Wednesday, June 7, 2017

Sustainability

Analytics Tools Are Still a Challenge for Many

Only a select few users have the means to make data-driven decisions

June 7, 2017 | Marketing Technology
There’s no doubt that analytics solutions are critical for a business’ success, but the complexity and rigidity of analytics offerings are major challenges for many of them, according to behavioral analytics provider Interana.
Leading Challenges of Their Existing Data Analytics Solution According to US Analytics Users, March 2017 (% of respondents)
Almost a third of US analytics users (30.0%) surveyed in March 2017 said their analytics technology is too hard to use, citing complicated interfaces. Some 27.1% also said that the tools require too much coding—another indication of the complexity of these solutions.
Even as analytics providers strive to build solutions accessible to all marketers, there’s still a lack of democratization in the analytics space.
In fact, 62% of respondents said that while employees throughout the organization understand the importance of data, just a few are armed with the tools and knowledge needed to make data-informed decisions. Only 25% said everyone is equipped with the right tools and knowledge.
Current State of Their Company's Organization and Governance of Data & Analytics According to Executives Worldwide, Sep 2016 (% of respondents)
These findings echo a February 2017 report from Forbes Insights and EY, which points to a broader organizational challenge when it comes to operationalizing analytics. The study found that a relatively small fraction of organizations has mature data and analytics groups at different company levels.
Only 17% of executives worldwide from various industries said these groups exist and are well-aligned.

Monday, June 5, 2017

Walmart CEO Evokes ‘Future of Shopping’ for Shareholders

McMillon highlights tech, associate endeavors at meeting

Walmart President and CEO Doug MacMillon at the company's 47th Annual Shareholders' Meeting
At Walmart’s 47th Annual Shareholders’ Meeting, which kicked off June 2, President and CEO Doug McMillon noted that the Bentonville, Ark.-based mega-retailer has “started to invent the future of shopping again,” as it makes use of technology to empower associates and improve the customer experience.
“Together, we’re building a new Walmart,” McMillon told 14,000-plus associates at Bud Walton Arena at the University of Arkansas in Fayetteville, Ark. “We’re going to make shopping with us faster, easier and more enjoyable. We’ll do more than just save customers money and you, our associates, will make the difference. Looking ahead, we will compete with technology, but win with people. We will be people-led and tech-empowered.”
Regarding the company’s vision for the future, McMillon said Walmart was “making every day easier for busy families and we’re using new ways of working to do it,” among them a program being tested in which store associates deliver items to customers, digital endless-aisle shopping in stores, automated pickup towers in stores for online orders, pickup stations in store parking lots, robotics and image analytics to scan aisles for item availability and shelf presentation, and machine learning and more advanced algorithms in pricing systems.
McMillon also pointed to initiatives that aimed to create a better working experience for associates and shopping experience for customers, including free two-day shipping on more than 2 million items, with no membership fee; a discount for customers picking up online orders in stores; grocery pickup in many markets around the world, and delivery from stores in some; and Jet Fresh delivery, which provides delivery of fresh groceries to homes in 1-2 days, now available to half of the U.S. population and growing.
The exec went on to exhort associates to “be lifelong learners.” Despite Walmart’s adoption of the latest technological advances, he emphasized, “The secret to our success will always be our people.” To that end, McMillon noted that the company is creating new jobs, including data scientists, machine-learning engineers and mobile app developers.
He also spoke about Walmart’s commitment to give back to the communities it serves, through such initiatives as pledges to source $20 billion from women-owned businesses – a goal that was achieved last year – and to source $250 billion in products that support American jobs over a 10-year period. McMillon also mentioned projects to source more local and sustainable products and to reduce greenhouse gas emissions in the company’s supply chain by 1 gigaton by 2030.
In other shareholders’ meeting news, Walmart revealed shareholder voting results, including that shareholders approved the election of each of Walmart’s 11 director nominees. Shareholders also voted in favor of a nonbinding advisory resolution to establish the frequency of one year for future advisory shareholder votes to approve the compensation of Walmart’s named executive officers; approved, on a nonbinding, advisory basis, the compensation of the company’s named executive officers described in its 2017 proxy statement; and ratified the appointment of Ernst & Young LLP as Walmart’s independent accounting firm.
Walmart operates 11,723 stores under 59 banners in 28 countries, and ecommerce websites in 11 countries, employing about 2.3 million associates worldwide.

