The retail world will change more in the next twenty years than in all of the history of modern day retailing. This is driven by the seismic shift in consumers’ shopping habits: they’re filling smaller baskets during each trip to the store; different categories drive consumers to different types of stores; and the ability to shop online for groceries is more prevalent than ever before, with the advent of services like Amazon Fresh and retailers boosting their digital fulfillment efforts.

On the retail front, channels are converging. What was once your traditional drug store may now be viewed as a convenience destination. Up against the likes of Blue Apron and Amazon’s filing for a meal kit patent, traditional supermarkets are crafting their own ways to compete in the meal kit game. Big box mass merchandisers are now competing with discount and dollar stores.

As the U.S. grocery industry continues to navigate the complexities of emerging channels like discount grocery retailers, it’s worth noting how these dynamics played out in Europe and assess if their success across the pond is a precursor to what we might see stateside. Across the pond, nearly three-fourths of market share was consolidated into the region’s top four retailers. And what’s more, over the last eight years, the top four’s share eroded from 73% to 67%, while the newer discount retailers that encroached on the market nearly doubled their share.

However, the European market where the likes of Aldi and Lidl dominated and reigned success is a very different world than the U.S., which is facing a different set of challenges.

Discount grocery retailers are typically smaller format than traditional supermarkets, though their U.S. counterparts are twice the size of their European stores which estimate 10,000 square feet. Still smaller than traditional stores, that means a limited assortment of products on the shelves. Despite this limited shelf space, discount grocery retail stores are growing. Between 2011 and 2016, store counts increased 17.6% across the U.S. Though not apples to apples, the growth of discount retailers in Europe could serve as a precursor to what we might see in the U.S. in the near future. Some may be wondering whether this channel could potentially rise to capture a significant percentage of the U.S. grocery marketplace, putting pressure on other retail channels on how to compete.

The growing presence of discount grocery retailers is sure to create (or add onto) the domino effect that is causing traditional grocery retailers to rethink their growth strategies to remain relevant. As the industry continues to navigate these effects, there are five key questions that retailers should be asking themselves today to prepare for tomorrow:

Retail Channel Dynamics: Where Are Consumers Shopping?
Gone are the days when consumers shopped for all of their groceries at their neighborhood supermarket. Today’s on-the-go consumer can now pick up deli prepared meals at the drugstore or purchase all natural beverages and snacks at convenience stores, something that was once limited to niche natural specialty stores.

According to Nielsen Homescan panel data, grocery shopping trips grew the most at discount grocery retailers (2.9%) compared to other brick and mortar channels in the last year. However, basket sizes at discounters slightly declined 0.3%.

This decline in spend per trip could be the result of many factors, one of which is consumers’ on-the-go lifestyles and the growth of sprawling urban areas where households may not have as much physical space to store packaged items. Retailers must focus on what drives consumption—including product variety, package sizes and store formats—in order to remain competitive.

Pricing Pressures: Combating Price with Value-Adds
Downward pricing pressures are lowering the growth ceilings for all retailers, driven in part by the looming threat of discount grocery and online retailers. That being said, value is about more than just the lowest price. According to a Nielsen 2016 retail growth strategies study, consumers rate high-quality produce (57%), convenient location (56%) and product availability (54%) as more influential in store-selection decisions than the lowest price.

Consumers are looking for good deals regardless of their economic circumstances. And indeed, for many consumers, deal seeking is the thrill of the chase. Sixty-eight percent of Americans say they enjoy taking the time to find bargains, and discount grocery retailers have hit the nail on the head to provide the bargains they are seeking at price points that meet their wallets.

Investing in Store Brands: Private Label Driving Highest Growth in Discount
For many retailers, but particularly deep discount retailers, store brands (or private label) play a strategic role for winning over shoppers from other channels. Compared to other major retail channels, discount grocery retailers have more than twice the share of store brand dollars (51%), compared to only 15% store-brand dollar share in mass merchandise and 20% in supercenters. read more

Chris Morley, CONTRIBUTOR
www.forbes.com

IImagine going to the grocery store for dinner, not to pick up a rotisserie chicken to take home, but to actually eat at the store. As online grocery shopping grows, many supermarkets are adding sit-down restaurants in a move to attract more millennials. And it seems to be working.

This valued event brings together the leaders of Georgia’s retail industries along with Georgia legislators to discuss the future of retail as well as laying the foundation for GRA’s legislative and membership priorities for 2018.

Kyle Riggs, who manages Market Grille, the restaurant at a Hy-Vee grocery store in Columbia, Mo., says most people don't expect to find this level of food service next to the produce aisle.

"And then when they walk in here, they're just amazed at the full wine wall with the ladder that slides," he says. "We have 20 beers on tap and a lot of high-end alcohol, whiskeys and things like that, and great food."

The ingredients come from the store. They are cooked in the store's kitchen and served here. Riggs says football games can pack the 148-seat restaurant with college students and young professionals.

Indeed, Rob Hunt, 30, and Aaron Hadlow, 28, have been stopping by all summer for happy hour after work. Hunt says the variety of food, the local, craft beer on tap and ultimately the price are a big draw.

