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GOURMET NEWS www.gourmetnews.com n JUNE 2017 n GOURMET NEWS 1 0 8 Key Trends Shaping Future of Grocery Retailing What could be said 20 years ago is even truer today: the U.S. food retailing busi- ness has never been more competitive. Ac- cording to "The Future of Food Retailing: Value Grocery Shopping in the U.S.," a brand new report by market research firm Packaged Facts, there are a number of trends that are putting pressure on food re- tailers of all stripes, from supermarkets whose bread and butter is groceries to su- percenters and drugstores for which food is a smaller but still crucial part of the product mix. "Food retail is evolving. The customer is king, and perhaps more than any time in history, the consumers are firmly in control. Competition from multiple chan- nels is unrelenting, and retailers must be creative and innovative in their market- ing, products offerings, services, and even store designs just to garner even a sem- blance of consumer loyalty," says David Sprinkle, Research Director, Packaged Facts. In "The Future of Food Retailing: Value Grocery Shopping in the U.S.," Packaged Facts identifies several trends impacting the food and beverage retail market. Three of the most prominent are the incursion of e- commerce onto the food retailing landscape, the evolution and expansion of contactless payment options and the rise of the smaller store formats. The E-Commerce Effect For several years, e-commerce has been one of the fastest growth areas for grocery and consumable products. Retailers covet e-commerce shoppers because they tend to be less price sensitive, spending noticeably more than in-store only shoppers and driv- ing higher margins. E-commerce shoppers are also desirable because they tend to stock up, placing two large orders per month on average, with items in their bas- kets often double or even triple what is typically found in the carts of in-store shoppers. Not surprising given Amazon's inex- orable inroads into consumables, many brick-and-mortar chains have begun making it possible for shoppers to order online and pick up in store. By some estimates, brick- and-mortar stores now average more than 100 e-commerce orders per week. The prac- tice is so popular that even Amazon wants a piece of the pie and is reportedly consider- ing establishing up to 2,000 "click and col- lect" stores and possibly even some full-scale grocery stores. Unsurprisingly, even the ever savvy and mighty Walmart is not immune to the allure of e-commerce. The supercenter juggernaut is working to get up to speed and dramati- cally boost its digital operations to better compete with the likes of Amazon, which presently has the advantage of a larger on- line presence in international markets, a larger selection and number of products on- line, and a more successful mobile app and customer loyalty program in Amazon Prime. Walmart's $3.3 billion acquisition of Jet.com in August 2016 was a decisive strategic step in boosting the retailer's digi- tal operations. Use of Mobile Payments, Apps and Screenless Payment Accelerate Especially as Millennials and Gen Z come of age, a growing aspect of shopping con- venience will be the ability to pay wirelessly or by tapping a card on a reader. Many ex- perts predict 2017 will see accelerated growth in contactless transactions due to a variety of factors, including America's con- tinued transition to the EMV electric stan- dard for smart payment cards requiring insertion rather than swiping. Rapidly gaining ground are apps designed to speed up the payment process, keep track of transactions, calculate and apply cus- tomer rewards, and help shoppers bypass lines. For example, since introducing the popular Walmart Pay in 2016, Walmart has already added two new features to the mo- bile app: the ability to refill prescriptions and skip pharmacy lines and the ability for users of Walmart Money services to submit information for the transaction privately rather than filling out paperwork in stores, also skipping the line. Also getting into the app game, Target plans to introduce a mo- bile payment option in 2017, although it is not yet clear whether it will be embedded in the core Target mobile app, Target's Cart- wheel discount/coupon app, or both. On a similar note, screenless payment is shaking up online grocery shopping. A pio- neer in this area is Amazon with its voice- activated Alexa home assistant and developing cashier-less Amazon Go brick- and-mortar stores, where sensors automati- cally calculate purchases as customers load up and leave the store." Smaller Stores Bigger Than Ever If there's one thing every grocery shopper wants, it's the convenience of being able to get in and out of the store as quickly as pos- sible, and for a growing number of shoppers and retailers, smaller stores are the ticket. In Europe, ALDI and Lidl have long wielded the smaller store advantage compared to the huge hypermarkets, and both chains are ex- panding in the U.S. As a result, the smaller store strategy will be even more important to Walmart and Tar- get, both of which have been fielding smaller formats to offset inroads made by dollar stores and to fill the gap between full-sized supercenters and stores too small to warrant their investment. Walmart's experiments with small-format stores include its Neigh- borhood Market stores – which measure ap- proximately less than one-quarter the size of a Walmart Supercenter – and currently num- ber about 700, with expansion ongoing. Wal- mart also recently added two Walmart Pickup and Fuel shops as a way to test addi- tional pickup options. Customers order on- line and pick up at the smaller stores, which carry convenience store basics as well as fuel. The orders are delivered from larger Walmart stores to the smaller stores. Target, too, has been opening small stores, though mostly in urban areas where space is tight. In late 2016, Target opened three smaller format stores in New York City, and according to reports, Chief Executive Offi- cer Brian Cornell envisions opening hun- dreds of smaller Targets, making them a major part of future growth. Overall in 2016, Target opened 32 "flex-format" stores occu- pying less than 50,000 square feet, with plans for at least 16 more in 2017. The smaller stores afford Target entry into high- rent urban areas that can't handle typical big-box stores. Along with the smaller size, the stores' product selection is tailored to the surrounding demographic. As of early 2017, even the smallest value grocery format of all – dollar stores – is going even smaller. Looking to tap further into the all-important Millennial cohort, in January 2017 Dollar General began testing in Nashville a 3,400-square-foot concept called DGX, with plans to open a second DGX in Raleigh, North Carolina. Carla's Pasta Puts Innovation at the Forefront By Ashley Biel, Project Manager, Carla's Pasta, Inc. Carla's has always worked to produce con- sistent, innovative pasta and pesto products that will tantalize our discerning customers. The rapidly growing Italian segment of the food industry is very dynamic. We continue to see our customers embracing our new pesto varieties, pasta shapes and fillings. Every day, restaurant owners discover our easy-to-prepare products that result in satis- fied, happy faces around the tables they serve. Carla's puts innovation at the forefront of all product development, striving to stand out among all competitors on quality. In 1979, Carla's first innovation to the food in- dustry was Basil Pesto, very traditional in Italy. The secret behind a wonderful and fla- vorful pesto, you ask? Simply using fresh, clean ingredients when blended together that generate an added punch of flavor used with any pasta, protein, sauce, etc. Carla's first introduced tortellini with the capelleto shape (cardinal's cap). This shape provides the customer with a greater filling- to-pasta ratio while allowing more sauce pickup. Tortellini with open centers are still produced by the competition with a smaller percentage of filling in each one. Another firm distinction between Carla's and our competitors is the colors of the rainbow tortellini we produce. A majority of pasta manufacturers incorporate dyes in their recipes to produce colored pasta, while Carla's uses all clean ingredients to achieve various pasta colors and flavors. Our pasta is vibrant in color because we use real spinach and tomato. Our customers can taste the difference. Sacchettini was an entirely new pasta concept discovered by Carla on a trip home to Italy. It is a fantastic and delightful cre- ation that looks like a purse – pasta gathered at the top to hold filling concentrated in its round belly. The top is a flower of delicate pasta, sitting on a burst of flavor. The most recent additions to the Carla's Pasta lineup, Tuscan Style Vegetable Ravioli and Gluten Free Penne, were strategically developed with health conscious consumers in mind. Tuscan Style Vegetable Ravioli be- gins with a stone ground whole wheat and durum octagonal pasta shape filled with a medley of sautéed summer vegetables, kale and edamame. Add any pesto variety or a simple lemon or brown butter sauce for a guaranteed light, but filling meal for spring, summer or any time of year. Carla's thought it was important to develop a product for those who are gluten intolerant or choose to consume a non-gluten diet. For that reason, Carla's produces a Gluten Free Penne, made from corn and rice flour so the whole family can enjoy a delicious Sunday dinner regard- less of dietary restrictions. Carla's then decided a new, innovative ravioli shape was needed, and the Pacchetti was born. This new shape is a four-sided, pinched pyramid ravioli filled with a blend of gorgonzola, Monterey Jack, ricotta and bleu cheeses sure to add a punch of flavor with any sauce. The pairings with this item are endless as there is such unique flavor. Our favorite pairing is with bourbon soaked cherries, toasted pecans and balsamic glaze. When it comes to Carla's, we never think anything is out of reach. Along with our tra- ditional items, Carla's offers 'out of the box' options as well, including Cheeseburger Ravioli, Buffalo Chicken Ravioli and Stromboli Ravioli. We are an old fashioned company with a very clear mission. We cre- ate pasta and pesto the best way we know how. The company's kitchen is just an ex- tension of Carla's kitchen at home. For more information, visit www.carlas pasta.com.