CAMDEN, N.J. -- The interests of manufacturers and retailers should revolve around those of consumers. After all, once it's understood what consumers want, it becomes far easier for the consumer packaged goods industry to know what products to manufacture and for retailers to know how to merchandise them. That concept is easy to understand and to state. But ascertaining the many implications of it is much more difficult. One executive who has spent a long career in the CPG industry working toward solutions is Denise M. Morrison, president of global sales and chief customer officer, Campbell Soup Co. here. (She reports to Douglas R. Conant, president and chief executive officer.) Another vexing and related issue of interest to Morrison is how to revivify supermarkets' center store section. The quest for answers led her to chair the Grocery Manufacturers of America's sales committee, which is looking into the matter.
Beyond that, her background includes positions of increasing responsibility at companies such as Procter & Gamble, Pepsi and Nestle. She also spent several years at Nabisco and Kraft, at the latter rising to the post of executive vice president and general manager of the snacks division. She is on the boards of Ballard Power Systems and Goodyear Tire & Rubber Co.
SN asked Morrison to talk about what the CPG and retailing industries are facing in some of these regards:
SN: What are some of the critical considerations that are driving consumers to select product?
DM: One of the key drivers for consumers is the accent on health and wellness. The fact is, there is a generation of baby boomers, about 78 million strong, that is aging. Just as this generation has redefined everything else they've done, they will redefine what it is to be a senior citizen. One of the traits of this generation, of which I am proud to be part, is the desire for control. A form of control to be exercised is over diet and eating. We're also obsessed with wellness, and, watching what happened to our parents before us, how to maintain a quality of life and well-being. This is transforming how baby boomers act as consumers and shoppers, how they shop and what they eat. There is also a recognition that a physically active lifestyle will maximize well-being. This obviously has ramifications for the whole food business. I think that CPG manufacturers, trained to listen to consumers, have started to respond with products that meet these needs.
SN: Is the regulatory environment changing?
DM: There is a changing regulatory environment that we're watching very closely because it's going to have an impact on CPG and retailers. That is seen in the change in the [U.S. Department of Agriculture's] dietary guidelines. The whole food pyramid will be turned into a food guide, it appears. The guide will be more about calories and controlling caloric intake to control weight. So there is an increasing awareness by regulators to pay attention to wellness and to obesity, which has gotten a lot of press and continues to be a global issue. Wellness is a platform for very proactive collaboration between retailers and CPG manufacturers with the objective to delight consumers and deliver on their needs. The challenge in all this is that consumers want food that tastes good. So in addition to being nutritionally better, products have to deliver on good taste. Consumers will vote with their dollars.
SN: How can CPG manufacturers avoid reacting to short-lived consumer trends but, at the same time, recognize and react to genuine long-term changes in consumer needs?
DM: There is a recent example of reacting to a short-term demand, and that is the low-carb trend. Foods were introduced around that. Some of them did better than others. It could be argued that all trends produce some change. We have low-fat and low-sugar products today, and I assume that going forward we will continue to have products that are low in carbohydrates. What's going to evolve is choice. Manufacturers and retailers will offer consumers a range of choices so no matter what nutrition regimen they choose, there will be products in the stores that cater to them. It's not a one-size-fits-all.
SN: You've mentioned the importance of an active lifestyle in addition to proper nutrition. Does the CPG industry have an obligation to promote proper lifestyles for consumers?
DM: Manufacturers are working toward that through GMA, and are working on different programs that stress the combination of physical activity and nutritional balance. Campbell's is a sponsor of some of them. Campbell's also shows its commitment because we have a fitness center on site. Employees are encouraged to engage in physical activity. In the cafe, we feature our "Soup for Life" recipes every day. That's the name of a cookbook Campbell's has produced.
SN: Rebuilding retailers' center store is an important issue. Does the wellness issue play into that, and does it figure into the fact that you chair the GMA sales committee?
DM: Wellness will be part of this because there will have to be a mirroring of some of the major consumer trends around convenience, wellness, kids, indulgence and ethnic in center store. Beyond that, in the last year the GMA sales committee has been more active and the committee is tackling some issues facing our customers in ways that could involve the expertise of CPG manufacturers. An area where we determined we could add value is center store. Here is how I've framed what's at issue: There is an expanding perimeter, a shrinking center [and] record numbers of new product introductions. So the math doesn't work. We're facing, in a lot of cases, a space crunch. It's also changing the basic economics of the store. Another important insight is that center store has traditionally been more operations-driven, while the perimeter has been more marketing-driven. When you walk the perimeter, you sense the investment in fixtures and in the theater that goes on. It's a marketplace of exciting smells and sensations. You get to the center, and it's boxes and cans. So the idea here is to bring marketing to the center store to get the consumer to shop it more, to add more dollars per trip. We also want to get more consumers into the store by providing a much more positive center store experience. There have been examples of that in other industries, such as Home Depot, and in our own industry, such as Whole Foods. They provide an experience that consumers respond to. We have the most exciting product in the world in food. How do we romance the food in center store, as retailers do on the perimeter, to create the kind of experience that lures more shoppers, and to have them spend more dollars per trip?
SN: That's the question. How can you do that?
DM: We're conducting a study, and we are delving into key drivers of center store and some of the ideas that could emerge from other retail formats, and from our industry, for insights about how retailers have created this experience and how we can bring it to the food store, too, and drive profitable growth. The first unveiling of answers will be at GMA's event. [GMA's executive conference will be at The Greenbrier resort, White Sulphur Springs, W.Va., June 10-13.]
