retail news in context, analysis with attitude

by Kevin Coupe

SCOTTSDALE, Arizona -- I've always felt that if I walk away from a conference or meeting with questions that have not been answered, that's probably a good thing. It strikes me that a good conference or meeting makes the attendees think; sure, they can provide some answers to some questions, but mostly they should exist to provoke questioning and fresh thinking on the part of the people who attend.

By that measure the 2017 Food Marketing Institute (FMI) Midwinter Executive Conference here has been successful ... because it has left me with questions about three different subjects.

To begin with, let's talk about e-commerce. There were several sessions over the weekend that focused on the digital realm, and how the supermarket industry is being affected by a technological evolution that seems to be accelerating. In one general session, Thom Blischok, chairman/ CEO of The Dialogic Group, unveiled some research from The Nielsen Co. projecting that by 2025, the share of online grocery spending could reach 20%, representing $100 billion in annual consumer sales. That's total store ... and it is the equivalent of the volume done by thousands of bricks and mortar stores.

There also was research suggesting that during that same time frame, the industry should expect that four out of ten dollars spent in center store will then will "migrate to an online shopping experience."

Those are big numbers. Hell, even if Nielsen is only half right, the numbers are considerable, and the impact on the retail food industry will be enormous.

Which led me to ask Blischok a question after the session: "Of all the companies in the room and attending the conference, how many do you think are ready for this shift?"

Blischok's answer: "Right now? Zero."

Now, that's not to say that they can't get ready, but he emphasized that to do so, they are going to have to rethink operational, logistics and profitability issues to a degree that is going to take them out of their comfort zone ... and that's not a place where a lot of retailers like to be.

I asked Blischok if the suggestions being made for embracing the challenge of e-grocery were any different than would have been made a year ago, or two years ago, or three years ago. He said they weren't ... only the research that points to exactly how big the e-grocery market is likely to get is different.

He also agree that we may all find ourselves back again next year, and the year after that, and the year after that, talking about these same issues in the same way. The only difference will be that the clock is ticking, and the window within which traditional companies can deal with these threats is slowly closing.

There was another breakout session on e-commerce at which two of the panelists agree that a) we are still early in the development of e-grocery and b) the pace is picking up.

Rich Tarrant, CEO of MyWebGrocer, made the point that "we're still in the second or third inning" of e-grocery development, but that things are changing fast as a lot of "intersecting models" compete to see what will work best and be sustainable. (Full disclosure: MyWebGrocer is a longtime and valued MNB sponsor.) And then David Mounts, CEO of Inmar, argued that while we still are early in the process, momentum and acceleration mean that we're actually "halfway there."

Which leads me to another question: What exactly does there mean? I'm not sure anyone knows, but I suspect that the winners will be the ones who have a vision, but also are nimble enough to understand that "there" may mean something different when you're in the fourth inning than it does when you're in the seventh.

But I absolutely believe that leaders and companies at least have to have some sort of strategic sense of where "there" is for them, and have to be completely committed to moving organizations in that direction,

The second subject about which I had questions was crisis management, the subject of another general session over the weekend.

For the most part, the conversation was about the importance of developing communications strategies designed to deal with the complexities of consumer interaction in a social media world, using examples like the debates over GMOs and cage-free eggs to stress the importance of transparency and trust.

All of which made perfect sense to me. Except ... I could not figure out for the life of me why nobody really was talking about the food safety issue, and how to deal with the changed regulatory climate and heightened legal demands that put new pressures on retailers and suppliers.

(More full disclosure. ReposiTrak, which is in the business of providing brand protection through a platform that offers food safety-related data tracking and collection, is another longtime and valued MNB sponsor. What can I say? I have cool sponsors working in areas critical to the business. And, because I've produced a bunch of videos for ReposiTrak on the subject of food safety, I've learned more than I ordinarily might know about the issue ... which had my antennae up when they were talking about crisis management.)

One of the things I've learned over the years about many retailers and suppliers is that they simply are not prepared to deal with a major food safety problem. Either they don't have complete records, don't have sufficient insurance, and don't have a comprehensive plan for how to deal with such a problem. I've talked to retailers who believe that just because they've never had a problem, they probably never will, or who lately have been less worried than in the past because we're currently living in a political climate that favors deregulation; they're convinced that the Food Safety Modernization Act (FSMA) will be essentially neutered, and so they don't or won't have a problem.

To me, this suggests a disregard for a simple reality - if a major food safety crisis affects one company, it will create mistrust, potentially, for all food companies ... and the drivers of this mistrust will be consumers, not regulators. And so, it was a subject that I thought should've been covered.

Finally, the third subject about which I have questions ... it is tangentially related to crisis management, but actually much bigger, and ought to be a number one agenda item for every company.

Here's the question: What do we do tomorrow if President Trump mentions our company in a Tweet?

Let me be clear. This is a business question, not a political question. It doesn't matter how you feel about the Trump administration and its policies. But there are certain realities.

A fictional scenario: Tomorrow morning, President Trump wakes up and Tweets:

Just read that Kroger is hiring 10,000 new employees in US. Winner! Everybody should shop at Kroger.

Three things then happen. Roughly 40 percent of the country is going to respond to that by saying, "I love Trump, good for Kroger, I'm going to shop at one of their stores."

Another 40 percent is going to say, "I hate Trump, and I'm never going to walk in a Kroger ever again."

And then Kroger's stock price drops, and the company finds itself in the middle of a political debate it did not want and cannot win, dealing with disenfranchised customers it did not want to alienate. Maybe it'll all be a wash between the ones who are happy with Kroger and those who are not ... but I cannot imagine that this would want to be a risk that the company would want to take.

By the way, the other 20 percent of people understand nuance enough to know that regardless of how they feel about Trump, hiring 10,000 employees is a good thing, and a random Tweet should not affect how they feel about the company. But we don't live in a world these days where nuance travels very far. Rather, our world is so polarized on both ends of the political spectrum that businesses and their people could well be hurt, and not because of anything they did or risks they took.

(This is different, by the way, from when companies decide to choose sides, whether their reasons are good or not. There's a lot of that going on these days, and when companies decide to stake out political positions in this environment, it has to be with the knowledge that they could be putting their businesses at risk.)

And so, this was a question I thought should've been asked. But wasn't. (Just for the hell of it, I test drove this question a bit with executives at the conference, and the majority of the ones I talked to said that a) it was a good question, and b) it was not a question their companies were asking themselves. (Only one company to which I talked - a supplier - said that they'd had an internal meeting on the subject.)

This is all a matter of risk, and of good business, and of being ready for anything in a sometimes toxic political environment that seems to envelop businesses, for better and/or for worse, with regularity.

(Speaking of being ready for anything ... it is worth noting that next year's FMI Midwinter Executive Conference is scheduled to be held at a Trump-owned property in Miami, which could be awkward if the administration has taken actions that have been unkind to the food industry. On the other hand, it could be cause for celebration. I hope it is the latter.)

Three subjects, lots of questions. Still looking for answers, right here, every day.

(By the way, we'll have more from the FMI Midwinter Executive Conference below...)
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