Danish non-food chain accelerates expansion

Søstrene Grene had its strongest financial result in the company’s history in the latest financial year, according to its CEO, Mikkel Grene. The Danish company increased sales by 22% and profit went up 15%.

Its stores offer a wide assortment of home interiors, kitchen items, hobby articles, beauty, travel items, party supplies, gift wrapping, stationery, toys as well as seasonal items. Every week, new products land in stores. Prices are low, most products are sold under 10 euros.

The concept is different from other non-food discounters in that the atmosphere in the stores is special, focused on aesthetics and ambience, appealing to the customers’ senses. Goods are on wooden shelves and wicker baskets, with warm light and delicate colours. The layout draws the consumer into the depths of the store, while the sense of time is quickly lost. Almost all the items in the store are own brands.

After the strong results of the past 52 weeks, the company now wants to take the opportunity of the momentum and expand its network of over 300 stores to a targeted 500 stores within the next three years. The company operates stores and web shops in 16 European countries.

Countries, big brands strike out at popular Nutri-Score

Despite its widespread appeal, Nutri-Score has faced pushback in several countries, including Italy, Romania, Greece, Cyprus, the Czech Republic, and Hungary. Authorities in these nations argue that the system unfairly penalizes traditional products, such as those commonly found in the Mediterranean diet. Critics contend that Nutri-Score oversimplifies food evaluations by focusing on select nutritional factors, which can distort consumer understanding of a product’s overall health value.

In addition to governmental objections, major brands like Danone, Heineken, Unilever, and Arla Foods have expressed reluctance to adopt Nutri-Score on their product packaging. These companies argue that the algorithm used to calculate the scores doesn’t align with their national dietary guidelines, or that recent changes to the system have downgraded their products to lower categories, resulting in what they believe to be unfairly low scores.

Nutri-Score, a front-of-pack label (FOPL) system, uses a color-coded, traffic-light-like design to rate the nutritional quality of packaged foods based on their fat, sugar, salt, and calorie content per 100 grams or millilitres. A “Green A” signals the healthiest option, while a “Red E” represents the least nutritious.

Recent revisions to the Nutri-Score system have reclassified dairy and plant-based beverages. For example, solid yogurt, considered a meal food, is classified differently from drinkable yogurt, which is viewed as a beverage often consumed between meals, moving it from the general food category to the beverage category. This shift had a significant impact on product ratings, as the algorithm applies different nutritional criteria depending on the product category. As a result, certain dairy products that previously held high ratings of “A” or “B” dropped to lower ratings of “D” or “E,” largely due to their sugar content or the use of alternative sweeteners.

In the beverage category, only water maintains the top rating of a “Green A.”

Packaging at crossroads

The forthcoming EU Packaging and Packaging Waste Regulation (PPWR) is set to reshape the packaging landscape across Europe. The new legislation aims to drastically reduce packaging and packaging waste and will be implemented gradually starting mid-2026. It establishes ambitious goals for manufacturers and retailers, impacting both branded products and private label.

A turning point for packaging! A new era for packaging! Revolutionary! Game-Changing! Experts keep on finding new words to express what an immense change this law will bring. The final version of the law is expected to be published before the end of this year, officially setting the timeline for implementation. So, how will the PPWR impact the private label sector? The answer is clear: it will significantly alter how packaging is designed, consumed, and disposed of throughout the entire EU value chain. Businesses need to be ready.

As part of the EU Green Deal, the regulation has three core objectives: to reduce packaging waste, promote high-quality recycling, and establish uniform rules across all member states. While there was previously an EU directive on packaging waste, it allowed individual countries considerable flexibility. Now, with this regulation, standardized guidelines will apply across the board, with stricter enforcement.

To address these changes, PLMA will hold an in-depth conference on all aspects of packaging on 30 January 2025. The event will not only focus on the new PPWR legislation, but will feature a diverse range of packaging related presentations, covering topics such as private label packaging trends, innovation, creative design, sustainability, a look into the future, and consumer perception. It is a must-attend for anyone in the private label industry. For more information, click here.

Come and go in Everest Alliance: Aura Retail in, Super U out

In a surprising turn of events, Cooperative U, operator of the Super U supermarket chain, is set to part ways with the international purchasing alliance Everest, as well as the Epic alliance. The retailer joined the alliance only two years ago, partnering with the other members Edeka, Picnic and Jumbo. The split is reportedly due to internal disagreements among the partners, potentially around strategic approaches or negotiations. Everest negotiates purchasing prices for its partners with more than 50 multinationals. Epic Partners includes Edeka, Jumbo and Picnic, as well as Migros Group, Jerónimo Martins and Esselunga. Epic negotiates with major suppliers for top-quality conditions for international marketing campaigns.

Just days after Cooperative U’s departure was announced, Everest and Epic welcomed a significant new member: Aura Retail, a French food purchasing powerhouse. Aura Retail stated that it wants to negotiate the best pricing conditions with the biggest multinational manufacturers, thus allowing more advantageous prices for its customers. With Aura Retail now onboard, Everest is expected to rival the size and influence of Eurelec, a key alliance between E. Leclerc, Rewe, and Ahold Delhaize.

Meanwhile, Aura Retail, Everest’s new partner, recently published details of this new partnership forged between Intermarché, Auchan and Casino. The French alliance comprises five operational structures offering purchasing partnerships between the three groups for an initial period of 10 years. For food purchases, Aura Retail will be made up of three central purchasing units managed by Intermarché. For non-food purchases of national brands, two structures have been set up by Aura Retail and managed by Auchan. Private label is part of the portfolio of the alliance.

