Shoppers’ Belts Remain Tight Despite Economic Improvement
Even as the economy improves, 94 percent of Americans indicate they will remain cautious and keep their spending for food, beverage and household goods at its current level, according to Deloitte’s 2013 American Pantry Study.
More than nine in 10 (92 percent) consumers surveyed indicate they have become more resourceful, and 86 percent say they are getting more precise in what they buy—attitudes that have remained consistent in the three years Deloitte has conducted the study, and across income levels.
Despite enduring frugal attitudes, few consumers feel they are making any compromise: More than seven in 10 (72 percent) consumers indicate that, even though they are spending less on household and grocery items, it doesn’t feel like they are sacrificing much, a seven percentage point increase in two years.
Nearly nine in 10 (88 percent) survey respondents report they have found several store brands that they feel are just as good as national brands, and few consumers plan to switch back to national brands: only 27 percent plan to do so as the economy rebounds, an eight percentage point decline from the previous year.
“One of the most notable year-over-year trends in the study is how embedded frugality has become due to the recession,” said Pat Conroy, vice chairman of Deloitte LLP and consumer products sector leader. “Prudent consumers and improving perceptions about store brands are squeezing national brands’ position. The gap between the few ‘must-have’ brands on shoppers’ lists and others on the shelf may be widening, making it more important for brands to differentiate through innovation, quality and performance. Consumer product companies may also consolidate low and mid-level performers and shift investment to the category leaders.”
Brand loyalty declines, shoppers put experimentation on hold
As store brands become more entrenched in the pantry, brand loyalty continues to slide; however consumers appear to be selectively loyal to certain brands.
Brand loyalty dropped for the third consecutive year in the survey. When asked why certain brands are no longer a priority for their households, consumers cited “other brands are available on sale” as the No. 1 reason. However, brands to which consumers are most loyal significantly outpace their lower performing counterparts by 20 or more percentage points on attributes such as performance, experience and trust. Consumers also have honed in on select brands they will consider. More than eight in 10 (84 percent) consumers say they have a specific set of brands in mind, and will purchase whichever one is on sale. When using coupons, 71 percent indicate they will use them only for items they would have purchased anyway.
Shoppers also are selective about the retail channels where they are willing to purchase certain items.
Consumers surveyed shop an average of 2.5 channels in each product category, compared with an average of 5.5 channels (including grocery, mass merchandise, club, drug, convenience, dollar, neighborhood market and online) for all of their food, beverage and personal goods combined.
Loyalty cards’ importance in consumers’ cross-channel shopping has increased, as the number of consumers with three or more grocery loyalty cards has grown from 28 percent in first American Pantry Study in 2010 to 39 percent in the most recent survey.
Additionally, 58 percent of shoppers surveyed use shopper loyalty cards in grocery stores every time they shop, up 14 percentage points in two years, and 30 percent participate in a loyalty program via their smartphone while shopping in a store. Consumers appear to feel a sense of reward from these efforts: eight in 10 (80 percent) say it is fun to see how much money they can save by using coupons or a shopper loyalty card.
Online options in demand for household goods, grocery; mobile shopping interest growing fastest among baby boomers
The 2013 American Pantry Study reveals an unmet demand for online shopping options, particularly for in-store pickup and at-home delivery. While 14 percent of shoppers surveyed currently buy consumer products online and pick them up in the store, 43 percent indicate they would like to do so, with strongest demand appearing in food and beverage categories for in-store pickup.
Approximately one in 10 (11 percent) survey respondents purchase online with home delivery, and the number rises to 34 percent among those who would like to do so, primarily for household goods such as laundry soaps and tabletop disposable paper products.
“Consumers are drawn to the convenience of purchasing frequently used food, beverage and household items online, and brand preferences will likely extend into their online buying habits,” added Conroy. “Consumer product companies can use mobile and online channels to strengthen the functional and experiential brand attributes that translate into conversion and loyalty. They should consider aligning their digital efforts with consumers’ location and context to reach shoppers online and on their phones, blending into their list-making, meal planning, product and price-checking, family activities and health and beauty routines. They may also market channel-specific product offerings and use these platforms to make product suggestions based on target consumers’ prior shopping behaviors.”
The latest American Pantry Study also indicates that interest in mobile technology is growing at a higher rate among baby boomers than younger consumers. Nearly one-quarter (23 percent) of respondents age 45 to 70 indicate they are interested in using mobile coupons they can scan at the checkout, up from 12 percent in last year’s survey, compared with a six percentage point increase among respondents age 21 to 29.
Shoppers surveyed are tapping into their smartphones outside the store nearly as often as they do inside the store. Three in 10 (30 percent) consumers manage a shopping list or recipe while in a store, just three percentage points higher than those who do so offsite during the shopping process.
Majority Of Americans See Organic Label As An Excuse To Charge More
Does an uptick in the economy give people more reason to care about Mother Earth? That is what a March 2013 Harris Poll of 2,276 U.S. adults (age 18 and older) interviewed online set to find out as Earth Day approaches. Turns out that concern for the current state, and future, of the environment is on the rise in 2013 (38 percent vs. 31 percent in 2012), just as economic indicators point to all time stock market highs and a solid housing market recovery. However, as Americans start to feel better about reaching into their pockets, they still may not be ready to dish out the extra green on organic items. Turns out that more than half (59 percent) agree that labeling food or other products as organic is just an excuse to charge more.
“What surprised us most was that, while Americans are showing more concern for the environment, they aren’t necessarily willing to pay more to do anything about it,” said Mike de Vere, president of the Harris Poll. “While Americans feel better about the economy, many are wary of the ‘greenwashing’ concept that gives companies a chance to cash in on consumers who want to help the planet but are confused by all the eco-friendly jargon.”
Fact vs. fiction
Going green continues to be a gray area, as consumers try to decide where it makes sense to incorporate it into their lives. While recent research shows that organic produce and meat typically aren’t any better for you than conventional varieties when it comes to vitamin and nutrient content, more than half of Americans (55 percent) believe that organic foods are healthier than non-organic. In addition:
• Forty-one percent think organic food tastes better and/or fresher than non-organic;
• Only 23 percent know what the term “dirty dozen” (The Environmental Working Group’s annual list of foods consumers should always buy organic due to pesticide levels) means in regards to organic food; and
• Forty-eight percent think washing dishes by hand is more environmentally friendly than using the dishwasher, though a study from Scientists at the University of Bonn in Germany found that the dishwasher uses only half the energy, one-sixth of the water, and less soap than hand-washing an identical set of dirty dishes.
Is it easy being green?
Americans are divided on how easy, or not so easy, it is to live a more environmentally conscious lifestyle, with nearly equal percentages of U.S. adults perceiving it as difficult (49 percent) and easy (47 percent). When asked about sentiments toward going green, respondents indicated the following:
• Eight in 10 Americans (80 percent) say they will seek out green products, but only three in 10 (30 percent) are willing to pay extra for them;
• Sixty percent of Americans prefer to use environmentally friendly cleaning supplies because of the chemicals contained in traditional cleaning products;
• As noted, the majority of Americans agree that labeling food or other products “organic” is just an excuse to charge more (59 percent);
• Men are the most skeptical about organic, with 63 percent agreeing that the labeling of food or other products as organic is an excuse to charge more, vs. 54 percent of women; and
• Overall, efforts to be green seem to have leveled off, with nearly two-thirds (63 percent) making the same amount of effort to be environmentally conscious as a year ago, up considerably from 2009 (51 percent).
Kroger Has $78 Million In Plans For Houston Market
by Terrie Ellerbee/associate editor
Houston rivals Dallas-Fort Worth as the Lone Star State’s top economic powerhouse.
Three times out of the past four years, Houston has been named the No. 1 “Top Metro” in the U.S. for corporate relocations and expansions by Site Selection magazine. In 2012, the greater metro area recorded 325 new or expanded facilities, up from 195 the year before, the Houston Business Journal reports.
Site Selection ranked the Dallas-Fort Worth-Arlington area No. 3 with 224. Houston is No. 1 among Trulia’s Top 10 healthiest housing markets for 2013. Fort Worth is No. 9.
The most recent Manpower Employment Outlook Survey found that 23 percent of companies in the Houston-Sugar Land-Baytown metro area plan to hire more employees between April and June, with just 4 percent expecting to decrease staff, leaving a net 19 percent employment outlook. That is the fifth-best among the 100 largest metro areas in ManpowerGroup’s report.
The Dallas-Fort Worth-Arlington metropolitan statistical area’s net employment outlook is 18 percent.
Dallas did beat Houston in population growth. Dallas-Forth Worth’s metropolitan region grew by approximately 132,000 people from July 2011 to July 2012. The Houston-The Woodlands-Sugar Land metro area added more than 125,000 people in the same time period. But Harris County, which is a large part of the Houston-area metro, grew more than any other county in the U.S., adding 80,000 people, according to the Associated Press.
