah, Wash.-based Costco recently hit all-timehigh member renewal rates, with a 92.6% renewal rate in the United States and Canada.

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Beyond consistently positive perceptions, Costco puts up big financial numbers that reflect its club-sized offerings and its loyalty-engendering approach to retailing. For its most recent fiscal year ending Aug. 28, Costco came in with $222.73 billion in net sales, up 16% from fiscal 2021 and largely in line with Wall Street expectations. Comparable sales in U.S. warehouses rose 10.4% on an adjusted basis (excluding gas and foreign exchange) for the year. The retailer’s net income hit $5.84 billion for the 52-week period ending in late August, a respectable increase over 2021’s $5.01 billion. Costco still shares monthly results, which also bode well for the new fiscal year. According to its September report, U.S. comps rose 11.2% over the five-week retail month and net sales were 10.1% higher than the same month in 2021.


From an e-commerce point of view, Costco is humming along on its own path. E-commerce sales rose 10.4% (adjusted) during the 2022 fiscal year and edged 0.7% higher from August to September. As with all retailers, the thorn in the side of inflation that has marked late 2021 and 2022 has affected Costco for both better and worse. On the better side, value-seeking shoppers have been stocking up, especially on items priced competitively against traditional grocery stores and other channels. Surging fuel prices, especially over the summer, have driven many consumers to Costco gas stations, which typically don’t require membership to gas up. According to the company’s latest earnings report, high overall gas prices positively affected sales during the retailer’s fourth quarter by as much as 5.5%. “We’ve gotten a lot of positive press

Costco continues to open new warehouses at a strong clip, with 20 to 25 new sites a year around the world.

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RETAILER DEEP DIVE

Costco Wholesale Corp. In addition to its perennially popular Kirkland Signature private label items, Costco continues to add new brands to its inventory, including Fairlife, Method Men and Hydro Flask.

adding, “All of our metrics are fine in terms of member loyalty.” The last increase occurred in June 2017.

A Warehouse View

on our gasoline prices, and we’ve seen that business grow dramatically — double digits on gallons compared to the U.S. population being near flat,” says Galanti. The climate of high inflation has spotlighted another aspect of Costco’s business that has created an intense, almost cult-like loyalty over the years: Despite surging prices elsewhere, Costco stuck with its $1.50 hot-dog-and-soda deal and its signature $4.99 rotisserie chicken, both of which spurred a lot of positive buzz on social media. Still, the choppiness of this inflation-defined year hasn’t left the warehouse store operator unscathed. Operating expenses went up for the most recent fiscal year, with merchandising costs increasing from about $170.7 billion in August 2021 to $199.4 billion by August 2022. Costco also reported that its assets of cash and cash equivalents were down compared with last year, while total liabilities edged upward. So far, though, there’s been no news about passing along higher costs of merchandise, labor or operations via a member fee hike. “We don’t disclose change rates, but we’ve done it historically every five and a half years, and if you look at the last three, they’ve averaged five years and seven months,” notes Galanti, Costco CFO Richard Galanti notes that the company is seeing "just a little light at the end of the tunnel" when it comes to inflation, wth minor improvements in some areas.

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Periodic COVID resurgences and inflation spikes haven’t spooked shoppers away from Costco stores. In its recent financial report, the company notes that traffic/shopping frequency climbed 7.2% at its locations worldwide and 5.2% in the United States during fiscal 2022. What has changed in the warehouses is what members are putting into their carts. Purchase habits continue to evolve as lifestyles have ebbed and flowed, Galanti points out. “We’ve come off two years of incredibly strong sales for the home, whether it’s patio furniture, indoor furniture, exercise equipment or other big-ticket items, because people weren’t traveling,” he observes. “If you look at the headlines now about consumer confidence flattening out, our numbers have come down from high increases we enjoyed for the last cou-


Going Big on Sustainability ple of years, but they are still strong compared to pre-COVID.” Galanti cites some other fast movers in warehouses, going into the home stretch of the calendar year. “Housewares have picked up recently, while fresh [food] has continued strong,” he notes. “Fresh was inordinately strong the first year of COVID, and we see some of that sticking as our market share in fresh continues to grow.” Early indicators point to a busy festive period, Galanti adds: “We are seeing the holiday season start off pretty well — people have been shopping early.” Burgeoning consumer interest in health and wellness is also spurring some changes at Costco warehouses. Earlier this fall, the retailer revealed that it’s offering a new blood glucose-monitoring system to its members, following the addition of a migraine treatment device over the summer. Costco has also become known for its hearing aid products and services, at a time when consumers are flocking to retailers for those items following the Biden administration’s approval of over-the-counter sales. Meanwhile, Costco’s beloved sampling program continues to incentivize sales in its warehouses, and its private label Kirkland brand is faring well. According to the latest financial report, Kirkland Signature merchandise penetration was about 28% for the last fiscal year, a 1% uptick.

Future Footprints

Largely staying with what has made it successful among consumers, Costco has been able to post strong sales, move much of its inventory at a time when other retailers are stuck with a glut of product, and continue to grow its footprint. “We are opening 20 to 25 locations a year worldwide, with two-thirds of them in the U.S. We’re now in 13 countries and will be opening in our 14th: Sweden,” asserts Galanti, who started with Costco more than 38 years ago, when there were just four Costco warehouses. Costco wraps up its first fiscal quarter of 2023 on Nov. 20, and plans to release first-quarter results on or around Dec. 8.

Although its fiscal 2022 sustainability results aren’t out yet — they’ll be detailed at the annual shareholders meeting in January — Costco Wholesale Corp. has balanced its warehouse growth and daily operations in a still-turbulent environment with its ongoing commitments to people and the planet. At a time when nearly all retailers are more mindful of and vocal about their business practices and cultures, Issaquah, Wash.-based Costco has made major strides toward its four sustainability pillars of taking care of its employees, supporting the communities where it operates, operating efficiently in an environmentally responsible manner and strategically sourcing merchandise in a sustainable manner. On the employee front, Costco touts its premium benefits, industry-leading $23.56-per-hour average wage in the United States, and high retention rates. “One thing about Costco — people have been here a long time and we have low turnover,” notes CFO Richard Galanti. “Our hourly turnover is in the low teens.” Employment ties into its pillar of community support, as the warehouse operator pledges to hire workers who represent their communities. Costco’s community support also encompasses charitable donations, which topped $58 million in 2021. From an environmental standpoint, Costco cites actions such as taking part in the Roundtable on Sustainable Palm Oil and reducing its packaging to the tune of 17 million pounds last year. The company met all of the milestones for 2021 as outlined in its ambitious climate action plan, which runs through 2024. This year, Costco has initiated several pilot programs to explore additional decarbonization opportunities related to emissions. Among other programs, these opportunities include the testing of electric bakery ovens at a warehouse location, conducting solar electric vehicle-charging tests at multiple warehouse locations, exploring renewable-diesel options for business delivery trucks in California, and testing refrigerant leak-reduction technology systems at 12 of its warehouse locations. Even Costco’s famous $4.99 Kirkland Signature rotisserie chickens have come into focus from a sustainability standpoint, as two shareholders filed a lawsuit over the summer making claims about the company’s poultry production practices. Costco is unique in Costco — which sold 106 miooion of its that it runs a vertically integrated rotisserie chickens in 2021 — runs a poultry production and processing vertically integrated poultry complex in plant, Lincoln Premium Poultry, in Nebraska to help supply its birds. Fremont, Neb., which raises around 100 million birds a year. According to information shared on Costco’s website, the warehouse operator has taken several measures to optimize broiler welfare at its poultry complex. The birds are raised uncaged in barns, where they are free to move about without restrictions, and the barns follow standards developed by the National Chicken Council. The plants are regularly inspected by independent third party auditors, Costco notes, and the company has deployed a more humane slaughter method of controlled-atmosphere stunning. In 2021, the company even brought in acclaimed animal welfare expert Dr. Temple Grandin to make recommendations for enhancements at the Nebraska site, many of which are in the process of being implemented. —Lynn Petrak

PROGRESSIVE GROCER November 2022

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SOLUTIONS

Branded Proteins

Meat Shoppers Polarize Choices AMID R AMPANT INFL ATION, CONSUMERS WANT AGGRESSIVE PRICING OR ALL-OUT CONVENIENCE, WITH BR ANDED ITEMS OF TEN FULFILLING THE L AT TER AT THE E XPENSE OF THE FORMER. By Debby Garbato

ouble-digit price increases in many meat and poultry categories are making consumers see red at the cash register. This is prompting them to choose cheaper cuts, money-saving combo deals and recipes requiring less meat. Bulk packaging and private labels are also experiencing more activity, as are pork and chicken overall. But when consumers are pressed for time, convenience often trumps price. Then they often have no compunctions about splurging on fully or partly prepared items. Premium and organic products are also performing well, particularly among affluent and health-conscious consumers and those looking to save by creating restaurant-style meals at home.

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Creekstone Farm's premium all-natural tenderloins contain no hormones or antibiotics. Many customers associate these claims with taste and quality, and are willing to pay more for such products.

Key Takeaways When consumers are pressed for time, convenience often trumps price, making easy-prep offerings like pre-marinated, pre-cut or pre-seasoned meats attractive choices. Preparing foods in stores provides fresh, customized offerings, but retailers must contend with cost and availability of suitable labor, while branded options abound. In the near future, some shoppers will seek bargains, while others may reduce spending in other areas to continue purchasing branded convenience-oriented or premium meat products.


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SOLUTIONS

Branded Proteins

SpartanNash offers many ready-to-cook items such as stuffed chicken breast and stuffed pork chops. In partnership with its vendors, it closely watches pricing, adjusting its product mix accordingly.

“Consumers are switching to more affordable proteins like chicken, pork and lots of ground meat,” affirms Rick Stein, VP of fresh foods at Arlington, Va.-based FMI — The Food Industry Association. “Retailers are trying to provide value and help them stretch dollars. But there’s idiosyncrasies. Shoppers say their dollar doesn’t go as far and they must be judicious. Then they’ll buy prepared foods because convenience means more than dollars. I don’t know the psychology. In inflationary times, you can’t stereotype consumers.” Jonathan Greenway, global lead of the consumer products

practice at New York-based global consulting firm Alix Partners, believes that more upper-middle-tier shoppers are trading down to the mid-tier. “People who buy premium priced will always have money for food,” notes Greenway. “It’s the almost-premium sector where people trade down to the middle. Middle brands benefit, although they lose some sales to value brands. The bottom end will benefit most.” Midwestern retailer and distributor SpartanNash closely monitors this ever-changing market. Working closely with suppliers, it evaluates pricing and introduces products that meet current needs. “When shoppers face rising costs, some categories are impacted by cautious spending,” says Tim Kent, director of meat and seafood at the Grand Rapids, Mich.-based company. “Part of SpartanNash’s mission to deliver ingredients for a better life means offering a range of meat options so shoppers don’t have to compromise due to budgets.” For the 52 weeks ended in September 2022, meat prices increased 6.8% category-wide, compared with the previous 52 weeks, according to Chicago-based IRI. Since September 2019, prices have risen 26.3%. On a price-per-pound basis, hardest-hit categories for the 52 weeks ending in September 2022 include fresh chicken, up 19.3%; fresh turkey, up 18.5%; processed chicken, up 16.9%; breakfast sausage, up 15.2%; and dinner sausage, up 11.8%.

