Washington D.C. – In what has become a seasonal ritual, the Girl Scouts set up shop in front of our office building in March to sell their fabled mix of cookies. Mysteriously missing was one of my favorites: Dulce de Leche. No worries, more money to buy Thin Mints, my thinking went.

It was only after a colleague forwarded a Wall Street Journal article highlighting innovative changes being made in this year’s cookie line-up that I realized how much grocery and convenience retailers could learn from the Girl Scouts.

Girl Scouts and SKU Rationalization

It turns out the girl scouts are in the midst of reducing their assortment. But it is the way in which they are going about the SKU rationalization effort that is truly admirable. To quote from the article:

A dozen councils testing the cutbacks with licensed baker Little Brownie Bakers, which is owned by Kellogg Co., hope to streamline sales, speed up cookie delivery and, ultimately, increase profits. (more…)

Washington D.C. – Fortune Magazine recently profiled Trader Joe’s, one of America’s most successful “new” grocers. Small assortments of primarily high quality private brand products dominate Trader Joe’s shelves. These private label products are at times sourced from the same manufacturers that make the national brands found in most regular supermarkets. Trader Joe’s business model is one that a number of established grocery chains are looking to emulate – with notable success: recent numbers show store brands attracted a stunning 30% of food servings sold (measured by unit volume) accounting for 17.4% of total dollar volume.  Some analyst predict that this volume could double in the next 15 years.

As is constantly reported, national brands are feeling the pinch as grocers reconsider the power of national brands within their product assortment. Aldi, Trader Joe’s and Save-A-Lot are have proven that they can retain customer loyalty while offering few brand-name products. Target’s success in differentiating its Archer’s Farms and Market Pantry in-house brands is driving a growing number of retailers to shift assortments to more prominently emphasize private label offerings. (more…)

Washington D.C. – Auto fuel has always been the economic poster-child of price transparency, efficient markets, and easy menu-changing. But any gas station owner will tell you that there’s still some money to be made at the pump. Yet given the razor thin margins on fuel, the game has, of course, moved away from the pump and into the store.

This shift has profoundly changed the make-up of where the gas game is played – very few pure refueling stations exist anymore and new entrants are looking to use zero-margin fuel as a traffic driver: grocer Stop & Shop recently announced that it will be ramping up their fuel service offering, opening their first location in Quincy, MA. (more…)

Washington D.C. – American Public Media’s Marketplace ran an interesting segment on in-store food sampling at Costco, with a quote that struck us:  “There’s just a high correlation with successfully run supermarkets and sampling.” Supermarket analyst David Livingston highlights that expanding grocery heavy-weights including Whole Foods and Trader Joe’s (as well as Costco) view sampling as core to their offering. Harris Teeter Chief Executive Fred Morganthall’s philosophy is clear, “Samples are there for a reason… the more you eat, the more you buy.”

Yet sampling doesn’t work for everyone, Livingston notes, as grocers have to be “certain that shoppers will like the food they’re eating.” We’d think that Mr. Livingston would give the ‘average grocer’ a bit more credit – even if consumers love the food they are eating, the economics of sampling vary wildly by chain.

More importantly, and far less discussed, even within a given supermarket chain the economics of sampling vary widely by store.

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Washington D.C. – In a bold step towards our world looking more and more like the Jetsons, ViVOtech recently announced the launch of their “contactless Near Field Communication payment system.” Which is tech talk for “people can pay for things with nothing more than their smartphone.”

According to ViVO, The ViVOpay 8800e features “a 16 million color HD display and tactile keypad,” which is tech talk for “this is going to be expensive.” With a price tag of $600 per unit (or 4 thousandths of a penny per color), equipping even a modest convenience store network is a sizable investment, especially after you consider training and any additional labor.

Is the ROI there? If you ask ViVO, they certainly believe so: “With tens of millions of NFC mobile phones about to hit the market in 2011 and EMV continuing to gain traction in the US, merchants have to be ready for the surge with the right technology.” (more…)

Washington D.C. – As we’ve discussed before, convenience stores have their sites trained on the lucrative quick service prepared foods market. Through a languishing economic recovery, consumers are looking for quick and convenient meal options at affordable prices without sacrificing quality.

Convenience stores are facing increased competition in this space from big box retailers like Target to drugstores such as Rite Aid.

Many c-store operators believe prepared foods to be key to customer loyalty and higher profitability. For example, Steven DeSutter, president and CEO of Stripes, is recently quoted in Convience Store News as saying that prepared foods is their “greatest loyalty program.” (more…)

Washington D.C. – Have you ever been frustrated that the lines around you seem to move faster as you are waiting to pay for your groceries? Or perhaps you would like to improve the operation of you company’s cashiers? Watch the Bill Hammack video below to find out why and how.

Washington D.C. – Note: In this week’s guest entry, APT’s founder and current chairman, Jim Manzi, revisits the famous jam experiment and the (non) paradox of choice.

The jam experiment

Over the past decade, some academics have claimed to have shown scientifically that humans tend to become paralyzed by too many choices. This is often called the “paradox of choice”. Probably the best-known piece of evidence is the “jam experiment,” in which shoppers bought more jam when presented with fewer flavors than when confronted with many flavors.

But what if one of the crucial experiments at the foundation of this mountain of inference showed no such thing? (more…)

Washington D.C. – While it is most frequently associated with sheer massiveness, Walmart continues to wrestle with strategies to erect smaller stores optimized for urban neighborhoods. “Going small” may not be as simple as it sounds.  It’s hardly news that the nation’s number one retailer has been experimenting for more than a decade with alternative formats like Neighborhood Markets (conventional-sized supermarkets about 42,000 square feet) and for three years with Marketside (15,000 square foot corner grocery stores).

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