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Notes and commentary from the FMI Show in Chicago…
The image that seems to stay with us, after four days in Chicago, is that of Soldier Field, the grand old football stadium that could be seen from the road as one went from hotel to convention center. Except that Soldier Field is grand no more; in an effort to keep the shell of the building and yet upgrade the facility, the architects have created something that looks like a spaceship sitting atop the Roman-style columns that used the dominate the site. It is a state of the art facility built inside an old, traditional stadium -- and it doesn't look like the pieces fit. It is, in fact, one of the ugliest monstrosities we've ever seen.

Perhaps this is an apt metaphor for what food retailers are trying to do today -- to fit what they believe to be modern imperatives within an old shell. It is possible that they won't fit, that the result will be ungainly and ugly, and that it would have been more effective to tear down and rebuild, or to simply strengthen the structure as it has existed for so many year.

In the waning hours of the 2003 version of the annual Food Marketing Institute (FMI) exhibition and convention, one thing seems clear: mainstream supermarket retailers have a lot of tough decisions to make and actions to take if they want to stay in the game.

And the same goes for the manufacturers that supply them. The demands of 2003 retailing demands much more than just putting up big (or medium or even, in some cases, small) booths from which to hawk the latest line extension or new product.

It isn't that the demands of the present and the future are easily determined; the choices can be vast, the rationales muddied, the logic uncertain, the destination shrouded in the fog of indecision.

Tuesday's morning Super Session, featuring three speakers with diverse views of consumers, technology and the economy, highlighted just how confusing the competitive road can be.

After all, Barry Asmus, senior economist at the National Center for Policy Analysis, told the audience that "information has always been power." And then Edie Weiner, president of Weiner, Edrich, Brown, Inc., differed: "Information is not power. Implementation is power," she said.

Asmus said that the next economic expansion in the US will be "greater than the last one." And then Gerald Celente, founder/director of the Trends Research Institute, suggested that "this is as good as it is going to get, and it could get a lot worse."

Who is a retailer to believe? (The folks we spoke with wanted to believe Asmus, but were afraid that Celente might be right. No wonder so many people are paralyzed…)

That's not to suggest that the morning speakers didn't have ideas to share with the retailers in attendance for how they could build consumer appeal and continue to grow their businesses. In one way or another, they all focused on the notion of supermarkets as solutions -- not exactly a radical notion, but at least they came at it from different directions. Celente, for example, noting that "food scares could have a devastating effect," suggested heightened emphasis on food safety…as well as providing solutions to "overworked, over-stressed and under-loved" consumers who "want food fast, want it easy, want it to taste like home cooked meals, and they want it cheap." (If consumers really are under-loved, making them feel loved when they enter the store and buy their food certainly is a novel approach to marketing, at least for the supermarket.)

Weiner focused on the aging baby boomer generation. "People 35 to 70 years old are not aging. At least we think we're not. (We expect the marketplace to help us stay immortal.) If you lose your hair, there's Rogaine. If you lose sexual function, there's Viagra. If you lose brain power, there's ginkgo. We've moved the outer edge of middle age to be older, and as we get closer to 70, we'll move it again," she said, suggesting that baby boomers expect the market to help them address these issues. (Supermarket as fountain of youth? Again, a somewhat novel approach, and worth consideration.)

But are these approaches that really fit? Or would a retailer's attempt to adopt them within the context of the existing business model be unworkable? Does adopting such approaches really call for tearing the whole thing down and starting all over again?

Easier said than done, certainly, but it is possible to reinvent the entire business. Sometimes, it isn't just possible, but absolutely necessary. At Monday's Learning Lab for independent operators, Stuart Lowry of Tiger Fuel, a Virginia-based independent convenience store company, told the audience how his chain had been facing declining gas margins, tough price competition, and even its own form of "category killer" in the form of express lube chains that threatened to take away the oil-change-and-car-repair business it had built up over decades. His company's solution? To close all the service bays and completely re-engineer the business as "The Market," focusing on fresh food. It still sells gasoline, but it far less reliant on it. And the foodservice portion of the enterprise has become so successful that it has expanded into catering, and even is running cafeterias for a local manufacturing plant and a local hospital.

It can be done.

But in the current competitive environment, it requires that kind of innovation, imagination, and inspiration.

It also requires the participation of the manufacturer, for this is a daunting task that the retailer faces, one that will require every bit of assistance that can be elicited from outside sources.

Tomorrow, MNB will feature our annual, highly subjective list of the "10 best-tasting things" from this year's show…some from the FMI side of the floor, and some from the Fancy Food Show sponsored across the hall by the National Association for the Specialty Food Trade (NASFT). In advance of that, however, there are a couple of anecdotes worth relating that illustrate where the manufacturer community can be found wanting…or at least a little shy of inspiration.

We were walking through the exhibit hall and bumped into someone we've known for a number of years. We asked what he'd seen that was interesting, and he showed us one particular food item that he thought was good. How does it taste, we asked…and he replied, "Not bad." Then he showed us another food product, and when we asked how it tasted, he repeated, "Not bad." This perplexed us a bit, and we asked if perhaps he was setting the bar a little low. "Hey," he said. "This is the FMI side of the floor. The stuff at the Fancy Food Show tastes better."

To a great extent he was right…and that, it seems to us, is a central and cancerous problem that affects the American supermarket industry. Too much food that is uninspiring. Too much food that is not distinctive. Too much food that is "not bad." While there were some good products to be eaten on both sides of the exhibit floor, on the FMI side there were too many so-called spicy hot dogs that tasted just like regular hot dogs (because heaven forbid they be too spicy and not to everyone's taste). There were too many drinks and cookies and desserts that simply were undistinguished -- or worse, undistinguishable. That's bad for the manufacturer, and bad for the retailer.

To some extent, it seems to us that innovation and excitement may get bled out of the industry by consolidation and acquisition. One perfect example, it seems to us, was the Ben & Jerry's booth, found in Unilever's pavilion.

Before its acquisition by Unilever, Ben & Jerry's FMI booth always was a hot spot -- lots of energy, lots of ice cream, and excited staffers wearing tie-dyed t-shirts pumping up the company's image and products.

This year? One small counter, five flavors of ice cream, and one lonely woman scooping it, wearing a prim white blouse and with her brown hair tied back in a bun.

No excitement. No energy. And we think that the equity of the Ben & Jerry's brand gets devalued, gets commoditized. If the manufacturer doesn't capitalize on a brand's traditional image and energy, then what are the odds the retailer will think of it as anything but just another ice cream brand…which is what it will become. Brand equity lost.

We're not picking on Unilever here (though we'd understand if some think differently). It's been a tough year for everyone, and it has a corporate structure that must be adhered to. This just struck us as a perfect illustration of a mainstream supermarket brand becoming undistinguished and undistinguishable, which serves nobody -- least of all the consumer.

And if the mainstream supermarket cannot offer food to the consumer that inspires them, then we believe that eventually many consumers will look for such foods elsewhere. (Or, just decide that the availability of such food isn’t all that important, and make all their decisions based on price, which isn’t helpful to mainstream supermarkets either…)

Tough decisions to make and actions to take.

To be continued…
KC's View: