Independent Grocer's Guide

INDEPENDENT GROCER’S GUIDE

Created by Sponsored by

For the best viewing experience of this book we recommend the following:

1. View in landscape mode

2. View in full screen by clicking button located at the bottom right

3. Use the hyperlinks in the table of contents

The Guide is a compilation of individual results and results may vary. UNFI does not claim that the successes herein are typical results that all Independents will generally achieve, and the success contained herein may not be indicative of future performance or success of any other retailer. UNFI makes no representation or warranty, express or implied and does not endorse any specific strategy, concept, or theme contained herein.

THE INDEPENDENT GROCER’S GUIDE: WHAT IT IS

At UNFI, we believe that support for you, and all of our Independent Community Grocery partners, is more important than ever.

We recognize the importance of Efficient Store Operations to your day-to-day shopper experience and bottom-line.

In 2022 we introduced the first Independent’s Grocers Guide with the goal of supporting Independents, to help them identify their own value proposition, and compete more effectively in this evolving marketplace. UNFI is again partnering with AlixPartners – the professional service firm specializing in grocery and retail industry best practices – to develop a second Guide, focused on Efficient Store Operations.

Shoppers are becoming more particular about where they purchase and why, especially given current economic conditions. Given this, store operations is a deciding factor in attracting new shoppers while supporting profit growth. The new Guide is geared toward desired topics from our Independent partners, including operational best practices and how they can be leveraged to both grow profit and better meet shoppers’ needs. Like in the original Guide, you’ll find strategies that are important to help you drive shopper loyalty and build a competitive edge. This Guide is based on a mix of market research, industry expertise, and in-person observation of best-in-class retailers.

We know that every Independent is unique and that you know your shopper and market better than anyone.

At the same time, there are several common best practices employed by successful Independents, which can be applied in a unique and differentiated way to your own stores. To that end, we developed this Guide following two main guiding principles:

• To be successful, every Independent needs to deliver a unique value proposition for its shoppers.

• Although there isn’t a one-size-fits-all solution to success, there are a few universal concepts and winning themes that Independents can apply in a tailored way to their own store(s) and shoppers. We collected several of those in this Guide.

Ultimately, the intent of this second volume of The Independent Grocer’s Guide is to serve as a helpful resource for you to grow your business.

You’ll find in here many things you already do well today and others that might be new and helpful. As you read through, you’ll decide which are most critical for you and your shoppers and how to apply them to your unique business.

A WORD FROM YOUR PEERS ABOUT THIS GUIDE

This Guide is an invaluable tool in assessing your day-to-day store operations. It offers a range of solutions for enhancing the store’s efficiency and improving your customer’s shopping experience as well as providing possible opportunities for sales growth.

Daniel McNabb Dave Mariano

UNFI has done a very good job partnering with Dierbergs to increase sales and volume in the private brand commodities.

Their growth in Wild Harvest and Essential Everyday has allowed us to offer our customers new items with a great value and high quality.

Today’s customers are all looking for value, and working together with UNFI, we can extend our product varieties so that our store merchandising offers consumers what they need.

Building new sales and loyalty with our customers is beneficial to UNFI and Dierbergs.

In a time where Staffing and Recruitment continue to be more competitive; it’s important that internal and external Talent see the Grocery Industry as a career, and not just a job.

The guide provides valuable insights into retention strategies and creating growth opportunities that not only excite current key personnel, but also attract new talent with new ideas into the mix.

Andy Pauk

HOW TO EFFECTIVELY USE THIS GUIDE

to improve store profits and operations

The Independent Grocer’s Guide was developed using a combination of internal expertise, interviews with both industry veterans and Independent grocery owners, and an assessment of industry data.

AlixPartners also conducted store visits across the United States of both small and large retailers, ensuring coverage across regions. The best-in-class examples have been highlighted throughout in specific case studies.

Navigating through the content

The Guide is built around six chapters related to Efficient Store Operations:

1. Store Experience

2. Employees & Staffing

3. Forecasting & Ordering

Each chapter has 4 sections:

1. Thought Starters

2. Key Concepts

4. Receiving, Stocking & Safety

5. Digital Tools

6. Additional Profit Drivers

3. Learnings

4. Self Reflection

Thought Starters and Self Reflections are structured as a workbook to help you determine your key strengths and areas of opportunity

Pinpointing the most relevant information

While developing the Guide, we kept in mind the differences among Independent grocers and tried to highlight broad operational best practices

Where applicable, we have highlighted how each strategy could be applied to different types of Independents

Quickly finding the most important insights

We know you’re busy, so we highlighted a set of pages that collect the most important insights from this work

Look for the stars

VOLUME 1 INDEPENDENT’S GUIDE

In 2022, Volume 1 reviewed high-level themes and best practices across a mix of operational, marketing, and merchandising topics.

INDEPENDENT GROCER’S GUIDE 2022

2 2 1 1 3 3 5 5 6 6 4 4

& MARKETING

Created

Sponsored

Key Volume 1 Themes

Stores should have a defined value proposition, including understanding your own store profile and your shoppers’ habits

Defining your target shopper is at the core of effective marketing

Win where you want to win: define what you want to be known for and deliver on the promise

Build pricing and promotion capabilities to attract and retain shoppers

Identify the type of shopping experience you want to deliver to your shopper and build staffing and processes to meet this experience

Define processes, plan labor schedules, and crosstrain employees to decrease inventory risk and working capital

eCommerce is growing at a pace that you can’t afford to miss; understand how in-house labor, partnerships, and fulfillment impact your eCommerce strategy

Scan here for access to the first volume of the Independent Grocer’s Guide

Guide Contents

VOLUME 2: EFFICIENT STORE OPERATIONS

2023’s Volume 2 focuses on efficient store operations and how to apply best practices at your store.

Chapters:

2 2 1 1

3 3

5 5 6 6 4 4

General Structure:

Callouts on how different Store Types apply the learnings

Store types reintroduced from Volume 1 that help you think about examples as they pertain to your stores

Thought Starters: Key questions to ask

Questions to help you put down on paper how to apply each chapter at your store(s)

Breakout of key concepts

Definitions and logic of key parts of each chapter and how to use them; Center Store and Fresh will be called out

Learnings from other retailers

Practical examples, from both Independents and other grocers, of key winning themes and actions

Self-Reflection

Questions to help you lock in your learnings and identify opportunities for your store(s)

We recommend spending some time on the next two pages, familiarizing yourself with the store “profile” concepts, considering which type you identify with. Where appropriate, the Guide concepts and learnings may apply best to a certain Independent profile.

YOUR STORE'S PROFILE

(Introduced in Volume 1)

Which of these profiles sound most like your store? Look for these icons to see how similar stores apply the Guide’s concepts to their business. If your business fits within multiple profiles, check out each applicable “Learnings” page.

THE CATEGORY SPECIALIST

THE ETHNIC SPECIALIST

THE NATURAL/ ORGANIC STORE

THE CONVENIENCE SHOP

Known as the go-to store for a specific category or purchase mission (cheese, meats, bulk goods, specialty baking goods, etc.)

Caters to a certain cultural demographic and their food choices (Italian, Latin American, Asian, etc.)

Prioritizes health and natural/organic selections, often with a limited assortment of national brand products

Serves up ease and convenience with lots of grab-and-go items, prepared meals, and a limited assortment of essentials

THE COUNTRY MARKET

THE LOCAL GEM

Operates in smaller towns with limited competition

A well-recognized store brand – usually a single or a few locations – that offers a unique shopping experience and product selection

TAKING A LOOK AT CHAIN RETAILERS

Independents can learn best practices from retailers of all sizes. You will also see examples from Regional and National Chains.

