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Notes and comment from the annual Food Marketing Institute (FMI) Show…by Kevin Coupe

CHICAGO -- Perhaps it is appropriate that after some two decades during which the annual FMI Show has been held in Chicago, this year marked the beginning of a transition to different convention formats in rotating cities. Because the industry itself is in transition, seemingly at war with its own instincts in a variety of areas. Time and again, as I walked the floor and visited with retailers and vendors, I encountered attitudes that at best seemed contradictory and at worst seemed to herald a cultural clash of major proportions.

Let me suggest three areas in which I found clear-cut conflicts not just on the horizon, but right in front of us.

Health & Nutrition Marketing. In his Tuesday presentation on health and nutrition, Dr. William Sears noted that he believes it necessary to educate children about red light foods (you shouldn’t eat them), yellow light foods (eat them occasionally and sparingly) and green light foods (eat all you want). This isn’t just an educational effort that should be undertaken by schools and medical professionals, he said, but also by supermarkets, which can turn the current obesity crisis into a real marketing opportunity.

No argument there. It is, after all, an approach that is being undertaken by Delhaize-owned Hannaford Bros. and Sweetbay Supermarkets in the US, and would seem to make a lot of sense.

The problem, of course, is that the vast and overwhelming majority of promotional and advertising dollars are dedicated to driving the sales of so-called red light foods, and I don’t see that changing anytime soon.

Freedom of choice notwithstanding, how long can the supermarket industry sustain itself in an environment where the growing popular opinion is that the business is making much of its money selling food that is bad for people? Especially when the organic/natural segment is showing so much growth (as reflected in the energy that could be felt in the All Things Organic show that co-located with FMI’s convention in Chicago).

I’m not arguing that we should eliminate all red light foods from supermarkets. Just that there seems to be a culture clash coming, and supermarkets are going to have to figure out how to deal with it, how to position themselves. More importantly, they will need to figure out where the customers are positioning themselves.

People, The Talent Gap & The Need For Leadership. Students from Portland State University who appeared onstage with FMI’s Michael Sansolo made several things perfectly clear: a) when they look for jobs, they are taking companies’ cultural, social, environmental and sustainability positions into account, b) they want work-life balance, and have the perception that this may not be an acceptable notion in retailing, and c) they are interviewing the companies they speak to as much as the companies are interviewing them.

At the same time, during a Super Session on “Filling the Management Talent Gap” that I had the privilege of moderating during FMI, there were general concessions that a) the food retailing business does not treat its employees and future leaders as investments but rather as costs, b) most retailers do not have an research and development budget line that is focused exclusively on the development of management and leadership skills within the organization, and c) senior executives at retail companies ought to be spending as much as 30 percent of their time on nurturing the human capital within their organizations.

Sounds like a culture clash to me. The bright young people who could be coming into the retailing business are not just demanding “more,” but have some pretty sophisticated attitudes about what they expect from the companies or which they work. And many of the companies – there are, of course, exceptions – in the business are not set up to understand those demands, much less meet them.

Sustainability & Product Availability. I remember when I was a kid, and items such as green grapes and fresh corn were only available at certain times of year. That’s changed, as a global growing environment has made virtually everything available all the time.

But now, with concerns about environmental sustainability, people are starting to look at grapes from, say, South America, and ask if it is worth all the fuel it takes to get them to the US. Or if it is necessary for New Yorkers to have apples from Washington State if the gasoline to get cross-country cost three or four or even six dollars per gallon. And smarter transportation strategies will only get us so far.

So here’s the question that must be faced by retailers. How will consumers react to a diminished supply of products that is sensitive to environmental and sustainability-related costs? Will we return to seasonal supply? Or will we all just get used to paying much higher prices for items because we’re addicted to year-round supplies?

(Of course, paying higher prices doesn’t solve the environmental issues…because four dollar gasoline burns at exactly the same speed as two dollar gasoline…it just costs more as we move toward the inevitable tipping point where supplies begin to run out.)

The Chicago era for the FMI Show is over. Next year, Las Vegas.

However, retailers who are looking to resolve some of these issues within their organizations are going to have to do a lot more than roll the dice or play the hot hand. They have to begin making some serious decisions about how the industry will be remade, how its priorities need to be adjusted, and how it is going to be relevant to a changing consumer as well as an evolving employee base.
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