Premium products like Creekstone Farms' Black Angus Beef and Natural Duroc Pork are attractive to affluent and health-conscious shoppers, as well as people looking to re-create restaurant-style dinners at home.

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“Consumers continue seeking convenience. The closer you get a product to a ready-to-cook state, the better it performs.” —Tim Kent, SpartanNash

Bigger Meat Departments

Over the past two years, many retailers have expanded meat and other fresh departments in square footage and offerings. Meat has benefited so much that it now outranks produce as a deciding factor in where people shop “for the first time in a long time,” observes Stein. Ground meat sections now provide more choices in aggressively priced convenient items. Ground poultry, beef and pork are often showcased together. The strategy seems to be working. Since 2019, pounds of ground meats sold have increased more than 22%, notes IRI. Beef commands 85% of ground meat dollars. It’s a good value, with price increases in the low single digits. “Consumers can comparison shop and are buying lots of ground meat,” says Stein. “It’s versatile, convenient and can be turned into tacos, chili and many things. You can buy two pounds, use one and freeze the other, or use the other pound the next night.” Retailers are also offering value by bundling together multiple meat types at one price, he adds.

Some meats, like fresh pork, are “consistently viewed as values, even with price volatility,” notes Kent. According to FMI, price per pound only increased 0.3% to $3.18 over the past year. The same goes for fresh poultry. Even with price increases, chicken averages $3.15 per pound, turkey, $4.22. According to the Washington, D.C.-based National Chicken Council, individual chicken consumption was 96.9 pounds this year, versus 58.9 pounds for beef and 51.1 pounds for pork. “With chicken, consumers can still have a premium experience at a smaller price compared to many red meats,” notes David Zucker, CMO and SVP of e-commerce at Salisbury, Md.-based Perdue Farms. “Nutrition, value and versatility are top reasons for consuming more chicken. Perdue continues to evaluate price strategies, including use of value bundles.” Zucker cites growing demand for thighs, which have been popularized by wing shops and bars, and whole chickens. Also, use of smokers and air fryers is growing. “Consumers are getting more inventive about preparing chicken,” he says. “We’re updating website recipes to account for this.” Private label is also gaining ground across multiple meat segments. FMI’s “Power of Meat 2022” report

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SOLUTIONS

Branded Proteins Premium Priced Despite higher prices, premium, natural and organic meats are in demand. They appeal to customers who want quality, gourmet and/or healthy food at almost any cost. Animal welfare and sustainability are also important. Some purchasers are affluent. Others believe strongly in health-oriented or other food claims and will cut spending in other areas to splurge on pricier meats. “This is a micro market where shoppers pay a premium,” says Colin Harter, EVP of sales and marketing at San Francisco-based non-GMO meat supplier True Story Foods. “They’ll cut elsewhere before they cut what they eat. You can taste the difference.” COVID-19 has driven more people to make healthier food choices, notes Tim Kent, director of meat and seafood at Grand Rapids, Mich.-based SpartanNash. “Our shoppers will pay a bit more to add these qualities to their cart.” Customers often associate claims like “all-natural,” “no hormones” and “no antibiotics” with taste and quality, according to Jim Rogers, SVP of sales at Arkansas City, Kan.-based Creekstone Farms, which markets premium Black Angus beef. “Many home cooks want to experiment,” he points out. “They’re confident and want to re-create restaurant meals. Retailers can capture the curious meat consumer.” True Story Foods makes these claims with Berkshire Kurobuta organic pork. Its humanely raised pigs’ “Old World” genetics help produce meat that is redder, sweeter and fat-laced, making it more tender and juicier. “These characteristics were taken out of hogs in the 1980s to make pork the ‘other white meat,’” explains Harter. Popular offerings from the company include pulled pork, bacon and carver-style chicken breasts, which work well in salads and wraps. Harter hopes to add seasoned and deli sliced versions to the lineup. Also making in-roads is European veal. The key ingredient in ossobuco and saltimbocca, the protein is known for its light color and delicate taste and texture. In the United States, the Dutch Meat Industry Association is promoting Trusted Veal from Europe. Veal hails from Holland, the European Union’s largest veal producer. “Trusted Veal has been enjoyed in European fine dining for decades,” says Frans van Dongen, director of international affairs for the Dutch Meat Industry Association. “It’s relatively new to the U.S. As shoppers become increasingly interested in global flavors, the Trusted Veal team is set to present Trusted Veal to the adventurous home chef.” True Story Foods' all-natural pork products are made from Berkshire pigs, making the meat redder, sweeter, fat-laced and juicy.

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Launched in 2019, Perdue's Chicken Plus label combines chicken and vegetables, addressing shoppers' desire to increase vegetable consumption. Chicken Tots, its newest product, incorporates chicken, cauliflower, chickpeas, cabbage and potatoes beneath a crunchy coating.

finds that consumer preferences for private brands reached new highs, at 31% for fresh and 26% for processed. Branded preferences are also high, at 29%. SpartanNash’s shoppers are purchasing its Our Brands private label products at “two times the pace,” notes Kent. SpartanNash is further investing in this cross-category portfolio to “meet customers’ needs in this inflationary environment,” he adds. Meats include bacon, sausage, lunch meat and meatballs.

Succulent, Seasoned and Savory

Interest in convenience-oriented meats is high. According to “The Power of Meat,” they were purchased by 67% of meat customers in 2022, compared with 37% in 2016. Products include pre-marinated, pre-cut or pre-seasoned kabobs; meatloaf; meatballs; pre-marinated chicken wings; and meal kits. Among shoppers, 26% buy such items frequently. Key purchasing drivers are saving time (28%), superior flavor (22%) and “something different” (20%). “Consumers continue seeking convenience,” asserts Kent. “The closer you get a product to a ready-to-cook state, the better it performs.” Kent sees a “marked uptick” in seasoned and marinated meats, market-made sausages and trimmed chicken. Many items are prepared in stores. “Taste preferences are becoming bolder, more unique and spicier,” he adds. “Our teams work hard to find the next flavor profile that will resonate.” Zucker notes that consumers have become “increasingly experimental” with new flavor combinations: “Coming out of the pandemic, unique flavors are driving growth in every category.” In chicken wings, he cites less interest


Hard-Boiled Egg-onomics in saucy offerings, and more in rubs and other flavors “while getting the right crispiness and texture.” Buffalo sauce is seeing more dry-seasoning blends that “get the heat and flavor without the mess,” he observes. Preparing foods in stores provides fresh, customized offerings, but retailers must contend with cost and availability of suitable labor. Some have opted for centralized commissaries or outsourcing production. “Labor continues to be challenging for grocers,” admits Greenway. “Outsourcing costs less and makes products consistent chainwide. Think of how many ribs a line manufacturer can prepare hourly compared to someone in a supermarket. It’s dramatically different.” There are also many branded options. Zucker notes strong demand for Perdue’s Short Cuts (pre-carved chicken breast) and Perfect Portions (individually wrapped skinless, boneless breasts). “They remove some preparation but allow consumers to have control making the meal,” he adds.

Nuggets and Finger Foods

Finger foods are another focus, like Purdue’s new limited-edition BBQ Seasoned Pork Bites. They’re breaded and flavored with sharp cheddar and barbecue sauce. Perdue also offers all-natural Chicken Plus, which blends vegetables and chicken in nuggets and tenders.

“With chicken, consumers can still have a premium experience at a smaller price compared to many red meats.” —David Zucker, Perdue Farms

Some consumers have found a new way to feather their nests and hedge against rising food prices: They’re raising backyard chickens. According to the 2021-22 American Pet Products Association’s (APPA) National Pet Owners Survey, individual chicken ownership climbed from 8% in 2018 to 13% just two years later. Chicken hatcheries are reporting sales increases of anywhere from 100% to 500%, according to thehappychickencoop. com. Even Amazon is getting in on the action, with almost 100 listings for prefabricated chicken coops and myriad searches for baby chick supplies and nesting boxes. Chickens are being raised mainly for eggs, followed by meat. While dodging inflation is a key motivator, consumers also want to make sure chickens are raised naturally, cage-free and in sanitary conditions. Others began raising them as a hobby during the COVID-19 crisis. Additionally, chicken manure is an excellent fertilizer for tomatoes and other vegetables. More men than women raise chickens, noted the Stamford, Conn.-based APPA. Among chicken owners, 22% are Millennials and 19% are Gen Zers. Many are affluent and regard chickens as pets.

New to the brand this year are Chicken Tots, made from white meat, cauliflower, chickpeas, potatoes and cabbage, and covered with a crunchy panko coating. Some finger foods emphasize holidays or are seasonal. Introduced last Thanksgiving, Purdue’s ThanksNuggets pair antibiotic-free turkey with potato-seasoned breading. Meanwhile, this past Halloween, Tyson unveiled Spooky Nuggets, white-meat chicken pieces shaped like pumpkins, bats and ghosts. Sausages are also popular during fall. This year, Hormel brought back its circa 1968 Little Sizzlers original pork dinner sausage for a limited time under its Black Label Bacon brand. Products were offered at select Midwestern retailers. For the near future, inflation shows no signs of slowing, running at a near 40-year high. Fall consumer price index figures indicate that food prices will continue rising at double-digit rates. Additionally, the retail price of food at grocery is rising faster than restaurant prices. How this will further affect meat spending remains to be seen. While some shoppers will seek bargains, others may reduce spending in travel, home improvement or other areas to continue purchasing convenience-oriented or premium meat products. It all boils down to personal priorities. PROGRESSIVE GROCER November 2022

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PERIMETER

Bakery Trends Treats like cakes, doughnuts and pastries are in a sweet spot coming out of the pandemic. New items like PopDots from Europastry (left) can bring excitement to the in-store bakery.

Global Inspiration

“During the original COVID-19 outbreak, when more people were relying on grocery stores, we found that consumers made a habit of treating themselves by buying baked goods more often to help ease stress,” observes Sarah Hickey, senior director of insights and market research for Dawn Foods, based in Jackson, Mich. “As pandemic restrictions are now largely lifted, we are finding that the rise in sweet baked goods is here to stay. According to Dawn’s trends research, 77% of people surveyed plan to continue making sweet baked goods a regular part of their routine moving forward.” Research from the International Dairy Deli Bakery Association (IDDBA), based in Madison, Wis., suggests a similar outlook for the future of in-store bakery. Since last fall, holiday and special-occasion celebrations have resoundingly resumed, fueling the in-store bakery and other perimeter departments. Meanwhile, shoppers are looking for more convenience and allowing themselves special treats as they focus on their emotional well-being, according to the trade group’s most current bakery trends information.

THE TIME IS RIGHT FOR SUPERMARKE T BAKERIES TO STEP UP THEIR INTERNATIONAL DESSERT ASSORTMENTS. By Jenny McTaggart

International desserts have always been a part of American bakeries, since, after all, the vast majority of Americans trace their origins back to other countries. Indeed, what would an American bakery be without Italian cannoli, German chocolate cake, pastries from France or, in more recent years, tres leches cake from Latin America? But today’s retailers should consider elevating their bakery offerings to include new flavors and recipes from around the world — while also promoting them more prominently in-store and online — to reach consumers who are either curious about different foods, looking for new inspiration for entertaining or are just interested in treating themselves after a particularly stressful couple of years. By doing so, grocers can create new excitement around the bakery and capitalize on increased sales. The timing to do this seems ideal, since the in-store bakery is experiencing a rebound, boosted in part by the COVID-19 pandemic. Treats like cakes, cookies, doughnuts and pastries in particular are in a sweet spot, due to the emotional connection that consumers so often make to desserts.

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Key Takeaways Retailers should consider elevating their bakery offerings to include new flavors and recipes from around the world to create new excitement around the bakery and capitalize on increased sales. In a globally minded world, authentic recipes can also pique the interest of shoppers whose roots aren’t tied to the countries that those recipes come from. Limited offers, sampling, occasion-based marketing, seasonal variations on ethnic flavors, and online promotions are great ways to introduce shoppers to international baked goods.


And even though inflation remains a top concern for consumers, IDDBA’s research suggests that they’ll pay more for premium desserts if these treats deliver on taste and create a “foodie” experience — especially if the price tag is perceived as being equivalent to or better than what’s available at a restaurant.

Universal Appeal

Of course, some grocers have already been perfecting the craft of ethnic merchandising over the years, so their current bakery selections include recipes that are targeted toward consumers whose families originate from specific countries. Just a few examples include churros (a type of fried dough) and conchas (traditional Mexican sweet bread rolls) in Hispanic-centric neighborhoods, and dan ta (egg tarts) in Asian markets. But in today’s globally minded, digital-savvy world, these authentic recipes can also pique the interest of shoppers whose roots aren’t tied to these countries. Some retailers are recognizing this trend and starting to grow their ethnic product selection.

A growing number of mainstream grocers are choosing to add churros and other Hispanic sweets to their bakery selections, according to Dawn Foods.

“Sweet baked goods from around the world are now mainstream, and more than ever, consumers are interested in exploring other cultures through food.” —Sarah Hickey, Dawn Foods

Hickey notes, for instance, that Dawn Foods has recently been experiencing a lot of growth in its Hispanic offerings, including churros, conchas and tres leches, among non-Hispanic-owned/-focused supermarkets. Whitney Atkins, VP of marketing for IDDBA, suggests that retailers pay close attention to their local markets but also recognize the appeal of specialty products to the mainstream. “When you consider the importance of personalization for today’s consumer and the [perennial] importance of convenience, the key is to know what products reflect the shoppers in the neighborhood,” she emphasizes. “Also, know your customers’ needs and wants. If an area is indexing high in the Hispanic population, for instance, then you want to have the products they desire and be ready with merchandising plans around important cultural holidays to drive sales, profits and customer satisfaction.” At the same time, however, she notes, “You will likely gain incremental movement from other consumers looking to explore and have that experience.” Dawn Foods’ recently released “Global Bakery Trends Report” underscores the appeal of international products in today’s more globally oriented world. One of the 2023 trends that the company highlights in the report is “experience exploration” — the idea that consumers around the world seek foods that not only enhance their nostalgic memories, but that also incorporate fresh and new flavor experiences from other cultures. “Through our ‘Global Bakery Trends Report,’ we learned that sweet baked goods from around the world are now mainstream, and more than ever, consumers

Sales on the Rise in Fresh Bakery Recent IRI data shows that the fresh perimeter and in-aisle bakery delivered growth in August 2022, although dollar growth came primarily through inflation. Unit sales were down 4.6% overall for fresh bakery. Cakes and cookies dominated dollar sales, while a few growth areas in units included doughnuts, croissants and specialty desserts (specialty desserts encompass perimeter candy like fudge, truffles and peanut brittle; dessert pastry trays; and other miscellaneous desserts and dessert pastries).

Perimeter Bakery (Sweets): Current Sales Versus Year Ago DOLLARS VS. 2019 2020 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 AUG. 22 YEAR AGO

UNITS VS. YEAR AGO

Cakes

+2.5%

-2.7%

+7.1%

+23.7%

+13.8%

+15.8%

+9%

+5%

$382M

+3.4%

-9.1%

Cookies

+6.0%

-2.7%

+2.4%

+21.8%

+15.7%

+19.4%

+13%

+18%

$171M

+13.8%

-0.1%

Pastries/Danishes/ Coffee Cakes

+7.8%

+2.7%

+9.1%

+17.6%

+16.0%

+14.1%

+10%

+7%

$119M

+3.7%

-18.4%

Doughnuts

+1.6%

-17.8%

-11.0%

+31.0%

+15.4%

+15.0%

+17%

+19%

$85M

+26.8%

+11.0%

Pies

+2.2%

-0.7%

+7.2%

+12.5%

+1.8%

+4.5%

+3%

+13%

$58M

-4.0%

-28.3%

+25.6%

+14.0%

+14.7%

+24.1%

+19.4%

+20.7%

+21%

+13%

$48M

+18.5%

+2.5%

Brownies/Bars

+6.5%

+2.2%

+15.3%

+26.7%

+19.2%

+2.4%

-5%

+9%

$27M

+7.2%

-5.6%

Specialty Desserts

+7.6%

-30.4%

-18.0%

+37.0%

+25.5%

+27.2%

+13%

+12%

$9M

+3.9%

+17.5%

Croissants

Source: IRI, Total U.S. Integrated Fresh, MULO (multi-outlet) * Data includes fixed and random-weight baked goods known to be commonly found in the perimeter bakery area, based on IRI’s Integrated Fresh research process powered in cooperation with IDDBA

PROGRESSIVE GROCER November 2022

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Bakery Trends are interested in exploring other cultures through food,” notes Hickey. “According to our global trends data, 78% of consumers like to try new foods and food experiences. Of the global consumers surveyed, we found that the majority have tried different origins of sweet baked goods and have liked them, especially when trying traditional sweet baked goods with a spin on them.” As an example of one such traditional-meets-global mashup, she points to mochi doughnuts, which combine traditional American doughnuts with Japanese mochi. In fact, fried dough is an example of a product that consumers all over the globe enjoy, albeit with slightly different variations, notes Hickey, who cites beignets from France, paczki (a jelly-filled doughnut) from Eastern Europe and churros from Mexico. “We have found that consumers globally enjoy all these different types of fried dough, and over a third of them are planning to experience other cultures through these desserts,” she explains. Egg tarts are another product that tends to have universal appeal. Asian American grocer 99 Ranch Market, based in Buena Park, Calif., has experienced phenomenal growth with its Portuguese Egg Tarts, a pastry that’s similar to Chinese dan ta, according to an article on its website. Europastry, a frozen bakery specialist with U.S. headquarters in Ronkonkoma, N.Y., is another company that’s working with retailers to enhance their global offerings, in this case, by providing parbaked premium brioche, pastries, and unique thaw-and-sell doughnuts inspired by European recipes. The company’s website notes: “Our products embody the spirit of France’s charming cafes, Italy’s lively streets, Copenhagen’s centennial bakeries and Lisbon’s romantic feel.” Carolina Moré, marketing director at Europastry USA, says that current trending items from the company include pastel de nata, an egg custard from Portugal; Danish Bretzels, a pastry inspired by pretzels; and Dots Original, a line of doughnuts made from an original recipe in Spain. “We’ve detected a clear positive trend for European-style pastries and brioche in the U.S. market,” she notes. To help introduce American consumers to these European recipes, Moré suggests that retailers consider creating limited offers, perhaps on a monthly basis, using the origin of the countries or the story behind the tradition of these desserts. Sampling is another great way to call attention to new globally inspired selections, and IDDBA suggests offering smaller portion sizes for those who don’t want to indulge too much. Dawn Foods’ “Global Bakery Trends Report” shares the idea of featuring an international cookie plate — an ideal showcase item for get-togethers and celebrations. Retailers should also consider occasion-based marketing, including primary and secondary holidays, along with self-invented holidays and special occasions, to promote premium items in the bakery, advises IDDBA.

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Touring the World Through Taste Supermarket bakers might want to take note of some globally inspired flavors that are trending and could be incorporated into some of their new dessert ideas. In Whole Foods Market’s Trend Forecast for 2022, the natural and organic food chain includes hibiscus, a flower that originated in Asia and the Pacific Islands and imparts a cranberrylike, sweet and slightly earthy flavor, and moringa, a tree that’s native to India and can be used as a matcha alternative. Earlier this year, Hunt Valley, Md.-based spice maker McCormick released a limited-edition seasoning called Miso Caramel and shared a few related recipe ideas, including Miso Caramel Oatmeal Whoopie Pies and Miso Caramel Sauce (miso is a traditional Japanese seasoning). In addition, one of the themes in this year’s “McCormick’s Flavor Forecast” is “plus sweet,” or how sweetness finds new dimensions through subtle and unexpected flavor combinations. In a pop-up experience that accompanied the report’s release, McCormick featured a “Sundae Service” with globally inspired ice cream toppings, including gomashio, a Japanese condiment made with sesame and salt, and chamoy, a Mexican sauce made with pickled fruits and chili peppers. Other international spices to consider include tamarind, turmeric and cardamom, all of which can add a surprising kick to baked treats.

Highlighting Seasonal Flavors

In the U.S. market, Europastry has expanded its line of authentic Danish Bretzels to include chocolate, custard and other fillings.

Another way that retailers can step up their global bakery assortments is to offer seasonal variations on ethnic flavors, notes Hickey. “For example, as we are now in the fall season, a pumpkin-spiced paczki could be a creative way to draw consumers’ attention to trying this dessert.” H-E-B, a regional grocer based in San Antonio that’s known for its savvy ethnic merchandising, recently featured Pumpkin Chai Tres Leches on its website. Vallarta Supermarkets, a Hispanic-owned grocer based in Sylmar, Calif., and operating stores throughout the state, showcased pumpkin spice horchatas and tamales on its website in October. While these aren’t dessert items, they still provide a great example of playing with flavors to celebrate new seasons and capture consumer interest. Last but not least, today’s grocers have to consider how they’re promoting bakery treats online as well as in the store. There seems to be a lot of room for growth in this area, judging from a recent survey of retailers’ websites. Dawn Foods’ Hickey observes that since online ordering and delivery are here to stay, grocers need to ensure that their digital listings of products are up to date and are marketed well to their customers. Meanwhile, they should be mindful of how social media can influence purchases. At least one grocer is already in tune with this idea: Earlier this year, Vallarta Supermarkets posted a short video showing a team member making conchas on its Instagram account. Creative ideas like this can go a long way toward spreading the universal love for sweet treats.


CENTER STORE

Beverage Alcohol Entertaining Trends

Lifting Holiday ‘Spirits’ AF TER T WO RESTRICTIVE COVID WINTERS, CONSUMERS ARE E AGER TO R AISE A GL ASS (OR T WO) WITH MORE FAMILY AND FRIENDS THIS FESTIVE SE ASON. By Marian Zboraj is the season for at-home entertaining to shine. With COVID-19 restrictions virtually gone, consumers are eager to gather with more friends and family this holiday season. And alcoholic beverages, while popular throughout the year, are among the most in-demand seasonal items that consumers add to their holiday shopping lists.

Meeting the seasonal demand for eggnog, single-serve BuzzBallz Eggnog cocktails are decadent and rich in vanilla flavor, with familiar hints of cinnamon and nutmeg.

Key Takeaways With COVID-19 restrictions virtually gone, consumers are eager to gather with more friends and family for the holidays. This year’s hosts are more cost-conscious than ever before as prices skyrocket and the cost of living increases, giving store brands and ready-to-drink cocktails a boost. Also on tap are seasonal spiced ales, wine variety packs and advent calendars to encourage experimentation, and inventively boozy takes on that classic holiday beverage, eggnog. PROGRESSIVE GROCER November 2022

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Beverage Alcohol Entertaining Trends Anchor Brewing suggests pairing its 7.2% Christmas Ale with hearty winter fare such as roasted achiote chicken with mole or a sweet treat like chocolate Bundt cake.

New York-based digital shopper marketing platform Chicory recently shared its Holiday Grocery Shopping 2022 guide, detailing how more than 1,300 survey respondents plan to buy alcohol for this year’s celebrations. More than half of those surveyed said that they planned to purchase wine over the holidays, with beer coming in as the second most preferred alcoholic beverage option. Data from Washington, D.C.-based global decision intelligence company Morning Consult delves even further, revealing that the drinks served to partygoers varies by generation. While Baby Boomers stick with wine — or nothing at all — for holiday gatherings, Millennials are more likely to reach for a range of alcoholic beverages. Although wine is still a top choice for this demographic, they’re just as likely to serve beer. Also, Millennials are roughly three times as likely as Baby Boomers to say that they’ll serve mixed drinks or cocktails at Thanksgiving. Millennials generally drink more alcohol than Gen Xers and Baby Boomers, which provides more opportunities for them to purchase different types of drinks. They’re also more likely to say that they’ve tried new adult beverages in the past month.

Price-Conscious Party Planning

This year’s holiday party hosts are more cost-conscious than ever before as prices skyrocket and the cost of living increases. According to a holiday shopping survey of more than 14,400 American consumers from Shopkick, a Denver-based shopping rewards app, 85% of consumers say that price and budget will influence them the most when building their

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holiday shopping lists. Arlington, Va.-based FMI — The Food Industry Association discovered that, to mitigate increased costs, 21% of consumers plan to choose less expensive private label options for winter celebrations. The growing boozy store-brand segment is therefore poised to boost overall sales of adult beverages during the upcoming holidays. In fact, store-brand dollar sales in the liquor department increased by 17% to $64 million for the 52 weeks ending Sept. 4 versus the prior year, according to Chicago-based IRI. Just because store-brand alcohol products are cheaper doesn’t mean they skimp on quality, however. In last year’s Product of the Year USA program, the winner in the wine category wasn’t a recognized-name varietal from a storied vintner, but rather a $10 Quarter Cut Bourbon Barrel-Aged Cabernet Sauvignon sold exclusively at Batavia, Ill.-based discounter Aldi US.

21st Amendment Brewery’s Fireside Chat is a winter warmer that’s full of spices and flavorful cocoa nibs meant to be enjoyed this holiday season with family and friends.


Economical ready-to-drink (RTD) cocktails are also experiencing an uptick in popularity. Rather than spending money on handmade cocktails that usually require high-priced liquors and various ingredients, at-home hosts strapped for cash will be attracted to RTD alcohol for their mixed-drink needs. These RTD products can also ease the burden of party cleanup without the need for additional glassware for cocktail mixing and shaking. According to data from Chicago-based Mintel, nearly 50% of adults over 22 years old reported drinking RTD cocktails in 2021, up from 40% in 2018. Further, as indicated by data from Chicago-based NielsenIQ — which measures malt-based beverages (including hard seltzer), spirits-based options and wine-based products as one large RTD category — spirits-based RTD cocktails led growth across the $9.6-billion RTD category in both 2020 and 2021. “American consumers are increasingly prioritizing convenience, taste, variety and quality in their choice of beverages,” says Robert Blizzard, partner at Alexandria, Va.-based Public Opinion Strategies, a national political and public affairs research firm. “Spirits-based RTDs fit squarely in this trend, so it’s no surprise these products are leading the spirits category in both market growth and consumer popularity.”

Entertaining With Eggnog

Nothing says holiday entertaining more than sipping on eggnog, and consumer brands are ready to meet the high demand for this popular beverage. For example, after a successful 2021 launch, BuzzBallz Eggnog is returning for the 2022 holiday season with both wine- and spirit-based variations. According to the RTD cocktail company, its spirit-based Cocktails and winebased Chillers embody a classic eggnog taste, decadent and rich in vanilla flavor, with familiar hints of cinnamon and nutmeg. Single-serve BuzzBallz Eggnog Chillers are made with an orange wine base, while BuzzBallz Eggnog Cocktails use real rum along with fresh dairy cream and spices. “We found most of the premade eggnog with alcohol to be somewhat harsh,” notes Charles Irvin, VP of R&D for Carrollton, Texas-based BuzzBallz. “We played around quite a bit with different spice-and-cream ratios, but ultimately came up with cocktails that we thought made eggnog better.” These seasonal flavors join more than a dozen others in the BuzzBallz portfolio. Meanwhile, breakfast brand Eggo is out to make adulting a little more fun. Battle Creek, Mich.-based Kellogg Co. has created Eggo Nog to elevate parents’ free time and give grownups a unique way to “L’Eggo” of holiday stress this season. Made in partnership with craft distillery Sugarlands Distilling Co., in Gatlinburg, Tenn., 20% ABV Eggo Nog Appalachian Sippin’ Cream is a rich rum-based liqueur with cinnamon and nutmeg flavor notes. “The holidays are exhausting for parents — from extra family responsibilities to the pressure of making the holidays perfect, parents rarely have any downtime for themselves,” says Joe Beauprez, marketing director for Eggo. “We created Eggo Nog to give parents a delicious way to indulge in some well-deserved ‘evening me time.’ Paired perfectly with our Eggo Thick & Fluffy Waffles — maybe even topped with a dollop of ice cream —

Kroger recently launched its specially curated Winter Wine Box Celebration Pack featuring reds, whites, rosé and sparkling varieties from around the world, including Bulgaria, France, Hungary, Italy, Portugal, the Republic of North Macedonia, South Africa and Spain.

Eggo Nog is sure to help parents L’Eggo during one of the busiest times of the year.” Adds Greg Eidam, Sugarlands’ master distiller: “We’re very excited to partner with an iconic brand like Eggo to create this fun and festive version of our popular Appalachian Sippin’ Cream. Our team at the distillery worked hard to ensure hints of cinnamon and nutmeg came through in the flavors, making every sip reminiscent of a perfectly toasted Eggo waffle. We’re confident this tasty twist on the classic holiday treat will have parents longing for their ‘evening me time’ all holiday season long.” Vegan and allergen-sensitive consumers can also partake in eggnog fun. Misunderstood Whiskey Co. is bringing the first RTD dairy-free hard 14% ABV Oat Nog to shelves this holiday season. The limited release, which uses Misunderstood’s Ginger Spiced Whiskey and oat milk as its base, provides a light, flavorful and creamy alternative to traditional eggnog. “Our goal has always been to change perceptions with products that taste so good, they make you think twice about a category,” explains Chris Buglisi, co-founder of Bardstown, Ky.-based Misunderstood Whiskey. “First, it was bringing together flavored whiskey drinkers and traditional whiskey drinkers with our Ginger Spiced Whiskey, and now bringing together the dairy and nondairy communities with our Oat Nog.” Much like Misunderstood’s flagship whiskey, which is blended with real ginger, shelf-stable Misunderstood Oat Nog is made with quality ingredients that include sustainably sourced oat milk blended with 100% American whiskey, and is free of neutral grain spirit, high-fructose corn syrup or artificial sweeteners. “We had such a blast working on this innovation, and we couldn’t be more excited to share our first limited PROGRESSIVE GROCER November 2022

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Beverage Alcohol Entertaining Trends release with consumers, especially with traditional eggnog drinkers,” notes JD Recobs, co-founder of Misunderstood Whiskey. “We’ve seen the alternative milk category grow exponentially over the past few years, so we’re thrilled to be a part of the innovation and release something unique and delicious for the fall and winter season. While Misunderstood Oat Nog is best enjoyed simply chilled or over ice, we also think it’s going to be a great base for seasonal cocktails.”

Retailers Satisfy Thirst for International Wines

With wine being the beverage of choice for so many festive gatherings, food retailers are looking to become wine destinations for this year’s holiday celebrations. Variety packs are a great way for consumers to experiment. For instance, The Kroger Co. recently launched its annual Winter Wine Box Celebration Pack, featuring 24 curated wines exclusive to the retailer. “We have specially curated 24 exquisite wines for our customers this season, and we can’t wait for them to be enjoyed,” says Barry Craft, VP of grocery at Cincinnati-based Kroger. “There’s something for everyone — reds, whites, rosé and sparkling varieties from around the world — and as customers try the curation, they can learn more about a prized varietal or world-renowned growing region each day.” The selection of handpicked wines hails from Bulgaria, France, Hungary, Italy, Portugal, the Republic of North Macedonia, South Africa and Spain. The Winter Wine Box contains 24 6.3-ounce bottles equaling six full-sized bottles of wine. Also, don’t forget to stock those boozy advent calendars. These seasonal items are always popular with consumers for holiday gift-giving or as a fun way for the purchasers themselves to count down to the holidays. Winn-Dixie, a Southeastern Grocers banner, is stocking shelves with its limited-edition Holiday Wine Advent Calendar in select Alabama, Florida and Louisiana stores. The new Mistletoe Magic Holiday Wine Collection features 24 miniature bottles of hand-selected fine wines from around the world. It touts a unique assortment of red, white and rosé varieties, including selections created by award-winning wineries. “From aspiring sommeliers to novice wine lovers, we want to help our customers celebrate the holidays and explore

uptowncocktails.com © 2022 Southern Champion, Carrollton, TX. All Right Reserved. Please Drink Responsibly.

“American consumers are increasingly prioritizing convenience, taste, variety and quality in their choice of beverages. Spirits-based RTDs fit squarely in this trend, so it’s no surprise these products are leading the spirits category in both market growth and consumer popularity.” —Robert Blizzard, Public Opinion Strategies


new wine varieties, one glass at a time,” says Raymond Rhee, chief people officer for Jacksonville, Fla.-based Southeastern Grocers. “Our wine advent calendars allow us to highlight our award-winning wine partners and give our customers the opportunity to discover new wine selections during the festive holiday season.” Additionally, wine enthusiasts are encouraged to scan the QR code located on each Mistletoe Magic Holiday Wine Collection calendar to find descriptions of each unique selection, pairing recommendations, and more.

Brewed for the Holidays

Anchor Brewing Co.’s annual Christmas Ale has returned for beer drinkers. Each year, Anchor’s brewmasters craft a new secret recipe and bottle the limited-edition ale with a different festive handdrawn tree label. Like last year, a portion of all sales benefits One Tree Planted, a nonprofit that’s dedicated to global reforestation and plants millions of trees across 43 countries. The 48th annual Christmas Ale showcases notes of orange, honeysuckle, toasted malts and eucalyptus. Featuring botanicals and herbaceous hops, the 7.2% rye-forward brew finishes with a touch of spice like the warming bittersweet notes of amaro, an Italian herbal liqueur often enjoyed as an after-dinner digestif. “Holidays at Anchor Brewing are always a special time to reflect on our history and the pioneering spirit that inspires our innovation,” says newly anointed Brewmaster Dane Volek, of San Francisco-based Anchor Brewing. “Our incredible brewing team crafted a Christmas Ale that truly captures the essence of the holidays. We’re excited for fans to celebrate the season with us.” This year’s hand-drawn label features a blue gum eucalyptus tree, a nod to Mary Ellen Pleasant — a 19 th-century San Francisco entrepreneur, financier, abolitionist and civil rights activist. Pleasant, who is recognized as the “Mother of Civil Rights in California” for her impact during Gold Rush-era San Francisco, planted blue gum eucalyptus trees outside her Pacific Heights mansion shortly before her death in 1904. Also in San Francisco, 21st Amendment Brewery is ringing in the holiday season with a fresh new look for an old favorite, Fireside Chat Winter Ale. The newer, more elegant packaging depicts two reindeer enjoying a cozy tête-à-tête next to a crackling fireplace, with wistful elves peeking through the windows. “Fireside Chat is a beer we’ve been making every holiday season since we opened our pub in 2000,” observes Nico Freccia, COO and co-founder of 21st Amendment. “It’s the very first Great American Beer Festival medal we won, back in 2001. So it was really fun to rethink the design and branding for this beer, really leaning into the holiday season and a sense of fun. While we play with the spices each year for just the right holiday flair, the beer hasn’t changed, and it’s still the best beer out there for your holiday table, as a gift for a friend or just to enjoy by a warm fire.” Shaun O’Sullivan, co-founder and brewmaster at 21st Amendment, describes Fireside Chat as having “a deep amber color, bright toffee foam-laced head, soft spice profile, and a rich, subtle chocolate layer on the finish that’s wonderfully elegant.” According to O’Sullivan, the 7.9% spiced winter ale “really comes together with the new package design. … Be like a reindeer and enjoy this beer with your reindeer friends.”

The

Perfect

S tocking Stuffer!

buzzballz.com © 2022 BuzzBallz, LLC, Carrollton, TX. Please Drink Responsibly.


OPERATIONS

Workforce Management

Places to Belong RE TAILERS ARE EMBR ACING THE IDE A THAT DIVERSIT Y MAKES WORKFORCES MORE PRODUCTIVE.

Brookshire Grocery Co. has an all-in approach to diversity: Everyone from the CEO and chairman to the newest entrylevel hire is on board.

By Bridget Goldschmidt

he way that Jacksonville, Fla.-based Southeastern Grocers (SEG) sums up its approach to its workforce is succinct: “At SEG, we’re in the people business. We just happen to sell groceries.” A key part of that people business is ensuring a diverse workforce. To do that, the retailer, whose grocery banners include Winn-Dixie, Harveys, and Fresco y Más, has rolled out several initiatives offering “inspiration and opportunities for all community members to break barriers and push for equity,” according to Raymond Rhee, SEG’s chief people officer. For instance, the grocer hosts eight associate resource groups that “provide development opportunities and focus on amplifying the voices and experiences of underrepresented groups, educating others on allyship, and improving [the] diversity of the communities they represent,” explains Rhee. The company has also implemented training sessions to educate and

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Key Takeaways Supermarket operators across the country are recognizing the value that comes from having associates with a wide range of backgrounds and viewpoints. Education, training and clear communication are crucial so that every employee understands that diversity is a company priority, and why. As the U.S. population continues to diversify, retailers must accurately mirror their communities to remain relevant.


encourage constructive conversations among associates on belonging, inclusion and diversity, and last year hosted its first-ever “We SEG” Conference, described by Rhee as “an event featuring a diverse panel of experts offering educational and interactive insights on developing inclusive workplace environments, training for creating a culture of belonging, and other initiatives addressing pertinent and relevant equity concerns.” Another move made by the company was to assemble the SEG Shadow Board to ensure that the voice of the customer is represented and to offer strategic, diverse perspectives that positively affect decisions made by SEG’s executive board. The board “consists of diverse leaders across the organization who review existing processes and propose new ways to ensure opportunities for people of diverse backgrounds and increase visibility for underrepresented groups at SEG,” notes Rhee.

Strength in Diversity

SEG’s actions in this space have earned it many accolades, including recognition from the National Diversity Council as a top employer of Latino leaders. Of course, it’s not the only supermarket company to embrace diversity wholeheartedly. Operators across the country are recognizing the value that comes from having associates with a wide range of backgrounds and viewpoints. “At SpartanNash, we strive to deliver the ingredients for a better life,” observes Deann Wright, senior director, diversity and inclusion at Grand Rapids, Mich.-based SpartanNash, a distributor that also operates 145 supermarkets under such banners as Family Fare, Martin’s Super Markets, and D&W Fresh Market. “To do that, we always prioritize investing in a strong team of associates who are well equipped to support our customers and shoppers and create an excellent culture. Diversity plays a big part in that, because having an increasingly diverse workforce ensures that our associates have a wide variety of perspectives and lived experiences. This helps us create innovative solutions to evolving customer needs.” To that end, in support of its People First culture, SpartanNash is actively expanding its internship program “to be a more robust and comprehensive learning experience” for its participants, according to Wright. Through the program, SpartanNash teams with local universities to provide career opportunities for both college students and recent graduates. “We are hopeful this program will help us support a new gener-

“Inclusivity must be a foundational part of every retailer’s work culture. If you’re not living your values, even a plan that looks great on paper won’t make a difference.” —Carol Leaman, Axonify

ation of diverse leaders who will drive innovative and creative solutions for our customers,” says Wright. She goes on to note that “beyond the internship program, SpartanNash has a long history of investing in inclusive workforce development initiatives, collaborating with community training and education partners, and advancing the development and promotion of associates [who are] diverse by gender, race/ ethnicity, disability and veteran status.” “At Brookshire Grocery Co., striving for diversity in our workforce goes hand in hand with our core values,” asserts Rosemary Jones, EVP – chief people officer/legal at the Tyler, Texas-based retailer. “We continue to make advancements through the objectives and initiatives of our diversity, equity and inclusion (DE&I) strategic plan. Our commitment to building a diverse workforce connects us in meaningful ways with our employees, whom we refer to as partners; our customers; and the 165 communities we serve through our 205 retail grocery stores. We see the positive impact DE&I has on morale, productivity and our overall culture. Our company’s focus in this area strengthens our brand and helps to attract and retain great people.”

Southeastern Grocers' diversity efforts have earned it recognition as a top employer of Latino leaders at banners such as Fresco y Mas. PROGRESSIVE GROCER November 2022

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OPERATIONS

Workforce Management Brookshire’s all-in approach to diversity – everyone from the CEO and chairman to the newest entry-level hire is on board – includes such resources and initiatives as a dedicated DE&I position, a diversity council, diversity champions, educational programs, and leadership training, along with leaders who “are more intentional about DE&I when hiring, recruiting and promoting those they lead,” explains Jones. “As a company, we advertise job openings, conduct job fairs, and reach out to colleges and universities in diverse markets. As a result of these and other efforts, we continue to see increases in management and overall workforce diversity trends. When filling leadership positions at every level, we involve human resources professionals whenever possible to support and guide hiring managers in prioritizing DE&I.”

Learning to Thrive

For retailers looking to streamline their workforce management efforts, Axonify offers solutions. For Carol Leaman, president and CEO of Waterloo, Ontario-based Axonify, diversity in hiring is a no-brainer. “With all that we’ve experienced over the last three years, from the pandemic to civil and racial unrest and ongoing economic hardships, now more than ever, our employees are encouraged to bring their whole selves to work and lean into what makes them unique,” notes Leaman. “Fostering a diverse workforce is important because it’s more reflective of how our society looks, and it allows talented and qualified people to see a place for themselves, no matter their gender identity, sexual orientation, race, religion or age. To me, the best ideas emerge when people feel safe, supported and valued, so it’s no surprise that more diverse workforces are also more productive, creative and innovative. There’s really no downside.” Asked what retailers should be doing to attract more diverse employees, she insists: “Inclusivity must be a foundational part of every retailer’s work culture. If you’re not living your values, even a plan that looks great on paper won’t make a difference.” Noting some of the inclusivity practices that her own workplace has initiated, such as offering a safe, easy way for employees to share their preferred pronouns, and a flexible public-holiday program enabling

“When you talk about ‘diversity,’ you have to be clear that it is about so much more than one component.” —Rosemary Jones, Brookshire Grocery Co.

staff to substitute their own significant spiritual, religious and cultural days, she observes, “As leaders, we need to be active listeners, and while we don’t have all the answers yet, retailers should be striving to make their business a place where everyone can thrive.” Retailers should also adopt “inclusive hiring practices that aim to remove any barriers, invisible or otherwise, that might exist while someone is considering working for your organization,” advises Leaman. “That includes where and how you’re seeding applicants, and how they’re supported throughout the hiring process. Are accommodations baked into all levels of employment, from applying for a position to accessible onboarding and continued support like education and career-pathing opportunities? It’s our job to make the employment journey not only engaging, but equitable and easy, which takes into account details like language, technology, access and taking a close look at who the gatekeepers are. If an employee feels supported, heard and valued from day one, it creates a sense of loyalty and encourages them to stay and grow with your business, instead of looking for more inclusive opportunities elsewhere.”

The Future of Diversity

What obstacles will retailers need to overcome as they continue their diversity hiring and retention efforts? “Acknowledging that work needs to be done is the easy part,” says Leaman. “Investing the necessary time to look at and break down the systemic hurdles, microaggressions, prejudices and stereotypes that exist within the business is where the real challenge lies. Education, training and clear communication are especially crucial so that every employee understands that diversity is a company priority, and why. As Boomers reach retirement age and Gen Z — the Southeastern Grocers hosts eight associate resource groups across its banners that enable diverse employees to share their unique experiences and advance in their careers.

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most racially diverse generation in history — becomes the dominant working generation, their expectations of how diversity and inclusion are treated will shape ongoing strategy and work culture. The effects of the pandemic will continue to shape labor trends, so retailers would be wise to stay nimble and strive for measurable change before the next disruption.” “Accessibility and flexibility in the hiring process are factors that we, as a retailer, continue to improve to continue growing our diverse workforce,” notes SpartanNash’s Wright. “Our team has developed a more streamlined hiring process, investing in text-to-apply technology and other recruiting resources that help clearly communicate opportunities to potential candidates.” She also points to “evolving recruitment efforts [as] an important part of continuing to grow a strong family of diverse associates,” such as new employment branding that features real employees. “We cannot underestimate the importance of retailers mirroring their communities,” emphasizes Jones. “Statistics tell us the U.S. population is diversifying and changing, and as retailers, we must embrace and adapt to those changes. This will involve dedicated resources and initiatives, including educational programs and tracking statistics. Retailers must also recognize the value diverse employees bring to the table. When you talk about ‘diversity,’ you have to be clear that it is about so much more than one component. It’s about race, age, gender, religion, abilities, sexual

Just as Southeastern Grocers' Winn-Dixie banner is doing, many supermarket operators across the country are implementing diversity, equity, inclusion and belonging programs so that associates feel comfortable bringing their whole selves to work.

orientation, ethnicity, marital status, language, culture, experiences, preferences and even the diversity of thought. It is realizing this, and respecting and appreciating the differences, that make a workplace truly great for everyone. In a world that is constantly evolving, retailers must be willing to adapt and evolve with it to be sustainable for the long term.”

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TECHNOLOGY

Operations

IoT and the Connected Store

Both e-commerce and in-store customers are reaping the benefits of an increased investment in the Internet of Things (IoT) at food retail.

THE INTERNE T OF THINGS IS CHANGING THE GAME AT FOOD RE TAIL IN MORE WAYS THAN ONE. By Emily Crowe

ood retailers have been making investments in technology for as long as they’ve been around, from cash registers to Just Walk Out and milk deliveries, to buy online, pick up in store. One solution that has proved itself to be the true game-changer of the past two decades, though, is the often-befuddling Internet of Things (IoT). Put simply, IoT is a term that describes a network of physical objects embedded with software or sensors that allow them to share data with other devices and systems over the internet. Its use at food retail has been building up for quite some time, and today’s solutions go far beyond what many might expect. Walmart, for example, has been employing IoT for several years, using millions of data points across its stores to monitor product temperatures, reduce food spoilage, manage energy usage over time, and much more. Amazon facil-

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Key Takeaways The global market for Internet of Things (IoT) end-user solutions is poised to grow to $1.6 trillion by 2025, according to Statista. Grocers should think strategically about their main objectives for wanting to incorporate IoT solutions into their tech stack, and base decisions on their own circumstances. IoT solutions are becoming smarter, and the technology is only expected to become cheaper and more accessible to retailers of all sizes.


ities use internet-connected robots to track, locate, sort and move products, while Simbe Robotics’ Tally robot has been roaming the aisles at myriad grocery stores in an effort to detect out-of-stocks and ultimately optimize store execution. According to Hamburg, Germany-based market data company Statista, the global market for IoT end-user solutions is poised to grow to a whopping $1.6 trillion by 2025. With this type of technology rapidly changing and accelerating, and its solutions reaching into practically every segment of the grocery business, retailers should consider taking a closer look at all that it has to offer.

and delivery, in-store shopping, and more. Walldorf, Germany-based software company SAP, which offers robust IoT solutions for retail, is partnering with hardware technology companies to drive innovation, from AI-powered computer vision and RFID for checkout and inventory management, to cameras and weight sensors that help associates further understand and automate store operations. SAP’s technology helps retailers better serve their customers in real time while continuing to invest and improve in their day-to-day operations.

Today’s Solutions

Improving Pain Points for Retailers, Consumers

IoT solutions come in many shapes and forms, and the basic devices and sensors that define them are often combined with other technologies such as artificial intelligence (AI), automation and machine learning (ML) to create the most effective solutions, explains Scott Headington, VP, strategy and solutions for Teaneck, N.J.-based IT services company Cognizant. “We try to, first and foremost, leverage those things to improve the overall customer experience,” Headington says. “How can we make it more relevant, more personalized for those consumers as they come into a store? For stores and supply chains, how do we make them more predictable, more seamless and more efficient in the long run?” When looking at an IoT shelf-edge solution, for example, Headington notes that a camera is programmed through AI to know how much product should be on a given shelf; then the camera will trigger an alert to replenish stock or reorder items when what’s available drops below that level. “It’s triggering that information to then be transferred to wherever the next touchpoint needs to be, as far as a reorder or for a store clerk to then act on it,” he says. “Over time, the models become smarter and more intelligent to better understand the situation on the shelf.” For his part, Sachin Gupta, global sustainability industry lead for Armonk, N.Y.-based IBM, has seen an evolution in IoT from a focus on operational efficiency, such as refrigeration and temperature control, to supply chain efficiency and optimization, and finally to the consumer efficiency that Headington addresses. Especially post-pandemic, Gupta explains, there has been a move toward experience-based retailing that’s being helped along by IoT solutions that can help consumers with seamless ordering

When it comes to IoT solutions that make operations easier on the back end while also creating a superior customer experience, Cognizant’s Headington believes store associates are a big part of the equation. IoT can help enable inventory visibility so employees can know exactly where a product is at any given time, which in turn translates to a better customer experience, thanks to fewer out-of-stock headaches. Many IoT-enabled solutions that take care of these types of tasks also lead to cost reduction in overhead and labor at a store, and free up associates to better help customers. As Headington explains, the Apple retail store has a QR code on the wall that allows cus-

Avery Dennison's technology allows businesses to access itemlevel insights for their products across the whole supply chain.

“If a grocer is looking to provide better service at a store, maybe you’re freeing up an associate that can then spend more time on the floor helping customers find products, answer questions and things like that.” —Scott Headington, Cognizant PROGRESSIVE GROCER November 2022

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The Connected Store

Building a successful loT Strategy Does your business strategy include both online and in-store experiences for your customers? Shoppers want to move between touchpoints - digital and physical seamlessly. In response, retailers need to knock down the walls that separate their channels, enabling shoppers to move seamlessly from online, to store, to mobile, to home delivery, and beyond.

80 °/o

of grocery retailers believe that it's important to offer shoppers a seamlessly unified experience across digital and physical channels.

44% of grocery

retailers believe that it's important to improve efficiency of commerce operations across digital stores and customer service.

6 6 o/o

of grocery retailers believe it's important to create new commerce experiences so we can take the store anywhere.

3 5 o/o

of grocery respondents are either piloting or have already implemented unified ecommerce and in-store cart services chain-wide.

A shopper's choices are informed by what matters to them most - product choice, pricing, proximity, or payment and fulfillment features. These features include the ability to use preferred methods of payment, the availability of online purchasing, pickup in-store services, and same-day delivery. Reducing friction during the shopping experience can make the difference between an enjoyable shopping experience and a frustrating one, so retailers need to have more than a single-channel strategy — they need to deliver the best experience across all channels. A successful frictionless store features multiple pieces of technology — like computer vision solutions, loT devices, cameras, and more — working together to create a brilliant, inspiring experience. The in-store experience plays a role at the beginning and the end of the customer journey. So how can retailers be sure they are offering shoppers the right touch points? Retailers need to keep several key elements in mind to provide successful experiences that span physical and digital channels: Personalization: Make the customer feel like the experience they received was just for them.

Uniqueness: Incorporate methods, language, or customs that are unusual, surprising, or proprietary - but also authentic and natural to your brand.

Repeatability: Enable a complete self-service experience anywhere in the store and creates new opportunities in areas such as deli & bakery.

Using these tactics and finding the balance between digital and physical channels, retailers can be more successful at guiding shoppers to purchases regardless of whether the final sale is made online or in a store. Source: Toshiba Global Commerce Solutions & lncisiv. (2022). State of the Industry: Unified Commerce in Food & Grocery


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TECHNOLOGY

Operations tomers to check themselves out, much like grocery self-checkout. While the company isn’t necessarily reducing labor, it’s dedicating more associates to helping people understand the technology and sell it. “If a grocer is looking to provide better service at a store, maybe you’re freeing up an associate that can then spend more time on the floor helping customers find products, answer questions and things like that,” Headington explains. SAP is also working to solve retail pain points, especially in relation to changing consumer preferences, according to Sameer Patel, SAP’s chief marketing and solutions officer. Convenience giant Casey’s General Stores Inc., for example, is creating a more convenient customer experience using the SAP CX portfolio, and has since streamlined its online ordering platform, introduced a mobile app and created a new loyalty program. Using other SAP solutions has allowed Casey’s to increase its average order value per customer during the pandemic, due to highly personalized offers. Avery Dennison Corp., based in Mentor, Ohio, is helping retailers address food waste by partnering with SAP and integrating its Analytics Cloud into its own connected product cloud. Through the partnership, businesses will be able to access item-level insights for their products from manufacturing to distribution to shelf, with this transparency providing unique supply chain information and enabling expiration date management and automation. According to Max Winograd, VP of connected products at Avery Dennison Smartrac, the company’s additional solutions can help retailers experience up to a 20% reduction in food waste through smarter tracking at all touchpoints. This tracking can also help consumers prevent excessive food waste in the home when a food recall is involved, as the granular producer- and lot-specific data lets them know for certain whether they’re directly affected by a recall and enables them to act accordingly. The technology can also help accelerate the time to recall, Winograd says, which will be especially helpful when a new FDA rule pertaining to the Food Safety Modernization Act and greater visibility into food recalls comes online in the near future. Additionally, IBM’s blockchain-enabled Food Trust and its other IoT solutions are making inroads with regard to reducing food waste and promoting sustainability. According to Gupta, this technology has an impact across the entire value chain, but especially perishables, since shelf life can be more easily managed.

