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    Published on: January 16, 2008

    Health Care, Generational Opportunities Highlighted At Industry Confab

    SCOTTSDALE, Arizona – Opportunity knocked on two doors yesterday as the final sessions of the 2008 Food Marketing Institute (FMI) Midwinter Executive Conference wrapped up. All that remains is for retailers to decide whether to answer them, and then to follow through with the hard work necessary to live up to the promise.

    The opportunities were in different areas – in health and wellness, and in catering to the next generation of shoppers. What they had in common, however, was that they reflected the rapid changes taking place in the retail world, and how retailers can – indeed, must - respond if they are to remain relevant.

    Perhaps the most tangible case was presented by the Coca-Coca Research Council of North America, which with the Institute for the Future has developed a road map for how retailers can create new value for shoppers by drawing a direct line between food and health. The possibilities were vividly reflected in a single illustration: a woman gets a prescription for sleeping pills filled, and the label that comes with the pill bottle informs her that eating foods such as bananas, whole wheat bread and turkey also can help one sleep.

    Such an approach would build on an awareness that already exists in the minds of some consumers, and that research has shown virtually all customer demographics would be open to. Archie McGregor, owner of McGregor Stores, said that health and wellness “seem to be pretty well dispersed from an interest standpoint.”

    In a video presentation made to the conference Sweetbay Supermarkets CEO Shelley Broader, who also chairs the council, noted that “food, health and wellness, and sustainability are all converging in the minds of consumers,” and that such an approach would help retailers redefine their futures, serving as a kind of portal to the healthcare system.

    The framework for such actions could take place as both static and dynamic in-store communications, could occur online, and also could take the form of comprehensive, integrated health care services. And Paul Boyer, a member of the council and vice chairman of Meijer Inc., noted that many of the pieces are already in place.

    “Customers already are connecting food and health to preventative treatment,” he said, noting that supermarkets already have the brand equity, consumer trust and, in many cases, pharmacies – all that remains is to develop the infrastructure that connects the dots.

    And, Boyer warned, “Other people are going to try to get there first. What would happen if health clubs decided to start selling the 10 superfoods? We have to make sure that we don't sit back and take our time.”

    The Coke Research Council plans to be rolling out its research and recommendations in a series of “chapters” that will be released in coming months.

    Full disclosure: MorningNewsBeat’s Michael Sansolo is a member of the Coca-Cola Research Council.

    The second major opportunity came compliments of futurist Martin Lindstrom, who painted a vivid portrait of the teenaged generation, which in a few years will be the center of the marketing bull’s-eye for retailers. “This is the generation on which you are going to be dependent very soon,” he said, “if not already.”

    In his presentation, Lindstrom took note of some basic truths – that kids are able to absorb far more material simultaneously than adults, as much as 31 hours worth of content in 24 hours; that they get far more of their information from the Internet than they do through more traditional means such as television, that they often are the decision-makers in their households, as parents either seek their approbation or advice when making major and minor purchase decisions. And, he said, “they know more about brands because they are exposed to so much,” which means they actually are educated consumers, which can make them even more demanding than their elders.

    Combine these realities with the fact that these same kids are highly proactive when it comes to communicating their own preferences to their peers. “Consumers are becoming even more powerful than you are at building your brand,” Lindstrom said, noting that more than 500,000 new blogs appear every week.

    And so, Lindstrom’s “opportunity” was this – retailers need to get aggressive about embracing these new shoppers and their needs and wants, and need to work to understand and take advantage of new communications realities. As in the case of the health and wellness opportunity, not to do so is risk irrelevance.

    • In other news, FMI CEO Tim Hammonds told the conference that FMI is working with the Grocery Manufacturers Association (GMA) and other food industry associations to develop a standardized online tool that will facilitate recalls in a more effective and efficient manner. It is expected to be available for industry-wide use in coming months.

    KC's View:
    Retailers should take these two challenges – and opportunities – very, very seriously … and start working on both right now.

    In the case of the health care challenge, the reality is that for some retailers – Whole Foods, for example – the lines between food and health already have been drawn…which is likely one of the reasons that the organic/natural foods category is growing so robustly. And Boyer is exactly right – if the mainstream supermarket industry does not take advantage of this opportunity, other retailers will…and supermarkets could find themselves on the sidelines watching the parade go by.

    As for the generational issue, Lindstrom was eloquently making a point that has been often made here on MNB, by me and many members of the community – it is critical for retailers to begin laying the groundwork now for marketing and merchandising plans that will appeal to young people.

    The parade is already under way. One can watch, or one can march. But survival isn’t a spectator sport.

    Published on: January 16, 2008

    As expected, the US Food and Drug Administration (FDA) formally released its report yesterday saying that food from cloned animals and their progeny is safe for people to eat.

    The move, according to the New York Times, clears the way “for milk and meat derived from genetic copies of prized dairy cows, steers and hogs to be sold at the grocery store. The decision was hailed by cloning companies and some farmers, who have been pushing for government approval in hopes of turning cloning into a routine agricultural tool. Because clones are costly, it is their offspring that are most likely to be used for producing milk, hamburgers or pork chops, while the clones themselves are reserved for breeding … The F.D.A.’s approval extends to cloned cows, pigs and goats but not other farm animals like sheep; the agency cited insufficient data on cloned sheep. The F.D.A. said meat and milk from cloned animals and their offspring would not be labeled because it was the same as conventional food and did not pose a safety risk.”

    Meanwhile, the Washington Post reports that the US Department of Agriculture (USDA) has asked US farmers to keep products from cloned animals off the market indefinitely, to give consumers time to understand and accept what the technological advance means, not to mention giving the government time to work with global trading partners to reassure them.

    However, it may be too late. As the Post reports, “even as the two agencies sought a unified message -- that food from clones is safe for people but perhaps dangerous to U.S. markets and trade relations -- evidence surfaced suggesting that Americans and others are probably already eating meat from the offspring of clones.

    “Executives from the nation's major cattle cloning companies conceded yesterday that they have not been able to keep track of how many offspring of clones have entered the food supply, despite a years-old request by the FDA to keep them off the market pending completion of the agency's safety report.

    “At least one Kansas cattle producer also disclosed yesterday that he has openly sold semen from prize-winning clones to many U.S. meat producers in the past few years, and that he is certain he is not alone.”

    KC's View:
    Obviously, consumers can feel reassured.

    Two government agencies issue conflicting statements, no matter how much they try to sound like they are in agreement.

    And then we find out that it is entirely possible, even probable, that food and milk from cloned animals and their progeny may already be in the food supply, and we don't how to what extent.

    Why should consumers feel anything but contempt for systems and organizations that work this way? Why should they trust a government in which the right hand doesn’t know what the left hand is doing? Why should they trust companies that seem to do whatever the hell they want to do, no matter what the government asks of them?

    Somebody explain to me why I, as a consumer, should believe anything that any of these people say.

    This is outrageous. And utter bull…

    Published on: January 16, 2008

    The Wall Street Journal reports that the weekly managers meetings, which have been taking place early Saturday mornings at Wal-Mart headquarters in Bentonville, Arkansas, since the days when Sam Walton founded the company, are being reduced in number.

    “Despite complaints over the years about the early morning timing, Wal-Mart has required managers at its headquarters to attend two meetings a month, staggering attendance to fit the employees into its headquarters auditorium. The meetings, which combined business discussions, celebrity visits and lots of cheering, provided a time for bonding and boosting morale.” But now, the meetings will be cut back to once a month, and held in a still-to-be determined location that can accommodate all managers, and will be broadcast to managers in other locations.

    KC's View:
    I can understand why executives at Wal-Mart got tired of the Saturday morning meetings, but somehow it does feel like a little bit of the company’s legacy is being lost in this new decision. One can kid about these kinds of sessions – and I’m certainly glad I don't have to attend them – but they were one of the things that made Wal-Mart different and distinct…and, I suspect, successful.

    Then again, sleeping late is never something to be quibbled with.

    Published on: January 16, 2008

    The Cincinnati Enquirer reports that the Kroger Co. has “become a leader in the emerging arena of cyber-shopping with a pilot project that uses technology to tie cell phone users – and more importantly their wallets and credit cards – to the chain’s millions of shopping carts. Kroger’s Mocapay approach, which could link the company’s estimated 40,000 check-out lanes to text-message-capable consumers in the year to come, is at least a long look at what is the Holy Grail of retail…”

    The story also notes that “Kroger does not yet have a hand-held system for shoppers to buy and bag goods as they move through the company’s 2,500 grocery stores, but it may not be long before it has no choice but to embrace shopper technology.

