In 1916, John and Walter Wegman opened the Rochester Fruit & Vegetable Co., with the help of their parents. A century later, their store has become one of the most beloved places in Upstate New York.
Wegmans announced on Wednesday that it will be hosting parties in all stores to celebrate its 100th anniversary. All locations will observe the milestone at 11 a.m. on Saturday, Jan. 30.
During the Wegmans-wide celebration, a new portrait of Robert Wegman will be revealed. Each store will be serving cake that is decorated based on the store's location. All customers are welcome to the cake.
Employees will wear 100th anniversary uniform shirts with a new logo that will appear on some Wegmans products, including gift cards, reusable bags and reusable coffee mugs, the Democrat & Chronicle says. Additionally, anniversary editions of Menu magazine will be available for sale.
Wegmans currently has 88 operating stores in several states including New York, Pennsylvania, New Jersey, Virginia, Maryland and Massachusetts. In 2015, Wegmans made Fortune's list of the 100 best places to work for the 18th year in a row. The grocery chain is one of only 12 companies that have appeared on the list each year since it began in 1998
Shares of Whole Foods(WFM) sank 5% Monday after an analyst downgraded the organic grocer to an "underperform" -- a Wall Street euphemism for 'sell." The stock rebounded slightly Tuesday but is down nearly 15% this year and not far from its 52-week low. Kelly Bania of BMO Capital Markets slashed her rating and price target for Whole Foods after conducting a survey of more than 1,000 Whole Foods customers. Her findings do not bode well for the company.
More than 70% of the respondents told Bania that they had not noticed any changes in prices in Whole Foods over the past three months -- even though the company has touted its efforts to lower prices to be more competitive with supermarkets.
In other words, the perception of Whole Foods being a place where you spend your Whole Paycheck remains.And in an even more troubling development, only 24% of customers said organic products at Whole Foods were "definitely" higher quality than organic food at grocery stores.Fifty-four percent of those surveyed said the quality of the food was "sometimes" better at Whole Foods while the remaining 22% said "not at all."
That's bad news for Whole Foods. If Whole Foods' own customers don't think the products are worth the price, then how much longer will they remain loyal shoppers?"This poses an uphill battle for Whole Foods, as we believe mainstream consumers find it difficult to differentiate the quality of organics," Bania wrote in her report.Whole Foods was not immediately available for comment about the findings in Bania's report.
But Wall Street is very, very worried. Whole Foods stock is now selling for Half Price. It has lost about 50% of its market value since the end of 2013.The stock dipped in 2014 as sales growth started to slow due to tough competition from organic rival Trader Joe's as well as supermarket chain Kroger(KR), Costco(COST) and Walmart(WMT).And last year was even worse.
Whole Foods was accused by New York City in the summer of overcharging by wrongly pricing previously weighed goods. That hurt the company's reputation ... and financial performance. Same-store sales fell in its fiscal fourth quarter, which ended in September.
It doesn't appear that shoppers have forgiven Whole Foods just yet either.Even though Whole Foods apologized for the errors and agreed in December to pay $500,000 to New York City to settle the overcharging probe, analysts are predicting that same-store sales fell 2.2% in its first quarter, which ended in mid-January.Whole Foods reports its first quarter results on February 10.
The company's defiant stance may be rubbing consumers the wrong way too. Whole Foods co-CEO John Mackey told investors last July that he felt the company was being unfairly singled out by regulators and the media.Whole Foods was targeted in a similar pricing probe in California in 2014 and agreed to pay $800,000 to the cities of Los Angeles, Santa Monica and San Diego."We do feel like we're victims," Mackey said. And when Whole Foods settled with New York City in December, the company said in a statement that it was mainly doing so to "put the issue behind us."
Howard Penney, a managing director who follows consumer stocks for Hedgeye Risk Management, said Whole Foods has lost the trust of consumers. It may take a while to work through that -- especially when rivals offer organic food for a lot less.
