Taking Stock

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Allegiance ‘Embraces Innovation’ At Record Setting Vendor Breakfast

It was another strong year for Allegiance Retail Services, the retailer-owned co-op that supports independent retailers who trade under banners such as Foodtown, D’Agostino’s, Shop ‘n Bag and Freshtown.

Under the leadership of president and COO John Derderian, one of the brightest minds in retailing, the Iselin, NJ-based company held its annual vendor breakfast meeting on November 8 at a new venue, the Hilton Meadowlands in Secaucus, NJ. The event drew a record crowd of more than 500 suppliers, brokers and distributors as Derderian, new VP and chief marketing officer Donna Zambo, VP-center store Mike Conese, and VP-perishables Dean Holmquist offered detailed views of their perspectives and priorities. Additionally, Allegiance’s director of advertising and marketing Patty Youchock presented awards to the company’s top vendors.

Reinforcing and updating some of the same themes as last year’s “Path Forward” meeting, Derderian told the group that Allegiance is still focused on “intelligent growth” – assessing locations for store development based on demography, competition and lifestyle/life-stage indicators; staying disciplined in its locational approach when analyzing the many vacant retail storefronts which present growth opportunity; and utilizing a paced approach by balancing store development with existing members trade areas.

The latter point was exemplified by Allegiance’s newest large member, Gristedes, which came on board this past summer. Most of Gristedes’ 26 stores are in Manhattan, a trade area where Allegiance previously only had a small presence. With the addition of Gristedes and several other independents, Allegiance’s store count rose to 117 (a 28-store gain over last year) and its member/owners increased to 32 (up from last year’s number of 29).

Derderian also noted the importance of format alignment, adding that with the income distribution gap widening (haves vs. have nots), Allegiance has the market knowledge and flexibility (three co-op formats and banners including Foodtown, Pathmark and Food Basics) to provide each member with a unique go-to-market approach.

Donna Zambo, who first worked with Derderian 30 years ago at Pathmark and most recently was with Wakefern, joined the Allegiance leadership team in May. She focused on the embracing the “idea” of innovation, quoting the late Apple CEO Steve Jobs who said, “Innovation is the difference between leaders and followers.” Zambo stated that Allegiance’s continued investment in IT – a new loyalty system, headquarter launch, upgraded analytical platforms, new financial systems and a new vendor portal – is paying dividends. Additionally, this year the company updated its foodtown.com website, added a new mobile app and aligned with Instacart to serve 49 stores in the Metro New York market.

Zambo also emphasized the importance of personalization as a powerful marketing tool. She said that Apple’s iPhone is the ultimate example of personalization. “It’s not just a phone – it’s my phone,” she noted, adding that one billion devices have been sold in 11 years that are all unique to the owner. At Allegiance, those personalized offerings extend to its circulars, emails, digital coupons and several other specific opportunities that will enhance the customer experience.

Former Fairway Market veteran Mike Conese, who joined Allegiance in 2015, urged the vendors in attendance to “keep center store relevant.” He emphasized the importance of building partnerships to ensure mutual success and promised that those companies that reward Allegiance with incremental trade dollars will be rewarded with increased case sales.

Conese addressed the growing presence of e-commerce (especially with millennials) and Allegiance’s increased role in providing online opportunities. He cited his company’s new relationship with Instacart and its improved “click & collect” program which is now available at 32 Foodtown stores and growing. He also suggested a pro-forma on how traditional retailers can regain share of market. Among the items to consider: conventional merchants must think unconventionally; changing avenues to the customer’s wallet; and greater vendor support for e-commerce initiatives.

One of Allegiance’s most senior and most popular executives, Dean Holmquist, addressed the issue of “Saving the Dinner Hour.” One “save” component, according to Holmquist, can be found in deli and prepared foods (retail foodservice), where the growth trendline has flattened, but untapped opportunities remain, particularly in purchase frequency and spend per trip. While home-prepared meals have dropped slightly in the past year, according to research provided by Holmquist, families with children are still eating at home, but are seeking convenience when preparing dinner. And the argument for improving and enhancing prepared foods departments can be seen in recent consumer polling on the top reasons why shoppers seek out such products: saves time on cooking; allows for immediate consumption; saves time on meal planning; saves time on cleanup; and saves time on shopping. And while Holmquist acknowledged that channel choices are shifting, full-service supermarkets are still the leading shopping destination and even more so in the purchase of retail foodservice items. He also cited the importance of technology (websites, mobile apps, social media) in consumers’ choices about where and when to eat. And the statistics don’t lie, Holmquist noted, displaying a slide that indicated that young millennials are more likely to utilize technology in dinner planning (13 percent) than are boomers (4 percent).

On the operational side, Holmquist asserted that retailers with in-store production facilities have the best opportunities to leverage their prepared food potential, adding that his data indicated that 64 percent of consumers want a store to offer both grab-and-go and made-to-order capabilities while 32 percent preferred that all items be made to order. Only 4 percent of those surveyed said that only grab-and-go items should be offered. In closing, the 31-year Allegiance executive concluded that four ways to drive deli/prepared foods sales and loyalty were: understanding shopper behavior; creating a “top of mind” destination; providing real consumer solutions; and maximizing vendor partnerships.

Derderian then took the stage again to close the meeting. He told the packed house that Allegiance has recently formed a task force to assess and design its “next generation” Allegiance stores by analyzing demographic shifts, technology advancements, merchandising concepts and product demand indices.

He also asked the audiences to remember three things: Allegiance’s recent efforts in the back-office technology will lead to enhanced customer-facing deployments in 2019; Allegiance’s merchandising divisions are embracing the new consumer so “partner with us and win;” and Allegiance’s philosophical approach to intelligent growth reaches all demographic segments through the its portfolio of formats and banners.

A quick poll of a dozen vendors indicated they found the meeting enjoyable and useful.

And why wouldn’t they? Derderian and his team packed a lot of information into 90 minutes that was concise and easy to understand.

Good job by all!