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BEDFORD, Pa. — What factors are driving the future of the food industry?
According to a panel of industry insiders — including executives from Sheetz Inc., Giant Eagle Inc. and NACS, the Association for Convenience & Fuel Retailing — channel blurring, changing consumer tastes, government intervention and attracting quality associates are all playing a part.
During the recent 2015 Pennsylvania Food Merchants Association (PFMA) annual conference, held May 12-13 at the Omni Bedford Springs Resort, Progressive Grocer Chief Content Editor Meg Major moderated a discussion featuring panelists Leslie Sarasin, president/CEO of the Food Marketing Institute (FMI); Hank Armour, president/CEO of NACS; Joe Sheetz, president and CEO of Sheetz Inc.; and Jerry LeClair, vice president of sales, marketing and merchandising for Giant Eagle Inc.
Major posed questions to the panelists regarding significant developments in the food industry over the past 12 to 18 months, including the changing roles of food retailers, innovation, 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, then we need to be similar across the board.”
NACS’ 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 the panelists were asked to discuss a key innovation that has strongly influenced their companies' competitive stance, Giant Eagle's LeClair cited CRM (customer relationship marketing). The Pittsburgh-based retailer uses CRM to 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." For instance, he noted that the multi-format Giant Eagle has begun experimenting with its successful fuelperks! loyalty program to spur healthy food choices.
When asked about the role store formats play in overall strategy, 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, located on the main level of campus apartments, doesn’t offer a Sheetz mainstay, fuel, but does provide an expanded array of grocery items.
While channel blurring is a reality of the reconfigured retail world as more non-traditional companies carve larger pieces of their own food dollar pie, FMI's Sarasin said: “It presents an opportunity for us an as association and as an industry to have broader representation — anybody who sells food at retail.”
She commended grocers' evolving role as curators and 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, is impacting where they shop and what they buy.
Consumers’ desire for healthier food choices is also changing stores, according to Armour, who said convenience store operators are focusing on the word “choice” when discussing product offering.
Healthy 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. Now, the trend is discernibly shifting. "We are seeing a change in our industry," although challenges are most prevalent with distribution for many. "Those of us in the industry who do our own distribution have an advantage that we can make daily deliveries,” he added.
Sheetz stores now provide a more extensive array of salads and vegetables for its made-to-order foods, as well as 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."