Community grocers, often family-owned LOCAL INDEPENDENTS

Medium to larger chains concentrated in a certain region or regions REGIONAL CHAINS

Large chains with stores from coast-to-coast NATIONAL CHAINS

Forecasting Ordering Assortment

Shrink & Out of Stocks

Receiving Inventory

LEARNINGS FROM OTHER RETAILERS PAGES

REGIONAL CHAIN

REGIONAL CHAIN

LOCAL INDEPENDENT

NATIONAL CHAIN

LOCAL INDEPENDENT

STORE EXPERIENCE

The overall experience can determine whether a shopper returns to your store

Shoppers place a high value on aesthetics, cleanliness, and how easy it is to find items

Use color, lighting, and smell — especially at the entrance — to set the right tone right away

Pay attention to the flow of your store and where you place departments and aisles

Place volume-driving items such as milk and eggs farthest away from entry/exit

Use aisle endcaps for items that have a high profitability or to showcase private label and promotions

Use signage to direct shoppers to traffic drivers and to provide education or awareness

Think of store flow as a tool to improve the shopping experience and to make each trip more valuable

Your store is part of a community: find ways to engage shoppers and other local businesses

Talk to shoppers to learn what you’re doing well or not and to understand what they’re looking for

Organize events to engage the community: partnering with other businesses can help share costs

EMPLOYEES & STAFFING

Post job openings in appropriate locations and ensure accurate and informative descriptions

Use competitor job posts to both compare offerings and to determine competitive wages and benefits

Get creative with where you find employees and offer a quick and simple application process

Ensure you are meeting minimum wage requirements and following federal and local employment laws

Retention and recruiting go together: Give employees timely feedback & create a career path

Invest in employees’ lives and careers to become an attractive and stable employer

Make employees feel valued and supported through feedback, rewards, discounts, and recognition

Prioritize staff training in a way that both helps store operations and employee careers

Use business-appropriate tools to schedule employees and to fulfill necessary store tasks

Create predictive and flexible schedules that take store traffic and essential tasks into consideration

Determine if investing in a scheduling platform or other employee-facing technology makes sense

& ORDERING

about how you can improve forecast accuracy to improve sales and reduce food waste

Understand key metrics to include in your forecast such as day of week and week of year

Build a recipe management and made-in-store production planner

Order holiday items in advance, account for SNAP activation days, and consolidate deliveries Get a big picture view of your shrink and what you could do to reduce it

When pulling shrink from shelves or converting products, record it to the product level

Understand root causes of shrink & theft and develop action plans to address them

RECEIVING, STOCKING & SAFETY

Develop a plan and standardize practices for receiving products and managing DSD vendors

Have dedicated staff to receive product, ideally during non-shopper hours

Audit all products being received against invoices from your vendors

Have the right amount of inventory and stock shelves with products shoppers want to buy

Fresh departments should be ready in the morning and stock levels monitored throughout the day

Center store stocking and rotating should be completed during non-shopper hours

Use store walks to pull out-of-date product, mark down near-dated product, and rotate product

Understand food safety practices such as allergen, recalls, and temperature monitoring

Learn where to get updates regarding federal regulation changes

Create a process to inform shoppers about recalls for products they purchased

Incorporate technology into practices to help improve food safety

Think about your software and how it integrates with all store operations

Understand key features such as computer-assisted ordering when looking for a management system

DIGITAL TOOLS

Think about the role you want digital tools and automation to play in your store

Automation has the potential to improve sales and reduce labor requirements

The most advanced technology may not be the right tool for your store

New tools should be piloted to understand what is the best fit for your needs

Introduce tools to assist staff with time-consuming, repetitive tasks

Identify where staff currently spend most of their time, and if it is better spent elsewhere

Determine what employee-supporting tools your store will benefit from

Understand your shoppers’ appetite for an Independent, self-sufficient shopping experience

Look for opportunities to introduce tools to allow shoppers to serve themselves

Have a form of self-checkout available

ADDITIONAL PROFIT DRIVERS

Use a website or app as an extension of the store to engage with shoppers

Develop a website to enable online shopping and to share information, such as store info, events, etc.

View mobile app as a subset of the website: offer shopping and functions that aid in-store shoppers

Identify how you can introduce new products or services to increase profit

Build new offerings based on existing processes and resources

Prepared meals and in-store partnerships appeal to new shoppers without large operational shifts

Understand how you want private label to be viewed in your store

Private label brands can grow profit by both competing with and supporting national brands

STORE EXPERIENCE STORE EXPERIENCE THOUGHT

STARTERS

1 1 Is shopping in your store an enjoyable experience? Is it easy for shoppers to find items they’re looking for?

2 2 Do you pay attention to how the floor, aisles, bathrooms and other areas look at all times of the day?

3 3 Do you regularly review signage around the store to ensure it’s up-to-date and complete?

4 4 Do you think of your store as being part of a community?

5 5 Are there ways in which you can easily reduce waste, packaging, and energy use?

GROCERY STORES ARE A SENSORY EXPERIENCE

Stores should engage all five of a shopper’s senses

1 1 3 3 2 2

• Shoppers should note a pleasing scent immediately

• Can be done via situating produce, floral, bakery, or coffee at entrance

• Create engagement while building baskets through samples or cut-your-own-herb stations

• Lighting and color should be bright and consistent

• Spotlights on certain items can create unseemly shadows elsewhere

• Make specific music choices

• Avoid silence and/or offensive options

• Have fresh produce; one unappealing product can spoil the experience

• Temperature should be on the colder side, reinforcing fresh feeling

3

SHOPPER POINT-OF-VIEW

CASE STUDY

More than 75% of shoppers responded important or very important to interior cleanliness and presentation, easy-to-find Items, & clutter-free aisles.

Making it work in practice at

REGIONAL CHAIN

REGIONAL CHAIN

Keep floor and aisle areas clean and clutter-free by removing physical barriers like ladders, cartons, etc.

Shopping cart bays can add convenience, accentuate the look, and be used to convey messages to shoppers. Have staff check in 2-3 times a day

WORK WITH YOUR LAYOUT

To encourage larger baskets, position your most important categories front and center while placing high-traffic items in the back.

1 1 2 2 3 3

Encourage higher volume sales by placing destination items (like eggs and milk) at the back of the store

Create a pleasing aesthetic for shoppers as they enter the store with fresh produce and seasonal items, not discount products

Showcase high-profitability products, private brands, and promotional items in highly visible locations throughout the store

Position items that people will purchase on a whim like candy, chips, sodas, and grab-and-go meals right at the checkout

Ensure products are given the proper amount of shelf space based on expected and historic sales

1 1

3 3

RECEIVING, STOCKING & SAFETY

2 2

4 4

CLEAR AND CONSISTENT SIGNAGE

helps shoppers navigate the store without wasting time and creates product awareness.

What to do + Benefits

Add store map at entrance and high-traffic areas (see page 108)

Can range from providing product location info to digital apps, that can show up-to-date pricing and/or integrate with POS

Highlight specialized departments like organic, gluten-free, or plant-based food

Shoppers won’t know about merchandising specialties unless you tell or show them

Clearly list prices as well as any markdowns or promos

Shoppers don’t like to be surprised about prices at checkout, while promo info can lead to an impulse buy

Use consistent look, design, and a font that is legible from a distance and is ADA compliant

Reinforces your brand identity while ensuring all shoppers  are catered to and can access your store

Use bulletin board for upcoming store events or catering availability

Effective and easy tool for creating a connection with the community and for branding and marketing purposes

CASE STUDY

FORECASTING & ORDERING

RECEIVING, STOCKING & SAFETY DIGITAL TOOLS

Making it work in practice at REGIONAL CHAIN

CREATE A GREAT FIRST IMPRESSION

Set and reinforce the shopper experience with an organized and clean exterior and checkout area.

PARKING LOT

• Curbside pickup with clear instructions

• Services like EV chargers/gas stations

• Letters in exterior signage should not have lights burnt out or chipped paint

• Ensure adequate outdoor lighting so shoppers feel safe

CUSTOMER SERVICE DESK

• Staff trained to interact with shoppers at customer service and information desk (see Chapter 2: Employees & Staffing)

• Clearly marked and dedicated buy-online-pick-up-in-store (BOPIS) and returns area

CHECKOUT LANES

• Organized and appropriate number of checkout lanes staffed based on expected traffic at time of day and day of week

• Self-checkout options (see page 112)

CONNECT WITH SHOPPERS

These 3 key strategies work cohesively to attract new shoppers and strengthen relationships with existing ones

• Proactively ask shoppers for feedback

• Train staff to help shoppers based on feedback

• Be open to complaints or issues and empower associates to accommodate

• Events can be as small as tastings or as big as seasonal festivals, depending on shopper base and store goals

• Intimate events such as cooking classes or wine tastings can be used to market product to more targeted shopper base

• Contributing to local charities can help embed the store into the community and create goodwill

• Pair up with other businesses to share costs and benefits

3 3 2 2

DIFFERENTIATE YOUR STORE WITH MARKET AND SPECIALTY DEPARTMENTS

Quality market stations such as full-service butcher, seafood prep counters, and on-premises bakery or a staffed health department can help stores stand out from the competition.

A specialized service with well-trained employees can be an effective point of differentiation for the business

Millennial and Gen Z shoppers prefer both convenience and customization when they’re shopping for food

These services can increase the quality of offerings and provide opportunities for cross-merchandising

By partnering with local providers, meat and seafood stations can be a vehicle for more seasonal and sustainable choices

Providing guidance, education, and assistance to shoppers can lead to increased basket size and repeat shoppers

A health & wellness department that includes nonfood items and trained staff can drive increased register rings

Making it work in practice at

SUSTAINABILITY LEVERS

Use heat recovery from refrigeration systems for space heating; install dishwashers that reuse water

Maximize use of natural light and/or use LED bulbs; alter refrigeration systems; detect refrigeration leaks

Source food locally as much as possible and from distributors that follow environment-friendly practices

Set up processes to reduce, reuse, or recycle packaging product is received in as well as bags used by shoppers

Partner with local organizations to donate to food pantries and/or to sustainable waste management such as composting

1 1

2 2

3 3

1 1 2 2 3 3 6 6 5 5

8 8 4 4 7 7

SELF-REFLECTION

We put ourselves in our shoppers’ shoes to evaluate if our store experience matches their needs

As soon as one enters, the store feels clean, welcoming, fresh, and bright

We have processes in place to ensure that the aisles stay clean and clutter-free while employees work on restocking

We put thought into item and aisle placement

We pay attention to the outside of the store, shopping cart bays, and the parking lot

Signage around the store is easy to read and understand

We leverage our community and create connections with other local businesses

We think about big and small ways to be more sustainable

1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7

EMPLOYEES & STAFFING EMPLOYEES & STAFFING

THOUGHT STARTERS

1 1

Are you using multiple approaches to attract the right talent?

2 2

Do you know how to find the most up-to-date wage information?

3 3 Do you invest in your employees and actively work on retention?

4 4 Do you track your staff’s performance and provide timely feedback?

5 5 Are you aware of any tools that can help create employee schedules and manage necessary store tasks?

RECRUITING SUCCESSFULLY

Take a flexible and creative approach that utilizes nontraditional channels and community resources

Define job roles and write descriptions

• Establish minimum required headcount for each role by time of day and day of week

• Define roles based on functions necessary to run the store, including front of store and back of store, and any additional stations or services offered

• Use competitor posts to compare offerings

Post openings across channels

• Use newspapers/magazines, in-store hiring events, social media, job sites, community meet & greets, virtual sessions, bulletin boards at schools, colleges, and trade schools, among others

• Reach applicants through shared networks and other local businesses

• Stores can find success with walk-in/on-the-spot interviews advertised outside the store

Set up a quick recruiting process

• Limit to a single interview

• Develop an interview guide to expedite

• Qualities to look for: punctuality and reliability, people and communication skills, ability to work with others, flexibility, problem-solving aptitude ROLE MAPPING

LEARNINGS: RECRUITING TACTICS

Store operators are getting creative with recruiting, advertising openings as much as possible and making the application process easy and accessible

Making it work in practice at

Hiring notice outside store that is reflective of company culture with application enabled via QR code

AI-enabled recruiting assistant that can provide details on benefits, openings, and culture

Making it work in practice at

Sign at store entrance advertising immediate on-the-spot interviews

WAGE BENCHMARKING

Determine competitive pay that will be attractive to employees in your area while ensuring that you’re complying with all federal and local wage laws

Wage Best Practices

• Consult U.S. Bureau of Labor Statistics data under “Food and Beverage Retailers” for type and level of job for your geographical area to determine minimum wage

• To be competitive and attract talent, research wages offered by other businesses in the area, including but not limited to other grocery stores

• Wage information can be accessed through classified ads, trade associations, job applicants, etc.

• It is not only good social practice to hire from diverse groups and target groups such as veterans, but it can also lead to business tax credits

Median hourly wage for cashiers across the U.S.

IMPROVING RETENTION

Give regular feedback and invest in employees’ lives and careers

Culture

• Predictable and consistent schedule

• Diverse and inclusive workplace

• Reasonable amount and type of work

• Rewards and recognition

Career Development

• Growth opportunities

• Professional learning, industry certifications

• Tuition assistance

• Investment in leadership development

Making it work in practice at

Pay & Benefits

• Competitive pay

• Paid time off & sick leave

• Health care, dental care, and life insurance

• Employee discounts, freebies, and perks

Feedback

• Feedback sessions with individual employees

• Up and down feedback so staff are heard and not just talked to

• Surveys and employee interviews to understand concerns

CASE STUDY

Making employees feel valued and supported

Support for mental and physical health

Clearly described benefits and employee perks

CAREER DEVELOPMENT

Help employees make this a career rather than a job by supporting their development

Policies & procedures

Orientation and onboarding, company overview and brand, task manuals

Safety & compliance

Local, state, and federal government, safety, security, and sanitation training

Customer & soft skills

Conflict management, emotional intelligence, effective communication

Career path & cross-training

Contingency training, filling skill gaps, training along structured career path

Upskilling & leadership

P&L and other business basics, leading store operations, how to provide feedback

CASE STUDY

Making it work in practice at

• Management training and business classes for nominated assistant managers, to create a career path and prepare next batch of promotable managers

• Affiliation with local community college so certification is more widely recognized

• Fully paid-for trade school programs for specialized positions such as meat & seafood cutters, cake artist, and culinary arts

ROLES AND RESPONSIBILITIES

Clearly define job expectations and track KPIs to support regular feedback and performance reviews

FUNCTION

STORE MANAGER AND ASSISTANT STORE MANAGER

DEPARTMENT MANAGER

CASHIER AND CUSTOMER SERVICE REPRESENTATIVE

STORE ASSOCIATE

BUTCHER AND SEAFOOD SPECIALIST/ APPRENTICE

COOK AND KITCHEN STAFF

RECEIVING AND STOCK CLERK

PICK AND PACKERS

SECURITY

CUSTODIAN

ROLE

Oversee overall store operations and day-today decisions, including staffing and scheduling

Manage specific departments such as produce, frozen, or dairy, including stock management

Handle checkout, bag items, and answer pricing, promo, or other shopper questions

Assist department managers with day-to-day tasks such as keeping shelves stocked

Cut, clean, and prepare meat and seafood, recommend product, provide customer service

Prepare food items alongside proper food handling, sanitation, and storage requirements

Unload delivery trucks and stock product in backroom, take inventory

Fill eCommerce orders, provide curbside pickup or delivery assistance

Ensure store safety and help with loss prevention

Maintain store cleanliness, sweep and mop floors, clean bathrooms

Shrink

Number of transactions

Attendance

Wasted product

Production time

Volume per hour

Picking accuracy

Loss

Shopper satisfaction

LABOR SCHEDULING

Determine the number of store labor hours you will need to effectively run every store activity

FUNCTIONS

Labor scheduling fundamentals

• Keep a running list of available employee time, skills, and full-time or part-time status

• Use traffic and transaction data from POS to determine busiest store hours

• Reflect hours needed at specific times (e.g., stocking in early morning)

• Start with paper or Excel-based labor schedule. As store grows, labor management system can help (see page 52 for examples)

• Get regular feedback from employees to improve scheduling

• Create a process of what to do in case of no-shows, both to cover tasks and provide feedback to discourage schedule abuse patterns

• There may be opportunities to use automation for certain repetitive tasks and free up staff for more value-add work (see chapter 5: Digital Tools)

STAFF MANAGEMENT PLATFORMS

Employee and staffing activities can be streamlined and automated through external applications

Align staffing to real-time needs and store traffic while factoring in employee workload

Automate payroll processing with built-in compliance that is easy for employees to use

Reduce the number of emails and phone calls among staff while ensuring complete communication

Real-time tracking of task progress and ability to provide qualitative feedback

Provide a searchable and complete database for operational documentation and materials

EXAMPLE PROVIDERS

1 1

SELF-REFLECTION

We have a process in place to attract, hire, and onboard store staff quickly and efficiently

2 2

We pay our employees a fair and competitive wage

3 3

We know what roles we need to hire for, and how to best use available staff for all shifts

The store offers a safe and inclusive work environment

6 6 5 5

4 4 7 7

There are processes in place to develop our employees and show them a career path within the organization

Employees know what their goals are, and how their work impacts overall store operations

All store staff receives feedback on an ongoing basis

8 8

We have found the right scheduling, task management, and communication platform for our business needs

1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7

FORECASTING & ORDERING FORECASTING & ORDERING

THOUGHT STARTERS

1 1

Do you currently have product-level forecasts? How accurate are they; could you be doing better?

2 2 Do you have a process in place to work with your vendors to order products?

3 3 How do you determine made-in-store production volumes?

4 4 How do you measure shrink, what do you use to track shrink, and what are you doing to reduce shrink?

5 5 Does your store have the tools needed to be successful?

PROCESS JOURNEY

Process

FORECASTING

• Daily sales at a product level going back a few weeks

• Production planner for made-in-store products

ORDERING

ASSORTMENT

SHRINK & OUT-OF-STOCKS

• Manual ordering

• Assortment based on space to sales

• Daily checks for out-of-date products and holes

• Product level shrink is recorded manually, and history is kept (e.g., Excel)

• Day-of-week and week-of-year demand

• SNAP activation days

• Made-in-store ingredient needs

• Seasonal and holiday product lifts

• Hourly forecast for made-in-store

• Computer assisted ordering system

• Automated ordering for products and ingredients

• Introduce new products into forecasting engine

• Include seasonal products

• Regular category and item reviews

• Seasonal holiday planner for made-in-store products

• Shrink and out-of-stock recorded daily and investigated to identify root cause

• Shrink is recorded with a handheld scanner that is linked to your inventory system

• Integrate with forecasting, ordering and POS

• Monitor out-of-stocks with shelf cameras

FORECAST BEST PRACTICES

Core requirements of a successful forecasting system include a base average forecast, seasonal lifts, and feedback to improve accuracy over time

• Rolling average based on sales

• Day-of-week, week-of-month, and week-of-year

• Use data going back up to 2 years, but place greater emphasis on recent sales

• Increased volume for holidays and seasonal events

• SNAP activation days

• Prepare for changing weather or natural events

• Made-in-store production plan

• Recipe management system

• Account for shelf capacity

• Incorporate feedback for forecasts that were too high or too low

• Scan-out and record all known losses or markdowns

Super Bowl & Valentine’s Day

Mother’s Day, Memorial Day, 4th of July, & Labor Day

Thanksgiving & Year-End Holidays

MADE-IN-STORE PRODUCTION PLANNERS

How to Build

• Prepopulate with data from your forecasting system (dark green columns)

– This could be a printed Excel sheet or an interactive system on a tablet

• Employees have leeway to make more or less than “Quantity Needed”

• Manually fill out “Produced Amount”, upload into a system or populate based on number of printed labels

• Use production, sales, and shrink data to improve your forecast

Examples of basic features:

• Product name and PLU

• Multiple container sizes

• Forecast amount (or minimum presentation level), whichever is larger

• Inventory and quantity to make

• Record production

• Recent shrink history

Allow employees to deviate from the forecast on days with unusually high or low demand

Examples of

• Highlight out-of-stocks

• Hourly forecast

• Labor hours • Recipe & ingredient system

RECIPE MANAGEMENT SYSTEM

Best

Practices

Examples of basic features:

• Recipes for all made-in-store items

• Ingredient forecasting

• Yield & serving size

• Allergen and nutritional labeling

Examples of advanced features:

• Labor time required to make finished goods based on production time standards

• Cost per unit of finished good

• Ingredient inventory management

• Tie into recall system

Fresh Guacamole

PLU #54321

05/14/23

Yield = 25 8oz Containers

Shelf Life = 3 days

Ingredients:

25ea large Haas avocados

32oz chopped onion

16oz chopped cilantro

8oz chopped jalapeño

8oz lime juice

4oz chopped garlic

1.5oz kosher salt

1.5oz black pepper

1oz cayenne pepper

1oz cumin powder

Preparation:

1. Add avocados, lime juice, and seasoning to large mixing bowl

2. Mash and mix until combined

3. Add remaining ingredients

4. Mix until combined

5. Add to container and place on the shelf

Serving Instructions:

1. Serve with tortilla chips and enjoy

Examples of best practices:

Item name and PLU

Finished goods picture

Last updated date

Recipe yield

Shelf life

Ingredients required in volumes

Recipe instructions 8 8

Cooking or serving instructions

ORDERING REQUIREMENTS

Each department should have standardized ordering frequency and requirements, taking into consideration current inventory, available space, and expected demand

• Understand vendor lead times

• Develop a list of never-out items

• Have a list of secondary vendors

• Place holiday orders early

• Limit last-minute changes

Center Store

• Consolidate deliveries by filling trucks to help lower your costs and help your wholesaler be more efficient

Fresh

• Order at least 2-3 times per week and space out the deliveries (e.g., M/W/F)

• Include ingredients for made-in-store

• Work directly with local producers

CASE STUDIES

Making it work in practice at

• Bagged salads are key products to always keep in stock

• Complementary salad products should be well stocked and fresh

Making it work in practice at

• Full organic shelf with numerous products

• Carrots could be over indexed to fill space because of their longer shelf life

CATERED ASSORTMENT

Your selection should reflect your desired store profile and cater toward your shoppers

Best Practices

Understand your store’s market and bestselling products

• Know which products your shoppers will buy and why

• Use data to inform assortment decisions

– Calculate space-to-sales at the category and product level

– Regularly request shopper feedback

• Add seasonal products based on projected shopper demand

• New products should be added after researching demand and soliciting shopper feedback

CASE STUDIES

Specialty products

LOCAL INDEPENDENT

Specialty products and certifications for local religious communities

Seasonal products

Highlight seasonal products and create dedicated space

Specialty products

Support your shoppers and local market with space for unique local products

FORMS OF SHRINK

Understand where your shrink is coming from: existing process should be continuously tracked and evaluated to identify root causes of shrink

Known Shrink

Waste Operational

• Ordering and forecasting

• Production planning

• Rotation errors

• Inconsistent product quality

• Product or handling issues

• Cashier or employee errors

• Accounting, scanning, or other errors

• Receiving discrepancies (e.g., short-dated items, mis-picks)

How can you reduce food waste?

• Incorporate feedback into ordering and forecasting system

• Develop production planners

• Create fresh recovery programs

• Markdown strategy

33% of known shrink

How can you improve internal operations?

• Train employees on product handling

• Audit and inspect deliveries

• Share findings with vendors

• Track intra-store transfers

31% of known shrink

Unknown Shrink

Known Theft

• General shoplifting

• Self-checkout theft

• Employee theft

• Swapping labels

How can you reduce theft?

• Digital tools (see page 102)

• Security cameras and guard

• Lock high-value items

• Hard tags on wine or liquor

• Separate entry and exit

36% of known shrink

• Undetected theft

• Not recording shrink when disposing or donating products

• After reconciling inventory, the discrepancy is unknown shrink

How can you limit unknown shrink?

• Record and track all known losses

• Well-defined processes, systems, and employee training

LEARNINGS: SHRINK MANAGEMENT

Focusing on theft mitigation, recovery programs, and markdowns can allow your store to reduce its shrink

CASE STUDIES

Theft Mitigation at LOCAL INDEPENDENT

• High theft and high-value items are locked in clear cases

• Signs direct shoppers to ask employees for assistance

• Leftover bread is used for croutons and crostini

• Near-dated food is pulled and donated to local organizations

Recovery and Donations at

Markdowns at

• Dedicated space for produce markdowns

• Bruised or unappealing fruit and vegetables could be used for precut fruit and vegetables

1 1

SELF-REFLECTION

We have a product-level sales-based forecasting system

2 2

Our forecast incorporates seasonal lifts, holidays, and local events (e.g., conventions, beach or ski openings)

3 3 Our forecast incorporates SNAP activation days

4 4

5 5

We have a production planner and recipe management system for made-in-store products

We use data to help us decide what products to offer

6 6

We have a good understanding of where we are seeing shrink and its root cause

7 7 We have recovery programs in place for all fresh products

8 8 We have systems in place to mitigate theft

1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7

RECEIVING, STOCKING, & SAFETY RECEIVING, STOCKING, & SAFETY

THOUGHT STARTERS

1 1

Do you have established receiving hours? Does your store have a well-defined receiving process that verifies all deliveries for accuracy?

2 2

How quickly do you turn over your inventory?

3 3

How do you manage product once it’s on your shelves?

4 4 How does your store ensure your food is safe?

5 5 Does your store have the software tools necessary to be successful?

RECEIVING, STOCKING, AND SAFETY PRACTICES

Process

RECEIVING

INVENTORY LEVELS

• Prioritize refrigerated and frozen

• Pallet audits

SHELF STOCKING

STORE WALKS

• Checks once a day

• Established replenishment priority plan

• Done throughout the morning

• Center store planograms consistent across the organization

• Incorporate safety stock

• Fresh walks to remove out-of-date and unappealing products

• Periodic center store walks

FOOD SAFETY & REGULATIONS

• Adherence to all federal and local regulations

• Dedicated staff receiving product during early mornings or late venings

• Case audits

• Multiple checks throughout the day

• Plans in place to prepare for peak traffic times

• Completed in the early hours

• Fresh departments are ready by 10am

• Consistent planograms across fresh and center store

• Fresh walks completed before opening and afternoon peak

• Product markdowns for near-dated items

• Dedicated receiving schedule

• Truck to shelf

• Product audits

• Continuous restocking throughout the day

• Truck to shelf

• Monitored by shelf cameras

• Center store completed during shopper hours

• Fresh departments are ready by 8am

• Store leeway to change space allocation

• Fresh walks multiple times per day

• Category schedule for center store walks

• Allergen signs in the fresh department and on all made-in-store labels

• Automated temperature checks and notifications when out of spec

CASE STUDY

RECEIVING PROGRAMS

Focusing on optimal receiving programs and working with your vendors will help both your store and your vendors operate more efficiently

Best Practices

• Formal delivery schedules that match employee schedules

• Minimize driver wait times

• Audit delivery invoices and arrival time

– Count pallets, cases, product received

– Count products as the shelves are stocked

– Share these findings with vendors

• Focus on temperature-sensitive products

• Have contingency plans to deal with mispicks and vendor out-of-stocks

• Develop relationships with secondary vendors

• Direct store delivery vendors (DSD)

– Have DSD vendors check-out when done

– Access to POS data

– Payment terms (e.g., scan-based trading)

Making it work in practice at

Coke Merchandisers

Did you remember to:

Check/fill/face Wine and Spirits mixers

Check/fill/face Wine and Spirits coolers

Check/fill/face coolers by registers

Check/fill/face deli cooler

Check/fill/face your displays

Condense backstock pallets

Park U-boat in your bay

Check in/out with grocery manager/closer

Each of these tasks needs to be done every day.

There should be no more than one extra backstock pallet left in the hallway, unless you are waiting on someone to rack any pallets.

Coke Sales Rep

Did you remember to:

Check/order enough for ad/displays

Check/order enough single serves

Take care of credits

You should be checking in with the grocery manager for every order to ensure what’s needed is being ordered.

Credits need to be addressed once a week at a minimum.Failure to complete this checklist may result in refusal of orders and/or loss of display space. Thanks for your cooperation!

