In Frozen Food Merchandising, Eye Appeal is Buy Appeal

Merchandising is key to selling products in the retail sector, particularly frozen goods, which are sometimes overlooked by consumers. With the Deep Dive Survey from HIM! Research and Consulting showing that 42% of retailers in the United Kingdom agree that frozen food is important to the success of their business, getting merchandising right is vital.

It’s clear to see why store managers concentrate most of their efforts on perishable grocery products at the entrance of the store – after all, it’s easy to make brightly colored fruit and vegetables look enticing. However, when it comes to frozen products, it’s not quite that simple. This is why merchandising plays an integral role in the success of any frozen food line.

Freezer aisles in supermarkets are incredibly crowded, creating an environment in which brands really need to compete to be noticed. This is no mean feat when stocking frozen food cases and cabinets, as there are limitations to what can realistically be achieved.

New Forest“Frozen packaging needs to make even more of an impact to entice buyers,” said Christina Veal, director at Lymington, Hampshire, England-based New Forest Ice Cream. “As customers also have to make a more conscious effort to look in the freezer to view products, it is even more important that each product stands out and has visual appeal.”

One way in which retailers have started to add curb appeal in the frozen section is to introduce more premium products. From Lidl’s Croquembouche and Sainsbury’s Toffee and Pecan Roulade to the Asda’s Extra Special Golden Baked Salted Caramel Cheesecake and Tesco’s Finest Strawberries and Cream Tart – the majority of supermarkets are realizing the pull of premium in the freezer aisles.

Brioche Pasquier MACARONS CLASSIQUE“By offering a few well-chosen premium products from the freezer, an operator can draw attention to the frozen range and tempt customers into treating themselves,” said Matthew Grenter, sales manager at Milton Keynes-based Brioche Pasquier UK.

Standing Tall

One game changer in the frozen aisles was the move from chest freezers to open and upright models, which give greater scope for displays. The Iceland chain is a prime exemplar of the importance of innovative merchandising in the frozen sector.

ICELAND CLAPHAM PRESS 300“Iceland food stores introduced upright freezers which look like conventional refrigeration units, allowing them to stock produce facing the customer,” explained Paul Colback, a freelance retail innovation consultant. “They have invested in quality equipment, so three’s no condensation or ice formation on the glass, thus allowing customers to see all products clearly.”

Iceland Foods has been a pioneer in enhancing the reputation of frozen food and has achieved this through altering the customer’s experience in their stores. They manage consumer perceptions by taking shoppers on a journey, starting with the introduction of perishable items at the front of the store.

“They are establishing quality and reassurance early on in customers’ experience by offering fresh produce and food-to-go,” said Colback. “That first journey of managing what people are thinking about a store is vital.”

Word on the Street

Consumer insight is essential to improve merchandising, and according to IGD’s ShopperVista report, price is always at the forefront of shoppers’ minds. In fact, frozen meals ranked fifth out of 34 categories where price was an important consideration at the point of purchase.

“Although price plays an important role in shoppers’ purchase decisions, the majority of frozen meal shoppers are prepared to pay extra for what they perceive to be higher quality,” said Nick Downing, commercial director at IGD. “Frozen meals rank second out of 34 categories where shoppers agree that it’s worth paying a little extra to get better quality.”

Igniting consumers’ imaginations in the freezer aisle is essential to gain sales. From flavor innovation to unusual items rarely seen in the UK, frozen products have to work harder to earn their place on the shelves.

According to ShopperVista, flavor innovation is important to shoppers when it comes to frozen meals, as 28% chose a specific product because it was a different flavor or type that they wanted to try, versus a category average of 13%.

“Suppliers of frozen meals should look for opportunities to surprise and delight shoppers to increase experimentation,” said Downing. “For example: using new ingredients, different cuisines, seasonal or limited-edition products.”

He added: “Aligning innovation to different needs or occasions can increase product consumption and may attract new shoppers into the category. For example: developing meals for a dinner party, or late evening snack, or meals to consume post-exercise.”

Location, Location, Location

The position of products can have a huge impact on sales. End displays are often more successful because they are highly visible to customers walking up and down the aisle, and they are synonymous with sales or offers. In fact, 48% of shoppers taking part in the ShopperVista survey agreed with the following statement: “If a product is displayed at the end of an aisle I assume it is on special offer.”

Furthermore, 67% always particularly look at end of aisles for promotions, making them an essential tool to maximise promotional sales.

It’s these types of promotional strategies that can result in a change in shopper behavior. Price reductions will result in impulse purchases, pushing trials of new products, and multi-buy offers will help to increase basket size. The IGD report found is that consumers often struggle to determine if special offers are good value for money, therefore providing both the promoted price and the savings made may increase buy appeal.

Once again, Iceland Foods has tackled the issue of clear communication with customers by introducing digital displays in some stores that can relay a range of information to consumers.

“In place of a conventional piece of card with the product cost, stores can utilize digital technology to not only communicate prices and deals, but promotions, recipes, provenance and attractive imagery,” said Colback. “It allows stores to tell a story.”

Merchandising has the potential to alter the spending habits of customers, thus increasing spend. Although this is harder to pull off in the frozen food sector, innovation in terms of packaging and display, as well as investment in more customer-friendly freezers, has improved both customer experience and retail sales dramatically.

Frozen Facts

Here are some interesting statistics, courtesy of IGD’s ShopperVista:

  • Shoppers are moving to discounters to buy frozen food – one in five consumers are buying more of their frozen food from discounters now compared to 12 months ago
  • 59% of symbol stores, 11% independents follow planograms
  • 3% of transactions in symbol convenience stores include a frozen purchase.

All in all, the evolution of “smart selling” in frozen food aisles continues apace thanks to new merchandising techniques taking advantage of digital technology, development and new generation equipment. – Reported by Sarah Welsh

Bühler Gathering Puts Spotlight on Challenges in Global Food System

How will the food industry feed nine billion people healthily and sustainably in the not too distant future?

buhler logoBühler addressed this issue, together with key customers, scientists and partners at the Bühler Networking Days gathering in Uzwil, Switzerland, August 22-24. Approximately 750 participants took part in the event.

The challenges for the food industry are enormous. Around 65% of global water consumption and 25% of all energy use is related to food and feed production. The world population is still growing and more than 30% of all food is wasted. Far too many people in developed countries are overweight or obese, with an estimated impact of US $2 trillion worldwide. At the same time, an estimated 840 million people suffer from hunger or malnourishment.

The world population is predicted to grow to over 9 billion by 2050. Feeding humankind healthily and sustainably is a huge task for agricultural systems and the international food industry. Indeed, it is believed that even today’s production of animal protein is not sustainable. Only 40% of vegetable proteins (in the form of rice, corn, wheat or soy) land on our plates, with the rest ending up in the stomachs of livestock or as food waste. Despite efforts and political agreements, no turnaround to a sustainable economic model and grain value chain has been achieved so far.

NWD Stefan ScheiberBühler Group CEO Stefan Scheiber talks about “Innovations for a Better World” during his address at the Bühler Networking Days event.“We take the responsibility of the food and feed industry for a sustainable world very seriously. It’s time now that the private industry steps up and makes a difference,” said Stefan Scheiber, chief executive officer of the Bühler Group.

Bühler Networking Days were organized, among other things, to discuss major trends that are shaping the grain-processing industry, including developments in nutrition, sustainability, food and feed safety, and the Internet of Things (IoT).

“We want to anticipate megatrends and lead the discussion about how our businesses will evolve in the future,” said Scheiber. “Our industry plays a key role – since corn, rice and wheat are the most important staple foods for four billion people. And with the impending protein gap, grain processing will become even more important.”

During the three-day event speakers provided valuable insights into the latest developments in the areas of nutrition, food and feed safety, sustainability and IoT. Break-out sessions, expert tours and a major solutions space created an inspiring environment in which participants exchanged and developed ideas, networked and discussed how the grain-processing industry can successfully feed nine billion people healthily and sustainably.

Bühler’s long-standing commitment to educating and training customers to be able to operate the latest equipment sustainably was in high profile at the event, with the presence of the Swiss and the African Milling Schools, as well as the Swiss Institute of Feed Technology.

Every year, the company invests up to 5% of its turnover into research and development. The resulting innovations make a big difference in feeding a growing world population and reducing energy and water usage. During the Bühler Networking Days, the company presented more than 30 innovations in a specifically built exhibition area covering 1,800 square meters.

A number of newly developed solutions were launched during the event. Among them: the latest generation of pasta-drying technology, Ecothermatic, which boasts energy savings of up to 40%; and the Tubex high-precision scale, which is said to reduce energy costs by over 90%.

