Giant Add Stores

Giant Food Stores Plans More PA Locations

04/10/2018

Giant Food Stores LLC has revealed plans to build six new stores, remodel two locations and open five new fuel stations in Pennsylvania, for a total capital investment of $70 million over the next two years. As part of its growth strategy, the Ahold Delhaize USA division will enter the East Stroudsburg and Walnutport communities for the first time.

“We are positioning the company for long-term growth, and we are excited to grow our presence within East Stroudsburg and Walnutport to better serve the families in those communities,” noted Nicholas Bertram, Giant president. “This year, Giant is celebrating our founding in Pennsylvania 95 years ago, so we’re especially proud to make these new investments in our home state.”

Both slated to open next year, the East Stroudsburg and Walnutport stores will each feature fuel stations.

The remaining new stores, all of them replacements for older locations, will be located in Feasterville-Trevose, opening this summer; State College, opening late 2018/early 2019; Warrington, opening early next year; and Broomall; opening late 2019.

Additionally two major store remodels will take place at stores in Shewsbury (a 4,000-square-foot expansion) and West Chester. When the renovations are completed later this year, the stores will offer a broader, more relevant assortment, including more local products, a deeper assortment of natural and organic selections, and healthier snack options, as well as an easier-to-navigate layout.

Further, three new fuel stations will be built at existing locations in Lititz, Horsham and Bethlehem, enabling customers in those communities to save with Giant’s exclusive Gas Extra Rewards program. When the new fuel stations are completed this year, the banner will operate a total of 103 fuel stations.

Through these various projects, Giant expects to bring about 300 more full- and part-time associate positions to these communities.

The $70 million investment comes on heels of a wareroom completed last February in North Coventry, Pa., in response to growing delivery and pickup demand, enabling Giant and one of its sister companies, egrocer Peapod, to serve up to 25 percent more shoppers in the greater Philadelphia area. According to Chicago-based Peapod, it’s seen double-digit growth in the Philadelphia region for the past three years.

Meanwhile, Giant has continued to invest in Beer & Wine Eateries since 2011, currently operating 59 of the establishments in Pennsylvania.

The banner has also committed $1 million over two years to Central Pennsylvania Food Bank and the Second Harvest Food Bank of Lehigh Valley.

“As we announce a significant investment in our store fleet to better serve our customers, we are also committed to help our regional food bank partners to better serve the communities we share,” noted Bertram. “Together, we can expand access to healthier, fresher food so those in need can nourish their families and meet basic needs to help them get back on their feet.”

The grocer’s corporate responsibility programs also include donating more than $20 million in cash and product annually, including hundreds of thousands of pounds of protein to food banks, through its Meat the Needs program, and serving as a member of the CMN Hospitals’ Miracle Million Club, in which it is a 20-year plus corporate partner.

Carlisle, Pa.-based Giant operates 171 locations in Pennsylvania, Maryland, Virginia and West Virginia.

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Warehouse Clubs

Why Warehouse Clubs Aren’t Facing an ‘Apocalyptic’ Decline

By Howard Jackson – 03/29/2018

We’ve heard a lot about the retail apocalypse, and specifically, the impending doom for warehouse clubs. The story usually goes something like this: Virtually every warehouse club member has a Prime membership (this is true, as our own proprietary model indicates the number is 87 percent). So it’s just a matter of time before Amazon starts eating clubs’ proverbial “lunch.” Additionally, many club members are inviting in some lazy house guests called Alexa or Siri to shop for them. Others claim that the U.S. club business is saturated and only two club chains will ultimately survive. They point to Sam’s Club’s 63 club closures earlier this year as confirmation.

Do clubs have the capacity to compete long term with Amazon, etc.? In our opinion at HSA Consulting, yes, they do.

In fact, the club business has done quite well over the past five years. In spite of the headwinds from competitors, warehouse clubs have grown faster than overall U.S. retail sales. Apparently, consumers are happy to hold both a warehouse membership and a Prime membership.

In fact, our research confirms that they will hold both, but rarely two warehouse memberships. The food and beverage categories are doing even better, increasing annually at 4.7 percent per annum, reaching 13.3 percent U.S. share. Club share is increasing by 26 basis points each year. Factors such as SNAP reimbursement reductions, which have negatively affected the grocery industry, have had little effect on clubs.

What we have seen at U.S. clubs is an increased penetration in food and sundries sales (excluding tobacco) to nearly 60 percent (total excludes membership income). This trend has stabilized over the past three years, with nonfood (including gasoline) growing 2 percent faster than food in calendar 2017.

The question remains, however: Are clubs simply more successful than grocery stores and supercenters that are also likely to lose long-term food share, or are they well placed to compete with Amazon?

HOW DO CLUBS CONTINUE TO GROW AND INCREASE FOOD SHARE EVEN WITH AN ONLINE HEADWIND?

It’s not because selection has broadened, because it hasn’t. Over the past five years, total club SKU count has declined 1 percent per annum, from 15,880 to 14,900, for the three club chains combined.

The real driver seems to be the substantial pricing advantage over major grocery chains, including Walmart and Amazon. We compared retail prices for 97 perishable, dry grocery and sundry items in 19 categories in Miami on March 1, which accounted for 45 percent of Costco’s 2017 merchandise sales. Costco was the cheapest overall, and all three club chains’ average prices were 24 percent cheaper than Walmart and Amazon, and more than 53 percent cheaper than Publix Super Markets for dry groceries and sundries. When we added perishables to the mix, the difference was even greater (directly comparable Amazon perishable items weren’t available). We recognize that club bulk-pack pricing affected these results, but while supermarket loyalty card prices were used, no allowance was made for premium club member “cash back,” which would further reduce club prices by 1 percent to 2 percent.

We also need to remember that two-thirds of Amazon’s gross merchandise value is third-party (3P) and provides little to no pricing leverage. Consolidation of Prime volume does yield last-mile cost advantages, but a shrinking portion of Amazon’s physical product sales are from owned inventory.

 

HOW CAN CLUBS MAINTAIN THEIR PRICE ADVANTAGE?

One reason that club chains have been able to maintain price advantage is their increased penetration of private label, which has grown from $20 billion to $28 billion since 2012 (7.2 percent) to 21 percent of overall club sales, and is expected to increase to 25 percent by 2022.

The second is their price advantage from a focus on reduced SKU count. This gives them two, significantly positive effects. One, it increases their pricing power with suppliers, and reduces supply chain costs. Two, it significantly reduces club operating expense, from less labor, smoother operations and inventory management as the club becomes more “pallet-driven.”

CLUBS HAVE INCREASED THEIR FOOD SHARE, BUT ARE THE SAM’S CLUB CLOSINGS AN OMEN OF THINGS TO COME?

Clubs have increased U.S. gross square footage by 2.6 percent per annum for the past five years, while the grocery segment has remained flat. We project that the rate of new space additions will fall to 0.5 percent per annum, with 5 million net square footage additions by 2022 (after Sam’s 2018 closure of 7.5 million square feet). All three club chains are expected to add space, with Costco the main contributor (Costco, 44 percent; Sam’s, 43 percent; and BJ’s, 13 percent).

 

Yes, Sam’s did close 63 clubs this year. Upon further examination, 33 were 20 to 30 years old and long past their “sell-by date’ – we even helped open 12 of them in the 1990s – 27 are located within 10 miles of an existing Sam’s, which will cannibalize a portion of potential lost sales; and seven are within club competitor strongholds where Sam’s is exiting the market. The average sales of this group of clubs was half that of Sam’s U.S. average, so the maximum sales loss will only be $2.9 billion annually (before potential switch sales to another Sam’s).

For the next five years, we see a healthy tailwind for clubs if they are properly managed. We project U.S. sales increasing from $163 billion to $193 billion, and food and sundries increasing from $96 billion to $122 billion (63 percent penetration) and 15 percent to 16 percent U.S. food and beverage market share – so it’s a little premature to start writing the club obituary just yet.

Wet Rack

Is the Wet Rack Washed Up?

Retailers dedicating greater shelf space to value-added salads, vegetablesBy Natalie Taylor on Mar. 30, 2018

A decade ago, butchers were arguably the last thing shoppers ever expected to find in the produce department. Fruits and vegetables were stocked in sprawling, vibrant wet rack displays, and perhaps the only “grab-and-go” option was the pull-out plastic bags that shoppers use to store their hand-picked produce selections. To make a salad meant to purchase lettuce, onions, tomatoes and other fixings individually—and worse, do the chopping and preparation at home—and the remaining products that went unused were often thrown away.

Enter: value-added produce.

When the first value-added greens hit the market, some grocers were skeptical. Jon Clements, director of produce for Pittsburgh-based Kuhn’s Market, recalls gathering around a simple 1-pound bag of packaged garden salad with his colleagues and wondering, “Is this really going to work?”

Today, he laughs at the recollection. “I looked at a bag of chopped salad today and it’s got romaine, kale, red cabbage, carrots, edamame, sunflower seeds and quinoa,” he says, not to mention the package of sweet onion vinaigrette dressing. Value-added vegetables have evolved far beyond convenience alone, from clamshells and resealable bags to produce butchers and multicultural meal solutions. The latest innovations now expose consumers to diverse flavors and ethnic ingredients, assist in the decision-making process and reduce meal prep time and potential food waste at home.

And while the wet rack still lives—and has long been the primary vehicle for conveying freshness, with rich, lively colors that bring the produce category to life—it’s a notoriously high-shrink category that’s prone to spoilage and is used more to impart theater than drive sales. As consumers continuously turn to packaged salads, mixes and related products, some retailers are openly wondering if it’s time to abandon the wet rack.

Growth in Value-Added Greens

“My wet rack has not shrunk, but the value-added category has grown,” says Clements, affirming recent Nielsen data that finds value-added vegetables experiencing steady growth over the years, with sales of more than $1.6 billion in 2017. However, it takes more than convenient packaging to maintain this growth. Consumers also seek creative and diverse value-added produce to justify its steeper price tag.

Both dollars and volume for value-added fruit, for instance, declined for the first time in 2017, as prices continue to climb, says Matt Lally, associate director for Nielsen. “With this in mind, retailers need to find ways to offer products at affordable prices or risk losing shoppers, as there’s a cutoff point where shoppers are willing to pay more for convenience,” he says.

It’s fresh innovations, such as cauliflower rice and veggie noodles, that have helped maintain growth in value-added vegetables over the years. According to Nielsen, vegetable medleys were the No. 1 value-added vegetable in 2017, and organic packaged salad was the top category consumers purchased in the 52 weeks ending Oct. 28, 2017, with dollar sales reaching nearly $900 million.

“The value-added salad category remains very strong and continues growing,” says Bil Goldfield, director of corporate communications for Dole Food Co., based in Westlake Village, Calif., pointing to salad kits at the forefront. With the growing demand for authentic flavors and creative dishes, the company offers 17 salad kits and 10 chopped salad kits, including its new Greek Chopped Salad Kit, featuring bite-sized pieces of Romaine lettuce, feta cheese and sweet onion pita chips with herb oregano seasoning and Dole’s Own Greek Vinaigrette dressing. And most recently, Dole launched an all-new line of packaged coleslaw, Slawesome Kits, seasoned in four flavors, including Sweet Apple, Mango Sriracha, Fiesta Lime and Smoky BBQ.

Making Room for Value-Added

With convenient kits and unique flavors increasingly drawing consumers to packaged greens, retailers are reducing their wet-rack displays to make room for expanded value-added products. “We are seeing growing consumer interest in ready-to-eat products in the produce department, and retailers are recognizing this and setting aside greater shelf space to meet the growing demand,” Goldfield says.

Kuhn’s Market, for instance, has begun remodeling its fresh departments to feature more narrow, vertical wet racks, as opposed to traditionally long, horizontal displays, to expand its value-added offerings. “It’s a lot easier to grow the value-added than it is the wet rack because you can go up a lot easier and you can stretch it out, as far as the display,” says Clements.

However, rather than eliminating the wet rack entirely, Clements expects value-added offerings to eventually lead shoppers back to the wet rack to separately purchase products they’ve been introduced to through salad kits, mixes and vegetable side dishes.

“Yes, we offer the wet rack items,” he says, “and we hope they like some of the flavors and different items that these magnificent value-added products let them try, and then they can come looking for it in the wet rack. Maybe next time they want to build that salad themselves. Let’s offer it both ways.”

Value-added products are not necessarily replacing the wet rack, but they can be used to enhance it. Retailers can tout their value-added vegetable products to inspire new purchases from the wet rack that consumers otherwise would never have considered, such as bok choy, edamame, kale or arugula. “If we can use value-added to introduce these other things into folks’ diets, then maybe we’ll have a chance to sell more,” Clements says. “They’re going to need to buy a whole head of lettuce or a whole head of romaine and all those other ingredients. So from a retailer’s perspective, it’s better because I’m going to sell you more fresh produce if you buy it from the wet rack.”

Grocery Wars

Grocery Wars Turn Small Chains Into Battlefield Casualties

By MICHAEL CORKERYMARCH 26, 2018

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After a career in groceries, Maribeth Druse still works part time at the Tops Market in Cooperstown, N.Y. “Who works in the same job for 44 years and gets a pension anymore?” she asked. “Nobody.” CreditAndrew Seng for The New York Times

CHESTERTOWN, N.Y. — At the Tops Market on Main Street recently, there was a “Mega Meat Sale” — buy one pork chop and get another free.

There were specials on avocados, paper towels and fried fish. Craft beer shared shelf space in the brightly lit store with cases of Genesee, a local favorite.

Tops was cutting prices even though it had filed for bankruptcy last month, responding to pressure from behemoths like Amazon and Walmart — which are lowering prices and targeting new markets — and from discount stores like Dollar General. The food war that is raging across the country is weeding out the weakest links, leaving small and medium-size grocery companies struggling to stay afloat.

It wasn’t long before another wobbly chain followed Tops into bankruptcy. The parent company of the Southern stores Winn-Dixie and Bi-Lo said it would file for Chapter 11 protection by the end of this month, and close 94 stores.

“There is a tremendous shakeout in food retail right now,” said Burt P. Flickinger III, a managing director of the retail consulting firm Strategic Resource Group, whose family founded a grocery business more than a century ago.

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Abel Porter, the chief executive of Fairway, addressing employees this month in New York. “It’s not a level playing field,” he said in an interview. “Competing against Amazon is like competing against the government or a military commissary.” CreditAndrew Seng for The New York Times

Amazon’s $13 billion purchase of Whole Foods in June added a sense of urgency to the competition to feed American families, raising the prospect that the e-commerce giant would upend groceries just as it has every other aspect of retail. This month, Walmart responded with its own plan to start offering an online grocery delivery service in 100 cities.Continue reading the main story

At stake is not only the price of toothpaste and bananas, but the fate of thousands of cashiers, cake decorators and meat cutters, many of whom belong to labor unions and are owed pensions when they retire. Tops employs more than 12,000 unionized employees at about 160 stores in New York, Pennsylvania and Vermont.

Maribeth Druse made a lifelong career in groceries, but given the industry’s struggles, her experience will increasingly be harder to replicate.

Ms. Druse, 61, was still in high school when she started working in the meat department of a grocery chain that Tops eventually acquired. She now collects a $20,000-a year-pension and is still able to work part time at the Tops in Cooperstown, N.Y.

“Who works in the same job for 44 years and gets a pension anymore?” Ms. Druse asked. “Nobody.”

Like businesses in other industries — including Toys “R” Us, which announced liquidation plans this month — many failing supermarkets are owned by private equity firms that have loaded the companies up with debt. That hampers their ability to compete in an environment where prices in some markets have dropped by as much as 25 percent, Mr. Flickinger said.

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Employees of Fairway, which went bankrupt in 2016, heard Mr. Porter tell them, “I am here to announce that Fairway has bounced back.” CreditAndrew Seng for The New York Times

Tops was long challenged by the debt its former private equity backer, Morgan Stanley Investment Management, heaped on it.

The private equity firm Lone Star has cashed out $980 million in dividends from Winn-Dixie’s parent company since 2011, according to Moody’s Investors Service. Most of the payments were made by taking out debt on the chain, leaving less money to invest in stores.

Marsh Supermarkets, an Indianapolis regional grocer that had been backed by private equity, laid off more than 1,500 workers and required a federal takeover of its pension plan last year.

And Fairway, the iconic New York grocer that the Blackstone Group took ownership of after it went bankrupt in 2016, is still trying to distinguish itself in a crowded field, but reports making some progress on its turnaround.

This month, Fairway executives met with the company’s roughly 3,500 workers, most of whom are unionized, to unveil a set of new initiatives — like investments in a new marketing campaign. It plans to emphasize the company’s role in bringing new foods to market, as it did with Chobani yogurt and Cape Cod potato chips.

“I am here to announce that Fairway has bounced back,” the chief executive, Abel Porter, told a group of cheering workers.

Photo

A Fairway on New York’s Upper East Side. Blackstone, which bought the chain after the bankruptcy, has been making investments in Fairway. CreditAndrew Seng for The New York Times

Blackstone has been making investments in Fairway, but company executives acknowledge that the grocer faces an uphill battle.

“It’s not a level playing field,” Mr. Porter said in an interview. “Competing against Amazon is like competing against the government or a military commissary.”

Amid the intense competition, the number of supermarkets around the country increased from 2010 to 2015, but the number of supermarket operators declined slightly. Analysts and industry executives say the pace of consolidation is expected to accelerate.

The changes are also taking a toll on unions. Membership in United Food and Commercial Workers, the largest grocery union, has dropped more than 9 percent since 2002, to about 1.2 million, according to the Labor Department.

While some union officials cite factors like automation and state laws unfavorable to organized labor for the decline in membership, others blame the bankruptcies.

“The private equity owners try to drain every last ounce of blood from these companies,” said John T. Niccollai, president of Local 464A of the U.F.C.W., which represents grocery workers in New York and New Jersey. “Their feeling is if it goes bankrupt, so be it.”

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“The private equity owners try to drain every last ounce of blood from these companies,” said John T. Niccollai, president of a union local that represents grocery workers in New York and New Jersey.CreditBryan Anselm for The New York Times

Mr. Niccollai, a former butcher who went on to get a law degree, works out of a cavernous union office, near Paterson, N.J., that is a throwback to a different era. A worn red carpet covers the floor; photos of union officials greeting priests adorn the wood-paneled walls.

When Mr. Niccollai started working at the union in the late 1970s, the A & P grocery chain had about 7,000 stores. By the time A & P had filed for its second bankruptcy, in 2015, it was down to about 125. Mr. Niccollai found jobs elsewhere for 3,500 workers who had been displaced by the bankruptcy, but 1,500 of his members were out of work.

He recently added membership by organizing some of the warehouse workers at the Peapod grocery delivery service, but it is challenging when the industry is increasingly dominated by nonunion employers like Walmart and Amazon.

“We are fighting hard,” Mr. Niccollai said.

Tops’s path into bankruptcy was similar to that of other unionized grocery chains. The first Tops supermarket was opened in Niagara Falls in 1962 by an Italian immigrant. The company grew into a large regional player that bought up smaller grocers and discount food stores through the 1990s.

The international food giant Ahold acquired Tops in 2001. The company was sold to Morgan Stanley’s private equity team six years later. Under the firm’s ownership, Tops loaded up on debt and paid out roughly $300 million in dividends to its investors, according to Moody’s.

Even though Morgan Stanley no longer owns the company, Tops never overcame the debt burden. And like other unionized supermarket chains, Tops has had to deal with steep pension expenses.

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A pro-union sign at the United Food and Commercial Workers office in Little Falls, N.J.CreditBryan Anselm for The New York Times

Tight on cash, the grocery chain has faced tough competition, even in more remote markets like Chestertown, a community of about 700 people in the Adirondacks.

Many residents said they drove 35 miles to shop for food at Walmart on the weekends but shopped at Tops, often paying higher prices, during the week because it was close to home.

But Tops’s virtual monopoly in the town ended in August 2016 when Dollar General — a national discounting chain — opened a store in Chestertown. The Dollar General doesn’t sell much fresh produce or meat, but it is siphoning off Tops customers with huge deals on other staples.

At $2.80, a gallon of whole milk at Dollar General costs about the same as a half-gallon at Tops.

Alex Colpas, 27, who works at a marina on a local lake, said he rarely shopped at Tops any longer because of the deals at Dollar General.

“You don’t even need a grocery store, frankly, if you can find a better way to shop,” Mr. Colpas said. “It’s a relic.”

When it filed for bankruptcy, Tops said it expected to operate “as normal’’ throughout the bankruptcy, but union officials are bracing for closings.

“I have never seen a bankruptcy that doesn’t lead to closing stores,” said Frank DeRiso, president of U.F.C.W. Local 1, which represents Tops workers in New York.

Tops, analysts say, would face a difficult time waging a price war with Dollar General.

“Survival depends on your ability to weather pricing pressure over an extended period of time,” said Mickey Chadha, a senior credit officer at Moody’s. “The weak guys can’t do that.”

Fresh Direct

I order my groceries from FreshDirect, the online grocery store that makes food shopping incredibly easy — here’s what it’s like.

• Sally Kaplan, Insider Picks.

The Insider Picks team writes about stuff we think you’ll like. Business Insider has affiliate partnerships, so we get a share of the revenue from your purchase.

FreshDirect

• Grocery shopping in New York City or any of its boroughs can be a huge pain if you don’t have a car.
• To avoid carrying 40 pounds of food home from the store and irritating my back, I started using FreshDirect, an online grocery store that delivers food right to my door. 
• Below you’ll find everything you need to know about how FreshDirectworks, what it costs, and how I deal with not being able to touch or see my food before buying it. 

I don’t hate grocery shopping. Quite the opposite actually — I love leisurely strolling through aisles, trying to follow my meticulously curated grocery list while simultaneously allowing myself to get distracted and inspired by everything that’s not on it.

Sadly, once I moved to an overpopulated city, this relaxed Sunday afternoon ideal became a perfect pipe dream.

Grocery shopping in Williamsburg, Brooklyn is terrible. I can’t get through the produce section without my cart getting hit or my vegetables being blocked by boxes to be unloaded, and after having to weave my way through a hundred people shoved into narrow aisles of a small store, I have to carry home 40 pounds of food. It’s not ideal — especially for someone who has back problems (and who grocery shops for a two-person household).

A few months ago, I started using FreshDirect, an online grocery delivery service that has helped me save both money and time. 

FreshDirect

Here’s how it works:

FreshDirect works exactly like any other shopping site. You search the items you want, and add them to your cart in the offered quantities. Once you’ve finished shopping, you’ll select a delivery time with a two-hour window, and pre-pay for your items. You can schedule your deliveries for next-day, or up to a week in advance, but there are no day-of options. Your boxes will arrive in a refrigerated truck, and the delivery person will even bring them inside to your kitchen counter.

When shopping on the site, you can look for inspiration by browsing sections like “fresh deals” and “top rated” or check out the products with available coupons. You can also search for local ingredients, shop specifically for organic items, or order basic home necessities like toilet paper and Lysol wipes.

And just like a regular grocery store, they have both name brand and generic brand food items, specialty groceries, ready-made items, and party platters (plus wine, beer, and liquor in certain areas). Their array is as vast as any big box store would be — it’s just much easier and faster to navigate.

One feature that I love the idea of but haven’t yet used is the “Farm Share” box, which is basically like a one-off CSA box full of a random assortment of produce from a local farm near you. In my area, the option that comes up is a $40 box full of a dozen eggs, one block of cheese, and four to five varieties of vegetables from the current harvest.

A small portion of FreshDirect’s available categories to shop under “vegetables.”FreshDirect

Sign up and delivery fee info:

The company only operates in specific areas of New York, DC, New Jersey, Delaware, and Philadelphia, and has different delivery fees for each area (see all cities and fees here). If you live in Manhattan or any of the boroughs, the delivery fee is $5.99 per order, plus an optional tip for your driver.

If you love the service and use it frequently, you might want to invest in the DeliveryPassoption, which is $79 for six months or $129 for a year, and affords you free delivery, exclusive special offers, reserved time slots, and a bonus $5 discount on orders delivered between Tuesday and Friday.

If you were to order from FreshDirect weekly, it would cost you about $311 per year in delivery fees — so the membership is extremely worth it. You’ll also always find a discount for signing up as a new customer — right now you can take $25 off your first order of $99 or more with code ‘WELCOME.’

Why I like it:

Ordering groceries online has its advantages. It helps me stick to a list so I don’t overbuy or get distracted by all the new ingredients I see, and it lets me search deals all in one place instead of running around the store, so I can build my weekly meal plan based on what’s on sale. And possibly the most important thing to note is that I don’t have to get dressed to go shopping. I can do it all from the comfort of my couch on a Saturday morning with a cup of coffee in my hand and my cat on my lap.

However, it also has its limitations. You can’t touch or smell the produce for ripeness, and you can’t just get “whatever looks best,” as my mom would say. It can also be risky to get fragile items like eggs (something I know from experience).

FreshDirect

How I deal with the limitations:

I buy eggs in person when I have time during the week, and I build my list around things I know are in season to avoid unripe or tasteless produce. FreshDirect‘s produce is, on average, excellent — and if you ask me, the annoyance of getting the occasional batch of unripe bananas in my order doesn’t hold a candle to the nightmare that is going to the store and carrying groceries home on a Sunday in the city.

Plus, I know that if anything’s wrong with my order, or if I’m not happy with something, I can just message FreshDirect’s customer service. They’re expedient and efficient, and in most cases, a complaint will result in at least a refund, if not a credit to your account for whatever inconvenience was caused.

So whether you also hate carrying groceries home, or you just have a hectic schedule that makes grocery shopping a major chore, it’s worth giving FreshDirect a shot.

Amazon Go

Amazon Go VPs Share Big Challenges of Cashierless Concept

By Randy Hofbauer – 03/21/2018

L-R: Dilip Kumar, VP of technology, Amazon Go and Amazon Books; Gianna Puerini, VP, Amazon Go; Jeffrey Dastin, technology correspondent, Reuters

Opening a new grocery concept is tricky enough as it is, often requiring adjustments even after the ribbon is cut. Amazon isn’t immune to this, even with a store employing technology not used by the competition that seeks to disrupt an entire industry.

That’s arguably the biggest takeaway from the Seattle-based ecommerce giant’s Amazon Go store, whose VPs, Gianna Puerini and Dilip Kumar, shared insights into the creation of the technology that fuels the store’s “just walk out” model – which caused the 10-month delay of the store’s public opening due to its difficulty in tracking more than 20 people at a time or items moved from their specific shelf space. The VPs’ presentation took place March 18 at ShopTalk in Las Vegas.

To give a quick overview of how it works: The store uses technology similar to that powering self-driving cars, employing computer vision, sensor fusion and deep learning to automatically detect when products are removed from, or placed back on, shelves. To use the “just walk out” technology, patrons download and check in via a mobile app, take what they want, and walk out the door, where they are charged for the products they take with them. There are no lines or barcodes to be scanned in the process.

Opening the presentation, Kumar shared three challenges his team faced when creating Amazon Go:

1. The team had to pull off the “just walk out” technology in a way that makes it seamless and effortless.
2. The concept required algorithms that are beyond state-of-the-art for its computer vision and machine learning to solve the problems of who took what. Also required were people shopping close to each other to test everything.
3. The store needed a robust hardware and software infrastructure to support everything.

