US MARKET TRENDS: RETAIL VISIONS FOR THE FUTURE 2020+

RETAIL VISIONS FOR THE FUTURE 2020+

Success in tomorrow’s world will depend on how well you adapt and take advantage of change. As big data increases, understanding consumers’ needs and dreams will become a key challenge.

Meaningful Brand PerformanceThe Meaningful Brand Index found that currently only 20% of brands have a notable positive impact on our wellbeing and quality of life and most people wouldn’t care if 70% of brands disappeared – so it’s clearly time to rethink business models and business values. To deliver Meaningful Brand Performance – true value in all areas of life – we must connect and engage with our consumers. For far too long we have banked on left-brain thinking only.

Everything is interconnectedIt’s time to offer Left & Right brain values to shape a positive future vision. This is Multidimensional Thinking – my method for mapping out trends. Our Food Retail Trend Atlas 2020+ visualises the future by exploring Scientific, Social, Emotional and Spiritual dimensions. It provides a visual framework of insights – enabling us to see global and local challenges and opportunities. While the 8 key trends for tomorrow’s retail sector below are described individually, they are all, in fact, interconnected.

Technology EnablersTOTAL TRANSPARENCY becomes essential in a reputation economy, where companies have to work harder to be noticed and trusted. To be an Authentic Organisation, your brand promise and consumer experience must be totally aligned with your performance. CLOUD SERVICES, in which agility and scalability rule, inspire new business and collaborative approaches based around dialogue. With over 50 billion devices connected to the ‘Internet of Things’ by 2020, there will be rich opportunities to reach a much larger consumer audience and understand how they live.

Consumer ConnectivityMULTI-CHANNEL PLATFORMS enable seamless transitions and self-defined boundaries in all areas of life, while Smart Technology empowers and shapes lifestyle choices. Last year, more than 60% of Turkey’s population searched for products online. Clearly, companies must move to a user-centred approach – be where people are – and adapt brand messages to multiple devices. Culturally open and mobile GLOBAL CITIZENS are ‘digital native’ market influencers setting new standards in all areas of life. Turkey looks set to be rich in this talent – in the 2050s your population’s median age will be 40 and IMF predicts Turkey will become 7^th largest global economy from 2030.

Planet Focus Foster TrustTHE REAL THING requires companies to deliver Cultural Capital and ‘real’ brand experiences that foster trust and enable communities to flourish People want to know and feel exactly why they should engage with you. A BETTER WORLD is what we all want and business, not government, must drive a sustainable future because people will engage with companies and brands that are making a positive difference.

Purpose DriversINTELLIGENT HEALTH options must be inbuilt because over consumption has sparked a focus on ‘Well-Being Economics’ and is already informing our choices – it’s about better, not more of the same. Ultimately, all these trends feed into our desire for THE GOOD LIFE – in which we question conventional measures of success and consider how to achieve a happier society. We already know happiness makes sound business sense – statistics show happy people are engaged, focused and up to 50% more productive.

Meaningful Retail ExperiencesThese 8 trends clearly show that delivering meaningful retail experiences is essential. In the future, the physical retail store will not be the core customer universe so businesses must evolve to reach out to their audience. From a rational perspective, people expect convenience & dialogue; from an emotional perspective, they seek community & engagement. In order to deliver this true brand engagement, businesses must also embrace the ‘4P’ approach that considers People, Planet, Purpose and then Profit.

The Core Consumer TypologiesWe have defined four core consumer typologies that should be targeted to succeed in tomorrow’s retail environment. High achieving and aspirational PREMIUM PROFESSIONALS expect mobility, convenience and multi-channel tools to manage their lives. Creative and adventurous HAPPY BOHEMES prefer ‘we’ time over ‘me’ time and look for networks and affinity groups. Authenticity-loving CULTURAL EXPLORERS are pro-active and informed and seek out ethical ‘Better World’ initiatives. Mindful WELLBEING HUNTERS prefer ‘me’ time and, in their individual quest for meaning, they embrace transparency and intelligent reduction

Creating Value in the FutureBrilliant business models are never anonymous, but reach out to the local communities they serve in order to fulfill the real needs of people. Winners of the future will be the business and organisations that are agile enough to adapt the ‘4Ps’ to deliver sustainable, social, emotional and economic value.

IMAGE SOURCES
1) The People’s Supermarket  - Kjaer Global 2013
2) Food Retail Trend Atlas 2020+
3) Tesco Home Plus
4) Whole Foods Store
5) School of Life6) Retail Experiences 2020+

TALK
Anne Lise Kjaer at the Local Retail Chains Conference in Istanbul 04_2013

MARKET UPDATE: Tea consolidates a decade of gains, is ready for more

Tea consolidates a decade of gains, is ready for more

Tea is poised to expand after a flat 2013, thanks to new blends and a probable popularity upswing among younger consumers.

The year 2014 could be breakout for teas - due to product innovation, display space opening in supermarkets, more evidence of health benefits, and a major expansion and marketing push of Teavana tea bars by Starbucks that could add cachet.

Expect tea to be more visible on supermarket shelves this year – as a food ingredient as well as a beverage.  Already used in ice creams and baked goods, tea should soon be integrated in main dishes and cocktails.  U.S. consumers could well adopt and personalize this trend while cooking at home: they could use tea to smoke fish or poultry, make syrups or soak dried fruit,suggests the BBC, which posts more than 1,000 recipes for meals, snacks, deserts and drinks with tea on its website.

Also, the emergence of vegetable teas could create a new supermarket category.  Their wholesome ingredients retain the wellness aspect of tea, and their new flavor blends and consistency could lead to new eating occasions with meals, snacks or on their own.  Supermarket buyers thirsty for what’s next in the beverage aisle in lieu of carbonated soft drinks now have vegetable teas to display in CSD’s vacated space, as well as in the permanent tea and soup areas. 

More innovation: other tea brands include bits of fruit or chocolate within tea bags.

If tea becomes hip among Millennials partly because of the Teavana push, that could provide a nice tailwind for tea sales for at-home consumption.  Forbes reported that Starbucks expects to open 1,000 Teavana tea bars to its current roster of about 300 over the next five years.  Teavana until now has sold loose-leaf tea and tea-related merchandise, but the serving of $4.95 hot cups of tea plus food is already underway.  

F3 thinks a slow rollout of Teavana is the right call for now, since tea varieties are infinitely broader than coffee varieties, and the chain is bound to encounter operational challenges in satisfying customers.  A couple of refinements already evident, according to Fast Company:  customers order their tea beverages first before they see food displays.  And redesigned cups and lids (vs. the Starbucks coffee cup) enhance the tea drinking experience. 

Most of the tea consumed today is ready-to-drink iced tea – 85%, says the Tea Association of the U.S.A. - designed to appeal to younger consumers.  Ready-to-drink volume has grown 15-fold over the past decade to top $4.8 billion in 2012 and continue the trend in 2013.  

The trade group’s latest figures also show:

• On any given day, 158 million Americans drink tea – about 79 billion servings in the course of a year.
• Nearly two-thirds of brewed tea in the U.S. is prepared using tea bags.
• Loose tea is growing in popularity; instant tea is declining.
• Total tea sales have grown 16% over the past five years. In supermarkets alone, dollar sales have exceeded $2.25 billion.

According to Nielsen, tea dollar sales in all outlets combined (including convenience stores) for the 52 weeks ended November 23, 2013 rose 0.7% to $5.74 billion, on a 0.5% unit decline.  These figures are for prepackaged, UPC-coded products only.

Check out my new e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain"

The book is available on Amazon and Kindle for $4.99 USD. Visit amazon/Kindle to order now:
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RETAIL MARKET UPDATE: Will Amazon take over the supermarket?

Will Amazon take over the supermarket?

With AmazonFresh, the online seller of basically everything wants to revolutionize the grocery business

By Ron Margulis  |  January 11, 2014

Many of us born in the 1960s or before remember getting milk delivered to our homes twice a week. Even my family, owners of a group of supermarkets, used this service.

