Grocery Guys

Ahold Delhaize USA proved to be up to the challenge when online grocery orders exploded following the coronavirus outbreak, according to JJ Fleeman, the company’s chief e-commerce officer and president of its Peapod Digital Labs unit.

As at other retailers, Ahold Delhaize USA — whose chains include Stop & Shop, Giant Food, Giant/Martin’s, Food Lion and Hannaford — has seen booming online grocery sales during the COVID-19 pandemic. Online sales rose 42% for the first quarter ended March 29 — which covered only the first couple of weeks of the pandemic — and then jumped 127% for the second quarter ended June 28. For the first half, online sales ended up growing 84%.

“Almost immediately, we saw e-commerce sales jump over 100% — really kind of overnight,” Fleeman said in an SN Off the Shelf podcast. “The biggest challenge we had, like many other retailers and manufacturers, was responding to the surge in demand. Our supply chain team did a great job in deploying innovative sourcing methods and new ways of procuring product, even standing up a temporary distribution center. And, obviously, we had to rapidly hire and on-board a lot of new people to keep the [supermarket] brands in stock through all those channels. Work continues today to stock up on the key items for winter and the busy holiday seasons, but we’ve made tremendous progress.”

The sharp e-commerce gains now have Ahold Delhaize USA projecting a more than 75% increase in U.S. online sales for fiscal 2020, up from its previous estimate of more than 50% and its initial forecast of over 30%.

That has led Ahold Delhaize USA to step up an already aggressive e-commerce expansion. In 2020, online grocery capacity is slated to grow by 70%. Plans call for same-day delivery to be added at over 600 Stop & Shop and Food Lion stores and the number of pickup sites across the company’s grocery brands to climb from 765 at the end of the second quarter to 1,100 by the fiscal 2020 year-end.

“What’s important to note is that we were in a really strong position when COVID-19 hit,” said Fleeman. “For the year or so prior, we had been doubling down on omnichannel, and the brands have been expanding with click-and-collect and delivery. We’d also just announced a major supply-chain investment and transformation. So we had the right efforts under way, but certainly it was a real acceleration.”

Fleeman has been Ahold Delhaize USA’s chief e-commerce officer and president of Peapod Digital Labs since May 2018. Peapod Digital Labs provides omnichannel solutions and services to Ahold Delhaize USA’s grocery chains. He previously served as executive vice president of commercial services and strategy for Retail Business Services (RBS), the company’s services arm. Before that, he was chief strategy and development officer at Delhaize America and served in a range of vice president roles at Food Lion.

The wholesale e-tailer adapts to the new normal as COVID-19 spurs online grocery purchases. Listen to the full interview now.

A burgeoning e-commerce business at Albertsons Cos. hasn’t blurred the supermarket giant’s focus on brick-and-mortar stores as the bedrock of the customer relationship.

“We try very hard to touch at least 10% of our store base each year with remodels to keep them current,” said Susan Morris, executive vice president and chief operations officer, told Supermarket News in an SN Off the Shelf podcast interview. “As far as 2020, we’ll still get to remodel at least 10% of our store base this year and probably open somewhere between 10 and 15 new stores.”

In fiscal 2019, Albertsons opened 14 new stores and remodeled 243 locations, and through the fiscal 2020 first quarter, the Boise, Idaho-based company has upgraded 46 stores.

“It’s really important for us to invest in our store base, making it look great for our cus-tomers, keeping up with our current offerings — expanding on fresh, which is important to us — and modifying to accommodate our growing e-commerce business,” said Mor-ris, who has held her current post since January 2018 and has been with Albertsons for the past 10-plus years.

Since the beginning of the coronavirus pandemic, there have been many reports of conflicts arising over face mask mandates in supermarkets and other public-facing businesses. But as Russ Turner, director of the People Incorporated Training Institute, points out, much of that focus on the negative can be chalked up to human nature.

His organization, based in the Twin Cities, offers a curriculum of training classes and workshops in a wide variety of subjects related to behavioral health including crisis de-escalation.

Turner and People Incorporated have provided hundreds of de-escalation and other kinds of training with individuals and organizations such as mental health professionals, the Minneapolis Police Department, Department of Housing, Animal Control and others.

“When one video of a conflict goes viral, we have to remind ourselves, that’s one video in a much bigger universe. That is one video of one event in a very, very large country at one point in time,” he told SN in our latest Off the Shelf podcast. “If you have 10 encounters with customers a day and nine are great, but one is bad, your brain still focuses on the negative response, which is an unfortunate tendency.”

