NEW FACES

The clear air of Palm Desert, Calif., must have had a salubrious effect on industry executives who attended the Western Association of Food Chains convention, judging by the thought-provoking content of presentations a couple of them made. Highly placed executives of both Vons Cos. and Ralphs Grocery Co. -- both southern California chains -- were unusually forthcoming in setting out provocative industry

The clear air of Palm Desert, Calif., must have had a salubrious effect on industry executives who attended the Western Association of Food Chains convention, judging by the thought-provoking content of presentations a couple of them made. Highly placed executives of both Vons Cos. and Ralphs Grocery Co. -- both southern California chains -- were unusually forthcoming in setting out provocative industry visions. First, let's take a look at how Roger E. Stangeland, Vons' chairman and chief executive officer, views emerging drivers of change. Roger Stangeland, by the way, also is chairman of the Food Marketing Institute, the industry trade association that convenes in Chicago next week. As is reported on Page 1 of this issue of SN, Roger Stangeland observed in his talk at WAFC that, for the first time in its 60-year history, the supermarket industry is being shaped mainly by forces from outside the industry, not from internally driven needs to change.

Those extra-industry forces include such well-known aspects of business as alternate formats and leveraged buyouts, but also range to less-contemplated social factors.

One such social force has to do with a seemingly permanent change in the economy: Consumers continue to be reluctant to loosen their purse strings even as the economy improves. Other such forces include the aging of workers, more women workers and an increasing diversity in educational and literacy levels.

Additionally, he said, the powerful social force of urban unrest is likely to continue for a protracted period.

To bring home the point of how social forces can impinge on the industry, Roger Stangeland said it was such a consideration that lead Vons to abandon its once-promising Tianguis store format, the format intended to address the product needs of Hispanic consumers in a special way.

He said the secondary effects of the long-running grape boycott caused sales volume at Tianguis to spiral into "free fall." Incidentally, the comments about the grape boycott represent one of the first high-level public acknowledgements that the boycott had such a strong effect on an industry segment. Also at this month's WAFC convention, Patrick W. Collins, retired vice chairman of Ralphs, addressed the meeting on an important issue attached, in a way, to one of the external forces mentioned by Roger Stangeland: alternate formats. As the news article on the front page of last week's SN shows, his concern was really about the industry efficiency quest -- the quest brought about because of pressures exerted by alternate formats. In a vigorous airing of views, Pat Collins said needed industry efficiency continues to be elusive because of a sort of continuing addiction to fees associated with the buying side of industry activity -- an addiction that causes the industry to pay less attention to the selling side. "If retailers suffer from the opium of allowances, let me suggest that manufacturers suffer from the cocaine of item proliferation -- in fact, the two are tied intrinsically together," he said. And that's the very counter-efficiency formula Pat Collins and many others believe the industry must shake off.

In its place, he said, the industry should move toward establishing a scan-audit trail that could form the basis of retailer payments to vendors, and lay groundwork for continuous replenishment.

It might be argued that Ralphs has a lot more ability to execute an information-based plan than do many other elements of the industry, but Pat Collins' vision is the ultimate Efficient Consumer Response strategy. It's also something we'll hear a good deal more about at next week's FMI convention.