Sunday, June 4, 2017

The Amazon Effect and the Global Supply Chain

In order to execute fast deliveries, distribution centers have to operate on a continuous fulfillment schedule.
By Rosemary Coates
May 30, 2017
Have you been keeping up with the “Amazon Effect” on supply chains? This effect is defined as the impact the digital marketplace has on the traditional business model in retail.  But for supply chain professionals, it is so much more.
We have come to love and maybe even depend on the fast response and delivery of just about anything we can think of. Want to order something at 2 am?  No problem, Amazon is open 24/7 and can deliver overnight. But behind the scenes, in supply chain operations, the Amazon Effect is causing a revolution of epic proportions across the globe.
In order to execute fast deliveries, distribution centers have to operate on a continuous fulfillment schedule. Orders are no longer processed in batches at the end of the day. They are processed instantaneously and sent to pick in the warehouse immediately. Trucks picking up packages for UPS, the USPO, FedEx and others must be ready to take their filled trucks to nearby sort centers for immediately processing.  Gone are the days of order cut-off times, and queuing packages for late-afternoon carrier pick-up.
But that’s not all…in order to keep the fast-moving inventory in stock at the distribution center, more frequent deliveries must be scheduled and that means yard congestion and perhaps a need for yard management software with delivery scheduling.  More people will be needed to manage these processes. Inventory control becomes key to managing the flow of inbound goods and assuring the availability of products.
But that’s not all…in order to make fast, more frequent deliveries, manufacturers must learn to produce in smaller lots with very fast machine change-overs to accommodate a faster demand schedule. Resellers must either build larger warehouses to store more inventory or figure out how to fill orders much more quickly and respond to vendor-managed inventory (VMI) processes.
But that’s not all…to effect very fast change overs in manufacturing, machine tool and robotics makers must develop and redesign their products to accommodate fast changes and smaller-run capability.
But that’s not all…procurement staff will have to adjust the way materials are purchased. To respond quickly to manufacturing needs, purchase orders will become more and more “blanket orders” with fast requisition release capability.  This may even give rise to a preference for local sourcing fueling the reshoring trend, or at least sourcing from local storage locations where inventory is held for rapid response.
But that’s not all…if sources are located in foreign countries like China, they must respond to faster turn-around time and smaller quantities and repeat orders. The traditional model of large lots that are built as the schedule permits, will have to be adjusted to faster, smaller shipment demands.
But that’s not all … transportation carriers are likely to see smaller, but more frequent shipments and demands for faster deliveries. This, in turn, will cause a need for more consolidation centers in foreign locations to load containers and get them moving fast.
The Amazon Effect is causing a revolution in thinking across the supply chain. It’s a wake-up call for supply chain professionals to design new and improved processes and think creatively about the future.

Saturday, June 3, 2017

Blue Apron just revealed how expensive it is to help America cook

June 01, 2017
Blue Apron has filed for an initial public offering. Founded in August 2012, the startup delivers pre-portioned ingredients and glossy recipe instructions to households across the US. It was valued at $2 billion during its last financing in June 2015.
The filing comes as many startups in the broader food delivery business are struggling to stay afloat. Maple, a New York startup that dreamed of delivering a better office lunch, shut down last month. Sprig, a gourmet meal delivery service in San Francisco, went out of business last week.
Blue Apron has tried to set itself apart from those other companies by tying its brand to the cooking experience. “We’re not an on-demand food product,” Blue Apron founder and CEO Matt Salzberg told Quartz in February 2016. “We’re helping people learn new ingredients, new techniques, new recipes. We’re helping them spend time in the kitchen with their families rather than eating things like Domino’s Pizza or Chinese food in front of their TVs at night in an antisocial way.”
One thing is clear from the prospectus the company filed on June 1: Teaching America to cook is an expensive undertaking.
Blue Apron lost $54.8 million dollars in 2016, a 16% greater loss than the previous year. It booked $795 million in net revenue, compared to $341 million in 2015, growth of 133%.
Food, packaging, and shipping (“cost of goods sold”) made up the bulk of Blue Apron’s expenses but marketing also weighed in heavily. The company poured $144 million into marketing in 2016 and $60.6 million in the first quarter of 2017 alone. Blue Apron says in the filing that its growth “will depend in part on our ability to cost-effectively launch marketing campaigns that attract and retain customers and successfully promote awareness of our brand.”
Like many startups in the meal-kit and food-delivery industry, Blue Apron spends a lot of money on promotions for its customers. It signs them up using a referral program, direct mail, television, and podcasts (lots of podcasts), among other things. New users typically get hefty discounts on their first order, often using a targeted referral code.
Through its massive marketing spend, Blue Apron has attracted more than 1 million customers. The company grew its customers at a consistent 18% quarter-over-quarter in three of the last four quarters. The business is seasonal: The beginning of the year tends to yield a lot of new growth (perhaps those New Year’s resolutions at work or people cashing in holiday gifts), while signups slow during the summer vacation months and holiday season.
Despite steady customer growth, Blue Apron doesn’t seem to be inspiring its customers to spend more over time. Over the last year, both its average number of orders per customer and the amount spent on those orders declined. Customers were spending an average of $236 per month on the service as of the first quarter of 2017, an 11% decline from the same period a year earlier. Those numbers include all of Blue Apron’s meal deliveries business, as well as sales of wine and kitchen utensils, so they’re not perfect indicators of the core business.

Organic foods backed by landmark report - warning pesticides far more dangerous than was thought

Green vegetables
The review examines scientific evidence about the impact of organic food on human health. CREDIT: ALAMY


 Consumers should consider going organic because pesticides on foods are far more dangerous than was thought, causing damage to the human brain, a major study suggests.
The research, published by the European Parliament, warns of the “very high costs” of current levels of exposure to pesticides - especially for children and pregnant women.
It could result in new limits on pesticide levels or changes to labelling of foodstuffs, under EU laws which require the UK to review its policies by next year.
lamb
The report says low level exposure to pesticides could harm children's brain development  CREDIT: ALAMY
The landmark study suggests that the damage caused by pesticides across the EU amounts to at least £125bn a year, based on the loss of lifetime income from such damage.  
The report warns of increasing evidence that residues from insecticides are damaging the brain, and reducing the IQ of the population. And it raises concerns that the chemicals could also cause cancer and damage to the reproductive system.
The research, commissioned by the European Parliament, is a review of existing scientific evidence about the impact of organic food on human health.
At least 100 different pesticides are known to cause adverse neurological effects in adultsEuropean Parliament report
It says previous attempts to assess the impact of pesticides have disregarded too much of the research, raising concerns that regulation of insecticides has been inadequate.
The study was carried out by the parliament’s Scientific Foresight Unit, led by the Swedish University of Agricultural Scientists.
“At least 100 different pesticides are known to cause adverse neurological effects in adults, and all of these substances must therefore be suspected of being capable of damaging developing brains as well,” the report states.
“Such adverse effects are likely to be lasting and one main outcome is cognitive deficits, often expressed in terms of losses of IQ points. The combined evidence suggests that current exposures to certain pesticides in the EU may cost at least € 125 billion per year, as calculated from the loss of lifetime income due to the lower IQs associated with prenatal exposure.”
It goes on to describe the calculation as “almost certainly" an underestimate as it does not consider the possible contribution made by pesticides to conditions such as Parkinson’s disease, diabetes and certain types of cancer.
The researchers recommend limiting exposure to non-organic fruit and vegetables - and say particular care should be taken by pregnant women and children.
Several practices in organic agriculture, in particular the low use of pesticides and antibiotics, offer benefits for human healthProfessor Axel Mie
"The evidence reviewed in this report shows that a decreased exposure  from the general population is desirable from a human health perspective in light of the findings from epidemiological studies that indicate very high costs of current levels of pesticide exposures," the report says.
Previous attempts to assess the risks have not taken proper account of epidemiological studies, which look at the health of whole populations, instead of just limiting themselves to scientific trials, it suggests.
"Of major concern, these risk assessments disregard evidence from epidemiological studies that show negative effects of low-level exposure to organophosphate insecticides on children's cognitive development, despite the high costs of IQ losses to society,” it states.
And it raises concerns that risk assessment of pesticides is inadequate, failing to properly examine any increased risk of cancer, as well as impacts on the body’s hormones and nervous system.

Cow in a field
Milk from organic cows could be nutritionally better CREDIT: CHRISTOPHER FURLONG /GETTY IMAGES
“There are concerns that this risk assessment is inadequate at addressing mixed exposures, specifically for carcinogenic effects as well as endocrine-disrupting effects and neurotoxicity. Furthermore, there are concerns that test protocols lag behind independent science studies from independent science, are not fully considered and data gaps are accepted too readily,” the authors warn.
Lead author, Assistant Professor Axel Mie said: "Several practices in organic agriculture, in particular the low use of pesticides and antibiotics, offer benefits for human health".
"Policymakers should support the use of such practices and their introduction in conventional agriculture, and make sure that organic agriculture continues to serve as a laboratory for the development of future healthy food systems."
Under an EU Directive on the sustainable use of pesticides, member states are required to public a national plan to reduce risks from pesticides every five years, with the UK required to update its restrictions by 2018.
US studies have shown women’s exposure to pesticides during pregnancy, measured through urine samples, were associated with negative impacts on their children’s IQ and neurobehavioral development. A study looking at structural brain growth found the grey matter was thinner in children whose mothers had high exposure to organophosphates, which are used widely in pesticides.
Peter Melchett, Soil Association policy director said:  “This report is great for organic farmers and everyone who eats organic food. Organic food sales have been growing strongly for five years, and a key reason that people buy organic food sales is that they feel it is better for them and their family – that is why more than half the baby food sold in the UK is organic. This new, independent, scientific review confirms people are right.”
Dr Chris Hartfield,  senior regulatory affairs adviser  at the National Farmers Union, said: “ Pesticides are among the most stringently regulated products in the world, with rigorous independent safety assessments and scientific studies carried out to ensure that any residues that remain on food pose no risk to people. It is important to point out that this European Parliament report makes it quite clear that our understanding in these areas is limited, the evidence is not conclusive, and the significance of the findings for public safety is unclear.”

Friday, June 2, 2017


OPINION

How grocery retailers can capitalize on convenience

John Stranger is vice president, group account supervisor at EvansHardy+Young, a marketing and communications agency specialized in servicing food, wine, restaurant and casino brands. John has managed accounts such as Safeway Markets, Dole Foods, Robert Mondavi Winery, NestlĂ© USA and Sara Lee. He currently heads up California Walnuts, Avocados from Peru and Hi-Chew. 
Convenience food was once a pejorative, but not anymore. Today, it’s practically a requirement  for food brands to provide convenient products, even when delivering “clean,” gourmet or vegan options. As A. Elizabeth Stone stated in the Institute of Food Technologists’  “Top 10 Food Trends” report in April 2017, “Despite the recent media preoccupation with clean labels and free-from foods, the food industry remains driven by convenience.” 
Here are some ways retailers and food manufacturers are responding to consumer demand for greater convenience, and tactics they can use to further capitalize on the trend.

1. The new from-scratch cooking

The IFT report cites Food Marketing Institute, Harris and Management Systems International data that illustrates the depth of consumers’ demand for convenience. Fifty-three percent of shoppers used partially prepared items when preparing dinner at home, with only 35% of people cooking mostly from scratch. Nearly half (45%) of shoppers buy heat-and-eat poultry or meat at least once a week, and 40% buy pre-cooked ready-to-eat products. Fifty-six percent of adults bought deli prepared meal items last year.
John Stranger
John Stranger
 
Credit: EvansHardy+Young
 
Younger demographics are demanding convenience more than older age groups. One-third of consumers under 45 use packaged meals or stir-fry kits, and 20% use refrigerated heat-and-eat potatoes or pasta.
Opportunity: Nearly half of all users of these prepared products doctor them with seasoning or added ingredients. There is a need gap for prepared or semi-prepared items with more variety, more ethnic options and more gourmet offerings.

2.  Meal kits

Supermarkets are waking up to the challenge of meal kit delivery services like HelloFresh and Blue Apron. These services have grown into a $1.5 billion market in the last five years, and are expected to double in the next five.
Kroger recently announced that it is testing a line of meal kits in four stores in the Cincinnati area. The line, called Prep + Pared, offers ingredients to prepare a meal for two in 20 minutes. Prices start at $14, with dishes like Moroccan-inspired spring vegetables, and creamy chicken and bacon alfredo.
Publix has introduced meal kits in two stores, one in Orlando and one in Tampa. Their kits come in three levels of difficulty, Simple (up to six steps), Simpler (four steps) and Simplest (heat and eat). Giant, Whole Foods and Peapod are among others to expand into the meal kit business.

Opportunity

With the size of this category exploding, food marketers have a huge new opportunity for growth, especially food commodity groups offering unprocessed raw materials.

3. Online ordering for pick-up (or delivery) is picking up

Jewel-Osco became the latest supermarket chain to enter the online ordering fray in an announcement at the beginning of May. Hy-Vee also has a plan on the drawing board to open a small market in West Des Moines that will feature a drive-thru coffee shop on one end and a drive-up lane on the other for customers picking up groceries they have ordered online.
Instacart has aggressive growth plans as well, and expects to be available to 80% of U.S. households by the end of 2018. Instacart uses independent drivers to shop at its grocery partners and deliver to customers, providing chains an easy way to offer their customers delivery without the cost of their own operation to do it.

Opportunity

Instacart partners with packaged foods brands to reach customers who are ordering online. Promoting a brand through Instacart is a different way to reach customers at the most valuable “point-of-purchase” moment.
grocerant
 
Credit: Megan Poinski
 

4. Fast fresh formats and grocerants are growing

Kroger recently opened Fresh Eats MKT, a new 12,000 square foot convenience store concept, in Blacklick, OH. Jeff Parker, president of Kroger Convenience Store Division, called the store “a new way to shop,” and he’s not exaggerating.
The store is a confluence of fresher, healthier offerings than is typical, and gives new meaning to the word convenience. It includes mobile and online ordering; made-to-order food with indoor and outdoor seating; a large assortment of fresh produce, meat, bakery and dairy; and bulk nuts, mixes and candy. It also features a drive-thru pharmacy, a Starbucks, Coke Freestyle machines and fuel pumps.
Similarly, Alberstons’ Star Market in Boston reopened four remodeled stores in the first week of May. The stores now feature expanded prepared meals and hot foods. These include fresh-made pizza, grilled chicken and a noodle bar, as well as fresh cut fruits and vegetables and bulk nut displays.
Whole Foods opened its fourth 365 branded store in Austin in late April, which features not one but two full service eat-in locations. Easy Tiger is a bakery and a beer hall, while Juiceland offers a full line of juices and smoothies.
Big Y recently remodeled its Amherst, MA store so it includes a ready-to-eat chicken wing bar, a stir-fry station and a cafĂ© area with a coffee house feel.
Wegmans and H-E-B were early adopters in the grocerant business.

Opportunity

Grocery retailers are clearly aware that traditional formats are giving way to new options that provide more convenient, faster ways for customers to get the food they want. Food manufacturers are going to have to be equally nimble in providing products that are adapted to the “new food chain.”
With customers demanding more convenience than ever, there is no doubt that new business models for food delivery systems will be developed. Food and beverage producers must be adept in providing products that will supply these formats.