Friday, January 29, 2016
Kroger Plans to Upend How it Organizes Booze in Stores
Plan calls for a privately held distributor to oversee how much display brands get in groceries
ENLARGE
Ian Giles shopped for beer at a Richmond, Va., Kroger Marketplace in 2014.PHOTO:ROB BRATNEY FOR THE WALL STREET JOURNAL.
Kroger Co. has started a booze-fueled brawl with the alcohol industry with a plan to change how the country’s largest supermarket chain organizes beer, wine, and liquor on its store shelves.
The proposal would do away with a decades-old system in which the biggest alcohol producers such as Anheuser-Busch InBev NV andDiageo PLC were tapped by Kroger and other grocers to be “category captains,” dispensing advice and influence about how much shelf space and prominence to give brands ranging from Budweiser to Robert Mondavi to Smirnoff.
Instead, the plan, introduced late last year, calls for a privately held distributor, Southern Wine & Spirits, to oversee how much display brands get in the grocery aisles of the more than 2,600 Kroger stores in 29 states.
It also asks the alcohol companies—not Kroger—to pay Southern for the service. Previously, manufacturers financed their own analysis. Southern said other retailers, some of whom have been inquiring about the program, could be included in the new arrangement. Southern declined to disclose which grocers asked about the program.
Several large supermarket chains contacted for this article declined to comment or didn’t respond to a request from comment.
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Retail consultant Jim Hertel, senior vice president at Willard Bishop,a unit of Inmar Inc., said that if the program succeeds others may emulate it, especially large retailers such as Albertsons Cos., and Ahold NV and Delhaize Group, which are merging. “People will look at this, if it’s successful, and figure out if it’s something the industry rallies around,” Mr. Hertel said.
The proposal has sparked a brouhaha between Kroger, which wants to simplify its system for managing the beer, wine and liquor section of its supermarkets, and the alcohol manufacturers, which would lose power and could incur new expenses.
Kroger wants to be able to rearrange store shelves more frequently to reflect changing consumer tastes by adding fast-moving, new craft brands such as Not Your Father’s Root Beer, and making seasonal changes like shifting space in August from heavy Chardonnays to light Pinot Noirs.
Kroger currently makes these changes up to twice a year, but it is executed inconsistently across its outlets. “Our goal is to better respond to customer needs and more quickly bring new, innovative adult beverages to market,” said Kroger spokesman Keith Dailey.
The liquor, wine and beer industry prefer the existing system in which they have more direct say in shelf placement. This can significantly influence sales. They also object to the fact that, for the first time, the new system would ask the alcohol industry to pay quarterly fees based, in part, on how much volume a store carries.
In a rare show of agreement across the alcohol industry, trade associations representing liquor, wine and beer, and several alcohol-distributor groups all sent letters to federal regulators last month questioning the legality of the Kroger plan. Prohibition-era laws ban alcohol manufacturers from giving retailers anything of value to keep them from marketing too aggressively.
“It appears, among other things, to run afoul of the prohibitions related to providing items of value to a retailer,” wrote the Distilled Spirits Council of the United States and Wine Institute. The Alcohol and Tobacco Tax and Trade Bureau, which regulates the industry, said it is reviewing the matter.
Brewers Association Director Paul Gatza, who represents craft brewers, say it is a “pay-to-play” system. If Kroger’s plan is approved, “what stops every other grocer from doing the same thing?” he asked. “Then it costs a lot of money to get on the shelves.”
Craft brewers are especially wary. They fear the plan will cut into their margins and squeeze them off the shelf. “For a start-up company, good luck trying to get into Kroger with this plan,” Mr. Gatza said.
A spokesman for Southern said the fees would be voluntary and are designed to offset the estimated $12 million it would cost annually to provide shelf-planning services for Kroger. He said manufacturers who don’t pay into the program wouldn’t be “adversely affected.”
Mr. Dailey said the new plan is legal because the fees would be voluntary and would be paid to Southern, a distributor. He said Kroger wouldn’t profit from the program. “This absolutely is not an introduction of slotting fees,” he added.
Southern said it would re-evaluate the program if no one, or too few, pay for the service. Kroger said it selected Southern partly because it believes the company could provide unbiased advice. It is unclear whether this was an open-bid process.
Manufacturers of products such as peanut butter and toothpaste are accustomed to paying some supermarkets so-called “slotting fees” to stock new products.
Securing approval for the program won’t be easy. In addition to the Alcohol and Tobacco Tax and Trade Bureau, Kroger and Southern also must ensure the program complies with state laws. In Ohio, the Division of Liquor Control last month said it believes the program would violate a state law banning manufacturers from providing something of value to retailers.
Southern and Kroger plan to meet with Ohio regulators in the near future. Southern said the regulators didn’t have all the facts of the new plan.
Kroger has the highest concentration of stores in some parts of the Midwest, the South, the Pacific Northwest and Southern California. It depends on state laws, but Kroger wants this change to apply to all stores.
Kroger made similar changes to its shelf planning for other store sections such as coffee and cereal 4 1/2 years ago.
Mr. Dailey said relying on one organization that isn’t a large manufacturer to analyze consumer data and recommend changes to shelves has yielded big benefits. Packaged food sales from the stores’ center aisles have increased at a time when other grocers are losing sales in that section to perishable foods sold on the perimeter, he explained.
Packaged-goods manufacturers pay a mandatory fee to the independent organization planning the shelves in the rest of center of the store, Mr. Dailey said.
Several large packaged food and household-care goods manufacturers contacted for this story declined to comment on their relationship with Kroger.
While old school ‘shop in a box’ ecommerce as we know it (you know the drill – search, compare prices, choose a site, filter and select goods, find a delivery slot, payment, delivery or collection) is still alive and kicking, it is under threat. Poor experiences, hard to find goods and challenges paying are all contributing to rising levels of poor customer experience.
In the past year, customer expectations of UK retailers rose by a staggering 23% (Brand Keys 2015),however 42% cited speed and user experience as key reasons for heading to a competitor (Dyn 2015), 45% claimed they were returning to physical stores because ecommerce sites offer too much choice (Rackspace 2014) and research has shown that retailers are losing as much as 42% of revenue at the payment stage (PPRO 2014).
Grocery shopping in the digital age Whilst grocers can offer choice, assortment and competitive pricing the nature of the grocery shopping experience as we know it doesn’t exactly lend itself to online shopping. You still have to navigate the aisles, it’s even harder to differentiate between goods in a digital context, a weekly shop can still take an hour to complete and there are no guarantees the stock you’ve ordered will arrive at the door. It is neither enjoyable or inspiring when compared to some of the clean, aesthetic and emotive experiences seen in categories such as apparel and travel. To give you two clear examples of this, let’s first look at Tesco. Tesco is a brand with lots of rules about what you have to spend to qualify for delivery and a ‘push’ rather than ‘pull’ model for the returning user (more ‘we’ve got this on special’ than ‘we know you’ll love this’ based on your shop last week).
Another example is Morrisons. Its site makes it tremendously hard to know where to start the shop given the sheer volume of options facing the user on the site, plus the user has to register BEFORE they know if a delivery slot is actually available.
Online grocery shopping, particularly for the repeat visitor, should be simpler but no one seems to have created a truly digital approach to it yet.
The paradox? Grocers should be in pole position. They enjoy access to a massive slew of customer data, they have loyalty schemes and they enjoy extremely high recency and frequency. According to Nielsen, just 27% of visitors on Grocery sites classify themselves as ‘intending to buy’ versus 46% in the apparel and footwear category, clearly there is serious ground to be made in getting the sector to seduce and support users.
The threat to today’s grocer Whilst ecommerce user experiences are evolving, this isn’t really where the change is taking place. Three forces are driving the change, mobility, the use of data to personalise and expedite shopping and finally, super-flexible fulfilment and delivery, which are focused on one thing: convenience.
