Progressive Grocer - December 2016 by ensembleiq

People Power

2017 NRF Show to concentrate on consumers Page 22

Built to Last

Highlights of the year’s top store design trends Page 26

New Rules for a More Transparent Road

New Year, New Store

Growth strategies for center store, frozen, fresh Pages 38, 57, 62

As it awaits the impact of a major political shift in Washington, D.C., the food industry grapples with a heightened level of transparency requirements Page 33

December 2016 • Volume 95 Number 12 $10 • www.progressivegrocer.com

ood t get left

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Contents

12.16

Volume 95, Issue 12

COVER STORY

Food Safety: New Rules for a More Transparent Road As it awaits the impact of a major political shift in Washington, D.C., the food industry grapples with a heightened level of transparency requirements.

22 / NRF Show Preview Power to the People NRF’s 2017 show will put spotlight on customercentric retailing.

Beverage December 2016

• www.progressivegrocer.com

Supplement

table of ContentS 44 49 51 52 55

Drink to Health Grass is Greener Front End Sips Tap into Flavor Crafting CSDs

24 / PG’s Grocerant Summit Be Prepared Experts offer guidance for retail foodservice at second annual conference. 26 / Store Design Review Designing Experience New stores need to engage and connect with shoppers. 38 / Growth Strategies Alive and Kicking Center store isn’t dead – but it does need a creative boost.

62 / Growth Strategies Fresh Foresight How can grocers ensure continued success in the perimeter categories? 67 / Produce Cross-promotional Power Build bigger baskets with produce pairings.

74 / Produce Category Spotlight

Onions and Garlic Galore These bulbs add zest to clever cross-promotions.

43 / Beverage Supplement Drink to Health Focus on function has retailers rethinking assortment, merchandising. 57 / Growth Strategies Chill Will Here are five ways retailers can boost their frozen sales in 2017.

74 December 2016 | progressivegrocer.com |

Contents

12.16

570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com SVP, Brand Director 201-855-7621

76 / Health,

Beauty & Wellness

Best Face Forward Grocers must narrow assortments, offer value and merchandise creatively to win in this category. 82 / Cleaning Supplies Brush Up on Cleaning Balancing the tried and true with the innovative is key to success in the category.

86 / Technology Big Data: In Search of Benefits Making insights actionable is key. 89 / Equipment & Design Getting Greener Retailers and suppliers are taking sustainability seriously.

8 / Editor’s Note Empty Promises 12 / PG Pulse 14 / In-store Events

Calendar

February 2017 16 / Nielsen’s Shelf

Stoppers/Spotlight

Baking Supplies/ Chocolate Chips and Morsels

18 / Mintel Global New Products

Diapers

20 / All’s Wellness Food Safety From Store to Home 94 / What’s Next Editors’ Picks for Innovative Products 98 / The Last Word Bond of Brillance

| Progressive Grocer | December 2016

Jeff Friedman jfriedman@ensembleiq.com

EDITORIAL Editorial Director Joan Driggs 224-632-8211 jdriggs@ensembleiq.com Chief Content Editor Meg Major 724-453-3545 mmajor@ensembleiq.com Editor-in-Chief James Dudlicek 224-632-8238 jdudlicek@ensembleiq.com Managing Editor Bridget Goldschmidt 201-855-7603 bgoldschmidt@ensembleiq.com Senior Editor Randy Hofbauer 224-632-8240 rhofbauer@ensembleiq.com Senior Editor Katie Martin 224-632-8172 kmartin@ensembleiq.com Senior Editor Anna Wolfe 207-773-1154 awolfe@ensembleiq.com Technology Editor John Karolefski 440-582-1889 jkarolefski@ensembleiq.com Art Director Bill Antkowiak bantkowiak@ensembleiq.com Contributing Editors Molly Hembree, Bob Ingram, Barbara Sax and Jennifer Strailey ADVERTISING SALES & BUSINESS Associate Brand Director Janet Blaney (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) jblaney@ensembleiq.com 630-364-1601 Midwest Marketing Manager John Huff 224-632-8174 jhuff@ensembleiq.com Eastern Marketing Manager Maggie Kaeppel 630-364-2150 • Mobile: 708-565-5350 mkaeppel@ensembleiq.com Western Regional Marketing Manager Rick Neigher (CA, OR, WA) rneigher@ensembleiq.com 818-597-9029 Northeast Marketing Manager Mike Shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@ensembleiq.com Account Executive/ Classified Advertising Terry Kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@ensembleiq.com Advertising/Production Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@ensembleiq.com Classified Production Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com

EvEnts • MarkEting • Digital • rEsEarch • circulation VP/Custom Media Division Pierce Hollingsworth 224-632-8229 phollingsworth@ensembleiq.com Production Manager Anngail Norris VP, Marketing & Communications Bruce Hendrickson 224-632-8214 bhendrickson@ensembleiq.com Director of Events Maureen Macke 773-992-4413 mmacke@ensembleiq.com Director of Market Research Debra Chanil 201-855-7605 dchanil@ensembleiq.com Audience Development Manager Shelly Patton 215-301-0593 spatton@ensembleiq.com List Rental The Information Refinery 800-529-9020 Brian Clotworthy Subscriber Services/Single-copy Purchases 978-671-0449 or email at EnsembleIQ@e-circ.net CORPORATE OFFICERS Executive Chairman Alan Glass aglass@ensembleiq.com President & CEO Peter Hoyt phoyt@ensembleiq.com Chief Customer Officer Ned Bardic nbardic@ensembleiq.com Chief Digital Officer Joel Hughes jhughes@ensembleiq.com COO and President of Richard Rivera Information Services rrivera@ensembleiq.com Chief Financial Officer Chris Stark cstark@ensembleiq.com

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Note By Jim Dudlicek

Empty Promises

A retailer’s economic strategy shouldn’t conflict with the best interests of the community.

r ogressive Grocer covers issues impacting our industry all across the country, and occasionally one of those issues hits home. Captive leases aren’t a new or localized concept; retailers have been using them for years to keep competitors off their turf, often to public outcry, sometimes provoking legal challenges. Where I live, in Chicago’s northwest suburbs, several communities are trying to get a string of vacant supermarkets occupied with new operators, but captive leases are making these efforts difficult. Community outreach is a key component of retailing in this day and age. Faced with fierce competition from multiple channels, traditional grocers have found it to their advantage to partner with community organizations; donate money, product and volunteer hours; and otherwise make their presence known in the neighborhoods where their shoppers live and work. But captive leases can put a retailer at odds with the best interests of its community. Especially during the holiday season, as retailers boast about their philanthropy, such efforts ring hollow in the face of a captive-lease scenario that forces storefronts to sit vacant, to the consternation of local governments eager to fill revenue-generating retail space, and residents seeking more convenient shopping venues. In my neighborhood, an independent chain grocer recently purchased a shopping center anchored by one of these vacant supermarkets, only to discover

Jim Dudlicek

Editor-in-Chief jdudlicek@ensembleiq.com Twitter @jimdudlicek

| Progressive Grocer | Ahead of What’s Next | December 2016

that the former occupant’s current parent company (which inherited the lease via merger) had exercised its option to extend its lease for five years at the eleventh hour before the deal closed, effectively killing plans for a new store. One community leader told local press that the move “upset a lot of our residents, as well as business owners. It was extremely frustrating.” The former operator denies that it’s thwarting competition, telling local press that it aims to work with towns to fill the spaces, because “it’s extremely important to us that we keep communities vibrant.” But it’s hard not to think that thwarting competition is the intent, when this retailer still operates three other grocery stores within a 3-mile radius of the vacant site. Last month, leaders from nearly a dozen Chicago suburbs met to express their concerns over the captive leases. One town’s mayor told a local newspaper that “the communities are not being put first. … We need to see some participation,” while another said, “So many of our residents do not realize that leases are being paid on these sites. They assume they are vacant because there is a lack of interest, but in reality they’re empty on purpose.” I’m all for private companies exercising legal options to protect their interests. But maneuvers like a late-hour lease extension to prevent a new owner from opening a grocery store ignore the greater good of the community. Retailers that want to prove their commitment to the community should stop playing real estate games. PG

Correction In our Category Captains Awards coverage in the November 2016 issue, we incorrectly stated the name of Duda Farm Fresh Foods. Our apologies to the winner of our Produce-Celery category.

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What’s trending on progressivegrocer.com …

Anne Dament’s abrupt mid-October departure from her role as Target’s SVP of grocery nabbed the top spot on progressivegrocer.com’s digital hit parade during the Oct. 15 –Nov. 15 timeframe, followed by Safeway’s acquisition of storied San Francisco indie grocer Andronico’s. Giant Eagle’s move to reduce its corporate employee roster by 1 percent, in tandem with streamlining its supply chain, factored as the third most widely read story on our website during the 30-day period.

Anne Dament Leaving Target Giant Eagle Offers Buyouts to 1% of Corporate Workers bit.ly/2eNH2gr

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Safeway Acquires Andronico’s bit.ly/2g3zsxL

The Fresh Market to Debut New Shopping Experience bit.ly/2eyNoNj

Kroger Reconsidering Drug Store Purchase? bit.ly/2fbu9vc

Stater Bros. Chair Jack Brown Dies at 78 bit.ly/2g5gGV2

| Progressive Grocer | Ahead of What’s Next | December 2016

Walmart, Kroger in Virtual Tie for Top Retailer: Kantar PoweRanking bit.ly/2g2s02s

WHERE HAVE ALL THE BABIES GONE?

59.8 births per 1,000 women.

Thatâ&#x20AC;&#x2122;s the lowest birth rate in U.S. history. How will you adjust your baby sales strategy?

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and

Februay 2017 is... American Heart Month Black History Month National Chocolate Lovers Month National Cherry Month National Snack Foods Month

National Dark Chocolate Day

National Tater Tot Day

Celebrate African Heritage & Health Week by asking customers to share recipes on your Facebook page.

Super Bowl LI. Make sure you’re well stocked for lastminute shoppers. World Nutella Day.

Abraham Lincoln’s birthday (1809)

Feature your staff’s favorite snacks on social media for National Snack Foods Month.

National Fettuccine Alfredo Day

National Potato Lovers Day. Set up a Hasselback potato demo.

Groundhog Day

Promote Mardi Gras (Feb. 28) with king cakes in the bakery and po’boys in the deli.

National Carrot Cake Day. Offer carrot cake coupons on your Twitter feed.

National Have a Brownie Day

National Stuffed Mushroom Day

Make sure your Valentine’s Day displays are suitably inviting.

National Bagels and Lox Day

Celebrate National Tortellini Day as part of National Italian Food Day.

Valentine’s Day. Have chocolates, cards and champagne ready for the inevitable procrastinators.

Confirm your travel plans for Natural Products Expo West.

Promote National Almond Day on your Facebook page.

Offer coffee samples to celebrate National Café au Lait Day.

National Drink Wine Day. Crosspromote wine with imported cheese in the deli.

National PB&J Day

ECRM Candy Planning begins in Las Vegas and continues through Feb. 22.

National Pistachio Day. Offer shelled and in-shell varieties, along with recipe ideas for entrées and treats.

Decorate with lots of red, white and blue. It’s Presidents Day and Washington’s Birthday (observed).

National Sticky Bun Day. Cross-promote frozen bread dough, brown sugar, pecans and butter.

National Muffin Day. Offer coupons for these perennial favorites.

National Biscuits and Gravy Day

National Kahlua Day. Share recipes incorporating the liqueur on your Pinterest page.

It’s fitting that this is National Cherry Pie Day, since it’s also George Washington’s actual birthday (1732).

Promote National Chocolate Soufflé Day on Twitter.

| Progressive Grocer | Ahead of What’s Next | December 2016

National Banana Bread Day National Chili Day. Have a staff contest and pick the best recipe.

Set up a class to make Tex-Mex migas in honor of National Tortilla Chip Day.

Email your calendar submissions to

National Clam Chowder Day. Sample New England, Manhattan and Rhode Island styles. Don’t forget the oyster crackers.

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Market Intelligence By The Numbers

Shelf Stoppers

Baking Supplies

What Types of products are americans purchasing online?

ToTal baking supply sales reached $1.5 billion in The pasT year (52 weeks ending Oct. 1, 2016)

Top 5 baking supply categories $4,500,000,000 4,000,000,000 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000

20%

500,000,000 0 52 Wks - W/e 10/01/16 baking chips

52 Wks - W/e 10/03/15

baking chocolaTe

52 Wks - W/e 10/04/14 frosTing

52 Wks - W/e 10/05/13

baking poWder/soda

52 Wks - W/e 10/06/12

purchase snacks

coconuT

“baking is as american a tradition as any, and with $1.5 billion in annual sales over the past five years, it remains a substantial business. but how and what we’re baking with is changing. While frosting has seen a nearly 25 percent erosion of the sales delivered five years ago, consumers spend more money on baking chocolates every year, growing that category by 11 percent in those same five years. “additionally, alongside snacks and beverages, baking products are some of the foods americans say they’re most likely to buy online. despite small single digits of cpg sales happening online today, 12 percent of americans say they’re purchasing baking products online. “baking also remains a truly social experience for the whole family. in fact, younger bustling families spend 49 percent more than their fair share on baking supplies. still, there remains an opportunity to package baking supplies to appeal to single-member households, who underindex on consumption of baking supplies by 42 percent.”

17%

purchase nonalcoholic beverages

—nielsen Vp consumer insights Jordan rost Source: nielsen

Spotlight on Chocolate Chips and Morsels consumers of chocolaTe chips and morsels are mosT likely To purchase:

77.6% breakfast food

81.5% cottage cheese, sour cream and Toppings

78.4% desserts, gelatins and syrups

Category breakfast food cottage cheese, sour cream and Toppings desserts, gelatins and syrups baking supplies

16%

purchase dry packaged foods

87.2% baking supplies

Index 118 116 116 115

| Progressive Grocer | Ahead of What’s Next | December 2016

12%

purchase baking products Source: The harris poll #48, June 2016, nielsen

Mintel Global New Products Database Category Insights For more information, visit www.mintel.com or call 800-932-0400.

Diapers Market Overview Low birth rates, early potty training and a switch to cheaper products from discounters are contributing to slower diaper category growth in developed countries such as the United States. 70 percent of U.S. parents with children age 3 and under have bought disposable diapers for their child, and 35 percent have purchased disposable training pants. key issues Since 80 percent of U.S. parents with children under 3 stock up on diapers when theyâ&#x20AC;&#x2122;re on sale, 74 percent are persuaded by coupons or discounts to try a different diaper brand, and 36 percent buy whatever diapers are the cheapest, branded players must address competition from discounters and cheaper diaper brands.

Dads remain an untapped target group in marketing.

With 37 percent of U.S. parents interested in, and willing to pay more for, disposable diapers that are more ecofriendly, such product launches are ripe for expansion.

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | December 2016

Brands can tempt consumers into spending more by developing diapers with smarttechnology features, products impregnated with lotions to soothe skin, and fast homedelivery subscription services.

Marketing and advertising that speak positively about the importance of dads in child rearing/ bonding will resonate with men, as will brands that offer support and tips on raising a baby. Natural/eco-friendly innovations that strongly market skinfriendly and nonallergenic claims can appeal to consumers and help address competition from cloth diapers.

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All’s By Molly Hembree

Food Safety From Store to Home Ensure that your shoppers stay healthy.

he Centers for Disease Control and Prevention (CDC) estimates that about 48 million people each year become sick from a foodborne illness — that’s about 15 percent of us. It’s time for supermarkets to offer up not only tasty, convenient and affordable food, but also products that promote health and safety.

Clean A desirable consumer experience at the store naturally includes, along with tidy vestibules, sparkling floors, hygienic bathrooms, clear aisles and orderly registers, safe, “clean” products. Supermarkets should safeguard stock by using proper rotation techniques such as FIFO, or “first in, first out,” ensuring that products are always within date. It’s also the retailer’s responsibility to confirm that goods across the store are unadulterated and pass through as few hands as possible before reaching customers’ carts. An event to promote in stores: the first week of December is National Handwashing Awareness Week, which reminds us to wash hands with soap and water for 20 seconds when we handle food. Separate Many perishable groceries include animalbased ingredients such as dairy, eggs, meat, poultry and fish, which are responsible for a larger share of potential foodborne pathogens in the food supply. The rule of thumb in exposing these perishables, as well as several plant-based foods such as nut milks, fresh/frozen produce, meat alternatives, etc., to the “danger zone” — 40°F to 140°F — is a maximum of two hours. Also, at the store or in the home kitchen, keep cutting boards and utensils separate when prepping raw animal products versus plant foods, to control cross-contamination. Cook When consumers are preparing food at home, they may think food is ready to eat based on appearance. Not so fast — food must be cooked to a safe internal temperature, which varies between products, from 145°F for whole beef, pork, veal, lamb, fish and shellfish, to 165°F for leftovers, poultry and casseroles.