    “ Motorola announced today that will bring its $900 consumer scanners to 90 Stop and Shop Supermarkets following a successful pilot program in Pittsburgh. Stop and Shop has stores in Connecticut, Massachusetts, Rhode Island, New York, New Hampshire and New Jersey. The device, named an MC-17, offers a color display, allows customers to scan groceries, bag groceries and go to a self-service area to pay the bill without having to remove groceries from the cart to let a clerk process the buy and then bag and return the items to the cart.”

    KC's View:
    “Holy Grail” can be defined a lot of different ways. But what strikes me is that these kinds of systems have the ability to provide consumers with far more product information than they currently are getting, allow shoppers to decide what information is relevant to them, and give manufacturers and retailers the opportunity to be utterly, completely transparent.

    That’s my Holy Grail.

    Published on: January 16, 2008

    The Clorox Co. announced that it is adding a series of natural, biodegradable household cleaners called Green Works to its $4.8 billion family of cleaning and household products. The new brand will even carry the logo of the Sierra Club – the first time that the environmental organization has authorized (for a fee) the use of its logo on a cleaning product.

    “We'll definitely have some folks who are surprised by this decision, but also people who are pretty excited about it," Sierra Club spokeswoman Orli Cotel tells the San Francisco Chronicle. "We are supporting Green Works in hopes that more people will have access to these kinds of products, some of which aren't even available in the middle of the country."

    The Chronicle writes, “Sales of natural cleaning products rose by 23 percent between 2006 and 2007, according to SPINS, a market research and consulting firm for the natural products industry. And Clorox's own research concluded that almost half of all consumers would be interested in natural cleaning products if they were as effective as traditional ones.

    “So company scientists set about creating cleaners that were at least 99 percent natural, biodegradable, nontoxic, made from plant- and mineral-based ingredients rather than petroleum, and not tested on animals.”
    KC's View:
    Sometimes it seems that history and circumstances have combined to make organizations like Clorox and the Sierra Club natural enemies…so it is nice on all sorts of levels when they are able to find common ground and do something that is both good for the planet and good for the bottom line.

    Published on: January 16, 2008

    • The Chicago Tribune reports that Wal-Mart “plans to open an eco-friendly store in southwest suburban Romeoville later this month, the first of a handful of test stores the world's largest retailer plans to open nationwide as part of a far-reaching effort to go green. ”

    The unit “is the second wave of so-called high-efficiency stores that Wal-Mart is experimenting with in a plan to make all of its new stores 25 percent to 30 percent more energy efficient by 2009.”

    KC's View:

    Published on: January 16, 2008

    • Upromise, the program that allows shoppers to save for college by purchasing products at more than 21,000 grocery and drug stores, announced yesterday that customers who belong to the program have saved more than $400 million to be put toward higher education – which is the equivalent of a fully financed, four–year public school education - including room and board - for more than 7,000 students.

    Advertising Age reports that the Milk Processor Education Program has unveiled its 2008 “Got Milk?” marketing program, which is themed around getting people to adopt a more healthy lifestyle as opposed to “dieting.” First up in the 2008 campaign – MNB-fave Glenn (Fatal Attraction, The Big Chill, Damages Close.

    • A week after Starbucks went through a management shakeup, another Seattle coffee company s emulating the Starbucks experience.

    KOMO-TV reports on its website that “Tully's Coffee announced Tuesday evening that President and Chief Executive Officer John Buller and Executive Vice President and Chief Financial Officer Kristopher Galvin have resigned from the company. Three other executives resigned as well.”

    Carl Pennington, Sr., a former executive vice president with Albertsons, has been named to Tully's board of directors and has joined the company's executive team as president.

    • A New York State Assemblyman, Sam Hoyt, has proposed a new state law that would ban the same of tobacco products in any store that contains a pharmacy or “whose purpose is to provide remedies to health problems," Hoyt said. The proposal comes a week after Wegmans Food Markets announced that it will no longer sell tobacco products.

    KC's View:

    Published on: January 16, 2008

    • The Kroger Co. announced yesterday that David Brislin, its vice president of human resources at Kroger’s corporate headquarters in Cincinnati, has been named vice president of operations.

    And, Kroger said, Joe Fey, vice president of merchandising for its Dillon Division in Kansas, has been named vice president of merchandising.

    • BJ’s Wholesale Club announced that it has named Laura Sen, the company’s executive vice president of merchandising and logistics, has been elevated to the post of president/COO.

    KC's View:

    Published on: January 16, 2008

    …will return.
    KC's View: