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During the next few weeks, MNB will present a series of previews looking at some of the cutting edge topics and speakers who are on the agenda for the 2007 Food Marketing Institute (FMI) Show, scheduled for May 6-8 in Chicago, Illinois.

This morning, we feature an exclusive e-interview with Michael Sansolo, FMI’s senior vice president, who will offer his annual “FMI Speaks” presentation on Monday, May 7. In his session, Sansolo will offer a “state of the industry” assessment, looking frankly at the supermarket business’s strengths and weaknesses, successes and challenges. This morning, Sansolo offers an exclusive preview…

MNB: It seems to us that this has been an extraordinary year in terms of some events that have affected the food industry. Let’s start with food safety – have the various reports about safety issues related to lettuce, onions, peanut butter and now pet food had any kind of impact on consumer confidence, as measured by FMI’s research?

Michael Sansolo: One of the most striking findings in this year’s survey is the drop in consumer confidence in food safety across the board. Shoppers feel decidedly less secure about the food they buy anywhere—in supermarkets or restaurants. And it is clear that the news events of the past six months have greatly impacted their feelings. One year ago, most shopper concerns focused on meat and poultry and little attention was paid to produce. This year, produce—specifically spinach, lettuce and bagged salads—top the list of concerns.

(It is important to point out that our consumer surveys were done prior to the pet food outbreak and during the first news reports about the peanut butter problem. No doubt, the news events would have shifted the areas of concern, but would not have altered the overall worries shoppers have.)

However, there is reason for hope here. The food industry has done a terrific job dealing with the challenges in food safety when it comes to meat, and all studies show that foodborne illness from meat products is significantly reduced. We need a similar focus on produce. This is one of the reasons that FMI offers our Safe Quality Food (SQF) program to give retailers a way to audit food-handling processes throughout the supply chain.

This is a vitally important issue that must be address aggressively. Consumers are looking for nothing less.

MNB: How about in areas like obesity and health/wellness? Any measurable shifts in terms of how consumers may be thinking and/or acting?

Michael Sansolo: Shoppers tell us annually that they are concerned about their health and how they are eating, but sadly, their actions are far different than their words. So it’s hard to know if their comments today will result in any changes.

The simple story in 2007 is all about fats. Shoppers say fat remains the ingredient they most want to avoid. In addition, they recognize that there are positive ingredients like whole grains that they want to consume in larger amounts.

The entire picture demonstrates opportunity for the industry. Shoppers make it clear that they believe meals served at home are healthier than restaurant meals or any meals eaten or prepared outside the home. An interesting piece of this is the concern parents have about meals bought in schools as opposed to those prepared at home.

Supermarkets can demonstrate leadership and possibly win shopper support by aggressively moving on this issue to help shoppers make better and more informed choices about the foods they buy. More information in the store, in the aisles and especially on prepared food products could all enhance consumer confidence and bring about additional shopping.

MNB: There has been a lot of speculation about how the cost of fuel may have affected people’s shopping habits. Is there any evidence that people have changed how often and where they shop?

Michael Sansolo: Energy costs are on the shoppers’ mind and are changing many habits. Lower-income shoppers tell us they are stepping up bargain-hunting this year to deal with the budget pressures of higher fuel costs. In addition, they are cutting out many luxury items or other indulgences that might strain their budget.

Even high-income shoppers say they are responding to fuel costs. Many say a big change is a reduction in eating out in higher-cost restaurants. Instead, those meals are migrating to less expensive restaurants.

Yet, that isn’t the entire story. Overall shopping patterns are changing with the ongoing blurring of channels. More than ever, shoppers are using non-traditional food stores, such as clubs and supercenters, as their primary store and are using a supermarket for fill-in trips. And overall, shoppers are making fewer trips to the food store than ever, either due to fuel or just an evolution in shopping behavior.

MNB: FMI always measures general consumer satisfaction with the food shopping experience. What do the numbers tell you this year?

Michael Sansolo: Customer satisfaction has been one of the most consistent numbers in our surveys year after year. Even though the pool of shoppers surveyed changes every year, our results were almost always the same.

That’s why it is somewhat surprising to report that the number declined this year. Shoppers are still overwhelmingly satisfied with their stores, but less so than ever before and we shouldn’t gloss over that change. The lowest ratings come from younger shoppers and those using supercenters as their primary store.

