Whole Foods and Instacart end partnership, 56 workers let go

Whole Foods and Instacart announced earlier this month that the two companies have "mutually agreed" to end their delivery services partnership, effective May 15. As a result, 56 Philadelphia-area workers have been laid off.

The end of the Whole Foods - Instacart relationship did not come as a surprise to industry analysts, many of whom predicted the change since Amazon purchased Whole Foods in 2017. Whole Foods currently offers Prime Now, a one- and two-hour delivery service in more than 60 U.S. cities, including Philadelphia.

Instacart remains a strong presence in the Philadelphia market, as it has relationships with Reading Terminal Market, CVS, Aldi, Sprouts Farmers Market, Sam's Club, Wegmans, Acme, and Costco. Overall, the company is in 5,500 cities and delivers from nearly 20,000 stores.

"The U.S. is nearly a $1 trillion grocery market, and last year we saw almost every major grocer in North America bring their delivery business online in a significant way," said Instacart CEO Apoorva Mehta in a statement last year. "We believe we're in the early stages of a massive shift in the way people buy groceries, and we expect that one in five Americans will be shopping for their groceries online in the next five years."

Plans submitted for first Delaware Wegmans

The state of Delaware is slated to get its first Wegmans supermarket. According to WDEL.com and Pettinaro Development, the store would be located at Barley Mill Plaza in Greenville if approved by New Castle County Council.

If approved, Wegmans would be an integral part of a multi-use plan that includes office, retail, apartments and townhouses.

Price comparison finds Whole Foods and Acme as most expensive in Greater Philly

A December story on Philly.com reported the findings of a Consumers' Checkbook study that compared prices of 19 grocery stores in the region. The lowest prices? Walmart. The highest? Whole Foods.

"When Amazon purchased Whole Foods last year, many consumers were excited by the prospect of paying Amazon-like prices for Whole Foods-quality products," said Checkbook Executive Editor Kevin Brasler. "But we're not there quite yet."

Checkbook staff members checked prices on 154 common items, and they surveyed thousands of consumers to assess the quality of the products and services offered at the stores. Although Whole Foods scored poorly on price, it was one of the highest rated grocers.

Unfortunately for Acme, it was not only one of the highest-priced grocery chains, but it was also one of the lowest rated. Only Whole Foods was more expensive.

The highest rated store in the region was Wegmans, and their prices came in at three percent below average.

Trader Joe's tops annual Retailer Preference Index

According to Dunnhumby's second annual Retailer Preference Index (RPI), Trader Joe's was the top grocery retailer, followed by Costco, Amazon, H-E-B and Wegmans. In a survey of 7,000 U.S. households, the RPI examined 56 grocery retailers to determine which companies have the strongest combination of consumer emotional sentiment and financial performance.

Market Basket finished 6th, followed by Sam's Club, Sprouts Farmers Markets, WinCo Foods, Walmart, Aldi, Peapod and The Fresh Market.

Dunnhumby said the rankings focused on seven "pillars": price; quality; digital; operations; discounts, rewards and information; convenience; and speed.

The company concluded that the top retailers on the index are mostly nontraditional grocers that have developed a highly targeted offering to bolster the value perception for their customer base.

"More traditional, regional grocery banners with a long history are hurting because of it, having relatively poorer-performing financials and/or emotional bonds," Dunnhumby said. "The reason: These traditional banners have inferior price perception and/or quality."

Trader Joe's also finished atop the rankings last year.

Trader Joe's proposed for Cherry Hill

Plans presented to Cherry Hill officials earlier this month reveal that a Trader Joe's store is proposed for The Shoppes at Garden State Plaza. TJ Maxx and HomeGoods are proposed as well.

If approved, the new stores, along with a Shake Shack restaurant, would be built on Haddenfield Road and Garden Park Boulevard, between Pier 1 and PNC Bank. Previous plans had called for townhouses to be built on that location.

Several projects in the shopping center complex are still pending, including a Costco.

The Market Place at Garden State Park, which is connected to The Shoppes, includes Wegmans, Home Depot, Barnes & Noble, Best Buy, Dick's, Bed Bath & Beyond, Christmas Tree Shops, and several other retailers and restaurants.

Two women visited all 97 Wegmans stores in one week

According to several news reports, two "Wegmaniacs" decided to spend their vacation time by visiting all 97 Wegmans stores in one week. Yes, two women traveled nearly 4,000 miles in six states doing nothing but driving to and from Wegmans.

Apparently they documented their journey on Instagram. I don't know the account name, and I've already wasted enough of your time.

Study finds that most consumers still want to buy groceries in stores

According to a recent Forbes.com story, The Food Marketing Institute estimates that online grocery sales will reach $100 billion by 2025, or about 20% of the grocery retail market. Today it is estimated that 2.0% to 4.3% of industry sales originate online.

Amazon currently leads the way in the online grocery market, with an 18% share as of December 31, 2017.

However, a new study by Morning Consult revealed that a majority of Americans prefer the in-store shopping experience over online shopping when it comes to groceries. According to the study, 65% of consumers say they have no interest in buying food and beverages online, even when their options improve.

The study (conducted in May among 2,200 American consumers) also found the following:

• One-third of those surveyed had previously purchased food or beverage products online at least once. 
• Early-adopters of online grocery shopping consist of high-income shoppers ($100k+; 45% have purchased groceries online), GenXers (39%), middle-income shoppers ($50k - $100k at 38%), men (38%), millennials (38%), and urbanites (36%).
• Of the consumers who have ordered groceries online, 56% have only done so a few times per year.
• Of those shoppers that purchase groceries online on a weekly basis, middle-income shoppers are way ahead of those with high incomes. Affluent shoppers prefer to shop in physical stores for their weekly groceries. And since typical affluent households spend 75% more on food than the average shopper, the study describes them as store shoppers that really matter. These high-income consumers have remained loyal to shopping for groceries in person.

Based on the findings, Morning Consult stated that enhancing the in-store shopping experience is the bigger opportunity that food retailers are overlooking in their race to home delivery of online orders.

According to Morning Consult, "By trying to push more grocery sales online, retailers are depriving themselves of the opportunity to entice shoppers to spend more in-store through attractive displays, strategic merchandising, helpful and friendly personnel and mouth-watering sight, smell and taste experiences that can only be found in-store. Just go to any Wegmans to see how exciting and fun grocery shopping can be. This is where grocery stores can really clean up."

Wegmans named easiest company for customers to work with, Wawa also top performer

Last week the Temkin Group published the 2018 Temkin Effort Ratings, which the company calls the industry's most comprehensive benchmark of customer effort. This measurement shows the degree to which customers view companies as either easy or hard to work with.

The winner? Wegmans Food Markets.

Temlin has proclaimed Wegmans as the "easiest company for customers to work with," with an overall score of 90 percent. Other top performers noted in the study were Subway, Citizens Bank, Ace Hardware, and Wawa Food Markets, all with 89 percent scores. USAA and Publix were close behind at 88 percent.

The worst ratings belong to Spirit Airlines, Medicaid and CarMax.

According to the Temkin Group, supermarkets, fast food chains and retailers earned "excellent" ratings (above 80 percent), while health plans and TV/Internet service providers earned "poor" scores (below 60 percent).

Instacart raises money to fuel expansion, add employees

Instacart announced last month that it received $350 million in financing from Coatue Management, a technology-focused hedge fund, and noted that it has raised more than $1 billion since 2012, with most of it still in the bank.

According to the company, the additional funding will be used to double its employee count, fuel expansion, and invest in new products and services.

Instacart is now used by North America's eight largest grocery retailers - Kroger, Albertsons, Publix, Costco, Ahold Delhaize, H-E-B, Loblaw and Sam's Clubs, not to mention regional grocers like Wegmans.

Supermarkets lead customer experience survey; Wegmans tops all companies

The Temkin Group, a research and consulting firm, said earlier this month that its 2018 Temkin Experience Ratings survey of 10,000 U.S. shoppers revealed that supermarkets were tops in customer experience ratings among 20 industries evaluated.

Supermarkets posted a rating of 78.5%, up from 78.1% in 2017. The industries near the top of the list include retail (74.4%), banks (73.1%), and parcel delivery (71.9%). A score of 80% or above is considered "excellent," 70% or higher is "good," and below 60% is deemed "poor."

Ratings are determined by customer responses in three main categories - success (can you do what you want to do?), effort (how easy is it to work with the company?), and emotion (how do you feel about the interactions?).

Overall, Wegmans turned in the top rating of all 318 companies included in the survey. The Rochester, NY-based food retailer had an overall customer experience rating of 86%. Among supermarkets, H-E-B, the top company in 2017, and Publix tied for second with a score of 83%.

Rounding out the top 10 scores among supermarkets for overall customer experience were Aldi and Wawa (82%), Trader Joe's and ShopRite (81%), Save-A-Lot and Food Lion (80%), Meijer, Kroger, Hy-Vee and Winn-Dixie (79%), Albertsons (78%), Safeway and Piggly Wiggly (77%), Stop and Shop (76%) and Vons (75%).

Investments in grocery-anchored centers grew in 2017

Investments in grocery-anchored shopping centers grew by 5.3% last year compared to 2016, according to a report issued by Chicago-based Jones Lang Lasalle (JLL). The increase makes the grocery-anchored segment one of the few retail sectors to see real growth.

The report also stated that grocery store openings declined by 29% in 2017, with several retailers cutting back on expansion plans and others shutting stores as they attempted to avoid bankruptcy.

"Grocery is considered to have a moat around it to defend against e-commerce, and because of that, these assets are seen by retail property investors as a safe investment," according to JLL.

A Supermarket News article points out investing in supermarket-anchored centers is not 100% safe, as Amazon and other e-commerce firms make inroads into the market. As a result, many shopping centers run the risk of dying, like their regional mall counterparts anchored by weak department stores.

Tops Friendly Markets (upstate New York) filed for bankruptcy last month, and Southeastern Grocers (Bi-Lo, Winn-Dixie, Harveys) may file this month. A&P, once a major player in the grocery industry, filed for bankruptcy and liquidated in 2015.

Not surprisingly, shopping centers anchored by strong operators like Whole Foods, Sprouts, Trader Joe's, Kroger, ShopRite, Wegmans and Publix are among those that have the greatest investment potential.

Supermarkets in malls proving to be a win-win

Here in Greater Philadelphia, we are getting used to having supermarkets at the mall (Wegmans in Montgomeryville, Whole Foods in Plymouth Meeting, Sprouts coming to Moorestown...), but it's still a new concept in many parts of the county. Industry analysts believe we will see several more supermarkets lease space in malls in the coming years.

"With the fast-paced nature of America, shoppers want to be as efficient as possible when running errands," said Displaydata Marketing Director Paul Milner. "Grocery stores in malls could give Americans the benefit of a one-stop shop for all of their needs... This transition is another step towards providing shoppers with the advanced and friction-less shopping experience that the American consumer demands."

Milner also sees supermarkets in malls as a winning proposition for landlords. Mall owners, often stuck with a declining retail property, can transform their asset into a destination allowing consumers to complete all of their shopping in one place. He warns, though, that parking could be a deterrent if shoppers have to carry their groceries too far.

ShopRite tops in New Jersey with 139 stores

A story on NJ.com last month listed the 10 biggest supermarket chains (by number of stores) in New Jersey. Here's the list.

ShopRite - 139 stores
Acme - 77
Stop & Shop - 61
Target - 44
Aldi - 42
Walmart - 29
BJ's Wholesale Club - 23
Kings Food Market - 23
Save-A-Lot - 22
Key Food - 22

Stores in New Jersey with fewer locations include Whole Foods, Trader Joe's, Wegmans, Weis Markets, and soon... Lidl.

Instacart to service PriceRite stores in PA's Lehigh Valley

PriceRite Supermarkets announced yesterday that it is expanding its partnership with Instacart to include the Lehigh Valley, where the grocer has two stores - one each in Allentown and Bethlehem. Instacart already operates in the Lehigh Valley, where about 206,000 households can shop online at Wegmans, Whole Foods and Costco, and have their purchases delivered to them for a fee.

Instacart is already offered at many PriceRite locations in Connecticut, Maryland, Massachusetts, New York, Rhode Island and Virginia.

Aldi to add Instacart online shopping in select markets

Aldi announced Monday that it would begin offering online ordering and delivery later this month via Instacart in Atlanta, Dallas and Los Angeles, with "potential for future expansion."

Instacart currently serves nearly 40 markets in 25 states, and provides online ordering and delivery for companies like Whole Foods, Wegmans, Giant, and others.

Wegmans tops Consumer Reports list again

Wegmans grabbed the top spot in a survey of grocery chains conducted by Consumer Reports, which received feedback from nearly 58,000 subscribers. Wegmans has held the top spot in the annual survey since 2006.

For 2017, the company received excellent ratings in categories such as cleanliness, fresh store-prepared foods, staff courtesy, checkout speed, produce quality and variety, meat/poultry quality, healthy options and local produce quantity.

Market Basket finished second, followed by Trader Joe's, Publix and Fairway Stores. Costco and Aldi received good marks, while Whole Foods, Kroger, BJ's, ShopRite, Giant and Weis were further down the list. Acme received poor marks, and Walmart finished last.

Instacart partners with Giant, Wegmans

Instacart announced that it has joined forces with Giant and Wegmans to bring online shopping and delivery to customers in select areas for the two food retailers. Giant's partnership will benefit Philadelphia-area customers, and the service for Wegmans will be available in Northern Virginia and Maryland.

With Instacart, customers in the service areas can order groceries online from Giant or Wegmans for a small fee, and have them delivered within the same day,  often within one hour.

Giant already offers Peapod, a similar service to Instacart, but Peapod only guarantees delivery for the next day.

Instacart has served Philadelphia customers since 2014, when it signed on with Whole Foods and Reading Terminal Market.

For Wegmans, the Instacart deal represents the first online ordering and delivery offering from the company. It is expected that additional markets will be added in the near future.

Wegmans plans openings for two North Jersey stores

Wegmans announced that new stores in Hanover, NJ and Montvale, NJ will open this year on July 23 and September 24, respectively. Each store will feature a Burger Bar, which is Wegmans' in-store restaurant counter. They will also have wine, beer and spirits shops operated by a third-party.

The stores are the company's closest locations to New York City so far. A Rochester, NY newspaper reported that stores may be coming in 2018 to Westchester County and Brooklyn.

Food deflation and competition hurting supermarket profit margins

A story this morning in USA Today reported that "low food prices and razor-sharp competition" are putting a serious dent into grocery chain profits. However, the issue is good news for consumers, who last year saw the first annual decline in supermarket prices since 1967.

According to Supermarket Analyst Phil Lempert, the low food prices and competition have created "a price war among everybody." This price war, combined with supermarkets' efforts to attract new customers (mainly via investments in pricing), have badly hurt profit margins.

According to the Agricultural Department's Economic Research Service, prices of supermarket items declined 1.3% in 2016 compared to the year before. The article cites confirming evidence from Wegmans and Costco, both of whom provided examples of recently lowered prices on items like bananas, peanut butter, eggs, pistachios and laundry detergent, among others.

The USDA said that meat, chicken and eggs have seen some of the biggest price cuts due to oversupply and lower than expected exports.

Kelly Bania, a senior analyst at BMO Capital Markets, added that "we're definitely in a prolonged deflationary period."

Weis Markets unveils in-store pub, ice cream shop and drive-thru pharmacy

Weis Markets unveiled its "Community Market," a new store prototype, last week in Enola, PA, near Harrisburg. The 65,000 square foot store incorporates an in-store pub, ice cream shop, juice bar and expansive food court.

According to a PennLive.com story that was reported in Supermarket News, the store is designed to take Weis' service to the next level.

"We are sort of a middle-of-the-road supermarket," said CEO Jonathan Weis in the PennLive story. "We always have one eye on pricing and we compete with massive competitors such as Royal Ahold, Walmart and Wegmans, and others who do a tremendous volume. So that tempers our thinking. But, on the other hand, we have to be on trend. We want to be interesting, not boring or dull. We just have a philosophy that we're not going to be afraid to fail."

The new store protoype also includes a drive-thru pharmacy, a fuel center, and online ordering for in-store pickup. The company says it intends to incorporate elements of the new prototype into existing stores.