Author: David Esparza

Marketing Specialist at Engage3
03 Jun 2019

Using Attributes to Appeal to Consumers

In an effort to appeal to increasingly health-conscious consumers, retailers are taking steps to make it easier to shop for a specific diet. The Keto diet, Paleo diet, and Gluten-free food trends have dramatically changed how shoppers purchase their groceries.

While some people research their products before grocery shopping, whether online or in-store, most make their purchasing decisions as they fill their carts. As a result, consumers are looking at shelf labels and nutrition information more closely. A retailer that takes advantage of this opportunity can grow their customers’ trust, because the store is seen as working with (rather than against) the consumer to better their health.

What Shoppers Are Eating

U.S. consumer Diet distribution

In a study by the Hartman group, 44% of U.S. respondents said they had tried a diet in the past year, and those that followed a specific eating approach broke down into specific categories: Low carb was the most popular, coming in at 12% of dieters. This includes ketogenic and similar diets. Gluten-free was the next most popular, despite warnings by doctors that only patients with Celiac’s disease or verified gluten intolerance should follow the diet. Dairy-free was tied at 11% of dieters, with advocates citing clearer skin among the top reasons to switch. Other food choices that can benefit from shelf labels are vegetarian, whole food, vegan, and paleo diets. For these smaller groups of dieters, making them feel welcome in a store with food labels can translate to greater loyalty and increased units-per-transaction.

Consumer behavior is changing to become more personalized, and as a result, promotions that were effective before are now becoming obsolete. Diet-specific savings are an easy way to cater to these various groups, particularly vegetarian and vegan shoppers. If a customer never buys meat or dairy products, what sense is there in offering coupons for cheese and ground turkey?

What Shoppers Are Buying

The Food Marketing Institute conducted a survey to find out which health attributes consumers valued, and their results reflect the trends in American diets and changing behaviors. Four attributes had significant changes from the previous year’s survey, the largest being an increasing interest in “low carb” and “no preservative” foods.

Attributes are grouped into similar categories, and “minimal processing” as a whole is a quality that 64% of respondents actively sought when shopping. Combined with the increase in private label offering from retailers, it is clear that consumers are starting to value attributes over brands.

One other change worth noting is that 23% of consumers look for products with “no high-fructose corn syrup,” a statistic that aligns with Nielsen data. American shoppers are increasingly aware of sugar in their food, and retailers that adapt to this preference have the opportunity to gain both trust and customers.

The New Grocery Shopper

Consumers are rushing towards diet-specific products as quickly as they move away from sugar and other additives, creating new opportunities for both retailers and CPGs. Though Americans may be on a diet, it doesn’t necessarily mean that they’re buying less food. In our next post, find out how retailers like Raley’s and Trader Joe’s are deploying new strategies to attract these shoppers.

For more information on changing consumer behavior, you can read our report on food allergies in the U.S. here. To see how retailers are changing their stores for cleaner products, you can view our interview with Frank Scorpiniti, CEO of health and wellness store Earth Fare, here.

02 Jun 2019
DMG Foods

Non-Profit Grocery Store: Doing the Most Good (DMG) Foods

When DMG Foods opened in March of last year, it appeared that the Salvation Army was taking a big risk in an unknown field. In such a competitive industry, how would DMG Foods survive where many non-profit grocery stores had failed? The answer is in the name: DMG stands for “Doing the Most Good,” the driving motto behind the Salvation Army.

DMG in Baltimore

The store’s location in a Baltimore, MD food desert is no coincidence, though instead of taking advantage of a lack of competition, Maj. Gene Hogg had a different plan. In an interview with the New York Times, he stated that the idea came down to him after three days of prayer. “God said I needed to open a grocery store,” he said, and so he set out to make it a reality. What spurred this decision was his previous experience caring for the food needs of the neighborhood.

During the 2015 riots in Baltimore, many stores and businesses were destroyed beyond repair. Major Hogg and his team of Salvation Army volunteers distributed food to people in need. Of the 200 businesses that were gone, a large portion were food stores, further limiting an already struggling community in their grocery options.

However, DMG Foods is a much more stable operation than its roots imply. The store has all the sections that a traditional grocery store does, including produce, a deli counter, a butcher shop, and a bakery. The prices, as noted by analysts, are lower than even the price-cutting supermarkets in Maryland. Because many of the store’s customers use their food-assistance dollars at the store, DMG Foods strives to give them as much value as possible. As a nonprofit, it is less concerned with margins and more concerned with the wellbeing of the neighborhood. Any profit made goes to the larger Salvation Army organization, where it is then used for charitable services like recovery centers, hospitals, and housing programs. The Baltimore store gives priority to Catherine’s Cottage, a home for people rescued from human trafficking that is based in Maryland. DMG Foods is also partnered with local Baltimore organizations, including food banks that provide prepared meals for the store.

The 7,000 sq. ft. store has all the amenities of a larger grocery chain

The success of this grocery store can be attributed to the reputation of its parent organization. The Salvation Army is a far-reaching name, and has existed for over a hundred years. Providing quality groceries to a community in need falls directly in its vision of “Doing the Most Good,” and this is evident in every corner of the store. Customers using SNAP (formerly food stamps) and WIC (a food program for women, infants, and children) are incentivized to shop at the store with changing promotions. For example, DMG Foods in its first few months offered a 10-pound bag of frozen chicken for customers using their SNAP benefits.

