Although not unique to 2001, the trends witnessed in Center Store aisles this year had an undeniable global scope and resonated throughout every facet of a supermarket's operation.
From the annals of food safety, the industry saw an overwhelming spotlight placed on the debate over genetically modified organisms and food labels. The financial climate was given a lift from private-label sales, while consumers' quest for food purity led them to the kosher, natural and organic aisles.
GMOs/Labeling
The debate over the use and labeling of genetically modified foods permeated the supermarket industry this year more than it has in the past, buoyed by actions from the Food and Drug Administration and consumer activist groups.
Consumer voices were heard via these advocate groups throughout the year, as they lambasted retailers for their use of, or support of, genetically modified organisms in food products.
Early on, Shaw's came under attack from the Massachusetts Public Interest Group for using undeclared GMOs in its Own Brand pancake mix. And, several times during the year Trader Joe's units were picketed by the environmental watchdog group Greenpeace, which staged numerous, and very public, at-site protests. Interestingly enough, by year's end Trader Joe's had announced that it would eliminate GMOs from its private-label products within a year's time. However, it was customer input, not activist opposition, which resulted in that decision, store sources told SN.
The industry's colleagues to the north did not escape the issues that were plaguing the States, and the Council of Canadians held a cross-country picket of Loblaws stores because the retailer placed a ban on foods labeled as being free of genetically engineered materials.
Many industry figureheads cite the very real possibility of pollination drift as the reason they do not feel comfortable using a label that promises products are 100% GMO-free. Yet, many said it was still the grocery industry's duty to tell consumers, to the best of its ability, exactly what products were made with.
Also early in the year, the FDA issued a proposed rule that asked consumer packaged goods vendors to meet with the FDA prior to introducing a GMO-laced product in the marketplace. This in no way represented any form of a mandatory ruling for GMO products, but was rather an attempt to assure consumers that such foods were being passed through one of the premier food-governing agencies, which vouched for the safety of the products.
Yet, some of the natural retailers took even stronger actions on their own. Whole Foods and Wild Oats took a collective stand on the topic by eliminating GMOs from their private-label programs. Whole Foods even went one step further, supplying its customers with postcards asking that the FDA enforce mandatory labeling laws for all products containing GMOs.
Private Label
Retailers became further entrenched in the private-label industry yet again this year, either adding to existing store-brand product lines or adopting new lines altogether through consolidation or innovation.
Maintaining that store brands are image-defining tools that foster consumer loyalty, retailers happily reported financials throughout the year that proved the genre could contribute nicely to bottom lines across the nation.
Leading chains including Kroger and Safeway heralded the influence that private-label sales growth had on their overall earnings growth early in the year. Other sizeable retailers, like Hy-Vee, Price Chopper and K-VA-T Food Stores, all spoke to SN about the growing penetration of private-label goods in their stores. In fact, by year's end Kroger had reported that the upscale Private Selection line was one of the retailer's most successful product launches ever.
But, even the smaller retailers and others servicing the food industry trumpeted the impact of private label. During an early 2001 SN profile of the independently owned West Coast-based Brunos, store owner Bill Brunetti said "private label is a wonderful image-building tool," telling SN he made sure to merchandise store brands at eye level for optimum viewing.
And, cooperative Topco Associates expanded its Food Club, Full Circle and member's labels by adding more than 30 new frozen food stockkeeping units earlier this year. Meanwhile, through the January introduction of the President's Choice line, D&W Food Centers was able to begin offering consumers three tiers of private-label products. Once again our northern counterparts were heard, including the Canadian Loblaw Cos., which spoke to SN about the infinite possibilities it believed was in store, so to speak, for the future of private-label products.
Organic/Natural
The organic segment was on retailers' lips from the very beginning of the year following the announcement of the final revisions of the national organic standards rules. Establishing the U.S. Department of Agriculture as the only agency capable of enforcing organic certification standards meant that mainstream retailers who were not too familiar with organic products could rest assured that they had been scrutinized by yet another of the food industry's highest governing agencies.
Despite the fact that the organic industry remained in a sort of transition phase this year, retailers' commitment to the marketplace grew as the year matured, and was evident in a variety of ways.
Early in the year, posing as a shopper, SN found plenty of evidence of this growing commitment to the organics realm by conventional supermarkets, in two King Kullen units and a Waldbaum's on Long Island, New York. Whether integrated or segregated, all three stores boasted a varied selection of organic products, and, as mainstream supermarkets, realize that they have to pay attention to the organic consumer, and they have to have knowledgeable associates.
Also this year, Safeway obtained organic certification for some of its flour mills. Other retailers made use of various materials produced by the Organic Trade Association in an attempt to educate consumers on "healthy" alternatives to processed foods, which is key to the segment's future success, sources continuously said.
This year's Mother Earth's Organic Festival, the annual supermarket promotion linked to Earth Day, saw 560 stores and 13 chains participate -- a record number for the event -- through ads in store circulars, displays and shelf-talkers. On the heels of this promotional blitz, the OTA sponsored its first annual trade show in May.
As with the kosher segment, the issue of integration vs. segregation is still under fire when it comes to organic and natural products. Lund Food Holdings told SN it merchandises its organic foods in line. Hy-Vee Food Stores, however, places its organic items in a HealthMarket store-within-a-store.
Ironically, it was during the Kosherfest 2001 trade show in November that speakers addressed another obstacle in the mainstreaming of organic products -- that of pricing. Pricing issues, along with consumer education initiatives, are expected to follow this segment into the future.
Kosher
Several supermarkets expanded their kosher selections this year and industry observers predict that, as product variety increases, sales will follow suit in the future.
Showing its commitment to its kosher customers, Jewel-Osco opened a full-service kosher store in the fall. A spokeswoman for the retailer said the store's intention was to not only serve the everyday kosher customer but also the growing subcategory of shoppers, which has come to include the lactose intolerant and others with a high interest in food purity. Another chain that openly showed its dedication to the genre was ShopRite, which won numerous awards in early 2001 for its Rosh Hashanah advertisements. Like many other retailers, ShopRite keeps its kosher items together in a destination area rather than integrate along with mainstream products, a practice that still lends itself to debate by industry participants, as mentioned earlier.
