The food world has always been hyper-competitive, and it’s now in the midst of transformations that will create new stars but also leave many industry stalwarts behind. Specialty food purveyors that connect with consumers, tell compelling stories, explore new flavors, pioneer convenient and healthy solutions and provide a transparent link to the sources of their products should thrive in this new world.

Those were among the many messages circulating at the Specialty Food Association’s annual Winter Fancy Food Show, held Jan. 21-23 in San Francisco. The show drew more than 25,000 attendees and 1,400 exhibitors and also featured a full slate of educational programming — 20 hours overall, highlighted by three “super sessions.”

Phil Kafarakis, the New York-based association’s president, opened one of the super sessions, a buyer panel dubbed “Selling Specialty,” by haling attendees as a “Food Innovation Nation.” “People like you are turning the food business upside down,” he said. “You are pioneers of a community that’s taking the industry by storm.”

The specialty food business, Kafarakis said, generates $138 billion in annual sales and accounts for 15 to 16 percent of all grocery sales. At this year’s show, he said, attendees could explore “three football fields of new stuff” to inspire them and help ensure that those numbers continue to grow.

 The buyer panel’s moderator, consultant Phil Lempert, aka “The Supermarket Guru,” told attendees they couldn’t ask for a more exciting time to be working in the retail food industry. “For the first time in a long time, working in food and grocery is cool,” he said. “Innovation in the industry is attracting the attention of people at Harvard and Stanford. The level of excitement is unbridled. I’ve never seen it before.”

The Winter 2018 version of Fancy Food showcased more new products than ever before, said Lempert, who has been a show regular for decades. “When I started coming, there were a lot of cheeses, sauces and snacks. Now, you see more stuff than you can imagine. It’s not the ‘fancy food show,’ it’s the ‘exciting food show.’”

The panel itself consisted of five industry veterans — Harley Butler of Shipt, Jeremy Gosch of Hy-Vee, Lynn Hochberg of Wawa, Jacqueline Ross of Ahold and Richard Tarlov of Canyon Market — and touched on a variety of hot-button topics.

On the subject of grocery delivery and pickup in the era of Amazon/Whole Foods, Walmart/Jet, etc., panel members discussed how the bar of consumer expectations continues to be raised. Just a few years ago, they said, consumers were excited when they got an Amazon delivery in a week. Now,  if it’s not there in four hours, they’re annoyed.

But Shipt’s Butler said that retailers need to keep in mind that efficiency is not the only goal of delivery/pickup. “If the high quality is not there, the consumer is not happy. It’s a balance between speed and quality.” To ensure that Shipt, an online delivery platform that was purchased by Target in December, sustains that balance, the company only hires about eight out of every 100 people who apply to be the shoppers who walk the aisles for their clients. Shipt also tries, whenever possible, to have the same delivery people deliver to the same customers to establish a personal bond, Butler said.

Hy-Vee’s Gosch said that while delivery is the current option of choice for consumers when it comes to alternatives to shopping the old-fashioned way, it’s certainly not the most cost-effective one for grocers. That’s why Hy-Vee is investing so many resources in refining curbside pickup and other alternatives to delivery. “It’s about how we take the friction out of it. As retailers, we win if they pick up.”

The success of Tarlov’s Canyon Market, a grocery store in San Francisco’s Glen Park neighborhood, is a reminder of how there are still plenty of people who choose neither delivery nor pickup — even if it means walking or taking a bus or train to a store like Canyon, which doesn’t have a parking lot.

And interestingly, Tarlov said, many of Canyon’s customers are high-tech professionals who would seem to be the ones most likely to take advantage of the new technologies. Instead, they enjoy a break from them. “We have a high-touch, high-service environment, which is an antidote to many people’s daily lives,” Tarlov said. “It’s an old-school model that works in a dense urban environment.”

That said, even though niche retailers like Canyon don’t share many SKUs with the Lidls and Aldis of the world, they’re still not immune from the pressures that everyone in the retail grocery world, big or small, is feeling. “You have to continually get better and better at data analysis, be smarter and more savvy to make this work,” Tarlov said. Gosch said Hy-Vee has had to slash prices on staples like milk in order to compete with Aldi. “You can’t afford to lose customers.”

Other panelists stressed the importance of differentiating your stores from those of Aldi, Lidl and other market disruptors. Ahold’s Ross said that unlike Aldi and Lidl, Ahold stores vary their offerings based on where the store is located. “We look at different things for our different banners,” she said. “The unique items, flavors, packaging that make our customers excited about products and make them want to buy more.” The key, she added, is to win the race to be first to market with such items.

What works for Wawa, said Hochberg, is a combination of the old and new.  The c-store chain’s customers love the instore experience, she said. But they love it a lot more when the convenience of mobile ordering is added into the mix. “It’s convenience at its best,” said Hochberg, who described retail foodservice as Wawa’s “point of differentiation” from its competitors.

A major goal for Ahold going forward is to continue to expand its private label programs, which currently account for 20 to 25 percent of the chain’s sales, said Ross. “It’s one of our key strategic pillars,” she said. “With private label, you can do a lot of trials, putting products out there more quickly” than is possible with name-brand products.

The panel listed many other industry trends that should remain top-of-mind in 2018, including:

• Organic and “free from”;
• Global flavors;
• Aromatic flavors (e.g. lavender);
• Plant-based alternatives (e.g. cauliflower crust pizza); and
• Protein alternatives.