CPG Cos., Retailers Shift Focus To New Rules Of Consumer Engagement
Retailers and consumer packaged goods (CPG) companies today are dealing with new rules of consumer engagement as they seize opportunities from advanced technology and the digitally connected consumer, according to the 2013 Financial Performance Report by the Grocery Manufacturers Association (GMA) and PwC U.S., titled “Growth Strategies: Unlocking the Power of the Consumer.” Despite the overall slowing of net sales growth rates in 2012, the report notes that food, beverage and household products companies experienced positive net sales growth of 7.0 percent, 5.5 percent and 3.2 percent, respectively.
According to the report, in the age of the digital consumer, leading consumer packaged goods (CPG) companies and retailers benefit from responding to the speed of the connected consumer and balancing operational quality with innovation accordingly. Top-performing companies see success by identifying their consumers, engaging with them and focusing on innovation that directly reach their customers. The report explores how numerous digital channels, accelerated mobile adoption and direct-to-consumer approach are rewriting the rules of retailing and CPG manufacturing. The report also examines how companies can seize new opportunities by creating lasting brand value.
“This report shows that in the midst of a challenging economy, the food, beverage and consumer products industry continues to show great resiliency,” says Pamela G. Bailey, president and CEO of GMA. “By providing consumers with innovative products and convenient, cutting-edge shopping experiences, CPG companies are well positioned to enhance consumer loyalty and profitability.”
“CPG companies that engage with consumers directly through digital channels and build out their direct-to-consumer processes will have the best advantage for creating new growth,” says Steven Barr, PwC’s U.S. leader for the retail and consumer industry. “Fifty-two percent of U.S. consumers are already buying directly online from brands they trust, proving that CPG companies now have far greater opportunities to walk alongside their shoppers in real time while driving sales of existing and new products.”
In 2013, more than 40 percent of CPG companies expect to sell products directly to consumers, up from 24 percent in 2012. According to the report, direct-to-consumer is a potent vehicle for testing new products and reaching out to new consumers faster and more effectively than ever before, making the retail store aisle no longer the last mile in the purchase journey. Flexibility will be essential, as companies also will need to manage a new set of risks and security concerns.
“Consumers today share much more readily with each other and with the companies than in the past,” says Bert Alfonso, president of international for The Hershey Co. “Their input tends to be about your product’s characteristics and about what they like and don’t like. We see it in North America, China, Brazil and in other markets that have a high penetration of both mobile and Internet usage. And that’s a rich body of information for companies, which is much more spontaneous and actionable than what you would have had in the past.”
“Both the U.S. and global economies are marginally stronger than they were last year, and the continued slow recovery has led to correspondingly modest growth for the CPG industry,” adds Lisa Feigen Dugal, PwC’s North American advisory leader for the retail and consumer industry. “To drive profitability, providing consumers with the core product may not be enough. Today’s consumers want solutions, they want experiences and value. CPG’s and retailers can address this emergence through social media, innovation and direct-to-consumer channels, which will help them understand the wants, needs and values of their consumers.”
Now in its 17th year, the GMA-PwC Financial Performance Report includes analyses based on public information from 144 companies in the food, beverage and consumer products sectors as well as 69 retailers.
Among the key findings of the report:
• Total retail sales reached $1.1 trillion in 2012: $568 billion at grocery stores and $530 billion at food service and drinking establishments;
• While net sales had been slowly going up since the recession, both top- and bottom-performing CPG companies experienced a slowdown in net sales growth in 2012;
• Bottom performers are starting to hold onto their cash, which means they could be ready to start making more investments in research and development (R&D) and marketing to launch new products;
• Many companies are embracing the need for product innovation as well as understanding consumer and market needs as part of their R&D activities;
• One of the key issues faced by food manufacturers during 2012 was the continued rise of commodity prices as there is a growing gap between prices companies pay for raw materials and the prices they can charge for finished goods; and
• The food sector benefited from higher sales per employee while remaining flat on inventory turnover and cash conversion cycle, while the beverage sector also posted a strong performance, with return on sales continuing a steady upward pace. The household products sector experienced better results in 2012, with also a greater increase on return on sales.
The report further delves into how companies can gain greater understanding of their customers, as it highlights best practices for developing loyalists, determining appropriate social media channels that align with business goals, along with successfully identifying target segments within their organization. The report includes recommendations on how companies can improve existing internal organizational design, talent management and how to best utilize partnerships to build quality relationships with consumers.
“Growth Strategies: Unlocking the Power of the Consumer” will be presented via webcast by PwC and GMA at 1 p.m. (ET) Thursday.
Yummy.com Expands Same-Day Online Delivery As It Looks To Go National
Yummy.com Neighborhood Market, a leading multi-channel grocery retailer that has offered same-day delivery to Los Angeles-area residents and businesses since 2002, plans to expand nationally after adding a fourth location in Los Angeles at the end of May.
“Due to the proven demand for on-demand same-day fulfillment in our current trade areas, we opened our fourth fulfillment center in Los Angeles and are looking for a partner to expand nationally,” said Barnaby Montgomery, co-founder and CEO of Yummy.com. “Consumers want their retail purchases immediately; that’s what they expect when they go to the store, and that’s what they want when ordering online. We’re in a unique position to offer large retailers a successful high-volume business model with low operating costs.”
As a fully-integrated multi-channel grocery retailer (online combined with storefront), Yummy.com operates a proprietary system that simultaneously integrates multi-channel revenue streams, manages inventory and provides accurate on-demand fulfillment at high volume. Yummy.com’s model, the company says, enables it to fulfill orders that come in over the course of the day randomly, which requires less staff and results in lower operating costs. Yummy.com’s next-generation online retail model can be integrated into an existing operation, allowing a company to acquire new customers and defend against warehouse-based online retailers, the company says. To date, Yummy.com says it has profitably fulfilled nearly two million same-day orders using its proprietary software, and has five to 10 times the demand for its service over other big-box grocery delivery services due to its flexible model and customer-centric 30-minute delivery promise.
Positioned as a neighborhood market, Yummy.com features a wide selection of fresh fruits and vegetables, fresh meat, packaged, gourmet and organic groceries, and offers a promise of delivery in about 30 minutes, giving local customers what they want, when they want it. Each Yummy.com location includes a storefront featuring thousands of grocery items, including fresh produce, fresh meat, packaged groceries, pet supplies, over-the-counter medications, cleaning products and household necessities. With the addition of the Silver Lake store, Yummy.com fulfills approximately 20,000 same-day orders each month from four locations, including Hollywood (delivery only), Santa Monica (storefront and delivery), and Playa Vista (storefront and delivery).
With nearly 30 years of combined experience in the online retail, grocery and same-day fulfillment categories, Yummy.com says its executives have a proven track record developing online grocery and fulfillment companies, including Yummy.com, HomeGrocer.com and Pink Dot. CEO Montgomery and COO Arthur Zonneveld founded Yummy.com in 2002 with a vision to bring the convenience of same-day delivery to the consumer grocery experience. Central to this vision, they say, was the understanding that a successful fulfillment system must reliably fulfill orders “on-demand” rather than at the retailer’s convenience.
Mettler Toledo’s 2013 Customer Council To Be Held In August
Mettler Toledo will host its 3rd Annual Customer Council in St. Louis, Mo., Aug. 21-22. This event is an opportunity for collaboration among leading grocery retailers, industry expert speakers and innovative solution providers to share ideas and best practices through discussion and hands-on learning.
Suppliers are facing numerous challenges in today’s marketplace, according to Mettler Toledo. For example, it can be difficult to provide a personalized customer experience in an increasingly digital and fragmented world. Self-service technology is often perceived as a key strategic direction, and many grocery retailers are implementing these systems successfully. Management of labor turnover and fresh item shrink, and food safety and traceability are other areas of consideration affecting store operations in the future. These issues will be explored in an open setting during the Customer Council event, Mettler Toledo says.
Additional topics for the 2013 Customer Council include trends in self-service technology, connecting to the shopper in the new millennium, technology-enabled operational excellence as well as food safety and traceability.
California Avocado Commission Again Promotes For July 4 Holiday
The California Avocado Commission (CAC) says that America’s Fourth of July holiday festivities—at the heart of the California avocado season—make for the perfect time for avocado consumption. This year, CAC plans to build on the success of last year’s integrated marketing program designed to put California avocados on picnic tables, at barbecues and everywhere consumers are gathered for Fourth of July celebrations. The program includes television advertising in California, general market radio, print and online advertising, public relations outreach, in-store retail support, new recipes, online and social media activities.
“Last year we set a goal for the Fourth of July to become one of the top avocado consumption events of the year,” says Jan DeLyser, VP of marketing for CAC. “We were blown away when the Fourth of July consumption in 2012 skyrocketed to the top avocado consumption occasion. We thought it might take some time to get there but, with growing consumer demand and availability of consistent quality fruit in season, we have a winning combination. This year the industry is forecasting a whopping 96.4 million pounds of avocados for Fourth of July consumption.”
CAC’s consumer advertising for the Fourth of July encourages shoppers to “add a little green to your red, white and blue” and features an all-American rendition of the commission’s California avocado grower campaign. CAC reveals that the TV commercial in California markets evokes a nostalgic, all-American mood and features California avocados in traditional American fare such as burgers, hot dogs and picnic salads. Print ads also showcase a recipe on its way to becoming a holiday classic, Firecracker Guacamole, which is served in a hollowed-out mini watermelon. Consumers in CAC’s advertised markets will hear radio commercials, see the advertisements in outdoor media and experience in-store promotion.
California avocado recipes for picnics and barbecues encourage usage in favorite American summer holiday dishes. A new recipe for Guacamole Potato Salad, one of several new recipes that encourage a higher produce ring with most of their ingredients coming from the produce department, is already one of the top CAC recipes shared by consumers online. It is included in CAC’s “Have a Blast with California Avocados” recipe booklet, now available for order here, along with customizable point-of-sale materials supporting American summer holidays. The recipe booklet features patriotic/fireworks-themed recipes such as California Avocado Red, White and Blueberry Salsa, one of several included in the Commission’s co-marketing promotion with Naturipe Berries.
CAC’s Independence Day promotions
Third-party registered dietitians (RDs) are promoting the nutritional benefits of California avocados for Fourth of July and American summer holidays through media appearances, recipe development, social media promotion and blog posts. Liz Weiss, MS, RD, and Janice Newell Bissex, MS, RD, known as The Meal Makeover Moms, created a beef and black bean hamburger and nutritious pasta salad recipe featuring California avocados.
CAC’s Fourth of July push includes online and mobile marketing with an email recipe newsletter, themed microsite reflecting the print advertising campaign creative and a consumer recipe contest featuring prize packages, including Weber grills and California avocado gift boxes. Social media outreach also is an integral part of CAC’s Fourth of July communication plan.
Enthusiasm, Upgrades Seen At Unified Grocers Expo 2013
Excitement and confidence were the feelings that dominated the Unified Grocers Expo 2013 in Long Beach, Calif., this week.
Bob Ling, president and CEO of the Commerce-based wholesaler, said those sentiments were shared by both Unified employees and vendors.
“Nobody is going to declare victory over the recession just yet,” Ling told The Shelby Report on Thursday, “but there are certainly some pockets of success and some people are experiencing some growth, and maybe everybody is just tired of all the bad news that has occurred over the years. But there is an uptick in enthusiasm amongst the members.”
The show itself saw some big improvements from the year prior.
“We have a technology upgrade this year, both in terms of the way we approach the show, but internally we are tracking in real time the sales by customer, by region, by commodity, and comparing it to last year,” Ling said. “It’s allowed us to track the activity on the floor, to direct some people to vendors who are perhaps a little more aggressive than others and create a little further competition amongst the members…”
Ling said Thursday that activity appeared to be up vs. the 2012 show and noted that the information currently is only being shared internally. He revealed his company will soon share customer-specific information by customer.
Additionally, Ling—who took over as president and CEO role at Unified in May—discussed what changes the industry can expect to see from the co-op.
“I think there is a sense of both urgency and a sense of enthusiasm and a sense of mission by all of our employees to become more creative, more demanding when necessary, to be more entrepreneurial and to work closely not only with the vendors but our members to drive sales through the channel,” he said. “The pace has been quickened; that’s certainly one of our initiatives.
“We’ve done a lot of reorganization amongst our team members in all aspects and tasked them to be more flexible and creative in terms of the way they go to market,” Ling added. “One major initiative that is in its early stages but is going to be very useful going forward is an issue we call our Scan Data Initiative, where we are investing in both technology and getting great early response. There’s member participation, where they’re giving us their scan data in real time and we’re feeding back to them already some analytics in terms of are they selling the right products, are they missing products that they should have on the shelf. And that information is flowing now where we’ll be able to communicate that to the trade to make sure our forecasting is better and that we can deliver in terms of promotional activities.”
Under Ling’s leadership, Unified also is empowering its regional divisions to act more locally.
“With respect to the Pacific Northwest, we have melded together a lot of the activities between Seattle and Portland to make that more of a regional presence and much more efficient and I think we’re more effective communicating with the vendor community in the Pacific Northwest,” he said. “We have consolidated up there.”
He pointed out, too, that Unified is “aggressively” looking for business both in its current market as well as outside it.
