The Lempert Report LIVE

Declining Dollar Stores, Blue Foods Revolution, and AI in Nutrition: A Deep Dive into Affordable Retail & Consumer Health

July 10, 2023 Phil Lempert Episode 85
The Lempert Report LIVE
Declining Dollar Stores, Blue Foods Revolution, and AI in Nutrition: A Deep Dive into Affordable Retail & Consumer Health
Show Notes Transcript

Is the dollar store era coming to an end? We peel back the layers on the recent decline in Dollar General's stock and what it means for the future of affordable retail. Packed with insight into the blight of economically strained customers, we don't shy away from the tough questions and discuss the mounting relevance of cost-effective, nutritious food options. We also tackle the rising trend of 'blue foods' and their potential to revolutionize both health and sustainability, and ponder the paradox of low seafood consumption despite its enormous health and environmental benefits. 

Buckle up as Marcus Strip, co-founder of Spoon Guru, steps in to illuminate the burgeoning field of AI, particularly GPT and chatbots. He shares fascinating insights into their partnership with Google to create a cutting-edge AI for food, nutrition, and recipes. Our conversation takes an intriguing turn as we spotlight the UK's decision to postpone the ban on 'buy one, get one free' promotions. We scrutinize the repercussions of such promotions on consumer health and spending habits, while also examining the broader socio-economic factors involved. This episode is a must-listen for anyone seeking thought-provoking insights and in-depth analysis!

Phil:

Welcome to the Lempert Report LIVE. On today's broadcast Dollar General's new competition, a Purdue study reports that shoppers trust food labels, except those that say low-calorie, natural or tout health claims. Blue foods may be the solution for health and sustainability and, on the bullseye, the UK postpones the ban on Buy One Get One Free. Let's get started. So, Sally. It looks like, even though Dollar General and Dollar Tree have had a good run the past few years during the pandemic, that seems to be coming to an end. When you look at Dollar General's stock, the shares fell 20% after their earnings call and basically what they're saying is when high and middle-income shoppers feel strained, they tend to shift their spending, buying a chicken instead of beef, for example, but when Dollar General's core customers feel strained, they pull back completely. That's the difference between the Dollar Store customer CEO Jeff Owens said. Unfortunately, our customers are saying they're having to rely more on food banks, savings and credit cards. So what do you think? Does this mean Dollar Store, their run is over?

Sally:

Well, I certainly hope not, because this is an important outlet for a certain customer. Their core customer makes less than $40,000 a year, and now it is alarming to hear that these customers are having to pull back, which could be because of reduced SNAP benefits or reductions on their tax refunds. But either way, if they're pulling back, then it is an indication that we are experiencing more food insecurity. So I think all retailers need to look at this customer and how we can help them shop in an affordable way.

Phil:

Absolutely, and when we look, they also did a study that found that 13% of consumers experienced out of stocks. That's compared to 22% in January, so that's good news. Local food spending up 5% over last year. Inflation is 4%, so it's up just a tiny bit. And what they found is that there were unique differences between those who were employed and unemployed adults as to how often they eat at home versus eating out. They had expected that those who work on a regular basis have a higher income to change their food consumption, but that didn't really happen. So it's going to be an interesting space to watch how dollar stores either come back from this. We've seen a lot of activity in dollar stores, especially getting into healthier items, especially getting into more produce, and the question is going to be whether all this is going to put that on hold, which I certainly hope not, because that population needs healthier foods and affordable prices probably more than anybody else. Let's talk about blue foods. So blue foods is basically defined as those that come from the ocean or freshwater environments, and they have tremendous potential both health-wise as well as environmental-wise, and it looks like this paper that was published in the journal Nature, called the Blue Food Assessment, is really touting the fact that it's time to turn to seafood.

Sally:

Yes, and we talked about recently on the show here about the program where the USDA rescued a large amount of Alaskan salmon from this year and is now helping people have access to that, which is wonderful. But in this report, yes, they were looking at, their objectives were to look at nutrition, health, environment and livelihoods and how blue foods support all of those things. We want to have that vitamin B12 and omega 3 fatty acids for our overall health, and we know that people are lacking in those nutrients, so seafood can really help with that. And we also know that supporting our ocean systems and our blue foods that it can help the environment by reducing our use of agriculture and raising cattle for beef and other animals. And we also know that blue foods can support jobs, more jobs for people. So there are a lot of benefits at the industry as a whole looking at how we can support blue foods and get consumers more interested in them.

