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Aldi vs Whole Foods

Aldi is fixing a major weakness and coming straight for Whole Foods

New AldiAldi is taking aim at Whole Foods.Business Insider/Hayley Peterson

The discount grocery chain Aldi is taking aim at Whole Foods with a new store design.Aldi is ramping up its rollout of a new design that looks almost identical to Whole Foods’ cheaper chain of stores called 365 by Whole Foods.

On Monday, the grocery retailer announced it is opening more stores that feature the new design after stores that utilize the layout outperformed traditional Aldi locations. The retailer is spending more than $1.6 billion to revamp stores and open locations with the updated format.

The Aldi stores’ new design features softer lighting than its older stores, as well as a larger fresh produce section, wider aisles, and electronic displays on the walls.

Here’s what one in Richmond, Virginia, looks like:

The new Aldi store looks similar to its older stores on the outside.

The new Aldi store looks similar to its older stores on the outside.

Business Insider/Hayley Peterson

But stepping inside, it feels much different. The lighting is softer and more natural, and the aisles are wider.

But stepping inside, it feels much different. The lighting is softer and more natural, and the aisles are wider.

Business Insider/Hayley Peterson

Permanent eye-level shelving fixtures are everywhere in the new store. In the older stores, shown below, many items are stacked on top of each other in cardboard boxes instead of placed on shelves.

Permanent eye-level shelving fixtures are everywhere in the new store. In the older stores, shown below, many items are stacked on top of each other in cardboard boxes instead of placed on shelves.

Business Insider/Hayley Peterson

Spotlights in the new store help make the fresh produce section a central focus.

Spotlights in the new store help make the fresh produce section a central focus.

Business Insider/Hayley Peterson

The produce area is much larger than in Aldi’s other stores.

The produce area is much larger than in Aldi's other stores.

Business Insider/Hayley Peterson

Like in other stores, most of the produce is sold in bulk packaging.

Like in other stores, most of the produce is sold in bulk packaging.

Business Insider/Hayley Peterson

It looks similar to this 365 by Whole Foods store in Los Angeles, which is about the same size as Aldi and also features metal, eye-level shelving fixtures and a centrally located produce section.

It looks similar to this 365 by Whole Foods store in Los Angeles, which is about the same size as Aldi and also features metal, eye-level shelving fixtures and a centrally located produce section.

Reuters

At the new Aldi, there’s a large refrigerated section devoted to produce.

At the new Aldi, there's a large refrigerated section devoted to produce.

Business Insider/Hayley Peterson

Fruit, salad greens, and vegetables are available, as well as premade dips and soups.

Fruit, salad greens, and vegetables are available, as well as premade dips and soups.

Business Insider/Hayley Peterson

Like at 365 by Whole Foods, there’s no deli at the Aldi store, but there are tons of packaged cheeses and meats to choose from.

Like at 365 by Whole Foods, there's no deli at the Aldi store, but there are tons of packaged cheeses and meats to choose from.

Business Insider/Hayley Peterson

Digital displays and lit signs everywhere promise quality and freshness.

Digital displays and lit signs everywhere promise quality and freshness.

Business Insider/Hayley Peterson

Refrigerators line the store.

Refrigerators line the store.

Business Insider/Hayley Peterson

365 by Whole Foods, shown here, has the same setup with the produce section in the middle of the store and frozen and refrigerated items on the perimeter of the store. Both stores also have very limited signage.

365 by Whole Foods, shown here, has the same setup with the produce section in the middle of the store and frozen and refrigerated items on the perimeter of the store. Both stores also have very limited signage.

Reuters

Unlike 365, however, Aldi sells home goods like pillows and holiday decorations.

Unlike 365, however, Aldi sells home goods like pillows and holiday decorations.

Business Insider/Hayley Peterson

Aldi, which is about 30% cheaper than Walmart, is growing rapidly. The chain has about 1,600 stores in the US with plans to add another 500 in the next couple of years. 365 by Whole Foods has six stores with plans to add 16 more in the next year.

Misfits

New ‘imperfect’ produce option at Meijer helps customers save money, reduce food waste

INDIANAPOLIS — Grocery store chain Meijer has started a new program for customers who want to reduce food waste and save money by sacrificing aesthetics, according to WXIN.

