This case study proposes a local food marketing program for Fresh Encounter Supermarkets. It defines local food based on research and recommends targeting two customer types - heavy local users and mainstream shoppers. For heavy users, the program demonstrates expertise, offers a variety of local products, and builds supplier legitimacy. For mainstream shoppers, it defines and promotes local foods, demonstrates quality and taste, and consistently presents the local brand. Tactics include local product displays, sampling, recipes, and a "Local Fresh Encounters" brand. Research found consumers will pay more for local foods and expect them in key departments. The program is expected to increase sales by 20-35% annually based on a case study of similar retailers.
2. Introduction
Saint Joseph’s University
Food Marketing Program, Haub School of Business
• Meredith Brisbane
• Jack Matsen
• Monica Argenzio
• Michael Bucher
Thank you for this opportunity!
3. 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?
4. Approach
1. Research
2. Overall Positioning for Local
3. Customer Definition and Objectives
4. Program Strategies and Tactics
5. Program Schedule
5. 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
6. 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)
7. Consumer Definitions
Beyond distance, consumers consider multiple
attributes:
• Fresh
• Scale of Producer
• Artisan
• Wholesome
• Benefits to Local Economy
• Personal Connection
• Environmental Impact
• Transparency
8. 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+
9. 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
10. Distance Dimension
How do shoppers think of distance?
• Same community or state (over 50%)
• 117 miles
• Not time
11. 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)
12. 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
13. How does Local marketing need to improve?
• Sampling
• Advertising, Signage
• Promotion, Specials
• Variety
• Finding Products
Improvements
14. 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
15.
16. Expected Retailers
Where do shoppers expect to buy Local?
1. Farmers/green markets
2. Natural food stores
3. Local independent grocery
4. Specialty food stores
5. Whole Foods
6. Trader Joe’s
7. Large chain supermarkets
8. Supercenters
9. Warehouse clubs
10. Online grocers
17. • 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
18. • 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
19. “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
20. 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
21. Heavy Local Users
Strategy #1 Tactics
Demonstrate knowledge
and expertise
Expand experience through digital
technology
Train one Local Captain for each
store
22. 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
23. Heavy Local Users
Strategy #2 Tactics
Develop “deeper” product
offerings
Expand variety
Scale and leverage “Grow for it”
24. 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
25. 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
26. Heavy Local Users
Strategy #3 Tactics
Drive legitimacy through
suppliers
Show program results
Supplier in-store special events
Bring supplier into store with media
27. 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
28. Mainstream Shoppers
Strategy #1 Tactics
Define local and build
awareness
Formally define “Local”
Integrate local products into
circulars
Department specific local displays
29. 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
30. Mainstream Shoppers
Strategy #2 Tactics
Demonstrate freshness,
quality and taste
Provide recipes and sample local
products
Use multiple touch points in the
store
31. Mainstream Shoppers
Strategy #3 Tactics
Consistent program
presentation in store
Leverage “Local” dept. displays
Leverage signature products
Create a “Local” brand
36. 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
37. 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
-Good Afternoon, my name is Meredith Brisbane,
my teammates are jack matsen, monica argenzio, and mike bucher….
And we are representing saint joseph’s university.
Thank you for this opportunity.
Our case study is based on Fresh Encounter Inc and their 30+ stores in the greater ohio area.
Our presentation addresses the company’s objective to grow sales, improve customer count, expand their product lines, and raise profits across all stores.
Our presentation also addresses a specific question; which is the most appropriate merchandising tactic for local products. A “store within a store”, integration “across the store” or a hybrid of the two.
To solve the case study our approach will be to
-conduct research
-determine overall positioning
-define customer and objective
-develop strategies and tactics
-and consider their scheduling and impact
We will be answering the case question about merchandising as part of this broader solution.
WE BEGAN with the review of 40 different secondary research sources.
Some of the most useful sources were reports from Mintel, Hoover’s, USDA and the Food Marketing institute.
we find that part of the problem is industry and government lack a consistent definition of local.
They consider distance and time primary factors.
For example: USDA considers local within 400 miles of the store. But Whole Foods considers it to be 7 hours drive time.
Another part of the problem is that beyond distance, consumers consider multiple attributes when defining local
For example; most people consider the environmental impact of food miles,
While others consider local products to be craft or artisan.
We found there is a disconnect across industry, government and consumer definitions of local
So We needed a better understanding of how consumers define local.
To achieve this understanding we conducted a custom shopper survey. We fielded an online survey in fall 2013. We talked to over 300 adult shoppers across the US.
The shoppers in our survey ranked the most important characteristics when they defined Local. They expect Local products to come from a small or independent, family owned business that is close to their home or apart of their community. We were surprised to find artisan as the lowest ranked factor.
Our survey shows that more than 50% of shoppers view Local from the same community or state. When they think of distance it’s in miles not time. The average miles across the 300 shoppers was 117 miles from the store. This is remarkably close to an industry definition of 100 miles.
We asked shoppers why they purchase Local food. We presented them with 16 different benefits. Freshness, taste, and quality were the most important. This ranking shows the other important benefits, note that environmental is not ranked on the top part of the list. Leveraging these top benefits will be critical for the RELEVENCE of the Local program.
The case overview asked which categories make sense for Local. So we asked customers in our survey. They ranked them in the order listed on the slide. The case notes also mentioned Fresh Encounter’s efforts to source more Local products within produce, dairy, and meat. Based on our survey results, this is a good idea.
Consumers believe retailers can do a better job marketing the benefits of Local. For example, they cited deficiencies in sampling, variety, and finding the Local products.
Picture?
From the survey data we identified two different types of customers. The demographics are slightly different between the two groups. However it’s their attitudes and behaviors about Local that separates them. These different customers have different needs. Heavy local users demand authenticity and competence in a Local program, mainstream shoppers are still learning about Local.
As cited in the case overview Fresh Encounter stores faces formidable competition. They compete with multiple formats and major national retailers. In this cluttered environment, remaining relevant and being different are critical strategic issues.
In our survey consumers ranked Independent grocers as the third most sought out retailer to find Local products after Farmer’s markets and Natural food stores. They ranked above national chains, value retailers, Whole foods, and specialty food stores as an outlet where they expect to find local food.
In summary, we find 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 products. Intense competition requires differentiation.
For a successful Local program a consumer-driven definition of Local is needed. Characteristics and benefits need to drive Local program. Consumers expect Local products in multiple departments. And you will need to cater to the needs of two different customer groups.
Based on our findings Fresh Encounter should leverage a local program to create relevance and interest, to attract new and retain current shoppers in an intensely competitive marketplace. This is a real opportunity for Fresh Encounter stores, our survey showed 1/3 of shoppers are willing to switch stores to purchase Local products. Two target customers requires two sets of strategies. One for heavy local users and one for mainstream shoppers.
The objective for the heavy local user is to have them TRUST that Fresh Encounter stores have a credible local mission & commitment. This objective can be achieved through three strategies.
The first is to demonstrate knowledge & expertise
The 2nd is to develop DEEPER product offerings
And the 3rd is to drive legitimacy through suppliers.
We recommend Fresh Encounter stores implement two tactics to achieve strategy number 1.
They should expand the local shopping experience through digital technology.
This can be done through mobile apps, the store’s website, social media, and other digital media.
They should also train a local captain for each Fresh Encounter store.
This person will have personal experience and interactions with local products and suppliers.
They will be a passionate locavore, supplier lee-a-zon, and be connected to the community.
The local captain will also act as a store level champion & trainer.
They should be easily identified as the “local captain” & expert of the store.
to achieve strategy number 2, they should expand variety by adding products to the categories prioritized in our shopper survey, and by having local products available year round.
They should also scale & leverage grow for it.
They should take their existing Grow For It program and scale it up by developing a hoop house garden in each major market to supply clusters of nearby Fresh Encounter stores.
As demonstrated on this slide each market has one Grow For It Garden to supply 5-6 FE stores
The current single Grow For It site has a surplus of products (tomatoes) which could now be distributed to other stores in its network
The 5-6 gardens would continue to function as CSAs as the current Grow for It garden does.
Invite Heavy local users to visit & participate.
Shoppers will now have the opportunity to experience a local growing operation directly. The distance may be only a few miles from the store.
To achieve strategy number 3, they should implement 3 tactics.
First, Share local program results with shoppers: Where products come from, impact on farms, economy, community, and product quality.
This can be shared through printed materials, digital, or signage.
Second, host Supplier Events that actually bring suppliers into the store to meet shoppers & share the story behind the products.
And the last tactic for the heavy local user will be to maintain an ongoing supplier presence in the store through media such as maps, pictures, and videos.
The objective for mainstream shoppers is to help them realize and appreciate the benefits of buying local from Fresh Encounter stores.
This objective can be achieved through 3 strategies.
The first is to define local and build awareness.
The second is to demonstrate freshness, quality and taste of local products.
The third is to create a structured program.
We recommend they implement three tactics to achieve strategy number 1.
The first tactic is to formally define “local.”
Based on our survey results, we offer the following definition:
A local product is one which comes from a family owned or smaller scale business that’s part of the community
Within 100 miles
If not Ohio itself
For the second tactic they should integrate local products into circulars with weekly free standing inserts showcasing “featured local items”
For the third tactic they should create department specific local displays
This addresses the primary merchandising question posed in the case briefing.
We recommend the hybrid option number 3, a series of displays across the store,
specifically, in 4 of the departments prioritized in our survey.
These displays should be supported by authentic décor, fixtures and signage.
We think this is the solution because the majority of verbatim complaints in our survey were related to the difficulty of finding local products throughout the store.
To achieve strategy number 2, they should provide recipes and sample local products.
Recipe cards will help my generation discover and experience new products.
In our survey, sampling was cited as the greatest marketing area needing improvement.
They should also use multiple touch points in the store to call-out and communicate the freshness, quality and taste of local products. Recall, these were the three most important benefits sought by shoppers in our survey.
Touch points could include signage, banners, shelf tags and register receipts.
To achieve strategy number 3, we recommend they leverage the local department displays recommended earlier.
We recommend they leverage signature local products. These would be current products such as craft beers, Grow for It’s heirloom tomatoes, and Jenni’s ice cream. These products get attention and communicate the overall value of the program.
We recommend they create a LOCAL brand that identifies and communicates the overall value of the program.
Create an umbrella brand and identity for the local program to help communicate the benefits of buying local and help shoppers find local products throughout the store and recognize their origins and qualities.
On this slide is an example of a brand logo that could be used in this way.
As an example, we used the brand name, local signifies the program.
We used fresh to signify the most important attribute of local foods.
Encounters suggests interaction with suppliers and the discovery of new product.
The image connects to the local source of the products.
On this slide is an example of a brand and logo that could be used in this way.
Notice your current tagline, Always Fresh, Always Local, fits with the proposed identity quite well.
Follow consistent use and treatment of the brand on displays, signs, packaging and in media.
We’ve also considered the timing of these activities.
The first set of activities are related to correct product assortment.
The second is related to store set-up.
The thirs is related to communicating and promoting the program.
We’ve also considered the economics of the program.
To do this, we looked at average sales per square foot according to FMI,
Average selling area square footage for Fresh Encounter stores, and
The typical percentage of marketing spend by a food retailer
We allocated 10% of that budget to the local program.
Based on this calculation, there would be a yearly budget of $125,000 dollars, which equates to $4300 per store.
Balls Food Stores is an independent chain of approximately 30 stores that developed a signature local program several years ago. They’ve realized a 20-35% increase in local food sales year over year.
We suggest a conservative estimate of a 12% increase for Fresh Encounter.
Balls Food Stores also found that their customers’ average basket size increased, as did customer count, because of the program. Additionally, their program began with signature hot house tomatoes – sound familiar? (may reword)
We began by recommending Fresh Encounter stores leverage a local program to create relevance and interest to attract new and retain current shoppers in an intensely competitive marketplace.
To do that, we’ve identified two different groups of customers and objectives for each.
Based on our primary research we recommended a series of strategies and tactics to serve them with a local program.
We also considered the scheduling, costs and returns of the program.
Based on our recommendations, Fresh Encounter can offer an interesting and engaging local program that will differentiate them from competition, make them relevant with shoppers, and give them a reason why to visit Fresh Encounter stores.
Thank you and we now open the floor to questions!
