Consumer shopping behavior changing, former supermarket executive says

by Josh Sosland
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AMELIA ISLAND, FLA. — Broad changes in how consumers shop at supermarkets have become evident as the economic picture has darkened, said Norm Rich, who recently retired as president and chief executive officer of Weis Markets, Inc., Sunbury, Pa.

Mr. Rich, who is vice-chairman of the Food Marketing Institute, discussed shopping trends in a wide-ranging presentation that launched the general session of the American Bakers Association annual meeting April 6 at the Ritz-Carlton hotel in Amelia Island.

While most of his career was spent in the supermarket business, Mr. Rich told the A.B.A. of his roots in baking, beginning with his grandfather who baked bread and rolls in Germany. His father was a baking apprentice there during the 1930s and fled to the United States, where he took jobs in various New York pastry shops. He opened his own business, and it was there that Mr. Rich began his work life.

"I cleaned pans," he recalled. "Talk about the bottom of the ladder!"

Discussing baked foods at Weis Markets, Mr. Rich said wide-ranging opportunities for cross merchandising exist. Beyond offering deli-style rolls next to the deli section, he said English muffins and pies are offered in the dairy section and bread is sold in the cookie aisle.

Another innovation Mr. Rich identified in baked foods is the continuing effort to satisfy consumers looking for single or smaller portions. For families with one or two members, Weis offers a half pie, a 4-inch pie, single muffins and a range of similar configurations.

"At the end of the day, it’s all sales," Mr. Rich said.

The weaker economy has offered supermarkets opportunities for growth in the snack business, Mr. Rich said. "More and more people are bringing snacks to work from home, rather than going to vending machines," he said. "People are cutting down on junk foods generally. Healthier foods are doing well, like probiotic cookies. Fiber rich bread and rolls are really taking off.

"All this tells me that there is less impulse buying going on than before. Shopping habits have changed. I see more people using shopping lists. People are taking a more sensible approach to shopping, asking the question, ‘What do I really need’?"

Mr. Rich said well considered couponing offers a powerful opportunity to reach these customers. Discounts on gas, based on how much customers spend at supermarkets, have been an effective method at Weis, he said.

With the increased focus on value, attention naturally turns to private label, Mr. Rich said. He cited data in which two-thirds of consumers believe private label offers good quality and value, but that consumers have greater confidence in national brands. Like other retailers, Weis has a three-tier private label program, offering about 125 products under its Big Top value brand.

"Big Top helps reduce leak to dollar and limited assortment stores," Mr. Rich said.

Weis Quality, the retailer’s national brand equivalent, has achieved 25% penetration, and more recently the company has introduced premium private label products.

"We’ve noticed other supermarkets with premium lines, but we’re doing it differently," he said.

In its Five Star Signature private label lines, Weis has opted to co-brand its products with manufacturers. For instance, Utz Quality Foods, Hanover, Pa., is partnering with Weis on its snack products. Under the program, Weis continues to offer the regular branded product of its partners, who also include Brent & Sam’s (Lance, Inc.) for cookies and Magnum Coffee for its Signature coffee line.

Signature facsimiles of Weis executives Robert F. Weis, chairman, and Jonathan Weis, vice-chairman and secretary, appear on each package.

Returning to baked foods, Mr. Rich said Big One bread is the value offering from Weis and is placed on the lowest shelf together with what he described as a "full complement" of private label variety bread choices. The supermarket has been merchandising different products with "shelf talkers," call-out signs to shoppers alerting them of savings or that prices have been frozen on select items.

Mr. Rich, whose experience was in quality assurance at Weis before going into general management, concluded his presentation with a discussion of food safety.

He said fundamental HACCP (hazard analysis and critical control point) is proactive.

"If you control your facility, end product will be under control," he said.

Weis has one employee fully dedicated to HACCP, an expenditure Mr. Rich said "has paid dividends" to the company.

He sympathized with the bakers over the challenge they face in tracking ingredients, noting that a single loaf of whole wheat bread contains 26 different ingredients.

Communication regarding product recalls has been a terrible problem for supermarkets, Mr. Rich said. He noted that he heard about a major peanut butter recall over the radio in his car and about another recall two months after the recall was issued.

"It’s unacceptable," he said.

Mr. Rich spoke highly of the new F.M.I. product recall portal, introduced in recent months. Still, he added that recalls will never be fully eliminated.

"It’s outstanding," he said of the F.M.I. portal. "But things happen. It’s not a perfect world. This is not a competitive issue. If we fail, we risk our business and our relationship with our customers."

This article can also be found in the digital edition of Milling and Baking News, April 21, 2009, starting on Page 20. Click here to search that archive.

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