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Disruption dilemma

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MIAMI — A sense of urgency pervaded the Food Marketing Institute’s (FMI’s) Midwinter Executive Conference here last month. Faced with the tsunami of change sweeping over the industry, retailers and suppliers were eager, in private meetings and public sessions, to hear new ideas and talk about innovative strategies that will enable them to flourish in a marketplace where established patterns are quickly unraveling.

Speaking at a keynote session, FMI president and chief executive officer Leslie Sarasin neatly summarized the factors remaking the grocery business. Referencing the work of Leon Megginson, a business professor at Louisiana State University in the 1960s, she examined what the industry needs to do to continue to thrive: “Megginson — while applying Darwinian principles of survival of the fittest to the business setting — offers a clear warning that we must take care in the way we define ‘fittest.’ He challenged his audience by pointing out that traditional measures of business success — things like size, strength and even intelligence — are not the actual supreme value drivers in a rapidly changing environment. In fact, in some ways those very things may work against our survival. Instead, the key to survival in a climate of change, Megginson argued, is adaptability. As the dinosaur’s experience testifies, when the environment changes, neither size nor strength nor even intelligence helps ensure survival as well as the ability to adapt.”

Sarasin went on to examine five interrelated forces — the new consumerism; artificial intelligence and technology; a new marketplace; a new workforce; and new avenues in food production — that the industry will have to master if it is to remain relevant. The demands of shoppers are greater than ever before, she asserted, raising the bar considerably for retailers.

“These new consumers expect personalized service that jibes with their lifestyle, their values and their unique choices,” Sarasin said. “In this new model, they want you to inform them; curate products, information and values on their behalf; and inspire them — especially when it comes to matters of health and wellness.

“This new set of customer expectations is utterly transforming the retail environment. You’re no longer simply purveyors of food products; you’re now the arbiters of values, the repository of information and the supreme judge of quality. It’s no longer enough to just stock the product; you must know all about it and be able to communicate that awareness in a meaningful, entertaining and accessible fashion.”

The empowerment of consumers is just one of the trends driven, in whole or part, by technology. “I’d be hard pressed to identify a single area in food retail operations that hasn’t been touched, reconfigured, challenged and changed by technology; front end, back end, delivery, center-store stocking — you name it,” noted Sarasin. “There’s definitely more coming — faster and more furiously — and these changes will completely revolutionize food logistics and rattle every link in the food chain. And here I would venture a word of warning — we must be careful about who and what we label as disruptors, because ultimately they may just prove to be our best and most beneficial ­collaborators.”

The road ahead is filled with formidable challenges, according to Sarasin. “Taken together, the factors confronting our industry that I have lined out add up to a radical shift in the retail environment. To thrive in such an environmental overhaul calls for adaptability that can only occur with imaginative collaboration and courageous ­improvisation.”

Another attribute that will stand the grocery industry in good stead is common purpose, according to Kevin Davis, CEO of Bristol Farms Inc. and outgoing FMI chairman. “Emerging issues, transparency expectations, information overload and evolving consumer preferences are all creating shocks to the food system,” he said. “These stresses frequently result in (and sometimes take advantage of) an increasingly fractured system that lacks a uniform approach to deal with big issues. To address this problem and create a space wherein we can work toward a common means of addressing issues affecting us all, FMI and the FMI Foundation have established a framework we are calling the Unified Voice Protocol. We believe amplifying our individual voices by speaking as one will give us both strength in numbers and wisdom in numbers, therein establishing a framework to proactively create trust in the food and consumer goods industries.”


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