STOCKING AND SHELF MANAGEMENT

Understand your shoppers’ behaviors and stock to meet peak demand, with continued attention throughout the day to ensure presentation and availability

General Industry Best Practices

CASE STUDY

overnight

by 8am

MADE-IN-STORE (BREAKFAST)

MADE-IN-STORE (OTHER ITEMS)

by open

by 10am

Additional General Industry Best Practices

• Remove damaged or bruised items in a timely manner

• Rotate product based on ripeness or first-in-first-out (FIFO)

• Make a hot bar or salad bar available during lunch and dinner

• Stir bulk salads and deli case items to maintain freshness

• Remove all items from service cases when closed

RECEIVING, STOCKING & SAFETY

Making it work in practice at

• Using black backgrounds helps the product to stand out

• The false back wall gives the appearance of a full shelf without needing excess product

• This can be removed on days with higher sales volume

LEARNINGS: SHELF PLACEMENT

Best Practices

• High volume, priority products at eye level

• Premium products on the upper shelves

• Mid-tier products on the middle shelves

• Value and bulk products on the lower shelves

• Incorporate private label products next to their branded equivalent or as a brand block

– Store’s private label is placed next to premium national brands Carbone and Rao’s

• Allow flexible space for seasonal products and promotions

• For stores with multiple locations, planograms could be:

– Standardized across all stores

– Variable, which gives individual stores more leeway into space allocation based on sales

CASE STUDY

STORE WALKS

Breaking up store walks into hourly, daily, and weekly tasks will help ensure you have the freshest product available for your shoppers

HOURLY DAILY

• Restock as needed

• Check for cleanliness

• Restocking completed overnight

• Check for out-of-stocks at least 3 times per day

Center Store

Fresh and Made-in-Store

• Check for out-of-stocks and restock as needed

• Check for freshness

• Focus on high volume items such as rotisserie chickens

• Stir or mix bulk salads

• Markdown near-dated product before opening

• Pull out-of-date product and scan-out as shrink

• Rotate products

• Pull items from service case overnight

WEEKLY

• Develop weekly aisle schedule to rotate and remove out-of-dates

• Markdowns for neardated products

INVENTORY LEVELS

• Morning store walk is critical to assess needs and prioritize daily tasks

• Buy in bulk to reduce cost per item

• Monthly inventory

• Service case changes for weekends & weekdays

• Samples or demo stations

• Morning store walk is critical to assess needs and prioritize daily tasks

• Truck to shelf to ensure freshness

• Monthly inventory

FOOD SAFETY

Best Practices

Made-in-store products

• Teams should be aware of and have a copy of the FDA allergen labeling requirements

• Labels should be regularly updated based on changing requirements

– E.g., Sesame added as 9th major allergen as of January 1, 2023

USDA Food Safety and Inspection Service (FSIS)

• Record-keeping is required for all made-in-store ground beef

Temperature checks

• Hot food should be kept at or above 135°F, cold food at or below 41°F

• Temperatures should be continuously monitored and recorded; digital thermometers can send alerts when outside the desired threshold

Recalls

• Post recall notices in store in clearly visible locations

• Integrate recalls with recipe system to replace accordingly

• Collect shopper contact information and purchase information to send alerts post-purchase

CASE STUDIES

Allergen information at

• Placed on all prepared food, service and grab-and-go cases

• Shows the 9 major allergens required by the FDA

• QR code link to nutritional information

Recall notice at

• Recall noticed placed where the product would be

• Displays information about the recall and phone number if shoppers have questions

• Directs shopper to bring product back for refund

ORDERING, FORECASTING, AND INVENTORY MANAGEMENT SYSTEMS

Requirements

Basic requirements

• Demand forecasting, ordering, receiving and DSD support

• Inventory and shelf management

• Integration with POS

• Shrink and out of stock management

• Traceability and allergen support

Advanced features

• Computer-assisted or automated ordering

• Production planning and recipe management

• Automated temperature checks

• Markdowns and date management

Example Total Store Operating System

• Cloud-based platform with components that cover the entire store operation

• Total store inventory management and AI forecasting system

• Fresh management, production planning, and recipe system

• Smart markdowns and expiration date management

• Food labeling, traceability, and automated temperature checks

• Task management

Example Additional Providers

1 1 2 2 3 3

SELF-REFLECTION

We have dedicated staff to receive product

We audit all invoices from vendors

We have a process for auditing DSD vendors

4 4 7 7

We give our vendors proper lead time when ordering

6 6 5 5

We have processes for managing seasonal inventory

We regularly review FDA and USDA requirements

We have a process in place to notify shoppers of recalls

8 8

Our current inventory management system meets our store’s needs

1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7

DIGITAL TOOLS DIGITAL TOOLS

THOUGHT STARTERS

1

5 1 5

2 2

What digital tools are currently used by your staff?

How much of your staff’s time is spent on repetitive tasks (e.g., price tag changes)?

3 3 How tech savvy is your staff? Have they expressed interest in using more digital tools?

4 4

How open to technology and self-service is your shopper base?

Do you have a need for more advanced digital tools? Do you have a way to test such tools?

THE ROLE OF DIGITAL TOOLS

The role of automation is to help improve profit via activities such as capturing lost sales, increasing basket size, reducing waste, and making staff more efficient

• Despite growth in automation, it can still take ~2-5+ years to see a positive return, depending upon the technology

• Grocers are increasingly running tests to identify what technology and processes are right for their stores

‒ Be patient with tests: do not overestimate the short-term impact, it can take time to see the full effect of technology

• For some retailers, advanced technology may lead to inefficiencies or minimal benefits compared to the investment

Success of digital tools is dependent upon a strong operational foundation, as described in the previous chapters:

• My store is designed in an easy-to-navigate manner

• I use in-store signage for directions and promotions

• My staff is well-trained, open to new tools and processes

• My staff is ready for more engaging tasks vs repetitive tasks (tag changes)

• I have regular processes to check and update assortment

• I have processes to manage out-of-stocks and shrink

• I have a loss prevention team and monitoring system

• My stocking schedule is customized by department

• I have regular re-stocking walks and checks

EXAMPLES OF DIGITAL TOOLS

PRICING Process

• POS system and Excel

PRICE TAG CHANGES

• Manual tag changes

• POS system and Excel

SHELF MANAGEMENT

MESSAGING & SIGNAGE

THEFT MANAGEMENT

STORE NAVIGATION

SPECIALTY STATIONS CHECKOUT

• Scheduled aisle walks

• Base electronic shelf labels

• POS with dynamic pricing

• Advanced electronic shelf labels

• In-store fliers

• Signage

• Cameras

• Loss prevention team

• In-store handouts

• Directories

• Paper number queue

• Shelf cameras

• Inventory robots

• Cashier

• Monitors

• Tablets

• Auto-locking carts

• Cameras

• Digital Map

• App

• Digital queue

• Cashier

• Self-checkout kiosks

• Interactive screens

• Smart rails

• Auto-locking carts

• Entry / exit gates

• Biometric cameras

• AI chat

• Self-service kiosks

• “Scan and Go” (app, smart carts)

The “Best” technology may not be the right fit for you! Pilots to test different digital tools should be run to identify what technology is the best fit for your stores.

DYNAMIC PRICING

Dynamic pricing and promotion processes and systems can be used to improve sales and profit

FUNCTIONALITY

• Intermittent price changes

• Planned price tests

• Manually entered in POS

• Promo based on history and experience

PROCESS

• Staff managed

• Based on historic & projected selling

• Informed by outside data (e.g., competitor price checks)

• Real-time price changes

• Constant price tests

• Directly tied to POS

• Incorporate expiration, time on shelf

• Item and promo % recommendations

• Predicts basket add-ons

• Staff-set inputs

• AI-developed prices

• Based on historic data, forecasts, machine learning

• Incorporates competitor and market data1

BENEFITS

• More involved pricing development

• Low capital investment

EXAMPLE TOOLS

• Excel and similar analytic tools

• Optimized pricing

• Labor process savings

• Shrink reduction

Example Providers

ELECTRONIC SHELF LABELS (ESL)

ESL Functionality & Benefits

Linked to POS for real-time price updates

Customizable content, including QR codes

LED bulbs highlight items for pickup orders

Reduced labor of changing paper tags

Improved price accuracy on shelf vs checkout

Sustainable, with a 5-10 year battery life

Making it work in practice at

Example of screen features:1

Display item name and details (size, nutrition, SNAP info, etc.)

Regular and promo price visibility

LED to indicate items for picking; color options to differentiate orders

Red sale ribbon to highlight promotion

UPC for employee scanning, tied to POS and inventory systems

Product description and background, an alternative to pricing to educate shoppers

Not pictured: QR code tied to app / website for coupons, info, etc.

ESL Challenges

• ROI can range from 1.5 – 5 years dependent upon the model purchased

• Time and money investment required to replace batteries

• ROI dependent upon continued best practices

CASE STUDY

Electronic Shelf Labels for Pricing

Not just Independents: Walmart and other national retailers are introducing the technology

SHELF MONITORING TOOLS

Several monitoring options exist, each with a different level of employee and technology investment

Have

multiple

store walks a day as a defined employee

role

Manually check shelves for out-of-stocks, misplaced, or damaged items (see page 86)

Risks: employee time investment

Install smart shelfmonitoring cameras

Digital cameras monitor shelves, notify staff of out-of-stocks, misplaced or damaged items

Risks: investment, privacy – staff will need to be trained to explain cameras to shoppers

Rely on inventory checking robots

Robotic options include monitoring aisles for out-of-stocks, spills, and damage

Risks: investment, vandalism, interfere with shopper experience

TOOLS TO REDUCE THEFT

Multiple forms of theft protection should be implemented to reduce shoplifting

TOOL CAMERAS & MONITORS

FUNCTION

BENEFIT

• Monitor shopper behavior

• Alert shoppers of surveillance

• Locking entry and exit gates

• Alarms in gates to detect unpaid items

RISKS

• Visible shoplifting deterrent

• Low relative investment

• Reduced theft

• Shoplifting deterrent

• Organized flow of shoppers

• Does not actively prevent shoplifting

• Negative shopper experience

• Auto-locking wheels when crossing defined perimeter

• Can be installed on existing shopping carts

• Biometric Identifier Information (BII) stores shopper facial and vocal data

• Loss prevention teams use data to identify repeat shoplifters

• Reduce cart theft

• Reduce item theft

• Proven ROI

• Negative shopper experience: frustration when taking cart to car and it locks

• Reduced item theft

• Identify repeat offenders

• Future theft deterrent

• Investment

• Requires asset protection training

• Shopper privacy

Staff other than asset protection should never confront a shoplifter for safety reasons

SHOPPER POINT-OF-VIEW ON SELF-SERVICE OPTIONS

Consumers indicate a need for a frictionless shopping experience at key points in the shopping journey, though some interaction is still valued

Q: How much employee interaction do you prefer during the following in-store actions, or when would you prefer a self-service option?

Shoppers have commonly reported pain-points around browsing for items, checkout, and specialty stations that digital tools can address:

Difficult-to-find items

Lack of product information

Inconsistent shelf vs checkout pricing Long waits

STORE LAYOUT AND ITEM LOCATION TOOLS

Providing store layout and item locations can result in an easier shopping experience and a potential increase in purchases

TOOLS

EXAMPLES

INFORMATION SERVICES

• Item location

• Promo & product info (physical maps)

• Online map

• Store layout in Google Maps (free to use)

• Additional online features (see pg 118)

NATIONAL CHAIN

• Interactive

• Near-exact locations

• Tied to POS pricing

• Product recommendations

• Customer service

ADDRESSED CONCERNS

RISKS

• Difficult to update permanent signs

• Printed maps not sustainable

• App not matching instore information

• Privacy concerns

• Investment if hosted by a 3rd party

• Learning curve

• Privacy concerns

• Investment

Making it work in practice at NATIONAL CHAIN

Quin is an AI chat developed to enhance the shopper experience

Can provide by-item recommendations on criteria ranging from promotions to nutrition requirements

Learns to answer customized general questions

Interactive store mapping with item locations

Can build a shopping list from home with live prices

Clear signs with QR codes and instructions Shopper handouts to learn functionality

SELF-CHECKOUT

Offering a form of self-checkout has grown to be an expected option with shoppers. Depending upon traffic, multiple forms of self-checkout can have diminished ROI

48% of registers

Kiosks

• Self-scan and weigh

• Multiple forms of payment

55% of transactions

Smart Carts

• Items scanned entering the cart

• Digital payment built into cart

• Clip-on tablet or full cart

• Can include additional features1

Scan-and-go

• Mobile app or in-store scanner

• Scan items as added to basket

• Can include additional features1

53% increase in usage over 5 years

Just-walk-out

• Scan your palm, card or app to enter

• Gates sense items, charge the app or card on exit

Making it work in practice at

Traditional checkout

• Eight traditional checkout aisles

• Staffing and utilization vary on day, time, staff availability

Self-checkout

• Six self-checkout kiosks available

• Observed by a single employee

• Limit shopper and item allowances (no Instacart, gift cards)

Self-checkout functionality

Interactive touchscreen

Fresh scale & scanner

Loyalty program scanner

POS card reader

Receipt and baggage area

Clear signage

1 1 2 2 3 3 7 7 6 6 5 8 5 8 4 4

SELF-REFLECTION

We use digital tools or software where possible

Our teams have a solid foundation, as described in chapters 1-4, prior to the introduction of digital tools

Our teams do not spend excess time changing tags

We have a security system and loss prevention team

Our shoppers have expressed interest in self-service tools

We have a store diagram or map displayed

Lines and waits are not common at our checkout, deli, or other service stations

We have a form of self-checkout available

1 1

3 3 2 2 4 4 5 5 6 6 6 7 6 8

ADDITIONAL PROFIT DRIVERS THOUGHT STARTERS

ADDITIONAL PROFIT DRIVERS

1 1

Do you have a website or app? What functionality is available on it?

2 2

Do you offer prepared or premade meals or made-in-store products? How do you promote these to shoppers?

3 3 Does your store participate in any partnerships to offer additional services? Do you manage a separate store within the primary store?

4 4 How do you perceive the role of private label in your store? How do you merchandise your private label to support this desired role?

5 5 How do you merchandise your product to differentiate from competitors and appeal to your target shopper?

WEBSITE, APP AND ECOMMERCE

An online presence that enables eCommerce is an operational must

• Hours and locations

• Product info

• Hiring info

• Online applications

• Contact section

• News and events

• Digital mailers

• Digital coupons

• Loyalty signup

• Loyalty rewards

• Recipes

• Social media links

• Blog & About Us section

• Health & wellness

• Store selection

• Limited product availability

• Linked to POS

• Full product availability

• Pickup or delivery

• Shopping lists

• Targeted promo

• Purchase history

• Online exclusives

• Shopper reviews

• Additional service (e.g., catering, meal ordering)

App Functionality

• Limited functionality vs. website

• Should include a purchase platform

• Content catering to supporting shoppers while in the store

• Item lookups (price, location, nutrition)

• Shopping lists

• Recipes to expand basket

• Shopper reviews

• Online ordering Website content and functionality should be prioritized over the app

LEARNING: ONLINE EXPERIENCE CASE STUDY

Making it work in practice at

Mobile App

Home Menu

eCommerce Departments

Each product category has a landing page with a clear directory of services and functions

The app contains fewer functions than the website to avoid clutter

Shoppers can shop on each platform, with matching departments and pricing

PREPARED

MEAL OFFERINGS

A prepared foods program should be included as a staple offering, presenting an opportunity to increase basket size with higher profit, potentially shrink reducing, products

Industry Stats from FMI

DELI PREPARED MEAL MARKET TYPES OF MEALS

Sales $ +9% vs. 2021, +19% vs. 2019

89% of shoppers purchase prepared meals from deli at least once a month

Grab-and-go

• Meal replacement for immediate consumption

STORE AND SHOPPER BENEFITS

e.g., sandwiches, premixed salads, fresh juices Store

• Understanding labor, ingredient, and packaging costs allow for price and profitability flexibility

• Can charge a premium for a higher profit while beating restaurant prices

Ready-to-eat

• Meals that can be taken home, require no additional cooking

e.g., rotisserie chicken, pre-cut and mixed fruit and vegetables

Ready-to-cook

69% of purchases made prior to 5pm

• Prepared and seasoned meals or bundles that require a few simple steps or basic cooking

e.g., meat and vegetable skewers, frozen pizza, pasta, side dishes

• Opportunity to market store brand

• ~1/3 of purchases are impulse buys

• Recovery programs reduce shrink

• Can repurpose underperforming space Shopper

• High perceived value

• Healthy options

• Satisfy craving

• Convenient alternative

CASE STUDY

Making it work in practice at

Ready-to-eat and ready-to-cook meals

• Variety of ready-to-cook, ready-to-eat meals and meals that can be reheated

• Complete stocking by 10am to prepare for lunch rush and peak traffic

Heated, prepared meals

• Hot meals available in clear display in the middle of the aisle

• Stock adjusted throughout the day depending on hourly demand

Customized meal prep

• In-store meal service of cutting and prepping vegetables

• Clear signage available in the fresh section advertising “fresh cut”

CATERING & EVENT SERVICES

CASE STUDY

Prepared meals and specialty stations could be expanded to offer catering as a service. Catering offerings are often higher profitability products, while additional service fees can offset added costs.

• Develop standard catering menu

• Bulk order recipes

• Delivery team

• Staff for live events

• Create a selection of “designer” items

• Highlight event types serviced

• Staff for live events

• Create standardized bouquet menu

• Highlight event types serviced

• Catering services

• Food trucks

• Wedding, event cakes

• Custom cakes

• Wedding, event flowers

• Custom bouquets

Deli & Prepared foods

Bakery

Floral

Making it work in practice at

Catering offerings include food platters, boxed lunches, cakes, gift boxes, floral

Provide a detailed brochure with available events, products, serving sizes, and prices

Catering and food production coordinated with food cart

EXTRA SERVICES FOR SHOPPER CONVENIENCE

A store-within-a-store or standalone kiosks can turn under-utilized space into a profit driver via new shoppers, basket building, partnership sales, and lease revenue

• Inside or connected to the store

• Potential signage at storefront

• Internally or externally managed

• Coordinated management, hours & ordering

• Additional staff and competencies

• Lease space to a third party

• Installations in under-utilized spaces

‒ Outside the store

‒ Front of the store ‒ Behind cash registers

• Acquired via renting, leasing, partnerships

• Café

• Bar

• Local business

• Restaurant

• Pharmacy

• Financial services

• Propane stations

• Amazon lockers

• Recycling services

• Lottery games

• Coin counting

• Vending machines

Example Providers Examples Examples Example Providers

Making it work in practice at

Store within a store

• In-store bar with a selection of wine and beer

• Rotating beer and wine offering for repeat visits

• Highlight local restaurants that buy store wine

• Makes the store an experience destination

• Potential increased basket size post-bar

Standalone Kiosks

• Outside to attract shoppers

• Visible from street

• Clear pricing

• Sustainable store perception

• Receive store credit for use

• ATM enables larger baskets

STUDY

Making it work in practice at

• At the exit for impulse purchases

• Game calendar for return visits

PRIVATE BRAND ON-SHELF STRATEGIES

Private Brand Fundamentals

• Private brands always offer the highest value at each price tier…

• …but it is not the lowest price in all cases – e.g., can sit in between national brand at the “better” price point…

• …and has a wider assortment of flavors/variety in the national brand equivalent (NBE) tier, offering more choice where it matters the most

• See page 45 of V1 Grocer’s Guide for more information on positioning of Private brand

Private Label Category Roles And Principles

• Strategy should be developed at a store and category level

• Category-specific strategies should be developed with the goal of building overall brand awareness and driving total brand sales

• Private label may take a reduced profit % in select key categories to support awareness and sales in other higher profit categories

Define how a private label will be positioned in the market

Designate private label roles by category

Develop category-specific plans to execute private label goals

be the top brand of a category

have a mid-large brand presence with competitive pricing

complement the national brand assortment as a profit driver

CREATE PRIVATE BRAND ROLES BY CATEGORY

A private brand should play a different role across categories, with the goal of growing the overall brand

brand category roles and shelf placement

to National Brand

Directly compete with National Brand (NB) on like items

• Placed next to National Brand equivalent (NBE)

• Price leader against National Brand

• Profit % adjusted to allow pricing against National Brand

• Direct “compare and save” tags

e.g., Frozen vegetables

Expand the assortment, not in direct competition with National Brand

• Differentiate on quality and price (premium or opening price point alternative)

• Assortment gap filler

• Profit generator

e.g., Hot sauce

Highlight the brand as the standout choice in the category

• Priority shelf placement (eye level)

• Price leader against National Brand

• Profit % adjusted to allow pricing against National Brand

• Full assortment offering

e.g., Cheese

Expand the assortment and compete with National Brand

• Premium or niche items

• Large enough assortment presence to garner attention

• Limited direct price comparisons for NBE

• Profit generator

e.g., Soup

Win Play Brand Block

SELECT MERCHANDISING PRINCIPLES AND TIPS

Merchandising can make or break a shopping experience, but when done correctly it can result in additional purchases and a higher profit product mix

Cross merchandise products from different departments to promote higher-profit items

Activity and function-related products or other unrelated products next to each other

Create multipacks and buy-one-get-one deals to move slow-moving items

Understand how colors impact shoppers, use them to create engaging displays to attract shoppers

e.g., warm and vibrant colors attract attention, cool colors are calming

Place products children are likely to ask parents to buy on lower shelves at their eye-level

Periodically rotate or update displays to highlight new items for shoppers to buy

Provide shoppers with recipes and ideas for how to prepare your products to encourage purchase of higher-profit fresh products 1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7 9 9 10 10

Utilize vertical displays: place in aisle or hanging racks to draw the eye up the shelf or create new space

Use shelf talkers: small signs or tags on the shelf to promote items, draw attention, market items, or highlight local producers

Cross-business promotions: partner with local businesses for promotions to generate new sales e.g., gas rewards to add value, draw in shoppers, encourage larger baskets

Offer preparation services to encourage shoppers to buy and try more fresh produce

3 6 6 1 1 4 4 7 7 8 8 9 9 REGIONAL CHAIN

1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7

SELF-REFLECTION

We have an easy-to-use website and/or app

Shoppers can shop online from our website

We offer a range or grab-and-go, ready-to-eat, and ready-to-cook meals

We offer catering and/or floral services

We have repurposed under-utilized space with a kiosk or standalone store

We offer additional services to meet shopper demand

We have a private label strategy that’s clear to our shoppers and being executed throughout the store

We regularly evaluate and evolve our merchandising

1 1 2 2 3 3 6 6 5 5 8 8 4 4 7 7

IN CONCLUSION…

Feel free to pick and choose the information that is most helpful from this Independent Grocer’s Guide Vol 2.

Whether you’ve learned something new or found information that reinforced what you already knew, we hope that it helps you build your legacy, loyalty, and competitive edge over time.

Ultimately, we wish you success as you continue to connect food (and more) to the communities you serve.

Created by Sponsored by