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Mainstreaming of Specialty Products Provides Opportunities for Grocery Retailers

 

By Lorrie Baumann

Joe_Falvey for webAmerican consumers are putting a more diverse array of products into their market baskets than ever before, including ethnic foods, gourmet food products and natural foods, and today’s independent grocery retailers are racing to catch up with the mainstreaming of what used to be considered specialty products. This is according to Joe Falvey, President of Market Centre, the specialty subsidiary of Unified Grocers, a cooperative distributor owned by about 400 independent grocers with more than 1,300 stores in the western United States.

Market Centre is Unified Grocers’ banner for a separate operating company, formed a decade ago by combining four smaller distribution companies into a subsidiary of the distributor. It is now focused on sourcing and distributing natural, gourmet, ethnic and health-beauty-wellness products, as well as confections to Unified’s member stores. Market Centre also serves more than 1,600 smaller, non-member stores through its Neighborhood Markets program.

In addition to serving as President of Market Centre, Joe Falvey is also the Senior Vice President of Unified Grocers. Falvey is currently spearheading the expansion of the company’s natural products offerings into California from its base in the Pacific Northwest, where Market Centre has offered a full range of natural products since 2011. Market Centre currently offers its retailers about 59,000 SKUs in its five product categories, not including those products that are carried in the center store freezer and deli cases.

Along the way, Market Centre is finding ways to expand independent grocers’ wellness centers by integrating natural homeopathic medicines and dietary supplements alongside over-the-counter pharmaceuticals. That requires some care to create displays that will accommodate these new products without making it harder for consumers to find the products they are accustomed to buying or causing them a mild degree of culture shock when they notice products on the shelf with which they are not familiar. “We’re introducing it without alienating some of the customers who still want to buy mainstream products,” Falvey says.

Market Centre is encouraging the Unified Grocers retailers in California to replace some of the gondolas in their health-beauty-wellness stores with custom-built islands and four-foot refrigeration units in which to display probiotic products. That careful merchandising helps to create an atmosphere that is less intimidating to customers who do not like change. It also eschews a model that is perhaps a little too similar to that employed by Whole Foods and which may be discomforting to more conservative consumers.

Falvey noted that grocers today have a unique opportunity to reach out to millennial generation customers who are gravitating to the wellness centers in their independent grocery stores as they ignore the brands that appealed to their parents in favor of products they find more interesting. “They’re looking for something different than the standard grocery item,” Falvey says. “They think, ‘I don’t want to buy what Mom bought. I want to try something different.’”

Along with reaching out to millenials, Falvey also sees opportunities for retailers to expand their ethnic food offerings, pointing out that although the grocery retailers traditionally saw Asian foods as products desired primarily by consumers of Asian ancestry and Latin foods as products purchased exclusively by Hispanic consumers, that is no longer the case. “Asian food’s become a behavioral change, not necessarily a demographic change,” he says. “Everybody eats sriracha sauce now … Everyone’s buying Asian. Everyone’s buying Hispanic foods … I don’t know anybody who doesn’t go to a Mexican restaurant.”

More Americans are reading nutrition labels on the products they are buying in their grocery stores as well, and, according to Falvey, consumers are increasingly seeking out products that contain fewer ingredients. “We see it in the data, but more importantly, we’re hearing it from our retailers, and they’re hearing it from their customers,” he said. “If you’re ahead of the curve, you probably learned it by talking to people.”

As specialty products become part of the mainstream, and curious customers venture out of their accustomed pathways in their neighborhood stores, there are opportunities for retailers to drive sales if they find ways to engage consumers, keeping them in the store longer. Falvey points out that retailers can create a “treasure hunt” experience that keeps shoppers interested and having fun. Falvey noted that millenial generation shoppers in particular are more curious about a lot more things than their parents were, and catering to curiosity is something that independent retailers can do well, particularly in these specialty categories where Falvey feels that it is easier for a retailer to be creative than it is with more mainstream product categories. “There’s a lot of opportunity to provide impulse buy opportunities that have been walked away from,” he said. “The retailers and the consumers are starving for it.”

 

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