True, some retailers overseas – such as Alibaba Group, with its Bingobox convenience stores – rely on RFID instead of computer vision for their own “grab-and-walk-out” stores. However, tagging every single item with an RFID label is burdensome and costly, Kumar stressed.

An interesting, unexpected challenge was training consumers to rethink how they shop in general. Puerini noted that when the first Amazon Go store opened to the public, staffers were positioned earlier in the path to purchase to answer questions and assist shoppers. However, the end of the path was in need of significant help: She didn’t expect so many to stop before exiting and ask if it were OK to leave, requiring the staff to post a sign assuring shoppers that they could go without physically checking out. Even she still sometimes thinks twice when exiting the store, as shopping Amazon Go requires changing a behavior consumers have had their whole lives.

It’s easy to think Amazon developed its new Amazon Go concept to cut costs or simply “do tech for tech’s sake” – and there might be a little truth to both. However, Puerini emphasized that retailers looking to employ similar technology in stores have to establish a sustainable business model that comes down to the customer. Grocers must ask themselves: “Who is my customer? What can I do to add value to their life? What am I uniquely positioned to offer them? And if I’m not offering something unique, am I willing to build, buy or go another route to offer it?”

ADDITIONAL INSIGHTS

Other questions and insights Puerini and Kumar brought up regarding Amazon Go include:

• What are customers buying at Amazon Go? The top seller is the chicken banh mi sandwich, although meal kits for dinner, fresh fruit in the morning, and items from Seattle bakeries also are popular.
• What has Amazon changed since opening the store? Learning about what customers like.
• How does Amazon determine what products or brands to introduce and/or discontinue?Customers write in via the Amazon Go app, which also is used to enter the store and pays for the total purchase upon leaving, about the brands and products they wish that the store stocked. When carrying a suggested item or brand makes sense, Amazon listens.
• What are the metrics for the store’s success? Pulling off the just-walk-out part is only part of the battle. Amazon Go is definitely about convenience, but none of that matters if pricing and assortment aren’t to shoppers’ liking. Therefore, primary focus is given to making sure Amazon understands what customers like, listening to their feedback and continually adapting to meet their needs.

Winn Dixie Files

Southeastern Grocers Embarks on Restructuring

03/27/2018

As expected, Southeastern Grocers LLC (SEG) has filed for Chapter 11 bankruptcy in Delaware to implement a pre-packaged plan of reorganization.

The Jacksonville, Fla.-based grocer revealed earlier this month that it has entered into a restructuring support agreement with a group of creditors and its private equity sponsor regarding the terms of a comprehensive financial restructuring. The company will continue to operate throughout the process.

SEG President and CEO Anthony Hucker noted that the retailer was “taking the next step in the implementation of our financial restructuring plan. This pre-packaged, court-supervised financial restructuring process provides for a clear and expedited path to put SEG in the best position to serve our communities and succeed in the competitive retail market in which we do business.”

Hucker said that the company had “more than 580 stores operating under the Bi-Lo, Fresco y Más, Harveys Supermarket, and Winn-Dixie banners,” minus the 94 locations slated to close under the restructuring, adding: “We are extremely pleased that this process continues to proceed quickly and as planned. With each key milestone reached, we move closer to emerging and making Southeastern Grocers into a true success story for our associates, our customers and the communities we serve.”

According to SEG, the restructuring will lower overall debt levels by more than $500 million and maintain the company’s strong liquidity position under the new post-emergence revolving credit facility. This considerable debt reduction should result in reduced interest expense, enabling the company to invest more cash flow back into the business in the form of more store renovations and new locations. With a deleveraged balance sheet and an optimal store base, SEG can then concentrate on store growth and financial health.

SEG has filed various customary motions to obtain the court approval to continue to support its business operations during the restructuring process, including the continued payment of associate wages and benefits without interruption, all of which it expects to be granted.

The company also recently expanded its Fresco y Mas banner by three stores in two new Florida markets.

Southeastern Grocers LLC, one of the largest conventional supermarket companies in the United States, operates grocery stores, liquor stores and in-store pharmacies serve communities throughout Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina.