Research: Food retailers should target Amazon Prime members

Thirty-two percent of Amazon Prime members visited grocery websites and apps

Julie Gallagher | Mar 30, 2017

Food retailers should actively engage Amazon Prime members who, according to market research firm GfK research, visit online retail websites more frequently than non-Prime members who use a smartphone, says Christina Pate, senior research director of digital experiences for GfK.

“Prime members are overall heavier online shoppers, so we tracked Prime and non-Prime members over a five-month period and found that Prime members are spending five more hours and visiting 50 more online shopping businesses than non-Prime members, and this extends to grocery categories. For grocery categories, Prime members were more likely to access grocery websites and apps as well.”

Amazon Prime’s subscriber base is estimated to be between 65 million and 80 million, with Amazon generating $6.4 billion in revenue from these shoppers, according to Pate. Fifty-nine percent are female and four in 10 (40%) are ages 55 and older, 36% are 35 to 54 years old and 24% are ages 18 to 34. When it 

comes to income, 29% of Prime members fall into the more than $100,000 range. Thirty-seven percent fall between $50,000 and $99,000 and 34% earn less than $50,000.

Over the course of the five-month research period, Amazon was the most used shopping touch point with 78% of Prime users visiting the site and/or app versus 72% of non-Prime members.

Thirty-two percent of Prime users visited grocery websites and/or apps compared to 25% of non-Prime members. One-third of Prime users (33%) visited wholesale club sites and/or apps compared to 26% of non-Prime users. When it came to visits to mass merchant sites and apps, 63% of Prime members made visits versus 68% of non-Prime members. Prime members showed a preference for mass merchant apps as opposed to mobile websites, with visit frequency being three times higher for apps.

Pate noted that given the online presence of Prime users, food retailers should enhance their apps and target these shoppers in other ways.

“Prime membership will continue to grow as Amazon keeps adding more benefits,” she said. “There are opportunities for other retailers to engage these online shoppers into their own programs and apps regardless of Prime membership. Prime members still use mass retailer apps so they’re not necessarily just dedicated [exclusively to Amazon]. They’re also more likely to visit apps and sites of club stores who require membership, so those who participate in Prime may be more inclined to also take part in clubs.”

Walmart, CPG giants to track sourcing from women-owned businesses

McMillon: ‘Customers care where products are sourced’

Jon Springer | Mar 29, 2017

Wal-Mart Stores is among nine companies joining in a collaborative effort to track and report sourcing from self-identified and certified women-owned businesses over the next five years, the retailer said Wednesday.

Walmart said the effort would raise awareness for the importance of sourcing from women-owned businesses. 

This marks the first time the Women’s Business Enterprise National Council (WBENC), the largest third-party certifier of businesses owned, controlled and operated by women in the U.S., will launch a formal initiative to publicly report aggregated spending on women-owned businesses. Other participating corporations are Campbell Soup Co., Coca-Cola, ExxonMobil, General Mills, Johnson & Johnson, Mondelēz, PepsiCo and Procter & Gamble.

Walmart made the announcement on behalf of the other companies involved and WBENC at Walmart’s Women’s Economic Empowerment (WEE) Summit in Washington, D.C.

“Creating economic opportunity and growth 

is central to who we are as a company,” Doug McMillon (left), president and CEO of Walmart, said in a statement. “We are proud to be part of this important initiative, and together we can make an even bigger impact in elevating these successful women-owned businesses. Our customers care where products are sourced, and we believe supporting women-owned businesses helps us put innovative products on our shelves while helping these businesses thrive and grow.”

This announcement comes on the heels of the culmination of Walmart’s five-year Global WEE Initiative, which included a set of goals to help empower women around the world through sourcing, training and supporting diversity and inclusion. As part of the WEE Initiative, Walmart sourced $20 billion from women-owned businesses in the U.S. and increased sourcing from women-owned businesses internationally.

Walmart also helped fund the creation of the “Women-Owned” logo, which can be used by any woman-owned supplier certified by those organizations at any retailer to highlight their products to consumers. Today, Walmart has more than 1,500 suppliers who identify as women-owned businesses, producing everything from apparel to produce.

Wegmans Food Markets

Colleen Wegman (right) with SVP Nicole Wegman and Danny Wegman, who remains as chairman.

Colleen Wegman named CEO at Wegmans

Danny Wegman to continue as chairman

Jon Springer | Mar 29, 2017

Danny Wegman, CEO of Wegmans Foods Markets, on Wednesday said he has appointed his daughter Colleen to succeed him at the helm of the family-run retailer.

“I will continue in my role, but now as chairman of the company,” Danny Wegman said in a short statement issued by the Rochester, N.Y.-based company. “The time has come to create a structure for the future that will allow us to remain strong, vibrant and family-owned. I have no doubt that our company will be in good hands.”

Colleen Wegman joined Wegmans in 1991 and was named president in 2005 by the late Robert B. Wegman, her grandfather. She previously served as a store manager, a SVP of merchandising, directed e-commerce and helped to develop Wegmans' natural/organic department.

Danny Wegman has served as CEO since 2005, succeeding his father, Robert.

The company operates 92 high-volume supermarkets specializing in fresh and prepared foods and has a reputation as an industry 

innovator and a top employer.

There's one huge factor shaping Starbucks and Dunkin' Donuts' 'coffee shop of the future'

• Kate Taylor 

• Mar. 26, 2017, 1:01 PMMobile ordering is just as important as the upscale Roastery in shaping the future of Starbucks.Matt Weinberger/Business Insider

Smartphones are about to change coffee shops as we know them, as Dunkin' Donuts and Starbucks prepare to build the "coffee shop of the future." 

"As we think about what that coffee shop of the future look like… the whole store will be much more focused on mobile ordering," Scott Hudler, Dunkin' Donut's chief digital officer, said at a media day on Tuesday.

While Hudler said Dunkin' Donuts doesn't have any design tweaks to announce yet, both Dunkin' and Starbucks are realizing that the rise of mobile orders means that the coffee shops need to make some changes... and fast. 

Currently, a little over 1% of Dunkin' Donut's orders are made via mobile devices.

At Starbucks, that figure has reached more than 8% — something that has created some problems for the chain.

Starbucks has added shelves at some locations to make the mobile ordering hand-off more convenient.Kate Taylor

In January, Starbucks reported that transactions, an important measure of customer traffic, dropped 2% in the most recent quarter, in part because of problems caused by mobile ordering. On Wednesday, at the company's shareholders meeting, executives said Starbucks has rolled out fixes, including adding more employees at peak hours and tweaking the beverage hand-off process, to fix bottlenecking issues. 

"Now, the early feedback from store managers and customers has been very positive," said Kevin Johnson, Starbucks' president and COO. "But keep in mind, these are just the first steps of a number of things we are doing to improve capacity and throughput in our store."

Some of these bigger picture changes may include reconfiguring some locations to make room for two separate lines: one for in-store orders and one for mobile orders.

In essence, both Dunkin' and Starbucks are realizing that store designs will need to fundamentally change at some point in the near future to put mobile front and center, at least in some locations. 

Kate Taylor

The two chains' futuristic coffee shops likely won't be identical. Dunkin' customers are more concerned about speed, while Starbucks needs to pay closer attention to maintaining shops' welcoming atmosphere. 

Coffee chains are in a unique position in the retail industry, as digital orders are crucial to the future and lack a clear precedent for stores to build upon. The retail industry demonstrates the dangers of ignoring mobile and online orders, as traditional retailers like Macy's and Sears close hundreds of locations after failing to compete with e-commerce rivals. 

"We've got to evolve rapidly. We've got to change," Hudler said. "Retail and really [quick service restaurants] specifically are really on the front lines on a lot of those changes."

Starbucks and Dunkin' Donuts aren't yet at the point where, if they fail to win over mobile customers, they'll be forced to shut down stores. However, as seen by Starbucks' recent struggles, it's becoming clear that the coffee shop of the future needs to fully embrace mobile — or risk losing customers as mobile orders grow. 

Blue Apron just partnered with the godfather of sustainable meat — and the move will transform its meal kits

• Leanna Garfield

Bill Niman at his family farm in Bolinas, California.Roman Cho/BN Ranch

In 1969, Bill Niman bought his first ranch, an 11-acre plot with pigs and chickens that roamed freely, for $18,000. Over the next four decades, that ranch grew to several hundred acres, and he built up his own sustainable meat supply company, Niman Ranch.

At the time, there weren't many farms who let their animals graze in open fields and spend time in low-density feedlots. Niman, who is essentially the godfather of sustainable meat, pioneered humanely raised livestock in the US.

In 2007, Niman launched BN Ranch, a small network of farms in California and New Zealand that only raise grass-fed cattle and free-range turkeys.

Now, he has sold BN Ranch to a meal kit company with a national reach: Blue Apron. Niman's not leaving — he will be in charge of building a supply chain for all the beef, pork, turkey, and chicken that Blue Apron ships in its 8 million meals every month.

Take a look inside Niman's family farm, where Blue Apron will source some of its meat.

Bill Niman lives and works on his family farm in Bolinas, California, where he raises grass-fed beef and free-range turkey.

Rancher Bill Niman with his wife, Nicolette Niman (an environmental lawyer), and their son.Courtesy Bill Niman

Niman left Niman Ranch in 2007 after Natural Food Holdings (NFH) took a controlling stake. He disagreed with how NFH changed the cattle-raising process, which wasn't up to his standards (Perdue later acquired Niman Ranch in 2015.) Niman then immediately launched BN Ranch.

Since launching BN Ranch in 2007, Niman has built a small network of ranches in California and New Zealand that produce meat under the BN Ranch brand. His own ranch, which is meant to serve as a model for the larger operation, borders the Bolinas Bay.

Bill Niman's ranch in Bolina, California.Blue Apron

Over the years, BN Ranch has supplied to restaurants from Chez Panisse to Chipotle.

By acquiring BN Ranch, Blue Apron will greatly increase the number of ranches in its production network, and start to work with ranchers who raise pigs and chickens, too. Before, Blue Apron bought its meat from dozens of farms across the US.

Blue Apron

“I really enjoy the camaraderie and the opportunity to continue my life’s work, and change the way people eat and raise animals the way they should be raised,” Niman tells Business Insider. “It’s what my family does, and now we can do it in a much more impactful way.”

Blue Apron

Blue Apron will raise only grass-fed, grass-finished cattle of British breeds, like Black Angus and Hereford, in areas where grass thrives year-round (e.g. Northern California and New Zealand), according to The Washington Post. Before the purchase, the company did not have these requirements.

Niman started supplying to and consulting for Blue Apron, a meal-kit company valued at $2 billion, after he met co-founder and chief operating officer Matthew Wadiak in 2012.

Rancher Bill Niman and Bue Apron's co-founder and chief operating officer, Matthew Wadiak.Blue Apron

“I think one thing's for sure: We are seeing brick and mortar stores shutting down across the country. And we’re talking about a trillion-dollar industry with food. I think it would be naive to think that will be buying food in the same way in 10 years,” Wadiak tells Business Insider.

“Through technology, we have opportunities that we haven’t seen in traditional food systems. Most of the energy used in a grocery store is keeping customers warm and food cold. It’s the most inefficient way to properly manage a food system, and customers pay for that.”

This year, Blue Apron will buy tens of thousands of cows, chicken, turkey, and pigs, which will go to slaughterhouses near the ranches that raised them. The meat will then go to processing facilities, where it will be frozen and shipped to Blue Apron’s warehouses. The company will incorporate the meat into its meal kits for customers.

Blue Apron

Niman says the partnership will allow him to scale BN Ranch and make sustainable meat more affordable for the masses. “It was challenging to scale, because we were a small ranch,” he says. “Now that we’re scaling, we’re going to be able to bring down the costs of production and distribution.”

Blue Apron

Niman adds that, going forward, Blue Apron may partner with farms in Australia, Canada, and states in the Pacific Northwest like Oregon and Washington (that will join the BN Ranch network).

The acquisition also makes financial sense for Blue Apron. Unlike many restaurants and grocers, which tend to only purchase expensive cuts like pork tenderloins or strip steaks, Blue Apron will buy the entire animal and design its menus to use every part.

Blue Apron

“We can pay farmers more, while paying less for meat,” Wadiak says. “By vertically integrating, we’re going to be more lean, and that’s better for everyone.”

Bill Niman at his family farm in Bolinas, California.Roman Cho/BN Ranch

The move also adds a bit of prestige to Blue Apron, which came under fire in late 2016 after a Buzzfeed investigation suggested the company's rapid growth led to inhumane working conditions at its Richmond, California warehouse facility.

Working directly with the ranches will also allow Blue Apron to cut out middle men (like secondary processors or breeders) and buy the meat at a lower cost per pound.

Blue Apron

Since the company will be purchasing whole animals in large quantities, it will cost less per pound to ship beef from, say, a slaughterhouse in New Zealand to a processing plant in Chicago.

A larger goal, Wadiak says, is to help fight climate change. Blue Apron will be focused on working with farms that don't use petrochemical fertilizers, which emit a great deal of CO2.

Blue Apron

However, it's important to note that whether ranches feed animals grass, grains, or corns, raising livestock takes a big toll on the environment. Scientists at Japan's National Institute of Livestock and Grassland Science estimate that producing 2.2 pounds of beef emits more greenhouse gas than driving 155 miles. 

Transporting meat from New Zealand will likely also emit a lot of CO2, and as Buzzfeed's Ellen Cushing notes, meal kit customers are also left with waste from all the plastic packaging. (Though it's recyclable, many cities don't accept it for curbside pickup.)

Though New Zealand is far from the US, Niman says ranches there can raise cattle at peak condition when it’s wintertime in North America.

Blue Apron

“It’s the same idea as if you would harvest a tree-ripened fruit,” he says. “In order to do that on a year-round basis, you really need to be in the northern and southern hemispheres, because it’s driven by nature. When the grass is at its best, and grazing animals can get fat and mature, that can only happen at a certain time of year in any one geography.”

Blue Apron

Teaming up with Blue Apron will give Niman’s vision a much wider reach. "This is really going to change the way people eat," he says. BN Ranch meat will start appearing in Blue Apron’s meals later this year.

Blue Apron's seared steak with mashed potatoes and roasted Brussels sprouts.Blue Apron