Future of the Marketplace

Transparency, hospitality, reinvention, a diverse workplace culture — all are considered important for food retailers in the years ahead, and all were key topics of discussion at this year’s Food Marketing Institute (FMI) Midwinter Conference, held January 23–26, in Miami Beach, Fla.

Keynoters and expert panels at the gathering of food retail’s top executives argued that, during a time of rapid change, retailers must be prepared to redefine themselves — multiple times if necessary — or accept their inevitable decline.

“Our industry has never been as challenged as we are now,” affirmed FMI President and CEO Leslie Sarasin. “Redefining moments are coming around a lot more quickly and more frequently than ever before. … Even when we redefine, we must maintain our historical focus on customer service.”

Further, retailers need to be prepared to serve consumers “in the format they prefer,” be it in-store or digitally, Sarasin said. “We’re only as good as our next innovation, and that must involve efficiencies.”

Sarasin led a Q&A with restaurateur Danny Meyer, CEO of Union Square Hospitality Group and founder of Shake Shack and other eateries of various formats.

Despite the rise in technology, consumers still demand hospitality, he asserted: “The more high-tech we get, the more ‘high touch’ people crave.” Hospitality is a competitive edge, he pointed out, adding that “the customer must always feel heard,” regardless of whether they’re right.

Acknowledging the importance of grocerants, Meyer told retailers, “Your stores increasingly will have to have eat-in opportunities. … The asset you have is access to the best possible food sources.”

Feeding the World

Mark Baum, FMI’s chief collaboration officer, moderated a panel discussion on “The Future of Food,” featuring Mike Frank, VP global commercial at Monsanto; Kirsten Tobey, chief innovation officer for Revolution Foods, which creates healthy prepared meals for schools and retail; James McCann, COO of Ahold USA; and Joel Bourne, National Geographic journalist and author of “The End of Plenty: The Race to Feed a Crowded World.”

According to Frank, to meet the world’s demand for food, farmers will need to double their output over the next four decades within the same land footprint, a feat he called “one of the most important challenges of the next 35 years.”

Bourne acknowledged that technology is needed to feed a growing population, but noted that there’s an issue of perception. Like the backlash against the use of synthetic growth hormones in milk production that helped drive organic dairy, “we haven’t seen the health and environmental problems that have been feared” from modern ag practices, he noted.

Frank told PG after the session that while Monsanto has websites that explain its technologies and dispel myths about them for consumers, perhaps his company needs to partner with retailers to help promote these resources to grocery customers. “We think the vast majority of Americans are open-minded about this issue,” he said, calling it a “great opportunity for dialogue.”

McCann noted that years ago, “customers were prepared to trust a company,” but that now they have access to a bewildering amount of data. “If we can provide really good information, customers can make informed choices,” he said. “It’s our role as an industry to enable that choice.”

People are becoming more aware of food, “but affordability is an enormous issue,” McCann added. “We need to find the blend that works, so poor families can feed their children protein.”

Baum led a second panel that took on “The Future of Shopping,” consisting of Tom Philips, director of Deloitte Consulting; Bob Wheatley, CEO of Emergent Healthy Living; Tracey Massey, president of Mars Chocolate North America; and Brandon Barnholt, president and CEO of KeHE Distributors.

Philips outlined a new study by Deloitte, the Grocery Manufacturers Association and FMI on how new factors have risen alongside the historic main purchase influencers of taste, price and convenience; members of the group discussed the study in an exclusive interview on Progressivegrocer.com.

Stores Here to Stay

Click won’t surpass brick in sales, at least where groceries are concerned, insistedThom Blischok, chief retail strategist for PricewaterhouseCoopers (PwC) and a panelist for “The Future of the Marketplace.” Moderated by Rorit Bhargava, CEO of Influential Marketing Group and professor of global marketing at Georgetown University, the discussion dealt with how the grocery retailing marketplace will evolve in the years ahead.

The panel also included Scott Moses, managing director at Sagent Advisors, and Suzy Monford, CEO of Andronico’s Community Markets, a five-store chain in the San Francisco Bay area.

“The store is alive and well,” Blischok declared, observing that since retailers began to focus heavily on the perimeter, “people have found it’s actually fun to shop again.”

In 2016, Blischok asserted, the trends to follow are local, experiential and a return to the store. Even for omnichannel retailing, grocers need to determine how best to use their stores as an asset. “Integrate what’s in-store and online,” he said, noting that “transparency is really critical.”

Monford agreed. “Brick-and-mortar is here to stay, but there will be fewer stores in the future,” she said, anticipating smaller locations that will handle custom orders and click-and-collect fulfillment.

Blischok added: “Then years ago, the question was, how big can you get; now it’s, how small can you get? The real question is, how relevant can you get — what size will best service your community?”

Stock-up trips are diminishing, he said: “If there’s one trip that will shift this year, it’s the restaurant trip.”

Moses, noting that restaurants have rebounded since the recession, when grocers benefited from fewer people eating out, observed that grocers “need another reason to be a destination.” The two most important areas for retailers this year, according to Blischok: dayparting and merchandising innovations. “Own those,” he advised.

Embracing Talent

Employees are as precious as customers, and both will vote with their feet — one of the key takeaways from a panel discussion of strategies for driving growth and competitive advantage, hosted by the Network of Executive Women (NEW) and American Express.

CEOs said attracting and keeping younger workers is one of their biggest challenges, according to the results of Accenture’s 2015 College Graduate Study, presented by Gerarda Van Kirk, partner for change management consulting at Accenture.

The next five years will see a shift from Baby Boomers to Millennials as the primary workforce generation, Van Kirk noted, at which time existing “ways of working” may not engage the changing workforce majority.

For example, she said, Millennials look for development opportunities, work-life integration, transparency and customization, compared with the “just work hard and pay your dues” mindset of earlier generations. Meanwhile, Generation Z — the next group following Millennials — values teamwork and meaningful tasks, and is willing to stay with employers longer.

Of 2015’s college graduates, only 15 percent wanted to work for large companies; 64 percent were looking for more education, 60 percent wanted a fun social atmosphere, and 64 percent expected a highdigital experience, the Accenture study revealed.

Corporate culture, mentoring and constant engagement are critical for retention in today’s workforce, the panel concluded.

Kerrie Peraino, SVP of global talent management for American Express, aimed to “debunk the myth that Millennials don’t want to come into the office” — they do, she countered, but they want a more flexible, casual and social environment.

“Culture is the single biggest competitive advantage anyone can have,” said Glenn Hartman, SVP of channel business development for Starbucks, noting that while companies can buy technology, “culture is homegrown.”

Sabrina Wiewel, SVP and chief customer officer at Hallmark, stressed the importance of social consciousness, toward employees and customers alike. She recommended that employers invest in inclusion councils to better understand marketplace objectives that reflect diversity.

Peraino advised building relationships and being advocates for employees’ advancement. The so-called “career conversation,” or regular talks between leaders and teams about “what’s next, and when,” is crucial: “You have to have a sense for what’s meaningful to them,” she said. “It’s the single most important thing our leaders can do in a highly competitive market.”

NEW CEO Joan Toth concluded: “We need a workplace culture that matches our workforce, not the other way around.”

High Honors

FMI presented its Sidney R. Rabb Award to Fred Morganthall, EVP for retail operations at The Kroger Co. and former FMI chairman. Jerry Kehe, chairman of the board of KeHE Distributors, received FMI’s Herbert Hoover Humanitarian Service Award. J. Alexander M. “Sandy” Douglas Jr., EVP of The Coca-Cola Co. and president of Coca-Cola North America, received FMI’s William H. Albers Award for Industry Relations.

Additionally, Randy Edeker, chairman, CEO and president of Hy-Vee Inc., received the Grocery Manufacturers 2016 Association Industry Collaboration Leadership Award.

“Culture is the single biggest competitive advantage anyone can have.”
—Glenn Hartman, Starbucks