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12/01/2012

What to expect in the Coming Year

Q: What would you most like to see change in the retail food industry in the year ahead? How can grocery retailers enhance their competitive advantage?

In advance of the Food Marketing Institute's Midwinter Executive Conference, Retail Leader asked four leaders to discuss industry goals for 2013. We've edited their responses for clarity.

Paula Price,
chief financial officer of Ahold USA, parent corporation of Stop & Shop, Giant Food Stores, Martin's Food Market and Peapod

Retailers need to recognize that customers have a lot more choices these days, so we all need to understand our customer base and focus on executing those specific things we do well to serve them. We recognize that every customer is different, and we want to acknowledge those differences and cater to each customer. We can take the data we collect through our loyalty cards to understand what customers are buying, and use that information to personalize our offerings to them. For example, if they buy one product, say yogurt, then we might get them a coupon for fruit or raisins to go into that product.

We also need to continuously look for ways to reduce costs. Becoming more efficient results in cost savings that we can reinvest in our business to improve our offerings, such as by refreshing our stores or creating better loyalty programs.

Enhancing Competitive Advantage

Overall, I would like to see the economy continue to improve so consumer confidence improves. Clearly this would enhance the size of the pie. More specifically, as a result of the recession, we have seen customers become more thrifty, and we expect that to continue in 2013. We also have seen more digital technology in every aspect of grocery shopping–putting together a shopping list, getting coupons, purchasing and picking up orders, sharing praise and problems with friends–and I see even bigger changes in that area in 2013.

Leslie G. Sarasin,
CEO, Food Marketing Institute

In 2013, I would like to see the food retail industry tackle the challenge of e-commerce head-on and convert it into a vibrant business opportunity by exploring multichannel platforms [and] finding creative ways of folding online shopping into the food retail business strategy.  Food retailers are famous for being innovative and able to adapt to new consumer environments, and I hope to see that inventive spirit spark new thoughts about how technology-enhanced shopping can be embraced and become a successful aspect of a forward-thinking industry.

FMI President and CEO Leslie Sarasin's name was misspelled in an earlier version of this article as well as in the print magazine. Retail Leader regrets the error.

Embracing Technology

We are just now scratching the surface of the life-changing potential afforded us through digital technology. To enhance their competitive advantage in 2013, grocery retailers should be aggressive at seeking the multifaceted ways high-speed electronic information-sharing can enhance food safety, improve product control, increase logistic efficiencies and greatly expand consumer convenience. Most of all, food retailers need to take full advantage of the multiple means social media provides to better know, inform and serve the customer.

Jesse Spencer,
director of social media of The Integer Group, a brand marketing and retail promotion firm

The opportunity I see is in improving the in-store experience using digital tools. One thing I'm seeing is an increase in mobile interaction. There is a perfect storm happening in the next couple of months with the new iPhone coming; now there are so many different price points for smartphones that I think we are going to see more and more adopters. And I think the adoption of QR codes will be something for retailers to watch. I think that is really going to take us to a new area in retail.

Addressing Barriers

To have a competitive edge, retailers should look at the barriers shoppers face and find tools to address those. My favorite example of this is a retailer in Korea called eMart, which faced the challenge that people were not shopping between 11 a.m. and 2 p.m. every day because they were going to lunch. So eMart came up with a creative way around it. At 11 o'clock every day, the sun shines through this thing that casts a shadow on the ground near the store that is a QR code. When people scan the code, it provides information about some item at the store for a crazy low price. People couldn't pass up this offer.

Andy Callahan,
president, retail at the Hillshire Brands Co.

It all starts with a deep understanding of their shopper and how to meet their needs on a consistent basis. We have found that if we provide products and solutions at a fair value, we create a strong affinity to our brands. Leading retailers are doing the same by understanding the shopper path to purchase and providing solutions and communications grounded in these insights and understanding. This will drive loyalty and profitable growth.

Progress through Collaboration

The industry has made significant progress over the past 15 years in collaborating around shared data. At Hillshire Brands, our objective is to drive profitable category growth for both the manufacturer and the retailer. This is only possible with a strong collaborative relationship that includes shared objectives and shared understanding of the shopper experience.

Ed Avis is a freelance writer and editor in Chicago who has written for Crain's Chicago Business, the Chicago Tribune, Specialty Coffee Retailer, Tea Magazine and many other consumer and trade publications.