Grocery Roundup: Sampling Returns As Food Prices Hit Decade-Long High
Good news for those who like to try before they buy in the grocery store: In-store sampling is making its return.
Wholesalers Costco and Walmart-owned Sam’s Club both announced this week that they are bringing samples back to stores after the tempting practice was suspended for the majority of the COVID-19 pandemic due to contagion risks.
Sam’s Club announced the relaunch of its Taste & Tips sampling program on Tuesday (June 1), but appears to be easing back into things, as it is limiting quantities of samples, restricting the program to weekends and only distributing individually sealed samples. One form this will take is the Member’s Mark Summer Eats Food Truck, which will offer samples in the parking lot of the store.
For its part, Costco shared on an earnings call on May 27 that after testing out different ways to bring back sampling, the chain is beginning a multi-phase return. Costco Executive Vice President, Chief Financial Officer and Director Richard Galanti told analysts on a recent call, “This will come in waves. The first wave of locations, about 170 of our 550-ish locations in the U.S., will be activated by the first week of June, with most of the remaining locations returning toward the end of June.” In addition to adjusting local restrictions, stores will also prepare samples behind plexiglass, restrict preparation to small batches and serve one customer at a time.
Meanwhile, on Wednesday (June 2), Godiva announced a sampling event in New York City featuring a sampling truck like Sam’s Club’s, suggesting that brands, like retailers, are eager to return to in-person sampling.
Global Food Price Increase Hits Highest Point Since 2011
For consumers, the return of free samples cannot come soon enough, given the high cost of purchasing groceries. The Food and Agricultural Organization of the United Nations (FAO) released the results of its monthly FAO Food Price Index (FFPI) on Thursday (June 3), revealing that May saw the highest global food price increase since September 2011.
The results showed a 39.7 percent year-over-year rise and a 4.8 percent month-over-month rise. This makes May the twelfth month in a row of consistent price increases.
Categories that saw especially dramatic price surges were cereal, which increased 6.0 percent month over month, vegetable oil at 7.8 percent and sugar (6.8 percent). Conversely, meat and dairy only increased 2.2 percent and 1.5 percent, respectively.
In the United States, the most recent food price change on record from the U.S. Department of Agriculture’s Economic Research Service is the month-over-month increase from March 2021 to April 2021, which remained significantly lower than the global increase. U.S. food prices rose 0.5 percent in the period, as prices grew 1.7 percent globally.
SpartanNash Sales Dip 7 Percent from 2020 Lockdown Surge
Grocery distributor and retailer SpartanNash saw its net sales for the quarter ending April 24 fall to $2.66 billion, down from the previous year’s $2.86 billion, the company announced on Wednesday (June 2). Net sales and retail comparable store sales both declined 7 percent year over year, though retail comps increased 9.3 percent compared to 2019 levels.
“While this was a transitional quarter for SpartanNash, our overall profitability was consistent with our expectations to start the year,” said SpartanNash President and CEO Tony Sarsam said in a statement. In addition to improving gross margins, the company also grew its private-label offerings, and Sarsam added that supply chain and hiring investments will “drive future efficiency [and] support our growth.”
Food distribution net sales only dipped 2.6 percent year over year, up 14.0 percent from 2019 levels. This decrease was partly “due to favorable prior-year sales attributable to increased consumer demand related to COVID-19,” the release said. The company is expecting continued year-over-year sales declines for the remainder of 2021.
Walmart Introduces Private-Label Beef Brand
Don’t be fooled by the name — McClaren Farms is not some small family cattle ranch in Kansas. It is Walmart’s new private-label line of beef. On Tuesday (June 1), the company announced the launch of McClaren Farms beef at almost 500 Walmart locations in five U.S. states. The line is a product of the retailer’s initiative to create an end-to-end supply chain for Angus beef.
The line’s name is derived from Walmart partner Bob McClaren of Prime Pursuits, who is also the president and CEO of 44 Farms. The products will be available at Walmart locations in Alabama, Florida, Georgia, Mississippi and South Carolina, and the line will feature cuts of meat including filet mignon, T-bone, porterhouse, ribeye and short ribs, among others.
The announcement comes as retailers look to sweeten their private-label offerings across the grocery industry, taking advantage of the model’s high margins and its ability to keep customers coming back. Private-label has been gaining in popularity for years, with its growth outpacing name brands for the last several years in a row.
On a recent earnings call, Walmart U.S. President and Chief Executive Officer John Furner said the company was “pleased with the share gains that happened in meat and produce and bakery,” noting that “even within the food categories, the mix has been favorable to categories that tend to have better margins, which is enabling us to maintain the price positions that we’ve been running.”
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