Brendan Proctor: More than a ‘Lidl’ Different

Retail Dive: “We offer the experience of grocery retooled, rethought and refreshed,” says Lidl U.S. CEO Brendan Proctor. Among the differences: “Packaged goods will be placed on shelves in their cartons, eliminating the work that would go into unpacking. Produce displays will not be precariously stacked, making all the fruits and vegetables equally accessible to shoppers. And shoppers will bring their own bags and bag their own groceries, eliminating the cost of paper or plastic bags as well as employees’ time and effort in bagging.”

“Aside from the food items, Lidl plans to differentiate itself through its specials on non-food items … These specials could be anything from yoga pants to lawnmowers to leather jackets.” Also: “The retailer plans to streamline the grocery shopping experience and pare down customer choices. Proctor said that the product selection will be curated so that shoppers will not be overwhelmed with too many choices for staples like ketchup. Instead of multiple varieties of the same product, shelf space will be devoted to different kinds of items.”

“Lidl’s strong global presence makes imports of premium Belgian chocolates and Italian cookies to the U.S. much easier and more affordable. Lidl’s Preferred Selection brand features the flag of the item’s country of origin on the label ,,, For the time being, Proctor said the supermarket chain will concentrate on locations on the East Coast … Lidl will also concentrate on brick-and-mortar stores for shopping. There are no plans to work on e-commerce models, at least for now. People still prefer going to the grocery store over ordering online, he said.”

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Keurig Designs Eco-Friendly K-Cup

The Washington Post: “Keurig Green Mountain said it plans by 2020 to change the plastic composition in the billions of K-cup single-serving coffee containers it sells annually, making them more lucrative to recyclers while removing one of the nagging complaints that mountains of the little pods are piling up in landfills … The recycling breakthrough comes as the Keurig’s single-serve coffee machines, which helped revolutionize coffee consumption, are becoming less of a habit after years of growth.”

“The recycling breakthrough comes as the Keurig’s single-serve coffee machines, which helped revolutionize coffee consumption, are becoming less of a habit after years of growth … The problem with K-cups has been twofold. First, they have been too small for the sorting machines to ‘see’ and move to the recycling line instead of the garbage heap. Second, the material composition of the K-cup plastic did not lend itself to being broken down and reused as another material.”

“Many of the 600 or so recycling plants across the United States and Canada have reinvested in technology that can spot the K-cup pods and divert them toward reuse.”
In addition: “Keurig is in the process of changing the makeup of its K-cups from polystyrene to polypropylene.”

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The Stitch Fix Secret: Make Shopping Easy

The New York Times: Stitch Fix is a mail-order clothing service that offers customers little choice in what garments they receive, and shies away from discounts for brand name dresses, pants and accessories. Despite a business model that seems to defy conventional wisdom, Stitch Fix continues to grow … To the company’s founder, Katrina Lake, success comes down to delivering what consumers want: making it easier to shop … In her view, what was important was helping customers find clothing they liked without taking lengthy shopping trips and returning dozens of items.”

“At the company’s warehouse, Eric Colson, formerly a top data scientist at Netflix, spoke to the role that data science — once the province of high-tech giants — plays in nearly every aspect of the Stitch Fix business. Mr. Colson excitedly illustrated on whiteboards how the company’s systems can narrow down a broad range of women’s pants to a relative few that each individual customer is statistically likely to keep … Algorithms have even cut the number of steps needed for workers to pick out clothes for individual clients.”

“Yet the question remains whether customers who are initially thrilled by receiving a customized box of clothing will remain customers for months or even years … Stitch Fix executives declined to share their retention statistics, but claim that they are above industry averages.”

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Jet.com Tells Fresh Story In Real Life

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Business Insider: “Jet.com — the online retailer that Walmart bought in 2016 for $3 billion — is now selling some of its products IRL. From May 10 to June 18, Jet will have a food-themed concept shop in Manhattan which showcases artisanal accessories, cookbooks, and kitchen appliances. Most of the items are pretty quirky, like face masks made from tomatoes, kale-flavored chocolate bars, socks with ice cream prints, and banana-shaped flasks.”

“The Jet experience comes to life at Story, a 5-year-old retail space that changes its products, decor, and events programming about every month based on its particular sponsor. For the next six weeks, the sponsor is Jet, where people can also find most of the store’s items. The larger goal of the temporary store is to raise awareness around Jet’s grocery delivery service.”

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Artists & Fleas: The New Retail Acrobats

The Wall Street Journal: “These are tough times for brick-and-mortar retail. Stores are closing locations at a record pace, while chains including the Limited and American Apparel are going belly-up. New York City’s flea markets, holiday markets, farmers markets, night bazaars and art fairs, however, continue to draw big crowds. If it’s sold from a stall or a folding table, it seems, shoppers can’t get enough of it.”

“Artists & Fleas … is opening a new, 5,000 square-foot market on Friday at the prime retail intersection of Prince Street and Broadway in SoHo, the former home of an Armani Exchange. Co-founders Ronen Glimer and Amy Abrams say artisan markets are thriving because shoppers are hungry for unique goods, not to mention connection. They choose their merchants based not just on their wares, but personality. A key question: ‘Is this a fun person?’ On peak days, their Chelsea location attracts up to 10,000 shoppers. That in turn draws merchants willing to pay $65,000 a year for a 50-square-foot booth.”

Cynthia Rybakoff, a jewelry maker, comments: “We might as well be baleen whales scooping up krill. We don’t have to work that hard to bring people in … There is no advantage to having a storefront other than vanity.”

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Who’s Better Than Trader Joe’s?

Business Insider: “A regional chain that most Americans have never visited was just named the best overall grocery-store chain in the US. Wegmans was the US’s highest-rated grocery chain out of more than 20 that appeared in Market Force Information’s annual survey of the industry … This is the second year in a row in which Wegmans has earned the top spot — though this year, it was forced to share the crown with Publix … With a score of 77% satisfaction, Wegmans and Publix beat out Trader Joe’s, which had 76% satisfaction, and the Texas-based H-E-B, which rounded out the top four with 69% satisfaction.”

“Wegmans stores are larger than the average grocery store, emphasizing variety and fresh products … Many locations have cafés, pizzerias, sushi bars, and buffets, plus seating areas for 100 to 300 people where customers can eat their food … The chain is also known for its extensive beer section, with a large selection of craft brews. Some locations even have walk-in beer lockers. Many customers love Wegmans because of its customer service.”

“Wegmans serves as a superior employer in the grocery industry. The company offers healthcare coverage for workers as well as college scholarships, paying about $4.5 million in tuition assistance to employees each year. All of these factors combine to create an army of Wegmans fans, responsible for the grocery chain’s top ranking. In 2015, the company reported that 7,300 customers contacted Wegmans to report how much they enjoyed their shopping experience or the way employees treated them.”

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Algorithmic Retail: Beyond Dynamic Pricing

The Wall Street Journal: “Advances in A.I. are allowing retail and wholesale firms to move beyond ‘dynamic pricing’ software, which has for years helped set prices for fast-moving goods, like airline tickets or flat-screen televisions. Older pricing software often used simple rules, such as always keeping prices lower than a competitor.”

“These new systems crunch mountains of historical and real-time data to predict how customers and competitors will react to any price change under different scenarios, giving them an almost superhuman insight into market dynamics. Programmed to meet a certain goal—such as boosting sales—the algorithms constantly update tactics after learning from experience … The software learns when raising prices drives away customers and when it doesn’t, leading to lower prices at times when price-sensitive customers are likely.”

“Algorithms can also figure out what products are usually purchased together, allowing them to optimize the price of a whole shopping cart. If customers tend to be sensitive to milk prices, but less so to cereal prices, the software might beat a competitor’s price on milk, and make up margin on cereal.”

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Two Buck Chuck: What Makes it So Cheap?

Business Insider: “Trader Joe’s wine is remarkably cheap. A bottle of the grocery store’s most popular wine brand, Charles Shaw (aka Two Buck Chuck, made by Bronco Wine) sells for less than $3.” What makes it so inexpensive? #1: “Most of the company’s vineyards are located in California’s San Joaquin Valley, where the cost of land is much cheaper than the more prestigious Sonoma or Napa Valley … Higher average temperatures in San Joaquin Valley can over-ripen grapes, which is a main contributor to the price difference between the regions.”

#2: “The company ferments wine with oak chips, which are cheaper than barrels.” #3: “The company uses … a mold of cork pieces glued together with a ‘real cork veneer at the bottom’.” #4: “Making wine in huge quantities keeps production costs low … The company uses machines to harvest the grapes, which helps keep labor costs low, but also increases the chances that bad grapes end up in the wine … Critics argue that mass production is also how animal matter can end up in your wine glass. But to be fair, there’s a chance of that happening with most agricultural products.”

#5: “Bronco cuts shipping costs by using lightweight bottles and cheap cartons … The lighter glass reduces the weight of a case of wine by several pounds, meaning Bronco can ship more wine at a time. Bronco also lowered the cost of its shipping cartons by a few pennies by replacing the white paper it was using with a light brown paper.”

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Shopping-Cart Psychology: To Return or Not?

Scientific American: “It seems like a basic courtesy to others: you get a cart at the supermarket, you use it to get your groceries and bring them to your vehicle, and then you return it for others to use. And yet, it’s not uncommon for many people to ignore the cart receptacle entirely and leave their carts next to their cars or parked haphazardly on medians. During peak hours, it can mean bedlam. Where does this disregard come from?”

“Social norms fall into two general categories. There are injunctive norms, which drive our responses based on our perception of how others will interpret our actions. This means that we’re inclined to act in certain ways if we think people will think well or think poorly of us. And there are descriptive norms, where our responses are driven by contextual clues. This means we’re apt to mimic behaviors of others—so what we see or hear or smell suggests the appropriate/accepted response or behavior that we should display.”

“The world will likely not end because we aren’t returning our shopping carts—that would be an amazing butterfly effect—but it’s an example of a quality of life issue we can control. That guy who didn’t return his cart may not be a complete jerk. He may just be using the example set by others so he can get home a little more quickly. But if everyone does that, then we’re shifting the balance of what is acceptable, which may have greater ramifications to the social order. We have a greater influence over seemingly mundane situations than we realize.”

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Redbro Chickens: Slow Growth, Better Taste

The New York Times: “Perdue Farms, one of the country’s largest chicken producers, has been raising what are known as slow-growth chickens side by side with the breeds that have made the company so successful. The new birds, a variety known as Redbro, take 25 percent longer, on average, to mature than their conventional cousins, and so are more expensive to raise.”

“Perdue is trying to find just the right slow-growth breed, and it has a strong incentive: A fast-growing cohort of companies that buy vast quantities of poultry, including Whole Foods Market and Panera Bread, are demanding meat from slow-growth chickens, contending that giving birds more time to grow before slaughter will give them a healthier, happier life — and produce better-tasting meat.”

“Consumers would … have to accept some trade-offs: While the new chickens have a fuller flavor, their meat tends to be distributed differently over the body, with more generous thighs and smaller breasts than the chicken most Americans are used to … In marketing slow-growth chickens, Perdue and others will have to make consumers understand why they are paying a higher price … the suggested retail price of a Sonoma Red (from Perdue’s Petaluma Poultry) that weighs four pounds is $16.”

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