Chill It’s recommended to chill foods in a shallow container in a refrigerator below 40 degrees Fahrenheit or to freeze them below 32°F. This will halt growth of active foodborne pathogens. High acidity, low moisture and low oxygen also prevent the growth of harmful microorganisms. In general, most meat, poultry and fish have a shelf life of one to three days, while dairy, fruits and vegetables keep for about a week. Action Steps According to the International Food Information Council Foundation (IFIC) Food & Health Survey 2015, six out of 10 Americans are confident in the safety of the U.S. food supply. Unfortunately, the study reports that only 11 percent of people trust food companies or manufacturers the most to provide accurate information about food safety, considerably fewer than those who trust friends or family (29 percent) or health bloggers (24 percent) to do so. This data should be a catalyst in thinking creatively about how not only to be a wellness destination related to your banner’s range of products, pharmacy options or dietitian services, but also in regard to food safety. Could your delicatessen, produce or seafood counter more prominently display safe internal cooking temperatures? How about launching a local food safety campaign? Could your banner improve its food recall procedures? Perhaps all store associates, from managers to clerks to cashiers, could receive training toward food safety certification. Check out trustworthy sources, including Fight Bac!, FoodSafety.gov, AskKaren.gov, FMI The Food Keeper, or the Food Safety & Inspection Service of USDA, for more insights to help improve your store’s food safety profile. PG Molly Hembree, RD, LD, is a registered dietitian coordinator for The Little Clinic and Kroger.

| Progressive Grocer | Ahead of What’s Next | December 2016

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Feature

Industry Events

Power to the People NRF’s 2017 show will put spotlight on customer-centric retailing. By Randy Hofbauer

with, the ever-changing consumer population. This is an especially huge issue as grocers turn their focus from products and stores to consumers themselves — a shift that’s anticipated to be a huge topic in presentations, on the show floor and elsewhere during the show.

sHow Business This January’s Retail BiG show will offer a forum for a wide array of forwardthinking retail thought leaders.

s it does every year, the National Retail Federation’s (NRF) Retail’s BIG Show this January will offer a wide array of forward-thinking retail thought leaders to speak, exhibit and connect with in New York. Perhaps the leading figure addressing attendees at this year’s event will be visionary and entrepreneur Sir Richard Branson, founder of the London-based Virgin Group. Beginning as a retailer in the early 1970s, Branson, through a mail-order record business that evolved into Virgin Record stores, built a business empire that now comprises nearly 400 companies and boasts global brand revenues totaling $24 billion. Today, the Virgin Group is a leading international investment organization that has grown successful businesses in the telephone, travel and transportation, financial services, leisure and entertainment, and health-and-wellness sectors. Branson has even been knighted for his services to entrepreneurship. True, he’s not a grocer, but through his “Undying Brand Engagement in an Age of Continuous Disruption and Reinvention” presentation, Branson will address arguably the foremost topic relevant in grocery retail today: the importance of constantly working to achieve relevance to, and relationships

| Progressive Grocer | Ahead of What’s Next | December 2016

The Customer is Always Right Customer-centricity is an especially big deal in an era when consumers demand to know more than ever before about the products they purchase — and expect brands and the folks that sell them to deliver. Recent years have seen increasing interest in products with a stronger focus on health and wellness, safety, sustainability, ethical procurement, and more, making such attributes critical for new product success. Further, 94 percent of consumers value transparency about everything, from ingredients to sourcing and manufacturing processes, when purchasing items, according to Chicagobased technology company Label Insight. This means that companies need to make sure that they’re truly delivering the attributes consumers want, and that they’re open about it. And not just manufacturers: While, on average, they placed most responsibility on farmers and manufacturers, respondents to a 2015 survey from The Center for Food Integrity (CFI), of Kansas City, Mo., put 16 percent, 17 percent and 13 percent of responsibility on grocers for the impact of food on health, food safety and environmental impact, respectively. They also placed 15 percent and 11 percent of responsibility on them for human rights and animal well-being, respectively, and 16 percent on them for business ethics. Since 40 percent of consumers expected transparency efforts only to get better — and 11 percent fewer thought the opposite, compared with two years before the CFI research — grocers that aren’t currently on the ball with regard to transparency and authenticity need to work with their partners to better respond to consumer demands here. The best place to start is in what they actually do: CFI notes that consumers, in five of the six areas listed above, value a company’s practices over poli-

cies, performance or verification. Consumers want to know what companies are actually doing in these areas, as well as to have the ability to engage by asking questions via a company website. And they expect straight answers in a timely fashion. Transparency isn’t the only reason to be customer-centric today. Take omnichannel, for instance, an incredibly hot topic in a world where Amazon.com is planning physical grocery stores, while services such as Instacart and Shipt are allowing more grocers nationwide to move into home delivery. NRF even reported in 2015 that the nation’s largest retailers at the time — including such grocery sellers as Walmart, Target, Costco and Amazon. com, all in the top 10 — were continuing to grow because of their “keen ability to connect with their savvy customers,” and that omnichannel strategies such as click-and-collect, direct-to-consumer fulfillment, same-day shipping and mobile shopping have “transformed the shopping experience and boosted sales in both physical and e-commerce spaces.” Customer-centricity is critical to developing a successful omnichannel strategy.

Making the Move Many retailers today, including grocers, still don’t have such a business approach in place, however. For example, in the merchandising process, seven out of 10 retailers surveyed didn’t use in-depth consumer demographics and psychographics in the merchandise- and assortment-planning process, according to EKG Research, a division of Chicago-based EnsembleIQ and a Progressive Grocer sister company, in its 2015 “State of the Industry Research Series.” Meanwhile, the lack of customer insights in the merchandising process emerged as the foremost challenge for four in 10 retailers surveyed. Moving to a customer-centric model requires several steps: In the planning phase, grocers must move from channel-specific merchandise teams and plans to a unified merchandising team and integrated merchandising plans. In the assortment process, grocers must move from low variability of assortment across stores and low levels of personalization and localization to highly localized and personalized assortments based on micro customer segments. In the allocation and replenishment process, grocers need

to go from limited flexibility with fixed allocation for distribution centers, warehouses, stores and online to high flexibility and response time based on real-time allocation. In the pricing process, grocers need to change from pricing based largely on historical data and intuition to price optimization based on advanced analytics on data integrated from across enterprise and customer data sources. In the promotion process, grocers must go from heavy use of mass promotions and markdowns to personalized promotions integrated with overall merchandising plans and customer profiles.

Tear Down Those Walls It’s not enough to focus solely on consumer-focused operations for success in retail, of course; grocers also need to scrutinize operations on the inside. Far too much disconnect occurs within many grocers’ organizations due to barriers and distractions that hinder communication. On most occasions, silos encourage behaviors that are beneficial to their occupants, but often are not in the best interest of an overall business or its customers. In fact, according to the New York-based American Management Association (AMA), 83 percent of executives say their companies have silos, and 97 percent believe they have a negative effect. There are many ways to “break down” silo walls. In its April 2015 “Why Silos Damage Customer Experience” whitepaper, however, U.K.-based cloud service company NewVoiceMedia suggests three elementary ones that grocers should consider: Focus on the customer, as learning how they’re missing, meeting or exceeding their expectations is paramount to success. Freely share information across the enterprise and deliver it into the hands of those who impact the customer. This discourages information hoarding and improves collaboration. Create an atmosphere in which collaboration, teamwork, trust and open communication are encouraged. This can be done by developing cross-functional teams with people from all relevant points of view, levels, divisions and locations. Additionally, AMA suggests rewarding cooperative behavior, being straightforward in communications, encouraging innovation and even holding employee retreats. NRF’s 2017 Retail’s BIG Show will take place Jan. 15-17, 2017, at the Jacob K. Javits Convention Center in New York. PG

high flyer Sir richard Branson will tout consumercentricity.

December 2016 | progressivegrocer.com |

Industry Events

PG’s Grocerant Summit

Be Prepared

Experts offer guidance for retail foodservice at second annual conference.

ating trends, culinary leadership and great stories — these are among the necessary ingredients for a successful retail foodservice operation. This was the message driven home by keynote speakers at Progressive Grocer’s second annual Grocerant Summit, where experts from the retail, supplier and culinary communities shared key insights and best practices for supermarket operators looking to leverage consumers’ desire for fresh prepared foods. The two-day conference was held Oct. 25-26 at the Renaissance Schaumburg Hotel and Convention Center, near Chicago. Addressing attendees at the opening session, William Rosenzweig, dean and executive director of The Food Business School of the Culinary Institute of America, in Saint Helena, Calif., said retailers need to offer consumers the opportunity for greater discovery to amplify their culinary experience. Grocers must also understand how shopping has changed: Eating occasions are now split between meals

and snacks, with new eating occasions arising, like prebreakfast snacks and late-night meals. At many grocers, deli “is a four-letter word” in need of an immediate fix, contended Eric Le Blanc, director of marketing, deli and convenience stores for Springdale, Ark.-based Tyson Foods. Grocers need to educate customers on how to use prepared foods to create meal solutions, inspiring shoppers to execute new ideas in combination with products from throughout the store. Chefs Charlie Baggs and Steven Petusevsky discussed a culinary blueprint for a successful program, with Petusevsky noting that the menu sets the personality of the operation. The next Grocerant Summit is scheduled for Sept. 1920, 2017, in Schaumburg, Ill. PG More details about this year’s summit can be found in the latest issue of Progressive Grocer’s Grocerant Solutions and at progressivegrocer.com.

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Feature

2016 Store Design Review

DEsigning ExpEriEncE new stores need to engage and connect with shoppers.

very year, the Progressive Grocer team visits a lot of supermarkets all around the country, and few fail to impress us. It’s really a shame that we have room to share only a few visits with you, through our signature Store of the Month features. We see stores in urban, suburban and rural areas, big and small, serving many demographics, with products and services targeting consumers specific to those locations. The common thread running through all of them: a laser focus on delivering the greatest possible shopping experience, from warm, well-lit surroundings to cozy niches in which to enjoy fresh prepared foods. “Today’s most successful concepts drive customer experience into every aspect of the store and provide associateconsumer interaction touchpoints,” says Tom Henken, VP and director of design for Tampa, Fla.-based retail design

By Jim Dudlicek

firm API(+). “When planning, the most successful operators allow for impactful changes in merchandising and position strategically throughout the store.” Additionally, the best store designs “communicate strong points of difference from the competition, and own them,” Henken notes. “Another key is to balance the quality and value equation, and communicate well to the consumer.” Of course, grocers are looking to increase frequency of visits and maximize higher-margin sales per visit, driven by creating a want-versus-need connection with customers. “Successful grocery companies place high importance on high-impact, cost-effective, brand-driven environments that take advantage of labor and maintenance efficiencies,” Henken says. Another common goal among new stores, he adds, is to provide a compelling and sustainable prepared food program, minimizing shrink and wasteful labor while meeting

| Progressive Grocer | Ahead of What’s Next | December 2016

the shopper’s desire for quick meals. “Driven by urban environments and shopper habits, grocers are often seeking smaller, more efficient store layouts that allow for better real estate opportunities,” Henken says. What are the most common challenges encountered in new store designs? According to Henken, rising construction, maintenance and energy costs top the list, balanced against the need to keep prices competitive. “Too many people involved in the design decisionmaking process can drive longer timelines for developing a new concept and can result in a mediocre project that everyone is satisfied with, but no one is passionate about,” he contends. “A strong yet compact leadership decisionmaking team informed by the overall management team is best for developing impactful retail designs.” And with each new design, there’s a learning process.

“The best learnings are obtained through strategic interviews with employees and customers in a post-opening evaluation designed to gain insight into reality and perception, relative to the design intent,” Henken asserts. “Opportunities often present themselves during the construction of a new store prototype to make the store better without losing the design intent or operational effectiveness.” What factors are going to be most important in the design of future stores? “Customer experience will be the only differentiating factor when competing with Amazon, Walmart.com and the myriad other online options available to consumers,” Henken says. “Amazon has already realized this and is developing brick-and-mortar stores.” On the following pages, we revisit a few of our favorite Stores of the Month from the past year and talk to some of the folks behind the projects.

December 2016 | progressivegrocer.com |

Feature

2016 Store Design Review

Strack & Van Til 1515 U.S. Highway 41 Schererville, IN 46375

Grand opening: Aug. 5, 2015 Total square footage: 87,000 Selling area: 55,000 square feet SKUs: 37,000 Employees: 270 Checkouts: 13 Hours: Open 24 hours Designer: CIP (décor); internal layout design by Strack & Van Til executive management team, led by Director of Construction Russ Webber

PG: What key elements were crucial to this store design? Russ Weber, director of construction, Strack & Van Til (SVT): SVT introduced several new concepts into this store

PG: What learnings did you take away from the execution of this store? Weber: There is never time wasted when planning a project of

that involved a comprehensive review by our merchandising and operations teams working closely with design and construction to produce the intended results. Areas like the sweets shop, prepared foods department and island prep for fresh-squeezed juices, fresh sushi and specialty cheeses took a great deal of time to be certain the design, fixtures and equipment properly displayed the intended merchandise.

this nature and scope. While adjustments were needed along the way, a very high majority of the plan worked to its intended results. Working closely with merchandising and operations in the planning phase was key to a successful project.

PG: What goals did you wish to achieve with this store? Weber: The Schererville project’s intent was to introduce

many new merchandising initiatives that reflected what our customers were looking for and provided SVT with the means to measure the results for consideration in future projects. A clear emphasis on fresh and prepared foods, along with a well-thought-out flow from department to department, were goals that were achieved 100 percent.

PG: What factors are going to be most important in the design of future stores? Weber: SVT continues to measure the results from the

Schererville store and will use this knowledge gained in determining which elements to include in future projects. We are currently under construction of a major remodel to our Valparaiso, Ind., store and are including several of the Schererville design and merchandising elements in that project. The Valparaiso project will complete just before Christmas of this year.

PG: What challenges were encountered, and how did you address them? Weber: Several of the challenges involved executing the

project in an accelerated timeframe, inside of a store that was already very busy. Sourcing equipment and fixtures that were new to our company. Establishing an interior environment and décor that achieved our goals and also met certain budget thresholds. Our general contractor executed a well-thought-out phasing plan that allowed us to continue to properly serve our customers during an aggressive construction phase, and our equipment and décor vendors stepped up with creative solutions to equipment and décor/design needs.

| Progressive Grocer | Ahead of What’s Next | December 2016

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Feature

2016 Store Design Review

Winn-Dixie

10915 Baymeadows Road Jacksonville, FL 32256 Grand opening: Feb. 4, 2016 Total square footage: 45,956 Selling area: 31,736 square feet SKUs: More than 40,000, including 4,000 natural and organic items; 450 fresh produce items; 260 beer varieties, including 150 craft brews; 1,000 wines; 350 artisan cheeses; and more than 100 local products Employees: 107 Checkouts: 10, plus two kiosks Hours: 7 a.m.-11 p.m. daily Designer: Southeastern Grocers

PG: What goals did you wish to achieve with this store? McLeod: Our goals were to meet the needs of the customer

and concurrently differentiate ourselves through foods that aren’t readily available in other traditional grocery stores. Our customers are increasingly health-conscious and have a growing preference to consume food that is more naturally developed, without preservatives or additives. To that end, we provide options that satisfy those needs. PG: What challenges were encountered, and how did you address them? McLeod: This concept puts a particular focus upon freshness PG: What key elements were crucial to this store design? Ian McLeod, president/CEO, Southeastern Grocers: We

aspire to demonstrate our capability to step-change the brand and establish contemporary concepts, reflecting the expectations of today’s customer. Central to our philosophy is that upon the moment our customer enters the store, there should be a sense of arrival, highlighted by a sense of freshness and space. Our customers are engaged by a store that is bright and open, and has a strong emphasis on fresh food. That sense of space is equally important, in that our customers are able appreciate the scale of the store and see from the front to the back of the store the moment they walk in. The first impression in the store is complemented by an opening vision of stunning fresh produce, enhanced by the merchandising of fresh green vegetables on a bed of ice. Not only does the ice facilitate hydration of the product, but it’s also aesthetically appealing — that balance to form and function is key. With our Baymeadows store, we intended to create the first impression as a stark contrast to previous iterations of store design, color contrast, brightness, and impact of departmental signage. As one example, the 6-foot letters above each department help them stand out in a notable way to the customer from the moment they walk in.

and, as such, creates new operational opportunities, including potential increases in cost of labor if not managed carefully. We pay close attention to the economics of each concept and overall store productivity. We use the appropriate level of investment to match labor with customer service expectations. PG: What learnings did you take away from the execution of this store? McLeod: We learned the extent to which this innovative

and new concept would resonate with our customer. The feedback has been extremely positive, and we’ll continue to refine, learn and adapt as we land new concepts. We’re encouraged by how we’ve implemented this concept, and we look forward to implementing our learnings in other markets, as we’ve done in markets such as Tampa, Fla., and Gastonia, N.C., earlier this year. PG: What factors are going to be most important in the design of future stores? McLeod: It’s a very competitive environment across the United

States and internationally, and that dynamic requires a perpetual commitment to learning and listening. No retailer can afford to be complacent, and we have to continue to embrace new ideas and concepts to meet evolving customer needs.

| Progressive Grocer | Ahead of What’s Next | December 2016

Bloomington Hy-Vee 1403 N. Veterans Parkway Bloomington, IL 61704

Grand opening: March 10, 2015 Total square footage: 108,000 Number of Items: Nearly 55,000, including more than 9,200 specialty, 8,200 HealthMarket and 1,200 fresh produce SKUs (145 organic and 55 home-grown) Employees: 514 Checkouts: 15 Hours: Open 24 hours Designer: Hy-Vee Inc.