While the major grocers are certainly moving in all three of these directions their models are still a long way from being user-centric.
This leaves each and every supermarket brand vulnerable to the new kings of convenience, digital intermediaries like Amazon, eBay, Instacart and in time, apps like Deliveroo that threaten to make every restaurant a take away, cannibalising another part of the grocery market too.
New darling of the digital grocery world, Instacart isn’t just responding passively to consumer expectations, it is creating completely new ones. Forbes is calling Instacart ‘America’s most promising company’. In January Instacart was valued at over $2 billion, just six months after it raised $44 million and is now in 15 cities. Whilst Instacart delivery costs are higher than the average big box grocer the digital experience, face-to-face personal service and fact you can buy goods from more than one retailer in a single transaction are serious draws for the upper end of the market.
Amazon Fresh is soon to hit the UK and plans to take 2% of the market. As a brand they are likely to offer what matters most, a contextual and where appropriate, app-like experience (mobility), the ability to recommend products and quicken the experience (data), and, importantly, total flexibility when it comes to service and delivery under its Prime proposition (regarding fulfilment). These factors coupled with the fact that Amazon is reportedly planning to team-up with local bakeries and delis, posing a major threat to existing UK supermarkets, particularly those without a physical presence such as Ocado.
We’ve seen mass disintermediation in retail banking and insurance, the money supermarkets of food are just around the corner and are building a business case whilst everyone else is sleeping. The use of data feeds, real-time pricing information, the ability to compare a range of flexible delivery and collection routes coupled with the inclusion of local and specialist produce would be all it would take to entice the savvier shoppers amongst us away from supermarkets we’ve relied on for decades.
Whilst grocers are of course here to stay I predict them starting to take second place behind marketplaces like Amazon and eBay and in time, a wider range of potentially local convenience apps for the upper-end of the market, unless they radically re-think how to offer truly user-centric convenience.
The way forward for today’s grocer? Convenience 2.0 If the value proposition for convenience 1.0 was – easy to use, you collect or we deliver. Convenience 2.0 is quite simply, shop on YOUR terms.
To thrive in this new world grocers need to move beyond their comfort zone of offering standard shopping cart, delivery and click & collect services and adopt a convenience 2.0 mentality on and offline.
So, what does this look like?
Think about me as the customer. Understand the context of where I am in, online or offline. Offer me a service that matches the moment. This might mean radically speeding up the offline high-frequency convenience shop by offering a concierge service at the door, rearranging where the top 20 convenience goods are in the store to allow me to complete my shop in under 10 minutes or conversely, if I decide to make a bigger shop but am on foot, allow me to switch into a home delivery mode very quickly through my app or a conversation with staff.
In this parity market, supermarket brands need to start with the end result, fulfilment, and quickly reassure users that the most convenient options are available for them so they can start to shop with confidence on any device.
This means rethinking how arrival and homepage experiences are designed and helping the user act quickly, firstly determining their delivery or collection preference then quickly populating (or pre-populating for the repeat user with a consistent list) their basket through the use of behavioural, transactional or personal recommendations ending the analysis paralysis we see today. We already know that the average app users expects to be able to undertake just two or three key tasks, supermarkets need to service design for these journeys and in tandem create new fulfilment partnerships at a local level.
Orders of any size are expected, so need to be enabled through partnerships if the retailer cannot deliver. These partnerships should draw on a range of businesses, delivery specialists like Shutl on the one end and sharing economy services on the other. Tesco meets Task Rabbit – why not? If it means you can delivery faster, more personal delivery services that people are willing to pay for? And they shouldn’t stop there, if Instacart and Amazon Fresh are teaming up to take a piece of the local produce market, why aren’t we seeing local produce market places on Tesco.com or through Sainsbury’s and Morrisons? (the Etsy of food coupled with best in class servicing?).
The future is there for the taking, the challenge for today’s supermarkets is to exceed user expectations, and explore the best ways of creating a brand new era of convenience. In the words of Peter Drucker, the best way to predict the future is to create it.
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