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    Published on: July 16, 2014

    by Kevin Coupe

    "Fresh Talk" is sponsored by Invatron: Proven Technology.  Innovative Thinking.  Intelligent Solutions for Fresh.

    Content Guy's Note: "Fresh Talk" is a new MNB column, scheduled to alternate on Wednesdays with "Kate's Take."  It will examine all aspects of "fresh," in both the broadest and most focused meaning of that term (depending on the whims of the columnist). "Fresh Talk" is sponsored by Invatron...which you can learn more about here…but which has no input into the subjects covered or responsibility for the attitudes taken.

    One of my favorite people in the food industry is Cathy Burns (pictured), the former president of Food Lion, who now serves as president of the Produce Marketing Association (PMA). In that role, she is responsible for developing and rolling out PMA's new strategic plan … and I think she has the unique perspective of someone who spent many years on the retail side, and now serves a swath of the fresh foods industry that is broader in some ways and more specific in others.

    Plus, Cathy is a fun person to hang with.

    So I thought it might make sense to catch up with her via e-interview, find out what she's learned about herself and the industry in her time at PMA, and get an update on the organization's fascinating Sesame Street-themed "Eat Brighter" marketing initiative.

    MNB: Okay, you've been at PMA for a little over six months.  What has been the biggest surprise about moving over from the retail side, in terms of organization and/or your own professional experience?

    Cathy Burns:
    Hmmm… the biggest surprise? It’s not as much a surprise, but more of a confirmation of what I experienced last July at PMA’s Foodservice Conference. Having the opportunity to witness each day the commitment and passion of PMA’s member leaders and staff driving the industry and organization forward has been a great experience. It’s one thing to see an organization’s core values on a piece of paper; it’s another to interact with people who live it every day.  The produce industry has an incredible soul.

    Also, while I knew a bit about what PMA did from my time as chair of the industry’s Produce Traceability Initiative, it wasn’t until I joined the staff that I more completely understood and appreciated the year-round value we provide to our members in a global, balanced, and differentiated way.

    Personally, I’ve had to make a slight shift in my mind from creating shareholder value to creating member value.  In both cases, the focus remains on having a solid strategic plan that delivers against consumer needs.

    MNB: What is the one thing that you've discovered about the produce supplier community that, from your experience, retailers do not know or do not understand? Conversely, what is the one thing about retailing that you think suppliers either don't know or don't understand?
     
    Cathy Burns:
    One thing I’ve noticed that’s underway is the transition from a very transactional, sales-based philosophy to one that focuses on true collaboration and partnership. Suppliers are starting to realize that the old paradigm of “real marketing is too expensive for a thin-margin business” is shifting in the new world of reaching consumers online, one in which they have a truly unique story to tell and the tools to do it. And retailers are becoming more aware of ongoing constraints impacting producers, among them water, labor, regulatory pressures and of course the ever-present threats of weather and pests.  
     
    MNB: It is my sense that at this moment, we're experiencing a kind of sea change in terms of produce marketing - some of it on the retail side, some of it on the supplier side - as companies offer greater variety, more information, and tap into an expanded consumer consciousness.  Do you agree, and can you talk about how these things are manifesting themselves?
     
    Cathy Burns:
    You are absolutely right. The industry as a whole is becoming more complex and tech savvy all along the supply chain. Just look at the interactions happening between the industry and consumers on various social media platforms. The everyday conversations that occur between produce marketers or retailers and their fans only underscore shoppers’ desires for more information about fresh produce.
     
    We need to continue to change the conversation around marketing fresh fruits and vegetables. Today, a child in the U.S. is bombarded by thousands of food ads over the course of a year, with less than 100 of them featuring fruits and vegetables. Our intent with the ‘eat brighter!’ initiative is to provide the produce industry with a unified movement that also provides customization — helping to rise above the advertising noise with a strong voice, and one clear message, and at the same time boost sales and instill good values to build customer loyalty through individualized applications. For our industry, it’s about coming together to increase consumption of fresh produce for the health and well-being of children all across the country.  It can be done, it must be done, it will be done.
     
    MNB: Speaking of ‘eat brighter!,’ you’re just a few months into it ... can you talk about how the rollout is going, and what we're likely to see when back-to-school rolls around?  Are there companies that you think are leading the way both on the supplier and retail sides?
     
    Cathy Burns:
    Sure. As of today we have 15 companies already approved for the licensing in the ‘eat brighter!’ movement – all of whom I consider as leading the way.  More are lining up to get licensed – and remember that they’re getting this fabulous intellectual property from Sesame with no royalty fee whatsoever!  That’s an amazing opportunity the likes of which our industry has never had.  Nonetheless, it takes courage to decide to change packaging, branding, and retail-focused strategies (all of which are not inexpensive undertakings) but also courage in stepping forward as a participant in an industry movement.   I do feel as though we’re about to see the tipping point in the next couple of months.
     
    We already have Sesame Street-branded products in grocery stores up and down the East Coast. Nearly 50 product lines are now available for retail outlets across North America. Many of those suppliers are targeting the back-to-school promotional window for launch, while others are looking at the fall season.
     
    We’ve also had a number of conversations with retail leaders (independents, regionals, and national chains) since the program launched – and these conversations are all in different stages, some are closer to in-store promotions while others are working on how the Sesame assets can be integrated into their go-to-market strategies.
     
    In short, would I love to see ‘eat brighter!’ in every store I shop or visit? Absolutely.
     
    When you look at produce and the broader fresh foods business, has your vision of the future changed or evolved since you joined PMA?  If so, how ... and what are the things the industry needs to do not just to embrace the future, but create it?
     
    Cathy Burns:
    There are a multitude of factors affecting the industry (such as increasingly limited natural resources, the aging farming population, developing efficient ways to feed the growing global population, etc.) that will challenge how we market and do business.  The produce department remains the point of differentiation for most retailers as well as a driver of profitability, and I know our members will continue to create innovative solutions to meet consumer demands.
     
    There is also the ability to be willing and nimble enough from both an organizational and personal standpoint to accept and act on change – innovation is key - be it in the form of new ideas, new business processes, or new opportunities.
     
    As a retailer, I believed in the power of marketing.  It works.  We have not scratched the surface in the produce industry to leverage this incredible tool to change consumer behavior and drive consumption.  It is not about telling consumers fruits and vegetables are healthy – they know that.  It is about creating marketing that is emotive.  This will be a key part of our future.  
     


    Over the past six months, I’ve had amazing visits with industry members to not only learn about their businesses but also how they feel about PMA. Our association was built by members, to serve members, so it’s key for us to understand what their needs and expectations are and for us to create and lead change based on that feedback.  Given the strong staff of subject matter experts, we want to be the industry’s first call. 

    Content Guy's Note: For more information about PMA's "Eat Brighter" initiative, click here.

    KC's View:

    Published on: July 16, 2014

    by Michael Sansolo

    Doesn’t anyone study history anymore?

    You have to ask yourself that question after reading of all the discussion in France about keeping Amazon and other on-line merchants out, or at least reducing their ability to compete and protecting smaller, independent booksellers. You can almost hear the impassioned arguments to build a wall behind which French retailers will feel eternally safe.

    Until they read their history books, that is.

    In the 1930s the French actually did build a wall, but to keep out the Germans, not e-tailers. The wall, called the Maginot Line, was supposed to be an impregnable defense that would prevent the type of fighting that so scarred the country in World War I.

    While the line prevented a direct German assault, it proved completely useless in World War II when the Nazis simply outflanked the Maginot and conquered France in about six weeks.

    Just as walls can’t stop a determined army, created barriers won’t prevent a new idea from taking hold. Rather than look for protection, French retailers need to consider every way possible to combat Amazon.com’s advantages. (The same holds true for car dealers concerned about Tesla and cabbies facing Uber competition.)

    Fences may make for great neighbors, but they are a terrible competitive strategy.

    That’s both a lesson from history and an Eye-Opener for today.
    KC's View:

    Published on: July 16, 2014

    A market analyst is out with a report saying that Walmart's Neighborhood Market stores "ave lost market share in about a third of their top 20 market locations in the past several years," according to a story in Investors Business Daily.

    Indeed, the report from Kelly Bania, an analyst at BMO Capital Markets, suggests that Kroger is likely to be the major beneficiary from Walmart's "changing product mix" and diminishing competitive edge.

    "We believe that Kroger is benefitting from an accelerating positive mix shift toward higher-margin natural, organics and fresh categories due to growing consumer demand for the categories, coupled with strong execution across these categories by Kroger," Bania says, adding that Kroger is likely to "benefit from consumers who are increasingly less cautious with prices as the economy improves."
    KC's View:
    I'm not really surprised by the problems that Walmart may be having in its Neighborhood Market stores, mostly because when I've gone into them, I've found them to be generally uninspired. It is like they're trying to jam 20 pound of sugar into a 10 pound bag … trying to simply create a smaller version of a supercenter and cram as much merchandise in as possible, rather than having a specific vision of what a small store should be.

    I recognize that I haven't been to every Neighborhood Market, so maybe I've just caught the wrong ones. But I just don't think that Walmart has cracked the code on small stores yet.

    Published on: July 16, 2014

    Advertising Age reports that "now that digital and social media are reaching what Walmart U.S. Chief Marketing Officer Stephen Quinn calls 'critical mass,' the retail giant is reshaping its marketing team and changing how it works with suppliers – including buying media for them … Walmart met recently with around 200 supplier marketing executives in part to discuss the Walmart Exchange, or WMX, which its executives bill as a digital targeting, buying and optimization platform that will bring everything from sales to social-media data to bear on spending plans for Walmart and its suppliers."

    The goal is to create more synchronized and effective marketing programs that envelop all the various different media with common themes, messages and product values.
    KC's View:
    They're playing my song when one of the executives involved says that Walmart no longer produces commercials. Rather, he says,"We shoot content."

    However, it is interesting to compare this story to the one about how its Neighborhood Markets may be underperforming … simply because it is beginning to sound like maybe Walmart has a greater specificity of vision when it comes to digital.

    Walmart has to be careful, because it is engaged in a multi-front conflict. They have to figure out not just how to make small stores work, but how to integrate them into the larger competitive vision.

    Published on: July 16, 2014

    CNBC has a good piece about how Lowes Foods, with stores in the Carolinas and Virginia, worked with branding consultant Martin Lindstrom to create an "in-store sensory experience, and a sense of community, that can't be packaged and delivered by mail, or perhaps by drone in the future."

    In other words, a store that'll compete not just with other bricks-and-mortar stores, but also a store that uses a variety of approaches to engage a multitude of customer senses.

    The store is in Clemmons, North Carolina … and according to CNBC, it is "ground zero for the chain's reinvention of the grocery shopping experience." It "doesn't look like a traditional supermarket. On the outside, it looks more like a greenhouse. On the inside, it's a mix of farmer's market and theme park."

    You can see the piece here.

    The story notes that Lowes "is remodeling 10 more stores this year, but Lindstrom said the work doesn't stop when the makeover is done. 'This is like a sand castle. It's beautiful day one, day two it starts to fall apart. To communicate that to an organization of 10,000 people, and in some cases a million people, is pretty hard. It has to go through the system'."
    KC's View:
    I've been to this store. And it is terrific.

    Published on: July 16, 2014

    Ad Week reports on a study by an organization called Millionaire Corner revealing that "among respondents with a net worth of $5 million or higher, the top retail destinations were Home Depot, Lowe’s and Target - with 61, 44 and 41 percent reporting, respectively, that they like to shop there. Nearly half the well-heeled respondents also said they liked to shop at Costco, and a full third admitted to setting foot in Walmart."

    Furthermore, "Millionaire Corner’s survey found that Lord & Taylor (part of Hudson’s Bay Company, which also owns Saks) was a regular destination for just 3 percent of multimillionaire respondents. Neiman Marcus, with 8 percent, didn’t fare much better."

    The conclusion: one of the reasons that rich people get rich is by being frugal, and that doesn't necessarily change once they get really rich.
    KC's View:

    Published on: July 16, 2014

    • Kroger announced yesterday that Bill Mullen, senior vice president for its Kwik Shop division, has been named vice president of merchandising for Kroger's Convenience Store Division, effective August 1. He succeeds the retiring Ken Nuss.
    KC's View:

    Published on: July 16, 2014

    …will return.
    KC's View:

    Published on: July 16, 2014

    MNB will not be posted on Thursday, July 17, since I will be spending the previous day attending my sister's memorial service and attending to various family responsibilities. MNB will return on Friday, July 18 … and I thank you for not just for your understanding, but for encouraging me to take the time off.
    KC's View: