EXCLUSIVE: 2022 INNOVATION OUTLOOK CATEGORY CAPTAINS 25th anniversary edition SPECIAL REPORT Grocery tech trends SUSTAINABILITY What’s next for plastic PROTEIN OUTLOOK What to expect in ’22
Uniquely Local, Purposefully Global How Ahold Delhaize plans to grow sales by more than $10 billion
December 2021
Volume 100, Number 12 www.progressivegrocer.com
Contents 12. 21
Volume 100 Issue 12
18 Features COVER STORY
18 Acting Locally, Thinking Globally
Ahold Delhaize leverages the ‘quiet competitive advantage’ that’s a key ingredient in its success.
Departments 8 EDITOR’S NOTE
A Top Grocery Challenge For 2022
4
2021 CAPTAINS
12 MENU TRENDS
The Rise of PlantBased Foods 14 NIELSEN’S SHELF STOPPERS
Health & Beauty Care
PROGRESSIVE GROCER 2021 CATEGORY CAPTAINS AWARDS
28 Rising to the Occasion, Again
Now in its 25th year, Progressive Grocer’s Category Captains program recognizes the exceptional efforts of suppliers that collaborate with retailers to serve shoppers and grow sales.
15 MINTEL GLOBAL NEW PRODUCTS
Oral Health 16 ALL’S WELLNESS
New Year, New Outlook
10 IN-STORE EVENTS CALENDAR
98 AHEAD OF WHAT’S NEXT
February 2022
Perimeter Pixie Dust
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Contents 12. 21
Volume 100 Issue 12
8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 773-992-4450 Fax: 773-992-4455
www.ensembleiq.com GROCERY GROUP PUBLISHER John Schrei 248-613-8672 jschrei@ensembleiq.com
58 TECHNOLOGY
Grocery Tech Trends Study 2021
GROCERY GROUP EDITORIAL DIRECTOR Mike Troy 813-857-6512 mtroy@ensembleiq.com EDITORIAL EXECUTIVE EDITOR Gina Acosta 813-417-4149 gacosta@ensembleiq.com
Retailers are spending more on IT to tackle new challenges and drive shopper value.
MANAGING EDITOR Bridget Goldschmidt 347-962-9395 bgoldschmidt@ensembleiq.com SENIOR DIGITAL & TECHNOLOGY EDITOR Marian Zboraj 773-992-4405 mzboraj@ensembleiq.com
82 TECHNOLOGY
58
Closing the Digital Foodservice Gap
SENIOR EDITOR Lynn Petrak 708-945-0415 lpetrak@ensembleiq.com CONTRIBUTING EDITOR Tim Denman ADVERTISING SALES & BUSINESS
Six ways grocers can unlock the potential of prepared foods through deeper digital engagement.
SENIOR SALES MANAGER Bob Baker (NEW ENGLAND, MID-ATLANTIC SOUTHEAST US, EASTERN CANADA) 732-429-2080 rbaker@ensembleiq.com SENIOR SALES MANAGER Theresa Kossack (MIDWEST, GA, FL) 214-226-6468 tkossack@ensembleiq.com SENIOR SALES MANAGER Tammy Rokowski (INTERNATIONAL, SOUTHWEST, MI) 248-514-9500 trokowski@ensembleiq.com
86 2022 INNOVATION OUTLOOK
Grocery Gets a Tech Upgrade
JUNIOR ACCOUNT MANAGER-GROCERY GROUP Natalie Meehan p 773-992-4410 m 619-823-4926 nmeehan@ensembleiq.com ACCOUNT EXECUTIVE/CLASSIFIED ADVERTISING Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com
Eight action areas on every grocer’s ahead-of-what’s-next agenda.
CLASSIFIED PRODUCTION MANAGER Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com EVENTS VICE PRESIDENT, EVENTS Michael Cronin mcronin@ensembleiq.com VICE PRESIDENT, EVENTS & CONFERENCES Megan Judkins 773-837-7595 mjudkins@ensembleiq.com MARKETING BRAND MARKETING MANAGER Rebecca Martin 773-992-4407 rmartin@ensembleiq.com
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AUDIENCE LIST RENTAL MeritDirect Marie Briganti 914-309-3378 SUBSCRIBER SERVICES/SINGLE-COPY PURCHASES Toll Free: 1-877-687-7321 Fax: 1-888-520-3608 contact@progressivegrocer.com PROJECT MANAGEMENT/PRODUCTION/ART CREATIVE DIRECTOR Colette Magliaro cmagliaro@ensembleiq.com
94 PROTEIN OUTLOOK
Another Wild Year?
ADVERTISING/PRODUCTION MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com
What retailers can expect with regard to meat and poultry sales in 2022.
ART DIRECTOR Bill Antkowiak bantkowiak@ensembleiq.com REPRINTS, PERMISSIONS AND LICENSING Wright’s Media ensembleiq@wrightsmedia.com 877-652-5295
96 SUSTAINABILITY
Plastic Waste Reduction Sparks Innovation
The retail industry steps up its commitment to operational sustainability.
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CORPORATE OFFICERS CHIEF EXECUTIVE OFFICER Jennifer Litterick CHIEF FINANCIAL OFFICER Jane Volland CHIEF HUMAN RESOURCES OFFICER Ann Jadown EXECUTIVE VICE PRESIDENT, CONTENT Joe Territo EXECUTIVE VICE PRESIDENT, OPERATIONS Derek Estey
PROGRESSIVE GROCER (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631. Single copy price $14, except selected special issues. Foreign single copy price $16, except selected special issues. Subscription: $125 a year; $230 for a two year supscription; Canada/Mexico $150 for a one year supscription; $270 for a two year supscription (Canada Post Publications Mail Agreement No. 40031729. Foreign $170 a one year supscrption; $325 for a two year supscription (call for air mail rates). Digital Subscription: $87 one year supscription; $161 two year supscription. Periodicals postage paid at Chicago, IL 60631 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to brand, 8550 W. Bryn Mawr Ave. Ste. 200. Copyright ©2021 EnsembleIQ All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.
EDITOR’S NOTE By Mike Troy
A Top Grocery Challenge For 2022 AN END TO THE PANDEMIC WON’T FIX A LONG-SIMMERING SUPPLY CHAIN ISSUE. ompetition for labor in the retail industry reached an unprecedented level this year and caused retailers to take extreme actions to fill open positions. Most notably, companies increased wages and expanded benefits, while some also resorted to paying signing bonuses to lure workers out of pandemic hibernation. It didn’t help the situation that for much of the year, grocers were also competing against federal stimulus programs and extended unemployment benefits. That combination gave potential job-seekers a reason not to seek work and caused some retailers to alter operating hours or reduce service levels as they scrambled to fill positions. That’s a politically charged view that most retailers steer clear of expressing, but Walmart CEO Doug McMillion went there during a third-quarter investor call when asked to quantify the effects of the stimulus. “It seems like the most pronounced thing we saw would be in hiring,” McMillon said. “Back when the stimulus dollars started to go away, the hiring situation changed faster. We saw people come back. In a matter of weeks, we were back to being staffed.” Walmart, the nation’s largest private employer, managed to hire 200,000 people during the third quarter. If its experience is any indication, distortion in the labor market has eased, especially for retailers that offer the combination of advancement potential and increased overall compensation. Solving a labor-related challenge in another sector of the economy with a huge impact on retail won’t be as easy as paying a few dollars more an hour, however. I’m talking about the supply chain — not the port situation that gets all of the attention and has more of an impact on general merchandise, but the domestic trucking piece. There’s been a driver shortage building for more than a decade in the transportation sector, due to the fact that truck driving isn’t the most appealing of professions for younger folks, and older drivers are retiring. Changes to hours-of-service rules and the introduction of electronic recordkeeping haven’t helped the situation. Here’s how bad it is: The trucking industry is currently short 80,000 drivers, according to Chris Spear, president and CEO of the American Trucking Associations (ATA), the nation’s largest trade organization representing the trucking industry. Testifying this past Nov. 17 before the U.S. House Committee on Transportation and Infrastructure on the topic of “A Further Look at North American Supply Chain Challenges,” Spear shared a sobering message as he made the case for mod8
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ernizing regulations and making targeted investments to attract a new, diverse generation of drivers and supply chain workers to the transportation industry. “Without substantial action, by 2030 and at current trends, the driver shortage could grow to 160,000,” Spear warned. “Overall, nearly 1 million new drivers will need to be trained and hired in the next decade to keep pace with increasing consumer demand and an aging workforce.” The trucking industry moves an estimated 70% of the nation’s freight tonnage every year, and over the next decade, ATA projects that trucks will need to move 2.4 billion more tons of freight than they do currently. Changes to federal regulations could make trucking more attractive and autonomous vehicles offer long-term potential, but be prepared for a challenging 2022 in terms of cost and the timely delivery of goods. There aren’t enough people willing to get behind the wheel and move product from point A to point B, and an end to the pandemic won’t change that situation.
There’s been a driver shortage building for more than a decade in the transportation sector, due to the fact that truck driving isn’t the most appealing of professions for younger folks, and older drivers are retiring. Changes to hours-ofservice rules and the introduction of electronic recordkeeping haven’t helped the situation.
Mike Troy Editorial Director, Grocery Group mtroy@ensembleIQ.com
ANHEUSER-BUSCH IS A PROUD RECIPIENT OF THE 25TH ANNIVERSARY PROGRESSIVE GROCER CATEGORY CAPTAIN AWARD.
IN-STORE EVENTS
Calendar
02.22
African-American History Month Bake for Family Fun Month Canned Food Month Chocolate Lover’s Month
Great American Pies Month Greek-American Heritage Month Irish-American Heritage Month Hot Breakfast Month
S M T W T F S
1
National Texas Day. The appropriate occasion to promote all products from the Lone Star State.
2
Groundhog Day. Early spring or not, start rolling out items for the season’s biggest occasions, including Easter and Passover.
3
National Carrot Cake Day
4
National Homemade Soup Day
5
World Nutella Day. Everybody’s favorite hazelnut spread never goes out of style.
Bubble Gum Day
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National Frozen Yogurt Day. Draw customers’ attention to the many fun novelties in this space.
National Pork Rind Day. Fittingly, it’s also the date of this year’s Big Game.
National Muffin Day
National Send a Card to a Friend Day. Whether it’s traditional or electronic in form, a caring message is always welcome.
Valentine’s Day. Make sure that shoppers have all of the ingredients to create a romantic home-cooked (or ready-to-cook) meal.
National Love Your Pet Day
National GrainFree Day. There are more products than ever to choose from in this fastgrowing segment.
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National Retro Day. The associate who comes in wearing the widest bell bottoms wins.
10
National Chocolate Soufflé Day
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National Iowa Day. Explore the best of what the Hawkeye State has to offer in terms of food and beverage.
National Gumdrop Day. Goody, goody!
Supermarket Employee Day, brought to you by FMI —The Food Industry Association.
National Bagel and Lox Day. Breakfast is served in the deli.
National Almond Day. What would we do without this ubiquitous nut, which both tastes good and is good for you?
National Dog Biscuit Day. Poll pet parents to find out which types their pooches prefer.
National Cream Cheese Brownie Day. Provide a recipe online, and ask customers to show off their resulting bakes via social media.
National Cabbage Day. Play up the healthy attributes of fermented products like kimchi.
National Toast Day. With avocado leading the way, encourage consumers to get creative with their spreads.
National Make a Friend Day. When consumers do so, urge them to go food shopping with their new buddies.
No One Eats Alone Day. Challenge your associates to “adopt” elders living on their own to share a meal with.
Skip the Straw Day. Remind shoppers to be more eco-conscious by omitting this implement from their beverages, or at least choosing biodegradable options.
National Plum Pudding Day. Who says it’s just for Christmas?
National Chocolate Mint Day. Spotlight all such offerings in your candy section.
National Pistachio Day. The ice cream flavor rocks, but these mild, slightly sweet nuts are fine to snack on by themselves.
T H E
A R T
O F
M E R C H A N D I S I N G
T M
HOOKS | SHELF & COOLER MERCHANDISING | LABELING WWW.TRIONONLINE.COM/ART | 800-444-4665 ©2015 Trion Industries, Inc.
MENU TRENDS
Research & Analysis
The Rise of Plant-Based Foods The term “plant-based” has grown more than 2,700% on menus in the past four years — a stratospheric rise for a term that has permeated just about every food establishment’s menu, and is craved by even the most devoted of meat eaters — at least once in a while. A growing number of consumers are cutting back on animal-based foods, but not giving them up entirely, and a majority of consumers overall, regardless of dietary preference, are interested in increasing the grains, nuts and legumes in their diets. The rise of plant-based interest has accompanied a broader focus on both personal health and the health of the environment. Whatever the reason that consumers are choosing more plant-based foods, innovation is rising to meet them at the grocery counter or restaurant. Plant-Based Seafood MAC stage: Inception – International markets, global independents and fine dining. Trends start here and exemplify originality in flavor, preparation and presentation.
Vegan Jerky MAC stage: Inception – International markets, global independents and fine dining. Trends start here and exemplify originality in flavor, preparation, and presentation.
Protein made from plants that mimics seafood is a varied but growing category. These products are great alternatives for consumers concerned about their global environmental impact, i.e. overfishing, and those who are already vegetarian and looking to diversify their protein options. Seafood is particularly difficult to mimic in plant-based form, however, because there are so many varieties. Desoite this, there are natural forms of seafood replacement that are already starting to show up on menus, like hearts of palm and banana blossoms.
Vegan jerky can come in a number of varieties — from mushroom to carrot to imitation meat — and a nearlimitless number of flavors, and therefore can interest a wide range of consumers. Innovation in the product is being seen primarily at retail, but restaurants are also starting to incorporate dried meat replacements into some menu items. Jerky and charcuterie have a ripe opportunity to grow as more consumers look to expand their plant-based diets beyond red meat replacements and into more parts of the day. On <1% of U.S. restaurant menus
On <1% of U.S. restaurant menus 41% of consumers know it/14% have tried it/ 7% love or like it Menu Example Kati Vegan Thai Stir-Fry Coastal Curry Vegan curry using crisp fried banana blossom, with onions and in-house curry blend
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41% of consumers know it/11% have tried it/6% love or like it Menu Example Vegan International Co. Kitchen & Market Louisville Vegan Jerky Co. Jerky Available in Carolina bbq, smoked black pepper, perfect pepperoni, maple bacon or smoked chipotle
Plant-Based Crumbles MAC stage: Adoption – Global foods aisle at supermarkets, casual independents, fast casual. Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. Plant-based crumbles resembling ground beef are an easy alternative for consumers, seamlessly replacing meat in everything from tacos and chili to casseroles and dips. On <1% of U.S. restaurant menus 33% of consumers know it/15% have tried it/10% love or like it Menu Example Qdoba Impossible Taco Salad Plant-based Impossible Ground Burger served on crisp romaine lettuce and pinto beans, topped with freshly made pico de gallo, new roasted tomato salsa, shredded 3-cheese blend and crispy tortilla strips
Plant-Based Burger MAC stage: Adoption – Global foods aisle at supermarkets, casual independents, fast casual. Adoption-stage trends grow their base via lower price points and simpler prep methods. Still differentiated, these trends often feature premium and/or generally authentic ingredients. Now that the plant-based burger field has grown so far and wide, it’s diversifying: More proprietors are making their own veggie burger blends with beets, grains or beans, while others are teaming up with Impossible Foods or Beyond Meat to draw in customers who’ve already tried those brands. On more than 12.8% of U.S. restaurant menus Up 21.8% over the past four years 83% of consumers know it/44% have tried it/27% love or like it Menu Example BurgerFi Conflicted Burger Features 100% Antibioticfree Angus beef stacked on top of a veggie burger. Along with American cheese, white cheddar, lettuce, tomato, BurgerFi Sauce
Delivering innovation. Driving growth. Soli Organic, formerly Shenandoah Growers, is the nation’s leading grower of fresh organic culinary herbs. As the category leader, we’re not only bringing breakthrough innovations to soil-based controlled environment agriculture, we’re also helping retailers drive growth by leveraging insights, data and effective consumer branding. We’re proud to be recognized as a “Category Captain.” Let us help you drive growth in 2022. Contact your Soli Organic Sales Rep or reach out to info@soliorganic.com.
soliorganic.com
FRONT END
Shelf Stoppers
Health & Beauty Care
Basket Facts
Total Department Performance Latest 52 Wks W/E 9/25/21
Health & Beauty Care
$101,622,452,161
Latest 52 Wks YA W/E 9/26/20
Latest 52 Wks YA W/E 9/28/19
$99,197,387,230
$93,461,673,818
Top Health & Beauty Care Categories by Dollar Sales Supplements
Internal Analgesics
Vitamins
Toothpaste
Body Wash
$7,000,000,000
How much is the average American household spending per trip on various health & beauty care products versus the year-ago period?
6,000,000,000 5,000,000,000 4,000,000,000
$16.71
on all health & beauty care items, up 6.6% compared with a year ago
3,000,000,000 2,000,000,000 1,000,000,000 0
Latest 52 Wks W/E 9/25/21
Latest 52 Wks YA W/E 9/26/20
Latest 52 Wks YA W/E 9/28/19
Source: Nielsen, Total U.S. (All outlets combined) – includes grocery stores, drug stores, mass merchandisers, select dollar stores, select warehouse clubs and military commissaries (DeCA) for the 52 weeks ending Sept. 25, 2021
The future of health and beauty products will center around people, the planet, purpose and prosperity. Consumers want products that are environmentally and socially responsible but still deliver on their value proposition, and this sentiment is growing. There is a baseline expectation for companies to produce products with clean, simple and sustainable ingredients. And those who educate shoppers on the benefits that their product brings to both the consumer and the world around them will be able to capture additional sales and shoppers. More than ever, consumers are taking charge of their personal maintenance — especially post-pandemic. We like to think we’re aging gracefully, but it does require an investment in personal care needs, so the future looks green in more ways than one.”
$11.46
on artificial nails, up 2.1% compared with a year ago
$6.39
on deodorant, up 11.1% compared with a year ago
—Carman Allison, VP, Consumer Intelligence, NielsenIQ
Generational Snapshot Which cohort is spending, on average, the most per trip on facial cleanser?
Millennials
Gen Xers
Boomers
The Greatest Generation
$7.66
$8.48
$7.92
$8.28
Source: Nielsen Homescan, Total U.S., 52 weeks ending Aug. 28, 2021
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$9.20
on eye cosmetics, up 3.7% compared with a year ago
Source: Nielsen Homescan, Total U.S., 52 weeks ending Aug. 28, 2021
MINTEL CATEGORY INSIGHTS
Global New Products Database
FOR MORE INFORMATION, VISIT WWW.MINTEL.COM OR CALL 800-932-0400
Oral Care Marketing Overview
In the past five years, growth of the oral care category has been slow and steady due to the saturated nature of the market. Consumers are consistent in caring for their oral health, with nearly 100% of adults saying that they’ve used an oral care product in the past six months. U.S. retail sales of oral health products benefit from strong usage and predictable repurchase cycles, amounting to $8.7 billion in 2020.
Of adults agree that maintaining oral health can prevent other health issues, and 43% say that a complete oral care routine is the best way to maintain oral hygiene.
Key Issues
Consumers are in search of wellbeing experiences through an entirely new lens, seeking greater integration between their lifestyle, routines and product choices. People are willing to go the extra mile when it comes to changing their consumption habits and choosing options that align with their personal health or values. Consumers are interested in technology-related innovations that allow for greater personalization or convenience. As many adults upgrade their toothbrushes, tech-based oral health options can seize this potentially lucrative opportunity. However, connecting with a widespread audience means providing accessibility and value.
What Consumers Want, and Why Continuing to connect oral health with holistic wellbeing and prevention will propel the industry forward in years to come. Consumers are looking for ways to make their lives easier, which may involve tailored insights provided through a device or app. Still, adults are mindful of their purchases and stress the importance of seamless integration. To sustain growth, key players must continue to focus on beauty and personal care industry trends in which consumers are interested. Particularly, consumers express high interest in antiinflammatory ingredients, convenience-based innovations such as a twoin-one brushing/flossing device and sustainability initiatives like eco-friendly packaging.
PROGRESSIVE GROCER December 2021
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ALL’S WELLNESS By Molly Hembree
New Year, New Outlook RE TAILERS CAN HELP SHOPPERS DE VELOP HE ALTHY E ATING STR ATEGIES. new year is approaching, and with that comes a fresh look at food strategies and trends that will be the focal point of the next 12 months. The upcoming year will continue to build on consumers’ omnichannel path to purchase and the even bigger headway being made in retailer e-commerce. Products and services that align with on-trend 2022 nutrition themes include unique ingredients, a continued enthusiasm for plant-based options and purposeful eating, foods for weight management, and easing stress at mealtime. Consumers are taking notice of ingredient buzzwords on foods and beverages at the supermarket. Popular core ingredients like oats, mushrooms and cauliflower, along with enhancers like turmeric and hibiscus, grace the panels of products designed to improve nutrition, offer health-promoting effects like reducing inflammation or increase flavor. Beverage options at retail have grown
Meet your customers where they are in your 2022 planning by providing meal kits, healthier frozen meal assortments and better-for-you delicatessen options that take some guesswork out of mealtime. exponentially, particularly functional shelf-stable beverages from April 2020 to April 2021, according to SPINS sales data, perhaps as consumers sought to ramp up protection against COVID-19. Predictions are that this category will remain steady or continue to gently pick up speed in 2022, predominantly online. These drinks include the addition of prebiotics, probiotics, vitamins, minerals, protein, fiber, botanicals and other bioactive compounds.
themselves as “flexitarian” or semi-vegetarian, while a recent survey from the Yale Program on Climate Change Communication and Earth Day Network found that 94% of respondents said they’re willing to eat more plant-based foods. Julie Emmett, senior director of retail partnerships for the Plant Based Foods Association, cites health as being a primary driver of growth, along with food safety and overall plant-based food innovation. Other attractive attributes include food purchases that support a greater good, such as fair trade, sustainable, Certified B Corporation, and foods that donate part of their proceeds to charitable organizations. Consumer food purchases are often motivated by efforts to lose weight, and this upcoming new year will be no exception. The hope is that cutting calories is the natural byproduct of better ingredients in private- and national-brand offerings. Encourage your R&D teams to adjust product formulations by lowering added sugar, reducing added oils, bulking up fruit and vegetable content, and/or ensuring adequate fiber content. This will not only appeal to shoppers’ interest in “clean labels,” but also to their waistlines. The world always seems like it’s in fast-forward. This includes the time we dedicate to obtaining, preparing and consuming food. Meet your customers where they are in your 2022 planning by providing meal kits, healthier frozen meal assortments and better-for-you delicatessen options that take some of the guesswork out of mealtime. Urge consumers to find products in your stores that can be adapted for multiple food preferences or intolerances, such as premade pizza crusts to build a customized homemade pizza, or heat-and-eat veggie patties for crafting different sandwiches or tossing into a loaded power bowl. In preparation for the new year, gather your company’s team of retail dietitians, category managers and merchandisers to brainstorm practical ideas unique to your retailer’s goals that promote appropriate trendy ingredients, plant-based and purpose-driven eating, weight-loss-friendly options, and stress-free meals.
Offer Alternatives
Healthy eating strategies undoubtedly have a spot in consumers’ baskets heading into the new year, as underscored by the relentless growth of plantbased foods and “eating with a purpose.” Around 30% of Americans classify
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Molly Hembree, MS, RD, LD, is a registered dietitian for Kroger Health.
The 2021 Mango Retailer of the Year Recognizing Albertsons Companies for going above and beyond to support the mango industry.
RETAILER DEEP DIVE
Ahold Delhaize
ACTING LOCALLY, THINKING GLOBALLY Ahold Delhaize leverages the ‘quiet competitive advantage’ that’s a key ingredient in its success.
A
By Bridget Goldschmidt t its comprehensive Investor Day virtual event on Nov. 15, international retail conglomerate Ahold Delhaize had plenty of lofty goals and solid achievements to share. The Zaandam, Netherlands-based company, which has a presence across Europe, in Indonesia, and on the East Coast of United States, operating a total of 19 local “brands,” or banners, noted that it planned to add 10 billion euros in sales growth and reach fully allocated e-commerce profitability by 2025, having raised its cap ex spend and financial guidance accordingly. At the event, Ahold Delhaize President and CEO Frans Muller laid out the company’s chief objectives: “Between now and 2025, we have four big priorities we are doubling down on for the next four years: Serve our customers through deeper digital relationships, accelerate our omnichannel transformation and continue to be the best local operator, lead the transformation into a healthy and sustainable food system, and create a one-stop shop for smarter customer journeys. These priorities tie straight to our vision to create a leading local food-shopping experience.” As far as what it’s already accomplished, in all of the countries where it operates, Ahold Delhaize brands are No. 1 or No. 2 in their respective markets, while in the United States, the company has reached the 65% mark in its supply chain transformation to self-distribution, a move that will give it full control of its supply chain and an optimized network at scale. The transformation is slated to wrap up in April 2024, with 26 facilities in the integrated self-distribution network. “We’ve been in the business of serving customers for more than 150 years and have a long track record of always delivering for our key stakeholders,” asserted Muller at the Investor Day event. “This has been the case in both good times and in bad.”
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Of Ahold Delhaize's U.S. brands, Food Lion leads in performance.
PROGRESSIVE GROCER December 2021
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RETAILER DEEP DIVE
Ahold Delhaize
Ahold Delhaize USA’s Local Brands In the United States, Ahold Delhaize
What accounts for this stunning success in an often precaricurrently has eight companies, each with ous industry? Muller credited “a strong operating model with their own distinct histories and characters: our leading local brands, supported by service brands who opFood Lion erate at scale and that leverage their best capabilities globally.” Salisbury, N.C.: established 1957, This advantage is brought home by Ahold Delhaize USA 1,029 stores, 404 pickup points CEO Kevin Holt, who discusses the company’s inner workings FreshDirect and expectations, here and abroad, with Progressive Grocer. Bronx, N.Y.: established 2002, e-grocer “Actually, that’s a really important value point that we have between our operations in Europe and our operations in the The Giant Co. U.S.,” affirms Holt, using Selma Postma, chief digital officer, Carlisle, Pa.: established 1923, Ahold Delhaize Europe and Indonesia, as a prime example. 186 stores, 159 pickup points “Selma actually is in the Netherlands, and she now runs the Giant Food digital practice for Europe, but we had her in the U.S. for two Landover, Md.: established 1936, years and she ran [e-commerce division] Peapod for us, and 164 stores, 144 pickup points then we had her at Stop & Shop. So we basically take that Hannaford executive learning and have allowed that experience set so Scarborough, Maine: established 1883, that when Selma goes back, she’s in a better place.” 183 stores, 102 pickup points Of course, that information exchange doesn’t end there. The Stop & Shop Supermarket Co. “We continue to look at how do we build that experience Quincy, Mass.: established 1914, set and exposure for our executives in order to get more 408 stores, 319 pickup points well rounded in the global view of what we’re trying to do,” Peapod Digital Labs explains Holt. “We also have picked some key areas that we Chicago: established 1989, e-commerce think are important, and one example of that would be autoengine of Ahold Delhaize USA mation. From an automation point of view, we’re both moving more and more towards automation and everything that Retail Business Services we do from our supply chain. We’re also looking at micro-fuloffices in Quincy, Salisbury, Carlisle and Scarborough: established 2017, fillment centers, or what we call home shopping centers.” shared services company Beyond sharing executive expertise across brands and of Ahold Delhaize USA continents, Ahold Delhaize strives to make use of that mastery in a meaningful, practical way. “What can we do together to … have the very best experience set around what’s working, what’s not working?” muses Holt. “How kinds of things that we’re talking about, the medo we build our three- to five-year plans? How do we dia platforms that we’re talking about building, then work with vendors on a global level, from global and how we would move forward with those.” contracting [to] how we would do those kinds of things? One area in particular where the company’s Then, how do we share best practices European operations have and trends against what’s happening proved beneficial to the U.S. across the globe? This is how we brands is sustainability. “We “We’ve been in actually apply that to some of these wouldn’t, I don’t think, be the business of serving key areas that are really important to us, where we think there’s a great deal customers for more of synergy. That’s possible both from than 150 years and a capability side as well as from a learnings point of view.” have a long track Holt brings up a further advantage of this way of working: easy access record of always to proprietary technology and other delivering for our processes. “If you think about our machine learning and all of our AI key stakeholders.” intelligence-type work, we’ve built a —Frans Muller, common platform,” he points out. President and CEO, Ahold Delhaize “So, if we build an algorithm in the U.S., that algorithm is published and it’s available to our folks in Europe, and vice versa. That’s been very successful for us in terms of being able to share the data science side of the business that we’re also working with as we think about things like personalization and a lot of other areas, insights and the 20
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RETAILER DEEP DIVE
Ahold Delhaize there if it wasn’t for our European colleagues, because they’re ahead of us on that,” notes Holt. “So we’ve learned just a great deal from them that we can actually apply in the U.S. around everything from plastics to clean label, to all of these things that are just incredibly important to us and we believe will be very important to our consumers. This is why we brought HowGood in for looking at sustainability by item. This is why we have our Guiding Stars [nutrition guidance program] that you can actually use to navigate, and we built that into our digital sites as well.” He sums up the ability to draw on Ahold Delhaize’s international know-how as “a great opportunity for us and … an area where I think it’s that quiet competitive advantage that we have.”
Domestic Doings
Among Ahold Delhaize's moves to expand its omnichannel capabilities was the opening of a Giant Co. e-commerce fulfillment center (EFC) in Philadelphia.
Meanwhile, in the United States, the rollout of rebranded An easy example … would be baby, pet, those Stop & Shop stores has hit something of a snag. “We’re still kinds of things, where there are a great deal of committed to the remodel program for Stop & Shop,” says assortments we could offer that we wouldn’t Holt. “With COVID, it actually impacted us a great deal in carry at the main store. So those assortments will our ability to stay on path with the number of stores that we be available, and for those consumers who have wanted to do. So we had to retract that in order for us to be pets or have babies, they would be able to really able to do that, because the perbenefit from that. As we build out mitting, all of those things, and our personalization, we would have in a lot of those larger markets, it that relationship with that con“Our entire strategy can become pretty difficult with sumer that would allow us then to has been built on, and everybody remote and things curate those assortments uniquely slowing down as municipalities for them, so that when you go to continues to be built on, … are really focused on their your homepage on whatever type the idea of being uniquely COVID response. … Then, being of device that you have, it would local in the neighborhoods able to get the contractors in, … basically then curate for you that we serve and being having people work and that kind the kinds of things that would be of thing, shut us down, too.” important to you for your shopping able to really resonate the Despite the delays, the experience.” attributes of our brands. At company was able to focus on the same time, we’re trying other elements, among them to build that scale and continuing to refine assortment builds in terms of modernizaleverage on the platform tion, depth and breadth; the level in order to be able to current categories that are most get the investments that important; and how to avoid out-of-stocks in those categowe can do through value ries to ensure that customers unlocks.” get the items that they want. —Kevin Holt, “There’s a great deal of CEO, Ahold Delhaize USA learning we’ve been able to pick up, and that’s all being applied then to the remodels as we go forward,” observes Holt. “But our intention is to continue to do the remodels. We’re looking at 50 to 60 remodels a year, [and] we’re at about 150.” Over at sister banner Giant Food, a new digital marketplace, Ship2Me, is making its debut. The solution, according to Holt, “sits on the platform of Prism, which is our commerce platform, and its intention is for us to be able to offer an extended aisle. That extended aisle is made up of goods and services that will be important to consumers in their local communities around the needs that they have. 22
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More corrugated packaging is recovered for recycling than any other packaging material1. The recovery rate for old corrugated containers (OCC) has hovered around 90 percent for years. Maybe that’s because 96 percent of Americans have access to community curbside or drop-off corrugated recycling programs2. And nearly all OCC is used to make new paper products. Reusable. Renewable. Extraordinary. Learn more about the renewability, recyclability and responsibility of boxes at boxesareextraordinary.com.
1 2
2013 EPA “Advancing Sustainable Materials Management: 2013 Fact Sheet” 2014 AF&PA Community Access Survey. Louis Berger, February 2015
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Ahold Delhaize Ahold Delhaize boasts such cutting-edge innovations at its facilities as space-saving 3D grids with totes full of fresh and nonperishable items at the new Giant Co. EFC, and wearable tech to reduce injuries among warehouse associates.
Asked what future plans for Ship2Me entail, Holt replies: “Longer term, we also see adding into it services of local operators and potentially looking at partnerships and those kinds of things. Also, featuring some of our local growers and that kind of thing with products and so on that they might build that are unique to them that we could actually fulfill, and we might not carry all of those in our store. So that’s the idea behind how we’re thinking about that. We will be taking that across all of the Prism brands. So, as we roll Prism out everywhere, we will have the extended aisle available to all of them.” Still, that solution would be tailored to each brand. “Our entire strategy has been built on, and continues to be built on, the idea of being uniquely local in the neighborhoods that we serve and being able to really resonate the attributes of our brands,” emphasizes Holt. “That’s why we’ve kept our brands all independent. We haven’t put the same name across them all, because we really believe they’re uniquely different. At the same time, we’re trying to build that scale and leverage on the platform level in order to be able to get the investments that we can do through value unlocks, and so we’re well on our way to achieving that.”
Still Growing
Formed by the momentous merger of two Europe-based retail conglomerates in 2016, Ahold Delhaize is known for such recent high-profile acquisitions as pure-play e-grocer FreshDirect in early 2021, and 62 former Bi-Lo and Harveys stores from Southeastern Grocers last year. Talking about the company’s future expansion prospects in regard to new markets, Holt says: “We’re always looking to say, ‘Are there white spaces where we should be building stores or acquiring stores that we can actually put into our format?’ So that’s something that we continue to look at where it makes sense. There are opportunities like that occasionally that we get in some of the northeastern areas, and when we have those, usually that’s through acquisition. It’s once in a while that we’ll find a new store location that’s kind of a white space for us, and we’ve taken advantage of those, [as with] Giant Co.’s recently opened [urban flagship] store [in Philadelphia]. So that’s how we’ve been approaching this in terms of our growth.” As for Ahold Delhaize’s favorite way of going to market, he’s unequivocal in his answer: “Onmichannel. ... It’ll be all grounded in digital, and that digital experience will be from outside 24
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of store, pre-shop, to shop to post-shop. It doesn’t matter what channel they want to use for that. So, if you’re on your digital device and you come into the store, we would switch over to in-store mode, and so as you’re walking in the store and so on, we’d be able to continue to tell you, ‘Here are some items. Oh, you went past that. This item is something you normally buy.’ … Our preferred method of growth is to have that available to the populations that we serve.” In imagining the future of grocery shopping, Holt sees more of the same, pointing to such factors as personalization and the digital experience growing ever more important, with brickand-mortar stores existing alongside a greater number of fulfillment centers. “I’ve been in the industry for a long time, and our industry’s always been an iterative industry and it’s always been low-margin and it probably will continue that way,” he observes. “So we’ve always had to be really good day-to-day operators. But I think as we look at the omnichannel environment we have today, and we look at all the different possibilities around how consumers have changed and the technologies that enable the future, there’s just an enormous number of opportunities ahead of us.”
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Ahold Delhaize
SHORTER TIMELINE TO NET ZERO THE RE TAIL CONGLOMER ATE COMMITS TO GOALS IN ACCORDANCE WITH THE SCIENCE BASED TARGE TS INITIATIVE. By Bridget Goldschmidt
I
n keeping with its ongoing commitment to sustainability, Ahold Delhaize and its brands have pledged to achieve net-zero carbon emissions across their operations by no later than 2040, and to become net-zero businesses across their entire supply chain, products and services by no later than 2050. Additionally, the retail conglomerate has joined the Business Ambition for 1.5°C, an international coalition of UN agencies, business and industry leaders, in partnership with the Science Based Targets initiative (SBTi) and the UN-led campaign Race to Zero. Ahold Delhaize’s previous net-zero carbon emissions target was 2050. In noting these targets during Ahold Delhaize’s Nov. 15 Investor Day event, President and CEO Frans Muller said that the company “definitely won’t give up on looking for opportunities and paths to getting the job done faster.” Having taken a systems approach to developing a climate strategy based on SBTi, the company has conducted in-depth research on the effect of climate change, following recommendations from the Taskforce on Climate Related Financial Disclosure. Ahold Delhaize has also garnered such third-party recognition as being ranked in the top 10% of companies in the Dow Jones Sustainability Index, an upgrade from an “A” ESG rating to “AA” from finance company MSCI, and a top 10% Sustainalytics rating in the food industry. Ahold Delhaize’s current goal is to lower carbon emissions from its brands’ own operations by 50% by 2030, the 2018 baseline. Key considerations are that: More than half of the carbon emissions come from energy consumption
Ahold Delhaize and its brands have committed to long-term targets to attain a net-zero value chain by 2050 and will advocate that value chain partners create carbon emission reduction plans consistent with a scenario to limit global warming to 1.5°C. The biggest opportunity to reduce carbon emissions is in agriculture: Ahold Delhaize brands are collaborating with farmers, incentivizing sustainable change through longer-term contracts with concrete environmental requirements, and co-investments on their farms. A detailed plan will follow within the next 12 months. “We will support farmers and suppliers as they decarbonize [their] operations and the overall supply chain, and transition toward an inclusive and regenerative food system that supports biodiversity,” said Muller in discussing the company’s efforts in this area as he kicked off Investor Day. Describing the current food system as “no longer fit for purpose” in her own Investor Day presentation, Daniella Vega, the company’s global SVP health and sustainability, asserted: “The system is broken, and the time to transform it is now.” She also noted that twothirds of the company’s current carbon emissions come from the Ahold Delhaize USA brands. Overseen by Vega, Ahold Delhaize’s Health and Sustainability strategy is based on the idea that the health of people and that of the planet are inextricably linked, and that healthier food choices are, more often than not, better ecological choices. Therefore, a more balanced diet and more sustainable shopping baskets will help reduce carbon emissions, improve soil health, mitigate deforestation and increase biodiversity. What’s more, according to Muller, “To further align and deepen our commitment to being the industry-leading healthy and sustainable retailer, we will [incorporate] healthy and sustainable further into our short-term and long-term incentive plans and other business metrics, and we will report on them just as we do on our financial metrics.”
More than one-third of the carbon emissions come from refrigeration systems Fewer than 10% of the carbon emissions originate from transport Therefore, Ahold Delhaize’s brands continue to improve their respective operations in the following ways: Replacing or retrofitting refrigerator systems with lower greenhouse-gas alternatives, installing natural/hybrid systems and minimizing leakage from all systems Accelerating the switch to renewable power, with a number of brands using 100% renewable electricity by 2023 Building and remodeling stores in the most energy-efficient way by installing LED lighting, adding doors to refrigerators and improving insulation Switching to low-carbon heating, including heat pumps and heat recuperation Converting the light and heavy transportation fleet to zero-carbon alternatives, including battery electric vehicles (BEVs), and leveraging route optimization technology and improved fill mechanism to reduce overall energy use Incorporating an internal carbon price model into investment proposals from its local brands
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“The system is broken, and the time to transform it is now.” —Daniella Vega, SVP, Health and Sustainability, Ahold Delhaize USA
AN ANCIENT RECIPE
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SOLUTION STRATEGIES
2021 Category Captains Awards
RISING TO THE OCCASION, AGAIN
Now in its 25th year, Progressive Grocer’s Category Captains program recognizes the exceptional efforts of suppliers that collaborate with retailers to serve shoppers and grow sales. By Lynn Petrak
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he discipline of category management has changed dramatically since the inception of Progressive Grocer’s Category Captains program 25 years ago. This program was conceived at a time when the notion of retailers and suppliers working together against one version of the truth — essentially point-of-sales data — was emerging as a new way of working among trading partners. Collaboration among trading partners has changed dramatically in the intervening years. Insights are deeper, shopper segments are more thinly sliced, methods of engagement are broader, and joint business planning occurs over longer time horizons, especially among larger retailers and their supplier counterparts. This mix was thrown into disarray at the onset of the pandemic, and that caused PG to adjust the criteria on which Category Captains entries were judged. As pandemic conditions persisted in 2021, disrupting shopper behaviors, supply chains and promotional efforts, the judging criteria continue to prioritize speed, agility and resourcefulness based on dynamic market conditions. What hasn’t changed about Category Captains is the ongoing focus on leadership among suppliers, those companies that work closely with retailers, offer great products, leverage consumer insights, provide accurate demand forecasts, have agile supply chains, make data-driven pricing and promotion decisions, employ advanced analytics, and drive demand through innovative shopper engagement strategies.