Kroger to invest $78 million in the Houston market
The Kroger Co. first entered Texas in the 1950s in Houston. Today, it is The Bayou City’s sixth largest employer with more than 14,900 associates. Kroger continues to add retail, management and construction jobs in Houston.
Last year, Kroger’s Southwest Division opened five new stores and eight new fuel centers, remodeled 25 locations and expanded one existing site in the Houston market.
In 2013, the Southwest division will invest $78 million as it continues to improve its offerings for the more than 820,000 households it serves in the metro area.
Construction is under way on a new 123,000-s.f. Marketplace store to be located at the northeast corner of U.S. Hwy. 59 and Northpark Drive in Kingwood. It is scheduled to open in the third quarter.
Kroger also will expand one store and remodel 17 others, and add four new fuel centers while expanding three this year in the Houston market.
The company caters to neighborhood demographics by operating different store formats. Its leading design is the Signature layout, which originated in Kroger’s Southwest Division in 1994. The Southwest Division also operates Fresh Fare (smaller footprint, focus on fresh and prepared foods) stores and Marketplace (larger footprint, focus on grocery products plus home goods, toys and jewelry) locations.
Like all traditional retail grocery companies, Kroger competes not only with other supermarkets, but also mass merchandisers and dollar, drug and convenience stores, which have all added to their “fresh” departments and general food offerings. Amazon.com is another formidable threat.
“The dynamic of the grocery retail market has evolved tremendously since Kroger entered Texas in 1955,” Bill Breetz, president of the Southwest Division, told The Shelby Report. “Technology, trends in customer preferences and the arrival of new retail options, which aren’t always brick and mortar, have shaped today’s competitive grocery world. This year, 2013, marks our company’s 130th anniversary. During this period, we’ve listened to our customers and taken action and evolved to remain strong and progressive amidst competitive forces that aren’t always other grocery retailers.”
Kroger is using digital channels to communicate with its customers to offer promotions and contests, streaming radio, social networks, websites, email and more.
“Kroger recognizes the way customers receive and interact with information is continually changing,” Breetz said. “We recently updated Kroger.com and introduced a new version of our mobile app that now allows customers the options to refill a prescription and check their fuel point balance. Every 90 seconds, a new shopper downloads the Kroger mobile app.”
Kroger’s innovations start with the customer first, Breetz said, referring to both the company’s philosophy as well as its business strategy.
“When customers told us they did not like waiting in long lines to check out, we developed a solution that allows our stores to deliver a faster checkout experience,” Breetz said. “Today, the average wait time to check out is nearly 40 seconds less compared to a year ago.”
Another way the company differentiates itself from the competition is through its corporate brands. Its newest own brands are Simple Truth and Simple Truth Organic. Both are designed to provide shoppers with an uncomplicated and trustworthy solution to eating better. Products in these lines are free of 101 artificial ingredients and preservatives
“Our corporate brands continue to trend positively and grow in popularity with customers,” Breetz said. “Kroger offers 11,000 corporate brand items including food, cleaning supplies, kitchen gadgets, health and beauty care, over-the-counter medications, and office and school supplies. Our corporate brands are categorized into three tiers: Private Selection, Kroger Brand and Kroger Value Brand. All tiers are priced to offer shoppers savings over other premium, national and economy brand names.”
Kroger has credited its Customer 1st strategy with its financial success, particularly since 2008, when the effects of the recession became widespread. That strategy began to evolve in 2002 and focuses on four keys: people, prices, products and shopping experience.
“Customer service is one of our core focus areas and a critical aspect of our business,” Breetz said. “We strive to create an environment in which our employees feel valued and an integral part of each shopper’s experience. We motivate and incentivize our associates to be their best through a company-wide culture and recognition program.”
To enhance the shopper experience in 2013, Kroger is focusing on convenience, value, ethnicity, personalization and age/health & wellness, Breetz said.
When asked about industry-wide concerns, he talked about bag bans. Such a ban just took affect in Austin.
“Plastic bag legislation is a hot topic right now in the retail industry,” Breetz said. “We feel the solution is increased plastic bag recycling, not a usage ban. In 2012, our stores in Southwest recycled over 2.4 million pounds of plastic through associate- and customer-facing initiatives such as Bag-2-Bag.
“We entered a pilot partnership with Coca-Cola in November 2010 to introduce the beverage brand’s first Reimagine Beverage Containers recycling center in the world,” Breetz said. “There are now five units in operation at Kroger locations across the Dallas-Fort Worth market. Since the program’s inception, our shoppers have recycled more than 10 million plastic bottles and aluminum cans.”
Sprouts Farmers Market, Aldi enter Houston market
Houston’s booming population, strong employment outlook, robust housing market and attractive incentives for corporate growth and expansion have made it a magnet for retail grocers. Sprouts Farmers Market and Aldi, for example, will debut in the Houston market this year.
“Dallas and Houston are two of the most competitive cities in the country,” Breetz said. “Both cities continue to see an emergence of new and existing retailers because of their steady population growth and economic strength. We live in a market that favors competition and the strongest thrive. Kroger continues to lead the markets because shoppers know us for service, variety, freshness, good prices, convenience, and a personalized shopping experience.”
Sprouts Farmers Market and Aldi are ready to break into the vibrant Houston market.
Sprouts Farmers Market will make its Houston debut in Katy, where it will open a 25,000-s.f. location on March 27 (after press time) at 23105 Cinco Ranch Blvd.
“We’re pleased with the overwhelming response to the announcement of our first Houston-area store,” said Sprouts President and CEO Doug Sanders. “We would like to thank the residents of Katy and the surrounding communities for the enthusiastic welcome. We’d like everyone to know that Sprouts makes a long-term commitment to each neighborhood where we open a store, one that extends long after the grand opening: To offer our shoppers healthy food options for less.”
Three more locations are opening soon in Houston and Spring Cypress. Arizona-based Sprouts Farmers Market has 23 stores in Texas.
Aldi has announced its first nine Houston locations, all set to open April 11. Locations include:
- 2228 FM 2920 Rd., Spring
- 4140 Fairmont Pkwy., Pasadena
- 2009 South Mason Rd., Katy
- 2045 North Loop 336, Conroe
- 5930 Fry Rd., Katy
- 10402 Hwy. 6 South, Sugar Land
- 11510 Broadway, Pearland
- 13340 Tomball Pkwy., Houston
- 6900 FM 1960 East, Humble
Aldi plans to open a total of 30 stores in the Houston area.
In January, Trader Joe’s opened a new store at 1440 S. Voss Rd. in Houston. Its first store in the market opened in The Woodlands in 2012.
San Antonio-based H-E-B released its official plans in late February for a new store at San Felipe and Fountain View in the Galleria that will replace one of its oldest stores in the Houston area.
H-E-B plans to open several stores this year, including its fourth location in The Woodlands.
Whole Foods Market opened a 37,000-s.f. store in Katy at Texas 99 at Fry Road on Jan. 30 that anchors Grand Lakes Marketplace.
Whole Foods Market plans to open another Houston-area store at BLVD Place, a mixed-use development at San Felipe and Post Oak Boulevard, not far from H-E-B’s planned Galleria location.
Report: Consumers Willing To Spend Money To Save Time
When it comes to cleaning time is of the essence, especially with the spring cleaning season in full swing. Overall, the household surface cleaners market has been quite stagnant, growing only 2 percent from 2007-2012. But, within this market, some segments are outpacing the rest, particularly those that offer quick and convenient cleaning options.
According to recent Mintel research on household surface cleaners, more than half (57 percent) of respondents say they would pay more for products that make cleaning faster and 53 percent say a product with suitability for a wide range of surfaces is very important. In addition, nearly half (48 percent) of people say a fast-acting product is very important to them, while 46 percent think a product that reduces steps in a common cleaning task is very important.
“Although budget remains a concern, consumers are not willing to compromise on certain attributes of their surface cleaners,” says John Owen, senior household analyst at Mintel. “While cleaning results are as important as ever, consumers also value surface cleaners that make cleaning quick and easy, and that seems to be more important than just a low price.”
Mintel research also found that in addition to reduced cleaning time, disinfection is becoming more important in and out of the home. More than seven in 10 (71 percent) consumers agree at least somewhat that disinfection has become more important to them and just over one-quarter (27 percent) agree strongly. Microbes have become a more top-of-mind concern among consumers in recent years, even more so in recent months with the particularly heavy flu season.
It seems concern about germs isn’t limited to the home. More than half (56 percent) of those who have purchased household cleaners say they are more concerned about cleanliness and germs away from home, like in the car or at work or school. This opens up a growth opportunity for car- and office-sized antibacterial cleaners.
