More Franchising Ahead

Retailers are increasingly turning to the franchise model in their store operations. Take Carrefour, from origin operating with own stores, started franchising convenience stores in Brazil last year. In Belgium, the majority of its stores are operated by franchisees and expansion here will equally be done through franchising. In France, it is mainly hypermarkets that are seeing a transfer to franchise.

Alexandre Bompard, CEO of Carrefour, has put the franchise model at the centre of its strategic operations and says that more than 90% of future store openings in Europe will be franchises. The Group will continue to transfer integrated stores to franchise and lease-management in Europe.

Delhaize stirred up the Belgian retail sector last year by announcing that all the stores it owned and operated in Belgium would be franchised. In the meantime, the retailer found buyers for all of the stores and the transfer operation started a few months ago. The goal is that the transformation will be finished by this autumn. Reportedly, the first new openings show encouraging results.

Auchan, historically owner and operator of all of its stores, embarked on a large development project towards franchising supermarkets. The retailer set itself the goal of achieving one thousand franchised stores in France in the long term.

Experts see the move towards franchising as a way to keep prices low and preserve margins. Franchisers can respond more quickly to the needs of their customers, with adjustments to the offer and the addition of local products. Work organisation in the store can be managed more flexibly, improving productivity and service.

Retail Industry Needs Skilled Tech Personnel

Technology has long been becoming part of the food retail and manufacturing operations, not only in online activities, but also in logistics, ordering processes and on the store floor. Finding skilled personnel is an ongoing challenge for both manufacturers and retailers now that more and more jobs in the sector require technical insight or knowledge of AI and machine learning. For tech students, the retail or fmcg manufacturing business have not been the most logical or attractive choice after graduation.

As a result, companies have been very creative with incentives to lure talented technology specialists, and to retain them. Lidl, for example, is financially supporting personnel in getting their driver’s license. Children of personnel can also participate in the discount. In the UK, the company is doubling the period of paid maternity and adoption leave from 14 to 28 weeks. In addition, the supermarket will be introducing paid leave for staff undergoing fertility treatment. Edeka tries to win over Gen Z to come work with a creative use of typical “money scam” videos, with which young-dynamic success gurus promise their peers simple tricks in order to quickly gain wealth. The guru in Edeka's videos points out the golden opportunities that lie in an apprenticeship at the retailer.

In addition to special recruitment activities, companies in the fmcg industry have set up in house upskilling programmes for existing personnel to learn them work with new technologies and programmes.

Is Lidl Changing Its Basics?

Discounters are known for their everyday low-price model. Yes, they do offer weekly promotions. But their permanent range and especially their private label has always been known for the ‘best product for the best price’.

In France, Lidl seems to be moving away from this motto. It has introduced a new range of ‘mini-prix’ products in its stores. The range includes everyday basics in simple packaging for the lowest price, approximately 25% lower than its regular private label. The range is being introduced gradually and the retailers’ objective would be to eventually have some 80 products.

Competition for price leadership seems to be the driver of this development. Lidl and E. Leclerc, market leader in France, have constantly been claiming to be the cheapest on the market. In today’s inflationary environment, Leclerc gained new market share with its low-cost Eco+ range and, in its own words, has dethroned Lidl from being the number one in price positioning on the French podium. Lidl’s introduction of the ‘mini price’ line seems to be a direct response to that.

Top UK Chains Endorse Mandatory Food Waste Reporting

Anti-food waste app Too Good To Go has released an open letter, co-signed by over 30 companies within the food, retail and manufacturing sectors, calling for “reconsideration of mandatory public food waste reporting”.

The letter, signed by the likes of Marks & Spencer, Aldi, Sainsburys, Tesco and Waitrose, was published in partnership with the British Retail Consortium. The letter references progress made in reducing food waste, such as “AI and innovative tools”, “improved staff training and opportunities to identify mutually economically beneficial collaborations”, to “partnerships with surplus food marketplaces”.

Too Good To Go and its signatories go on to say that the action they take as individual businesses “won’t tackle the issue alone”. The companies say that they “need mandatory food waste reporting to help measure and judge if meaningful impact is being achieved, and to encourage more action to be taken across the whole industry”.

The letter warns the cost of not bringing in the measures would far outweigh any costs to the industry of extra reporting.

EU Supply Chain Law Moves Towards Adoption

The EU Committee of Permanent Representatives of the Member States voted in favour of the supply chain law. This means the law is one step further in the adoption process. The rules must be voted on in the European Parliament before they come into force.

Now, what is this law about. As reported earlier, the EU has been investigating the possible stopping of goods entering the Union if they were produced using "forced labour." The rules are to provide a framework for communities to sue EU companies for human rights abuses and environmental harm in their supply chains.

A system would be set up in which a list of high-risk areas and sectors would be created. When a company wants to import goods from the list, or produced in areas from the list, the burden to proof that no forced labour was used would fall on the company, not on the authorities.

The process leading up to the approval has meant that many concessions were done. The new agreement now applies to companies with more than 1000 employees, up from 500 and a net turnover of €450m, three times the amount previously agreed. Environmental groups estimate the changes will exclude 70% of the companies the law was meant to cover. 

PLMA Live!
The Rise of Self-Care Solutions at Retail

The aging population along with the rise in chronic disease and other factors have led to more demand for doctor, hospital and other healthcare services. What does this mean for retailers? Judith Kolenburg reports on the opportunity for retailers to leverage their store brands to strengthen their position in the healthcare market. Meanwhile, while consumers want to life healthier lifestyles, convenience and taste make ultra-processed foods appealing. Hans Kraak discusses the widespread consumer confusion surrounding the definition of ultra-processed and which foods fit into this category.

In the stores

Aldi has revealed new, fully recycled own brand wine bottles that are flat, thus optimising shelf space. Reportedly, the new flat bottles are seven times lighter and stronger than the standard glass bottle. Aldi also introduced own-brand paper wine bottles made from 94% recycled paperboard.

Intermarché is betting on its urban proximity format and aims for 300 Express stores within the next six years. According to the company, its urban proximity store has an average turnover of 12,000 euros per m².

Iceland has launched a new private label range of household goods called Home. The frozen food retailer wants to transfer to a comprehensive supermarket offering a full range of products to meet diverse consumer needs.

Sister companies Delhaize and Albert Heijn are going to buy more private label products together, increasing the joint own brand SKUs from the current 700 to 900 items. The new products concern entry-level price products that Albert Heijn markets under “Price Favourites” and Delhaize under “Little Lions”.

Co-op has re-introduced its free online wine tastings to offer its members exclusive access to the producers behind its wine range. The events aim to celebrate the winemakers who produce its own-brand range as well as help members learn more about wine.

Rewe is introducing a new own label called “Rewe Geheimzutat” (secret ingredient). Together with Germany's famous chef, Tim Mälzer, the retailer developed products like salad dressings, sauces, and seasoning pastes, with which one can quickly and easily create delicious dishes.

Denner has a pilot project to decrease food waste. To achieve this, the Swiss Migros subsidiary will freeze unsold meat on the day the expiry date is reached. Aid organization Caritas will pick up the goods weekly with its refrigerated vehicles and offer the products in Caritas stores as a new frozen product.

Morrisons is installing AI cameras in all its stores to improve product availability. The cameras provide real-time on-shelf data and automatically direct staff to where stocks are running low.

Jumbo is testing an avocado scanner in two of its stores in Belgium. When the customer holds an avocado in front of an x-ray machine, it gives the customer a ‘ripeness-score’ of the fruit. This means one no longer has to squeeze an avocado to know if it is ripe.

Carrefour is bringing a cross-functional sports-oriented offer to market. The retailer is a premium partner of the Paris 2024 Olympic Games and as such, it presents a new protein offering, energy bars, and nutritional beverages under its Carrefour Sensation private label.

Boots launched the first two of an own brand rapid self-test line, an Iron and Vitamin D deficiency self-test. The retailer wants to strengthen its position in the growing consumer at-home testing market.

Rema 1000 has introduced an image recognition service for fruit and vegetables. When weighing the item, customers are immediately suggested the correct type.

Hofer has rolled out a new organic baby own brand called “Mamia” in its Austrian stores. The range includes various jars, porridge, squeeze bags and snack items with ingredients from organic farming.

Drugstore operator dm is testing the sale of unpackaged own brand nuts, lentils, muesli, coffee and spelt pasta from organic farming. Customers can either bring their own containers or use the deposit containers available at the filling station.

Market research
Self-Checkout a Hit In The Nordics

A study by Swedish Uppsala University and software developer ID24 among over 100 retail chains in the Nordics shows that the grocery sector is one of the leaders in the use of self-checkout systems. Many retailers are integrating mobile app scanning.

Some 62% of retailers operating in the food sector use self-checkout systems. Most retailers use self-checkout for reasons of a faster process for consumers as well as a means of reducing staffing costs. Interestingly, overall, retailers did not perceive a positive association between self-checkout adoption and generating higher sales.

Undoubtedly, the greatest challenge associated with deploying self-checkout systems emerging from the survey is theft, which was indicated by 89% of respondents, of whom 29% noted theft as being an extreme challenge.

Despite the challenges associated with the adoption of the mobile app feature, grocers remain committed to further investing into their mobile app technology due to the steady increase in customer usage.

Nutri-Score Pressures Food Makers To Improve

Research by economists into the composition of ultra-processed products in France, the UK and Italy has revealed that recipes in France have improved over time. With France being the only country of these three that has implemented the Nutri-score, the researchers conclude that manufacturers have modified their recipes to raise their score. From the introduction of the label, retailers had already understood the benefit of Nutri-score to promote their own brands, making sure that the products contained less sugar, less salt, and less saturated fatty acids, thus achieving a higher score. Apparently, in a context of heightened competition between national brands and private label, Manufacturers’ brands are starting to modify their recipes, too. It is said that one in three French people considers the Nutri-score to be decisive when choosing a product.