Vol. 3 No. 7

Global Closeup

The Industry Affairs Review  is made possible by support of:

In This Issue:  

Planet Retail: Global

Top 20 Retailers

Executive Conference

General Sessions

Noddle, Rich Win

Hall of Achievement

Record Entries for CPG Award

Sibert Addresses NEW Conference

Adulteration-Counterfeiting

Study Begins

Late Registration for

Unsaleables Meeting

Sam's Club Exec Headlines

MSM Conference

Bain Wins Outsourcing Study

GMA's Position on

Derivatives Outlined

Logistics Group Tackles

Two Studies

DSD Committee to Launch Study

Industry Research:

Retailer-Direct Data Study

Datebook

GMA Industry

Affairs Group:

Yacine Chettouh

Intern

Industry Affairs

Jonathan Downey

Manager

Industry Affairs & Business Development

Jennifer Finci

Assistant

Supply Chain & Technology

Jeanne Iglesias
Director
Supply Chain & Technology

Jill Johnson

Director

Logan Kastner

Senior Manger

Sales & Sales Promotion

 
Brian Lynch
Director
Sales & Sales Promotion

Jessica Martin

Assistant

Sales & Sales Promotion

 
Stephen A. Sibert
Senior Vice President
Industry Affairs

Brooke Weizmann

Senior Manager

Industry Performance

Industry Affairs

Review Team:

Natalie Berg
Grocery Retail Manager
Planet Retail Ltd.
IAR Consultant

Jo Anne Sharlach
Singley Associates

Editor

August 29 - September 1

The Broadmoor

Colorado Springs, Colorado

Learn How Shoppers

Think Green, Buy Green

More than 6,400 shoppers were surveyed to determine where, how and why they buy - or do not buy - green products in this study released in April by GMA and Deloitte Consulting entitled Finding the Green in Today's Shopper: Sustainability Trends and New Shopper Insights. 

Oldies But Goodies Still

Available at Book Store

There’s nothing like going to the source. Walgreens and many grocers now are adapting solution selling in their retail formats. Read the original book that launched the initiative, Full-Service Solution Selling by GMA in cooperation with Anderson Consulting and FMI. Published 1999. Another: The Root Causes of Unsaleables, published also in 1999, in cooperation with FMI.

Click here to visit GMA’s book store for a storehouse of knowledge – newly published or long-lasting.

Contact Lowell Karr at 202.639.5910 or e-mail lkarr@gmaonline.org. for more information.

Global Top 20: Discounters Dominate Global Grocery Market

By PlanetRetail 

Despite the grocery sector remaining fairly insulated from the economic downturn, severe price competition, fluctuating food prices and drastic shifts in consumer behavior mean that the grocery retailers have not escaped entirely unscathed. As a result, it has truly been a game of survival of the fittest with the world’s leading retailers looking to defend their spot in the global rankings.

In 2008, the Top 20 grocery retailers collectively generated banner sales of U.S. $1.95 trillion, up 10.5 percent year-on-year and representing 25 percent of the global market as a whole. Led by global heavyweights Walmart, Carrefour, Metro and Tesco, the Top 20 continued to plant new flags around the world – India and Russia are particular retail hot spots – to offset slow growth in their domestic markets. (In photos at the left, Walmart looks to India and China for future growth.)

Perhaps a reflection of the broader economic climate, the largest gains in 2008 were made by discount retailer Schwarz Group, which moved up the rankings from No. 9 to No. 5. Meanwhile, non-food heavy retailers, such as Target and Sears, have suffered as consumers rein in their non-discretionary spending. 

Crisis?  What Crisis? Overall, the Top 20 seem to have weathered the economic storm relatively well. In fact, few of the major players have scaled back their expansion plans to a significant degree. Rather, it seems the smaller local players in many markets (e.g., Russia) have had their store-opening ambitions hardest hit. The large global giants – with funds for investment, the ability to pressure suppliers and the most successful economy private labels – can perhaps capitalize on the scenario to boost their presence even more. Indeed, with consumer spending in their domestic markets in North America, Japan and Western Europe hardest hit, the leading players seem intent on expanding at an ever faster rate in the more promising emerging markets of Asia, Eastern Europe and Latin America.

Global: Top 20 Grocery Retailers 2008

Source: Planet Retail Ltd - www.planetretail.net

Top 5 Hold Their Ground: As would be expected, the more price-focused of the Top 20 seem to be performing the best. In fact, those with a reputation for offering exceptional value for money (Walmart, the hard discounters) are currently experiencing particularly good times. As these retailers would agree, it seems we have seen a noticeable, perhaps long-term, shift in shopping habits in many markets. The search for value is likely to remain an important factor even after economic conditions improve, which is good news for the discounters and bad news for the mainstream grocers expecting shoppers to flood back to their stores.

For this reason, it seems impossible to see any scenario where Walmart – equal in size to its next four largest competitors combined – is dethroned from its reign as the world’s No. 1 retailer, a position it has held for more than a decade. In fact, if its international division were a stand-alone retailer, it would outrank Schwarz as the world’s fifth largest player with banner sales of U.S. $104.3 billion.

Yet, despite its scale, Walmart is by no means resting on its laurels. In its home market, the retailer has showed signs of moving away from its one-size-fits-all strategy by launching new formats targeted towards specific consumer groups such as Marketside (for cash-rich, time-starved shoppers) and Supermercado de Walmart and Mas Club (two Hispanic-oriented concepts).

Meanwhile, the trend towards small-box is also prevalent in its international markets. The bodega-style Changomas Express concept was launched in Argentina earlier this year while discount stores were recently launched in China (Smart Choice) and Puerto Rico (Super Ahorras). With the exception of shutting its Sam’s Club division in Canada, Walmart continues to expand overseas with the most notable events of the year being the launch of its first store in India and the acquisition of D&S, marking its entry into Chile. Going forward, Russia is in the cards, possibly through the acquisition of local player Lenta. In the longer term, market entry into Turkey is also expected.

Despite the wide gap with Walmart, Carrefour holds a strong number two in the world rankings. The French giant is the most international of the group with a presence in more than 40 countries. Over the past year, Carrefour added Bahrain, Bulgaria, Morocco and Pakistan to its roster of international markets. Yet, perhaps the most significant event thus far has been the opening of its first store in Russia, where it will compete with X5 as well as the familiar names of Metro and Auchan. Carrefour also remains committed to small-box after the recent launch of Carrefour Convenient Buy in Taiwan and its Express format in China, Indonesia and Malaysia. The retailer is also looking to reinvent its struggling hypermarket business through more customer-centric initiatives and to further strengthen its home market by rebranding its multiple formats to the Carrefour banner.

Leading cash-and-carry operator Metro is the only retailer in the top five to generate more than one-third of its total sales from non-food formats thanks to its Media Markt/Saturn division. As a wholesale operator, Metro has been able to reap the benefits of achieving first-mover status in the more fragmented and developing markets such as Russia, India, Vietnam, Turkey and China. This year, the retailer was expected to enter Egypt and Kazakhstan.

Coming in at No. four is the U.K.’s Tesco. Despite some recent setbacks in its home market (losing share to discounters and rejuvenated competition) and the United States (slowed expansion due to the economic crisis), Tesco remains a formidable player at home and abroad. Unlike Walmart or Carrefour, Tesco did not enter any new markets over the past year, but instead focused on driving growth through existing business units abroad. The retailer also announced plans to enter India by launching a wholesale cash-and-carry business with Trent, the retail arm of the Tata Group. Its Express format remains a key growth driver with recent launches in China and Slovakia. Over the next decade, Tesco will look to generate more than half of its revenue from overseas markets, mainly the United States, China and Southeast Asia.

