Keeping Up with the Pace of Change

By Jim Dudlicek - 09/10/2017

What do grocery retailers and their trading partners need to do to stay competitive as their world changes at breakneck speed?

Shed their fear of failure and take more risks. Always be thinking about the consumer. Establish collaborative relationships with each other. Create a seamless experience between physical and digital platforms.

Those were all familiar themes coming out of sessions at the 2017 Grocery Manufacturers Association Leadership Forum this past weekend at The Greenbrier, in White Sulphur Springs, W. Va. But this year, the underlying message seemed to be, “And we really, really mean it.”

To be sure, these were all concepts that have been discussed before, but now – after a year dominated by Amazon’s acquisition of Whole Foods Market and the arrival of hard-discounter Lidl – there appears to be a heightened sense of urgency that if you don’t fundamentally change the way you do business, and do it now, you’re in big trouble.

“The industry has to move quicker. It’s OK to try small projects and fail,” said Justin Dye, former chief administration officer for Boise, Idaho-based Albertsons Cos., remarking that more innovation is coming in the next five years than has in the past 20. Retailers need to step up their efforts in areas like service and even entertainment, he said.

“The winners are going to have a good balance sheet and a clear differentiated strategy,” said Dye (pictured above, center). “People are going to be making a lot of bets in different areas.”

Bob Mariano, former chairman, president and CEO of Milwaukee-based Roundy’s Supermarkets, urged more honesty and transparency between trading partners. “We’ve got to cut through the nonsense and look at facts together to make decisions to move the business forward,” said Mariano (pictured above on right, next to Dye and former Walgreens CEO Greg Wasson).

Another clear message out of this weekend’s confab: Don’t be afraid for form partnerships to move forward rather than doing everything from scratch. Mariano foresees this as a key driver of continued industry consolidation.

“One of the reasons we merged the company was to leapfrog on click-and-collect,” he said of The Kroger Co.’s acquisition of Roundy’s, which operates his popular namesake supermarket chain in the Chicago area.

On the CPG side, executives recommended simplifying business operations to redirect resources toward better delivering on consumer needs.

“Focus more on consumer need rather than your day-to-day job,” said Paul Grimwood, chairman and CEO of Arlington, Va.-based Nestle USA.

Likewise, Michele Buck, president and CEO of the Hershey Co., in Hershey, Pa., said that she’s “focusing more on the operational structure” to include leaders “willing to take risks.”

With omnichannel commerce growing, agility and innovation will be the main arbiters of success moving forward. “Scale is no longer a competitive advantage,” said George Zoghbi, COO of US commercial business at The Kraft Heinz Co., based in Chicago. Added Benno Dorer, chairman and CEO of The Clorox Co., based in Oakland, Calif. “Business models that have relied on scale will suffer.”

RETAILER AND CPG AWARDS

Also at the forum, GMA presented its Hall of Achievement Award to Mariano as well as to Ken Powell, who retired earlier this year as president and CEO of Minneapolis-based General Mills.

The Hall of Achievement Award, which is GMA’s highest honor, recognizes the service and extraordinary contributions of distinguished food, beverage and consumer packaged goods industry leaders.

“Bob Mariano’s 50-year career in the grocery industry earned him a reputation as the consummate merchant, someone with an uncanny ability to listen to and understand his shoppers,” said Pamela G. Bailey, president and CEO of Washington, D.C.-based GMA. “Ken Powell’s leadership at General Mills has been marked by listening to consumers, driving innovation, and committing to a sustainable future for the world around us. He brought that same steadiness and sensible leadership to his role as chairman of the GMA board of directors. We are honored to present them with GMA’s Hall of Achievement Award.”

GMA also presented its CPG Awards for Innovation and Creativity, selected each year by the GMA Advisory Council in recognition of recipients' creativity and willingness to take risks, resulting in measurable results and significant impact on the industry.

Austin, Minn.-based Hormel Foods was recognized for Skippy P.B. Bites, which were created to meet a challenge by company leadership to take peanut butter out of the jar. A Progressive Grocer Editors’ Pick, Skippy P.B. Bites, the first in its category of peanut butter snacks, initially launched in 2015 in two varieties – pretzel and double peanut butter – that exceeded expected sales. The successful launch aligned with one of the company’s key growth pillars – solving for the on-the-go eating occasion – and has set up the company for further growth in the snacking business, with the addition of granola and graham cracker options.

“Quality and innovation are two guiding principles at Hormel Foods that help the company meet consumers’ needs and satisfy appetites around the world,” said Scott Aakre, VP of consumer insights and corporate innovation at the company. “Accomplishments such as Skippy P.B. Bites inspire us to continue to put the consumer first as we look for food solutions that reimagine convenience, give consideration to personalized nutrition and respond to consumers’ demands for food adventures.”

Nando’s Peri-Peri won for its launch in Atlanta of the grocery version of its famous sauce, a South African blend of chilies, garlic, sun-ripened lemon, fresh herbs, and spices. Nando’s sauce is available at its restaurants in 26 markets across the world – including Chicago and Washington, D.C. in the United States – but the company wanted to launch its bottled sauce to consumers in cities where it didn't have restaurants. It chose Atlanta for a test market, and used a combination of targeted sampling, strategic seeding, influencer gifting and a series of pop‐up experiences to gain widespread social media sharing and earned media coverage that was supplemented by a trade marketing program.

“Around the world, we have seen that as soon as people try our famous little Peri-Peri from South Africa, it’s love at first bite,” said Paulo Oliveira, head of Washington, D.C.-based Nando’s Grocery North America. “Our fresh flavor and spice speak for themselves, but it’s not easy to get samples to everyone in the U.S., so we’ve had to get creative in our approach. We are excited and humbled to see we’ve been so positively received by staying true to our brand and heritage."