Week of January 26, 2020

Why FMI could be more relevant than ever

With a familiar acronym, but a new approach to serving the food retailing industry, FMI enters 2020 poised to become an even more relevant force than it has been previously. The reason why has everything to do with a recent rebrand that more closely aligns with how shoppers view the universe of food retailing options as opposed to a channel specific approach which led to FMI's member base being dominated by traditional supermarket operators.

FMI's new inclusive philosophy, which president and CEO Leslie Sarasin elborated on Sunday morning at the group's annual Midwinter conference in Phoenix, could lead to an expanded member base, an even more powerful voice and overall more relevant organization. For more on the logic behind FMI's shift to be the "food industry association," click here.

FMI president and CEO Leslie Sarasin addressing members of the board at the trade group's annual Midwinter executive conference in Phoenix.

Five key takeaways from FMI Midwinter

The FMI Midwinter conference began last Friday and wraps up Monday morning. While there were many highlights and pressing topics of conversation, a few stood out. Here's five things you should know.

Meijer hires Hyer to solve labor pain point

Meijer is working with new on-demand app-based labor provider Hyer to connect gig-economy workers with identified tasks in all of its 246 stores. The first-of-its-kind program is fundamental shift in the gig economy, with those who download the app and passing a background check performing physical tasks as opposed to merely observing and recording information in more of an audit or compliance function on behalf of a supplier.

"There are many responsibilities at the store level that can be fulfilled quickly and easily by individuals looking for flexible work arrangements, said Mike Graham, Meijer’s SVP of supply chain and manufacturing. “Hyer allows us to secure labor on demand through a large, independent workforce that is ready and qualified."

"Across the system, the user experience is fast and simplifies the overall resource management at store level, saving us time and increasing efficiency, while simultaneously improving the customer experience," said Todd Weer, Meijer's SVP of stores. "We're excited to fully put this app to work for us."

It’s not often that two executives from the same company offer such a full-throated endorsement of a new solution, which suggests the two longtime PepsiCo executives behind Hyer, CEO Dave Dempsey and COO Mario Mercurio, are on to something with big potential.

How to get shoppers to download an app

An appeal from actress and native Texan Eva Longoria and a chance to win a lifetime of groceries is how H-E-B is enticing shoppers to download its mobile app. H-E-B has launched a commercial to coincide with the Super Bowl in which Longoria crashes a party and then tells fellow party goers to download the app and participate in a gamified experience. The game will ask registered users to choose 10 H-E-B products that were featured in the commercial and once ten items are correctly picked, the user will click submit to automatically be entered for a chance to win. The program kicks off when the commercial airs in the break between the Super Bowl’s third and fourth quarters in more than a dozen key Texas markets.

The doctor is in at Kroger stores in Michigan and Idaho

Ailments that used to require a visit to a doctor office for treatment are increasingly diagnosable, and treatable in alternative settings such as retail stores. The latest example involves 104 Michigan and 15 Idaho Kroger pharmacy locations where customers can now receive strep throat and flu testing. Pharmacists are then able to prescribe and supply the appropriate treatments during the same customer visit. Approximately 250 Kroger Health pharmacists received special training to offer the new service.

Starbucks looking to set new sustaintability standard

Being carbon neutral or creating zero waste are yesterday’s news in the world of sustainability. Starbucks CEO Kevin Johnson is focused on being, “resource positive,” as a long term sustainability goal. That means, the company will store more carbon than it emits, eliminate waste, and provide more clean freshwater than it uses, according to Johnson. “This aspiration is grounded in Starbuck's mission. By embracing a longer-term economic, equitable and planetary value proposition for our company, we will create greater value for all stakeholders,” Johnson wrote in a letter. Details of how the company plans to get there will be revealed in 2021, but for now preliminary goals include a 50% reduction in carbon emissions, waste sent to landfills and water used for operations and coffee production.

SC Johnson gives new meaning to game-changing sustainability

Specially branded plastic cups used at Miller Park, home of the Milwaukee Brewers baseball team, will be recycled and used to make bottles for SC Johnson’s Scrubbing Bubbles cleaning product. The first-of-its kind partnership provides a highly localized solution to plastic recycling with fans able to place cups branded with the SC Johnson logo in specially designed receptacles so they can be separated from other waste for collection by SC Johnson. "We all need to work together to help close the plastic recycling loop, and I hope this first-of-its-kind initiative with the Brewers will serve as a model for other major league teams, companies and even other sports leagues," said Fisk Johnson, Chairman and CEO of SC Johnson.

CPG bellwether P&G offers uplifting sales message

Increased product volumes outpaced pricing increases as the driver of sales growth during Procter & Gamble’s second quarter. Increased volumes accounted for 3% of a 5% increase that pushed second quarter sales to $18.2. That’s in contrast to an overall trend the past few years in which price, rather that increased unit volume, was the primary driver of growth. Health care was the strongest segment with sales up 14% to $2.53 billion, driven by 11% unit growth.

And in another sign of consumer strength, leading branded apparel supplier VF Corp. said sales for its third quarter ended Dec. 28, increased 6% to $3.4 billion on a constant currency basis. Gross margin also expanded 110 basis points to 55.7%.

KeHe launches emerging brand accelerator

Leading natural, organic, specialty and fresh wholesaler KeHE is leveraging its unique market position to create KeHE Elevate, an emerging brand program to nuture upstart brands and help maximize their potential. KeHE said it is actively searching for program candidates and will limit the program to 200 brands.

"We look for brands that are purpose-driven, have high-quality ingredients, are innovative in their category, represent a future trend, have a unique taste profile, and will appeal to consumers at the shelf," said Rachelle Radcliffe, director of brand development at KeHE.

Colgate-Palmolive Company has something to smile about

In the latest example of a major CPG company buying an emerging brand, oral care leader Colgate-Palmolive bought Hello Products for an undisclosed sum. The company described Hello as a naturally friendly lifestyle brand with strong appeal among younger shoppers. Hello will continue to be led by CEO Kien Kotcher and Craig Dubitsky who founded the company in 2009.

Kroger confirmed Frederick, Md., 60 miles northwest of Washington, D.C., as the location of 350,000-sq.-ft automated grocery fulfillment center. The facility isn’t expected to open for two years and is among a total of 20 such centers Kroger is developing with U.K. retailer Ocado. Kroger broke ground on its first facility in Monroe, Ohio, last year and also has locations in development or announced near Orlando, Atlanta, Dallas and Chicago.

The Retail Industry Leaders Association (RILA) is out with its 2020 Retail Public Policy Agenda. The group plans to advocate for; trade policies that allow for efficient and reliable supply chains; privacy and data protections laws that protect consumers; payment reforms that enhance competition and transparency; criminal justice reforms that address the growing challenge of organized retail crime; and workplace policies that promote diversity and flexibility. The full agenda is available here.

The food and beverage industry expanded its share of the 100 largest U.S. industrial and logistics leases in 2019 by 4.1 million square feet. The gain was driven by grocery delivery, according to a new report by commercial real estate firm CBRE, which prompted a 44% increase in the number of lease transactions.

E-commerce companies and logistics companies – which include third-party logistics providers who handle distribution for other companies – accounted for 52% of the square footage in the largest 100 industrial leases last year, down from 61% in 2018, CBRE found. Still, e-commerce and logistics remain juggernauts for warehouse leasing, accounting together for far more leases (54) and square footage (45 million) last year within the top 100 than the next-closest category – wholesalers at 18 leases for 15.2 million sq. ft.