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    Published on: March 16, 2016

    by Kate McMahon

    I had my annual spring break case of supermarket envy last week, returning to my favorite coastal Georgia retailer with a fresh prepared food department that far surpasses the grocery store chains in suburban Connecticut. The entrée offerings at the St. Simon’s Harris Teeter were appetizing and well-priced (not to mention a 20% off discount on wine by the case ... we can't even buy wine in Connecticut's supermarkets).

    I coincidentally came across two studies on the fresh prepared food sector from two different vantage points – the industry and the consumer. Both confirm that busy Americans want healthy meal options in a hurry and the competition is heating up for the dinner-to-go dollar. In addition to traditional takeout food, Uber-style meal delivery services from casual to upscale restaurants are readily available with one click on a mobile phone. Home-delivered meal kits such as Blue Apron and Plated are reaching millions of kitchens a month.

    Let’s get back to supermarkets. A survey released last month from the Food Marketing Institute (FMI) and Technomic detailed “the sophistication of supermarket fresh prepared foods” among 28 banners representing 8,000 stores. It substantiated the $15 billion growth of supermarket fresh prepared foods over the last eight years, and found the sector grew by an annual rate of 10.4%, making it one of the highest performing in the entire food industry.

    The report also found leading chains are hiring professional chefs to contemporize menus, offering in-store amenities such as café seating and WiFi, re-modeling deli departments, and making long-term investments “as traditional foodservice operators (namely restaurants) aggressively counter this threat to their business.”

    To be honest, I haven’t seen any such investments in the chain supermarkets I frequent in Fairfield County, CT. Nor do I sense the connectivity with the customer that is apparent at the Harris Teeter in St. Simon’s or in Winston Salem, N.C., where my college student daughter gets an additional five percent discount on top of the store loyalty card.

    The second study, from Consumer Reports, found that more than half of the 63,000 subscribers surveyed buy meals at their supermarket’s fresh prepared food counter. The magazine sent secret shoppers and nutritionists to six major Northeast retail chains to test 24 different prepared dishes.

    Among the findings:

    • “Fresh” doesn’t necessarily mean made fresh on site, and that some dishes weren’t even prepared in the same zip code of the store.

    • Nutritional information, calorie counts and even portion sizes were hard to come by at most locations.

    • The Consumer Reports’ lab analysis showed many of the dishes had very high sodium content, and some included packaged processed foods.

    • The price differential between buying prepared foods vs. making at home is steep. For example, the Whole Foods Cranberry Couscous cost $8.99 per pound prepared vs. $4.10 if made at home. The best bargain: The Costco rotisserie chicken at $4.99 (a go-to dinner at our house.)

    In order to compete, retailers need to be transparent with prepared foods and provide nutritional information even if it isn’t mandated by the FDA for that category. Consumers not only want that information, they will soon be demanding it. The Wall Street Journal noted this week that both big and small suppliers "are rushing to meet consumers’ increasing demand to know more about what’s in their food, where it came from, and how it was produced." I will certainly be scrutinizing fresh prepared items more closely after reading that a cup of The Fresh Market’s lemon orzo contained 938 milligrams of sodium per serving, which is 40% of the daily recommended limit.

    I think there is tremendous opportunity here for retailers to gain market share and customer loyalty. They key is preparing healthy options and making ordering, pick-up or delivery quick and easy.

    As Tom Furphy said in a recent MNB Innovation Conversation, this should be “squarely in the sweet spot” of retailers today.


    Comments? As always, send them to me at kate@morningnewsbeat.com .
    KC's View:

    Published on: March 16, 2016

    by Kevin Coupe

    Pay by selfie?

    Yup.

    Re/code reports that Amazon - naturally - recently "filed a patent application for a process that would allow shoppers to make a purchase by taking a photo and/or video of themselves rather than keying in their account password. The application is related to a separate patent Amazon holds for a technology that allows a device to authenticate a user via a photo or video, but not necessarily to complete a transaction."

    The story goes on to say that "under the scenario in the patent application, a phone or computer 'can prompt the user to perform certain actions, motions, or gestures, such as to smile, blink, or tilt his or her head.' This would be done to prove that the shopper is who he or she says, rather than an imposter simply holding up a photo of the shopper."

    While the phrase "pay by selfie" may first inspire howls of laughter and/or eye-rolling, I have to say that I've pretty much given up being skeptical about Amazon's various Eye-Opening initiatives. (I felt that way about drones. It seems pretty obvious that I was wrong about that.)

    There's no reason for me to think this can't work, or that it won't work.

    I just hope I get to show my best side. If I have one.
    KC's View:

    Published on: March 16, 2016

    Fortune reports that a Washington State Superior Court judge has ruled that the Grocery Manufacturers Association (GMA) "broke the spirit and the letter of the law" when it "concealed the backers of a multimillion dollar campaign" designed to defeat a ballot initiative that would have mandated the labeling of products that include genetically modified organisms (GMOs).

    The ruling specifically found that GMA violated state campaign finance disclosure laws when it did not report that it funded the anti-labeling campaign with $11 million in funding from PepsiCo, Nestle and Coca-Cola.

    "“There is one, and only one, reasonable inference that can be drawn from the facts before this court: that the GMA intentionally took steps to create and then hide the true source of the funds…from the voting public of Washington State,” wrote Thurston County Superior Court Judge Anne Hirsch.

    The initiative was in fact, narrowly defeated.

    While GMA did eventually reveal the donors - the court concluded that it did so "under duress" - it also maintains that the state campaign finance law is "unconstitutionally vague," and that there was no intent to break the law. This latter point will be important, since GMA is being sued by the state and whether or not its decisions were intentional will be critical in determining both guilt and penalties.

    GMA also says that this new ruling “will hurt the constitutionally protected right of trade associations to engage in political debate in the state.”
    KC's View:
    I'm not a lawyer, so I am singularly unqualified to make any legal pronouncements in this case. But it certainly sounds to me like GMA almost certainly held off as long as it could before listing its donors, hoping that its millions of dollars would have undue influence over the voting. I don't know if that falls to the level of intentional illegality, but I certainly think it stinks ... though a lack of transparency that seems right in character for those who so assiduously oppose GMO labeling.

    On the broadest scale, I am totally sick and tired of a political system in which people and institutions can spend millions of dollars on one cause or another, and then hide in the shadows. As far as I'm concerned, the rule ought to be that if one donates or spends or loans more than $100 that is used to try to influence public opinion - or legislative votes - on behalf of any political issue or candidate, it ought to be made public within 30 days. We have the technology to make it so ... and just ought to do it.

    This isn't about limiting free speech ... it is just requiring that people who finance campaigns - all campaigns - ought to be bathed in the disinfectant qualities of bright sunlight.

    By the way ... the New York Times reports this morning that the US Senate today "is set to vote on a measure that would create voluntary national standards for labeling food with genetically modified ingredients. The bill would prevent states from mandating labels just before Vermont was set to become the first in the nation to impose such requirements."

    It may not have enough support to pass, but I'm sure that even as we speak checks are being written and phone calls are being made, and the shadows are occupied by people and companies who like it there.

    Published on: March 16, 2016

    The Wall Street Journal reports this morning that Chipotle, which has begun centralizing some of its meat preparation as well as doing DNA testing of many ingredients as it looks to avoid the food safety issues that recently has plagued its operations, may dial back some of these new operations.

    According to the story, Chipotle is considering "dialing back or eliminating pathogen testing on some ingredients," believing that the pre-cooking of beef before it is shipped to restaurants in vacuum-sealed bags (where it is then "marinated and heated on a grill") makes the testing redundant.

    Chipotle did not comment on the report.

    The Journal goes on to say that "the use of fresh ingredients has been a point of differentiation for Chipotle, which has been competing with a cadre of new entrants in the fast-casual space, as well as with fast-food chains that are increasingly turning to fresh ingredients. Chipotle, which had prided itself on its from-scratch cooking techniques, now risks turning off some customers."

    In related news, the Journal reports that "Chipotle on Tuesday tapped meat industry expert James Marsden to be its new executive director of food safety. Mr. Marsden, a former Kansas State University meat-science professor, will oversee food safety across the 2,000-unit chain."
    KC's View:
    One of the most interesting things in the Journal story is a passage noting that while federal regulators have not definitively said what caused the contamination problems that hit a number of restaurants, Chipotle believes that "the source of the E. coli was beef imported from Australia, which it believed spread to other ingredients through cross-contamination." I think that many Chipotle customers might be surprised that in this case, "local sourcing" apparently means from somewhere on Earth.

    I can understand that on some level, Chipotle wants to avoid redundancies ... but I also think that at this moment, better safe than sorry. If I were Chipotle, I'd be worried that redundant might not actually be enough.

    Published on: March 16, 2016

    Marketing in the UK has a report that Tesco CEO Dave Lewis seems to be sanguine about his company's prospects now that Amazon has made a deal with William Morrison Supermarkets to deliver groceries to British consumers.

    "If as a marketer you sit there fearing the idea that somebody might enter your market, you're halfway done ... Competition will make us stronger. Bring it on," Lewis says.
    KC's View:
    Perhaps, being a Brit, Lewis is not familiar with the baseball movie Bull Durham, which is a source of great business wisdom. In this case, the relevant scene is when Crash Davis tells Ebby Calvin "Nuke" LaLoosh, "You gotta play this game with fear and arrogance."

    Nothing wrong with a little fear. It is being paralyzed by fear that it becomes a problem.

    Sounds like Lewis has the arrogance piece down, though...

    Published on: March 16, 2016

    TechTimes reports that Uber is expanding its UberEATS program, which uses Uber drivers to deliver food from local restaurants, by making it available via both Android and iOS in a widening number of cities. Originally available in San Francisco, Los Angeles, Houston, Chicago and Toronto, it is now being rolled out to cities such as New York, Dallas, Austin, Atlanta, Seattle, Washington, Paris and Melbourne.

    The story notes that "The app's food delivery service works with local restaurants in the city. The prepared food is continuously picked up by couriers who place the food in temperature-controlled bags before heading to busy areas. Customers can get food within a few minutes by just a tap ... The Instant Delivery feature has a curated menu that includes four to five daily specials. The feature promises to deliver food in less than 10 minutes. To ensure a smooth delivery, customers who are getting the Instant Delivery service are advised to step out the door of their home or office and meet the courier curbside ... Instant Delivery pricing options would usually range from $8 to $12."
    KC's View:
    It sounds like Uber is making a real investment in the food delivery business. And, it sounds to me like this is just one step in what is going to be an ongoing series of shoes dropping, as alliances and business relationships form for the purpose of disrupting the ways in which people obtain food.

    Watch this space ... because I'm as curious as you (hopefully) are about who will be next...

    Published on: March 16, 2016

    Fortune reports that Walmart is saying that it plans "to focus on remodeling existing stores rather than opening new ones" in Japan this year, and " has no plans to withdraw from the country and may open new stores if good locations can be found."

    The retailer cited "fierce competition and consumer reluctance to spend freely amid uncertain economic times" as the rationale behind the new remodeling strategy.

    Walmart went to Japan in 2002 by investing in Seiyu, and then took control of the chain in 2008.
    KC's View:

    Published on: March 16, 2016

    Delhaize and Ahold announced yesterday that they have received approval of their proposed merger from the Belgian Competition Authority, contingent on the divestiture of a limited number of stores for competitive reasons.

    The two companies, having also received shareholder approval of the $10.9 billion deal, still awaits a ruling from US antitrust regulators.
    KC's View:

    Published on: March 16, 2016

    WTOP-TV News reports that "grocery-delivery service Instacart has signed on with Giant Food for delivery in the Washington market, although the Giant deliveries by Instacart are limited only to the District ... Giant says the partnership with Instacart will augment, not replace its current Giant by Peapod delivery service. Giant will evaluate the pilot with Instacart over time to determine how well it complements its current online ordering, and whether it will be expanded outside of just the District."

    Instacart already has a presence in Washington, DC, delivering there to Whole Foods, Harris Teeter, Safeway, Costco and Petco.
    KC's View:
    I'm not a big Instacart fan, but the message here is that Ahold/Peapod is looking at the whole "last mile" issue and trying to figure out how it can and/or should disrupt its own existing business. And I have to wonder if they're thinking about what they should do when the merger with Delhaize is approved, and they need to think about expanding their e-commerce and delivery mechanisms to those stores.

    Published on: March 16, 2016

    • The Bellingham Herald reports that when Albertsons completes its acquisition of 29 Haggen stores in the Pacific Northwest, the plan is to keep 14 of them running under the Haggen banner, with the other 15 being converted to Albertsons stores. The Haggen stores will operate separately out of a Bellingham office, and they will continue to "focus on sustainably sourced and locally produced products."


    Mobile Marketing reports that "Coca-Cola will introduce IOS and Android in their respective 'native services' in spring 2016 that allow consumers to earn rewards points for free drinks and perks through its vending machines. The company views them as worldwide retail stores that aggregate data on a variety of consumer actions ... The rewards program is not new, but now the integration will allow consumers to make cashless purchases using native services already available on the phone and earn points through its vending machines."
    KC's View:

    Published on: March 16, 2016

    ...will return.
    KC's View:

    Published on: March 16, 2016

    Disney announced yesterday that Harrison Ford will return in a fifth Indiana Jones movie, directed by Steven Spielberg, that will hit movie screens on July 19, 2019.

    No details, co-stars or title were announced, though George Lucas - who co-created Indy with Spielberg - was not mentioned in the press release. (Lucas generally is blamed for the creative problems with the fourth film in the series, Indiana Jones and the Kingdom of the Crystal Skull, which was released in 2008.)

    Ford first played the swashbuckling archaeologist in 1981, in Raiders of the Lost Ark, when he was 38. He'll be 77 when the new movie is released.
    KC's View:
    I've got a good feeling about this...