Sansone, Leonardi headline Elevation Forum
How is it that some companies seem to thrive in an environment of uncertainty — even chaos — while most others fail? Understanding how the winners are able to embrace the paradox of control and the uncontrollable, and how two leading retail organizations are doing it every day across thousands of stores, was the key focus of the most recent Mack Elevation Forum meeting, held April 20 in Palm Beach, Fla.
Moderated by Elevation Forum creator Dan Mack and presented by The Swanson Group, forum members — which included sales and marketing executives from nearly 20 leading consumer health and consumer packaged goods companies of various sizes — discussed opportunities for value creation with major retailers, mining a brand’s hidden assets and what it is that makes some companies successful amid chaos and uncertainty.
But the real stars of the day were retailers Judy Sansone, SVP merchandising and store pricing for CVS Caremark, and Joanne Leonardi, director of HBC for Ahold USA, who came to talk face-to-face with Elevation Forum attendees about how their companies could better engage with their chains.
Sansone talked about CVS’ vision for creating personalization for its customers and in the communities it serves, and further leveraging its industry-leading ExtraCare loyalty card program. ExtraCare, now in its 14th year, has 69 million active cardholders. Card members are accounting for about 82% of all front-end sales and 67% of all store transactions.
Key to CVS’ segmentation strategy is a store clustering initiative that seeks to better mold its stores to the unique needs of the communities it serves. CVS will look to build each store’s assortment based on the key reasons consumers shop there, Sansone explained. For instance, CVS has identified about 400 of its stores that deserve a permanent end display of adult incontinence items to meet everyday demand; however, baby products do not perform well in these stores and would be de-emphasized, she described.
An early example of CVS’ clustering strategy has been CVS’ Urban Cluster stores, which feature a vastly expanded consumables offering. A new variation will include a greater emphasis on fresh food, and other store clusters are being designed to serve Hispanic neighborhoods, as well as others for top beauty and pharmacy areas.
As CVS continues down this path of greater personalization, it is an area where it will expect continued help from its suppliers. As many as 30% of CVS’ promotional offers are currently personalized, and it is looking for greater conversion among its ExtraCare users — another area that it is looking to its suppliers for help with — with an eye toward capturing a greater share of the consumers’ wallet.
For her part, Leonardi challenged Elevation Forum members to think of Ahold and its four unique operating divisions — Stop & Shop New York, Stop & Shop New England, Giant Landover and Giant Carlisle — essentially as drug stores, and for vendors to offer its stores the same opportunities they would offer to customers in the drug channel and to play off Ahold’s inherent strengths. For instance, Ahold typically is cheaper in health and beauty aids versus the drug channel, and the chain is looking to its vendors to help drive programs and create products that help it earn credit with consumers on pricing.
Important to Ahold, Leonardi explained, is that its vendors create unique products and programs that optimize cross-channel shopping, and that leverage the authenticity of each of its divisions and help them look different from their core competitors. Local adaptation is the key to helping Ahold win in its markets, and vendors need to think in terms of how they customize their products and programs to match each of the formats it operates.
One program Leonardi challenged vendors to take a greater role in is Ahold’s First Rack program for HBC items, and to look to create opportunities in health and wellness to drive customers to their brands and to Ahold’s stores.
Private-label growth remains a priority at Ahold, with a long-term goal of 40% penetration by 2016 — last year private label accounted for about 31% of sales — the continued expansion of its Care One health and beauty brand is a great contributor to reaching this goal. The line currently includes more than 800 healthcare SKUs and more than 300 personal/beauty care SKUs.
Attending April’s Elevation Forum were Tom Rice of Ansell, Jim McGuiness of Drive Medical, Bruce Montgomery of Fleet Labs, Tim Cleary of GoJo Industries, Jeff Burress of Beiersdorf, Nilda Oyola of Majestic Drug, Ward Lennon of Abbott Medical Optics, Jim Doyle of Sunstar Americas, Bob Ford of Coty, John Kotkosky of Celsius, Mike Huard of i-Heath/DSM, John Kelly of Nature’s Products, Dan Quail and Urs Lehmann of Similasan, John Bennett of Pacific World, Jim Beghtol of Lil Drug Store, Darrick Blinoff of Traditional Medicinals, Charles Wachsberg of Apollo Health and Beauty Care, Rich Swanson of The Swanson Group and Wayne Bennett of Drug Store News.
The next Elevation Forum was scheduled for June 22 in Denver. Walmart’s Carmen Bauza was the special guest retailer speaker.
Produce supplier focuses on local
“This tomato sucks.”
A blunt assessment, for sure, but it was the honest opinion delivered at a recent TED talk by Paul Lightfoot, the CEO of BrightFarms, as he plopped an organic tomato into his mouth.
BrightFarms, founded through the January 2011 merger of BrightFarm Systems and Better Food Solutions, offers an alternative to the traditional fresh produce supply chain. “The food that’s being sold in grocery and drug stores — we would like to change it,” Lightfoot told Drug Store News. “We want it to be healthy for people and healthy for the environment.”
BrightFarms’ model turns the supply chain on its head by designing, financing, building and managing hydroponic greenhouses that serve microregions of stores for a retailer, which then pays for the produce itself, but for the same price it would pay under a traditional model at competitive market prices. “We always want to make sure the food is consumed in the same community where it’s grown,” Lightfoot said.
The demand among consumers for fresh, locally grown produce has been developing for some time. An August 2010 survey of 1,200 U.S. consumers conducted by the Hartman Group on behalf of the Produce Marketing Association found an increased interest in seeking out locally grown produce and making purchases from farmers markets; a preference for fresh produce over other types; and the continued power of interest in health to drive consumption of fresh produce.
BrightFarms recently announced a deal to serve A&P’s stores in New York by building greenhouses in the Sunset Park neighborhood of Brooklyn, while another complex of greenhouses will serve Supervalu’s stores in the Minneapolis area. In theory, a contract with a retail pharmacy chain would work under a similarly decentralized model. “It definitely seems that drug stores want to be part of the solution of getting fresh produce into markets where there isn’t enough fresh produce right now,” Lightfoot said.
Most retailers that sell produce — including supermarkets, mass merchandisers and a growing number of drug stores — ultimately get it from all over the country and the world. At the TED talk, Lightfoot remarked that nearly all the lettuce sold in the United States comes from farms in California and Arizona. This type of supply chain creates a system that he called both efficient and inefficient. It’s efficient because it creates huge quantities of produce at low prices, but inefficient because that produce is grown to travel the longest possible distance without spoiling, but at the cost of flavor. Case in point, the aforementioned sucky tomato, not to mention the number of audience members who raised their hands when he asked if the best tomato they’d ever eaten had come from a supermarket: something fewer than one.
According to BrightFarms, its model also is more environmentally sustainable. In one year, the company said, a 1-acre greenhouse grows up to half a million pounds of produce and generates up to $1.5 million in sales, but also saves up to 5 million gallons of water and mitigates up to 740 pounds of CO2 emissions — owing to the much shorter distance between the source and the store — and 430 pounds of pesticides. And unlike a farm, the greenhouses can be built in urban areas.
Coca-Cola to bring Core Power to masses
CHICAGO — Coca-Cola announced it will distribute a dairy product that is produced and marketed by Fair Oaks Farms Brands, a collective of American family farmers.
Core Power, originally marketed as Athletes HoneyMilk in Colorado and Texas, initially will be delivered in select markets via Coca-Cola Refreshments’ distribution system. The protein milkshake, made with real milk and honey, is lactose- and gluten-free. Core Power will be available in 26-g and 20-g protein versions and such flavors as honey, chocolate, vanilla and strawberry banana, and is packaged in 11.5-oz. recyclable plastic bottles.
"At Coca-Cola we believe in providing a wide range of options that help empower consumers to make the beverage choice that best suits their lifestyle, occasion and need," said Julie Francis, chief commercial officer at Coca-Cola Refreshments. "Lending our distribution and marketing expertise to help deliver new Core Power to consumers is another way to provide customers and consumers with additional beverage choices."