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    Published on: January 26, 2010

    by Michael Sansolo

    ORLANDO, Fl. -- In the midst of economic meltdowns, format proliferation and so much more, it’s easy to forget root issues that shake an industry. But the simple truth is that there has been no single factor that has impacted the food industry as much as this:

    Thirty-five years ago 47% of mothers with school aged children worked outside the home. Just prior to the current economic downturn, that percentage was 71%.

    In the process, mealtime changed radically and moved countless billions of dollars out of the aisles of supermarkets and into food service establishments from McDonalds to Starbucks to Chili’s, Applebee’s and more. And in the process, food stores and products changed radically to make putting a meal on the table easier than ever.

    Yet the battle rages on and the lingering question is why should anything be different tomorrow?

    This morning at the Food Marketing Institute (FMI) Midwinter Executive Conference in Grande Lakes, FL, the Coca-Cola Retailing Research Council is delivering some new answers to that question thanks to a new study prepared in concert with NPD, a well-known researcher of food service trends. More than answers, though, the study outlines the changing challenges facing supermarkets in the battle for breakfast, lunch, dinner and snack time. The battle, the questions and the challenges deserve consideration yet again.

    (Full disclosure: I remain a participating member of the current Council and helped work on the research and preparation of this report.)

    NPD’s research unearths some interesting ways of considering the challenges of different meal occasions, including some incredibly contradictory behavior during the course of daily meals. For instance, the same people who complain about boredom with meal choices at dinner have no problem eating the exact same breakfast daily. What’s more, the same shoppers who put a heavy premium on convenience are increasingly willing to add a stop in their commute to buy coffee.

    As NPD carefully shows, each meal has different characteristics, which means the battle facing the supermarket changes by the meal. And that in turn means the strategies supermarkets must employ require a constant examination of shopper behavior and needs to make sure the mix is constantly shifted for success.

    The report clearly outlines areas of opportunity, specifically an overall 2.2% increase in sales growth per store if aggressive measures are followed. Yet, it also lays bare some incredible challenges, including how the drivers of meal decisions at dinner can be both strengths and weaknesses for supermarkets. A big part of that is that dinner is largely a one-hour experience from preparation through clean up, yet sadly, eating is a relatively small part of the hour.

    In the course of the report, NPD examines the drivers of meal decisions during each part of the day, the impact of changing demographics and the incredible opportunity for sales growth if supermarkets can start winning back meal occasions. (You should shortly be able to click here to read the entire report under the tab for the North American council

    The motivation to read it couldn’t be any simpler. As former Supervalu CEO Jeff Noddle said at an FMI Midwinter meeting just a few years back: The loss of meals has impacted supermarkets more than Walmart, Costco, Whole Foods and others. The battle goes on.

    Michael Sansolo can be reached via email at . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
    KC's View:

    Published on: January 26, 2010

    Notes & comment from The Content Guy

    ORLANDO, Fl. - It was not a morning of presentations designed to lighten attendees’ mood, put a spring in their step and send them from the room whistling a cheerful tune.

    Rather, the initial educational sessions at the Food Marketing Institute (FMI) Midwinter Executive Conference here was largely a cold shower of sobering statistics and trend lines, delivered on a morning when a tropical storm lashed the area limiting visibility and slowing mobility. Indeed, the weather may have been a kind of barometer for the moment in which the industry finds itself, seeking some sunshine after months of recession.

    There was the detailed and occasionally very funny presentation from Dr. Regina E. Herzlinger, professor of business administration at the Harvard Business School, in which she explained “how to solve the healthcare crisis,” but left more than a few people in the room scratching their heads about what the next steps ought to be for business. “As great as our doctors are, as great as our hospitals are, as great as our technology is, we get seriously bad value for our money,” she said. Herzlinger seemed to be arguing against a public option (because government does a lousy job of administering anything), for a personalized and consumer-driven medical system, and that any national approach to overhauling the nation’s healthcare system needs to be seen as eliminating waste without raising taxes. But how to get there? Hard to know, and Herzlinger did not seem to provide a light at the end of the tunnel.

