Reply all: Urgent action required of food retailers

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Reply all: Urgent action required of food retailers

By Mike Troy - 01/30/2018
FMI's Midwinter Executive Conference drew nearly 1,100 attendees, a figure that would be considerably higher if some of the nation's largest food retailers (see below) were more supportive of the organization.

A colleague of mine who has a tendency to ask provocative questions did it again this week. Knowing I had attended the FMI Midwinter Executive Conference, he posed the following: “Interested to know given the seismic conditions that lay before our industry, was there an appropriate sense of urgency to solve some of the critical issues?”

A broad inquiry like that was going to require some time and thoughtful response so rather than reply directly, I’m hitting “reply all” to the universe of Retail Leader readers. What follows are my thoughts about FMI Midwinter, seismic market conditions and what sort of important and not so important stuff happens over a long weekend at a resort in Miami.

For starters, on the issue of whether urgency level was appropriate. No, it was not. It really isn’t possible to move fast enough in today’s competitive climate, especially when the companies rewriting the rules by which the rest of the industry is playing don’t feel like they are moving fast enough. Anyone pondering whether they are moving fast enough certainly is not.

This point was made clear by two presentations that bookended the conference which began on Friday, Jan. 26 and ended on Monday, Jan. 29. Kudos to FMI for scheduling the conference over a weekend because, rest assured, the tech entrepreneurs looking to disrupt the food retail world are working plenty of weekends and nights. The first presentation was from Tim Steiner, Founder and CEO of Ocado, an online food retailer in the United Kingdom that is something of an overnight success 18 years in the making. That’s because most U.S. retailers haven’t heard of the company which is disrupting the U.K. landscape more than any other. Steiner comes across as a pompous Brit when describing the company he built, but like Muhamed Ali calling the round in which he would knock out an opponent, Steiner substantiated his lack of humility with details about Ocado’s home delivery approach, modern distribution systems, route optimization and profitability. Ocado is all about home delivery, which he contends makes the click and collect approach irrelevant.

It was a perfect wake up call for food retailers with a tendency to reassure themselves that everything is going to be okay because the industry has dealt with market turbulence before. While that is true, the industry hasn’t been through a period like this – ever. Issues such as transparency and personalization are rewriting the rules of shopper engagement while new ways of shopping and building brands are creating challenges for established brands and retailers. All of these things speak to the “seismic conditions” my colleague mentioned and were touched on during a panel on the final day.

Consumer adoption of new methods is faster than ever and developments such as automated stores, driverless vehicles and predictive meal planning and list building are not as futuristic as they sound, according to Steve Pinder, Managing Director of Kurt Salmon, part of Accenture Strategy. Technology is changing the shape of the shopper journey in exciting (some attendees might argue disturbing) ways, according to Pinder. He kicked of the final session which included panelists from Facebook, Google, start-up accelerator Food X and was moderated by Mark Baum, FMI’s Chief Collaboration office and Senior Vice President of Industry Relations.

“This is really a first for us,” Baum said, regarding the panel’s topic of “the battle for the food marketplace: a view from Silicon Valley.”

That view is one dominated by mobile devices, constant communication and shoppers expectations of brands and retailers that are changing and rapidly elevating faster than any conventional grocer can hope to keep pace with.

“We expect everything to be relevant and personalized to us,” said Kate Sayre, Global Head of Consumer Goods Strategy at Facebook, noting that 20% of all time spent on mobile devices is on Facebook’s various platforms. “Consumers expect brands to act on the signals they are sending.”

From the perspective of Google technical director of applied artificial intelligence, Ron Bodkin, we have entered the “age of assistance.” That means Google is seeing, “an increasing frequency of people using online resources even if the outcome of the interaction is trip down the street.”

One of the more sobering comments on the panel came from Andrew Ive, Managing Director of Food-X. He highlighted the competitive climate facing retailers by noting that every six months the accelerator reviews applications from 500 companies but chooses only 10 to invest in. Those numbers show how much interest their is among entrepreneurs to disrupt the food retail industry.

“We are looking for big ideas and companies that can pull it off,” Ive said referring to the investment philosophy of Food-X.

Lastly, the group touched on the accelerated pace of innovation and product cycles. The timeframe for planning cycles is compressed and the future is unclear, noted Pinder.

“We do six month planning cycles and we couldn’t even tell you what things will look like in two years,” said Facebook’s Sayre.

The panel discussion was the perfect way to end an event that was more future focused than ever, and appropriately so, because acting with urgency will determine whether some companies are in business within five years. Nevertheless, I returned home from a generally awesome and productive event disappointed in the overall food retailing industry. That’s because while nearly 1,100 people gathered for FMI Midwinter, companies such as Walmart, Target, Costco, CVS, Walgreens, Dollar General, Family Dollar, Aldi, Lidl, Trader Joe's and Amazon/Whole Foods were not represented. At least not that I could tell from the attendee list or by scouring name badges at receptions, parties, in hallways and educational sessions.  That’s a shame because they sell a lot of food and FMI advocates on their behalf as well as the traditional supermarket chains and food wholesalers who comprise the majority of attendees.