“Combined with machine learning and AI, IoT solutions will form the backbone of store operations, supply chain processes and customer experience. IoT capabilities will be commoditized and thus more accessible and easier to deploy.” —Sameer Patel, SAP

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IoT solutions from IBM's Food Trust can help companies trace their products from production to store shelf.

“Imagine the whole supply chain optimization that can happen because of IoT. Now the distributors can simply do a QR code scan and know where something is meant to go, where it’s coming from and how much shelf life it has,” Gupta says. “It’s the same for retailers as well. Retailers don’t need to bother with looking manually for the shelf life.”

Getting Started and Looking Forward

While there’s no linear path to IoT integration in any given food retail environment, Headington believes that grocers should start with an assessment of where they’re at as a company with technology and the overall mindset behind technology integration. “If we get down to the store level, what are the issues or pain points we’re trying to address?” he asks. Gupta also believes that grocers should think strategically about their main objectives for wanting to incorporate IoT solutions into their tech stack, and base decisions on their own resources, number of stores, types of products they offer and other considerations. “I think the simplest use cases of IoT today are the operational efficiency ones, in terms of refrigeration control and automatic movement sensors,” he explains. “These have proven themselves: They save between 20% and 30% of all energy, and that presents an automatic business case.” Clearly, IoT solutions are becoming smarter, and the technology is only expected to become cheaper and more accessible to retailers of all sizes. SAP’s Patel believes these solutions will become interoperable, and as they’re further embraced by consumers, more potential use cases will emerge that could blend health and food to lead to a more personalized and sustainable future. “Combined with machine learning and AI, IoT solutions will form the backbone of store operations, supply chain processes and customer experience,” Patel says. “IoT capabilities will be commoditized and thus more accessible and easier to deploy.” Headington expects the treasure trove of data being collected through IoT technology to help grocers get better at making strategic decisions, and also that theft prevention is a major area where IoT can make even more headway. “We have clients that are looking at IoT technologies where you can take a handbag, scan something on the inside of the bag, and it’ll tell you if it’s authentic,” he notes. “How do you apply that technology to food?”


EQUIPMENT & DESIGN

New Fixtures & Formats

Building the Next Generation of Food Stores

Swiss retailer Migros' Gooods convenience format enables it to appeal to more targeted groups, including train travelers and commuters.

ood retailers around the globe are facing important challenges right now: labor shortages and costs, as well as rising energy costs. As a design and shopfitting company, Interstore | Schweitzer keeps developing strategies to help retailers tackle these challenges. Following are two of our recent projects:

ro stations, and focuses on selected target groups. While the format is not a novelty in itself, the learnings we can extract from this example are how big players like Migros can create more diversity in their formats, thinking about more targeted offers, in the way that independent retailers have already been doing for years. At the same time, Migros understood the necessity of creating a dedicated brand for smaller formats to address the targeted clientele with a custom-made offer.

Gooods, Zürich, Switzerland (opened in September 2021): For the biggest Swiss retail company, Migros, we developed a new convenience format, which consists of a small convenience food store at such important nodal points as train or met-

Bridge, Zürich, Switzerland (opened in April 2021): Bridge is an all-in-one fresh food market, catering and event location that we designed and built for Migros in the heart of Zürich,

U.S. RE TAILERS CAN LE ARN FROM SOME OF THE PIONEERING FIX TURES AND FORMATS ALRE ADY ESTABLISHED IN EUROPE AND CANADA. By Angelika Engl

PROGRESSIVE GROCER November 2022

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Designed for center store, perimeter, general merchandise, soft goods, cooler and freezer use. Tool-free universal mount adapts to all major gondola and upright configurations.

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System design options allow choice of 1" or 1/2" vertical adjustment and increased usable tray and hook depth for even greater display capacity.

Eleven standard tray depths available with width adjustment from 2-3/4" to 17-1/2." Mini system, oversize product trays, vac-pack deli trays, dual lane trays and others address all product needs.

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Cheese and Fresh Pasta

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©2013 Trion Industries, Inc. Toll-Free in U.S.A. 800-444-4665 info@triononline.com www.TrionOnline.com Note: Product photography is a simulation of a retail environment and is not meant to imply endorsement by or for any brand or manufacturer.


EQUIPMENT & DESIGN

New Fixtures & Formats near the main train station. It offers a one-off experience, which creates a halo effect for the whole business of Switzerland’s biggest retail company. Bridge has been conceived as a test store for Migros, where different formats, fixtures and innovative retail solutions can be experimented with, and if successful, be implemented at other locations. It’s another perfect example of how major retailers can try unique, highly experimental formats that can be a beacon for the brand.

The Freedom of Flexibility

In October, Choice Market opened what it says is the first autonomous store in the United States in a health care setting.

The Automated Choice Choice Market recently opened a location at The University of Colorado (CU) Anschutz Medical Campus, in Aurora, Colo. The convenience operator’s inaugural Mini-Mart will be open 24 hours a day, 365 days a year. The Mini-Mart concept, which leverages artificial intelligence (AI) and vision systems to a enable checkout-free experience, offers fresh meals, locally sourced groceries and everyday staples. The store also includes Choice’s Central, a Latin fusion kitchen serving freshly made tacos, burritos and salads made on-site, available Monday through Friday. According to Choice, the location is the first autonomous store in the United States to open in a health care setting. Choice’s shopping experience is powered by Choice Now, a frictionless shopping technology that allows customers to enter their payment information on the Choice app, select their items for purchase and leave. AI-powered ceiling cameras determine what customers have bought and automatically send an e-receipt to their phone. As well as allowing customers to shop, the app provides access to the Choice Rewards Program. “Our decision to open at CU Anschutz highlights Choice’s commitment to provide fresh and healthy food to those that need it most,” notes Mike Fogarty, founder and CEO of Denver-based Choice, which operates three other locations in the Mile High City. “The medical community and CU students work tirelessly to serve the greater Denver community. We couldn’t be more excited to provide these time-strapped first responders, students, patients and their families with high-quality groceries and fresh meals 24x7x365.” —Bridget Goldschmidt

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This shows the mindset of Migros, which is open to innovation and experimentation, leading to a high level of flexibility. Indeed, flexibility is also the order of day when it comes to a store concept itself. Bridge, for example, has been based on a maximum amount of physical flexibility. To this end, the market has adopted the Flexstore principle invented by Interstore | Schweitzer to allow retailers to adapt their store layouts quickly, efficiently and in a cost-effective manner. The same principle and mindset have also been adopted by the Canada’s second-largest retail group, Sobeys, whose Orangeville, Ontario, food market became the first in North America to implement Flexstore, in late 2021. With fixtures and especially refrigerated counters made modular, thanks to an elaborate plug-and-play system where all of the building services — water, electricity and more — are fed from the ceiling, retailers gain maximum flexibility. This allows them to quickly react to changing consumer needs by adding or taking away counters and

In 2021, Sobeys became the first Canadian retailer to implement the Flexstore system, at its store in Orangeville, Ontario.


refrigerated units, something that would be more difficult with old-style fixtures.

Self-Service Advancements

Due to high labor costs and customers increasingly seeking convenient solutions, service counters are becoming less relevant than ever. These are challenges that retailers need to find new ways of dealing with. We at Interstore | Schweitzer have our finger on the pulse and are constantly working on innovative and cost-efficient solutions to find “new ways in fresh.” Thanks to our in-house production of refrigerated counters, apart from designing and shopfitting, we are also able to provide custom-made refrigeration solutions. Switching from service to

San Francisco Gets Lucky With New Format The Save Mart Cos. has unveiled its latest Lucky location, in the Bayview neighborhood of San Francisco. The store offers a full array of groceries and meal solutions in an innovative smaller footprint and, according to Save Mart, marks a new chapter for the company. Originally announced in March, Lucky Bayview is housed in a vacated 9,549-square-foot retail location along the neighborhood’s Third Street corridor, filling a void in what some consider a food desert. The store offers online shopping and home delivery provided by Instacart, and promises low, affordable prices for its customers. “The opening of Lucky Bayview, a small-footprint, full-service store, represents a transformational new chapter in The Save Mart Cos.’ storied history of serving our shoppers and fulfilling their needs with innovative and affordable solutions,” says Shane Sampson, executive chairman of the board of The Save Mart Cos. According to Sampson, the new store offers a vibrant shopping experience with an abundance of fresh and local products, including some hyper-local items from Bayview and San Francisco, as well as from the wider Bay Area. The company listened to the community to understand their tastes and preferences, and the assortment reflects what it learned. Sampson adds that the smaller format of Lucky Bayview is the next step in Save Mart’s unique portfolio. “With a 70-year history of servicing communities throughout California and northern Nevada, Lucky Bayview is the innovative next chapter in our portfolio introducing a new market solution in the industry,” he explains. “This format is a nimble, fast and flexible solution that can be built in various communities eager for a full-service grocery shopping experience in a small footprint.”

self-service counters becomes quick and easy, allowing retailers to quickly adapt to changing situations. We believe that, if needed, experiential self-service departments help retain the feeling of a department without the requirement of staff being present. It’s important to maintain the feeling of a staffed department by finding a way to communicate through the product and/or the fixture. Angelika Engl is chief sales officer, North America for Interstore | Schweitzer, a retail architecture and planning firm in Naturno, Italy.

The store is actively working with community groups while also hiring associates directly from the neighborhood. The Young Community Developers in Bayview organization is helping Lucky with employment opportunities, and 90% of the store team is currently from the Bayview area. During the grand opening, store associates were joined by San Francisco Mayor London Breed, San Francisco Board of Supervisors President Shamann Walton and San Francisco Police Captain David Moran, among other city officials. Lucky Bayview also revealed $3,000 in community investments, including donations to a local elementary school, and gift card donations to Bayview Senior Services and Bayview Hunter’s Point YMCA, to help support culinary endeavors at each organization. Lucky has two additional locations within San Francisco and 67 stores in the greater Bay Area and surrounding communities. Based in Modesto, Calif., The Save Mart Cos. operates more than 200 retail stores under the banners of Save Mart, Lucky California and FoodMaxx. In addition to its retail operation, the company operates SMART Refrigerated Transport and is a partner in Super Store Industries, which owns and operates a distribution center in Lathrop, Calif., and the Sunnyside Farms dairy-processing plant, in Turlock, Calif. —Emily Crowe

The Save Mart Cos.' small-format Lucky Bayview store carries a wealth of hyper-local products.