Finally, in at No. five is Germany’s Schwarz Group, which has jumped the most places in this year’s rankings. The discount and hypermarket operator has spent the past few years leapfrogging its grocery competitors as it expanded throughout Europe. Now that Schwarz Group is present in nearly every European country, the retailer spent 2008 infilling existing markets with 640 stores added in the last year alone. Schwarz entered the Swiss grocery scene in March and will enter Cyprus later this year. Lidl has repeatedly declared its intentions to join rival discounter Aldi in the U.S. market, a move that has been put on ice for the time being due to the current economic uncertainties. Yet with operations only in Europe, the retailer has benefited from the strength of the Euro. Sales in 2008 in local currency grew by an impressive 12.6 percent year-on-year.

Going Big by Going Small: The discount sector on the whole is well-positioned for future growth due to growing popularity among consumers and the ease of rapid expansion with a small-box format. In fact, Aldi, which unlike Lidl is looking outside of Europe to markets like the U.S. and Australia, is poised to debut on the Top 10 rankings by 2013. The discounter will look to open around 500 stores per year over the next five years.

Similarly, an aging population in the North America and Europe has prompted the growth of another small-box format—the drugstores. Walgreens is expected to drastically rise the ranks over the next few years, making its debut on the Top 10 list by 2013. Despite actually revising down its forecasts, Walgreens was expected to open about 495 net new organic stores in 2009, 425 in 2010 and 365 in 2011.

Global: Top 10 Grocery Retailers, Forecast 2013

Source: Planet Retail Ltd - www.planetretail.net

Go East, Young Man!  In order to offset slowed performance at home, the world’s largest retailers will continue to look eastward for growth, specifically Russia, India and China. With 100 percent foreign direct investment allowed as of the beginning of 2009, Vietnam is also a hot market to watch with Metro already present, and Carrefour, Tesco and Auchan expected to enter in the future. In the emerging markets, hurdles such as bureaucracy in Russia and FDI regulations in India still must be overcome. However, the lucrative nature of these markets makes it likely that the benefits will outweigh most difficulties.

(Editor’s note:  To add variety for Industry Affairs Review readers, Planet Retail will intersperse its personal profiles of the world’s leading retailers with in-depth vignettes of global corporations and marketplace trends.)

Industry Affairs News

GMA Executive Conference

Executive Conference Boasts Thought-Provoking General Sessions

The GMA Executive Conference this year August 29-September 1 at The Broadmoor in Colorado Springs features a wide variety of headliners in business, communications, academia, public affairs and much more.  Some of this year’s general sessions include:

• Economic analyst Stuart Varney of Fox News Channel opens the conference with a session on how the economic crisis is changing American business.

• A session unveiling the industry’s Healthy Weight Commitment initiative features Safeway’s Chairman, President and CEO Steven Burd, FMI Chairman and Chairman, President ad CEO of Hy-Vee Inc. Ric Jurgens, President and CEO of the Robert Wood Johnson Foundation Dr. Risa Lavizzo-Mourney, President and CEO of Kellogg Company David Mackay, President of Unilever Americas Michael Polk, and Chairman and CEO of General Mills Ken Powell

• The extraordinary Malcolm Gladwell, author of Outliners, Blink and Tipping Point, talks about the success phenomenon at the Leadership Luncheon.

• Delivering innovation in a recession is the subject of a CEO roundtable featuring Chairman and CEO of Church & Dwight Company James Craigie, CEO of Publix Super Markets Ed Crenshaw, CEO of ConAgra Foods Gary Rodkin, and Partner of Bain & Company Darrell Rigby.

• Former Metronic Chairman and CEO and author of Authentic Leadership and True North, Bill George, speaks on a subject he knows inside and out:  leadership. He is followed by the delightful Peggy Noonan, columnist and author, who headlines the closing brunch

• A blue-ribbon panel on sustainability includes EPA’s former chief legal advisor Roger Martella;  Senior Vice President for Sustainability of Walmart Matt Kistler; President of French’s Food Products and Senior Vice President of Reckitt Benckiser Elliott Penner; Associate Partner at McKinsey & Company Steven Swartz; Associate Professor at UC/Berkeley and Co-founder and CEO of GoodGuide Inc. Dara O’Rourke. 

• The new value consumer and how companies are responding to changed shopper habits are subjects for a panel that includes William Coyne, president and CEO of Raley’s Family of Fine Stores; Chris Fraleigh, CEO of North American Retail and Food Service for Sara Lee Corporation; Cathy Green, COO of Food Lion; and Frank Tataseo, executive vice president for strategy and growth, The Clorox Company. Thom Blischok, president, consulting and innovation, IRI, is the moderator.  

A bevy of the ever-popular “Coffee With…” sessions is planned, in addition to a special salute to Feeding America at the President’s Dinner. Country music songwriter and recording artist Phil Vassar will take part in the salute to the partnership between GMA, its member companies and the nationwide feeding network.

The conference is for top-level executives and is by invitation only.

Contact: Stephen Sibert, Mary Olsen

Executive Conference Headliners: Left to right: Stuart Varney, economic journalist, Fox News Channel; Malcolm Gladwell, author of Outliers, Blink, & The Tipping Point; Bill George, leadership professor, Harvard Business School; Peggy Noonan, columnist, Wall Street Journal.

GMA Salutes Noddle & Rich with Hall of Achievement Awards

The 25^th annual GMA Hall of Achievement Awards go to Jeff Noddle, chairman and outgoing CEO of SUPERVALU INC., and Robert E. Rich, chairman and former President and CEO, Rich Products Corporation.  Rich is also the former chairman of GMA and the longest serving board member in GMA history.

The awards will be presented at the Chairman’s Lecture, August 30.

Two of the four winners of the 2008 Hall of Achievement Awards will also be on hand to be recognized, since last year’s centennial GMA conference had to be cancelled due to a hotel labor dispute.

Contact: Stephen Sibert

Association Leadership

Record Number of Entries Received for CPG Award

On July 22, some 18 submissions for GMA’s CPG Award for innovation were judged by a special committee of members of the Associate Member Council, which sponsors the annual award. Entries were received from Campbell Soup Company, The Clorox Company, ConAgra Foods, Del Monte Foods, E & J Gallo Winery, Frito Lay North America, General Mills Inc., Henkel, The Hershey Company, Hormel Foods Corporation, Kellogg Company (2 entries), Kimberly-Clark Corporation, Kraft Foods Inc. (2 entries), Mars, Inc., Unilever and Wm. Wrigley Jr. Company.

The winner will be announced at the Leadership Luncheon at the GMA Executive Conference August 30 and profiled in the Industry Affairs Review’s September issue.

Contact: Jill Johnson

Sibert Addresses NEW Executive Leaders Forum

GMA Senior Vice President led a panel on empowering business partnerships of the future at the mid-July meeting of the Network of Executive Women’s third annual Executive Leaders Forum in Irvine, Texas.  The panel discussing manufacturer-retailer partnerships and collaborations included Ann Fink, senior vice president and general manager, PepsiCo; Chad Rucker, vice president, sales, Mass Connection; Lisa Klauser, vice president, consumer and customer solutions, Unilever; and John Morioka, vice president and merchandise manager, Target Corporation.  NEW is an organization of executive women in the CPG and retail industry.

Contact: Steve Sibert

GMA Member Participation Sought in Adulteration-

Counterfeiting Study

GMA’s Science and Education Foundation (SEF) is partnering with AT Kearney to address the economic adulteration and counterfeiting of foods and consumer products.  The initiative was triggered by recent adulteration of food products, such as the use of melamine in foodstuffs and other packaged goods like toothpaste.

The working title of the study is Economically Motivated Adulteration in Food and Consumer Goods. Study coordinators are seeking input and recommendations from members companies – as well as from academia and government, according to Dr. Craig Henry of the association’s SEF team.

Contact: Dr. Craig Henry

Sales & Sales Promotion

Never too Late to Register for Unsaleables Conference

Decided at the last minute that you want to attend next week’s Unsaleables Conference to learn how to reduce the costs of unsaleables in your company?  It’s not too late. Join more than 200 of your colleagues from companies all over North America to attend the conference July 28-30 at the J.W. Marriott Las Vegas. Go to the GMA Registration desk in the Marquis Foryer at the Marriott for a walk-in registration. However, it is suggested that you call in advance for a room reservation at the Marriott at 702-869-7777.