Competitive Price, Welcoming Store

One price comparison done by WYPR, the local public radio station in Baltimore, shopped 14 essential grocery items at three local stores. These items included canned tuna, potatoes, and olive oil, among other kitchen staples. The result was that DMG Foods came out to be much lower than other stores in the area:
“In the end, the total at DMG Foods came out to $38.04, about two dollars cheaper than Giant and $12 cheaper than Safeway.”

The reporter who conducted this price comparison, Dominique Maria Bonessi, also interviewed various shoppers that were in the store to get their perspective on the nonprofit’s groceries. One shopper’s words reinforce the store’s mission to make a difference:

“Yeah. I think now people got more choices,” says Brooks. “So if they see this right next to the MacDonald’s, a lot of people instead of going to get those Happy Meals and those nuggets, they be coming over here to grab chicken.”

Sean Brooks, a customer interviewed by WYPR

Education and Development

For this Baltimore neighborhood, DMG Foods is providing a stable food supply and education to use it effectively. By partnering with the Maryland Food Bank, DMG Foods is able to offer ready-to-eat meals as well as instructional cooking classes. These classes are geared towards healthy eating, with a larger focus on nutrition over cooking skills.

Volunteers from the Maryland Food Bank showcase their prepared foods

One added benefit of having a nonprofit grocery store in the neighborhood is that it also provides jobs and training for the community. DMG Foods has established a program that mimics that of the Salvation Army thrift stores, wherein job seekers can work to build up the skill set needed to succeed in a larger grocery store.

Providing for a Community

There are separate loyalty programs for regular shoppers and those on food assistance programs, but the cards look identical. The store recognized that food stamps carry a strong stigma, especially in larger cities like Baltimore, and set out to make every shopper feel welcome while grocery shopping. In an interview with NPR, Maj. Gene Hogg explained the store’s mission more clearly:

“Our business is not really selling food,” he says. “What we’re in the business of doing is helping and loving people. And the qualifications to shop here is to walk in the door.”

Major Gene Hogg, Central Maryland Commander for the Salvation Army

DMG Foods is open to the public, but most of its customer base is from the surrounding neighborhood. Many residents would previously have to travel a fair distance to buy groceries or settle for corner stores with limited produce. The Salvation Army-branded grocery store has become a community hub in many ways, making it easier for local residents to access healthy food at reasonable prices.

The Future of Nonprofit Grocery

Though the Salvation Army intended DMG Foods to start a larger chain serving food deserts in America, it is currently limited to its single store in Baltimore. The store recently celebrated its anniversary, which may lead the Salvation Army to start expanding to other areas.

In the meantime, chains like Lidl are opening more locations and increasing access to fresh foods. The retailer recently announced that it will build 7 new stores in Maryland, including 2 stores in Baltimore County. Their recent partnership with, which delivers bulk items and now fresh produce, may be the key to healthier eating for many Maryland residents.

DMG Foods operates out of a 7,000-square-foot space, but its influence reaches much farther than the store. While cooperatives have cemented the nonprofit grocery model throughout the U.S., DMG Food’s mission goes beyond sustainability and community. “Doing the Most Good” is an exciting new direction for food stores.

For more information on how grocery stores are setting themselves apart from the competition, you can read our list of America’s most unique supermarkets here. We also visited another retailer to see how they are caring for their customers–through in-store medical clinics. Read our store review here.

05 May 2019

America’s Most Unique Supermarkets

From long-established chains to concept stores, grocery sellers have had to set themselves apart from the competition in order to draw in more customers. For some, the answer is hospitality that goes above and beyond; for others, it may be talking robot animals. American supermarkets in particular have succeeded in establishing a loyal customer base through unconventional means, though their tactics may be surprising. Here is our list of the most unique supermarkets in America:

Farmhouse Market

Though larger retailers are experimenting with automated grocery in urban areas, rural markets are taking their ideas to a new audience. In New Prague, Minnesota, members of Farmhouse Market can access fresh food at any time using their key card. The store is open to the public during regular hours, but members can enter in the middle of the night to make purchases if needed.

Membership costs $99 for the first year and $20 thereafter, and the owner has received national attention for the store’s unique operation. Farmhouse Market offers organic and locally-produced food in an area where large retailers were the only food source. Their website points out that despite rural areas producing most of the food in Minnesota, all that food makes its way to urban centers instead. Since its creation, dozens of interested parties have contacted the owner for advice on opening similar stores where they live.

Capitol Market

Sushi, Wine, and much more in the indoor section, via Capitol Market

Originally the site of a train station, this indoor-outdoor market began operating in 1997 as a way of re-purposing the location and creating a community hub in Charleston, West Virginia. The market operates year-round, and serves as both a farmers market and a bustling food hub.

Chocolate shops, coffee stands, and all sections of a grocery store are represented, and the market is home to one of the city’s most popular restaurants. Capitol Market is a space for West Virginia visitors and natives to experience community events throughout the year and see what the city has to offer.

Dekalb Farmers Market

As shown in the video above, residents of Decatur, Georgia are fond of their local grocery store. At 140,000 square feet, the store offers international foods that no other grocer in the area can compete with. It has all the standard departments–produce, meat, bakery, and so on–but also stocks ingredients from all over the world.

