Labor Gains How retailers can get a handle on wages, training, tech Performance art Discover 5 ways to lift grocery, frozen, perimeter sales PersonaLizeD touch Design a winning ecommerce strategy
21st annual awards recognize innovators of solution management
PLUS!
2018 Category Management Handbook
December 2017 • Volume 96, Number 12 $10 • www.progressivegrocer.com
YOUR PACKAGED POTATO SALES
NEVER LOOKED SO GOOD AMERICA’S FAVORITE MASHED POTATOES*
*Based in part on Nielsen sales data, 52 weeks ending 10/28/17
Continuing at
Number 1 7 Straight Years and Going
3
4
5
6
Dole Category Development Confirms Industry-Leading Position Dole has a reputation for delivering high-quality fresh fruits, vegetables, and salads.
Dole’s category development group has an award-winning proven legacy in delivering best-in-class thought leadership and strategic direction driving new heights for our retail partners in produce. For the past seven years, DOLE® has been among the most awarded companies in the industry, earning 5 more awards in 2017. We’d love to talk to you and share testimonials direct from our retail partners. Contact your local Dole sales representative, or Call (818) 874-400 or (831) 641-4200 to learn more.
Contents 12.17
Volume 96 Issue 12
Features
51 75 22 COVER STORY
51 SpECial SECTiOn
Progressive Grocer ’s 2018 Category Management Handbook
Solution Centers
A collection of articles on the latest incarnation of category management, and how grocers can benefit from it.
Progressive Grocer ’s 2017 Category Captains
Desperately Seeking Solutions
75 FEaTuRE
Forces of Labor
Category management moves toward solution-based collaboration between retailers and suppliers.
Rising wages, new training initiatives and technology’s impact are 3 issues for retailers to follow in 2018.
Departments 8 EDiTOR’S nOTE
16 niElSEn ShElF STOppERS
103 EDiTORS’ piCkS
Out With the Old, in With the Bold
Baking Supplies
Food, Beverage & Nonfood Products
12 pulSE
Tea and Other Hot Drinks
104 aDVERTiSER inDEx
14 in-STORE EVEnTS CalEnDaR
20 all’S WEllnESS
105 inDEpEnDEnT ThOughTS
February 2018
Helping Shoppers With New Year’s Resolutions
Making a Difference
18 MinTEl CaTEgORY inSighTS
Progressive grocer December 2017
5
contents 12.17
Volume 12 Issue 96
8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 800-422-2681 Fax: 978-671-0460
www.ensembleiq.com
80 Grocery
svP, Brand director Katie Brennan 201-855-7609 • Mobile: 917-859-3619 kbrennan@ensembleiq.com
Keeping Center Store Relevant
editoriaL Managing Director of content Strategy Joan driggs 224-632-8211 jdriggs@ensembleiq.com
5 ways to reinvigorate an underappreciated section of the store.
eDitorial Director James dudlicek 224-632-8238 jdudlicek@ensembleiq.com Managing eDitor Bridget Goldschmidt 201-855-7603 bgoldschmidt@ensembleiq.com
86 Frozen & reFriGerated
Digital & technology eDitor randy hofbauer 224-632-8240 rhofbauer@ensembleiq.com
Chilling Effect
Senior eDitor Katie Martin 224-632-8172 kmartin@ensembleiq.com
5 ways of getting shoppers to warm up to the frozen aisle.
Senior eDitor anna Wolfe 207-773-1154 awolfe@ensembleiq.com contributing eDitorS Jenny McTaggart, Lynn Petrak, Barbara Sax and Jennifer Strailey
89 Fresh Food
advertisinG saLes & Business SoutheaSt account executive Larry cornick 224.632.8248 lcornick@ensembleiq.com
Freshening Up
Here are 5 ways to boost the perimeter in the new year.
MiDweSt Marketing Manager angela Flatland (ar, co, il, in, ia, kS, ky, Mi, Mo, ne, nD, ok, SD, tn, wi) aflatland@ensembleiq.com 224-229-0547 • Mobile: 608-320-4421
92 industry events
Senior Marketing Manager Judy hayes 925-785-9665 jhayes@ensembleiq.com
Moveable Feast
Senior Marketing Manager theresa Kossack 214-226-6468 tkossack@ensembleiq.com
PMA’s Fresh Summit 2017 captured the epicurean explosion and innovation in fresh produce.
89
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 claSSifieD ProDuction Manager Mary Beth Medley 856-809-0050 marybeth@marybethmedley.com events SvP, eventS & conferenceS Maureen Macke 773-992-4413 mmacke@ensembleiq.com custoM Media vP/cuStoM MeDia DiviSion Pierce hollingsworth 224-632-8229 phollingsworth@ensembleiq.com general Manager, cuStoM MeDia Kathy colwell 224-632-8244 kcolwell@ensembleiq.com MarKetinG Marketing Manager courtney hofbauer 224-632-8215 chofbauer@ensembleiq.com audience deveLoPMent Director of auDience DeveloPMent Gail reboletti greboletti@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 art/Production Director of ProDuction Kathryn homenick khomenick@ensembleiq.com
98 98 technoLoGy
101 nonFoods
Clear and Captivating
New Ways to Clean Up
Grocers desiring repeat ecommerce customers must provide content that is accurate and makes shopping more convenient, personalized.
6
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Specialty, innovative and targeted products offer potential growth in a mature category.
aDvertiSing/ProDuction Manager Jackie Batson 224-632-8183 • Fax: 888-316-7987 jbatson@ensembleiq.com art Director Bill antkowiak bantkowiak@ensembleiq.com rePrints, PerMissions and LicensinG Wright’s Media ensembleiq@wrightsmedia.com 877-652-5295
corPorate oFFicers executive chairMan alan Glass chief oPerating officer richard rivera chief financial officer Len Farrell chief buSineSS DeveloPMent officer Korry stagnito PreSiDent, enSeMbleiQ canaDa Jennifer Litterick PreSiDent of enterPriSe SolutionS/ chief cuStoMer officer ned Bardic chief Digital officer Joel hughes chief huMan reSourceS officer Greg Flores
© 2017 Rust-Oleum
d in
h e B
g in
, z s a e m a ip ing
z c a e . m rare a ses s e m ®
r, t te
Ku d . u K r acle t h ir wi g m u d in K r cut t t he aset C u gre the
INTRODUCING KRUD KUTTER KITCHEN DEGREASER
A formula developed for and tested by real home cooks
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High conversion from in-store demos
National advertising campaign: FSI with aggressive offers Television Facebook & Instagram Paid search Public Relations and editorial tours Blogger & Influencer marketing
Contact Matt Casto at Matt.Casto@KrudKutter.com to
ADD KRUD KUTTER TO YOUR CLEANING ASSORTMENT
Editor’s NotE By Jim Dudlicek
Out With the Old, In With the Bold ur last issue of the year typically looks at ways that you can do business better in the next one. In that vein, here are five things to watch as the retailing world enters 2018: Amazon: The mega-etailer is selling its devices inside Whole Foods Market stores, pushing Whole Foods loyalty members toward Amazon Prime, rolling out in-home delivery using smart-lock technology and, reportedly at this writing, poised to go public with cashier-free stores. Meanwhile, Amazon has pulled back home grocery delivery in at least nine states, with rumors swirling that Amazon Fresh is fraught with problems. Is Amazon not the game changer it’s made itself out to be? Grocery’s a whole new world with its own logistical challenges that just require time to overcome. Don’t bet against Amazon — and don’t stop your own innovations toward becoming every bit as relevant a retailer. Walmart: With strong ecommerce numbers and grocery comps, the Bentonville behemoth is countering the Amazon invasion every step of the way. With its own initiatives, among them checkout-free shopping, expanded grocery delivery including tests of direct-to-fridge, and investments in etailing, Walmart is also partnering with Google on voice-enabled shopping. After losing its way for a while, Walmart has a renewed focus and is finding new ways to leverage its scale. Aldi/Lidl: Fierce competition continues from and within the limited-selection/hard-discount sector. With a decades-long head start in the U.S. market, Aldi is aiming to hit 2,500 stores within five years while remodeling some 1,300 locations, and is even piloting a home-delivery service, while its historic overseas rival Lidl establishes itself in the States. Lidl launched last summer with great fanfare and, despite softer-than-expected results in the overstored Southeast, some executive shuffling and apparent retreats in at least four states, remains committed to nationwide expansion. With penny-wise shoppers and the growing popularity of private brands on its side, look for this sector to continue making inroads against traditional players. Kroger: The largest traditional grocer and the industry’s usual pacesetter hasn’t escaped the influence of its rivals. Expansion of private labels, restaurants and meal kits, digital, home delivery, new stores, price cuts, new sustainability initiatives, and courting of local suppliers are among Kroger’s latest moves. Bouncing back from the end of an unprecedented comps-growth streak, Kroger is relying on investments in insights to make its customer-first elements faster and more aggressive. 8
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From home delivery and meal kits to prepared foods and in-store experiences, grocers will be focused on innovating the best means to the shopper’s end.”
Solution management: With competition more fierce than ever before, retailers will be duking it out over how best to deliver on shopper need states. Stores are going to be reconfigured, new services created. From home delivery and meal kits to prepared foods and in-store experiences, grocers will be focused on innovating the best means to the shopper’s end. Mergers and alliances will be less about expanding market share and more about leveraging complementary competencies to better bring consumers what they want, how they want it.
oh, and You May Have Noticed … Every grocery store, no matter how great, needs a refresh now and then — and so does PG. This issue is the first to feature our new look, which we feel is authoritative, bold and contemporary, always looking ahead of what’s next while being true to our heritage of guiding the industry through every milestone of the past century. Our new design is clean and easy to read, the perfect platform for all of the compelling features and information that you look for every month, as well as new concepts that we’ll be rolling out in the coming year. Welcome to the new Progressive Grocer — we look forward to your feedback!
Jim Dudlicek Editorial Director jdudlicek@ensembleIQ.com Twitter @jimdudlicek
Are the sides you're serving Your pre-packaged customers don’t want to take a number, and they don’t want to wait – but they don’t want to settle, either. If you’re not packing enough variety into your pre-packaged offerings, your Millennials will find someone who will. That’s where Blount’s culinary expertise comes in. Instead of a bread stick, you get to pair quality side dishes like broccoli rabe with white beans, mac & cheese, and truffle polenta with those short ribs, turning an everyday option into a gotta-have-it meal. For more info, contact your Blount sales rep at 800-274-2526.
TM
blountsides.com
What’s trending noW on progressivegrocer.com
Pulse
News about Supervalu made up two of the top three stories on progressivegrocer.com during the Oct. 16-Nov. 15 time period. For the No. 1 slot, grocery expert Burt Flickinger lauded the Eden Prairie, Minn.-based wholesaler-retailer for pulling off “the two most-important acquisitions in the U.S. and Canada in decades,” following its purchase of Associated Grocers of Florida in mid-October and of Unified Grocers several months prior. For No. 3, alternative investment management firm Blackwells Capital LLC, one of Supervalu’s largest shareholders, urged the company to sell roughly one-third of its store base to help create substantial value for shareholders and strengthen business. In between those two stories, at No. 2, was a piece speculating on the possible failure of Amazon Fresh following its pullout from neighborhoods in several states, proving that fresh delivery truly is a tough code to crack in grocery ecommerce. Rounding out the next few top stories are a recap of Progressive Grocer ’s own Top Women in Grocery gala, at which the program celebrated the opening of its second decade; news that despite reports to the contrary, Lidl is forging ahead with its plans in Georgia and beyond; and the announcement that Anne Dament, who joined Supervalu from Target in January, already has been upped to EVP following her success in reimagining the company’s retail and wholesale businesses, and in bringing greater collaboration between both sides.
1
Grocery Expert Lauds Supervalu’s ‘Sensational Back-to-Back Deals’ http://bit.ly/2yvTNVQ
2
Is Amazon Fresh Failing? http://bit.ly/2zvLFFU
“Amazon Fresh is failing because they don’t yet get how to do fresh compared with Peapod, who is excellent at it.” —Bill Bishop, chief architect, Brick Meets Click
3
Major Investor Urges Supervalu to Sell Stores http://bit.ly/2zLt4EU
4
Top Women in Grocery Celebrates in Chicago http://bit.ly/2ANjezC
5
Georgia ‘Still a Focus’ for Lidl
6
Dament Promoted to EVP at Supervalu
http://bit.ly/2yVe84I
http://bit.ly/2jBrhMU
“Over the last year, she’s set a positive vision for our retail initiatives, particularly here in Minnesota; introduced exciting new product innovation to wholesale and retail; and brought greater collaboration between our retail and wholesale teams.” —Mark Gross, Super valu pre sident and CEO
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© 2017 CROPP COOPERATIVE | 17-10060
in-store events
Calendar S
02.18
M
American Heart Month Black History Month National Chocolate Lovers Month
T
W
National Cherry Month National Snack Foods Month National Hot Breakfast Month
T
1
Celebrate African Heritage & Health Week by asking customers to share recipes on your Facebook page.
F
2
Groundhog Day
S
3
National Tater Tot Day
National Carrot Cake Day. Offer carrot cake coupons on your Twitter feed.
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10
National Dark Chocolate Day
4
Super Bowl LII. Make sure you’re well-stocked for lastminute shoppers.
5
World Nutella Day. Offer samples and recipes using Nutella as an ingredient.
National Homemade Soup Day. Set up a display of soup pots, soup bowls and soup ladles.
National Frozen Yogurt Day
11
12
Make sure your Valentine’s Day displays are inviting.
6
Feature your staff’s favorite snacks on social media for National Snack Foods Month.
7
National Fettuccine Alfredo Day
ECRM Candy Planning begins in Chicago and continues through Feb. 21.
Abraham Lincoln’s birthday (1809)
National Clam Chowder Day. Sample New England, Manhattan and Rhode Island styles. Don’t forget the oyster crackers.
13
National Tortellini Day
National PB&J Day
National Italian Food Day
19
20
It’s Presidents Day and Washington’s Birthday (observed).
26
National Pistachio Day. Offer shelled and in-shell options, along with recipe ideas for entrées and treats.
The Annual Meat Conference begins today and continues through Feb. 27.
14
Promote Mardi Gras (Feb. 13) with king cakes in the bakery and po’boys in the deli.
National Have a Brownie Day
National Pizza Day
14
Valentine’s Day. Have chocolates, cards and champagne ready for the procrastinators.
15
Winter 2017 Market begins in Los Angeles and continues through Feb. 20. Confirm your travel plans for the Natural Products Expo.
National Drink Wine Day. Crosspromote wine, wine glasses and corkscrews.
25
National Potato Lovers Day. Set up a Hasselback potato demo in the cutlery department.
National Bagels and Lox Day
NGA Show begins and continues through Feb. 14
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ECRM Snack & Dry Grocery begins in Chicago and continues through Feb. 23.
21
National Sticky Bun Day. Crosspromote frozen bread dough, brown sugar, pecans and butter.
National Muffin Day. Offer coupons for these perennial favorites.
National Biscuits and Gravy Day
27
28
National Kahlua Day. Share your favorite Kahluabased recipes on your Pinterest page. National Strawberry Day
Promote National Chocolate Soufflé Day on Twitter.
16
Plan a DIY dim sum class in honor of Chinese New Year. Promote National Almond Day on your Facebook page.
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23
It’s fitting this is National Cherry Pie Day, because it’s also George Washington’s actual birthday (1732).
National Chili Day. Have a staff contest and pick the best recipe.
National Margarita Day
National Banana Bread Day
17
LAMKT begins in Los Angeles and continues through Feb. 20.
Offer coffee samples to celebrate National Café Au Lait Day.
24
Set up class to make Tex-Mex migas in honor of National Tortilla Chip Day.
For 125 years, Del Monte has stood as the freshest name in produce. After all, we’re fruit fanatics. And, as a leading year-round Hass avocado supplier with 23 North American distribution centers, we’re also supply-chain fanatics. Efficiency fanatics. Quality fanatics. And we’re fanatics about the 20 essential vitamins and minerals found in our avocados. Fresh guac, anyone?
FRESHDELMONTE.COM
@DelMonteFreshProduce
1-800-950-3683
@DelMonteFresh
FRUITS.COM
@DelMonteFresh
FRUITFANATICS.COM ©2017 Del Monte Fresh Produce N.A., Inc.
DelMonteFresh
Front End
Shelf Stoppers
Shelf Stoppers
Frozen Vegetables TOTAL FROZEN VEGETABLE SALES REACHED $2.97 BILLION IN THE PAST YEAR
Baking Supplies (52 weeks ending April 2, 2016)
Baking supplies re ached ne arly $1.5 Billion in total sales this past ye ar, down slightly (1.5 percent ) from the pre vious ye ar.
Basket Drivers
Consumers chose frozen broccoli over alternatives for a variety of reasons:
$700,000,000
Among various baking supplies, which12% commands the largest basket because it’s quick and easy size (average spend per trip)?
600,000,000
500,000,000
400,000,000
10%
300,000,000
because it tastes great
200,000,000
9%
100,000,000
Spotlight on Frozen Broccoli 0
Baking chips
because it’s $7.69 healthy and nutritious
WHEN ARE CONSUMERS EATING FROZEN BROCCOLI?
52 wks - w/e 52 wks - w/e 52 wks - w/e 52 wks - w/e 52 wks - w/e 08/26/17 08/29/15 08/30/14 08/31/13 Broccoli 08/27/16 as an ingredient is most commonly Frozen broccoli is most often used in a side consumed at dinner, followed by lunch. dish, followed by as a main entrée. frosting Baking chocolate Baking powder coconut 3% and Baking soda 9%
Baking supplies have felt the pinch this year, contracting by nearly OCCASION MEALhas ITEM 2 percent in dollars since 2016. While on the whole, the category 29% TYPE CLASS 62% 61% struggled, it’s important to note the impact that health 35% and sustainability have had on products within the baking world. In fact, the majority of baking staples— 57 percent as of July 2017 — comprise products classified as ‘clean label.’ Remaining free from artificial colors, flavors, preservatives and other undesirable LUNCH OTHER SIDE DISH MAIN ENTRÉE OTHER ingredients is of peak interestDINNER to savvy consumers of today. With close to 4 percent growth in dollar share of clean-label products this year, it is pivotal to consider transparency and sustainability in order to succeed in the realm of baking supplies and staples.”
—Jordan Rost, nielsen vp consumer insights
candy kits
8%
because it’s low in calories, fat and sugar
$4.69
Baking chips
$4.31
Baking chocolate
Spotlight on Baking Supplies Comparison Products
Index
produce
96.8%
116
yogurt
81.1
116
cottage cheese, sour cream and toppings (ounce)
81.9
114
nuts (ounce)
80.2
114
stationery and school supplies
86.2
114
Source: nielsen
16
Percent Penetration
progressivegrocer.com
$2.65 yeast
Source: nielsen homescan, total u.s., 52 weeks ending aug. 26, 2017
Baked with
Happiness Introduce your customers to a delicious line of HERSHEY’S and REESE’S bakery products brought to you by CSM Bakery Solutions. For more information, please contact your CSM Bakery Solutions sales representative today.
csmbakerysolutions.com +1 (800) 241-8526 © 2017 CSM Bakery Solutions LLC. All Rights Reserved. The HERSHEY’S, HEATH, REESE’S PIECES, REESE’S trademarks and trade dress and the orange color background are used under license.
Mintel Category insights
Global New Products Database
FOR MORE INFORMATION, VISIT WWW.MINTEL.COM OR CALL 800-932-0400.
What Does It Mean?
Tea and Other Hot Drinks Market overview Natural remains at the center of innovation for global tea brands, with the claim growing steadily. Ethical and environmental claims have risen in recent years, appearing on 36 percent of global new-product launches in the 12 months to July 2017. Much of this is centered on packaging, but ethical/ humane and environmentally friendly products are also growing. As the tea category is a crowded market, premium packaging can help differentiate premium brands on shelf and drive purchase of higher-priced varieties. About 16 percent of U.S. consumers are influenced by the packaging of brewed teas.
Key issues Twenty-two percent of U.S. tea drinkers are interested in cold-brew teas. The cold-brew preparation method is a form of premiumization that began in the coffee category and is now expanding into the brewed-tea segment. Retail sales of tea continue to slow in North America as a result of growing competition from other beverage categories such as coffee. Tea pods represent a premium new tea format that’s having a significant impact in markets where single-serve beverage ownership is high, especially in North America. With a higher price relative to tea bags, this format is helping to drive value growth. The United States has struggled for value growth over the past five years, but opportunities can come from premium teas, as tea drinkers are willing to pay more for premium varieties, with more than one-quarter of U.S. tea drinkers agreeing that premium teas are worth the extra cost.
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The ubiquity of ethical/ humane accreditations, such as Fair Trade and Rainforest Alliance, has made it important for brands to adopt more detailed messaging that focuses on more specific ethical activities and projects. Consumers show a strong interest in the health benefits provided by herbal teas; however, growing interest and value in other tea types, such as black and green teas, is driven by the beverage’s functionalities. It will be important to also focus on educating consumers on how different tea varieties could help them achieve their health goals. Dessert-inspired flavored teas could appeal to occasions when people have a desire for something sweet but don’t want the additional calories of an actual dessert, though the challenge lies in delivering on flavor expectations, as many consumers find dessert-flavored teas lacking in strength.
®
Growing Your Pet Category with brands shoppers know and trust.
Proudly offering a portfolio of well-known and beloved brands that nurture the bonds between pet parents and their cherished family members.
©/TM/® The J.M. Smucker Company. © 2017
All’s Wellness By Molly Hembree
Helping Shoppers With New Year’s Resolutions Re TAIl DIe TITIANS CAN eNCoUR AGe CoNSUMeRS To MAke he AlThY-lIFeST Yle MoDIFICATIoNS. t’s that time again: the exciting transition of embarking on the unknowns of a new year while one reflects on the accomplishments of the past 12 months. This milestone ignites hope in many people as they cast their gaze on future growth and progress. Beginning a new year cleans the slate and opens the door to opportunity for improvement across many aspects of our lives. The grocery industry’s ability to influence this momentous occasion is no exception. In a December 2016 survey conducted by Marist Poll, four of the top five New Year’s resolutions that respondents made were related to health. These included losing weight (10 percent), exercising more (10 percent), improving health (7 percent) and eating healthier (7 percent). Further, as demonstrated by Food Marketing Institute’s U.S. Grocery Shopper Trends 2017 survey, participants described their “primary food store” as a top ally (45 percent) in their quest for wellness and what “helps keep them healthy.” As a wellness destination for customers, retail has a responsibility to offer potential products and services that align to customers’ health goals.
In an effort to support shoppers’ newfound motivation heading into the new year, consider highlighting your retailer’s connection to the fitness community. Gyms with large followings, such as YMCAs, woman-only fitness centers, Zumba studios or CrossFit clubs, might be expanding their reach, particularly around January, and would be delighted to set up a table inside your store or offer shoppers a discount to check out their location(s). Now may also be the time to partner with upcoming events or fundraisers, such as local 5ks, marathons or bike races, to market your store’s good-foryou foods or perhaps donate perishable produce with some health messaging. Maybe there’s even space inside your store to allow nearby businesses to conduct exercise classes like yoga or Pilates.
Play it sMART
Many resolutions are well intentioned but fall short on execution. As registered dietitians, we commonly see this struggle in our patients or customers, and find instead that small behavior changes are what lead to big results.
It may not come as a surprise, but many New Year’s resolutions aren’t kept (a staggering 88 percent are unsuccessful, as suggested by a 2015 ComRes/Bupa survey). Many resolutions are well intentioned but fall short on execution. As registered dietitians, we commonly see this struggle in our patients or customers, and find instead that small behavior changes are what lead to big results. A method called SMART goal-setting — an acronym for specific, measurable, attainable, realistic and timely — is one such method. Achievable health goals are positive and encouraging, and can start in grocery store aisles.
