Walmart Is Investing In Shopper Data: How That Will Change The Grocery Aisle

It might not be able to put a price on trust, but Walmart is preparing to pay the fare for getting personal, and it could cost the entire food industry billions in shifting sales.

The world’s largest brick-and-mortar merchant has acknowledged it is lagging in the quest to personalize through the use of shopper data. Now, perhaps because of Amazon’s purchase of Whole Foods, which could yield unprecedented in-store and online data models, Walmart is embarking on a “multiyear journey” to get its data in good enough shape to produce relevant personalized experiences.

“From 1 to 10 in our use of data, I would say we’re probably about a 2,” Doug McMillon, president and CEO of Walmart, recently told attendees at its annual investor conference. “We use data to improve in-stock and replenish. We don’t use data to personalize.”

Walmart’s declaration isn’t kicking off the race toward data-enabled personalization, but it ensures it is not a race for amateurs. In addition to Amazon’s ambitious leap into expanded grocery analytics through Whole Foods, Kroger is using its data to reset and refine assortments, store by store, in an initiative called Restock Kroger. Albertsons, meantime, has expanded its work with analytics firm IRIto combine its in-store data with supply-chain data, enabling it to collaborate with vendors in real time.

Such efforts may be overdue. Grocers and food retailers have lost 29% of their market since 1992, according to a November report by market research firm International Data Corp. (IDC) and retail analytics firm Precima. That translates to $310 billion in lost annual revenue.

Shifting Dollars Mean Big Change

Where is the money going? To recreational venues, the workplace, universities and fast-casual restaurants, which are marketing catering services to families, according to the report. Among the findings:

  • A quarter of shoppers (growing to 32% within two years) satisfy their grocery needs by shopping at multiple stores.
  • More than 40% of families shop groceries online at least once a month.
  • Perhaps as a result, 79% of supermarket chains said they are changing their assortments and space strategies in the centers of their stores.
  • Across age groups, shoppers expressed an interest in personalized prices, promotions and in-store experiences.

Yet most retailers that use advanced data insights — 55% — said they are not where they need to be with their analytical tools.

Walmart Weighs In Change

All of which means supermarket retail is about to get real on data-enabled personalization, and this could sharply change the shopper experience.

Walmart, for example, is actively seeking to build trust and loyalty through its data refinement. “You can imagine use cases that will save customers time and have them actually understand that we do understand them to an extent,” McMillon said, “all those things done in a way that builds trust with them, which is our ultimate asset.”

To this end, Walmart has partnered with the data firm Nielsen to smooth out the way its data is used among manufacturers, vendors and business partners. A goal of the program, called Walmart One Version of Truth, is to provide supply chain partners a consistent view of the market so they can leap on opportunities that cut costs and also improve the shopper experience.

It won’t happen quickly — McMillon acknowledged it could take years to organize Walmart’s data so it can be effectively used for personalization. In the interim, other large merchants, as well as regional chains, are boning up on their analytics practices and putting the findings into play.

3 Changes to Expect

The outcome of these analyses will entail changes that shoppers should easily recognize. Among what they can expect:

Fresh change: Increased online grocery shopping means certain categories, specifically shelf-stable condiments and household goods, will be purchased less in the store. As a result, grocers are almost uniformly reconsidering how they allocate space, and many are expanding their fresh food offerings. More than seven in 10 supermarket retailers (72%) are changing assortment and space in the produce sections, according to the IDC/Precima research. This is despite that just 51% see the category as important. Note: While the middle of the store is being reconfigured, regionally produced items will likely take the place of staple products.

Online in store: But there’s no reason for those staple sales to go to a competitor. In-store touch screens can offer endless aisles of shelf-stable foods (like flour, salad dressings and candy). Shoppers can place orders while at the store, and the products can be delivered as soon as the next day. In some cases, store space could be reconfigured to allow for more warehousing, which is less expensive to maintain, and products stored in the back could be brought to the front in time for checkout. Shoppers are ready: 47% of U.S. consumers said they would use auto-replenishment for household items such as soap, according to research by Accenture Strategy.

Hyper-personalized promotions: As more supermarkets partner with data firms to combine supply-chain and in-store data, their understanding of what sells, why and under what conditions will improve, and will be reflected in more relevant communications. Kroger’s loyalty program and purchase data, for example, help its suppliers deliver targeted ads in Kroger stores and online. Kroger’s agreement to introduce a mobile wallet in 2018 through JPMorgan Chase could enrich its insights into shopper behavior outside the store. These finer analytics could enable merchants to identify promotional opportunities before the shopper visits the store or website.