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202
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CAP
TAIN S
These are just a few of the broad attributes that make a supplier worthy of the distinction of Category Captain. To help the team at PG evaluate entries, we asked questions such as: What was the most important shopper insight or innovation you brought to your retail partners? How did your organization address pandemic-driven supply chain challenges to ensure that retailers of all types had adequate product quantities? What new methods of collaborating with retailers were especially innovative or creative? How did new insights or innovations that your company developed build total category volume? How did initiatives promote connectivity between complementary store departments, and boost basket size, trips or overall store sales? How did your initiative invigorate a dormant or declining category, or create a new one to address an unmet consumer need? How were digital methods such as social media or retail media leveraged?
This year’s entries were all impressive. The level of creativity displayed by suppliers when working with retailers to serve mutual customers continues to grow and take the concept of category management in new directions, way beyond what existed when this program first launched. Meet this year’s record-setting crop of Category Captains …
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Through our product innovation, category insights and more than 100 years of expertise, we continue to bolster category sales growth, bringing new users to the category and driving existing consumers to purchase more.
LIGHT & SUBTLE
MILD & DELICATE
RICH & BALANCED
SMOOTH & DELICATE
SMOOTH & DELICATE
FULLBODIED
FULLBODIED
STRONG & FRUITY
SOLUTION STRATEGIES
2021 Category Captains Awards Abbott
drove market share. Today, the category at this retailer is up 10.6%, with gains in the adult segment driven by Ensure and increases in the diabetic segment led by Glucerna. The same shift to large packs was seen in the balanced-nutrition category. Using its insights, Abbott built a new merchandising planogram for this segment and created a phased approach to rollout. Retailers that remerchandised aisle entries with large pack sizes saw more than a 6% increase in total category shopper retention. Abbott also reported that large-pack buyers of its balanced-nutrition products are spending two times more and repeating more often.
Amplify Snack Brands
Amplify shifted its strategy to capitalize on the latest shopper tendencies and retailer dynamics, providing recommendations rooted in analytical rigor and substitutability modeling. The solution identified duplicative products and recommended productive and incremental item voids to drive greater category sales and profits. Amplify shared its learnings with key retailers — especially those with underdeveloped BFY assortments — to help them attract and retain more of today’s valuable health-and-wellness-oriented consumers. During this time, the company’s total brand sales accelerated 15.6%.
During the peak of the pandemic in 2020, consumers went out CAPTAIN less but bought more when they did. Abbott, an adult nutrition/diabetic nutrition (AN/DN) leader, responded accordingly. Abbott’s consumer insights led its teams to change tactics to provide what shoppers clearly wanted. In the AN/DN segment, Abbott developed the first-ever large pack of its Ensure and Glucerna products, and supported the launch with a customer merchandising solution that included shoppable displays at one of its major retailer partners, featuring out-of-aisle secondary merchandising in the pharmacy and health/beauty area. The program provided additional inventory at a time of surging demand, reduced out-of-stocks, filled distribution gaps and, ultimately, 2021
At-home consumers snacked more frequently during the global health CAPTAIN crisis, often reaching for better-foryou (BFY) salty snacks. As mindless noshing turned to mindful eating, the BFY subcategory within salty snacks outpaced overall category growth, vaulting to a 7.4% increase for the 52 weeks ending Sept. 12. The Amplify Snack Brands group from The Hershey Co., which offers BFY products under the SkinnyPop, Pirate’s Booty and Paqui brands, redoubled its efforts during this time. The company recognized that BFY shoppers spend more on salty snacks that fit their lifestyles: For every $1 that an average shopper spends on salty snacks, a BFY shopper spends $2.89. 2021
Anheuser-Busch
This perennial category captain adjusted its sails during the ebb and flow of this past year. At a time of changing consumer demands and varying usage occasions, Anheuser-Busch (A-B) worked with retailers to help them redesign their adult beverage departments, recommending alcohol macro space by category, such as warm and cold allocation and key category adjacencies. One major mass retailer that leveraged these recommendations reported that those stores have outperformed non-remodeled stores by seven percentage points. A-B also used its insights on hard-beverage trends to help a major grocer relocate its ready-to-drink cocktails to a cold wine space, leading to a 0.8% greater market share. Additionally, the company developed omnichannel solutions to 2021
CAPTAIN
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increase the relevance of meal-and-alcohol pairings. A-B partnered with industry leaders to promote at-home barbecue occasions, driving a 38% increase in dollars for the categories across more than 600 activations at a top grocery retailer leading into the Labor Day holiday. A-B continually collaborates with retailers to help them drive online sales using a proprietary eRetail scorecard system, digital shelf optimization and thought leadership on today’s online shoppers. The company also recently opened a collaboration center in St. Louis called “The Vault,” where the company showcases trends, research and new products for retail partners.
SOLUTION STRATEGIES
2021 Category Captains Awards
B&G Foods
The strong rate of growth in frozen vegetables — up CAPTAIN 19.2% in sales last year — begs the questions of who’s contributing to the renewed health in that category, and how can brands and retailers tap into the trend even more? Last year, B&G Foods’ Green Giant brand determined growth drivers in the category as part of the Go Green initiative, discovering that much of the recent success could be attributed to younger health-andwellness-minded shoppers interested in plant-based eating, low-carb offerings, convenience, value and sustainability. Through the Go Green program, which included both insights and retail solutions, B&G found that targeting Millen2021
2021
Cacique LLC
campaign, Your Auténtico Awaits, that helped consumers create an authentic experience while adding their own flair to dishes, while multicultural partnerships with customers around the country showcased its thought leadership. Further elevating the category, Cacique shared key insights with retail partners, including findings of a consumer segmentation from which the shopper profiles and actionable insights were developed. Also, the manufacturer leveraged category management tools and price elasticity data with retailers, enabling it to maintain industry-leading case-fill rates.
Chiquita Fresh North America
6% compared with 2019. Also in 2020, Chiquita ran a six-week digital media ad campaign with a major U.S. retailer to increase banana-buying trips for lapsed buyers or nonbuyers of bananas. The effort generated sales 16.4 times the ad spend, with an incremental sales uplift of 102%. Focusing on sustainability also positively affected its category performance: Chiquita became the first global fruit company to have its goals and progress independently verified by the Science Based Targets initiative.
Leading authentic Hispanic product producer Cacique focused on integration to CAPTAIN improve category performance for retail partners. In-store, the company created destination sets that serve as a holistic Mexican food solution while also cross-promoting with complementary products like rotisserie chicken. New products, like a line of premium chorizo, kept the category dynamic. Recognizing the importance of a seamless in-store and online experience, Cacique worked with retailers to accelerate digital programming and enhance the digital shelf through tools like digital coupons and “boosted” searches and advertising. The company also developed a fully integrated year-long marketing
2021
Success may not grow on trees like, say, bananas, but Chiquita didn’t let major marketplace disruptions affect its momentum. During an uncertain time that pretty much called out for comfort food, Chiquita extended its brand presence by teaming up with the Nutella brand on new co-developed recipes and adding a Chiquita banana bread recipe to Nutella jar lids. In-store and social media efforts exceeded expectations in target message reach, site visitors and paid social reach. In stores where both Chiquita and Nutella were present, dollar sales increased by 10% and volume sales rose CAPTAIN
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nial-age consumers with social media marketing and better aiming education messaging and crossitem promotions helped elevate brand and category performance. The initiative also discovered that retailers are interested in more strategic programming that teaches shoppers how the frozen vegetable category is evolving with innovative products and promotions. Green Giant’s experts recommended additional tactics to address these concerns, including the deployment of fewer but bigger and better promotions during key periods and use of demand-generating efforts throughout the year.
progressivegrocer.com
SOLUTION STRATEGIES
2021 Category Captains Awards
2021
The Coca-Cola Co.
In the diet sparkling soft-drink category, industry stalwart Coca-Cola recently CAPTAIN improved the taste, consistency and packaging of its Coca-Cola Zero Sugar offering. Leveraging the company’s longstanding partnerships with football teams, Coca-Cola rolled out a new marketing campaign that invited consumers to cheer on their favorite team with the Best Coke Ever. The updated Coca-Cola Zero Sugar packaging, which transitioned from black to red to enhance taste perception, could be customized for fans to see their favorite team at their local grocery store. The campaign included customizable in-store displays that resembled mini-branded stadiums, and a cross-category program with game-day recipe demonstrations by football talent to promote homegating. Creative elements included outdoor, retail, streaming audio, radio, video, digital and social channels, and mobile gamification. Effective large-store channel activation drove the success of the relaunch, positively affecting the sparkling soft-drink category. Since the revamp, the product’s year-to-date growth rate has doubled in total retail and tripled in large stores, with
strong results in the second-largest U.S. supermarket chain, which reported an eightfold gain. Moreover, with 18% of Coca-Cola Zero Sugar buyers new to the beverage post-relaunch, base velocity is up 34% over 2019.
2021 CAPTAINS
SOLUTION STRATEGIES
2021 Category Captains Awards
2021
Dole Food Co.
Up against market headwinds and actual hurricane-force winds, Dole Food Co. still ratcheted up its category leadership. The brand addressed increasing demand for restaurant-style experiences at home by adding a new line of salad kits called Just Add Chicken. The move resonated with premium shoppers, brought new buyers to the category, drove multiple salad purchases and increased basket size. On top of other major market disruptions, Dole contended with hurricane damage in its production areas in Honduras and Guatemala in November 2020, which limited supply and caused volume loss. Dole partnered with retailers to mitigate their financial impacts and shared price elasticity insights. Finally, in light of changing consumer behaviors, Dole CAPTAIN
gained revealing category insights by partnering with NielsenIQ to analyze how households shop, identifying purchase drivers for items like ready-to-eat products, kits and salad mixes. One major retail partner used the findings to develop distinct strategies for each of those subgroups that ultimately delivered a category sales increase of 13.1% and a 10.8% jump in unit sales.
FRESH. FORWARD. FLOWERS. Award Winning Category Management and Shopper Insights. Committed to leveraging consumer focused insights to deliver sustainable category growth.
SOLUTION STRATEGIES
2021 Category Captains Awards E. & J. Gallo Winery
point-of-sale display kits featuring partner Barstool Sports that propelled a notable sales lift. The brand also supported one retail partner’s e-commerce promotions with digital assets, and executed virtual demos that included QR codes linking back to informational videos. This ability to pivot proved crucial to the company’s category success: During a supply chain shortage, E. & J. Gallo sourced aluminum from new international manufacturers and worked with co-manufacturing plants to integrate them into a single automated IT system.
Eagle Family Foods Group LLC
advised to schedule merchandising activity at peak times when weekly volume was twice as high as the off-season. In the off-season — i.e., beyond the peak baking periods of holidays — the company helped retailers enhance consumer interest in the baking supply aisle with marketing efforts that included regional and ethnic recipes. Eagle Foods also recommended a reduction in deep discounting during the off-season to maintain profitable growth supported by usage messaging.
The hard-seltzer category is on a roll, experiencCAPTAIN ing dramatic growth for five consecutive years. While some brands experienced sales drop-offs, the High Noon brand from E. & J. Gallo Winery is still on a high, thanks to innovative retail promotions capitalizing on consumers’ penchant for switching from vodka and value seltzer brands to spirits seltzers. With a 79% share of the spirits seltzer segment, High Noon outperformed the category in basket ring, basket lift and unit sales per trip through a variety of tactics, including 2021
2021
At-home baking took off during the pandemic, which was a boon to Eagle Foods and its retail partners. The producer of staple baking products, including condensed and evaporated milk, deployed strategies designed to “retain the gain” of baking product sales. Highlights from the initiative included a “good, better, best” tiered pricing architecture that yielded a more than 10% bump in retail profits. In-season tailored promotions featuring “baking center” displays increased traffic and transactions, and retailers were CAPTAIN
2021
Flowers Foods Inc.
With higher base sales contributing to significant growth in CAPTAIN commercial packaged breads over the past couple of years and likely into 2022, Flowers Foods worked with retailers to keep that growth on track and provide solutions to both shoppers and grocers. To make it easier for consumers to buy bread – including more than one product purchase per transaction – Flowers sought to improve traffic flow in the typically large commercial bread aisle. The company implemented a shopper-based merchandising strategy designed to determine which bread
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segments have the highest interactions and would work well merchandised together for optimal sales. Stores that followed the new merchandising flow expanded their total bread category sales by 4.7% and also grew their share of market by 43 basis points. Flowers Foods also devised a new promotional strategy focused on the bundling of highly interacting bread segments, which has been successfully used by several of its retail partners. Retail bread category managers reported that this strategy works because it’s supported by clear shopper data.
SOLUTION STRATEGIES
2021 Category Captains Awards Fresh Express
Value-added salads can provide value for retailers as well as shoppers. Case in point: Fresh Express created a multifaceted and ultimately successful program to maximize sales of its packaged salads at a time when many consumers were splurging on premium and convenient food items at home, pulling back spending on travel and other pursuits during the pandemic. The program was based on insights showing that the packaged salad category is more resilient to price increases, due to shoppers’ interest in foods that are plant-based, healthy, convenient and flavorful. Subsequent messaging highlighted ways that shoppers could enjoy chef-inspired meals at home and relieve any pandemic-related cooking fatigue with easy-toenjoy salads, including innovative items. 2021
CAPTAIN
Good Culture
shopper marketing and promotional strategies enabled the brand to effectively reach consumers who didn’t realize that there was a better alternative. As a result of its production, packaging and promotional efforts, Good Culture is now the fastest-growing overall cottage cheese brand and the top natural brand in its category, contributing to overall category growth in the United States. Category initiatives and sales success have helped the company position itself as a joint business-planning partner with key retailers.
GSK Consumer Healthcare
groups. Elements included a menu of actionable in-store and online solutions designed to address each segment and overcome barriers that often prevent consumers from taking all actions possible to support their healthy lifestyles. In-store solutions included an Immunity Revolution end cap display; signage cubes with messaging on immune support, vitamin support, hydration support and personal care; and a post-purchase flier for pharmacy customers. An immune support add-on was also developed for online shoppers.
A mature category, cottage cheese received some CAPTAIN renewed vigor with products and promotions from Good Culture. The brand, which offers certified-organic, pasture-raised, and stabilizer- and additive-free cottage cheese, drew new and younger shoppers through innovative products and targeted efforts to its core shoppers: Millennial moms and young transitionals. Through its consumer research, Good Culture learned that cultured-dairy shoppers often have an “autopilot” mentality when shopping for cottage cheese and sour cream, typically picking whatever brand they grew up eating. A combination of disruptive packaging, 2021
2021
The recent spotlight on health and wellness catapulted the vitamin, mineral and CAPTAIN supplement (VMS) category, which was already growing before the pandemic. As the pandemic helped spark 33% growth in the immunity category, GSK focused on maintaining and accelerating growth. To ensure that gains seen during the pandemic were sustained, GSK began with a deep dive into new VMS and immunity users, determining that there was a strong opportunity to encourage the use of immune supplements year-round. The company created a segmentation strategy designed to unlock the full potential of these products among key consumer
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As another way to build frequency and volume, Fresh Express recommended boosting promoted pricing from two for $5 to two for $6 or $7, and encouraged “three-for” promotions in segments with higher units and trips. This tactic — again based on insights — resulted in increased category sales, larger basket sizes, the identification of underperforming brands, and increased efficiency via minimized shrink.
progressivegrocer.com
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SOLUTION STRATEGIES
2021 Category Captains Awards The Hershey Co.
Other insights showing the importance of the digital experience led Hershey to guide its retail partners to drive more digital candy category awareness. Merchandising candy with affinity categories, balancing package types on the first page, providing additional packtype breakouts and introducing a new seasonal landing page led to increased shoppability, conversion, and spend per customer. Hershey also bolstered its relationship with Hispanic retailers by developing customized solutions like the promotion of the Hershey’s, Reese’s and Kit Kat brands, which overindex with Hispanic consumers. The company created digital ads spotlighting confections as part of popular Hispanic holidays and added racks with bilingual messaging.
Hormel Foods Corp.
To bolster its retailer relationships, Hormel revamped its sales team for the first time in almost 20 years. The human capital restructuring maximizes available resources and helps retailers lean more into e-commerce. Hormel also invested more in its own e-commerce team and in consumer studies to drive more growth in the online channel. Through those learnings, the company developed new products like Hormel Black Label Breakfast Combos, Hormel Black Label egg bites and Herdez avocado hot sauce that support longer-term category growth.
Idaho Potato Commission
in its region, and strategically merchandised around those items. During two weeks in March, the retailer performed 16% better than the rest of the market, and grew russet sales 30% compared with the same time frame the prior year. In addition to optimizing insights to make informed decisions, IPC helped retailers achieve category success through its team of professional category advisors. Working closely with grocers, the advisors analyzed retailers’ data to optimize their respective promotional strategies.
The Hershey Co. is responding to different growth drivers in the candy catCAPTAIN egory by unwrapping a multipronged approach. The company used robust consumer insights to work with retailers to modify their space and assortment based on changing consumer behaviors. Data supporting trends like family movie nights, gaming and at-home baking led to some of those modifications that resulted in double-digit category sales growth and purchase frequency. Consumers’ expressed desire for personalized solutions led to the development of Hershey’s Build Your Own Six Pack, which optimized opportunities in the instant consumables space. Displays set up near alternative payment areas and on beacon end caps and shelving adjacent to the candy aisle, along with point-of-sale signage and bundled pricing, contributed to 25% to 30% growth at participating stores. 2021
Balancing technology and interpersonal relationships has been pivotal to CAPTAIN Hormel Foods’ success as a category captain. From an insights standpoint, Hormel’s retail sales group used a strategic pricing tool to identify opportunities for mutual growth and profitability, leading to data-driven conversations about price optimization and promotional pricing amid the pandemic and supply chain disruptions. Also in the past year, Hormel created an automated tool with logic to allocate inventory and automatically update purchase orders based on a variety of factors. This tool enables Hormel to talk with buyers about the most optimal ordering quantities. 2021
2021
Like the crop it promotes, the Idaho Potato Commission (IPC) achieved grow th by staying grounded. This year, IPC used data to help retailers understand the impor tance of promoting the right products to grow the total categor y instead of focusing on the gourmet categor y or other ideas. These insights enabled IPC to drive more strategic decisions among its retail partners. For example, a large West Coast retailer decided to forgo its normal advertising schedule for 24-ounce packs and go with IPC’s new data-driven tactics. The retailer advertised russet potatoes, the top-volume mover CAPTAIN
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#1 Brand in Chopped Salad Kits
TAYLORFARMS.COM
SOLUTION STRATEGIES
2021 Category Captains Awards Kellogg Co.
It’s a category captain for many retailers, but the Kellogg Co. might be described as an admiral at the helm. Kellogg recently created a new omnichannel framework called SNACK to create seamless digital and in-store operations, with features like “searchendizing” that define where best to place and maximize investments, along with updated navigation, assortment and content tools. The in-store shelf has been another area of emphasis for Kellogg, which teamed with a software company and a large retailer-owned co-op to fine-tune a holistic macro and micro category management approach. This partnership led to an occasion-led aisle renovation at the co-op’s stores, leveraging Kellogg’s proprietary research combined with an interactive 3D cloud-based platform that allows for optimized aisle flow, category shelf space allocations, product placement and on-shelf capacity. Through this technology, team members from all groups can essentially walk through the store, navigate the aisle, select products from the shelf and make real-time decisions while viewing the layout from different office locations. 2021
CAPTAIN
Kellogg deployed innovative category-lifting tools earlier in the pandemic, too. The company leveraged virtual-reality stores that allow stakeholders to view the aisle on demand. Used by three of the top five U.S. food retailers, the technology elicited positive feedback from those that used the program to add products and make reconfigurations where needed. The CPG giant also kept busy on the product development side to enliven categories. In the salty snack space, Kellogg
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created a new limited-edition Pringles item, a digital “non-fungible token” (NFT) called the CryptoCrisp; the animated artistic depiction of a gold Pringles can with cryptocurrency-inspired chips was an agile social-first idea and a product that sold out within an hour. Proceeds were donated to No Kid Hungry, a national campaign working to end childhood hunger. The Pringles brand also introduced a new (real) spicy chicken variety that garnered 1 billion earned impressions through a social media campaign. Looking ahead, Kellogg is embracing a proprietary dataset called Landmark that identifies more than 200,000 occasions that can fuel an interconnected commercial activation plan for retailers to target the right shopper at the right occasion. The company is using the dataset as part of an organizational transformation using occasions to capitalize on trends and further expansion opportunities.