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New Year’s resolutions geared toward health can recruit help from both grocery and general merchandise. Action items in the aisles, such as 100-calorie snack displays, increased merchandising of low-calorie beverages, lower-sugar treats in bakery, healthy-recipe substitutions in the baking aisle, or better sales in produce, can win over health-conscious customers. GM products like cooking equipment and utensils, exercise gear, fitness devices, lunch bags, and reusable containers are tools that can boost shoppers’ confidence in meeting their goals. Your team of health experts, including pharmacists, physician assistants, nurse practitioners and/or dietitians, translate the science of health into consumer decisionmaking. Make it a priority not to miss the opportunity to walk alongside your customers in this journey, through in-store recipe demos, nutrition classes, weight management programs or guided health handouts. This can build trust with your shoppers that will last, regardless of whether their New Year’s resolutions are achieved.
Molly Hembree, RD, LD, is a registered dietitian coordinator for The Little Clinic and Kroger.
CALIFORNIA WALNUTS TRUST COMMITMENT QUALITY •
•
From our farms to your store shelves, California walnuts are handled with great care and attention to bring our customers and consumers the best quality product. For more than a century, the California walnut industry has earned a reputation for producing the highest quality walnuts in the world while maintaining an exceptional food safety record. It all starts at the farm, with growers setting the stage for producing a wholesome product by following established best practices, known as Good Agricultural Practices (GAPs). With the 2017 harvest underway, walnuts are shaken from the trees and quickly processed, adhering to, if not exceeding, standards set by the United States Food and Drug Administration (FDA). The California walnut industry has been a leader in ensuring food safety through continuous investment in education, training and research. And while it helps that walnuts, in addition to being rich in beneficial omega-3 fatty acids, are also naturally protected by two layers of a hull and a shell that significantly reduce the possibility of contamination, there is no substitute for due diligence and effective food safety, sanitation and safe product handling practices while growing and handling walnuts through the supply chain. In preparation for the Food Safety Modernization Act (FSMA), including the Produce Safety Rule for growers, the industry has been proactively training walnut growers on reducing the risk of food borne illnesses. Furthermore, several of the walnut handlers voluntarily undergo rigorous GMP and GFSI audits to demonstrate their commitment to food safety and quality. With over $2.1 million invested in food safety research projects for nearly a decade, our industry is committed to solid science to protect our customers and consumers. And this is evidenced by the excellent food safety track record of the California walnut industry.
SUPPORTING GOOD AGRICULTURAL PRACTICES
Water
Soil
Hands
Surfaces
walnuts.org/foodsafety
Cover Story
2017 Category Captains
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Desperately Seeking Solutions Category management moves toward solution-based collaboration between retailers and suppliers. By Jim Dudlicek, Bridget Goldschmidt and Jenny McTaggart
PG received nearly 70 entries, from which we selected 53 winners honored as top-ranked Category Captains or honorable-mention Category Advisors. Some entries that particularly impressed us with their focus on cross-category solutions: Abbott’s diabetes care destination concept Chiquita’s positioning of bananas in nontraditional areas Coca-Cola’s meal solution pathways poet John Donne famously wrote, “No man is an island,” so do we declare, no product is an island. Products in retail grocery stores possess an inherent connectivity with other products, sharing symbiotic relationships that deliver on key consumer needs. In today’s retail climate, where anyone can get anything delivered to their door at a moment’s notice, it’s crucial for grocers to position themselves as solution providers, fulfillers of need states, focusing on the “why” behind the buy, giving folks a good reason for actually coming to the store rather than mouse-clicking another item off their shopping list. That’s why the idea of category management as the industry has known it for the past two-plus decades is undergoing a radical transformation. Technological advancements in the ensuing years have made it possible for retailers and their trading partners to tap shopper insights and collaborate on customized solutions that look beyond traditional category boundaries. Progressive Grocer’s Category Captains Awards honor what our editorial team considers to be the best such initiatives, ones that are delivering on their promises or show the most potential to do so.
Dietz & Watson’s regional flavor assortments E&J Gallo’s shopper motivation initiatives Kellogg’s work to capture flexitarians in frozen meat substitutes Mars Wrigley’s Transaction Zone Vision for the front end, fulfilling multiple need states with a variety of products Tyson’s customizable meal initiative for prepared foods The industry still has work ahead of it to fully embrace the idea of broader, multicategory solutions after a generation of concentrating almost exclusively on individual aisles. But as the rapidly changing world of retail is showing us on a daily basis, it’s not enough anymore just to sell stuff on a shelf — there has to be a reason, it has to solve a problem, and it has to help consumers feed their families as easily and conveniently as possible. Retailers need to persuade consumers that they care about their needs and are working to create solutions customized for them.
Read on for the list of this year’s winners ... Progressive grocer December 2017
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2017 Category Captains
GroCerY-FooD & BeveraGeS
Baking Mixes Category advisor
Bread/CoMMerCial Bakery Category advisor
Pinnacle Foods
Flowers Foods
Consumers seeking more convenient, healthier snacks were fleeing the baking aisle. Pinnacle’s solution: a more permissible, clean-label, great-tasting, warm, sweet item that bakes in a mug in about one minute in the microwave. the complete range of baking mixes across morning, afternoon and evening varieties addressed unmet demand. this new category within the aisle reversed historic downward sales trends and helped launch baking mixes into ecommerce for all retailers. it far exceeded expectations and drove highly incremental results for retailers.
as the demand for organic products has grown, Flowers Foods has developed a dedicated organic bread section while expanding its dave’s Killer Bread brand, acquired in 2015. Leveraging studies showing that lower-demographic stores also had demand for organic offerings, Flowers secured organic sections throughout all major-retailer stores, regardless of store demographics. Merchandising space was allocated based on projected sales versus the traditional method of employing sales history. additionally, the dave’s line was expanded, with bagels and breakfast breads joining its premium thin- and wider-slice formats. organic bread sales have since grown significantly. additionally, the dedicated section enables traditional grocers to better compete with specialty retailers.
Candy and guM Category CaPtain
the Hershey Co.
Beverages-single-serve Category CaPtain
treeHouse Foods Believing that the shelf was becoming more difficult to shop, treeHouse Foods felt that it was imperative to help retailers understand the way that consumers shop and how best to organize the shelf. the company teamed with iri to create a decision tree, which revealed that consumers shop coffee drinks based on segment first, and then size, roast type and brand. this led to a new planogram with better segmentation, flow, adjacencies and space to sales. since implementation, the retailer’s singleserve beverage category base dollar sales have outpaced the market. Based on this success, treeHouse is partnering with other retailers and pursuing additional research.
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Hershey partnered with several major grocery retailers to help them boost front end, center store and seasonal candy sales. Leveraging best-in-class merchandising principles in re-racking the front end drove flat sales for one retailer to grow significantly, using a flexible system with better space allocation. For another retailer, Hershey tapped consumer insights to optimize assortment and aisle flow with store-within-a-store concepts across multiple banners. grouping candy by use occasion created a friendlier shelf. Meanwhile, Hershey helped yet another grocer revive a faltering seasonal promotion through close collaboration, and yet another grocer saw its everyday take-home business grow through better center store and incremental perimeter merchandising opportunities. all resulting programs enabled retailers to gain new households, expand the confection basket and drive incremental dollars across categories. Candy and guM Category CaPtain
Mars Wrigley Confectionery the way consumers shop impulse products is rapidly changing. armed with global research, Mars Wrigley developed the transaction Zone vision (tZv) program to drive confection sales at checkout. the program was built on the “refresh, reward, remind” need states during checkout: refresh after shopping, reward themselves or remember items they’ve forgotten. this shopper-centric approach helps shoppers more easily navigate the store and encourages impulse purchases. Partnering with one retailer, Mars Wrigley redesigned express lanes, created a more efficient queuing system, devised new signage, and updated layout and aisle flow. Participating stores saw increased shopper satisfaction and higher sales across all three need states. additional work has focused on the entire confectionery path to purchase, with plans for redesigning the candy aisle and leveraging the seasonal mindset year-round.
LEADING GROWTH WITH ICONIC FLAVOR BRANDS
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2017 Category Captains
GroCerY-FooD & BeveraGeS
Canned/PaCkaged Food Category advisor
ethniC Foods Category Captain
Hormel Foods
Hormel Foods
Hormel conducted research and developed a robust strategy to help several key retailers implement a strategy for boosting sales of canned meats and meals. insights based on consumer demographics resulted in a “utopian microwave convenience set” that expanded the demographic footprint, pulling in larger household penetration. For one retailer, Hormel rebuilt the chili planogram to simplify shoppers’ purchase experience, creating space for better-for-you varieties and regional brands. For another, Hormel employed adjacency and assortment insights to make shelving recommendations. For a third, the company used eyC data to analyze primary shopper sales, exclusivity and switching by brand within the microwave meal set, with the goal of optimizing assortment. significant sales lifts resulted across all partnerships. CraCkers Category advisor
Kellogg Co. the cracker category enjoys high closure rates and revenue productivity, but with fewer consumers shopping center store, driving traffic to the aisle is key to increasing category exposure and converting shoppers. Kellogg developed a simple framework to assess which brands were best suited for leading the category as a brand beacon. Brands were assessed based on brand health, household penetration and visual cues. With Kellogg’s Cheez-it leading the pack, the company used softwarebased heatmaps to create concepts that maximized visual attention. in-market tests with key retailers have proved successful, with others still in progress. dry PaCkaged Potatoes Category Captain
Idahoan Foods despite negative trends across center store, this category is showing volume growth driven by idahoan’s innovative prescription for Category growth program, which analyzes each retailer’s opportunities and recommends specific growth-building programs aligned to the four ps (price, promotion, product and placement). retailers following this program saw significant growth. idahoan concentrated on driving household penetration and annual shopper trips to the category and store as a whole through meal solution programs that bundled packaged potatoes with items in other departments, such as rotisserie chickens and other meat products. to make the category more attractive to on-the-go Millennial shoppers, idahoan helped retailers place a renewed focus on the single-serve cup segment, growing penetration and dollar volume.
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the Mexican food category is one of the few in center store that continues to outpace sales and unit trends. through product innovation and continued insights investment, Hormel and its MegaMex Foods division worked with retailers to enable continued growth within the Mexican food aisle. the company’s partnership with a southwestern regional retailer on adjacency and aisle optimization resulted in double-digit total household penetration shopper growth, with buying households up similarly. Further, Hormel teamed with a major northeastern grocery chain to develop a broader center store Latino/Mexican food aisle, and to adopt those best practices in produce, deli, bakery and frozen as well, with significant sales and unit growth.
Meat snaCks Category Captain
Jack Link’s Protein Snacks to help a national retailer boost its meat snack sales, Jack Link’s recommended category growth opportunities, assortment optimization, and expansion of the primary set and secondary locations. Leveraging macro snacking and protein trends, consumer shopping behavior, and category insights, the retailer expanded space and optimized assortments within the set at seven of its divisions. since the implementation began in 2017, the retailer’s total meat snack sales are up 20.1 percent, growing faster than both U.s. food sales, at 12.2 percent, and extended all-outlet combined sales, at 6.2 percent. in five of the seven divisions where the change was implemented, sales have outpaced corporate growth, with a range of 21 percent to 45 percent in dollar growth. the retailer has asked Jack Link’s to partner on future category leadership projects.
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2017 Category Captains
GroCerY-FooD & BeveraGeS
ReaDy-to-eat CeReal category caPtain
General Mills Hardly a stale category, ready-to-eat cereal is growing in terms of household usage: the $9.5 billion segment is enjoying 90 percent household penetration and 97 percent penetration in households with kids. general Mills has continued to drive growth by focusing on taste and wellness trends. the company now has one of the largest gra-
nola brands, nature valley, which has grown into an $85 million business in just the past five years. at the same time, general Mills has zeroed in on retailers’ shelf performance with its Prosets initiative. During a category review with one of its retailer partners, general Mills brought a “wealth of data,” including a summary of the top five categories that have the highest affinity with cereal, along with ideas for promoting them together, according to the retailer.
ReaDy-to-eat CeReal category aDvisor
Kellogg Co. cereal stalwart Kellogg helped retailers drive growth by sharing shopper insights and creating in-store execution plans. its comprehensive go-to-Market activation strategy put the shopper first in all areas that impact the retail environment. in a recent joint business-planning session, Kellogg and one of its retailer partners set up an objective to optimize promotion and display plans, which is expected to drive more than five points of sales growth, and also identified additional testing opportunities in the areas of shelving, assortment and display. With all of its grocery customers, Kellogg continued to suggest segmented sets to improve shopability. retailers that implemented target age Flow saw base sales performance five points higher than retailers that set the aisle by manufacturer, according to Kellogg.
SalaD DReSSingS category aDvisor
Pinnacle Foods Pinnacle brought new life — and new shoppers — to the $1.3 billion salad dressing category with its launch of Wishbone avocado oil dressings. the line delivers on consumers’ desire for different flavors with healthier product profiles. Pinnacle’s product development team saw that the oil segment has been the fastest-growing for the category. avocado oil in particular appeals to both Millennials and more upscale consumers. so far, the company has received positive feedback and results from its retail partners.
SnaCk BaRS category caPtain
General Mills convenient wholesome foods, a $4.7 billion category in the cereal aisle that includes grain, fruit and toaster pastries, is down 5 percent versus the previous year. the natural and organic grain bar segment has been growing, however, and general Mills expects the segment to continue performing well. the company focused on product innovation and best-in-class shelving to ensure success for its retail partners. new products included nature valley granola cups, nature valley Biscuits with nut Butter, Larabar nut & seed crunchy Bar, and annie’s organic chewy granola Bars. Meanwhile, general Mills continued to urge its customers to expand space for grain snacks. retailers that expanded the section beyond the common 12 base feet saw an increase in sales upwards of 6 percent, according to the company.
Salty SnaCkS category caPtain
Kellogg Co. Kellogg’s category management team made significant inroads to improve salty snacks’ visibility. according to the company’s research, 76 percent of shoppers don’t see the salty snack aisle, as most of them are on perimeter- and mission-based trips. to counter that, Kellogg developed two shopperbased solutions to attract new attention: vertical-ribbon merchandising and a gravity-feed system. its Pringles vertical-merchandising system leverages the iconic packaging of Pringles, coupled with a verticalmerchandising orientation. the company tested the concept with shopperMX, a virtual-store environment application, and got strong results for the brand, as well as the category. to date, retailers that have converted to the system have experienced 5 percent to 6 percent category growth. Kellogg’s Pringles gravity-feed system, meanwhile, has resulted in 10 percent growth for the brand and 1 percent growth for the category. Progressive grocer December 2017
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Snack BarS Category advisor
GroCerY-FooD & BeveraGeS
SpiritS Category CaptaiN
Kellogg Co. in the past year, portable wholesome snacks experienced its first-ever sales decline. Kellogg identified several reasons for the underperformance, including undifferentiated assortment that created an overwhelming shopping experience, resulting in one of the lowest conversion rates in center store. the company worked to change that by focusing on three key areas: rationalize, organize and engage. Leveraging its proprietary insights in snacking, Kellogg optimized the product portfolio to become more focused while still featuring innovative items. in addition, the company teamed with Nielsen and videoMining to understand barriers to category engagement. it then developed an aisle solution based on organizing the category in three distinct segments: treat, wholesome and lifestyle. Soft DrinkS Category CaptaiN
the Coca-Cola Co. Coca-Cola’s latest category management work went beyond soft drinks to include other packaged beverages, as well as several perimeter departments. the company developed a merchandising program to help retailers capitalize on the trend of more convenient at-home meal preparation and simultaneously drive food sales, improve beverage category growth and enhance mealtime shopping for consumers. Coca-Cola developed meal solution pathways for three key meal occasions: ready-toserve solutions in the deli, ready-to-create solutions in the perimeter and fresh-to-go solutions in the cooler. each pathway allowed retailers to bundle multiple categories of Coca-Cola beverages and adjacencies (products that complemented the beverages). Based on its outstanding results so far, Coca-Cola plans to expand the program beyond 2017. Soft DrinkS Category advisor
Dr Pepper Snapple Group With health-and-wellness trends on the rise — as well as a push for higher taxes on sugar-sweetened beverages in some cities — dr pepper snapple group saw the need for more emphasis on smaller package sizes in the $19 billion carbonated drink category. the company worked with a national retailer to revitalize package and flavor assortment and space. the plan followed path-to-purchase methodology and helped shoppers more easily identify the package they were seeking, incorporated an average days-of-supply (dos) methodology to optimize shelf performance, and integrated demographics along with a shopper-centric approach. through its work, dr pepper snapple group ignited significant dollar, volume and share growth, and increased profit margin for the retailer.
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Beam Suntory in partnership with spectra/ Nielsen, Beam suntory added a new tool, pulse Check, to its category management portfolio. pulse Check is a next-generation process that uses 3d intelligence to cluster and subcluster stores so that retailers can understand what their locations’ potential sales should be and evaluate how they’re currently doing. since no two stores are equal under any retailer’s banner or within a traditional cluster, pulse Check analysis helps retailers target specific underperforming stores and identify untapped opportunities. Working with one regional grocer, Beam suntory was able to recommend shelf principles to help close the gap on underachieving stores, while maintaining or growing “at potential” and “overachiever” clusters. total spirits for the retailer grew 6.1 percent. toaSter paStrieS Category CaptaiN
Kellogg Co. Kellogg focused on learning more about the core toaster pastry shopper to help retailers grow sales and convert new users. Working with Cambridge, Kellogg identified that the core shopper prefers indulgent over healthy and is always seeking new flavors. Key conversion drivers for this shopper are assortment, price and ease of finding options. armed with these insights, Kellogg developed account-specific retailer activation templates and identified specific conversion drivers by account teams. to build on shopper segmentation, Kellogg conducted market structure research with Nielsen for both the toaster pastry category and the larger aisle adjacencies. after learning that shoppers seek more size options, Kellogg introduced large-size packs, which are now contributing 10 percent of category dollar sales. Meanwhile, by adjusting product mix and focusing on merchandising, the company was able to achieve 17 percent growth in category incremental sales.
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• Unique & Strategic Selling Events
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2017 Category Captains
GroCerY-FooD & BeveraGeS
Wine category caPtain
e&J Gallo Winery e&J gallo Winery saw that retailers need to connect with their shoppers on a deeper level, so the company developed a proprietary internal shopper research tool to help better understand shopper motivations. gallo worked with one regional grocer to help target three consumer profile types during thanksgiving, a top wine holiday. the company’s 360-degree program engaged shoppers in and out of the store. the program began with end caps promoting various wines. a mobile platform engaged shoppers by having them send a text to receive a quiz that they could take to discover what wine would go best with their thanksgiving meal. an accompanying microsite offered recipe ideas. gallo’s results included revenue growth of 16 percent for the top-10 recommended wines, a 17 percent lift in wine dollars per trip, and a gain of 28 percent more new wine buyers into the category compared with the same period in the prior year.
GroCerY-FroZeN FooDS Frozen BreakFast category advisor
Kellogg Co. Kellogg’s strategy focused on delivering category solutions that drive sustainable growth; the company also sought out “white space” consumer opportunities for innovation. recommendations were customized by leveraging retailer-specific data regarding trip frequency, basket premiums and buyer overlaps. a category story was developed that identified key shopper and consumer segments, breakfast occasion trends, evolving trip types, and food preferences within the category. these concepts were brought to life through virtual-store software to help retailers visualize them. With breakfast forecast for continued growth, Kellogg drove innovation with further development of its eggo brand, as well as the co-branded Moe’s southwest Bowls to leverage demand for ethnic foods. Frozen Meals category advisor
Pinnacle Foods Pinnacle’s Birds eye brand launched a multiserve meal platform that aimed to meet demand for a healthy veggie-rich meal that was restaurant-quality and didn’t sacrifice on taste. Pinnacle’s team gathered insights from a mix of primary and secondary research to map out the landscape of consumer preferences regarding health attributes, taste and convenience. as a result, Birds eye signature skillets helped to reverse downward trends in the category and attract new users, including Millennials. insights learned are being included in numerous innovation projects focused on growing sales and profits for retail partners.
Frozen Meat suBstitutes category caPtain
Kellogg Co. With a dominant share of the meat substitute category through its Morningstar Farms brand, Kellogg shifted its focus away from vegetarian entrées and toward burgers, poultry and meal starters, seeking to capture growth from a rising number of consumers who are increasingly open to trying meat alternatives. research reinforced the need for a healthy-living destination in the store to leverage interaction between natural/organic meals and meat substitutes. retail partners that followed this model experienced accelerated category sales growth, with burgers proving lucrative as well. innovations driving growth included meal starters such as veggie pulled pork.
NoNFooDS-HeaLtH, BeautY & WeLLNeSS DiaBetic nutrition category caPtain
abbott Nutrition With diabetes increasingly prevalent in the United states, abbott collaborated with a national retailer to tap an opportunity for an all-inclusive destination set for all needs of diabetic customers that was easy and convenient to shop. diabetic trips are a highly planned purchase, and diabetes products are preferred in a stand-alone set, so creating destinations within the set simplified the overall shopping experience. since the launch of the new diabetic care set, including care (strips, meters) and nutrition (shakes, snacks) products, the category has increased by double digits. abbott worked with its retailer partners to execute collaborative merchandising strategies to attract and retain shoppers while building retention, conversion and trust. Progressive grocer December 2017
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Gerber’s going above and beyond for babies (and the baby food aisle at large)
Winning over today’s consumer Changing the way parents seek advice Our plan to boost the category We’ve transformed our brand
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CATEGORY EVOLUTION
A look at trends and opportunities in the baby food aisle It’s no secret that recent years have seen big shifts in the baby food and formula aisles. Though category sales were slightly up on a dollar basis over the last six years, they were largely driven by pricing and premiumization, not because more baby food was being sold.
When they’re in store, they’re not easily won over. 5 With so many new brands and flavors, there are more choices than ever before. And their expectations of transparency from those brands are very high. They want to know exactly what’s in the food and where all the ingredients come from – demanding more from brands and retailers alike. What’s the way in? It’s simple, really: Evolve right along with them. Show them that we understand them, and their food values. Meet their expectation of homemade, but eliminate the hassle. And win them over with nutrition, quality, safety and, most of all, trust.
CM&D $ Sales (in millions)
More on modern families. Of course, it pays
to dig a little deeper too. As part of our brand transformation, we took great care to understand the root of modern families’ pain points, 2016 Dollar Sales what they like about our current offer-0.2% ing and what they’d like to see from us vs. YAGO in the future.
1% CAGR: +
2009
2010
2011
2012
2013
2014
2015
2016
Source: Total Nielsen xAOC- $, Unit Volume and Pricing Trended Annually Nielsen Panel Data 52wks ending 10.1.16 v YAG
In fact, in 2016, we saw a category sales decline (down 0.2%) for the first time in six years. So, what’s driving the trend?
The root of category pains. While declining birth rates were one driver, changing consumer attitudes are also forcing a shift in the category.
The needs and priorities of today’s parents have evolved1. They’re seeking out simpler, less processed, real foods for themselves, and their babies too2. They’re breastfeeding longer3, introducing baby food later, and making more of their own baby food at home4.
