Dear Valued Client Partner,
The recent heat wave reminds us that we’re well into the summer season and nearly 7-months into calendar year 2018, and I think it’s an appropriate time to share with you a brief RDD and marketplace update. As you are likely aware, RDD Associates LLC is celebrating our 20th anniversary this year, and the RDD team remains as energized and passionate as ever to provide trading partners a distinctive, perishables-focused service solution. RDD is proud to represent the broadest portfolio of leading perishables brands in the market, and I thank you for your long-standing support and commitment to our company.
So, what’s new at RDD in 2018? I’m pleased to share with you several of the important and progressive initiatives we’ve been implementing:
In December, 2017, RDD Southeast, our perishables-focused, full service sales agency based in Charlotte, NC, opened for business, servicing AD’s Food Lion banner and all major grocery and wholesale customers across the region.
- With the addition of Food Lion, we are proud to offer a seamless Ahold Delhaize service solution for headquarter and retail continuity coverage at all AD brands through “RSM”, our regional service solution through the RDD brands (Metro NY and the Southeast) and our partners ProStar (Mid-Atlantic) and Matrix (New England).
- RDD has significantly expanded our Metro New York — urban/independent grocery retail continuity coverage, which includes an exclusive partnership program with Krasdale’s C-town and Bravo supermarkets to build distribution levels and sales volumes in perishables.
- RDD continues to expand our “Foodservice@Retail” focus, to include the launch of the region’s first supermarket-distributed “meal kit” program at ShopRite.
- RDD and our RSM partners have invested in an enhanced syndicated data platform with a recent conversion to IRI’s Unify platform, and we’ve added a new associate, Lisa Bonomo, to our business insights and analytics department. Lisa previously worked in digital commerce at Toys R Us.
- RDD continues to expand our focus on digital marketing programming and shopper e-commerce (to include ShopRite from Home, Ahold’s Peapod, and Walmart’s Jet.com).
- RDD is expanding our business management team with the reassignment of Matt Thennes to Business Manager — Dairy, and the promotion of Tom Murgia to Associate Business Manager — Fresh Foods.
- In August, RDD is adding a new Customer Manager for Dairy and Frozen at Wakefern, with significant industry experience at Wakefern in both business disciplines, plus perishables specialty foods.
So, how’s the business environment in the marketplace? Like the majority of supermarket chains across the US, Metro New York, Mid-Atlantic and New England grocers are struggling to maintain their base transactional levels, with total sales revenues either in decline or marginally increasing only due to modest inflation. Even several of our largest customers have experienced declining sales. The contributing factors impacting traditional grocery sector sales are well documented in the news…consumer-direct/e-commerce sales from Amazon, Walmart and multiple upstarts; increased competition from the “extreme value” operators like Aldi, Dollar General and Lidl; increased competition from “experiential” chains like Whole Foods and Wegmans; a resurgence in the restaurant/foodservice sector; and broad changes in purchase behaviors related to generational, demographic and lifestyle changes. That said, fortunately the majority of RDD’s client brands have performed quite well during the 1st half of 2018, and are experiencing favorable sales versus industry trends. I’m pleased to report that we’re on track to achieve our annual budget and retail sales goals for 2018.
So, what’s new at ShopRite? Wakefern’s 2017 fiscal year was among their most challenging in decades, with flat or declining category sales across multiple departments and at Price Rite. As part of a broader initiative to restore growth and chart a progressive strategy for the foreseeable future, Wakefern membership (owners) directed the leadership team led by Chris Lane, EVP, to engage several management consulting firms to assess company performance, identify key areas for focused resource investments, and activate progressive strategies to accelerate sates and improve financials. Included among these strategies are:
- Formalized negotiations with Wakefern’s largest supplier partners, leveraging their purchasing scale to lower costs and increase promotional funding in exchange for enhanced merchandising at the shelf. It remains to be seen what the long term impact this will have on category sales, but it does appear that suppliers’ cost-to-serve Wakefern is increasing.
- Expanded focus on developing Wakefern’s private brands… Procurement veterans, Chris Skyers and Will Magistrelli, have been appointed VP — Private Label and Director — Product Innovation, respectively, and are charged with significantly increasing private brand penetration at ShopRite.
- Promotion of Jim Dorey to President — Price Rite Marketplace… Jim recently attended the RDD Management Conference, and presented Price Rite’s evolving go-to-market strategy, with significant changes designed to build customer count and increase store sales.
- Appointment of a new SVP — Marketing… Industry veteran Erik Keptner joined Wakefern earlier this month, and is responsible for private brands, digital commerce, corporate merchandising, advertising and social media. He previously held a variety of executive roles at Ahold USA.
- Jeff Reagan is appointed SVP — Operations, responsible for improving merchandising coordination between Wakefern and membership stores, which includes activation of Wakefern’s ISE reset program.
What’s new at Ahold Delhaize? Last summer, AD announced their strategic redirection to decentralize merchandising and field operations to align with their five (5) supermarket banners and Peapod, and created RBS, Retail Business Services division, responsible for “own brands” coordination. The strategy officially launched in January, and continues to evolve as it is executed in real-time. That said, the decentralized brand-centric supplier engagement processes and protocols are being communicated and increasingly more predictable and routine, and key staffing is in place.
Recently, AD introduced a new decision-support platform developed collaboratively with IRI called Brands Insights Gateway. Gateway is an integrated technology business solution, combining several previously stand-alone platforms covering POS (syndicated) data, FSP (frequent shopper program) data and Supply Chain (RSI) data. AD will invite a number of larger scale suppliers to participate in Gateway, effectively outsourcing some of the daily oversight of merchandising and supply chain responsibilities, and performance metrics to the supplier.
Last, but not least, what’s new at with our Metro New York independents? After the A&P/Pathmark liquidation in 2016, Metro New York’s independent banners and co-ops significantly benefited from increased co-op membership and store count, due to the re-bannering of approximately 50 stores. Unfortunately, throughout 2017 and so far during 2018, a new reality has set in with retail sales comp’s trending down, several store closures and a number of defections to other member groups. That said, the urban/independent sector remains critically important to succeeding in the New York marketplace, with over 1,000 stores and aggregate New York Market ACV of approximately 35%. Here are a couple of changes directly impacting our businesses:
- Allegiance recently announced adding 40 new stores to the co-op’s roster this summer, increasing store count to approximately 130. Most of the new units come from Gristede’s (which had been supplied by Wakefern), plus a number of former ASG stores (Associated, Pioneer and Met Foods).
- Sales and membership growth at Key Foods, the #3 supermarket banner in the marketplace and #1 in NYC, has plateaued with a slight decrease in store count. However, Key Foods leadership reports that this should reverse in the back half of 2018, with a renewed uptick in banner conversions. In addition, Key has announced several associate reassignments, to include long time Director of Dairy, Daisy Colon, moving to a similar role managing Grocery, current Frozen Director Lisa Gniewkowski moving to Dairy, and a new associate, Tamekia Bolden, managing Frozen. We wish all three women terrific success in their new positions, and especially want to thank Daisy for her special trading partnership with RDD over many years!
We invite all of our valued clients to partner with RDD in the investments and initiatives outlined here including…
- Partnership opportunities to expand your business with RDD Southeast for Food Lion, Harris
- Teeter, MDI Lowes, Ingles and the remaining Southeast customer base.
- Insights and Analytics support from our existing and recently enhanced team
- Participation in our Krasdale “KoolTemp” program to improve promotional efficacy and retail placement
- Representation for your brands to gain best in class placement and promotion with Hoboken, NJ-headquartered Jet.com
As you can see, there is a lot happening in our marketplace and RDD is working diligently to insure that we provide our client and customer partners with performance-driven merchandising solutions. If you have any questions or topics you’d like to discuss in greater detail, please don’t hesitate to contact me or any RDD senior manager to arrange a convenient time and venue.
Thank you again for your continued support and business partnership with RDD!
Best regards,
Bob