Iceland Foods’ Sales Dip in Challenging UK Retail Market

Iceland Foods has reported a 2.7% sales decline, to £2.675 billion, for the 52-week year-on-year period that ended on March 26. Adjusted EBITA (excluding exceptional items) amounted to $150.2 million, showing a slight improvement driven primarily by a strengthening of gross margins and control of operating costs.

iceland 2015Capital expenditure during the year rose to £63.5 million, up from £28.9 million in 2015.) This included major investments in a new electronic point of sale system, the introduction of LED lighting across all stores, and modernization of the company’s Manchester manufacturing facility.

As the overall sales drop was less than the 4.4% slide registered during the previous year, Malcolm Walker, chairman and ceo of the Deeside, Flintshire, UK headquartered frozen food retail chain, was upbeat when announcing the results on June 10.

“We have achieved good progress with a range of strategic initiatives designed to differentiate our business, and stabilize our financial performance, in what remains an extremely challenging UK marketplace,” he said. “Our ‘Power of Frozen’ marketing campaign is successfully re-¬emphasizing our long-¬established credentials as the UK’s leading frozen food specialist. It is also helping to improve public perceptions of frozen food by underlining the real advantages only it can offer to consumers in quality, authenticity, freshness, choice, convenience and waste reduction as well as in providing consistently good value.”

This new marketing approach has been combined with Iceland’s biggest-¬ever program of product development and enhancement, bringing many new distinctive and exclusive frozen lines into its stores, including the Slimming World range which was launched in February of 2015 and has grown into Britain’s number one healthy eating brand.

Iceland delivery 300Building on 20 years of expertise in home delivery, Iceland has developed a fast--growing online business that has been recognized in an independent survey as offering the best customer service in the United Kingdom. The company, which employs over 22,300 people system wide, makes 200,000 home deliveries to customers in the UK.

Iceland has also begun an accelerated roll¬out of its larger store concept, The Food Warehouse, operating at retail parks where foot traffic is growing faster than at outlets in traditional high street locations. These outlets target families and bulk buyers, as well as persons engaged in small- to mid-size foodservice businesses.

“Together these initiatives have delivered a moderation of the decline in our like--for-¬like sales, the planned stabilization of our EBITDA and continued strong cash generation,” said Walker. “Our like-¬for-¬like performance principally reflected a reduction in total customer transactions, partly offset by an increase in our average basket values. We benefited from sales generated by the nine net new stores opened during the year, and by the net 28 new stores opened in the previous financial year.”

Tough Marketplace

The UK food retail market remained exceptionally challenging throughout the year, due to the combination of intense competition, food price deflation and changing consumer shopping patterns. The “Big Four” food retailers in Britain have continued to be impacted by an array of competitors including limited assortment discounters, pound shops, convenience stores, more upmarket specialists and online retailers.
Iceland has been affected by the decline in high street footfall and a reduction in smaller basket sales because of the wide range of alternative outlets now offering everyday top-¬up shopping lines at deeply discounted prices.

Products, Pricing and Marketing

Iceland fish“Against this background, we have maintained our focus on highly competitive pricing and also sought to give consumers even more reasons to shop at Iceland through a major program of new product development, coupled with our ‘Power of Frozen’ marketing campaign,” said Walker. “One of our most successful initiatives has been a major expansion of our frozen fish and seafood range beyond the traditional British staples of cod and haddock to include lines such as sea bass, scallops, lobsters, Dover sole, red mullet, monkfish and red snapper. The quality and value that we can deliver by freezing fish at sea ensures that we can consistently outclass purportedly “fresh” fish offered by our competitors, much of which has in any case been previously frozen and defrosted for sale. All our new lines have been well received by customers across all demographics and in every part of the UK.”

The company reported having “also achieved great success” with the Slimming World range of prepared meals, soups and sauces, developed in conjunction with Slimming World and produced at the Iceland Foods facility in Manchester. Since launch of the first lines in February of 2015, this has become the UK’s fastest--growing prepared meal range and by far the country’s biggest healthy eating brand.

New ranges of Iceland frozen premium prepared meals, “superfoods,” soups and gourmet pizzas rolled out during the year have also performed well, while the chain’s new luxury range of starters, main courses, accompaniments and desserts helped to deliver a strong performance in the frozen food category over the key Christmas trading period.

Throughout the year Iceland has supported its brand with a substantially increased investment in marketing and public relations. The “Power of Frozen” campaign has embraced national TV advertising, billboards, press advertising and door drops, promoting the advantages of frozen food.

“Because it’s frozen, we are able to bring our customers top quality food from around the world at truly amazing prices: food that not only tastes good but also has authentic provenance, such as our genuine Italian pizzas and gelato,” said Walker. “Freezing minimizes the need for artificial additives and preservatives, helping our customers to eat more naturally and healthily. It also substantially reduces the amount of food that households waste, which is good for the environment as well as saving money.”

Store Count Rises

Iceland 2During the past year Iceland opened 16 new stores in the UK (including six larger operations under The Food Warehouse fascia) and closed 11 units, resulting in a net gain of five outlets and a total of 864 UK stores (including 12 Food Warehouse stores) at the year-¬end. Elsewhere, two new stores were opened in the Republic of Ireland and one in the Czech Republic, making for a net addition of nine stores across the group as a whole, and a grand total of 881.

The Food Warehouse

The number of Food Warehouse operations doubled from six to 12 during the year. These stores are based on a 10,000-square-foot concept (more than twice the size of the average Iceland store) doing business at retail parks, and designed to operate at a substantially lower cost than the traditional Iceland store model.

As well as the full Iceland range of frozen and chilled products, warehouse stores offer extended ranges of luxury and specialty frozen food, chilled meat and fresh produce, and a wide selection of value bulk packs of grocery products.

The company has also successfully tested a larger 15,000-square-foot store carrying a wider range of general merchandise. All the outlets are trading successfully and the concept has proved a valuable test-bed for initiatives in ranging and store operation that have then been applied across the Iceland core estate.

Shifting Grocery Shopping Patterns Forecast for 2016

Ordering groceries online and digitizing retail stores rank among the top trends in grocery shopping for 2016, according to John Karolefski, veteran supermarket watcher and purveyor of Cleveland, Ohio-based GroceryStories.com. He also predicts that grocers will lure more shoppers into stores with special events and dining options.

trends2016"The top trends for 2016 indicate that traditional shopping patterns are changing. Look for grocers get creative and enliven what has been a mundane chore," he said.

Karolefski lists his top trends for 2016 as follows:

Shopping Online
Ordering groceries online has been growing steadily for a few years in North America, but will surge in 2016. Many supermarkets that have not offered such an option will jump on board.

H-E-B and Hy-Vee supermarkets have recently opened impressive online stores. More grocers will join the 65 retailers partnering with Instacart, which lets consumers order groceries online and pairs them with a personal shopper who hand picks items at customers' favorite stores and delivers to the home. Also, there will be more testing of curbside pick-up of groceries that have been ordered online.

Digitizing the Supermarket
Retailers will look to connect digitally with smartphone-carrying shoppers, especially Millennials who will account for most grocery purchases as they start families. Grocers such as Marsh Supermarkets and others have equipped stores with beacons. These Bluetooth-enabled devices connect with nearby smartphones to send ads, coupons or product information to shoppers.

More grocers will install Electronic Shelf Labels (ESLs) now being tested by Kroger. ESLs display prices, ads and nutritional information. Meanwhile, all of Kroger’s stores are being equipped with temperature monitor sensors in the frozen and refrigerated food cases to ensure product quality and safety.

Shrinking the Supermarket
Less is more as grocers continue to open smaller supermarkets to cater to the needs of small households, especially in growing urban areas. These shoppers will cruise the perimeter for prepared food, dairy, baked goods and produce.

Hy-Vee now operates four 14,000-square-foot Mainstreet stores, Ahold has opened the first of its 10,000-square-foot "bfresh" grocery stores in Boston, and further north near Portland, Maine, Hannaford opened a 20,000-square-foot store with a focus on fresh foods.

shopping cart

Entertaining in Stores
Operators of large supermarkets will take advantage of their space to lure customers with special events. More product sampling, nutritional tours and cooking demos will take place.

Chefs at H-E-B stores prepare a variety of recipes every day as part of the Cooking Connection program. At Giant Eagle's Market District store in Solon, Ohio, it is Food and Wine Friday every week. Shoppers sample wines and hors d'oeuvres at serving stations throughout the store.

Dining in Stores
Before customers go about their grocery shopping, they can have a bite to eat or something to drink. Operators of many new large supermarkets are including a cafe with a light menu to nourish customers. For example, the lunch crowd at Mariano's in Wheaton, Illinois can enjoy pizza and other edibles in the cafe. Giant Eagle's Market District in Strongsville, Ohio has a full-sized bar next to a cafe. Starbucks are being added to the perimeter of more supermarkets for a quick coffee break while shopping.