Tuesday, September 18, 2007

Mid-Week Roundup

Industry news, ideas and information you can use
Whole Foods Gets It Right With New San Francisco Store
Above is a photograph of Whole Food's new store located in the City's Potrero Hill neighborhood. The store is the anchor of a mixed-use development which includes upscale condominiums above and on the sides of the market.

Whole Foods Market, Inc. opened it's newest Northern California store last week in San Francisco's Potrero Hill neighborhood. The store is 42,000 square-feet and is the retail anchor of a mixed use development in the neighborhood. NSFM wrote about the store, which we call a hip, lifestyle neighborhood store, last week. You can read our piece here

John King, the urban design writer and critic for the San Francisco Chronicle, says in an article and review today that Whole Foods got the store just right, creating a retail marketplace that not only fits perfectly with the neighborhood but also is inviting and welcoming for shoppers. "The new Whole Foods Market in San Francisco shows with meticulous precision why upscale grocery stores are coveted by communities that want to see themselves as fully rounded or on the map," says King in his article in today's Chronicle.

King isn't as crazy about the condominium project located above and around the Whole Foods store but nearly waxes poetic about the store's design elements and architecture. "The new Whole Foods is the supermarket equivalent of an iphone or Mini Cooper (car)," he says in his review. "It's designed to send a message that anyone using it is on top of their game."

King loves the store's Market Bistro restaurant (a new feature for Whole Foods) which has a bar made of recycled glass and red bar stools crafted from recyclable leather scraps.

In the review article Whole Foods' regional president for northern California Anthony Gilmore tells King about the new store, "We want to evolve and give our customers a continual since of discovery. I'll sit down with consultants and review every color, every texture, every piece of the design. It's this attention to detail and openness to design that makes King like the store so much. It's also what makes NSFM, who has visited the store, love what Whole Foods as done with the store in terms of incorporating the Potrero neighborhoods industrial past with its more upscale present in creating not only a retail food store but a shopping and lifestyle experience.

Read John King's full review in today's edition of the San Francisco Chronicle here. The photograph at top is from the San Francisco Chronicle. You can view a mini slide-show of the new Potrero Hill district Whole Foods store here.
Shoppers Rate New San Francisco Whole Foods Store
For an interesting look at what shoppers think of the new Whole Foods Market in San Francisco's Potrero Hill neighborhood you can take a look at the yelp.com review site. The sites slogan is "real people real reviews." You can read reviews from real live customers about their experiences at the new store here. So far the store has 4 out of 5 stars with 31 shoppers reviewing. Five stars is the best.
An Urban Design Expert's Thoughts on Whole Foods
Washington, DC-based Historic preservation and urban revitalization consultant Richard Layman has a related story on his blog titled "The seduction of Whole Foods Market." In it he mentions the new Potrero Hill neighborhood Whole Foods and talks about Whole Foods from his perspective as an urban revitalization and historic preservation professional. You can read his thoughts here.
Breaking News: New Whole Foods Store to Open in Oakland
Whole Foods Markets has more retail tricks up its sleeves when next week (on Wednesday, September 26) it opens its newest San Francisco Bay Area store near downtown Oakland, across the Bay Bridge from San Francisco.
The new store is something very new in terms of design for Whole Foods. The store has been designed to resemble a European Food Hall. Whole Foods' northern region president Anthony
Gilmore says he studied food halls in various countries and ended up modeling the new Oakland Whole Foods store after the Galeries Lafayette market in Berlin, Germany. (Read about Europe's Galeries Lafayette chain, owners of the Berlin store Whole Foods is modeling its new Oakland food hall market after here.
Gilmore says the grocer wanted to design a food hall rather than a conventional grocery store to celebrate what he calls Oakland's and the surrounding area's rich, progressive food culture. He says the Oakland store/food hall is an international food market with an international flair.
It's interesting to note that many years ago there was a popular international-style food hall called "Housewives Market" right near the new Whole Foods store in downtown Oakland. By choosing an international food hall design for this new store Whole Foods is paying homage to the downtown's historic roots as well as offering residents a completely new shopping experience. This will be the first Whole Foods for Oakland, which has a population of about 450,000. The new store is located at 230 Bay Place on 27th and Harrison Streets near Oakland's popular Lake Merrit.
The new food hall-style store is designed so the first thing shoppers encounter when they enter the store is the produce department. The store's architect's have then designed the store in such a way that its flow leads the shopper to each in-store attraction in a lively manner. Unlike the traditional supermarket, which generally has its perishables departments around the store perimeter and its dry grocery area in the center or core-of-the-store, the new Oakland Whole
Foods reverses that design. The perishables departments are in the center of the store while dry groceries are located on the perimeter.
The store has an indoor restaurant with an outside dining patio, similar to the Market Bistro Whole Foods debuted last week at its new store in San Francisco's Potrero Hill neighborhood. Specialty, ethnic and natural foods from all over the world also will be merchandised in the store in keeping with its international food hall design and theme.
The store is about 50,000 square-feet and is built in what was once a large Cadillac dealership building which the grocer completely renovated to create its food hall market. The original structure dates back to 1890 when it was built and first used to house a power-generating station. The building was renovated three times before Whole Foods bought it, the last tenant being the car dealership. It had been vacant for some time prior to Whole Foods buying the property.
The property and site are important to Oakland's history and community so Whole Foods' type of community and local retailing should make it not only a popular retail store but a community focal point and gathering place as well.
Retail Briefing
Hypermarkets Booming in China
Hypermarkets, those huge combination supermarket-department stores, are taking hold in China thanks to the lure of low prices, convenient one-stop shopping, accessible locations and the integration of other retail facilities such as restaurants, cinemas and coffee houses that can turn a shopping trip into a full day outing for Chinese consumers, according to a new study conducted by China-based TNS Worldpanel, a market research firm. The research firm says the growing popularity of hypermart shopping is creating a new shopping culture in China. You can read a complete summary of the research report here.
Wal-Mart Canada Going Fresh, Local in New Supercenters
Tomorrow (September 19) Wal-Mart Canada Corp. is opening five new supercenter stores in Alberta. The stores, which will all have grand opening festivities tomorrow, are in Wainwright, Vegreville, Lethbridge, Pincher Creek and West Edmonton.
The stores range in size from 101,000 to 205,000 square-feet and all include a complete selection of fresh foods and groceries as well as other standard supercenter offerings including fashion, electronics, home goods and more. The stores are said to stock over 120,000 products and will be the largest retail stores in Canada, according to Wal-Mart Canada.
Wal-Mart Canada is going upscale and employing local marketing concepts with these new supercenters. For example, the stores will feature a "Your Fresh Market" concept which is exclusive to Wal-Mart's Canadian stores. The Fresh Market will feature ready-to-eat prepared foods, artisan baked breads and deserts, and other prepared foods selections, all of which will be prepared in store.
The five supercenters also have expanded natural, organic, ethnic and specialty foods selections including perishable products as well as groceries. Organic fresh produce will be merchandised in the produce departments right along-side conventionally-grown. The stores are putting an emphasis on "Fresh" and the produce, meat, deli and seafood departments will reflect that fresh emphasis in their size (large), decor (upscale) and selection (broad).
Wal-Mart Canada is putting a local merchandising touch on the stores as well as part of what the retailer says is a major effort to make the supercenters "community" stores. The supercenters will feature Canadian produced beef, veal, chicken and pork. Among the Canadian-produced meats will include Paradise Valley free-range pork and Diamond Willow certified organic beef, which are produced in the local Alberta cities of Wainright and Pincher Creek.
Wal-Mart Canada is expanding this upscale, fresh, natural, organic and specialty format to its other supercenters in Canada after the five new stores open. The retailer opened its first Canadian supercenter about one year ago. There currently are 17 supercenters in the country and the company plans to have 28 of the units open and operating in Canada by early 2008. In addition to the current 17 supercenters Wal-Mart Canada has 270 standard discount stores and six Sam's Club Warehouse stores. The supercenter, Fresh Market format is the retailer's major emphasis at present in Canada.
Wal-Mart Canada is much more popular in Canadian communities than it's U.S. counterpart division. More than 100 communities in Canada have lobbied or petitioned the company to have supercenters located in their towns. Wal-Mart Canada also scores high in annual ratings of the "best companies to work for in Canada" surveys. There also has been little if any opposition from communities in Canada when Wal-Mart announces its desire to build a supercenter, unlike the case in the U.S. where communities in many parts of the country are conducting efforts to prevent the chain from building supercenters in their towns and counties.
Tesco Says its 'Locked and Loaded' For Fresh & Easy Launch
Tesco CEO Sir Terry Leahy told a reporter for the Dow Jones News Service that the grocer is "locked and loaded" and ready for its November, 2007 launch of its Fresh & Easy Neighborhood Market upscale convenience-type stores. (NSFM reported here that the first store might open as early as next month in Las Vegas.)
Leahy told the Dow Jones reporter on the sidelines at a media conference late last week the retailer's three main priorities in the U.S. with the Fresh and Easy stores will be community,
environment and nutrition. You can read the full report from Dow Jones here.
Kroger Co. Second Quarter Profits Soar
Kroger Co., the largest U.S. supermarket chain, saw its second quarter profits soar by 28% from the same period in 2006. The mega-chain raked in profits of $267.3 million for the period ending August 18, which was 58.3 million more than its Q-2 profits of $209 million in 2006. You can read more here from Forbes.com. Last year Kroger launched as one of its major initiatives a dramatic increase in merchandising and selling higher margin natural and organic products in most of its many store banners. This initiative gained steam late last year and has picked up even more momentum this year. Kroger's CEO is a major force behind the initiative saying he wants Kroger to be the retailer who brings organics to the masses at reasonable prices. It looks like the chain is doing something right based on these second quarter profit numbers.
From Clerk to VP: Woman Grocer makes Good At Kroger
Although it's changing somewhat, the retail supermarket industry has long been "a man's world" when it comes to high-level management and executive positions at food retailing companies. However, it's also historically been an egalitarian industry from the standpoint of formal education, giving entry-level workers a chance to move-up based on their job performance. One hasn't traditionally needed an MBA, or even a BA in many cases, to climb the ranks and become an executive.
In the case of Pam Matthew's, vice president of merchandising and marketing for Kroger's Central Division in Indiana, she's proven that gender shouldn't matter when it comes to climbing the corporate ladder. In fact she was recruited to her current position at Kroger by a man, who picked her over all the other potential candidates--who were all male. (See it's changing.) Matthew's, who doesn't have a college degree, also took advantage of the industry's promote-from-within ethic, combining determination with hard work to get to her current position. you can read a feature profile about Pam Matthews in today's Indianapolis Star here.
Industry News and Information Briefing
Aussie Food in Big Demand Globally
Australia's clean, green image of its fine foods and wine is attracting buyers from the new middle classes in emerging economies worldwide in such countries as China, Indonesia, India and other emerging regions, according to an Australian government report detailed in an article in today's The Age, an Australian publication. "In terms of food (and wine) our markets have traditionally been in high income countries like Japan, the United States, the United Kingdom, New Zealand and Hong Kong," says Tim Harcourt, the chief economist for Austrade, the country's economic and trade organization. You can read more about the growing market for Australian foods and wines here.
New California Food Legislation Could Be Trend Setting
The California legislature has passed two new legislative bills in the area of food health and safety which could portend changes in other states as well. The first new law requires manufacturers to clearly label any food intended for human consumption that contains products from a cloned animal or its progeny. The second bill requires fast food chains with 15 or more outlets to provide nutrition information for their products served in the restaurants, including clearly posted information on trans-fat content, sodium, carbohydrates and more. The Governor still needs to sign both bills before they become law. You can read about the two bills in more detail here.
Consumer Behavior: Business By the Numbers
The Economist magazine (09-13-07 issue) has a fascinating article about how businesses are increasingly turning to the use of mathematical algorithms (they have nothing to do with how Al Gore moves) to track and analyze consumer and shopper behavior. At its core an algorithm is a step-by-step method for doing a job. For example, a recipe is an algorithm for preparing a meal. Also, those decision-tree posters that hang on doctors office walls which help them to work out what is wrong with a patient from his symptoms are called medical algorithms, step-by-step methodologies for pin-pointing a cause in this case.
In the business world companies are increasingly turning to the mathematical science of algorithms to learn more about their customers and consumers in general better. A case in point is the Tesco Supermarket chain. Tesco, with the help of a marketing consulting firm named Dunnhumby, has dumped all of the data from the chains loyalty card users into a huge database and is using algorithms to analyse these shoppers, learn more about them and develop ways to meet their every grocery shopping need. You can read the Economist article here. This information has great utility for all business sectors in the natural and specialty foods industries.
Confection Industry Giant Mars Says No to Vegetable Oil
NSFM has reported on the move by some major confection industry makers and industry trade groups to get the U.S. Governemnt to allow chocolate-makers to add up to 5% vegetable oil to their products rather than using 100% cocoa butter, which currently is the case, and still be able to call the confections product chocolate or pure chocolate. Yesterday confection industry giant Mars announced it's against this move by the other candy-makers and said it opposes any such legislation. "Today Mars U.S. chocolate products are pure, authentic chocolate and they are going to stay that way," said Todd Lachman, president of Mars Snackfoods USA. You can read more here.
The fastest growing segment in the confection industry is in high, quality premium chocolates and all-natural and organic varieties. Mars and others are going after that market via acquiring smaller, gourmet confection companies as well as creating new premium products. NSFM thinks Mars was smart to get out front and let consumers know the company is against any plans to "adulterate" chocolate quality. A nice way to differentiate themselves from the other large confections companies and to strike a blow in the effort to brand the company as premium. Mars CEO Lachman made this announcement yesterday at the "All Candy Expo" confections show in Chicago. We think that was a savvy move--making the announcement at the show with all the major confection industry players in attendance as well as the media.
New Categories: Yoplait's Fizzy, Carbonated Yogurt in a Tube
Yogurt maker Yoplait (owned by General Mills) has introduced a new carbonated, fizzy yogurt product that comes in a tube rather than a traditional plastic container. The product is named Fizzix. The company created the product for and is targeting it to the "Tween" demographic. This group consumes less yogurt than other demographics and is growing rapidly. Overall yogurt category sales are growing rapidly as well. Yogurt category sales more than doubled between 1998 and 2006. Health and convenience are the two primary factors attributed to this rapid growth in sales. You can read more about the new carbonated yogurt category and new Yoplait product here.
U.S. Department of Defense Grocers Go Organic
Sales of organic foods in the U.S. have grown by about 25% over the last seven years. And it hasn't just been the private sector food retailing industry that's taken notice and increased its organics product selections year after year. The grocers at the Defense Commissary Agency (DeCA), the U.S. Defense Department organization responsible for running the numerous supermarkets in the U.S. for members of the military, says it has more than tripled the number of organic products on its stores' shelves over the last few years.
"To ensure our patrons have available the products they want we keep an eye on trends," says DeCA CEO and director Patrick Nixon. "Because of this you will see organic selections on our store shelves. Organic alternatives are side-by-side with similar non-organic items (integration) throughout the commissary," Nixon says.
The Department of Defense-operated stores sell grocery products for about 30% less than the average for-profit supermarket, according to Nixon. This 30% price reduction applies to organic products as well making them relatively affordable for military customers.
The Defense Commissary Agency operates stores worldwide selling groceries to active-duty military members and retired veterans and their families. The agency doesn't make a profit on its products allowing it to price everything it sells in its stores at cost plus a 5% surcharge which goes to pay for building new commissaries and remodeling existing ones.
New Survey: Americans Prefer Domestic, Local Foods
A new survey conducted by the Leopold Center for Sustainable Agriculture at Iowa State University found that 85% of Americans have confidence in the safety of their local and regional food systems. However only 12% of those survyed expressed confidence in food produced and imported into the U.S. from anywhere else in the world. "American's remain extremely wary of foreign foods," says Richard Pirog, the deputy director of the Leopold Center and the co-author of a paper about the study's results and implications. "That was something that was very apparent (in the results).
These numbers are very stark." You can read a complete summary of the survey here. The survey's numbers are indeed very stark and if true--and varified by similar surverys--point to a particluarly troublesome situation for specialty and natural foods importers and for foreign food and beverage companies doing business in the U.S.
Unified Western Grocers to Acquire Seattle Wholesaler
Los Angeles, California-based Unified Western Grocers is acquiring Seattle, Washington-based wholesaler Associated Grocers. Associated Grocers shareholders approved the sale to Unified Western Grocers at a special meeting on September 14, 2007. Unified Western Grocers is the largest wholesale grocer in the Western United States and is member-owned. Associated Grocers has been selling groceries to independent retailers in the Pacific Northwest for almost 75 years.
Unified and Associated have been competitors in the Pacific Northwest market for a number of years. The acquisition makes sense for both companies since Unified is the larger of the two. Also the independent retail market in the region has consolidated considerably over the last 10 years and Unified is better able do its size and resources to provide not only the best wholesale cost of goods to independents but also provide the myriad of services they need to compete against the region's retail chains which include Safeway Stores, Kroger-owned Fred Meyer and numerous others.
Unified also has a large specialty and natural foods division called Market Centre Foods. The specialty & natural division serves Unified retail members and also chain operators including Raley's Superstores and Save Mart in California and Nevada as well as other chains throughout the Western U.S. You can read more details about the acquisition here.
Mid-Week Roundup Ender
Health and wellness is a growing movement among people of all ages. It's far more than even a trend. Rather, we see it as a movement that's here to stay--and will only get bigger as people continue to live longer and want to live healthier lives. The health and wellness movement offers huge opportunities for manufacturing, marketing and retailing companies as many have already discovered and others are beginning to. The wellness movement offers great opportunities for retailers and as an extension to their supplier companies. The current monthly issue of Grocery Headquarters magazine (Sept., 2007) has a cover story on health and wellness and the marketing opportunities it presents. You can read the story here.

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