How Regional Grocers Can Win With Fresh Over The Next Decade | 5IM

Foreigning us for today's 5 insightful minutes segment is Jeremy Levine.

Jeremy is a senior director at the Alvarez and Marcel consumer and retail group, and he is here to walk us through the key insights from his recent white paper called Mastering Fresh Operations Tactics for Grocers to Win in the Next Decade.

Jeremy, let's start with this.

Why are fresh departments getting so much attention right now?

And what does that mean specifically for traditional regional grocers?

Okay, first, thanks for having me on the pod.

Yeah, we are really excited to write this article.

I think this is a great time for your traditional grocers.

So what we've seen is an acceleration of a handful of consumer trends that really pushing shoppers towards those fresh departments.

And they all anchor around healthier lifestyles.

Right.

You see it in aversion to processed foods.

You see it in less alcohol.

You see it in more protein.

On that point, we've done some research, and in the US Americans consume about 12 billion fewer grams of protein than they should every single day.

A couple of protein bars per person.

So, yeah, I see your jaw drop on that one.

That's, that's, that was my reaction when, when we finished the, the analysis as, as well.

And yeah, so I just.

There's a lot of legs for the, for the, the meat department and the seafood areas in, in particular.

Yeah.

And I think what's exciting is because fresh is more important than ever.

These are things or what's important there is what the, the traditional grocer does really, really well.

Right.

You think about quality, you think about service, that, that butcher that knows your name, that person at the deli counter who knows your order, and also localized assortments, you know, be it local producers or really tailored assortments for, for a particular region.

So I think in a place where traditional grocers have been squeezed from big box, from discounters on one end and then from specialty on the other, this is a really exciting time where they can, they can really lean in.

The fresh area is definitely a defensive moat for many regional grocers if they do this the right way.

Of course, there's dynamics involved in that too.

I mean, I can remember, you know, going back almost 15, 20 years at Target, always talking about fresh.

So.

But even though it matters, it's really easy to, to screw it up or get it wrong.

So what makes the fresh department so hard to execute, Jeremy?

They're just fundamentally more complicated than, than the rest of the store.

The margin of error is hours, not days, between a fuzzy strawberry versus a fresh one, a brown steak versus a appealing steak.

So you just really need to get every detail right and people are more discerning in those areas.

Everyone picks up and examines the apple to the nth degree.

So it's just really, really critical.

And I think where we see that go wrong is people often treat them all the same when they're really all kind of unique, unique problems to solve.

You can't treat fruit like you can steak.

That's what you're saying.

Exactly.

It matters.

You need to get the donuts out early in the morning in the bakery.

You need to be ready for the lunch rush.

You need to kind of constantly do the culling in the produce section.

They just have very different operating rhythms and customer expectations.

Yeah, from my days running super targets too.

That takes a different level of expertise at the store level too, to make it sure everything's working correctly.

Well, all right, so how so if.

I'm a grocery executive listening to this, how should I be thinking about getting this right?

What does good actually look like to you?

Yeah, so what we talked about in the article is really four things that are critical.

The first is just having a team top to bottom to the organization that is good at fresh.

Right.

So you think about is a store manager incentivized on the fresh department.

What does the fresh training look like for store associates?

Just, you need need that workforce.

You can execute all of those things.

The second is process excellence.

You know, the more complex the area is, the more standardization is required to execute it.

Two things I'll call out just from my experience.

One, culling store associates.

Often it's just very counterintuitive that you pull product off of the floor to get more sales.

That one takes a lot of extra discipline.

The other is back rooms.

If the back room's a mess, it will show up on the sales floor in the quality, etc.

So two areas that have been top of mind for me and my clients.

Third bucket is scheduling.

And I just really emphasize that a well placed hour of production, say in the deli department, can set up the department for success or failure for the entirety of the day.

It really matters on an hour by hour basis where you have folks if a production, as I mentioned, or for customer service, the last one I'll call out is just a bridge between stores and headquarters.

I think too often there's a bit of a communication gap between the two.

And one, the stores will be able to tell you when things aren't going well.

So you want to have kind of your finger on the pulse there and also make sure that collaboration is in place between the store teams and, say, the merchandising teams.

All right, Jeremy, so let me put you on the spot here before I let you go.

So if I'm a grocery CEO, let's take it to the highest level now.

And I'm listening to you.

What's the first thing I should do.

Monday morning around this area?

Yeah, I'm going to double down on the scheduling piece.

Scheduling?

Yeah.

I have yet to see a retailer who consistently gets this right.

There's always pockets of folks who are, say, scheduling lesson on the weekends when people are there.

And it's something you can implement and affect really, really quickly.

And it might just be a question of enforcing the rules that are already there.

There might be some new design for how you think about scheduling, but even just some discipline around how it works today can make a massive, massive difference very, very quickly.

That's great stuff and great advice.

Thank you, Jeremy.

Thank you.