February/March 2012 by Grocery Business

February | March 2012 Vol 2 | No 1 $9.95

Metro's

Bernadette Hamel A Passion for Produce

100 Days of Summer

On Target: A Closer Look

PM # 42211029

PLUS Pg 49

parmalat

People • Products • Promotion • Passion

February | March, 2012 Volume 2, Number 1 www.grocerybusiness.ca Co-Publisher and Executive Editor Karen James 416-561-4744 KarenJames@grocerybusiness.ca Co-Publisher and Content Director Kevin Smith 416-569-5005 KevinSmith@grocerybusiness.ca Executive Vice-President Content and Market Development Dan Bordun 416-817-5278 DanBordun@grocerybusiness.ca Editorial Team Noelle Stapinsky, Sally Praskey, Elaine Walker, Angela Kryhul Creative Agency Boomerang Art & Design Inc. Contributing Photographers Christopher Scott, Chris Sinclair, Pierre Charbonneau Subscription changes & updates or general inquiries: info@grocerybusiness.ca Grocery Business Advisory Council Bill Dunne, Acosta Canada Phil Donne, Campbell Company of Canada John Scott, Canadian Federation of Independent Grocers Perry Caicco, CIBC World Markets Nancy Croitoru, Food and Consumer Products of Canada Tim Berman, Kraft Canada Inc. Mark Ayer, Procter & Gamble Inc. David Wilkes, Retail Council of Canada Cori Bonina, Stong’s Market Michael Marinangeli, MIDEB Consulting Inc. © Copyright 2012. All rights reserved. No part of this magazine may be reproduced without written permission of the publisher. GST Registration No. 83032 6807 RT0001 Publications Mail Agreement No. PM42211029 ISSN 1927-243X Grocery Business Media 390 Queen’s Quay W., PO Box 4085 Toronto, ON M5V 3A6

publishers’MESSAGE Target Takes Aim Retail giant Target has set its sights on Canada and, early next year, makes its debut with 24 stores in the highly competitive Ontario market. Retailers have Target’s arrival marked on their calendars. Many remember the shakeout when Walmart arrived 18 years ago... but things are different this time around. Today, Canadian retailers are much savvier and better prepared to defend their hard-earned markets. There will be an impact, and some will feel it more than others. Our special seven-page report explores Target’s Canadian strategy, including important market research. In the view of Perry Caicco, of CIBC World Markets, even with the PFresh concept as part of its offering, Target won’t be a destination for groceries – shoppers will come primarily for the fashion. Still, with an aggressive new player on the scene, there’s an estimated $400-million in Canadian food sales in play. What does that mean for grocers? Fresh departments are more important than ever. As Metro’s Bernadette Hamel says, “You have to make sure that everything is better and fresher,” because consumers are demanding more variety and quality. With this in mind, check our Produce Manager section for new research on consumer shopping preferences and buying behaviour as well as important initiatives undertaken by the Canadian Produce Marketing Association.

If the one constant is change, then no group has been more adaptable than Canada’s vibrant independent grocer community. A read through the Canadian Federation of Independent Grocers’ recently published “In Celebration of 50 Independent Grocery Entrepreneurs,” marking the 50th anniversary of CFIG, is a testament to their resilience in the face of massive marketplace re-calibration. You’ll read more about these remarkable retailers in Grocery Business over the course of the year and we begin our coverage with Peter Cavin and Mark Wilson at Country Grocer in Victoria, B.C. Even if Target’s arrival triggers a marketplace shakeout, it’s not the first and certainly won’t be the last. Canada’s grocery community has proven flexible enough to roll with the punches and wise enough to grasp the opportunities. karenjames@grocerybusiness.ca kevinsmith@grocerybusiness.ca

Grocery Business February | March, 2012 Volume 2, Issue 1

contents Departments 5

Publishers’ Message

Front End

Target takes aim

What’s happening in the grocery business

11 Open Mike

64 It Figures

Nielsen spotlights consumer shopping behaviour

66 Perry’s Point of View

Perry Caicco, CIBC World Markets, looks at loyalty programs

Michael Marinangeli talks: Building Sustainable Customer Loyalty

15 CFIG 50th

Anniversary Profile

16 6

February | March 2012

Country Grocer, Victoria, BC

62 Launch It, List It

on the cover

Passion for Produce

When the teenaged Bernadette Hamel experienced her first taste of selling produce during her summer job in Repentigny, Que., she may not have known that she was laying the foundation for a remarkable career.

17 features 13 Hockeyville promotes team

Zehrs helps Ontario community heal in wake of disaster

Cool Merchandising

spirit in Goderich, Ont

Sizzling Trends Good Libations

17 CFIG celebrates 50 years of entrepreneurial spirit

19 Perspective - Nancy Croitoru

100 Days of Summer

Breaking Down Barriers

23 International

Heinenâ&#x20AC;&#x2122;s â&#x20AC;&#x201C; U.S. Grocer Extraodinaire

35 Smartphones Pack a Wallet

As more and more smartphones incorporate Near Field Communication technology, the mobile wallet will go from curiosity to commonplace.

Special Corporate Report On Target

50 CPMA SHOW AGENDA

Program at a Glance

57 Greening the Fresh $upply Chain

Refrigerated Trucks Cost Savings

58 Produce Profile Jane Proctor of CPMA

59 International

Canada and U.S. join forces in produce action plan

60 Consumer Research Produce by the numbers

61 Fresh Merchandising

Ready, Set, Eat! at Longos

46 Golden Pencil Awards

The grocery industry gathers to honour Philip Donne and Frank Coleman February | March 2012

Offer SELF SERVICE A convience that is EASY EFFICIENT ACCURATE BIZERBA - K CLASS scale systems.

Front End

Walmart on the move Walmart connects with Chinese community As part of its “Store of the Community” program, Walmart Canada catered to its Asian customers – who make up about 40 per cent of its local community – at one of its supercentre locations in Scarborough, Ont. Just in time for the Chinese New Year celebration, the store featured an expanded selection of decorations including lanterns and ornaments, and paper cutouts and banners, chosen from those carried in the retailer’s stores in China. This location also became the first in Canada to house an Asian bakery, fish market and butcher.

Walmart Canada unveils Urban 90 prototype

Bizerba K class Touchscreen scales

Walmart Canada’s new Urban 90 format takes its name from its footprint of 90,000 square feet, which allows the retailer to build supercentres on less than half the land normally required for traditional designs that take up 200,000 square feet.

Walmart U.S. reorganizes marketing and merchandising departments Reuters reports that Walmart has decided to redraw its organizational chart putting its marketing functions under the leadership of its merchandising group, a move, the story says, that comes “as Walmart sees a need for better coordination between the two groups. Shopping and advertising are being quickly transformed by the Internet, social media, smartphones and other shifts in both shoppers’ behaviour and reaching shoppers with the right campaigns.”

... Ideas ... Change the World

Bizerba North America In Canada: Tel. 905 816 0498 Fax. 905 816 0497 E-mail. sales @ Bizerba.ca www.bizerba-na.com

Darryl Rowe, president of McCain Foods Canada, has been named chair of the Canadian Federation of Independent Grocers’ Associate Members’ Darryl Rowe Council. John Guarino has been appointed president of Coca-Cola Refreshments Canada. Guarino succeeds Kevin Warren who has joined The Coca-Cola Company’s Bottling Investments Group (BIG) as regional director for Russia, Middle East and Africa. John Guarino

Front End

Kraft ReALIGNS U.S. SALES Kraft Foods Inc. has announced it will cut 1,600 positions in North America as it prepares to split its business into two parts – high-growth global snacks and a highmargin North American grocery business. However, only 10 layoffs are expected in Canada where the company employs about 4,000 people. The biggest impact will be to Kraft’s U.S. sales force, where about 40 per cent of the 1,600 positions will be eliminated as the company switches to a broker, or independent sales force. “In Canada, the sales force structure will be the same moving forward as it is today, which is head office, headquarters and retail sales for both companies,” says Kathy Murphy, Kraft Canada’s director of corporate affairs. However, Kraft Canada will continue to work with the independent sales force of Mosaic Sales Solutions for its convenience gas and warehouse channel, says Murphy. The cuts will be made over the coming year among its sales, corporate and other business units. About 20 per cent of the job eliminations are currently open positions.

Galleria Supermarket shares the love Galleria Supermarket’s Toronto store recently hosted its 5th annual “Share the Love” event, donating more than $19,000 to local charities. This year’s event was the biggest yet, attracting over 52 vendors, friends and family. Presenters for the event included Joe Daniel, MP for Don Valley East, and John F.T. Scott, president of the Canadian Federation of Independent Grocers (CFIG), who presented a copy of the CFIG book In Celebration of 50 Independent Grocery Entrepreneurs to Galleria president Jeff Min.

Joe Hudson named to Ontario Agricultural Hall of Fame Canadian egg industry pioneer Joe Hudson will be inducted into the Ontario Agricultural Hall of Fame on June 10, 2012. Hudson, Chairman and CEO of Burnbrae Farms Ltd. of Lyn, Ontario, has been at the helm of Canada’s largest integrated producer and marketer of egg and egg products for more than 60 years. For 31 years, Hudson served as a director of the Ontario Egg Producers. He has consistently supported egg-related research at the University of Guelph, and serves as chair of the HudsonBurnbrae Foundation that provides financial support to education and charitable organizations in Eastern Ontario. In 2001, Hudson was a recipient of the Golden Pencil Award, and in 2007 he was inducted into the “We Care Hall of Fame”

Mike Forgione, formerly the director of produce at Longo Brothers Fruit Markets Inc., is now the executive vice-president of operations at Longo’s. Mike Forgione Mimmo Franzone, Longo’s produce category manager, has replaced Forgione as director of produce. Food & Consumer Products of Canada (FCPC) has welcomed Sandy Nay as senior vice-president of Industry Affairs & Membership. Sandy replaces Sandy Nay Lesley McKeever.

Pavel Grekov, who had previous roles at Kao Brands and McCain Foods Canada, has joined Campbell Company of Canada’s beverage strategy division. Katz Group Canada Ltd. has announced the appointment of Frank Scorpiniti as chief executive officer. Robert Coallier has Frank Scorpiniti assumed the position of CEO of Agropur, replacing the recently retired Pierre Claprood.

Former business development director of Campbell Company of Canada, Lloyd Banfield, is now at Nestlé Canada in its trade marketing nutrition Lloyd Banfield division. Duncan Reith has left Canadian Tire Corp. to join XS Cargo as president and CEO. Duncan’s career has included senior roles at Sobeys Inc., A&P and Miracle Food Mart.

February | March 2012

Front End

Reset...

Kellogg Company has entered into an agreement to acquire Procter & Gamble’s Pringles business for $2.695 billion. Pringles is the world’s second largest player in savoury snacks, with $1.5 billion in sales across more than 140 countries. . . . . Walmart Canada plans to spend more than $750 million this year to open, relocate or remodel 73 retail stores, including 39 former Zellers locations. . . . . Danny Wegman, CEO of Wegmans Food Markets, Inc., received the inaugural Food Marketing Institute (FMI) Robert B. Wegman Award in honour of his entrepreneurial leadership in the design of retail strategies and imaginative merchandising. . . . . Douglas R. Conant, former president and CEO of Campbell Soup Company, was awarded the FMI William H. Albers Industry Relations Award for his excellence in trading partner relations in the food retail supplier community. . . . . R. R. Donnelley & Sons Company has signed a multi-year, multimillion-dollar agreement with Metro Inc. Under the terms of the agreement, which renews and expands the companies’ relationship, Metro will draw upon R.R. Donnelley’s Canadian production, distribution and technology platform for its administrative and operational documents. . . . . As the first of three planned for Canada, Target Corp. has already started construction on a 1.3-million sq. ft. distribution centre in Balzac’s High Plains development, located in Alberta’s Rocky View County just outside of Calgary. . . . . Walmart Canada has launched the Walmart Canada Income Tracker, a monthly tool that gives insight into the financial health of Canadian households. The retail giant plans

Transitions After almost 40 years with the Overwaitea Food Group, the last 15 as president, Steve van der Leest has decided that it’s time for something completely different – retirement. John F.T. Scott, president of the Canadian Federation of Independent Grocers (CFIG) says, “Steve has been part of CFIG since he was an independent grocer in High River, Alta. in the late ’70s. He has supported us through many difficult situations. He has been a catalyst for our growth and played a pivotal role in inviting new members to join in the wake of the CCGD dissolution last year.” As a testament to his dedication and contribution, CFIG awarded van der Leest a Life Member designation in 2011.

to report monthly on Canadian household spending power. . . . . The NPD Group, Inc., a global provider of consumer and retail market research for a wide range of industries, has reached an agreement with Walmart to receive and analyze its point-of-sale (POS) information in the U.S. . . . . . General Mills has made Fortune magazine’s annual list of the “100 Best Companies to Work For” for the fifth consecutive year. . . . . Metro Inc. has reported solid Q1 earnings of $103.7 million, or $1.01 a share, a penny ahead of its $1 estimate. . . . . .Quebec-based Groupe Biscuits Leclerc Inc. has purchased Ancient Grain Bar from California-based Go Pure Foods. . . . . Canadian Tire Corp. is putting the brakes on its food offering to focus on its core signature products and automotive related items. . . . . ConAgra Foods, Inc. recently agreed to purchase Toronto-based Del Monte Canada Inc., a provider and marketer of packaged fruits, snacks and vegetables in Canada, from an affiliate of Sun Capital Partners.. . . . . Sofina Foods Inc., a Markham, Ont.-based retail and foodservice food manufacturer, and Janes Family Foods Ltd., recently signed an agreement making Janes a wholly owned subsidiary of Sofina. . . . . Jim Pattison Group has announced a partnership with Quality Foods, a well known independent grocer with over 1,000 employees and 11 stores on Vancouver Island.

February | March 2012

Bill McEwan, president and CEO of Sobeys Inc., announced his retirement earlier this year citing ongoing health issues. McEwan, who has held the position since 2000, will continue in his role until a successor is found, which is expected to occur in the company’s next fiscal year beginning in May. “Although Bill has advised of his intentions to retire for personal reasons, it is important to note that Sobeys’ progress and performance will continue under his very capable leadership, including the advancement of all the strategic initiatives currently underway during this orderly transition period,” said Paul Sobey, president and CEO of Empire Company Limited.

Open Mike

Building Sustainable Customer Loyalty By Michael Marinangeli

Every week when I look at the supermarket flyers, I see several price points on front-page lead items that are lower than they were 20 years ago. This is hard to believe, considering how the cost of energy, rent and wages has increased during that period.

All customers have to do today is cherry-pick the front-page items and they could save as much as 50 per cent on their grocery bill each week. In fact, consumers don’t even need to shop around; some discounters will match – or even beat – the ad price of their competitors. This is a tough way to build customer loyalty, even with a solid loyalty-card program. Twenty years ago, manufacturers and retailers collaborated on ECR (Efficient Consumer Response) initiatives to drive costs out of the system. One strategy was to eliminate spikes in inventories caused by Hi/Low (higher regular prices/lower feature prices) promotional programs, taking instead an EDLP/EDLC (Everyday Low Price/Everyday Low Cost) approach to make inventory requirements more predictable and consistent each week. The cost savings would be shared by manufacturers, retailers and consumers.

But from what I see today, Hi/Low is back in full force. I would hate to be the order writer for retailers’ warehouses, or the production manager for a manufacturer. The promotional volumes must be staggering relative to regular-priced shelf movement. In my recent store visits, I couldn’t help but notice the long line-ups at the express checkouts, often consisting of customers who had only loss leaders in their baskets. These are your worst customers because they are the least profitable. With new competitors and more square footage in the marketplace over the next few years, the reliance on hot features to drive profitable customer traffic may no longer work. So what do you need to do to build sustainable customer loyalty? How do you get your customers coming back, week in and week out, despite all the noise in the market?

Fresh departments can be a very important part of your offering and perhaps your point of differentiation.

February | March 2012

Open Mike

First of all, be great at fresh. I know you’ve heard this song before. Yes, fresh departments can be a very important part of your offering and perhaps your point of differentiation. High quality is an expectation today and most retailers deliver on that. I am talking about turning your deli, bakery and Ready-toGo departments into a weekly destination for shoppers. For example, there is a very small deli/bakery near my house. No more than 5,000-sq. ft. in size, this place is packed every day of the week. It’s in a lousy location, the parking is terrible and the store ambience is circa 1970s. Remarkably, it’s located just a few kilometres from every major grocery retailer, and yet at any given time it has more customers buying deli and bakery items than any of its competitors. This store has sustainable customer loyalty, and it doesn’t even advertise.

So what separates my neighbourhood deli/bakery from its competitors? hh

Outstanding service and knowledgeable staff: I can go there any day of the week and there will be six to eight staff members behind the deli counter. You have to take a number to be served, but you don’t mind waiting because it is fully staffed

and, with this much action, you know the products are fresh. hh

Great core products: For some of us, exceptional bread is a key component of the meal. I drive out of my way to go to this store each week for different varieties of bread. You know the quality is as good as – and perhaps better than – that of the competition, and it’s half the price. Talk about great value. The store even has a full-time person on the floor slicing bread for customers. This person is also responsible for facing and presenting the product on the shelf. One nearby competitor, on the other hand, has a self-serve slicing machine. Need I say more? By the way, when you buy a great loaf of bread at $2, you might spend another $20 to put something between the slices. Turning a $2 sale into $20 or more is smart merchandising. Selection of unique products: Have a sprinkling of unique products that customers won’t find at competing stores, and price them to sell daily. This store, for instance, makes great focaccia bread that retails for only $2.99 – unbelievable value. Also, tailor your store to your trading area. If there are ethnic groups within the community, make sure your offering reflects their needs.

Simplified offering: I think home meal replacement (HMR) is a great idea for the time-weary consumer. Do fewer items but do them better. Devote your time and energy to the items that count most to the consumer. Remember, you want your store to become a destination. If you have a pizza and chicken program, the offering better be great. This is one situation where you have to balance quality and price. Provide a superior product at an everyday great price, and you will build loyalty.

These are just a few simple tips. The same principles apply to produce, meat and grocery. Loyal customers mean higher profit. Loyalty cards aren’t the main deal – they are the icing on the cake after you have convinced your customers to buy the cake. Michael Marinangeli is a principal at MIDEB Consulting Inc. and a retailing veteran with more than 40 years of experience. mjmarinangeli@gmail.com

Provide a superior product at an everyday great price, and you will build loyalty.

By getting involved in CPMA’s exciting Fruits and Veggies – Mix it up!TM program, you can become a leader in the movement towards better overall health for Canadians. Your support will go directly into programs that promote better health through the consumption of products that drive your business.

Mix it up!TM today!

@FruitsNVeg TM/MC

February | March 2012

Contact Lianne Wand 613-226-4187 ext. 225 • lwand@cpma.ca

Goderich grocer promotes

team spirit Local grocer helps Ontario community heal in wake of disaster By Noelle Stapinsky

Last August, Goderich, Ont., suffered a devastating disaster as one of the province’s biggest tornados ripped through the centre of town, leaving it in shambles. The picturesque town square, where residents held community events and markets, was reduced to uprooted trees and debris. Businesses and homes were severely damaged, and one of the downtown restaurants was never seen again. Pulling together as a community has been the backbone of the town’s recovery efforts. So when the opportunity arose to compete for the Kraft Hockeyville 2012 title, the residents, spearheaded by Steve Hewitt, general manager of the Goderich Zehrs, eagerly embraced the challenge. Volunteers decorated homes and businesses with hockey themes; they constructed an outdoor ice rink in the town square; and they organized numerous hockey-themed events. On Fridays, everyone wears hockey jerseys. “We at Zehrs are supporting this 110 per cent,” Hewitt, chair of the Goderich Hockeyville bid, told Grocery Business. “There are

Goderich Zehrs Store

display built in the store where customers come in to take pictures of it,” he says. At a local arena, Zehrs used 900 boxes of Christie Premium Plus crackers to construct a display with the community spirit slogan “Spread the Feeling.” “There are about 50 people on our Hockeyville committee and hundreds of volunteers that help the many activities,” says Hewitt. “I’ve never been involved with so many volunteers that are so engaged in creating community spirit.” There were 227 passionate communities running, but that list has been narrowed down and Goderich is now in the top 15. Canadians are voting online for the communities that will make the top five and on March 31 the winning community will be announced on CBC’s Hockey Night In Canada. “ I’ve never been So far, according to Hewitt, Goderich is leading the country in involved with so many Facebook followers, updates on volunteers that are so the CBC website, and members engaged in creating who signed up by e-mail.

several levels to this competition. Our store is competing with other Loblaw stores, and we’ve also been helping the town to qualify for the countrywide competition.” The competition is based on online submissions from communities displaying their hockey spirit. The winning community will receive $100,000 in arena upgrades and host an NHL pre-season game. The winner of the Loblaw store competition receives a cheque for $2,000 towards the community’s minor hockey program. Hewitt’s Zehrs features a display in the lobby with a real Zamboni machine and a score clock suspended from the ceiling that Hewitt built in his home garage. There’s also a Zamboni parked outside. “We’ve never had a

community spirit.”

photo : chris sinclair

February | March 2012

CFIG 50th Anniversary Profile

all in the Families Independents prosper through a series of partnerships

Peter Cavin and Mark Wilson

When Peter Cavin, his brothers-in-law Mark Wilson and Brett Large, and his sister-in-law Jody Large, bought two rundown grocery stores in Victoria, B.C., they had to find a way to turn a proverbial sow’s ear into a silk purse. “[One] store had a concrete floor, warehouse racking and an old freezer across the front,” recalls Cavin, an accountant who earned his CGA designation while working full time in the stores. “The layout was all wrong. Starting out that way, I guess we really didn’t know what we were getting into.” “We had to figure out a way to make them work, keep things lean, and do a lot of it ourselves,” adds Wilson. As young entrepreneurs with no equity, they were unable to obtain financing from the banks, but their wholesaler agreed to finance their inventory.

“ Take the things that you’re good at and be proud of them.” “The wholesaler thought we could make a go of it. We had nothing to lose – we didn’t own anything,” says Wilson, who has worked in the grocery industry since age 15. “We had to take the inventory and turn it into cash to make our first payroll.” Consequently, they

bought as much stock as possible, filling even the bathrooms with merchandise. “That’s how we financed the first store,” laughs Wilson. While they might have been short on cash, they weren’t lacking in ideas and initiative. They negotiated arrangements with local suppliers, renovated the two stores, got involved in the community and supported local charities, and provided the best possible customer service. Still, times were tough. Competition was growing, suppliers were demanding increasingly higher minimums, and their wholesaler was no longer able to service them. They needed to make a change. Enter Wally Large and Henry Zwynenburg, the owners of Food Country in Nanaimo since 1984. In 1997, the two groups formed a partnership, and the Island Independent Buying Group (IIBG) was born. The existing three stores were rebranded as Country Grocer and the partners opened a warehouse in the town of Chemainus, allowing the stores to increase their buying volumes significantly and pass along savings to customers. As business prospered under the new partnership, IIBG hit the acquisition trail. In 1999, it bought an existing store in the village of Cobble Hill and converted it to Country

Grocer. The Lake Cowichan Country Grocer followed in 2006 and Saltspring Island in 2008, for a total of six stores and some 650 employees. Fiercely supportive of local suppliers, the company made a commitment to carry Vancouver Island beef, pork and chicken in all six locations. The families delegate responsibilities to ensure the operation runs smoothly. Large and Zwynenburg look after the warehouse, while Cavin and Wilson oversee the jointly owned Cobble Hill store on their partners’ behalf. Country Grocer is now on a roll, with further expansion in the works. The company recently announced a new store in Nanaimo, due to open this year. “We’re definitely going to move ahead and try to get some other locations on Vancouver Island,” says Cavin. Never one to shy away from a challenge, Wilson urges independents not to be afraid to go head-to-head with the big chains. “Take the things that you’re good at and be proud of them.”

February | March 2012

CFIG Celebrates 50 Years

CFIG celebrates 50 years of entrepreneurial spirit The Canadian Federation of Independent Grocers (CFIG) was founded five decades ago by a small group of Ontario retailers as an organization that would provide cost-effective training programs.

Jim MacDonald, Gord Joyce and John Scott

Mark Rutledge

Today, CFIG represents almost all of the privately owned grocery retailers in Canada. To mark its 50th anniversary, the association held a reception on January 12 at the Intercontinental Hotel in Toronto, where it unveiled its â&#x20AC;&#x153;Most Influential 50 Independent Grocers in Canadaâ&#x20AC;? book, which celebrates 50 Canadian independent grocers who are true entrepreneurs in the industry today.

Tom Michaelis, Michelle Scott

Dino Bianco

Joey Longo, Dave Powell, Mark Vickars, Karen James, Kevin Smith, Cori Bonina and Scott Mitchell

February | March 2012

Charlie Coppa and Will Willemsen

Mark Vickars, Peter Cavin

Denis Moncion, Ward Hanlon and Peter Knipfel

Ingrid Willemsen and Pete Luckett

Tim Berman

Mark Ayer and Doug McGillivray, Joey Longo, Dave Powell, Mark Vickars, Chris Scott, Lisa Armstrong, Dave Parsons

Christy Mullen

Canadian Federation of Independent Grocers Board of Directors

February | March 2012

FMI2012

THE FOOD RETAIL SHOW

Dallas Convention Center | Dallas, TX USA Education: April 30-May 3 | Exhibits: May 1-3 w w w . F M I 2 0 1 2 . c o m

KNOW YOUR CUSTOMER MAKE THE CONNECTIONS THAT COUNT FOR SUCCESS. The food retail industry’s premier event—FMI2012— focuses on customers as people, not data points. Co-located with the U.S. Food Showcase, AMI Convention and Exposition and United Fresh 2012, FMI2012 stands out as your No. 1 destination for personal engagement, professional solutions, and empowering education. Buzzing with new ideas, teeming with new products, and sizzling with new solutions, this big event brings 25,000 industry professionals and 1,200 suppliers face to face, finding fresh ways to satisfy the shoppers who drive sales.

Get beyond the barcode. Register today at www.FMI2012.com.

Perspective

BREAKING DOWN

BARRIERS By Nancy Croitoru, President & CEO, FCPC

No sector in Canada impacts more people than the consumer packaged goods industry. Canadians purchase and enjoy food and household products every day and those same products put more Canadians to work in manufacturing jobs than any other sector – almost 300,000 in rural and urban communities from coast-to-coast.

tional best practices. Minimizing uncertainty will encourage Canadian CPG manufacturers to invest and create more high-quality jobs right here in Canada, benefiting Canadian consumers in many ways. Prime Minister Harper and President Obama – to their credit – have laid out an ambitious and historic plan, and manufacturers from coast-to-coast are optimistic that we will see real, positive changes. As part of the Canada now has a clear path forward to help plan, the Regulatory Cooperation bring even more product choices to Canadians, Council is also an encouraging save taxpayers money, help Canadian businesses step forward for Canadian manucompete on the global stage and sustain highfacturers as they expand and export into the U.S. and other quality jobs within the country. markets. Canada now has a clear path forward to help bring even more Unfortunately, even with these large product choices to Canadians, save taxpayers employment numbers, this important money, help Canadian businesses compete manufacturing sector is falling behind. on the global stage and sustain high-quality Amongst the Food & Consumer Products of jobs within the country. Canada (FCPC) association’s membership, There is still a lot of work that needs to be while I hear countless stories of innovation done to see these bold plans through. and excitement with the opportunities in this However, one key outcome manufacturers country, I hear even more about how our would like government to consider is the outdated regulatory regime is stifling growth, move to mutual reliance on science with denying Canadians access to new, innovative products and ultimately, hurting our economy. other jurisdictions. What this means is that regulators can rely on scientific studies from The solution to this complex regulatory other jurisdictions to support product environment is simpler than you may think introductions, instead of requiring manufacand can be largely achieved through predictturers to repeat these same studies, which is able, transparent and responsive regulations cost prohibitive and time consuming. so that Canada can better align with interna-

Making progress on this front will increase trading opportunities, trigger cost efficiencies throughout the supply chain, benefit the economy and ultimately, bring more product choices to Canadian consumers. Canadian manufacturers are not looking for absolute regulatory harmonization with our neighbours to the south. Canadian sovereignty would be maintained but we can’t ignore this opportunity to remove a barrier that impacts consumers’ choices. Despite the work ahead, I believe that our dynamic industry is up to the challenge and ready to work with the government to move the ball forward. At the end of the day, we believe that growing Canada’s CPG industry represents one of the single greatest opportunities we have to create jobs and maintain a high-quality manufacturing environment, translating into a better future for all Canadians.

Food & Consumer Products of Canada (FCPC) is Canada’s largest industry association representing the companies that manufacture and distribute the vast majority of food, beverage and consumer goods found on grocery store shelves. Our members are all based in Canada, providing jobs to almost 300,000 Canadians, and include small and large; multi-nationals and Canadianowned companies. Learn more at www.fcpc.ca

February | March 2012

KRUGER PRODUCTS IS PROUD TO ANNOUNCE IT IS AN OFFICIAL PARTNER OF EARTH DAY CANADA

Kruger Products proudly announces a partnership with Earth Day Canada to achieve a shared mission around fostering and celebrating environmental respect, action and behaviour change; communicate about the true environmental value of our EnviroCare family of 100% recycled paper products; and reduce the impact of our operations.

ASSOCIATION OF COUPON PROFESSIONALS

International: Heinen’s

Jeff Heinen

Heinen’s Fine Foods Family-owned grocer builds business by creating a company culture By Noelle Stapinsky “We don’t think you can be successful through inspection and supervision-style management,” says Jeff Heinen, president and CEO of Cleveland, Ohio-based Heinen’s supermarket chain. That statement set the tone for his keynote presentation at Grocery Innovations Canada, in which he described how creating a company culture has made his independent business a growing success over the years. The management style at Heinen’s is to

Cleveland, Ohio provide its staff (associates) with the knowledge and skills they need, and then trust them to do their job rather than micromanaging them. “I am often asked: Why bother putting so much into training staff if they’re going to leave in six months? My answer is: What happens if you don’t and they stay?” says Heinen. What Heinen’s grandfather Joseph started more than 80 years ago as a small meat market is still a family-owned business running on the same philosophy – to provide world-class customer service while offering the freshest, highest-quality foods. Today the

company operates 17 locations throughout northeast Ohio. The chain attributes its high-quality offerings to the control of its supply chain. For instance, Heinen’s partnered with local ranchers and scientists to breed and raise animals to create a consistent meat product. “This earns the trust of our customer base,” says Heinen. “We also have QR codes on our products so that consumers can watch a clip of one of the ranchers and see where the meat comes from.” Heinen’s holds similar partnerships with many local farmers for its produce offerings. In such a highly competitive retail landscape where it seems almost all grocers have installed hot counters for ready-to-serve food options, Heinen’s chose not to venture down that path. “We’ve decided not to offer hot food in-store because we believe you can’t provide high-quality foods held at a constant temperature,” says Heinen. Also unlike other grocery retailers, Heinen’s keeps more traditional hours of operation, open Monday to Saturday from 8 a.m. to 8:30 p.m., and Sunday 8 a.m. to 6 p.m. The retailer’s Diamond Standard program offers incentives for its associates to excel – the three diamonds in the business’s logo represent the consumer expectation for excellence in retail professional, sales merchant and business professional. “Employees who meet the standards for each of those categories receives a diamond-shaped emblem for their uniforms,” says Heinen. And each year, more than 10,000 consumers participate in phone and online surveys that measure the various stores’ products, associates, facilities and loyalty. Customers earn rewards, such as a five per cent store discount, for participating; the survey results are posted for store employees to see. To change a grocery retail business culture starts with “values, honesty and respect,” according to Heinen. But once that’s in place, both consumers and employees gain a sense of ownership. That kind of culture and community has been a major driver in Heinen’s success. February | March 2012

Get YOUR GROceRY ShOwcaSe weSt Fix On apRil 22nd & 23Rd at the VancOUVeR cOnVentiOn centRe

Have you heard? Studies show that as the only conference and trade show in Western Canada dedicated to the grocery industry, Grocery Showcase West contains all of the essential networking and business opportunities needed for grocery innovators to thrive in 2012! Make sure you donâ&#x20AC;&#x2122;t miss a crumb of the action. Register today at cfig.ca!

Grocery ShowcaSe weSt 2012 | april 22nd and 23rd | VancouVer conVention centre

Program-at-a-glance

Grocery Showcase West 2012 Saturday, April 21st Vancouver Convention Centre West 6:30 pm Grocery Showcase West Opening Night Reception - a Meet & Greet for ALL attendees and exhibitors.

APRIL 22 & 23, Vancouver Convention Centre & The Fairmont Waterfront Hotel

Sunday, April 22nd

Monday, April 23rd

The Fairmont Waterfront Hotel

9:45 am CFIG 50th Anniversary Celebratory Brunch Waterfront Ballroom

7:30 am Breakfast Speaker Session MacKenzie Room

11 am Keynote Presentation Waterfront Ballroom

9 am Keynote Presentation Waterfront Ballroom

W. Brett Wilson

Trevor Linden

Former CBC Dragon, Celebrated Entrepreneur & Philanthropist

Former NHL All-Star and Olympian

Vancouver Convention Centre East 12 to 5 pm Grocery Showcase West Trade Show – “The Trade Show of Champions,” featuring: • Small Canadian Processors Pavilion • First-time Exhibitors Pavilion • CFIG’s 50th Anniversary Museum • BC Local Wine Bar (@ Retailers’ Lounge)

9:45 am Conference Session Waterfront Ballroom

James Fraser Partner, Hunter Straker 11 am Panel Presentation Waterfront Ballroom Three of CFIG’s 50 – The Next 25 Years • Darryl Hein – Market on Millstream • Doug Lovsin – Freson Bros. IGA • Chris Szeszorak – Harold’s Family Foods

Sunday, April 22nd 7 pm An Event to Remember 2012 Where were you in 1962? Don your pearls, fedoras and your best guess, and let’s reminisce amongst the sea creatures at The Vancouver Aquarium.

