Monday, October 31, 2016

A Maryland-based produce delivery startup that hooked one of the Shark investors on ABC's Shark Tank earlier this year has decided to stay in Philadelphia after a successful beta period.

Baltimore's Hungry Harvest, which received a $100,000 offer in January this year from Shark Tank investor Robert Herjavec for a 10 percent stake in the company, launched a beta period in Philadelphia immediately after appearing on the TV show.

Hungry Harvest, a Baltimore-based produce delivery company, will stay in Philadelphia after its initial launch period.

The company buys surplus produce that local farmers and wholesalers are unable to sell to grocery stores because of aesthetic or logistic imperfections.The company then sends the variety packs to customers' doorsteps.

For every box sold, the company donates up to 2 pounds of produce to a shelter or food bank. The company for Philadelphia formed a partnership with Philabundance, providing food to about 90,000 people in the area, according to Hungry Harvest.

"We were excited to test the waters in Philadelphia early," CEO Evan Lutz told the Philadelphia Business Journal. "Purely based on its size, we were confident we could succeed here."

The results were better than expected, said Lutz, who said the company found Philadelphia is a "socially-conscious city, especially when it comes to food."

Philadelphia is the first city the company is expanding to outside of its core Beltway area of Baltimore, Washington, D.C, and northern Virginia.

There were a number of key metrics the company wanted to hit before officially launching in Philadelphia, like a positive return on investment, acquiring more than 300 customers and minimizing delivery process errors.

"We focused on getting our logistics processes in place, hired a team of drivers, found partners, and collected feedback from our customers to ensure Philadelphians would have a great experience with Hungry Harvest," Lutz said.

Now that these processes have been proven, the company is now able to move "full steam ahead" with its launch.

The company during its beta period delivered throughout Philadelphia and some of the suburbs. As part of its official launch, Hungry Harvest will expand its delivery zones to include the Main Line, South Jersey, and other parts of Montgomery and Chester counties.

The new areas are collecting pre-orders, and the aim is to begin delivery on Nov. 20.

The food industry is experiencing a major consumer trend toward fresh foods, which comes with a demanding preference set in that customers want "beautiful, blemish-free and visually abundant" food, according to Sara Williamson, assistant professor at St. Joseph's University.

This results in a lot of unsold, perishable products that are still edible. It's a financial loss for the retailer that eventually "ends up being calculated as part of the price we pay for what we do purchase," Williamson said.

Hungry Harvest, however, gets it produce before they're sent to grocery stores, so the question becomes what farmers and distributors were doing with the unsold produce.

"If it was all direct disposal, that is a different impact than donation or even composting," Williamson said. "For example, if farmers were composting the unsold produce and now Hungry Harvest is buying it from them, that provides an incremental revenue but also may necessitate purchasing fertilizer externally."

"If wholesale and distributors were donating in bulk to Philabundance but now are able to sell to Hungry Harvest, then Philabundance secondary market donations stand to decrease, food waste stays about the same, but profit for distributor and wholesaler increases."

Philabundance at first was worried its donations may decline as a result of Hungry Harvest entering the Philadelphia market, but a shift in Philabundance's strategy may actually increase its donations, according to Scott Smith, director of food acquisition.

"We’ve started to purchase produce that is near the end of its life — for a discounted rate — as well as accepting [Hungry Harvest's] donations," Smith said.

Philabundance as a result is now being viewed as a partner, and the organization can purchase produce with a longer shelf life. Philabundance also pays in under 14 days as opposed to major retailers, which can take up to 120 days.

Aldi named best value for money supermarket

By ISN Editorial on 31/10/2016Comments Off

German discounter Aldi has been crowned the ‘Best Value for Money Supermarket’ by industry magazine Moneywise. In a reader’s poll conducted by the magazine, Aldi surpassed market rivals Tesco and Lidl. This is the second time in a row that Aldi is winning the ‘Best Value for Money Supermarket’ title.

Aldi’s Joint Corporate Managing Director, Tony Baines, said: “At Aldi, we’re committed to providing customers with top quality products at unbeatable prices, and the results of these awards are testament to this.” The award win comes as we continue to open more stores across the UK and we look forward to welcoming more people through our doors to enjoy award-winning products at everyday low prices.”

The award, according to Moneywise, was decided after each one of the participating supermarkets were rated by its readers for quality, customer service, range of produce and value for money. The selection criteria also included on the likeliness of one recommending the supermarket to his family or friends.

Aldi has won gold in the International Wine and Spirits Competition earlier this month, thanks to its £5.99 wine from Australia. The competition, which is judged using blind taste tests, put Aldi’s sweet dessert wine at the top of the pile. It’s not just Aldi’s wine though, the supermarket’s whisky also managed to scoop a top accolade in July this year. Amazingly, five of Aldi’s whiskys took home awards in the International Wine and Spirits Challenge. Whisky aside, the supermarket managed to net a grand total of 16 awards for its spirits range.

Amazon mum on stores, but bullish on grocery

Analyst: Whole Foods, Kroger vulnerable amid Amazon expansion

Oct 28, 2016Jon Springer

Kevork Djansezian/Getty Images News/Getty Images

Amazon officials late Thursday declined to address recent reports that it was looking into building grocery stores, but reiterated that groceries were a key part of its offering, and that it was exploring different ways of getting products to customers.

Brian Olsavsky, CFO of the Seattle-based retailer, in a conference call discussing quarterly earnings declined specifically to address what he called "rumors and speculation" around grocery stores, but said the company was pleased with results at a handful of physical bookstores, pop-up stores and pickup sites providing an alternative to shopping strictly online and delivery. A report earlier this week cited company documents contemplating building as many as 2,000 Amazon grocery stores following a test of units reportedly under construction in several markets. "We will try different delivery methods or pickup points or ways of getting product to customers, but [there is] nothing specific to point out on the grocery side right now," Olsavsky said.

Olsavsky confirmed the company was continuing to expand its Amazon Fresh program, adding the service in Dallas, Chicago, Northern Virginia and Maryland during the fiscal third quarter, and expanding to new ZIP codes within existing markets.

"We're very happy with the progression, both in the geographies that we've been in for a long time where we're at, continuing to add ZIP codes and additional neighborhoods and also in these new cities," he said. "Certainly [it is] a business where we continue to work on costs and profitability, but we are finding it's a very attractive service to our customers, which is what we're after."

In addition, Amazon this week said customers in Amazon Fresh markets can now shop for groceries directly through the Amazon.com website and separately, announced a fivefold increase in sales of its Dash buttons providing Prime members with convenient consumable reordering.

Amazon's financial results for the period, which ended Sept. 30, reflected the retailer's continuing investments in infrastructure to support these services. Net income of $252 million was below analyst estimates, but sales improved 29% to $32.7 billion.

In a research note Friday, analyst Scott Mushkin of Wolfe Research said Amazon's moves in grocery should bring additional pressure to cities already dealing with an overabundance of space devoted to food retail. Mushkin also believes demand is weakening, citing demographic trends, but said Amazon's focus on Prime consumers could prove especially problematic to Whole Foods and other staples retailers.

"With growth in the food-at-home industry very tepid, in part due to demographic headwinds, Amazon’s aggressive push is adding to the oversupply challenges in the industry," Mushkin wrote.

"We view Amazon's aggressive push of its Fresh offering to be particularly negative for Whole Foods as many of the Amazon Fresh markets are also large Whole Foods markets and there is likely overlap with customers given the make-up of Prime members. We also believe that Amazon’s move into consumables is starting to present challenges for the traditional supermarkets, including Kroger."

Specialty grocery stores fight for life against larger chains

By Lisa Fickenscher

October 27, 2016 | 12:00am

Specialty grocery stores fight for life against larger chains

The Garden of Eden store on 14th Street in ManhattanPhoto: Michael Sofronski

Speciality grocers are getting squeezed like a bunch of lemons.

The chains, which once were the only place to get high-quality and organic merchandise, are now fighting more and more a losing battle against larger chains — like Costco, the largest seller of organic food today — that sell it for less.

New York-based Mrs. Green’s Neighborhood Market is one chain getting caught in the squeeze.

It has closed nine of 20 stores over two years — and recently exited Chicago.

For the past several weeks, its New York-area stores, including one in the West Village, sported signs apologizing for their bare shelves.“We are experiencing significant product delivery challenges,” the signs state, referring to its distributor’s decision to withhold product because of late payments, according to sources.

The company itself declined to comment on why some shelves are empty.

The chain is also shifting its focus to smaller stores, ones of about 12,000 square feet. Its stores had been 25,000 square feet.

“Mrs. Green’s used to be that cool, small organic retailer where you could get stuff that others don’t offer, but that’s not the case anymore as Whole Foods and even Target offer the same things,” said Dan Glickberg, a partner in food consultancy Rodeo CPG.

Mrs. Green’s is not alone.

Garden of Eden, once a six-store speciality chain, closed three underperforming stores in the last few years — but it was still forced to file for Chapter 11 reorganization in September.

Even larger regional chains, like The Fresh Market of Greensboro, NC, are retrenching, focusing on less-expensive merchandise and exiting certain markets.

Last week, the 177-store chain — known for its healthy and locally sourced products — said it was lowering the prices on hundreds of items and adding new categories, including “everyday grocery classics.”

Earlier this year, it left Texas, Iowa, Missouri and Kansas.

Meanwhile, some grocers are getting squeezed by skittish distributors who don’t want to get burned by another massive bankruptcy filing like A&P’s.

“The distributors’ banks are getting tighter on them and it becomes a domino effect,” said John Catsimatidis, owner of the Gristedes and Red Apple chains in New York.

What do cars and grocery have in common these days? If you answered lots of digital-driven innovation rocking the traditional model, then you read my mind.

A recent Economist article summed up all of the competing innovations in today’s car market – self-driving cars, intelligent cars, ride services like Uber and Lyft, car share services instead of ownership – as “The Race to Reinvent the Automobile.” A similar “race to reinvent grocery shopping” is underway as digital innovations in the marketplace compete for consumer’s attention, and the outcome depends on how consumers react and respond.

Retailers and suppliers are like observers at the racetrack, foot on the rail, racing form in hand, trying to figure out how to handicap the race – here’s a tool that will help.

Dueling innovations in the marketplace

Digital influence and online shopping options have clearly produced a significant uptick in the competition for share of both mind and wallet.

Digital influence is big – and bigger than many realize. It impacts 31% of food and beverage sales according to Deloitte. These influences include a wide range of communication platforms such apps, sites, and social media – from idea generator/sharers like Pinterest, AllRecipes, and Facebook, to savings apps like Ibotta and Cartwheel, to new information sources and transparency about food origins, health values, and prices, and even devices such as Amazon’s Echo (which puts Alexa in the middle of household conversations).

In addition, ecommerce now offers consumers a wide variety of online grocery options that make it possible to skip the trip down the aisles entirely for some or all of a household’s grocery purchases -- 40% of grocery shoppers have tried it according to Brick Meets Click research, and 21% use it regularly for at least some grocery purchases.

Online shopping options seem almost endless, and more keep appearing each day. Shoppers have:

Plenty of sources to choose from – Amazon, supermarkets, organics, farmers market-style, specialty retailers, mass marketers, etc.
Many choices about how the offer is structured – from subscription services to one-off’s like meal kits or big trip stock-up orders.
An array of fulfillment possibilities to fit the needs of the moment – from slow and economic, to click and collect, to on-demand delivery.

Lasting impacts on shopping habits

It’s not clear which of today’s dueling innovations will finish “in the money” in the race to reinvent grocery shopping, but their presence is already changing the future in some significant ways by:

Expanding the choices people have of where to shop and which information they will use to make purchasing decisions.
Shortening the time between recognition of a need and when the purchase is made.
Changing the way consumers organize and execute their grocery shopping. (Think of the impact of Basket Bandits.)

Don’t underestimate the growth potential

Complicating the picture is the fact that although most grocery purchases still happen in store, digital is where the growth is. Overall growth in the grocery market is flat (maybe one percent per year), in contrast, digital is growing 15% per year.

To put it another way, consider that the business from the 80% of consumers who aren’t open to changing their grocery shopping habits is growing very, very slowly if at all – but business is growing very quickly among the 20% who are open to change, and digital is where it’s happening.

Tools for handicapping the race

A. Create your own adoption curves

Whether you’re a grocer or a CPG brand with traditional roots that’s looking for guidance on how to navigate these waves of innovation, the advice is the same.

The first thing you should do is find out where your customers are on the adoption curve for online grocery and digital tool options. Tracking their progress relative to interest level, readiness and use will give you the best guidance for how and when to invest.

Traditional grocery retailers will want to understand how their customers are changing where and how they shop for groceries.

Which digital platforms are your customers using?
Where are they on the adoption curve?
What are they looking for and not finding in terms of greater convenience, product information, assortment, and ease of shopping (such as ordering, fulfillment, payment, etc.)?

CPG brands and other suppliers will want to learn how consumers are prioritizing channel choice when buying their products (in-store, online, or blended).

TWO TYPES OF ADOPTION CURVES: The blue bell shaped curve identifies the different adopter segments, describes their size, and shows the sequence of adoption. The gold S-curve shows how the innovation accumulates total market share over time. (Image source: http://www.ondigitalmarketing.com/learn/odm/foundations/5-customer-segments-technology-adoption/)

2. Follow the adoption drivers

So what propels that adoption curve? Studies across different fields have shown that the adoption of specific innovations is typically influenced by the following set of drivers.

The relative advantage of the innovation – how big is the improvement vs. the traditional practice?
Compatibility – the ease of integrating the new innovation into daily life.
Complexity – how challenging is it to actually use the innovation?
Tryability – how difficult or risky is it to try?
Observability – how easy is it for others to see that a household has begun to use it?

These drivers apply to grocery shoppers trying new digital tools, too, and they can provide insights into why some digital innovations have more success and lasting impact than others.

3. Location matters, more than ever

Lastly, it’s important to recognize the importance of location. Your local market will differ from national averages – specific use may be higher or lower, but either way, it is important to measure/find out.

The range of involvement in digital influences and use of online options is highly influenced by how many are present and their attributes (per the list above) in a given market. As the number of digital options increases in a market, so does consumer awareness for the services due to advertising and promotions, and greater awareness drives adoption rates up.

How prepared are you?

Going forward, retailers and suppliers need to understand exactly what’s happening in the race to reinvent grocery shopping if they want to compete for business. The data is out there, and adoption curves – like a good set of binoculars at the racetrack – make it possible to bring the contest into focus before it gets to the homestretch.

Food: Value Network Issues