The cause of this shift is likely a reflection of concerns over food safety, gas prices and even health and wellness. The challenge to the industry is recognizing how shopper wants are shifting and determining how to change to serve them. We see many companies successfully doing this, but clearly it’s not an easily resolved problem.

MNB: Last year, there was a big point made at FMI about how the distance is widening between stores perceived as excellent or extraordinary, and those seen as average or mediocre. Is this continuing to take place, and what does it tell you about what retailers are doing...or need to do?

Michael Sansolo: The distance may not be widening, but it is still very prominent. The clear message is the need to find diverse ways to satisfy and hopefully delight different shoppers in different ways. Companies continue looking for ways to stand out from the crowd in whatever ways possible.

Your question is dead on. Mediocrity is where no one should be. Even a very mainstream store can excel in many ways, and our surveys show that the winners are finding a way to make it happen.

MNB: Is it a case where the big keep getting bigger and the small keep getting smaller? And how do you see the independent retailer in this country changing to stay competitive?

Michael Sansolo: Actually, we have seen growth at both ends of the spectrum. Yes, there are big companies growing successfully in size and scope, but we also see some strong results from smaller operators with focused retail positioning.

Independent retailers are working very hard to stay successful by finding new ways of connecting with shoppers and getting employees focused on the store’s goals. One of the reasons I’m very excited about this year’s FMI show is the combination of MARKETECHNICS, FMI’s technology event, with the annual show. We think this will help more independents get information and insights on technology they need to build gains in the future.

MNB: Not just based on the numbers, but also based on your conversations with retailers and manufacturers, is it your sense that the industry is in a time of confidence? Or are people feeling vaguely uneasy with the industry’s ability to keep up with changing consumer demands and needs and well as shifting and evolving technologies?

Michael Sansolo: We’d all like simpler times and simpler challenges, but it’s not going to happen, and I really don’t encounter anyone who is nostalgic for the past. The recognition is that we must face the complex challenges of the day and surmount them.

In many ways, these are very exciting times and opportunities abound. Many of the desires shoppers have fit in perfectly with the strengths of the industry. Shoppers want health and nutrition for their families and we have the food choices that enable the best possible eating. They want savings to deal with the budget pressures in this time of rising energy prices and we have that. They want confidence in the food they eat and again we can provide that.

What’s readily apparent is that there are retailers who are building enhanced relationships with shoppers by understanding their lifestyles, needs and aspirations. More can do this.

MNB: What do you think is the single most important consumer priority that the food industry IS NOT addressing, but should? And conversely, what is the industry initiative that is most OUT OF TOUCH with what consumers really are thinking and feeling, and how should the industry shift gears?

Michael Sansolo: One of the great benefits of our industry is the constant customer contact that helps retailers get practical and important feedback each and every day. But the challenges are so varied these days that it’s difficult to stay up on everything. I think the biggest priority we have to recognize is the ever-increasing diversity of our shoppers and the need to communicate with them in so many new and different ways. This includes everything from new ethnic groups to younger shoppers to emerging desires for products and companies that are increasingly sensitive to environmental concerns. If it matters to shoppers, it must matter to retailers and what matters changes daily.

The second part of the question is much harder, but can be answered through another industry. I read recently about how Toyota looks for every way possible to cut costs in their supply chain so that more money can be spent in the cars on features drivers want. The same holds true for us. There isn’t a single consumer who cares about data accuracy or synchronization, unsaleables or backhaul. But our ability to fix these issues and remove impediments to inefficiency can make us ever more effective in the store.
KC's View:
Once again, this reminder about the annual MNB Wine Party scheduled for FMI…

On Sunday, May 6, from 6-7:30 pm, we will once again be hanging out at the Bin 36 bar…and if any members of the MNB community would like to stop by, say hello, and chat for a bit…well, the first couple of bottles of wine will be on us. It’ll be a great opportunity for all of us to put faces and voices with the names and words that appear on MNB plus an excuse to drink good wine. (Not that we need an excuse…)

And there will be a special guest appearance this year – for the first time, Mrs. Content Guy will be joining us!

Bin 36 is located at 339 N Dearborn on the west side of Marina City, between the river and Kinzie.

See you in Chicago.