BLOOMINGTON TEAM Back row, from left: Carrie Elliot, product manager; Tim Schwier, assistant manager, store operations; Andrew Cochran, store director; Tony Hazell, manager, perishables; Lexi Arndt, HR manager; and Ashely Bigelow, restaurant manager. Front row, from left: Ryan Griffen, manager, general merchandise, and Roman Teig, produce manager.

PG: What key elements were crucial to this store design? Andrew Cochran, Bloomington Hy-Vee store director: Since

the building for this store was previously owned by another retailer and not entirely constructed from the ground up, we really had to make this our own space. When the Bloomington Hy-Vee opened, we also introduced several amenities that were new to the company at the time. The Bloomington Hy-Vee was the first store to implement several new sustainability features, including electric-vehicle-charging stations, off-grid parking lot lights that are powered by small wind turbines, and new concrete flooring. We also executed new wayfinding/signage throughout the store.

PG: What goals did you wish to achieve with this store? Cochran: As with all of our Hy-Vee locations, we really

wanted this store to be as community-centric as possible and provide offerings that our customers were asking for. For example, this store was one of the first stores to launch Aisles Online, where customers can order their groceries online and pick them up at the store or have Hy-Vee deliver them to their home. PG: What challenges were encountered, and how did you address them? Cochran: Since we were working with an existing store

structure, our design team had to decide what walls and structures to leave in place and which ones to remove during design and construction; however, the space allowed us to be creative in the development process. To this day, the Bloomington Hy-Vee remains our company’s largest store. PG: What learnings did you take away from the execution of this store? Cochran: With the large footprint of the store, there was

space to design and implement different amenities and areas that we didn’t have in our smaller stores. PG: What factors are going to be most important in the design of future stores? Cochran: It’s all about meeting customers’ needs. Different

communities may require different store sizes and formats, so our offerings can be tailored to meeting our customers’ needs in each area. PG December 2016 | progressivegrocer.com |

Food Safety

New Rules for a More Transparent Road As it awaits the impact of a major political shift in Washington, D.C., the food industry grapples with a heightened level of transparency requirements. By Bridget Goldschmidt

Cover Story

ith a new presidential administration headed to Washington, D.C., next month, augmented by Republican majorities in the House of Representatives and the Senate, the implications for the food industry are on the minds of many. The legislative and regulatory policies enacted in the past eight years — which include what is widely viewed as the most sweeping food safety updates since the 1950s, culminating in the Food Safety Modernization Act (FSMA) — have been significant. When campaigning for his new job, Presidentelect Donald J. Trump pledged to limit federal government regulations, which inherently involve two of the food industry’s most influential federal agencies — the U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA) — both of which play central oversight roles with regard to food safety, immigration, nutrition, federal agricultural policy and international trade. While it remains to be seen whether the incoming president will completely dismantle, maintain or only tweak the existing rules and regulations, no candidates for such key cabinet positions as agriculture secretary or FDA December 2016 | progressivegrocer.com |

Cover Story

Food Safety

commissioner had been announced at press time. Those two key roles are among more than 4,000 that the president-elect will be required to fill in relatively short order as part of a complex transition process. The industry will certainly be on the alert, with the only known being that the new commander-in-chief ’s pro-business/small-government stance is — in part — what carried him to victory. In the meantime, as retailers continue to refine and retool their food safety practices in the wake of the passage of FSMA, they’re running into issues related to compliance. “The legislation requirements in the FSMA include creating mandatory food safety plans, increased inspections, managing the new authorities of the FDA on rulemaking and recalls, and more,” notes Liz Gonzalez, marketing manager for SafetyCulture, a global technology provider with offices in the United Kingdom; Australia; Lenexa, Kan.;

Distribution of Safety Before food ever gets to grocery stores, it’s important that the integrity of the supply chain be preserved, so along with suppliers like those registered with the Safe Quality Food Program, distribution centers are also beefing up their food safety solutions. For instance. Commerce, Calif.-based Unified Grocers, the largest retailer-owned wholesale grocery cooperative in the western United States, supplying more than 2,900 retail locations, recently implemented the automated system of ReposiTrak, a division of the Park City Group, in Salt Lake City. The solution “will enable us to better manage our growing list of required documents to ensure that we remain in compliance and continue to provide safe food to our retailers and consumers, which is our top prior-

and San Francisco. “These pose a new operational requirement that can be time-consuming to implement but costly to public health, and with possible fines if not [implemented].”

Greater Transparency “The greatest challenge for retailers to ensure food safety lies in achieving total supply chain visibility all the way back to the farm or manufacturing plant,” asserts Angela Fernandez, VP of retail grocery and foodservice for Lawrenceville, N.J.-based GS1 US, leader of the GS1 US Retail Grocery Initiative and the Foodservice GS1 US Standards Initiative. “Product traceability enables stakeholders to locate potentially harmful products within the supply chain in the event of a recall or foodborne illness outbreak. To do this, they need standardized data they can retrieve quickly and accurately — or precisely, to those products that

ity,” says Unified VP of Procurement Mark Johnson. Additionally, Salt Lake City-based Associated Food Stores (AFS), which serves more than 400 independent retailers across eight Intermountain West states, has deployed two new systems from Boise, Idaho-based PakSense, the AutoSense Inbound and the AutoSense Real-Time logger, at its Farr West distribution center to help monitor temperature and ensure that products comply with food safety regulations during transport and storage. AutoSense InBound enables AFS to track the temperature of a pallet during transport from the vendor to the distribution center. Vendors purchase, program and set the chip on their pallets prior to shipping. When the pallet arrives at the distribution center, it syncs with AFS’ iBrite monitoring system and provides a temperature report, allowing the receiving team to determine whether the product is safe before it accepts the load. “A few months ago, we received a load of bananas that had basically cooked inside the trailer during transport,” recounts Terri Jensen, receiving manager at the distribution center, who, with her team, led the effort to bring the AutoSense trackers to the facility. “With the report from AutoSense Inbound, we were able to show that it wasn’t safe, and it saved us from losing the load.” The AutoSense Real-Time logger, meanwhile, helps monitor the temperature of products stored in trailers when the distribution is in overflow. The system monitors the temperature inside each trailer and sends an alert to the receiving team if any go out of range, enabling them to be quickly checked and adjusted before the product is compromised. “The AutoSense systems are basically insurance policies for us and our vendors,” explains Jensen. “They allow us to ensure the products we receive and send to our stores are safe, and prevent us from losing product.”

| Progressive Grocer | Ahead of What’s Next | December 2016

Meeting of the Minds truly need to be removed from shelves. “The problem,” she continues, “is that while most companies have some level of traceability in place, some are further along in implementing standardized traceability processes than others, or are using proprietary systems that are not interoperable. Outdated, proprietary or paper-based systems that are not based on standards can lead to time delays during a recall, when time and accuracy are essential.” To address this particular problem, retailers “should have all suppliers sharing complete, accurate product information in real time,” counsels Fernandez. “Retailers can make the food supply chain safer by working proactively with manufacturers and distributors to implement effective traceability programs. It’s time for stakeholders to evaluate the effectiveness of their current traceability programs, or accelerate their development if they have not yet been implemented.” She adds: “Retailers, as a community, also need to align their approach to product data requirements relative to traceability, so that suppliers won’t have to provide the same information in multiple ways to different customers — this collaboration can accelerate their ability to fulfill requests. According to Fernandez: “Implementing supply chain visibility shows a strong commitment to traceability, and that a company is staying vigilant instead of simply reacting to a recall. With enhanced traceability procedures, businesses can prepare for crisis situations and avoid the damage a widespread recall can inflict for months or even years afterward.”

As part of their commitment to food safety, Wegmans Food Markets and Wal-Mart Stores Inc. participated in a Nov. 15 Food Safety Modernization Act (FSMA)-focused food safety briefing in Washington, D.C., held by the Global Food Safety Initiative (GFSI), at which some 200 attendees, also including Coca-Cola, Amazon and Mondelez, as well as government representatives, discussed how GFSI could be employed by governments and the food industry for FSMA implementation, international business and public health. “Science guides industry and policymakers to the same place as we work towards our common objective of ensuring a safe food supply for consumers,” notes Mike Robach, chair of the board of directors of GFSI, which was established and is managed by the Paris-based Consumer Goods Forum. “Public-private dialogue and collaboration is paramount to achieving this goal.”

Under Audit Integral to transparency is an effective audit system, as Gonzalez acknowledges. “Where food retailers have increased exposure to compromised food safety is in the non-dry goods areas,” she points out. “Foods in these areas have shorter shelf lives and can often be harmful if not kept at proper temperatures, and similarly, if food is handled improperly, there is risk for contamination. What will facilitate the FSMA requirements will be internal auditing controls, where a food retailer can inspect their location on a regular schedule to ensure compliance and food safety precautions are met on an ongoing basis.” To address this need, FoodSafety offers iAuditor, which Gonzalez describes as “a mobile inspection checklist that can ensure proper protocols are taken to keep correct food temperature, storage and handling procedures. Inspections can be conducted throughout the store via mobile device, and audit results can be viewed in real time to take quick action on unsafe food conditions. With digital inspections, food retailers can capture images of unsafe food storage or handling, record temperatures of food, scan bar code information, and more.” The system has been implemented by Coles, one of the largest food retailers in Australia, allowing it to operate more efficiently in accordance with that country’s food safety laws, she notes. iAuditor is used across Coles’ 760 stores, enabling each location to conduct its

What will facilitate the FSMA requirements will be internal auditing controls, where a food retailer can inspect their location on a regular schedule to ensure compliance and food safety precautions are met on an ongoing basis.” —Liz Gonzalez, SafetyCulture

December 2016 | progressivegrocer.com |

Cover Story

The greatest challenge for retailers to ensure food safety lies in achieving total supply chain visibility all the way back to the farm or manufacturing plant.” —Angela Fernandez, GS1 US

Food Safety

own audits and thereby providing management visibility over all store operations. In a similar vein, Rochester, N.Y.-based Wegmans Food Markets recently upgraded to PAR Technology’s SureCheck Advantage Solution, a state-of-theart food safety and checklist system that captures required data in real time and synchronizes it to the SureCheck cloud for seamless, automated storage and recall of food safety records for management, maintenance, analytics and auditing, at all 95 of its stores. Before the grocer deployed New Hartford, N.Y.-based PAR’s SureCheck in November 2015, it was still using paper-and-pencil recording methods. “PAR’s SureCheck Advantage is a key tool in the day-to-day operation of Wegmans foodservice,” says Tom Adams, Wegmans’ food safety coordinator. “SureCheck Advantage has provided a 15 percent to 25 percent improvement in operational efficiency, and the cloud-based online reporting saves time and money from our original paper recording process.” Additionally, the Safe Quality Food (SQF) Program and ReposiTrak Inc., a subsidiary of Salt Lake City-based Park City Group and a provider of compliance management and track-and-trace solutions for food, pharma and dietary supplement safety, have joined forces to integrate SQF audit management into ReposiTrak’s compliance management system. The partnership aims to benefit SQF’s thousands of registered suppliers, as well as its certification bodies and auditors, in managing the audit process from initial request and payment, through collection of results and reporting. As part

Safer Sprouts Rä Foods LLC has developed Cold Grown Rä Nanoshoots as an alternative to traditional sprouts, which often have food safety issues. Tiny living plants grown in sealed packages at cold temperatures to ensure the highest level of food safety, Rä Nanoshoots have a naturally long shelf life of 21 days that the company maintains means less shrink for grocers and better value for shoppers As well as being ready to eat, available year-round and produced sustainably, the nanoshoots are herbicide-, pesticide- and GMO-free, and use only a fraction of the water required to grow traditional sprouts. “We wanted to go beyond the standard practices of seed sanitation and water testing as the means of assuring food safety,” explains Dan Sholl, general manager of Sacramento, Calif.-based Rä

of the initiative, ReposiTrak will host and provide exclusive access to SQF’s audit results database. The collaboration also lets SQF-registered suppliers use ReposiTrak’s compliance management system to collect and manage all of their vendor documents in one place, including SQF-required documents such as a current register of approved vendors, along with third-party audits and food safety plans, and other vital business documents. Notes Robert Garfield, SVP of the Safe Quality Food Institute (SQFI), a division of Arlington, Va.-based Food Marketing Institute: “This is an exciting time at SQFI, as we look to roll out version 8 of the SQF Code, a new Retail/Wholesale Grocery Program, and start gaining extensive supplier and buyer use and support of our Ethical Sourcing Certification. We were looking for a technology partner to help us raise the bar not only with our data management and reporting, but also with upgrades to all of our user interfaces.” By focusing on transparency, the grocery channel can ensure greater compliance with FMSA, as well as keep pace with a rapidly changing retail landscape. “The grocery industry is evolving quickly, along with consumer expectations,” notes GS1 US’ Fernandez. “The safety of our food supply will continue to hold center stage, and advancements will be needed even as sales and supply chain channels diversify. For example, e-commerce is a growing area, and carrying food safety precautions through to this channel will require the same diligence in traceability.” PG

Foods, which worked with The Vista Institute LLC on the product. The traditional sprout-growing process germinates seed under conditions that encourage the growth of dangerous seedborne pathogens, and also requires a considerable amount of product handling that can introduce environmental pathogens. “Cold became our key to inhibiting pathogen growth,” notes Susan Harlander, managing partner, The Vista Institute, in Eden Prairie, Minn. “After more than two years of research, we succeeded in developing the patent-pending Cold Grown process that creates a product environment hostile to pathogens, and allows Rä Nanoshoots to grow in the package to prevent environmental contamination.” Rä Nanoshoots come in several varieties: Clover, Clover/Alfalfa, Clover/Broccoli blend, and Spicy Blend (Clover/Radish blend). Packed six 3-ounce clamshells per case, Cold Grown Rä Nanoshoots are currently available on a limited basis at select West Coast grocers.

| Progressive Grocer | Ahead of What’s Next | December 2016

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Grocery

Growth Strategies

Alive and Kicking Center store isn’t dead — but it does need a creative boost. By Randy Hofbauer

any have claimed center store to be “dead” or “dying.” But grocers need not fret: Such news appears to be, for the most part, a lot of doom and gloom. Although the perimeter of many retail stores is starting to account for larger sales, center store is still contributing to overall growth, Schaumburg, Ill.-based research firm Nielsen notes. Looking at the 52 weeks ending Aug. 22, 2015, center store accounted for $709.4 billion in sales across the United States, up $56.7 billion from 2011. “In fact, center store sales have benefited from many of the same trends driving growth in the perimeter,” says Jordan Rost, VP of consumer insights at Nielsen. For instance, while bread sales have been flat over the past four years, those of tortilla wraps have grown at nearly 8 percent. Vinegars and liquid coffee and tea also have experienced rising sales. The bad news, however, is that Millennials, an incredibly large generation that’s gaining spend-

| Progressive Grocer | Ahead of What’s Next | December 2016

ing power, aren’t making center store purchases as much in the supermarket channel as they are elsewhere, such as mass merchandisers or dollar stores, says John Owen, senior food and drink analyst with Chicago-based market research firm Mintel. This could spell trouble for many traditional grocers, which now need to come up with new ways to attract this increasingly valuable demographic to center store. So, in time for 2017, here are five things grocers can consider doing to “spruce up” center store: Deliver solutions, not just products: Since consumers today have experienced the ease of online curation, they now often seek more solution- and occasion-based shopping offline, too. New ways of rethinking center store include organizing around themes such as breakfast, school lunches and entertaining, as well as secondary placement in the faster-growing perimeter depart-

ments to create comprehensive solutions, says Jim Holbrook, CEO of Stamford, Conn.-based branding firm Daymon. “Loblaws in Canada created a President’s Choice Insider Collection destination, with products curated by theme: Dine, Brunch, Mingle and Gift,” he explains. “Similarly, in its new Market 32 format, Price Chopper is reconstructing center store around meal solutions, moving cooking staples — e.g., oil, spices, pasta — from in-aisle to their own merchandising units alongside fresh.” Adds Steve Abdo, SVP of marketing firm Catapult Integrated Services, in Westport, Conn.: “At Kroger, there was communication in dairy with offers for cereal and milk, coffee and creamer, crackers and dip. In each case, [it’s] tying a center store brand to a dairy department brand in a simple, relevant way that incents shoppers to purchase cross-category.” Center store is an area where Millennials are more likely to say they would buy items on impulse, Mintel’s Owen adds. So when suggesting crosscategory purchases, grocers may be able to suggest more center store products than they would items in other departments. Sampling, too, helps here to pick up incremental sales, as Millennials show a desire for trying before buying in this section. And given that meal solutions are all about convenience, adding other forms of convenience also can help drive sales. Michael Tyson, CMO with Highland, Ind.-based grocer Strack & Van Til, notes that in the new year, his team is adding not just meal solutions, but also click-and-collect and home delivery options. Add click-and-collect or home delivery options: As the months go by, it becomes increasingly hard to picture a world of grocery retail, especially in larger metropolitan areas, where a time-starved consumer doesn’t have the option to order groceries via smartphone and have them delivered or available for pickup nearby. In fact, 34 percent of CPG retailers today offer either click-and-collect or home delivery (direct or thirdparty), according to the 2016 “Trends & Research Report” from Retail Leader, a Progressive Grocer sister publication. And among the 66 percent of retailers not offering such services, more than six in 10 reported, to some degree, the likelihood that they would offer such services within the next two years. While such services provide a number of competitive benefits to grocers, one in particular can be a boon to center store: continuous automated replenishment, a new type of shopping trip observed by Pat Walsh, VP of supply chain and business development with Arlington, Va.-based Food Marketing Institute (FMI). Center store is home to a lot of frequently purchased staples, and being able to simply set up auto-replenishment for anything from

coffee and cereal to paper towel and toothpaste not only takes items off shoppers’ grocery lists, but also creates loyalty and regular sales for grocers. “I think there’s a lot of opportunities to grow the center store in the traditional sense,” he explains. “It just may not necessarily mean that all that growth will come in a bricks-and-mortar environment.” Draw them into the aisle, then wow them: The entrance to an aisle should offer an enticing taste of what’s inside. For instance, Bashas’ has been adding upgraded, designer end-cap fixtures that create a boutique look at the entrance of center store aisles, encouraging customers to enter and further explore what each aisle has to offer, according to Ashley Shick, director of communications and public affairs for the Chandler, Ariz.-based grocer. “We are also actively evaluating the center store shelf tags to ensure that they are making an easier, more informative, interactive and engaging shopping experience,” she notes. A helpful resource grocers can use here is SmartLabel, a program launched last year that makes it easier to find more information about products, says Jim Flannery, executive SVP, operations and industry collaboration with the Grocery Manufacturers Association, in Washington, D.C. Via the scan of a barcode, shoppers can get instant access to hundreds of product attributes. With an increasing number of places to shop, it’s more critical than ever for grocers to differentiate and capture shopper attention, especially in center store aisles. Incorporating in-aisle multisensory experiences that attract and encourage product interaction extends time in center store and increases basket size. “Outside of food, incorporating emerging technology in nonfood categories, like Whole Foods’ Whole Body interactive mirror in their health and beauty section, provides a fun and engaging way to recommend new products to shoppers, based on their ‘aura,’” Daymon’s Holbrook notes. “I’ve seen many creative ways to bring engagement into store aisles, and some are so simple, yet effective.” Strack & Van Til’s Tyson notes the importance of converting “quick trips” into “longer, exciting trips.” Center store, by informing and romancing shoppers, can do this. “We need to convert secondary shoppers into primary shoppers,” he says. “Knowing the customer directly by store is key to ensuring these opportunities are met.”

I think there’s a lot of opportunities to grow the center store in the traditional sense. It just may not necessarily mean that all that growth will come in a bricksand-mortar environment.” —Pat Walsh, FMI

Focus on healthier eating: Whether products are natural or organic, free from allergens or loaded with superfoods, consumers are flocking to items with health-and-wellness benefits faster than ever.

December 2016 | progressivegrocer.com |

Grocery

CLASSY CAPS Bashas’ has added designer end caps that create a boutique look at the entrance of center store aisles, encouraging customers to enter and explore further.

Growth Strategies

And grocers see a “huge upside” if they’re quick to respond, Nielsen’s Rost observes. “Shoppers are looking to fill their shopping carts with healthier items, which provides numerous opportunities for all grocery stores,” Bashas’ Shick says. “Overall, integrating natural and organic sections and products to the center store is changing the look and feel of every aisle.” This applies even to pet food, which is gaining more space in center store, she adds. Pet owners think of themselves more as “pet parents” and want only the best for Fido or Mittens. Therefore, more healthful and natural options here are favored. But free-from, natural and organic products don’t have to be the only ones positioned as healthful. Many traditional canned foods can be marketed as containing all of the nutrients found in their fresh counterparts, but also available year-round and conveniently packaged. Canned fruits and vegetables, for instance, are picked and packed at the peak of freshness and are as nutritious as — or even more nutritious than — their fresh counterparts, says Katie Toulouse, communications manager at the Pittsburgh-based Canned Food Alliance. Additionally, canned beans are a convenient source of fiber. “Last year, we provided over 60 supermarket dietitians with toolkits to help them communicate the benefits of canned produce within their stores. This includes a What’s Inside the Can display for use in store demos or in media segments,” she notes. “It’s accompanied by an online toolkit that offers seven themes. Each theme has a recipe, talking points, a sample Tweet and a consumer-friendly educational handout to support the theme.”

Shoppers are looking to fill their shopping carts with healthier items, which provides numerous opportunities for all grocery stores. Overall, integrating natural and organic sections and products to Offer destination private brands: the center store Consider that in 2015, 97 percent of Millennials said that they were more is changing the look and feel of likely to buy store-brand products over nameevery aisle.” brand ones, Mintel research shows. Also consider

—Ashley Schick, Bashas’

that 70 percent of Millennials who purchase store brands believe that the products are of higher quality than they used to be, and 42 percent even believe that store-brand goods are more innovative than national-brand ones. Now, in an area of the store that could use a shot of innovation, couldn’t unique, quality store-brand items have the potential to boost sales — especially among the highly valued Millennial demographic?

| Progressive Grocer | Ahead of What’s Next | December 2016

“In an era of brand agnosticism, retailers have tremendous opportunities to better leverage and capitalize on their private brands,” Holbrook points out. “Uniquely positioned to better address the needs of their trading area, private brands are evolving from national-brand equivalents to destination brands, aligning with the latest culinary and wellness trends.” For instance, San Antonio-based grocer H-E-B brings hyperlocal food and flavors to private brands via its TX Street Eats product line of food-truckstyle foods. And Netherlands-based Ahold Delhaize, at its U.S. banners, creates “artificial scarcity” through its “Limited Time Originals” cross-category platform, bringing together unique items across the store based on seasonal flavor profiles such as Limoncello and Honeycrisp Apple, available only for a proscribed time. “These types of approaches to private brands,” Holbrook explains, “can help drive traffic while boosting sales — and profitability — of center store.” Bashas’ Shick agrees: “Private label brands continue to break barriers as they move past a priceonly merchandising strategy. Private label items have become more category-specific, like Topco’s Simply Done brand for nonedible products, and are attracting new customers in different ways through increased marketing and branding appeals, like Topco’s Culinary Adventures brand that targets the Trader Joe’s product image.” PG

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Drink to Health Focus on function has retailers rethinking assortment, merchandising. By Barbara Sax

RefReSh Retailers are rethinking their approach to center-store beverages given the influx of new, healthier options.

onsumers’ desire for healthier foods with fewer ingredients is having a significant impact on the beverage category. The result is a dizzying array of new products that’s causing retailers to find new ways to accommodate shoppers’ changing tastes for fresh, healthy forms of refreshment. SPINS defines the refreshment drink category as shelf-stable and refrigerated ready-to-drink tea and coffee, refrigerated juices and functional beverages, shelf-stable juices, shelf-stable functional beverages, carbonated beverages, and nonbulk water. Those segments, which are becoming harder to define as new products blur the distinctions between channels, grew 4.5 percent last year, according to Kora Lazarski, senior strategic alliance manager at Chicago-based SPINS. Most of that growth came from healthy/ natural beverages such as premium juice, kombucha, plant-based water, and single-serve tea and coffee. A focus on healthier, fresher beverage alternatives is causing retailers to rethink their product mix in center store and to scramble to create a greater amount of refrigerated sections that accommodate a wider selection of higher-priced fresh and functional options. Fresher taste without preservatives also

| Progressive Grocer | Ahead of What’s Next | December 2016

means narrow refrigerated shelf life, so retailers must manage the category more tightly than ever before. Manufacturers continue to offer new products to satisfy younger consumers, who are thirsty for a steady stream of innovative items that offer the most on-trend ingredients, and who are reaching for many types of beverages over the course of a day. The new beverage landscape is ultra-fractured, with innovations blurring the lines between segments (sparkling tea and natural juice-flavored waters are just two examples). “In the last year or two, retailers are reducing the amount of space they are giving to carbonated soft drinks and significantly expanding their selection of healthier beverages,” says James Hoagland, CEO of Brooklyn, N.Y.-based Ito En North America, manufacturer of the Teas’ Tea brand of RTD green tea and Matcha Love beverages. “Conventional channels are quicker to respond than they have been in the past, and we’re seeing trends move into the mainstream at a much faster pace,” observes Lazarski. Once found exclusively on health food and specialty food retailers’ shelves, products such as kombucha and chia beverages are migrating more quickly than ever before to conventional supermarkets as retailers seek to satisfy

consumers’ desire for new beverages with fewer and more natural ingredients, lower-calorie profiles, and added health benefits.

Cold-brew Coffee, Kombucha on Fire The RTD single-serve tea and coffee segments are punching above their weight class, according to Lazarski. While they comprise only 7 percent of category sales, SPINS data show that the segments experienced 15 percent growth this year over last year. Cold-brew coffee is quickly becoming a category star. Starbucks and PepsiCo debuted a cold-brew beverage in the grocery channel last June, and Dunkin’ Brands Group and Coca-Cola will launch a cold-brew line in 2017, making the segment’s appeal even more mainstream. Cold-brew coffee, made by steeping coffee grounds in room-temperature or cold water for an extended period, has lower acidity but a higher coffeeto-water ratio than conventional coffee, meaning that it has a smooth taste, but its concentrated nature gives it a higher caffeine content per serving. Since it has a wider appeal than traditional energy drinks, it could create competition for that category, which is viewed as having a less healthful profile and appeals to a more narrow demographic. “Ready-to-drink coffee as a category is growing at a 20 percent average year to year, and the cold-brew subcategory is exploding with triple-digit growth,” asserts Jared Smith, VP of sales and marketing at Los Angeles-based Bowery Coffee Co., which recently launched at Ralphs and Aldi. Despite a higher price point, Smith says that consumers are “spending more, buying more often and buying in multiples. They’re not scared of higher price points.” “Millennial consumers are used to customization and high quality in coffee, and they want that level of quality in a cold ready-to-drink product,” says Greg Steltenpohl, founder and CEO of Califia Farms, also based in Los Angeles. Califia recently launched three new flavors of bottled cold-brew, and a new dairyfree nitrogen-infused Nitro Cold Brew latté with almond milk, packaged in an aluminum bottle. Cold-brew coffees are also emerging in shelf-stable multipacks. St. Louisbased Madrinas Coffee is now rolling out its brand nationwide. The company has placed high-impact cut-case displays of its 6-packs of canned coffee in JewelOsco, Roundy’s and Schnucks. In addition to refrigerated singleserves and multipacks in center store, manufacturers are testing tapped coffee. Rory Mulcahy, director of sales, eastern division at Austin, Texas-based Chame-

leon Cold-Brew, sees potential for tapped cold-brew coffee in conventional markets. “There’s still growth for our bottled line, but we’d like to take our kegs national,” he observes. “Wegmans would be on our hot list.” SPINS’ Lazarski says that the “There’s still growth coffee category could even move for our bottled line, into cultured and fermented terbut we’d like to take ritory, which has been a big factor our kegs national. in teas such as kombucha. Still one of the hottest trends Wegmans would be in health beverages, kombucha, on our hot list.” along with other fermented drinks, —Rory Mulcahy, topped $318 million in sales, with Chameleon Cold-Brew nearly 30 percent growth in the past year, according to SPINS data for the 52 weeks ending Sept. 4. “A recent survey found that more than 70 percent of respondents would prefer to consume probiotics in a food or beverage product rather than in a supplement, and 40 percent to 54 percent were willing to pay more for products with probiotics in them,” says Bryan Crowley, chief strategy officer at Oxnard, Calif.-based KeVita, a maker of handcrafted fermented drinks. The fizzy, low-calorie probiotic drink category to which KeVita belongs continues to show upside. “It’s a huge category,” says Lazarski. “We’re seeing not just the three big brands showing growth, but growth among regional brands that are heavily marketing in their place of origin.” KeVita recently launched a Master Brew Kombucha in three flavors — dragonfruit, lemongrass and mango habanero — and a CitrusCleansing Probiotic Tonic line of sparkling drinking vinegars in three flavors: Meyer lemon, ginseng Mandarin and elderberry.

Next Wave for Teas The next generation of kombuchas may be drinking vinegars and switchel, which is made from apple cider vinegar, fresh ginger and maple syrup, and then cut with water. In addition to KeVita’s recent launch, Cide Road, based in Mendham, N.J., has expanded distribution of its switchel, launched in 2014, to 3,500 stores nationwide, including ShopRite stores in New Jersey. Austin-based Live Beverages, meanwhile, recently launched drinking vinegars with soft-drink flavor profiles like lemonlime and root beer that are being sold in operators such as H-E-B, Safeway, Ahold USA and Kroger. “The gateway was kombucha,” says Live Beverages CEO Trevor Ross. “Consumers are becoming more adventurous, and they are willing to explore more sour flavor profiles.” December 2016 | progressivegrocer.com |

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Matcha tea, which is partly shade-grown and then ground into a powder, is becoming a popular additive across a number of different beverage segments. “Matcha is on consumers’ radar because of its antioxidant and clean-energy profile, but we wouldn’t have predicted that it would [go] mainstream as quickly as it has,” admits Adam Hertel, Ito En’s SVP of sales for grocery and alternate channels. Carried in such retailers as Wegmans, Fresh Thyme and Gelson’s, the brand is gaining wider distribution. Nonfermented sparkling teas is another specialized segment that’s erasing the barriers between the tea and sparkling water categories. “There was space in the category between sparkling water and tea,” explains New York-based Sound Sparkling Tea cofounder Tommy Kelly.

Willing to Pay More for Less For a growing number of consumers, what’s not in their beverages is just as important as what’s included. “These products bring in a younger consumer who recognizes the value of nutrition density and clean labels,” says Anne Williams, VP of marketing for Bellevue, Wash.-based Evolution Fresh, a juice company owned by Starbucks. “Consumers are looking at labels and don’t want to see preservatives and too many ingredients in their beverage.” “Whole Foods has New entrants into the cold-pressed proven that the juice category are helping to educate traction already consumers on the value of higherexists for people quality, more nutrient-dense products. to pay $1 extra for Consumers are paying for highera beverage with priced single-serve juices that contain perceived health on-trend antioxidant-rich ingredients benefits.” such as spirulina and turmeric. New York-based Fairway Market stocks —Cristian Robiou, cold-pressed juices made by BluePrint Caribé Juice Organics, a division of The Hain Celestial Group, in Lake Success, N.Y., for $6.99 each, and juices from Saratoga Springs, N.Y.-based Saratoga Juice Bar for $7.99 each. Most brands keep their prices in the $3.99-to$4.99 range. Evolution Fresh recently developed a new four-SKU Superfoods line of organic juices that will roll out in March 2017. “Retailers are chasing that Millennial consumer with higher disposable income,” says Cristian Robiou, CEO of Caribé Juice, in Alexandria, Va. “Whole Foods has proven that the traction already exists for people to pay $1 extra for a beverage with perceived health benefits.” Robiou adds that while consumers will pay more, they’re not indifferent to price. Caribé adjusted its packaging to bring down the price of a

| Progressive Grocer | Ahead of What’s Next | December 2016

single-serve juice from $4.99 to $2.99. “When you are aiming for adoption at mass, price still signals to consumers,” he explains. “The magic number is $3.” SPINS’ Lazarski predicts that the future of coldpressed juice could begin to look more like gazpacho than orange juice. Fairway is carrying juices from Salinas, Calif.-based organicgirl, which carry the tagline “more greens less fruit.” “Cold-pressed, which has been associated with sweeter juices, is now moving into more vegetable-based juices that are starting to look more like soup than juice, with ingredients like balsamic vinegar, sweet potato, adaptogens [a natural substance considered to help the body adapt to stress], ginseng root, turmeric and other herbs, and fungi,” she says. There’s also action in the lemonade segment. Daily Greens, based in Austin, recently launched new flavors — Watermelon-Hibiscus Ade, LimeBasil Ade, Jicama-Blue Majik Ade and OrangeTurmeric Ade — in its Green Ade line of hydrating lemonade. The beverages boast nutrient-dense algae-based superfoods such as chlorella and Blue Majik spirulina in their formulations. Brooklyn-based Honeydrop Beverages is marketing cold-pressed lemonade made with honey in flavors like cayenne, lavender, basil, turmeric and matcha. The company also makes an apple kale’ade and a lemonade with charcoal. Suja, a San Diego-based maker of organic, coldpressed and non-GMO beverages, also introduced a juice with charcoal last year. Charcoal is porous and adsorbent, meaning that a wide range of molecules and chemicals stick to it so it can be used as a “detoxifier.” The ingredient has been showing up in beauty products, including masks and pore strips, for several years, and now it’s made the jump to juice. The industry is still taking a wait-and-see approach to this particular innovation, however. “The juice-with-activated-charcoal segment has legs,” says Lazarski, “but it’s so new we’re not tracking it yet.” PG

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Grass is Greener Plant-based beverage sales growing at grocery retail. By Barbara Sax

lant-based milks and nondairy beverages remain a hotbed of innovation. “This is a $4.2 billion category, with most of the growth happening in the RTD [ready-to-drink] segment, which is up 4.3 percent, while shelf-stable milks are actually down,” says Kora Lazarski, strategic alliance manager at Chicago-based SPINS. According to Lazarski, nondairy beverages resonate with both vegan and Paleo consumers who are looking for new protein sources. Sales of soy and rice milk, once the backbone of the category, have been waning as sales of coconut, almond, hemp, quinoa, macadamia, pistachio and tiger nut milks have all grown. Parsippany, N.J.-based Kings Food Markets devotes 4 feet to shelf-stable nondairy milks in the cereal aisle, including macadamia, oat, hemp and cashew milks. The chain also includes Califia almond milks, dairy milk-based Rumble supershakes and Orgain organic protein shakes in its grab-andgo section in the front of the store near checkout. “These products are getting the RTD treatment as retailers are moving them away from the pantry sections and placing them in grab-and-go sections near other RTD products in the front of the store,” notes Lazarski.

From Commodity to Specialty “Dairy milk was viewed as a commodity, but if you add nutritional density without adding calories, the category becomes much more valuable to consumers and retailers,” observes Greg Steltenpohl, founder and CEO of Los Angeles-based Califia Farms. “The usage occasions for nutritionally dense products are more frequent and diverse than ever,” adds Steltenpohl. “For people who are working late, the products offer satiety. They can also replace breakfast. Grab-and-go is a way of life for consumers, and if retailers aren’t offering these products, they aren’t serving their consumers.” Califia recently introduced an Enhanced Milks line of 10.5-ounce single-serve almond and coconut milks retailing for $2.79 each. The line includes Ginger Almond Milk with Turmeric, Vanilla Protein Almond Milk, Chocolate Almond Milk, Whole Coconut Milk and Matcha Almond Milk. In dairy milks, chocolate milk could be the next

cold brew treated like coldpressed coffee, with flavorings like Mayan spike or mint. More sophisticated chocolate milks are entering the market.

Liquid Assets Drinkable yogurts (including kefirs and skyrs) are also on the rise, with dollar sales estimated to have grown 62 percent between 2011 and 2016 to reach $893 million this year, according to Mintel research. Chicago-based Mintel estimates that across all channels, sales of drinkable yogurt are expected to grow 11 percent in 2016, making this the second straight year of double-digit gains for the segment. Drinkable yogurts are resonating with consumers looking for high satiety as well as gut health benefits. One Stop & Shop location in Ridgewood, N.J., stocks several branded varieties as well as a private label kefir, along with plant-based refrigerated milks, in a special refrigerated section near yogurts. “Grab-and-go is a way Nicole Mydy, innovation of life for consumers, manager for the La Farge, Wis.based Organic Valley co-op, says and if retailers aren’t offering that consumers are increasingly looking for organic, natural meal these products, they aren’t serving their replacement and protein-booster consumers.” beverages, and that retailers are answering the call by merchan—Greg Steltenpohl, dising the products in several Califia Farms locations throughout the store. “Our Organic Fuel and Organic Balance single-serves are in the grab-and-go sections and in the organic dairy set, and multipacks are in the high-protein product section,” she notes. “Consumers who are looking for high-protein alternatives are buying over 100 bottles a year, so multipacks move really well in those sections.” Kings recently devoted an end cap to Organic Valley single-serves and multipacks, in addition to Silk shelf-stable almond milks. PG December 2016 | progressivegrocer.com |

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Front End Sips Retailers are offering healthier options for grab-and-go and impulse shoppers. By Barbara Sax

hifting consumer tastes have caused retailers to rethink their front-of-store beverage merchandising strategies. Supermarket retailers are finding ways to increase refrigerated space to house the variety of products consumers have come to expect in a hypersegmented beverage category. More retailers are adding space to their everexpanding deli or produce sets to accommodate higher-priced perishable products such as freshpressed juices, kombuchas and cold-pressed coffee. “Super-premium juices are often in the produce and dairy sets incorporated in a section with kombuchas, cold-brew coffee and chia beverages,” says Jill Walter, VP of customer business development at Bellevue, Wash.-based Evolution Fresh, a Starbucks subsidiary. “Kroger recently created an 8-foot set in the produce section, and Publix is increasing its section from a 4-foot to an 8-foot section in produce and expanding its selection of products,” notes Walter. Premium supermarket chains, such as Parsippany, N.J.-based Kings Food Markets and Greensboro, N.C.-based The Fresh Market, have placed near checkouts open refrigerated sections featuring an array of beverages, from infused sparkling waters to chia beverages. For instance, Kings merchandises healthy snacks in baskets on top of the beverage case at its Midland Park, N.J., location.

Keep Cooler “Millennial consumers are always looking for something different, something interesting,” asserts Justin Davis, president of St. Louis-based Madrinas Coffee. “To appeal to these consumers, Kroger and other large supermarket chains are now adopting the strategy Whole Foods took 15 years ago. At the Mariano’s stores, the cooler program is store-controlled.” More chains are taking control of the coolers they place at checkout end caps or are working with manufacturers to create new cooler options that feature products beyond traditional carbonated soft

drinks and bottled water. Through their North American Coffee Partnership joint venture, Starbucks and Purchase, N.Y.-based PepsiCo have created front end coolers to showcase the successful Starbucks readyto-drink line. Kings features the coolers, as well as shelfstable multipacks of Starbucks Double Shot Espresso, Frappuccino and Iced Coffee on checkout end caps, to capture sales in the fastgrowing ready-to-drink coffee segment. Nicole Mydy, innovation manager for the La Farge, Wis.-based Organic Valley co-op, says that retailers are transitioning away from coolers that feature only carbonated soft drinks to coolers that include products that offer higher value for retailers and a more nutritious profile for consumers. “There’s some movement away from 99-cent cans of soda to include some protein drinks or coldpressed juices that retail for $2.99,” she observes.

Seeking Differentiation Retailers are looking for new ways to partner with manufacturers to expand space and maximize sales. “Shopping patterns have changed, and retailers are facing a challenge of redesigning their stores to reflect “Shopping patterns an increased focus on the perimhave changed, and eter of the store,” says Ari Tolwin, retailers are facing CEO of Happy Tree, a Grahamsa challenge of ville, N.Y.-based manufacturer of redesigning their coconut water-based beverages. Tolwin adds that his company is stores to reflect an stepping up to help retailers solve increased focus on those challenges by designing the perimeter of coolers that can help expand space the store.” devoted to healthy beverages. —Ari Tolwin, Happy Tree Mydy notes that some retailers are gearing their product mix to specific times of day, and that Organic Valley is open to helping them tailor their assortments. “For the morning rush,” she says, “some Safeway West stores are featuring coolers with meal replacement drinks or morning beverages.” PG December 2016 | progressivegrocer.com |

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Tap into Flavor New waters blur lines with other beverage categories. By Barbara Sax

he water category is anything but boring. New products, such as naturally flavored low- and no-calorie still and sparkling waters and plant waters are bringing continued innovation, growth and new users to the category. Plant waters, including coconut, aloe, maple, cactus, prickly pear, and other tree and plant waters, topped $501 million in sales, with 11 percent growth for the 52 weeks ending Sept. 4, according to SPINS data. Refrigerated plant waters, with $37 million in sales for the period, grew 18.5 percent — twice the rate of equivalent shelf-stable plant waters. Despite their slower growth, shelf-stable plant waters saw sales of $453 million for the period and generated the bulk of the segment’s sales. Chains such as Kroger, Ralphs and Vons, and even value players such as Shoppers Food & Pharmacy, have expanded shelf space for plant-based waters.

“Once maple water took off, it was off to the races for the category. Everyone started tapping everything.”

Waters, Waters Everywhere A new wave of refrigerated plantbased waters is creating even more excitement. “The numbers suggest that the innovation in this category is launching through the refriger—Kora Lazarski, SPINS ated section,” says Kora Lazarski, senior strategic alliance manager at Chicago-based SPINS. “Once maple water took off, it was off to the races for the category. Everyone started tapping everything. We’ve seen many more new product launches in the past two years.”

| Progressive Grocer | Ahead of What’s Next | December 2016

Consumers are just as likely to find the latest products at a conventional supermarket as in a specialty market or health food store. “People used to have to go to specialty retailers to get healthy, natural products, but there’s been a big shift in the pendulum as mainstream grocery retailers have adapted,” notes Tom Zummo, CEO of Scottsdale, Ariz.-based True Nopal Cactus Water, a subsidiary of True Me Brands. New versions of plant-based waters that boast added hydration benefits and on-trend, natural flavors are stealing share from carbonated soft drinks. Several manufacturers have introduced singleingredient watermelon waters. World Waters, which markets the Wtr Mln Wtr and DrinkMaple brands, recently launched DrinkMelon, an organic watermelon water. “We’re getting more exposure at chains like Ralphs and Fred Meyer,” says Allison Frazier, marketing manager at the St. Albans, Vt.based company. Taste Nirvana, based in Walnut, Calif., has debuted all-natural Coco Aloe, a beverage that combines Taste Nirvana coconut water and aloe vera for a new “superdrink.” “Coco Aloe has 2 grams of natural fiber per bottle and no added preservatives,” observes Tiffany Wattanaporn, director of PR and marketing for the family-owned company. “Aloe is a big trend right now because it’s an anti-inflammatory and is good for digestion.”

Hyping Hydration Other brands are hyping the hydration of their beverages. The Maple Guild, based in Island Pond, Vt., has launched a line of seven flavored waters enhanced with antioxidants, electrolytes, B vitamins and green tea extract. True Nopal cactus water also features a combination of antioxidants and electrolytes. Verday Chlorophyll Water, part of the Mumbai, India-based Chlorophyll Brands portfolio, has debuted three water flavors — watermelon, cucumber, and lemongrass with ginger — formulated with the antioxidant and cleansing properties of chlorophyll. Happy Tree is positioning its lemon-flavored maple water, which contains only 6 calories per serving, against traditional sugary lemonades. “We don’t think this is a niche business,” insists Ari Tolwin, CEO of the Grahamsville, N.Y.-based manufacturer of maple water-based beverages. “We’re looking at all of the things consumers are drinking

and finding segments where it would be cool to reinvent those products without all of the sugar and calories, and without compromising taste.” As in other categories, hypersegmentation is affecting the coconut water segment of the category, and manufacturers are finding ways to differentiate their brands. “We’re seeing a division of superpremium, mainstream and value waters,” notes Jane Prior, EVP of global brand strategy and development at Vita Coco. Last March, the New York-based company launched Coco Community, a super-premium “artisanal” coconut water made with Nam Hom coconuts supplied by Thai coconut processor Cocos Enterprises. The brand is organic, Fair-for-Life certified and single-origin. Prior notes that consumers are willing to pay more for a product that they believe in. A 250-ml single-serve container of Coco Community retails for $2.99, versus $1.99 for a 330-ml single-serve bottle of VitaCoco.

Sparkling Conversation Innovation is also fueling the sparkling water category, which is seeing an influx of premium products flavored with natural juices, and featuring a no- or

low-sugar content profile. The products are positioned against traditional carbonated beverages. “The sparkling water category was starved for innovation, and there wasn’t any premiumization going on, so we came into that space with an eye to bringing fresh ingredients and the locavore trend to sparkling water and elevating offerings in the category,” says Bill Creelman, founder of Spindrift Fresh, in Waltham, Mass. Alta Palla, the line of sparkling juices from Hi-Ball Energy that launched in April, is adding a four-SKU sparkling water line in 2017. The launch represents a bigger non-energy commitment for the brand. “Consumers want good taste, and they want natural and organic, and they want Fair Trade,” says Todd Berardi, president of San Francisco-based Hi-Ball, adding that Alta Palla’s super-premium look will attract new users to the category. In the energy drink category, Cleveland, Ohiobased Avitae USA, unveiled Sparkling Avitae, a line of carbonated caffeine waters. PG

December 2016 | progressivegrocer.com |

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Beverage SuPPlement

Crafting CSDs Premium positioning takes craft sodas outside the beverage aisle. By Barbara Sax

raft sodas are worlds away from traditional carbonated soft drinks. The products are created to be savored and consumed as a special treat, include natural ingredients, and carry higher price points than mass-brand carbonated beverages. “We’re creating unique flavors that provide an elevated experience for consumers,” says Sharelle Klaus, CEO of Seattle-based DRY Sparkling. “We’re not suggesting a consumer drink six of these a day. They are meant to be a treat.” DRY Sparkling soda, made with a touch of cane sugar, comes in 10 standard and two limited-edition flavors. “Food gifts are on the rise, and these bottles make a great gift item,” notes Breeanna Marchitto, VP of marketing for DRY Sparkling. A 4-pack of DRY Sparkling retails for $6.99 and is typically merchandised with other carbonated beverages, while single-serves, which retail for around $1.99, are merchandised in the grab-and-go section.

Ready to Pop More value-priced specialty sodas are benefiting from the mix-and-match trend in supermarkets. Harris Teeter’s 4-foot specialty and craft soda section features iconic old-time brands from Mukilteo, Wash.-based Orca Beverage, such as Dad’s Root Beer and Moxie, in glass bottles in a mix-andmatch five-for-$6 everyday price deal. Specialty soda brands are also a big focus at San Francisco-based confectionery chain Lolli and Pops, where they get 8 feet of space in their own cooler. The chain also devotes significant space to Japanese Ramune Soda in flavors such as wasabi, kimchi, bubble gum and curry. The beverages, which are moving beyond Asian markets, could be a segment to watch. Single-serves drive artisanal craft sodas as well. “Single-serve sales drive repeat purchases for us, particularly among consumers who have left the CSD category,” notes Kevin Li, marketing manager for Brooklyn, N.Y.-based Bruce Cost Ginger Ale. Crafted Cocktails Ginger ale is one of the strongest segments of the category. Reed’s, maker of Virgil’s Root Beer and Reed’s Ginger Beer, recently introduced 7-ounce bottles in a 4-pack targeted for cocktail mixing.

“Our products are usually merchandised in the carbonated section, but additional space near liquor gives us a big incremental opportunity,” says Neal Cohane, SVP of sales and marketing at Los Angeles-based Reed’s. According to Andrew Virciglio, beer and wine buyer at Crestline Piggly Wiggly in Mountain Brook, Ala., ginger beer has taken off at the chain. “We merchandise ginger beer in the soda aisle and in an additional location near liquor as well,” he says. Virciglio recently expanded the craft soda selection at the Crestline store. The line between sodas and mixers is blurring as consumers snap up sparkling beverages in flavors such as DRY Sparkling’s serrano pepper, lavender, cucumber and, of course, ginger, for crafting cocktails at home. “The cocktail-mixer solution category wasn’t something we initially “Consumers aren’t anticipated, but our products are going to spend a so flavor-forward they have taken lot of money on a off with the craft cocktail trend for bottle of craft gin or people who are creating these drinks at home,” says DRY Sparkling’s vodka, and then mix Klaus. “Consumers aren’t going to it with a 99-cent spend a lot of money on a bottle of bottle of tonic.” craft gin or vodka, and then mix it —Sharelle Klaus, with a 99-cent bottle of tonic.” DRY Sparkling Brooklyn-based Q Drinks, which manufactures Ginger Ale, Ginger Beer, Kola, Club Soda and Tonic, is positioning its beverages as mixers with the tagline “the world’s best spirits deserve Q.” “Premium and super-premium spirits make up 60 percent of dollar sales volume in spirits,” says Q Drinks CEO Joran Silbert. “It makes sense that they want their mixer, which is three-quarters of a cocktail, to have the same quality and sophistication.” PG December 2016 | progressivegrocer.com |

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Growth Strategies

Frozen Foods

Chill Will

Here are five ways retailers can boost their frozen sales in 2017. By Jim Dudlicek

ales of frozen foods have seen better days. Overall retail sales in this $50 billion category have been tepid at best over the past three years, posting an increase of just 0.9 percent in 2015 after two years of declines, according to Nielsen data reported in Progressive Grocer’s 69th Annual Consumer Expenditures Study last July. Gains in products such as ice, dessert toppings and pizza buoyed a category pulled down by negative sales of mainstays like vegetables and baked goods, according to PG’s report. Consumers perceive frozen foods as unexciting, processed and less healthy than their fresh counterparts. But there are signs that retailers, through strategic partnerships with their suppliers, can turn that around. Here are five strategies that grocers should pursue to heat up sales in their frozen aisles in the coming year: Market to Millennials Frozen vegetable marketers have recently launched campaigns aimed at young adults, and research suggests that they’re on the right track. “The continual parental reminder to ‘eat your vegetables’ stuck with Millennials and Gen Zs because they are driving the growth in fresh and frozen vegetable consumption,” reports The NPD Group, noting that health-focused consumers under 40 have upped their annual per capita consumption of frozen veggies by 59 percent over the past decade. What’s more, Port Washington, N.Y.-based NPD forecasts consumption of frozen vegetables to increase by 3 percent through 2024. “Vegetable consumption among younger consumers is a reflection of their more health-conscious eating behaviors,” says David Portalatin, VP and food industry analyst at NPD. “Our research shows that their attitudes about eating vegetables will not shift as they age and go through their life stages.”

have staying power. “Health and wellness is a trend that is delivering exceptional growth today, and with an aging population looking to lead healthier lifestyles as they age, along with a Millennial population that is behind many of today’s better-for-you trends, it will likely continue to offer growth opportunities tomorrow, too,” declares Julie Henderson, VP of communications at the Harrisburg, Pa.-based National Frozen and Refrigerated Foods Association (NFRA). “Health-conscious consumers are a large and growing segment of shoppers today, and manufacturers big and small, are taking advantage of producing products that will satisfy those shoppers’ preferences.” NFRA’s “Real Food. Frozen” campaign, which offers marketing ideas and materials to retailers, helps “tell the story that the most versatile foods can be found in the frozen food aisle, including options for every lifestyle and every food occasion,” Henderson explains. “Frozen foods start out the same as their fresh counterparts, from healthy produce and perfectly portioned meals to a variety of ethnic cuisines and restaurant-quality dishes.”

Focus on Health and Wellness Health consciousness isn’t exclusive to the young, and trends toward wellness eating, along with demands for natural and organic products,

Position Frozen Food as a Solution Retailers and suppliers can take the guesswork out of grocery shopping for consumers.

Frozen foods start out the same as their fresh counterparts, from healthy produce and perfectly portioned meals to a variety of ethnic cuisines and restaurantquality dishes.” —Julie Henderson, NFRA

December 2016 | progressivegrocer.com |

Frozen Foods

Frozen FIx With proper promotion, the frozen food aisle can become a destination for need states such as breakfast, ethnic foods and afternoon snacks.

Growth Strategies

“Many shoppers are in search of a healthy and affordable meal solution that they can feed their family,” says Bluzette Carline, director of marketing for Jacksonville, Fla.-based Beaver Street Fisheries. “Busy lives call for quick and easy meal solutions.” The freezer aisle has a lot of opportunity for expanding category management by pairing frozen items with other foods and beverages in the store to provide a complete meal solution. The concept of meal assembly using frozen ingredients and full meals is one that NFRA has brought into a majority of its content development and consumer outreach. “Meal assembly can be as easy as pairing a fully prepped frozen lasagna with a starter salad for a full meal,” Henderson says, adding that grocers can demonstrate to consumers that “whether it’s picking up a frozen entrée or adding frozen ingredients to a homemade meal, frozen foods

Source: NFRA

| Progressive Grocer | Ahead of What’s Next | December 2016

help make mealtime prep a breeze.” A NFRA consumer survey found that about 55 percent of women depend on the convenience of frozen foods when getting dinner on the table. With the average meal taking nearly an hour of total prep time, “perfectly portioned, ready-to-cook meals save time and guesswork,” Henderson says. “Consumers looking for simple, healthy products can find nutrient-rich frozen fruits and vegetables captured at the height of ripeness available in the frozen aisle. All the cleaning and chopping is done, saving time and eliminating waste.”

Showcase Variety and Innovation Consumers “want authenticity from their favorite brands when it comes to packaging and product representation,” Carline asserts. To that end, manufacturers of frozen foods are responding to consumers’ desires for simple ingredient lists, more organic options, single-serve portions and culturally inspired flavors. “From signage to demos, retailers can showcase the many innovative products the frozen aisle has to offer,” Henderson says. “Sampling takes the guesswork out of a purchase and is proven to create sales lifts.” Earlier this year, The Schwan Food Co., in Marshall, Minn., created Schwan’s Chef Collective, a team of chefs that will help develop the next generation of Schwan-branded frozen foods, which include the Red Baron, Freschetta, Mrs. Smith’s and Pagoda brands. “We believe the Schwan’s Chef Collective

frozen foods

for all reasons retailers should guide shoppers toward dinner solutions, healthy produce and indulgent desserts available in the frozen food aisle.

Growth Strategies

will help us change the way people think about the frozen food category,” says Schwan CEO Dimitrios Smyrnios, adding that the initiative would lead to “a spectrum of great food ... with the goal of exciting our retail, foodservice and home delivery customers.” Chefs partner with the Marshall-based Schwan culinary team, each tasked with scouting emerging ingredients, cooking methods and global cuisines to continually influence the innovation of frozen foods. “We gain insights from other leaders in the food world,” says Stacey Fowler, Schwan SVP of product innovation and development, noting that the initiative “enables us to dive deeper into emerging trends and consumers’ ever-changing

Source: NFRA

| Progressive Grocer | Ahead of What’s Next | December 2016

lifestyles to develop new, delicious and wholesome recipes with quality ingredients.”

Improve In-store Visuals For years, frozen aisles at the grocery story have been big, cold and sterile, qualities which do little to entice shoppers to spend time there. “Retailers can change that perception with a focus on point of purchase,” NFRA’s Henderson says, suggesting such ideas as attractive food photography, and signs that call out new products, culturally diverse cuisines, dietary benefits, and more. “Digital media and video is the language of Millennials, and can help engage this demographic,” she adds. NFRA makes POP materials and support available to retailers, particularly for March Frozen Food Month promos. “Supermarkets can take advantage of all the national hype just by making the frozen food aisle a focal point and featuring those items that are already being promoted by the manufacturer,” Henderson notes. Retailers can also leverage NFRA’s Easy Home Meals online offerings. “We work hard to provide our retailers with display tools that enhance their freezer space and drive our brand to the consumer,” Beaver Street’s Carline adds. “We strive to develop packaging that appeals to shoppers while truly representing the product inside the package.” PG

Fresh Food

Growth Strategies

Fresh Foresight

Five tips for ensuring continued success in the perimeter categories. By Bridget Goldschmidt

or the past few years, in response to rising consumer demand, retailers have introduced a plethora of “fresh-focused” store formats playing up the produce, meat/seafood, deli/prepared food and bakery departments, often at the expense of perceived lower-value sections such as center store and frozen foods. But how long will this interest in fresh last, and how can retailers prevent it from growing stale? Following are five key pieces of advice to retailers to maintain a booming fresh offering. Although some comments refer to one category in particular, many observations are applicable across departments.

SPrOuTS’ SPlendOr The prepared food service case at Sprouts Farmers Market boasts a wealth of convenient and tasty options.

Stay on Top of Health and Other Trends Since fresh products are so closely connected with consumer perceptions of better health and nutrition, retailers need to strike the right balance in communicating these properties to customers, so that they’ll be encouraged to incorporate more and varied fresh items into their diets. “When promoting fresh food, retailers should

| Progressive Grocer | Ahead of What’s Next | December 2016

be careful not to lecture or pressure consumers into eating healthy,” notes Dionysios Christou, VP marketing at Coral Gables, Fla.-based Del Monte Fresh Produce. “They should promote the nutritional value and many benefits that the products can bring to consumers and their families. Consumers like to have free will when making shopping decisions, and negative promotional tactics or comparisons to other products may make them feel forced and turned off from a particular message and/or product.” Kathy Means, VP of industry relations at the Newark, Del.-based Produce Marketing Association (PMA), urges, “Use programs like [PMA/ Sesame Workshop partnership] Eat Brighter! to attract attention and make it easy for kids to want produce — parents will thank you!” “Following a successful test, we expanded deli offerings in many of our stores by adding a salad bar stocked with ready-to-eat healthy and flavorful salads, prepared proteins, healthy side dishes, and an improved assortment of entrées, meals and side dishes,” observes Diego Romero, corporate communications manager at Phoenix-based Sprouts

ar dd e Ch te hi W

Sea Salt

Fresh Food

Growth Strategies

Farmers Market. “We will be looking to incorporate many of these offerings into a greater number of stores in 2017 and beyond.” Retailers must always bear in mind, however, that fresh isn’t only about better-for-you items. “The holistic approach to produce will continue as consumers see produce as more than just a health solution, though health remains important,”

Keeping your perimeter fresh…

Means points out. “It’s family favorites and traditions. It’s convenience and time saving. It’s fresh and new, even adventuresome at times.” That being the case, it’s crucial that retailers not fall behind when it comes to retailer attitudes and preferences. “Innovation in product development and marketing promotions will be key components to the continued growth of [produce],” says Christou. “Retailers must always stay current with consumer trends, needs and shopping behaviors.” “Stay current on trends,” similarly advises Means. “Fruits, vegetables, herbs, etc., are often the key to making a cuisine what it is, so highlight those opportunities to customers.”

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Light It Up Another sage recommendation is to make sure that the products look as good as possible by presenting them, quite literally, in the best light. “When it comes to merchandising, different colors can convey different feelings and moods,” explains Margie Proctor, marketing and design specialist at Conyers, Ga.-based Hillphoenix. “Warm tones, perceived as more pink-red tones of light ... can impart a fresh, warm look to baked goods and a pleasing appearance to pink and red meat products.” Meanwhile, she notes that temperatures “on the opposite end of the spectrum ... can help impart a cooling visual [that] emphasizes the white and green in fresh vegetables such as lettuce and green onions, as well as the shining scales of a freshly cut white-flesh fish. The lighting you choose may even affect food spoilage and nutrients.” Borrow Ideas When promoting fresh food, grocers shouldn’t feel locked into marketing and merchandising strategies from their own retail channel — or even limit themselves to retail ideas at all. “Think of your own experiences at other retail outlets: You appreciate suggestions, whether from a display or an associate,” notes Means. “Make that work at your stores — it shows respect and understanding for your customers. People like to shop at a retailer that ‘gets’ them.” One creative example: “Book-

stores have ‘employee picks’; why shouldn’t your stores have something like that?” she asks. “It could be favorite fruits or vegetables, their own recipes or prep tips.” Further, adds Means, “The impact of foodservice and food culture (cooking shows, new restaurants, etc.) does seep into retail — take advantage of it.”

Keep it Simple As with many things, simpler is better when it comes to fresh. “Avoid vast assortments in prepared foods,” counsels Jill Tomeny, senior manager, category solutions at Stamford, Conn.-based Daymon. “Focused programs help drive turn and freshness. There are ways to sell the same item in multiple formats — such as in the hot bar, in the service case and prepacked in the cold case — that hit on all shoppers’ needs but maintain streamlined offerings.” This strategy should extend to allaying any concerns that consumers may have about preparing items. “Cooking can be scary for a lot of shoppers,”

acknowledges Tomeny. “Be sure to tailor the complexity of any culinary offerings — such as meal kits — to the needs and skill levels of shoppers. Do they want to cook meals, or merely assemble? Make sure any in-store education or demonstrations focus on approachable techniques.” Additionally, better organized departments will ensure that customers find what they’re looking for faster. This can mean rethinking traditional category management approaches. Alan Hiebert, senior education coordinator at the Madison Wis.-based International Dairy-Deli-Bakery Association (IDDBA),

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Growth Strategies

notes that “we’ve seen at least one chain that has begun locating the specialty cheese department next to the dairy case, often next to the wine and craft beer. From a traditional category management and store layout perspective, some chains may not think it makes sense. IDDBA research, however, has shown that ... positioning the two together can help strengthen the relationship between the two, increasing sales of both and helping shoppers fill their needs efficiently.” “Make it easy for consumers to shop your department and use these products, whether that’s fast meals, understanding how to use new items, fresh takes on old favorites, whatever,” counsels Means. “Be the consumer’s solution. They’ll keep coming back.”

Create a Worthwhile Experience Above all, retailers must strive to make their fresh departments as inviting as possible. Del Monte Fresh’s Christou says that “retailers must adopt various tactics such as eye-catching promotional items and merchandising activities that entice and educate consumers. This might include development of seasonal POS for shelves, in-store demos, and improved labeling information about product usages for different occasions. Recipe cards and coupons can also help boost engagement.” Hiebert likewise believes that “stores should avoid being passive purveyors of fresh products. Engage shoppers through in-store associates, through digital and social media, and through signage. Though shoppers won’t be looking for an immersive experience every time they’re in the store, the more exciting and engaging the store is, the more likely they will be back.” All of this engagement, however, needs to result in the consumer’s conviction that the shopping trip was well worth it. “Our investments in deli are designed to deliver more value to our customer,” asserts Sprouts’ Romero. “Value is our ultimate goal.” Finally, grocers have to realize that the fresh departments can work in concert. “Don’t just put a fresh program out there and hope it will sell,” cautions Tomeny. “Retailers need to develop marketing programs that tie together all perishable departments, tell a story and ultimately become the obvious choice for customers.” PG

Produce

Fresh Food

Cross-promotional

Power

Build bigger baskets with produce pairings. By Jennifer Strailey

ategories within fresh produce, from avocados to tomatoes to onions, can be strong sellers own their own, but put them together in a colorful display complete with tempting, easy-to-prepare recipes, and sales will surge. “Cross-merchandising always has been a great tool, but I think its importance has increased,” affirms Tom Wheeler, director of produce operations for Mollie Stone’s Markets, a family and locally owned grocer with nine stores in the San Francisco Bay Area. “It’s really about building an idea in the consumer’s mind of how they might use the product,” he adds, “and it’s critical to reaching the younger-generation consumer. Millennials are super-experimental, but they didn’t have home economics [in school] like we did.” Some of Mollie Stone’s most successful crosspromotions to date were achieved with the support of the California Avocado Commission (CAC), based in Irvine. “We’ve worked with the CAC for quite a few years, and it’s been a huge success for us,” notes Wheeler, who points to Super Bowl-themed California avocado promotions, a Hatch chiles-and-avocado cross-promotion, and another for Cinco de Mayo. “Cinco de Mayo was probably the biggest success we’ve had with a cross-promotion,” he says. “We saw a massive increase in sales year over year.” The promotion featured California avocados, Mollie Stone’s in-house guacamole, its private label tortilla chips, and more — all conveniently merchandised together for customers to grab and go. “Cross-merchandising definitely increases sales,”

Wheeler continues. “You can eat an avocado by itself, but it goes a lot better with other things. It’s a nucleus for building a bigger basket.” Mollie Stone’s supports its promotions with in-store signage and through social media and recipes on its website. Whether it’s a simple cheese-and-apples pairing or a caprese salad promotion with mozzarella, basil, heirloom tomatoes and Mollie Stone’s private label olive oil, the grocer sees value in frequent cross-promotions — so much so that Mollie Stone’s recently hired a marketing person to help develop its crossmerchandising plans throughout the year.

croSS purpoSeS Mollie Stone’s Markets wows with california avocados and Hatch chiles.

Advancing Avocados In the 18 years that VP of Marketing Jan DeLyser has been with the CAC, the commission has put together hundreds of successful cross-promotions. While each had its merits, DeLyser says there are two key elements that are consistent throughout the December 2016 | progressivegrocer.com |

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most successful examples. “First, the program must be supported by and be turnkey for the retailer,” she asserts. “Second, the partner products need to make sense together and fit the brand communication.” While promotions featuring California avocados and tomatoes or fresh-cut salads are natural pairings, spicing things up can also be effective. “A late-summer cross-promotion with Melissa’s

Hatch chiles last year generated a lot of excitement,” recalls DeLyser. “Sometimes a unique idea can bring together two products that may not seem to have a natural fit, and create a successful pairing, such as when we promoted the idea of serving guacamole in a hollowed-out watermelon for the Fourth of July.” The watermelon and avocado cross-promotion had a “wow factor” for consumers, she says. Capitalizing on hot trends in avocado usage, from sushi to avocado toast to creative avocado cuts such as ribbons, are also valuable promotional tools, notes DeLyser. “Retailers can showcase these in ads, social media, demos and via the deli,” she suggests. “Seasonal ideas are an opportunity to bring on the green, such as Big Game spreads, avocado shamrock cutouts for St. Patrick’s Day and avocado deviled eggs for Easter.”

