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The End of Grocery Shopping as We Know It?

Friday, May 9th, 2014

 

It’s happened to all of us – you finish off the last of the peanut butter at breakfast and make a mental note to buy more next time you’re at the store. But on your next grocery run, that peanut butter slips your mind and you only realize you’ve forgotten it after you’ve purchased and unpacked your groceries. Shouldn’t there be an easier way?

Here’s where Amazon Dash comes in. With this innovative new handheld scanner from Amazon.com, users simply scan an item – like that empty jar of peanut butter –and the product is automatically added to their Amazon Fresh shopping order.  Dash is Wi-Fi enabled and connects directly to users’ Amazon Fresh accounts, so they can select a week’s worth of groceries without ever turning on their computer. It’s voice activated as well, in case users think of an item they want but don’t currently have on hand to scan. When they’re ready to order, users just log into their accounts to purchase and schedule a delivery.

In today’s dog-eat-dog CPG landscape, exciting innovations like Amazon Dash are one of the best ways to get ahead.  IRI’s Q1 2014 MarketPulse survey found consumers are feeling more optimistic about their finances, but still place a strong emphasis on value. Of course value can be synonymous with low prices, but for many time-starved consumers, value is best conveyed through convenience. Amazon Dash, for example, offers a very enticing convenience value proposition. Users can easily restock pantry staples and their favorite brands without the hassle of having to search for those products on the grocery aisle or online.

Currently Amazon Dash scanners are available by invitation only, but this unprecedented level of convenience will likely attract many consumers in today’s increasingly time-stressed society. Amazon’s existing infrastructure has already given Amazon Fresh a leg-up over other online grocery startups, and Dash is likely to further boost that edge. This type of creative, leading-edge offering is a great example of CPG innovation, and is certainly worth watching and considering.

What do you think of Amazon Dash? Will this offering help make online grocery shopping more mainstream? There’s no doubt this is convenient, but is that convenience worth the extra cost of delivery fees, or the potential environmental impact of having items driven long distances in large trucks instead of purchasing them locally? There are already many barcode-scanning apps to help consumers with list making, but should traditional grocery stores follow Amazon’s lead and offer something similar?

Share your thoughts in the comments section below!

Waste Not Want Not: Are Anaerobic Digesters Really the Best Solution for Food Waste?

Thursday, June 27th, 2013

Ready for a shocking fact? Forty percent of food produced in the United States each year is never eaten. Yes, you read that right—40 percent. We’re talking about expired meat, blemished, overripe fruit and moldy bread. Sure, some food is donated to food pantries and other charitable organizations. Yet, the Natural Resources Defense Council reports that 40 percent of food in the United States—about 20 pounds of food per person per month, or the equivalent of $165 billion annually—goes uneaten.

In her May 2013 Los Angeles Times article, “A powerful use for spoiled food,” Tiffany Hsu details one retailer’s solution: at a massive distribution center in Compton, Calif., Kroger Co. converts 150 tons of unsold food a day into energy. Thirteen million kilowatt-hours of electricity a year, to be precise—a figure Kroger says could power more than 2,000 California homes a year.

The technology used to transform stale food into clean electricity is called an anaerobic digester system. Rather than sending food they cannot sell or donate to a landfill, Kroger subsidiaries Ralphs and Food 4 Less ship their unusable food to the anaerobic digester facility. Expired food, along with its cardboard and plastic packaging, is shredded in an enormous grinder, pulverized in a pulping machine, and eventually stored in a two million gallon silo. Here, bacteria convert the sludgy former food into methane gas, which is siphoned from the tank to power three on-site turbine engines. Meanwhile, the anaerobic digester’s excess water is purified and sent into the industrial sewer system, while excess sludge is used as fertilizer. The system offsets more than 20 percent of the distribution center’s total energy demands, and does not produce any offensive odors.

Kroger estimates the anaerobic digester will offer an 18.5 percent return on the company’s investment. Over its lifetime, the project could save the grocer $110 million. Anaerobic digesters are also being considered as a potential fuel source for data centers, farms, and government buildings, to name a few.

