FMI MIDWINTER: Forces, Forecast and Outlook
Retailers must prepare for sweeping societal shifts
By Jim Dudlicek, EnsembleIQ
“The sky isn’t falling - the status quo is disappearing.”
That’s how Michael Sansolo describes the ongoing global societal shifts that are changing the way people produce, sell, prepare and consume food.
Sansolo, principal of Sansolo Solutions LLC, moderated a panel discussion on the future of food retailing during the 2017 Food Marketing Institute’s Midwinter Executive Conference this past weekend in Scottsdale, Ariz.
FMI partnered with agency Kurt Salmon, part of Accenture Strategy, on a study of these influences, which food retailers and suppliers must heed in order to stay relevant and successful in the years ahead.
Grocers need “to be progressive in adapting to these changes,” Sansolo told PG following the panel discussion, which included industry players from the much-heralded Millennial age bracket: Emily Coborn, VP of fresh at upper Midwest grocery operator Coborn’s Inc.; Michael Needler Jr., president and CEO of grocery retailing group Fresh Encounter Inc.; Joe Davis, group director for marketplace and shopper insights at The Coca-Cola Co.; and Steven Pinder, partner at Kurt Salmon.
“A lot of the traditional strengths of the food network are disappearing,” such as location and brands, Sansolo said, because of changing consumers and technology. “We know the ‘what’ of the consumer. We need to know the ‘how’ and the ‘why,’ so we’re fulfilling needs, not just products.”
Pinder delivered a broad overview of the study’s key points, such as:
- By 2030, 60 percent of the world’s population will live in urban areas
- 85 percent of consumers are willing to pay more for healthier food
- 80 percent are willing to share personal data for benefits or convenience
- Agricultural yields will grow through irrigation and technology, meanwhile 12 plants and five animal species will provide most of the world’s food
- Meal replacements such as proteins, bars and liquids will increase in popularity
- Consumers will be most often influenced in their decision making by the multiple “tribes” to which they belong, and will be willing to pay more for socially conscious products
This comes amid an overarching demand for transparency from the food industry. “Consumers will always look to purchase something they desire from someone they trust,” Pinder said. “One of the biggest trends will be how we participate in these tribes. Other industries are changing how customers expect to interact with us.”
That trust will come down “to accountability and the ability to be heard as a consumer,” Needler asserted.
So how can retailers engage consumers in discussions about factors impacting the world’s food supply such as climate change, global population and GMOs?
Educated Employees Create Educated Shoppers
“We have these discussions every day,” Coborn said, noting that her company’s focus is on educating its employees to help educate shoppers. “Regardless of science, some people are going to make decisions based on what they feel are ethical questions. We’re going to give them a choice - we’re not the food police.”
Needler said most people don’t understand the long-term implications of “stuff sprayed on their food,” so the industry needs to demonstrate health safety and build trust. Otherwise, “the consumer’s going to reject it at first blush,” he said. “Our customers prefer overalls to lab coats.”
Coborn agreed that “people are interested in talking to experts,” noting that one of her company’s priorities is investing in talent such as butchers, pastry chefs and retail dietitians. “It’s important to know how we’re going to attract the next generation of talent. We’ve got to get young people to see our industry as one where they can have a career. Millennials don’t get enough credit for how hard they’re willing to work -- they just want to know there’s a reward.”
The in-store experience is key to making sure even digital-centric shoppers keep visiting physical stores. “Don’t forget that, despite all the data,” Needler said, “it comes down to store-level execution and human interaction.”
Coborn acknowledged that technology is “pushing us beyond our comfort zone, explaining how the company’s grocery delivery service, established in 2008, is growing faster than its brick-and-mortar stores, and has since been introduced as a click-and-collect service at its supermarkets.
Meanwhile, Coborn made a daring prediction: “I wouldn’t be surprised if, in my lifetime, I see shoppers sending their own drones to use to pick up groceries.”
Ultimately, the goal is to deliver solutions that help consumers deal with the scarcity of time,” Needler said. “Our goal as retailers should be to solve that problem for the consumer,” he said. “It comes down to a great in-store experience.”
Coborn added, “Make it enjoyable, a place comfortable for parents to bring their kids, a gathering place to see your neighbors.”
Perhaps the biggest challenge, amid rampant speculation and dizzying change, is figuring out the most successful course of action. “Ten years from now, none of us will be right,” Pinder quipped, “but things will be significantly different”
The Wide Angle
FMI President and CEO Leslie Sarasin offered a view of what’s in store for the industry from a historical perspective – FMI celebrates its 40th anniversary in 2017 – and used it as a call to action for retailers challenged by the rapid pace of change.
“Our main threat isn’t each other – it’s any entity grabbing a share of meal and snack occasions,” Sarasin declared, advising supermarkets to stop “playing by old rules” while other channels create new ones. Grocery retailers’ real competition, she asserted is “outdated thinking.”
With changing habits, the old 21-meals-a-week model has been replaced by 14 meals plus 14 to 21 snacks, with three to four dinners eaten at home and most lunches out.
Restaurants, e-tailers and meal kits are a bigger threat to supermarkets than other grocers, Sarasin said, because “ consumers don’t make a distinction between foodservice and retail – they just want their needs met.”
While retailers need to do a better job connecting with consumers on their own turf, grocers need to transform the in-store experience as well. FMI advocates the concept of total store collaboration, and the greatest potential exists with wellness.
With many grocers employing in-store dietitians, and some even putting doctors and nurse practitioners in stores, retailers can create “meaningful partnerships that combine food and health care,” Sarasin said. “Health and wellness is going to continue to grow in importance and be a big purchase driver.”
Consumers “seek inspiration to make good choices,” she said – shoppers don’t want to be told what to do, they’re “waiting to hear voices that inspire them to do what they know they should be doing.”
Besides operating at “the nexus of food and pharmacy,” Sarasin said, grocery retailers enjoy a high level of trust among businesses, with 93 percent of consumers reporting they trust their grocery stores, according to FMI research.
Grocers need to leverage that trust to stem the tide of other channels like dollar, drug, mass and c-stores, which have been capturing the lion’s share of total retail gains.
“Being traditional is not a good strategy for growth,” Sarasin said.
The 2017 FMI Midwinter Conference also saw the debut of Stir It Up, a dinnertime tasting event at which test kitchens set up by Hy-Vee, Wakefern, Coca-Cola and Pepsico prepared dishes in multiple categories: Healthiest Family Meal, Easiest Family Meal to Prepare, Tastiest Family Meal, Most Affordable Family Meal and Best Culinary Adventure.
In addition, Campbell’s, Kellogg’s, Smuckers and Procter & Gamble offered sampling stations, which other retail and CPG companies sponsored beverage stations and tables.
Culinary creations ranged from roasted meats and crab cake sliders to lettuce wraps, cheesecakes and baked Alaska.
Coke took honors in two categories (easiest and most affordable), while Hy-Vee won for tastiest, Wakefern for healthiest and Pepsi for culinary adventure.
The event is expected to be expanded next year, when the FMI Midwinter Conference unfolds in Miami on Jan. 26-29, 2018.
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