A word about the cover
Ever see the movie “Pleasantville,” where the kid and his sister get sucked into their TV set and become trapped in a late-1950s sitcom? As the two introduce 1990s sensibilities to inhabitants of the fictitious town, the people and their surroundings slowly transform from black-and-white to color. The film is a metaphor for enlightenment, innovation and discovery.
It’s also an interesting way to think of the current fresh food movement in drug store merchandising. This is more than just good business — call it enlightened discovery. Fresh is bringing new color to the store, and importantly into customers’ diets. And fresh has the potential to color perceptions of what the drug store represents to the community.
Take Chicago as an example. According to the June 2011 Chicago Food Desert Progress Report, over the past year, areas of the city that had been designated as food deserts contracted from about 64 to 55 square miles. In terms of the people affected by this, the food desert “population” decreased from 550,382 to 383,954, or about 30%, between 2010 and 2011, according to the research compiled annually by Mari Gallagher Research & Consulting Group since 2006. Over the last five years, Chicago’s food desert population has decreased 39%.
Behind this improvement have been massive commitments from such companies as Walgreens and Walmart, because in reality, fresh doesn’t exactly grow on trees. “Moving 166,428 people from a food desert to a food oasis … is not a small accomplishment,” Gallagher Group reported. “To put that number in perspective, consider that is roughly equivalent in population size to the city of Rockford, which is the fourth-largest metropolitan area and third-largest city in Illinois.”
At the end of “Pleasantville,” even the geography of the town has been forever reshaped in the name of enlightened discovery; Main St., which once was locked in an infinite circuit stuck forever inside the fictitious town, now leads to other cities and towns.
Fresh is the freshest idea right now in drug store merchandising, bringing new color to the store and to shoppers’ diets. And it is reshaping the geography in the inner cities, transforming food deserts to oases of health and nutrition.
Increasingly, chains that traditionally have not been major forces in food retailing are making bigger commitments than ever to fresh — including meat, produce and dairy — in an effort not only to help solve the nation’s growing health crisis and expand Americans’ access to nutritious food options, but also to create new reasons for customers to shop their stores.
Walgreens late last month — as part of its Chicago Hometown Investment Initiative, which in all will add 600 new jobs around the city — announced that it would grow its base of food desert stores from 11 to nearly 50 over the next couple of years.
“Fresh” is the freshest idea on the front-end of the store, and it’s another example of how the corner drug store can do good, while doing good business.
According to the U.S. Department of Agriculture, nearly 6 million Americans live at least half a mile from a supermarket and lack access to a vehicle. And more than 20 million Americans live in low-income areas more than one mile from a grocery store, making them residents of what are called “food deserts” — areas with limited access to wholesome and fresh food. In such areas, consumers often must resort to small stores that sell only packaged food or mediocre — if any at all — produce, contributing in a big way to the bad diets that are to blame for the country’s growing problems with obesity and diabetes.
In June, Chicago Mayor Rahm Emanuel hosted a summit with CEOs from Walgreens, Walmart, Aldi, Roundy’s and the companies that operate the Jewel and Dominick’s chains, offering incentives for the companies to build stores in the city’s numerous food deserts. According to press reports, the retail chiefs talked openly about the obstacles companies face in opening new stores, including transportation, security and real estate issues and bureaucratic red tape. Emanuel has promised the city would fast-track store openings in areas it has designated as food deserts.
While the food desert problem faces communities — urban and rural alike — all across America, it appears that Chicago has emerged as a key learning lab for how government can partner with the private sector to address the nation’s obesity crisis. Emanuel has stated publicly that his city would be working with the White House to set up a national model for healthy eating and living programs.
For Walgreens, it is no small commitment — in one of its Chicago “food oasis” stores, 40% of the retail space is devoted to food. President and CEO Greg Wasson said at a shareholders meeting earlier this year that the company may expand its fresh food centers to 400 or more stores over the next several years. Walgreens also announced in May that it would test-market stores with healthy food options at 30 locations in San Francisco.
Walmart also has built Walmart Express stores in Chicago’s food desert neighborhoods, including West Englewood, and recently signed a lease for a 14,000-sq.-ft. property at 3636 N. Broadway, which likely will be another Walmart Express location.
The world’s biggest retailer recently promised Wall Street that it would accelerate growth of its Walmart Market stores — another smaller format it could look to add in food desert communities.
In New York, many Duane Reade stores have dramatically expanded fresh food departments; however, these efforts have targeted stores in more affluent areas. Still, wealthy or poor, Manhattan’s neighborhoods from Battery Park to the Bronx are under-represented by supermarkets in the city.
For its part, CVS is investing in more of what it calls “Urban Cluster” stores, which feature vastly expanded food sections. CVS rolled out the Urban concept to 200 stores in 2010, and plans to add another 220 this year.
And since Target developed its PFresh store concept in 2009, the company has introduced the format in 462 stores through 2010, and plans to roll it into 350 more units this year.
Rite Aid’s approach to fresh has been an apples-to-oranges departure from what other chains are doing through its partnership with Supervalu on 10 Rite Aid/Save-A-Lot stores located in the Carolinas. Rite Aid president and CEO John Standley told analysts during a June 24 conference call that the stores “continue to show solid sales gains” and the two companies continue to look at opportunities to expand the program to more stores.
But it’s not all about philanthropy. Expanding fresh grocery offerings also represents another reason to shop drug stores and another opportunity to grow the market basket, Bill Renz, Rite Aid VP consumables, said late last month at a special panel discussion hosted by the Grocery Manufacturers Association and the National Association of Chain Drug Stores at NACDS Marketplace in Boston.
“Dairy is a great example of that, if you can grab that extra dairy trip,” Renz said, because there are a lot of items that can go into that basket with the dairy trip.
This summer could be a litmus test of the consumers’ willingness to trade trips to drug from other channels to buy food. According to a recent report by SymphonyIRI Group, 4-out-of-10 shoppers said they have been forced to reduce or completely eliminate trips to their preferred retailers due to the price of gas.
General Mills completes Yoplait acquisition
PARIS — General Mills now has a 51% stake in Yoplait S.A.S. and a 50% interest in a related entity that holds the worldwide Yoplait brands, the company announced Friday.
General Mills acquired the ownership stakes from Europe-based private equity firm PAI Partners and Sodiaal, the largest dairy cooperative in France, for about $1.2 billion. With this transaction, Yoplait will be governed by a supervisory board with representation from General Mills and Sodiaal, as the remaining ownership stakes in both entities will continue to be held by Sodiaal.
General Mills has licensed the Yoplait brand from Yoplait since 1977 and operates the Yoplait business in the United States.
“Yoplait is a fantastic global brand with tremendous potential,” General Mills chairman and CEO Ken Powell said. “General Mills and Sodiaal are well-positioned to advance and grow the Yoplait brand around the world. It is an exciting combination.”