Whole Foods Hits the Street for New Products
Back in 2003, while working barely-undercover at Trader Joe’s
to learn about the company’s culture, we heard the story of a regional manager
who gave up being a buyer so he could spend more than one month a year sleeping
in his own bed. (We assumed an exaggeration, but to what degree we weren’t
sure.) Trader Joe’s was (is) known for having its people scouring the planet
looking for unique products so it can deliver items not found in other stores.
Trader
Joe’s, of course, is not the only retailer that hunts for new product treasure
and a current example making news is Whole Foods, which has approached street-food
vendors in the San Francisco Bay area about developing items for sale in its
stores.
Harvindar Singh, identified as the Northern California forager for Whole
Foods Market, told SFWeekly, "The street-food movement is very
hot right now, and they’ve got some great products."
Mr. Singh has spoken
to vendors about developing shelf-stable, refrigerated and frozen foods for
the chain’s 30 stores in Northern California. "They
have to feel ready and capable of doing this," he said. "This is
a whole new business for them. I’d want to make sure they have the volume and
know how to do business at this level. It’s a partnership."
According to SFWeekly,
Mr. Singh is serious about finding new supplier talent for Whole Foods. He
even gave them his email: Harvindar.Singh@wholefoods.com.
Discussion Questions: What food retailers do you think excel in the search
for new and unique products?  What do you think about the approach Harvindar
Singh is taking in trying to develop new vendors for Whole Foods?
Trader Joe’s is doing the best job finding new vendor talent to bring new things to the stores. Most other retailers are stuck in the mindset of SKU rationalization and so their shelves are pretty much top UPC codes, “me-too,” and same as everyone else. Let’s be honest, most retailers are looking into the future through a rear view mirror. But Trader Joe’s approaches the future with a creative exploratory mindset, and that’s why even consumers that normally shop the “regular” stores will go out of their way to check out Trader Joe’s and spend their money in their stores, too!
Most do not focus on changing the game or developing differentiators. They are focused on surviving and competing. It will take some innovation and unique initiative in the food industry for someone to develop and prosper under this model. They will be a game changer.
First, I live at Trader Joe’s. But my thought went away from scouring the world for food differentials to other products. I consulted to the Bata Shoe Company years ago which most people in the US have never heard of but who manufacture and sell footwear all around the world. In Toronto they have the Bata Shoe Museum which is amazing. But when you see the styles and colors that people in other countries are wearing you can’t help but wonder why some of those aren’t introduced to North America. Lots of them are very cool. Instead, every shoe store (at least men’s shoes and sports stores) are virtually identical. “Differentiating” may be the most ignored marketing and sales strategy of all time.
I think you have to give Costco some chops in this arena for the major retailers. But the real winners are the smaller local chains–often with an ethnic focus. Examples around the Northern Chicago suburbs where I live include Garden Fresh, Joe Caputo’s and Sunset. I’m sure there are plenty of others worthy of mention in this area as well.
Loblaw Companies Limited is the master at this. They learned it from Dave Nichol 25 years ago. Their President’s Choice brand started it all. They progressed with “Memories of…”, a line of products whose inspiration is sourced from around the world.
I’ll never forget a visit to the World of Coca-Cola in Atlanta, where the last exhibit is a sampling room dispensing Coke products from around the world. It’s amazing. Differentiation has allowed Trader Joe’s to thrive, and restless consumers will continue to seek out the new and different. “Same old” no longer cuts it.
“I wish we had a Trader Joe’s close to where we live” is one of the most commonly heard statements when it comes to a discussion regarding food retailers. Sad thing is there isn’t a Trader Joe’s within a hundred miles or maybe more. I am not sure.
Trader Joe’s is unique. Almost to the point of being a boutique shop. They have set the standard for their customers. It is no surprise the next grocer to jump on would be Whole Foods. The approach they are taking is unusual. But it is the unusual that becomes the norm in future years. It will be interesting to follow this and see how successful the project becomes. My guess is Wegmans already has their plan in motion.
These companies are doing to the grocery industry what Southwest is still doing to the airline industry. They are being innovative and creative while the other old line companies sit around saying things like “that will never work.” Watch!
I guess it’s sad, but other than Trader Joe’s and now this report from NorCal for Whole Foods I cannot think of a retailer that is striving for new and different and creating unique shopping assortments. This in no way implies that retailers need to go the lengths of a percent of uniqueness that Trader Joe’s is but the first question from too many retailers is show me the Spin’s and IRI/Nielsen data. You would think that once you got to $50 billion in sales, a lot of them would look at themselves as a data repository for category reviews and trends.
Why anyone would want to seek out new products and give up slotting allowances is beyond me.
One more vote for Loblaws Limited–under Nichols, they “scoured the world” looking for new products and delivered hundreds of truly interesting and different products. President’s Choice became well established private Brand, sold across North America. Their PC Decadent Chocolate Chip cookies with more butter, chocolate,and a new take on package graphics made it a a category leader for over a decade. Loblaws continues the search for new food product companies, and introduce a number of truly innovative items quarterly that are fairly priced and taste great. Their Insiders Report is heavily circulated–the Christmas edition is a must have for Canadian shoppers to plan their holiday gatherings.
It is not surprising that Trader Joe’s and Whole Foods are doing something different. Doing things different is their entire reason for being. It is part of their business model. They must be different to exist.
Similarly, the mainstream retailers must provide the bulk of the public with what they want, which are the typical grocery SKUs. It is their business model. The two don’t go together any more than Southwest Airlines can be a Delta and Delta can be a Southwest.
Good ideas for some businesses are not good for others. Retailers like any business must understand their reason for being and operate within those parameters. When they try to be somebody else, they end up being neither and completely lose their way.
Which retailers excel in the search for new and unique products? Certainly, as others have mentioned, Trader Joe’s comes to mind. Their brands present differentiation across the board and their sampling stations provide an opportunity for consumers to taste products while they are shopping.
Wegman’s brands from fresh, processed to frozen provide unique products that differentiate at store level and on package labels. Their organic tomatoes are just one recent example of their point of differentiation in marketing.
Giant Food and Stop&Shop offer Healthy Ideas and Simply Enjoy products as well as Nature’s Promise products featuring national and organic foods.
Whole Foods has differentiated itself with 365 products in multiple private label categories where they have been able to promote a price image as well as health. That is unique.
I think World Market can evolve into this type of retailer, especially now that the TJ founder is Chairman of the Board. Cost Plus is a chain to watch over the next 36 months, and innovative food and beverage products should play a major role in their growth.
My vote is Publix on this one. I still see them as the market leader.