Channel blurring, changing consumer tastes, government intervention and attracting quality associates are all factors driving the future of the food industry, according to industry leaders participating in a discussion during the Pennsylvania Food Merchants Association (PFMA) recent annual conference at the Omni Bedford Springs Resort, Bedford, Pa.
Meg Major, chief content editor, Progressive Grocer, moderated the discussion featuring panelists Leslie Sarasin, president/CEO, Food Marketing Institute (FMI); Hank Armour, president/CEO, National Association of Convenience Stores (NACS); Joe Sheetz, president and CEO of Sheetz, Inc; and Jerry LeClair, VP, sales, marketing and merchandising, Giant Eagle Inc.
Major posed questions to the panelists about significant developments in the food industry over the past 12 to 18 months, including the changing roles of food retailers, innovations, technology, challenges and key growth areas, among others.
According to Sarasin, the impact of the Food Nutrition and Education Act and other government requirements will continue to affect retailers. While restaurants are not subject to these same requirements, retailers will be required to comply.
“I think this intrusion by government into your businesses is not going to stop and it has created an important factor in the last couple of years,” she said. “If we’re going to have parity with the restaurants and we are substantially similar, than we need to be similar across the board.”
Armour said menu labeling legislation came from the local and state level. The National Restaurant Association (NRA) and the large national chains advocated a single national standard, rather than differing regulations at the state and local level. “The growth of state and local legislative activity is amazing,” affirmed Armour. “The front line of defense on that has to be the state organizations. NACS is looking at resources we can bring to help state associations with research and messaging on local level issues.”
When asked to discuss a key innovation that has strongly influenced their companies' competitive stance, Giant Eagle's LeClair cited CRM (customer relationship marketing) as a key component to help the Pittsburgh-based retailer determine what customers want, how they shop, how products should be positioned in the store and promotion frequency.
“We’re seeing some incredible results on some early categories that have gone through what we call ‘category factory,” LeClair said. “It’s going back to the customer to find out what they want, which is something that will help us grow," he said, noting that the multi-format Giant Eagle has begun experimenting with its successful fuelperks! loyalty program to spur healthy food choices.
WVU's Next-gen Sheetz
When asked about the role store formats play in overall strategy, Joe Sheetz discussed the company’s new concept store – a 15,500-square-foot market and café on the campus of West Virginia University in Morgantown, W. Va. The unique store, which is located on the main level of campus apartments, doesn’t offer another Sheetz mainstay, fuel, but offers an expanded array of grocery items.
While channel blurring is a reality of the reconfigured retail world as more non-traditional companies carve ever larger pieces of their own food dollar pie, FMI's CEO said: “It presents an opportunity for us an as association and as an industry to have broader representation — anybody who sells food at retail,” noted Sarasin, who commends grocers' evolving role as curators. She said shoppers are placing a higher value on products and the overall shopping experience. Personal beliefs, such as concern about the environment, particularly among women, are impacting where they shop and what they buy.
Consumers desire for healthier food choices is also changing stores, according to Armour. He said convenience store operators are focusing on the word “choice” when discussing product offering.
It can be a fine line to walk as retailers want to keep other manufacturers happy, while providing healthier choices.
“Ten to 12 years ago people talked about eating healthy, but they ate unhealthy,” Sheetz relayed. But the trend is discernibly shifting. "We are seeing a change in our industry," although challenges are most prevalent with distribution for many. However, Sheetz noted, "Those of us in the industry who do our own distribution have an advantage that we can make daily deliveries.”
Sheetz now provides a more extensive array of salads and vegetables for its made-to-order foods and more fresh fruit, cut fruit and hummus in its grab-and-go cases. “It has reached a point where every six weeks we introduce a new food or drink item,” Sheetz said. “It’s created a culture of innovation and total menu development."