masonways.com
Over 80 Base Sizes
Litehouse Foods
Litehouse Foods shook up the refrigerated salad dressing (RSD) category with several campaigns addressing new pain points emerging from the pandemic. In late 2020, Litehouse launched a family-focused campaign with ideas and resources to keep families entertained during their time at home. The campaign, which included a landing page with family night ideas, weekly giveaways and a partnership with Redbox, resulted in a 47% increase in sales of Litehouse’s 20-ounce dressing over the same period in 2019. For all shoppers, Litehouse invested in targeted efforts like layering retailer purchase data with digital advertising to reach the right audience. The company also optimized shopper marketing efforts per retailer to better support partners and test new marketing tactics with trackable ROIs, including placing ads on retailer websites to target RSD shoppers in the online retail purchase path. These and other category programs helped elevate results compared with pre-COVID levels, including increasing market share by 1.2 points and solidifying the company’s position as an RSD market leader. Litehouse’s RSD sales grew 11% year over year, two times the category growth. 2021
CAPTAIN
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Retail Display Solutions
SOLUTION STRATEGIES
2021 Category Captains Awards
2021
Monterey Mushrooms
Monterey Mushrooms recently worked with a traditional wholesaler that experienced reduced offerings due to supply chain challenges and low customer traffic. Monterey Mushrooms helped the wholesaler determine the right size set for them, what items needed to be placed in the set first, how to set everyday retails and how the category would be promoted. After following the recommended tactics, the wholesaler posted 23.3% sales growth compared with 12.6% growth among other retailers in the region. Monterey Mushrooms also worked with a traditional retailer that had the right size set and assortment, but wasn’t growing at the same rate as other retailers in the region. A quick analysis of the category showed that its everyday retails were in conflict with each other. Out of the retailer’s 20 items, Monterey Mushrooms recommended eight increases and nine decreases to support a new strategy. That move had no impact on category markup, and the retailer saw a 3.1-point increase in sales over its current trends. CAPTAIN
2021
NatureSweet
NatureSweet sensed a ripe opportunity in the digital space based on the pandemic-related spike in e-commerce and the lifestyle shift to cooking more at home. Adding a new digital marketing manager position, teaming with a new tech partner, revamping its website and launching new ads across digital platforms helped NatureSweet triple its website traffic and garner an eight- to 15-fold return on all investments. In addition, the company’s Associate Under the Label program, initially created to highlight its farmworkers, was expanded to include more associates, and QR codes were added to NatureSweet’s packaging, linking consumers to videos of associates sharing their unique stories. As a result of these changes, NatureSweet increased associate and consumer engagement by 15% across all social channels. CAPTAIN
SOLUTION STRATEGIES
2021 Category Captains Awards Nestlé Purina North America
You can teach an old dog new tricks — or at least, a heritage pet food brand can enhance its strategies to meet the needs of consumers and retailers in today’s ever-changing environment. For Nestlé Purina North America, shifting and sometimes seismic market trends propelled its category team to reprioritize its focus to winning in an omnichannel landscape for both short- and longterm category growth. Noting the ways in which e-commerce is driving the majority of pet care sales and accounts for nearly three-fourths of the category’s growth over the past three years, Nestlé Purina homed in on versatility with the development of a new store-based retailer toolkit that includes an omnichannel perspective, activation framework, best practices and retail assessment. That strategic offering, which also maps the simultaneous strength of store-based retail, guides retailers as they seek to stay competitive in the dynamic pet care category. As a result of the new focus, Nestlé Purina is a pet category share leader in total e-commerce, and the top pet food company driving e-commerce growth. Ultimately, the company’s 2021
CAPTAIN
goal is to drive greater awareness and collaboration to build the best frictionless shopping experience that consumers now expect, given the realities of an omnichannel pet care category.
SOLUTION STRATEGIES
2021 Category Captains Awards
2021
Pharmavite LLC
Given the anxiety-causing events of the past couple of years, many consumers are wide awake at night. CAPTAIN According to one study, 73% of people have sleep issues. Pharmavite LLC has witnessed this trend firsthand in the vitamin category, which has seen an influx of new shoppers. These trends prompted Pharmavite to uncover fresh insights
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and debut a line of Nature Made Sleep Health items. Introduced this year, the products address consumers’ needs before sleep, during sleep, when falling back to sleep and after sleep. In addition to these products, Pharmavite used new assortment optimization technology that identifies item-level incrementality and substitutable items within the category and the company’s brands. This helped clean the shelves of low-incremental items and created space for innovation. Pharmavite also provided key insights to retail partners as a result of its research, including weekly demand shaping with details on in-stock conditions and real-time resource shifts that could ensure in-stock position on the shelf. That’s especially pivotal at a time when shoppers are mindful and concerned about product availability. Pharmavite reported that the new Nature Made Sleep Health items are fueling growth in the category and providing category gains for its retail customers, with 50% sales growth compared with last year and a 36% increase in trips and buyers.
2021 S
AIN T P A C
SOLUTION STRATEGIES
2021 Category Captains Awards
2021
Pompeian
In the olive oil category, Pompeian used data to inform category innovations and communications with CAPTAIN its retail partners and consumers, driving existing shoppers to use more products and converting other shoppers. Knowing the olive oil aisle traditionally takes 10 or more minutes to shop, Pompeian sought to simplify the process through in-store educational materials like floor graphics, shelf blades and shelf talkers. The company created new varieties and spread the shelf with incremental sizes to attract a broader range of consumers and build incremental category sales. Pompeian promoted its innovations with paid media advertisements targeted at retailers and category stakeholders, resulting in more than 30 accounts accepting the new products. The company increased sales through digital- and social-first tactics like a tool that makes recipes on Pompeian. com more shoppable and an influenc-
er program that drove Instacart cart additions. While data showed that category dollar sales have dipped slightly back from COVID-inflated peaks in 2020, Pompeian continued to bolster category sales growth above 2019 results — up 23% over two years ago.
Fresh Express is honored to be recognized for category management excellence and selected as Category Captains in 2021
As the brand leader in Value Added Salads, we are dedicated to providing 20 million consumers each week with healthy and delicious ready-to-eat salads, leafy greens, vegetables and fruits. Visit freshexpress.com to learn more.
TIME FOR A LITTLE
shelf care?
GLOW U P YOU R CH E E SE C A SE W I T H E M M I ROT H Shelf improvement starts from the inside out. That’s why Emmi Roth begins with data-driven consumer behavior and category trends that help you select the right cheeses based on your unique situation. We even provide marketing support to make certain your customers seek out your new and improved cheese case.
To get started on your shelf care journey, visit us at emmiroth.com/shelfcare.
SOLUTION STRATEGIES
2021 Category Captains Awards
2021
Reynolds Consumer Products
Gaps mean opportunities for growth, and Reynolds Consumer Products (RCP) tapped into that mindset to attract a fast-rising group of consumers. Recognizing the potential to reach more Hispanic shoppers within its Hefty Waste Bags franchise, RCP partnered with Venezuelan share leader Fabuloso Pourable Cleaners to launch a line of Hefty Ultra Strong Fabuloso-scented waste bags, which include tall kitchen and 30-gallon offerings. Not just a single addition, the launch is part of a long-term partnership designed to bring further innovation to the waste bag category and provide opportunities to cross-merchandise two important household categories at retail. The launch has been successful, with the Hefty share of wallet among Hispanic shoppers growing 1.6 points to 13.3% in the 25 weeks since the introduction of Hefty Fabuloso. Among Hispanic shoppers, the Hefty brand has risen 19% in dollars, and trips have grown 9% since rollout. On a net impact basis, Hefty waste bags contributed 47% of the growth posted by the total category among Hispanic shoppers for that time period. CAPTAIN
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SOLUTION STRATEGIES
2021 Category Captains Awards Sanofi
increased 3.6% in dollars, while Sanofi’s Allegra brand was up 4.9% and its Xyzal brand posted a 9.3% gain. In the hand and body lotion (HBL) category, Sanofi found that the category was underperforming, ranking lower in terms of dollars, trips and penetration per household. The company fielded primary research and subsequently developed a category vision focused on accelerating HBL growth through a combination of in-store and out-of-store elements, including end cap displays, social media messaging, and landing page information and images. Although this HBL initiative is in the process of being shared with retailers, Sanofi reported that initial reactions have been strong.
Scholl’s Wellness Co.
to drive category sales and profits. Based on Scholl’s recommendations, the category experienced growth in key segments. Insoles and devices, for example, grew 14.1% over a 12-week period ending Sept. 5. The company also rolled out innovations based on consumer insights, including Wart Remover Freeze Away Max and new Floaton-Air insoles. Aware that people were going to spas less often during the pandemic, the company further drove category and retailer sales with a new foot care and grooming collection that included Ultra Hydrating & Exfoliating Foot Lotion, cracked-heel balm products, and a hydrating and exfoliating foot mask product.
Shenandoah Growers
tion, promotional programming and targeted messages. Merchandising solutions also helped reach shoppers with products and messaging. Among other displays, Shenandoah offered half-pallet living displays and a basil destination rack. These efforts allowed Shenandoah Growers — which provides offerings in all four fresh herb subcategories — to continue to lead the category, including in the highly valuable organic fresh-cut herb segment. The company and its private label programs have outpaced growth of the fresh-cut and living categories. Meanwhile, as shopper interest in sustainability continues, Shenandoah Growers has focused on eco-friendly practices, including growing herbs in soil-based indoor bio farms that are 100% USDA Organic and that produce organic basil year-round.
While consumer health is a priority, Sanofi also likes to focus on the health of its categories. In CAPTAIN the allergy category, the company understood that the aisle isn’t always easy to shop and invested in new research to better understand and address shopper barriers. Among other learnings, the company found that 75% of consumers know the brand they want, but it still takes 90 seconds for them to find it, while a third aren’t satisfied with what they’re currently taking. After identifying key barriers and growth drivers in the allergy arena, Sanofi created solutions such as lifestyle-targeted social media marketing, educational signage and end cap displays, as well as landing pages and an allergy symptom app for retailers. In the 52 weeks ending Aug. 28, category trends 2021
2021
More than a century ago, Dr. William Scholl decided that peoCAPTAIN ple needed to take better care of their feet. Today, foot care, which is linked to various health conditions, drives more than $1.21 billion in sales, and Scholl’s Wellness Co. is still helping people take care of their feet. The company recently invested in new shopper insights as a foundation for a sound strategy, using a shopper decision hierarchy showing how foot care is seen as a collection of products that shoppers expect to find together. The initiative also reinforced the importance of brands in the decision process and identified how sizing and gender affects interest and sales. Scholl’s created actionable solutions rooted in the insights and analysis to deliver optimal assortment recommendations to its customers
This category captain isn’t content just to bloom where it’s planted. Shenandoah CAPTAIN Growers invested in primary consumer research to build a category management tool and retail playbook that enabled its retail partners to improve their assortments of fresh herbs and meet shopper interest in organic varieties. The company identified the “Basil Coefficient” linking a store’s herb sales and its basil penetration. In short, stores that sell the most herbs recognize that basil doesn’t cannibalize other herbs, but actually helps put more herbs on the customer’s map. In addition, Shenandoah Growers developed quantitative consumer segmentation and corresponding shopper profiles to improve targeting, segmentation and messaging. By investing in consumer panels and surveys, the company was able to identify and segment consumer need states for better resource alloca2021
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Taylor Farms
During a period in which consumers’ routines shifted, the family-owned and founder-led Taylor CAPTAIN Farms leveraged its social media following and influencer partnerships to showcase healthy- eating solutions that fit pandemic-era routines. The producer of value-added salads, vegetables and deli foods — which grew its revenue 20.6% from June 2020 to June 2021 — focused on solutions like the Everything Ranch Kit, the brand’s top-growing salad. As part of its efforts to emphasize fresh staples, the company deployed weekly meal guides featuring its chopped2021
salad kits and executed a Taylor-To-Your-Tastes campaign that netted 106 million impressions and increased brand awareness by 5% in targeted media markets. One retail partner that works with Taylor Farms to supply 65% of its value-added salads reported that its category sales grew 30% versus the remaining market’s gains of 10%. That retailer chose Taylor Farms to receive its 2020 supplier award for service and partnership. Another major retail partner reported that Taylor Farms was an integral part of its 20% bump in the value-added cut-vegetable category.
TECHNOLOGY
Grocery Tech Trends Study 2021
GROCERY TECH TRENDS STUDY 2021 Retailers are spending more on IT to tackle new challenges and drive shopper value. By Tim Denman
Grocers are facing disruption around every corner as historic supply chain woes, a national labor shortage and the lingering effects of nearly two-year-old pandemic push operations to the limit. Despite this perfect storm of challenges, grocers continue to reinvent themselves and are investing heavily in the technology capabilities needed to operate efficiently amid dynamic market conditions to provide shoppers with safe, memorable and engaging customer experiences, whether in store or online. The 6th Annual Grocery Tech Trends Study, conducted by Progressive Grocer sister brand RIS News, explores these challenges and opportunities, and benchmarks the investment plans of more than 70 individual retail technologies. 58
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TOP TAKEAWAYS
54% 74% 75% 21%
of grocers surveyed increased their IT spend in 2021
cite the tight labor market as a major obstacle driving tech investment
of grocers report year-over-year revenue increases
of grocers are currently deploying new e-commerce platforms
PRESENTED BY
PROGRESSIVE GROCER December 2021
59
Everything you Always Wanted to Know about Grocery Personalization (but were afraid to ask…) Q: How does this play out for the customer?
Gabriel Nipote COO and Co-Founder of Halla
Retail personalization makes shoppers 110% more likely to buy unplanned items and 40% more likely to exceed their planned budget, according to Boston Consulting Group. But how does this translate to grocery? How is “grocery personalization” different from general retail? And what does great grocery personalization look like? Progressive Grocer talks with Gabriel Nipote, Co-founder and COO of grocery technology company Halla, to answer these questions. QUESTION: How do you think most retailers and providers promote “personalization”? ANSWER: “Personalization” is often sold as a feature that you load up with personally identifying information in order to segment shoppers into large persona groups. Recommending Axe body wash to men, for instance, is a type of personalization that uses correlation averaging, and frequently shows up as “people like you bought” type of algorithms. This is not true 1:1 personalization and it will never deliver the results that grocers need. Q: How do you define personalization? A: True personalization requires predicting shopper intent based on everything you know about that individual customer and the products they love, or will love. That means giving the shopper an experience that is tailored to their personal preferences at the moment of decision. Great grocery personalization shows the shopper it knows why they are interested in a particular item and how they plan to use it. The next recommendation is then informed by what is highly relevant to that shopper, at that moment. To get to that level of personalization, grocers not only need a deep understanding of each shopper, but more importantly, a true understanding of every grocery product and their unique qualities. That knowledge is what we call “Taste Intelligence,” our human preference engine built specifically for grocery. That’s how we make recommendations, substitutions and search results that make sense on a human level.
A: Taste Intelligence is trained on billions of food items, recipes, flavor combinations, restaurant dishes, and grocery decisions. It understands what food items are, how they are used together, and how they relate to individual human preferences. With Halla, if a lactose-intolerant customer searches for butter, for example, the first search result will be a dairy-free butter, not butter that is popular with other shoppers. If that item has to be substituted, the replacement will also be customer-relevant, and if the shopper puts macaroni in their cart, they might be recommended dairy-free cheese and milk at checkout. That’s how smart Taste Intelligence is. This happens millions of times, down to the unique customer ID, in real time, in a groceryspecific and enterprise-ready context. Anything short of this doesn’t count as personalization. Q: What advice do you have for grocers who are considering how to begin or improve their personalization? A: Don’t wait! In the next year, the quality of the personalized grocery shopping experience will separate winners from losers. It will create a gap that will widen over time and make it very difficult for grocers to catch up. Don’t look at personalization as a cost item, look at it as the center of your customer centric strategy to drive profitability across your digital channels. Set a very high bar. Be skeptical and ask technology vendors to explain what goes into the secret sauce. Grocers should seek out personalization designed exclusively for grocery that functions on a 1:1 basis. Personalization technology must work in real-time. To Halla, “real-time” means “in-the-immediatemoment,” meaning if the shopper adds an item to the cart, the recommendations instantly change based on this new information. No batch processing or overnight data science. It must happen in “real-time.” To some providers “real-time” might mean that they pre-cache recommendations and refresh them in the middle of the night. If you ask me, that is not real-time technology. Shoppers want you to predict what they need now, based on what they’re doing in their current session. In the future, that type of attention to customer experience will pay off in increased loyalty and profitability. Great grocery personalization makes customers feel like the store was built just for them. It improves customer experience, and therefore loyalty, and with Halla it also results in 5-15% uplift in basket size.
Q: Why build a human preference engine just for grocery? A: Grocery is radically different from any other industry. Standard retail personalization engines don’t understand the complexities of human food preferences. We wanted to build an engine that could make accurate, sales-generating, and split-second decisions at the moment that a shopper is filling up their cart.
Visit halla.io to learn more about Halla’s human preference engine or request a free demo of Taste Intelligence Sponsored Content
Th h ma b t
Identify shopper intent.
Personalize results.
Specific to each unique customer ID.
In real-time, at the moment of decision.
Halla Search
Halla Recommend
Halla Substitute
Enables shoppers to easily discover products that fit their individual needs using their own words, not keywords.
Recommends contextually relevant products based on shopper behavior and intent at the point of decision across the digital store.
Substitutes the most similar and personally relevant replacement product available in real-time.
TECHNOLOGY
Grocery Tech Trends Study 2021
Opportunities Born From Challenges
TOP BUSINESS CHALLENGES DRIVING TECH INVESTMENT (OVER THE NEXT 18 MONTHS)
I
t’s certainly a demanding time for retail, and the grocery segment in particular. The obvious challenges brought on by the pandemic, coupled with supply chain and staffing issues, made 2021 a difficult year, and more disruption is on the horizon. To pinpoint grocers’ top concerns, survey respondents were asked to identify their biggest business challenges from a list of predetermined options, while also sharing open-ended feedback. Not surprisingly, considering the lack of workers willing to provide their services at current rates of pay, 74% of grocers report that the tight labor market is a major obstacle that will drive their retail technology investment over the next 18 months. The concerns about employees weren’t limited to labor competition, but also included engaging with current associates and providing a safe working environment. In addition to labor worries, massive supply chain troubles are top of mind across the industry. The global supply chain is in crisis, with raw-material scarcities, closed ports, truck driver shortages and much more leading to front-page news. Obviously, grocers haven’t been immune
Tight labor market Price competition Increasing margins/profits Economic uncertainty Employee engagement Employee and shopper safety Waning CPG brand influence
TOP BUSINESS OPPORTUNITIES DRIVING TECH INVESTMENT (OVER THE NEXT 18 MONTHS)
Advancing digital and mobile capabilities Analytics-driven decision-making Personalized marketing Click-and-collect and curbside pickup New product/service categories Upgrading and unifying back-end systems House-brand development
GROCERS SPEAK
“Looking ahead, my company’s greatest OPPORTUNITY in 2022 is ...” Blockchain integration Higher margins
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Re-establishing our foodservice business Maintaining and affirming our identity
Live inventory
Strategic transformation Private label grab-and-go items
28% 57%
Percentage of total sales from housebrand/private label products Year-over-year increase in house-brand sales
House-brand/private label sales continue to increase across the industry. Fiftyseven percent of grocers report an increase in house-brand sales this year, bringing the total amount of revenue received from private label sales to 28%. Interestingly, 9% of grocers report a dip in house-brand sales, with 6% enduring a greater than 10% decrease. to these crises, citing supply chain management, labor and inventory shortages, and keeping morale high as major challenges heading into the new year. As every eternal optimist can attest, however, challenges often bring possibilities, and savvy grocers continue to invest in technology to drive their businesses forward and meet changing consumer demand. More than half (54%) of grocers are increasing their year-over-year tech spend, with a focus on advancing digital and mobile capabilities, analytics-driven decision-making, personalized marketing, and click-and-collect.