February | March 2012

buttons

Metroâ&#x20AC;&#x2122;s Bernadette Hamel has parlayed a summer job selling produce into a flourishing career.

PASSION FOR

PRODUCE February | March 2012

P hoto : P ierre C harbonneau

By Noelle Stapinsky

Cover Story

PASSION FOR

PRODUCE When the teenaged Bernadette Hamel experienced her first taste of selling produce during her summer job in Repentigny, Que., she may not have known that she was laying the foundation for a remarkable career.

BIOGRAPHY bernadette hamel Birthplace: Montreal, Quebec Family Background: Youngest of eight children (including seven girls). Career Path: Co-owner of a fresh produce store at the age of 20. In her 28 years at Metro, Bernadette progressed through the ranks from junior buyer to vice-president, national procurement, produce. CPMA Involvement: Active member of the CPMA board since 1998; joined the executive committee in 2009. Served as chair of the Montreal Convention in 2011, and will do so again in 2013. President of the AQDFL from 2007 to 2009, and a governor of that institution since 2009.

But from those early beginnings, Hamel’s passion for produce has helped propel her through the ranks at Metro Inc. from junior buyer to her current position as vice-president of national procurement – produce. Beyond her responsibilities at Metro Inc., Hamel gives back to the industry in many ways. From her appointment as the first female president of the Quebec Produce Marketing Association to her leadership role as the convention chair of the Canadian Produce Marketing Association (CPMA) in 2011, Hamel has been a driving force in helping guide the Canadian produce industry through a period of unprecedented change. “Our association is extremely diverse in the way we support the market; the programs we develop and the issues we deal with,” says CPMA president Ron Lemaire. “One of Bernadette’s greatest attributes is the ability to work through the diversity of issues, ranging from our board of directors to the executive committee, which does the hands-on work between board meetings. Bernadette’s contributions span a wide-range of issues.” Metro Inc. has been extremely supportive of CPMA for over 30 years, says Lemaire. “The philosophy coming from Metro and continuing on through Bernadette is invaluable.” He is impressed by the passion and energy that Hamel brings to her work. “She’s strategic, professional and very focused. Bernadette gets the job done.”

“ SHE’S STRATEGIC, PROFESSIONAL AND VERY FOCUSED. BERNADETTE GETS THE JOB DONE.” Ron Lemaire, CPMA president

February | March 2012

Q&A with Bernadette Hamel of Metro Grocery Business: Where did your career in the produce industry begin? Bernadette Hamel: My first experience in the industry came when I was 14 years old. I got a summer job working in a fruit and vegetable store in Repentigny. In fact, six years later, I became a co-owner of that store. That lasted four years. I was 28 when I started working at Metro as a junior buyer. GB: What do you see as the biggest shift/ change over the past 10 years in retailing fresh produce? BH: Demand, no doubt about it. Customers expect a much greater variety of produce than they did 10 years ago. They want to discover new tastes from all over the world. Immigration is one of the factors that have contributed to the change in the culinary landscape. But it’s also because customers travel more than ever before, even if it’s just a virtual trip; the Internet is such a window onto the world, opening up so many horizons. Not to mention the explosion of cooking shows and books, and the fact that more and more people want to eat right. So you have to make sure that everything is better and fresher, on top of offering a wide variety of products.

exceed our quality standards. We launched an improvement program for our produce in 2011, and we have started setting it up in our Quebec and Ontario stores. The program reaches across all aspects of our operations, from choosing suppliers and the new standards that they must respect, to reviewing the supply chain, to in-store display standards, right up to employee training. We foresee that our fresh produce improvement program will be carried out in almost all of our stores during the coming year. GB: The consumption of produce has grown quite a bit in the past few years. Do you feel that we can keep up that momentum? BH: Yes, we can keep it going. It’s a matter of responding to the increasingly specific demand of our customers and exceeding their expectations. For example, we pay closer attention than ever to how products taste; food meets a need, but people want a taste experience. And they are more and more aware of the positive effect that food can have on their health. So if we want to keep that momentum going, it’s up to us to make sure that they find everything they want – and more.

GB: What challenges you most about the industry today?

GB: Canadian consumers continue to evolve. How do you see this changing consumer mosaic impacting the produce industry?

BH: Surrounding ourselves with good suppliers who can help us respect and even

BH: All the demographic changes that have taken place have definitely had an impact on

the industry. That phenomenon affects everything provided in the store, including produce. Greater ethnic diversity involves adapting what we offer. There is a mutual influence of culinary cultures, and it can only help enrich them both. GB: Do you feel that the industry has been successful in attracting young people to the ranks? And what more could be done? BH: We have many good young people on our Metro teams and many of them come to us with pertinent educational backgrounds, such as studies in nutrition, biology or quality assurance. We have noticed that “field” experience is the real key when it comes to gaining expertise in the produce area. That’s one of the reasons why Metro has several entry-level positions that we fill with young dynamic graduates. On average, they will stay in the same position for two years before being given new responsibilities, in order for them to acquire as much experience as possible. Fresh produce provides many challenges that can open a lot of doors later on. GB: What’s the number one reason why anyone would want to work in the fresh produce Industry? BH: Because it’s the most dynamic and incredible journey! Every day is a new challenge; each day is different than the one before. There is always something to look forward to!

February | March 2012

ANNUAL

DATE

DINNER

Friday, June 1, 2012

Copper Creek Golf Club Dinner will be served at 2:30 p.m. All clubs are licensed

SHOTGUN START 7:30 a.m. for all courses

COURSES Eagles Nest Golf Club Kings Riding Golf Club Copper Creek Golf Club The Country Club

PRIZES (Must be present to WIN) • Registration Gift $50 value • Prize table with over $2000 in great prizes • Door prizes including $1000 in cash • Closet to the Pin

FOOD & ALLIED

INDUSTRIES

GOLF TOURNAMENT

NEW

Best Ball Format At All Courses Order Your Tickets EARLY! This Tournament will be SOLD OUT!!

DEADLINE FOR ENTRIES IS APRIL 27, 2012 To order your tickets please visit:

www.foodandalliedgolf.ca/registration.php

SPring into

Despite the lure of the backyard barbecue, out-of-home eating occasions rise during the spring and summer months and in-home meal occasions drop to 64 per cent. Interestingly, 80 per cent of those meals are cooked on the barbecue. After a long winter, Canadians look forward to socializing in the summer but will often meet friends in restaurants and outdoor cafés, so the heat is on for manufacturers and grocery retailers to collaborate on creating a truly compelling in-store offering that will entice consumers to keep cooking.

80% of barbecue meals are eaten in spring and summer

Maximize BBQ sales with ethnic flavours Asian and Indian flavours are on trend. Many consumers are already using ethnic seasonings and sauces for mainstream dishes, and they are looking for more innovation in marinades for summer barbecuing. Help your shoppers bring Indian and Asian inspired recipes to the grill by using these in-store tips to create quick, easy and exciting meals. »» Create cross-merchandising displays to spice things up and grow incremental purchases. Build an Asian or Indian themed barbecue display coupling marinades with dipping sauces, chutneys, noodles, rice and naan bread to help customers make some new recipes with an international twist. »» Create simple recipe cards for your customers. Recipes are just the ticket for easy summertime grilling ideas. With recipes like Madras Shrimp, Tandoori Salmon, Hoisin Ribs, and Butter Chicken or Red Curry Skewers, customers can explore some of their favourite international flavours on the barbecue. »» Don’t Forget Featuring. Display sauces, rubs and marinades prominently and consistently in your flyers and promotions to draw customers to the store and maximize sales. Source: AB World Foods

February | March 2012

100 Days of Summer

Sizzling trends Food trend and innovation expert, Dana McCauley, predicts this summer’s hottest barbecue trends.

Grocery Business: What are some of the key trends we will see this summer season in barbecue flavours and what will drive them? Dana McCauley: Expect to see more regional barbecue-themed flavours. Consumers have been going to rib fests and watching food shows that celebrate the regional U.S. forms of barbecue and they want to try it. There will be an emphasis on smokiness with particular attention paid to specific wood smokes such as apple, pecan, hickory and mesquite. Even if consumers haven’t attempted low and slow barbecue techniques at home, they’ve seen smokers and wood chip pucks in these flavours at places like Bass Pro Shops and they are intrigued. Gourmet burgers have also become a home trend. Salmon burgers, unbreaded chicken burgers and more are sharing the grill with beef burgers. Likewise, using a burger for a new way to enjoy favourite ethnic flavours is becoming popular with consumers, too. Nontraditional items are also trending up as BBQ appropriate foods, such as pizza and flatbreads and vegan/vegetarian grilled meals. In the U.S., the Kingsford charcoal folks have a great program called BBQ University. This could work in Canada as well. GB: Are ethnic flavours becoming a trend? DM: Korean BBQ is big and growing, and it can be fairly authentic at restaurants. Canadians are experiencing Indian, Japanese and Korean BBQ flavours at restaurants and some adventurous ones will duplicate these flavours at home. GB: With such a variety of sauces, marinades and other options available at every store, what are some key elements in retailing summer flavours? DM: I’d love to see a creative merchandising approach that groups all the ingredients you need to complete a barbecue experience in one area. Or a flyer that groups these items in separate sections and includes a shopping list. For instance, for Korean Kaibi: thinly sliced beef short ribs, Kaibi sauce, sesame seeds and green onions. Or for authentic Texas brisket: a smoky tomato-based sauce, pork back ribs and the foil bags you need to wrap the meat in to get a perfectly cooked result. Create a consumer solution. GB: Do you have any examples of unique strategies encouraging consumers to become more adventurous? DM: Magazines and blogs have written great articles about how to understand regional and ethnic barbecue, and cookbook authors and TV chefs have contributed resources. There’s a great opportunity for a retailer to “own” this area.

Dana McCauley is the culinary director for Janes Family Foods. Dana has owned her own consulting firm and appears regularly as a food trend watcher on Canada AM and Breakfast Television. She is also a judge on the Food Network Canada/Global original reality TV show Recipe to Riches.

February | March 2012

ol o C Merchandising As temperatures rise across the country, shoppers and retailers’ thoughts turn to the ice cream and frozen novelties category, not only for the promise of tantalizing treats, but also the ringing up of sales as ice cream manufacturers gear up for summer with exciting new products.

Here are some tips to keep in mind as ice cream season heats up: 2 Even without a price discount, displays generate more than twice the

lift over base volume.

3 Target perimeter bunkers and end-of-aisle freezers. Utilize available

point-of-sale areas to direct shoppers to the section.

4 Focus display support on premium and super premium brands to

maximize profit margins.

5 Increase sales and display efficiency by showcasing your best sellers

and new products.

Novelties

DID YOU KNOW? Ice cream and frozen novelties category is second only to frozen dinners and entrees in dollar size in the frozen aisle; its size makes it a key category to get right both in and out of aisle. 68% of shoppers make their ice cream selection decisions in store at the section. A well-maintained and merchandised section will simplify shopper decisions and generate the sale.

1 Display is critical during the weeks of summer and holiday weekends.

Sales Pattern

100 Days of Summer

Packaged

25 M

20 M

Only 17% of shoppers enter the frozen aisle and ice cream is a highly impulsive category. Driving out-of-aisle displays is key to maximizing sales. Over 40% of ice cream sales happen in the 16 weeks from May to August, and while it’s an expandable consumption category year-round, it’s important to capitalize on the season. 43% of packaged and novelty multi-packs volume is sold in the 16 weeks over summer. 60% of single serve novelty is sold during this period. Frozen novelties volume indexes higher in the summer.

