Retailers’ approaches to selling specialty food are as varied as the product landscape.
At the Winter Fancy Food Show on Jan. 23, five retailers shared their points of view on what it means to be selling specialty foods today.
The panelists were (pictured left to right): Sam Mogannam, founder, Bi-Rite Family of Businesses in San Francisco; Freddy Cameron, general manager of operations, Sam's Club, based in Bentonville, Ark.; Mathis Martines, emerging brands & innovation leader, The Kroger Co., headquartered in Cincinnati; Suzy Monford, CEO of Andronico's Community Markets in San Francisco; and Bentley Hall, CEO of Good Eggs in San Francisco.
The discussion, which drew a large crowd and a sizeable line before the 8:30 a.m. start time, was moderated by Phil Kafarakis, president of the Specialty Food Association.
An Evolving Definition
Specialty food is a sales driver for retailers of all sizes. The industry topped $120.5 billion in 2015, according to the 2016 State of the Specialty Food Industry report. At retail, specialty food sales grew 19.7 percent between 2013-2015.
“To me, specialty food is where everyone is rushing to be,” said Monford.
However, “There has been an evolution the past 10 to 15 years that has really changed what specialty food means to us, the retailer, and what specialty food means to the consumer,” said Kroger’s Martines.
Restaurants and the availability of different cuisines has helped increase awareness of some specialty foods, added Martines. “It has made some of these fancy foods fairly commonplace. We are actually achieving the mission of bringing better food to more people.”
Kroger isn’t striving to replicate what an upscale independent retailer such as Bi-Rite is doing. “Someone like Kroger, what we try to do is to maintain our root with the local communities while providing these types of products that they request … We really understand that it may not be the right fit for us. We are really looking to customize so that we are finding the best fit for us and our communities.”
Looking for the Story
“For us, it’s a product that tells a story,” said Sam’s Club Cameron. “It’s local, it’s creating a unique atmosphere. Our mission is to find unique, hidden gems.”
When it comes to product attributes, Sam’s Club is also “looking for products with clean and natural ingredients,” to add to its repertoire of bulk-sized items, said Cameron. It is not uncommon for the discounter to seek out specialty foods and work with the producer to develop a larger size and perhaps a slightly different label for its 656 membership warehouse clubs.
For online retailer Good Eggs, 84 percent of its business is selling is local, craft or artisanal food, said Hall. The online retailer delivers groceries to Bay Area residents seven days a week. “It is our reason for being; however nobody eats solely that way,” he said. “We have fewer SKUs. It’s our job to curate what’s there.”
Product selection and inventory management are concerns of retailers of all sizes. When asked how he gets so many SKUs into his two 2,500-square-foot Bi-Rite stores, Mogannam confessed, “I love puzzles, and Bi-Rite is a day-to-day puzzle.”
But the point of difference between the traditional market and Bi-Rite is “we are deeply rooted in our values,” said Mogannam. “We understand not just sellers of food. We actually feed people, and feeding people is very intimate act.”
Establishing trust with customers is key for a mission-driven retailer such as Bi-Rite. “There are so many products out there we have issues with,” said Mogannam. “A significant part of the marketplace is products we wouldn’t want to touch, we wouldn’t want to sell them because we would not be able to look at that guest and honestly say, ‘This will make you feel good.’ It probably won’t. It’s got preservatives or chemicals or the people (have been exploited) or that the land it is grown on has been destroyed so that nothing can grow on it again without artificial inputs.”
Customers of Good Eggs are also looking for “authentic sourcing,” said Hall. “We feel the best products should win (shelf space) not the ones who write us the biggest checks,” a comment about slotting fees that drew applause from a few members of the audience.
“We aren’t here to serve ourselves; we are here to serve our suppliers, and we are here to serve our customers. That in and of itself is a different approach,” said Hall, who added that small brands are driving growth in 19 out of the top 25 grocery categories.
Creating an inventory that appeals to your customers is key. “Today to be a great retailer, you have to have the right assortment,” said Andronico’s Monford, who spearheaded its FitMarket concept and FitBank program that promoted healthy living with incentives. “You’ve got to have the right people. You have got to have health and wellness."
Martines stressed that Kroger is not looking to pioneer new startup brands chain-wide. “In the specialty food business, there is sometimes limited inventory of these artisan products, and we appreciate that. … We have programs and platforms in place to help sustain and support the smaller scale (companies) to help develop them in the future growth brands of tomorrow.
“As a company of many different banners … we need to focus our efforts on those items that create a connection for the customer… It is going to be completely different in each market, in each city,” he added.