business news in context, analysis with attitude

by Kevin Coupe
One of the obligations of pundits and prognosticators at this time of year is to identify the major stories that occurred during the past 12 months, and predict the significant developments that are likely to unfold in the coming 365 days.

The funny thing is that if I were to have suggested a year ago that Kmart would file for bankruptcy and close hundreds of stores, that Fleming would get out of the retail business, that e-grocery would begin to rebound, and that Safeway would suffer the slings and arrows of consolidation gone awry and have to put Dominick’s up for sale, an awful lot of people would have suggested that I was nuts. (More than the usual contingent, that is.)

If I’d said that Wal-Mart would continue to grow in global leaps and bounds, on the other hand, you probably would have said I was right on the money.

All of which points to the real truth about prognostication. Essentially, it’s a crapshoot.

Today, I can look at those stories of the year gone by and see their significance -- not just because of their importance in and of themselves, but because of the trends that each reflects, and the implications that each one carries.

Each of these stories is a piece in a larger puzzle, the puzzle of a permanently altered retail landscape in which players large and small and in between must search their souls -- if indeed retail entities can be said to have souls -- to determine their credibility and viability.

Except, of course, for Wal-Mart. It is a Wal-Mart universe, in which at least for the moment all other retailers are simply planets circling the bright, sometimes blinding light of the Bentonville Behemoth. When you are the center of the universe, you leave the soul-searching to others.

Can retail entities be said to have souls? Perhaps the problem for many of them is that too few do. They have no soul, no heart. They have a brain, used mostly for counting money and calculating efficiencies and projecting profitability and productivity. But no soul. No heart.

Go into most supermarkets in the United States -- not all, but most -- and within about 15 seconds you know where everything is. It doesn’t matter if you’ve never been there before. You can figure out quickly where produce is, and from there knowing where the meat and seafood departments are located, and where the deli and bakery are, is no big deal. It’s intuitive. Habit. There are no surprises.

There will be those who would suggest that this predictability is a good thing, that it helps people navigate stores easily and confidently. This may be, but it also is the surest path to boredom. And beyond that, to irrelevance. And finally, perhaps, to extinction.

For the coming year, I make no pretense of having any idea what will happen. I can guess, for example, that Kmart will close enough stores to cut its retailing presence essentially in half as it struggles to survive. But that’s just a guess.
I can guess that Wal-Mart will invade yet another major country as it continues its inexorable march toward world domination, but it’s just a guess.

But I can suggest some things that should happen. That would happen if the world were a perfect place or I were in charge. That could happen if the stars align correctly.

  • Sure, Kmart will continue to imitate the Wicked Witch of the West after Dorothy tossed water on top of her, shrinking and shriveling and shrieking all the way to oblivion. But more importantly, the closing and divestiture of stores by Kmart will mean that Wal-Mart and Target will both pick up significant pieces of real estate and market share in various places -- which will put new and enormous pressure on those entities attempting to compete with them. It won’t be pretty.

  • The lesson that Safeway has learned -- or should have learned -- in its Genuardi’s and Dominick’s divisions, that there is intrinsic value to local values even in a world hooked on consolidation and globalization, will be learned by other major retailers. The question remains, will they learn it soon enough?

  • There will be a change in senior management in one of the top five US food retailers. No idea which one. But the shift will reflect the dawning realization that the food retailing biz has grown stale and requires fresh blood, fresh ideas and fresh approaches.

  • Concern about what people put in their mouths will continue to grow. It will be tied, variously, to issues like obesity, biotechnology, bioterrorism, food safety, and nutrition. It will remain a breeze for the immediate future, though it will eventually turn into a stiff wind impossible to disregard. Retailers and manufacturers will ignore this at their own peril.

  • The ethical conduct of business, and the importance of truth and candor, will emerge from the ruins of Enron and WorldCom, affecting businesses of every shape, size, and venue because it will be what consumers expect and demand. I think that this trend will take on unexpected significance, in part of because so many of us have been affected by companies and managers who have behaved despicably. (That’s the subject of my screenplay…)

  • E-grocery will continue to grow, slowly but steadily, as more and more retailers come to the understanding that the Internet is an important strategic alternative to offer shoppers. Small and regional operators will recognize that they must move in this direction in order to fight off the growing influence of Albertsons, Safeway, and Ahold’s Peapod.

  • The consolidation that has affected so much of the retailing and manufacturing industries also will take a toll on the trade association business. It is our expectation that one major trade association in the food business will either collapse or be absorbed by another; it is more likely the latter than the former, but nothing would surprise us. This is not a bad thing. It is just inevitable, as associations that offer more services to greater numbers of members are simply in a better position to survive.

Sure, I have other thoughts about the year to come. I’d like to lose 20 pounds, finish my novel, sell my screenplay, and run another marathon. I’d like to learn more about wine, become a better cook, and visit at least one or two countries I haven’t yet visited.

Most of all, both personally and professionally, 2003 seems like a good year in which, 12 months from now, we should not look back and say, “Woulda. Coulda. Shoulda.”
KC's View: