Hormel Foods Aims to Simplify
Center Store Shopping
By John Karolefski
Hormel Foods Corporation is trying to breathe life into the dying Center Store.
The $5.75 billion maker of meat and poultry products, salsa, canned stew and microwaveable meals is combining innovative products and partnership with retailers to simplify the shopping experience and boost sales in an area of the supermarket that has fallen on hard times because of a lack of pizzazz and foot traffic.
The results? So far, so good, according to Jeffrey Ettinger, chairman of the board and chief executive officer of the Austin, Minn.-based multinational marketer of such well-know brands as Hormel, Spam, Jennie-O Turkey, and Dinty Moore.
“The center of the store has become hot and interesting again because of the economy. We’ve tried to innovate against it for many years because it’s a core area for us and for our retailers,” he said in a presentation recently at the Food Industry Summit hosted by St. Joseph’s University in Philadelphia.
“What are consumers looking for in the shopping environment?” he asked. “They’re still
time pressed and don’t want to spend a lot of time in the store. They find the store layout to
be frustrating.”
For example, he said microwaveable products such as soups, meals and pasta are in different aisles of the grocery store. This identified a potential problem and a potential solution for the Hormel team.
“The center of the store – particularly in some retailers – has not gotten much attention and wasn’t calling out new items to consumers. So we thought the center of the store was ripe for innovation,” said Ettinger
Last month, Hormel and Cannondale Associates released the results of a study that found shoppers are looking for a more efficient and effective way to shop for convenience food items. The shopper insights study found that rather than having convenience items scattered throughout the store, shoppers would prefer a dedicated convenience meals aisle where the full range of quick and easy products could be found.
“Based on the study results, we are now communicating with many of the retailers in the U.S.,” said Ettinger. “We’ve started pilots with a few of them to try and change the section. It won’t be a radical change in one day from the way the store is designed today to a complete reset, but we are encouraging them to try a sub-section at a time in a few stores.”
Research for the study involved interviewing 1,500 shoppers in-store, and analyzing more than 15 million frequent shopper card households and more than 100 million baskets. Also, they analyzed the buyer and basket interaction indices for convenience foods and a cultural anthropologist examined shopper’s grocery lists, habits and patterns in the store.
“Our goal for this research study was to develop a fact-based, shopper-designed program that would improve the shopping experience, and in turn, help retailers optimize their center store for increased sales,” said Bob Samples, director of category planning and support for Hormel Foods, in a press release announcing the program. “Americans today are eating in more, but we’re not cooking more. Instead, we’re relying on convenient meal solutions to feed ourselves and our families. By creating a convenience meals aisle, retailers have an opportunity to better serve today’s busy shoppers and grow their center store.”
The convenience meals aisle would be located in the center store, a highly profitable area for retailers, representing 88% of total store net profit. The research found that convenience meal shoppers are worth up to 31% more annually than other shoppers for retailers and that “Best in Class” retailers generate up to 12% higher aisle sales.
“By leveraging our knowledge of the center store, studying how shoppers interact with various products and categories, and then combining those insights with our experience delivering innovative convenient meal solutions for consumers, we were able to develop a comprehensive solution that benefits both retailers and shoppers,” said Bob Pepper, group product manager for Hormel Brands, in a press release. “By approaching the project from multiple angles and including cross-functional disciplines, we were able to deliver on the retailer’s desire for improved profitability while at the same time providing solutions that will improve the shopping experience for the convenience-seeking consumer.”
Hormel Foods designed its convenience meals aisle solution to allow retailers to customize it to specifically meet the needs of their stores and shoppers. For example, retailers can implement the solution in small steps, starting with key adjacencies, and can integrate private label with national brands to find the right assortment of products to fit serve their clientele.
During this study, shoppers defined which products they would include in the convenience meals aisle, as well as the organization of those items within the aisle. Shoppers requested that ultra-convenient items, such as microwavable meals and microwavable soups, should be placed at the end of the aisle nearest the front of the store, and more time-intensive meals, such as boxed dinners and sides, including macaroni and cheese and add-meat-and-heat entrees, should be placed toward the back of the store. Shoppers also chose a name for this aisle: the “Convenience/Prepared Foods” aisle.
In response to the survey findings, Hormel developed a white paper outlining a convenience meals aisle to help retailers better serve convenience-minded shoppers. The full white paper is available on the White Papers tab at http://www.hormelfoods.com/newsroom/download/
ISI Network Study: Issues Beset One in Four Resets
By James Tenser
Nearly one in four supermarket resets analyzed over a three-year span suffered from implementation issues in a case study previewed this month by the In-Store Implementation Network. More than half the issues reported resulted from planners’ inadequate understanding of store conditions, according to an excerpt of the study previewed by the ISI Network.
The supermarket reset case study is slated to be the first released by the group, which has been advancing an educational mission around professionalizing In-Store Implementation. The report accesses a rich data set gathered from a sample of more than 2,000 supermarkets, with multiple banners, between 2006 and 2008.
Data highlights include 4.6 million hours of reset work tracked, 900,000 store visits, 220,000 issues identified, and 40,000 schematics tracked.
More than 2,000 individual users in the field, associated with 40 different reset providers.
This unprecedented data set was captured using an On-Line Reporting System (OLRS) – a Web communications portal – that was used to distribute tasks to reset providers in the field and capture compliance verification data as those tasks were completed. The OLRS application was developed by Retail Tactics, a founding member company of the ISI Network, which is also providing the case study data.
“Issues” were defined as reasons why an assigned reset task was not completed on time or to specification. By far the most frequently cited issue in the data set was “section not carried,” followed by “division elected not to complete” and “section combined with another category.” All these issues – 125,000 in the present data – may be characterized as disconnects between the reset plan and the reality on the ground.
This case study may be a promising step toward defining industry benchmarks around In-Store Implementation. Analysts are presently pursuing further insights from the data set, including:
- Normalized labor hours on a per-project and per-foot basis
- Project time to completion trends
- Percent completed on time
- Time required to correct issues
Some time-series analyses are also anticipated, to explore how ongoing feedback from the on-line reporting system may affect reset performance.
A preview of the OLRS case study will be shared at the NARMS Spring Conference this month in Colorado Springs, as part of an ISI Network presentation.
With this initial case study, and the launch of a new Web portal in March, the In-Store Implementation Network has commenced a transition from defining an industry opportunity to identifying some practical solutions around professionalizing retail compliance.
The ISI Network has evolved considerably since April, 2008, when ten companies calling themselves the In-Store Implementation Sharegroup issued their working paper, “In-Store Implementation: Current Status and Future Solutions.” With more than 800 copies of the paper downloaded, the group’s leadership elected to shift to an open-enrollment model that would permit widespread industry participation.
At the beginning of the current year, the name was changed from ISI Sharegroup to ISI Network, and work commenced on a revised portal Web site (http://instoreimplementation.com) that can support interaction among members. Now with an email list topping 3,000 individuals, including a 280-member LinkedIn group, ISI Network is actively pursuing its educational mission on several fronts.
Top of the list are membership recruitment and case study development. Most of the original ISI Sharegroup companies remain involved as members of a Steering Committee, and general membership is now open to retail, manufacturer, broker, merchandising services organization, and solution provider firms who share an interest in advancing In-Store Implementation practice.
Editor’s Note: The author is Director of the In-Store Implementation Network
MARCH 2009
Wal-Mart Calls on Partners to Help
Improve Customer Experience in Store
By John Karolefski
Wal-Mart is not satisfied with being the world’s largest retailer. Now it is looking to enhance the shopping experience in its stores. To do so, Wal-Mart is relying on market researchers and is calling on manufacturer and vendor partners to join in a collaborative effort for improvement.
High on its priority list is leveraging shopper insights and segmentation to improve traffic patterns and merchandising tactics, sometimes with the help of virtual shopping testing.
“We’re working continuously to improve the customer experience in store,” said Candace Adams, PhD, senior director of insights & consumer strategy. “This includes understanding
our shoppers, how they shop our stores, their underlying purchase dynamics, as well as coming up with innovations for store formats.”
Adams called on manufacturers to help Wal-Mart improve its shopping experience by leveraging their category and customer expertise to drive category growth.
“You can help us be more successful if you help us drive category growth and not focus
on the brands so much,” she said. “There is an opportunity for us to work together to drive
the category.”
She thanked vendors for working closely with Wal-Mart, and singled out several of them,
including Red Dot Square Solutions, a virtual reality research company, and Smart Revenue,
a market research and ethnographic consulting firm in Ridgefield, Conn.
Adams outlined her vision in a presentation in Las Vegas at the In-Store Marketing Expo, hosted by the In-Store Marketing Institute.
Since nearly 9 of 10 Americans already shop at Wal-Mart, she said the new strategy is to encourage people to shop there more often and to buy more while there.
“That’s why we rely on shopper insights, segmentation and a host of other research tools,”
she said.
Segmentation research has found several types of Wal-Mart shoppers, including price-value shopper, brand aspirational, and price-sensitive affluent.
“What they all have in common is that they are all looking for value,” she said. “For example, the price-sensitive affluent refuse to pay a higher price just because they can.”
But the segmentation research has also shown that Wal-Mart needs to stock the right products in the right place at the right time. In other words, it’s not just about low prices.
“Doing the segmentation has helped us differentiate ourselves as a brand so that we’re not just a warehouse that has products in it,” she said.
Adams said Wal-Mart is using a virtual shopping platform to understand its shoppers better. The work essentially involves building a store on a computer screen. Shopper feedback on proposed changes in store is possible without showing the competition those changes in actual pilot stores. Those changes might include different shelf alignments, on-shelf positioning, and end-caps.
She said virtual retailing also helps Wal-Mart enhance the shopping experience by studying various traffic patterns and different department configurations and décor. Breaking down
aisles and turning them in different directions has been tested with more tinkering planned
this year. Adding more colors to the grocery department will serve to make food shopping
more appealing.
“We have to engage the customer in our stores,” she stressed. “It’s not only about providing the products; it’s about providing an experience.”
Market Watch
Digital Media Enhances Fred Meyer, Fry’s Marketplace
By Rose Anthony
In an effort to enhance the in-store media experience for retailers and consumer, digital media provider Premier Retail Networks (PRN) and entertainment marketer Retail Entertainment Design (R-E-D) have joined forces to enhance the in-store media experience for Fred Meyer and Fry’s Marketplace.
“Our retail partners’ goals for branding and marketing can truly be explored now as we combine fully customized lifestyle programming,” said R-E-D CEO Brian Marin.
“We are now leveraging our industry-leading ad sales operation to assist other companies in monetizing their out-of-home networks,” said PRN President Richard Fisher.
PRN enables retailers and manufacturers to reach consumers in over 6,400 leading retail stores worldwide. PRN works with retailers, content partners and advertisers to create in-store programming that engages, informs and motivates consumers where they shop. The company’s retailer customers include Acme Markets, Albertsons, Best Buy, Carrefour,
Costco Wholesale, Jewel-Osco, Pathmark, Sam’s Club, Shaw’s, ShopRite, Star Market, and Wal-Mart Stores.
Under the terms of the agreement, PRN will provide exclusive advertising sales services for two of the out-of-home networks programmed and operated by R-E-D – the TV Wall networks in the home electronics and music departments of Fred Meyer and Fry’s Marketplace stores, located in the Pacific Northwest and Phoenix areas, respectively.
“Fred Meyer is extremely pleased with the solution provided by R-E-D on multiple levels,” said Brent Beebe, Group VP Home Electronics & Music Market, Fred Meyer. “Their in-store video program ad model is a creative revenue stream for our home electronics department as well as a great way to capture the customer’s attention within a short window of opportunity.
NARMS Virtual Trade Show Debuts
NARMS International has announced the launch of the NARMS Virtual Conference Trade Show site accessible via www.virtualbeginnings.com/start/narms or www.narms.com. The 3D trade show is a collection of exhibitors who will stage “real-life” exhibits at the 14th Annual NARMS Spring Conference trade show in Colorado Springs April 4-7. It will eventually also house other exhibitors seeking access to NARMS members and website visitors.
The development of the virtual trade show site for the National Association of Retail Marketing Services will give extended access to information from Spring Conference exhibitors both before and after the live conference and trade show. Exhibitor company information is staged in virtual world booth areas with links to company websites, brochures and other sales materials via web links. Additionally, select program elements from the actual conference will be made available as educational sessions after the April live event.
SUPERVALU Launches Nutrition Labels
SUPERVALU, the nation’s third largest grocery retailer, has launched “nutrition iQ,” a unique nutrition information program designed to help consumers make better-informed, better-for-you food choices right at the store shelf. The program was developed and implemented in collaboration with Joslin Clinic, part of an academic medical center affiliated with Harvard Medical School in Boston.
The nutrition iQ program will roll out the company’s family of grocery stores nationwide, including Acme, Albertsons, bigg’s, Cub Foods, Farm Fresh, Hornbacher's, Jewel-Osco, Lucky, Shaw's/Star Market, Shop ‘n Save, and Shoppers Food & Pharmacy over the next six months.
