Groceryshop Day 1 recap: It’s all about private label

The continued success (and hunger for) private label was a main theme on Day 1 of industry show Groceryshop, which kicked off Monday in Las Vegas at the Mandalay Bay hotel. 

But grocers face a challenge: how to grow private label without spurning CPG companies? On Monday, most C-suite grocer executives danced around answering that question directly.

Ahold Delhaize, for instance, has an aggressive goal to grow its U.S. private label by 45%. On Monday, the company’s CEO Frans Muller talked about how the company plans to get there. U.S. private label sales currently make up some 30% of all retail sales, Muller said, and Ahold believes that making a push towards the types of products consumers want (sustainable, fresh, tailored) will help to close that gap.

And what about the tension between increasing private label and decreasing traditional CPG offerings?

“Since COVID, we lost a little bit on innovation…and I think the private label and CPG brands on the shelves can also both foster more ambition” in new product development, Muller said. 

“What tension?” said Sam’s Club CEO Chris Nicholas in a later session. 

“I don’t think there’s tension, actually,” he said. “We rely on and love national brands. But here’s the thing: those brands need to innovate and those brands need to continue to bring great value…I also have a very high standard for setting the bar on what that innovation and value looks like. And I think that natural tension is just really healthy for everybody, honestly.”

Tension or no tension, private label spending now makes up 20% of all grocery spend, according to a recent report. In the past month alone, multiple new private label lines have launched. Amazon rolled out its Amazon Saver discount line. Walgreens launched a premium private label skin care line, sold under the Walgreens brand. Albertsons announced a new private label wine offering.

“This private label is very different. It is not the private label of old,” said NielsenIQ’s Sherry Frey on Monday. “It is premium, it is leaning into sustainability, it is beautiful packaging, it is innovative. So you’re seeing great innovation here.” 

But there was more than just private label talk going on at Day 1 of Groceryshop. Here are some additional takeaways:

What grocers have an eye on

Sam’s Club is gaga over tech: Over the past eight years Sam’s Club has made a heavy investment in tech, and it has paid dividends in a variety of ways.

Sam’s Club President and CEO Chris Nicholas’ keynote on Day 1 touched on frictionless shopping experiences, a new all-digital store in Grapevine, Texas that will have zero cashier stations, and how the retailer continues to have success attracting Gen Z and Millennials. 

Here are some of the takeaways:

Sam’s Club has cut Members Mark items from 5,500 SKUs to 4,000 SKUs in the club. “What’s really great about it is they are all pallet positions. And the reason you need a pallet is because the velocity of the item is selling so rapidly that you can’t have it on the shelf,” Nicholas said

Dollar General—Fresh and the supply chain: Dollar General’s supply chain already has a challenge in serving over 20,000 locations, and when you add a fresh foods movement, that mission becomes nearly impossible. Dollar General, however, wanted to bring in fresh and nutritional food to food deserts, where many locations sit, and the addition makes it more competitive with box retailer Walmart.

Rod West, Dollar General’s EVP, Global Supply Chain, used the Groceryshop 2024 stage to talk about the challenges behind serving the discount retailer’s complex network and the extra effort necessary when fresh food is involved. 

Some takeaways from West’s presentation:

SpartanNash makes a personalized push: Like many grocery retailers, SpartanNash is trying to get more personal with its shoppers and it’s doing it with data insights to form a strategic approach to be more engaged with customers.

Amy McClellan, EVP & chief customer officer for SpartanNash, had the following takeaways from the grocer’s latest round of research:

Tech and AI: what’s new?

Artificial intelligence once again took center stage this year, making its way into the conversation of almost every forum. The cutting-edge technology is transforming the industry online and in-store from large players like Instacart and Thrive Market to less well-known players like Dragonfruit AI. 

Computer vision: At the Techtalks Stage, Dragonfruit AI founder and CEO Amit Kumar explained how his computer-vision surveillance system is protecting retailers not only from theft, but also frivolous lawsuits. The system detects and records staged slip-and-fall incidents and saves them in the cloud in case a customer returns months later with a lawsuit. 

Dragonfruit AI also detects and records liquid spills and other accidents in the store that could lead to a real slip-and-fall lawsuit and alerts associates to address the issue.

The smart camera system also detects the poses that customers are making in the store and can determine if shoplifting is taking place or about to. “So this can be done at a very affordable price point now. This was possible 20 years ago, but it was really expensive,” Kumar said.

Health-conscious and AI: AI also was a hot topic at a forum on healthy shoppers that featured representatives from Thrive Market and Instacart, both of which are trailblazing in the AI space. 

While Instacart is known for its Caper Cart technology, Sarah Mastrorocco, vice president and general manager of Instacart Health, explained how the San Francisco-based last-mile delivery company is going further with its Instacart Developer Platform that enables third-party app partners to integrate with its AI-powered recommendations for healthy eating. She noted that The New York Times and Weight Watchers are examples of companies that have integrated with AI tech.

April Lane, chief merchandising officer for online health food retailer Thrive Market, said their efforts are focused on investing in AI that works to help better predict what shoppers will want to fill their carts — particularly for new customers. She said one of the biggest problems for online grocery is filling that first basket, which can include as many as 30 items or more.

“When you're hunting and pecking throughout a site to find those 20 items for your basket, it takes a very long time, and so we've been able to simplify that process really dramatically,” she said. “We've got a very quick onboarding quiz that takes five minutes, and from there, we're able to pre populate your first cart. Now we don't get it right 100% of the time, but it's a starting point.”

Data deep dive

Reps from NielsenIQ, Circana, and Ipsos all presented some deeper data dives towards the end of day one. Highlights included:

Don’t underestimate the baby boomers: Baby Boomers may not be driving growth in overall grocery spending (that’s Millennials), but Boomers do still represent 34% of overall sales. So, according to NielsenIQ’s Sherry Frey, don’t ignore this group as a result. Make sure to target to them appropriately

What’s going on with foodservice at retail? Foodservice traffic is down 2% year to date, according to data from Circana. Why? Well, says Circana’s Sally Lyons Wyatt, meal deals are part of it, especially splashy meal deals from QSRs. Take a hard look at how you’re marketing your foodservice offerings (and additionally what time of day you’re offering them: it matters.) There’s also been an uptick in heat and eat sales—so if you have those, push them. Consumers still want dinner solutions

Does signage affect sustainability? The answer, at least via one test case from Ipsos, is: no, not really. Ipsos’ Wendy Wallner walked through a recent virtual consumer test case in which consumers were asked to navigate a section of cleaning products to gauge what factors resulted in them gravitating towards sustainable products (or not). In this case, signage didn’t matter as much as merchandising. And, in the end, perhaps behavioral science matters most of all—consumers constantly make non-conscious buying decisions and the smart grocer should gather information to better understand its sustainable shopper behaviors, Wallner said   

Groceryshop runs Oct. 7-9. Stay tuned for more coverage from Supermarket News.