    And then, there was the detailed and not-funny-at-all presentation by Dr. Martin A. Regalia, senior vice president and chief economist for the US Chamber of Commerce, who argued that while the economy seems to be getting a little bit better - likely five percent growth for the fourth quarter of 2009, settling back to something like three percent growth for 2010 - there is still much work to be done to get the economy back on track. There is still $12 trillion in national wealth to be rebuilt in order to return to where the country was before the recession, which is going to be difficult to achieve in less than five or six years because of continuing unemployment, not to mention crushing national debt that inhibits growth. Still, he did offer some good news:

    “There is a school of thought,” Regalia said, “that we will take a page from the Japanese and become extreme savers, and thus save our way into a depression. But I firmly believe that the American consumer is going to come back, it is just that she is going to behave a little more judiciously” than in the past.” In other words, there is a light at the end of the tunnel, and it is only somewhat possible that it is an oncoming train.

    The beacon of optimism, as it happened, was Tres Lund, chairman/president/CEO of Lund Food Holdings and chairman of the Midwinter conference, who, while he detailed some of the disastrous events of the past year or so - including some 200,000 retail units closed in the United States, out of 1.1 million that were operating when the recession began - also made the point that this had actually been an important time for his company.

    Lund argued that the recession forced his company to run a “stress test” on the organization, to evaluate what could happen in every imaginable scenario. In other words, the wise and uncommon approach in which you prepare for what can happen, not what you think will happen. And then, while maintaining a commitment to conservative management and a “built to last” philosophy,” the company actually was able to announce two new stores and a multi-million dollar renovation project as the recession was beginning - which essentially communicated to employees that they were part of something both important and lasting. This is turn built a sense of camaraderie and elevated morale, which fed back into the company’s operations, which allowed it to move forward in an environment that ordinarily would make it difficult to do so.

    It is not that Lund embraced the recession so much as he dealt with it realistically; perhaps it is not so important to wait for the light at the end of the tunnel and speculate about what it might be as it is to create your own light source, and use it for both warmth and illumination.

    In other FMI news...

    • FMI CEO Leslie Sarasin announced what she said would be a heightened organizational commitment to fighting hunger in Americas, complete with greater collaboration with Feeding America (formerly Second Harvest). FMI distributed commitment cards to attendees, asking them to provide contact information that would permit FMI and Feeding America to develop and more effective approach to dealing with what she said are the “17 million children living in food insecure households” and the 49 million Americans “living on the brink of hunger.”

    • Jeffrey Noddle, executive chairman of Supervalu, received the Sidney R. Rabb Award for his exceptional service to the community, and involvement in and strong advocacy on behalf of the supermarket industry.

    • Gary Phillips, retired president and chief executive officer of Associated Wholesale Grocers(AWG), was awarded the FMI Herbert Hoover Award for his personal and professional excellence in serving the food retail and wholesale industry.
    KC's View:

    Published on: January 26, 2010

    Tops Friendly Markets announced that its bid to acquire a majority of Penn Traffic’s assets, including its 79 supermarket locations, has been approved by the U.S. Bankruptcy Court.

    The acquisition is expected to close by the end of this week.

    “We are very pleased that the court has approved our comprehensive bid, said Frank Curci, Tops’ president and CEO. “We look forward to the upcoming closing and the opportunity to bring the Tops Friendly Markets shopping experience to our new neighbors and customers.”
    KC's View:
    Now comes the hard part - actually making them both efficient and effective.

    On the other hand, it probably won’t take much to improve on what Penn Traffic was doing.

    Published on: January 26, 2010

    The Fort Worth Business Press reports that in the next few months, discount grocer Aldi “will open 11 Tarrant County locations amid its North Texas expansion of 25 stores. And among the first to open March 19 will be three Fort Worth stores, as well as one store in Hurst, one in Pantego and one in White Settlement, with a second round of Tarrant County stores set to open April 23.”

    The article suggests that this is just the beginning for Aldi in Texas.

    “We’re going to continue to expand,” said Karla Waddleton, director of real estate at Aldi’s Denton division. “There are still some opportunities to pursue in Tarrant; we’re looking at new sites, new locations for us here. We like the market.”

    Indeed, Aldi also has a 500,000 square foot regional warehouse in the area...and the company says it will open as many warehouses it needs to service as many as stores as it opens. And for the moment, the possibilities seem almost endless.
    KC's View:

    Published on: January 26, 2010

    There was a very nice piece in the St. Louis Post-Dispatch about how the Schnuck family was named the city’s Citizens of the Year - the first time an entire family has gotten the order, and a reflection of the family harmony, collegiality and civility that marks its approach to management.