Ice cream and frozen novelties category is second only to frozen dinners and entrees in dollar size in the frozen aisle.

15 M

Joy Fukushima is Nestlé Canada Inc.’s Director, Category Sales Development – Ice Cream

10 M

Dec 03

Nov 05

Oct 01

Sept 03

Aug 06

July 02

June 04

May 07

Apr 02

Mar 05

Feb 05

Jan 01

February | March 2012 Strategic Insights: NESTLE CANADA INC.

Libations 100 Days of Summer

Good

From backyard barbecues to lakeside lunches, consumers drive beverage consumption to annual highs in the summer months, so stock-up to avoid stock-outs.

Cold Beverages for Hot Days Liquid Refreshment Beverages (LRB) is the largest category in grocery. On average, LRB volume increases 13 per cent in key summer months (May to September) with seasonality index of 113. Carbonated Soft Drinks (CSD) are the largest segment, representing roughly one-third of LRB. CSD volume increases 10 per cent during summer months (Index 107) and is generated largely by frequent summer occasions such as barbecues, family gatherings and long weekends.

Sports Beverages Isotonics are highly seasonally driven – in the top 10 category. This is an important profit builder with significantly higher retail values than flat water. Merchandise it Perimeter displays with POS materials will help engage shoppers and convert shopper moms looking to ensure their kids are hydrated during their summer sports activities.

Seasonal Favourites Other highly seasonal categories that are popular in the summer season include: water (Index 127), ready-to-drink iced tea (Index 134), and lemonade (50 per cent of lemonade sales happen in the summer period). Merchandise it Perimeter displays with POS materials will help engage shoppers, and occasion-based POS materials remind consumers of upcoming consumption occasions.

Cross-category merchandising drives basket size Carbonated soft drinks and salty snacks – One in four CSD plus Salty Snack purchases are made for social occasions such as backyard barbecues and family gatherings. Shelf-stable beverages and barbecue items – Shelf stable beverages like CSDs and ready-to-drink iced tea are ideal for merchandising next to barbecue products. They can also can be merchandised near bunkers with meat products such as burgers and hotdogs.

Hot dates Victoria Day Frozen novelties, weiners, dressings/mayonnaise, nuts and corn snacks, isotonic beverages, and mustards and sauces. Canada Day Weiners, salads, frozen novelties, isotonics, bottled water, butcherblock meats, and suntan products. All summer long Isotonic beverages, frozen novelties, turkey breast, ham, weiners, and butcher-block meat. Source: Pepsico Shopper Insights Study, 2009

February | March 2012 Strategic Insights: PEPSICO CANADA

Smartphones

pack a wallet As more and more smartphones incorporate Near Field Communication technology, the mobile wallet will go from curiosity to commonplace. By Sally Praskey

hile the time-honoured wallet bulging with credit, debit and loyalty cards isn’t about to go the way of the buggy whip yet, that day may not be too far down the road; several players are touting the mobile wallet, which allows consumers to pay for products via their smartphone. After all, Canadians are one of the most tech-savvy and -hungry populations in the world. “Canadians are leaders when it comes to adapting latest technologies,” says Ron Caughlin, vice-president, TNS Canada custom research company, which recently released the survey TNS Mobile Life: Global Telecoms Insights. The 2011 survey revealed that 41 per cent of Canadians have a smartphone – significantly higher than the global average of 28 per cent. As Canadians look to do more with their cellphones, they have what the study calls a “huge interest” in the mobile wallet. While 10 per cent of Canadians have already used a mobile wallet, four in 10 are interested in using their cellphone as a credit or debit card in the future, with 17 per cent wanting to be able to pay for items in shops and restaurants. Even more convincing, a 2011 Visa study indicated that two out of three Canadians are interested in using their mobile device for payments.

The concept of the mobile wallet is not new, but it is only now starting to gain traction. To date, the biggest hurdle to its widespread adoption has been the limited availability of Near Field Communication (NFC) enabled smartphones. NFC is the short-range communications standard that enables mobile phones to securely transmit payment information to a contactless payment terminal. Unlike “smart chips,” NFC chips transmit data wirelessly over short distances. That is rapidly changing however. Visa, for example, recently authorized three smartphone manufacturers to use its payWave system, which paves the way for mobile device manufacturers, mobile operators and retailers to partner with financial institutions to offer the digital wallet to consumers. Grocers are also making a move. Recently, Visa Canada and Metro Inc. announced a partnership to bring the Visa payWave mobile payment platform to more than 600 grocery stores in Ontario and Quebec this year. “We are thrilled to be bringing Visa payWave to our customers, who will no doubt appreciate the ability to shop quickly and conveniently at any of our grocery stores in Ontario and Quebec,” says Jacques Couture, vice-president information systems, Metro Inc.

February | March 2012

“M-wallets provide the momentum to move beyond payments to participate in the entire chain of mobile commerce – from brand awareness to after-sales loyalty and care,” says international advisory firm KPMG in its global survey.

Bell Canada, Telus and Rogers Communications Inc., is using its Zoompass mobile application as a stepping stone to a digital wallet. Launched in 2009, Zoompass allows users to shop using the Zoompass Prepaid MasterCard. For its part, Interac Association payment network has introduced Interac Flash, Canada’s That followed Overwaitea Food Group’s earlier first contactless debit payment option designed for small-value payments. Eventually, the launch of both payWave and MasterCard’s PayPass contactless payment technology at its network plans to incorporate Flash into the mobile phone device. more than 120 stores. Other early adopters for It remains to be seen how all these initiatives payWave include most of the Loblaw Compawill shake out, but one thing is clear: mobile nies Limited, Kin’s Farm Market in British Columbia, and Rabba Fine Foods in Ontario, says payments are poised to take flight. Yankee Group predicts the value of NFC-based transacDerek Colfer, business leader, global mobile tions will grow from $27 million in 2010 to $40 product innovation, Visa Canada. billion in 2014. While there has been much fanfare about Both consumers and retailers will reap the Google Wallet, which launched in the U.S. in benefits – for consumers, the mobile wallet September, it is not currently available in Canada, says Wendy Rozeluk, Google’s commu- represents convenience and reduced time at the checkout. Retailers will see reduced nications manager Canada. Initially partnered handling costs and chargebacks. And both with MasterCard Inc.’s PayPass, the initiative parties will eventually benefit from retailers’ now includes Visa, American Express and ability to integrate the digital wallet with Discover cards as well. Google Wallet shows loyalty, rewards, coupons, discounts and any promise, not only for its open-platform other value-added services. approach to purchase, but also because it “M-wallets provide the momentum to move allows consumers to redeem coupons and earn beyond payments to participate in the entire rewards points. In the meantime, Visa has announced its own chain of mobile commerce – from brand awareness to after-sales loyalty and care,” says digital wallet, called V.me. It, too, will be “payment agnostic,” says Colfer, meaning it will international advisory firm KPMG in its global survey “2011 KPMG Mobile Payments Outlook.” be an open wallet with all forms of payment That could be the ultimate pay-off. credentials included. It will also provide personalized offers triggered in real time. In another initiative, EnStream LP, owned by

Facts & figures

41%

of Canadians have a smartphone, significantly higher than the global market average of 28%. About 58% of smartphone users have downloaded apps to their mobile phone, with the average user having downloaded 12. 22% of smartphone users do some of their banking or pay for products and services from their mobile phone. Nearly half of mobile phone users are aware of 2-D barcodes, and 10% have scanned one. Most popular was product barcodes (22%). Grocery items (14%) was second.

Canadians are interested in the mobile wallet:

10% have already used

a mobile wallet, while four in 10 are interested in using their cellphone as a credit card or debit card.

Between 16 and 24% of mobile users were interested in using their phone to scan a 2-D barcode to instantly access a coupon (24%) and additional information about a product or service (23%). 17% of Canadians want to be able to pay for items in shops, restaurants, and bars with their mobile. 29% are interested in the idea of a service that would send information or coupons to their cellphone based on where they are at the time.

Sources: 2011 Cell Phone Consumer Attitudes Survey, Quorus Consulting Group on behalf of Canadian Wireless Telecommunications Association; Mobile Life 2011, TNS Canada.

It remains to be seen how all these initiatives will shake out, but one thing is clear: Mobile payments are poised to take flight.

February | March 2012

Cash still has

currency

Paying with plastic takes on new meaning as the Bank of Canada’s new polymer bills come into wider circulation. The Bank issued the $100 note in November 2011, with the $50 bill to follow in March. The $20 note will begin circulating late this year, followed by the $10 and $5 bills by the end of 2013. “We expect that polymer notes will be the dominant bank note in circulation about a year after the last denomination is issued,” says Julie Girard, senior analyst – media relations, with the Bank of Canada’s currency department. In the meantime, retailers will need to adjust their equipment to accommodate the new notes during the transition period. The Bank has been working with the manufacturers of cash-handling equipment to facilitate a smooth transition to the polymer notes, says Girard. The Bank estimates the cost of converting the roughly 500,000 machines used to accept, dispense and sort

bank notes in Canada to be in the order of $75-$100 million. However, the one-time cost will be offset by the long-term benefits, most significantly the reduction of counterfeiting losses. “The fact that [the new notes] are harder to counterfeit is certainly being welcomed by the retail community,” says David Wilkes, senior vice-president, Grocery Division, Retail Council of Canada. “The retailers that we represent appreciate any effort to reduce the loss associated with counterfeit overall.” As the Bank works to remove paper notes from circulation, it’s asking retailers to keep polymer and paper notes separated in the till and bundle them separately in their bank deposit.

“ The fact that [the new notes] are harder to counterfeit is certainly being welcomed by the retail community.”

February | March 2012

Calendar

Mark your calendar April 11-13 Canadian Produce Marketing Association Conference/Show — BMO Centre, Calgary, Alta. www.cpma.ca

April 16-18 Shopper Marketing Summit, The Westin O’Hare, Rosemont, Ill. www.p2pi.org/about/events

April 19 Annual Supply Chain Symposium – details to come www.fcpc.ca

April 19-22 Natural Health Products West – Vancouver Convention Centre, West Building, Vancouver, B.C. www.chfa.ca

April 22-23 Grocery Showcase West 2012, Vancouver Convention Centre, Vancouver, B.C. www.cfig.ca

April 30-May 3 FMI 2012 – Dallas Convention Center, Dallas, Tex. www.fmi2012.com

May 5-8 NRA Show 2012, National Restaurant Association – McCormick Place, Chicago www.restaurant.org

May 8 to 10 Sweets & Snacks Expo McCormick Place, Chicago, Il www.sweetsandsnacks.com

June 17-19 Summer Fancy Food Show, National Association for the Specialty Food Trade – Walter E. Washington Convention Center, Washington, D.C. www.specialtyfood.com

June 20-22 The Global Summit CIES: The Consumer Goods Forum – Istanbul, Turkey www.theconsumergoodsforum.com

May 9 to 11 SIAL Canada – Palais des Congrès de Montreal, Montreal, Que. www.sialcanada.com

June 10-12 Dairy·Deli·Bake 2012 New Orleans Morial Convention Center New Orleans, LA www.iddba.org

Will your machines work with Canada’s new polymer notes? rch

a ing M

Com

201

Now in circulation

ABM

Vending machine

$20s coming late 2012

$$$ Cash counter

Self-serve checkout

Contact your supplier. More about polymer notes: www.bankofcanada.ca/banknotes • education@bankofcanada.ca • 1 888 513-8212

Special Corporate Report

oN TARGET Target Corporation’s Canadian debut is still another year away, but you wouldn’t know it from the excitement – and defensive moves – already building in the marketplace. Many Canadians know the brand with the giant red bull’s-eye logo from shopping trips to the United States. Analysts say there’s no doubt that initial store traffic will be high when the first 24 stores open in Ontario in early 2013, with the conversion of between 125 and 135 Zellers stores across Canada to follow. A survey by Canadian retail consulting firm KubasPrimedia in May 2011 found that 60.8 per cent of Canadian consumers were “very” or “somewhat” interested in shopping at Target. The discount retailer’s biggest fans are in Vancouver and Toronto where the survey revealed shopper interest of at least 70 per cent. By comparison, one in four Montreal residents has never heard of Target. By Elaine Walker

February | March 2012

“ Our goal is to ensure that the shopping experience we offer Canadian guests is as similar to our U.S. shopping experience as possible.” John Morioka

“There seems to be a lot more excitement about Target than when Walmart came into the market,” says Ed Strapagiel, executive vice-president at KubasPrimedia. “The reason Canadians like Target is not for bread and milk; it’s for fashion. Target provides unique products and great fashion that Canadians otherwise can’t find.” Fashion merchandise like Target’s limitededition designer partnerships will be the carrot that will lure Canadians to the store, and that will ultimately represent the biggest percentage of the retailer’s Canadian sales, analysts say. CIBC World Markets estimates that apparel and accessories may account for as much as 35 per cent of Target’s Canadian

sales, compared to 20 per cent in the U.S. The challenge Target will face in Canada is getting the customer who is shopping for clothes and home essentials to also pick up a loaf of bread and a case of Diet Coke. “I don’t expect Target to be in any big way a destination for food,” says Perry Caicco, managing director of equity research with CIBC World Markets. “They’re going to try to attract people from the general merchandise business to go over and buy some food because they’re there.” That’s very similar to Target’s strategy in the U.S. where the retailer has never been a remote threat to Walmart’s dominance in the grocery segment. Target’s focus on groceries

Canadian Stores and Square Footage

2012 2013 2014 2015 2016 2017 2018 2019 2020

# of stores, end of year

0 65 135 145 155 165 175 185 195

General merchandise

Food

Total square footage (000s)

5,490 11,550 12,550 13,550 14,550 15,550 16,550 17,550 645 1,400 1,600 1,800 2,000 2,200 2,400 2,600 6,135 12,950 14,150 15,350 16,550 17,750 18,950 20,150 Source: CIBC World Markets Inc.

February | March 2012

M ichal T hompson / T he H illsboro A rgus

The challenge Target will face in Canada is getting the customer who is shopping for clothes and home essentials to also pick up a loaf of bread and a case of Diet Coke.

started with the 1995 launch of SuperTarget, about a decade behind its discount store rival. But with the recent rollout of its PFresh concept, Target is poised to become a bigger player. What started in 2008 as a pilot at two stores in Minnesota is now Target’s vision for the future. The retailer has been aggressively remodelling its U.S. stores to the PFresh concept, which combines a general merchandise store with between 50 and 200 per cent more grocery items – including bananas, bags of lettuce and fresh-baked baguettes, along with cheese, milk and ice cream – housed in a typical 135,000-sq.ft. store. There’s also a traditional selection of packaged goods, snacks and beverages. But missing are the full-service deli, produce, meat and bakery departments. Canada is expected to get a similar but scaled-down version of the PFresh concept since the stores here will average about 100,000 square feet.

In the U.S., Target’s goal with PFresh has been to encourage customers to buy a few more things each trip and return frequently.

Canada,” says John Morioka, senior In the U.S., Target’s goal with PFresh vice-president of merchandising for has been to encourage customers to Target. “Our goal is to ensure that the buy a few more things each trip and shopping experience we offer return frequently. Canadian guests is as similar to our “It’s a very credible place to a do a lot U.S. shopping experience as possible.” of your grocery shopping, just not all Morioka is part of the leadership team of it,” says Neil Stern, a Chicago-based assembled by Target Canada’s president retail consultant with McMillan Tony Fisher, the American who took over Doolittle. “Target is gaining market the helm in Canada in January 2011. share, but at a very slow pace. It’s not Fisher joined Target in 1999 and has like they’ve gone from two per cent to served in a variety of executive positions, 10 per cent – maybe something like most recently as vice-president of two per cent to three per cent. But if merchandise operations. Target can take one point of market The Zellers stores are expected to share in a $500-billion U.S. grocery start closing in the fall for major business, that’s a lot of money, but it’s renovations prior to reopening under very much incremental growth.” the Target banner. Target has said in In Canada, Target hopes to do $6 filings with the U.S. Securities and billion in total sales by 2017. Although Exchange Commission that it plans to the company doesn’t plan to open any invest between $2 billion and $3 billion SuperTargets and it hasn’t decided on in Canada over the next three years. the product mix for the Canadian “Our approach to Canada is to be our stores, it has announced that Sobeys Canadian guests’ retailer of choice for will supply frozen, dairy and dry both wants and needs,” Morioka says. grocery items, including both national brand and Target’s private-label brands. “We expect grocery to play a critical role in helping to deliver on the needs “I can tell you that food will be a aspect of that equation.” critical part of our assortment in

Sales by Category From Zellers to Target (in billions) Zellers Target Target 2011 2014 2017 Food 0.3 0.7 1.1 Apparel 0.9 1.4 2.4 General Merchandise Total

1.6 2.0 2.8 $ 2.8

$ 4.1

$ 6.3

Source: CIBC World Markets Inc.

February | March 2012

BULL’s-Eye

Breakdown 1

FOOD RULES

TARGETING DESIGN

Target’s internal slogan behind the PFresh grocery rollout is “One more item, one more trip.” Of the retailer’s US$60 billion in sales, food accounts for a growing percentage – from 15 per cent in 2008 to 19 per cent in the first nine months of the 2011 fiscal year. The biggest driver of sales remains household essentials, including pharmacy, beauty, baby care, cleaning and paper products.

Target’s designer partnerships date back to 1999 and extend into every facet of its offering. The retailer works with the hottest designers to offer limited-edition collections in clothing, housewares and even food. This strategy has worked extremely well to drive traffic and create a strong level of anticipation for new products among consumers. Target’s design focus is not only on a product’s appearance or its “cool factor,” but also on how it satisfies a need. For example, one of the retailer’s private-label lines, Archer Farms, features resealable chip bags with a zipper to keep the product fresh after opening. The line’s cereal boxes are oval cylinders with a peel-off seal and a hinged plastic cover that flips up halfway for easy pouring.

Focus on Formats

Target has a reputation as a solid corporate citizen, and is known for its philanthropy.

The transformation of Target’s 1,767 U.S. stores is well under way. By the end of its fiscal year in January, the company expected to have remodelled about 900, or 60 per cent, of its general merchandise stores to the PFresh concept, with the reminder to be completed this year and next. Target also has 252 SuperTarget stores averaging 186,000 square feet that feature a full-line grocery store, including all the fresh departments. The retailer’s newest format, City Target, offers a smaller size for urban markets.

4 Sales Mix U.S. Canada Canada with PFresh (actual) (projected) (projected) Household essentials

24% 21% 20%

Hardlines

20% 20% 20%

Apparel and accessories

20% 35% 32%

Home furnishings and decor

19% 14% 5%

Food and pet supplies

17% 10% 23%

Total

100% 100% 100% Source: Company reports and CIBC World Markets Inc.

February | March 2012

IN-STORE BOUTIQUES Taking it to the next level, Target’s newest partnerships are all about creating specialty shops within the massmerchandise store. Apple “Mini” stores will open within 25 stores as part of a test designed to boost Target’s electronics sales and give Apple access to new markets that might not support a stand-alone store. Target is also teaming up with five trendy boutiques from across the U.S. for “The Shops at Target.” The first exclusive boutique collection debuts in May for six weeks at all Target stores. The initial items, priced from $1 to $159, will feature everything from dog biscuits and retro candy to vintage furniture and designer clothes. In the fall of 2012, another group of boutiques will be featured.

Who feels the Impact? $400-milion in food sales are in play. Here’s who may feel the impact:

Loblaw

$110 28%

Empire

$60 16%

Metro

$40 9%

Walmart

$30 8%

Safeway

$20 5%

Costco

$20 4%

Jim Pattison Foods

$10 2%

Other

$110 Source: CIBC World Markets Inc.

Staying In-Stock Target’s in-stock positions are impressive even on a busy weekend, as was seen on a recent visit to a SuperTarget in Florida. Stock levels are tightly monitored throughout the day, and all store personnel are held accountable for keeping the shelves and displays fully stocked. Facings are well aligned, and price scanners and telephones are located throughout the stores to enable guests to call team members for assistance. Target’s policy is that the guest will have a response within 30 seconds. The retailer’s online offering is also impressive; it recently redesigned its website, and just launched a mobile app to reach customers at home, online or on-the-go.

E mployee and Community Relations Target has a reputation as a solid corporate citizen, and is known for its philanthropy. It has been recognized on Fortune’s list of the “World’s Most Admired Companies,” and Forbes’ list of “America’s Most Reputable Big Companies.” It has also received numerous awards for a commitment to diversity in its hiring practices. None of Target’s U.S. stores are unionized, although workers in Long Island, N.Y., made an unsuccessful attempt to organize last summer.

Shopping by Design The first Canadian Target pop-up store opened in Toronto on February 23, 2012, attracting 1,500 eager shoppers. The one-day shopping opportunity featured designer Jason Wu, and gave Canadians an exclusive glimpse at the retailer’s design history plus a chance to shop the Jason Wu for Target collection. Every stitch of the 2,500-piece collection was sold within five hours, representing $60,000 in sales, 100 per cent of which was donated to United Way Toronto.

First in Pharmacy Service

Target Talk Shoppers are called “guests”; employees are “team members”; and managers are known as “team leaders”.

The Target Pharmacy has been ranked highest in customer service by J.D. Power and Associates for the past four years. Pharmacy has become an area of focus in Canada where Target has recently announced it will be adopting a franchise model.

February | March 2012

BULL’s-Eye

Breakdown 8

MARKETING AND PROMOTION “Eat Well. Pay Less.” Target’s grocery slogan comes with a promise that the retailer compares prices on over 25,000 items, so “you’ll find more on your list for less.” Target is not an EDLP retailer but positions itself as offering good value through limited-time sales which they feel reinforces their “low price promise” to match competitive pricing. The retailer’s popular Sunday circular mixes general merchandise with food items. However, consumers need to read the fine print because the circular features a mix of sale prices, temporary price cuts and everyday low prices, and in markets that have been converted to the PFresh concept, the flyers include a one-page grocery insert.

The Target Pharmacy has been ranked highest in customer service by J.D. Power and Associates for the past four years.

PRIVATE LABEL FOR FOODIES As it has done with fashion, Target has taken its private-label food products upscale. Archer Farms includes organic foods, European baked goods and gourmet appetizers. Target’s Choxie chocolates are on par with Godiva and Lindt, offering exotic flavours like milk chocolate crème brûlée truffle. Food Network star Giada De Laurentiis has been Target’s culinary expert since January 2010, when she debuted a line of kitchen tools and food products ranging from sun-dried tomato pesto to Tuscan-style white-bean and fire-roasted garlic soup mix.

Elaine Walker is an award-winning journalist based in Florida, who is a business writer for The Miami Herald. She has covered the retail and restaurant industries in the U.S. for more than 14 years.

RETRO FITS Limited-edition cereal packaging, offered exclusively at Target stores, gave consumers a dose of nostalgia, ’80s style. General Mills’ Big G cereals partnered with Atari – which was celebrating its 40th anniversary – to create retro cereal box designs for Lucky Charms, Cocoa Puffs, Cheerios, Cinnamon Toast Crunch and Honeynut Cheerio brands. The back of each box featured graphics from Atari classics such as Asteroids, Centipede and Missile Command games, as well as Atari trivia. Consumers could also test their skills at the Centipede game on a specially designed website (grocerysavvy.com) for a chance to win Target gift cards and Atari swag.

February | March 2012

Target U.S. Business Profile Total retail sales (2010)

$ 65.8 Billion

Total store count

1,750

Average store size sq. ft.

133,500

Total General Merch. stores

1,499

Talking Target

with Chris Whitaker, Explorer Shopper Solutions In your view, how aware are Canadians of Target?

Canadians already know Target very well and have been shopping their U.S. stores for many years. A recent survey indicated that 61 per cent of Canadians were “Very” or “Somewhat” interested in shopping at Target.

Total SuperTarget stores 251

General Merch. Stores Sales per store

$ 35.5 Million

PFresh (e/o 2011)

850

Quebec is the only area of Canada where awareness of Target is low and this will create some additional challenges for them.

Source: Company reports and CIBC World Markets Inc.

How does Target approach in-store merchandising?

Target has a “clean-floor” policy with very few free-standing displays and merchandising units. Their white floors, bright lighting and strong (non-branded) Target signage are all about “The store is the brand” positioning.

Interest in Shopping at Target (by Market)

Very Interested

A focus on merchandising is part of the superior shopping experience that Target tries to deliver. They’re not afraid to sacrifice shelf space in order to support unique merchandising initiatives.

Somewhat Interested

Toronto 35%

36%

Vancouver

If you had to choose one thing that companies selling to Target will need to know, what would it be?

33%

37%

Interesting question! These companies need to understand that for Target, the Target brand is their greatest asset and they will strongly reinforce this first over any other branded communication.

Calgary 39%

27%

Edmonton 36%

25%

Chris Whitaker is a partner at Explorer Shopper Solutions with over 25 years of CPG experience.

Ottawa-Gatineau 21%

36%

CSI shopper lab facility allows companies to “shopper test” their plannograms. For more information contact: Chris@explorergroup.ca

Montreal 11%

29%

Target Starting Position 2013 B.C. Alta/Man/Sask Ont # Target Stores Average store size 100,000 sq. ft. Will add 10 greenfields per year

Que

Alta Total

43 18 6 100 Source: Company reports and CIBC World Markets Inc.

February | March 2012

GOLDEN PENCIL AWARDS

Golden Pencil Awards program

PhilIP Donne, Paul Higgins JR, Anthony Longo

February | March 2012

Golden Pencil On November 28, 2011 the grocery industry gathered together to congratulate Philip Donne, President of Campbell Company of Canada and Frank Coleman, President and CEO of Colemans Group of Companies

01 The Golden Pencil Committee with (seated) Frank Coleman, Paul Higgins Jr. and Philip Donne 02 Eric Laflèche, Metro Inc, Stephen Kouri, JM Smuckers 03 Lloyd Banfield, Nestlé Canada, Stacey Kravitz, Kraft Foods Canada 04 B elinda Junkin, Canadian Pallet Council, Michelle Scott, Grocery Foundation, Anthony Longo, Longo’s 05 G olden Pencil attendees 06 L es Mann, Walmart, Bob Chant, Loblaw Companies Ltd. 07 Melissa Martin, Steve McGraw, Kraft Foods Canada 08 John Scott, CFIG, Frank Coleman, Golden Pencil Recipient

Frank Coleman, Paul Higgins JR, Peter Byrne

09 B Ill Sheine, Golden Pencil Executive-Treasurer

February | March 2012

The reviews are in.

“

GROCERY BUSINESS: INDUSTRYSTATE STATEIND NEW, NATIONAL AND OF THESTAT INDUSTRY AVAILABLE NOW THEINDUSTRYINAUG

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August September 2011 Vol 1 | No 1

ssue

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”

Be Part Of It, Contact: Karen James | 416-561-4744

Kevin Smith | 416-569-5005

karenjames@grocerybusiness.ca kevinsmith@grocerybusiness.ca

Dan Bordun | 416-817-5278 danbordun@grocerybusiness.ca

February | March 2012

ready, set, EAT! by the Numbers CPMA Show Agenda Fresh Engagement

longoâ&#x20AC;&#x2122;s

February | March 2012

Program-at-a-glance P hotos by: S tephane L andreville , C P M A

CPMA SHOW AGENDA

April 11-13, 2012 Calgary, Alberta

Wednesday, April 11

Thursday, April 12

Friday, April 13

7:30 am – 5 pm Registration

7 am – 6 pm Registration

7:30 am – 4:30 pm Registration

4 pm – 5 pm CPMA Members’ Annual General Meeting

8 am – 10 am Delegates’ and Companions’ Breakfast

8:30 am – 10:30 am Awards Breakfast

6 pm – 8:30 pm Registration (Hyatt Regency Calgary) 8 pm – 10:30 pm Chair’s Welcome Reception

KEYNOTE SPEAKER

The Mary FitzGerald Award

DAVID CHILTON, Author of The Wealthy Barber and The Wealthy Barber Returns

The Packer’s Produce Person of the Year Award

10:15 am – 11:15 am Business Sessions

10:30 am – 11:30 am Business Sessions

10:15 am – 5 pm Companions’ Program

10:30 am – 12 pm Retail Tour

11:30 am – 1:30 pm Delegates’ Luncheon KEYNOTE SPEAKER

ANTHONY D. WILLIAMS, Co-author, Macrowikinomics and Wikinomics The Produce News Fresh Health Award 1:30 pm – 5:30 pm Trade Show 8:30 pm – 12 am Variety Night

CPMA Lifetime Achievement Award

11:30 am – 4:30 pm Trade Show 6:30 pm – 7:30 pm Annual Banquet Reception 7:30 pm – 11 pm Annual Banquet

For more information visit

www.cpma.ca

GROW YOUR BUSINESS WITH THE CANADIAN PRODUCE MARKETING ASSOCIATION Attend CPMA’s 2012 Annual Convention and Trade Show in Calgary for great learning sessions on the trends, issues and challenges facing the produce industry. Visit online for information and registration. www.cpma.ca

CALGARY 2012

CALGARY 2012 February | March 2012

@cpmaconvention

87TH ANNUAL CPMA CONVENTION & TRADE SHOW

PRODUCE A MOUNTAIN OF OPPORTUNITIES

April 11-13, 2012 • Stampede Park BMO Centre Canada’s leading fruit & vegetable industry event!

Greening the Fresh $upply Chain

COOL RUNNING By Alan Boughton

The trucking industry has a saying: “If you got it, a truck brought it.” And if your exotic produce arrived at your store in pristine condition, a reefer brought it.

Alan Boughton is president of Trailcon Leasing Inc. Headquartered in Misssissauga and with operations in Edmonton, Calgary and Cornwall, Trailcon leases, rents and services a wide variety of trailer equipment. For more information, visit www.trailcon.com

Reduces Cooling Unit Run Time Annual Hours Saved Total Hours Saved to Date

1200 Hours of Cooling Unit Run Time

through the glass. If the argon escapes through leaks between the glass and frame, your heating bill will soar. You may think you’re saving a couple of hundred dollars a month by running an older reefer, but if you look at the bigger picture, you’re burning up more money keeping the trailer refrigerated. Therefore, upgrading your reefer fleet should always take priority over upgrading your dry van trailers. Some manufacturers of trailers use a special lining within the trailer to slow down insulation degradation by preventing out gassing. For example, a trailer with the proper lining can potentially reduce cooling unit run time by more than 1,000 hours and save more than 1,200 gallons in fuel over the course of five years (see chart). Think of it as replacing your 1960s gas-guzzling muscle car with a newer model. Sure, today’s cars will cost more to buy, but at 35 mpg versus five mpg for your vintage Mustang, which one do you think is more affordable in the long run?

1000 800 600 400 200

01 02 03 04 05 YEAR Source: Great Dane Trailers

Reduces Fuel Consumption Annual Fuel Saved Total Fuel Saved to Date

1400 1200 Gallons Saved

Refrigerated trailers are critical in keeping fruits, vegetables and other temperature-sensitive products as fresh as possible during transportation. And yet, many grocers and suppliers are keeping older units on the road in the mistaken belief that because the trailers are paid for or have smaller depreciation interest costs against them, they are more cost-effective to operate. Nothing could be further from the truth. As a reefer ages, its foam insulation degrades by a whopping 50 per cent in five years. It’s not unlike the insulation in your attic or walls. Over time, it tends to settle and you need to add more to maintain the same effectiveness. In the case of a reefer, the insulation degrades due to “out gassing.” Refrigerated trailers are insulated with polyurethane foam that is injected into the walls, floor and ceiling. The “insulating gas” in the foam expands it, boosting the efficiency of the insulation. However, over time, some of this gas escapes from the foam and air migrates into the cells. As more of the insulating cell gas escapes, the foam loses its insulation capacity. This is called thermal degradation. And that means the cooling unit has to work harder to maintain the proper temperature, causing fuel and maintenance costs to skyrocket. Consider the windows in your house. The most energy-efficient ones are multiple-glazed windows that trap gas such as argon between the panes of glass, impeding the flow of heat

Prevention of Insulation Degradation

1000 800 600 400 200 01 02 03 04 05 YEAR Source: Great Dane Trailers

February | March 2012

Produce Profile: Jane Proctor

Guiding Produce Policy With over 26 years of experience with the Canadian Produce Marketing Association (CPMA), Proctor has seen the produce industry evolve dramatically. Having worked in marketing, government relations, education, food safety and industry technology, Proctor is currently the vicepresident of policy and issue management for CPMA and is the association representative on a plethora of international committees examining the issues that impact the industry. “As a key part of CPMA for more than two decades, Jane has been part of the change and growth of the organization,” says CPMA president, Ron Lemaire. “She has supported many elements of CPMA’s foundation.” Proctor was involved in the creation of the Global Traceability Standard, the standards for DataBar, the North American Transportation best practices, and the globalization of the Produce PLU identification scheme. But, perhaps most notably, she was the industry lead in the effort to create the Global Fruit & Vegetable Traceability Guide. These traceability guidelines were initially developed by two North American organizations – the CPMA (led by Proctor) and the U.S.-based Produce Marketing Association (PMA). When Can-Trace, a GS1-led Canadian multi-sectoral traceability initiative, was

formed, Proctor represented the Canadian produce industry and eventually took on the role of chair which produced the Canadian Food Traceability Data Standard. This standard formed the basis of the work that that began the global endeavour under the sponsorship of GS1 Global. Proctor represented both Can-Trace and the produce sector in the global work, which produced the Global Traceability Standard. Once the standard was complete – and at the request of the International Federation for Produce Standards (IFPS), which Proctor eventually chaired – a formal request was

Jane Proctor VP, Policy & Issue Management

made to GS1 to create a global produce guide. “Jane is an instrumental part of providing value to our members, and to the industry at large, through her expertise in industry efficiency technologies, traceability and advocacy efforts” says Lemaire. Today, Proctor facilitates both the CPMA Industry Technology Advisory Council and the CPMA Industry/Government Policy Working Group in Canada. And she is the staff lead for the Produce Traceability Initiative (PTI), which now includes GS1 U.S., the backbone of global supply chain efficiencies.

Going global Late 1990s

2008

2009

The Canadian produce industry recognized the need to focus on tracing produce throughout the supply chain as a key component of effective food safety.

At the request of their members, the CPMA, PMA and the United Fresh Produce Association formed the Produce Traceability Initiative (PTI).

The Global Fruit and Vegetable Traceability Implementation Guide was published.

CanadiaNs at THE Produce Marketing Association Conference ATLANTA, GEORGIA – OCtobeR, 2011

Ron Lemaire, Bev Appleby, Lyse McClelland, Natalia Kaliberda, Jane Proctor, Janet McMaster (CPMA staff), Tom Byttynen (CPMA Chair)

February | March 2012

International

Canada and U.S. join forces in produce action plan Earlier this year, Prime Minister Stephen Harper and President Barack Obama announced that Canada and the U.S. have finalized a Joint Action Plan designed to boost legitimate trade and travel, improve security and align regulatory approaches between the two countries. The plan’s initiatives are directly related to the priorities of the Canadian Produce Marketing Association’s (CPMA) members and are outlined in two reports – Action Plan on Regulatory Cooperation and Action Plan on Perimeter Security and Economic Competitiveness. The initiatives include:

• Developing comparable approaches to financial risk mitigation tools to protect Canadian and U.S. fruit and vegetable suppliers from buyers that default on their payment obligations.

• Further align crop protection product (e.g.,

pesticides) approvals and establishment of maximum pesticide residue limits/tolerances in both countries.

• Developing a perimeter approach to plant

protection to leverage each country's efforts

to mutual advantage and, where possible, streamline certification requirements for cross-border shipments.

• Developing a common approach to food

safety, to jointly enhance the safety of the Canada-U.S. food supply and minimize the need for routine food safety surveillance inspection activities in each country.

• Developing a harmonized approach to

screening offshore inbound cargo between the Canada-U.S. border, under the principle of "cleared once, accepted twice."

• Providing a single window through which importers can electronically submit all information to comply with customs and other participating government agency regulations.

“Our goal has been to identify these and other issues in our industry and bring them to the attention of our government representatives to encourage action,” said Ron Lemaire, CPMA president. “It is gratifying to see that the Joint Action Plan includes initiatives relative to the food safety, financial risk mitigation, efficacious border clearance and other issues that we know are priority areas for our industry. We look forward to working toward realization of our common objectives.”

• Investing in Improving Shared Border Infrastructure and Technology.

The complete documents and associated background information and reports are available online at: www.borderactionplan.gc.ca.

Michael Reed, President, BC Hot House Foods

Kendra Mills, Marketing Director, PEI Potato Board

February | March 2012

Consumer Research How often do you purchase fresh fruits or vegetables from the produce department?

produce by the numbers

18%

A few times a month

56%

26%

Weekly

53%

A few times a week

52%

Where do you routinely get your information on fresh produce?

30%

30% 22%

16%

15%

14%

r he

ck ag e uc si e gn de s i pa n t fa rtm he en m ily t /fr ie nd de pa s rtm pr en odu t s ce ta ff ne ws pa br pe oc r yo hu ur re re s a ta t ile we r bs ite s m ag az in es so ci al m m ob ed ile ia m ar ke tin g

3% 0

How important are the following factors in your decision to purchase packaged produce? 100

25%

13% 30%

66%

8% 26%

13%

8% 28%

31%

24% 34%

53%

30%

9% 12%

11% 15%

neutral 28%

21%

12%

17%

somewhat important

21%

16%

extremely important

12%

nu pr od tri uc tio t na co li nv nf en o ie rm nc at e io of n th e pa ck pr ag od in uc g t m on de at e s er n th cr ia vir e ip ls on pa tio us m ck n ed en ag in tal e th lye fri pr pa en ep in ck dl ar st at ru ag y io ct in n io g on n sf t ki h o e ru dpa s fri ck e/ en ag dl ym e es sa gi ng

pr ic e

21%

somewhat unimportant

66%

34% NO

YES

of th e

co nv en ie nc e

cl ea n sa line ni ss ta / tio n

25%

not at all important

19% 32%

21% 26%

51%

35%

38%

17%

Excluding packaged salads, do you ever purchase packaged pre-cut produce?

February | March 2012

Source: PMH: Produce Packaging: Preferences + Buying Behaviour

Fresh Merchandising

Ready, Set, Eat! Longo’s, the Toronto-based independent grocery chain, is moving into the 12th year of hosting its annual Watermelon Eating Contest event.

Photo credit: Longo’s and the National Watermelon Promotion Board

By Noelle Stapinsky

In collaboration with the National Watermelon Promotion Board (NWPB), the event has grown over the years, attracting more and more contestants and visitors. Geared towards children, participating stores set up market-style canopies outside to host the contests and watermelon displays, and to give away promotional items such as recipe cards, colouring books and posters. Eating contests are held every hour between 11 a.m. and 3 p.m. during the weekend-long event. Contestants are outfitted with plastic aprons, must have their hands secured behind their backs, and the eater who finishes first receives a trophy that says “Longo's Watermelon Eating Champion.” Other participants also receive prizes.

“This weekend event is normally held at the end of June,” says Lorraine Buffa, Longo’s special events and community relations specialist. “As our stores keep growing, this event has gotten bigger.” The event has become so popular that the NWPB now sends two Watermelon Queens, who represent a watermelon producing state in the U.S., to visit the stores and interact with the children. “This is a huge weekend for Longo’s. The displays are awesome and the crowds are big,” says Gordon Hunt, director of marketing and communications for NWPB. “This year, we will be sending the Florida and Georgia Queens to the Longo’s extravaganza.” Although a date has yet to be set for this year’s event, Buffa says, “It’s in the works.”

All Hail the Watermelon Queens Each watermelon producing U.S. state has its own association and selects a queen annually. Throughout the year, the queens act as public relations spokeswomen for their states' watermelon industry and travel more than 100 days appearing on TV and radio shows and at promotional in-store events, festivals, parades and more. After their year-long reigns, these young women compete for the title of National Watermelon Queen. To support retailers, Watermelon Queens have made appearances across Canada – from Newfoundland and Labrador to British Columbia.

February | March 2012

list it

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February | March 2012

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February | March 2012

it figures >

10%

Only

of Canadians believe product claims of “All Natural”

80%

of all new products are gone or vulnerable to delist after one year Takeaway Innovation needs to be about quality not quantity. More products on the shelf just spreads volume across more SKUs, putting them at risk. Choose the right product initiatives to accelerate growth and know when to cut losses early on items that are performing poorly.

February | March 2012

13% 15%

trust claims of “Organic” believe claims of “Non-Artificial” are accurate

Takeaway Canadian consumers are discerning readers of nutritional labels and are skeptical of product claims. They trust the information on a standardized nutritional fact panel, but don’t necessarily trust everything they read on the packaging itself. This is a real opportunity for marketers to offer additional education and support for nutritional claims to win over skeptical consumers. This can be achieved through website support, messaging within your advertising, or professional endorsement.

60% 20% of Canadians consider themselves to be overweight

of Canadians are somewhat or very overweight

60%

26% spend 6+ hours weekly

of Canadians visit social media sites

Takeaway Engaging with your consumer is crucial to growth. Consumers are willing to get more involved with your brand; they’re willing to offer input on and review new products, join loyalty programs, receive coupons and share recipes. These are great ways to connect with your customer.

80% About

Takeaway Despite the high levels of obesity, consumers are motivated and willing to take action – half of Canadian consumers are currently trying to lose weight. Your customers are striving to eat healthier foods and grocery stores can benefit by stocking the freshest produce and offering a wide variety of healthy selections. Manufacturers can benefit by building brand awareness through campaigns around healthy lifestyle choices and product offerings.

of Canadians agree on the need for companies to contribute to environmental enhancements Takeaway Consumers simply expect manufacturers and retailers to operate in an environmentally-friendly and sustainable manner. That’s a given but consumers don’t want to necessarily pay a premium for it. Among the environmental and sustainability efforts that manufacturers have taken, Canadians see recycled or minimal packaging as well as energy efficient products, as the most helpful (about eight out of 10 Canadians agree).

Carman Allison is Director of Consumer Insights for Nielsen in Canada and is responsible for creating thought leadership insights for CPG manufacturers and retailers.

Carman Allison

all stats courtesy: N ielsen

February | March 2012

Perry’s Point of View

THE TRUE BEAUTY OF

LOYALTY PROGRAMS “Give us your personal information every time you shop with us, and we’ll give you some nominal currency you can exchange for gifts.” Since this invitation seems harmless to most customers who are shopping at a store anyway, this has become the bedrock proposition of all loyalty programs. All the merchant has to do is maintain a high perceived value for the nominal currency, while reducing the actual cost of that currency. In an ideal world, not all the customers who sign up will cash in their rewards (this is called breakage); and if they do cash them in, the reward cost is off-loaded to suppliers. Loyalty programs are not, therefore, programs that create loyalty. These programs are about collecting customer data at a low cost. But is the value to the consumer meaningful? Can merchants justify the cost of these programs? Is the consumer data collected actually worth the investment? Looking carefully at most programs, it seems that the actual value to the consumer is minimal. The base levels of these programs (collect points, redeem points) imply consumer discounts of between 0.7 per cent and 1.5 per cent. Consumers can occasionally boost the discounts to as high as 2.5 per cent to three per cent by using various mega-point deals. Since the merchants issuing these points are conventional retailers whose prices

February | March 2012

index from 15 to 30 per cent above those of discounters, the savings are indeed modest – certainly not enough to cause customers to switch stores. But as a reward for regular shoppers, already made loyal by convenient locations or quality merchandise, these savings are appealing. When discussing these programs, retailers say that “shoppers using our loyalty card have a bigger basket size than shoppers who don’t use our card,” implying that the card must cause bigger baskets. Nobody actually knows if this is true because those big-basket shoppers were not tracked prior to having a card. Most likely, the statement is questionable because it’s the loyal big-basket shoppers who would be most prone to sign up for a reward card anyway. By our math, if 75 per cent of customers sign up for a loyalty program, and if 90 per cent of those redeem their points (implying 10 per cent “breakage”) then the programs would cost between 50 and 100bp of gross margin. These are generally funded by selling packages of promotional programs and data to suppliers. Since Canada is a market with many suppliers and few channels, vendors may feel obligated to buy these programs or risk losing shelf space. Suppliers then work to get their money back by subtly altering trade packages or invoice pricing. That fuels inflation. Since cost

inflation gets spread around to all merchants, retailers without loyalty programs end up paying part of the cost with loyalty programs. As long as these programs cover their costs, it really doesn’t matter if a merchant makes

These programs are about collecting customer data at a low cost. immediate intelligent use of the customer data. The data may produce consumer insights, targeted promotions, or reconfigured planograms, which might improve the performance of the retailer over time, although so far there is little direct evidence of that. Still, the merchant with the loyalty program wins overall and, as a bonus, regular customers think they’re getting a discount.

Perry Caicco is the managing director for CIBC World Markets. He has worked for 15 years in the supermarket, general merchandise and packaged goods industries with Loblaw Companies, Coca-Cola and Consumers Distributing.

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