On the surface, this all seems like a great idea. Kroger’s anaerobic digester is an ingenious method of dealing with food waste that not only reduces the company’s electricity bills, but also helps the environment. But, this fascinating process also raises a multitude of questions: why are supermarkets wasting so much food in the first place? Should we be producing less? What can retailers do to get food off their shelves before it’s too late?

Food waste is a major problem. Considering the exorbitant amounts of land, water, labor and money it takes to create our food in the first place, throwing away so much of it—even to produce clean energy —can’t be the best way. Kroger’s anaerobic digester is a practical, economical, way of handling the issue, but what we really need is a solution that reduces food waste from the beginning. Maybe perishable goods should be discounted to correspond with freshness, with prices dropping as expiration dates near. Or maybe Andronico’s is onto something: the Northern California chain sells produce that is aesthetically damaged but still edible at a discount. Maybe food should be donated sooner to avoid missing the freshness window.

What do you think? Are anaerobic digesters the wave of the future, or should we determine a way to not waste so much food? Share your thoughts in the comments section below!

Cause Marketing: Are Shoppers Caused Out?

Friday, October 12th, 2012

Have you ever purchased a product because it supports breast cancer, or because it featured an Olympic athlete, such as Ryan Lochte, on the packaging? As marketers, we must be aware of which emotions are more likely to resonate with shoppers. In today’s retail environment, shoppers must decide what promotions provide the most value. There are several different strategies that CPG marketers use to increase sales, including associating consumer products with specific causes, events or giveaways.

According to Wikipedia, cause marketing refers to “a type of marketing involving the cooperative efforts of a ‘for profit’ business and a non-profit organization for mutual benefit.” Breast cancer awareness is one of the most prevalent causes associated with consumer products. Each October, and increasingly throughout the year, marketers coat their products in pink and donate a portion of their proceeds to research. Similarly, companies that release limited-edition products surrounding major events like the Olympics also rely on the power of cause marketing campaigns to provoke an emotional response that will influence shopper behavior.

Lately, some marketers have begun to question the effectiveness of cause marketing, wondering if it is any more influential than other promotional vehicles, such as coupons. While many companies have turned to cause marketing, some marketers wonder if “cause fatigue” has set in.  Recent research indicates that as cause marketing becomes more pervasive, some shoppers are starting to consider it gimmicky and disingenuous. To address this concern, Think Before You Pink, a project of Breast Cancer Action, launched in 2002 to address the increasing amount of pink ribbon products on the market. The campaign seeks more transparency from companies participating in breast cancer fundraising, and it advises shoppers to critically evaluate pink ribbon promotions.

Additionally, while consumers do believe CPG brands’ support of breast cancer has raised awareness of the cause, recent studies indicate that shoppers are concerned that the extensive support of breast cancer awareness overshadows other important causes. One mother, whose daughter has melanoma, was quoted in a recent USA Today article, and wishes this serious form of skin cancer “got even a fraction of the attention and funding.”

Several simple steps to overcome ineffective cause marketing programs include:

  • Choose a charity for the cause marketing campaign based on relevance to the product involved
  • Choose a charity that has achieved measureable results
  • Tell shoppers what charity the brand is marketing with and why
  • Provide shoppers with information about how much money the charity will receive through the campaign and how the charity will use the funds
  • Publish follow up information after the campaign ends

Oversaturation aside, it may no longer be enough for marketers to simply attach a specific cause to their brand – it’s time to get creative! Yoplait’s effort to raise awareness for breast cancer, “Saving Lids to Save Lives,” incorporated a more personal approach that included painting one woman’s house pink to honor the four friends she lost to breast cancer. Yoplait has donated a total of over $30 million in the last fourteen years.

Are consumers really more likely to purchase something because a certain percentage of the proceeds benefit a particular cause? Or, at the end of the day, would they just rather have a coupon and/or receive a giveaway upon purchase? It may be time for marketers to reevaluate their programs and revamp cause marketing as we know it.  What causes tug at your heartstrings?

