From Our Print Edition

WHY NESTLÉ BOUGHT FRESHLY

BrickMeetsClick (brickmeetsclick.com) in a Nov. 30 post, noted that “Nestlé’s recent purchase of Freshly, the prepared foods platform, is an example of how one of the world’s largest food manufacturers is preparing for the new marketplace realities. By expanding into the fresh food space, they position themselves to take the lead in bringing a new and different line of personalized fresh meals that are on trend with the way consumers are taking more responsibility for how food choices affect their health… Freshly’s online business model, combined with the ‘better-for-you’ promise, creates a differentiated offering that will justify premium pricing and generate more margin dollars for Nestlé.”

Brick Meets Click goes on to say that “In taking this action, Nestlé has begun to implement a strategic vision where food and health can converge on a massive scale. Assuming this idea can live up to its potential, it will create an entirely new edible grocery category that is sold outside of the supermarket channel.

“This represents a direct challenge to grocers who will need to respond by either creating something similar or partnering with Nestlé to share in the growth. We think that there is a good chance that most retailers will opt for the partnership option because of the difficulty of doing it themselves.

“Big picture: While retailers need to expand private-label and brands must test the benefits of selling direct to consumers, it’s hard to imagine how either party can prosper in the future without the longstanding, mutual support of the other.”

Brick Meets Click is a Barrington, Ill.-based consultancy that was co-founded by Bill Bishop and Steve Bishop.

A PLUG FOR SPROUTS

From a posting about Sprouts by David Trainer, CEO of New Constructs, Nashville, which appeared on SeekingAlpha.com on Nov. 30.

“There’s no doubt grocery stores benefited from COVID-19 and the resulting changes in consumer behavior. Last month industry sales were up 10% year-over-year. However, with the recent news of an effective vaccine for COVID-19, investors are cycling their money away from many stocks that have outperformed over the past several months. With future expansion plans, a strong brand, and a competitive position in a niche market, investors would be mistaken to move away from this growing grocer.”

HERE’S HOW TO DO OMNI-CHANNEL

HRC Advisory (hrcadvisory.com), Northbrook, Ill., recently posted thoughts on developing a roadmap for omni-channel success. Here are excerpts.

—What do the majority of your customers expect from your company? Which omni-channel solutions are most popular? Do the research, and then prioritize the solutions that resonate most with your customer base. For example, if click and collect is a major hit with your customers, make it a top priority.

—Measure your store-level inventory accuracy. Are there issues within your internal processes and systems that are creating inaccuracies? Identify and address any identified inventory accuracy issues.

—Assess the impact of store-level fulfillment at your brick-and-mortar stores—and determine whether adjustments need to be made to store roles, store labor, store design and/or fulfilment costs.

—Identify and eliminate barriers that prevent visibility of inventory across channels and across the store network, so the inventory can be efficiently accessed and leveraged.

FRANCE’S UNIQUE SUPERMARKET LAW

Author Mark Bittmann (markbittmann.com), in an interview on national public television about how France requires its larger supermarkets to give food to the needy if it would otherwise go to waste.

One-third of the food produced in the world rots in the field, in transport or is simply thrown away. This is obviously not only a massive waste of food, it’s also a big contributor to global warming because as it decomposes in landfills it releases methane. In fact, according to the UN Food and Agriculture Organization, if food waste were its own country, it would be the third-largest emitter of greenhouse gases after the U.S. and China.

TARGET ADDS SAME-DAY FROZEN

In its third quarter conference call with securities analysts on Nov. 18, Target execs said the company entered its fourth quarter with more than 1,600 stores able to fulfill fresh, refrigerated and frozen items through its pick up and drive up services, making shopping for holiday dinners very easy — something that wasn’t possible a year ago. “Among guests who have been shopping this enhanced assortment using drive up, we’ve seen half of the orders picked up within two hours and two-thirds within four hours, demonstrating how guests are using this service to conveniently serve an urgent need,” said John Mulligan, COO. Sales through Shipt, the delivery service, grew by 280% at Target in the third quarter, accounting for $200 million in incremental sales. In all, same-day services grew well over 200% compared with last year, adding more than $1 billion of incremental sales. The chain turned in strong quarterly numbers, with comparable sales up by 20.7%, reflecting a 4.5% traffic growth, combined with an increase in average ticket of more than 15%.

GROCERY OUTLET POSTS 9.1% GAIN

In its third quarter call with analysts on Nov. 11, Grocery Outlet reported sales up by 17.1% to $764.1 million, driven by a 9.1% increase in comparable store sales and 35 more stores than in the period last year. The average transaction size was up, partially offset by a reduction in traffic as customers continued to consolidate trips. Gross margin rate rose to 31.2%, primarily due to reduced markdowns and fewer throwaways resulting from better than expected inventory turns. The chain plans to open between three and five stores in the mid-Atlantic region next year. In online chats, some analysts say Grocery Outlet should be working to add more in the way of home delivery or buy-online-pick-up-in-store. And one worries that over the long haul, as manufacturers continue to consolidate, it may be harder for the retailer to find adequate supply.