PARIS -- Today's international food retailing CEOs are less focused on the minutiae of company operations than their predecessors.
And that's probably a good thing.
So asserts Richard Fedigan, chief executive officer of CIES, The Food Business Forum, based here.
As head of a global organization of retailers and suppliers, Fedigan regularly inquires about the issues most important to top food industry executives. He has found that CEOs are no longer all-consumed by data on market shares, financial performance and other aspects of company results. Now they are increasingly concentrating on external factors that affect the company and the sector as a whole.
"CEOs are letting other executives focus on operations, and they are more focused themselves on things like the retailers, the company as brand and the consumer's perception of the food sector," he said.
Fedigan said some current key issues for top executives are food safety, the environment, genetically modified foods, irradiation, consumer awareness, e-commerce and views that young people have of the business.
He was interviewed by SN in advance of CIES' World Food Business Summit 2001, which will be held June 20 to 22 in Prague, the Czech Republic. That event is the successor to CIES' annual Executive Congress. The event was repositioned to meet the needs of the new, broader outlook of top retail executives.
CIES' membership is composed of about 460 member companies around the world, including more than 230 retailers. Some 50 countries are represented by the retail members.
Fedigan said shifts in the attitudes of top retail executives result from the growing impact of outside events. "The global, political and economic situation now has an impact on the food business worldwide more than ever before," he asserted. "It impacts the entire sector and the impression the consumer has of that sector. And if the image of the sector isn't positive, then all companies suffer."
Fedigan pointed to food safety as perhaps the quintessential example because a string of recent global crises has impressed many people on the challenges. "If there was any doubt before, there's no doubt anymore that food safety is the No. 1 priority," he said. "There's no such thing as perfection. But awareness has been heightened. It's optimization of best practices."
CIES is the global facilitator of an international effort to address this issue. Called the Global Food Safety Initiative, it will set recommended guidelines for food products sourced by retailers around the world. It was launched last year and the task force driving the project now includes more than 40 retailers from all parts of the world, including the United States and Canada, Europe, Asia and Australia. A food safety director was hired and there are ongoing consultations with governmental bodies, scientific organizations and trade associations from many countries.
Subgroups are exploring issues including certification and inspection, accreditation of inspection agencies, recommended guidelines and early warning systems.
The plan is to research the best standards and programs already in use in various parts of the world and incorporate them into the guidelines. "This is about retailer own-brand products and fresh produce," Fedigan said. "These are the things retailers are most responsible for. It involves having processes of traceability right back to the feed for animals. So it's all-embracing and comprehensive, and almost everything will be covered."
A retailer's reputation is increasingly linked to its store brand products, so the state of a retail franchise rides on food safety issues, Fedigan stressed. He noted that by mid-June a business plan will be completed so it can be presented at CIES' Prague event later that month. The food safety guidelines may be ready for unveiling by late September.
CIES is also highly supportive of efforts to develop global electronic commerce standards. It is a founding member of the Global Commerce Initiative, the organization that is now leading an effort to find consensus on an item catalog standard that would act as a catalyst to e-commerce activity, such as transactions by the major B-to-B exchanges.
"This is a very important effort because the exchanges are under pressure to move forward on their business, for financial reasons," Fedigan said. "They are screaming for the catalog."
Fedigan said other issues for GCI to tackle include product identification, intelligent tagging, import/export languages, globalization of CPFR (Collaborative Planning, Forecasting and Replenishment), and product classification.
E-commerce and food safety are among the topics that will be discussed at the upcoming World Food Business Summit. CIES developed an agenda that is sharply focused on CEO concerns, according to Fedigan. This year's event will have four themes:
Remodeling the Business: "This is about how to redefine the sector," Fedigan said. "How to grow in a saturated market. We refer to areas such as financial services, e-services, internationalization. Can the U.S. companies go international?" Among the sessions on this theme, Joel Saveuse, managing director Europe, Carrefour, France, will address "Remodeling the Business and Growing the Value Chain." Also, a panel discussion on trading exchanges will include Barry Knichel, Tesco supply chain divisional director and member of the board of WorldWide Retail Exchange; Judy Sprieser, CEO, Transora; and Joe Laughlin, chief executive officer, GlobalNetExchange.
Style is Substance: How to Catch a Fashion Wave: "Can food be a fashion item?" Fedigan asked, noting that this theme explores whether the industry can make stores and brands more attractive to consumers. Among the speakers will be Luc Vandevelde, chairman and CEO, Marks & Spencer, U.K.
The Pyramid of Leadership: "How do you get bright young people to work for you?" asked Fedigan. "This is an opportunity for retail to reassert itself." This theme explores the issues of attracting talent of all kinds. Michel-Edouard Leclerc, co-president, Association des Centres Distributeurs, Leclerc, France, will speak on "Attracting and Retaining Independent Entrepreneurs."
The Confidence Factor: "Accountability is probably the most important issue of all," Fedigan asserted. "There's a responsibility to stakeholders, customers and employers." Among sessions in Prague related to that theme, Cees van der Hoeven, president and CEO, Ahold, the Netherlands, will speak on "Social Accountability -- Maintaining Confidence in Food in the 21st Century." Also, John Menzer, president and CEO, Wal-Mart International, will address "Managing Investor Confidence in a Global Retailer."
Many of the issues raised at the summit will have long-term impact, and will likely be revisited at next year's event, which will be held in Atlanta. Planning for that forum has begun and is focusing on issues including accountability and market definition. On the latter theme, Fedigan explained, "Government agencies are restricting companies in growing their market shares. Is there a need for someone to be asking how they measure market share? Why is our retail sector being treated differently than, say, oil companies?"
As he discussed summit agendas, Fedigan turned to CIES' organizational agenda, which he said has been streamlined. "We don't have 50 things on our agenda anymore," he said. "We're trying to align ourselves with just a few priority areas and get our ducks in a row."
Also streamlined is the organization's dues structure. CIES used to have multiple membership categories, such as national, international, regional, etc. But now all operators fall under international membership, a recognition that CIES has truly become an international organization.
As an international player, CIES supports efforts to make the transition to the Euro currency easier for retailers. The big change for consumers will take effect Jan. 1, 2002, often dubbed E-Day. That is when Euro currency and notes will be introduced in the participating countries, beginning a period of a couple of months for phasing in the Euro and phasing out the old national currencies.
A potentially large problem is that many retailers will be unprepared to make change and deal with customer transactions, Fedigan said. That's because the European Central Bank refuses to distribute notes until Jan. 1, giving companies and consumers little opportunity to acclimate before the new program takes effect, he explained. Further complicating matters is that on Jan. 1 banks are closed in most European countries.
"Small retailers in particular will suffer," he said. "Y2K was an IT issue, but this is a business issue."
He pointed out that Euro coins, which are the responsibility of national mints, will be available for distribution a few weeks before E-Day in most countries. That move that will enable consumers to have the new coins even though they can't use them yet. CIES advocates the same procedure to be followed for notes.
Fedigan is nothing but optimistic, however, on the overall concept of the Euro. "It's a positive thing," he stressed. "It's the most important development in Europe for a long time. If handled properly, it's a business opportunity for large multinationals. It facilitates business and creates confidence."