While interest in germ-killing and disinfection remains strong, it is counterbalanced by underlying concern about the safety of products that kill germs, especially in homes where young children reside. Some 56 percent of all adults are concerned about the healthfulness of cleaning product ingredients. Currently, just 13 percent of house cleaners agree strongly that environmentally friendly surface cleaners are as effective as conventional cleaners—but there is opportunity for natural cleaners with disinfecting power.
“Factors such as natural ingredients and packages made from recycled materials are less likely to be rated very important, but they can nonetheless be points of difference to consumers, as long as their expectations for cleaning performance and convenience are met first,” says Owen.
Capital Expenditures In 2013 Spur Cost-Cutting Measures
Independents today are energy- and economy-minded
by Wendy Bailey/World Alliance for Retail Excellence & Standards
Denver, Colo.—With a watchful eye on the economy, many of today’s independents are taking measures to cut down on operating costs, employing more methods to be energy-efficient and dollar-minded.
Dale Kamibayashi, store director of Alfalfa’s in Boulder, an independent natural grocer, says about capital expenditures this coming year: “Everyone is watching their bottom line these days. Capital spending is always a front-burner item for a small independent retailer. You have to watch how you control your spending.”
He adds, “Due to the condition of the economy, you can’t depend on automatic growth. You always have to look at what expenses you can control, and a key one is your capital spending. When it comes to capital expenditures, you always look to see what you can do to reduce ongoing costs. That includes equipment, fixtures, shelving, construction costs, etc.”
However, Kamibayashi is quick to caution that independents need to consider the other side of the coin.
“If you try to cut corners too much or cut corners in the wrong areas, oftentimes you may be spending more in the long run, rather than making the appropriate investments to stay energy efficient, for example. So you always have to weigh the pros and cons when it comes to capital expenditures, especially on costly equipment.”
What are some of the ways that ownership and managers cuts down on the daily expenses of running a successful business?
Kamibayashi says there are environmentally friendly measures to consider.
“LED lighting is a direction we went with our store when we opened two years ago. Research showed us that we really needed to look at this measure to save energy and money. LEDs use 69 percent less energy than fluorescent lighting, relamping costs are reduced considerably and LEDs have a five- to seven-year life expectancy compared to two years with fluorescents.”
There are a couple of other added added bonuses, too.
“You get superior color rendition since LED’s quality of light provides better visual clarity for your shopper,” Kamibayashi says. “For instance, product packaging is more fully illuminated, allowing the colors to be more vibrant. And LEDs produce less heat, which makes them ideal for meat refrigeration cases. They reduce the rise of internal product temperatures, which helps maintain the freshness and appearance of meats.”
Coolers and freezer cases are “a major capital expense,” he notes, adding that “refrigeration systems make up about 50 percent of the total energy cost in the store, with compressors comprising almost 30 percent of that refrigeration energy expenditure. Independent retailers must look at how to reduce their costs on refrigeration energy use in their efforts to run their stores more cost effectively. Those are major factors in terms of looking at capital expenses. You want to work with more energy-efficient refrigeration systems to try to reduce costly refrigerant leakage. A retailer can spend $4,000 to $10,000 per year per store finding and repairing refrigerant leaks.”
When it comes to the front end, Kamibayashi’s store has ergonomically designed that area to be space saving, yet efficient; get customers checked out as quickly and conveniently as possible; and make sure the cashiers’ work stations are set up properly to avoid and reduce work-related injuries.
In the receiving area, Kamibayashi says that “keeping an eye on your POS (point of sale) system, and maintaining its integrity is critically important. If you are able to scan items as you receive them and they are scanned as they leave your store, you will know, right down to the item, what your available inventory is on each SKU. This helps you to stay on top of, and manage your profitability.”
Having a well-run backroom, he points out, is “an important element of running a profitable store because if you are not organized with your receiving protocol on a daily basis, you’re going to lose control of properly managing your inventory, and overall profitability.”
Today’s economy may be supplying more than its fair share of surprises to retailers, but Jim Hall, marketing and sales manager for Riteway, has a perspective on the marketplace from an independent food broker’s angle.
“Globally, stores may be going through ups and downs, but we’ve been fortunate,” he says. “We’re in a growth mode and our customers are in a growth mode. Both of our chain customers are growing, so we’re growing with them.”
Hall says his business doesn’t have the need for a lot of equipment other than computers, but Riteway makes sure they are up to speed.
“We’ve invested in our internal network; we’ve upgraded all of our network servers and switched to Windows 8, so we are moving forward in that regard in order to be more current.”
Other recent capital expenditures at Riteway include a building remodel.
“We added a 10,000-s.f. building last year. We’ve also added some distribution facilities. We will be expanding our Jacksonville (Fla.) office, actually doubling the size of our staff and office in that area this year.”
In short, Hall doesn’t think capital expenditures will be down in his world during 2013.
“It’s really the result of the fact that our customers are growing, so we have to grow with them.”
And with that business upturn, Hall says, “The greater percentage of our expenses this year is going to be tied to accessing data, such as Nielsen, and then employing category analysts to manage and analyze the data so we can continue our growth curve.”
Alfalfa’s Kamibayashi has been with the company since 1983 and was the first store director in the first store. As the store count expanded to 11 in 1990, he became the purchasing director. In 1996, Wild Oats purchased Alfalfa’s. But in 2010, the opportunity arose for Kamibayashi to return to work for Alfalfa’s, when Whole Foods Market, which bought Wild Oats, was ordered by the FTC to divest certain stores. Kamibayashi rejoined some of the original owners to resurrect Alfalfa’s once again at its original location in Boulder, Colo. He received his degree at the University of Colorado at Boulder.
Riteway’s Hall, a member of the Independent Food Brokers of America (IFBA), is the immediate past Chair of the Independent Food Brokers of America. He has been with Riteway for 31 years. Hall received a degree in marketing from the University of Florida, working through college at grocery retailers.
Forecast: Top 10 Industry Trends
Trends compiled from an annual consumer panel conducted by Supermarket Guru Phil Lempert have been released. The top 10 industry trends were presented by National Grocers Association (NGA) President and CEO Peter Larkin, filling in for Lempert, during the 48th Annual Food Marketing Conference earlier this week in Kalamazoo, Mich.
“I think (if Phil were here) he would tell you that it is a snapshot, the pulse of people that he has within this consumer panel that he uses,” Larkin said.
“(These trends) should not be taken as gospel; as a matter of fact, don’t be surprised if as I go through these you’re not going to shake your head at some of them or wonder about where did that information come from or why is this a trend? Some of this may be old news to you but I think, when taken as a whole, it will be very thought-provoking.”
Larkin moderated a discussion panel following his review of the top 10 industry trends, which include:
• No. 1: We need to stop wasting food.
The National Resource Defense Council estimates that 40 percent of the food in the United States goes uneaten; $165 million worth of food is wasted each year. For a family of four, that translates into an economic cost of between $1,300 and $2,300 annually.
“Those are big numbers and very, very important numbers,” Larkin said. “But as some of our waistlines continue to grow, and we all know the issues that we have with obesity in this country, the amount of food we waste also continues to increase. It seems like those two lines should not be going in the same direction, but unfortunately they are.”
“When you ask the American public about environmental, sustainable issues and you line up food waste in there with issues like recycling and how can I be green, food waste is one of those things that is very high on the radar screen,” Larkin added. “Thirty-nine percent of Americans say they have green guilt for the amount of food they are wasting. That’s another high number right there.”
Larkin noted that, as one study indicates, food waste can be reduced by as much as 20 percent if the industry keeps careful checks of expiration dates and use-by dates.
A program in the U.K. called “Love Food, Hate Waste,” started by 150 leading food retailers and CPG companies, is trying to combat food waste.
“I’m sure a lot of it is going to be education,” Larkin said of the program. “The EU Parliament gets involved in these. I think in the United States we would prefer to try to address this issue as an industry voluntary program as opposed to having something legislated or regulated, but in the EU they are looking at regulations to try to tackle this issue.”
Larkin pointed out that data shows that the food waste issue is one that is “about to explode and one that is going to take center stage for our industry.”
No. 2 Snacking is taking the spotlight.
While snacking has a negative connotation for some, the Journal of the Academy of Nutrition and Dietetics recently performed a study in an attempt to associate how snacking compares to a quality diet.
“There is a very high correlation between snackers and having quality food and quality diets,” Larkin said. “It is not associated with a poor diet. Snackers do indeed have healthier diets, and fruit, whole grains, oil, sodium, milk, all have positive associations with snacking.
“In 2013, smaller bites, more frequent meals, are on a trend line. You see how that matches up with this emphasis and this explosion of snacking.”
Millennials are craving more flexible meals, more frequent meals and more variety. Additionally, Hispanics, the fastest growing population in the U.S., is 23 percent more interested and more likely to be snackers.
“If you’re not thinking about meals, or if you are thinking about meals in the old traditional fill-up-the-plate, eat three times a day, you may be missing opportunities,” Larkin said.