These efforts could bring straying shoppers back into the supermarket, but merchants must move fast or pay the price of lost opportunity. With so many food dollars spent outside the grocery store, the industry is already in catch-up mode.

Source: Forbes

Price-fixing more commonplace than thought in grocery aisle, experts say

The recently revealed 14-year industry-wide arrangement to co-ordinate bread prices in Canada doesn’t seem to shock experts, who say price fixing is a common and tempting practice in the country.

Any possible reward, they add, appears to outweigh the risks of penalties and losing consumers’ trust.

Grocery giant Loblaw Companies Ltd. and George Weston Ltd. revealed earlier this week they participated in a co-ordinated bread pricing scheme from late 2001 to March 2015. The companies tipped off the Competition Bureau and struck an immunity deal to avoid criminal charges or other penalties from the ensuing investigation.

According to court documents, the regulator is also investigating the alleged involvement of Canada Bread, Walmart, Sobeys, Metro and Giant Tiger as well as “other persons known and unknown.”

Details about the investigation are sparse and no criminal charges have been laid. Many of the companies say they do not suspect their companies or employees broke laws, and that they are fully co-operating.

“Price-fixing cases are actually quite common,” said Jim Brander, a professor at the University of British Columbia’s Sauder School of Business in Vancouver.

For grocery stores, which have small margins, a seemingly small jump in price for a product can provide big gains, he added.

Between 2001 and 2015, the consumer price index for bread, rolls and buns rose 96 per cent, according to Statistics Canada. During that same time frame, CPI for all food purchased from stores increased about 45 per cent.

Historically, fines were quite small compared to the gains companies could make, said Brander, so the penalties were not a major deterrent.

Penalties for conspiracy — the umbrella under which price-fixing falls — include fines up to $25 million and imprisonment for up to 14 years, or both. That’s up from a previous $10 million and five years.

In recent history, the competition watchdog pressed criminal charges, which were eventually stayed, against several parties in a price-fixing arrangement in the country’s chocolate industry. It also charged and fined a number of individuals and companies involved in a Quebec gasoline price-fixing cartel.

However, it’s difficult to be caught and prosecuted, said Fred Lazar, an associate economics professor at York University’s Schulich School of Business in Toronto. After all, Canada’s major grocers allegedly managed to do this for nearly 15 years, he said.

“What’s required for the Competition Bureau to have a case is a smoking gun,” he said. “Some type of memo, some letter, something on a computer that basically states, ‘Yes, you know, my competitor and I are co-operating and we’re increasing prices.”‘

Without that, it’s difficult for the bureau to prove collusion, he said.

There are many people at an organization, such as those whose salary is tied to the financial performance of the business, who have incentive to improve profits and engage in price fixing, Brander said.

These individuals may meet each other at industry events, like a conference, he said, or it could be as simple as picking up the phone and dialling the number of someone at a competitor.

“You’re not going to say on a phone call or a text message, you know, ‘Let’s fix prices,”‘ he said. “But, you might say, you know, ‘Let’s have lunch.”‘

The Competition Bureau published excerpts from some conversations it intercepted during its Quebec gasoline price-fixing investigation. These include lines as direct as: “OK, I’ll let you call your people and I’ll call mine, and then at 10 o’clock at 95.4 cents.”

The retailers facing the recent bread allegations likely chose to manipulate bread prices rather than another product due to the small number of companies involved, said Lazar.

Canada has few major bread wholesalers, including George Weston’s bakery division as well as Canada Bread and only a handful of national grocery chains.

“If you had 10, 20 of these suppliers serving all these major supermarket chains than it’s much less likely there would have been any form of collusion,” said Lazar.

It’s unlikely a similar scheme is happening in the price of other products, he said, as there aren’t many other areas with a limited number of suppliers, including one owned by the parent company of a grocery titan like Loblaw.

George Weston and Loblaw have said they are confident there is no similar arrangement for any of their other products.

It’s also unlikely companies implicated in the arrangement will lose customers, Brander said, as these headlines fade from consumers’ memories quickly.

The way the companies are handling the news may even enhance people’s trust, he said. Loblaw and George Weston say they informed the bureau immediately after discovering the information, and Loblaw is offering eligible shoppers a $25 gift card as a goodwill gesture.

“I would not place loss of consumer trust very high on the list of major, major concerns coming out of this case,” he said.

Source: CBC News

Grocery Industry Celebrates Tax Reform Passage

With final passage of the Tax Cuts and Jobs Act accomplished at last after a last-minute U.S. House of Representatives re-vote due to a legislative technicality, and the $1.5 trillion tax package now awaiting President Donald J. Trump’s signature, retailers hailed the move as “a major victory” for industry members and consumers alike, in the words of Matthew Shay, president and CEO of the Washington, D.C.-based National Retail Federation.

Noting that retailers “currently pay the highest tax rate of any business sector,” Shay noted: “Our priorities were clear: Reform must jump-start the economy, encourage companies to invest here in the United States, increase wages and expand opportunities for employees, and protect our small-business community, of which the vast majority are retailers. That’s exactly what this legislation will achieve. Most importantly, this historic tax reform will put more money in the pockets of consumers – the best Christmas gift middle-class Americans could ask for this holiday season.”

Sandy Kennedy, president of the Arlington, Va.-based Retail Industry Leaders Association, observed that the act’s passage cleared the way toward “the goal of a fairer, more globally competitive tax code that provides middle income taxpayers with critical relief.”

Added Kennedy: “A fairer and more competitive tax code will give retailers the ability to modernize stores, invest in their workforce and continue to transform the shopping experience for consumers. The fierce competition of today’s retail environment means the ultimate winner in tax reform will be our customers.”

Grocers shared in the general rejoicing in response to the news that the tax reform bill was about to become law.

“Food wholesale and retail are low-margin, high-tax industries that have been waiting for just this type of relief to spur investment and create jobs,” observed Jennifer Hatcher, chief public policy officer and SVP for government relations at Arlington-based Food Marketing Institute, adding that the organization “and its members are anxious to see this legislation implemented as quickly as possible.

“The bill dramatically lowers the corporate tax rate and increases expensing levels, which should help fuel improvements in technology and job growth within our industry,” said Hatcher. “It does so while also preserving industry priorities like Last-In, First-Out (LIFO accounting) and the Work Opportunity Tax Credit and does not impose a punitive Border Adjustment Tax (BAT).”

What’s more, according to Hatcher, “Consumers will also benefit from having more money in their pockets, thanks to a doubling of the standard deduction and lower tax rates.”

“This is the most significant piece of tax reform legislation in 30 years,” asserted Pamela G. Bailey, president and CEO of the Washington-based Grocery Manufacturers Association. “It will help spur job creation within the grocery manufacturing industry and provide tax relief for working families. The food, beverage, and consumer products industry has long urged action to fix our broken tax system, which must work in favor of both consumers and manufacturers.”

Speaking on behalf of the independent grocery sector, Peter J. Larkin, president and CEO of the Arlington-based National Grocers Association, said: “Independent grocers across the country can feel more optimistic now that a once-in-a-generation tax reform bill has finally passed Congress and is on its way to the president’s desk for his signature. For years, independent supermarket operators have tried to keep pace with a rapidly changing marketplace while operating in an industry with high effective tax rates on just 1 percent to 2 percent profit margins. This new weight lifted off their shoulders will allow stores to invest more in their companies, employees and communities.

Continued Larkin: “This landmark legislation reflects the hard work of many independent supermarket operators who helped shape the final bill. We’re pleased this historic bill lowers rates for both C-corporations and pass-through businesses, and retains the many important policies that will significantly help entrepreneurs hire additional staff, expand offerings and upgrade their stores. We look forward to President Trump signing the bill into law so independent grocers can be given much-needed and long-awaited tax relief.”

For her part, Hatcher expressed a few minor reservations in regard to the final legislation, as well as praise, noting, “While we would have liked to see more progress in certain areas such as greater parity between the corporate and pass-through rate and full repeal of the estate tax, we’re grateful for a number of changes made during conference, such as allowing estates and trusts access to the reduced pass-through rate. No piece of legislation is perfect, but the tax reform conference report offers food retailers important economic relief.”

Source: Progressive Grocer

Walmart Will Let Its 1.4 Million Workers Take Their Pay Before Payday

For decades, Walmart has taken heat for how it treats its work force, including paying low wages and creating unpredictable schedules. Now, the giant retailer is trying to ease some of its workers’ financial strain, allowing them to receive wages before their next payday.

Instead of waiting two weeks between paychecks, Walmart workers can now use an app to access a portion of wages for hours they have already worked.

But Walmart’s new service also highlights, albeit unwittingly, the financial struggles of the low-wage workers in the retail and service industries. Even as the economy strengthens, many workers in stores and restaurants are not earning enough to make ends meet.

Walmart said the new initiative is intended to help workers avoid costly payday loans and other debt traps, and reduce the stress that comes with financial hardship.

Workers who are less worried about cash issues “feel more confident and more settled at work,” Judith McKenna, Walmart’s chief operating officer, said in an interview.

“We believe this is the right thing to do, and we are happy to champion it,” Ms. McKenna said.

Labor groups say the best investment Walmart could make is not in a new app, but in increasing pay.

“It sounds like this may be a useful service but it doesn’t tackle the fundamental problem Walmart workers suffer,” said Paul Sonn, general counsel of the National Employment Law Project, a labor advocacy group. “Their paychecks are too small.”

The minimum starting wage at Walmart is $9 an hour, which is $1.75 higher than the federal minimum wage. But it is lower than the starting wage at retailers like Costco, which pays $13 an hour, and Target, which recently raised its entry-level wage to $11 an hour.

The average hourly wage for a full-time Walmart worker is $13.85, while the average hourly wage at Costco is about $24.50.

Walmart executives say that raising wages alone will not solve the problems many Americans have managing their cash flow. Rather, the company says, the new service is meant to help workers with the broader issues of financial management.

The app, called Even, has been used by other employers, but never on such a large scale as Walmart.

With the new service, every Walmart employee can obtain a portion of his or her earned wages eight times a year free of charge. For most of the workers, the so-called Instapays will be deducted from their next paycheck. The workers can pay extra if they want more than eight Instapays.

The Even app also helps workers manage their finances by pinpointing exactly how much they can safely spend before their next paycheck.

Alexis Adderley, who works nights in a Walmart distribution center in Fort Pierce, Fla., has started using the Even app as part of a pilot program.

At first she was suspicious, she said, that the app was yet another in a long line of financial products like payday advances and “overdraft protection” that end up driving low-income workers deeper into a hole.

But Ms. Adderley, the mother of boys ages 8, 7, 4 and 2, said she had been pleasantly surprised.

The app, which connects to her bank account, calculates how much she pays for housing, food and phone bills and tracks when she makes big monthly payments. With that data, Even provides Ms. Adderley a real-time estimate of how much she has to spend before payday.

She earns $19.25 an hour, more than the average Walmart employee, and works 30 hours a week. But money is still tight, especially since she was forced to leave her home after Hurricane Irma. Earlier this week, the app warned Ms. Adderley, 30, that she had only enough money to safely spend $9.08 before her next paycheck.

“I would love to save more,” she said.

Walmart executives said they learned about Even after reading a New York Times article about the firm a few years ago. The retailer is also working with another tech firm, PayActiv, which facilitates some of the payments. 

These partnerships reflect Walmart’s broader effort to make inroads in Silicon Valley, where the old-line retailer is seeking to acquire talent and ideas to increase its digital heft in its battle with Amazon.

Before creating Even, one of the firm’s founders, Jon Schlossberg, had developed an app called Knock, which allows phone users to unlock a Mac computer by knocking on their phone.

Idealistic and flush with money from the success of Knock, Mr. Schlossberg said he began studying how a cash shortage affects people’s physical and mental well-being.

“It is a fundamental problem with the capitalistic society,” Mr. Schlossberg said in an interview.

Mr. Schlossberg, 30, said he set out to create a product that could reduce the stress associated with money problems, joining a crowd of other so-called fintech start-ups seeking to disrupt the traditional banking model.

Walmart pays a small fee to Even to allow workers to withdraw their wages ahead of payday. Workers can take out only a portion of wages that they have already earned during the two-week pay cycle — so technically, Even says, these are not loans.

“You have earned this money,” said Safwan Shah, founder of PayActiv. “Who decides you should get paid every two weeks?”

For years, consumer advocates and regulators have warned about the dangers of using high-interest loans to pay for unexpected expenses.

Walmart workers will not be charged interest if they opt to obtain their wages in advance. But getting paid early, while it may solve an emergency cash shortage, will leave the workers with less money on payday.

“It is still going to be a struggle for most people,” said Alex Horowitz, a senior researcher at the Pew Charitable Trusts who focuses on consumer finance.

Matt Fixel, 29, a Walmart worker in Tucson, lives on the financial edge. He works part time earning $10.20 an hour unloading trucks and stocking shelves. When he ran into trouble paying rent one month, he overdrew his bank account, incurring huge fees. Unable to obtain a credit card because “his credit is just shot,” Mr. Fixel pays for services like Hulu with gift cards.

“That app sounds helpful,’’ Mr. Fixel said of the Even service, but added, “I would prefer it if they gave me more hours.”

Cash flow issues, Walmart executives say, are not just a problem for the poor, but affect a broad segment of Americans. Ms. McKenna cited a survey by the Federal Reserve that showed that 46 percent of Americans would have trouble paying for an emergency expense of $400.

Ms. McKenna said Walmart was making a “reasonably substantial investment” in paying for the Even service for its employees. The company raised starting wages nearly three years ago, and Ms. McKenna pointed out that Walmart has also increased employee training programs that aim to advance workers into management, where they can earn more.

“We continue to look at investing in our associates,” Ms. McKenna said.

Source: The New York Times

Target to Buy Grocery Delivery Startup Shipt for $550 Million

Target Corp. is paying $550 million to acquire grocery delivery startup Shipt Inc., moving to match services that have been rolled out by rivals Inc. and Wal-Mart Stores Inc.

Shipt, like rival Instacart, uses thousands of contractors to buy products at retail stores and deliver them to customers. It charges a $99 membership fee and its shoppers buys products from local stores, including grocers like Kroger Co. and Costco Wholesale Corp. Shipt typically sells items at a slight premium to the in-store price, and charges delivery fees for orders less than $35.

For Target, the deal helps the company quickly expand its delivery services, an area where rivals have been aggressively doubling down. Wal-Mart, which sells far more groceries, has expanded curbside grocery pickup this year and programs to make home grocery deliveries. Amazon has upended the grocery market with its acquisition of Whole Foods and rapid expansion of its Pantry and Fresh delivery services.

Concentrated in cities and surrounding suburbs, grocery delivery is still a small business, accounting for less than 2% of last year’s $715 billion in food-retail sales, according to research firm Technomic Inc. Amazon already makes up more than half of online food orders through its Fresh, Prime and Prime Now services.

Target said the acquisition would allow it to offer same-day delivery services in about half of its Target stores by early 2018. It plans to have the service in all major markets before next year’s holiday season. Currently, the retailer has used a partnership with Instacart to deliver groceries in three markets.

Shipt, which was founded in 2014 in Birmingham, Ala, currently offers its service in more than 70 cities through 20,000 shoppers. The startup, which has about 275 employees, has raised more than $60 million in venture capital, from backers including Greycroft Partners and Harbert Venture Partners.

The acquisition puts Target “several years ahead” in its efforts to offer delivery services to customers, said John Mulligan, Target’s chief operating officer. “They have built their business model based on the customer experience through the entirety of the purchase pipeline.”

Executives didn’t disclose whether Shipt is profitable or how much revenue it is expected to generate this year. Target said it expects the transaction to add to its earnings starting in 2018.

Target said Shipt will operate as a subsidiary and seek to maintain its partnerships with other chains, but it won’t utilize the customer data of other retailers on the platform. “We’re going to be very respectful of the data of other companies,” said Mr. Mulligan.

Target has been catching up to rivals after coming late to some aspects of e-commerce. The company outsourced nearly all of its online operations to Amazon in 2001 before ending the relationship in 2011. It has partnered with several e-commerce companies over the years and considered acquiring some. Earlier this year, it bought a small logistics software, Grand Junction, to help it expand its same-day delivery offering for in-store purchases.

After weak holiday performance in 2016, the company has been making headway on its three-year plan to spend $7 billion on stores, supply chain and digital improvements.

Source: The Wall Street Journal

Brick-and-mortar grocery stores hope to edge out Amazon with curbside pickup

As looks to upend the US grocery market with home delivery, some veteran supermarket operators are betting on a different strategy: curbside pickup.

Americans have long loved the convenience of drive-through service for burgers and coffee. Kroger Co and Wal-Mart Inc are tweaking that formula for groceries.

The companies have invested heavily in online systems that allow customers to order ahead from their neighborhood store. Workers pick and pack the products, then run them out to shoppers in the parking lot, the grocery version of carryout pizza.For the retailers, the service is cheaper than delivery, because customers do the driving. For shoppers, it means skipping crowds and queues at their local market, and no worries about missing packages or melted ice cream if they are not at home to meet the delivery guy.

Tony Sacco, who lives in the Los Angeles beach community of Playa Del Rey, is a regular user of the service at a nearby Ralphs supermarket, owned by Cincinnati-based Kroger. Each pickup costs $6.95, but the time-crunched married father of three says it is worth it.

“This is easy. Time is money,” said Sacco as a worker loaded bags into his SUV on a recent morning.

Retaining customers like Mr. Sacco is critical for traditional grocery retailers as they battle an array of upstarts bent on turning groceries into the next home-delivery juggernaut.

New entrants such as meal-kit company Blue Apron and organic food seller Thrive Market are peeling off coveted slices of their business. Amazon, the nation’s largest online retailer, has amassed an 18 percent share of the $12.6 billion US online grocery market mainly through the sale of packaged goods such as pasta and diapers. It is the largest player in a sector that is expected to grow to $41.7 billion by 2022, according to market research firm Packaged Facts.

But even mighty Amazon has struggled with the trickiest part of the trade: delivering fresh produce, meat, dairy, and other perishables. Its AmazonFresh service started more than a decade ago, but has yet to make a major mark.

Amazon is making another run at it with its $13.7 billion purchase of upscale grocery chain Whole Foods earlier this year. Amazon has said little about its plans. But analysts expect it will use Whole Foods’ 450 locations as distribution hubs for home delivery, opening a new front in its campaign to disrupt the $700-billion US grocery industry. Old-line players are responding with some new moves of their own. Kroger and Wal-Mart are experimenting with delivery. But they are wagering that pickup is the true sweet spot in the industry’s online evolution. Both are rolling out the service in thousands of their stores.

“The way people are going to shop for groceries is going to be curbside, not delivery,” said Jason Goldberg, a senior vice president at digital marketing firm SapientRazorfish.

Amazon, too, is eyeing that channel. AmazonFresh has already tested pickup in Seattle and analysts expect Whole Foods to do the same.

Nevertheless, researcher Packaged Facts says traditional retailers can win with real estate: “Companies such as Walmart and Kroger have the advantage, because they already have stores all over the country in both urban and rural settings,” it said in a recent report.

Click and collect

Kroger bought its way into pickup with its 2014 purchase of southeast grocer Harris Teeter, which had an established program.

That same year, Kroger debuted its own offering, known as ClickList, adding features such as coupons and promotions based on detailed customer data.

Pickup is now available at 1,000 of the chain’s 2,800 stores and the company is adding the service at 400 to 500 locations a year, according to Matt Thompson, the vice president of ClickList.

He said curbside customers spend 40 percent to 60 percent more than traditional shoppers, because they tend to stock up on bulky items such as bottled water.

Users pay $4.95 to $6.95 for each order depending on their location. Kroger would not disclose how many shoppers use ClickList. It promotes the service in stores and online, while customers spread the word through social media.

Users log into ClickList online. They put items into digital carts, pay and reserve a pickup time at least four hours in advance.

The order is sent to a terminal in a store’s dedicated ClickList room, where “pickers” are dispatched with handheld devices that tell them exactly where to find each item. These workers bag the products and put them into labeled bins; perishables are kept in a nearby freezer or fridge. When customers pull into designated pickup parking spaces, they are directed to call a number to alert a ClickList staffer, who wheels the bags to their cars.

Kroger gave Reuters a tour of its ClickList operation at a Ralphs supermarket in Los Angeles’ Westchester neighborhood in late November.

Miguel Lopez, who leads the ClickList team there, said it takes about 30 minutes to pick a $100 order; a $400 order takes an hour. The team tracks progress on a white board that showed weekly progress since the service debuted in January. The number of daily orders ranged from 13 to 36. Sales for the week Reuters visited, which included Thanksgiving Day, were on pace to hit a record of more than $12,000.

Analysts say typical Kroger stores have annual sales of around $30 million, excluding gasoline. Deutsche Bank analyst Shane Higgins said pickup already accounts for over 5 percent of sales in some locations.

Kroger declined to comment on the overall performance of ClickList but acknowledged costs are initially higher for pickup orders because of the additional labor involved. Company executives said increasing sales and efficiency can virtually eliminate that gap in as little as three years.

Another challenge to profitability is that pickup customers are not tempted by in-store impulse items. But the biggest risk, analysts say, is to do nothing and let customers drift to competitors that offer the service.

Shopper Kimberlee Isaacs says ClickList has kept her loyal to the Westchester Ralphs, where she drops $800 a month on groceries for her family of three.

“We use it every single week. I don’t go into the store unless I forgot something,” Ms. Isaacs said.

Coming on strong

Meanwhile, Walmart, the nation’s top grocery seller, aims to add free curbside pickup at 1,000 stores next year, bringing the total to 2,100 of its 4,700 US locations.

It declined to discuss profitability of the service. But spokeswoman Molly Blakeman said the company decided to expand it quickly based on encouraging results.

Pickup is winning converts such as Hudson, Florida shopper Steve Mondock, who had previously shunned Walmart.

“I hated the crowds, I hated the parking,” said Mr. Mondock who now buys most of his basics there.

Virtually every food retailer is now testing or adding pickup, including Publix, HEB, Meijer, and Safeway. Target Corp, which just bought delivery company Shipt, is testing drive up for non-perishable groceries and other items.

“That’s why you want to be early so you can capture someone else’s customers,” said Loop Capital analyst Andrew Wolf.

Source: The Christian Science Monitor

Steph Curry Is Betting This New Grocery Store Concept Will Be A Slam Dunk

The online grocer carries non-brand name products that it sells direct-to-consumers, including everything from condiments to cleaning supplies, Fortune reports. Brandless aims to appeal to more socially conscious consumers by offering cheaper and more eco-friendly products. The company sells more than 250 products, all of which are listed for $3 apiece.

All food products are organic, and health and beauty products are not tested on animals.  Investors in the latest fundraiser include big name celebrities like Curry, author and philanthropist Jessica Seinfeld, Weight Watchers CEO Mindy Grossman and bareMinerals founder Leslie Blodgett, Fortune reports.


Amazon buying Whole Foods was the best thing that ever happened to Instacart

Grocery stores had been keeping a wary eye on Amazon. When word came in June that the e-commerce giant was buying Whole Foods for $13.7 billion, big grocery chains scrambled for a response. They found one in startups like Instacart.

The San Francisco-based delivery service has long positioned itself as the “de facto ally of American grocers against Amazon” as Alison Griswold wrote for Quartz. By hiring shoppers to pick out and deliver orders from existing supermarkets, the $3.4-billion startup founded in 2012 gives on-demand service to decidedly low-tech grocers.

That was a much tougher sell before Whole Foods was bought, says Instacart CEO Apoorva Mehta. “The day of the Amazon announcement, my phone was ringing of the hook,” he tells Quartz. Instead of pilots and multi-year roll-outs, Mehta says retailers were calling to launch immediately in as many stores as possible. Everyone in the space needs a delivery solution,” he says.

The “Amazon Effect” is accelerating the move to online shopping across retail. It will likely claim many victims that fail to compete. But among the beneficiaries are grocery-delivery startups like Instacart and Shipt, which Target has agreed to purchase for $550 million.

Shipt says it has seen orders jump 60% since June and is expanding from 30 to 70 markets by the end of the year. Instacart is also on a tear. It says its partnerships have soared from 30 to 165 retailers in the past year. Many have come since Amazon’s Whole Foods announcement this summer.

Instacart now serves 52% of all US households (66 million) through retailers such as Food Lion, Publix, Target, Costco, Wegmans, Aldi and Whole Foods. By 2018, the company says it aims to reach 80%.

Instacart still has a tricky path ahead. Its exclusive delivery deal with Whole Foods may not last, given the competing AmazonFresh service. (Amazon now owns a small stake in Instacart, estimated at $36 million, from its Whole Foods acquisition.) Meanwhile, Instacart is racing to make itself look more like Amazon Prime. Instacart Express, which waives delivery fees, accounts for more than 50% all orders, says Mehta, and it’s growing.

Source: Quartz

France’s War on Waste Makes It Most Food Sustainable Country

A war on food waste in France, where supermarkets are banned from throwing away unsold food and restaurants must provide doggy bags when asked, has helped it secure the top spot in a ranking of countries by their food sustainability.

Japan, Germany, Spain and Sweden rounded out the top five in an index published the Economist Intelligence Unit (EIU), which graded 34 nations based on food waste, environment-friendly agriculture and quality nutrition.

It is “unethical and immoral” to waste resources when hundreds of millions go hungry across the world, Vytenis Andriukaitis, EU Commissioner for Health and Food Safety, said at the launch of the Food Sustainability Index 2017 on Tuesday.

“We are all responsible, every person and every country,” he said in the Italian city of Milan, according to a statement.

One third of all food produced worldwide, 1.3 billion tons per year, is wasted, according to the U.N.’s Food and Agriculture Organization.

Food releases planet-warming gases as it decomposes in landfills. The food the world wastes accounts for more greenhouse gas emissions than any country except for China and the United States.

“What is really important is the vision and importance of [food sustainability] in these governments’ agendas and policies,” Irene Mia, global editorial director at the EIU, told Reuters. “It’s something that is moving up in governments’ agendas across the world.”

Global hunger levels rose last year for the first time in more than a decade, with 815 million people, more than one in 10 on the planet, going hungry.

France was the first country to introduce specific food waste legislation and loses only 1.8 percent of its total food production each year. It plans to cut this in half by 2025.

“France has taken some important and welcome steps forward including forcing supermarkets to stop throwing away perfectly edible food,” said Meadhbh Bolger, a campaigner at Friends of the Earth Europe. “This needs to be matched at the European level with a EU-wide binding food waste reduction target.”

High-income countries performed better in the index, but the United States lagged in 21st place, dragged down by poor management of soil and fertilizer in agriculture, and excess consumption of meat, sugar and saturated fats, the study said.

The United Arab Emirates, despite having the highest income per head of the 34 countries, was ranked last, reflecting high food waste of almost 1,000 kilos per person per year, rising obesity and an agriculture sector dependent on depleting water resources, it said.

Source: VOA News

Grocery Disruptor of the Year: Hy-Vee

In a notoriously conservative industry, Hy-Vee has been a standout for experimenting with its retail store model and for trying out-of-the-box approaches to attract more business.

This year, the company unveiled some fresh new store concepts, including a hybrid grocery-convenience format called Fast & Fresh that will feature 10,000 square feet of fresh foods, groceries and a Market Grille Express. The company is also building a store that distills Hy-Vee’s focus on health. It features a medical clinic, a health market and — naturally — a gym.

Hy-Vee executives have said they’re looking to redefine the company’s role as a traditional retailer. But crafting a compelling store experience is also a big part of the equation. In February, the company opened an upscale urban concept store called Fourth & Court. The format, which seeks to attract food-focused millennials living in downtown Des Moines, features an array of offerings not typically found in a traditional grocery store, including international food stations, craft beer bar and an old-fashioned soda fountain.

Meanwhile, Hy-Vee continues to expand and evolve its Market Grille restaurants, which now appear in close to half of all stores. The locations’ sophisticated fare includes double-cut pork chops and blackened fish tacos served along with $2 pints, 20 tap handles and an extensive wine collection.

“If you look at experiences as a driving factor of differentiation, Hy-Vee has been leading the charge in creating an experiential shopping environment in a way that few other retailers have figured out how to compete with,” Diana Sheehan, director of retail insights with Kantar Retail, told Food Dive.

A few unique partnerships further burnish Hy-Vee’s identity as much more than a typical grocer. This summer, the retailer announced it will build and operate 26 Wahlburgers restaurants, becoming the largest franchisee of the burger chain founded by actor/producer Mark Wahlburg and his brothers. Wahlburgers food items are also being added to in-store Market Grille menus.

The Midwestern chain retains a stronghold in its home state of Iowa, and has a solid presence in seven surrounding states. It’s expanding in Minnesota’s Twin Cities, where it’s stealing away market share from established players like Supervalu’s Cub Foods, and now has eight stores in the market.

“Hy-Vee has been very strategic in expanding their penetration through entering new markets,” Sheehan said. “You hear a lot about Wegmans pushing into the Carolinas and Publix pushing northward. Hy-Vee expanded into the Minneapolis market in the last 18 months or so and they really didn’t get much buzz. Yet they entered with some amazingly beautiful stores that have come in and changed the dynamics in a market where Lunds & Byerlys and the smaller Kowalski’s do a very good job.”

Looking to the future, Hy-Vee sees its ecommerce as a growth-driver that can extend its market reach and draw in new shoppers. The retailer said this spring it planned a dedicated fulfillment facility for its Aisles Online program, and recently announced it will build three more.

While many grocers are saving money by using their stores to fill online orders, Hy-Vee’s use of fulfillment centers promises faster, more efficient way to pick, pack and deliver products.

“It’s one of the few strong regional players that have e-commerce at every single store,” said Sheehan.

Hy-Vee’s many moves point to a retailer that’s aggressively pursuing consumer trends around fresh foods, health and wellness, convenience, unique experiences and a growing demand for online shopping — opportunities many grocers recognize, but few are willing to invest in to the degree Hy-Vee has.

“There is a changing landscape in the retail industry,” Randy Edeker, Hy-Vee’s CEO and president, said in a statement earlier this year. “Hy-Vee has a responsibility to our customers, employees and communities to look for new ways to strengthen our company. With this type of progressive action, Hy-Vee is well positioned for future growth.”

Looking Forward

With expansions to its Aisles Online program and new fulfillment centers being built, the retailer is likely to continue to stay ahead of the curve in terms of serving its shopping community.

Source: Food Dive