Gradually, however, shoppers began buying milk, eggs and other dairy from grocery stores, and the milkman began delivering to fewer homes.

At some point, perhaps when only 40% of a neighbourhood was buying from the milkman, it was no longer economically feasible for the dairy industry to continue this service.

Now think of this story in reverse. As more people buy groceries online, the economics of the model become feasible, especially in cities and suburbs. All of this is a long way to say that home delivery may now be more than just a solution looking for a problem.

This is what Amazon.com’s home-delivery grocery service, AmazonFresh, is counting on.

Amazon.com launched AmazonFresh, six years ago, in Mercer Island, a city of around 24,000 near the company’s headquarters, in Seattle. The service has since expanded to other areas of northwest Washington.

More recently, AmazonFresh arrived in Los Angeles, and it is rumoured the service will be in 20 markets next year, including, possibly, Vancouver.

In Canada, Amazon has sold books and more for years. But now the company appears keen to enter the grocery game.

Last month, Amazon.ca/grocery launched. The service delivers dry foods and beverages, but no fresh or frozen. Some 15,000 products are available, and Amazon promises two-day delivery.

But shipping parcels of coffee pods or cereal boxes is not the same as delivering milk, meat and celery to homes in person. That’s why AmazonFresh is a potential game-changer: the world’s largest and most sophisticated e-tailer going head-to- head with supermarkets for the weekly grocery shop.

To hear company officials explain it, Amazon is getting into groceries simply because consumers asked for it.

“We heard from our customers that there is a desire to shop for fresh food online. Testing AmazonFresh in Seattle and expanding into Los Angeles has given us the opportunity to be very thoughtful about our entry into the online grocery business,” says Amazon.com public relations spokesperson Katie McFadzean.

Experts suggest a different motive. AmazonFresh, they surmise, is a way for Amazon to connect with millions of shoppers more often.

Simply put, people buy food once or more a week. If they get used to buying groceries from Amazon, they might order higher-margin DVDs and e-readers, toys, housewares, video games and even bedding as well. In other words, grocery could allow Amazon to control a bigger portion of trips and sales across all of retail.

That’s in the future, of course. For now, AmazonFresh sells 10,000 grocery products along with a smattering of regular Amazon.com items in just Seattle and L.A. Consumers can either get their orders the same or the next day, depending on truck availability.

Recent reports give context to the rollout of AmazonFresh and its potential impact. RetailNet Group, a consulting firm based in Waltham, Mass., estimates AmazonFresh had US$66 million in sales in 2012, which is little more than a rounding error in the US$10 billion Seattle–Tacoma grocery market.

AmazonFresh isn’t even the largest delivery online grocer in the U.S. Peapod, a subsidiary of Dutch giant Ahold, sold $525 million worth of groceries in 2012 across seven states and the District of Columbia, according to RetailNet Group. Fresh Direct sold $407 million in New York City and Philadelphia, while Safeway’s e-commerce business sold $196 million.

But Amazon is investing in its grocery future. It has pumped more than US$100 million in a temperature-controlled delivery fleet and a specialized facility to store approximately 15,000 frozen, chilled and shelf-stable grocery SKUs.

RetailNet Group expects AmazonFresh to expand aggressively. It points to the company’s capital investments in its logistics network over the last 24 months. The firm also notes that in negotiations with vendors, Amazon is claiming the delivery service could roll out to as many as 40 American markets by the end of 2014.

One shocking advantage AmazonFresh has over rival grocers is that it doesn’t need to make money selling food.

Tom Furphy, former vice-president of AmazonFresh and consumables at Amazon, says his former employer already has many profitable revenue streams, so there’s little pressure to make a profit on new retail lines.

Amazon is able “to enter new businesses and price competitively, and can absorb losses thanks to these other profitable revenue streams,” says Furphy, now CEO of Consumer Equity Partners.

“They certainly don’t want to make a long-term commitment to a business in which they cannot make money. But they can afford to absorb losses while they perfect the model,” he explains.

All of this leads to the question of how grocers are responding to the launch of AmazonFresh, and what tactics can be deployed to compete with the service. While technology is critical, industry observers say it’s more important to meet the specific needs of the shopper.

One grocery executive in the Seattle area said his chain has been impacted more by Costco than Amazon. To retain customers from both rivals, he uses a marketing approach that includes a focus on fresh and prepared items, weekly flyers, store brands and a loyalty card.

The executive, who asked not to be identified because of competitive issues, says his private-label brand and prepared foods in particular help his stores present a clear difference to grocery shoppers.

Over the long run, AmazonFresh will expand and likely gain some consumer following. But dominance may prove elusive. As the Seattle market has shown, merely being “Amazon” is not enough to attract double-digit market share in grocery.

Nor is selling books online anywhere near as complex as selling pork loin. Amazon can beat up on Indigo and Best Buy because it doesn’t have to pay costly store rents and salaries.

Delivering food door-to-door, on the other hand, is labour intensive. It remains to be seen whether same- or even next- day grocery delivery can be made more efficient, and therefore cheaper, than more traditional supermarket models.

In Canada so far, Amazon’s grocery prices aren’t sending shoppers scrambling to the Internet. In early November, Amazon.ca was advertising a 400-gram box of Kellogg’s Vector cereal for $5.39. That was 90 cents cheaper than Toronto’s entrenched online grocer, Grocery Gateway. But it was $1.40 higher than Shoppers Drug Mart, which had a sale on Vector.

If and when online grocery shopping takes off, AmazonFresh will surely face stiff competition. In Canada, that’ll come from the Big Three grocers plus Walmart, which have considerable clout with suppliers as well as store fleets that could become pickup points should European-style click-and-collect grocery shopping emerge.

“Food retailers with an omni-channel presence will present a challenge to those like Amazon. So much so that I expect Amazon to consider bricks-and-mortar outlets along the lines of the Apple Store,” says Richard George, professor of food marketing at the Haub School of Business at Saint Joseph’s University in Philadelphia.

AmazonFresh may not be the bogeymen some analysts make it out to be. But it does have the backing of one of the world’s largest retailers, and so it can’t be written off.

Traditional grocers are advised to increase their engagement with shoppers and make shopping more customer-rather than product-focused. The difference is subtle, but important, and it could result in bolder supermarket experiences that keep customers coming into stores, rather than buying online.

George envisions a supermarket with “its current perimeter expanded and romanticized, similar to European street markets, with stalls of delicious fresh fruit and vegetables, with gourmet cheeses, artisan breads, fresh flowers, as well as today’s lunch or tonight’s dinner.”

Stores would also have drive-thrus in which pre-ordered groceries would be loaded into cars. That could prove a winning formula for existing supermarkets as AmazonFresh begins its march across cities.

Retired milkmen everywhere will be watching

Check out my new e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain"

The book is available on Amazon and Kindle for $4.99 USD. Visit amazon/Kindle to order now:
http://www.amazon.ca/Social-Media-Marketing-Agri-Foods-ebook/dp/B00C42OB3E/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1364756966&sr=1-1

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RETAIL MARKETING: The importance of developing a planogram

RETAIL MARKETING

Marenos Papadopoulos

BETTER INSIGHTS. BETTER BUSINESS.

• How to deal with the influx of data
• Ways to implement shopper insights successfully
• Shopper Insights: Moving beyond what to understand why

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The importance of developing a planogram

A good planogram process involves working with stakeholders to ensure stores can execute them

Marenos Papadopoulos  |  January 02, 2014

So often is the case when meeting with a new or potential client and we start talking about their current merchandising and more specifically their planogram process do I hear ‘we have a great process already in place’…’we’re all about process’…or on the flipside ‘we struggle to establish a consistent process’…’we’re always reactive and not proactive’…’our store execution & compliance rates are sub-par’…

Understanding all the moving parts involved in a full merchandising process – from pre-analysis to store execution and compliance – is key.

Who is involved?  Who should be involved?  How should they be involved?  When should they be involved?

To help answer these questions you must first understand what’s happening today:  what’s working & what’s not, identify the pain points, bottlenecks, time-consuming manual steps that are necessary but take forever to perform and bog down the process drivers preventing them from focusing on the real goal which is to get stores to execute.

It is important to develop a planogram process road map.

An example would be to breakdown your process into the following areas and then work with key stakeholders to flush out the details and requirements specific to the organization: analyze, kickoff, build, approve, integrity, execute.

Analyze: conduct a category review (assortment decisions, new innovation and overall strategy), as well as a planogram review (item efficiency, space to sales allotment, gap analysis, version/planogram size review, market or regional input).

Kickoff: meet with all stakeholders to finalize assortment, gain alignment on strategy/direction/blocking, fixture requirements, ensure vendor innovation is aligned to planogram release schedule.

Build: draft full assortment planogram (either largest or most common size variation) adhering to established gold standards (for example: days on hand, control label placement, item efficiency, blocking), lab or test store setup to ensure correct fit, build remaining variations, capture missing images, listing for new innovation.

Approve: gain approval from stakeholders.

Integrity: store authorizations are complete for items, fixture arrangements made if applicable, inventory ordered into DCs/confirmed with DSD supplier, markdowns processed for discontinued items, finalize communication, confirm store footage assignments for web distribution.

Execute: ship new item inventory to stores, ensure distribution centres have adequate fill inventory for sku penetration increases, planogram delivery to stores, store execution completed, store compliance review.

Put simply, stores won’t or can’t execute if the planogram they’ve been issued has issues (items don’t scan, products or fixture elements don’t fit, there’s no inventory, labor hours to implement were underestimated).

All these components need to be addressed during the process prior to releasing to the stores.  The stores need to know that when they receive a new planogram there will be no barriers to execution – they need the confidence that head office has dotted all the I’s and crossed all the T’s.

Check out my new e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain"

The book is available on Amazon and Kindle for $4.99 USD. Visit amazon/Kindle to order now:
http://www.amazon.ca/Social-Media-Marketing-Agri-Foods-ebook/dp/B00C42OB3E/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1364756966&sr=1-1

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MARKET UPDATE: Stevia, soda pop and that aftertaste

Stevia, soda pop and that aftertaste

An interview with Paddy Spence, CEO of stevia beverage maker Zevia

By Candice Choi/Associated Press  |  January 09, 2014

Can natural sweeteners that taste good rescue diet sodas from their decline?

We all know that consumers have been cutting back on soda for years in part because of fears over weight gain. But the pullback on diet soda is a relatively newer phenomenon.

Big soda makers Coke and Pepsi blame the slowdown on people’s concerns over the safety of artificial sweeteners that are used in diet soda. The two beverage makers say they’re working on creating sodas that use natural sweeteners, but it’s difficult to create a diet soda using natural sweeteners, which can leave a bitter aftertaste.

Zevia, a small Los Angeles-based company whose products are sold in Canada, already makes zero-calorie sodas sweetened primarily with stevia, which is derived from a South American plant.

Zevia, which was founded in 2007, says it’s now distributed in 42 per cent of conventional supermarkets like Kroger and Safeway and Loblaws, as well as specialty chains such as Whole Foods. The privately held company would not say if it’s yet profitable.

We spoke to Zevia CEO Paddy Spence about the soda industry:

Coca-Cola is testing a drink called Coca-Cola Life that’s sweetened with a mix of stevia and sugar in Argentina. How would that impact Zevia if it came here?

I think it’s great in terms of validating stevia as a sweetener. But what they appear to be aiming at is a mid-calorie solution. When you think about it from a consumer standpoint, who are you attracting with that? The zero-calorie person wants no part of something that’s 60 or 80 calories. The full-sugar person may gravitate toward that, but you’re really just cannibalizing your sales.

Part of the reason they’re doing a mid-calorie version is the strong aftertaste of stevia–the sugar offsets that. Isn’t taste an issue for Zevia?

Absolutely. It’s just like when I was a kid and I tried Tab for the first time and I said, “This is not Classic Coke.” I think that’s true with any zero-calorie product. In a blind taste test, no one is going to prefer Diet Coke over Classic Coke. A zero-calorie product by its nature is going to have a different taste. But what we’ve been trying to do is narrow the gap. And I think with the new iteration on the sweetener system, we’ve really cracked the code.

You recently started using some monk fruit as well as stevia in Zevia. How many times have you tweaked the sweetener formula?

A: It’s been several. Our flavourists are getting more experienced in understanding how to use stevia–what flavour notes work well, which don’t. There’s a lot of art as well as science.

One concern in the industry is that people are cutting back on soda, even if they’re not quitting it altogether. Are there people who drink several cans of Zevia a day?

Our customers don’t perceive a consumption ceiling. It’s a guilt-free option. It’s very easy for people to consume a lot of our product. Our heavy users account for a huge portion of our sales. The top third of our consumers are spending over $200 a year on Zevia.

How many cans a day does that translate to?

If you were to buy it at the most expensive retail price, that would be on average a can every other day. But that’s for the top third of our consumers.

People have so many different beverage choices now–sparking and flavoured waters, etc. Is there even a demand at this point for a naturally sweetened diet soda?

Tap water has been a dominant beverage for hundreds of years. From a health perspective it’s the ultimate solution. Yet people crave sweet drinks. That’s just the bottom line. I don’t see Americans or global consumers getting away from soda quite frankly.

What’s the difference between a soda and a flavoured, sparkling water that’s sweetened?

The dirty secret is that there is no difference. There’s going to come a time when the consumer is going to wake up and realize that

Check out my new e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain"

The book is available on Amazon and Kindle for $4.99 USD. Visit amazon/Kindle to order now:
http://www.amazon.ca/Social-Media-Marketing-Agri-Foods-ebook/dp/B00C42OB3E/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1364756966&sr=1-1

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MARKET UPDATE: Cut prices by one per cent, Sobeys tells suppliers

Cut prices by one per cent, Sobeys tells suppliers

After closing Safeway deal, Sobeys won't accept any price increases this year

By Canadian Grocer staff  |  January 09, 2014

Just months after taking over Canada Safeway in Western Canada, Sobeys is demanding its suppliers take one per cent off all of their prices.

In a letter sent to suppliers before the new year, Canada’s second largest grocery chain said it also wouldn’t take any price increases from suppliers, except some pharmaceuticals, during 2014.

READ: Sobeys unveils its latest store with food discovery and more

The letter came from Dale MacDonald, Sobeys’ senior vice-president of category management and national procurement. A copy was obtained by the Globe and Mail, which reported thestory this morning.

“To support growing sales and to improve our internal productivity, we expect to fully leverage our new consolidated scale,” MacDonald wrote.

The price cut is retroactive to Nov. 3.

Analysts expected that upon hearing of Sobeys’ demands, other retailers would follow suit and also demand suppliers shave their prices.

With retail food inflation stubbornly low over the past year, food retailers and manufacturers have found it difficult to grow sales and increase margins.

READ: Food price increases will be low in 2014, says report

Food prices at retail grew just 1.2 per cent last year, according to estimates from the University of Guelph. Prices could rise as little as 0.3% this year, according to the university’s annual Food Price Index report.

Among the reasons for low food inflation is the hotly competitive grocery environment where too many stores are chasing too few customers.

“The landscape in Canada has become very, very competitive,” Dr. Sylvain Charlebois, lead author of the report, told Canadian Grocer last month.

Check out my new e-book entitled: "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain"

The book is available on Amazon and Kindle for $4.99 USD. Visit amazon/Kindle to order now:
http://www.amazon.ca/Social-Media-Marketing-Agri-Foods-ebook/dp/B00C42OB3E/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1364756966&sr=1-1

Thanks for taking the time