Since the onset of the coronavirus pandemic and the peak of panic buying and hoarding in March and April, grocery retailers have seen and are continuing to see significant growth in center store categories. For our latest Off the Shelf podcast, we talked about the success of the category during COVID-19, as well as some of the challenges and opportunities going forward in center store with Sally Lyons Wyatt, executive vice president and practice leader at Chicago-based IRI, a leading provider of data analytics and market research.

Lyons Wyatt, a recognized food and beverage thought leader in the CPG and retail industries and authority on consumer eating and shopping trends, noted that amidst all the devastation of the pandemic, there has been a silver lining for center store and CPG manufacturers.

“The iconic brands, that honestly were struggling for that 1 and 2% growth pre-pandemic, had an influx of new buyers that really is unprecedented,” she said. “And, God forbid, we don't have another pandemic, this is probably going to be a once-in-a-lifetime opportunity for these brands to really get out and build lasting connections. So while we won't have the types of growth we've had this year, we certainly have the potential for increased consumption of those brands and others through center store at a minimum till the end of this year, but what looks to be into '21 as well.”

After the initial run on cleaning supplies and paper goods, it’s been meals at home that have been driving center store sales.

“We all shifted our behavior from being on the go, going to work or being out and about, to then being thrust into the home and eating more meals at home,” said Lyons Wyatt. “When consumers were seeking these meal solutions or snack solutions, they turned to the center store. There's a lot of reasons for that. It might've been for the ingredients or a recipe. It could have been to ensure they had food in the pantry. But we witnessed center store roles evolving because of those home occasions.”

Dinner and breakfast occasions were big winners, according to Lyons Wyatt, along with the big increase in home baking, particularly during those first two months. “What's interesting is that hasn't stopped. So, yes, we saw this big surge in those that big eight-week period, probably around March 8th till April 25th. But since then, we see making dinner and breakfast still resonating. But in addition, snacking and beverages have realized growth.”

During the podcast, Lyons Wyatt also shared her thoughts on the rise of kid-focused products, shopping behaviors as restrictions ease in some places and tighten in others, the race for share of meal business, and the impact of health awareness on center store. Check out the podcast below for insights on these and other areas of opportunity for center store.

And be sure to take a look at IRI’s new report, “Covid-19 and Navigating the Path Ahead: Charting the Course for Continued Center Store Growth.”

Late last month, Schnuck Markets premiered a new specialty store called EatWell, A Natural Food Store by Schnucks — a concept that Chairman and CEO Todd Schnuck said had been in the making for some time.

The opportunity came when a store lease for Lucky’s Market, which was in Chapter 11 bankruptcy, went up for auction in Columbia, Mo. The site at 111 South Providence Rd. not only offered an attractive customer demographic — adjacent to the University of Missouri’s flagship campus — but Schnucks also already operated a supermarket in Columbia less than three miles away. So the St. Louis-based grocer acquired the leased store at the end of March.

“We thought that, ‘Here’s a real opportunity for us to step right into operating a natural food store,’” Schnuck told Supermarket News in a podcast interview. “And we liked Columbia because it’s a university town and already had an established customer base. So we thought it was a great way for us to take that first step.”

That site, too, just happened to be the previous location of the current Schnucks supermarket now at 1400 Forum Blvd. in Columbia.

“We’ve been in the Columbia market for over 50 years. Interestingly enough, this location is in the same shopping center where our original [Columbia] store was located. We opened in 1970, and then later we closed that store and moved to a bigger store about two miles away,” Schnuck said. “So we’re coming full circle, back to a location that’s closer to the university, closer to the student population and closer to the downtown area of Columbia.”

The past few months have seen supermarkets and other grocery retailers implement multi-pronged strategies to protect customers and employees from COVID-19. But what do shoppers think of retailers’ efforts, and how well are stores adhering to these safety steps?

Global market research firm Ipsos aims to help answer those questions with the Consumer Health & Safety Index, a new benchmarking tool to evaluate how retailers across seven sectors — including grocery — are operating during the coronavirus pandemic. The study includes a poll of 2,000 U.S. shoppers to find out which COVID-19 safety practices they deem most important, followed by “mystery” shopping trips at thousands of stores across 45 major U.S. brands to gauge compliance with health and safety measures.

Nick Mercurio, executive vice president and service line head of U.S. channel performance at Ipsos, told Supermarket News in a podcast that grocery rated highest among retail sectors in coronavirus health and safety. Whole Foods Market, Costco Wholesale and Trader Joe’s were the top overall retail performers.

“These three brands clearly outperformed among the 45 brands across the seven industries by a significant margin. In fact, grocery was the highest-performing industry in total, when you look at the composite scores for the index and also the individual behaviors,” Mercurio explained. “Across all of the brands, grocery represented three of the top five and seven of the top 10 [performers]. Brands that sell food — including clubs and big-box stores — were among the top 10 performers, really head and shoulders above the other industries.”

Also rated highly were Walmart, Aldi, Publix, Sam’s Club, Safeway, Target and Albertsons. Other grocery retailers examined included Giant Eagle, Stop & Shop, BJ’s Wholesale Club and dollar stores, all of which also performed well.

“Across the board, there was consistency and high performance from grocery retailers,” Mercurio said.

Still, among all the retail sectors studied by Ipsos, there’s room for improvement in COVID-19 health and safety, particularly when individual store locations and different geographies are taken into account, he noted. For example, the “mystery shops” uncovered shortfalls in employees wearing face coverings and/or gloves, availability of hand sanitizer or handwashing solutions, plexiglass shields at checkout lanes, staff actively cleaning areas of the store, and shopper capacity limits in stores.

Why does this matter? Ipsos found that 61% of consumers are still delaying returning to brick-and-mortar stores on a regular basis for fear of catching the virus.

“In the research we conducted, 62% of shoppers said they would stop shopping at a retailer if they were not taking health and safety seriously. So there’s a really high potential defection rate and very little margin for error if you don’t get it right,” Mercurio said. “But if you do, there’s definitely a chance to not only grow your market share, but also your share of wallet and profitability.”

Launched in 2012 — and cleverly named after the robot housekeeper on “The Jetsons” — online grocery app Rosie allows customers to shop online from their favorite local stores for same-day delivery or in-store pickup. In addition to e-commerce, Rosie provides retailers with delivery opportunities, omnichannel marketing and deep data services. Since its founding, Rosie’s mission has been to bring online grocery to Main Street or, as co-founder and CEO Nick Nickitas says, “Let's make it as easy to shop online, from a local store, as it would be to shop on Amazon or Walmart.”

When Publix Super Markets heard that produce and dairy farmers were hurting, it didn’t hesitate to come to their aid, said Curt Epperson, business development director for produce and floral.

In April, Publix launched a program to buy surplus fruit, vegetables and milk from farmers that have seen demand plummet from customers forced to shut down during the coronavirus crisis. The Southeastern supermarket chain donates the rescued product to Feeding America food banks throughout its seven-state market area.

Reports have continued to emerge of farmers being compelled to throw away huge amounts of unsold produce and milk, a situation arising from mass closings of schools, restaurants, hotels, cafeterias and other foodservice customers amid the pandemic. At the same time, the economic fallout from COVID-19 has increased food insecurity nationwide, putting more pressure on food pantries to help hungry Americans.

Epperson said Publix focused its assistance on three areas: source, purchase and deliver. And the program, kicked off April 21, has made tremendous progress. After the first week, Publix procured more than 150,000 pounds of produce and 43,500 gallons of milk for donation. That surged to 2.25 million pounds of produce and 200,000 gallons of milk through May 20, with the product going to 15 Feeding America food banks.

For independent supermarkets in the hard-hit New York area — which are frequently smaller neighborhood stores with narrow aisles in close quarters — COVID-19 has created a number of challenges, including lack of employees and an uncertain supply of goods due to the pandemic. The daily restocking of shelves due to the unprecedented demand from customers, as well as the constant sanitizing of stores, has taken a toll on these supermarkets and their employees.

In our most recent SN Off the Shelf podcast, we spoke with executives from Associated Supermarket Group, the Port Washington, N.Y.-based marketing alliance that serves more than 220 independently owned, mostly urban supermarkets in the New York Tri-State area under banners including Associated, Compare, Met Foods, Met Fresh and Pioneer. Our conversation with CEO Joe Garcia and EVP & chief administrative officer Zulema Wiscovitch covered a range of topics, including the challenges of operating stores in the coronavirus epicenter of the U.S., how shoppers can help ease the strain, the explosion of online grocery and what the grocery industry might look like post-coronavirus.