Dekalb Farmers Market has 184 flags hanging throughout the space, firmly establishing itself as an international food giant. Foreign produce, spices, coffee beans, and much more make visiting the market a culinary adventure. The meat department even sells quail, goat, and rabbit, which are difficult to find in U.S. supermarkets. It’s no wonder why the store has over 100,000 visitors every week.

Berkeley Bowl

Produce of all varieties making up the bulk of the store, via Berkeley Bowl

The local grocery store in Berkeley, California got its name from moving into a former bowling alley in 1977. Rather than change the sign, the owners saw it as an opportunity to appeal to the college-town residents. After moving to a converted Safeway building in 1999, the store expanded to fill a 40,000 square foot space with fresh produce and affordable groceries.

Berkeley Bowl opened a second store in 2009, this time in a modern building with plenty of parking. This location carries a larger selection of Asian groceries, and even stocks cookware imported from Japan. Square omelette pans, chopsticks for cooking, tea pots, and sushi-making supplies are all available in-store. However, the biggest draw for Berkeley Bowl is still the overwhelming variety of produce.

Dave’s Fresh Marketplace

One of many larger-than-life displays in the supermarket, via Dave’s

What started as a food stand in Warwick, Rhode Island has grown into the state’s largest independent grocery chain. David Cesario’s grocery stores have all the makings of a traditional supermarket, but include an extra dose of hospitality. Shoppers are welcome to a free cup of coffee while they shop, and Dave’s Fresh Marketplace prides itself on customer service and doing things “Old School,” as they put it.

Some stores also have educational food tours, guiding customers through various cuisines and ingredients as they taste their way through the store. These can be anywhere from an hour to two hours, and include the “Gluten-Free Walk, Taste, and Test” tour and the “Learn to Read a Food Label” tour.

Jungle Jim’s

Aerial view of the colorful store interior at Jungle Jim’s

Jungle Jim’s International Market is known for its extravagant displays and attractions, making it equal parts grocery store and theme park. The main store, which measures over 300,000 square feet, holds surprises around every corner. The selection of foods from over 70 countries draws customer from all over Ohio to Jungle Jim’s Fairfield location, and makes for a vibrant shopping experience.

Despite some displays like an animatronic lion belting Elvis songs, the store is much more than a collection of gags. Jungle Jim’s also carries one of the largest wine collections in America, and its humble beginnings as a food stand are reflected in the store’s low prices. In 2012, a second location was built in Eastgate, Ohio that resembles a traditional grocery store more closely.

Stew Leonard’s

Tile floors and citrus trees and Stew Leonard’s

Jungle Jim’s isn’t the only retailer promising a theme park experience in its stores. In Connecticut, Stew Leonard’s also aims to provide quality groceries in a fun environment. Stew Leonard’s runs on two tenets of customer service, etched into a boulder at the entrance of each location. Displays throughout stores have led some, including the New York Times, to call Stew Leonard’s the “Disneyland of Dairy Stores.” During warmer months, visitors can even enjoy an outdoor petting zoo. What makes this retailer unique, though, is its product selection.

Whereas many of the supermarkets on this list offer a wide variety of products, sometimes upwards of 80,000 different items in a single store, Stew Leonard’s only carries 2,200. These products are carefully curated, giving the impression of an old-fashioned neighborhood market. Much like Jungle Jim’s, Stew Leonard’s employs a variety of animatronic animals as well as costumed employees that heighten the family-friendly environment.

Though these supermarkets inspire loyal followings, they still rely on competitive pricing. Stores like Stew Leonard’s have the benefit of managing a small number of items, but this also means that their customers are more sensitive to price changes. Meanwhile, larger markets like Jungle Jim’s require more careful management of competitive shops. Checking prices monthly or even quarterly is not necessary for most of the items in these giant markets.

To find out more on optimizing your competitive shop program, you can read our 7 tips here. For more information on innovative retail spaces, read our individual store reviews like Falling Prices and CVS MinuteClinic on our blog.

04 May 2019

CVS MinuteClinic: A Review


MinuteClinic by CVS Health is the retailer’s project to provide healthcare services to more Americans. The demand for primary care doctors far outpaces the supply, and walk-in clinics like these help to fill the gap. CVS opened the first clinic in 2000, and it has since expanded to over 1,100 locations in the U.S. These clinics are in a large number of Target and CVS stores, offering customers a convenient and inexpensive resource for primary care.

Region where MinuteClinic operates, totaling 33 states and Washington D.C.

In 2014, CVS published an article titled “What’s Next for MinuteClinic,” detailing their goals for providing healthcare service to Americans. They estimated that by achieving their target of 1,500 clinics and continuing to expand, “half of all Americans will have a MinuteClinic within 10 miles of home.” In the last five years, their walk-in clinics have grown dramatically and may soon close in on these numbers. We visited a Sacramento-area MinuteClinic to see first-hand how retailers can improve their customers’ health and well-being.

The Store

Exterior of the store on Florin Rd., via CVS

The CVS pharmacy I visited is located in a residential area of Sacramento, about 15 minutes south of Downtown. This particular store seems to have been chosen for a MinuteClinic because of how distant it is from other medical facilities. Other than a nearby pediatric center, the closest hospital is 20 minutes away.

Outside of the store, there were multiple signs advertising the MinuteClinic, but it still looked like a normal CVS Pharmacy. Though the clinic had limited hours, the store itself is open 24 hours a day. When I walked inside, I was greeted by more advertising for healthcare services.

Store entrance, featuring signs for MinuteClinic

MinuteClinic Kiosk

For the MinuteClinic visit, I opted for a walk-in rather than a pre-scheduled appointment to measure how easy or difficult it is to receive in-store care. The MinuteClinic website lets anyone schedule an appointment at a nearby location, which may be in a Target or CVS Pharmacy. In some states, patients can sign up for a video appointment with a healthcare professional for minor issues like stomach aches, colds, coughs, and some women’s health services.

Clinic located in the back of the store, next to Beauty products and the pharmacy

The clinic was in the back of the store next to the pharmacy, and had a small section with chairs that served as a waiting room. For both walk-ins and appointments, patients checked in at a small touchscreen kiosk. Additionally, the kiosk handled out-of-pocket visits costs with a payment card slot. The website says that a patient can pay for healthcare services with cash, but the kiosk only prompted a card payment. Patients using their medical insurance present their information to the healthcare professional.

From the main menu, I had a choice of different services provided by the MinuteClinic. This particular clinic had a large selection of tests and procedures for patients to choose from, including a two-part test for tuberculosis that requires a follow-up visit. Prices for the services were listed on a monitor, changing every 15 seconds to the next section of the “menu.”

Surrounding Store and Advertising

Hand sanitizer, face masks, and tissues were provided alongside medical pamphlets to read while waiting for an appointment. After checking in, I had an estimated 20-minute wait time–there were two patients ahead of me who were already seated in the waiting area.

Because I had some time before my meeting, I explored the rest of the store to see how it differed from other CVS locations. The biggest distinction was in the aisle markers: a section advertising the MinuteClinic hung from the bottom of every overhead sign. This pattern had no exceptions, which led to some amusing combinations–such as the clinic ad attached to the aisle marker for liquor, wine, and drink mixers. Still, the store was thorough in making its commitment to promoting its health services.

I grabbed a few items from the snack and drink aisles, and then made my way back to the MinuteClinic to await my appointment. A few other patients had checked in while I explored the store. The doors to the private rooms had sliders indicating whether the room was occupied, and though I heard some murmurs on the other side, the rooms were mostly soundproof. Soon enough, the healthcare professional called me in to the clinic room.

In the Clinic

I opted for a routine physical to get the most basic service, and I learned that the person providing care was a nurse practitioner. After a blood pressure check and some other tests, we finished the physical and discussed any healthcare concerns.

MinuteClinic employs nurse practitioners who can address any patient needs, diagnose and prescribe medication, order and read laboratory tests, and perform any other service that a primary care doctor could in the same situation. In some states, CVS also has physician assistants in their clinics as well, providing the same level of service. These healthcare professionals are part of CVS’s goal to fill the demand for primary care doctors, and the American Association of Nurse Practitioners estimates that Americans make over 1.06 billion visits to NPs every year.

Though my visit was over quickly, MinuteClinic offers many more services for a relatively low cost. It accepts most medical insurance plans, but patients can also pay the out-of-pocket costs themselves.

Full view of the clinic and the area around it

I grabbed my basket of items from the waiting area and went to the checkout. By the time I left CVS and the MinuteClinic, the drink I had picked up in the refrigerated section was still cold!

The Verdict

The MinuteClinic experience was quick and easy to follow, and it offers patients in underserved neighborhoods access to affordable healthcare. Because the clinic sits in a CVS or Target store, it is far less intimidating for patients who may fear large hospitals and the costs associated with them.

Though CVS relies on loyalty cards for most of its in-store deals, the MinuteClinic is open to anyone. A customer can walk in, pay for their clinic visit, and walk out without any issue. Additionally, if they are prescribed a medicine by the nurse practitioner or physician assistant, patients can fill that prescription at the CVS or Target pharmacy immediately.

Consumers who visit MinuteClinic may be more willing to shop at Target and CVS Pharmacy in the future, and the clinics are particularly effective at building trust with the retailers. With the current state of healthcare in America, retailers can offer a level of personalization that starts with a consumer’s health and translates it into loyalty and grocery dollars.

For more information on how personalization is changing the retail industry, you can view our conversation with Bill Bishop at the NGA Conference here. This article is part of the Engage3 Visits series, and follows our trips to stores like Joe V’s Smart Shop in Houston and Falling Prices in North Sacramento. To view all the services provided by MinuteClinic, you can visit their website here.

08 Apr 2019
Joe V's Smart Shop

Joe V’s Smart Shop: A Review

When H-E-B launched their line of Joe V’s Smart Shop in 2010, retailers across the industry were curious to see how the value-first store would perform. Aside from initial criticism by Trader Joe’s on account of the name, the first store received a highly positive response from shoppers in the Greater Houston Area.

The barn-like entrance of the store differentiated it from other discounters, and once inside, customers were met with great values. The chain’s motto is “Low Prices, Quality Groceries,” a phrase that rings true today based on a price analysis conducted by Engage3. The ninth Joe V’s Smart Shop opened at the end of 2018 in Pasadena, Texas, showing that H-E-B’s investment in a discount banner continues to draw in new customers year after year. We visited a Houston-area Joe V’s to compare it to H-E-B’s main stores.

The Entrance

To begin, Joe V’s Smart Shop has a very distinctive entrance. The recessed sign is eye-catching and separates it from other stores in the area. The carts were standard supermarket size, and there were no flatbed carts like those available at warehouse retailers like Sam’s Club and Costco.

When we entered the store, items marked as “special buys” lined the sides and advertised especially good deals. From here, it was easy to guess that the majority of the products in the store would be bulk-packaged.

Main aisle leading to the produce section and the rest of the store

These deals continued into the main aisle, with prices marked on large yellow signs leading all the way into the produce section. Products were stacked in pallets three levels high and were priced lower than an average grocery store, but they were also in their original bulk packaging.

Produce and Fresh Food

When we reached the end of this aisle, the store opened up to the produce section and the other areas inside. Fruits and vegetables were piled high, allowing customers to move between the different produce items, a big change from the carefully curated displays in a normal H-E-B store. The focus here was on the value and volume Joe V’s offers.

Alongside the produce section was a Sushiya booth, a staple of H-E-B markets. This is where sushi is prepared and sold. From here, we had the option of going into the warehouse-style portion of Joe V’s or continue in grocery. We stopped by the meat section, seeing a sign advertising freshly-butchered meat. The selection was not as expansive as a traditional H-E-B location. This trend continued in the bakery, where there was a large sign boasting eight bread rolls for a dollar.

The Aisles

Once we left the fresh food areas, Joe V’s resembled a warehouse retailer much more closely. Bulk items, pallets, and spacious aisles made the store feel entirely different from a supermarket. Here lies Joe V’s biggest strength – the prices that consumers typically find at warehouse retailers without the membership fees. The store’s true character came out in these aisles, making the store seem inviting despite the bulk packaging and bright yellow signs.

General merchandise like cookware were also scattered throughout the store, but it was never overwhelming or unexpected. Joe V’s mainly sells groceries, and these items were stocked to complement the rest of the store’s inventory. The store’s weekly ad, available on the Joe V’s website, only lists food items and related products like paper towels.

A Hybrid Checkout

When we were ready to leave the store, we had a checkout experience we have never seen before. At first, it resembled a typical grocery store setup. There was a long conveyor belt, a cashier, and a bagging area. The difference was how the customers were paying for their goods.

The cashiers do not handle money. No cash, no coins, and no cards ever cross their hands. Instead, they were focused on ringing up the items and bagging them as quickly as possible to keep the lines down. The cashiers were friendly and had animated conversations with shoppers as they loaded up the carts. Customers either used the card payment system or inserted their bills and coins into a device that looked like an ATM.

The hybrid system created an experience similar to a self-checkout machine without having shoppers bag and scan their own purchases. It looked like this unassisted payment system was quicker and let customers still interact with a human cashier.

Warehouse Prices – Is it Sustainable?

Though Joe V’s Smart Shop shares many characteristics with other stores like warehouse retailers, it gave us a unique shopping experience. It provided value comparable to a membership warehouse, but without the membership fees.

Joe V’s checkout system is notable in an industry adopting tech innovations. Pure self-checkout kiosks face criticism from customers who are looking for a human connection while shopping. With Joe V’s checkout method, shoppers get human interaction, and cashiers are freed up to scan and bag quickly.

Overall, we think that the store delivers on its promise — “Low Prices, Quality Groceries.” The combination of an efficient labor model (cashier-less payment and the use of vendor boxes for display), bulk-size offerings, less assortment, and the use of H-E-B’s low-tier private label — all add up to a unique strategy that might prove to be a winning idea.

Read about our reviews of other stores like Raley’s Market 5-ONE-5 or Sam’s Club Now: A Review in our Engage3 Visits series.

05 Apr 2019
Private Label Milk vs National Brand

Private Label Best Practices

A private label, also called a store brand, is an assortment of products offered by a retailer that matches national brand items. Some private label examples include Target’s Up&Up, Costco’s Kirkland Signature, Whole Foods’ 365 Everyday Value, and Kroger’s Simple Truth.

Lasting Shopping Trends

During an economic downturn and the years following, customers are especially sensitive to grocery retail prices. This is a time when consumers are willing to exchange their name-brand loyalties for savings, and a time when private labels can create significant opportunities for retailers. Nielsen details this effect in their global report on private labels, emphasizing how a recession influences consumer habits:

“When an economy recovers from recession, changed shopper behavior often remains, and this sentiment is favorable when it comes to continued private-label growth. When coming out of economic downturns, consumers will maintain a more cautious approach with regard to household expenses, having developed a habit of seeking and expecting value for their money.”

Nielsen- The Rise and Fall of Private Label

Customer Expectations

Customers expect a retailer to have a large selection of products for relatively low prices. Meeting customer expectations on assortment and price builds trust and keeps shoppers buying from their chosen grocer.

Room Essentials, Target’s housewares line aimed at college students and young adults

One way to build trust and loyalty without sacrificing margin is to expand private label offerings. In recent years, we’ve seen retailers like Amazon and Target introduce products under multiple new private label lines. Ranging from electronics and housewares to lingerie, these products offer compelling value to customers at higher margins. “Carrying non-standard categories besides groceries can also maximize price image,”
Tim Ouimet, Co-Founder of Engage3, said. One example of this is Aldi’s experience in cookware and home goods.

“Carrying non-standard categories besides groceries can also maximize price image.”

Tim Ouimet, Engage3 Co-Founder

Aldi Addresses a Need

For years, Aldi has sold enameled cast iron cookware for a bargain. A dutch oven, used for many roasts and holiday dishes, can cost upwards of $300 from the leading brand. Other branded competitors like Cuisinart and Lodge offer more cost-effective options, but customers frequently doubt the quality of the products. This is because even the leading brand can get chips in the enamel and scratches over time.

Aldi saw this gap in the market, and began selling a private label dutch oven under the name “Crofton.” For $29.99, customers could have a functional piece of cookware for a tenth of the cost of the leading brand. If the pot chipped or broke in some way, the consumer did not face a significant loss. The Crofton dutch oven has surged in popularity, gaining a large number of fans in the past three years due to its compelling value and favorable reviews.

Reviews on Chowhound, a home cooking forum, show that the Aldi Crofton pot is well-liked. One reviewer said, “My husband drove all over the city to 3 different Aldi stores to get me a complete set of Crofton enameled cast iron for Christmas 3 years ago… The braising pan works perfectly from stove to oven; my braised chicken never turned out so beautifully before I got this set.”

In response to Aldi, Amazon followed with an AmazonBasics dutch oven (priced at $44.99), which currently has a 4.5-star rating and over 700 customer reviews. These reviews mirror those of the Aldi Crofton cookware (priced at $29.99).

Added Benefits of Private Labels

Because of the lower cost of manufacturing private label items (minimal R&D and marketing expenses involved), they can be easily priced competitively against national brands like Heinz, Kraft, or General Mills.

Private labels not only allow higher margins, they also improve the customers’ perception of the store by keeping the store’s average prices lower than if they just carried more higher-priced national brands. “For most products, the price difference between two retailers’ private label products isn’t as important as the gap between the private label and the national brand from the perspective of the consumer, ” Ouimet added.

“For most products, the price difference between two retailers’ private label products isn’t as important as the gap between the private label and the national brand from the perspective of the consumer.”

Tim Ouimet, Engage3 Co-Founder

Private labels also allow a retailer to price defensively, because it is much more difficult to detect and match pricing on private label products. In this way, retailers can undercut their competition without drawing attention.

For example, a private label natural pasta sauce at Retailer A measures 24 oz and costs $2.96 ($0.12 per ounce) while a comparable pasta sauce at Retailer B measures 25 oz and costs $2.30 ($.09 per ounce). Because of Retailer B’s various private label tiers, this item brings a lot of value to consumers while Retailer A is unable to identify and compete with its similar item.

Non-standard Private Labels

Dick’s Sporting Goods private label workout apparel

Carrying non-standard categories like apparel can also maximize price image. Dick’s Sporting Goods recently announced that they were expanding their private label assortment to reduce their reliance on large vendors. In his article for Digiday, Suman Battacharrya writes, “As larger brands like Nike switch gears to sell directly to consumers, retailers like Dick’s, Target and Walmart are beefing up their own brand selection to stay competitive. With private-label products, retailers see higher margins on products that customers can’t buy elsewhere.”

By focusing efforts on their store brand assortments, retailers can adapt to an industry that has aggressive retailers like Amazon and Aldi in new and unique ways.

A robust private label assortment places retailers at a significant advantage over their competition. To get more information on Engage3’s quarterly reports on pricing for national brands, private labels, and fresh categories, you can click here. View Nielsen’s report on global private label trends here, or read how Walmart stores adjust locally to hard discounters in our “Aldi Effect” report here.

07 Mar 2019

Data Science Modeling for the Real World: UC Davis MSBA Students Get a Taste of Retail

Retail data science requires a high level of expertise and collaboration on complex projects. In the first round of a year-long project with Engage3, six students from the UC Davis Graduate School of Management experienced a taste of what retail technology has to offer.

The Master of Science in Business Analytics program gives students the opportunity to work with a company on a long-term project. One description drew the interest of Abhinav Chatterji and his five teammates, intrigued by Engage3’s mission statement for the partnership: to help revolutionize the $22 trillion retail sales industry.

After the initial online meetings, the team prepared to work with Engage3’s data scientists on developing their 12 month project in the downtown Davis headquarters. From there, Chatterji describes, “We went on a four-day, rigorous sprint.”

The team met the employees at the Davis office, including CEO Ken Ouimet and other executives. Though surprised at first, the group quickly adapted to the company culture and felt welcomed. They then started their project with data scientist Sahar Pirmordian, working to build the foundation for their year-long partnership.

In the four day period, the team tinkered with thousands of lines of code to accomplish their pilot study. With the help of the Engage3 data scientists, the MSBA students funneled large amounts of data through their models and presented to the results to the Davis office.

The six students passed their first checkpoint in a long but rewarding project, and got a sense of the scale of the retail industry and its data potential. “We felt transformed into consultant or employees capable of delivering on deadline, under pressure,” writes Chatterji.

To read the full post on the UC Davis graduate school website, you can click here. For more information on how artificial intelligence is changing retail technology, you can also request a copy of our White Paper here.

01 Mar 2019
Market 5-ONE-5

Raley’s Market 5-ONE-5 Store: A Review

In the months since it has opened, Raley’s organic-focused concept store in downtown Sacramento has settled into the neighborhood. Its closeness to office buildings makes it a convenient stop for customers on their way to or from work, and there are very few competitors in the area. Engage3 visited the small-format store to take a closer look at its selection, and what is contributing to its popularity.

Bike Accessibility

The parking lot is spacious, and allows for customers to park their cars without worry (there’s a 90 minute time limit, but Sacramento is notoriously difficult to park in to begin with). In front of the store is an ample amount of bike parking, as well as lockboxes for cautious bikers. There were a few electric-assisted bicycles to rent, the kind that are popular in downtown Sacramento and other cities. Market 5-ONE-5 is reasonable biking distance for customers working downtown or at the state Capitol.

I walked up to the entrance, noting the various signs boasting local coffee roasters and breweries. Next to a small garden section was a sign that read: “Beer tasting this Friday at 5:00 pm. Brews by: Fort Point Beer Co.”

Store Entrance
Flowers and beer-tasting lead the way inside

Inside the Store

Once inside, I noted the size of the store immediately. Though it resembled a Whole Foods or a local food co-operative, the store was scaled down to fit a wide selection of products.

Produce section
Produce section at the grand opening

As I walked through the aisles, I looked up to find that there were no signs indicating the products in each aisle. Instead, there were a great number of employees roaming in the miniature grocery store. When I asked a floor employee where I could find a certain product, he led me directly over to the aisle and gave a few short product recommendations. It seemed that Market 5-ONE-5 was focused on knowledgeable and friendly employees to enhance the shopping experience, an approach that was unique to a small-format store with an organic-only selection.

Missing Labels?

Still, there something missing while I browsed through the aisles, and it took me a while to think of the answer. I kept seeing organic cookies and soups and soaps, but I found that there were no private label products. With Raley’s private label brand being so easy to identify, it came as a shock that they would pass on the opportunity to advertise it.

This may be the result of having very little competition nearby, as well as a slight boost to margins from both convenience pricing and organic-only products. Whatever the reason, it seemed that Raley’s was relying primarily on word-of-mouth marketing and customer loyalty to succeed with Market 5-ONE-5.


I became more convinced of this when I made my way to the food bar section of the store. In addition to a salad bar and hot food bar, the store offered fresh deli meals like soups and sandwiches. According to Yelp reviews of the store, this section was the crowd favorite, and several reviewers preferred it over the Whole Foods hot bar. Next to this was also a small coffee counter proudly displaying signs for a local coffee roaster.

A bit of background: since the city officially changed its title from the “City of Trees” to the “Farm-to-Fork Capital,” Sacramento and its residents have taken great pride in promoting local businesses and the food supply chain. When giving the option, shoppers who frequent grocery stores like Market 5-ONE-5 will typically buy local goods. The product selection in the store matched this sentiment.

After ordering my coffee (which was from a place called Temple Coffee, several signs told me) I sat down in the cafe area of the store to observe for a short while. Market 5-ONE-5 is currently partnered with Instacart, and a small sign near the food bar gave instructions for customers wanting their groceries delivered in the future. The store location makes it easy for Instacart to pick up groceries and deliver them to office buildings throughout downtown, from what I could tell.

Extra Sections

I got up and explored more of the store, stopping by the meat department and refrigerated sections. Though there was a wide selection of fresh meat and seafood lining back end of the store, and it was all ethically sourced (with the price tag to match). The refrigerated sectioned fared better in terms of price, fitting into the range of a typical organic grocer or food co-operative.

The wine aisle was reasonably large but not overwhelming, and featured many bottles in the $10 to $20 range that I had never seen before coming to this store. About one quarter of the wine came from local wineries in the Sacramento and Lodi, California area.

As I made my way to the checkout counter, I also had a closer look at the fresh produce section. Consistent with store policy, every item was organic. The selection was limited to what was currently in-season with some exceptions for popular fruits and vegetables. Though the area was small, the produce displays were meticulously arranged to make up for it.

Checkout counter
Checkout counters prior to opening last year

I finally checked out at a counter that looked like it belonged in a clothing store. There were no conveyor belts, magazines, or candy displays–just a cashier waiting to scan and bag your purchases. Though the experience was odd at first, I found that the transaction was more personal. I had no fear of holding up the next person in line or taking too long to finish my purchase.

Final Thoughts

I left Market 5-ONE-5 impressed by the range of products they offered in such a compact space. The lack of private labels items also was a significant surprise, and Raley’s seems to be fostering store loyalty rather than chain loyalty with this location. There were no in-store or online markers that suggested this was a Raley’s venture, focusing instead on the product selection and appealing to the downtown Sacramento crowd.

The store’s slogan is “Organics – Nutrition – Education,” fitting with the larger goal of providing ethical and sustainable goods to downtown residents. Based on the signage throughout, Market 5-ONE-5 aims to be a community space promoting local businesses. This idea was cemented in my mind when I walked out and saw a delivery van from the featured coffee roaster.

Coffee delivery van
Coffee delivery for the small-format Market 5-ONE-5

Even after nine months, Market 5-ONE-5 has a loyal customer base in Sacramento and continues to grow. To read about other stores in our Engage3 Visits series, you can start with our review of Falling Prices–where prices drop from $6 to $0.25 over the course of a week.

14 Feb 2019
Falling Prices

Falling Prices Store in Sacramento: A Review

The latest store turning heads in Northern California isn’t known for its purchase-tracking cameras or smart shelf tags—-it’s drawing crowds to its particle board bins. Engage3 visited Falling Prices for a full report on what the discounter has to offer.

Falling Prices, a store based in the Sacramento-area city of Carmichael, serves as a liquidator of Target and Amazon goods. The store is attracting customers through word of mouth and local news coverage, touting a unique pricing model. Though the store is only open 5 days a week, prices fall—as the store name suggests— from $6 to 25 cents throughout the week.

If any goods are left in the store by the end of Saturday, when everything is priced at 25 cents, they are thrown away. Interested shoppers have to balance savings and selection throughout the week before the store is restocked.

First Impressions

When I arrived in the parking lot, the thing I immediately noticed was the sign hanging from the storefront. “Falling Prices” was printed on a white banner held up by four ropes. It was a Thursday, or a $2 day at the store, and there was still a variety of items to search through.

Falling Prices Parking Lot
A full parking lot, largely due to the new Falling Prices store

Outside, one of the windowed walls displayed the price schedule and a list of the product types that the store carried. While standing outside, I noticed a steady stream of customers going in and out of the store, despite it being an ,early afternoon on a weekday.

Falling Prices Sign
An explanation and disclaimer outside of the store, as well as a category list

When I stepped inside, what caught my eye was the furniture in the store. Every piece of furniture, from bins to shelves to the checkout counter, was made from particle board. The shoppers paid no mind to the decor, and instead were busy sifting through the various bins.

The particle board bins were filled to the brim with shelf-stable food products and toys, among other items.  I could see dozens of shoppers wading through the bins, uncovering hidden objects, and placing them in their carts. Here, a four-pack of chocolate almond milk; there, children’s Halloween costumes of every size.

On the far end of the store was a section dedicated to holiday decorations. Wrapping paper, string lights, and home goods made up the bulk of the items here. Immediately next to this area was a bin full of showerhead replacements. Signage was unnecessary, as everyone in the store knew it was $2 Day at Falling Prices.

I continued through the aisles, stopping to search through the bins and pick up odd items. In my cart I carried a collection of bobbleheads, canned sparkling water, a pair of headphones, and a showerhead attachment from an earlier bin.

Showerheads at Falling Prices
Dozens of showerheads, all priced at $2

Despite the appearance of the store, I could feel the excitement of the shoppers around me. The combination of discounted items and a treasure hunt vibe made the store enjoyable to explore.

After taking a few pictures and retracing my steps through the aisles, I was ready to check out. The wait was on the longer side, but this was mainly from the sheer amount of items that customers ahead of me had picked up in the store. Each cart had 20 or more items inside, and I was tempted to go back and pick out a few more items.

I walked away from the store with more than I expected, both in purchases and in opinion. According to a news interview, the owner of the liquidation store is looking to expand to a second location. Bargain hunters may find stores of a similar kind popping up in the area, but competitors will struggle to find a pricing strategy clever enough to outdo Falling Prices.

Local news stations featured Falling Prices during its second week of opening, attracting a larger crowd of shoppers and more items to liquidate. In the video below from the KCRA 3 Facebook page, you can see a larger variety of the products available.

Falling Prices in Carmichael

😱 BARGAIN ALERT: 😱A new store in Carmichael is selling retail items that could otherwise be expensive for $6 and below!Get the details >>

Posted by KCRA 3 on Wednesday, January 16, 2019

This article is part of the Engage3 Visits series, where we explore concept stores and innovative retail technology. To learn more about our earlier visit to Sam’s Club Now in Dallas, you can read the blog here. For more information on our visit to Amazon 4-Star, the retailer’s customer-curated offering, you can click here.

11 Feb 2019
Winsight Grocery Business

Winsight Grocery Business: Engage3 leads in precision pricing

New visibility illustrates precision pricing on ‘known value items’

In an article detailing the looming tensions in the retail industry, Winsight Grocery Business cites Engage3 as a leader in precision pricing technologies for retailers.

The publication, analyzing the aggressive pricing strategies being put in place by various retailers, points out that there is one common thread in the price war. Winsight writes, “Today, retailers are monitoring prices with exacting precision, right down to the store level.”

This observation was fueled by a blog published by Engage3 co-founder, Tim Ouimet. In the blog cited by Winsight, he clarifies the trend towards dynamic KVIs that are reevaluated much more often than once a year. Technology is playing a larger role in competitive pricing as a result: “The analysis needs to come down to the store level, down to the shopper level, down to the daily level, and have items coming in and out of the KVI list at those lower levels.”

To illustrate the heightening competition in the industry, Winsight references a study published by Engage3 on the “Aldi Effect,” and also notes the growing tension between retailers and the supply chain. The modern retailer faces pressure not only from their competitors, but from suppliers and vendors as well. Tariffs may be a driver behind this pressure.

Pricing battles are becoming the norm, but we may see much more wide-reaching effects from an automated retail industry in the near future. To read the full article by Winsight Grocery Business, you can visit their site here.