Supermarkets Top Alternative Formats (Part 1)

1 2016alternativeformats

Now more than ever, alternative formats like mass merchandisers, natural food retailers, dollar stores and even drugstores are encroaching on supermarket food sales. The following companies from the 2016 Top 75 list of U.S. and Canadian retailers represent the alternative formats with the most food sales.


1. Wal-Mart Stores

Annual sales: $247.5 billion (estimated, consumables only)


2. Costco Wholesale Corp.

Annual sales: $69.4 billion (consumables only)


3. CVS Health

Annual sales: $44.4 billion (estimated, consumables only)


4. Target Corp.

Annual sales: $34.2 billion (estimated, consumables only)


5. Walgreen Co.

Annual sales: $28.3 billion (estimated, consumables only)


6. Meijer, Inc.

Annual sales: $16.9 billion (estimated)


7. Whole Foods Market

Annual sales: $15.4 billion


8. Dollar General Corp.

Annual sales: $15.3 billion (estimated, consumables only)


9. 7-Eleven

Annual sales: $13.3 billion (estimated, consumables only)


10. Trader Joe’s Co.

Annual sales: $13 billion (estimated)

Yubari King, el melón de 20.000 dólares el kilo.


El caviar, algunos champanes o la trufa blanca pueden llegar a tener precios desproporcionados. El café extraído de las heces de la civeta o el tostado en las tripas de un elefante también. Pero, ¿por qué un melón puede costar 5.000 euros el kilo?

Yubari King es un tipo de melón japonés cultivado en la región nipona de Kobe. Localizada es la isla de Honshu y Yubari, la tierra de está región cultiva los que se consideran los mejores melones del mundo.

Su precio habitual ronda los 5.000 euros el kilo. Sin embargo, en la subasta de melones Yubari King que se realiza en el mes de mayo – se considera la mejor cosecha del año- el kilo de melones puede superar el doble de su precio habitual. En el año 2008 la subasta alcanzó un récord: 18.000 euros el kilo.

Una de las razones que explica el elevado precio de esta fruta japonesa se debe a un cuidado sistema matemático de cultivo. La cosecha de los melones Yubari King se realiza a través de un secreto sistema de riego que controla en cada momento la temperatura y pureza del agua. Asimismo, a través de un sistema invernadero se mantiene una humedad óptima. Por último, la tierra de la zona, rica en ceniza volcánica, contribuye a la calidad final de la fruta.

Sin embargo, el motivo principal que atribuye el sabor original, la fama y el precio a estos melones se debe a un proceso de cruce de frutas. En 1961, se cruzó un melón americano, el ‘Cantaloupe picante’, con una modalidad de melón europeo. El resultado es una fruta esférica cuya carne, de color oro, se caracteriza por un dulzor explosivo atenuado con toques de picante.

Report ranks Natural Grocers as Yelp favorite.


A new analysis of customer reviews posted on the Yelp site indicates Natural Grocers by Vitamin Cottage, Lakewood, Colo., draws the highest customer satisfaction scores from a group of selected publicly traded food retailers.

The analysis, published in a research note Friday by Bill Kirk of RBC Capital Markets, manually aggregated more than 130,000 Yelp customer reviews on more than 2,050 grocery stores. On Yelp’s five-star rating system, Natural Grocers averaged 4.14, the highest overall score among a group of publicly traded peers, followed by Sprouts Farmers Market (3.87), Whole Foods (3.71), The Fresh Market (3.70), Smart & Final (3.57), Kroger (3.37) and Supervalu’s Save-A-Lot (3.17). A “weighted average” removing the effect of rarely-reviewed stores resulted in the same sequential ranking, Kirk noted.

Natural Grocers’ scores compared favorably to privately held Trader Joe’s (4.24 average score) and Publix (4.10); and outscored Trader Joe’s in its core Colorado markets 4.09 to 4.08.

 “We believe that investors who would love the opportunity to invest in privately held Trader Joe’s are ignoring a similar opportunity at Natural Grocers,” Kirk said.

Sprouts, the second-highest rated retailer in RBC’s coverage by Yelp scores, was also outperforming its peers among its newer stores – an indication supporting the company’s ongoing geographical expansion.
“Other regional strong retailers have struggled when expanding outside their core markets,” Kirk wrote. Although Sprouts tended to draw slightly lower review scores in newer markets of Kansas, Missouri, Georgia, Alabama, and Tennessee (3.78) than established markets of Arizona and California (3.88), “we believe the small difference is encouraging. Using The Fresh Market (core in Southeast and new market of Texas) as a proxy, we find a sharper difference between reviews in new markets and reviews in core markets. The Fresh Market has an average review of 3.78 in the Southeast, but just 3.55 in Texas and 3.53 outside the Southeast.”

Fresh & Easy sets auction for warehouse equipment.


Fresh & Easy said Monday it plans to hold an auction Saturday to sell the rolling stock of its refrigerated food distribution facility in Riverside, Calif.

The equipment includes 307 new and used refrigerated trailers, more than 40 forklifts and more than 200 electric pallet jacks, as well as machinery, batteries and other items, according to the company.

The items will be available for viewing on Friday, with the auction scheduled the following day beginning at 10 a.m. Interested parties can call (818) 508-7034 or go to for additional information.

The auction was ordered by the U.S. Bankruptcy Court as part of Fresh & Easy’s Oct. 30 Chapter 11 filing.

Fresh & Easy operates 97 stores in Southern California, Arizona and Las Vegas. It was acquired by Yucaipa Cos., Los Angeles, in 2013 from United Kingdom-based Tesco, which built the Riverside warehouse.

Walk like a man, eat like a chimp… Chimpfood products in Whole Foods


First there was juice, then there were smoothies, now there is, er, Chimp Food, the brainchild of Florida-based entrepreneur Scott Joseph, who lost 100lbs after eating like a chimp (he ditched meat, dairy & grains and ate nothing but fruits, vegetables, nuts and seeds) and wants to bottle his success.

Launched three months ago, his 290-calorie 16oz high-pressure-processed Chimp Food bottles – which retail at around $5.99 and contain a blend of 25 different berries, fruits (including the seeds, peel and stems), vegetables (including the skin), nuts and seeds – are now available in around 40 outlets in the Florida area.

Chimp Food bars- which retail at $2.95 and contain only nuts and dates (380-cal nut bars), and seeds and raisins (310-cal seed bars) – are also available in most locations that stock the drinks.

Chimp Food is not juice: I tried juicing when I was trying to lose weight and I gained weight

The plan has always been to start small, understand the customer base, iron out any formulation and packaging issues, and then build slowly, Joseph tells FoodNavigator-USA.

At the moment we’re still making the Chimp Food bottles ourselves [the bars are made in Chicago by a co-packer] and then sending them to Hyperbaric to go through the HPP process [which gives them a shelf-life of 45 days, but means they don’t have to add preservatives or lose nutrients, flavor or color], so if Whole Foods came along and said we want them in hundreds of stores tomorrow, I wouldn’t sleep for weeks.

“But I would love to get into Whole Foods. That would be the real test of our product. But I’d like to start with one store, then three, then 10 stores, and so on to see how things go.”

But just three-four months after launch things are already ramping up nicely, says Joseph, who started off by knocking on individual retailers’ doors, but is now talking to distributors (KeHE and UNFI) and brokers (Presence Marketing) about getting his products stocked in a wider range of outlets.

He’s also considering Amazon as he thinks the low shipping rates could help him reach a wider audience.

As for the target consumer, it includes everyone from Moms looking for something healthier for their kids, to bodybuilders, fitness enthusiasts, dieters and people looking to replace one meal a day with something filling and wholesome, he says.

And while the price tag is high, when you consider that each bottle is a meal, it’s a different proposition, he claims, noting that consumers have already proved willing to shell out up to $9 for a bottle of high-end juice.

We’ve been doing sampling three days a week, and it really works, as when people try it, they love it.”

13g of fiber, 6g protein: Peel, seeds, stems included…

The key is positioning the products correctly, says Joseph, who originally had the strapline, ‘Eat like you should, eat like a chimp’, but has switched to ‘It’s raw whole food that you drink’ and ‘Your super-healthy meal of the day’ to highlight the fact that his products can work as meal replacements, and that they are really foods, not drinks.

“They are not juices,” adds Joseph, who contends that drinking a juice-only diet is a fast-track route to diabetes rather than improved health.

“I tried juicing when I was trying to lose weight and I actually gained weight, and it spikes your blood sugar. When you eat Chimp Food [each bottle has 13g of fiber and 6g protein], because we’ve got all that fiber, the peel, the nuts and seeds, it won’t spike your blood sugar.”

I realized that none of them were selling anything as healthy as what I was making for myself

Chimp Food is not about ‘cleansing’ either, stresses Joseph, who is in his early 50s and says changing his diet transformed his life to such an extent he was convinced his strategy could work for other people. 

“I tried cleansing and you just get into this yo-yo pattern, cleanse, and then eat pizza, cleanse, then hamburgers.”

Chimp Food also has a different profile to meal replacements such as Boost, Ensure and SlimFast, he says. “They have an ingredients list half a mile long.”

He adds: “If you look at animals, they don’t have all these diet-related problems that humans have. Look at chimps as our closest living relatives; they just eat fruits and vegetables, nuts and seeds, and they get all the nutrition they need, so I started doing the same and the results were incredible.

“I was walking around Whole Foods and all these other stores and I realized that none of them were selling anything as healthy as what I was making for myself.”

Click HERE for details.

Kings shows off private label line.


Kings Food Markets announced Thursday a complete line of private label products under the Kings Own brand. The retailer has been gradually introducing Kings Own products to stores over the past few months.

The gourmet line includes fresh, frozen and packaged goods, everything from eggs and orange juice to pastas and sauces to gelato and frozen sides.

The products were chosen to meet Kings’ standards, the retailer said. The assortment of marinades and sauces, for example, are made in small batches from all-natural ingredients.

“At Kings, our passion for food drives us to bring shoppers the highest quality, the freshest and the very best ingredients, and now, through our own assortment of products, we’re able to bring our customers the perfect balance of quality and value, tailored for each product, making great food approachable,” Judy Spires, president and CEO of Kings Food Markets, said in a press release. “That’s why our shelves are filled with amazing choices that turn everyday experiences into memorable events — and now we’re making it even better.”

According to a company spokesperson, the initial response from shoppers has been “overwhelming.”

Kings, based in Parsippany, N.J., has been promoting the private label products on its Facebook page as they roll out.


Why supermarkets are only fair in health and wellness


It’s hard to get better sales numbers than what supermarkets are seeing in health and wellness. SN’s Whole Health industry survey back in March produced eye-popping results. Some 80% of industry respondents said these categories have grown in sales over the past 12 months, and a third said by 20% or more.

Consumers of all generations, particularly Millennials, are embracing natural, organic and better-for-you items. Mainstream retailers, aka supermarkets, are benefiting. That’s the way it should be because supermarkets have worked hard and deserve the payoff. Right?

Maybe, but that industry survey was only half the story. SN just published the other side, a consumer survey that will humble retail executives.

The consumer data comes from SN’s partnership with Supermarket Guru Phil Lempert, and you can see an analysis by Jon Springer here.

Some 52% of consumers called their supermarket only fair in selection of natural and organic and better-for-you items, and fair was defined as “I usually (versus almost always) can find the brands and items that I want.” That compares with 38.6% saying “good” and 8.9% “poor.”

That sentiment carried over into prices. Asked to characterize prices for natural/organic and better-for-you items at their local supermarket, the biggest percentage, 56%, said “fair,” meaning “about average versus other stores.” Some 25% said “good” or “good value,” while 19% said “poor.”

Many consumers rate their supermarkets as only "fair" in health and wellness.

Many consumers rate their supermarkets as only “fair” in health and wellness.

The broadest question asked was “How does your supermarket rate in servicing a desire to eat healthier?” About 52% said “fair,” meaning “staff often provides service and knowledge, but not always.” Roughly 31% said “good,” while 16% said “poor.”The upshot is consumers feel supermarkets are performing fair. Stores are meeting basic needs, but could do better.

So how can that be with all the focus on enhancing these categories? One factor is that price really mattered to respondents. Consumers said price was the leading factor influencing where to shop for food overall and natural and organic groceries in particular. In only one segment, produce, did price take a back seat to quality in importance.

To really understand why supermarkets are rated only fair, it’s important not just to view the survey numbers, but to read the emphatic consumer comments. Here’s a sampling of what shoppers want from supermarkets, directly from the respondents:

Lower Prices: “Stop raking us over the coals to eat healthier.”

Better Selection: “Offer more of the foods that places like Whole Foods offer.”

Better Service: “Employ people who have a genuine interest.”

Layout: “Move health to front instead of hiding it at the back.”

Health Commitment: “Stop forcing all the naughty stuff in our face.”

You have to admit there’s a lot of frustration in those remarks.  Consumers appear to be saying they’re willing to shop for health and wellness products at mainstream retail, as long as stores raise their games. If that doesn’t happen, at some point they may switch to other outlets that do better.

So even as supermarkets celebrate sales growth, their executives need to closely monitor shopper feedback and adapt. Criticism is humbling, but far better to get the truth now while there’s time to act.

Retailers invest in produce to thwart competition.


With consumers increasingly focused on the perimeter, many retailers are making investments in the produce department as a way to differentiate their offerings or simply bring shoppers into the store.

Other retailers have been playing catch up as competition in produce heats up.

The Fresh Market, for example, has worked to lower produce prices after seeing too much of a price gap over its competitors’ prices. Interim CEO Sean Crane told investors last week that the retailer had made efforts to close the gap in the previous quarter.

Enjoying results from the initiative may take time, however. The Fresh Market’s comparable-store sales dipped in the second quarter, and Crane said overall pricing and promotional investments were “less effective than anticipated.”

Crane outlined a few reasons why the produce investments have taken time to sway customers.

“One is you need to shop the store a few times to really start to feel the improved pricing. And then, we also have a little bit of a headwind in that as customers shop our store, our research indicates that even if we are equally priced, there is a price perception issue because of the premium attributes of the experience around it. So, we have to keep finding ways to invest in price, but also better communicate it,” said Crane.

Produce price competition is heating up.

Produce price competition is heating up. (Photo by Liz Webber)

Similarly, Sprouts Farmers Markets has noticed a “more aggressive approach on promotions” in the produce department from its competitors, president and COO Jim Nielsen told investors earlier this month.

“It’s primarily coming from our conventional competitors within each geography. We’re seeing some specialty retailers do some in-store, but we don’t — we haven’t seen any negative impact to that,” said Nielsen.

He added that he expects the same level of produce promotions from competitors in the third quarter and possibly through the end of the year.

Sprouts has always used produce as a differentiator, and often makes investments in order to maintain a competitive edge.

At the same time, one of the main factors impacting produce sales this year is deflation, executives noted. Sprouts still sold the highest amount of produce by volume in the second quarter this year since the first quarter of 2014.

“So we’re moving a ton of produce, no pun intended there, and we’re seeing the basket size in terms of number of items grow at the highest level in two years,” said Nielsen. “So I don’t anticipate the conventionals backing off in terms of their investment and, if they do, there is going to be upside for us. If they don’t, it’s built into our guidance.”

How much Sprouts needs to invest in produce moving forward will depend on inflation and competition, new CEO Amin Maredia said.

“We had a pretty rough first half of the year in produce this year. I think that the marketplace will dictate how much we need to invest,” said Maredia.

One conventional retailer that has begun to see the fruits of its investments is Ahold USA. The retailer has invested in price across the perimeter and remodeled produce departments in many of its stores.

“And it’s not only the choice and the signage, but also the customer engagement with our employees has been made the big step forward in this produce department by training and education,” Ahold CEO Dick Boer said in an earnings call earlier this month.

Boer credits these investments for Ahold USA’s four consecutive quarters of volume market share increases.

“Our growth in volume market share proves that our customers reward us for offering better quality and value to them,” said Boer.

After an initial lag time where produce volume was up but dollar sales turned negative, Whole Foods Market has also experienced positive results from stores where it has invested in produce.

“So we’ve been encouraged and started to see in the last couple of periods where the actual sales have gone positive, and those produce departments are comping positive now so that the units now have increased in a lot of them above where the investment is,” president and COO A.C. Gallo told investors in July.

“That’s been very encouraging to us. And we definitely have plans to use those learnings in additional stores and regions as we go forward, especially next fiscal year.”

Wall Street concerned with The Fresh Market results.


Wall Street analysts expressed concerns with The Fresh Market a day after the chain reported flat earnings per share and negative comparable-store sales.

“Results were even more disappointing than we thought and suggest the company is not moving fast enough to address the challenges of a fast-changing food retail landscape,” Kelly Bania, an analyst with BMO Capital Markets, New York, said.

“The weak results were likely exacerbated by temporary factors — including produce deflation and double-digit meat inflation — yet we believe TFM is in an identity crisis as it struggles to maintain its industry-leading EBITDA margins while resisting the temptation to more aggressively compete on price but maintain its premium quality and in-store experience.”

Those goals, she added, are complicated by the lack of a permanent CEO and, as of Thursday, the departure of Marc Jones as SVP and chief merchandising and supply chain officer.

“Near-term initiatives — encompassing productivity, brand awareness, advertising, testing and changing promotional and pricing strategies — do not appear to be enough to stabilize comps, [which] leaves a high degree of uncertainty for earnings.”

Karen Short, an analyst with Deutsche Bank, New York, said she believes Greensboro, N.C.-based TFM “needs to invest in price to drive traffic and comps and should cut its unit growth until it can stabilize the core business.”

In discussing financial results with analysts Thursday, Sean Crane, interim president and CEO, said The Fresh Market plans to review its pipeline of expansion targets with a greater focus on returns.

“While the success of our most recent store openings gives us confidence there are significant opportunities for unit growth, we also believe it is prudent to continue to review our current pipeline,” he explained. “In light of current sales and margin performance, we are reviewing the assumptions with a focus on managing return-on-invested-capital for our company and shareholders.”

Addressing the flat earnings and negative comps, Crane said they reflected “changes in our pricing and promotional investments that were less effective than anticipated in a more challenging macro environment, which were partially offset by successful marketing activities as well as the benefit of our expense controls.”

Jeffrey C. Ackerman, EVP and CFO, said the company’s promotional goal in the second quarter was to improve traffic flow by replacing one-day events with multi-day events, “which we thought would result in better in-store execution and thereby better sales. But looking back, we realize that as we chose the promotions, it required us to take a different approach in terms of the items, and we believe that had an effect on the traffic that came in.

“As we move forward, we’re going to continue to make sure we’re providing a great experience for customers, with great execution, but that we’re also balancing the traffic-driving capabilities of the promotions so we have the right promotions at the right price.”

CMO’s departure

Crane announced the departure of the CMO, noting a search is underway “for an individual who will help us accelerate the improvement of our pricing, selection and merchandise offering.”

Until a successor is named, Crane said he will be more hands-on, working with the merchandising team “to bring up some fresh ideas and help with merchandising, pricing, selection and that kind of thing.”

On the supply chain side, Crane said Maria Ross has been hired as VP, supply chain, following three years as VP, supply chain strategy, at BJ’s Wholesale Club and previous stints at Home Depot and Oldcastle.

Crane, The Fresh Market’s VP and COO, was named interim CEO earlier this year. He said the TFM board “continues to interview candidates for the CEO position.”

He said TFM expects negative comps to continue through the second half because of more difficult comparisons with last year and continued deflationary pressures.

Crane listed several initiatives the company has implemented to improve financial results, including a multi-media brand-positioning; refinement of targeted marketing promotions to develop more personalized programs; increased use of social media; an improved customer service program; and efforts to develop more productive backrooms to create better in-stock positions.

Ackerman said the company is also implementing new recruiting tools to help better assess “people that have a propensity to serve”: testing new incentives to align staff with service; eliminating non-value-added tasks to better serve customers; and, at a couple of stores, testing incremental labor-hour investments.

Regarding pricing, Ackerman said The Fresh Market intends to be competitive on like-for-like items and charge a price commensurate with value on differentiated products.

Asked if customers recognize the company’s pricing strategy, Crane said they do if they shop the stores on a regular basis.

“We invested pretty heavily this quarter in produce prices, but we saw a sequential deflation in produce of 600 basis points. So customers need to shop the store a few times to really start to feel the improved pricing. There’s also a little bit of a headwind [because] our research indicates that even if we are equally priced, there is a price perception issue because of the premium attributes of the [store] experience.

“So we have to keep finding ways not only to invest in price but also to communicate it better. Once we find that balance, we can start to make those investments.”

Instacart moves to hire in-store pickers.


Grocery delivery service Instacart on Monday said it has begun to give its store pickers the option to convert from contractor to employee status, saying trained and supervised employees would provide additional quality and efficiency.

The company said it made the decision following a successful pilot in Boston. Effective Monday, independent contractors embedded in stores in Chicago will have the option to become part-time employees of Instacart. Based on data from the Boston pilot, Instacart expects more than three-fourths of its current in-store contractors to opt to part-time employee status. Instacart plans to roll out this option to more of its independent contractors in some of the other cities it serves in the coming months and will make permanent the changes that were already in place in Boston.

“As Instacart grows, and we continue to learn what makes the best experience for our customers, we are constantly looking for ways to improve our service,” Apoorva Mehta, founder and CEO of Instacart, said in a statement. “When you look at the difficulty of shopping, picking and delivering items such as fruit or eggs that need to be carefully selected, you realize that grocery shopping can be complicated. For this reason, we want to provide supervision and training, which can only be done with employees.

“We began experimenting with part-time employee roles in Boston,” Mehta continued, “and the data from our pilot showed that this change improved the quality and efficiency of order picking and made for a better customer experience. We’re excited to be able to expand this option to other cities.”

The change continues evolution for San Francisco-based Instacart, which was established behind a so-called “sharing economy” model of independent contractors who shopped for and delivered groceries. More recently the company has shifted towards a business model that splits its shopper and driver roles, with some shoppers embedded in stores now being offered employee status while driver and shopper-drivers remain independent contractors. The change helped to improve order and delivery efficiency, the company said.

Originally launched in San Francisco and since expanded into many other cities, Instacart connects customers with shoppers and drivers who shop for and deliver grocery orders providing their own transportation in as little as one hour. This eliminates the retailer’s need for costly infrastructure such as inventory, warehouses and trucks.

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