AI-related retail news

Morrisons is employing thousands of AI-powered cameras across its UK stores by the end of the year, after trials showed they significantly improved availability and increased the efficiency of staff.

Edeka, Germany’s largest grocery retail chain, is deploying AI-powered age-verification technology at one of its micro locations at Stuttgart Airport in Germany. Age verification is needed roughly 22% of the time at stores.

Tesco has announced it is launching the second phase of its Fit for Growth range review, which will use AI-driven technology to develop location-specific ranges for its Express stores.

Aldi puts a voice developed with the help of artificial intelligence at the center of its first campaign with a new advertising agency. The voice in the new advertising campaign was developed by AI based on the voice of Aldi employees.

New labeling rules from EU

To keep up with the changes on the EU food market and enable consumers to eat healthy, the European Parliament approved a revision of existing rules on the composition, labelling and production of honey, fruit juices, jams, marmalades and milk.

Under the new rules it will not be enough just to indicate if honey comes from the EU or not. It will be obligatory to list the countries of origin, in descending order, together with what percentage of the product comes from them.

Minimum fruit content in jams will increase, which means there will be less sugar in them. Jams will have to have at least 450 grammes of fruit content per kilogram (before it was 350 grammes), while high quality “extra jams” will have 500 grammes of fruit content per kilogram (before it was 450 grammes). The term marmalade is currently used only for citrus jams, but with the new rules, it will be possible to use it for any fruit jams, in line with local traditions.

The EU will authorise the production of dehydrated milk products with reduced level of lactose. Dehydrated milk covers various types of milk that have reduced water content and may even be in solid form.

Getir departs Western Europe, US to focus on Turkey

Getir, the Turkish delivery platform once valued at €11.2bn, will pull out of all its European markets – Germany, the UK, and the Netherlands – and the US, the company confirmed. The company said it will focus on its core market in Turkey.

After a boom and rapid expansion during the COVID-19 pandemic, the company – like all other online quick delivery companies - saw more and more consumers returning to physical shopping. The retailer’s high profit margins fell, making it difficult to meet costs. Quick delivery companies have also had to cope with a lot of opposition from residents around their dark stores and subsequently from municipalities. Earlier, the company waved goodbye to France, Spain, Italy and Portugal amid the growing difficulties.

Walmart launches massive private label line

US grocery leader Walmart shook up the industry this month when it announced that it is rolling out a new private label premium food line. Under the name of Bettergoods, the company says it is its largest private label release in two decades. “Today’s customers expect more from the private brands they purchase – they want affordable, quality products to elevate their overall food experience. The launch of bettergoods delivers on that customer need in a meaningful way,” said Scott Morris, Walmart’s senior vice president of private brands, food, and consumables in a statement.

The premium line seeks to appeal to younger consumers who are not loyal to grocery brands and want chef-inspired foods that are less expensive. Most products of the new brand are under $5. The packaging was designed in a mix of colours for a more premium look. The brand name bettergoods can be found as a single word in all lowercase letters and a custom typeface to look approachable and friendly. “With a vivid and colorful new brand identity that has the looks, messaging, and product offerings of more premium competitors, the goal,” says Walmart vice president of creative and design David Hartman, “was to create a brand that’s “as desirable as the leading national brands.”

Bettergoods products typically fall within three categories - culinary, plant-based, and “made without”. Walmart expects to have 300 products in the line by the fall, including frozen foods, dairy items, snacks, beverages, pastas, soups, coffee and chocolate.

Persistent inflation has made American shoppers cost-conscious, pushing the popularity of private label. According to PLMA, more than 1 of 5 grocery items sold in the US is a private label. In 2023, total private label dollar sales were USD236 billion, up by about USD10 billion, an all-time mark. Dollar sales rose 4.7%, vs plus 3.4% for national brands. Private label dollar share was 18.9%, ahead 0.2 points, likewise a high. Unit sales were nominally even, off 0.1%, vs national brands which shed 2.8%. Private label unit share was 20.7%, up 0.5 points and another record.  

Private label in the US has continued to shine in 2024, recording unprecedented highs in both unit and dollar shares during the first four months. Dollar share was 20.5% and unit share was 23.1%, as of April 21. The new share standards came on the strength of private label’s outstanding performance versus national brands during the period. Private label dollar sales were up 2% vs a gain of 1.1% for national brands, while in unit sales the difference was even greater, as private label improved by 2.5% while national brands fell 1%.

French retailers forge long-term alliance

Three major French retail groups announce a purchasing alliance with a remarkably long duration: for up to ten years, Intermarché, Auchan and Casino will jointly negotiate with major brand manufacturers.

Last December, Intermarché and Auchan had already stated that they were in talks to set up a purchasing alliance for food and non-food. Now they are also including Casino, the group from which they acquired several hundred super- and hypermarkets earlier this year. The new alliance, which will immediately become the largest in France, aims to “maintain and develop long-term partnerships with the agricultural world and French industrial players”.

Intermarché will take the lead for negotiations with big brand producers such as Danone, Nestlé, or Coca-Cola. The cooperation already established between Intermarché and Auchan for private label products will now also benefit Casino. In non-food, Auchan will negotiate with branded manufacturers for the three partners.

The three retailers stress that their cooperation will respect competition laws and regulations. Each of the partners will retain full independence in terms of commercial, pricing or promotional policies, and for the development of store networks.

Sports supplements flexing their popularity

Sports nutritional supplements are increasingly finding their way onto the shelves of supermarkets. Where in the past, professional and avid amateur athletes or body builders would be surfing online to buy their sports nutrition and food supplements, the category is experiencing an important push from “mainstream” consumers.

Today’s consumer is more and more looking for healthy and tailored nutritional options, and he has discovered the world of sports nutrition.  According to Euromonitor, globally, sports nutrition is the fastest growing consumer health category since the COVID-19 pandemic, with double-digit growth for three consecutive years to 2023.

In Europe, e-commerce sales are still dominant in the category, but supermarket sales are rapidly catching up. With growing consumer demand, grocery retailers are expanding their product offerings with protein bars, shakes, pre-workout supplements, and performance ‘boosters’ like creatine.

Private label lines are popping up. Retailer Musgrave has a high protein line of foods under its Supervalu name. The packaging contains eye-catching plain and simple information on protein content. Aldi in the Netherlands carries, amongst others, mousse and sports drinks under its Milsani dairy brand. Albert Heijn has AH protein bars; Lidl sells sport supplements such as creatine and Jumbo carries own brand protein shakes.

Euromonitor expects the percentage share of store-based sales will increase going forward as more private label brands enter the market, especially for categories such as protein/energy bars and protein RTDs. These products are becoming a popular on-the-go healthy snack option which are easy to find at nearby convenience or supermarket stores.

PLMA’s “World of Private Label” international trade show will have some 150 exhibitors with sports nutrition and food supplements on display on 28-29 May at the RAI in Amsterdam. Come and visit! Register here.

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. 

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.

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 has 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 teach them how to work with new technologies and programmes. 

 

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.