Grocery stores have a plan to get back to normal
Grocery stores have a plan to get back to normal
23:44

Grocery stores have a plan to get back to normal

Wellness
Well for the last 70 years or so you could walk into your local supermarket and find an ample supply of fresh food, packaged food, paper goods, cleaning supplies, beverages of all kinds. Then all of a sudden something changed. This pandemic came along and turned a lot of things upside down. Consumers started hoarding things. Grocery and supermarket operators were suddenly faced with kind of a mega holiday season but without any warning at all, and a lot of their suppliers got all kinked and crimped. Because of shutdowns and issues with logistics and pipelines of moving things got clogged. Suddenly, some days it could feel a bit like shopping in the Soviet Union. Now what. [SOUND] Joining me now are a couple of guys who should absolutely know what's going on and where things will be going. Michael Brown is managing editor of supermarket news pretty much to the viable of the supermarket industry as I am As I see it, it's an organization that I follow for news and information about that vertical and Doug Baker is VP of industry relations with the FMI, the Food Industry Association, the FMI part star stands for Food Marketing Institute. And that marketing part is going to be an important part of our discussion as we go forward. Michael, let me start with you. What's going on in your newsroom at Supermarket News? What is topic number one that you guys are keeping an eye on right now as we are rounding the corner into May as you watch the supermarket business? Thanks, Brian, I'm glad to be here. What we're seeing is retailers are looking out to sort of like what's next because they feel like March had that explosion and supply issues there. And now that April kind of settled down too it's still very high, volume is very high. But, I think it was Ronnie McMillan last week from Kroger who was saying that was phase one and phase two. We're looking at phase three and we're not sure what that's going to be. How long is this sales volume increase gonna be sustainable? Will there be more of the outages and hoarding that we've seen, because in different categories now? March was all about paper goods and cleaning And then sort of move to the food side of things. The question is kind of what's what's next put what's gonna be the next category that that customer is going to have difficult getting a hands on. Certainly meat I think has come up and we'll probably talk about that a little bit. Yeah. So it sounds a little bit like your, your store audience is a little bit waiting for another shoe to drop. Hopefully not for a shoe to drop, maybe things actually get better. Just get to get better news. You know the businesses are open, they're busy that they're having some of the best sales I've had in years, but. Trying to figure out what to stock and how to store your higher labor. Just things like that. You can't plan around what's going on right now. It's interesting because as you point out, sales are very high because we're flocking to stores to let's face it hoarding is the right word or at least shopping more frequently to try and pick that moment. When that thing that's out might be in it's a little bit of a treasure hunt. And yet it doesn't certainly feel like a good time for the it's not a good time for any industry. So What a strange dichotomy that seems like?>>Yeah, it's, you know, their priorities are safety supply it's not a Good time for the smart business just because those challenges but yes sales are absolutely sky high and it's just you know it is a dichotomy and how long will that last? You know, I mean let's the hoarding and all the essentials people have that stuff now they've bought that stuff. Will there be some kind of flattening Have volume of sales volume, but it'll still be slightly higher because people are home and they're shopping and they're shopping for home consumables. Yeah. Now, Doug, you're focused on the food side of the equation FMI the food industry association. As I mentioned earlier, the M in there is food Marketing Institute and tell me what kind of a marketing job lies ahead for food vendors for the food retail sector. What do they have to reposition? What do they have to retell as a story as we start to come out of this strange time? Yeah, there's some shifting shopping behaviors that are going on. And I think one of the things that grocers are really good at is being the center of their community and you can say they're at their best when the community needs them. The most. And so continuing to ensure their communities that they're for them, I think is going to be extremely important. And what that means is a little bit different today than what it meant two months ago. It's having consistent supply. It's having those measures in place inside of the store that both give them and the associates. Safety that they need that comfort level they need that when they're in the store, that they're also safe in that store. And so, you know as, as states come out of their, out of their shelter and place orders, how to, how do stores continue to work within those environments. Will we continue to see the sneeze guard stay up and very much likely we probably will. Full service cases are those now going to become grab and go cases. Most definitely they will for a while until we continue to see where we go with this thing. [INAUDIBLE] And then also the mention about e-commerce. You know that is a very different shop than going into the store. When I'm in the store it's an experience. I'm probably doing a lot of impulse buying. And when I'm online it's a very purposeful shop. So as more business moves in April was online was even better than March sales. There needs to be a different type of relationship between the retailer and the consumer online than there typically is in store. So they're going to have to think about that and they're going to have to think about it. How do we get those windows filled when people are using the online platform? You can see that windows are going out about seven days right now before you can get an available window, in some cases, to place your order. And so what kinds of technology and automation are needed, and what Kind of reformatting of the stores required in order to be able to fill more of those orders because right now they're being picked from the same shelves that you're picking from when you're in the store in most cases That's interesting cuz that echoes something that worked really well for [UNKNOWN] the restaurant chain who we'll be talking to tomorrow, on connected to the pandemic they started to build a second make line in their restaurant. So digitals made on one counter and walk-in is made on another counter. Turns out to been a really good move although they couldn't've predicted why. Is there something like that, that needs to happen at grocery locations or is that a warehouse thing? Yes. So, interestingly, retailers were testing what is called micro fullfilment before Covid19 And basically what micro fulfillment is if you think about a large warehouse that is moving full cases of product, this is a much smaller version of that. So it can be anywhere from 1000 square feet to 20,000 square feet. And many of these can be extra place right inside the the retail grocery store. So you could be shopping your perishable products while the self table products are being picked in a micro center in the back of the store at the same exert time. The benefit of that is typically right now it takes about an hour to an hour to 20 minutes for a human to pick that order for you So instacart going into a store, it's gonna take about an hour for instacart to pick that order in that store. But if you can get it through a micro fulfillment activity, you can reduce that pick time down to about six, four to six minutes, which really expands on them windows that are available to the to the public to place those orders. That's a huge efficiency gain. That's a big one. I didn't know about that kind of differentiation and trend you're talking about. Another differentiation is we always see our offline versus online. There's always the word versus in there, regardless of the industry but particularly in this one. Is it really a versus or, Michael, is this offline online really more of a slash that most Of the supermarket chains out there can excel at both>>Yeah, I think that we're certainly seeing it become more of that. Yeah people today now are doing both shops they're doing their online stock of shopping but because they can't get slots or they're out of stuff is frequency of out of stocks. To actually getting up and going to the store and doing stack ups, and that they are comfortable with both are getting a lot more comfortable with online. I think [INAUDIBLE] were like I think 25 to 30% of online shoppers last month were first time online shoppers or something that high. Yeah, [INAUDIBLE] Sort of Yeah. People are being introduced to it. And I think they're gonna continue to use both. Like you said it's a different kind of shopping experience for each. And people still need to go to the store to do the experience of it and buy the things they made it not on their mind when they were filling out the online. So, What is your hunch about how this is being divvied up? If I'm going and doing more online in addition to my in store? Am I doing it with the same brand of supermarket or vendor? Or am I going and adding it online from someone else? That's obviously what Jeff Bezos wants to capture and Walmart wants to even capture from maybe more tradit more straight, more straightforward supermarket chains. People staying vertical or are they going a little more horizontal with their online offline?. I think that there's a little more flexibility because You know you can choose more from online you have more options but I can't get a slot with these guys. Let me try these guys. So, you know you're I don't think there's as much loyalty on the online side as there is in the store experience on the store side Do you have any thoughts about how supermarkets and food grocery chains can increase that loyalty to keep that more vertical?. Where am I in store and my online is with the same vendor?. Yeah, absolutely. I do prior to the recession in 2008, 2009 private brands was somewhat of an afterthought. And through that recession, private brands is really sort of become a much more acceptable brand in homes. And it is a way for retailers to differentiate. So as they do differentiate in store with private brands and their service departments, the same brands that they own that they put on their e commerce site and that consumers Trust more than ever 99% of homes now have a private brand in the pantry. That's also a way for that retailer to keep them engaged in their e commerce platform is to continue to grow their own private brand and and get the customer the attributes in the, in the items that they need the most and want the most and then put those in an online format and that will continue to. Drive that differentiation and ultimately, loyalty. Do you think that, and just for our viewers, private brands or things like 365 and Whole Foods or I guess, signature at Safeway? Do you think that those got a bigger presence because they got more premium or more exciting or did we as consumers get thriftier and a little more aware that staples or staples? It started off with thrifty, right? If you think about the recession of 2008, people were looking for ways to stretch their dollar, rightfully sold and so there was trial and error, and a lot of that trial, and a lot of that acceptance has allowed retailers. To sort of recreate the boundaries of what they do with their private brand program in the early 2000s. In the 90s and 80s. It was always about following the national brand and move through that consumer acceptance. Retailers were now given permission to actually experiment. And what it's done is it's it's allowed them to expand their their private brand portfolios across the store and into departments. And really get creative on what they do. The other thing is that we have a couple of new generations that are out there shopping now and they can grow up with the brand the way we did and our parents did. So there is a little less loyalty there in the first place and they are really focused on what does the brand do for me and how does the brand live within society with me and so Any brand has the ability to win a customer if they can answer those questions.>> Let's turn to an area that typically doesn't have a brand and that is the meat counter at a grocery store. It's an unbranded area that is of that stores as we perceive it as consumers anyway, of that stores production they presented. It's in there rappers. If there's a meat shortage coming as we understand the president putting it into kind of a required production mode. What does that do to other sales around the supermarket because I know that a lot of people will buy something from the meat counter and then go shopping for all the stuff that goes with that center of the plate item. Michael, how important is there is this Fallout idea from a potential meat shortage? Well, the fallout would be huge, but we're not quite there yet and we're gonna hope that that doesn't happen. But, what do you see I guess is other categories stepping up. Central store packaged foods, frozen Areas outside of the meat counter where people can do the sort of meal replacement. I have a little more faith that the [UNKNOWN] category is not going to go away as dramatically as we're looking right now. There will be shortages it but I don't think we're going to have the, I don't know it just sounded very dramatic the last couple of days about the meat shortages and what I fear is that that's going to cause some of the hoarding and stuff that we've seen. Yeah. Previous so I, what my my advice right now is to calm down they'll be mute for a while Okay, you're not foreseeing the Soviet era isles that I. [LAUGH] No, I think they'll be panic bomb. Yeah. And then, there will be shortages. I've just I just think that it's you know i think that we're in a place where with there's some things in cold storage its distribution things that they can do that can sort of, Is that painless? And you mentioned as you're mentioning logistics there it's a good time to to ask you Doug about this matching program that you guys that your organization have done with the International Food Service distributors Association, which is one of those names I like it actually tells me what it is. What is this matching program you're doing to try and I guess clear the pipes to get things where they need to be Yeah so early on when the food service sector was asked to close or reduce their service and grocery was unprecedentedly growing. There was an opportunity for us and we reached out to if the the International Food Service distributors association to create a partnership. And knowing that when you manufacture an item, they're they're very two very different processes. Manufacturing for retail is very different than the way you would package a manufacturer for a food service restaurant. So what we wanted to do though, is we wanted to be able to identify those, those elements, those resources. That we can redeploy into grocery retail. And with some work with the FDA and USDA getting some waivers on the way some of the stuff is packaged and shared within a retail environment versus a food service environment, we were able to create this partnership and it's really a fillable form. We had to move fast. So technology didn't play a big role in this. But it allows food service distributors to fill out this form and share what resources they have available and that could be food. It could be people, it could be trucking equipment. It could be even capacity in their warehouse. On the other side on the retail side, they're filling out what is it that they need, you know, it's I need fluid milk I need I need protein products?. I need canned goods, whatever that is. And then what basically FMI and if they did is we just did matchmaking and we connected the two companies together. They created a working relationship did their negotiations separately and then they went on about their business. And it's been pretty successful as you've seen Kroger is Has created a relationship with Cisco and we've had some other retailers that have created relationships with other food service providers like PFG and then down in Carolina. MBI has a relationship now. So it's been helpful. It probably the idea of it wasn't so foolproof for silver bullet that people didn't still see some of the things that they're seeing in the press with some of the challenges that farmers are having getting some of their inventory going. But what it did do is it allowed us to move the inventory through the food service division, but it also allowed people to stay and continue to work at those foodservice distributors location. That's an interesting benefit. Yeah, Yeah.>> I think we've given our viewers a pretty good idea of some of the inside minutiae of what makes the issues at the store that they see as consumers. Let's finish up now with a couple of thoughts I want to ask you about. One of the hotter technologies out there that is really forward looking is these touchless check-outs, like Amazon pioneered, but some other companies offer it as well. So you can come and go without touching anything except the products you're taking home. Is that being only Oversold Michael, as an important new technology or do you think touchless checkout really is gonna get a lot of attention? Yeah I think it's gonna get a lot of attention certainly now with what's going on now I think it boards well for that kind of contactless touch and go just, you know, payment You know Amazon goes in getting a lot of media about it but it and I think they just opened supermarket now in Seattle, it's supermarket sized version of Amazon go. So they're trying to scale it up. That kind of happened right before the whole pandemic thing. So you've got lost in that news, but they are looking to scale that sort of system up and, Believe it's a hope Dale Hayes who is that they're also doing that kind of thing, but they want to do it and sell it to other retailers. And so that's a retailer who's looking to. Yeah. Sell technology to other retailers. So yeah, I think it's definitely it's not a flash in the pan and it's certainly something that after this, Challenge we're gonna see a lot more of.>> Okay, it fits in that category of a number of other technologies and suddenly just took off including the one we're on right now video teleconferencing, which was kind of niche compared to the way it is. Right now. Let me start finish up on both you guys. We'll start with you, Doug. What should we be watching for as consumers in the next month, we're coming into May as of our taping today. What should we be watching for to see how our food vendor, our grocery store nearby is doing or changing? What is on the agenda for the next 30 days? Yeah, so, really retailers are focused on, one is providing that safety for their employees and their customers. You're starting to see more and more retailers who are Going mandatory facial covering. And it's partly and mostly because the customers are asking for that. And so it's listening to their customer and trying to get them and make their shopping trip efficient. And comfortable. I think it's also going to be extremely important over the next 30 days to see if we start to see some of the sales demand debate and people start to settle into their new normal, which will allow the supply chains to refill. We had a number of conversations last week with product manufacturers and they're in the process of retooling their manufacturing And some of the categories that were the hardest hit. And so hopefully over the next 30 days, we'll see some of the benefits that come out of that retooling of those manufacturing facilities. And we start to see that inventory become more available whenever we're in the store, and not just when the truck arrives until everybody can grab it and get out of there. So I think the next 30 days is going to be very telling time. But it's also going to be a time for the industry to sort of settle in the public to sort of settle into place into this, this new normal, we're going to be in for a while. I imagine things like one way aisles and clear shields. And as Michael was mentioning, perhaps a greater uptake of cashless go. Those things may be here for a long time, right? Yeah, I would agree. You know, we, when we're in blue sky days, I have the benefit of being a part of a group called the open voice network. And it's a project with MIT. To create an open platform for voice, and so, although micro fulfillment I believe is going to grow I also want to see what happens with voice assistance. My last day in the office, I was hitting the Elevator buttons with my elbow. So how do we, how does voice actually come away from this? We know we've got it and the various technologies with Amazon and Google. But what does that mean in the store? What does that mean for me as a customer and where else can I use voice in order to not have to touch a surface so I think that's gonna be another technology to watch Michael you get the last word what do you guys gonna be watching in the month of May what's on your give us a look a little sneak peek at your your hot buttons on your editorial calendar, anything chicken or trends that we haven't yet discussed that you think are going to be very telling. It's more about I think now just the safety issue honestly. We're getting A lot of feedback about groceries as first responders. I think there's a movement to from the UFCW to sorta have them designated as first responders and getting the same safety allocations as for traditional first responders so that they can have access to PPV masks things like that.>> That's interesting.>> Yeah, it's, it's, it's actually taken off Albertsons Kroger and stop and shop have all signed on with that, you know, they wanted they want to move that. So, you know, the idea I think that is to continue to make customers feel safe in the stores and workers feel safe in the stores. Labor is going to be a big issue. Retailers are looking to hire a lot of people, and you need to guarantee their safety, and the safety of customers in stores. So, I'd say labor an safety going forward. Yeah. It's interesting, I mean the safety message is so, is so key it's come up so many times at the top of mine from both of you guys. So I think that's a big takeaway for us is that we think about grocery and supermarket as grocery and supermarket industry. They are very much in the safety and well being industry right now. Didn't ask for it, but that's a role that they have to get to. As you're pointing out, I mean there's not much more front line after health, than grocery food supermarket and those daily staples. I've been talking to Michael Brown who's managing editor of supermarket news and Doug Baker, who is VP of industry relations for FMI. The Food Industry Association.

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