WEST PALM BEACH, Fla. - Grocery distributors are emphasizing the need to better align the supply chain and store merchandising with consumer demand, according to a panel of senior executives representing a cross-section of trading partners. That goal is crucial to gaining market share from non-supermarket retailers and food-service establishments, panelists said here last week.
"Everyone is washed with data and struggling to make sense of it, but the companies who are really getting out in front do a much better job of linking transactional information and shopper insights," said Frank Britt, vice president of procurement and supply chain management, C&S Wholesale Grocers, Keene, N.H.
SN's Power Panel: Industry Leadership in a Time of Change was part of Grocery Manufacturers Association's Merchandising, Sales and Marketing Conference held here at The Breakers last week.
Companies whose executives were past or present members of SN's annual Power 50 list of the most influential
members of the industry were represented on the panel including leaders from Supervalu, 7-Eleven, C&S Wholesale Grocers and Acosta Sales & Marketing Co. SN, a media partner, was also represented.
Supervalu's vice president of grocery, Trey Johnson, discussed how the retailer is reaching consumers through nontraditional channels.
"Everyone is selling groceries these days," he said. "My son lives in Boulder, Colo., and there is a nearby Home Depot with 12 pallets of food displayed right there in their promo aisle. Luckily for us, Supervalu supplies that so we get in on a little piece of the action."
Competitive challenges are numerous, Johnson conceded.
"Our largest categories are the largest categories for massive clubs," he explained. "We've got Whole Foods and Trader Joe's taking the high end and price formats taking the low end, and probably the biggest threat that we have is from casual dining. The typical family of four eats outside of the home about three times a week, so our challenge is getting one or two of those meals back."
As part of a test under way in California, Supervalu offers prepared Boston Market meals that convenience-seeking shoppers can eat at home.
7-Eleven, traditionally a destination for beer, cigarettes and gasoline, is altering its business model to appeal to health-conscious consumers eating on the go, according to Denis Wojcik, vice president of enterprise procurement.
"We're trying to give customers what they want, and we think that is fresh and healthy food rather than a frozen package you've got to heat up in the microwave," he said. "We're trying to focus on items that consumers will come back and repurchase. Our biggest challenge has been reading the data."
That problem commonly impedes achieving a truly demand-driven supply chain, said Gary Chartrand, chairman and chief executive officer, Acosta Sales and Marketing Co., Jacksonville, Fla.
"Trading partners need to collaborate better together and share data better together," he said. "We have the job of making sure all of the manufacturer's products are on the shelf where they're supposed to be and correct any out-of-stocks that we have there."
Supervalu puts its transaction data to use in an in-store customer-facing program it calls Avenue.
"There are a whole bunch of consumer touch points in the store that allow manufacturers to hit customers with an offer based on their past shopping behavior," Johnson said.
Still, Supervalu's efforts, like those of other retailers, are sometimes misguided, he said.
"We all agree that we spend way too much time focusing on promotion and way too much time trying to merchandise a store that probably isn't merchandised the way our customers want," Johnson said. "Customers want solutions. Aisle innovation, not category innovation."
Chartrand noted that Whole Foods Market's handle on its customers is reflected in its financial success.
"Two years ago with 168 stores, the chain had the same market cap that Albertsons had with 2,500 stores," he said.
"One of our top five manufacturers," Johnson added, "said that they have 800 items in a typical supermarket growing at about 1% to 1.5% and 12 items in a Whole Foods store that are growing in the high double digits."
Wojcik noted that too often supply is pushed rather than pulled. "A lot of times we end up talking about supply chain issues from the supply side rather than the demand side," he said. "A large soft drink manufacturer, for instance, has introduced flavors of their beverage in every type of fruit. Next they'll probably come out with a vegetable flavor in response to the health trend. We don't need a broccoli-flavored soft drink, we only have so many facings and we want to focus on the ones that sell. Having a facing in the store for 28 days isn't doing me any good and it's not doing the manufacturer any good."
RFID and data synchronization technologies will help to uncover these and less-conspicuous inefficiencies, said David Orgel, editor in chief, SN, another panelist.
"When you get to the point where you're able to track products everywhere in the supply chain, knowing where they are and verifying that promotions are being executed correctly, there becomes a much more seamless flow," he said.
Britt also recognized RFID's potential.
"There are a lot of sins in that back room from both manufacturers and retailers," he said. "Gen 2 RFID read rates are improving and we see it as a great way to track that last 100 feet."