Katie Galloway and Emily Nicholson, DevryBV Sustainable Strategies
Tres Lund is the President and CEO of Lunds & Byerlys, a family-owned company that operates 28 grocery stores in the Minneapolis-St. Paul area. Tres has served on the MPSC board since 2003, providing a successful retailer’s perspective as Rinse & Chill® technology was rolled out. Throughout his time on MPSC’s board, Tres has brought financial discipline and planning expertise, shepherding the company through a significant restructuring that has led to growth and a strong balance sheet over the years.
As someone who started out bagging groceries with his grandfather’s company and worked his way to the top, we were excited to hear Tres’ insights on consumer preferences and expectations in the grocery market, how product sourcing and branding have evolved to meet those needs, and sustainability priorities for Lunds & Byerlys and the broader retail grocery industry.
You represent the third generation in your family’s business. Could you talk about the company’s history and how it has grown and evolved over the years?
My grandfather, Russell Lund, started the business back in 1939 as a partner in the perishable department of Hoves grocery store on Lake Street in Minneapolis. He helped them successfully open two new locations, and in 1964, the stores were renamed to become our first branded Lunds stores. Throughout the 1970s and 80s, Lunds expanded and opened many new locations, and in 1997, we merged with the grocery chain Byerly’s. Merging the companies was not about becoming bigger. We’ve always been a family business with family values, so by merging two of the top grocers in the local market, we aimed to combine the best of both brands. We continue to see our familial values reflected in our 28 locations, with many of our team members being 2nd and 3rd-generation employees. We’re proud of our dedicated and experienced team and believe it’s an important point of differentiation for our brand.
You mentioned the importance of combining the best of both Lunds & Byerlys brands during the merger. How do you describe the L&B brand today?
Since day one we’ve focused on delivering quality, service, and expertise to our customers, and we work hard to elevate these values through our brand. Our stores have a high level of build-out with a consistent design for a unified and pleasant shopping experience. Our premium-tier private label is also a large part of our brand, with 5,000 Lunds & Byerlys private label products developed by our amazing executive chefs. We have a large R&D team that is focused on innovation and quality. In fact, one of our team members developed an innovative approach to aging meat, and now we have a culinary patent for the aging process. We also have very high standards and specifications for our produce and other products. Our customers are quite discerning, and they can taste the difference. Local restaurant chefs even purchase our products directly from the shelf because they know they can trust us for high-quality products.
How does your involvement on MPSC’s board align with Lunds & Byerlys’ focus on quality?
I had a desire to get involved with MPSC because of the potential impact their technology could have on the meat industry. We conducted shelf-life studies and found that products using the technology had a significantly longer shelf life. The technology acts as an antimicrobial intervention, making their products safer and more flavorful. When it comes to food safety, Rinse & Chill® delivers tremendous benefits, but enhanced flavor is something that appeals to us as well. For example, Great Range Premium Bison is a product we feature in our stores, and the texture and flavor profile of their bison products is the best around because they use Rinse & Chill®. We can taste the difference, and so can our customers.
What trends are you seeing in consumer preferences, and how is that guiding your sourcing and product selection?
We are seeing that an increasing number of customers are seeking products that are not just high quality but also high on attributes that align with their health journey. Based on our data, consumers are increasingly seeking products that are gluten-free, plant-based, organic, non-GMO, and more. To meet this increased demand, we set a goal last year to introduce 1,000 new products. We may have set the bar too low, as our category teams introduced over 3,000 new attribute-rich products last year. In our stores, we aim to make it easy for customers to identify these products. That is why nearly 22,000 products now highlight product attributes right on the shelf tag. On our online store, customers can filter our assortment by various product attributes to make their online shopping experience even easier and more personalized to their preferences.
Our customers value transparency in their purchases, especially when it comes to our sourcing. We have always prioritized sourcing from local suppliers when possible, and we like to support other family-owned companies. Yet we also emphasize the importance of using the best quality ingredients possible for our private label products, and that can require sourcing from other regions. For example, our marinara sauce uses San Marzano tomatoes from Italy because they’re considered the very best for authentic marinara. Additionally, our commitment to enhancing and expanding our product assortment has led us to new partnerships. We work with exceptional local producers, such as Krista and Steve, who craft Velvet Bees Honey Butter using their family recipe, and national producers, such as The Foraging Fox, which offers gluten-free, sustainably-sourced ketchup and was the first company to launch upcycled certified ketchup in North America. Our dedication to quality and service allows us to adapt to changing customer preferences while staying true to our values.
What signs are you seeing from customers and others in the industry about the need for sustainability initiatives?
Going green is not a choice for us, it’s a business imperative. Our customers want us to do it, and we are more profitable by doing so. For example, initially the industry believed that consumers needed open-air access to products and that doors on coolers would be a barrier. We started putting doors on our refrigerators and have continued to do so because we found that consumers quickly adapted and the reduction in energy loss was significant. The industry also believed that consumers preferred seeing their meat packaged in Styrofoam and plastic wrap, as it was perceived as fresher. However, we began sealing our fresh meat to reduce waste, and as a result, we saw an increase in sales. When we implemented our recyclable bag program, we received high praise from consumers seeking to reduce their plastic waste. Our customers support ESG, and we have leveraged this to become more profitable and environmentally friendly.
You mentioned your customers demand transparency and care about sustainability. What has Lunds & Byerlys done to implement sustainable practices in its operations?
Sustainability has been a priority for us for many years, although we don’t always talk about it in a big way because we know it’s a journey of continuous improvement. In 2007, we started focusing on ways to make the stores more efficient. Grocery stores are heavy energy consumers, and we wanted ours to be different. We installed new equipment, LED lighting, and solar tubes to act as secondary lighting. To reduce the environmental impact of our refrigeration, we switched to CO2 refrigeration, which has reduced refrigerant leakage and helped us achieve the EPA Green Chill certification. These changes have helped us reduce our energy use by 45%, saving us money and benefiting the environment.
We also use a Phood in our delis and food bars, which incorporates AI to collect data on the weight of food sold throughout the day so we can better estimate quantities. This helps us put out the right amount of deli products, which has enabled us to eliminate 150,000 pounds of food waste per year. We also participate in a food rescue program with Second Harvest Heartland, where we donate food that is still edible but will not sell on our shelves. Through this program, we rescue 3 million pounds of food every year. Local pig farmers collect the rest of our non-edible food waste, which diverts an additional 3 million pounds of food.
To reduce our water usage, we recently started using dry misting, which gently wets the produce without soaking it. This has helped extend the shelf life of our produce, resulting in less food waste and reduced water consumption. In terms of our sustainability, we know it’s a never-ending journey, and we will always continue to look for opportunities to further reduce our impact on the environment through everything from energy efficiency and waste reduction to water usage and sustainable packaging.