No. 3: Baby Boomers.
Baby boomers will control 50 percent of the dollars spent on grocery by 2015; that equates to $706 billion.
“As a group, we are interested in healthy and nutritious meals, “ said Larkin, a Baby Boomer himself. “That is something that is very, very important to us as we age. We’re looking for how do we eat healthier, how do we eat a more nutritious diet? We are twice as likely to follow the food guidelines as in the pyramid or the plate than those outside our group. We’re more concerned, for obvious reasons, about fiber, less fat, cholesterol and certainly, fewer fried foods.
Larkin revealed that 8.3 percent of the population today, children to adults, has some form of diabetes. Moreover, 79 million Americans over age 20 have pre-diabetes. One-third of the adults in the U.S. have high blood pressure.
This health issues are being addressed, particularly later in life, through diet and nutrition, according to Larkin.
No. 4: The new proteins.
Twenty percent of the human body weight is made up of proteins.
“The variety of functions in our bodies that require proteins to build tissue and create enzymes for immune cells, they’re all very, very important…These amino acids that are created through a high-protein diet are not produced by the body but come from some of these external sources in the food that we eat.”
Complete proteins are sources of amino acids—meat, poultry, fish—but as food prices continue to increase for those commodities, consumers are going to be looking for alternate forms of protein to enhance their diets, Larkin said.
“So it’s not just the traditional complete proteins but things like peanuts and chickpeas and yogurt and tofu,” he said.
“…If your company, whether you’re a manufacturer, supplier or retailer, if you’re not aware of this and you’re not dealing with it, you’re not understanding what your consumer wants. This is a trend you want to pay attention to.”
No. 5: Breakfast is not just for breakfast anymore.
Breakfast remains the most important meal of the day. Countless studies show that children do better in school, have fewer behavior issues, have more normal weight, more energy and improved memory and mood by consuming a nutritious breakfast each day.
“So nutrient-rich breakfast items should be and will be eaten all day, including yogurts and veggie omelets and smoothies and nut butters, which stabilize blood sugar and reduces the risk of diabetes,” said Larkin.
No. 6: Frozen foods that evolve into foods that are frozen.
The frozen food aisle is not the most trafficked aisle in the supermarket these days.
“It has been difficult to create new products; it has been difficult to create the excitement and it’s difficult to really generate traffic in the frozen food aisle,” Larkin said. “Sales are down, but is this about to change? Perhaps.”
Younger shoppers are not particularly likely to buy frozen because it’s viewed more as processed than it is prepared.
“But food makers believe that if they just start changing the dialogue—this isn’t just a meal that was frozen, but this is real food that was prepared differently in a way to encourage people to take advantage of this natural way to preserve foods—that could start changing,” Larkin said.
It’s forecast that more ethnic and a la carte offerings will take over this category.
Millennials, Hispanics and other groups trend strongly toward smaller, more frequent meals. The Hispanic community especially will buy a lot of traditional foods and prepared traditional foods but, at the same time, buy certain frozen items that will be added to the family meal, according to Larkin.
No. 7: Men in the supermarket and in the kitchen.
In 2012, 41 percent of the cooking was led by Dad. Fifty-two percent of fathers are primary grocery shoppers. Thirty-one percent of grocery shoppers are men, a percentage that has doubled since 1985.
Men also are remaining single longer so they cook alone to a later age.
“Dads more than moms are more likely to plan the meal for a week ahead of time,” Larkin said. “More husbands are working at home, whether that’s because of the economic conditions, taking care of children while mom is working. But the reality is that more men are working at home. Some supermarkets are creating man aisles.”
No. 8: Mobile gets more interesting.
Some retailers use mobile technology as an advantage; others as a threat, as it empowers the consumer with information that they might not otherwise have had.
“It provides transparency in the pricing in terms of the product, the ingredients, where the product came from,” Larkin said. “And there are some retailers that just can’t understand what that means and they’re afraid of it. Half of the phones in the United States today are smartphones, and (people are) not just using them to check their email. There are more apps, more ways to use mobile, and it’s definitely getting more interesting.
“Think ahead if you will; it wasn’t that long ago that we would talk about apps for an iPhone and we couldn’t imagine what some of those apps are capable of doing today. Try to challenge yourself and look ahead at what some of those apps may do in the future. Can they help determine whether or not fruit is ripe? Can they trace the product back to the farmer who grew the product? Any number of different things.”
No. 9: It’s all about the Millennials.
Millennials will be 75 percent of the workforce by 2025. The most common jobs for them right now are retail clerks.
“What opportunity does that provide for our industry and how are we going to change the experience of what it means to work for, whether it’s a CPG company or a retailer?” Larkin said. “I think there are many retailers out there who are rethinking the whole relationship between their company’s needs in the labor force and how they recruit, how they develop jobs.”
Larkin’s 27-year-old daughter works at Trader Joe’s.
“One of the reasons she enjoys working for Trader Joe’s is when she walks in the door, every day she’s not sure what it is she’s going to do. She may be stocking shelves, she may be making signs, she may be at the register, she may be doing any number of different things. She may be in charge of ordering for the GM/HBC department on any given day. And that flexibility (is) combined with a very fair pay scale.”
No. 10: Transparency about where our food comes from.
The number of farmers markets is increasing all over the country. In fact, there’s been a 17 percent jump in the number of farmers markets in the past few years.
“Customers are asking for information; they view the farmer’s market as a place where some guy in overalls has just come off the farm and put it in a truck and brought it to them and can answer all their questions,” Larkin said.
“I think in reality we know that a lot of those people at the farmers markets aren’t the ones who produced it. They may be selling it, but they may not have any better information about the product than other retail outlets where there is a perception that there is less of a connection to the food. I think we need to work on that in our industry and help provide more information to our consumers, not be afraid of it because it’s not going to go away. It’s not a trend that is going to stop, so we have to embrace it,” Larkin said, mentioning Whole Foods Market’s recent commitment to full GMO transparency by 2018.
Post Foods Looking To Close Modesto Manufacturing Plant
Post Holdings Inc., a leading manufacturer, marketer and distributor of branded ready-to-eat cereals, said today that it is considering closing its manufacturing facility in Modesto, Calif., to improve operational efficiency and to better position the company for future growth. Post will be soliciting input from the union that represents the hourly employees to ensure that employees’ interests are represented before the company makes a final decision on the matter, which is expected by the end of April.
“We are committed to addressing our excess capacity,” said Terence E. Block, president and COO. “This initiative, if we proceed, would provide the increased efficiency necessary to compete in today’s environment.”
The Modesto plant has approximately 140 employees. Production is expected to be moved to other Post manufacturing facilities within its existing network in the event the plant closes.
“If Post decides to close the Modesto plant, we are committed to helping our employees through the transition,” said Block.
NGA Releases Tax Reform Principles To Congress
The National Grocers Association (NGA) today released the results of a tax survey of its members in a report entitled “Principles of Tax Reform for the Independent Grocery Sector.” The report is being shared with members of Congress, including members of the House Ways and Means Committee and Senate Finance Committee who are undertaking comprehensive tax reform.
“Many try to simplify tax reform into a one sentence talking point that often fails to reflect reality. The results of this survey clearly demonstrate those tax provisions identified by our membership are important to growing the economy and creating jobs,” says Peter J. Larkin, president and CEO of NGA. “Independent retail and wholesale grocers are committed to serving their consumers, communities and employees. If tax reform is done fairly and equitably they will continue to fulfill that commitment.”
The results of the tax survey developed three main principles that NGA believes must be part of any tax reform legislation.
• Principle 1: Tax reform must be fair and equitable for all business entities. Respondents indicated 57 percent operate as pass-through entities such as S-Corps or LLCs while 37 percent operate as C-Corps, highlighting the importance that tax reform must address both individual and corporate rates. Survey respondents illustrated the direct correlation between higher taxes and the adverse effect on their ability to reinvest in their stores and people without going deeper into debt. The death tax remains a prominent concern for many with 88 percent of respondents rating the issue as important.
• Principle 2: Tax provisions that encourage capital investment in businesses should be retained to continue creating jobs and growing the economy. Bonus depreciation was rated by 93 percent of respondents as important, while 89 percent rated Section 179 Expensing as important. Survey respondents specifically cited their ability to use these provisions to provide cash flow necessary to reinvest capital in their businesses.
• Principle 3: Incentives to expand employment opportunities and business investment in underserved communities should be maintained. Provisions such as the Work Opportunity Tax Credit (WOTC) is an important provision that enables independent grocers to hire workers that typically face barriers to employment, while the New Markets Tax Credit (NMTC) is an essential tool for independent grocers working to open stores in underserved communities.
“NGA member companies and our lobbying team will continue to meet with decision makers on Capitol Hill to ensure the principles outlined in this important report are given strong consideration and become incorporated into comprehensive tax reform.” says Larkin.
Go here to access the report.