Beyond Self-Checkout: Mobilizing Mobile Payments

Friday, October 5th, 2012

Last year, bold projections indicated self-checkout kiosks may become a thing of the past. After a self-service boom, leading grocery retailers announced a shift in their strategies, opting to focus on better customer service. But a year later, it seems that self-checkout, for the most part, has survived – perhaps because shoppers have defined improved service as including convenient checkout alternatives.

It seems self service is here to stay. However, uncooperative touch screen monitors and technology glitches can create long wait times. To ease this frustration, there’s a new mantra for the CPG industry: no lines ever. Leveraging recent advances in mobile technology, retailers are introducing new ways to pay.

In other retail sectors, mobile payment systems are already proving they may eventually eliminate traditional cash registers. At cutting-edge retailers like Apple, customers can walk up to any iPad-clad employee and pay anywhere on the shop floor. Many smaller retailers have adopted Square, a mobile payment service that expects to process $6 billion in payments this year. Starbucks and several apparel retailers are experimenting with similar systems.

The CPG industry is no exception to this modernization game, and has plans to go mobile as well. Walmart is testing a “Scan & Go” program that lets shoppers use their iPhones to scan products as they drop them into their carts. Customers then download their list at a payment kiosk. To expand this process beyond the world’s largest retailer, QThru, a smartphone app that works the same way, is present in Myers Group grocery stores, after a successful pilot program at a supermarket in the Seattle area.

As more shoppers embrace technology, mobile payments may do more than shorten lines. Apps capable of syncing to loyalty card programs and digital coupons may make it easier for customers to save. They could also serve as a differentiator for successful early adopters, and ultimately increase brand loyalty. Many shoppers will view updated technology that shortens lines and turns them on to savings as the ultimate in customer service.

Other shoppers may feel the retailer is fobbing them off to a machine and view mobile payments as yet another technology designed to cut costs by eliminating personal interaction.

Before investing in a mobile checkout system, retailers should evaluate their shopper base to gauge its potential for success. As not all shoppers are equally tech savvy, retailers should decide if a large enough portion of shoppers would prefer mobile payment options. SymphonyIRI’s DigitaLink research segments customers based on their digital habits, attitudes towards technology, and use of mobile devices. Applying DigitaLink or conducting similar segmentation can help make the decision to “mobilize.”

As I discussed in a blog about self-checkouts last year, each shopper has a preference as to how they pay. To prevent shopper confusion, until more shoppers embrace mobile technology, perhaps retailers’ best bet is to provide multiple checkout options.

What do you think?  How do you see this trend at play in retail environments? What is your retail outlet doing to embrace mobile technology?

To Sin or Not to Sin: Can a “Sin Tax” Benefit Consumers?

Tuesday, July 24th, 2012

A recent revelation that sugar heavily contributes to the United States’ overall decline in health through an increase in diabetes, obesity, heart disease and cancer, has prompted policy makers to suggest government imposed “sin taxes” on sugary foods to help deter Americans from consuming such large quantities of sugar.  The initial proposal to impose a sin tax on sugar has generated buzz among CPG marketers, manufacturers and retailers regarding opportunities to capitalize on the shift to healthier living, and the current consumer wants and needs associated with that change.

The question still remains, however: Will a sin tax really deter consumers from purchasing sugary foods, or do other factors more effectively impact behavioral change?  Proponents of the sin tax submit that if it costs more to purchase sugary products, the demand for those products will decrease. Such taxes are currently in place for the sale of tobacco products and alcohol. On the other hand, Denmark provides us with an example of how ineffective sin taxes can be, as the government is considering reversing a current “fat tax” because citizens have been crossing the Danish border to purchase fattier items in neighboring countries. The behavior of the people of Denmark supports the argument that taxing sugary products is not quite the same thing as taxing the behavior of consuming sugar—the desire to consume sugar may remain regardless of price.

In light of this debate, CPG marketers and retailers have the opportunity to act proactively, navigate through this social change and emerge with increased profits and sales despite the implementation of a sin tax.  Some alternative solutions will not only help shoppers make healthier decisions, but also allow retailers and marketers to maintain control within their industry, such as price incentives, brand extensions and easy to interpret labels. The following illustrates some examples of how this could be executed:

Pricing: While imposing a tax ultimately increases the price of sugary foods, CPG insiders can more effectively manipulate pricing to change purchasing behaviors. Foods that tend to be healthier, organic or non-processed are not always affordable. By lowering the prices on natural foods like produce, meat and poultry, consumers might be more likely to purchase those items over the processed products stocked on store shelves.

More Healthy Options: As I mentioned in my prior post, “How Bittersweet It Is,” retailers can provide their own solutions to the sin tax dilemma by offering more options to health-conscious consumers. In addition to remaining in control of the product and pricing strategies for their stores, by carrying a greater array of products, retailers will also help support current trends and lifestyle changes. CPG brands can also benefit from the demand for alternative products, because if they haven’t already done so, they have the opportunity to extend their product lines by providing reduced sugar and sugar free variations of popular products.

Effective, Easy-to-Read Labels:  Another reason shoppers buy products with high sugar content is simply because they aren’t aware those products contain as much sugar as they do. Current labels are hard to read, and the details regarding ingredients are printed on the back of product packages in small fonts. By introducing straightforward, front of package labels that are easier to read, it ultimately becomes the consumer’s decision to purchase something that contains 22 grams of sugar per serving. Perhaps if shoppers immediately see that a product contains 22 grams of sugar per serving, they will seek alternatives.

Since the concern about how much sugar we consume is still a fairly new development in the CPG industry, it’s the responsibility of marketers, retailers and manufacturers to take control of the situation and provide viable and easy to execute solutions. Doing so will not only benefit the CPG industry, but it will have a lasting impact on shoppers.

How Bittersweet It Is

Thursday, May 31st, 2012

Is sugar to blame for America’s obesity epidemic? Of course, it’s not the sole cause of thickening waistlines, but sugar has become the scapegoat as recent headlines have claimed it a toxin. And, CPG marketers have taken note.

The International Food Information Council’s (IFIC) annual Food and Health Survey reported that in 2012, 20 percent of consumers selected “sugars” as the “source of calories most likely to cause weight gain.” This figure is almost double that of the 11 percent reported in 2011.

CPG manufacturers have the opportunity to help relieve a public health crisis, as overconsumption of sugar can lead to type 2 diabetes, hypertension and heart disease. Ahead of the curve, some have already responded to consumer demand with new sugar-free offerings and even reformulated additions to traditionally sweet product lines.

In the past, artificial sweeteners took sugar’s place in diet soda, candy and baked goods, but frequently came under attack for possible negative effects. Sucralose still has its place in the market, but more and more products are now substituting chemical-based sweeteners for all-natural options, such as monk fruit, oats, and the popular stevia.

Natural sugar alternatives provide more ingredient choices to CPG manufacturers but also complicate the selection process. When choosing an ingredient, keep these factors in mind:

  • Claims: Front-of-package health claims can lead to sales increases. Will your target market see “all-natural” as a benefit?
  • Cost: Natural stevia is much more expensive than artificial sweeteners, such as aspartame, saccharin and sucralose. What price point is optimal for your product?
  • Calorie reduction: It’s possible to mix natural or artificial calorie-free sweeteners with sugar for only half the calorie count. What calorie range fits your consumers’ needs?
  • Aftertaste: Sugar alternatives sometimes have a lingering or bitter aftertaste that may need to be masked by other flavors.

For retailers, giving health-conscious consumers more options is key. The UnitedHealth Group predicts that by 2020, more than half of the American population will be diabetic or pre-diabetic. By adding more sugar-free products to their shelves, grocers can help this group achieve weight management goals. Many retail stores have expanded sugar alternative sections by carrying a greater variety of products lines and package types. Retailers should also consider dedicating increased shelf space to products with a sugar substitute as a main ingredient.

These efforts will not only encourage lifestyle changes, but also increase brand and shopper loyalty. What steps are you taking toward implementing sugar-free substitutes in your products or on your shelves?

How to Keep Kids (and Your Brand) Healthy

Tuesday, January 3rd, 2012

Pending legislation may restrict the types of food that can be marketed to children. Supporters of the proposed guidelines seek to alleviate an all-time high level of childhood obesity, but others fear the policy will eliminate too many jobs.

It may be awhile before a decision is reached due to the requirement of a cost-benefit analysis. The cause-effect relationship between advertising and childhood obesity is also being debated.

Nevertheless, children’s health is a prime concern. In the meantime, how can the CPG industry show support for minimizing the obesity crisis while upholding their brands?

Over the past few years, some manufacturers have voluntarily altered their product’s ingredient composition. For example, General Mills vowed to lower sugar levels in all cereals marketed to children, which now contain 10 grams of sugar or less per serving. The company also increased the use of whole grain in kid-friendly Big G cereals.

Other retailers and manufacturers are supporting healthier options in schools, as the nutrition of cafeteria food has long been scrutinized. Produce providers Dole, Chiquita, and Sun World have recently donated salad bars to schools to offer children fresher alternatives to standard cafeteria menus.

Whole Foods Markets (a sponsor of the Let’s Move Salad Bars 2 Schools initiative) and Publix have also made donations, in hopes that children’s act of choosing from an assortment will turn fruit and vegetable consumption into a habit.     

Dole’s Nutrition Institute even created a school curriculum, including lesson plans, music, games and activity books focused on forming healthy eating habits.

Other possible strategies manufacturers can employ to support children’s healthy eating may include:

  • Introducing healthier, kid-friendly brand extensions (Sara Lee disguised whole grains in whole wheat white bread)
  • Reducing size and calorie count of lunchbox-friendly packs (Nabisco introduced 100 calorie packs for portion control)
  • Increasing marketing efforts to promote existing healthy product lines to children (Last year, farmers borrowed the traditional junk food marketing approach to brand baby carrots as “the original orange doodle”)

What are some strategies your brand is using to combat childhood obesity?

Eat This or Die

Wednesday, December 7th, 2011

Coffee, wine, beer and chocolate have long been considered vices, but recent studies reveal their health benefits: Coffee cuts skin cancer risk and lowers women’s depression; beer can help women protect against osteoporosis; and red wine and cocoa antioxidants could boost metabolism and benefit the heart, respectively.

Even so, consumers should have enough sense to not overindulge in traditionally unhealthy products. But, how do they react when a study reports health claims of nutrients without an existing bias?

The overly-trusting consumer may run out to buy every product with ginger in the ingredient list after reading that it reduces colon inflammation and cancer risk. Suddenly, CPG manufacturers of ginger-snaps have some decisions to make. Should they attempt to capitalize on these claims with front-of-packaging ingredient information?

Packaging claims have been a hot issue lately, as two camps of thought sparked a great debate. The Grocery Manufacturers Association’s (GMA) “Facts Up Front” rivals the Institute of Medicine (IoM) over what should be included in front-of-package nutritional facts.

IoM believes displaying calories and a simple star rating will sufficiently inform consumers of nutritional level, while the Facts Up Front Label will present calories, total fat, sodium, sugars, and two “nutrients to encourage” for the manufacturer to choose.

These systems ultimately have the same goal: help consumers make healthier choices. But striking a balance between information overload and ease of use is key.

Time Healthland featured a University of Minnesota study suggesting that people don’t actually look at the same nutrition information on food packages as they claim. Researchers used an eye-tracking device with a group of designated shoppers to reveal which components of nutrition labels participants paid attention.

“Although 26% of people self-reported that they almost always look at Nutrition Facts labels at the grocery store, 37% of them actually noticed at least one component of the label for almost all food items,” according to the article.

