Grocery Roundup: Retailers Tap Contextual Commerce; Kroger Expands Private Label

As food-at-home prices skyrocket and retailers absorb some of these rising prices in an effort to avoid losing shopper loyalty, many are seeking other ways to boost their profit margins. Some, for instance, are expanding their marketing opportunities for brands, offering higher-value in-store and online placements to boost their ad revenue.

One such strategy comes in the form of on-site video advertising. Lightbox, an out-of-home video network, announced Wednesday (June 29) the expansion of its retail media business to 2,800 supermarkets across the United States at grocers including Albertsons-owned and The Kroger. Co.-owned brands.

“Demand for these audiences is very high, and this is something our team has been working on for over a year,” said Lightbox CEO Greg Glenday in a statement. “We didn’t want to dip our toe in the water, we wanted to go big. These are high-frequency destinations — with American consumers going to the grocery store on average 1.9 times per week — and the screens provide an invaluable connection point for advertisers to reach audiences in brand-safe environments.”

Supermarkets are not the only retailers leveraging the increased engagement offered by video marketing to drive sales. Multinational meal kit company HelloFresh announced last week the launch of a video series on livestreaming service Twitch, Unleash the Feast, with cooking content centered on the service’s meals.

The launch leverages contextual commerce to drive sales outside of high-intent digital ecosystems, such as the brand’s own online shop.

“We’re excited to engage with consumers and fans on Twitch by creating entertaining and original content they can view and interact with,” said HelloFresh U.S. Chief Marketing Officer and Managing Director Jens Reich in a statement.

Kroger Invests in 35,000-Square-Foot Dairy Farm Expansion

Also in response to these rising food prices, shoppers have been making the shift away from national brands to lower-priced options such as private-label products.

Noting this shift, The Kroger Co., the U.S.’s largest pure-play grocer, is investing in its own brands selection. The company announced Friday (June 24) a $70 million line expansion at dairy product producer Tamarack Farms Dairy in Newark, Ohio, to produce aseptic milk products.

“Kroger is Fresh for Everyone, and that means we are committed to sourcing and manufacturing only the best and freshest products,” said Kroger Senior Director of Supply Chain and Manufacturing Doug Blacksten in a statement. “This cutting-edge innovation at Tamarack Farms Dairy underscores that commitment, improving our ability to offer high-quality dairy products to Kroger customers.”

PYMNTS research found that grocery shoppers have been opting for lower-price options such as private-label products. Findings from the May U.S. edition of PYMNTS’ Digital Economy Payments study, “Digital Economy Payments: How Consumers Pay in the Digital World,” revealed that consumers’ average spending on their grocery purchases fell between March and April even as the prices of the foods they were buying continued to rise.

Read more: PYMNTS Data Shows Consumers Switch to Lower-Priced Grocery Brands, Merchants

The study, which drew from a census-balanced survey of more than 3,000 U.S. consumers in April, found that shoppers spent $95 on average for their most recent grocery purchase when surveyed in April, a 14% decrease from $110 in March. Given that the amount of food consumers need every day has not decreased, this trend indicates that consumers are likely switching brands to more affordable options.

The Consumer Price Index for All Urban Consumers (CPI-U), reported by the U.S. Bureau of Labor Statistics (BLS) found that food prices overall rose 10.1% year over year in May, and food at home (i.e., grocery) prices increased 11.9%.

The Save Mart Robotic Delivery Pilot Comes to an End

With retailers and delivery services continuing to struggle with a difficult driver labor market, it would seem that any test of robotic fulfillment would be destined for success. However, it appears that this is not the case.

The Save Mart Companies, a California-based grocer that operates around 200 stores under several brands in California and Nevada, which had been testing robotic grocery delivery in Modesto, California, in partnership with autonomous vehicle company Starship Technologies, shows that this fulfillment method is not a surefire hit. The test is no longer running, local news outlet The Modesto Bee reported Wednesday.

A spokesperson for The Save Mart Companies, Victoria Castro, told the outlet that Starship “made the decision to exit Northern California” weeks ago. Additionally, she relayed that a message on the Starship app, through which Save Mart shoppers used to place their orders, stated, “Temporarily closed. We’re sorry we cannot deliver from this merchant right now.”

The test had been running since September 2020.

News outlet Grocery Dive reported that, when asked for comment, Starship sent a link to an announcement concerning “internal changes” at the technology company, including layoffs and closures of some locations. The company attributed these changes to “dramatic downward shifts” in the “global economy and investment market.”