Let's face it. For some time now it's been a grocery buyer's market.
Shoppers won't jump as quickly at a buy-one, get-one-free offer when they can buy-one, get-two free (currently the case at Big Y) down the street.
But wooing today's shopper isn't simply about price-based one-upmanship. As they look ahead to 2010, retailers are also seeking new means for differentiation.
Take a look at the strategies outlined in the following pages.
Just when you thought retailers exhausted all original ideas for new corporate-brand lines, Meijer has come out with a premium offering that highlights the story behind the product. Similar strategies have at least one expert deeming products with pedigree the new “local.”
Now that supermarkets have a larger stake in the private-label game, many are also moving to mitigate food safety risks by either mandating or encouraging suppliers to achieve factory audit certification against one of the Global Food Safety Initiative's recognized standards.
Meanwhile, a focus on convenience is demonstrated by those who seek original ways to reach consumers as they shop via their constant companion — the mobile device.
The Web is also a vehicle for educating shoppers about wine while they taste at home. Programs like these are proving to be invaluable in states like Michigan that restrict tastings in-store.
Offerings are also set apart not just through reduced prices, but by the promise of a little something extra. In some cases retailers are combining price reductions with added value in the form of a charitable donation.
INITIATIVE 1:
Highlight a Product's Pedigree
IF ITEMS in the new Meijer Gold line could talk, each would say a mouthful.
That's because to even be considered for the Grand Rapids, Mich.-based retailer's brand, foods have to be the product of an original recipe that stems from local roots, family tradition or for a food endemic to a particular region.
The one-of-a-kind delicacies include Champagne Dill Mustard prepared from an old German recipe by a Midwest company; Grilled Pineapple Chipotle Salsa made by an acclaimed family-owned Southern California producer; and a sparkling lemonade that comes from an original family recipe in France.
By presenting these unexpected, yet affordable discoveries under a single private-brand line, Meijer is writing itself into the story, noted Marcia Mogelonsky, senior research analyst at Mintel, Chicago.
“It seems less industrialized and dispassionate and gives them more of a person-to-person feel,” she said.
Pedigree is the new local, according to Mogelonsky, and in order to be appreciated by shoppers, history and heritage don't necessarily have to be linked to a company located nearby. Retailers can capitalize on the trend with products distributed nationally as long as they've got an interesting tale to tell.
“These back stories make you feel you're getting a genuine product that has some guarantee that it will taste good,” she said.
Indeed, when presented with relatable stories of time-honored family recipes, consumers often infer that production is done in limited quantities, as if homemade with natural ingredients.
Among those making this impression on shoppers is an Israeli-brand called Elsa's Story, Mogelonsky said.
Each package of Elsa's cookies, crackers and strudel features a black-and-white '40s-esque photo of real-life baker Elsa and her family, designed to “send you back to a time and place when you were young and carefree,” according to elsastory.com. “It's about a memory, a hint of nostalgia captured in the scents and tastes of warm cookies baking in the oven.”
The company is so interested with painting a picture of Elsa in the kitchen for shoppers, that it's taken a high-tech approach to get back to basics — one that combines “highly sophisticated techniques of dough processing, laminating and molding to imitate manual work,” according to the company.
— Julie Gallagher
INITIATIVE 2:
Private-Label Quality Assurance
IN AN ATTEMPT to ensure the integrity of the food supply chain, leading retailers are holding their store-brand suppliers more accountable for quality assurance.
One of the key ways they are doing so is by embracing the Global Food Safety Initiative. Formed in 2000 and coordinated by the Consumer Goods Forum, the GFSI is an international effort that requires food suppliers to achieve factory audit certification against one of its recognized standards, which are said to go beyond food safety requirements established by the Food and Drug Administration or U.S. Department of Agriculture.
To get GFSI's endorsement, suppliers must receive factory audit certification in one of several of its approved food safety standards, including the Safe Quality Food (SQF2000) standard, British Retail Consortium (BRC) and International Food Standard (IFS).
Wal-Mart Stores, Bentonville, Ark., now requires suppliers of its private label and other food products such as produce, meat, fish, poultry and ready-to-eat foods to have their factories certified against one of the GFSI standards.
Likewise, Rochester, N.Y.-based Wegmans Food Markets told its some 470 Wegmans-brand suppliers last year that they should work toward GFSI compliance within the year.
Wegmans expects that half of its store-brand food suppliers will be certified to a GFSI standard by the end of this year, up from 37% last month, and 17% last year.
Along with directing suppliers to become GFSI compliant, Wegmans is working to get SQF2000 certification for its two manufacturing facilities. They include the Central Bakeshop and the new $36 million Culinary Innovation Center.
The work toward GFSI compliance comes at a time when a series of food recalls and cases of foodborne illnesses have made consumers more skeptical about the safety of food they buy in supermarkets both nationally and abroad. Wegmans alone was affected by 42 recalls in 2007, 46 in 2008 and 77 so far this year.
Along with Wal-Mart and Wegmans, other companies involved in the GFSI effort include McDonald's, Danone, Tesco, Coca-Cola, Hormel Foods and Carrefour.
Gillian Kelleher, Wegmans' vice president of food safety and quality assurance, serves on the GFSI Technical Committee, as do representatives from Royal Ahold, H.E. Butt Grocery Co. and Costco.
— Carol Angrisani
INITIATIVE 3:
Dialing In to Mobile
WHEN IT COMES to cell phone technologies, Wakefern-owned ShopRite has its shoppers' number.
But that's because it's gone to great lengths to figure out how best to engage consumers via mobile device.
Its latest introduction is a free Apple iPhone and iTouch application called ShopRite Weekly Specials. Once downloaded, the MyWebGrocer-created app displays store-specific, real-time information about sale items that consumers can browse while they shop. A planning tool lets shoppers populate a shopping list.
While sales circulars from Stop & Shop, Publix, Giant Food and Winn-Dixie are featured on a ReachEverywhere iPhone app called Shopping Assistant, ShopRite Weekly Specials is the first to focus exclusively on a single retailer, MyWebGrocer founder and Chief Executive Officer Rich Tarrant told SN.
ShopRite took the unchartered route due to the popularity of the iPhone device.
“Everyone's got an iPhone these days,” noted ShopRite spokeswoman Elizabeth Loeb.
Based on early results, many also have the new ShopRite app.
Within a couple of days of its introduction, ShopRite hit its download goal, said Loeb, who declined to elaborate. Within that time frame ShopRite Weekly Specials also became the 35th most downloaded free app within Apple's lifestyle category.
“That's pretty impressive for a regional grocer,” said Loeb.
The app joins another cell phone technology new to ShopRite — Cellfire coupons.
The free service lets registered customers load coupons directly to their ShopRite Price Plus Club Card via their computer or Web-enabled phone. Cellfire offers available at shoprite.com include $1 off Huggies Diapers, 50 cents off one tub of Betty Crocker frosting and 50 cents off Progresso Broth.
The availability of Cellfire comes just months after ShopRite's four-week test of another cell phone technology in its Hillsborough, N.J. location in June.
Powered by Samplesaint, Chicago, the mobile technology allowed shoppers to select Unilever coupons via their Web-enabled device. A barcode representing the offer was then sent via text message to their phone and then scanned at the checkout.
Shoppers could also access savings in another way, by locating and texting a number featured below eligible items at the shelf's edge. A barcode was then texted back to them.
Although ShopRite was pleased with the pilot's results, it doesn't have definite plans to implement the system.
“It was a very successful program but it was only a test,” said Loeb. “For now, Cellfire is the way we've opted to go.”
— Julie Gallagher
INITIATIVE 4:
Online Wine Education
WHEN D&W shopper “Stacy” questioned which wine to serve with Mexican food, she didn't go to the store and ask a wine associate. Instead, she logged on to her computer last Tuesday and participated in a D&W-sponsored online wine forum.
“What wine goes best with jalapenos and spicy salsa?” Stacy asked the chat hosts: D&W wine specialist Roz Mayberry and Spartan Stores' beer, wine and spirits buyer Greg VanOverloop.
Mayberry suggested a sweet wine like a red or white zinfandel.
“Zins are grown in Baja, Mexico,” Mayberry added.
While online chats like these are common in the wine industry from vineyards, wine critics and specialty wine shops, supermarkets are now getting involved in an attempt to win the loyalty of wine shoppers — and the higher basket rings that accompany them. The chats offer a new way to reach shoppers in states where in-store tastings are restricted.
D&W recently kicked off monthly virtual wine tasting during the day and at night. For the nighttime events, participants are encouraged to purchase three featured wines at D&W's wine shops, and then log into the chat session to learn how to taste the wine.
Listeners are invited to discuss and share their impressions. Wine-positioning mats and tasting notes can be printed for free before class.
The Dec. 8 forum was a daytime chat, what D&W calls a “High Noon Wireside Chat.” Due to the time of day, there are no tastings during these chats, only conversation about various wine topics, including: “What to serve with Beaujolais Nouveau,” “Is Wine Really Good for You?” and “Post Holiday Economy Wines.”
The theme of last Tuesday's forum was “Wine for the Holidays.” Once participants registered for the event via a link on the D&W website, they were emailed log-in information. Twelve people joined.
Participants — who were identified by a number or, if they chose, their first name — had numerous questions about what wines to serve, how much wine to buy and which brands are best for certain parties and guest preferences.
“Paul” wanted to know how much wine to buy for a holiday party.
VanOverloop said that a good rule of thumb is one-half bottle per person for a walk-around party or three-quarters bottle per person for a sit-down dinner.
Another participant said he was meeting his girlfriend's parents for the first time and wanted to know which wine to bring as a gift.
Mayberry suggested a 92-point Chianti Classico that D&W carries in its stores.
“It's very impressive,” Mayberry stressed.
— Carol Angrisani
INITIATIVE 5:
Rewarding Good Behavior
THE SOCRATIC idea that “doing good is its own reward” can be lost on today's value-seeking consumer.
Rather than participate in cause marketing programs simply for the intrinsic benefits, many are seeking a tangible incentive or reward for doing good.
“Consumers expect value for participating in a cause program,” said Rich Maiore, vice president of cause branding for Boston-based consultancy Cone. “It's all about providing an incentive to get the customer to reach into their pocketbook.”
Just as retailers hope to gain a halo that sets their brand apart, consumers are hoping that marketers will make it worth their while to give.
At a time when shoppers take holiday markdowns for granted, Wakefern-owned ShopRite set itself apart by offering a charitable incentive for participants in its new Holiday Sharing Rewards program.
Shoppers who purchase the qualifying amount of eligible items in the same transaction will receive a Catalina checkout coupon to be used with their next order.
Each time a coupon is redeemed, ShopRite will donate $1 to its Partners in Caring Fund to help fight hunger. Now in its tenth year Partners in Caring provides $2 million annually to charities in seven states.
Offers range from a $3-off coupon earned when five participating Unilever items are purchased to $10 off when 15 General Mills products are bought. Items from Hershey's, Hormel, Kellogg's, Kraft, Nestlé and Pompeian also earn rewards.
This marks the first time that ShopRite has combined an offer of savings with charitable giving, spokeswoman Elizabeth Loeb told SN.
“It provides an easy way for people to give back,” she said. “They're getting something for themselves while they're giving to others.”
Hannaford Bros., Scarborough, Maine, is another retailer who's rewarding shoppers for their generosity via its Hannaford Helps Fight Hunger campaign.
A coupon book filled with $50 in savings is the reward for shoppers who either donate $5 to benefit local food banks or purchase a $10 box filled with food to be donated to a local food bank. Among the coupons is one for a free private-label product when a shopper purchases a national-brand counterpart.
Also part of the program is a “Buy 1, Give 1” component. It consists of shelf tags used to highlight eligible Hannaford-brand items and to indicate to shoppers that when one of these items is purchased another will be donated to a local food bank.
— Julie Gallagher