    According to the story, “three key ingredients ... have helped the Schnucks keep the peace and grow as a company: the regular family meetings where they can hash out personal issues, the advisory board that offers input from the outside, and the advisory board's compensation committee that recommends pay packages for the Schnucks who run the day-to-day operations.”

    The company continues to invest in the business and the community - for one thing, it has two concept stores that it is developing in the middle of the recession.

    “It's an experimentation,” the Post-Dispatch writes, “spurred on by the drive to survive in a market where more and more retailers are fighting for a piece of the same pie. It's not only Wal-Mart, Target, Dierbergs and Straub's. It's also Whole Foods, Trader Joe's, Shop 'n Save, Save-A-Lot, Costco, Walgreens, gas stations, and the list goes on.

    These days, the Schnucks are trying to get a leg up on competitors by striving to be the food experts. They are rolling out ‘Schnuck Cooks’ stations where customers can try out food and at the same time pick up the ingredients and recipes. Schnucks now has eight to 10 certified wine specialists who roam the sales floors. At the same time, the Schnucks have been stripping out costs from other parts of their business so they can lower prices. “
    KC's View:
    These days, this isn’t just good news about a terrific family and wonderful retailing organization. It also comes as something of a relief when contrasted to the recent demise of Ukrop’s as a family-controlled organization.

    Survival, it seems, is an option.

    Published on: January 26, 2010

    A new study from promotion transaction settlement provider Inmar says that “annual coupon use is on the rise for the first time since 1992 and coupon distribution hit the highest level recorded since the company began tracking trends in 1988. For the first time in 17 years, consumers used more coupons than they did the year before, with 3.3 billion consumer packaged goods coupons redeemed, an explosive 27% increase over the 2.6 billion redeemed in 2008.”

    In addition, the study says that “the increase in redemption goes hand-in-hand with an increase in distribution. Despite the tight economy, marketers invested heavily in coupons, boosting the number available to the highest level in over 30 years. Brands issued 367 billion coupons, at an average face value of $1.44, indicating that they were committed to promotions in 2009.”

    The report acknowledges that “the rise in coupon use started in October of 2008, coinciding with news of the U.S. financial crisis,” which has led to five consecutive quarters of double-digit growth.
    KC's View:

    Published on: January 26, 2010

    The National Retail Federation has released its 2010 economic forecast, projecting retail industry sales (which exclude automobiles, gas stations, and restaurants) will increase 2.5 percent from last year. NRF argues that “influential economic indicators such as the housing market and employment are beginning to show positive signs, which will bolster consumer confidence throughout the year.”

    Total industry retail sales for 2009 declined 2.5 percent, according to NRF.
    KC's View:

    Published on: January 26, 2010

    • Walmart is getting high marks - and internet “buzz” - for a new television commercial that debuted Sunday during the NFL championship games.

    The ad portrays a family in which an entire children’s birthday party has been created through purchases at the discounter. As part of the party, the child’s father has dressed up as a clown to surprise her....and when he jumps into the room, his foot lands on small toy unicorn, driving the animal’s horn through his foot ... causing a scream of unremitting agony that, amazingly enough, makes the audience laugh.
    KC's View:
    Chalk up another winning entry in Walmart’s ad campaign. This ad is a crack-up.

    Published on: January 26, 2010

    • Kroger-owned Fred Meyer announced that its unionized employees have ratified a new four-year agreement that covers some 3,000 associates working in 27 stores in the Portland, Oregon, metro area.
    KC's View:

    Published on: January 26, 2010

    • HEB announced that Craig Boyan its COO and chief strategic officer, will take on the additional role of president of the San Antonio-based company. He succeeds the retiring Bob Loeffler, who in fact volunteered to serve as chief administrative officer for two years before taking full retirement.
    KC's View:

    Published on: January 26, 2010

    Pernell Roberts, the actor who left the classic western television series “Bonanza” after just six years playing Adam Cartwright, has died of cancer at age 81. He was the sole surviving actor from the original “Bonanza” cast, having outlived Lorne Greene, Michael Landon and Dan Blocker.

    Roberts later found renewed TV series fame as the titular character on “Trapper John, MD,” a series that purported to follow the late-in-life career of a character from “M*A*S*H.”
    KC's View:

    Published on: January 26, 2010

    ...will return.
    KC's View: