Week of September 16, 2019

Target talks food strategy at Groceryshop

Target is becoming Target in food. That was the message Stephanie Lundquist, Target’s President of Food and Beverage shared Sunday evening in Las Vegas during a keynote address to kick off the second annual Groceryshop event.

What that means is Target plans to bring the same type of innovation and inspiration on which its corporate brand was built to a food and beverage business where the approach has been more functional. Lundquist described how Target has strengthened its core food retailing operations and supply chain, built a strong leadership team and revamped field operations. The company hired 10,000 employees with grocery background and dedicated those workers to food.

Why it matters

The focus paid off as Lundquist said the company grew its food and beverage comps for eight consecutive quarters and market share in seven consecutive quarters. Food and beverage now accounts for 20% of Target’s annual sales and is headed higher.

“Food and beverage is playing an outside role in our success,” Lundquist said.

The next major development in Target’s food and beverage business is the launch of the Good & Gather private brand which Lundquist said is the company’s largest ever.

“In building good and gather we knew we had to start with a blank slate,” Lundquist said, describing the more than 2,000 item product assortment that will replace existing brands Archer Farms, Simply Balanced and greatly reduce the Market Pantry brands.

“We are doing amazing things in food and beverage,” Lundquist said. “We have are an iconic brand breaking new ground in an important part of our business.”

A hometown grocer takes on Amazon in Seattle

An escalating battling is developing in West Seattle where locally popular grocery cooperative PCC Community Markets is doubling the size of an original store a week before Amazon-owned Whole Foods Market opens an even larger store nearby. It's a David versus Goliath food retailing battle where PCC may actually be the favorite and there are a lot of good reasons why.

PCC Community Markets new store in West Seattle opens Oct. 2, a week before Whole Foods Market opens a store nearby.

Stew Leonard's shows growth ambitions

Stew Leonard’s brings its unique brand of food retailing to New Jersey this week when it opens an 80,000-sq.-ft. store at the Paramus Park Mall in a space previously occupied by Sears. The store is only the seventh location for a company that has shown new interest in expansion the past four years. It’s sixth store, a 70,000-sq.-ft. location in East Meadow, Long Island, opened August 2017. Prior to that, a 60,000-sq.-ft. Stew Leonard’s opened in January 2016 in Farmingdale, Long Island. That’s a tremendous rate of growth for a company founded in 1969 that operated four locations (three in Connecticut and one in Yonkers, N.Y.) for most of its existence.

Why Stew Leonard's is legendary

An innovator of experiential retail and theatrical presentation, Stew Leonard’s unique value proposition stems from its limited assortment (2,200 items) and a focus on fresh categories which account for 80% of sales. Then there is the Ikea-like approach to merchandising where customers are channeled through the store. The concept works. Annual sales last year were more than $400 million and with the addition of a massive new store at one of the nation’s highest volume malls sales are likely to surpass $500 million next year.

The retailer is having fun with the opening and has invited New Jersey native Martha Stewart to attend. Known for its dairy offering, Stew Leonard’s plans to host a homecoming reception for Stewart and name a Jersey cow in her honor.

Kroger’s McMullen says, “wait ‘till November”

Kroger second quarter sales increase of 2.2% was a positive sign, but Wall Street didn’t get the answers it wanted from executives after the company pulled its long-term profit guidance. Chairman and CEO Rodney McMullen and CFO Gary Millerchip confirmed the company’s full year forecast then injected uncertainty into the longer term outlook by not reconfirming earlier guidance provided when the Restock Kroger plan was introduced in the fall of 2017. That three year plan called for a $400 million incremental increase in operating profit.

As analysts pressed McMullin and Millerchip for insight into the guidance suspension, they were repeatedly told stay tuned as the company has an investor meeting in New York scheduled for Nov. 5.

“November 5th is the appropriate forum to be deliberate and to allow the experts on our team to spend the proper amount of time with our financial stakeholders to explain how we are thinking about Kroger's business model and how to measure the shareholder value created by Restock Kroger,” McMullin said during the earnings call.

Stew Leonard’s brings its unique brand of food retailing to New Jersey this week when it opens an 80,000-sq.-ft. store at the Paramus Park Mall in a space previously occupied by Sears. The store is only the seventh location for a company that has shown new interest in expansion the past four years. It’s sixth store, a 70,000-sq.-ft. location in East Meadow, Long Island, opened August 2017. Prior to that, a 60,000-sq.-ft. Stew Leonard’s opened in January 2016 in Farmingdale, Long Island. That’s a tremendous rate of growth for a company founded in 1969 that operated four locations (three in Connecticut and one in Yonkers, N.Y.) for much of its existence.

Now Hiring: the job function all retailers need

The most significant executive move in the retail industry went largely unnoticed at Walmart last week. The company appointed its first chief counsel of digital citizenship. Filling the position is Nuala O’Connor, a former Amazon, General Electric and U.S. Department of Homeland Security executive who most recently served as CEO of the Center for Democracy and Technology, an advocacy organization focused on the digital rights of individuals.

Walmart’s need for an executive with O’Connor’s experience and perspective highlights the complex issues facing retailers brought about by the digitization of everything and the resulting volume of data. She will counsel the company on issues related to privacy, use of data and data governance, emerging technologies, cybersecurity and records management. Most importantly, O’Connor’s new boss, Rachel Brand, EVP of global governance, chief legal officer and corporate secretary, said O’Connor will help the company discern between whether Walmart may legally use data or technology in a certain way and what effect doing so would have on the company’s relationship of trust with customers and stakeholders.

Ahold Delhaize goes all in on ESLs in Europe

Electronic shelf labels have never really took hold with U.S. retailers, but Europe is a different story. Ahold Delhaize has entered a partnership with Hanshow Technology to deploy the firm’s ESLs at all of the retailer’s European stores following a pilot last year. The companies also plan to open a Joint Innovation Lab to develop frictionless payment solutions, in-store navigation and in-store advertising. Ahold Delhaize and Hanshow, a Chinese technology firm, started collaborating in early 2018 with electronic shelf labels (ESL) in stores at Delhaize Belgium and Albert Heijn stores in the Netherlands.

“Hanshow offers best in class in-store applications and know-how, and we have been very pleased with their contribution to the mobile phone scan and pay service ‘YesWeScan’ at Delhaize and with the first wave of installed ESL at Albert Heijn,” said Wouter Kolk, CEO of Ahold Delhaize Europe and Indonesia. “This is an important step for Ahold Delhaize and our local brands to offer an easy and attractive shopping experience to our customers.”

Traditional grocers continue to lose share

The world of food retailing has changed dramatically and a new report from Inmar shows just how much change there has been. Traditional grocers market share slid again last year to 44% as total traditional grocer sales declined 1.1% to $547.6 billion. That doesn’t seem like much, but when Inmar looked over the last 30 years it found traditional grocers had a 90% share in 1988. Here’s what else Inmar found in its, “2019 Future of Food Retailing Report.”

Veteran CPG executives Rick Kash and Dimitri Panayotopoulos joined the board of IRI, a big data, analytics and insights firm. Kash is the founder and former chairman and CEO of Cambridge Consulting Group, one of the world’s leading growth-strategy consulting firms, which was acquired by Nielsen Holdings Plc in 2009. Kash joined Nielsen at the time of the acquisition, ultimately serving as vice chairman of Nielsen. He left Nielsen in 2016 and currently serves on the board of Simply Good Foods.

Panayotopoulos is a former vice chairman of Procter & Gamble where he spent 37 years. After his retirement from P&G he became a senior advisor at Boston Consulting Group.

Clean label innovator Kind Healthy Snacks said founder Daniel Lubetzky would become executive chairman and Mike Barkley would become CEO. Barkley joined the 15 year old company last fall after a career at Pinnacle Foods, Campbell Soup and PepsiCo. In other key moves, former Pinnacle Foods EVP and chief supply chain officer Dan Poland joined Kind as COO. Doug Behrens, the former president of Amplify Brands and chief customer officer at Danone WhiteWave was named Kind’s chief customer officer.

There has been a changing of the guard at sales and marketing services firm Crossmark where Chris Moye was named CEO. He fills a position held the past five years by Steve Schuckenbrock who replaced short-lived CEOs Ben Fischer who replaced Joe Crafton who replaced John Thompson held the CEO role since 2010.

Are you a good leader? Want to become a better one?

The latest issue of PwC’s Strategy+Business has a helpful article worth reading on “The four X factors of exceptional leaders,” that is worth reading.

Long live brick and mortar, Part II

Old Navy is in the process of spinning off from parent Gap Inc. and believes it can nearly double its store count to 2,000 locations from the current 1,140 stores. Such claims are typical among companies looking to stoke investor interest future growth prospects. Last week it was rural lifestyle retailer Tractor Supply Company touting brick and mortar. It's on track to open 80 stores this year after a similar number last year.

Walmart in omnichannel overdrive

Same day delivery will be available from 1,600 Walmart stores by year end. The retailer announced a rapid expansion of the service following a four market test earlier this year in Houston, Miami, Salt Lake City and Tampa. For more details on the service and how Walmart is undercutting Amazon’s fees, check out Retail Leader’s coverage here.

It was a busy week for Walmart

Dallas, Ga., is home to a new health care approach where the entire family, including pets, can receive care. As immunizations have become commonplace at retail pharmacies, Walmart raised the bar at its new medical center at a remodeled supercenter at 3615 Marietta Hwy by offering services that were once unthinkable in a retail setting. Walmart said by partnering with local providers, its new Walmart Health center will deliver services including primary care, labs, X-ray and EKG, counseling, dental, optical, hearing, community health (nutritional services, fitness) and health insurance education and enrollment. The clinic will provide low, transparent pricing for key health services for local families, regardless of insurance status.