nga final presentation 2.9.14

University Case Study Competition2014

Introduction

Saint Joseph’s UniversityFood Marketing Program, Haub School of Business• Meredith Brisbane• Jack Matsen• Monica Argenzio• Michael Bucher

Thank you for this opportunity!

Case Study Briefing

Fresh Encounter Supermarket: • Headquartered in Findlay, OH • 30+ stores in greater Ohio

Company Objective: • “We want to grow sales, customer count, item count and

profit…” (8/27/2013 conference call)Specific Local Question:

Should we consider local as…1. A “store within a store” merchandising tactic,2. An integrated “across the store” strategy, or 3. A hybrid of numbers one and two?

Approach

1. Research

2. Overall Positioning for Local

3. Customer Definition and Objectives

4. Program Strategies and Tactics

5. Program Schedule

Secondary Research

Reviewed 40 sources from these areas: • University studies • Industry studies• Academic articles • Government reports• Trade and popular magazines • Case studies (Balls Food Stores)• Websites and blogs

Industry Definition: Local

There are several different definitions of Local.Industry• Distance (USDA, 400 miles)• Size (Wegmans, 100 acres)• Drive-time (Whole Foods, 7 hours)• In state (Wal-Mart, Ohio Proud)

Consumer Definitions

Beyond distance, consumers consider multiple attributes:

• Fresh • Scale of Producer• Artisan• Wholesome

• Benefits to Local Economy • Personal Connection• Environmental Impact• Transparency Local?

Primary Research

We conducted a custom Shopper Survey.• Online Qualtrics Survey, Fall 2013 • 300+ shoppers across the US drawn from national

shopper panels • Representative sample of US demographics 18+

Consumer Definition

Most Important Characteristics of Local: 1. Family-owned 2. Close to home 3. Small or independent 4. Part of community 5. Regionally traditional or unique 6. Non-corporate 7. Specialty 8. Artisan

Distance Dimension

How do shoppers think of distance? • Same community or state (over 50%)• 117 miles • Not time

Benefits Ranking

Why do shoppers buy Local?1. Fresher (71)2. Better tasting (43)3. Higher quality (42)4. Support local economy/jobs (36)5. Knowing where and who your food comes from (36)6. Healthier, more nutritious (35)7. Supports community or small business (35)8. Picked later at their peak ripeness (34)9. Minimally processed, more natural (34)

Where do shoppers most expect Local products?1. Produce (89%)2. Dairy (77%)3. Bakery & Deli (74%)4. Natural & Organic (73%)5. Meat & Seafood (69%)6. Grocery Foods (53%)7. Non-Foods (49%)

Department Ranking

How does Local marketing need to improve?• Sampling • Advertising, Signage • Promotion, Specials• Variety • Finding Products

Improvements

Two Types of Customers

Heavy Local Users • Caucasian, Household size: 2, Age: 45-65, $45k-$60k• Influencers, purchase local at least once a week, demand

authenticity and competence.

Mainstream Shoppers • Caucasian, Household size 2.5, Age: 35-50, $30k-$45k• Families, price and quality, purchase local occasionally,

retailers must grab attention

30+ Fresh Encounter

Stores

60+ Kroger's

60+ Wal-Mart's

120+ Dollar

General’s

Save-A-Lot, Independent

grocers

Expected Retailers

Where do shoppers expect to buy Local?1. Farmers/green markets2. Natural food stores 3. Local independent grocery4. Specialty food stores 5. Whole Foods 6. Trader Joe’s7. Large chain supermarkets8. Supercenters9. Warehouse clubs10. Online grocers

• The definition of local is more than just distance

• Shoppers seek product quality, then other benefits

• Consumers are willing to pay more for Local products

• Shoppers expect certain retailers to sell local

• Intense competition requires differentiation

Research Insights

• Consumer-driven definition of Local needed

• Characteristics and benefits need to drive a Local program

• Consumers expect local in multiple departments

• Must cater to the needs of two different types of customers

Defining the Problem

“Leverage a local program to create relevance and interest in Fresh Encounter stores to attract new and retain current shoppers in an intensely competitive marketplace.”Two Target Customers:

• Heavy Local Users • Mainstream Shoppers

Local Positioning

Heavy Local Users

To have heavy local users trust that Fresh Encounter stores have a credible local mission/commitment

#1 Demonstrate knowledge and expertise

Objective Strategies

#2 Develop “deeper” product offerings

#3 Drive legitimacy through suppliers

Heavy Local Users

Strategy #1 Tactics

Demonstrate knowledge and expertise

Expand experience through digital technology

Train one Local Captain for each store

Train one Local Captain for each store• Personal experience and interaction with products and

suppliers

• Passionate locavore, supplier liaison, connected to community

• Store-level Local trainer

Heavy Local Users

Heavy Local Users

Strategy #2 Tactics

Develop “deeper” product offerings

Expand variety

Scale and leverage “Grow for it”

Scale and leverage “Grow For It” • Develop a hoop house garden in each

major market to supply clusters of nearby Fresh Encounter stores

Heavy Local Users

FE Store

GFI Garden

FE Store

FE Store FE Store

FE StoreFE Store

GFI Garden

FE Store

FE Store FE Store

FE StoreFE Store

Scale and leverage “Grow For It” • The 5-6 gardens would continue to function as CSAs

• Invite heavy local users to visit and participate

Heavy Local Users

Heavy Local Users

Strategy #3 Tactics

Drive legitimacy through suppliers

Show program results

Supplier in-store special events

Bring supplier into store with media

Mainstream Shoppers

Objective Strategies

To help mainstream shoppers realize and appreciate the benefits of buying local from Fresh Encounter stores

#1 Define Local and build awareness

#2 Demonstrate freshness, quality, and taste

#3 Consistent program presentation in store

Mainstream Shoppers

Strategy #1 Tactics

Define local and build awareness

Formally define “Local”

Integrate local products into circulars

Department specific local displays

Create “department specific” local displays • A hybrid strategy

• In 4 departments; assorted products - Produce, Dairy, Bakery & Deli, Meat & Seafood

• Authentic décor, fixtures and signage

Mainstream Shoppers

Mainstream Shoppers

Strategy #2 Tactics

Demonstrate freshness, quality and taste

Provide recipes and sample local products

Use multiple touch points in the store

Mainstream Shoppers

Strategy #3 Tactics

Consistent program presentation in store

Leverage “Local” dept. displays

Leverage signature products

Create a “Local” brand

Mainstream Shoppers

Create an umbrella brand and identity for the local program

Local Fresh Encounters

Local product call-out

Interactions with suppliers

Key attribute of local

Local source

Local Fresh Encounters

Implementation Schedule

Budget

Average sales per square foot (according to FMI)

x total selling area square footage for FE stores

x typical percentage of marketing spend by food retailer

x 10% of budget allocated to local program

= $125,000 yearly budget

= $4,300 per store

Expected Return

Balls Food Stores Example• Increased sales of local foods by average of 20-35%

annually

• Increased average basket size

• High customer count

• Began with hot house tomatoes

ConclusionLocal Fresh Encounters

GFI Garden

FE Store

FE Store FE Store

FE StoreFE Store