Retail Report: Natural Foods Buyout, Back-to-School

Back-to-School Ads

Start Late This Year

Back-to-school season is an important time for retailers. Not only does it mark an opportunity to sell apparel, school supplies and technology, it also leads into the even more critical holiday season. Interestingly, Advertising Age reports that this year brands took their time in advertising to parents and students. In fact, 2016’s ads started five days later than they did the year before.

The reason for the change in timing isn’t entirely clear. One explanation is that many school years now run well into the summer. Kids may not be interested in stocking up on notebooks and uniforms when they’ve only had a week or two of summer break.

In the recent Advertising Age piece, Miriam Tremelling, senior content marketing manager at Ace Metrix, said the delay could be tied to the fact that many children are still in school in late June, and retailers want to give them the chance to enjoy summer and “not cut it short.”

“Marketers may have decided to air their ads closer to when viewers need to pay attention,” Tremelling added, according to the story.

The article reports that back-to-school shopping also may be starting later in the year, which makes timing important. If brands and retailers start advertising too early, their efforts may be ignored. Promotions that get a late start may likewise be bypassed by consumers who have already begun or even completed, that year’s shopping.

For its part, the National Retail Federation is bullish on this year’s back-to-school sales, expecting as much as an 11 percent increase over last year’s spending, although it has noted in a recent press release that families are spreading back-to-school shopping out over a longer period of time. This may, in part, explain why some companies were in no rush to start advertising.

In addition, the NRF notes that parents and students plan to shop online this year in record numbers. In fact, shopping online is becoming ever more popular with both back-to-school and back-to-college shoppers.

Finally, shoppers remain concerned about reducing costs. In a recent NRF survey, families that are shopping for a return to school are looking to coupons and special in-store deals to manage expenses.

United Natural Foods

Acquires Gourmet Guru

United Natural Foods Inc. recently announced that it has acquired Gourmet Guru, a 20-year-old distributor of “emerging” organic and natural food brands in the New England area. UNFI distributes 90,000 different products to over 45,000 retail stores but is perhaps best known as the supplier for Whole Foods Market.

In a press release, UNFI emphasized that the acquisition would benefit its ability to serve the New England region.

“Gourmet Guru brings diverse skills in merchandising and service, targeting cities and high traffic locations, which will enhance UNFI’s unique ability to deliver on the most innovative and local brands,” said Kirsten Hogan, UNFI’s national vice president of retail services.

Jeff Lichetenstein, founder and president of Gourmet Guru, will remain with the company and is excited about joining forces with UNFI.

“UNFI recognizes the importance of helping exciting and new producers of fresh and organic foods, and Gourmet Guru is proud to become a part of UNFI,” Lichtenstein said. “We look forward to helping UNFI bring exciting and differentiated products to market.”

The acquisition happens at a critical time for the natural and organic food market. For years, organic and other “healthy” foods were considered a premium, specialty category. However, cultural changes have taken “natural and organic” from niche to commonplace. As a result, premium grocers like Whole Foods, as well as the brands that UNFI distributes, face stiff competition from lower-priced competitors. Aldi and Wal-Mart Stores Inc. both stock private-label organics at competitive prices, and other grocery chains are following suit.

In fact, UNFI’s stock took a tumble earlier this year, and there have long been rumblings about Whole Food’s stagnant numbers. Whole Foods decided to play against its high-priced reputation by developing the 365 store concept, offering organics and other healthy foods at lower prices. UNFI’s decision to acquire Gourmet Guru may indicate a recognition that working with new brands may be a key to remaining competitive in the face of the mainstreaming of natural and organic foods.

Walmart’s New ‘Good Neighbor’

Approach to Loss Prevention

Recent media stories have highlighted the problems that some Walmart stores have with crime. Local law enforcement agencies have sometimes reported a disproportionate number of calls to stores. In many cases, this is because Walmart is open late hours and is often one of only a few retail options in a given area.

“At night, they’re the only place that’s open, and where Walmart is the dominant retailer, they’re pulling in visitors from all over,” author Charles Fishman said, according to a Time magazine article. “They can easily generate more traffic than the whole town. By pure numbers, the crime is going to be where the people are.”

Fishman also notes that Walmart has invested in outside lighting and other security features to reduce crime outside its stores. Nowadays, many of the calls involve shoplifters. Because repeated calls can damage Walmart’s reputation, as well as create tension with local law enforcement, the retailer has sought alternative ways of dealing with those who steal goods from its stores.

One program that Walmart is trying is that of “restorative justice.” This process does not involve local law enforcement but instead allows first-time offenders to complete an online educational program designed to divert the individual from the criminal justice system. According to the Time article, at least one police department reports a 40 percent reduction in calls over the past year.

The courses are administered by third-party providers, and program participants are required to pay for the course. The course fee has triggered some criticism which argues that the fees may further complicate matters for shoplifters who are already having financial problems. A Walmart spokesman has stated that financial aid is available for some course-takers who may benefit from assistance.

For its part, Walmart appears to be satisfied with the program, seeing it as a way to be a good neighbor while reducing losses due to theft. As Walmart seeks to become the retailer of choice, particularly for millennials, creating a safe and secure shopping environment will be an important aspect of cultivating a community-conscious image.