By Glen Terbeek
Each week, we are offering both a Premise and a Challenge to MNB users. The Premise will seek to state either a fact of life for the food industry as it currently exists, or a trend that seems to be developing as retailers and manufacturers seek a better way of conducting business.
Your Challenge is to respond by identifying the best ideas and examples that typify where the industry ought to be heading.
Week One
Premise:
The two most frequently expressed opinions in the food industry often are:
• “What a great idea? Who else is doing it?”
• “We can’t do that, we’re too big.”
Challenge:
What, in your mind, is the best idea in the food industry that has not been embraced by the major players? What makes it the best idea, and why hasn’t it been embraced?
Winning responses:
We received many good thoughts on the above challenge, and I would like to show excerpts from the finalist’s responses, followed by my thoughts and reasons why they were chosen.
Richard Lowe writes; “We have put the local grocer, butcher, and bakery out of business. Not many can walk to the corner merchant any more. We need to re-evaluate our principals. Maybe the French and Italians have the right idea. Maybe small is really better.”
What I liked about Richard’s thoughts was the notion of the local store for the local marketplace. After all, each store is in a different marketplace defined by its shoppers and its competitors, so of course this makes sense. Are we past the low hanging fruit opportunities of mass marketing, and need local market precision to win? Can our current organizations and business processes support this?
Ian Ricketts said the following, which supports Richard's thoughts: “One to One marketing. Building a store that meets the needs of a chosen customer base. From choice of merchandise to time at the check-out. By using the one to one formula for success, customers have a stake in the development of their stores product mix and services. The store becomes their store and is not vulnerable to competitors’ promotions.
It (one to one) hasn't been embraced because most retailers either don't have the data or don't know how to mine the data that would allow them to find their most profitable customers and build their store to exceed their needs individually. Conventional wisdom tells them to go after all the customers within a given marketplace with a plan that appeals to the majority of customers but sadly doesn't quite satisfy anyone.”
Again, the focus on the local store and its customers is the theme. And I really like the idea of the shoppers “owning” the store and wanting to improve it. Of course, that means there is someone shoppers can talk to. And the point about the data is interesting. Do we need data mining and other techniques because management is too far removed from the marketplace to make common sense decisions? Because they aren’t relevant anymore due to centralization? The further away from the action means there are more and more layers of organization to penetrate and more and more risks to worry about and more and more data to support “risk free” decisions (I E Who else is doing it). As a CEO of a very successful independent retailer said when I asked him if he feared all the big retailers visiting his store: “By the time they get the idea though their organization and rolled out to their stores, we will be on to the next best idea”.
George Morrow said the following: “Having worked in stores since I was 16 ( 39 years ago ) I believe the most important idea a chain food store could come up with is to give the store manager much more leeway in how they run their stores and let them personalize their own store to fit their neighborhood and clientele. . Why don’t Albertsons, or Safeway, or Kroger have the courage and the foresight to turn their managers loose, with some supervision, of course. That is the key to me; MAKE THEM (customers) WANT TO COME BACK AND FEEL WELCOME. If a chain can do that, I believe they will survive. We just want to be treated respectfully and, hopefully, appreciated for our patronage of that store.
Again, more local store thoughts. Do we need to go back to where we came from, the local store environment supported with today’s logistics efficiencies? Has the industry become an agent of the manufacturers at the expense of not being an agent of the customer like the old corner store was? Do we measure task productivity in the store to a point that we interfere with marketing productivity, getting the shopper to return?
Earl W. Engleman writes the following: “The best idea in the food industry that has not been embraced by the major players is simply, what Wal Mart's entry in the supermarket food business did, "Wal Mart Style". The idea: volume buying power price advantages, delivered to the average consumer! Here you have another retail industry, enter into the retail food marketplace and virtually take over, by actually doing everything that the others always said they were delivering
Why is it the best idea, it's the original idea of a supermarket concept! Why hasn't it been embraced? Fear of the unknown, the inability to accept change in a highly dynamitic marketplace. Failure!”
I put Earl’s thoughts here because in many respects he is right about Wal-Mart, and in some respects he is wrong. It’s hard to remember, but Wal-Mart had a handful of stores in 1970, so I argue they didn’t have buying power at that time. Manufacturers didn’t even know if they should do business with them. Wal-Mart did several things right. First they realized that the only place that the industry makes money (retailers and manufacturers) is at the store, so that is their only focus. All their business processes from Retail Link to net, net buying, to lowest cost logistics are so they have complete visibility of each stores performance. They don’t make money anywhere else in their minds. Second, they realize that every day low prices on food and other frequently purchased items only makes sense to the consumer, and will pull shoppers to their stores on a regular basis. Remember the slogan on their early stores, “Everyday low prices on names you can trust”. Has the supermarkets’ dependence on trade dollars in the past years clouded their vision of the real performance at store level? Has it emphasized centralization and consolidation around supply chain, while at the same time moving away from the shoppers needs? Has Wal-Mart defined the new (or should I say old) business process around each stores performance?
And lastly, Greg VanOverloop writes: “Best Idea: Taking care of each customer the best I can. Why the best? It empowers everyone in the organization to do what it takes to make 1 or 100 customers satisfied. It is the most inexpensive yet most effective tool in the box to retain customers.
Barriers:
1. Everyone in the company thinks the above idea is being embraced because it’s a company mantra or that some new technology (loyalty cards, new front end systems, coupon dispensers) is introduced and therefore its no longer up to me.
2. The above is only embraced if senior and middle mgt. practice it in word and in deed when visiting retail or doing their job at their desk. The decisions made have to be upheld by the above. Who is setting the example? Who is expecting the above? Who is measuring the above? Who is listening to the customer? If all 10,000 associates in an company of 10,000 cannot answer “I am", then the best idea starts to fail."
Greg points out two very good points. Loyalty is an attitude first, maybe supported by a system second. And two if the senior management is focused on anything other than the stores markets performance and their shoppers, there is a problem. The associates in the stores know when they are not listened to. When this happens, the associates’ attitude becomes one of “who cares”. A good question to ask any retailer is “Who is responsible for each stores performance?”
The answer most often given is everyone is and no one is! Enough said.
Summary:
The response from these five winners point out the obvious: that the industry’s organizations, measurements and business processes are not in alignment with the marketplace realities of today and for sure tomorrow. In general, they are built around central buying and distribution to a common, standard store, when saturation, slow population growth and outside competitors dictate that the local store and its shoppers are more important. Fortunately, there are several very good exceptions to this rule; they tend to be privately held independents who are in the stores all the time.
Each week, we are offering both a Premise and a Challenge to MNB users. The Premise will seek to state either a fact of life for the food industry as it currently exists, or a trend that seems to be developing as retailers and manufacturers seek a better way of conducting business.
Your Challenge is to respond by identifying the best ideas and examples that typify where the industry ought to be heading.
Week One
Premise:
The two most frequently expressed opinions in the food industry often are:
• “What a great idea? Who else is doing it?”
• “We can’t do that, we’re too big.”
Challenge:
What, in your mind, is the best idea in the food industry that has not been embraced by the major players? What makes it the best idea, and why hasn’t it been embraced?
Winning responses:
We received many good thoughts on the above challenge, and I would like to show excerpts from the finalist’s responses, followed by my thoughts and reasons why they were chosen.
Richard Lowe writes; “We have put the local grocer, butcher, and bakery out of business. Not many can walk to the corner merchant any more. We need to re-evaluate our principals. Maybe the French and Italians have the right idea. Maybe small is really better.”
What I liked about Richard’s thoughts was the notion of the local store for the local marketplace. After all, each store is in a different marketplace defined by its shoppers and its competitors, so of course this makes sense. Are we past the low hanging fruit opportunities of mass marketing, and need local market precision to win? Can our current organizations and business processes support this?
Ian Ricketts said the following, which supports Richard's thoughts: “One to One marketing. Building a store that meets the needs of a chosen customer base. From choice of merchandise to time at the check-out. By using the one to one formula for success, customers have a stake in the development of their stores product mix and services. The store becomes their store and is not vulnerable to competitors’ promotions.
It (one to one) hasn't been embraced because most retailers either don't have the data or don't know how to mine the data that would allow them to find their most profitable customers and build their store to exceed their needs individually. Conventional wisdom tells them to go after all the customers within a given marketplace with a plan that appeals to the majority of customers but sadly doesn't quite satisfy anyone.”
Again, the focus on the local store and its customers is the theme. And I really like the idea of the shoppers “owning” the store and wanting to improve it. Of course, that means there is someone shoppers can talk to. And the point about the data is interesting. Do we need data mining and other techniques because management is too far removed from the marketplace to make common sense decisions? Because they aren’t relevant anymore due to centralization? The further away from the action means there are more and more layers of organization to penetrate and more and more risks to worry about and more and more data to support “risk free” decisions (I E Who else is doing it). As a CEO of a very successful independent retailer said when I asked him if he feared all the big retailers visiting his store: “By the time they get the idea though their organization and rolled out to their stores, we will be on to the next best idea”.
