A New Era in Food Retail?

While possibly making less of a splash than the Amazon-Whole Foods deal,  Lindl US opened a new store in Virginia Beach, VA, signifying the beginning of what many have termed a new era in food retail.

According to a SupermarketNews article, hundreds of shoppers were waiting in a line that circled the parking lot early Thursday morning waiting for Lidl US to open the doors.

The big splash and anticipated disruption to the industry may be based on a number of factors, two of which truly stand out:

  1. Lindl US is committed to offering the lowest prices. “We will beat the best prices in the market,” Brendan Proctor, CEO says.
  2. Lindl US is basing decisions on the voice-of-the-customer. “It’s not about whether our model works in a market,” Proctor said during an interview. “It’s about what we have to do to adapt to the market.”

As they say, time will tell…

Online Store “Made Easy” for Supermarkets

“We make it easy to take your grocery store online,” says Indemand a San Francisco-based plug and play platform for building an on-demand store or service.

According to the company website, their platform allows anyone to set up their own on-demand store without the need for any technical expertise. Customers can customize their solution, and also take advantage of a “mobile-first” solution.

While the service is available to “any” type of business, pricing plans for supermarkets range between $149 – $299 per month, plus a start-up fee and a per transaction fee.

 

More “Food for Thought” Regarding Supermarket Customer Experience

A number of presentations at this year’s NRA Show in Chicago focused on how supermarkets and c-stores can build on some key elements of restaurant design to create a dining experience customers will seek out.

In other words, the combination of upscale design and finer dining options can be leveraged to make a supermarket or c-store a destination where customers feel welcome to stay, dine and enjoy.

“Consumers care about what the experience is like, and 90% of the information sent to the brain is visual,” Tré Musco of Tesser, a brand strategy design firm, said. “People form judgments instantaneously. In terms of design, perception is reality.”

But Tre Musco and other presenters also noted that, if a store is to become a place to enjoy a meal, customers must perceive it as such.

Some of the steps retailers will need to take in order to accomplish this include:

  • Lead with change… go beyond just “adding a few tables and chairs” and create a warm, comfortable, and alluring dining area.
  • Pay attention to details… such as food displays, lighting, and even restrooms. “Restrooms really matter,” Musco said. “Customers 100% judge your freshness and cleanliness on your restrooms.”

Read the full article… 

Different Grocers Top Different Lists!

A recent Reuters article focused on “low cost” grocery leaders, noting that the German grocery chain Aldi Inc is trying to outdo the world’s biggest retailer (Walmart).

Aldi currently boasts 1,600 U.S. stores, but only accounts for about 1.5 % of the U.S. market.  A company spokesperson referenced in the article says Aldi is growing at 15% per year and plans to open 400 new locations by the end of next year; he also said Aldi’s prices are 21 % lower than its lowest-priced competitors.

Walmart, on the other hand, currently controls about 22 % of the market and its U.S. sales are estimated to grow about 2 % this year, according to analysts; and, of course, Amazon continues to grow Amazon Fresh while feverishly testing brick-and-mortar stores.

At the same time, in a race based on customer satisfaction and shopping experience, MediaPost reported the results of a Top Grocer’s survey done by Market Force, a market research company based in Louisville, Colorado. Their customer loyalty index is based on responses from some 12,700 consumers, the article said, and the top slots were awarded to:

  1. Wegmans and Publix (tie for 1st)
  2. Trader Joe’s
  3. H.E.B.

Ironically, Walmart came in last in the Market Force survey… which makes one realize that price does not necessarily guarantee customer loyalty.

Can Digital Resources Solve Grocery’s Inventory v. Profitability Dilemma?

“The biggest challenges that grocery retailers face is excess inventory and profitability,” says Randy Evins, Senior Principal for Food, Drug & Convenience at SAP.

In a recent SupermarketNews article,  Evins explains that grocers face the dilemma of keeping their margins low by spending less while still delivering quality products. More labor requires higher costs, but without the additional attention to fresh foods, products will not be up to standards.

The solution: Grocery retailers should leverage digital resources and process improvement to more easily monitor, plan and execute their efforts.

“It’s critical that grocery free themselves from the constraints of doing everything manually.” Elvin says.

“Automation of simple tasks can help ensure manpower is used in more critical roles rather than routine monitoring and conditions management.”

The article goes on to present ways in which digital information can help supermarket management better-understand what products are most popular and what are consistently undersold, as well as which processes are the best candidates for streamlining. They would then be able to better manage some of the more challenging yet vital areas of the business, such as the fresh foods and perishable sections, which typically comprise up to 50 percent of sales and more than 60 percent of profits.

In addition to leveraging technology to improve operational efficiency, Elvins also stresses the importance of using data to better-understand customer preferences, and to drive the customer experience (CX).

“Stores must differentiate from online by taking advantage of consumer senses, drawing consumers into the store, and using experiences to convert the sale,” he writes.

In-store events like wine tastings, and providing local product representatives and vendors throughout the store to offer expert opinions, are often popular offerings that aren’t possible online, thus creating greater brand-and-store loyalty as well as a competitive edge over online retailers.

Supermarkets, FDA React to the Coast-to-Coast Demand for Healthy & Fresh Choices

According to a recent SupermarketNews article, supermarkets are offering healthier and smaller fresh snack options.

Chains on both coasts are reacting to consumer demand for the same level of quality and freshness in their snacks that they demand from other prepared foods.

For example, Roche Bros., a 20-store chain based in Wellesley, Massachusetts has responded to the increased interest in fresh, prepared snacks by offering “salad toppers,” which are displayed alongside prepackaged salads. The small containers, which sell for about $2.50 to $3, include varieties of shrimp, chicken, steak tips, hard-boiled eggs and other proteins that are designed for either combining with a salad or eating as standalone snacks.

“It allows people to get a quick bite of protein on the go, without spending a lot of money,” said Adam Laliberte, kitchen director.  “There’s definitely an increase in demand for little bites to eat.”

Similarly, KeHE Foods’ Monterrey, Calif., fresh foods division has rolled-out a new line of cheese-based fresh snacks to about 50 retailers, said Amber Mahin, director of marketing and merchandising.

“They have proven to be very popular,” said Mahin. “The trends we are seeing are fast, fresh and healthy. People are eating smaller meals and meals with less calories.”

It seems like the U.S. Food and Drug Administration (FDA) may be providing support to health-conscious consumers as well, as their final rule for the new menu labeling provision of the Affordable Care Act has been published. This new law will impact supermarket deli and bakery departments for chains of 20 or more stores operating under the same name. Labeling will be required for restaurant-type food such as:

  • Made-to-order sandwiches, ordered from a menu or menu board at a grocery store
  • Food items shoppers serve themselves from a salad or hot food bar at a grocery store
  • Grab-and-go items such as muffins at an in-store bakery

Artificial Intelligence Driving Faster Shopping Trips?

As you most likely are aware, Instacart provides shopping and home delivery in a variety of stores.

In an ongoing effort to generate more precise shopping trips — i.e., a faster way of shopping for its employees, who are shopping on behalf of customers — the San Francisco-based company has been testing various ways to determine how people might most efficiently shop for items on a list, ranging from:

  • an alphabetical list
  • a route-based approach
  • an artificial intelligence (AI) approach that uses data from the company’s most efficient shoppers to predict a sequence of picks that would be the most efficient

The article states that people are using AI to solve hard problems more and more… and the algorithms used for more traditional problem solving are not so different from those that can determine how a human would pick-up specified items in a store. In fact, Instacart is able to “guess” the next item a shopper will pick 60% of the time with the AI solution!

“It’s not 95%,” said Jeremy Stanley, VP of data science at Instacart. “But there’s room for variance and error. When we look at the overall sequence it mimics what the shopper does very closely, and usually only reverses a few items per trip.”

Might there be an application for using this AI approach for you and me to enhance our food shopping experience?

If so, how might retailers view this developing use of technology, considering it might make shoppers less susceptible to impulse buying because they will do less wandering through the aisles?

Amazon “Pick-up” Stores Free for Some

According to a recent SupermarketNews article, Amazon has released information about new “click-and-collect” sites in Seattle.

Called “AmazonFresh Pickup,” the new concept will provide a full selection of grocery and household items available for online ordering and pickup, free to its Prime members.

The prototype sites are currently open only to Amazon employees. While Amazon did not specify any time-frames or plans, the article quoted an analyst at Wolfe Research, who said he expected Amazon will open as many as 30 such outlets this year.

Trends Continue to Add Fuel to the Shopping Experience Fire!

In a recent article posted by Pan Oston, a customized retail fixture and display manufacturer, the following five supermarket trends were identified for 2017, adding more fuel to the “shopping experience” fire:

  1. Retailers Should Treat Their Stores Like a Home: Unique retail experiences are still very important to customers and reward retailers who provide them.
  2. Convenience Will Be Key: Push button product, services, payment and delivery will be come more and more prevalent.
  3. Brick-and-Mortar Stores Will Become More Integrated
  4. Niche Retailers Will Rise
  5. Brick And Mortar Drives Customer Experience: Driving the customer experience, brick-and-mortar stores will remain relevant in 2017.

Read the full article…

Service v Price in Supermarkets?

Various articles and reports are consistent: supermarket shoppers want more convenience and better service!

One SupermarketNews article reported how consumer demand for service impacted operations at Meijer and the curbside pickup option it launched in some stores in 2015. The article quotes Peter Whitsett, EVP of merchandising and marketing at Meijer, “…[data] has put a spotlight on the huge demand for convenience, and the challenge for the big retailer to wrestle it economically. As retailers we’ve done a reasonably good job of managing price for products, but what we’re learning to do is managing price for service.”

The piece goes on to explain that Meijer assumed curbside pick-up would primarily serve for fill-in trips, but the company soon realized they “were 180 degrees wrong. Customers said ‘do all my shopping for me.’”

Similarly, Euromonitor International, a world leader in strategic market research, published a white paper “The New Definition of Convenience in Retail,” which indicates that, “Thanks to time-pressed consumers, the need for convenience is paramount and retailers, in all channels, are deploying tactics to get consumers what they want as conveniently as possible.”

Of course, the convenience of online shopping and grocery delivery means different things to different people. For urbanites, many of whom opt to forgo car ownership, transportation to and from the supermarket might be the key issue. Yet for others, as noted above, time might be the driving force.

So, what does this mean for supermarkets?

First, as noted by Meijer’s Mr. Whitsett, supermarkets will need to go beyond managing price and find ways to streamline and improve the work processes for providing added services and convenience.

Secondly, online shopping is poised to become a bigger part of the overall grocery shopping equation going forward, and grocery providers must find ways to compete in this arena – against the likes of Amazon and Walmart, this will not be an easy task!

As noted in an article posted on fooddive.com, “Grocery retail value should be re-framed to emphasize non-price factors such as freshness, quality, customer service and the shopping experience. 2017 could become the year when retailers stop primarily selling products and instead start selling services, solutions, and quite possibly stellar shopping experiences.”