“Looking ahead, my company’s greatest CHALLENGE in 2022 is …” Supply chain management
Labor and inventory shortages Keeping morale high
Maximizing sales with reduced store trips
Redefining our role in the post-pandemic world Technical breakthroughs
PROGRESSIVE GROCER December 2021
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ADVERTORIAL
The AI Advantage:
POWERING PROFIT IN FRESH Every grocer knows that fresh departments are the key to their store’s success. But while fresh is the strategic heart of the store, managing the category presents unique challenges that require unique solutions. The Afresh Fresh Operating System, powered by Artificial Intelligence (AI), is one of those solutions. Progressive Grocer asked Matt Schwartz, CEO of Afresh, to explain how the company’s new technology unifies ordering, inventory, forecasting, merchandising, and store operations to transform the fresh department into a competitive advantage — and why the time is right to embrace the power of AI.
Progressive Grocer: What can grocers expect when it comes to integrating Afresh? Matt Schwartz: Unlike many systems grocers may have integrated before, they’ll find Afresh is as easy to implement as it is to use. Our Fresh Operating System is not just the first solution built specifically for fresh’s challenges — we also stand out because of our technology. We’re a modern, cloudbased SaaS solution with cutting-edge AI that requires minimal IT resources and time to get up and running. Our solution is also easy for store team members to use, regardless of how much fresh or tech expertise they have. All they need is a simple iPad app that digitizes the order guide. Our solution also reduces the need to do weigh outs
and scan outs, so fresh teams can spend more time on tasks that keep their departments vibrant and fresh, and improve customer experiences
PG: Why is now the right time for digital transformation in fresh? MS: Grocery stores are already going through a digital transformation in other areas — consider what they’re doing with point of sale and ecommerce. And digitizing fresh department operations is an integral part of that puzzle! Grocers who invest in technology now will gain a competitive advantage today and as the industry continues to evolve in the years ahead. Inefficiency and waste in the fresh food supply chain is systemic; reducing overordering in grocery stores is essential to addressing that waste and has significant positive business benefits, as well. Our Fresh Operating System uses AI to analyze previous demand and data trends so grocers can plan produce purchases in advance. This lets each store increase product rotations, reduce waste, and boost sales while they achieve sustainability and profitability simultaneously.
PG: What’s the impact of Afresh on the day-to-day work for store teams? MS: First, let’s consider two things that are happening in fresh: One, while fresh teams are remarkably good at juggling the complex daily tasks required of them, the tools they have now take additional time and labor, reducing time for value-added tasks and customer engagement. Two, even though labor shortages
continue to impact the industry, stores still must be able to support new (and new-to-fresh) employees. One of the best ways to do that is by arming them with tools that guide them through the ordering process rather than requiring them to guess how much to order. Before we launched Afresh, our team took time to deeply understand the processes, challenges, and frustrations fresh department employees have. We then built a solution that feels familiar to store teams and transforms the way they work in the process. The app lets order writers and fresh managers adjust recommendations based on their knowledge of the current and future trends of their specific departments, which empowers them to make decisions based on their expertise without requiring a calculation for every item.
PG: Why do fresh departments need AI solutions specifically for fresh? MS: Fresh data is inconsistent, messy, and complex due to the variable nature of fresh food itself. Unfortunately, almost all technology built for grocery stores has been designed for center store operations, which require far less flexibility when it comes to the types of data and recommendations those systems can make. Consequently, when attempts are made to use that tech in fresh, it breaks. Grocery retailers also lack insight into both store-level and chainwide performance, particularly in fresh. Insights gained through Afresh help our partners drill down into performance, operational efficiency, and merchandising success.
BENEFITS TO THE STORE
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25% Shrink reduction
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3% Sales growth
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+2days Post-sale shelf life
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80% Stockout reduction
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20% labor efficiency gains *Aggregated customer results
TO LEARN MORE ABOUT HOW TO OPTIMIZE FRESH WITH THE POWER OF AI, VISIT www.afresh.com.
TECHNOLOGY
Grocery Tech Trends Study 2021
Supply Chain in Crisis
G
rocery executives were asked to provide one word to describe the current state of the grocery segment. Among the most popular responses were “challenging,” “changing” and “evolving.” Much of this ongoing uncertainty and evolution has been brought on by the supply chain woes that are disrupting nearly every industry. While many of these supply chain issues are beyond grocers’ control — think stranded cargo ships and port
CURRENT STATE OF GROCERY Challenging Changing Evolving Promising Steady Chaotic Competitive Complicated Difficult Disruptive Fatigue Flux Hectic Horrible Miasmic New Normal Positive Uncertain Volatile shutdowns — savvy operators realize that part of the inventory issues they’re experiencing could be lessened by investing in their current tech infrastructure. The most forward-thinking among them are doing just that. Since the onset of the pandemic, grocers have been working diligently to improve their supply chain capabilities as well as their ability to accurately predict future demand.
SUPPLY CHAIN TECHNOLOGY INVESTMENTS
66
Up-To-Date Technology In Place
Started Major Upgrade
Will Start Major Upgrade Within 12 Months
Will Start Major Upgrade Within 24 Months
No Immediate Plans
Warehouse/DC management
27%
15%
15%
6%
36%
Logistics
38%
3%
16%
0%
44%
Fulfillment
41%
6%
16%
6%
31%
Real-time inventory management
30%
15%
12%
12%
30%
Order management
50%
16%
9%
3%
22%
Sourcing
39%
9%
15%
3%
33%
Transportation management
36%
3%
6%
3%
52%
RFID at case/pallet level
12%
3%
9%
6%
70%
progressivegrocer.com
ADVERTORIAL
Helping Retailers Find SUCCESS IN FRESH SPEAKING WITH...Jim Smits, VP of Retail Advisory, Apeel Sciences
Retail executives are looking for ways to meet today’s complex consumer needs, while securing their operations against future disruptions. Nowhere is that task more important or challenging than in the fresh produce category. To help grocery retailers address those challenges, Apeel Sciences recently brought on Jim Smits as VP of Retailer Advisory. An industry leader with 40 years of retail experience, Smits is charged with bringing retail and supply chain leaders together to identify new ways Apeel’s technology can help optimize opportunities in fresh produce. Here, Smits explains how Apeel’s plant-based technology can drive their success. PG: You have 20+ years of experience in operations and shopper go-tomarket strategies. How have things evolved since you started your journey in grocery retailing? JS: Today’s retail executives, those in the fresh produce specifically, are under pressure to adapt at a more accelerated pace than ever before. Demands that have been growing since the turn of the century reached an accelerated tipping point due to the pandemic. There’s been a shift to online/omnichannel buying, a decrease in shopping frequency, and an increase in demand for healthy, fresh, sustainable food. Retail executives now must react to those new buying behaviors while dealing with rising costs, labor shortages and supply disruptions. They have to set new expectations for freshness, shelf life, and sustainability if they want to not only survive, but also thrive, now and into the next decade.
PG: What does Apeel do? And how can the technology help grocers meet these challenges head-on? JS: Apeel is a tasteless, odorless, edible coating made of plant-derived materials called lipids and glycerolipids that exist in the peels, seeds, and pulp of the fruits and vegetables we eat. When applied to produce, the coating slows water loss and oxidation — the primary causes of spoilage — which means produce lasts twice as long. This shelf-life extension technology fights waste, gives more time for produce to be consumed, and creates added value throughout the supply chain. PG: How does the technology align with consumers’ changing shopping habits and retailers’ corporate and financial goals? JS: Our technology gives retailers more time, and how a retailer might decide to use that extra time will vary based on their unique goals and operations. That’s why we create bespoke success plans for every retailer. However, there are several areas that excite retailers the most: • Consumer Experience and Satisfaction: Consumers are demanding healthier, value-driven, convenient and sustainable produce. Offering longer-lasting, differentiated products that are ready to eat today and days from now — or items that offer innovation and value — can improve shopper frequency and overall loyalty. • In Store Experience: Bright, fully stocked displays deliver a great shopping experience, but waste and spoilage are often a concern.
Carrying Apeel-protected avocados, limes and organic apples can derisk these displays, and enable cross-merchandising at ambient that weren’t feasible before. • Sustainability: The number of environmentally driven shoppers is growing, and they are willing to spend more on more sustainable products. Apeel’s plant-based coatings address this trend by giving consumers a way to help reduce waste, conserve resources and ensure the best possible eating experience. • Revenue: With today’s increasing pressure on profitability, decreasing waste and managing in-store operations and distribution centers with longer-lasting produce are obvious opportunities. Offering competitive private label produce has been successful for several of our retail customers. • Inventory & Logistics: Global produce supply chains are disrupted and often inconsistent. Having a product that lasts longer ensures quality will last despite delays. The bottom line: Apeel’s shelf-life extension technology gives the entire supply chain more time. Fewer fruits and vegetables go to waste, and more resources are conserved. That is all good for business, customers and the planet.
For more information, visit apeel.com.
ADVERTORIAL
One Centralized Platform.
Moving Forward as the Best in Fresh Speaking With... Joe Smirlies, SVP, Product, Invafresh
“Fresh is more
dependent on human-technology relationships & understanding.”
In May 2021, Invafresh unveiled a bold new brand when the company announced a name change from Invatron to Invafresh to reflect its strategic focus on the fresh food experience. Now, six months post-rebrand, Progressive Grocer reached out to Joe Smirlies, SVP of Product, who is recognized as one of the world’s foremost experts in sustainable Fresh Item Management solutions, to learn more about how the company’s Freshology™ platform is helping global grocers re-energize their fresh food operations, improve in-store performance, and delight the consumer experience.
Endless Fresh Possibilities. Don’t just compete. Win in fresh through augmented human intuition combined with the replenishment, compliancy and sustainability across fresh food retail operations.
25k+ 30% stores on our platform
waste reduction
Think forward. Think fresh.™
5%
sales growth
3%
100% fresher product
1 (866) 332-3055 • thinkfresh@invafresh.com • www.invafresh.com
are done well, they can save the industry from disruptive new competition and shrinking center store traffic and profits. PG How important is it for intelligent fresh forecasting to be flexible and to be made to work with human intuition? JS Non-fresh (center-store) operations often leave little room for human intuition, opinions, and interpretations. In fresh, they are always a factor. Fresh is more dependent on human-technology relationships and understanding, so trusting insights, forecasts, work orders, and recommendations provided by algorithms require a higher level of trust and confidence. Most problems in fresh are forecasting and data problems. An intelligent demand sensing engine proactively forecasts to luminate anomalies, inefficiencies, and resource waste in operations and supply, and anticipate consumer demand accurately in the moments to avoid shrink and shortage. All processes work effectively with a unified fresh forecast from corporate to store level that help grocers to produce just-in-time and on-demand with the freshest product quality and consistency.
Progressive Grocer Invafresh has made the commitment to inspire the world to “think forward and think fresh.” Why is now the right time for grocery retailers to focus on fresh? Joe Smirlies Consumer behavior is changing. The pandemic, climate change and urbanization are prompting consumers to pay more attention to health and wellness, convenience, safety, and the sustainability of their food choices. These food-aware and digitally empowered ‘consumers of tomorrow’ are not only putting new pressures on the grocery industry, but also awakening opportunities for grocery retailers.
1
With the new landscape comes challenges. Waste, assortment, labor, and operational complexity are increasingly difficult to manage in fresh. But when those things
2
PG The fear of food waste and disrupting margins often lead to grocers missing out on high-performing SKUs, and in turn sales. How does intelligent fresh forecasting provide the confidence and reliability needed to improve sales? JS We believe there are four key points: For a category that is sensitive to time, fresh forecasts need to respond to quick shifts in demand or slice the day into hourly production periods. Fresh requires a platform that leverages the computational power
to deliver on its promises. It needs to be used every day as a new insight into what the next day might require.
3
In fresh, experience still matters in this modern world of machine learning technologies. Taking advantage of fresh centric data analysis expedites and maximizes the benefits of machine learning forecasting algorithms.
4
A fresh forecasting engine needs to consider that human intuition and observations still play an active role in the process. PG What are the key differentiators between an AI-enhanced fresh forecast engine and a legacy system? JS AI-based machine learning uses advanced recursive techniques that can be more effective in modeling patterns providing quicker pathways to introduce new data inputs that can offer additional insights to demand versus the legacy model. A fresh food retail platform needs to leverage the myriad of inputs readily available from retailers while augmenting it with relevant insights traditionally not available. More specifically, an intelligent fresh forecast engine needs to deliver a single source of the truth from consumer to store to warehouse that can also deliver flexible relevant forecasts to production and replenishment periods. PG Any final thoughts you’d like to share? JS We are here to inspire the world to think forward and think fresh. The Invafresh platform is designed to help grocers manage fresh food retail operations in ways that will keep the category vital and relevant...and position them to win and lead in fresh — today and for the future.
TO LEARN MORE VISIT WWW.INVAFRESH.COM.
ADVERTORIAL
One Centralized Platform.
Moving Forward as the Best in Fresh Speaking With... Joe Smirlies, SVP, Product, Invafresh
“Fresh is more
dependent on human-technology relationships & understanding.”
In May 2021, Invafresh unveiled a bold new brand when the company announced a name change from Invatron to Invafresh to reflect its strategic focus on the fresh food experience. Now, six months post-rebrand, Progressive Grocer reached out to Joe Smirlies, SVP of Product, who is recognized as one of the world’s foremost experts in sustainable Fresh Item Management solutions, to learn more about how the company’s Freshology™ platform is helping global grocers re-energize their fresh food operations, improve in-store performance, and delight the consumer experience.
Endless Fresh Possibilities. Don’t just compete. Win in fresh through augmented human intuition combined with the replenishment, compliancy and sustainability across fresh food retail operations.
25k+ 30% stores on our platform
waste reduction
Think forward. Think fresh.™
5%
sales growth
3%
100% fresher product
1 (866) 332-3055 • thinkfresh@invafresh.com • www.invafresh.com
are done well, they can save the industry from disruptive new competition and shrinking center store traffic and profits. PG How important is it for intelligent fresh forecasting to be flexible and to be made to work with human intuition? JS Non-fresh (center-store) operations often leave little room for human intuition, opinions, and interpretations. In fresh, they are always a factor. Fresh is more dependent on human-technology relationships and understanding, so trusting insights, forecasts, work orders, and recommendations provided by algorithms require a higher level of trust and confidence. Most problems in fresh are forecasting and data problems. An intelligent demand sensing engine proactively forecasts to luminate anomalies, inefficiencies, and resource waste in operations and supply, and anticipate consumer demand accurately in the moments to avoid shrink and shortage. All processes work effectively with a unified fresh forecast from corporate to store level that help grocers to produce just-in-time and on-demand with the freshest product quality and consistency.
Progressive Grocer Invafresh has made the commitment to inspire the world to “think forward and think fresh.” Why is now the right time for grocery retailers to focus on fresh? Joe Smirlies Consumer behavior is changing. The pandemic, climate change and urbanization are prompting consumers to pay more attention to health and wellness, convenience, safety, and the sustainability of their food choices. These food-aware and digitally empowered ‘consumers of tomorrow’ are not only putting new pressures on the grocery industry, but also awakening opportunities for grocery retailers.
1
With the new landscape comes challenges. Waste, assortment, labor, and operational complexity are increasingly difficult to manage in fresh. But when those things
2
PG The fear of food waste and disrupting margins often lead to grocers missing out on high-performing SKUs, and in turn sales. How does intelligent fresh forecasting provide the confidence and reliability needed to improve sales? JS We believe there are four key points: For a category that is sensitive to time, fresh forecasts need to respond to quick shifts in demand or slice the day into hourly production periods. Fresh requires a platform that leverages the computational power
to deliver on its promises. It needs to be used every day as a new insight into what the next day might require.
3
In fresh, experience still matters in this modern world of machine learning technologies. Taking advantage of fresh centric data analysis expedites and maximizes the benefits of machine learning forecasting algorithms.
4
A fresh forecasting engine needs to consider that human intuition and observations still play an active role in the process. PG What are the key differentiators between an AI-enhanced fresh forecast engine and a legacy system? JS AI-based machine learning uses advanced recursive techniques that can be more effective in modeling patterns providing quicker pathways to introduce new data inputs that can offer additional insights to demand versus the legacy model. A fresh food retail platform needs to leverage the myriad of inputs readily available from retailers while augmenting it with relevant insights traditionally not available. More specifically, an intelligent fresh forecast engine needs to deliver a single source of the truth from consumer to store to warehouse that can also deliver flexible relevant forecasts to production and replenishment periods. PG Any final thoughts you’d like to share? JS We are here to inspire the world to think forward and think fresh. The Invafresh platform is designed to help grocers manage fresh food retail operations in ways that will keep the category vital and relevant...and position them to win and lead in fresh — today and for the future.
TO LEARN MORE VISIT WWW.INVAFRESH.COM.
TECHNOLOGY
Grocery Tech Trends Study 2021
INTEREST IN INVESTING TO IMPROVE INVENTORY MANAGEMENT High Interest
Medium Interest
Low Interest
No Interest
AI
15%
15%
24%
45%
Machine learning
22%
16%
19%
44%
Automated DCs/warehouses
12%
6%
24%
58%
Autonomous delivery vehicles
3%
3%
21%
73%
RFID
6%
15%
21%
58%
Real-time reporting Computer vision
6%
24%
3%
36%
15%
30%
6%
48%
3%
9%
3%
73%
In-aisle mobile robots
TOP 5 CURRENT AND PLANNED ANALYTICS UPGRADES OVER THE NEXT 2 YEARS 51%
PREDICTIVE ANALYTICS
42%
CAMPAIGN OPTIMIZATION
39%
PRESCRIPTIVE ANALYTICS
38%
PRICE OPTIMIZATION
36%
MARKET BASKET ANALYSIS
Last year, grocers reported significant ongoing investment in transportation management, order management, fulfillment, logistics and sourcing. This commitment has paid off, and now more than a third of grocers report up-to-date technology in these critical areas. Currently, grocers are focused on order management (16%), warehouse/DC management (15%) and real-time inventory management (15%), with plans to invest heavily in logistics (16%), fulfillment (16%) and warehouse/DC management (15%) over the next 12 months. While plenty of investment is ongoing and planned over the next year, when the timeline is stretched to 24 months, we see a big drop in overall investment allocation to the supply chain. In retail, a successful supply chain can be evaluated with one simple question: Is product where it needs to be, when it needs to be there? Unfortunately, across the industry the answer has been a resounding “no.” We asked grocers to rank their interest in a select group of technologies designed to improve inventory accuracy, and the technology that received the most “high interest” was machine learning, at 22%, followed by computer vision, at 15%. The leaders in “medium interest” were computer vision (30%) and real-time reporting (24%).
ANALYTICS TECHNOLOGY Up-To-Date Technology in Place
Started Major Upgrade
Will Start Major Upgrade Within 12 Months
Will Start Major Upgrade Within 24 Months
No Immediate Plans
Market basket analysis
24%
12%
12%
12%
39%
Competitive analysis
33%
9%
15%
6%
36%
Category analysis
41%
16%
13%
6%
25%
Price optimization
25%
13%
9%
16%
41%
Campaign optimization
15%
15%
21%
6%
42%
Space optimization
24%
3%
24%
9%
39%
Predictive analytics
18%
6%
30%
15%
30%
9%
6%
21%
12%
52%
15%
6%
15%
12%
52%
6%
3%
9%
21%
61%
18%
6%
18%
9%
48%
Prescriptive analytics In-store shopper tracking analytics Machine learning /artificial intelligence Workforce analytics 70
progressivegrocer.com
Digital Shopping to the Rescue
W
CUSTOMERS’ OMNICHANNEL EXPECTATIONS
hile the deck has certainly been shuffled on the grocery industry, digital shopping has become the wild card that has helped many grocers turn a struggling hand into a pot winner. Survey respondents report that nearly a quarter (24%) of sales are now allocated to digital channels — this tally includes orders that were placed online, but the final transaction was conducted at the store level. This marks a significant increase year over year, with survey respondents reporting just 9% of total sales originating via digital channels last year. Digital sales growth has increased in lockstep with customers’ omnichannel expectations, with 27% of grocers reporting that expectations have increased greatly, while an additional 52% report a slight increase. To meet changing consumer attitudes, 21% of grocers are currently implementing new e-commerce platforms, with another 15% planning a similar enhancement over the next 12 months. In addition to investing in their e-commerce foundation, grocers plan to allocate capital expenditures to customer experience upgrades like product recommendations (21%), digital coupons (21%) and customer reviews (12%).
6%
27%
DECREASED
INCREASED GREATLY
15%
NO CHANGE
52%
INCREASED SOMEWHAT
24%
Sales through digital channels
OMNICHANNEL FUNCTIONS OFFERED 50%
CURBSIDE PICKUP
41%
CLICK-ANDCOLLECT
38%
HOME DELIVERY
31%
FAST FULFILLMENT
31%
FREE DELIVERY
31%
SHIP FROM STORES TO CONSUMERS
28%
RETURN WEBPURCHASED ITEMS IN STORES
16%
16%
SHIP FROM STORES TO STORES
SPLIT ORDERS IN STORES
13% PICKUP LOCKERS
PROGRESSIVE GROCER December 2021
71
ADVERTORIAL
TAKE A FRESH LOOK AT FOODSERVICE LABELING TO RING UP REVENUES BY DAN LYDIGSEN, Director of Retail & Hospitality Brother Mobile Solutions merging from some tough years, grocery retailers are freshly motivated to explore opportunities for growth. One area they’re taking a close look at is what’s trending with consumer eating preferences and how fresh prepared food options are driving in-store sales. A key challenge for store operations teams responding to this trend is that consumers are continually changing their diet and food interests. That makes them a moving target for grocers eager to offer new foodservice offerings along with traditional grocery product assortments. Adding to the challenge, today’s shoppers are pressed for time, many say they are facing cooking fatigue and they’re looking for innovative new selections from grocery and convenience stores, according to recent FMI research.¹ One example: shoppers are moving toward hybrid meals — a mix of semi-and-fully prepared meals that allow them to cook meals at home with a little help. Additionally, nearly 60% of consumers surveyed planned to cook as many meals at home in the future as they do now, and 39% view retail foodservice as bridging the gap — a substitute for both a home-cooked meal and restaurant meals. Expanding grocery foodservice offerings with more freshly prepared, ‘grab and go’ choices, offers a significant opportunity for today’s grocery retailers large and small. Progressive Grocer recently talked with Dan Lydigsen, Director of Retail & Hospitality, at Brother Mobile Solutions to learn more about how grocers can capitalize on this trend and the role mobile print and labeling technology can play in not only satisfying shoppers but also capturing a greater share of wallet and the overall food dollar.
E
Why is barcode labeling critical for grocery retailers as they introduce or expand fresh foodservice offerings? When it comes to fresh prepared food offerings across retail — barcode labeling can improve the communication of food content information for consumers. There are measurable benefits from clear listing of ingredients to updated sell-by and use-by dates. Next-gen labeling can also strengthen brand
and product appeal as well as effectively communicate key information such as ingredients and food content. Proper labeling is also essential for meeting many federal and state government requirements regarding the food supply chain from source to finished product. This helps ensure accurate chain of custody from farm-to-table products, to product recalls, to identifying the root causes of any type of illness-causing contamination throughout the food chain. Labeling also helps retailers price fresh foodservice items correctly to ring up revenues, and also helps speed checkout which keeps busy customers happy. Beyond foodservice — are there more ways grocery retailers can gain from barcode labeling? From curbside pickups, fast markdowns, BOPIS and shelf edge labeling — grocers are leveraging mobile labeling. And today more than ever stores need more points of fulfillment so they can serve shoppers however they wish to be served. Mobile receipt and labeling solutions deliver clear benefits designed to help retailers work more productively, compete effectively and meet changing shopper demands. Some added pluses — these systems come in many configurations so they’re ideal for any size retailer. They are also very easy for retail associates to use. Are retail barcode labeling systems expensive and difficult to implement? Not at all! Unlike many core retail software operating systems that often have big price tags and long implementations, barcode labeling systems are quick to deploy and very affordable. They work seamlessly with practically any device such as smart phones and tablets which are highly popular among retail associates in today’s bring your own device (BYOD) world. Barcode systems can also stand-alone, or easily tie in to core retail POS or WMS operating systems, so they provide a quick ROI.
¹ Food Industry Association (FMI) 2021 “Power of Foodservice at Retail’ report.
TECHNOLOGY
Grocery Tech Trends Study 2021
The Store Still Rules
W
hile the store is still the center of the grocery universe, how it’s used is quickly pivoting. Over the next 12 months, a quarter of grocers plan major click-and-collect and curbside investments as they look to cater to consumers who prefer a contactless shopping experience. In addition, grocers report a slew of pointof-sale (POS) investment over the next 12 months, with POS peripherals, software and hardware all receiving major overhauls at more than one out of five grocers. These upgrades will help grocers process contactless payment, execute click-and-collect orders, and allow for self-service checkout, among other additional functionality. Part of the appeal of the in-person grocery shopping experience is the thrill of discovering new and exciting products that consumers might not have been aware of otherwise. Over the next 12 months, a third (33%) of grocers expect to invest in new product or private label development to not only keep their assortments fresh, but also increase margins by keeping profits in-house. Of course, finding reliable workers to fill their shelves with these new products has proved to be a monumental undertaking. Grocers, like the entire service industry, have struggled to attract and retain hourly workers. To bolster their workforce management capabilities, one in 10 grocers is currently deploying next-gen human resources, time and attendance, scheduling, training, task management, and compliance solutions to better connect with an increasingly fickle workforce.
WORKFORCE TECHNOLOGY
74
Up-to-Date Technology In Place
Started Major Upgrade
Will Start Major Upgrade Within 12 Months
Will Start Major Upgrade Within 24 Months
No Immediate Plans
Time and attendance
55%
21%
12%
0%
12%
Absence management
52%
9%
15%
0%
24%
Labor scheduling
52%
12%
15%
0%
21%
Education and training
39%
15%
18%
6%
21%
Recruitment and onboarding
42%
12%
24%
3%
18%
Task management
33%
12%
21%
0%
33%
Compliance
36%
12%
18%
6%
27%
Mobile workforce and/or HR applications
30%
12%
9%
9%
39%
Employee monitoring
41%
6%
13%
3%
38%
progressivegrocer.com
s ’s pr
o analyz
and r ’s v
Ev
883-328-2736 | www
or
y Day.
EMPOWERING YOUR BUSINESS WITH CUSTOMER FIRST DIGITAL COMMERCE Prepare your business for the continued growth of digital commerce with our AI-driven end-to-end solution for eCommerce, picking, and fulfillment. Our platform allows you to develop a seamless, unique and personalized customer experience both in-store and online including: Highly Personalized Digital Marketing Capabilities Product Recommendations and Substitutions Powered by AI Owning Your Customer Data and Brand Experience Accurate Stock Management Both In-Store and Online Live Dashboards with Real-Time Order Management Eliminating Third-Party Dependency Integration with eCommerce and Other Key Systems
VISIT STOR.AI TO LEARN MORE OR CALL (929) 447-0444 TO SPEAK WITH A SPECIALIST
ADVERTORIAL
Speaking with... Orlee Tal, CEO, stor.ai
gaps that can lead to a negative shopping experience and lost revenues, too. Substitutions are a good example. If you don’t have integrated systems, customers who place an order for pickup or delivery might
CUSTOMER EXPECTATIONS HAVE
are forecasted grow up to 20% by
not get the correct or any replace-
EVOLVED MORE OVER THE PAST
2025, and we are seeing big players
ment items. When that happens,
18 MONTHS THAN THEY HAVE OVER
like Amazon, Walmart and Instacart
the customer isn’t happy — and it
THE PAST DECADE. Grocers are
becoming hyper-focused on mone-
decreases the value of the order.
struggling to build new strategies
tizing data and leveraging it through
and leverage technology so they
personalization. We want grocers
PG: How have grocers who have
can meet changing customer
to know that the ability to do those
adjusted to these changes been
needs and be profitable in the pro-
things isn’t limited to large chains.
rewarded?
cess. With 2022 fast approaching,
There are affordable solutions that
OT: In our experience, grocers who
Progressive Grocer asked Orlee Tal,
allow any grocer to personalize the
have adapted — or at least have
CEO of stor.ai, how these changes
omni-channel shopping experience
started to implement strategy to
are impacting retailers’ relationship
— and they’re AI-driven solutions that
create that enhanced customer re-
with customers, and what grocers
give the grocer ownership of the data.
lationship — have seen double-digit growth in their online sales. They’ve
should be thinking about as they plan for the new year ahead.
PG: What should a grocer be doing
grown from 1% to 3% of revenues to
to control the customer journey?
10% or higher in some cases. And
Progressive Grocer: How have
OT: They need the ability to access
their average order values have
grocers been adapting to changing
data about lifestyle preferences,
increased as much as 50% because
customer expectations?
previous purchase history, and buy-
they’ve personalized the shop-
Orlee Tal: You’ve probably heard the
ing behaviors to personalize the cus-
ping experience and made it less
adage, “Know your customer.” The
tomer experience. Having that data
time-consuming. Happy and loyal
fact is that adage is more relevant
will allow them to customize and tai-
customers spend more!
today than ever before. As con-
lor advertisements and promotions
sumers have shifted from in-store
and even give customers access to
PG: How can stor.ai can help gro-
to hybrid or online shopping, gro-
highly personalized “one click” shop-
cery retailers create these innova-
cers are struggling not only to win
ping carts and product recommen-
tive, personalized experiences for
customers but to keep them loyal,
dations — even while they’re in the
their customers?
too. Customers expect a seamless,
store. This enhances the customer
OT: Stor.ai’s e-commerce, picking,
omni-channel experience tailored to
experience because you are mak-
and fulfillment platform enables
their lifestyle, shopping habits, shop-
ing sure they don’t forget items they
a seamless, personalized experi-
ping history, and preferences. And
regularly purchase. Not only does
ence to customers, whether they
that’s true no matter where they’re
that make the shopping experience
are shopping in-store or online. Our
shopping — in-store or online.
easier and more efficient; data
AI-driven personalization engine
shows that it leads to higher average
ensures that every interaction a cus-
orders and builds loyalty, too.
tomer has with the retailer’s brand is
PG: What are the emerging trends grocers should pay
tailored to them. Our platform gives
attention to in 2022?
PG: What are grocers struggling
retailers a competitive edge. It helps
OT: We have been working with
with most while trying to adjust
them increase average order values,
grocers on eCommerce since 2014
to these new expectations?
efficiency and satisfaction — all
— and we’ve seen that many of
OT: Integrating their e-commerce and
things that lead to higher profitability.
haven’t kept up with trends in digital
fulfillment platforms to their point-of-
commerce because so most of their
sale, loyalty, and inventory systems
revenues came from in-store shop-
is one of the biggest challenges they
ping. That’s all changing: Online sales
face. If this is done poorly, it creates
› To learn more about how the stor.ai platform can transform the customer experience, visit stor.ai.
TECHNOLOGY
Grocery Tech Trends Study 2021
IN-STORE TECHNOLOGY Up-to-Date Technology In Place
Started Major Upgrade
Will Start Major Upgrade Within 12 Months
Will Start Major Upgrade Within 24 Months
No Immediate Plans
WiFi for customers
55%
6%
3%
0%
36%
Click-and-collect management
23%
10%
16%
16%
35%
Curbside pickup management
18%
10%
15%
12%
45%
Home delivery of web orders management
21%
3%
12%
3%
61%
Food safety
50%
7%
3%
0%
38%
Mobile devices for managers
33%
0%
21%
3%
39%
Food labeling
47%
3%
16%
3%
31%
Real-time store monitoring of KPIs
18%
10%
3%
15%
55%
Shopper tracking
9%
7%
13%
19%
53%
Location-based marketing
3%
3%
12%
18%
64%
POS software
39%
10%
12%
9%
30%
POS hardware
36%
16%
6%
9%
30%
POS peripherals
36%
16%
9%
9%
27%
Self-checkout terminals
9%
7%
6%
9%
69%
Scan and go
3%
0%
9%
12%
76%
Scan and go on store-owned device
0%
3%
0%
12%
79%
Computer vision item scanning
3%
0%
3%
3%
88%
Autonomous inventory robots
0%
0%
3%
9%
85%
Up-to-Date Technology In Place
Started Major Upgrade
Will Start Major Upgrade Within 12 Months
Will Start Major Upgrade Within 24 Months
No Immediate Plans
MERCHANDISE MANAGEMENT
78
Replenishment
30%
6%
15%
12%
36%
Item master data management
42%
18%
9%
6%
24%
Allocation
24%
9%
12%
12%
42%
Assortment planning
27%
12%
12%
9%
39%
New product or private label development
30%
18%
15%
12%
24%
Enterprise resource planning
24%
0%
21%
12%
42%
Price management
45%
9%
12%
6%
27%
SKU/product management
39%
21%
12%
3%
24%
Space planning
33%
9%
18%
6%
33%
Product lifecycle management
19%
3%
13%
16%
50%
Trade promotion management
33%
6%
9%
3%
48%
Fresh food management/tracking
36%
12%
9%
6%
36%
Markdown/promotion management
27%
9%
15%
6%
42%
progressivegrocer.com
WHO TOOK THE SURVEY KEY FINDINGS 54% of grocers are increasing their year-over-year tech spend, with a focus on advancing digital and mobile capabilities, analytics-driven decision-making, personalized marketing, and click-and-collect. One in five grocers plans major POS overhauls in the next 12 months, including software, hardware and peripherals.
This annual benchmark study of the grocery industry draws data primarily from regional and national chains. A quarter of the respondent pool is employed at grocers with more than 10 stores, and a third of the respondent pool boasts revenue north of $100 million. Data was collected in August and September 2021 from respondents who hold executive positions within their companies that give them significant influence over technology strategy, project selection and budgets. The overall grocery segment continues to expand at an impressive rate, with 75% of respondents reporting increased year-over-year revenue and 39% reporting an increase of greater than 5%. NUMBER OF STORES
3%
74%
of grocers report that the tight labor market is a major obstacle that will drive their retail technology investment over the next 18 months.
>500
72%
3%
<10
250-499
6% 100-249
15% 10-99
ANNUAL REVENUE
9% $100 MILLION - $ 249 MILLION
6% $250 MILLION $999 MILLION
67%
9%
<100 MILLION
$1 BILLION $4.9 BILLION
9% >$5 BILLION
Nearly a quarter of sales are allocated to digital channels — this tally includes orders that were placed online, but the final transactions were conducted at the store level.
REVENUE CHANGE PAST 12 MONTHS
18%
9%
INCREASED >10
DECREASED
15% NO CHANGE
Grocers rank their interest in machine learning (22%) and computer vision (15%) as “high” as they look for ways to improve inventory accuracy. Consumer omnichannel expectations have increased greatly over the past year, according to 27% of grocers. 57% of grocers have experienced an increase in house-brand sales this year, bringing the total amount of revenue received from private label sales to 28%.
21% 36%
INCREASED 5%-9.9%
INCREASED .1%-4.9%
YEAR-OVER-YEAR TECHNOLOGY BUDGET
9% INCREASED >10%
12% INCREASED 5%-9.9%
12% DECREASED
33% NO CHANGE
33% INCREASED .1%-4.9%
PROGRESSIVE GROCER December 2021
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ADVERTORIAL
Customers are Embracing Digital Currency —
IS YOUR STORE READY? SPEAKING WITH...Chris McAlary Chief Executive Officer, Coin Cloud Are you a grocery retailer interested in joining the digital currency revolution but not sure how to begin? Making these digital assets more accessible to your customers is a good place to start! Progressive Grocer asked Chris McAlary, founder and CEO at Coin Cloud, to explain how the company’s Digital Currency Machine (DCM) can help grocers build new revenue streams by offering customers the opportunity to buy and sell Bitcoin and other cryptocurrencies in-store — all at no cost, with no work, in less than two feet of floor space. Progressive Grocer: Tell us a little bit about Coin Cloud’s experience in the digital currency space. Chris McAlary: Coin Cloud is the leading Digital Currency Machine operator in the marketplace today. We have the world’s largest and fastest-growing network of 100% twoway DCMs. Our state-of-the-art machine is significantly more advanced than a Bitcoin ATM. Every Coin Cloud DCM empowers users to quickly and easily buy and sell more than 40 cryptocurrencies with cash. Our technology is 100% made and managed in the U.S. We have more than 4,000 locations in 47 states nationwide, and even some in Brazil. And we’re growing right along with the popularity of digital currency. PG: Over 40 cryptocurrencies sounds impressive, but why is that important? Isn’t Bitcoin the preferred, or at least the most well-known, digital currency? CM: There are so many new digital assets hitting the market today — Bitcoin is just the tip of the digital currency iceberg. It’s a very competitive environment. Mainstream adoption of digital assets is happening at a pace exceeding that of the internet in the 90s. There’s been 100% growth year-over-year. In March 2021, the NASDAQ reported that 46 million people in the U.S. own some form of digital asset. PG: You say your machine is an advanced version of the Bitcoin ATM. But if stores want to dip a toe into the digital cur-
rency space, isn’t a Bitcoin ATM or Crypto ATM good enough? CM: One of the easiest and most convenient ways to buy Bitcoin is with cash at a self-serve kiosk. And yes, customers can do that at a Bitcoin or Crypto ATM. But here’s the big difference: Coin Cloud’s DCM makes transactions faster and offers so many more options. Our DCMs let customers buy and sell Bitcoin and more than 40 other digital currencies with cash — including meme coins, stablecoins, DeFi and smart contract tokens. And despite being more technologically advanced, our machines are extremely easy to use, even for beginners! There’s another feature that sets us apart: Unlike most Bitcoin ATMs, a Coin Cloud DCM lets customers cash out crypto on the spot. That’s a great perk because customers who use our machines have cash in hand immediately to spend in the store! PG: Is the Coin Cloud DCM really 100% turnkey with zero cost and zero work for retailers? CM: Yes! We deliver, install, set up, maintain and service the machine for retailers. We take care of everything. Take marketing, for example: If you have one of our machines, we list your store as a featured destination on Google, Apple Maps, and Facebook. That increases foot traffic and repeat foot traffic because customers who want to buy or sell digital currency recognize your store as a place they can do those things. We also provide 24/7 customer service and handle legal requirements like registration and licensing, too. And you get paid for your floor space! Every month, we pay you for the privilege of using 16 inches of space. It’s the most effective way to infuse your business with passive income — it delivers the highest revenue per square foot in retail. PG: Is there anything else you’d like to tell retailers thinking of getting into the digital currency space? CM: Bitcoin ATMs, like regular ATMs, are outdated technology of the past. The industry is moving so quickly that you want to have a platform that is enabled to adapt to the evolving landscape and accommodate what consumers’ behavior is today, as well as what it is going to be tomorrow. The Coin Cloud Digital Currency Machine is built on that kind of platform. GET STARTED BY APPLYING TODAY AT WWW.COIN.CLOUD/HOSTS.
DN Series EASY TM
Built for the Storevolution. Built for More.
TM
Retail is changing faster than most retailers can react. Staying ahead of everchanging consumer demands is a key challenge. DN Series™ EASY meets these evolving challenges head-on. Our new retail self-service solutions are highly modular, more open than ever before and offer you the ultimate in uptime and reliability. Explore the family at DieboldNixdorf.com/DNSeriesEASY.
ADVERTORIAL
SCORING BIG:
How to Win the Self-Service Game Self-service solutions are fast gaining ground in all retail verticals, including the grocery vertical—and the COVID-19 pandemic has accelerated the need to implement it. PROGRESSIVE GROCER sat down with Carl von Sydow, Director of self-service Americas, Retail, Diebold Nixdorf, to discuss why retailers should adopt self-service checkout solutions and how to enhance existing self-checkout offerings.
PROGRESSIVE GROCER: What’s sparking the accelerated growth of self-service in retail? CVS: Consumers are constantly changing their consumption behaviors. This isn’t new, but the pandemic has accelerated some changes that were already happening. Consumers expect frictionless, flawless, more self-service-oriented experiences. They expect to be recognized and served on demand. Increasingly, they’re socializing more, seeking experiences, and adopting on-the-go lifestyles. Retailers must be adaptable and flexible enough to respond to these changes and meet shoppers’ expectations, in a timely manner that best serves their customers and their business. They must also prioritize store associates’ journeys, because efficiency and service are essential to delivering better shopping experiences and improving customer loyalty. This isn’t about adding lots of unattended self-service checkouts and dehumanizing the in-store experience. Staff and consumer journeys are increasingly intertwined, with technology as a catalyst and enabler.
PG: What considerations are imperative for retailers when preparing to move to self-service? CVS: Self-service implementation shouldn’t be a “one and done” process. Retailers frequently need to integrate new technologies and touchpoints into their existing brick-and-mortar stores. Meeting consumer and business needs requires an approach that supports constant change and adaptability, plus a relentless focus on optimizing consumers’ experiences while lowering overall costs. Retailers must integrate new technologies with existing ones in a flexible way, to preserve the investments they’ve already made.
PG: What technologies can enhance supermarkets’ self-service offerings? CVS: When preparing stores for now and the future—and only after they’ve evaluated self-checkout usage for some time—retailers can consider adding innovative features like AI-based age checks, fresh
produce recognition, and personal self-scanning, combined with self-checkout using either store-owned scanners or shoppers’ own devices. Diebold Nixdorf offers these technologies. The first step retailers must take here is focusing on the preferred journeys of their target audience and the “frictions” they face while shopping. Then they can select the appropriate next-generation features to incorporate into their current point-ofsale arsenal. The objective: to design and enable appealing consumer journeys supported by an optimal combination of customer checkout technologies that benefit the consumer experience—no more queues, faster checkout, and more convenience—as well as the staff journey, where staff time is freed up to make consumer interactions more efficient and technology TCO is lower. However, innovative features should be deployed one by one, so they can be introduced, monitored, evaluated, and adjusted step by step. Otherwise, retailers won’t fully leverage their self-checkout investments.
PG: What self-service technologies and services does Diebold Nixdorf offer to retailers? CVS: We’ve developed Storevolution™, an overarching program and approach to supporting retailers in keeping up with continuous change. We’ve introduced DN Series EASY, a complete portfolio of highly modular retail self-service solutions built on a single platform. They’re more open than ever before and offer the ultimate in uptime and reliability. All-in-one, yet fully flexible, DN Series EASY features customizable configurations, best-in-class components, and an optimized footprint. Retailers can choose from multiple options for card/cash modules, screen sizes, and peripherals, with on-site scalability, with seamless adaptability. Openness is essential for a successful self-service strategy. An open, modular software platform ensures that solutions are configured for individual store environments and speeds time to market. Our DN Vynamic™ Self-Service solution, the most open software of its kind, has a modular, flexible architecture that fits a wide variety of current and future self-service scenarios and fulfills market requirements for open retailing via open APIs. Our comprehensive Managed Self-Service solutions ensure availability levels of up to 99.8%, at the lowest TCO. The DN Series EASY platform approach was born of our Storevolution™ consultative philosophy, which ensures the right combination of hardware and software solutions, operationalized in the right way. Storevolution™ Advisory Services experts work with retailers to optimize their checkout mix in the way it best serves their specific situation and business.
FOR MORE INFORMATION: Email us at Karina.Romanato@dieboldnixdorf.com or call us at 1.330.490.4000
TECHNOLOGY
Grocery Tech Trends
Closing The Digital Foodservice Gap Six ways grocers can unlock the potential of prepared foods through deeper digital engagement. By Heather Kirchner
M
ost grocers today have some type of e-commerce presence to give their customers the option of shopping anywhere, anytime. If they didn’t have all of their ducks in a row on this front by 2020, the pandemic certainly pushed them forward, as most people were looking for online order and delivery options to take the place of trips to the physical grocery store. What grocers are still behind on, however, is how to properly monetize their catering and prepared food business. The U.S. catering market is roughly $60 billion and growing about 2% annually. While catering and prepared foods are among a grocer’s most profitable offerings, many grocers still manage these orders using spreadsheets, paper order forms and sticky notes. If they do have some type of catering software, it tends to be more of a legacy system, and their existing inventory and point-of-sale (POS) systems don’t support the complexities of catering and prepared foods, including lead time, departmental production reports, multiple store locations, shelf life and managing ingredients. Many of the catering software options available don’t offer a way to centralize orders from multiple channels such as in store, over the phone, via email and online.
COMPLEXITIES ABOUND
Americans’ appetite for prepared foods is expected to grow in 2022, and grocers are well positioned to better connect with shoppers and serve the increased demand. However, doing so requires overcoming technology challenges to integrate foodservice offerings into digital platforms and provide shoppers an elegant and easy user experience. Ordering prepared foods from a grocer should be, and can be, as simple as doing so from best-in-class foodservice operators that set shoppers’ expectations. FoodStorm executive Heather Kirchener explains how. 84
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It hasn’t been easy to find a technology platform to manage the catering and prepared food business. Among the many reasons that grocery catering and prepared meal operations are complex to manage are the following: Large grocers will operate across
multiple store locations, often with varied pricing, taxes and menu items per location A single order will often be made
up of items produced by multiple departments, e.g., deli, bakery, produce and grocery items. Operations require a multichannel
approach to customer ordering: online, in store, kiosk, customer service representative and call center.
Grocers need to be able to support in-store customer
pickup and checkout at the register/POS. The urgency to bring catering online became even more pronounced during COVID-19 as the demand for prepared foods dramatically expanded. As the threat from giants like Amazon and Walmart continues to increase, catering and prepared meals provide further differentiation for independent grocers, which becomes even more important during peak seasons such as holidays. Grocery businesses really need to think through a multichannel approach in managing their catering operations. Customers are expecting to be able to order online, in the store on a kiosk, or by phone with a customer service person. Grocers need to support pickup of orders from customers and have their catering orders integrated with POS systems.
CHECKLIST FOR SUCCESS When making decisions about technology solutions to support omnichannel foodservice capabilities, there are six things that should be on every grocer’s checklist. The technology should:
1
Support online and in-store ordering
Having a central system to manage all order channels — in store, online, by phone or email — allows grocers to have a clear picture of their entire catering business. This helps facilitate production reporting and stock forecasting, therefore allowing them to better execute on the customer experience. It also enables them to meet their customers where they prefer to order; some customers may prefer the online experience, but others still prefer to have the in-person/human-touch experience when they place a catering order for an upcoming event. A centralized system supports both of those experiences.
2
Provide powerful order management and production capabilities
Having a central place to manage all catering orders (i.e., pointing back to No. 1), allows grocers to have a full view across the entire catering operation. It also allows them to generate production reports across every single department — bakery, deli, etc. — so that each team is clear on what it needs to make for a day of catering. Also, by giving customers the ability to edit their own orders online, grocers eliminate calls into their team to make changes. For customers that do require assistance, the team can easily get into the system and edit orders on their behalf.
3
Offer centralized menu management
Being able to easily edit menus across all locations in one place is powerful. With strong software, grocers are able to easily adjust the catering offerings per location, provide varied pricing and even get more creative with seasonal menus when everything can be managed in one place.
4
Include POS integration options
Grocers should look for features that will let them export catering sales data — item info, pricing, customer info, etc. — back to their POS, allowing them to have central reporting across every store and department. Having all of the data in one place makes reporting easier and will enable them to make more informed business decisions.
5
Provide delivery abilities or integrations with third-party logistics (3PL) delivery services
Strong catering systems can offer ways to export order data and streamline the customer delivery process, or integrate directly with a third-party delivery software to support the customer delivery process.
6
Offer customer relationship management (CRM) features
Grocers should find a system that accurately tracks customer spending behavior — when they last had an order picked up/delivered — to proactively market to shoppers and drum up new business. For example, if a customer hasn’t placed an order in the past 90 days, grocers can create a promo code to entice them to come back and reorder. Another important feature is the ability to pull historical seasonal orders and promote upcoming holiday menus/ orders for repeat customers. Now is the time for grocers to start effectively monetizing this highly lucrative piece of their business, as demand for prepared foods will only increase over the next year. Bringing catering and prepared food products online doesn’t have to be a clunky process; understanding the importance of a centralized ordering and management system, integration with POS and 3PL delivery services, and CRM features is crucial and will save grocers a lot of headaches down the road.
Heather Kirchner oversees the U.S. business development strategy at FoodStorm, a provider of order management software for foodservice at retail. FoodStorm was acquired by Instacart in September 2021.
PROGRESSIVE GROCER December 2021
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2022 INNOVATION OUTLOOK
Trends
Grocery Gets a Tech Upgrade Eight action areas on every grocer’s ahead-of-what’s-next agenda. By Progressive Grocer Staff
M
ention the word “innovation” in grocery, and the first thought that comes to mind is technology. There isn’t an aspect of food retailing that hasn’t been touched by technology, from how products are grown, harvested, transported, packaged, merchandised and marketed, to how stores operate, are integrated digitally and leverage data to optimize decision-making. Progressive Grocer’s annual Innovation Outlook offers a practical look at the pervasive impact of technology as well as overarching consumer trends. “Practical” is the key word. By design, this isn’t an exercise in futurism to look at how grocers will operate in the metaverse — whatever that is — or to predict when digital currencies displace dollars and autonomous vehicles and robotics rule the retail landscape. While each of these things have long-term implications, PG took a more constructive, near-term approach in developing our Innovation Outlook. We focused on what’s in front of the industry right now, as in 2022. We isolated eight broad areas where innovation is occurring on multiple dimensions. These
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are areas where, over the course of 2021, we witnessed profound change and expect more change in the coming year. The grocery industry is transforming in profound ways in the following areas: Artificial Intelligence: Retail is a data-driven industry and grows more so every day. However, as data sets grow larger and legacy systems obstruct the execution of strategies, a key determinant of success in 2022 will be the ability to unify data sources and apply AI to make optimal decisions. Ethical Eating: Americans have embraced this concept in a big way. Whether it’s the consumption of plant-based products, humanely raised conventional proteins or fair-trade certified goods, a fundamental shift in shopper behavior is intensifying. Retailers and brands will need to appeal to shoppers in new, authentic ways, backed by transparency, to drive shopper trust.
Foodservice at Retail: Restaurants have come roaring back, but grocers have innovation on their side. Quality and affordability are strengths, too, especially amid rampant inflation. The biggest opportunity is to more effectively integrate prepared foods into e-commerce platforms to grow sales with shoppers who are already digitally engaged. Retail Operations: Signing bonuses and pay increases became the norm in 2021 for front-line employees in stores and fulfillment centers, but now what? Increased labor costs have altered the expense structure of retailers that are employing new strategies to increase employee productivity while leveraging technology in new ways. Shopper Engagement: Targeting shoppers has never been easier due to an abundance of data, but it’s also becoming increasingly challenging due to evolving privacy regulations. Data stewardship and privacy matter to consumers — and federal regulators — which is why retail media will be the hottest space in marketing in 2022. Store Experience: Traffic has rebounded at stores, but ensuring that it sticks around requires new ways of thinking about the store experience. New technologies and innovative partnerships will re-energize physical spaces in ways that make them magical as opposed to less worse. Supply Chain: It’s a broad topic and innovation abounds, but one area of huge impact in the coming year involves advances in middle- and last-mile transportation of goods, and the fulfillment of orders. Autonomous pilot programs are advancing and new business models are gaining steam to disrupt traditional supply chain approaches. Sustainability: The focus on sustainability is getting stronger and more expansive. This was evident from the volume and creativity of entries in PG’s inaugural Impact Awards program earlier this year. Retailers and CPG companies in 2022 will deepen existing commitments and find new areas of their operations to view through the lens of sustainability. As retailers look to executive strategies in each of these innovation areas, they’ll be doing so in a marketplace of quickly evolving shopper expectations. As recent research from PG revealed, shopper expectations continue to increase and grow more expansive, thanks to technology, changing demographics, unprecedented access to information, and shifting views of the role of business. In “The New Age of Elevated Expectations,” we looked at the attitudes and behaviors of those ages 18 to 34 who are entering their prime household formation and peak spending years. They expect more from the companies with which they do business. That’s going to require an unprecedented level of innovation in 2022, and beyond.
1
Artificial Intelligence
The origins of retail as a data-driven industry can be traced to the advent of point-ofsale scanning more than 30 years ago. That’s when retailers first turned on the spigot of Big Data and two things happened: There was the euphoria of having accurate sales information, combined with the realization that effectively leveraging the data was an immense challenge due to unsophisticated systems. The data seemed overwhelming at the time, so early use cases were crude exception-based approaches to identify item and category sales trends for underperformance to take corrective action. Large retailers would boast of data warehouse capacities in terms of terabytes. As sources of data from all types have grown exponentially, the unit of measurement has shifted to petabytes (1,000 terabytes), and exabytes (1,000 petabytes) have entered the conversation, too. This explosion of data is happening on two fronts: There’s the structured kind that comes from retailers’ operations or those of trading partners, and then there’s the unstructured kind, most commonly emanating from social media or user-generated content. Both types are extremely valuable, but deriving actionable information from incomprehensibly large data sets has outstripped the capabilities of humans. That’s why 2022 will be the year of AI in grocery. Retailers are discovering the breadth of use cases where the power of AI can be put to use against large data sets to inform strategic decisions. Some obvious examples are in demand forecasting, where AI can produce the perfect order, in theory, by incorporating assumptions about the effectiveness of pricing and promotion strategies. Insights from other data sets can be incorporated, too, such as social media, which can have a bearing on demand and consequently feed into supply chain considerations, order quantities and lead times. Other use cases revolve around connected devices and have implications for food safety, equipment maintenance and shrink reduction. Connected devices throughout stores, whether on the shelf edge, in the frozen aisle or prepared food area, can gather valuable information. However, without an AI engine to make sense of the volume, the data is essentially worthless. It’s the difference between knowing a freezer is about to fail or only discovering it’s failed when the ice cream has melted. AI will also play a huge role in 2022 in optimizing marketing. As more retailers enter the retail media world and larger operators grow more sophisticated, AI will help with targeting and real-time optimization of campaigns to individual shoppers. These things are now happening selectively with market leaders, but 2022 will be the year in which AI is adopted more broadly by the grocery industry. PROGRESSIVE GROCER December 2021
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2022 INNOVATION OUTLOOK
Trends
to expand the production of lemna, more commonly known as duckweed, which emulates the functional characteristics of widely used animal-based proteins and enables food companies to match the taste and texture of animal-based products with a more sustainable plant-based ingredient. Emerging ethical considerations of consumers that should also be on manufacturers’ and grocers’ radar are protecting endangered pollinators through policies enacted across both retail stores and supply chains; foods produced by regenerative agriculture, which employs practices aimed at reversing climate change; and upcycled items, which are made from ingredients that are byproducts of other processes.
3
Foodservice at Retail
Millennial and Gen Z consumers are driving growth of plant-based alternatives to animal proteins, due to these shoppers' concerns about health, sustainability and animal welfare.
2
Ethical Eating
As shoppers are becoming more aware of where their food comes from, they’re pushing for food manufacturers and even retailers to align with their own values with regard to sourcing. A good example of this is in the red-hot plant-based food space, which is seeing an impressive influx of new products across all categories. In 2020, U.S. retail sales of plant-based foods continued to climb by double digits, increasing 27% to $7 billion, the Plant Based Foods Association and The Good Food Institute found, noting that this growth was consistent across the country. Advocacy groups like PETA are even getting in on the act: The organization’s recent ThanksVegan promotion urged consumers to go meatless for Turkey Day, citing grocers with robust plant-based holiday offerings and recipe ideas. Further, according to a recent study from The NPD Group, plant-based dairy and meat alternatives are forecast to grow through 2024, driven almost entirely by Millennials and Gen Zs, who are selecting such products not only because of their healthy halo, but also because of these demographics’ abiding concerns regarding sustainability and animal welfare. How widespread are those last two convictions? Deloitte research uncovered that 70% of the 2,000 U.S. adults ages 18-70 that it surveyed last July agreed with the idea that plant-based food is more environmentally sustainable than fresh meat, while 65% agreed that the treatment of animals informs their interest in plant-based meat alternatives. As Millennials’ and Gen Zs’ interest in plant-based dairy and meat alternatives reaches beyond burgers and almond milk to various meat, poultry or seafood analogs; flavor profiles; and formats, NPD identified additional plant-based opportunities in the frozen, shelf-stable, indulgent and snack categories. As for new plant-based proteins, this past September, San Diego food tech company Plantible Foods raised $21.5 million
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Americans’ eating behavior altered dramatically over the course of the pandemic. People stuck at home throughout 2020 and much of 2021 ate more meals at home, discovered the art of cooking and propelled grocery sales to record levels. The pandemic undid more than a decade of market share losses that had seen food away from home overtake food at home as the preferred meal solution for the majority of Americans. Grocers were in the right place at the wrong time for the foodservice channel when the share-ofstomach pendulum took a huge swing, but that’s all changed. Americans are dining out again, and in numbers that exceed pre-pandemic levels. Further, they’re ordering takeout from their favorite restaurants in a big way, too, as evidenced by delivery statistics shared by leading platforms such as Uber and DoorDash. The extent of the competitive challenge that grocers now face can be seen in the recent sales trends of food wholesalers and mid-tier chains that vie for the same dollars as grocers with prepared foods and meal solution offerings. For example, leading wholesaler Sysco said that sales for its quarter ended Oct. 2 increased 39.7% versus the same period the prior year and 8.2% compared with the same quarter in 2019. Bloomin’ Brands, the operator of 1,450 restaurants under such
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2022 INNOVATION OUTLOOK
Trends
banners as Outback Steakhouse, Carrabba’s and Bonefish Grill, saw its third-quarter same-store sales increase 9.5% compared with the same (pre-pandemic) period in 2019. During the comparable time frame, Brinker International’s Chili’s brand posted a 6.5% comp increase at its nearly 1,100 U.S. locations. Dine Brands Global, the parent company of Applebee’s, said that same-store sales for its quarter ended Sept. 30 increased 12.5% versus the comparable period in 2019. What’s notable about the performance of Applebee’s nearly 1,700 restaurants is that roughly 27.5% of its sales were off premise. The big swing back to food away from home was inevitable. Americans clamored to be out and about, and that was reflected in the sales numbers of key operators. What happens next in 2022 is in the hands of grocers that can choose their destiny through increased innovation, enhanced offerings of on-trend prepared food offerings and increased online integration. The prospects for success are encouraging because, although there has been a swing back to restaurants, Progressive Grocer research shows shifting consumer perceptions. For example, home cooking is perceived better than restaurant food by 45% of Americans who participated in the second installment of PG’s exclusive research series, “What’s Next For the Way America Eats.” Convenience, taste, quality and cost-effectiveness are top reasons that consumers choose foodservice at retail, and nearly
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60% say that it’s more affordable than restaurant food. Restaurants still top retail, however, with 42% of those surveyed of the opinion that restaurants are “far better” than prepared foods from a retail store. As grocers look to shift those perceptions, they’ll be doing so in an environment where restaurants are challenged with service levels and price perceptions in a highly inflationary environment. Restaurant food may still hold the edge over foodservice at retail when it comes to quality perceptions, but grocers have gained ground. The big advantage that grocers will have in 2022 relates to the affordability issue and increasing to-go order volume with shoppers who are already using grocery pickup with increased frequency.
4
Retail Operations
Buffeted by a lingering pandemic that has exacerbated economic inequality, divided Americans politically and given rise to persistent supply chain shortages, retail employees have had it. That’s the key takeaway from a recent study from learning management system software provider Axonify, which found that
workers in the sector reported burnout (63%) as being a more important motivating factor for resigning than compensation (50%), with grocery associates citing 56% burnout. The study of 2,500-plus front-line employees in the United States, the United Kingdom and Australia in such industries as grocery also found that almost half planned to leave their current jobs, with Gen Z the most eager to quit, at 63%. In mid-November, the Bureau of Labor Statistics reported that the number of people quitting their jobs in the United States had reached yet another record high in September, with about 4.4 million Americans leaving work behind — especially in retail, where the quit rate was 4.4%. Along with the pandemic, such factors as retiring workers and limits on immigration are contributing to this lack of willing workers, economists have noted. Further, enhanced U.S. unemployment benefits during the pandemic may have played a role in some laid-off employees’ determination not to seek another job right away. To counter these trends, food retailers ranging from large (Walmart, Dollar Tree, Kroger) to not so large (Big Y Foods, Cardenas Markets, Oliver’s Markets) have been offering various sweeteners at massive hiring events, including bonuses for new and existing employees, funds to cover tuition for associates who wish to further their educations, and additional training and career advancement opportunities. According to an Accenture research
study, 48% of retailers have altered/enhanced hiring processes to onboard new recruits faster, 38% have altered/enhanced their training processes to make it faster and easier for recruits to become work-ready, and 34% have changed role descriptions to target and attract different types of candidates. Shoppers have been affected by the retail labor shortage, too: Supply chain management software and consulting company Blue Yonder found in its annual holiday grocery trends survey that almost half of consumers (46%) said that grocery store associates were less available during the pandemic. Of that group, 39% said that this had an adverse effect on their ability to find an item or request assistance. When asked by Axonify what would make them stay, although compensation was important, workers also placed emphasis on more flexible scheduling (44.2%), more appreciation (42.6%) and more positive relationships at work (42%). As pandemic restrictions are finally phased out and potential job seekers’ COVID-related fears ease, it’s up to retailers to make the necessary investments to ensure that their associates feel truly respected.
PROGRESSIVE GROCER December 2021
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2022 INNOVATION OUTLOOK
5
Trends
Shopper Engagement
What’s the hottest shopper engagement trend in food retail going into 2022? It’s starting or growing a retail media network. According to Forrester, retail media revenue is poised to balloon to $50 billion globally in 2022 as more companies take their ad business in-house in hopes of growing it faster than a third party can. In the past year, food retailers such as Albertsons Cos., Dollar Tree, Cub Foods and Sedano’s have launched media networks that aim to leverage first-party and zero-party data by delivering digitally native, shopper-centric and engaging branded content to shoppers. Albertsons, for example, aims to use its loyalty program data to differentiate itself by selling local advertising as part of retail media packages. Meanwhile, The Kroger Co. was the first place that Conagra Brands turned to when the pandemic affected every aspect of the grocery industry, from supply chain to shopper behavior. Kroger’s 84.51° data science and media arm helped Conagra make sense of its 2021 forecast, evaluate shopping behavior changes across numerous commodities and predict which new behaviors would stick. The transaction-level data with built-in privacy controls enabled the team to present better demand projections for its portfolio, make more informed assumptions about demand for innovation, and make smarter decisions on production levels, shopper retention efforts and other marketing spend — all of which have helped Conagra attract and retain new brand buyers at disproportionately high numbers, according to Kroger. At the same time, while targeting shoppers may never be easier, it’s also becoming increasingly challenging due to rapidly evolving privacy regulations and issues related to the collection, usage, storage and sharing of data. As retailers navigate the first-party and zero-party data-privacy waters, they’ll have to persuade consumers that their data is going to be protected, and that it’s worth it for them to hand over their info and get something valuable in return. Only those retailers that gain that kind of consumer trust will be in a position to truly leverage the massive opportunity in digital ad revenue.
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Store Experience
Once upon a time, shoppers pushed carts through their favorite stores on an aisle-by-aisle route. Now, after a series of seismic shifts across omnichannel, grocers need to up their game to keep customers in the physical store. While traffic has rebounded at brick-and-mortar locations following a rough couple of years, operating at pre-pandemic levels may not be enough to keep people there, at least at the same rate and pace. Indeed, the store experience has become not just a point of differentiation among competitors, but also a point of retention. Throughout the country, grocers have deployed a variety of innovative features and attractions to elevate the store experience for their customers. Co-located stores: By partnering with other retailers for store-within-a-store concepts, grocers are providing more solutions for their shoppers. Whether it’s Target teaming up with Ulta, Hy-Vee working with DSW, or Kroger collaborating with
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Bed, Bath and Beyond, such mutual brand-building efforts are the tide that lifts all boats. It isn’t just about sharing space for other types of retail products, either: Grocers can offer more services, as they’ve done with banks and health clinics for years. A self-care spa within a store? Why not? More theater: If the digital market is all about the screen, the in-store experience can include live shows. Hy-Vee’s new store in Grimes, Iowa, for instance, includes a cake studio where customers can watch bakery staff decorate cakes like a boss, while shoppers who walk into the new Dom’s Kitchen and Market in Chicago can watch plant butchers slice, dice and chop plant foods at a food stall strategically located near the entrance. Multimedia: Live in-person demos can be augmented by video displays set up in various spots around the store, featuring content ranging from recipe demonstrations to “meet the producer” spotlights on suppliers. Personalization: Putting the “custom” in customer relations, innovation-minded grocers are making the store experience all about the shopper’s wants and needs, beyond table-stakes tailored offerings like made-to-order sandwiches or top-your-own salads. Reinventing store space for foodservice: Sure, it’s about grocery shopping, but as the rise of grocerants taught us a few years ago, it’s about the spectrum of eating and drinking. Forward-thinking grocers, including indies that are particularly nimble, have turned rooftops into coffee bars and created restaurant-style spaces for party rentals and special occasions catered by the store’s culinary pros.
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Supply Chain
If there’s anything certain in this uncertain climate, it’s that keeping shelves stocked — physical or digital — will continue to be difficult for food retailers and consumer packaged goods companies for the foreseeable future. That’s because supply chain bottlenecks are poised to linger as the world expands and contracts as a result of COVID-19. Even if the cargo ships stuck off the coast of California, freight trains carrying empty cars, and the national warehouse vacancy rate at a historic low of 3.6% are short-term problems, the trucking and shipping companies’ struggles with labor shortages are looking to be sticky. The supply chain crunch might be more about a lack of people to fly planes, drive trucks and pilot ships than container gridlock. For example, there has been a shortage of truck drivers in the United States for the past decade, but the increase in imports and demand due to the pandemic has
Instant-needs platforms like Gopuff are growing through acquisitions and expansion to new markets.
exacerbated this problem. According to the American Truckers Associations, the United States currently faces an all-time-high shortage of 80,000 truckers, and it’s getting worse. In addition, the problem isn’t just in distribution. As of August, there were an estimated 1.2 million job openings in the retail trade, according to the Bureau of Labor Statistics, a rise of 62% year over year. Many retailers may struggle to find the labor they need to handle the holiday rush and beyond. Plus, as retailers turn to costly air freight to get more products to locations on time, consumers can expect to see these rising transportation and supply chain costs reflected in higher prices. Companies such as Walmart are focused on easing some of these supply chain pressures by focusing on the middle mile. The retailer has expanded its partnership with Gatik, which provides a fleet of autonomous delivery trucks. These trucks move customer orders between a Walmart dark store used for the fulfillment of online orders and stores where customers pick up those orders. Finally, while Walmart and other retailers play with middle-mile models to cut distribution costs and meet consumer needs, the last-mile race is getting even hotter. Instant-needs companies such as Gopuff, Buyk and Gorillas, with their 10to 30-minute grocery delivery promises, are burning through major investment dollars with key acquisitions and expansion. It remains to be seen how the ultrafast grocery space might evolve, but innovative food retailers may be thinking about partnering with these supply chain disruptors.
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Sustainability
There has been a growing sense of urgency centered on sustainability across almost all sectors of business and commerce, as the previous groundswell has turned into a wave of efforts to minimize carbon footprints and the erosion of important resources. On an almost daily basis, consumer packaged goods roll out efforts to improve sustainability as they work toward goals set as part of their environmental, social and governance (ESG) initiatives. Many of those innovations focus on packaging,
including packaging made from more sustainable or compostable materials, or packaging that minimizes or even eliminates waste in a circular economy. CPGs across several categories — and especially in agriculture-related segments — have also revealed plans to produce their items in more sustainable and environmentally efficient ways, whether it’s sourcing seafood, feeding broiler chickens or growing crops using aeroponic methods. Grocers, likewise, are taking concrete and often innovative steps to minimize their environmental impact, moving beyond words of support to action. To combat fresh food waste, for instance, retailers are teaming up with tech partners that use data and artificial intelligence for more accurate orders and efficient category management. Other retailers are adding on-site container farms or incorporating programs that help shoppers save money by buying fresh food near its sell-by date. For instance, one of Progressive Grocer’s inaugural Impact Award winners, The Kroger Co., partnered with TerraCycle to launch a program allowing shoppers to recycle packaging from the grocer’s Simple Truth products. As they build or renovate stores, retailers are using eco-friendlier materials and components; Meijer, for example, recently completed a durable parking lot made with 12,500 pounds of post-consumer recycled plastic, and Tops Markets is working with an energy firm to power 75 stores through community solar farms combined with battery storage. On the transportation front, Albertsons Cos. is piloting electric trucks and electric-powered transport refrigeration units for zero-emission refrigerated grocery delivery, while United Natural Foods Inc. (UNFI) has added 53 solar-powered all-electric refrigerated vehicles to its fleet in California. These are just a few of an increasing number of innovations in sustainability. Going forward, expect innovations to focus on advances that help CPGs and retailers hit their goals of being carbon neutral or net zero, as well as find new ways to reduce packaging and food waste.
The United States is currently experiencing a shortage of 80,000 truck drivers — a situation that has been exacerbated by the pandemic.
PROGRESSIVE GROCER December 2021
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PROTEIN OUTLOOK
Animal Proteins
Another Wild Year? WHAT RE TAILERS CAN E XPECT WITH REGARD TO ME AT AND POULTRY SALES IN 2022. By Lynn Petrak onsumers may be looking to trim the fat in their meat-buying budgets, but animal proteins are still center-of-the-plate mainstays. According to the 2021 “Power of Meat” report conducted by 210 Analytics on behalf of FMI — The Food Industry Association and the Meat Institute’s Foundation for Meat and Poultry Research and Education, 98% of American households buy meat. As a new year begins, carnivorous consumers are making decisions based on a variety of socioeconomic factors that continue to shape — and reshape — the marketplace. First, with implications for both shoppers and retailers, prices continue to rise. According to the U.S. Bureau of Labor Statistics, the protein market is experiencing some of the highest rates of inflation, with meat, poultry, fish and eggs up nearly 12% over 2020 levels. Beef prices are hitting highs not seen since 1990, and several manufacturers have already revealed their intent to raise prices on their branded products in or after January. In response, many shoppers are dialing back their animal protein purchases, at least compared with the high levels seen during the cook-at-home period of the pandemic. According to market research firm IRI, consumers bought fewer items from the meat department during the first three quarters of 2021 compared with 2020.
Still Hungry for Meat
Although people face steeper prices at the meat case and are exposed to the drumbeat of stories about the impact of meat production on the environment, they’re still eating animal-based proteins — just in different ways. Similar to what’s happened in past economic downturns, shoppers are trading down from more expensive steak cuts to budget-friendlier ground beef or ground turkey. Some shoppers are switching to frozen foods, including frozen meals made with meat, and value portions of frozen meat. In a recent IRI report on the meat category, researchers from 210 Analytics found that consumers are seeking out sales specials, often using apps and in-store promotional signage to find deals.
Meanwhile, as the pandemic lingers, changing lifestyles and priorities are also influencing purchases at the retail meat case. The prioritization of health and wellness has fueled interest in leaner cuts and products made with a blend of meat and plant-based ingredients; buying smaller portions for dietary reasons also helps consumers spend less as prices rise. Further, pandemic-era shoppers who’ve brushed up on their cooking skills but want a hand in the kitchen are looking for products that make preparation easier. There are some differences within protein segments heading into 2022, however: In the pork sector, dollar sales of fresh pork rose during September, as did bacon and ground pork, outperforming other animal proteins.
Chicken may be siphoning some sales from higher-priced beef cuts: The National Chicken Council points to a projection from the U.S. Department of Agriculture’s Economic Research Service that per capita consumption of total chicken will edge up from 97.2 pounds to 98.3 pounds in 2022.
Beef prices may be on the upswing, but demand in the consumer and wholesale market remains strong, according to the industry group CattleFax. Wildcard factors for 2022 include drought conditions, market volatility and processing capacity challenges.
The seafood category, which was riding high during the pandemic, has been affected by supply chain issues and shoppers’ price sensitivity, reflected in a dip in fresh seafood sales from October 2020 to October 2021. That said, between January 2021 and October 2021, frozen seafood sales rose 2.6%, IRI and 210 Analytics research shows.
No matter how prices and other factors shake out across various animal protein segments, assortment is more important than ever, points out Michael Uetz, principal/ owner at Chicago-based Midan Marketing. “One strength of the meat case is the amount of variety it holds,” Uetz notes. “Between beef, pork, chicken and more — as well as numerous different cuts and their many applications — meat is certainly not a one-size-fits-all meal solution. For consumers looking for a premium option, the meat case delivers. For those on a budget looking for value, there are options. When promoting and merchandising your meat selection, be sure to show different cuts of different proteins in different price ranges.”
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SOLUTIONS
Sustainability
Plastic Waste Reduction Sparks Innovation THE RE TAIL INDUSTRY STEPS UP ITS COMMITMENT TO OPER ATIONAL SUSTAINABILIT Y. By Marian Zboraj ar too much plastic ends up in our environment. For instance, at least 8 million tons of plastic turn up in oceans every year, according to the International Union for Conservation of Nature. The use of plastics continues to gain importance with all types of retailers as they search for new recycling methods to lessen their environmental impact.
Plastic Bags Pave Way
One creative plastic recycling strategy is being implemented by Meijer Inc., which collaborated with materials science company Dow on a new paving technique using recycled plastic bags to create a more durable parking lot for the retailer’s Holland, Mich., supercenter. This recycled polymer modified asphalt (RPMA) parking lot uses about 12,500 pounds of post-consumer recycled plastic (PCR), which is the equivalent weight of 944,000 plastic grocery bags. “We are committed to lessening our impact on the environment and are pleased to partner with our customers and Dow in the largest in-state project of this kind to better demonstrate our commitment to a circular economy through recycling and reusing plastic to better ensure a more sustainable future,” says Meijer President and CEO Rick Keyes. “This is an exciting partnership from start to finish, and a perfect example of how the plastics used to keep food safe and fresh, like bread bags, can have a new life as infrastructure like a parking lot,” notes CJ DuBois, North American paving application development leader, Dow Packaging and Specialty Plastics. “This RPMA parking lot made with recycled content and our ELVALOY RET [Reactive Elastomeric Terpolymer] is just one example of how we’re continually creating new technologies and initiatives to transform used plastics into functional and valuable solutions.” All of the recycled plastic used for the Michigan parking lot was contributed by Meijer customers through the grocer’s in-store plastic film-recycling program. Meijer placed a collection bin inside the front entrances of each of its stores for customers to deposit clean, dry plastic bags and films, including single-use, bread, dry cleaning, produce and water softener bags. This year, Meijer expects to recycle 6 million pounds of plastics through the program.
Wrapping Up Packaging Waste
Walmart is also working to improve its plastic use. The retailer hosted a sustainability milestone meeting in October that unveiled a new vision regarding plastics. “We shared a new goal at the meeting to achieve a 15% absolute reduction of our virgin plastic footprint by 2025,” Walmart President and CEO Doug McMillion said during a Nov. 16 call with investors. “We think this goal and others announced at the meeting will move our business in a direction that is good for the planet and good for the business by giving our customers the things they love without the things they don’t.” The retailer aims to reduce its use of plastic through the increased use of recycled content, elimination of unnecessary material, redesigning its packaging, and the exploration of reuse models. The reduction will likely approximate a 180,000-ton reduction out of the 1.4 million metric tons of plastic packaging that Walmart used in 2020, according to the company.
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The Olyns reverse vending machine serves as an alternative bottle-recycling platform for customers, and also features a full-motion video screen that doubles as a retail media channel.
Meanwhile, online retailer Amazon is taking a major step in making pickup and delivery better for the planet. The company has launched curbside recyclable packaging that keeps grocery items chilled and frozen during delivery. Grocery items from Amazon Fresh and Whole Foods Market now arrive insulated in packaging made from recycled paper, permanently eliminating the need for plastic liners and bubble bag insulation. The new packaging is also easier for customers to recycle at home.
Recycling Vending Machines
Another strategy to reduce a retailer’s plastic impact on the environment is to install reverse vending solutions for customers. These recycling machines are ideal in any high-traffic location where consumers purchase, drink from or discard beverage containers, like grocery stores. Campbell, Calif.-based provider Olyns designed its bottle collection machine to gather about 1.5 metric tons of recycled material per year. Olyns’ recycling cubes are also streamlined with a 65-inch full-motion video screen that doubles as a retail media channel. Earlier this year, PepsiCo partnered with Olyns to produce a pilot program in one Bay Area Safeway store. The successful program has expanded to include four of Albertsons Cos.’ Safeway banner stores. “To solve the crisis in our oceans, we must focus on how plastic is produced and handled on land,” notes Stefan Ranstrand, president and CEO of Norway-based TOMRA, another reverse vending machine provider. “There is clear evidence that recycling infrastructure such as container deposit schemes drives huge improvements in recycling rates, consumer behavior and reducing pollution.” By 2025, TOMRA estimates that its reverse vending solutions will sort more than 8 million tons of plastic per year from waste streams at a global level. Its machines already collect 40 billion used beverage containers every year.
AHEAD OF WHAT’S NEXT By Gina Acosta
Perimeter Pixie Dust DISNE Y’S FOODSERVICE INNOVATION OFFERS LESSONS FOR FOOD RE TAILERS. have a confession to make: I’m not a big fan of theme parks. Despite being born and raised in Florida within driving distance of arguably the world’s most famous attraction — Walt Disney World — I can count on one hand the number of times I’ve visited, most times rather reluctantly. I’m just not a fan of waiting in long lines or fighting through crowds. As a student of food retail, however, I decided to make an exception to my “no Booths at the EPCOT International Food and Wine theme parks” rule and head to the EPCOT Internation- Festival weren’t just focused on international cuisine. This Flavor From Fire kiosk offered grilled meats and a al Food and Wine Festival in November. The festival, which has been running since 1996, delish whoopie pie made with smoked chocolate cake. was originally dreamed up to boost attendance during traditionally less busy times at the park. Today, the event has become when many consumers want to be outthe most popular attraction at EPCOT because it offers a master class side more than they want to be inside. in technology, innovation and international culture — all of which are The post-pandemic consumer will conextremely attractive to today’s consumer. tinue to be fickle, following the ebb and During the festival, guests at EPCOT, which stands for Experimental flow of COVID-19 surges and restrictions. Prototype Community of Tomorrow, were taken on a culinary journey But grocery retailers can be ready to grab around the country and the world. The immersive, interactive, communal more foodservice share by sprinkling some yet socially distanced and contactless experience offered lessons for food Disney-style pixie dust on their offerings. retailers looking to elevate their post-pandemic foodservice offerings. Whether by diversifying the prepared After entering the park, customers could pick up a digital or pafood options, hosting a food festival in the per passport with a complete list of menus, entertainment options and parking lot or adding cuisine gamification more. The passport allowed guests to features to their retail apps, grocers can inmap out where they wanted to eat and As I walked around vite the post-pandemic consumer to have cross off dishes, cuisines or even shops. on-premise fun with food again, which and soaked it all It added a gamification aspect to the will most likely lead to increased purchases experience of walking around the park, in, I couldn’t help for at-home consumption. amid the fresh air and gorgeous Disney but wonder why all gardens, and trying fun dishes from grocers don’t invest across the globe. Gina Acosta in food festivals,
Fun With Food
especially now postCOVID, when many consumers want to be outside more than they want to be inside.
This year, the festival offered at least 34 food booths. Some of my favorite dishes, which were tapas-sized and meant to offer two or three bites of food, included Irish Chocolate Pudding Cake, Maine Lobster Chowder, Australian Lamb Chop, Hawaiian Passionfruit Cheesecake, French Three Cheese Beignets, Teriyaki Chicken Buns, Wild Mushroom and Truffle Tart, Italian Bomboloni Donuts, Rosemary Roasted Porchetta and a delicious concoction called Crispy Chicken on a Sriracha-Glazed Donut. Lines were long, but it was easy to keep a distance from other patrons. I saw excited festival-goers — racially, ethnically and generationally diverse — passing around dishes among friends and family. Paying for the food was easy (most dishes were priced in the $5-to$10 range) because Disney makes contactless payments a breeze. As I walked around and soaked it all in, I couldn’t help but wonder why all grocers don’t invest in food festivals, especially now post-COVID, 98
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Executive Editor gacosta@ensemleiq.com
Supermarket Employees are Frontline
Heroes!
Day after day, supermarket employees keep communities going. They define the term “community service.” Thank a supermarket employee today!
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