Grocery Outlet shores up ‘red alerts’
Since January 2011, when the Food Safety Modernization Act became law, Americans suffered 37 deaths and 1,753 pathogen illnesses (such as listeria and salmonella) linked to food recalls. Contaminated food sickens 48 million Americans per year, show recent FDA and Food Safety Inspection Service statistics compiled by U.S. PIRG.
In 2012 alone, federal agencies (FDA, U.S. Department of Agriculture, and the Consumer Product Safety Commission) reported nearly 900 product recalls.
“Food safety is at the top of consumers’ concerns right now,” Tom McMahon, vp-sales and marketing, Grocery Outlet, told The Lempert Report in an interview, during which he detailed how and why the chain modernized its internal ‘red alert’ system with the electronic Recall InfoLink system in 2012 following a full quarter of mock recall tests.
“Manual red alert worked well for us,” said McMahon, estimating that Grocery Outlet is involved in 20 to 30 recalls per year. That’s fewer than retailers that carry the same items consistently, because GO buys opportunistically. But the chain has been adding 20+ stores a year, and is now up to 190 independently owned and operated units ringing up $1 billion in yearly sales. “It became important for us to scale as we grew. We would ring a bell and 20 to 30 people would phone stores to pull recalled products from shelves within 30 minutes of notification. But this process wasn’t scalable,” he noted.
Under Recall InfoLink, once GO receives a recall notice from a supplier or distributor, the product buyer activates an alert. From that point, two GO project managers—one on the supply side and another on the operations side—manage the electronic system to inform stores and have them follow disposal instructions. Notifications are simultaneous, saving labor and time. Alerts can reach store managers by mobile, inventory status updates in real time, and electronic trails document activities so the chain can be reimbursed for recalled product and prove regulatory compliance.
While Albertsons, which also uses this system, can communicate to consumers they identify, GO has no frequent shopper program. Nevertheless, GO wants to reassure the public, so it uses the system to disseminate consistent talking points for store managers in local media interviews, store signage, and conversations with customers. Even when GO isn’t involved in a widespread recall, it may post signs with the gist of, “You may have seen this was on the news. We don’t carry it,” to give shoppers confidence.
“We don’t notice any appreciable drop in category sales after a recall. Most occur in perishables, which is our highest growth area,” explained McMahon.
The Lempert Report applauds Grocery Outlet for moving to improve on a manual process where consumer safety is concerned, and where speed and accuracy are critical.
The Recall InfoLink system was founded by Roger Hancock, a former Albertsons food safety and quality assurance chief who managed 250 recall events per year. He claims three key functional differences over FMI’s Rapid Recall Exchange—it notifies all customers of recall initiators and continuers at no cost to them, customized recall information can extend to the consumer level, and it generates more documentation reports per recall.
By contrast, FMI’s Rapid Recall Exchange is based on GS1 US global standards, and is supported by GMA and NGA. It counts Publix, Kroger, Wegmans, Wakefern, Hy-Vee and Harris Teeter among its users, which it claims to represent 85% of grocery U.S. all commodity volume. In mid-2011, Publix added a 6% weight to its vendor scorecard under the Recalls, Returns and Damages section; vendors not enrolled in Rapid Recall Exchange forfeit the 6%. Wakefern required all its vendors to join.