George Morrow said the following: “Having worked in stores since I was 16 ( 39 years ago ) I believe the most important idea a chain food store could come up with is to give the store manager much more leeway in how they run their stores and let them personalize their own store to fit their neighborhood and clientele. . Why don’t Albertsons, or Safeway, or Kroger have the courage and the foresight to turn their managers loose, with some supervision, of course. That is the key to me; MAKE THEM (customers) WANT TO COME BACK AND FEEL WELCOME. If a chain can do that, I believe they will survive. We just want to be treated respectfully and, hopefully, appreciated for our patronage of that store.
Again, more local store thoughts. Do we need to go back to where we came from, the local store environment supported with today’s logistics efficiencies? Has the industry become an agent of the manufacturers at the expense of not being an agent of the customer like the old corner store was? Do we measure task productivity in the store to a point that we interfere with marketing productivity, getting the shopper to return?
Earl W. Engleman writes the following: “The best idea in the food industry that has not been embraced by the major players is simply, what Wal Mart's entry in the supermarket food business did, "Wal Mart Style". The idea: volume buying power price advantages, delivered to the average consumer! Here you have another retail industry, enter into the retail food marketplace and virtually take over, by actually doing everything that the others always said they were delivering
Why is it the best idea, it's the original idea of a supermarket concept! Why hasn't it been embraced? Fear of the unknown, the inability to accept change in a highly dynamitic marketplace. Failure!”
I put Earl’s thoughts here because in many respects he is right about Wal-Mart, and in some respects he is wrong. It’s hard to remember, but Wal-Mart had a handful of stores in 1970, so I argue they didn’t have buying power at that time. Manufacturers didn’t even know if they should do business with them. Wal-Mart did several things right. First they realized that the only place that the industry makes money (retailers and manufacturers) is at the store, so that is their only focus. All their business processes from Retail Link to net, net buying, to lowest cost logistics are so they have complete visibility of each stores performance. They don’t make money anywhere else in their minds. Second, they realize that every day low prices on food and other frequently purchased items only makes sense to the consumer, and will pull shoppers to their stores on a regular basis. Remember the slogan on their early stores, “Everyday low prices on names you can trust”. Has the supermarkets’ dependence on trade dollars in the past years clouded their vision of the real performance at store level? Has it emphasized centralization and consolidation around supply chain, while at the same time moving away from the shoppers needs? Has Wal-Mart defined the new (or should I say old) business process around each stores performance?
And lastly, Greg VanOverloop writes: “Best Idea: Taking care of each customer the best I can. Why the best? It empowers everyone in the organization to do what it takes to make 1 or 100 customers satisfied. It is the most inexpensive yet most effective tool in the box to retain customers.
Barriers:
1. Everyone in the company thinks the above idea is being embraced because it’s a company mantra or that some new technology (loyalty cards, new front end systems, coupon dispensers) is introduced and therefore its no longer up to me.
2. The above is only embraced if senior and middle mgt. practice it in word and in deed when visiting retail or doing their job at their desk. The decisions made have to be upheld by the above. Who is setting the example? Who is expecting the above? Who is measuring the above? Who is listening to the customer? If all 10,000 associates in an company of 10,000 cannot answer “I am", then the best idea starts to fail."
Greg points out two very good points. Loyalty is an attitude first, maybe supported by a system second. And two if the senior management is focused on anything other than the stores markets performance and their shoppers, there is a problem. The associates in the stores know when they are not listened to. When this happens, the associates’ attitude becomes one of “who cares”. A good question to ask any retailer is “Who is responsible for each stores performance?”
The answer most often given is everyone is and no one is! Enough said.
Summary:
The response from these five winners point out the obvious: that the industry’s organizations, measurements and business processes are not in alignment with the marketplace realities of today and for sure tomorrow. In general, they are built around central buying and distribution to a common, standard store, when saturation, slow population growth and outside competitors dictate that the local store and its shoppers are more important. Fortunately, there are several very good exceptions to this rule; they tend to be privately held independents who are in the stores all the time.
- KC's View:
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Thanks from both Glen Terbeek and MNB for all the terrific responses we got to Week One of our “BIG IDEA Beat” contest.
All five of this week’s winners will receive copies of Glen’s book, Agentry Agenda.
And look for next Monday’s “BIG IDEA Beat” contest challenge…exclusively here on MorningNewsBeat.com.