"You can't get $2 pints of beer anywhere else and that's honestly the biggest thing," he says. "We tried a couple of other places this summer and they were fun, but it's just cheaper over here."

Across the country, supermarkets like Whole Foods have been offering sit-down dining and drink deals for years. The trend of adding full restaurants, sometimes called "groceraunts," falls in line with the uptick in prepared store meals, which has grown 30 percent since 2008 and driven $10 billion in sales last year, according to the NPD group.

Hy-Vee, which was one of the early adopters of the groceraunt model, has added 115 Market Grilles to date.

While grocery stores had been losing customers in recent years to smaller markets and online food shopping, groceraunts have helped bring back foot traffic to the old-school grocers.

"It's really made a big difference for us in the evening," says Jeremy Gosch, executive vice president strategy and chief merchandising officer, at Hy-Vee, Inc. "That's where most traditional grocery store food service had oppurtunity."

Gosch says creating an in-house restaurant, different ambiance and different lighting were important to draw in diners. "I think we're capturing business that we didn't have before in our food service department," he says.

While people are looking for more options in prepared foods, the traditional center of the store, with cans of beans and boxes of cereal, has had to make room. That means space on the shelf is becoming more competitive.

"As ... we continue to roll out into existing stores some food service updates and expansion, especially on meals to go for consumption at home, I think you'll see a little bit of that compression," Gosch says. That could mean a future with only one size and brand of canned tomatoes on the shelf.

A large part of this shift is thanks to millennials, like Hunt and Hadlow, who are more likely to dine out than older generations. More than half of millennials surveyed by financial services firm Morgan Stanley said they had eaten out in the past week, compared to 43 percent of previous generations.

Today, groceraunts are featuring seasonal menus and hiring graduates of the Culinary Institute of America as chefs. Food industry analyst Phil Lempert says this appeals to millennials, too.

"What these groceraunts can do is give them a convenient location where they can meet their friends, where they can have great food, and have it at a great value," he says. "That becomes a terrific formula to attract this generation."

Millennials are also turning away from slumping restaurant chains, like Chili's or Applebee's, which plans to close up to 60 locations this year.

That's forcing some restaurant chains to look toward grocery stores as potential partners. Think of Starbucks and Caribou coffee kiosks in grocery stores, except in this case, Wolfgang Puck wants his cafe to become the in-house restaurant, says Lempert.

"Now these restaurateurs want their space in the supermarket as well, because they know that it's more convenient for people, it's more of a one-stop-shop, and it's hurting their traditional restaurants," he says.

The next step for grocery stores may be to add home meal-delivery options, Lempert says, as digital orders ramp up with tech-savvy, young adults. Market analysts are looking at the Amazon-Whole Foods merger and expect both more restaurants to be added to grocery stores, and more people to order their groceries and dinner together online.

"This is a trend that's going to continue to grow," Lemeprt says. "Grocers are putting more money and more effort in this. They see it as their culinary mark, if you would, on society. So this is here to stay."

For Immediate Release: July 31, 2017
CONTACT: James Miller This email address is being protected from spambots. You need JavaScript enabled to view it., (850)701-3015

1st Annual Best Bagger Competition winner was Kelina Salinas from Lucky’s Market, who received a $1,000 cash prize and all-expense paid trip to February’s national championship

TALLAHASSEE, FL – The Florida Grocers Association (FGA), a division of the Florida Retail Federation, hosted an event to identify Florida’s best bagger of groceries among Sunshine State grocery industry employees. The 1st Annual Florida Best Bagger Competition took place Sunday, July 23 during the 2017 Sunshine EXPO®, one of the largest retailing events in the Southeast, with contestants representing a number of grocery stores throughout Florida. The winner of this inaugural contest was Kelina Salinas from Lucky’s Market. In addition to taking home “bagging rights” for the year, Kelina also won the $1,000 grand prize along with an all-expense paid trip to represent Florida and compete for a $10,000 grand prize at the National Grocers Association National Best Bagger Championship held in February 2018, in Las Vegas, Nevada.

“We were thrilled with the interest and participation from our grocery members for our first ever Best Bagger Competition as well as the excitement of the audience during the event,” said FGA Executive Director Josie Correa. “I want to congratulate all of the contestants for participating in this inaugural event, and we look forward to supporting Kelina and cheering her on as she represents the State of Florida at the national championships in February.”

The runner-up bagger, Josue Anelus from Publix, received $500 while the third place contestant, J.P. Paiva also from Publix, won $250.

The Florida Best Bagger Competition was for supermarket employees demonstrating a superior core customer service skill in a friendly competition. Contestants were judged by speed of bagging, proper bag-building technique, weight distribution in the bag, as well as style, attitude and appearance. All stores were encouraged to do their own in-store competition and then send their best bagger to the Florida competition. Family, friends, cheer teams and fellow workers were in attendance to cheer on their favorite contestant.

ABOUT THE FLORIDA GROCERS ASSOCIATION
The Florida Grocers Association, a division of the Florida Retail Federation, was launched in 2015 to provide a voice and identity to the state’s $45 billion grocery industry. FGA’s goal is to advocate for its members at the local, state and national level while serving the needs of the more than 2,300 grocery stores and their industry partners statewide. For more information about the Florida Grocers Association, please visit flgrocers.com.

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