NGA, Brick Meets Click Release Digital Check-Up For Grocery
The National Grocers Association (NGA) and Brick Meets Click (BMC) on Wednesday announced the publication of the “NGA/Brick Meets Click Digital Check-Up.” The paper, which analyzes data from an online survey of more than 22,000 grocery customers, includes data on digital shopper readiness and retailer engagement. The results show that grocery shoppers are not just ready to connect online with food retailers; a lot of them are already doing it.
“The thing that surprised me was that 13 percent of the shoppers surveyed had bought some grocery products online in the last 30 days” said Bill Bishop, chief architect of Brick Meets Click. “That tells you that while sales are still small, there’s significant customer interest in online grocery shopping.”
The survey was conducted in the first quarter of 2013 and included shoppers from seven different banners on the East and West coasts and the Midwest. Key takeaways include information on consumer texting, smartphone use, online shopping, grocer engagement and e-marketing. It is the first element of an NGA/Brick Meets Click partnership that will provide NGA members with insight to help them compete successfully in what is becoming a multi-channel grocery business.
“We are excited to expand our partnership with Brick Meets Click,” said Peter J. Larkin, president and CEO of NGA. “By pairing their research expertise with our channel of independent grocers, we are increasingly able to bring value to our membership and keep them ahead of the game on shopper insights and engagement.”
Piggly Wiggly Midwest Partners With Ibotta To Offer Cash Rewards
Ibotta Inc., makers of one of the fastest growing mobile shopper technologies in the U.S., has partnered with Piggly Wiggly Midwest to allow its shoppers to earn cash rewards when using their Preferred Club Card to buy selected products.
Through its partnership with Ibotta, Piggly Wiggly Midwest continues its tradition of finding new ways to enhance and differentiate the in-store shopping experience, the company says.
“Our shoppers asked us to enable Ibotta in our stores, and we listened,” says Gary Suokko, COO of Piggly Wiggly Midwest. “Ibotta provides rewards in addition to the savings and discounts that are already available through the Piggly Wiggly Preferred Club Card.”
Once a shopper registers their Piggly Wiggly Preferred Club Card on the Ibotta app, earnings for Ibotta Offers are redeemed upon checkout, with the cash rewards being deposited directly to their Ibotta account. Shoppers can withdraw their money using PayPal or choose other rewards.
“Tying Ibotta directly to Piggly Wiggly’s point of sale system makes it easier than ever to redeem Ibotta offers and earn cash,” says Ibotta’s CEO Bryan Leach. “We’re excited to be partnering with Piggly Wiggly on this initiative.”
“A key for us in working with Ibotta was the ease in technical implementation and I was pleased that it was such a straightforward process,” says Bill Bell, director of information technology for Piggly Wiggly Midwest.
Ibotta can be downloaded for free at the Apple App Store and Google Play. Starting June 20, Ibotta can be used in store at Wisconsin and Illinois Piggly Wiggly locations by connecting a Piggly Wiggly Preferred Club card to the Ibotta App.
Piggly Wiggly Midwest supplies 101 Piggly Wiggly supermarkets in the greater Wisconsin and northern Illinois areas. Sheboygan, Wis., is home to Piggly Wiggly’s headquarters, its company’s corporate offices and two of its distribution centers. A third distribution center is located in Milwaukee.
AG Baton Rouge Selects Recall InfoLink For Recall Process Management
Associated Grocers Baton Rouge, a leading regional retail operations support center for more than 200 independent retail supermarkets, announced today the deployment of Recall InfoLink’s best-in-class recall process management system. Associated Grocers is using the solution to improve recall effectiveness and reduce product safety risks.
“The Recall InfoLink system’s simplicity and speed creates efficiencies for AG Baton Rouge, and provides a state-of-the-art system for our member retailers to simplify processes and regulatory compliance,” said Kimberly Hawkins, corporate communications specialist at Associated Grocers.
Recall InfoLink’s patented, web-based product recall management platform protects brand image and brings value to all businesses involved in processing recalls. It improves efficiency by providing standardized messages, automated communications, inventory tracking and reports for compliance efforts.
“Associated Grocers is working hard to lower the potential impact of product recalls on shoppers at member stores. Recall InfoLink is working equally hard to provide Associated Grocers with the solutions they need to reach this goal,” said Roger Hancock, president and founder of Recall InfoLink.
Associated Grocers Baton Rouge formed in 1950 with 17 founding member stores. Today, its membership boasts more than 215 independent retailers in Louisiana, Mississippi, and Texas.