A new line of Misfits produce helps connect shoppers to tasty but cosmetically-challenged fruits and vegetables at a reduced price.

Meijer says even though the produce may be discolored, scarred or odd-sized, it has the same taste, freshness, and quality of other produce in the store.

Misfits produce items will vary each week based on their availability, and the discount is between 20 to 40 percent. Customers should look for the Misfits bins in the produce section of their local Meijer store.

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Understand Millennials

Want Millennial Customers? Here’s How to Get Their Attention

As the largest living generation, Millennials are a demographic every brand wants to charm. Here’s how to do it.
CREDIT: Getty Images

As the largest living generation, Millennials are a demographic every brand wants to charm. And while these people–roughly between the ages of 21 and 39–are certainly a diverse group, they do share some defining attributes. For one thing, they’re a group 77 million strong which was the first to grow up with the Internet, cell phones and cable TV. In fact, according to NielsenMillennials rank their use of technology as the factor that most makes their generation unique. It also makes it challenging to get and keep their attention. That’s according to Sean Brown, owner of GO VC, a venture capital firm which invests heavily in technology startups. He also owns Agency Y, a digital marketing agency that specializes in Facebook advertising. As a Millennial himself, here are his words on marketing to younger consumers.

1. Traditional ads are out.

Traditional advertising methods such as radio ads, newspaper ads, and print ads aren’t how you’re going to reach Millennials, who view them as intrusive. They stream music, and don’t listen to the radio. They fly through their twitter feed, and don’t read the newspaper. Their life is about constantly being connected, and your strategy needs to be overly responsive in that regard. Twitter releases updates on a weekly, if not daily basis, and digital strategies are constantly evolving. To keep up you need to constantly evaluate how technology is evolving and how Millennials are consuming information.

2. Selling won’t work.

Millennials don’t want to be sold to. The key is to make them feel as though they are part of a conversation. You need to first create brand loyalty and trust, then gain their business. Creating authentic, meaningful content through blogs, videos, and interactive social media campaigns will not only keep them informed, but tell them a story about your brand they they’ll want to be a part of.

3. Shares trump likes.

When Millennials love–or hate–something, they tell everyone. Make sure your social media platforms and website gives them the ability to give feedback and share their thoughts on your products. Millennials trust the opinions of their friends and family–and even strangers–over what a brand has to say. It’s essential to keep this in mind and monitor what is being said about your brand online. This is where a social listening tool can help so you can respond immediately.

4. They want perks.

Millennials love loyalty programs. Going beyond the obvious of helping them save money, a loyalty program makes them feel as though they are part of a community, while rewarding them at the same time for doing business with you. Provide them with discounts and referral offers which give them a discount if they refer a friend to your business. You can also keep them engaged through perk-based programs by having exclusive events for customers who reach a certain reward level, or who are considered MVPs. This will make them feel valued and rewarded for being loyal customers. Keep it fresh, surprising and engaging.

Americans Don’t Like to Cook

The Grocery Industry Confronts a New Problem: Only 10% of Americans Love Cooking

SEPTEMBER 22, 2017
sept17-21-86283984

The supermarket and grocery business is likely to suffer strong headwinds in the future, due to long-term shifts in consumer behavior. Although many people don’t realize it yet, grocery shopping and cooking are in a long-term decline. They are shifting from a mass category, based on a daily activity, to a niche activity that a few people do only some of the time.

I’ve spent two decades consulting extensively for consumer packaged goods companies. Early in my career I gathered some data for a client on cooking. This research found that consumers fell into one of three groups: (1) people who love to cook, and cook often, (2) people who hate to cook, and avoid that activity by heating up convenience food or outsourcing their meals (by ordering out or dining in restaurants), and, finally, (3) people who like to cook sometimes, and do a mix of cooking and outsourcing, depending on the situation. At the time, the sizes of the three respective groups were about 15% who love to cook, 50% who hate to cook, and 35% who are so-so on the idea.

Nearly 15 years later I did a similar study for a different client. This time, the numbers had shifted: Only 10% of consumers now love to cook, while 45% hate it and 45% are lukewarm about it. That means that the percentage of Americans who really love to cook has dropped by about one-third in a fairly short period of time.

Beyond the numbers, it also suggests that our fondness for Food TV has inspired us to watch more Food TV, and to want to eat more, but hasn’t increased our desire to cook. In part, Food TV has raised our standards to discouragingly high levels: How many of us really feel confident in our cooking skills after watching Iron Chef? (My high school chemistry teacher quit the cello in college after playing a semester next to Yo-Yo Ma.) This may be one reason why consumers now spend more on food in restaurants than on groceries. Despite all the buzz about the growth of pre-prepped meal kits like Blue Apron, or the promise of Whole Foods under Amazon’s management, cooking itself is on a long, slow, steady decline. The top 25 food and beverage companies have lost $18 billion in market share since 2009. Grocers are watching customers make fewer trips to stores, and many chains are in a prolonged price war, with prices declining 1.3% last year.

I’ve come to think of cooking as being similar to sewing. As recently as the early 20th century, many people sewed their own clothing. Today the vast majority of Americans buy clothing made by someone else; the tiny minority who still buy fabric and raw materials do it mainly as a hobby. If that’s the kind of shift coming to the food industry, change leaders and corporate strategists will have their hands full.

The risk to traditional grocers and Big Food is not just market share declines but category obsolescence. To prevent that, the industry needs to stop putting Band-Aids on a major bleed-out, and instead make a decision to amputate through ruthless portfolio strategy. Food manufacturers need to identify categories that are long-term losers, and exit by selling them while they can. Find and exit the categories whose fun-to-chore ratio is weakening, and where a food service proxy has gotten much better at a greater value. Even categories that can hardly be considered “cooking” — such as cold, ready-to-eat cereal — are losing sales as people buy breakfast at Dunkin’ Donuts, Starbucks, or even Taco Bell, where breakfast now accounts for 7% of sales. As more people opt to buy prepared meals, grocers need to reallocate shelf space, and manufacturers will need to exit entire categories.

Another way to survive is to raise the price dramatically by going super-premium or by becoming very focused in local markets. Consider Spam, whose revenues are still growing, even though only 13% of households buy it today. Spam is owned by Hormel, which has outperformed nearly every big food stock, due to a massive portfolio renovation — mostly by moving upscale. It’s acquired Wholly Guacamole, Skippy peanut butter, Muscle Milk, Applegate Farms, and Justin’s nut butters and confection.

A final adaptation should be done through technological innovation, which is how Big Food really got its start. (Frozen food and canning were gigantic industry breakthroughs.) One promising innovation is MATS technology, or microwave assisted thermal sterilization, created at Washington State University. This FDA-approved technology creates multiple benefits. First, it sterilizes food with minimal heat, pressure, and time so that the texture and taste of the food remains restaurant-quality. Second, thanks to the minimal degradation of quality, there is a super-clean label (meaning the product will have few chemical-sounding, unpronounceable ingredients) and an incentive to add high-quality ingredients. Third, the food remains packaged at room temperature, and remains safe to eat for months on end.

That last benefit might be a tough sell to consumers, but it represents a profound breakthrough in shelf life that could have a massive impact on inventory management, distribution, and broader supply chain benefits. (Amazon is intrigued by MATS technology, which in time could have a far bigger impact on the industry than the Whole Foods deal.) Reducing spoilage could reduce food waste. It could also address global hunger: Roughly 1 billion people around the world suffer from food insecurity.

I love the grocery and food business. But the industry must stop trying to live in the past, when most households cooked most meals from scratch.

My advice to grocery leaders is simple: Rediscover your pioneering spirit and missionary DNA. Embrace new science and technology. Rebuild your portfolio, adapt, and advocate for the future. Change the world, just as you did before.

Supermarkets vs Amazon

Supermarkets Need to Get Sexier in Amazon Era, Grocery CEO Says

  • Chains may add things like restaurants to entice shoppers
  • Ahold CEO also sees challenges for Blue Apron-style meal kits

Amazon May Soon Bring Shake Shack, Chipotle to Your Door

The key to surviving Amazon.com Inc.’s grocery push? Making sure traditional supermarkets are still exciting places to visit.

That’s the message from Dick Boer, chief executive officer of Royal Ahold Delhaize NV, the grocery giant that owns Stop & Shop, Hannaford and Food Lion.

Dick Boer

Photographer: Simon Dawson/Bloomberg

Boer estimates that as much as 15 percent of grocery purchases will move online by 2025, but that means most customers will still visit stores — especially for fresh items like meat and produce. To make Ahold’s stores more enticing, they may add restaurants and other gathering spots, he said in an interview on Friday.

“We have to make the store more exciting,” Boer said. “The shopping environment needs to be easier, less complex and more entertaining.”

Ahold has more than 2,000 brick-and-mortar stores along the East Coast, but it’s also confronting Amazon online. The company’s grocery-delivery service Peapod has operated for about 25 years (in the early days, customers ordered their food via fax).

The cost of delivering groceries to shoppers’ homes remains a hurdle, and Peapod isn’t yet profitable, Boer said. But the chain sees the service as a necessity for grocers at a time when more customers are shifting online.

Amazon’s $13.7 billion acquisition of Whole Foods has roiled the grocery industry and reverberated through the food world, fueling pessimism about both traditional supermarkets and upstarts such as meal-kit delivery business Blue Apron.

Plated Deal

Earlier this week, Albertsons Co., the second-largest U.S. grocery chain, agreed to buy the meal-kit provider Plated. The grocer paid about $200 million for the startup, said a person familiar with the deal, which was completed swiftly in reaction to the Whole Foods acquisition.

Ahold offers its own meal kits through Peapod, and Boer thinks companies in that industry will struggle to survive unless they partner with grocery stores. The boxes of ingredients for meals are a nice additional purchase for a customer doing their grocery shopping online, but they don’t work as stand-alone products. It’s too expensive to acquire and keep customers if your only business is delivery meal kits, he said.

“Meal boxes really need the support of a home-delivery system,” he said. “The best way is to have the support of dry groceries.”

Uber Eats

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The kitchen at Footprints Cafe Express in Brooklyn, whose owner, Bob Gordon, said the UberEats delivery service had been a boon to his business. Mr. Gordon also owns Footprints Cafe, a separate location. CreditSam Hodgson for The New York Times

SAN FRANCISCO — For years, Bob Gordon, the owner of Footprints Cafe in Brooklyn, handled the delivery of his restaurant’s meals, like his Caribbean-inspired “Rasta Pasta,” to customers. So when he decided to work for the first time with an outside delivery service — UberEats, the delivery arm of the ride-hailing giant Uber — he was nervous.

Then, the orders started pouring in.

“We weren’t prepared for the volume that came in” through UberEats this year, Mr. Gordon, 46, said. “I myself, as an owner, had to work three weeks straight cooking on the food line just to keep up.”

By winning over restaurant owners like Mr. Gordon, Uber has barreled into the crowded, cutthroat space of food delivery. As its new chief executive, Dara Khosrowshahi, assesses the strengths and weaknesses of the company with an eye toward an initial public offering in the next 18 to 36 months, top executives believe UberEats could generate enormous growth. Even as Mr. Khosrowshahi grapples with issues such as Uber’s loss of its operating license in London, he has said UberEats has been a “wonderful surprise,” according to a person who has spoken with him.

UberEats stands out even from the rest of the company’s fast-growing — and unprofitable — business. The delivery service, available in more than 120 markets globally, sometimes eclipses Uber’s main ride-hailing business in markets like Tokyo; Taipei, Taiwan; and Seoul, South Korea, the company said. The number of trips taken by UberEats drivers grew by more than 24 times between March 2016 and March 2017. As of July, UberEats was profitable in 27 of the 108 cities where it operated. Uber declined to reveal the service’s revenue.

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At Footprints Cafe Express, monitoring, fulfilling, bagging and handing over orders for UberEats.CreditSam Hodgson for The New York Times

“There’s a global trend towards delivery,” said Jason Droege, vice president of UberEverything, the division under which UberEats operates. “As people use mobile phones more and more for everything in their lives, we’re starting to see a secular change in how people eat.”

Uber came late to food delivery, which is a $100 billion-plus market, or about 1 percent of the total food market, according to a study by McKinsey. Typically, food delivery companies fall into one of two categories. The first is aggregators like Grubhub, which collect restaurant options and menus through an online portal for customers, and which usually require restaurants to handle delivery themselves.

The second is full delivery services like Postmates and UberEats, which take orders through an online portal and deliver the food for restaurants. The restaurants generally fork over a fixed percentage of an order as a fee, while customers also pay a fee to the delivery service.

The competition is stiff. Postmates, which established a foothold six years ago, has raised more than $250 million, has more than 100,000 delivery drivers (the company calls them “postmates”) and makes 2.5 million deliveries every month. Grubhub, a public company, had $3 billion in gross food sales in 2016, with an active base of 8.17 million customers.

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The UberEats office in San Francisco. As of July, the delivery service was profitable in 27 of the 108 cities where it operated. CreditChristie Hemm Klok for The New York Times

There is also the threat of Amazon, which has tried food delivery in a few markets. The Seattle retail giant’s recent acquisition of Whole Foodsprovides hundreds of potential bases for drivers to pick up prepared food for delivery in major urban areas, where takeout orders are popular.

“The number-one concern for all of these delivery companies is Amazon,” said James Cakmak, an analyst at the equity research firm Monness, Crespi, Hardt & Company who follows the food delivery space. “How could Amazon use its network to crush our business? They have the logistical network and the balance sheet to be able to compete on the price side with all of these players.”

Matt Maloney, the founder and chief executive of Grubhub, said his company’s focus on food orders set it apart.

“Uber has built a great company focused on black car service and human transportation, but succeeding in food delivery is a different game,” Mr. Maloney said in a statement. “We are known for one thing only — takeout ordering — and we have engineered our entire product around this purpose.”

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“There’s a global trend towards delivery,” said Jason Droege, vice president of UberEverything, the division that introduced UberEats in 2015. CreditChristie Hemm Klok for The New York Times

Both Amazon and Postmates declined to comment on UberEats.

Uber first dabbled in food delivery in Los Angeles in 2014 under the name UberFresh, offering prepackaged lunches and dinners from restaurants. Uber also tried other experiments, like UberEssentials, a way to deliver pantry and drugstore items quickly.

“If you can hit a button and get a car in a few minutes, what else can you get in a few minutes?” Mr. Droege said.

But the situation wasn’t ideal, with drivers usually carting food around in a safe storage container in their car trunks. That led to issues with food quality, and customers were unhappy when their food arrived cold. People also wanted a greater selection of restaurants, something that competitors like Postmates provided.

In December 2015, Mr. Droege’s division introduced a separate app, UberEats, in Toronto, working with restaurants to provide freshly cooked meals that could be ordered with a few touches of a smartphone button. The service took off, and over the next 18 months UberEats expanded its sales force to bring more restaurants on board and to open in new cities.

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Flags from around the world decorate the UberEats headquarters. The service is now in more than 120 cities.CreditChristie Hemm Klok for The New York Times

Uber executives said UberEats, which is now in more than 120 cities, had several advantages over rivals. For one, Uber has a network of more than two million drivers who can also deliver food. Cars used for UberEats also do not need to pass all of the inspection standards required to carry passengers, widening the potential delivery labor pool. (Drivers need not own a car at all; UberBike is a popular delivery method for food orders.)

Uber has also spent the better part of a decade mapping cities and finding the most efficient routes, which the company said may help improve delivery times. And since the problems with UberFresh, it has invested in better technology and added more drivers in participating cities. The ideal UberEats delivery has the driver arrive at the restaurant just as the food has finished cooking, and has it delivered to the customer while still warm.

“What Uber has are the last-mile logistics, and that’s crucial,” Mr. Cakmak said.

Uber has taken the partnership approach to speed up the growth of UberEats, echoing a strategy of companies like Postmates. Uber struck a deal with McDonald’s this year to offer delivery from thousands of its restaurants. Lucy Brady, a McDonald’s executive, said on an investor call in July that the initial results of the partnership were positive.

The service has stumbled at times, including this month when it faced complaints that an ad in India — telling husbands to use UberEats so their wives could take a day off from cooking — was sexist. The companyapologized for the ad.

Uber said it had invested in increasing its UberEats sales force, as well as hiring data scientists to analyze daily information on customer orders and preferences to help restaurants improve their service or promote their more popular menu items.

For Mr. Gordon, the owner of Footprints Cafe, Uber’s investments have been a boon for business. He said the delivery service had helped his restaurant reach new customers outside its loyal Caribbean community, without spending on advertising or promotion on Facebook or Groupon, as he did in the past.

“We’ve employed people who just work on Uber deliveries, and have a counter just for Uber driver pickup,” Mr. Gordon said. “It has definitely been worth it.”