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EDITORS’ PICKS

Food, Beverage & Nonfood Products

Reimagined Snack Cakes

With Hostess Bouncers, Hostess Brands is giving consumers another way to enjoy some of its most beloved offerings — Twinkies, Ding Dongs and Donettes — as bite-sized snack cakes featuring creamy fillings. The line comes in three flavors: Glazed Twinkies, baked with real vanilla; Glazed Chocolate Ding Dongs, made with real cocoa; and Cinnamon Donettes, including real cinnamon. Each multipack box of Hostess Bouncers contains five packable, portable pouches, with three Bouncers per pouch, at a suggested retail price of $4.99. https://www.hostesscakes.com

Upcycled Munching

The latest offering from Rind Snacks, Dark Cocoa Sea Salt Coconut Crisps, features just four simple ingredients — dried coconut, coconut sugar, real dark cocoa powder and a hint of sea salt — for a sweet-and-salty snack combo. With Dark Cocoa Sea Salt Coconut Crisps, Rind retains the fruit’s nutrient-rich inner husk, and then dusts it with the cocoa and that sprinkling of salt for a treat high in fiber — a whopping 7 grams per serving — and heart-healthy fats, while being low in carbs and added sugar. The snack can be eaten straight from the bag, frozen or used to top a wide range of dishes. A 3.5-ounce multiserve package retails for a suggested price range of $4.99-$5.99, while a 1.4-ounce single-serve bag retails for a suggested price range of $2.99-$3.49. Like all Rind products, Dark Cocoa Sea Salt Coconut Crisps are non-GMO Verified, kosher, naturally vegan and gluten-free, and retain as much of the natural fruit as possible, continuing the brand’s commitment to divert more than 1 million pounds of food waste this year. https://www.rindsnacks.com/

Free-From Flatbreads

Plant-based pioneer Daiya Foods has now rolled out what it describes as the first-ever plant-based and allergen-friendly flatbreads. Inspired by an Italian trattoria experience, the line consists of three flavors, all featuring Daiya’s award-winning Cutting Board Cheeze Shreds atop a thin gluten-free crust: sweet and savory Mushroom, Caramelized Onion & Fig (12.2 ounces); hearty Meatless Italian Sausage Style Crumbles, Roasted Pepper & Kale (11.4 ounces); and nut-free Tomato, Sunflower Seed Pesto & Arugula (12.0 ounces). Suitable for lunch or as a shared appetizer, Daiya Flatbreads can be found in the frozen section for a suggested retail price of $6.99 per package. https://daiyafoods.com/

Main Squeeze

Cold-crafted Ithaca Hummus, known for its fresh ingredients and bold flavors, has now launched a portable snack line, Ithaca Squeeze. The first hummus product to come in a pouch for kids, Ithaca Squeeze offers a protein-rich, gut-friendly and wholesome snack for the whole family. The convenient line comes in three flavorful varieties: Plain, Beet and Red Pepper. A portion-controlled 3-ounce pouch of any variety, featuring 5 grams of fiber and 7-8 grams of plant-based protein, retails for a suggested $2.99. Additionally, the product is made with sunflower butter instead of traditional sesame, one of the top nine allergens, so parents can feel good about packing Ithaca Squeeze as a school snack. Additionally, with the use of sunflower seeds, the product offers more protein per serving. https://ithacahummus.com/

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Chickpea Yogurt

CHKP’s dairy-free chickpea yogurt option brings yogurt fans pleasing taste and a rich, creamy, smooth texture, with no nuts, artificial sweeteners, soy or fillers. Containing 5-6 grams of protein per cup — two to three times the amount of many brands in the segment — with significantly less sugar and fat than other dairy-free yogurts made with almonds, coconut or soy, CHKP features pure, high-quality, non-GMO, easy-to-read ingredients, including live active cultures, and nothing fake. The Kosher OU Pareve line comes in Plain, Vanilla, Strawberry and Blueberry flavors. In addition to being highly nutritious, chickpeas are sustainable, so the product is good for the planet as well as the body. The suggested retail price is $2.49 per 5.3-ounce cup. https://chkpfoods.com/

Better-forYou Nuggets

Absolute Zero

To meet the needs of health-conscious consumers, tortilla and wrap brand Mission Foods has introduced Zero Net Carbs Tortillas that also contain zero sugar, as well as being keto-certified, high in fiber and low in calories. Made with high-quality ingredients, the product line comes in two varieties: Original and Sundried Tomato Basil, the latter featuring zesty sundried tomatoes and fresh basil flavors. The launch is particularly timely, as consumer research reveals that more than half of shoppers are seeking foods with less sugar, and more than a third are looking for fewer carbohydrates on nutrition labels. Mission Zero Net Carbs Tortillas have a suggested retail price of $3.99 per 8.89-ounce bag of 14 tortillas. The launch builds on the success of the company’s gluten-free Almond Flour and Cauliflower Flour tortillas, both of which debuted in 2021. https://www.missionfoods.com/

Maker of the No. 1 cauliflower crust pizza and No. 1 gluten-free pizza in the United States, Caulipower has entered another segment with the introduction of Chicken Nuggets. The product offers all-natural white meat chicken breast with a veggie coating made with chickpea and cauliflower, making it the only chickpeaand cauliflower-coated chicken nugget on the market. The easy-to-prepare item is also gluten-free, as well as free from artificial flavors, colors or preservatives, with zero trans fats or added sugars. According to Caulipower, its nuggets have 29% fewer calories, 39% less fat and 27% fewer total carbs than the top 25 frozen nugget SKUs. The suggested retail price range for a 14-ounce bag of nuggets is $8.99-$9.99. https://eatcaulipower.com/en/

Slider Innovation

Inspired by the famous flavor of White Castle Sliders, frozen Castle Bites are made with 100% real beef and onions and wrapped in a crispy golden crust. The line comes in two flavors, Hamburger and Cheeseburger, and two sizes, an 18-ounce stand-up bag retailing for a suggested price range of $4.99-$5.99 and a 40-ounce party pack retailing for a suggested price range of $9.99-$10.99. The product was developed through a collaboration between pioneering fast-food hamburger chain White Castle and frozen food company Bellisio Foods. Bellisio and White Castle also launched Chicken Rings at retail this past spring. Brandgenuity, White Castle’s licensing agency, brokered the partnership for both launches and is supporting the bites program rollout. https://www.whitecastle.com/grocery; https://www.bellisiofoods.com/; https://www.whitecastle.com/ PROGRESSIVE GROCER November 2022

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AHEAD OF WHAT’S NEXT By Bridget Goldschmidt

A Decade of Blue Apron ON THE OCCASION OF ITS 10 T H ANNIVERSARY, THE PIONEERING ME AL KIT COMPANY LOOKS BACK ON ITS HISTORY, AND AHE AD TO THE FUTURE. t’s hard to think back to a time before meal kits were a viable option for time-stressed consumers, but Blue Apron was there at the very dawn of the concept, and the New York-based company is now celebrating its 10th anniversary this year. One reason for its longevity in this space, according to Blue Apron President and CEO Linda Findley, is its focus on continuing education. “We named our company Blue Apron as an homage to chefs around the world who wear blue aprons when learning to cook,” explains Findley. “A blue apron symbolizes lifelong learning, a value that permeates everything we do. We make incredible home cooking accessible by creating unique experiences built on original recipes; quality, pre-portioned ingredients; and engaging content. Along the way, as we introduce new flavors, new ingredients, new techniques, and tried-andtrue cooking fundamentals, our customers keep learning.” Other reasons for the company’s success cited by Findley are its “culinary authority,” resulting in “unique chef-curated recipes with ingredient quality that rivals any of our competitors,” and direct relationships with most of its suppliers that enable it to provide a great value for customers every week.

“Prior to the pandemic, meal kits, including Blue Apron, were viewed as more of a convenience play. Now, with more meals being enjoyed at home, we solve that all-too-familiar mealtime rut.” —Linda Findley, Blue Apron

“We also continue to offer our customers the right blend of variety, flexibility and choice,” she notes. “Over the past two years, we’ve focused on evolving our product offerings to give them the right variety to meet their needs in the kitchen. Today, we have over 60 menu options, compared with just 17 in 2019. Not only can customers choose from a variety of recipes, they can also customize and add on select menu items. For example, they can turn a dish with meat into a vegetarian option, double the size of select Two-Serving recipes, or add a side salad, appetizer and/or dessert.” In another smart strategy, the company expanded to other e-commerce platforms, such as Walmart.com, which allowed it to give customers the option to purchase a Blue Apron box without a subscription and expanded its product visibility to a potential pool of customers who may not have considered Blue Apron otherwise.

What’s Cooking

Such moves have helped Blue Apron prosper, with a healthy assist from certain societal trends. 66

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Meal kit company Blue Apron is named for the garb worn by those learning to cook, in a symbolic reference to the company’s emphasis on lifelong learning.

“Research continues to point to the fact that cooking at home is increasing in popularity, a trend we saw take shape prior to the start of the pandemic,” observes Findley. “And over the past two years, the popularity of cooking at home is taking on a new meaning, going beyond just cooking, but also learning and expanding one’s skills in the kitchen. We also know that cooking and eating at home is, for some, associated with financial savings. All of this creates a great dynamic for Blue Apron and the meal kit industry as a whole.” Although, as she points out, the rise of meal kits pre-dated the pandemic, COVID still played a significant role in changing consumer attitudes. “The pandemic has created a big shift around how customers see meal kits and the value they can bring,” asserts Findley. “Prior to the pandemic, meal kits, including Blue Apron, were viewed as more of a convenience play. Now, with more meals being enjoyed at home, we solve that all-too-familiar mealtime rut. We offer a variety of product options that can help address those decision-making moments.” When asked what lies ahead for meal kits, Findley highlights two major trends: personalization and climate-friendly policies. “I think the future of the meal kit sector will call for more tailored offerings to meet a more niche customer base,” she predicts. “You’ll see an increased number of meal kits focused on meeting specific customer needs, like dietary preferences or experiences in the kitchen, while still focusing on subscription flexibility and convenience. I also believe the industry will become more diligently focused on sustainability, both in terms of packaging and delivery methods.”


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