Archives for January 2018

Whole Foods looks to Category Management to Drive Growth

January 16, 2018 by randersen0919 Leave a Comment

Intense competition for natural and organic foods has slowed sales growth at Whole Foods. Total overall revenues are up, but comparable-store sales have declined over the past year and a half, dropping 2.4% in its most recent quarter. Why? Demand for natural and organic foods has increased, but so has the competition:

Big box supermarkets like Kroger, Target and Walmart are carrying more natural foods.
Powerful rivals like Trader Joe’s are opening more stores.
Healthy online alternatives like Blue Apron and Plated have taken sales away from traditional grocery chains.

Whole Foods understands that competitors are making inroads and luring away customers. Their plan is to concentrate on their core customers via category management to maintain loyalty and increase average transaction size at checkout.

In February, Whole Foods hired dunnhumby, experts at analyzing customer behavior with a deep understanding of sales data from the manufacturer’s perspective. Whole Foods plans to use dunnhumby’s data-analysis skills to drive both its loyalty program and the implementation of category management. dunnhumby partnered with Kroger to develop its acclaimed loyalty program and will help Whole Foods build on the positive results of a loyalty pilot program launched last year in Dallas.

According to Mark Johnson, CEO of Loyalty 360, “dunnhumby’s rich data analysis will assist Whole Foods in optimizing product assortments, while at the same time bringing an understanding of the various triggers — price, promotion, selection, etc. — that drive increased purchases for each individual customer.”

Whole Foods CEO John Mackey stated, “We’re refocusing on our very best customers … we are focused on data through category management; managing our company a lot more with data and marketing information – evolving our purchasing operating model while developing data-rich, customer-centric category management capabilities are critical steps.”

Best Buy Looks to Mobile Phones to Continue Growth

January 16, 2018 by randersen0919 Leave a Comment

Best Buy shares recently jumped nearly 20% in one day when they announced comparable sales increased 1.6% in the past quarter. Analysts had expected a decline of 1.5 percent. One of the surprises was the increase in sales of mobile phones.

Recognizing the opportunity with smart phones, Best Buy has recently redesigned their mobile departments and put them front and center in their stores.

“It’s literally one of the first things you’ll see in the store,” said Carly Charlson, a Best Buy spokeswoman.

Some of changes to Best Buy mobile departments include:

additional specially trained employees
expanded presence from major carriers
big menu boards will highlight various promotions to offer more clarity
a new section dedicated to the growing category of prepaid and unlocked phones

In smart phones, Best Buy competes with thousands of Verizon, AT&T and T-Mobile stores and kiosks. But Best Buy has the advantage by offering all the major carrier plans in one place. Plus, most smart phone users prefer to purchase at a brick and mortar store where they can better understand new phone options, ask questions, transfer their info to new phones, etc.

For Best Buy, the focus on mobile looks like a smart move. Just a two percent increase in market share would result in more than $1 billion in incremental sales from smartphones alone.

Plus, incremental mobile sales will increase store traffic, a key objective for the company. And since smartphones aren’t gender specific, more smartphone sales will generate more store traffic by women – another important driver for Best Buy growth. More store traffic means more sales of TV’s, computers and large appliances – a boost to overall sales.

It’s clear, the mobile phone category can be a tremendous long-term growth opportunity if Best Buy can continue to leverage it. That is, get the word out about their unique buying experience and offer better deals than anyone else.

Hispanic spending down in 2017

January 16, 2018 by randersen0919 Leave a Comment

Hispanic consumers are spending less this year and the retail industry is concerned.

“The Hispanic consumer in the U.S. is shopping much less,” Target CEO Brian Cornell said during the Fortune Brainstorm Tech conference in July. “Particularly among border towns in the U.S., you’re seeing a change in behavior.”

Why is this important?

Hispanics make up 18% of the U.S. population (about 57 million people) and their buying power ($1.3 trillion in 2015 according to Nielsen) is growing faster than the rest of the country. Retail experts, economists and business leaders believe the administration’s stance on undocumented immigrants is causing anxiety in the Latino community.

Millions of immigrants are staying home and not shopping out of fear,” according to Robert Kaplan, president and CEO of the Federal Reserve Bank in Dallas, Texas.
Hispanic business leaders added, “Many Hispanic consumers are saving money in case something happens to them or their loved ones in any crackdown on immigrants.”
“There’s concern about going out in an environment where you could be deported,” noted NPD analyst Marshal Cohen. NPD Group is a market research company that covers 20 industries and interviews 12 million consumers a year.

NPD found that purchases (by Hispanics) at certain retailers have fallen 8 percent in 2017. NPD sports industry analyst Matt Powell says that the purchasing slowdown is disproportionately impacting the sportswear market. The category hit hardest has been shoe chains, followed by sporting goods; however, no channel has been immune to the slowdown.

Why Amazon’s Lower Price Strategy for Whole Foods Will Work & Why It Won’t

January 16, 2018 by randersen0919 Leave a Comment

Amazon is dramatically reducing prices at Whole Foods to attract new customers and bring back those who left to find lower-priced natural and organic foods at traditional super markets. The lower price strategy may be just what Whole Foods needs to win back customers after same store sales have dipped over the past two years. But will it be enough?

Why lower prices will work for Whole Foods:

High prices are a key reason long-time Whole Foods customers left and competitive prices should bring many of them back.
Millennials are driving large increases in produce sales and have a healthy appetite for high quality organic fruits and vegetables.
Whole Foods shoppers may be able to order some items online not stocked at their local store and pick them up at the store.

Why lower prices won’t work for Whole Foods:

Already in a price war, large super market chains have been lowering their price points even further – so low Whole Foods may not be able to match.
Convenience is important, especially to Millennials who prefer one-stop grocery shopping. Even if Whole Foods shoppers can order other items online and pick up at the store, it still requires an additional step.
Lower margins will make it more difficult to absorb the costs of home delivery – a strategy Whole Foods would like to pursue.

Time will tell. Stay tuned.

This brick and mortar retail sector is thriving.

January 16, 2018 by randersen0919 Leave a Comment

C-stores get an “A” for growth. While many brick and mortar stores have been closing, the convenience store industry has actually doubled in size over the past 30 years and is still growing. In 2016, the number of c-stores in the U.S increased to 154,535 and experienced record in-store sales of $233 billion.

Key sales driver – C-stores account for 80% of all the auto fuel purchased in the country.

Fill-up & light-up – Gas and cigarettes are still the most popular c-store purchases followed by beer, non-alcoholic drinks and foodservice (prepared food) items.

Mouth-watering margins – Foodservice is becoming the c-store industry’s most profitable category, contributing over 21% of in-store sales in 2016.

Hungry for change – Sandwiches, hot dogs and pizza are still the most popular meal items, but healthy options such as salads, yogurt parfaits and fruit cups are increasingly in demand.

Fresh opportunity – 76% of 18-34 year-olds would purchase more prepared foods from c-stores if the foods are designated as local, natural, and in environmentally friendly packaging.

Core customers – Consumers aged 35-44 are more likely to be daily or weekly c-store shoppers, and those 25-34 are more likely to buy in-store merchandise after purchasing gas.

Older, not so much – Customers, aged 55 and up, are less likely to make daily or weekly c-store visits or to stop in for a post-gas merchandise purchase.

Whoa! – Texas has, by far, the most C-stores with 15,671. That’s one c-store for every 752 residents of the Lone Star state. California is a distant second with 11,774, one c-store for every 3,355 residents.