With the departure of Cooperative U and the entry of Aura Retail, Everest is undergoing a significant transformation. The evolving makeup of these international purchasing alliances reflects the increasingly complex and competitive nature of global retail. As large retailers seek to enhance their negotiating power with multinational suppliers, these alliances will continue to shift in response to both internal dynamics and external market pressures.

The inevitability of AI in retailing never more apparent

Artificial intelligence is increasingly being integrated across various functions within retail businesses. Carrefour recently demonstrated how it leverages AI to enhance its commercial offerings and optimize stock management, both in stores and warehouses. AI tools assist store managers in making data-driven decisions about product placement, quantities, and shelf arrangement. These algorithms consider factors such as location, weather, and population demographics, providing precise insights for decision-makers. Additionally, AI is now being used for pricing and promotions, tailored down to the store and product level. Data from loyalty cards or apps plays a crucial role, offering models real-time, customer-specific purchasing behaviour.

Tesco is another retailer harnessing the power of AI. It has announced plans to utilize AI to introduce a new initiative: using loyalty card data to encourage customers to choose healthier and more affordable alternatives. By analysing customer shopping habits, the AI will provide personalized product suggestions aimed at delivering greater value to shoppers.

Albert Heijn has introduced a new feature in its app, called "Scan & Cook," aimed at helping customers reduce food waste. The feature allows users to snap a photo of items in their fridge or pantry and upload it to the app. Using this technology, which will be further enhanced throughout the year, the app then transforms the ingredients into personalized, delicious recipes with just one click. This is one of the Generative AI applications that Albert Heijn has developed, implemented, and is now rolling out.

IN CASE YOU MISSED IT: The 2024 PLMA Salute to Excellence Awards®

Get a behind-the-scenes look at the judging ceremony for the 2024 PLMA Salute to Excellence Awards®

Notable Quotable: Kim Coffin, Sprouts

“Life can be overwhelming, but taking care of yourself shouldn’t have to be. Real Root by Sprouts products focus on wellness, delivering a restorative experience that nurtures both inner and outer well-being.”

- Kim Coffin, Chief Forager of Sprouts Farmers Market, on the launch of Real Root by Sprouts, a store brand line of more than 130 premium body care, personal care and home fragrance items.                
 

IDEAS AND INSPIRATION: Target, Walmart, Whole Foods

- A cast iron 7.5-quart braising pan and 12-inch fry pan are among the new additions to the 365 SoapTabitha Brown for Target kitchenware line.

- Walmart’s Bettergoods fully cooked frozen chicken wings with garlic butter dry rub are among the store brands the retailer is promoting for tailgate season.

- Pumpkin Crumble, Lakeside Leaves and Honeycrisp Apple are among the fall scents available in a limited-edition line of foaming hand soaps at Whole Foods Market. 
 

Wawa Takes First Place in C-Store Customer Study

Wawa earned the top score (82 out of 100) in the American Customer Satisfaction Index (ACSI®) Convenience Store Study 2024.

QuikTrip finished second with an ACSI score of 81, followed by Buc-ee’s and Murphy USA, at 80 each.

A robust set of food options is a main reason for the high scores. Examples include hoagies from Wawa and QuikTrip’s QT Kitchens®. Buc-ee’s has a reputation for a wide variety of on-the-go food options, and Casey’s General Stores, with a satisfaction score of 79 (same as Sheetz), is a go-to option in the Midwest for pizza, both traditional and breakfast varieties, according to the report.

Nearly all reported chains have scores exceeding the industry average (76).

Most convenience stores are investing in enhancements to the customer experience by adding more customized food offerings, larger merchandise selections, enticing rewards programs, and mobile ordering services, according to the report.

“Convenience stores are no longer just a quick stop for gas and snacks — they are becoming serious competitors in the food service industry,” Forrest Morgeson, Associate Professor of Marketing at Michigan State University and Director of Research Emeritus at the ACSI, said in a statement. “By focusing on the in-store dining experience, while maintaining the speedy service that customers have grown accustomed to, convenience stores may have found the perfect recipe for success.”
 

Survey: Grocers Plan to Increase Private Label Investment

Eighty-four percent of food retailers and manufacturers surveyed say that private brands are extremely important to their organizations and 93% plan to moderately or significantly increase private label investments in the next two years, up from 82% a year ago, according to FMI – The Food Industry Association’s “The Power of Private Brands 2024: Industry Strategies to Sustain Momentum” report.

Key areas of investment include adding capacity and value through innovation and new product development in growth opportunities like premium, best value, health and well-being, products with simple/clean ingredients, and frozen and fresh foods, according to the report.

Price (71%) and good value (72%) are top reasons cited by shoppers for buying more private brand items, and 80% of food industry respondents believe that private labels continue to perform well in terms of driving growth of customer purchases via delivering value.

However, more than half (54%) of retailers are focused on emphasizing the value of private brands beyond price, focusing on other areas that motivate consumers’ private brand purchases, including quality, taste, and meeting meal solution needs.

Eighty-one percent of food industry executives said that appealing to younger consumers is the top area of importance, along with emphasizing value/price, to driving private brand growth.

Both food retailers (69%) and manufacturers (52%) cited digital marketing as a top strategy to attract younger consumers from digital-native generations. Additional strategies cited by retailers and manufacturers were increased use of samples (33%), leveraging shopper insights (30%), boosting convenience (25%) and enhancing ecommerce experiences (20%) through improved search functionality, suggestive selling, and more compelling online product images.