But, customers seem to be unaware of which components they actually noticed. There were large discrepancies between self-reports and eye-tracking data. While 33% said they looked at calorie count, only 9% actually did. In addition, 31% reported they paid attention to total fat content, 24% said they looked at sugar content, and 26% said they looked at serving size, when in reality, only 1% studied each of these components.

It will be interesting to see if this data changes when front-of-package nutrition facts become more prominent, as they’re expected to do in 2012. Will consumers trust only a standardized system, such as Facts Up Front or IoM’s, or can CPG manufacturers continue to play up key healthy ingredients in a less structured manner?  What’s your take?

Why is My Packaging Green?

Tuesday, November 1st, 2011

Everywhere we look there is a huge shift to all things “green.” Whether it is green homes, green cars or greener day-to-day practices, the “live green” mentality is here to stay. This eco-friendly trend has also spread to the CPG industry with the introduction of sustainable packaging. And, while it is obviously a positive shift to transform our current practices to become more environmentally sound, is sustainable packaging truly sustainable?

The most recent trend in sustainable CPG packaging is to use compostable materials that look and act as a plastic but are made from sugar cane waste or corn oil. Because the packaging is derived from natural materials, it can be placed in compost recycle bins or  home compost piles. While this seems like a wonderful idea on the surface because these are natural materials versus plastic, are we now growing crops strictly for packaging? And, if so, is that a problem?

The ability to eliminate the creation of plastic and replace plastic use by natural materials is a huge step in the right direction. Even if crops are being grown for the sole purpose of replacing plastic, the ability to eliminate the need to produce an unnatural material creates a closed loop circle where a product is completely sustainable on its own (i.e. growing corn to make corn oil to create biodegradable/compostable replacement plastic materials only to compost them and start the process over).

If CPG manufacturers can piggy-back on this emerging trend and package products in compostable, green packaging, this can be used as a competitive advantage since today, many consumers are extremely environmentally conscious of what they purchase.

Many shoppers purchase soaps containing no phosphates or entire household cleaning product lines that contain all natural ingredients. For a manufacturer to have products packaged in compostable materials would open the doors to a growing population of eco-consumers while being an environmentally kind company.

As the green movement continues, it’s safe to say we will also see a significant green shift within the CPG industry. The ability to use green materials for packaging and offer those products to the masses can be beneficial for consumers and manufacturers alike, especially in a time when people are hyper-conscious about the sustainability of the products they purchase.

Check It Out

Tuesday, October 25th, 2011

As shoppers, we’ve all seen self-checkout stations pop up in stores nationwide.  Some stores now only provide the self-checkout option.

This idea was initially implemented to save retailers labor costs by eliminating the need for cashiers at all times that the store is open. However, it hasn’t necessarily provided the cost benefit that some expected.

It’s arguable that a store with all self-checkout stations may be too much, as it eliminates shopper contact with the cashier whose role can serve as the face of the retailer. At the same time, a store with no self-checkout stations might also be a disservice to consumers who prefer less face-to-face interaction or are buying a last minute item and want to get in and out quickly. It seems a good compromise would be to have a few self-checkout stations in any given retail outlet in addition to express and regular checkout lanes serviced by a cashier.

Think of it this way:

  • From the consumer side – Offering a few self-service checkout stands enables those who only have an item or two or who are really efficient at self-checkout to quickly complete their purchases.
  • From the retailer standpoint – It also allows for face-to-face interaction with cashiers, creating opportunities to build relationships and establish brand loyalty.
  • From an economical perspective – The retailer is being responsible by opening up more workable hours and creating job positions in the current dire job market.

On one hand, this is completely a personal choice where each consumer has a preference as to how they pay; face-to-face or self-checkout. Through trial and error, retailers will figure out what method best suits their stores and their shoppers’ needs. As all shoppers are unique, addressing the needs of different customers by offering regular and express checkout lines in addition to self-checkout stations seems to be the most well rounded option. As a consumer, which do you prefer?  As a retailer, what has worked best for you and your customers?