Fresh Food

Sometimes a unique idea can bring together two products that may not seem to have a natural fit, and create a successful pairing.” —Jan DeLyser, California Avocado Commission

Salad Savings Shoppers love to save, so pricing is a powerful component of successful cross-promotions in produce. San Antonio-based NatureSweet reports that one of its most successful cross-promotional partnerships has been its Better Together salad promotion with Fresh Gourmet Baked Cheese Crisps.

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Fresh Food

Crossmerchandising always has been a great tool, but I think its importance has increased.” —Tom Wheeler, Mollie Stone’s Markets

Produce

The program offers consumers substantial savings. Cross-merchandising the salad pairing outside of the produce department has also contributed to the program’s success. “Getting our NatureSweet tomatoes to the center store helps to increase basket size for retailers, and is a convenient reminder of fresh ingredients for consumers,” says Brand Manager Lori Castillo.

Repositioning Pistachios While pistachios have been successfully crosspromoted with beer as a game-day snacking sensation for years, Joseph Setton, of Setton Farms, in Commack, N.Y., is encouraging retail partners to look at new ways of promoting these nutritious and delicious nuts. “Over the last several years, pistachios are increasingly being promoted as a great-tasting healthy snack. We see pistachios frequently promoted with bottled

| Progressive Grocer | Ahead of What’s Next | December 2016

water and vegetables,” observes Setton, who adds that Setton Farms’ pistachios and pistachio-based products, like its new Chewy Bites, now carry the American Heart Association Heart Healthy checkmark. Setton Farms is also reaching out to kids and their families with regular cross-promotions of pistachios alongside fruits and vegetables through the Orlando, Fla.-based nonprofit organization Produce for Kids. Further, for easy cross-promotions anywhere in the store, Setton Farms offers a quarter-pallet bin. “Our pistachio bin is all inclusive for retailers,” he says. “They can just roll it out on the floor, so there’s no labor involved.”

Holiday Delights While many grocers, including Mollie Stone’s, use cross-promotions to drive produce sales throughout the year, Wheeler admits that the produce department really ramps up on cross-merchandising during the holidays. “Cross-merchandising is very important during holidays and special sporting events,” agrees Sarah Deaton, of Zespri Kiwifruit North America, in Newport Beach, Calif. “Retailers can place all of the ingredients for appetizers and cocktails together to help promote healthy party foods and drinks.” Zespri Kiwifruit is extending the availability of Zespri SunGold and Green Kiwifruit through the winter for the first time. Previously, Zespri was available only from May through October. “The extended availability of high-quality fruit is important as consumer demand increases,” says Deaton. “This demand is driven by consumer education about the health benefits of kiwifruit, as well as discovering just how tasty a premiumquality kiwifruit can be.” Zespri has developed many kiwifruit-centric recipes, from appetizers, entrées and desserts to breakfast items and lunches, as well as cocktails and drinks. Deaton recommends that grocers include recipe cards at the point of purchase. “It’s important to include educational POS that shows consum-

ers how to eat Zespri Kiwifruit, as well as how to choose and store it,” adds Deaton, who further notes that offering kiwifruit by the pound helps to increase sales.

Meal Makers This year’s Produce Marketing Association (PMA) Fresh Summit, held in Orlando, featured an array of products ripe for cross-promotion. Among them were a host of on-trend, meal-ready vegetables that offer consumers the flavor and convenience they crave. At the show, Coral Gables, Fla.-based Del Monte Fresh Produce introduced fresh, readyto-cook Del Monte Vegetable Noodles in Zucchini, Yellow Squash, Sweet Potato and Butternut Squash varieties. “Our vegetable noodles align perfectly with the recent consumer trend focusing on healthy alternatives to pastas and other carb-heavy products,” says Dionysios Christou, VP of marketing. “This versatile new product line also allows for ample cross-promotional opportunities, especially since they can be enjoyed as both hot and cold dishes,” continues Christou, who suggests crossmerchandising with complementary products

such as pasta sauces, other vegetables, seasonings, protein, and ethnic-cuisine sauces and spices. “They also make excellent cold salads; thus, cross-merchandising with salad dressings and other fresh ingredients such as tomatoes, avocados, cucumbers and olives would work well,” he adds. Meanwhile, Melissa’s Produce, in St. Vernon, Calif., showcased its Ready to Cook Vegetables at

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the PMA Fresh Summit. The line of fresh specialty baby vegetables in 1-pound retail packages offers a convenient ready-to-cook dish, serving two to three people. “We will continue to extend the line with items like Butternut Noodles and Zucchini Noodles in the coming months,” notes Robert Schueller, director of public relations.

Cause-related Cross-promotions Responsibly cultivated produce that’s better for the environment and farm workers was another top trend at the recent PMA show. Wholesum Harvest, of Nogales, Ariz., displayed new Fair Trade signage that offers participating retailers a simple and effective way to communicate the complex message of Fair Trade Certified produce with shoppers. “PMA proved to be a huge Fair Trade success for us, reassuring us that our customers care, and that they are hearing that consumers care how their products are sourced,” affirms Marketing Manager Jessie Gunn. “The POP helped them visualize the message, and helped them understand how to help

their customers understand.” All Wholesum farm-grown produce is available in Fair Trade versions for retailers willing to share in the responsibility of fair sourcing. For retailers building a cross-promotion with Fair Trade Certified produce, Gunn recommends communicating the direct correlation of the premium to the benefit. “We turn tomatoes into school buses.” “We turn bell peppers into soccer fields.” “We turn cucumbers into playgrounds.” These are messages that will resonate with consumers. Wholesum, which helps its partner growers become Fair Trade Certified farms, expects that in the

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All in the Family With its highly visible brands, including Pom Wonderful juices, Wonderful Pistachios and Wonderful Pom Poms, The Wonderful Co., based in Los Angeles, offers a range of items that can be seamlessly cross-merchandised. “Awareness of the Pom brand is higher than ever before,” says a Pom Wonderful representative. “We want to leverage this excitement and awareness of Pom and get consumers to embrace our products by reminding them about the nutritional benefits of our Pom Poms Fresh Arils through advertising, in-store displays, online promotions, PR, and cross-merchandising efforts across our family of products.” Additionally, since Pom Poms Fresh Arils are in season for only a short period of time, creating a sense of urgency in cross-promotions can spur sales. “Pom is uniquely positioned in the produce department to cross-sell our family of products, and consumers identify packaged goods sold in produce as fresh and healthy food,” notes the Pom Wonderful rep. “When Pom Poms ready-to-eat fresh

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pomegranate arils cross-promote with Pom 100% Juice, consumers can bundle the two products for a grab-and-go breakfast or a healthy snack.”

Crossmerchandising Going Bananas is very In an effort to convert light and medium conimportant sumers of bananas to frequent customers, Chiquita North America implemented two highly successful during holidays cross-promotions through its partnership with Uni- and special versal Studios and the sequels of two of the highest- sporting grossing animated films in U.S. history: “Despicable events.” Me 2” in 2013 and “Minions” in 2015. —Sarah Deaton, “The two campaigns were designed to drive Zespri Kiwifruit consumer engagement and impulse buying to incite North America higher banana purchase frequency,” explains Suyapa Mansilla, global business strategy manager for Cincinnati-based Chiquita. The campaigns were supported by a microsite, MinionsLoveBananas.com; advertising; radio; social media campaigns; and in-store POS. According to Chiquita, its retailer partners that fully executed the promotions saw an 8.3-to-11.6 percentage point advantage in volume growth per store per week over their competitive markets or control stores. PG

Fresh Food

Produce Category Spotlight

Onions and Garlic

Galore

These bulbs add zest to clever cross-promotions. By Jennifer Strailey

hile recipes are often a critical component in a successful produce cross-promotion, they’re all the more essential when it comes to promoting onions and garlic — the spice of life in the produce department. “Our retailer-level on-pack IRC campaign has been very successful over the past several years,” says John Shuman, president of Shuman Produce, in Reidsville, Ga. “Through our partnership with brands inside and outside of the produce department, we can help drive sales of a variety of items.” Shuman Produce ships bags of its RealSweet Vidalia onions to participating retail partners with a coupon booklet attached to the front of each bag. Along with offers from each of the partner products, each retailer-specific coupon booklet features a recipe including all of the items. “The consumer gets the added value of a meal solution, along with discounted ingredients, while the retailer has a built-in cross-merchandising

| Progressive Grocer | Ahead of What’s Next | December 2016

tool that results in a larger basket at checkout,” explains Shuman. “By creating a unified display showcasing these products, the retailer can provide consumers with convenience and positively affect purchasing behavior.” “Signage and recipes are always a great idea,” affirms Patsy Ross, of Christopher Ranch, in Gilroy, Calif. She notes that many retailers have also found success by creating a “Garlic Center” in the produce department that offers fresh garlic in bulk, packaged garlic, jarred garlic, and other value-added items that add flavor and spice to meals, all in one display. Christopher Ranch’s retail customers have also benefited from cross-promotions in which fresh garlic is merchandised next to tomatoes and avocados. “The white of the garlic really stands out next to the vibrant colors of the tomatoes and avocados,” Ross enthuses. Specialty onions, like shallots, pearls, cipolline and boilers, are best merchandised with other onion varieties, notes Ross, who recommends

cross-merchandising all of the items needed for traditional meals during the holidays. “For example, cross-promoting sage, green beans, garlic, specialty onions, etc.,” she suggests. “Cross-merchandising — especially value-added ingredients such as Squeeze Garlic and Squeeze Ginger — is the best way to increase sales, with the holidays upon us,” agrees Louis Hymel, of Spice World Inc., in Orlando, Fla. Hymel points to the widespread use of garlic and ginger in traditional favorites and a host of ethnic dishes, all of which provide abundant opportunities for cross-promotions not only during the holidays, but also throughout the year.

Sweet Deals “The most successful cross-promotion we executed, and continue to execute, was the snack foods promotion with our sweet onions,” says Meg Meyer von Bremen, marketing and sales director for Bland Farms, in Glenville, Ga. Bland Farms offered purchasers of Vidalia Brands snack foods a coupon for $1 off Bland Farms Sweet Onions. “The redemption of the coupons continues to be high each year when we offer this

Sweet to eat Vidalia onions make sensational salads.

cross-promotion,” notes von Bremen. “We plan to do the same thing with our new dressings to drive consumers to buy both sweet onions and Vidalia Brands dressings.” The new line of Vidalia Brands dressings are all-natural and gluten-free, and contain no highfructose corn syrup, trans fats or preservatives. The dressings are also a natural for cross-merchandising with Vidalia Sweet Onions. Bland Farms plans to provide recipes on its website that call for both its dressings and sweet onions. “We will offer the option of shippers or inserts for the bins of onions, as well as cases,” says von Bremen, “so retailers can display the dressings to fit their stores.” PG

We turn tomatoes into school buses. Wholesum Harvest operations in Mexico are Fair Trade Certified. This certification documents our practice of empowering our employees through premiums that are managed by our employees to lift their communities. Improving the lives of the people who grow our organic produce.

December 2016 | progressivegrocer.com |

Nonfoods

Health, Beauty & Wellness

Best Face Forward

Grocers must narrow assortments, offer value and merchandise creatively to win in this category. By Barbara Sax

upermarkets are taking a pareddown approach to facial, hand and body moisturizers, offering a narrow selection of best-selling items and targeting fill-in shoppers. “Supermarkets have to make it easy for consumers to shop this category, or they are going to purchase online,” warns Candace Cortlett, president of New York-based WSL Strategic Retail. If consumers are browsing, they’re doing so online or in channels with an extensive selection. One-fourth of shoppers are buying facial skin care products online, according to Cortlett, and one-third are pre-shopping consumer package goods online before purchasing in stores. That doesn’t mean there isn’t opportunity for the grocery channel, however. “Supermarkets don’t need to focus on the shopping experience in this category,” notes Cortlett. “Their opportunity is in replenishment trips, and they can win those purchases by making sure the best-selling facial moisturizers are represented and by organizing them in a way that makes it easy for consumers to find. Research shows consumers will pay more for products they really want or to purchase in a convenient location.”

Supermarkets have to make it easy for consumers to shop this category, or they are going Only the Best Sellers to purchase A buyer at one Midwestern supermarket chain says online.” his store layouts are tight on space and don’t allow —Candace Cortlett, WSL Strategic Retail

for special fixtures or lighting, so he’s narrowed the focus to best-selling products. “Space is my enemy, so I’m concentrating on best-selling fill-ins,” he explains. According to the buyer, Neutrogena and Olay best-sellers are driving his company’s business in facial moisturizers, while the hand and body business is dominated by Gold Bond, Eucerin and Jergens. “The category is mostly basics,” he says. “I can’t remember the last time I sat through a spapositioned presentation.” Safeway, a division of Albertsons Cos., is sticking to the best-seller formula by keeping its facial

| Progressive Grocer | Ahead of What’s Next | December 2016

moisturizer section trimmed to 3 feet. Best-selling brands such as Olay Regenerist and Olay Total Effects share space with L’Oreal’s Revitalist and Neutrogena’s Hydro Boost. The Pleasanton, Calif.based retailer aggressively promotes the category with on-shelf signage signaling everyday pricing on best-selling products. Safeway and Englewood Cliffs. N.J.-based Unilever recently ran a promotion offering $5 toward a gift card with the purchase of $15 worth of participating Unilever brands. Wendy Hale, of Plainwell, Mich.-based Harding’s Friendly Markets, notes that selection varies by store size. “In our larger stores, Olay and Neutrogena are the best sellers, but our smaller stores may stick with value brands like St. Ives and Ponds,” she says. According to Hale, Gold Bond specialty moisturizers are performing well at the stores, particularly the brand’s Diabetics’ Dry Skin Relief and Ultimate Eczema Relief Skin Protectant Cream, which were introduced over the past few years by Sanofi’s Chattanooga, Tenn.-based Chattem division as part of a line of therapeutic products. The chain promotes regularly in-store and in circulars.

Sorting Out the Segments While some higher-priced facial moisturizers are still performing well, anti-aging facial moisturizers are in a slump overall, with multioutlet dollar sales down 4 percent, according to IRI data for the 52-week period ending Oct. 2. The general facial moisturizer category is faring much better, with dollar sales in that segment up 6 percent for the same period. Neutrogena’s Hydro Boost, introduced in 2015, had a strong year, and a few products from the Aveeno Active Naturals, Cetaphil and CeraVe brands showed double-digit increases, according to Chicago-based IRI. The Olay brand has lost market share to Johnson & Johnson’s Neutrogena Hydro Boost and Aveeno Active Naturals. Continued on page 80

December 2016 | progressivegrocer.com |

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Nonfoods

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Continued from page 76

Best-in-class retailers promote new natural beauty products prominently and consistently in high-traffic secondary locations.” —Ingrid Jackel, Yes To

Face oils, according to London-based Euromonitor International, are gaining some traction in the category. Last year, Physician’s Formula introduced the Argan Wear collection, which includes a facial oil. Ahold’s Etos brand beauty oils, which can be used on the face, body and hair, are carried by the company’s Stop & Shop and Giant Landover stores. Stop & Shop recently tweeted about the oils on its Twitter feed. Natural beauty brand Yes To recently launched multitasking PrimRose Oil Miracle Oil and Argan Oil Miracle Oil. The natural brand is being carried at Giant Landover stores, which also offer Burt’s Bees and Unilever’s Simple in a small natural section. “Natural beauty products are growing at seven times the mainstream growth during the latest 24 weeks, based on IRI data, and are contributing over 20 percent of the absolute dollar growth,” says Ingrid Jackel, CEO at San Francisco-based Yes To. Jackel adds that best-in-class retailers have large dedicated natural skin care sections with good signage, education, graphics and premium merchandising to call attention to key product features. “They promote new natural beauty products prominently and consistently in high-traffic secondary locations, including end caps, floor stands and clip strips,” she says. Men’s skin care is also getting more play in the category. Last February, Switzerland-based Galderma Laboratories, with U.S. headquarters in Fort Worth, Texas, launched Cetaphil Men, a line of skin care products that includes three moisturizers: Daily Face Lotion SPF 15, 3-in-1 Daily Lotion and Extreme Healing Lotion. Men’s personal care is a growing segment: According to recent research from Chicago-based Mintel, men’s personal care in the United States is anticipated to reach $4.7 billion in sales by 2021. Overall, the past year has been light on innovation in the hand and body moisturizer category, and IRI multioutlet data show hand and body moisturizer sales to be flat overall. Some brands, such as Jergens and CeraVe, have had slight upticks in dollar sales. Chattem was the only

| Progressive Grocer | Ahead of What’s Next | December 2016

skIN deeP More than 20 CeraVe moisturizing products have earned the National eczema Association seal for their healing properties.