Phil:

And the problem still remains and this is one of the things that I think not only this group but supermarkets in general need to address is people are afraid to cook seafood. We've seen that for decades. And the per capita consumption of seafood is a fraction of what it is for beef or for chicken. So we really need to be smart about that because otherwise, frankly, we're just going to have some severe problems health-wise and environmental-wise. So we need to have our RD's that are out there. We need to have, you know, supermarkets really commit to having more in-store demonstrations, cooking demonstrations for seafood, giving out those recipes, because seafood is probably one of the easiest foods to cook, yet people are afraid to do it and it's been a conundrum for decades. And until we can get past that, I'm not sure that, with all this data that's out there from health, all this data that's out there about sustainability, we're going to be able to move the needle as it relates to seafood consumption. Thanks, Sally. There's lots of buzz surrounding chat, GPT and chatbots in general. On Lost in the Supermarket, we met with Markus Stripf, co-founder of Spoon Guru, who offers a clear look about what this technology is and what it's not, and why they partnered with Google to create the best Gen AI for food, nutrition and recipes. Here's what MarKus had to say. So when I again pick up the newspaper or look at TV, it seems like just about everybody who's in tech are saying wait a minute, we need to slow down on AI because we don't have the controls in place yet. Are these the kind of controls that they're talking about? about accuracy, about traceability? Is that the big challenge? And it seems that Spoon Guru and Google have overcome that challenge with what you're describing.

Markus:

Yeah, i think it's important that you architect a solution that is based on verified data sources, especially in an enterprise context. If you're a retailer and you use this type of technology in enterprise context, they zero risk or error or they zero room for error, because the potential damage to your brand is just too big. So the idea to have a framework that consists of verified data sources so you know exactly how the response or how the answer is being constructed, is really important. For example, would you want an Instagram influencer to give you medical advice or nutritional advice? Probably not, or at least you should know. Okay, here's the answer Generative AI software has come back with. At least you should be able to know. Okay, it's based on some scientific journal that was published or on some medical advice, or it wasn't Instagram, but at least you want to know where that piece of information has come from. And that's why we're excited about developing our capability within the Google framework, because it does put guardrails around how information is being processed and ultimately made available and exposed to consumers and users.

Phil:

On today's bullseye, the UK has made a bold move, and not one that I agree with. A ban was about to take place on Buy One Get One Free promotions on those foods and beverages that are high in sugar, salt and fat, commonly known in the European Union as HFSS. It's been pushed out to October 2025, as Prime Minister Sunak is stressing the fact that, because of rising food prices, it's not the time to eliminate these strong promotions. He cites that it's about consumer having choices during the UK's cost of living crisis. According to the UK's Office for National Statistics, our BLS, if you would. Food inflation in April 2023 was 19.1%. No question that it's unbearable for most UK families, but the UK, or the US for that matter, cannot ignore the fact that putting these heavy promotions on foods that are in high sugar, salt and fat realms does no one any good. Hattie Burt, senior policy and international projects officer at campaign group Action on Salt, told Food Navigator that "the government's own data shows that multi-buy promotions on unhealthy food caused people to spend 20% more than they intended. This marketing technique is applied to higher sugar products more than any other foods, resulting in consumers buying 6% more sugar than they otherwise would have done. If multi-bys on products that are high in sugar, salt and saturated fat were stopped, people would have money freed up to buy healthier products. Furthermore, such restrictions would force food and drink companies to place such offers and marketing tactics on healthier products, helping the population eat better. Hey, i have an idea. What if the government put through this ban right away but then supported buy one, get one free products that met a healthier criteria? Wouldn't that solve two problems simultaneously Help people's budgets and give them, and maybe even introduce them to, healthier offerings? Everyone is quick to cite the stats that show how eating healthier would save billions and trillions of dollars in health care costs. Well, let's take those dollars and compensate retailers and brands to offer these deep discounts on the foods we should be eating. The Lempert report is all about inspiring ideas, making our industry think and challenging each other. Let's think about being the shopper and how we can bring our supermarkets and our restaurants closer to meet their needs. I hope you'll be back to join us next week on the next installment of the Lempert Report LIVE, when we focus on the biggest and the best insights and the things that really matter. Visit us at SupermarketGuru. com all week long for the latest marketing analysis issues and trends and I'll see you back here next Monday at 2.30 pm Eastern for more.