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After all, they have a lot on their plates. With all their work and family obligations, they often feel like there’s simply not enough time in the day. They also have concerns about all the uncertainty in the world and, when it comes to their little one, they worry about leaving anything to chance. And because health and nutrition are foremost concerns, they take an active role in making their feeding choices—showing their love for their child by seeking out simple ingredients and short-cuts to clean credentials like organic and non-GMO offerings. They can’t control everything, of course. And they can’t make everything from scratch. So they know they have to also rely on others. Understandably, they look for brands that understand them, and give them confidence that they’re making the best choices that actually free them up to spend more time with their little one. GERBER
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Why they matter. It’s important to note that
modern parents—Millennial and Generation Z moms in particular—also tend to be influencers. They’re very social, they do a lot of research and they actively share their ideas about infant nutrition with those in their expansive circle. Parenting is an important part of their overall identity; and being a good parent is an important life goal for them. As shoppers, they’re very engaged. They view their time in the baby food aisle as yet another place to educate themselves on what’s best for their little ones6. Their interpretation of value has also evolved. They do not solely seek value in deep discounts but also in superior ingredients, easy-to-use educational tools, and added convenience. We believe that engaging modern parents, and giving them the right value that they’re seeking across the category, can help us reverse recent trends.
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THE NEW GERBER
How our quality, new look and services can help reverse category trends As the definition of what’s healthy is changing, so is Gerber. We’re announcing major plans to leverage our strengths, tap into emerging consumer trends, and to reconfirm our mission.
We’re touting our real food heritage, showcasing our Clean Field Farming PracticesTM, our impeccable food standards, our ingredient choices, and our science-based nutrition for babies.
It’s a tremendous opportunity to deliver the best quality, the best nutrition and the best help to parents and babies. We have great brand awareness, historical market leadership and an authentic food heritage, but most of all, we have parents’ trust.
We’re supporting moms on their terms, with personalized 1:1 access to experts in their channel of choice: text messaging.
But we are transforming, and building on our strengths, to more closely connect with modern families and better meet their evolving needs. Here are the steps we’re taking to transform our brand and bring some much-needed excitement to the baby food aisle: We changed our look, refreshing our iconic Gerber baby logo and introducing a new packaging look that celebrates our real food values with a cleaner, more premium tone. We’re making it easier for parents to shop, with a unifying bold blue hue on our packaging and an updated system of stage-based symbols to clearly aid their purchase decisions.
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For us, it’s not just about us winning in the market or outpacing our competition. For 90 years, we’ve been the go-to brand for moms who’ve trusted our devotion to giving their babies a healthy, happy start. That’s why we feel a broader responsibility to win the hearts of parents once again, by meeting and exceeding their evolving needs, helping to turn around trends, and drive growth for the category overall.
About our new look. One of the most visible ways we're inspiring category growth is through a packaging redesign.
We have great brand awareness, an iconic brand mark and a heritage of trust. But we knew there was an opportunity to refresh and update our packaging,
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more strongly unify the portfolio, and deliver a more premium experience that reflects our food quality and heritage. And we knew we could do it in a way
that helps parents understand the care that goes into each and every one of our products and that our values are authentically aligned with their own.
Gerber product line BEFORE redesign:
Brand identity not well unified across products; doesn’t convey a premium feel
Gerber product line AFTER redesign:
Premium, high quality, showcasing our real food credentials
Confidential and Proprietary
2 Confidential and Proprietary
2
Now, anchored by a sophisticated blue across the portfolio, the brand is more shoppable. It stands out on shelf. There’s a more consistent brand identity across the aisle. And it features a refreshed system of milestone symbols that guide parents as they move from one stage of foods to the next.
elements showcase the care we take in selecting our ingredients and our commitment to wholesome foods.
The refresh kicks things up a notch, elevating our brand to more premium status.
Our iconic Gerber baby logo has also been refreshed —and more prominently positioned as a beacon of trust. The babyhead itself represents Gerber to most people. And the hand-drawn nature of the sketch speaks to the extra care they can expect from our brand.
The new design better highlights our real food credentials, with Instagram-worthy photos of fresh foods and clean product call-outs, such as non-GMO. The design
We paired that with a cleaner, more contemporary layout, and simpler font styles and packaging for a truly modernizing effect.
GERBER
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Spotlight on Milestones
Old system The most common questions we get from parents is how much to feed baby and when to move from one stage of foods to the next. That’s where our Milestone SymbolsTM are key. Unique to Gerber, our developmentally based milestones are better indicators of feeding stage readiness than age alone7. Not only do they make it easier for moms to shop, they also help them understand when it might be time to transition their baby to a new category of food so they don’t have to worry about making those choices. The nutritional content is also based on the milestone to ensure we’re delivering the right nutrition, at the right time.
packaging research, is a more intuitive location9. We then redesigned the symbols, moving from a shaded outline of a baby to a larger, more streamlined silhouette that, when rendered in white, stands out against the brand’s new blue. We also gave each element of the system more breathing room, removing the imagery from the associated text. In all, the refreshed milestone system has become more relevant, intuitive and easier to find.
We knew that the milestones were must-haves in the redesign8 because they’ve proven to be a system of practical advice that our families trust. But we also knew there was room to make them better. To start, we moved the symbols from the top right of the package to the bottom right which, according to our
New system 6
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What consumers think. Consumers love the new design. Research shows that it outperforms our current packaging on premium attributes like “high quality” and “worth paying more for,” an important win for us as the category has increasingly gone upmarket. Our refreshed Milestone SymbolsTM were also proven as more relevant and easier to find.
The new packaging system debuts this fall with our 2nd FoodsTM purees (our top sellers), and will roll out in multiple waves across the portfolio, with a full roll out by the end of 2018. Our brand refresh, coupled with the support of a significant marketing investment is primed to help us make fresh connections with modern families10.
Spotlight on Pouches One thing that sets Gerber apart is the amount of time we spend observing the ways toddlers eat, pulling insights to inform product and package development to better meet their needs. An example of that is in our proprietary spouts, which feature a special smart-flow feature that helps babies control how much food actually comes out—letting them sip more and mess less.
GERBER
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The feature adapts the flow rate to the thickness of the product, helping little ones master the empowering act of self-feeding and going a long way to creating mealtime moments that both toddlers and their families will love.
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How our quality, new look and services can help reverse category trends Our voice. We’re also ensuring we speak to parents in their voice consistently across all channels. At Gerber we get the ups and downs of parenting, so we can ensure we sound real, authentic and passionate but with the credibility to back up our advice, services and products—like the savvy big sister they always wished they’d had.
For more than 90 years, we’ve been meticulous in our approach to nourishing healthier and happier babies. And we view our brand transformation as an opportunity to better communicate that core message. We recognize the lengths parents will go to for their little ones and want them to know that we’ve spent decades doing the very same.
We’re not only promising to do more, but to be more.
Our promise. It started with one mom, in one kitchen, in Fremont, Michigan. Thanks to Dorothy Gerber, the idea of commercial baby food was born, and with it our sky-high standards, and our unending promise to go above and beyond, to help babies grow up happy and healthy.
We’ve always proactively educated families on their parenting journey, but we now have a plan to also be there for them in their “I need help now” moments. Support from Dotti. That’s where our personalized expert text-based support service comes in. Named for our fearless founder, Dorothy Gerber, this coaching service connects parents with real-life baby experts who will offer advice on nutrition, lactation and sleep; and it’ll keep the same hours that parents do with 24/7 support.
That promise is reflected in everything we make and in everything we do. Food origins. It’s in the authentic origins of our Fruit and Veggie Purees. We’ve partnered with generations of American family farmers to bring our Clean Field FarmingTM practices to life, carefully selecting seeds, preparing soil, tending to crops—ensuring that all our fruits and veggies are nutritious, safe, and delicious. We know what farms and what fields they came from. And we have more non-GMO options than any other baby food brand.
Here’s how it’ll work: Wondering if it’s time to start solids? Need help figuring out how to supplement with formula? Or, just curious if the color of Olivia’s poop is normal? Our feeding experts backing the Dotti service are trained in hundreds of the top questions asked by parents around nutrition, breastfeeding or sleep. Dotti is exclusive to members of the MyGerber family; this is how we personalize our advice for members, so we’ll already know the child’s age, feeding preference and our conversation history. All our members need to do is shoot Dotti a text and our experts will respond in minutes with tailored advice and links to important articles and videos, and will even set them up for a live conversation with our lactation, sleep or nutrition experts.
Nutrition research. The promise to do more also finds life in our nutrition research, including our Feeding Infants and Toddlers Study (FITS), where we looked at the feeding behaviors and dietary needs of nearly 10,000 babies over the last 15 years to better inform the nutritional profiles of all our foods. This research not only helps to fill an important knowledge gap in nutrition science, like the fact that many babies fall short on ironrich foods, vegetables, fruits, and whole grains from an early age, but it also informs the nutritional profiles of our foods to ensure we’re delivering what baby needs – with the right foods and nutrients, in the right amounts, at the right time.
We aren’t just looking to change the way parents seek out and receive advice, we’re hoping to drive deeper engagement (and greater potential revenue lift) by bringing them closer to our brand – one that they already know and trust. In all these ways – and many more – we’re letting this new generation of moms and dads know that, just like Dorothy, and every parent to follow after, we will always, always, do anything for baby.
And while research is something we’ve already committed to, we’ve made a bold promise to invest more in infant nutrition research than any other baby food brand. NOTES 1 Mintel 2017. 2 Nielsen CINA 2017.
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Breastfeeding rates are higher in 2016 vs. 2010, and moms are breastfeeding longer. CDC. 4 LRW Puree A&U 2015. 3
FMI 2017 U.S. Grocery Shopper Trends. Path to Purchase, On Line Bulletin Boards. 7 Decision Insights 2016. 5
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Decision Insight 2016. Decision Insight 2016. Metavision 2017.
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2017 Category Captains
Oral ElEctrOlytEs category caPtain
abbott Nutrition a national retailer, which carried electrolytes in the baby aisle, recognized the need for a secondary location to drive sales and increase conversion and share. Pedialyte maker abbott created new UPcs so products could be tracked in the secondary location of the pharmacy, and tested competitively priced flavors that appealed to kids and adults alike in liquid and freezer pop forms. the company drove awareness and conversion through such efforts as engaging pharmacists to make recommendations, an exclusive ibotta offer, a shelf blade with a coupon, on- and off-site ecommerce, sampling, and targeted media. as a result, the total electrolyte category rose 23 percent and the retailer gained 1.9 points in category share from last year. the secondary Pedialyte location has been 50 percent to 70 percent incremental to the brand, while Pedialyte continues to grow in the baby aisle, enabling abbott to expand the brand assortment.
Otc UppEr rEspiratOry category caPtain
Bayer HealthCare in keeping with its theme of “Maximizing Upper respiratory,” Bayer developed the actionable solutions of encouraging more sufferers to treat ailments via such means as out-of-store communication based on regional and seasonal incidence, digital trackers showing the “alert level” in a given area and prominently featuring multisymptom products for a more personalized treatment regimen; aisle merchandising that excludes such ancillary items as lip care, and guiding retailers in critical evaluations of assortment by segment; and promotion and display optimization. the program has been well received by major retailers, and Bayer is currently working with several to test a new shelf configuration and signage for the category, incorporating critical shopper insights and elements to enhance shopability. Otc UppEr rEspiratOry category advisor
reckitt Benckiser as the manufacturer of such brands as Mucinex, airborne and delsym, reckitt Benckiser invested in a multiyear strategy of partnering with retailers to grow the total upper-respiratory category, including the emerging immunity and homeopathic product segments. the company began by identifying macro-level trends and defining how the category connects to broader health-and-wellness strategies at retail, thereby providing the foundation for future aisle- and category-specific efforts. this macro-level strategy, combined with more micro executional elements, including shelving and assortment best practices, led to positive performance of the category. For instance, Mucinex is one of the fastest-growing brands in the cold and flu segment, up 7.7 percent, and the fastest-growing brand in the large cough and chest congestion segment, up 15.8 percent.
Otc smOking cEssatiOn category advisor
GSK Consumer Healthcare in 2017, gsK realized that its efforts to help smokers quit were being hindered at retail by inconsistent category placement, unrelated adjacencies, limited access and lessthan-motivating educational messages. the company’s shopper insights and category leadership undertook consumer-driven quantitative research yielding new insights into how best to motivate current smokers to quit. a new go-tomarket strategy, featuring the four key pillars of quit motivations, in-store execution, shopper targeting and continuity initiatives, was rolled out to retail, along with concrete merchandising changes. in the 52 weeks ending august 2017, the category was up 3 percent, with gsK’s nicorette, the category’s largest brand, pacing this growth with a 4.6 percent increase. sUn carE category advisor
Bayer HealthCare sun care is one of the more challenging HBc categories to manage, due to its seasonal and regional dynamics, but Bayer’s coppertone brand has developed promising new strategies for its retail partners. the company’s “protection” platform focused on two pillars — educate and simplify — at both the shelf and beyond. Working with edgewood consulting group, the coppertone team joined forces with key retailers on a shopper strategy of “Buy More, spend More and get new consumers to Buy sun care.” additionally, Bayer focused on shopper activation solutions that drive category involvement by highlighting different sun care usage occasions at shelf and creating digital assets focused on sun care reapplication. thanks in part to these efforts, category dollar sales were up 5.4 percent in 2016, which was double the growth of the previous 52-week period. Progressive grocer December 2017
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2017 Category Captains
NoNFooDS-HeaLtH, BeautY & WeLLNeSS
Vitamins and supplements Category Captain
Pharmavite pharmavite continued to serve as a trusted category management advisor to multiple retailers. For the 52-week period ending aug. 26, retailers working with pharmavite grew category dollar sales 4 percent. in the past year, the company focused on a new count-size strategy specifically tailored for ecommerce, and also engaged in category reinvention transformation. it developed a proprietary need-state design framework for the vitamin and supplement category that collapsed its 80-plus product segments into 19 health solution platforms. new signage that’s currently being tested draws attention to need states, while lighting has been integrated to illuminate shelves. a tablet computer is also being made available so that shoppers can conduct searches at the point of sale. Vitamins and supplements Category advisor
Bayer HealthCare Working with edgewood Consulting, Bayer developed a strategic vision for nutritionals with the theme of “opportunities for nutritionals excellence,” or “one.” the company recognized that the definition of nutrition has now expanded from core vitamins and minerals to include other products such as superfoods, fortified foods and sports active nutrition. traditional food/drug/mass retailers now account for less than $3 in $10 spent on the category, according to Bayer’s research. the company focused on optimization — delivering the right products with the right adjacencies, as well as relevant education and navigation. Bayer initiated three strategies: targeting Millennial entry points; shopper activation (providing better, more relevant assortment, communication and shelf navigation); and leveraging emerging nutritional trends. its work helped play a role in a 3.6 percent rise in category sales.
dairy-milk Category Captain
Dean Foods dean continued to make inroads in creating excitement and driving growth for retailers in a category beset by commoditization, price volatility and, more recently, competition from plant-based beverages. the company’s dairy pure and true Moo labels allowed retailers to offer differentiated brands and optimize performance amid changing market conditions. robust investment in advertising, online, public relations and shopper marketing raised category and brand profile through movie tie-ins and partnerships with complementary products like Kraft Mac & Cheese and oreo cookies. Category education targeted Millennial moms, and three-dimensional insights helped key retailers with fresh shelving, merchandising and promotion principles. Further, dean tapped key trends such as organic and free-from to leverage the clean-label halo.
PerIMeter Bakery Category Captain
rich Products rich worked with a northeastern grocer on programs to stimulate bread and roll sales, based on three key elements: capitalization on sensory stimuli, complementary department connectivity and assortment focus adjustment. Breads and rolls were now baked in the afternoon so fresh product was available, its aroma filling the store, for the post-work rush, and new bags with a window enabled customers to see the product and visually confirm its freshness. incorporating breads and rolls into meal deals established a connection to take-home deli meals, drawing traffic to both departments and supporting supplementary purchases. a focus on the top-performing sKUs, accounting for 80 percent of the department’s business, allowed the bakery to better use employees and keep profitable high-sales-volume products fresh and well stocked. as a result, the grocer’s bread category saw a 4.5 percent unit sales increase, even as total U.s. bread unit sales dropped 4 percent. the program also helped fuel growth in complementary departments.
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It’s an honor! Many thanks to our valued customers, who leverage the best category management plans, to grow sales and profits.
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2017 Category Captains
PerIMeter
Deli-Meat & Cheese Category Captain
Deli-PrePareD FooDs Category aDviSor
Dietz & Watson
Hormel Foods
Dietz & Watson promoted a variety of advancements within the deli case by continuing to work closely with its various retailer partners. Using geographical consumer trends, the company provided retailers with key insights and used consumer trends and point-of-sale data to offer different flavor profiles across deli meat and cheese items, to optimize current pricing, promotions and assortment. Dietz & Watson’s analytics managers provided the latest sales trends and consumer information to help retailers execute on actionable insights. identifying a growth opportunity at a key Midwest retailer, the company determined that offering multicultural flavors resonated with its consumers and offered competitive differentiation. Success came through enhanced sales as well as the retailer’s better understanding of its multicultural consumers.
Deli-PrePareD FooDs Category Captain
tyson Foods tyson’s prepared Foods Challenge experiment revealed that consumers need to be taught how to use the prepared food department. tyson worked with a major eastern retailer on a comprehensive three-month program, Start in the Deli, which highlighted the ease of using prepared foods to assemble convenient meals that deliver freshness and quality. tyson collaborated with a professional chef on customizable meal ideas for the project. Campaign tactics included store signage, recipe card handouts, social media, website integration, magazine advertorial, email and highly targeted digital advertising. Sales rose, particularly at stores with spot cooler displays. the experiment demonstrated the effectiveness of coordinated messaging to drive incremental sales at full margin, and represented a new approach to retailer and manufacturer partnerships. Deli-PrePareD FooDs Category aDviSor
Blount Fine Foods Moving beyond its commitment to organic and clean-label soups, Blount examined consumer trends and emerging flavors from around the world to help its retailer partners excite deli shoppers. innovations in packaging and sourcing made possible a new line of noodle and rice bowls, customizable at point of purchase and designed to appeal to Millennials. Blountmade soups were merchandised at several locations around the perimeter; the company advised retailers to crosssell the refrigerated cooler and the deli’s hot-to-go bar, creating an effective soup-sampling platform.
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to drive deli prepared category growth, Hormel launched a charcuterie-based line extension of the Hormel gatherings party trays, on trend with consumers’ shift toward specialty meats, cheeses and snacks, and a successful way to drive incremental sales. in addition, its business analytics and insights team worked with retailers to implement other solutions. For example, one retailer was struggling to maintain the stock of a well-selling item that had high impulsivity. Hormel collaborated on a solution that allowed for everyday placement without interrupting normal assortment and shelving flow by providing a stand-alone cooler option, yielding a healthy sales boost.
FixeD-weight Meat Category Captain
Pre Brands pre merchandised its assortment portfolio in an attention-getting vertical block, employing proprietary shelf trays and flags to better define the block and prop up product for easy in-store handling. its customer partners adopted an eDLp approach on pre items, which, in addition to enhancing category profitability, improved demand forecasting and in-stocks. after a one-region test at a major national retailer, sales and profits significantly outperformed sales and profits of other premium or grass-fed programs offered previously, and pre was expanded to all of the retailer’s regions. in 2017, pre’s 314 percent growth at that retailer helped drive its total fresh beef category to 0.2 percent growth. additionally, cross-merchandising partnerships with complementary categories like wine, beer and spices helped drive strong basket size across retailers, with pre proving incremental to the category.
We are honored to have been awarded once again 2017 Category Captain. Over 70 years since we became the first company to brand a banana, we continue to be in front of the banana pack creating value. • • •
Strong category, shopper and consumer insights Consumer driven campaigns Disruptive and innovative in store visibility
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2017 Category Captains PAckAged LunchmeAt Category CaPtaiN
Hormel Foods Hormel, maker of the Hormel Natural Choice and applegate brands, worked with two retailers to implement dedicated natural/ organic sets within their lunchmeat sections. at one of the retailers, the test environment showed growth two times that of the control stores, leading to the creation of an in-store natural lunchmeat destination. at the other retailer, natural/organic lunchmeat sKUs saw growth eight times greater than the rest of the market, and these items made up 75 percent of total lunchmeat growth. additionally, Hormel continued to work with a third retailer to expand its natural set at the expense of underperforming value lunchmeat items. Now in its fourth year, the set is in 75 percent of the retailer’s stores and continues to grow at nearly 20 percent, aided by the increased use of banners, floor graphics and digital campaigns.
PerIMeter
Produce-AvocAdos Category advisor
avocados From Mexico avocados From Mexico (aFM) ran a series of successful marketing initiatives, including a health-focused tie-in to the Big game; the omnichannel guac Nation program sharing the fruit’s nutritional benefits; the Breakfast Partner program with egg and dairy industry participation; #MiniChefs, which encouraged kids to create their own recipes; and tastiest tailgate with ro*tel during fall football season. aFM continued to evolve its efforts in 2017, generating awareness and growth through compelling cross-promotions, and driving conversion year-round through programs like a partnership with tabasco and Fanwich focusing on handhelds, a key usage occasion, to boost basket ring through a national retail display contest that drove traction.
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2017 Category Captains
Produce-Bananas Category Captain
Chiquita Brands Chiquita’s research showed that an opportunity existed to build shopper baskets by driving impulse purchases via secondary displays, end caps and checkouts. this year, the company relaunched secondary displays at a national retailer. Since implementation last april near the checkout counters and swimsuit department, the retailer’s banana category has made a strong comeback. Before implementation, the retailer experienced 11 consecutive months of banana volume sales declines, but between april and July 2017, it experienced four consecutive months of category volume growth, obtaining a banana volume growth advantage of 14.5 points over the rest of the market, which saw a mixed performance. an unexpected outcome of the program was the shopper response on social media: Consumers posted positive images and comments regarding the retailer’s secondary banana displays.
PerIMeter
Produce-Bananas Category Captain
Dole Food Co. While conventional bananas remain the largest segment in the category, consumers are buying more organic and plantain products. Dole is collaborating with retailers to develop these growing segments. Since Dole received all of a major regional retailer’s banana business, the retailer has significantly outpaced rest-of-market trends in organic sales, and outperformed across all major segments in dollar performance versus 2016. a promotion with another retail partner drove organic promotional sales to maintain consumer engagement, resulting in an increase in organic banana sales of more than 39 percent during the promotion, and aiding category growth at the same time. Further, the following week’s organic sales were fueled by the promotion’s residual effect. Consequently, Dole recommended placing greater promotional emphasis on emerging segments, organics and plantains to drive category awareness, based on lower subsidized volumes.
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2017 Category Captains Produce-Berries Category Captain
Dole Food Co. Dole set out to combat declines and revitalize the mature strawberry segment through such means as innovation. Consumer-focused research identified the need for a unique strawberry product offering for snacking occasions, which would create additional consumption opportunities and attract new buyers. the solution was Dole’s go Berries! Strawberries, consisting of three convenient snap-off 4-ounce packages. an early-2017 test of the product at a retailer partner garnered highly favorable initial results; within four weeks, the go Berries! velocity rates exceeded those of 16-ounce offerings. From this success, Dole continued to launch with additional retailer partners, both existing and new, resulting in increased segment performance that contributed to total category growth.
Produce-celery Category Captain
Duda Farm Fresh Foods Duda’s three-pronged challenge was to obtain greater household penetration of celery, increase usage during nonholiday periods, and capture new and younger consumers. the company expanded to four SKUs its celery snacking-stick line incorporating a baseball theme to support spring, summer and fall sales, and created a 12-week consumer promotion to kick off the effort. Duda’s sales team collaborated with retailers not only to highlight the promotion, but also to work on promotions, assortment and new items. over the 13-week period ending July 2, total category sales were up 10.6 percent — a big leap for a non-holiday period. the retailers that got involved beat that number significantly, with one West Coast supermarket operator growing sales an incredible 57.8 percent. Duda will continue to work with retailers on eliminating barriers to purchase, and on developing long-term strategies for profitable celery category growth.
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2017 Category Captains
PerIMeter
Produce-Fresh Pack (commodity Vegetables) Category advisor
Dole Food Co. Focusing on innovation, data resources and education led dole to become the freshpack category growth driver, at 11.9 percent, and the main contributor to the 0.9 percent year-to-date total vegetable category growth rate. in the realm of innovation, dole identified an opportunity to rejuvenate the slowing commodity-cauliflower segment by creating and testing a new combination of colored cauliflower at a retailer partner. the retailer outperformed its marketplace, with less of a decline than the competition, because it could charge a premium price for a new product, while others were slashing commodity-cauliflower prices to try to spark demand. additionally, dole teamed with Nielsen on the largest custom integrated produce database in the United states, combining all UPC and random-weight produce items in one place, and launched get Up and grow together, a successful interactive healthy-lifestyle initiative encompassing store tours, giveaways and coupons with recipes containing produce ingredients.
Produce-mushrooms Category CaPtaiN
Monterey Mushrooms Monterey strove to understand exactly how each of its retail customers wanted to use the category. one southwest traditional retailer wanted to grow organics, but not at the expense of total category growth. after Monterey fine-tuned the retailer’s assortment, everyday retails and promotional strategy, it saw units increase 4.4 percent, while those in its market grew 2.6 percent; total category pounds rose 4.2 percent, versus 2.9 percent market growth; and sales grew 6.9 percent, compared with 4.6 percent for the market. the retailer’s organic sales soared by 34.8 percent, with organic net profits of 42 percent, while net profits for the entire category were 5 percent, with only 1 percent shrink growth. also with help from Monterey, a southeast supermarket operator grew its organic mushroom share beyond 15 percent and a Midsouth grocer maximized category sales and profits so it could support other promotions in the department.
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Produce-Packaged salads Category CaPtaiN
Dole Food Co. dole worked with retailers to maximize their chopped-salad-kit performance. in one example, a West Coast grocer’s salad-set space constraints caused chopped kits to be merchandised elsewhere in the department. dole recommended realigning the sets to incorporate chopped, leading the grocer to a 22 percent increase in chopped sales velocity and a 10 percent increase in category sales velocity. the company also teamed with retailers to expand the kit block to accommodate the projected growth in premium kits. one Midwest retailer added dole’s new Country ranch and Creamy Balsamic varieties, and incorporated premium kits into the rotational promotional calendar, employing digital marketing and social media to help generate consumer awareness and trial. after two months, the retailer’s premium-kit baseline grew 40 percent, aided by an innovation baseline of 57 percent. this fueled 100 percent dollar growth, driving kits to a 30 percent share of category sales.
RAISING A GLASS TO OUR RETAIL PARTNERS COULDN’T BE CATEGORY CAPTAINS WITHOUT YOU!
Beam Suntory has been recognized for the second c o n s e c u t i v e y e a r a s t h e 2 0 1 7 S p i r i t I n d u s t r y C a t e g o r y C a p t a i n c y, s u p p o r t i n g o u r c o n t i n u e d v i s i o n t o b e r e t a i l e r ’s I r r e p l a c e a b l e Insights supplier of choice.
STORE LEVEL
©2017 Beam Suntory Inc., Chicago, IL USA.
www.beamsuntory.com
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2017 Category Captains
refrigerated Meat snacks Category Captain
Produce-Packaged salads Category aDViSor
Fresh express
Hormel Foods
Using iri tools, Fresh express identified organic kits as the greatest opportunity for incremental category growth. the company launched six organic Kits, accompanied by recommended placement, promotions and pricing, and helped one of its regional retailer partners increase 52-week category sales by 6.9 percent. at another retailer, Fresh express helped to increase basket size through multichannel marketing and promotions that included an interactive Build a Better Salad contest. Produce-PineaPPle Category Captain
Dole Food Co. Dole’s pineapple category revival strategy consisted of increasing whole-pineapple base volume, focusing on competitive eDLp; creating an effective promotional strategy, using price points to generate unit and dollar lift while preserving margin; growing whole and fresh-cut pineapple, finding the right balance between both to maximize dollar revenue and profitability; and overlaying unique consumer buying opportunities through tie-ins and creative marketing vehicles. the company also invested in a customized nielsen planning tool, enabling it to design simulated growth models employing elasticity coefficients tailored to individual retailers. in one case, Dole teamed with a major grocer to raise base volume for larger-sized pineapples by at least 50 percent with a 20 percent everyday-price reduction. to cater to projected lifts, Dole recommended increasing display sizes and moving the location to a more visible area of the department. results showed an immediate, continued baseline-volume lift of 126 percent, with revenue growth of 70 percent.
Produce-Potatoes Category Captain
Idaho Potato Commission in 2017, the idaho potato Commission (ipC) created an interactive pivot table, updated monthly, which shows ads by both company and region. originally created for one Southeast retailer because of the large number of markets in which it competes, the data solution enabled the grocer to look at ads by individual competitors and markets. the ipC has since developed similar formats for other key customers. also new was a potato Storage and Handling wall poster for retail employees, providing details on potato storage and rotation, as well as the best way to handle potatoes in general. additionally, the ipC continued to offer retailers ad slicks touting new-crop idaho potatoes and potato Lover’s Month, in addition to providing merchandising recommendations and in-depth category analyses.
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PerIMeter
Following its launch of reV wraps and reV bites in recent years, Hormel introduced Hormel natural Choice snacks in 2016. the company also invested in snacking research to understand the importance of the right assortment mix, product connections within segments, and consumers’ path to purchase. Hormel worked closely with several of its retailer partners to help grow the refrigerated snack category. its work included multiple shelf resets incorporating pepperoni and string cheese that boosted dollar sales by almost 50 percent at one regional retailer.
refrigerated salad dressings Category aDViSor
Litehouse Foods Litehouse collaborated with retailers to grow the refrigerated salad dressing category through strategic marketing campaigns and promotions, and expanded its See the Lite integrated marketing campaign into seven new U.S. markets to further educate consumers. the 10-week campaign resulted in increased unit velocity by as much as 16 percent. at one grocery store chain, Litehouse leveraged insights and analytics to help build an assortment focused on growth opportunities. Meanwhile, the company introduced additional flavors of its popular opa line in a pourable format. in the latest period, sales in the refrigerated salad dressing category were up 4 percent, with Litehouse brands experiencing a 6.8 percent lift.
WE’VE GOT THAT CHEERLEADER EFFECT The Cheerleader Effect (n.) A phenomenon that happens when you add Pre® to your fresh beef category. Suddenly, your fresh beef selection is elevated, premium shoppers magically return out of nowhere, basket sizes increase, and you see growth in both same-store sales and net profits across your entire category. What can we say? We make the whole squad look good.
#1 fastest growing brand in beef1
3x
#1
increase in basket size2
highest rated fresh beef3
85% 2
incrementality
OUR PLAYBOOK CAN HELP YOU WIN BIG: Highest Velocities Lowest Shrink 99%+ Order Fulfillment Rates 98%+ On Time Delivery Rates 1
Nielsen Fresh Facts 2016 - 2017 2Proprietary Customer Data 3Online Consumer Reviews
READY TO WIN IN FRESH? CONTACT: Sales@EatPre.com www.EatPre.com
In AllIAnce wIth
Inside C4 Editor’s Note C6 Executing CatMan 2.0 C8 So You Want to Be a Category Captain? C11 Education C13 Shopper-Centricity C20 Superconsumers
2018 Category Management Handbook
December 2017 www.progressivegrocer.com
SP ON SORE D C ON TE N T
Q&A
Talking with…
Marissa Jarrett VP of Marketing, Dean Foods
Progressive Grocer: Retailers are focusing a lot on fresh as a differentiator for their stores. In what ways can dairy be a “power perimeter” department? Marissa Jarrett: Consumers are being encouraged to shop the perimeter for health reasons and to incorporate fresh items into their diets. Dairy is a consumer staple, so it can benefit from this fresh trend—there is a lot of potential, which is where the term “power perimeter” comes from. Fluid milk/dairy is a potential traffic driver and basket builder. Companies are developing so many new, innovative products and brands in the category, and all the new products in the dairy case, positioned along the perimeter, can draw shoppers in. Retailers can distinguish themselves by the quality and variety they offer in their fresh departments. The dairy department can be a destination for shoppers when the right brands are carried, products are shelved according to consumer usage occasions (3-D Insights), and items are kept in stock. PG: From a category management perspective, what steps can retailers take to maximize fluid milk sales? MJ: There’s actually a lot retailers can do to maximize their fluid milk sales: • Allocate space based on milk’s higher turn rates and AGMROII to keep it in stock. • Provide all four milk fat types (whole, 2%, 1% and fat-free) in all package sizes. • Offer a wide range of specialty and alternative milk products in both take-home and single-serve sizes.
PG: How are promotion strategies for milk evolving as shoppers, products and trip missions evolve? MJ: As consumers move more and more toward e-commerce and click-and-collect to fulfill their regular food and beverage needs, milk promotions will evolve too. Due to the nature of milk consumption, it is on a frequent purchase cycle and on shopping lists very regularly. So making milk products like DairyPure and TruMoo top of mind for online shoppers is important. The holy grail is to be the top 1, 2, 3 or 4 item commonly searched and put on the e-commerce list; we are evolving how to drive that awareness and get in that position. Beyond that, the advent of digital/mobile marketing presents ways to offer value. The Ibotta app, which lets consumers download coupon offers, is one example. There has been a 20 to 40 percent redemption rate with Ibotta—the redemption rate for FSIs (free standing inserts) is less than 2 percent. That’s because Ibotta can target offers to specific customers who are receptive to particular promotions. Other promotional strategies tie into the on-the-go snacking trend. As Millennials have families and try to balance work, careers and kids, they’re looking for healthier solutions that allow them to fill up on the go. We’re introducing DairyPure Mix-ins in 2018—single-serve, clean-label packs of cottage cheese that have real fruit and real nuts that consumers can mix in with the cottage cheese. They fit in with the trend toward convenience snacking and are great for people who don’t want to compromise on nutritional benefits. PG: With more consumers demanding “clean” products, how can retailers use dairy to meet those needs?
PG: What is the role of brands vs. private label?
MJ: DairyPure has always been a pure product! It is one of the cleanest-label products you can buy—and that’s an important message we want to communicate. Today, white milk is antibiotic- and growth-hormone free—but it is basically the same unadulterated beverage that it has been for hundreds of years.
MJ: From the shopper’s perspective, brands are crucial in building interest and engagement and long-term loyalty. Brands capture the hearts and minds of consumers, not just their wallets and stomachs! Brands create a point of differentiation from private label. For our retail partners, brands offer an important way to grow profits and sales. Private-label milk is a lower-priced item, so when there are price wars, retailers are not making
At Dean Foods, we have gone through our products to make sure the label on each one is as clean as it can be. If it isn’t, we ask, “How do we change it to make it better?” That is the value of our brands.
• Satisfy shoppers’ needs with a strong private-label program combined with the right brand. • Keep milk’s low-price sensitivity in mind when discounting. • Co-merchandise milk strategically with high-affinity products throughout the store.
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money selling a gallon of white milk. Brands are a profit pool— there is an important role for brands in the milk and flavored milk categories.
progressivegrocer.com
2018 Category ManageMent Handbook
Editor’s Note
Solution Centers hat headline is what all contemporary grocery retailers must be. Many are, while others are still working to break free of traditional merchandising tactics that are rapidly losing relevance as consumers shop not for miscellaneous components, but for complete need states. This year’s Category Management Handbook focuses exclusively on ways that retailers can transform themselves from mere sellers of things to providers of solutions. Don’t just sell your customers meat and vegetables — sell them dinner. The end result is their true goal. There’s a wealth of ideas on the following pages. First, we have the latest report from the Category Management Association, which has been rolling out its CatMan 2.0 initiative, the dramatic refashioning of category management standards first introduced nearly three decades ago, now being made relevant for a new era through the application of Big Data and detailed shopper insights. Similarly, a collaboration of Food Marketing Institute, Deloitte
and Win Weber & Associates promotes the idea of shopper-centricity and a reinvention of the traditional grocery retail operational structure. And we hear from Eddie Yoon, whose theory of “superconsumers” drives home the idea of how categories throughout the store are interconnected, opening vast new possibilities for packaging goods to meet specific consumer needs. Consumers are looking for the end result — show them what it looks like before they leave the store.
Jim Dudlicek Editorial Director jdudlicek@ensembleIQ.com Twitter @jimdudlicek
Advertorial
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2018 CaTegoRY ManageMenT HanDbook
Executing CatMan 2.0
Bringing CatMan 2.0 To Life 5 ke Y CHOICeS re TaIlerS faCe In mOvIng fOrWarD. By Ed Sheedy and Tom McDonald
Editor’s Note: At the IRI Growth Summit in April 2017, Ed Sheedy, of Weis Markets, and Tom McDonald, of the Category Management Association (CMA), spoke about bringing CatMan 2.0 — the next iteration of decades-old principles leveraging Big Data shopper insights — to life in the marketplace. Sheedy spoke about the issues from a retailer’s perspective, and McDonald spoke from a manufacturer’s perspective, based on his nearly 30 years of experience at Procter & Gamble. The talk focused on the five key choices that retailers and manufacturers face as they look to execute CatMan 2.0: people, data and data warehousing, analytical tools, process, and presentation. This is a follow-up to that presentation.
1
How You Hire, Train, Develop and Retain People
Ed Sheedy: One of the biggest challenges on your team is that each person brings a different level of skills, talent and capabilities to work. Some are great at analytics, while others are excellent at process or developing insights. We need to take advantage of people’s strengths and put them in a position to succeed at their work. Having clear expectations on key performance measures and what the endgame looks like is crucial to your people. The more they understand the importance of category management to the retailer’s business, the easier it is for them to develop winning strategies and tactics. Tom McDonald: We need to continually train — formally and informally — especially as we add new data types or tools. One of the biggest challenges in today’s market is finding and retaining top talent. If you don’t love the extraordinary talent that is on your team, then another manufacturer or retailer will. Creating centers of excellence on annual tasks, like clustering, and then staffing that group with your clustering experts, plays to people’s strengths. Creating a culture in category management that embraces innovation, gives people the tools to succeed and allows for work-life balance is the best way to retain your talent.
2
Data and How to Warehouse It
Sheedy: The plethora of data is one of the biggest challenges that a retailer faces. Some retailers struggle in getting a handle on their own internal data such as sales, profit, inventory and cost of goods in their supply chain. The next challenge is marrying the internal data with external data such as
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syndicated data or shopper behavioral data. There are so many sources of data available that quilting it together to get to insights that drive the business is more challenging than ever before. The data warehouse needs to be the one source of truth while being flexible to deliver against the business needs. You need to choose your external business partners wisely, with an eye on how we can transform all the data into actionable insights. McDonald: The data warehouse needs to be flexible and expandable to enable your people to do their jobs more effectively. The flexibility allows you to look at the data from an internal lens for your bands, and an external point of view for your customers. The expandable part is needed due to the new data types that we have from our smartphones and ecommerce. We have added more data types to our analysis in the past five years than we had in total 20 years ago. The warehouse needs to enable your tools to work and deliver insights. One piece of advice on new data sets: Don’t buy a new set of data without a training plan, a delivery tool and an expert on the data to answer questions. Otherwise, you just frustrate your people, and the new data will not create a competitive advantage.
You need to choose your external business partners wisely, with an eye on how we can transform all the data into actionable insights.” —Ed Sheedy, Weis Markets
3
Data Mining
Sheedy: The key is getting to the one version of the truth from your data. The tools and solution providers you choose must have experience and a track record of success. The tools need to be user-friendly and intuitive to use, as well as expand the capabilities of your people. We have some platforms and tools now built around the key business questions we need to answer, such as assortment, pricing and promotion. These tools allow us to answer key business questions quickly and efficiently. We need to ensure that our tools enhance our data warehouse usage and help us quilt together the various data sources. McDonald: The analytic tools need to be user-friendly and provide outputs that a high school freshman can understand. Wherever possible, the integration of tools needs to be aligned before a purchase is made. Tools and platforms need to be enablers, not the one thing that your people complain about every day. There are great solution providers out there who can make a tremendous difference in your business. if you need a recommendation on a solution provider to help with your business issue, please reach out to us at the cMA.
4
The Process
Sheedy: if we have 15 different category managers, then you can have up to 15 different ways or processes used in delivering category management. The process provides a standard look at assortment and pricing and promotion. Process provides one set of key performance metrics that we use to build our scorecards and evaluate our business. The process calls for an evaluation of all our tactics, which allows us to build on strengths and correct any issues. The key is to follow the process from the starting point all the way through evaluation. The process provides the guidelines and the standards that keep our business working every day. McDonald: Without a process, people will revert to their “favorite tool” or “favorite slides” or “favorite shadow system. cat Man 2.0 allows your group to implement a process that guides work from start to finish. The best processes focus on alignment upfront on data needed and the role of category. catMan 2.0 then moves into an analysis of the sales fundamentals so you can develop strategies and tactics. it concludes with an emphasis on execution, and then evaluation of the output to determine necessary revisions. catMan 2.0 focuses on the key business questions that we all need to answer: what is happening, why is it happening and how should i respond.
5
Bringing Insights to Life
Sheedy: The key to making a great presentation to us is to have the guidelines in place well before the meeting. We need to have alignment on the definition and role of the category, as well as the performance expectations for the category. When that alignment is missing, we see presentations off our strategies and numbers that don’t add up or match. The alignment builds trust into the process and allows open dialogue on the business. one thing to watch out for is manufacturers who only want to talk about their brand or brands without context to the category strategies or goals. The biggest opportunity is to have alignment upfront that drives collaboration on the tactics needed to win. McDonald: our presentations need to be dynamic, not static, and focused on the what/why with clear, concise next steps. often, we attempt to PowerPoint someone into submission to our analysis, versus telling a compelling story. our presentation tools should be usable in front of our retail partners to collaborate on
The company that gets to insights by better managing their data will win over the next decade.” —Tom McDonald, Category Management Association
better insights. Most presentations i see are not any different from 10 to 15 years ago, except for length due to more data types. There are great data visualization companies who can make a tremendous difference in your presentations. if you need some recommendations, please reach out to us at the cMA.
The Future Sheedy: The thing that concerns me the most is how quickly the retail landscape is changing and how that speeds up our need for better analytics. The landscape changes now happen from month to month — two recent examples are Amazon and Whole Foods and Walmart and Jet. The two examples have combined brick-and-mortar and ecommerce overnight for two giant retailers. it means we must be flexible and nimble on how we get to our shoppers, and we need to constantly evaluate delivering against their needs. The advice i would give to young people is that retail today is a dynamic business that is constantly changing, but if you work hard, it can be an incredibly rewarding career. it is a people-focused business that allows you to take ownership for a part of the business. Take that ownership, work hard and run with it. McDonald: The thing that concerns me the most is the data overload on today’s category manager. We appear to focus too much on the data and not enough on the insight that drives shopper behavior. The company that gets to insights by better managing their data will win over the next decade. We need insight on ecommerce shoppers, click-and-collect shoppers and the brick-and-mortar shopper. My advice to young people is to think — too often, we just work a to-do list or check into a routine each day. We need to think about what is happening in the marketplace and what we need to do to improve our business. Develop your strategic thinking skills, and you will have a rewarding and prosperous cPg career.
Ed Sheedy is director of category analysis, promotional income and retail strategies for Sunbury, Pa.-based Weis Markets Inc. Tom McDonald is best practices team lead and chairman of the advisory board for the Minneapolis-based Category Management Association.
Progressive grocer December 2017
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2018 CategoRy ManageMent Handbook
So You Want to Be a Category Captain?
The work of a category captain falls into the following buckets: planogram or modular responsibilities Weekly reporting of category results/key sales data (pricing/promotion/assortment) Marketplace analysis to determine whether a retailer is winning or losing, and why strategic yearly review of category for insights into needed tactics and strategies ad hoc analysis per buyer requests Planogram/modular responsibilities: Category review data pulling/cleaning/attributing pre-modular work Modular drawing/proofing post-modular evaluation
Over the Influence What does it take to be a Category Captain in today’s Cpg World? By Tom McDonald his article explores the role and work to be done, the data requirements, necessary skills, and the process outlined in CatMan 2.0. each retailer has a distinct set of expectations and deliverables for category captains; however, there are core job requirements. Manufacturers that deliver on the requirements will help influence strategies and tactics in the role of category captain.
Role and Responsibilities Let’s start with a definition: a category captain is a person or team of people who helps a buyer at a retailer drive the retailer’s sales through a focus on tactics and strategies that deliver that category’s shopper. the tactics and strategies are developed from insights obtained through marketplace analysis of what drives shopper purchases. a category captain is an unbiased analyst who works to deliver the retailer’s goals for the category.
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Weekly reporting: each retailer has key measures that it expects to be recapped and time-trended on Monday morning. one set of measures are from the retailer’s data: dollar sales, volume sales, inventory, turns and, potentially, profit dollars. another set of weekly reports comes from syndicated data — nielsen/iri — with a focus on the retailer’s market share on dollars/units/volume. there’s also a group of household panel measures that can be updated monthly: trips, dollars/ trip, closure, loyalty, leakage and others. Marketplace analysis: a key responsibility of the captain is to be a marketplace expert on the category, with an ability to provide shopper insights and highlight which retailers and channels are winning and losing. the analysis of the marketplace is a daily responsibility that focuses on the sales fundamentals that drive the business: pricing, promotion/ merchandising, assortment/distribution and shelving. the captain uses all available data sets to review the fundamentals to ascertain how retailers are using them to drive shopper behavior. We believe that the insights come from thoroughly answering and understanding the dynamics involved in these questions:
What is happening in the category? Why is it happening? How should the retailer respond?
Assortment and shelving in the marketplace and key retailer competition Pricing and promotion in the marketplace and key retailer competition
How should I respond? Marketplace Analysis
The data necessary to succeed at the category captain position have increased dramatically over the past five years. The proper data warehouse is a must for category captainship. The category captain may not value all of the data sets below, but it needs to have expertise and understanding of the following data: 1. retailer Pos 2. syndicated data 3. Household panel data 4. Marketplace ads/coupons 5. retailer loyalty cards 6. ecommerce data 7. social data
What is happening? Why is it happening?
The graphic above shows the workflow for a marketplace analysis:
Strategic Yearly Review The category captain should provide a yearly review of the category based on trends, sales and any innovation that has launched. The key deliverables from a yearly review are: strategic choice on which segments to drive to deliver goals strategic choice on which brands to drive to deliver goals shopper choices: focus on closure, loyalty and leakage
Data Requirements
The Process The introduction of category management via catMan 1.0 more than two decades ago marked a turning point in how retailers and suppliers approached merchandising, shelving and assortment-planning decisions. This process is now at an inflection point, thanks to the emergence of new industry dynamics. These dynamics include the ever-changing shopper, an explosion of new data sets, the dramatic decline in
data storage and processing costs, the development of analytical tools that allow for quicker insight generation, and the growing importance of ecommerce. catMan 2.0 is the new industry standard process to create a comprehensive plan that meets shopper needs in a superior manner to produce better results for retailers and manufacturers. The process looks to enhance the workflows created in catMan 1.0 by highlighting the key industry changes: an abundance of new data, and the emergence of ecommerce, smartphones and innovative technologies. catMan 2.0 establishes a framework for how to integrate the changes to drive insights, and the 17 workflows allow a captain to use the correct tool or process at the proper time to deliver insights that drive the business. catMan 2.0 will continue to evolve and add necessary best practices and standards as shopper behaviors are shaped by technology. The cMA is launching a major project on ecommerce category leadership that will define best practices for the industry on standards and analytics. category management is on the cusp of the biggest changes in its 25-year history. The combination of innovative technologies with a constantly changing retail landscape has given more power to the shopper. The retailers and manufacturers that turn their abundance of data into actionable insights will influence shoppers on their journey to purchase.
The Ultimate CatMan Advantage STEP 1 CatMan 1.0
Internal Alignment
Category Definition
Organizational Design and Development
Definition CDT
CatMan 2.0
Key Process Steps
Internal agreement on objectives and strategies
What products are included? What are the subcategories?
STEP 2 Category Role
STEP 3
STEP 4
Category Assesment
Category Scorecard
STEP 5 Category Strategy
Assessment What Assessment Why
How important is the category to the consumer? To the retailer?
Who buys the category? What are they buying?
CatMan 1.0: “Shopper Facts” Behavioral Assessment: Who, what, when, where, how is the category bought?
What are the goals and objectives? How will we measure success?
How are we going to achieve the objectives?
CatMan 2.0: “Shopper Insights” Attitudinal and Perceptual Assessment: Why is the category bought?
STEP 6
STEP 7
Category Tactics
Plan Implementation
Assortment Pricing, Promotion, Shelf Merchandising, Shopper Marketing
Deployment, Supply Chain, ROI
What are the elements of the plan for each subcategory or segment?
Who does what and when?
Drives Shopper Marketing Builds brand and banner equity, driven by facts and shopper insights
Source: Category Management Association Progressive grocer December 2017
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2018 CATEGORY MANAGEMENT &
SHOPPER INSIGHTS CONFERENCE
NASHVILLE, TN • MAY 7th – 9th, 2018 GAYLORD OPRYL AND CONVENTION CENTER
CONFERENCE FOCUSES: CatMan Shopper Insights eCommerce
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Just a few of the companies that attended last year!
Questions?
Contact Diane Milanese.... dmilanese@cpgcatnet.org.... or call 937-492-0300
2018 CategoRy ManageMent Handbook
Education
What the Study Revealed here are the key learnings from the study: only 7 percent of the college students surveyed believed that their high school guidance counselors did a good job of explaining retail careers. The largest influencer of choosing a career was the information available on companies and careers on the internet. The next two influencers were faculty at the university and their parents. The three most important factors in selecting employment were advancement opportunities, worklife balance and compensation. The three least important factors in selecting employment, of the nine factors in the survey, were diversity/inclusion, environmental policies and work-from-home options. To more than 90 percent of students, benefits (health insurance, 401(k), education) were as important as salary in choosing employment.
Managing Talent gUiDeliNes To helP recrUiT for cATegory MANAgeMeNT Jobs AT UNiversiTies. By Dan Strunk n 2016, 10 universities collaborated with the category Management Association to field the inaugural “student employment Motivation study.” More than 1,000 students were asked questions about their motivations and influences in choosing employers. More than 450 responses were received from students pursuing marketing, category management, sales and retail careers. The students were asked 36 questions that focused on the following five areas: 1. career awareness of cPg while in school 2. career and personal values 3. selecting work 4. influencers on selecting a career 5. Demographics of the sample The universities involved were DePaul University, Northwoods University, ryerson University, saint Joseph’s University, Texas state University, University of Arkansas, University of North Alabama, University of Texas-Tyler, Western Michigan University and Xavier University.
70 percent of the students surveyed believed that their career will define who they are, and 81 percent believed that society equates occupation and income as success. More than 90 percent of the students would relocate for the right job. Almost 90 percent of the students would take a job with salary and a bonus, versus one with a potentially higher commission. current university recruiting efforts employed by most cPg companies aren’t maximizing results. Most companies don’t understand the curriculum, know the faculty, or have an ability to discern a candidate beyond their resume and transcript. Progressive grocer December 2017
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2018 CateGoRy ManaGeMent HandBook
Education DRIVE DELI FOOD SALES +11%
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Career advancement opportunities are the No. 1 need for students, so paint a picture of the opportunities at your company.�
When you Guidelines for Better Recruiting
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Companies looking to recruit category management professionals should follow these guidelines to ensure a steady flow of talent to the industry: Establish university partnerships to deliver trained talent. Many companies have moved away from this model over the past 20 years. Universities need these partnerships to train and develop young talent, and to highlight the industry. Internships provide key benefits for all parties involved and enable faculty get to know their students. Your total compensation package (compensation and benefits) needs to be understood now, and what it can look like five years from now. Career advancement opportunities are the No. 1 need for students, so paint a picture of the opportunities at your company. Work-life balance is important to these students, so they need to understand the social aspects of your company. Student-debt levels are at record highs, so guaranteed compensation is much more important than commission. The company that develops a program to help pay off student debt will be a highly attractive employer to this generation. The information on the internet is the No. 1 influencer of career choice for these students. Companies need to learn to use the technologies of campus recruiting, such as Handshake, so they can interact with students. Also, a company needs to ensure that its website highlights opportunities for college students. Develop relationships with key faculty members. They know their students and their strengths/ weaknesses and likes/ dislikes. Companies should spend the money on a job service at a university and get a two-tothree-times ROI.
Dan Strunk is managing director of the Center for Sales Leadership at DePaul University, and SVP of certification and education for the Category Management Association. *Nielsen Retail Execution Audit Custom Study 2015 Š 2017 The Coca-Cola Company
Shopper-Centricity
Shopper-Centric Retailing for Today and Tomorrow Focus oN soluTioNs ANd exPerieNce is A FouNdATioNAl requiremeNT iF reTAilers Are To eFFecTively eArN shoPPer loyAlTy. By Win Weber
hopper-centric retailing is an all-encompassing and transformative business model that focuses all functions within a retailer on increasing sales by exceeding shopper expectations. This means evolving beyond ingrained business policies and practices to a fully integrated, top-down, cross-functional focus on the shopper, shopper solutions, and enhancements to the shopping experience. considering the fact that the grocery industry is experiencing the most dynamic change in decades with expanding food lifestyles, digital connectedness, social media and increasing generational complexities, this new business model provides the support necessary in today’s shopper-centric environment to deliver sustainable incremental gain. it’s expected to be a key contributor to industry growth by delivering customer satisfaction for years to come. The new shopper-centric retailing business model represents a major paradigm shift. This will vary from a few retailers requiring minimal change to a majority that will require significant change.
those solutions the shopper is seeking and enhancements to the shopping experience. This aligns with what we know about today’s shopper. Traditional definitions of categories no longer dictate the shopping journey, with shoppers wanting solutions tailored to their lifestyles. it’s the combination of items, with a particular solution in mind, that often defines a shopping trip. in a recent survey, shoppers scored solutionsbased merchandising as significantly more attractive on almost all key metrics than item-specific displays and signage. shopper solutions planning is a continuous process allowing for adaptability to, and staying in front of, changing market dynamics. it begins with, and is driven by, an in-depth understanding of the “why” behind what drives merchandising solutions, with a focus on shopper insights that identify actionable shopping experience issues and opportunities. The internal/external assessment step, which looks at actual and anticipated market performance for merchandising-solution potential, is an in-depth collaborative process requiring transparency in the sharing of consumer and shopper insights between the retailer and cPg manufacturer. This leads to the development of solutions groupings. solutions groupings capitalize on the growth power of complementary categories and products comprising the solutions from a shopper’s perspective.
New Vocabulary to Reflect Evolution Job titles and the vocabulary within retailers changed 27 years ago, when the industry shifted from basic buying to category management. Now, with another significant change taking place, it’s important to reflect this commitment throughout the organization. For example, at the department level, the term “category management” should be replaced by the term “shopper solutions.” The category manager job title should be changed to shopper solutions manager or merchant. Also, the functional title “store operations” doesn’t convey the importance of serving and meeting the needs of the shopper. one retailer has already made the change to “customer experience team.” This helps put the shopper at the forefront at all levels.
Insights Into Solutions shopper solutions planning is the next-generation process specifically designed to translate insights into enhancements at the category, aisle, department and total store. it shifts focus from products and categories to Progressive grocer December 2017
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SPONSORED CONTENT
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Talking with…
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Organic Valley is the #1 organic grass-fed dairy brand offering a broad portfolio of organic, 100% grass-fed products, including Grassmilk® milk, Grassmilk® yogurt in tubs and cups, and Grassmilk® raw cheddar cheeses. More than half of Natural and Organic category consumers purchase grass-fed dairy, and organic 100% grass-fed products are the fastest growing organic segments, driving 23% of the YOY organic dollar growth.1 Progressive Grocer spoke with Eric Snowdeal about the features and benefits Grassmilk products deliver. Progressive Grocer: What is Organic Valley Grassmilk®? Eric Snowdeal: The milk that goes into our full line of Grassmilk products comes from cows that are 100% grass-fed and are never supplemented with grains and soybeans. This premium, artisanal-quality milk comes from 160 Organic Valley farms in northern California’s Humboldt County, the Midwest and Northeast, and is produced in small batches to maintain highest quality and nutrition profiles. PG: What do Grassmilk cows eat? ES: The short answer is they’re 100% grass-fed. They receive no grains. To dig a little deeper, our Grassmilk cows eat only fresh grasses and dried forages, like hay, and are lovingly cared for by the dedicated farmer-owners of the Organic Valley cooperative. The more high-quality pasture a cow eats, the better her health and the quality and flavor of her milk.
conjugated linoleic acid (CLA), which have been shown to help reduce inflammation in the body.2 PG: What’s in it for the cows? ES: Consumers increasingly understand that animals allowed to roam freely and feed on natural grasses and pasture produce delicious and nutritious products, and are voting with their dollars, propelling incremental growth.3 Cows love grass, and we love our cows, so we are very careful to see to their well-being. The energy needs of any active, lactating mammal are tremendous. When needed, we give our Grassmilk cows supplements in the form of minerals, vitamins and molasses, but no grains. PG: Who wants Organic Valley Grassmilk?
PG: Does Grassmilk Milk look and taste the same as other milk? ES: Our cows produce a rich milk infused with hints of herbs and grass and all the things we love about a perfect day outdoors. Though the color and flavor varies slightly from season to season depending on which plants are dominant in the pasture at certain times of year, the easiest way to sum up the taste is to say it has a barely perceptible light herbal flavor. Some refer to it as a “grassy” note. PG: What are the nutritional benefits of Organic Valley Grassmilk products?
ES: Consumers who want Grassmilk love dairy, and they want delicious and nutritious food produced the way nature intended. They also care about what happens behind the scenes. They care about great quality, humane animal care, the environment, and fair pay for farmers. Organic Valley’s Grassmilk products can deliver on all these levels! 1
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reported, respectively, 62% and 50% higher levels of omega-3 fatty acids, 18% and 34% higher concentrations of beneficial CLA fatty acids, and an ideal balance of
ES: Organic Valley Grassmilk milk, yogurts and raw cheddar cheeses contain naturally occurring calcium, of course. But a big benefit is that because our organic cows spend so much time on pasture, Grassmilk products also contain higher levels of beneficial omega-3 and C14
progressivegrocer.com
omega-6 to omega-3. 3
Source: 2016 Market LOHAS MamboTrack Health & Natural Consumer Annual
Study MarketLOHAS.com
Sales that grow quicker than grass and drive growth
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Organic 100% grass-fed products are the fastest growing organic segments, driving 23% of YOY organic dollar growth** • Organic Valley is the #1 grass-fed dairy brand** offering a broad portfolio of 100% grass-fed products including milk, yogurt tubs and cups, and cheese. • Made with 100% grass-fed milk. No grains. • Always organic. We never use GMOs, antibiotics, synthetic hormones, or toxic pesticides.
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Email salesadmin@organicvalley.coop to place your order. Visit www.organicvalley.coop for more on our Grassmilk line!
*6 oz. cup flavors: Black Cherry, Strawberry, Wild Blueberry, Vanilla and Plain 32 oz. tub flavors: Vanilla and Plain **SPINS: 52 Weeks Ending 10/08/2017 combined Mainstream/Natural channels.
2018 CAtEgory MAnAgEMEnt HAndbook
Shopper-Centricity
Solutions groupings, combined with shopper insights, lead to the development of solutions strategies. Strategy statements must align with corporate strategic initiatives and be consistent with the role of the category. The preparation of the final plan is a retailer-driven, in-depth collaborative process that focuses on the shopper, shopper solutions, the shopping experience and building shopper loyalty. This process sets a new standard for the industry, with CPG manufacturers participating to date rating it better and more productive than any they have experienced in the past.
Focus on Solutions and Experience There are certain structural elements that should be applied to how a retailer structures its organization if it is to optimize its shopper solutions management capabilities, including how support is provided to the merchandising teams, how merchandising and operations should interact, and how store execution should be addressed. Our experience suggests the traditional department structure (grocery, nonfood), based on merchandise attributes, needs to evolve to a solutionsbased structure focused on shopper attributes. The current siloed department alignment should evolve to one with a focus on shopper solutions. In this new structure, there are solutions group managers. For example, pet care, including food, supplies and accessories, would be assigned to one solutions group manager. Other solutions group examples include baking needs, household care and baby care. Reporting to the group managers are shopper solutions managers, who would focus on driving sales, understanding shoppers, creating solutions and exceeding shopper expectations. Within each solutions group team is a manager working with the solutions manager team on the promotional and solutions elements of the plan.
Analytic Support is Strategic and Essential Analytic support for a retailer’s merchandising solutions function, in the future, should be viewed as a strategic imperative and an essential investment.
Vertical Alignment of Merchandising and Priorities
Shopper-centric Retailing Vision — Strategy — Commitment
Shopper Solutions Planning
Infrastructure
Strategic Positioning
Organization Restructuring
Shopper Insights
Descriptive Job Functional Titles Core Merchandising Processes
Internal/External Assesment
Shopper Experience
Marketplace Assessment
Actionable Shopper Insights
Solution Goals and Strategy
Repository of Knowledge
Focus
Shopper and Shopping Experience Source: Winston Weber & Associates
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People Culture/ Behavior Business Practices
Solution Plan Implementation
This takes into consideration that the solutions manager’s role will evolve from a specific category and product focus to a more strategic solutions-oriented role with a multidepartment, total-store shoppingexperience perspective. Solutions managers need the right information for making decisions in this environment. They can’t be expected to be experts in everything. They need to be supported by a number of specialists with deep expertise in specific areas. This will require the consolidation of the consumer/shopper insights and category analytic functions into one group. Consolidation better positions the analytic function to identify opportunities through integrated analysis of disparate data/ information, and is essential when considering the analytic complexity related to the digital revolution. Consolidation has worked so well with one client that it’s planning to establish a solutions support team “center of excellence,” which, in addition to analytics consolidation, will include all merchandising support functions reporting to a centralized decision support team. This structure is designed to lead to standardization, simplification and continuous improvement.
Cross-functional Collaboration Required Skills Performance Appraisal
Retailers should create a senior-level executive position within their store operations structure that’s responsible for executing merchandising plans; interfacing with the solutions team to ensure that plans are implementable; communicating with the stores on all merchandising activities; providing input on the need for locally relevant merchandising, including local brands or ethnically important items for the neighborhood; and acting as the feedback loop from the stores to the solutions team on what’s working and what’s not. This position establishes vertical alignment of merchandising responsibilities and shopper-centric priorities. As the solutions teams are developing plans, they should be interacting with this function to ensure alignment and execution. Importantly, it creates an alignment that’s more conducive to collaboration between the two organizations.
Addressing the Old Execution Problem out-of-stock conditions have remained in the 8 percent-to-10 percent range for years, with 72 percent of the problem directly related to store ordering/ forecasting and “in-store, not-on-shelf” conditions. Add to this wide-ranging planogram, assortment, display and pricing compliance issues. Apart from investing in new predictive technologies, improving execution and enhancing the shopping experience are directly related to the organizational structure and deployment of resources at the store level. A new management function, manager of merchandising solutions and execution, should be added to store management teams, to coordinate cross-merchandising activity, support execution of corporate initiatives, and serve as a conduit for local merchandising within tight guidelines. This will improve a retailer’s capacity to tailor in-store merchandising to “touch” the local customer. This position is accountable for the execution of all crossmerchandising activities across the store. it should be understood that process and tools alone will likely not produce the desired results.
Alignment and Transparency a Must Most retailers and cPg manufacturers still need to establish the type of relationships required to support a shopper-centric retailing environment. Many joint- or collaborative-planning processes are too tactically focused on individual brand-building opportunities. The alignment of business strategies and capabilities in a solutions-oriented environment, with a focus on the shopper, presents a significant opportunity for both parties. By seeking ways to rise above brand-centric biases, both sides can benefit from common goals: to grow the business, increase overall sales and forge valuable long-term shopper relationships. sharing information is also an essential component of a successful strategic alliance. it’s foundational to establishing shopper-centric strategic alignment, and it needs to be improved. Finally, this evolution will have implications regarding how cPg manufacturers conduct business with retailers in the future. The manufacturers that wish to develop strategic alliances, and actively participate in the shopper-centric solutionsplanning process, will need to better align their capabilities with the retailer.
A Case for Change: Tops Markets “Becoming a shopper-centric retailer and incorporating shopper solutions planning is an evolution and a journey,” says Jeff culhane, svP of sales and merchandising at Williamsville, N.Y.-based Tops Markets LLc. “shifting course to shopper solutions planning takes time, internally and externally. We’re still learning.” The idea of creating business solutions at store level, learning how key categories play together, and how items within those categories respond to particular customer behavior versus looking at categories in silos has been a change, culhane admits. “shopper-centric retailing can be broken into three lenses: customer, supplier partner and retailer,” he continues. “The foundation is all about understanding the customer and what drives their behavior. For Tops, shopper solutions planning takes tightening the definition of ‘local marketing’ to a new level. Understanding at both a macro and a micro level the demographics around a store, the social economics of the marketing area, customer segmentations with that particular market and shopper cohorts, all have an impact on our plan.” All of these factors define a category’s role and assortment, as well as impact a product’s role within a category. “A product or category location within a store no longer determines category business manager (cBM) ownership,” culhane says. “it’s one store.” Additionally, he asserts, shopper solutions planning creates trust in vendor partners. “sharing of data and insights with trusted vendor partners, as well as gaining access to resources that only a supplier partner
A product or category location within a store no longer determines category business manager ownership. It’s one store.” —Jeff Culhane, Tops Markets LLC
can provide, is the foundation to building the plan,” he says. “The retailer holds the data around product and customer interaction, along with insights into your customer’s basket ... [and] shopper demographics. This is gold to vendor partners. Understanding how the customer behaves and responds to promotions, shelf placement and product adjacencies helps guide vendors’ decisions on growth and spend.” The categories planned to date have seen results regardless of the category size, culhane says. “For example, one category that had been seeing erosion executed the plan as outlined with a new set, consumer awareness and education, along with a shift in promotional strategy to improve the category’s profitability,” he recounts. “The team has exceeded its growth goals in units by one basis point, and profit goals by a whole point. it also improved its sales versus trend.” To accommodate this planning-process change, as well as support of the cBMs, Tops created two key departments, culhane explains: “First was decision support. Tops has a loyalty card, called Bonus Plus, as well as a warehouse full of data. We needed to sift through the data and compile it into something the teams could work with. We broke the department into two teams: product and customer. We bring them together to look at the basket. Their insight helps guide decision-making during the planning process. The second department is in-store merchandising and execution. This team works with both the cBMs and key vendors partners to ensure store execution of the plans.” Becoming a shopper-centric retailer “is not a light switch for the customer, the vendors or the retailer,” culhane cautions. “As you work towards building plans from the perspective of the customer, they will come. customers will recognize retailers working hard to gain their business, and the vendors will jump on board, too.” Read more about shopper-centricity at progressivegrocer.com/CatMan2018centricity. Win Weber is the founder, chairman and CEO of Tampa, Fla.-based management consultancy Winston Weber & Associates, which introduced the shopper-centric retailing model in collaboration with Deloitte Consulting and Food Marketing Institute.
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SP ON SORE D C ON TE N T
Q&A
Talking with‌
Brent Ewing VP of Product Development, Southern Imperial
Progressive Grocer: Why are store fixtures and displays such an important component of category management in grocery retailing today? Brent Ewing: Product merchandising has been an issue as long as retail has existed. In today’s environment, we see more and more stores reducing their footprint, or updating their existing stores to engage customers better. Choosing the right displays and fixtures is a critical component of maximizing the space that is available and making every product visible and accessible. With a growing selection of product options for customers, retailers need to be sure that they can get all of the items that customers are looking for in an appealing display and organized to make the shopping process easy and enjoyable.
PG: Does Southern Imperial have anything new that would be of special interest to grocery retailers who want a new look in their stores? BE: Southern Imperial is continually reviewing retail market and looking for ways to help grocers enhance
their product displays. A new line of products that we will carry in 2018 is self-serve bulk bins. As shoppers are increasingly conscious of what they buy, how much they buy, and how much they are spending, we see a real opportunity with gravity and scoop bins to help retailers merchandise bulk products. With these bins, grocers can carry a broad selection of bulk items, from nuts and candy to coffee, cereals, pet food and more. This allows customers to quickly view the available products and purchase precisely how much they want, and not be constrained by additional packaging, which makes them more environmentally friendly. PG: I understand you are carrying new electronic price tags. How do those work? And what benefits can they offer grocery retailers? BE: Grocers spend thousands of hours a year with price changes, which happen on a weekly, if not daily, basis. Electronic Price Tags allow for a centralized source to set all pricing and be pushed out and automatically updated for any and all locations at designated times. These help grocers ensure they have pricing integrity and accuracy for every item in their store. Our Electronic Price Tag solution offers solutions for almost any environment in the retail store. They also have additional features that can help with setting store planograms, giving notification of out of stock items, or help notify store staff of items that need to be picked for an online order. This opens up the options for retailers to dramatically reduce labor in a mundane task like price changes by adding automation. Employees can be freed up to engage more with customers, or help execute any omnichannel programs the retailer is running. Progressive grocer December 2017
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2018 CAtegory MAnAgeMent HAnDbook
Superconsumers
Superconsumer Solutions to Reinvent Grocery STorIES AND MErcHANDISING SoluTIoNS ArE WHAT WE NEED For ToDAy AND ToMorroW. By Eddie Yoon
intertime in Hawaii is the window for epic waves on the North Shore, which could lead to a thrilling ride of your life, or a frightening or even fatal wipeout. It’s much like being in the grocery business right now: Grocers face three major waves that will either propel the industry forward to new heights or leave behind bruised businesses and broken brands. We need to take a step back, rethink everything and consider radical solutions. Business as usual won’t work. More money now is spent on eating out than buying, storing and cooking food at home. Eating out and delivery have always been fun, but have never been better. We have more multicultural options to eat, with a greater ability to personalize our food to be tastier or healthier, with more convenience and at lower prices than ever. Technology has disrupted how we eat and drink. Domino’s not only improved its pizza, but also doubled down on technology. More than half of its orders are digital, and it’s now testing driverless cars for delivery. If you don’t believe that Domino’s is as much a technology company as it is a food company, then consider that an investment in Domino’s Pizza stock in January 2010 would have outperformed Apple, Google, Amazon and Facebook.
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Finally, we are migrating from a scale economy to a superconsumer (high-passion, high-spending consumers) economy. Scale used to yield huge advantages, but that was when consumers had limited choices. When you had only three TV channels to choose from, then scale mattered a lot. Now that the consumer has exponentially more choices of what to watch, it’s far more important to anticipate what people want than to advertise what you make. Superconsumers are the consistent theme through all of these waves. Pizza superconsumers love pizza, period, and buy frozen pizza and deli pizza, as well as delivery or restaurant pizza. They love new technology that helps them enjoy and learn about pizza. And they are less interested in the “lowest common denominator” pizza that results from scale, but rather are inspired by fellow superconsumers’ new creations at Blaze or Mod Pizza. Having literally written the book on superconsumers and created growth strategies for many food and beverage companies for two decades, I offer three things grocers can do now to win in this brave new world.
Cross-promote to Drive Aisle Conversion one of the coolest findings from mining terabytes of Nielsen Big Data was that a superconsumer of one category was a superconsumer of as many as nine others. often, these categories were surprising and spanned beyond the store. For example, someone who loved standby electric generators also tended to buy more life insurance than they needed, had two or more refrigerators and freezers, and were superconsumers of vitamins. These were “preppers” ready for the worst-case scenario. The International Dairy-Deli-Bakery Association discovered that some superconsumers of cheese from the deli section were also superconsumers of pizza. For
example, one pizza superconsumer was a graduate student who loved pizza but was tired of spending so much money on delivery. so he started buying frozen cheese pizzas and combining them with specialty cheeses and meats from the deli to top them off at home. This enabled him to personalize his pizzas while still spending less money. cross-promoting frozen pizza and the deli is a novel idea that also gets shoppers to go down more aisles. superconsumers have unlimited creative, quirky solutions to solve the problems they have or to fulfill broader quests in their lives. They don’t just use one category, but teams of categories, to solve them. Figure out what those teams are, and cross-promote creatively.
Merchandise Stories to Grow the Category Big Data is, of course, important, but stories are even more so. every superconsumer has an “origin story” of how they became a superconsumer, as they’re not born, but evolve that way over time. Understanding the evolution and key triggering events can lead to creative merchandising solutions that not only appeal to superconsumers, but attract new users to the category as well. For example, more than a decade ago, a hot dog company realized its category superconsumers were households with teen boys, and that these teens were consuming many of the hot dogs in a surprising need state: the after-school snack. going deeper into the superconsumer origin story, the company realized a few key insights: The teen had eaten lunch hours earlier and was starving after school. But speed was critical, as they had loads of homework, sports or other after-school activities to get to. satiety was key, too, as they didn’t want a blood-sugar crash later. These teen superconsumers discovered that hot dogs were the perfect after-school snack. Hot dogs took 30 seconds to heat in the microwave and 30 seconds to eat, so much faster than a frozen appetizer or snack. But because it was protein, it was more satiating than chips or other carb snacks. This was key, because if you asked Mom whether hot dogs were healthy, she’d generally say no. But if you asked whether they were healthier than chips or carb snacks, then she’d absolutely say yes. The hot dog company partnered with retailers to merchandise this story and not only grew themselves, but also grew the category. Profits grew even faster, as the after-school snack was counter-seasonal to the summer hot dog season, where volume is very high but heavily discounted, so not very profitable. This is where leaning into technology, specifically social media, can be helpful — not to “talk to consumers,” but rather to listen and learn. A huge portion of instagram and Facebook is photos of food. Look at what people are eating and combining together. i know of $100 million new products that emerged from an idea from Pinterest. People are telling their stories. We just have to be humble and remember that we still have much to learn.
Shift Assortment to ‘Eating’ Versus ‘Cooking’ i recently wrote in the Harvard Business review that cooking is likely to go the way of sewing. My hypothesis is that cooking is migrating from “most consumers, most of the time” to “some consumers, some of the time.” This means that a lot of food categories will likely face strong headwinds, which makes it very difficult for both food brands and grocery stores to grow. Now, this doesn’t mean that no one will cook, nor that grocers have to be 100 percent foodservice. This means that grocers need to reflect the right ratio of categories and brands that you can more readily eat, versus focused on cooking. in fact, just being one step closer to eating and drinking can help, since you don’t have to outrun the bear, just the slowest person. each merchant needs to look at its category and map out a spectrum of
Understanding the evolution and key triggering events can lead to creative merchandising solutions that not only appeal to superconsumers, but attract new users to the category as well.” cooking to eating across grocery and foodservice, and ask itself what’s growing, and is this reflected in what i have? For example, rotisserie chickens are a great example of eating versus cooking. But even that can go further, as with alreadypulled chicken. or by looking at chik-Fil-A’s growth, grocers might consider a wider array of fried/breaded chicken for sandwiches. Deli pizza might evolve to mimic what the fastcasual channel offers. We see the same thing in center store. For example, single-serve coffee reinvigorated the coffee category by being one step closer to drinking coffee than having to make a full pot. The growth of jerky similarly represents the desire to eat meat versus cook it. in the produce aisle, fresh-cut fruit remains a brilliant category that makes consumers happy — and grocers very happy, too — by making a nice profit on food that was going to waste. This is where scale can be a hindrance and speed is likely far more important. shelf resets may need to occur more frequently. We may need to redo aisles and create new sections to excite shoppers. We may need to invest more in labor to create exciting experiences that drive trips to the store. My view is that the growth of Aldi and the threat of Lidl and price-driven ecommerce are perhaps the best medicine for grocers. it will force us to confront the truth that scale isn’t as valuable as it once was, and that superconsumer stories and merchandising solutions are what we need for today and tomorrow. Eddie Yoon is founder of Eddie Would Grow and author of “Superconsumers: A Simple, Speedy and Sustainable Path to Superior Growth,” published by the Harvard Business Review.
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S P ONS OR E D C ON TE N T
QA &
Speaking with...
Mark Hardy CEO, InCOntExt SOlutIOnS
Embracing Innovation for Impact at the Shelf Progressive Grocer: We hear a lot now about how retail isn’t dying, it’s evolving. What does this mean? brand-owned apparel line. Mark Hardy: It means a few things. I don’t think anyone believed brick and mortar retail was going away completely—but as malls became scarce, consumer trends shifted toward fresh and organic, and Amazon just kept getting bigger and bigger, there was a heavy sense of helplessness that hung like a cloud over traditional brick and mortar stores. We know now that we shouldn’t have been worried about people no longer shopping in-store. According to Accenture, 77% of Generation Z respondents—those who were born into using mobile and social technology—said that shopping within a brick-and-mortar setting is their preferred channel. For these digital natives, shopping online, as well as convenience in general—has always been the standard. Excitement to them means actually experiencing products in new ways. So the problem wasn’t that physical stores were going extinct. It was that many retailers and manufacturers simply didn’t—and many still don’t—know how to respond to these changes in consumer behavior. The retail industry is finally coming around to the fact that it needs to evolve not only from a consumerfacing standpoint, but behind the scenes as well—starting with the use of emerging technologies, like virtual reality solutions and other technologies like AI and automation— to change outdated go-to-market processes.
“Category managers need to embrace innovation in order to get into the mindset of their shoppers, learn what resonates, and what will draw them into the store.” PG: How should today’s category managers be thinking differently when it comes to driving in-store interest? MH: At a basic level, the goal of a category manager stays the same: increase penetration and sales of a certain brand and category, while staying on budget and on time. But the way they go about achieving that goal needs an overhaul. Today’s shoppers want an experience—we keep seeing it over and over. Target has invested heavily in reviving its instore look and feel, with new layouts, convenient click and collect entrances, and wine and beer shops. Amazon-owned Whole Foods is creating a new era of grocery shopping, in that it allows seamless integration of the online and in-store worlds. Even Kroger is expanding its offerings to include a C22
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So category managers need to embrace innovation. They need to use technology as a tool to get into the mindset of their shoppers, and learn what resonates, and what will draw them into the store. It’s no longer about throwing up a new shelf arrangement or promotional marketing signage and hoping it sticks—it should be about first learning what will entice shoppers and what will drive that foot traffic, and then testing those specific concepts to learn which concepts will, or won’t, promote positive change. Because knowing which concept will fail before launching it in the store is just as valuable. At InContext, our virtual reality solutions for retail are the catalyst for that change in thinking. PG: Talk about how virtual reality is promoting positive change for category management practices, and ultimately helping create a space where shoppers want to be. MH: Using a cloud-based VR platform for store planning and in-store concept creation, brands and retailers are saving time and money by visualizing and testing within a virtual environment before creating anything in the real world. So that’s the up-front benefit. But it also allows for iteration on concepts, and mining insights directly from real shoppers, instead of just guessing or relying on historical data. How would your customers feel about a different signage placement, or more visible seasonal displays, or an exciting new product launch? These are all insights that can be found by leveraging virtual simulations. So you’re getting customized feedback from real shoppers, but before having to physically prototype products or use expensive mock centers to figure it out. Plus, with virtual, you can communicate your concepts like never before. If you’re in charge of a category and want to show the retailer that your concept will increase interest at the category level in order to gain buy-in, VR is a powerful tool. Decision makers can become immersed within a virtual environment to truly understand the impression your concept will make, creating an impactful way to present your ideas. By embracing innovative technologies like VR, category managers can evolve their go-to-market strategies in a way that will truly make a difference. To learn more, visit www.incontextsolutions.com/catman.
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Feature
Labor Issues
Forces of Labor Rising wages, new training initiatives and technology’s impact are 3 issues for retailers to follow in 2018. By Jenny McTaggart
ith unemployment at just over 4 percent — the lowest rate in nearly 17 years — there’s never been a more pressing time for supermarket operators to think about how to attract and retain good talent. While some naysayers would have the world believe that robots and online ordering will soon deplete the retail industry of any “people” jobs, grocers in the trenches know better. For now at least, retail jobs aren’t disappearing so much as changing. As retailers get ready to start business with a clean slate in 2018, they would be wise to keep several key labor issues on their radar. First on the list is the pressure to increase wages. Walmart and Target, two of the largest mass merchandisers that staunchly continue to compete on grocery turf, started the trend in the past few years by offering more attractive pay to lure new workers. Will smaller chains and mom-and-pop grocers be able to follow suit? At the same time companies are raising wages, several are boosting their internal training efforts to help with retention. Also in the works is a retail industry-wide training initiative from the National Retail Federation’s NRF Foundation that’s poised to grow in the next several years. Companies such as Walmart, Kroger and BJ’s Wholesale Club have already signed on, and industry-specific training may be on the horizon. Last but not least, technology will continue to play a huge role in all things labor-related, whether its function is to make employees’ mundane tasks easier, help with scheduling, or shift more jobs to warehouses and pickup stations as a result of more online shopping. Progressive grocer December 2017
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Labor Issues
Total Job Demand, Cashiers and Grocery Retail Despite the rise in self-checkout options, the demand for grocery cashiers has risen over the past few years.
4,330
YTD 2017
9,400
2016
8,990
2015
8,460
2014
6,510
2013 0
2,000
4,000
6,000
8,000
10,000
Sources: Employment data: Statistics of U.S. Businesses (SUSB) from U.S. Census Bureau; Job demand data: Burning Glass Technologies
One thing is for certain: This is a critical time for the retail industry and its workforce. “There are a tremendous number of government agencies and nonprofit and philanthropic groups, think tanks, and businesses trying to solve today’s problems and forecast tomorrow’s challenges,” observes Ellen Davis, executive director of the NRF Foundation and SVP of research and strategic initiatives for the Washington, D.C.-based National Retail Federation. “It’s really rewarding to be in the middle of this work, because we see the power it has. We’re at a really interesting period for both the retail industry and its workforce, due to changes in technology and changes in consumer behavior. From our perspective, building a program that can be used for the future workforce is coming at a really good time.”
Issue 1 Wages on stage The federal minimum wage is still $7.25, but some states and companies are becoming more aggressive by boosting that rate instead of waiting for the federal government to make any moves. Minneapolis-based Target Corp. said in September that it would raise its starting wage to $11 an hour, with plans to increase that to $15 an hour by 2020. Its announcement followed that of Bentonville, Ark.-based Wal-Mart Stores Inc., which said in 2015 that it would raise the baseline wage of current store employees to $10 an hour. Other retailers that have increased their entry-level wages in recent years include Issaquah, Wash.-based Costco Wholesale Corp. (its lowest hourly wages are now between $13 and $13.50) and Austin, Texas-based Whole Foods Market (its starting pay is now $11 an hour). But will smaller retailers follow suit? They may have no choice if their competitors are doing so, unless they can attract new workers by espousing other benefits such as more flexible scheduling or fast-track career growth. “Grocery is a low-margin business, so as wages rise, this has a significant impact,” notes JoAnn Martin, VP of retail industry strategy, 76
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North America for Scottsdale, Ariz.-based JDA Software. “This will be increasingly important going into 2018.” “Some of this is just general supply and demand,” adds NRF’s Davis. “The challenge with mandated minimum wage is that in some cases, people aren’t taking a first job for the money. They’re taking it for what they can learn. It’s important to have a balance between making sure that you don’t price certain people out of the market with regulations.”
Issue 2 training on the ‘rISe’ If raising wages isn’t enough to attract new talent, more companies are taking a closer look at their training initiatives to make sure they not only bring in, but also keep, good workers. When Walmart announced its pay increases a few years ago, the company also noted that it would offer additional instruction to new hires and reward them with a $1-an-hour raise upon competition. The retailer also said it was launching a leadership academy to prepare staff for more advanced jobs. It’s no surprise then that Walmart is one of the supporters of NRF’s new RISE Up initiative, which officially launched in January 2017. The RISE in RISE Up stands for Retail Industry Skills and Education, and the program has three goals, according to Davis: to help people become more prepared for retail jobs and excel more quickly once they get in,
DEAR FOOD INDUSTRY PARTNERS:
THANK YOU! Food companies are driving transformational changes in how animals on farms are treated. Your companies are switching to cage-free eggs; you’re switching to more humane pork products. And in recent months, dozens of the largest food retailers—including Burger King, Subway, Jack in the Box, TGI Fridays, Boston Market, Sonic Drive-In, Aramark, Sodexo, Compass Group, Focus Brands and many more—have announced plans to ensure their chicken suppliers switch to healthier breeds of birds, provide animals better living conditions, and transition to a more modern processing system. Your work has already led major poultry providers, like Perdue Farms and Wayne Farms, to make similar animal welfare announcements of their own. You’re setting the stage for a more humane food supply and more humane society. Thank you.
Feature
Labor Issues
to help retailers address their talent challenges at all levels, and to demonstrate retail as an industry of opportunity and mobility. “None of the three goals can stand alone and still be effective,” explains Davis. “All these things needed to come together in one program.” The program grew out of conversations that NRF had with the heads of talent at leading retail companies, she says. “We recognized a disconnect between millions of people in this country who are trying to find jobs and an industry that has between 500,000 and 600,000 open positions at a time.” A capacity-building grant from the Walmart Foundation allowed the idea to blossom into a full-fledged program with more than 30 retail supporters, including Walmart and Target, as well as Westborough, Mass.-based BJ’s Wholesale Club and Cincinnati-based Kroger. In its inaugural year, RISE Up has helped roughly 30,000 people earn credentials in the areas of Retail Industry Fundamentals, Customer Service and Sales, and Advanced Customer Service and Sales. Its pupils ranged from high school students to people who are switching careers or have been out of the workforce for many years, including recovering drug addicts looking for a second chance. Classes were taught in traditional classroom settings, but also through special programs sponsored by workforce boards and other nonprofit groups. In many cases, job candidates need very basic workforce readiness skills that they would normally acquire in a first job, notes Davis. “Teenage unemployment is the highest it has been in decades, so you have teens that haven’t learned a lot of those skills.” Over the summer in Baltimore, NRF held a hiring fair to help some of its newly certified students apply for jobs. Now, as NRF looks to the future, Davis says that the program might branch out and offer more specific training and credentials, which could conceivably include food preparation or specifics in grocery management, for example. “One of the things we want to do to demonstrate mobility is to have a bunch of different training and credentials under the RISE Up portfolio,” she notes. For BJ’s part, the warehouse club operator aims to “help people build skills and confidence to launch a meaningful career in retail,” according to Gina Iacovone, BJ’s SVP of field operations. “Through RISE Up, we hope to help families in our communities thrive through new career opportunities.”
Issue 3 technology’s Impact When Walmart announced a few months ago that it was testing a robot that scans shelves for out-of-stocks, incorrect prices, and wrong or missing labels, some of the mega-retailer’s critics were quick to assume that “people” jobs would soon disappear at the company. Walmart explained, however, that the new technology is intended to free up floor-level associates’ time so that they could “focus more on doing what machines typically can’t do as well as humans: better serve customers and sell merchandise.” At least one labor and technology expert agrees that Walmart is merely using the robots as an enabler for its associates. JDA’s Martin notes, “The career path in supermarkets is transforming a little, and technology is playing a part in that. But human interaction with customers is essential in the grocery industry, and really in any customer service industry at this point in time.” In fact, Martin foresees a future where technology will help add value to supermarket jobs. “Technology can take some of the repetitive nature out of the job and allow more human intervention, potentially elevating the position,” she says. “When you think about it, with unemployment being so low, when you tie these two together, technology is actually helping.” 78
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We’re at a really interesting period for both the retail industry and its workforce, due to changes in technology and changes in consumer behavior.” —Ellen Davis, National Retail Federation
At JDA, technology is also an important tool for employers that want to tie their supply chain visibility all the way from inventory to the store level, she continues. “Our latest workforce management solutions allow retailers to schedule their associates when they need them, and help to enable specific tasks to be executed as well — making sure the product is in the right place, and making sure you have the right fulfillment.” As technology continues to influence the way people shop, workforce management will help with specific tasks and training tied to omnichannel operations, she adds: “With the announcement of Amazon and Whole Foods, there’s an intensification there. So the labor and training associated with buy online and delivery, or buy online and pick up in the store, or whether it be a kiosk or a drive-thru … it’s definitely adding complexity to the labor force within the grocery arena.”
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Center Store
Keeping Center Store Relevant 5 ways to reinvigor ate an under appreciated section of the store. By Bridget Goldschmidt
t doesn’t get a lot of love these days, what with the current focus on fresh, but center store is still a force to be reckoned with. “center store absolutely has an important role to play in large stores, and research shows that this area of the store is a key profit driver — 75 percent to 80 percent of grocery bottom-line profit is contributed by center store,” asserts ron hughes, senior manager of shopper strategy and innovation at the coca-cola co., in atlanta. “on the other hand, we know Millennial consumers believe the center store is uninteresting and unappealing. in fact, 25 percent of Millennials say [that] the ‘center store is a boring part of the store,’ and 23 percent say, ‘i almost get claustrophobic when shopping center store.’ given that Millennials are a key shopper segment for growth, this presents a notable challenge.”
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Meanwhile, shelley Balanko, ph.d., svp at the hartman group, in Bellevue, wash., believes that the section “has lost a lot of relevance in modern eating. today’s consumers orient toward fresher eating and immediate consumption, so they are more inclined to shop the perimeter to meet their fresh-quality expectations and get inspired for immediate or very near-term cooking/assembly. contemporary consumers have generalized their ‘fresh expectations’ from the perimeter to center store, and now use ‘minimal processing’ and natural product formulations as cues for ‘fresh packaged’ food in center store. unfortunately, the majority of conventional center store aisles fail to have a strong assortment of such products, and thus, center store slips in relevance.” faced with such drawbacks as these, how can the center store get its groove back? following are some expert recommendations:
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GROCERY
Center Store
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Engage shoppers through a spectrum of solutions: “It is important that we appeal to all cohorts, but especially Millennials,” advises Hughes. “We can do this by developing complete solutions that fit with their busy lives, that are environmentally conscious, and offer authenticity, which is very important to them. Calling out product features and benefits when defining value is very important as well.” These complete solutions would “cross departments, from center store, frozen, produce and beverages, and ways to link perimeter purchases to key center store items can be effective,” he adds, going on to note, “Shoppers will require us to deliver on more experiential and holistic ideas across the total center store landscape.” Balanko cautions, however, that retailers shouldn’t implement a single fix for all customers. “Provide a continuum of solutions for consumers who vary the degree of involvement in cooking/assembly from occasion to occasion,” she suggests. “Not everyone desires a complete solution or scratch ingredients all of the time.”
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Focus on product offerings: “Despite declining to flat dollar sales earlier in the year, the center of the store continues to provide consumers with essential products to fulfill their everyday needs,” observes Jordan Rost, VP consumer insights at Schaumburg, Ill.-based Nielsen. “Encouraging the purchase of certain items can often drive higher overall basket sizes. Many center-ofstore edibles rank highest as basket builders for driving larger purchases in-store,” among them popcorn and gum. Beyond the staples, retailers should spotlight the special. “Increase the proportion of premium products – clean label, no legacy branding, contemporary cues of quality sourcing and production — to capture consumers’ attention and share of wallet,” advises Balanko. In fact, she predicts that the center store of the future will offer “a much smaller footprint with primarily young premium brands, because consumers will be increasingly interested in trading up for freshness and premium quality, and there will be little room at shelf for brands that don’t deliver on quality expectations.”
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Identify explicit consumer needs around health and what’s considered ‘clean,’ and then make sure product label claims appropriately publicize desirable attributes to win over consumers’ dollars.” —Jordan Rost, Nielsen
“For products sold in the center of the store … identify explicit consumer needs around health and what’s considered ‘clean,’ and then make sure product label claims appropriately publicize desirable attributes to win over consumers’ dollars,” recommends Rost. For its part, Chicago-based market research firm Mintel observes that “[p]romoting premium and wholesome indulgences … could be an effective way for retailers to drive incremental center store sales.” The firm also puts forward a case for carrying more items that encourage shoppers to stimulate their taste buds: “[C]enter store categories that facilitate flavor exploration, such as spices and seasonings and hot sauce, … generated better-than-average growth in [multioutlet sales] between 2011 and 2016. … [I]nternational foods overall are projected to continue to generate moderate growth, driven by consumers’ expanding palates and exposure to a wider range of ethnic foods as the U.S. multicultural landscape evolves. The strong performance of these categories points to an opportunity to position the center store as a focal point for exploring new flavors and cuisines through serving ideas and recipes highlighted at the shelf and cross-promotions with perimeter departments.” Additionally, recently introduced items should be highlighted for maximum impact. “Dedicating convenient space to feature new items will become pervasive” in center stores of the future, according to Hughes. “A new-item center, for example, will provide excellent visibility with shoppers and can serve as incremental display space.”
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GROCERY
Center Store
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Up the ante on merchandising: When deciding on the right mix of items, retailers should make sure they’re accessibly placed. “We must get shelf presence right,” notes Hughes. “Most of us get pretty overwhelmed by too much choice. If we can make the category both visible and shoppable, then we will have a better chance of turning shoppers into buyers.” Retailers shouldn’t stop there, however. “Many center store aisles today adhere to the ‘come find me’ approach to merchandising and product presentation,” he points out. “If we want to win with shoppers, we have to make shopping a much easier task, and much more fun and exciting.” One way Coca-Cola has identified of doing just that is to offer “delightful and engaging end caps that interrupt the shopping experience, providing an arresting point of difference, having stopping power and providing an enjoyable place for shoppers to convene.” Balanko agrees that retailers should be more assertive in this area, suggesting that they “merchandise to inspire consumers for a variety of meal/ snack occasions.”
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concepts — for all similar-occasion needs will become more and more the norm and will deliver on shopper convenience.” Ultimately, notes Hughes, “While there isn’t a perfect silver bullet to grow retail sales or re-energize the center store, we are confident that if retailers are prepared to test new solutions and try new things, they will stay ahead of the game.”
Incorporate tech into the shopping experience: “Embracing technology and social media in the in-store environment in an intentional and purposeful manner is a staple of future innovation,” says Hughes, no doubt thinking of computer-savvy Millennial and Gen Z customers. To lure these “digitally engaged shoppers” to center store, supermarkets will need to understand the way they use technology, and adapt accordingly. “Along this journey, even social media could become a form of currency, sometimes carrying more weight than money,” he notes. “Trial will likely be leveraged through social media, i.e., Instagram photos and Facebook posts about the brand.” Ecommerce is another important consideration. “While online shopping can deter instore traffic, center-of-store packaged items are the top areas driving online [fast-moving consumer goods] growth, meaning potential growth opportunities for retailers and manufacturers alike,” says Nielsen’s Rost. It’s not just the internet that retailers should be leveraging, though. “We also know that shoppers will want a mobileled interaction and multisensory solutions with intentional use of lighting, digital, scent and sound experiences,” observes Hughes, adding, “Technologies such as informational and self-service kiosks will become more pervasive throughout the total path to purchase of the future store.”
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Make optimal use of physical space: Even as they acknowledge the importance of technology, supermarkets shouldn’t neglect the unique attributes of their brick-and-mortar center stores. “Retailers are transforming their stores to amplify the benefits of threedimensional space,” says Hughes. “The goal? To motivate store visits and loyalty by delivering a new type of value that is differentiated from what can be found on the internet.” He further notes that grocery sections of the future “will enable like-minded consumers to converge and connect in their physical spaces, especially with sampling/trial and connections with food-and-beverage pairings, which must be integrated into the traditional center store format,” and that “destinations with one-stop shops — i.e., store-within-a-store
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Frozen & Refrigerated
Chilling Effect 5 WAYS OF Ge T TING ShOPPeRS TO WARM UP TO The FROzeN AISLe. By Lynn Petrak
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Make navigation easier: It’s not enough to stack freezer cases with products — no matter how attractive they may be — and hope that shoppers come down the aisle. “Retailers should ensure the frozen section is easily navigable, and should keep end cap freezers stocked with a variety of teaser items as to what else is available down the aisles,” advises Acosta SVP Colin Stewart. If necessity is the mother of invention, there are other inventive ways to bring needed traffic and sales to the frozen section. “Improved lighting and case design can help, but the big change that needs to be made is for the frozen case to be easier to shop — to make it even easy to browse, so shoppers can discover products that are new to them,” points out industry analyst Bill Bishop, chief architect at Brick Meets Click, in Barrington, Ill. Grocers can also bring frozen foods to other areas of the store, and some brands are helping them do just that. Los Angeles-based My/Mo Mochi Ice Cream, for instance, now offers signature self-service bars filled with its colorful, portable frozen snacks. “It’s all about creating an immersive, engaging experience, coupled with a completely Instagrammable moment,” says Russell Barnett, chief marketing officer.
2 n the frozen food category, there are various ups and downs that may warrant a different tack to entice and engage shoppers. On the one hand, sales have largely remained flat. In its 2017 report on frozen foods, Rockville, Md.-based Packaged Facts estimated that sales were almost identical in 2016 and 2012. According to research from Schaumburg, Ill.-based Nielsen, sales of frozen foods were down by a scant 0.1 percent in the past year. Chicago-based SPINS reports that overall sales of frozen foods edged up a slight 0.3 percent in the past year, another indication of the generally fixed nature of the category. Other research has found a silver lining in the freezer case, such as Acosta’s “The Future of Frozen” report, which notes that more than 26 percent of U.S. grocery shoppers say that they’re shopping the frozen food department more frequently this year, including Millennials and households with children. Jacksonville, Fla.-based Acosta also found that frozen foods is one of the few categories with more purchases in-store than online. With such trends in mind, frozen food companies, retailers and analysts alike say that there are things that can be done to bolster traffic and sales in the frozen food aisle, to capitalize on areas of growth and stanch any erosion.
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Offer not just a bigger mix, but also a different mix of products: Frozen food companies continue to roll out innovative products, invigorating the category. “New product development is critical,” asserts Bishop. “You only have to look at what companies like Aldi are doing to innovate in frozen to get an idea of the upside potential. Last week, we bought some imported Italian frozen-lemon desserts at Aldi that were
great-tasting, but i’m sure were also good profit generators for the retailer.” on that point, many innovations are happening in frozen foods. For example, green giant, a brand of Parsippany, N.J.-based B&g Foods, just came out with a new line of sides that includes veggie Tots and Mashed cauliflower. Meanwhile, the pace of development of new natural and organic frozen offerings also ramps up choices for consumers.
offers some advice for reaching consumers before they enter the store. “compared to other departments, coupons, promotions and the requests made by others in one’s household are all key triggers to entice frozen food purchases before consumers are even in the store,” she
points out. “conversely, product recommendations, advertising and digital influencers are less likely to have impact in this category.” she continues: “once in the store, frozen food consumers are more likely to be heavily engaged in selecting their product
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Go with a theme: As grocers seek to influence sales in frozen foods, they can use resources offered by manufacturers and industry organizations such as the American Frozen Food institute (AFFi) and the National Frozen and refrigerated Foods Association (NFrA). Harrisburg, Pa.-based NFrA has addressed the perception of fresh versus frozen foods in its ongoing real Food. Frozen. public relations campaign. The association also puts a lot of muscle behind March Frozen Food Month, which includes digital coupons, an integrated media campaign, social media platforms, sweepstakes and a dedicated website. “Many of the major manufacturers are eager to promote in March. 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,” explains Julie Henderson, NFrA spokeswoman, adding that the organization offers point-of-sale materials, artwork and consumer information to help retailers build their promotions. Many supermarkets are successfully tapping into such efforts. “As we continue to strive to be relevant and engaging in the space, we have found success in focusing on key monthly themes, such as Frozen Food Month and ice cream Month, which provide us with opportunities to highlight both national and own-brand offerings,” says Jannah Jablonowski, spokeswoman for Pittsburgh-based giant eagle.
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Engage consumers with offers and materials: Although special offers and point-of-sale materials aren’t new, grocers can use them in strategic and creative ways to entice shoppers to take a fresh look at frozen. gillian Mosher, spokeswoman for Nielsen,
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and, compared to other categories, index above the norm in terms of time spent browsing the aisle. Therefore, a combination of coupons and in-aisle placement/messaging could hone in on the pre- and in-store triggers that matter most to frozen food shoppers.” From a merchandising perspective, NFRA’s Henderson recommends that grocers improve digital media to attract more Millennials. “Consumers demand quick and easy meal solutions, and may not see how frozen foods can fit into last-minute meal planning,” she says. “Offer ideas for pairing frozen items with other foods and beverages in the store.” In developing messages for offers and materials, Bishop suggests that grocers take advantage of tools at their disposal. “One way to drive traffic to the frozen case is for retailers to use the purchase data from their loyalty programs to identify those households with a high likelihood to buy certain frozen products, and then team up with manufacturers of those products to offer very high-value coupons targeted just at those customers,” he notes.
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Give them a taste: Sampling, too, can be taken to another level. Rochester, N.Y.-based Wegmans Food Markets recently held a harvest tasting event that featured sampling across many departments, including frozen, where shoppers noshed on Wegmans’ pumpkin pie ice cream. Sampling is also emphasized by Marjorie Proctor, marketing and design specialist for Hillphoenix, a designer and manufacturer of commercial
Retailers should ensure the frozen section is easily navigable, and should keep end cap freezers stocked with a variety of teaser items as to what else is available down the aisles.” —Colin Stewart, Acosta
refrigerated food-display cases and application systems in Conyers, Ga. “Often, consumers are not fully persuaded to buy something, even though it may be a food item they are familiar with, until they actually taste it,” observes Proctor. “With a well-orchestrated demo and sampling area, a store can increase shopper knowledge, boost sales and increase traffic.”
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Fresh Food
Perimeter
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Freshening Up Here Are 5 WAys to Boost your PeriMe ter in tHe ne W ye Ar. By Jim Dudlicek rom produce to prepared foods, the perimeter is where the action is. But as competition heats up from all directions, grocery retailers will need to constantly look for new ways to keep their fresh areas distinctive. While fresh produce, meat and seafood, and prepared foods still give brick-and-mortar stores an edge over the looming threat of online shopping, retailers will need to be proactive to make sure that they’re unique, solutionfocused and worthy of repeat visits. Here are a few ways that retailers and observers say that grocers can keep the fresh perimeter fresh in the coming year:
Solution destinations: More often than not, consumers are shopping for meals or occasions, not random items. create solution destinations offering value-added products cross-merchandised with complementary products to maximize convenience. “chopped and ready-to-eat fruits and vegetables are an easy sell, especially if by other ingredients,” says John griesenbrock, vP of produce and HealthMarkets for West Des Moines, iowa-based grocer Hy-vee inc. “items such as sliced squash, peppers and other vegetables are an easy sell in our meat departments, merchandised with steak, chicken or pork. A lot of customers have a hard time deciding on the main course, so when they decide that chicken breast is going to be the main dish, the easy sell is the side dish, so a container of cut-up squash is the perfect accompaniment. Many stores that merchandise the side dishes next to the main dishes see no shrink — it’s all extra sales and profit.” eric richard, education coordinator for the Madison, Wis.-based international Dairy-DeliBakery Association, notes three factors in play: “First, consumer interest in fresh prepared foods continues to grow (3.8 percent growth over the last four years); away-from-home food spending has surpassed at-home food spending, illustrating consumers’ desire for already-prepared meal options; and continued evolution of meal occasions and rituals, as some no longer adhere to the sunday dinner and three-meals-a-day mindset, and whereby snacking is now part of the daypart model.” Winning retailers will understand and implement current trends in shopper eating patterns, according to richard. “Food is an emotional experience for many consumers,” he observes. “retailers can appeal to these shoppers by marketing meal solutions in their in-store delis and focusing on how they can help families better connect through eating occasions.”
Our focus is to get produce out of the traditional aisle and incorporate it into other departments.” —John Griesenbrock, Hy-Vee Progressive grocer December 2017
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Richard’s suggestions:
Falck further recommends intra-day space resets; for example, refrigerated space near the front of the store to offer breakfast items in the morning, lunch items at midday and dinner options in the evening.
Employ in-store messaging, advertising and social media that position the store as the best option for prepared food solutions.
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Offer a variety of prepared-meal dinner options that are quick, convenient and innovative.
Fresh experience: Despite its recent and projected growth, Richard asserts that grocery ecommerce lacks one important characteristic that brick-and-mortar can deliver on: experience. It’s an opportunity, Schmansky further notes, to engage consumers. “Shoppers no longer view supermarkets as simply a place to purchase groceries; rather, they see them as places to learn about their food, get ideas on how to prepare meals, sample products and learn about food-and-beverage pairings,” Richard says. “The sights and smells of fresh departments already lend themselves to this concept; for example, the smells of fresh bread baking in in-store bakeries.”
Focus on messaging that reminds shoppers of meal occasions with families and friends, and how a store’s foodservice options are the perfect solution. Additionally, eating healthy is increasingly top of mind, Griesenbrock observes. “Our focus is to get produce out of the traditional aisle and incorporate it into other departments,” he says, suggesting berries with yogurt (dairy case) or angel food cakes (bakery). Consumers are increasingly turning to ready-to-eat meals and meal kits, notes Michael Falck, co-founder and U.S. president of Atlanta-based retail-planning firm Relex Solutions. “Grocers seeking to pull shoppers into their stores should focus on offering healthy and convenient meal options, including in-store restaurants,” he says. “Convenience offerings are a great way for traditional grocery retailers to compete with online grocers and meal delivery services.” Such offerings focus on the consumer’s need for personalization as well as convenience, points out Sarah Schmansky, director of fresh for Schaumburg, Ill.-based Nielsen.
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Local focus: From food to outreach, consumers appreciate when retailers demonstrate a connection to the local community. “More and more consumers are looking for locally grown and produced food, from ingredients like locally grown wheat in baked goods, to locally raised and produced beef, pork and chicken products found in deli and prepared food departments,” Richard says. “Retailers can capitalize on this trend by working with local producers and growers in getting their products to their store.” It’s also important to tell the products’ stories through in-store messaging and external marketing channels like social media. “Transparency is a very important consideration among many shoppers,” Richard says. “Storytelling really helps retailers connect with shoppers who value the integrity of the food they purchase and consume.” Joe Watson, VP of domestic business development for the Newark, Del.-based Produce Marketing Association, agrees. “Consumers are looking for those types of connections, and they want to know more about where their food and floral products come from,” says Watson, former produce director for Thibodaux, La.-based grocery store chain Rouses Markets. Retailers can communicate about their community support through activities with schools, churches, food banks, civic groups or other avenues. “Make that ‘caring’ connection,” Watson advises, “and, because produce and floral are so important in the diet and the happiness factor, that connection is strong.”
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Sustainability: The increased desire for transparency also includes care for the environment. Hy-Vee has had success with its Misfit program in the produce department, Griesenbrock notes: “These ‘cosmetically challenged’ fruits and vegetables increase landfill diversion while offering discounts to our customers. In a time when up to 40 percent of the farmer’s harvest goes unsold, this is a way to sell ‘ugly’ produce to the consumer who doesn’t care what it looks like, while the product tastes just as good as anything else in the aisle.” According to Watson, retailers can communicate how they’re working to reduce waste through specific company initiatives, among them offering reusable shopping bags to customers, using returnable packaging containers to limit their landfill needs, and even working with local producers on composting programs. “Today, customers want to know that their store cares as much about these issues as they do,” he says.
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Authentic flavors: Today’s fresh-department experience is all about exploration, Richard says. “Driven by the diverse ethnic makeup of Millennials and Gen Z, all generations nonetheless are looking beyond traditional products and flavors to try cuisine, tastes, flavors and ingredients originating from different cultures such as Southeast Asian, African and Middle Eastern,” he notes. “Prepared food depart-
ments can quickly incorporate these taste trends into their offerings; other fresh departments potentially follow suit as well, both in terms of products and ingredients.” Further, an increasing number of consumers want those flavors to come with food that’s better for them, or that addresses specific dietary needs such as being gluten-free. “If you can make their shopping trip just as easy for them as for others, then you have won a primary customer,” Griesenbrock asserts. “Lettuce wraps instead of bread seem to be gaining momentum, and so is the need to merchandise lettuce and other varieties of greens. If you can bring the recipe to life with the marinades, steak, greens and other items such as peppers, the trick is marketing it as a gluten-free option.”
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Industry Events
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Moveable Feast PMA’S FrESH SuMMIT 2017 CAPTurED THE EPICurEAN ExPlOSION AND INNOVATION IN FrESH PrODuCE. By Jennifer Strailey
his year, the Produce Marketing Association’s (PMA) Fresh Summit Convention & Expo presented a bounty of fresh and delicious food and beverages in an atmosphere buzzing with innovation and creativity. Held in New Orleans Oct. 19-21, the summit showcased the inspired offerings of more than 1,000 exhibitors. “Fresh Summit is a food show, and it’s about the food experience,” said Kathy Means, VP of industry relations for Newark, Del.-based PMA. “It’s definitely not a commodity show. “And while there’s a foundational health message, there is also a huge focus on flavor, with food that is beautiful and delicious,” she continued. Indeed, from meal and snack solutions, to a bevy of beverages, to plant-based protein, to coconut concoctions, to kid-friendly products, the top trends at this year’s show emphasized flavor, functionality and convenience. “People are searching for food solutions, and protein is a big part of this,” noted Means. “Plant-based protein is also huge. The industry is responding
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by looking more holistically at new product development.” Whether combining fruits and veggies with protein, carbs and fiber in a snack pack or bowl, or adding plant-based protein powders to beverages, suppliers are creating products that deliver on taste, nutrition and convenience. Means also sees the industry engaging in more strategic marketing, storytelling and deeper explanations of why certain foods and food combinations are healthful. “We know produce is important to everything we do, but why is it healthy?” she mused. However, when it comes to the spectrum of healthy produce-based foods and beverages, “if it’s not tasty, it’s not going to make it,” asserted Means. The industry’s emphasis on more flavorful produce is driving everything from new apple varieties to tomatoes to kiwifruit and more. As a result, Brix, or sugar content, was a frequently mentioned topic on the PMA show floor. Sarah Deaton, marketing manager of Newport Beach, Calif.-based Zespri
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Fresh Food
Industry Events
North America, explained that its New Zealand growers are incentivized to grow for taste and higher Brix rather than crop size, while NatureSweet, of San Antonio, noted that its 4-packs of flavorful Jubilees and Eclipses have a higher Brix than many medium tomatoes. A focus on delectable food is also influencing produce packaging. A number of redesigns, like those from Litehouse, of Sandpoint, Idaho, employ colorful and luscious images of the ingredients within. Litehouse’s packaging refresh of its core line of dressings and dips features custom food photography that illustrates the real ingredients in each product, like the lemon and herbs in its new Organic Lemon Herb Vinaigrette.
drink to Good health Visitors to Fresh Summit were invited to drink a wave of refreshing, functional and tasty beverages from scores of exhibitors ready to talk protein, recovery and refueling. Rebbl, of Emeryville, Calif., makes organic coconut milkbased, dairy-free herb drinks. Its Elixirs and Proteins feature ethically sourced whole roots, extracts, berries, barks and leaves in a line of 11 drinks ranging from tart Lemon Turmeric to Reishi Cold-Brew Coffee to Dark Chocolate Protein. Rebbl’s Cold Brew Coffee Protein drink, for example, offers 12 grams of protein per serving, while its Vanilla Spice and Dark Chocolate varieties each contain 16 grams of protein. Protein was also front and center for Mamma Chia, of Carlsbad, Calif., which recently redesigned its labels and introduced Organic Chia Protein Smoothies with 12 grams of plant-based protein. The company’s Super Berry, Island Mango, Dark Cherry and Cool Watermelon Smoothies — all of which are dairy-free — are made with ground chia rather than whole seeds, as well as fruit purées and organic coconut cream. Mamma Chia Protein Smoothies offer 1,000 milligrams of omega-3s, 12 grams of plant-based protein and 4 grams of MCTs, high-quality fats that are easily absorbed and burned by the body. Tiesta Tea debuted five functional teas, each with different
health benefits. its cold-brew teas, including Light citrus green Tea and Maui Mango Pineapple Fruit Tea, are made with natural ingredients and no artificial sweeteners. The Wonderful co., of Los Angeles, recently launched a $115 million marketing campaign across its Wonderful brands, including PoM Wonderful. extensive research on the health benefits of pomegranate juice has revealed that it is rich in antioxidant polyphenols and has a number of anti-inflammatory effects. The 48-ounce size of PoM Wonderful juice is the line’s No.1 seller. Another hot topic at this year’s summit: beverages and foods that aid in faster recovery times after a workout. The Tsamma Watermelon Juice line, from Keenes, ill.-based Frey Farms, offers what it calls “performance hydration” through watermelon juice, and juice blends made with coconut and blueberry. Designed to accelerate hydration and recovery, Tsamma Watermelon Juice contains natural electrolytes and nutrients.
energy boost. Bare’s line of chia coconut Bites in vanilla, Pineapple and Flax varieties is baked with no oil, yet delivers a satisfying crunch. The san Francisco-based company makes each bite from sliced whole coconuts that are lightly seasoned and baked with a generous sprinkling of chia seeds. Targeting male snackers and anyone with a hankering for what snack it Forward ceo Nick Desai calls “meaningful junk food,” the World Peas brand Peatos offers a new twist on an American classic snack. owned by Los Angeles-based snack it Forward, the recently launched Peatos line offers 4 grams of plant-based protein and 3 grams of fiber per serving. “We’re bringing pulses to a mainstream audience,” asserted Desai, adding that Peatos have 20 percent less fat and calories than cheetos, and are available in three bold flavors: Fiery Hot, chili cheese and Masala.
Snacking With Substance creativity, innovation and fun flavors were especially evident in the snack category. calbee North America, of Fairfield, calif., the parent company of Harvest snaps, has redesigned the line’s packaging to convey a farm-to-snack visual cue on its products, which are sold in the produce department. Made from peas, red lentils and black beans, snaps offer 4 to 5 grams of plant-based protein per serving, depending on the variety. Harvest snaps’ two newest flavors, Parmesan roasted garlic and White cheddar, contain a three-carbs-to-one-protein ratio, which studies have found is beneficial to replenishing muscle energy stores and assisting in recovery and repair after a workout. “Purposeful eating is something many consumers are thinking about,” asserted carrieann Arias, vP of marketing for Naturipe Farms, in salinas, calif., which introduced snack packs for every occasion. “Naturipe snacks offer enough protein so that you can just eat a snack, and not still feel hungry.” The company also introduced Naturipe Bites, a 1.5-ounce snack that does double duty as a topper on oatmeal, yogurt or salad, and Fruit cups, featuring a 5-ounce serving of washed and readyto-go fruit with a convenient spork inside. Naturally high in protein, chia has become a sought-after ingredient in many foods and beverages that seek to offer an
Kid Cravings
Harvest Snaps offer 4 to 5 grams of plant-based protein per serving.
“i’m super-encouraged by our industry’s efforts to get kids age 2 to 5 to eat more produce,” enthused Means, of PMA. “Kids have different tastes than adults, and if they’re turned off when they’re young, they could be turned off forever.” Knowing that children have three times more taste buds than adults, the folks at vegy vida, in cincinnati, have identified a cucumber extract that acts as a “bitter blocker” in its kid-friendly salad dressings and dips. “Part of our mission is to change the way kids eat vegetables, as nine out of 10 kids don’t get enough veggies,” affirmed vegy vida Partner Julie Lincoln. The company’s five varieties – creamy ranch, cheesy cheddar, Zesty southwest, savory Bacon and cool Buffalo — come in a bottle designed for kids’ small hands. Made with a greek yogurt base, the dressings contain 8 grams of protein Progressive grocer December 2017
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per serving. Vegy Vida plans to introduce a Greek yogurtbased dip in Q2 2018. Sun Pacific’s family-inspired Mighties kiwis, available in 1-to-4-pound clamshells, account for about 50 percent of the California kiwifruit market, which runs from October through May. “Mighties kiwis are like avocados years ago, in that consumers want to know how to pick one out,” said Howard Nager, VP business development at Pasadena, Calif.-based Sun Pacific. Mighties clamshells include a spife (knife-spoon combo) for easy eating. “Retailers see the untapped sales potential, and Mighties are really starting to take off,” added Nager. The company noted that many retailers are introducing Mighties display shippers in secondary locations throughout the produce aisle, and in conjunction with its Cuties brand. When the fruits are merchandised together, Sun Pacific has seen triple-digit volume and dollar sales lifts for Mighties, as well as significant increases in Cuties. All Sun Pacific Mighties, Cuties and grapes will be organic as of the 2018 season.
It’s Alive! Fueled by trends in home gardening, and increasing demand for local and fresh produce, Fresh Summit welcomed a number of exhibitors showcasing living greens, mushrooms and tomatoes.
PSF Prog Groc - SNOWMAN 1/2 pg horizontal Ad.indd 1
“We saw it first at our foodservice show, with chefs who have herb gardens on the roof of their restaurants or grow their own microgreens,” observed Means. “We’re seeing it expand to hydroponics,” she added, noting that living greens and homegrown potted herbs are an extension of this trend. “It connects people to produce.” Pete’s Living Greens, a Carpinteria, Calif.-based company specializing in hydroponically grown living lettuces and cress varieties, introduced Endive and Escarole to its line, which also includes Baby Romaine, Spring Mix, Sweet Butter Blend, Italian Mix and Upland Cress. Pete’s Living Strips allow consumers to cut off what they need of the plant, while a strip neatly separates the roots from the greens, which have an 18-day shelf life. Each Living Strip comes in a
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patent-pending, 100 percent recyclable plastic container known as the Home Harvest Pack. North Shore’s living Basil, Rosemary, Oregano, Mint and Roasting Mixes offer less food waste, with what the company claims is the longest shelf life in the industry. Thermal, Calif.-based North Shore introduced all-new packaging this year. Back to the Roots, of Oakland, Calif., introduced Organic Mushroom Farm, which allows consumers to grow their own organic mushrooms in a small box in 10 days. The item, which recently launched in 1,200 Home Depot locations, is set to expand to between 350 and 400 Whole Foods Market stores, according to co-founder Nikhil Arora. Back to the Roots guarantees two mushroom crops from each box.
Meal Solutions and More Innovation is the name of the game when it comes to making produce center-ofthe-plate fare. Del Monte Fresh Produce N.A. Inc., of Coral Gables, Fla., displayed vegetable noodles and seasoned and cut vegetables, as well as new branded sandwiches, subs, wraps and salads. Convenient grab-and-go produce-based snacks with protein and grains from cheese and crackers were also featured. Mastronardi/Sunset, of Kingsville, Ontario, offered a fresh and flavorful meal
North Shore Living Basil is a featured ingredient in a recipe for Classic Pesto with a Twist.
solution with its Pasta Kits in a variety of flavors, including Creamy Parmesan, Classic Italian, Spicy Arrabbiata and Cold Pasta Salad. Each package contains fresh tomatoes, seasoning and pasta that can be prepared in 15 minutes or less. In his annual media presentation on the hottest trends in specialty produce, Robert
Schueller, of Melissa’s in Los Angeles, identified convenience and pre-cooked ingredients as top sellers. Melissa’s new Steamed Baby Gold Beets, Organic Steamed Lentils and Steamed Parisienne Potatoes are all strong sellers, as are its two recently rolled-out Clean Snax varieties, Matcha and Carrot Cake.
USA
Warmest thoughts and best wishes for a wonderful holiday and a very Happy New Year
Technology
Ecommerce
Amazon and Fexy Media have made recipes shoppable on SimplyRecipes.com, where visitors can order, through Prime Now ultra-fast delivery, all ingredients for select recipes with just the click of a button.
Clear and Captivating GROCERs dEsIRInG REpE AT ECOMMERCE CusTOMERs MusT pROvIdE COnTEnT ThAT Is ACCuR ATE And MAKEs shOppInG MORE COnvEnIEnT And pERsOnAlIzEd. By Randy Hofbauer
s food retailers continue their advance into ecommerce, a focus on clear, complete information is key to winning sales. Yet nearly all shoppers have jumped ship before making a purchase online, because they found content to be lacking, research from Irvine, Calif.-based digital commerce solutions provider Episerver shows. According to the March report, “Reimagining Commerce,” 98 percent of consumers have been dissuaded from such purchases due to incomplete or incorrect content, with nearly one-third (32 percent) of consumers being deterred every time. Further, more than one-third (35 percent) feel that brands do a poor or very poor job giving the online shopping experience a customized feel, showing that a large number of consumers today aren’t finding the content they value when ordering online.
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“Just as a poorly designed storefront or cluttered displays can deter shoppers from a physical store, a website or mobile app with lackluster content can turn off consumers and, in many cases, discourage them from making a purchase,” said Ed Kennedy, senior director of commerce at Episerver, in March. “Our study shows consumers really care about content when shopping online, not only the quality and accuracy, but also how it’s delivered to them. Complete and accurate content is now table stakes, and brands looking to go above and beyond must consider personalization.” To create a more consumer-friendly, personalized experience on their ecommerce sites, grocers should consider providing:
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An exploration-focused landing page: While some shoppers head to a grocer’s site knowing what they want to purchase, others are there to
browse, knowing what they want when they find it. Peter Leech, partner and director of digital and ecommerce at The Partnering group inc. (TPg), based in cincinnati, says that landing pages for these shoppers should explain, at a glance, two to five types of products, using light copy and clickable images that provide deeper subcontent upon shopper request. expert finders also could allow the shopper to answer key questions that will lead to a recommended product list subset.
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Shoppable recipes: From Amazon’s recent partnership with Fexy Media to eMeals teaming with Walmart and Kroger, a growing number of food retailers are offering consumers the opportunity to find a recipe they like and fill their virtual cart with all of the ingredients needed to prepare that recipe, with a single click. even safeway, Leech says, produces quality digital recipes whose ingredients can be purchased easily with the click of a button — seamless from idea to buy. such solutions might not be meal kits, but could compete against meal-kit programs without the problems that come from portioning and preparing ingredients for immediate use in the kitchen. “studies suggest that 80 percent of us have no idea what we will be doing for dinner at 3:30 p.m. that same afternoon. imagine if a retailer could make three dinner ‘suggestions’ personalized to their
individual consumer a couple times a week,” muses food industry expert Matt gutermuth, former president and ceo of safeway.com, and founder of empowerpositive.net. “if you expand a consumer’s menu and make it easy and fun to do so, you give people less of a reason to eat out — the easy answer to the question, ‘What do you want to do for dinner tonight?’”
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Nutritional data and ingredients: in an age when consumers are more health-conscious than ever, understanding what’s in a product is a paramount issue for many consumers. Prem Balwani, founder and ceo of Miramar, Fla.-based ecommerce platform igrab.it, notes that 72 percent of customers on his platform research nutritional data and review ingredient information, which is what drove him to change the user interface to start highlighting total carbohydrates on product listings, giving customers easy-to-see information on the spot. in addition, customers want to make sure ingredients used are from fresh sources, and to look up ingredients. He suggests that grocers adopt modern nutrition labeling of items to make it easier for shoppers to read and even understand the information. raley’s has done something like this with its shelf guide labels, which, developed independently, include descriptions such as Minimally Processed, Nutrient Dense and No Added sugar. The program was developed after the West sacramento, calif.-based grocer realized that even though recognizing ingredients is the No. 1 influencer of consumers’ decisions to purchase a food or beverage, 59 percent of grocery shoppers experience difficulty understanding nutrition facts on product packaging.
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Ecommerce-optimized photos: While many grocers have ecommerce programs in place, not all present ecommerce-ready content, notes courtney Acuff, vP of product and marketing with chicago-based ecommerce service itemMaster. For example, scale images and ecommercespecific product descriptions help capture attention when viewing items “on the shelf” and examining product details before making the purchase. “if you look across ecommerce sites today, you’ll see widely different takes on consumer experience — the content exists, but is often not yet utilized,” she says. TPg’s Leech adds that ecommerce leaders today are testing product images that are zoomed in to show a consumer using a mobile phone what they need to see at a glance without the need to manually zoom, which In a listing on Jet.com for Keurig’s The Original Donut Shop brand of K-Cups, a closeup of a foil top displays as the main image, clearly showing visitors the exact type of coffee that they’re viewing. can blur the image. They’re also Progressive grocer December 2017
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using content featuring key callouts, such as flavor in the main image section, to make the product easier to understand. For instance, in a listing on Jet.com for Keurig’s The Original Donut Shop brand of K-Cups, a closeup of a foil top displays as the main image, clearly showing the flavor currently being viewed.
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Personalized suggestions: Consumers hate seeing ads completely unrelated to what they’re trying to purchase, meaning that grocers that place banner ads that aren’t applicable to the specific customer run the risk of turning that person off. However, Jeremy Neren, founder and CEO of Madison, Wis.-based GrocerKey, recommends that grocers make sure that they use data specific to shoppers to plan personalized ad campaigns for products that may appeal to them, based on purchase history. “So, for instance, if you see a customer’s buying a high rate of organic items, when they’re searching the floor, put things like a digital end cap or some sort of engaging ad campaign in front of them to advertise other organic products’ relevance to that search,” he advises.
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Guest checkout: Ecommerce is all about convenience, so giving site visitors the ability to shop without registering can be a critical way of providing quick and easy purchases while reducing cart abandonment, recommends Anush Viswanathan, account manager at New York-based data analytics firm Ugam.
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If you look across ecommerce sites today, you’ll see widely different takes on consumer experience — the content exists, but is often not yet utilized.” —Courtney Acuff, ItemMaster
Moreover, when grocers prompt customers to register, they generally request personal information to use down the road. However, many consumers don’t want their inboxes filled with promotions, discounts and company news. First-time customers especially want to take the site for a test drive without committing to additional communication.
NoNfoods
Cleaning Products
New Ways to Clean Up Specialt y, innovative and targe ted productS offer potential grow th in a mature category. By Barbara Sax pullback on promotion has hurt incremental growth in the household cleaning category. dollar sales for most segments in this mature category remain flat, according to multichannel data from chicago-based iri for the 52-week period ending oct. 8. two bright spots in the category are household cleaning cloths, with a dollar sales increase of 5.3 percent, and laundry care, with a 4.7 percent dollar sales uptick for the 52-week period. further, cleaning cloths, which offer convenience along with a higher price point, are here to stay. “there does not appear to be any significant letup in the popularity of wipes,” says Kurt Jetta, founder and ceo of Shelton, conn.-based taBS analytics. “manufacturers seem to be finding ways to make them more retailer-friendly by making them more space-efficient.”
Supermarket chains routinely promote laundry care. parsippany, n.J.-based Kings food markets, for example, recently ran a $7 price break on procter & gamble’s tide with Bleach and a two-for-$5.99 deal on colgate-palmolive’s ajax laundry detergent on an end cap promotion. north haledon, n.J.-based nicholas markets foodtown, meanwhile, heavily promotes laundry detergents in its household cleaning department. “everybody wants a deal,” notes Jetta, adding that nine out of 10 consumers use at least one promotional tactic when shopping for household cleaners, and nearly two-thirds of consumers use three or more deal tactics to shop. “household products are much more receptive to bulk packs and value sizes relative to other promotional vehicles than we see in other sectors,” he says. “these are the types of promotions that deserve high-visibility display space because [of] the sales and transaction sizes on these products.” heavy shoppers and heavy deal buyers in this category, tending toward households with five or more members, and african-american and hispanic households, are motivated by passive deals rather than coupons. this means that deals are more focused on load versus incremental transactions. for almost every other sector, incremental promotions are a function of the extra transactions. “Bonus packs are a dud in most other categories, but not this one,” observes Jetta. taBS research reveals that while the grocery channel has the second-largest share of sales in the category, behind walmart, the channel isn’t attracting heavy shoppers or heavy deal buyers, so focusing more heavily on this consumer population could grow sales.
specialty outlook at the Seabrook, texas-based arlan’s market chain, specialty products help offset eroding margins in a chronically promotional category. “we integrate specialty products to raise our gross margins,” explains Buyer perry hallett. “mrs. meyer’s clean day does really well for us.” in addition to mrs. meyer’s and method, Kings stocks other specialty brands, including ecos, from earth friendly products; earthworm; common good; and Better life. progreSSive grocer December 2017
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While popular with some consumers, organic household products remain a niche category. The segment has “a long, long way to go before it becomes mainstream, so retailers need to be prudent on the amount of space they allocate to these products,” cautions Jetta. “It’s also hard to get these products parity-priced in a category where deals are still very important.” Jetta believes that natural and organic household cleaning products have another five to 10 years before the segment could become a meaningful category. “Organics have low productivity, but if retailers take the products out of the store, they lose those sales entirely,” he says, and the stores risk losing that attractive younger, upscale customer. “Most CPG companies are vying for the middle-income or lower-income consumer,” says Steve Zeitler, co-founder of Danbury, Conn.-based Citra Solv, which markets the Citra Solv, Home Solv and Air Scense brands. “Brands like Citra Solv help pull in that upper-income consumer who buys less on promotion and spends more per item.” According to Seitler, natural products, which generate more profit per square inch, help retailers realize better margins and are “a small but important part of the category.” “Given that margins on the high-tonnage items are so thin, the specialty cleaning products are very important as margin drivers,” asserts Jetta. “They are what enable retailers to invest in trafficdriving programs with more mass appeal.” For Arlan’s Market, specialty products with a Mexican heritage and products targeted to Latino consumers are profitable parts of the category. Hallett carries products from Mexicobased AlEn to appeal to his Hispanic customers. “Products such as Choralen and Colgate’s Fabuloso fabric softener have a higher margin and are popular with our consumers,” he notes.
Man Power Innovation can also be key driver in the category, with the ability to offset margin erosion that occurs with chronic promotion, but the category hasn’t seen much innovation recently. “The category doesn’t have the technological innovation it should, since the big players are spending money protecting their market share rather than on research and development,” points out Mike Eaton, CEO and founder of Miami-based Hero Clean. The company’s line of technologically advanced homecleaning products is specifically formulated and fragranced for men’s gear and homes. “We built the brand on technology to create high-performance, ease-of-use products for the tougher stains, odors and dirt that guys create,” says Eaton. He adds that the market for the brand is ripe: 47 percent of the adult male population is single, and more men are sharing chores, buying their own groceries and doing their own cleaning. The Hero Clean line “smell[s] the way guys would like it to smell, look[s] the way guys would want it to look, and ha[s] the
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The category doesn’t have the technological innovation it should, since the big players are spending money protecting their market share rather than on research and development.” —Mike Eaton, Hero Clean
technology to handle all the manly odor, stains and messes we can throw at it,” notes Eaton. The brand’s best-selling products are laundry detergent and odor-eliminating spray, both formulated with a patented malodor technology. “The stain wars are over,” says Eaton. “Now it’s all about odor. Our fabric spray has a probiotic microbe that goes into a fabric to eat away at the food source of odor. The product has outperformed all other products in the category.”
To Promote, or Not to Promote? Some retailers are still promoting the category heavily, while others say that they’ve long avoided promotions and still find the category a strong performer. According to Doug Bender, director of merchandising at Mechanicsburg, Pa-based Karn’s Markets, the eight-unit chain hasn’t pulled back on promotions. “We’re still promoting that category pretty heavily,” says Bender. “Traditionally, we’d run promotions in the fall and spring, but now they are spread out over the whole year.” The chain uses on-packs and bonus packs to lift sales. At Buffalo, N.Y.-based Hardings Friendly Markets, however, buyer Dave Lynam has resisted the promotion trend. “Our category produces pretty steadily,” he says, “so we aren’t depending on promotions.”
EDITORS’ PICKS
Food, Beverage & Nonfood Products
Light and Lean Ready Pac Foods has introduced two lunch options: Fresh Prep’d Soup Kits and Fresh Prep’d Wrap Kits. The soup kits are complete meals with 250 calories or fewer, 11 to 18 grams of protein, and at least a half cup of vegetables. Ingredients are prepared and separated to maintain a crisp, fresh flavor, and can be combined and prepared in a microwave-safe bowl with water in three minutes. Varieties include Chicken Tortilla, Vegetarian Tuscan White Bean, Asian Inspired Beef, Italian Style Wedding and Chicken Noodle. The wrap kits come with meats, cheeses, sauces, fresh vegetables and a soft tortilla. Each delivers a complete meal with 470 calories or fewer, 13 to 23 grams of protein, and one-half to three-quarters of a cup of vegetables. Varieties include Bacon & Garlic Caesar, Buffalo Style Ranch, Thai-Style Peanut, Southwest Style Ranch and Vegetarian Roasted Vegetable & Feta. The SRP per refrigerated kit is $4.99. www.readypac.com
Matcha Made in Heaven Matcha is valued by many health-minded consumers for its antioxidant-rich, metabolism-boosting and calorie-burning properties, as well as its detoxifying and calming effects. Now Unilever offers its own version of the product with the Pure Leaf line of hot and iced tea products, the company’a firstever home-brewed matcha teas. Sourced from Rainforest Alliance Certified tea estates in Kagoshima, Japan, the two offerings — Pure Matcha and Matcha with Ginger — are available in pre-portioned, individually wrapped form. Pure Leaf Matcha is crafted from high-quality tea leaves that are shade-grown, plucked, dried and ground for a full-bodied, smooth taste. The high-quality herbs and spices found in Matcha with Ginger are specially selected and blended with the fine matcha powder for a zesty kick. The teas sell in 12-count jars with an SRP of $8.49 each. www.pureleaf.com
Waste Not While a growing number of Americans want to snack more healthfully and eat more vegetables, many in smaller households face the problem of food waste if they can’t consume all of the vegetables they purchase. In response to this problem, Robinson Fresh now offers a full line of baby vegetables under the Green Giant Fresh label, including baby squash, cucumbers, peppers and tomatoes. Ideal for health-conscious consumers, the veggies are poised to become popular for convenient, healthful snacking or easy meal preparation. The products come in 8-ounce bags with a handle on top for easy grip-and-go access. www.robinsonfresh.com
On-the-Go Goodness Grab-and-go foods are especially important for mornings, given that many never have as much time as they need to get ready, drop the kids off at school, commute and more. Helping to make mornings a little easier are Nancy’s Petite Stuffed Bagels, freshly baked bagels made with Philadelphia brand cream cheese from the Kraft Heinz Co., ready to serve and enjoy in minutes. Made with the same ingredients used in home cooking — butter, flour, milk, eggs, fresh produce, herbs and cream cheese — the frozen line comprises four varieties: Original, Jalapeno, Apple Cinnamon and Pumpkin. The SRP is $6.99 per box, each of which contains 16 bagels. www.nancyspetitestuffedbagels.com PROGRESSIVE GROCER December 2017
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Advertiser index
Airius Avocados From Mexico Beam Suntory Inc. Biro Manufacturing Blount Fine Foods California Walnut Commission Chiquita Brands CSM Bakery Products Daymon Dean Foods Co Del Monte Fresh Produce NA Inc. Dietz & Watson Inc Dole Food Company Dr Pepper Snapple Group Duda Farm Fresh, Inc E&J Gallo EnsembleIQ, Inc. Flowers Foods Fresh Express Fruit Logistica General Mills Inc Hughes Network Systems Idahoan Foods Mars Chocolate NA/ Wrigley MasonWays Indestructible Plastics MilkPEP Monterey Mushrooms, Inc. Nestle Nutrition U.S New Pig Organic Valley Family Of Farms Perfetti Van Melle USA Inc. Peri & Sons Farms Pharmavite LLC Pinnacle Foods Pre Brands LLC Reckitt Benckiser Inc Rich Products Corporation Rust-Oleum The Humane Society of the United States The J.M. Smucker Company Transcontinental Robbie TreeHouse Foods Corporation United Fresh Produce Association USA Bouquet Company Vestcom
87 93 47 90 10-11, 28 21 39 17 81 4 15 31 3 25 32 27 100 40 37 94 106-Inside Back Cover Back Cover Inside Front Cover 45 88 9 42 Cover Tip, Insert 35 91 13 84 96 49 34 50 41 43 7 77 19 85 44 83 97 79
2018 Category Management Handbook Beaver Street Fisheries Coca Cola NA Dean Foods Co InContext Solutions Organic Valley Family Of Farms Southern Imperial Inc Trion Industries Inc.
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C4 - C5 C12 C2- C3 C22 - C23 C14 -C15 C18 - C19 C24
United states Markets • Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Technology • Hospitality • Apparel Canadian Markets • Convenience • Pharmacy • Foodservice advertising sales & BUsines s staff ExECUTIVE CHAIRMAN alan glass 609-276-2842 aglass@ensembleiq.com CHIEF OPERATING OFFICER/CHIEF BRAND OFFICER richard rivera 973-264-4380 rrivera@ensembleiq.com CHIEF BUSINESS DEVELOPMENT OFFICER korry stagnito 224-632-8171 korrystagnito@ensembleiq.com CHIEF CUSTOMER OFFICER/PRESIDENT OF STRATEGIC PLATFORMS ned Bardic 224-632-8224 nbardic@ensembleiq.com SENIOR VICE PRESIDENT/BRAND DIRECTOR katie Brennan 201-855-7609 • Cell: 917-859-3619 kbrennan@ensembleiq.com SOUTHEAST ACCOUNT ExECUTIVE larry Cornick 224-632-8248 lcornick@ensembleiq.com MIDWEST, MARkETING MANAGER angela flatland (AR, CO, IL, IN, IA, kS, kY, MI, MO, NE, ND, Ok, SD, TN, WI) 224-229-0547 Cell: 608-320-4421 aflatland@ensembleiq.com SENIOR SALES MANAGER Judy Hayes 925-785-9665 jhayes@ensembleiq.com SENIOR SALES MANAGER theresa kossack 214-226-6468 tkossack@ensembleiq.com WESTERN REGIONAL SALES MANAGER rick neigher (CA, OR, WA) 818-597-9029 rneigher@ensembleiq.com NORTHEAST, MARkETING MANAGER Mike shaw 201-855-7631 • Cell 201-281-9100 mshaw@ensembleiq.com ADVERTISING MANAGER Jackie Batson 224-632-8183 jbatson@ensembleiq.com
8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631 Phone: 800-422-2681 Fax: 978-671-0460 www.ensembleiq.com Progressive groCer (ISSN 0033-0787, USPS 920-600) is published monthly by EnsembleIQ, 570 Lake Cook Rd. Deerfield IL 60015. Single copy price $10, except selected special issues. Subscription: $135 a year; Canada $164 (Canada Post Publications Mail Agreement No. 40031729. Foreign $270 (call for air mail rates). Periodicals postage paid at Deerfield, IL 60015 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to Progressive Grocer, P.O. Box 1842 Lowell, MA 01853. Copyright ©2017 EnsembleIQ All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.
Independent thoughts By Katie Martin
Making a Difference USDA report De tAilS chAllengeS, opportUnitieS for inDepenDent SUpermArke tS. ndependents can sometimes feel like the redheaded stepchild in the supermarket landscape, even though they make up a vibrant portion of the market. With this in mind, the USDA recently released a report, “Independent Grocery Stores in the Changing Landscape of the U.S. Food Retail Industry,” by Clare Cho and Richard Volpe. The report is a deep dive into how independent supermarkets have fared in the years between 2005 and 2015, and especially into how the Great Recession affected these stores compared with chains. Few surprises emerged from the report; it is similar to what we’ve been reporting during the past few years and reflects what many of you have told me in our numerous conversations. Independents generated $70 billion in sales in 2015 — about 11 percent of all supermarket sales — and employed more than 330,000 full-time staffers. In 44 percent of U.S. counties, at least half of the supermarkets were independently owned; however, the share of sales was low: Only in 19 percent of counties were the majority of sales from independent stores, and these counties represent just 28 percent of the U.S. population.
Impacts of Recession, Rural Locations It’s no surprise that the Great Recession had a greater impact on independents, defined by the study as operators with fewer than four outlets, or that independents have a big effect on communities with smaller populations. During the 10 years the study looks at, the overall number of grocery stores increased by 7 percent, but with the onset of the recession in 2008-9, the number of independent stores stagnated, with only the number of independents declining in 1,269 counties; this has caused chain stores to gain market share. The report also found that most independent grocery stores were superettes (58 percent), defined as stores with annual sales between $1 million to $2 million, while supermarkets (annual sales of more than $2 million) made up 33 percent. When it came to annual sales, however, the independent supermarkets had more sales than their superette counterparts — 58 percent and 27 percent, respectively. So, while more superettes may be in operation, independently owned supermarkets are attracting more
customers and generating the lion’s share of sales. The report also noted that independent stores tend to be located in rural, low-income counties where chain stores don’t have much of a presence — again, no surprise there. While independents most likely don’t have the funding to increase store numbers during a recession (which caused their market share to decrease), on the flip side, chain stores often see little value in locating in low-population areas. Independents, not beholden to shareholders, can often thrive in such communities. That’s not to say, though, that these areas don’t pose great challenges.
turning it Around I recently read a thread on RetailWire called “Will independent grocers turn it around in 2017?” It generated a fairly lively discussion from several parts of the industry. One of the commenters was Tony Orlando, owner of Tony O’s Supermarket, in North Kingsville, Ohio. Tony O’s won Progressive Grocer’s 2017 Outstanding Independent for Deli/ Prepared Foods. I remember in our conversation for that award, he noted that small independents in rural areas are struggling, as customers don’t often have ready funds for “extras” at the supermarket. However, that didn’t stop him from setting himself apart by differentiating what he offered in the price range that his customers could afford. It’s this ability to differentiate that will allow independents to continue their fight for market share and consumer dollars.
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