company to post a dollar sales share gain, due to the success of its therapeutic Gold Bond line. Dollar sales of Chattem’s Gold Bond Ultimate Hand & Body lotion were up 5 percent for the period. Therapeutic skin care products are performing well, particularly those targeted to specific conditions. Valeant Consumer Healthcare, a Canadian company with U.S. headquarters in Bridgewater, N.J., recently introduced CeraVe Healing Ointment, formulated to provide intense, long-lasting moisturization for eczema-prone skin. The product doesn’t include lanolin. “More than 20 CeraVe products have been awarded the National Eczema Association seal,” says a spokeswoman for the brand. “CeraVe is the fastest-growing brand at retail, and growth has been driven by consumption, not price.” Sales of CeraVe’s Hand & Body lotion were up 6 percent for the period. Cincinnati-based Kao USA introduced a line of wet-skin moisturizers under its Jergens brand last year and launched another wet-skin moisturizer under its Curél brand this year. Jergens Wet Skin Moisturizer offers twice the moisture of a traditional lotion and is specifically formulated to absorb quickly into wet skin. Curél Hydra Therapy Wet Skin Moisturizer featutes proprietary ceramide technology and a cationic formula to provide skin-healing benefits. Additionally, Galderma’s Cetaphil recently launched an In-Shower Moisturizing Oil. According to Jeanette Chantalat, marketing director for Cetaphil, “Innovation in fun/unique packaging or unique product forms, such as in-shower, are driving purchases and trade-up behavior in the category.” PG

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Cleaning Supplies

Brush Up

on Cleaning

Balancing the tried and true with the innovative is key to success in the category. By Barbara Sax

he cleaning supply category remains a solid performer for supermarkets, but without much innovation in the past few years, it’s not a category offering retailers tremendous growth. For that reason, retailers that promote the category year-round and concentrate on pockets of growth within it are seeing the best results in the household cleaning aisle. Previous innovation in the category has been convenience-focused, and products that make cleaning tasks easier are gaining share, particularly among younger consumers, who are more likely to purchase disposable cleaning products. “The wipe segment continues to expand as convenience products become a bigger part of the category,” says Rita Gorenberg, associate director of public relations at The Clorox Co., in Oakland, Calif. “We’re focused on introducing products that make quick cleanup easier.”

| Progressive Grocer | Ahead of What’s Next | December 2016

Last year, Clorox introduced Clorox Disinfecting Wipes with Micro-Scrubbers, which offer one smooth and one textured side for more challenging cleaning, and Triple Action Dust Wipes, designed to trap dust, hair and allergens.

Category Snapshot “Multipurpose products are growing,” says Shelley Cade, VP of marketing at St. Louis-based Willert Home Products. “Since consumers, particularly younger consumers who are living in smaller spaces, have limited space to store cleaning products, there’s been movement toward one product that can be used for a variety of tasks.” Multichannel data from Chicago-based IRI for the 52 weeks ending Oct. 2 show that dollar sales of all-purpose cleaners/disinfectants outperformed most other household cleaning segments, with an increase in dollar sales of 2.5 percent. The comparably strong performance isn’t surprising, since research from Mintel, also based in Chicago, indicates that household cleaner product purchasers are likely to rank cleaning power and antibacterial action among the most important attributes when selecting surface cleaners. By comparison, glass cleaners/ammonia saw a slight decline in dollar sales, while nonabrasive tub and tile cleaner dollar sales held steady, with a meager 1.5 percent dollar sales boost during the previously cited period. To boost sales year-round, Clorox partners with retailers during the backto-school season to outpost disinfecting wipes near school supplies, and during cold and flu season on end caps and shippers placed near the pharmacy, to add incremental support and create opportunity. This year, the company will also make a push for antibacterial and dusting wipes during allergy season. “We used educational shelf signage last year to communicate how keeping the house clean during cold and flu season can

stop germs from spreading, and we plan to use that approach with allergy season this year,” says Gorenberg. Specialty cleaners remain the profit center of the category, with dollar sales up nearly 6 percent, according to IRI data. Gurnee, Ill.-based Weiman Products, which markets stainless steel, glass and granite cleaning products, among other specialty cleaning offerings, saw a 16 percent dollar sales gain over the period, and Falcon Safety Products, which markets the Dust-Off brand of electronics monitor-cleaning products, also experienced a 16 percent spike in dollar sales. “As people are replacing their PCs and the smartphone and tablet market grows, consumers are looking for quick, easy and affordable solutions for cleaning their electronics, especially on the go,” says Jennifer Rappaport, director of marketing at Branchburg, N.J.-based Falcon. According to Rappaport, consumers are discovering multiple uses for Dust-Off products. “Our line of Dust-Off dusters was primarily used to clean CPUs and keyboards, but we’re finding that people are also using them around the home on hard-to-clean items like blinds and lampshades, or to quickly remove dust from a shelf or bookcase without having to remove all the items on it,” she says. The company is working with retailers to keep its Dust-Off products together in the cleaning aisle rather than merchandised in the stationery or electronics sections. “We’ve created an off-the-shelf display that highlights all our electronics cleaning products,” notes Rappaport. “With shelf spacing being so limited, we’ve found that off-the-shelf displays let retailers bring new products into a crowded section.” There’s been some growth in toilet bowl deodorizers and cleaners, with dollar sales of both Clorox and Willert Home Products brands up 10 percent. Ty-DBol recently introduced toilet rim products priced 30 percent below other branded products. “People are still very into fragrance, especially when it comes to bathroom products,” says Willert’s Cade. “Clorox Toilet Wand, which hit the market a few years ago, has had an uptick in sales,” says Gorenberg. “Part of the growth is due to placement in the home cleaning tool section so the product goes head to head with traditional brushes. Growth is also due to a change in the way consumers, younger consumers in particular, are cleaning the bathroom.”

Tradition Still Matters While disposable products are a bigger part of the category, retailers also need to offer traditional cleaning tools. “We’re seeing some migration to traditional dust mops and microfiber cleaning cloths that offer enhanced performance,” observes Michael Silverman, director of marketing at Hudson, Mass.-

When we can tie a highly consumable product to a higher-ring, higher-margin product and increase that basket purchase, the retailer wins.” based Butler Home Products. “Kroger dedicates a lot of space to traditional cleaning tools to give consumers choice, and their business is very strong.” Butler recently introduced a spin mop under the Clorox label that retails for $25, and updated its licensed Dawn line of kitchen brushes and sponges with more bristles, updated handles and hang-hole options. The products, which have an average retail price of $3.49, are often cross-promoted with Dawn dishwashing liquids at some chains. “When we run a coupon for a brush-and-liquid-

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Cleaning Supplies

combination sale, consumers are 80 percent more likely to make that brush purchase,” says Silverman. “When we can tie a highly consumable product to a higherring, higher-margin product and increase that basket purchase, the retailer wins.” Lakeland, Fla.-based Publix, he adds, takes a highly promotional approach to sponges, frequently running promotions that tie product to dishwashing liquids. Dave Lynam, HBC buyer at Plainwell, Mich.based Harding’s Market-West, says that he’d be interested in cross-promoting Dawn and Gain licensed brushes and sponges with liquid cleaning products. “Household cleaning tools are a good, solid everyday category, and we do have good consumer acceptance when we cross-merchandise,” he affirms. While convenience is a key driver in the category, price is still a factor and promotion is a big consideration. A recent report from Schaumburg, Ill.-based Nielsen reveals that half of global consumers choose where to shop for household cleaning supplies based on price.

“Promotions are very effective,” agrees Cade. “Any time we do a coupon valued 50 cents or above, such as a $1 off when you buy two, it’s successful. We try to keep our promotions very specific and targeted.” Tops Markets LLC promotes heavily in the category, with two-for-$5 and two-for-$9 deals common in the household cleaner aisle. The Williamsville, N.Y.-based chain also features deals on floor stands in the aisles and recently promoted Clorox Clean Up, Libman brushes and Soft Scrub cleaning gloves on separate floor stands in the aisle. Big Time Products, meanwhile, is using dump bins, wing displays and clip strips to generate impulse purchases of its cleaning gloves. “We can boost incremental sales tenfold over normal shelf movement when we use well-located displays built around core items, such as detergents, dish soaps and household chemicals,” says Tim Stapleton, president of U.S. sales. The Rome, Ga.-based company recently upgraded its Soft Scrub Premium Fit with UltraFresh and its Premium Defense lines with a new color, fit and packaging. PG

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| Progressive Grocer | Ahead of What’s Next | December 2016

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Technology

Big Data

Big Data:

In Search of Benefits Making insights actionable is key. By John Karolefski

B What you do with your data is much more important than how much data you have.” —Craig Alberino, Grey Jean Technologies

ig Data means big business for grocery chains. Kroger leverages data to drive basket size, shopping visits and retention over time via highly targeted promotions. Raley’s, in Northern California, creates a world-class customer experience by analyzing its transactional and shopper card data, connecting this with customer comments, and by listening to shoppers on social media. “In order to use Big Data to the fullest, grocers need transaction history with data like demographics, social media activity, geolocation, and personal preferences and behavior, to predict their consumers’ next product purchase and deliver coupons, offers and messaging that they’re actually going to respond to and use to make a purchase,” explains Craig Alberino, CEO of Grey Jean Technologies, a New York-based AI-powered personalization company. But not every grocer has the resources of a Kroger or a Raley’s. Experts advise food retailers of all sizes to make leveraging Big Data more of a priority, and perhaps partnering with a consultancy to guide them within the limits of their budgets. Why? Because the insights from Big Data may prevent them from losing customers, and will enable independent and midsized retailers to compete more effectively with larger chains.

| Progressive Grocer | Ahead of What’s Next | December 2016

“It’s clear that grocery chains are taking learnings from their data and using it to target customers in smarter ways,” affirms John Kyriakides, assurance office managing partner with BDO USA, a Chicago-based professional services firm. “We’re seeing this in strategic shelving as well as how they send targeted coupons to customers through email, text and sometimes in-app. “As for the smaller and more niche grocery stores, they know that they must be conscientious of their regular customers,” he continues. “It’s impossible to say, in general terms, whether all grocery chains and all small grocers are using data to the fullest, but it’s obvious that many are clearly using it to their advantage in smart and meaningful ways.” Here are some of the specific benefits that grocers can gain by leveraging Big Data:

Understanding Customers Better “One of the biggest benefits grocers can acquire from Big Data is a better understanding of their customer base, which in turn drives revenue,” says Eileen Kolev, marketing program manager for Tysons Corner, Va.-based MicroStrategy, provider of an enterprise analytics platform. “This understanding is especially critical in the grocery industry, where margins are razor-thin and food waste is a crucial issue. By effectively leveraging shopper data,

grocers can customize marketing activities, pricing, product assortments and customer service in order to build consumer loyalty and increase revenue.” She adds that one available source of Big Data — mature loyalty programs — provides grocers with a wealth of customer insight that can be used to identify product segments, silo shoppers and define product affinities. By combining these data with other sources of information — nutritional trends, preferred method of receiving promotions, weatherrelated events and customer traffic patterns — grocers can focus on improving the overall shopping experience and drive revenue, according to Kolev.

Segmenting Shoppers “With Big Data, grocers can understand which items to sell at which prices to which shopper segments that will drive loyalty of trips and stimulate incremental demand,” notes Brian Elliott, CEO of Periscope by McKinsey, a global consultancy. “This insight into consumer behavior impacts pricing, promotions, assortments, personalization and even vendor negotiations.” December 2016 | progressivegrocer.com |

Technology

Big Data

Elliott gives an example regarding assortments: Big Data enables grocers to optimize which products shoppers see in the store, how many facings are needed, and the total linear feet by category, given the shopper segments in the store. “With Big Data and advanced analytics,” he explains, “we better understand which store clusters need to be sharper on price and which can save money by not investing in price quite as deeply. With a better understanding of willingness to pay by customer segment, by key value item and by store cluster, retailers are better able to make investments in loyalty that pay off.”

By effectively leveraging shopper data, grocers can customize marketing activities, pricing, product assortments and customer service in order to build consumer loyalty Optimizing Promotion Pricing and increase “Making correlations between verified price-torevenue.” consumer information and a retailer’s own POS —Eileen Kolev, MicroStrategy

data allows individual stores to optimize pricing by location,” points out Guy Amisano, CEO and founder of Salient Management Co., a Horseheads, N.Y.-based software provider. Retailers can do this in three ways: Finding the best price point for a specific product or an entire brand Effectively offering promotion Tracking product flows and understanding profitability “Combining the mass amounts of data already at a retailer’s fingertips — from invoice info to scan records to vendor rebates — allows them to gain a clear picture of profitability by day, as well as digging deeper into performance of each vendor, department or individual store as a whole,” he says.

Mining for Insights in Loyalty Data Retailers with mature loyalty programs have householdlevel shopper data showing basket activity over time that experts say can be used to identify product trends, segment shoppers, define product affinities, and more. Hari Shetty, global head — retail vertical at Bangalore, India-based consultancy Wipro Ltd., agrees, but only if grocers have the capability to analyze the data in a mature loyalty program. “The more grocers and other retailers know about their

Personalizing Promotions According to Elliott, the consultant, there are two ways that Big Data enables companies to motivate their customers. The first is localization, which allows companies to tailor which products are available in which stores and which promotions best appeal to the local shopper market. “The second approach is personalization, which is a step beyond localization,” he explains. “With this, companies move from a segment of many to a segment of one. This can be reflected in simple targeted pricing promotions as well as ‘awareness’ promotions targeted to shopper interests without requiring a price promotion to get their attention.” He gives the real-time example of a store sending a text to alert a shopper that an item they have purchased a lot previously is currently on clearance in a nearby store, or to share a recipe near dinnertime to spur an incremental trip for the ingredients. Summing up the benefits, Alberino, of Grey Jean Technologies, stresses that the biggest piece of knowledge grocers can take away from the data they’ve accumulated is that perceived “volume” of data doesn’t matter. “What you do with your data is much more important than how much data you have,” he says. “In order to provide the biggest value for your customers — and, consequently, grocers themselves — grocers need to make those data insights actionable. The key to successful Big Data use is the ability to identify exactly which customer data points will help them understand individual buyers, what motivates them and what drives them to purchase — and understand that this data can and will change from purchase to purchase.” PG

customers — the way they shop and when, their preferred methods of communication, their buying patterns and habits — the better they can tailor products and services, which improves the overall customer experience,” asserts Shetty. As evidence, he cites key findings from a study of retailers by the London-based Economist Intelligence Unit: 64 percent believe data increases brand loyalty 52 percent say Big Data enabled them to expand their sales by offering the next logical item 64 percent of retailers have made financial gains in customer relationship management through Big Data 66 percent significantly increased the amount of information held about customers last year “It’s obvious that the more you know about your customer, the more effectively and efficiently you can deliver on their needs,” notes Shetty, “and loyalty programs are one way to do just that.”

| Progressive Grocer | Ahead of What’s Next | December 2016

Sustainable Solutions

Equipment & Design

Getting

Greener

Retailers and suppliers are taking energy conservation seriously. By Bob Ingram

oday’s food shopper increasingly sees sustainability as a mark of good corporate citizenship in choosing a retailer, and supermarkets are responding accordingly. It makes economic sense, too. “Since 2008, we’ve reduced our company’s greenhouse emissions by 22 percent — four years ahead of schedule,” says John Lerch, director of energy and facilities at Weis Markets, in Sunbury, Pa. The company’s overall goal is to reduce energy usage by 3 percent annually. Weis has a handful of stores with 100 percent LED lighting and an aggressive program to increase LED lighting in remodels, as well as specifying LED lighting for all new stores, Lerch says. “To conserve energy, many of our stores have dimming modules in specific sales-area lighting, and motion sensors in back-room and cooler and freezer

locations,” Lerch says. New stores use skylights and dimming to harvest daylight and reduce energy use. Weis’ new refrigerated dairy cases have doors, and in new stores all medium-temperature dairy, cold, meat and bagged salad cases have doors, all cases are required to have LED lighting, and motion sensors on specific cases, he adds. HVAC equipment is highly advanced, and along with state-of-the-art energy management systems, reduces and manages Weis’ utility costs, Lerch observes, adding that the company recently received EPA’s GreenChill award for reducing refrigerant leak rates, achieved through advanced equipment. The company also has an Energy Awareness Program for associates, he notes. Redner’s Markets, in Reading, Pa., is saving $3,000 to $5,000 monthly, according to Eric White, director of marketing, by converting to LED

smart storE Danfoss’ aKsm880 system manager can oversee an entire supermarket.

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December 2016 | progressivegrocer.com |