Contact: Logan Kastner

Sam’s Club’s Hefner to Speak at MSM

Executive Vice President and Chief Merchandising Officer of Sam’s Club Linda Hefner will be one of the featured speakers at the GMA Merchandising, Sales & Marketing Conference (MSM) November 2 and 3 at The Arizona Biltmore, Phoenix.  Prior to her current Sam’s position, Hefner served as executive vice president and general manager of the home business unit for Walmart Stores USA. For MSM registration information, visit www.gmamsm.com.

Contact: Brian Lynch 

Bain Wins Bid to Conduct Outsourcing Study

Bain & Company has been awarded the contract by GMA and the ASMC Foundation to do an analysis of performance results of CPG companies before and after outsourcing to sales and marketing agencies, according to Brian Lynch, director, GMA Sales and Sales Promotion. The CPG survey is a follow-up to two previous studies on outsourcing and provides GMA member-company executives with insights into sales agency deployment strategies.

The ASMC Foundation is a non-profit research and education organization formerly affiliated with the Association of Sales and Marketing Companies (ASMC), which merged with GMA several years ago.

Contact: Brian Lynch

Industry Performance

GMA Opposes Regulation of Financial Derivatives

GMA has joined with the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers earlier this month in opposing the Obama Administration’s proposal to regulate all over-the-counter derivatives, or those that are traded directly between buyer and seller (rather than through a third party).  In a joint letter July 10, the four associations expressed concerns that the proposal would increase the cost of doing business.

Contact: Brooke Weizmann

Supply Chain & Technology

Logistics Committee Tackles Two Studies, Joint TPA Conference

GMA’s Logistics Committee tackled numerous pending and future projects at its recent meeting in Portland, Maine. Committee Chairman Bruce Hancock, director, waste reduction of The Hershey Company, presided over a meeting that worked on program content for the 2010 Trading Partner Alliance (TPA) Supply Chain Conference, formerly the GMA IS/LD and the FMI Supply Chain Conferences. The committee also worked on the upcoming Kurt Salmon Associates survey of supply chain effectiveness, a joint GMA-FMI project that updates a similar study in 2002.  The agenda included ways to enhance the 2010 GMA Logistics Benchmark Survey and make it more user friendly. 

Contact: Jeanne Iglesias

DSD Committee Launches Study on Holistic DSD Process

“The Perfect Shelf” was the subject of a brainstorming session for a new project at GMA’s Direct Store Delivery (DSD) Committee meeting July 1 in Chicago. An RFP will be commissioned in upcoming weeks for a study on the perfect shelf and a holistic DSD process that includes a perfect shelf “simulator.” Committee Chairman Ann Dozier of The Coca-Cola Company, presided at the meeting. Next meeting: September 1-2 in Chicago.

Contact: Jeanne Iglesias

Association Research

Retailer-Direct Data Sharing Report Released This Week

This week GMA released a white paper on U.S. grocery retailers and mass merchants who share shopping data directly with their suppliers, creating numerous rewards for both trading partners.

The practice of retailer-direct data-sharing began in the 1990s, but today the practice is growing, according to Jeanne Iglesias, GMA senior director of supply chain and technology.

The Retailer-Direct Data Report identifies successful practices and more than 30 business benefits that can result from sharing data directly in business planning and forecasting. Benefits include improved sales forecast accuracy, reduced out-of-stocks and reduced costs of merchandising at retail.

Iglesias pointed out that two of the case studies demonstrate this point: Kimberly-Clark had a bath tissue out-of-stock rate of 18 percent in September 2008. Th

e next month, the company used promotional sales data by store to identify under-allocations, resulting in sales a whopping 167 percent higher than the previous month and an out-of-stock rate of 10 percent. In a Food Lion-Kellogg data-sharing case study, inventories were reduced by 17 percent, and inventory older than 60 days was cut from 15 percent down to 6 percent over a three-month period.

“I think we’re in a new dawn of partnering between suppliers and retailers – data is game-changing,” Iglesias said. “The top-of-mind issues of supply chain executives are all about supply chain visibility, cost containment and partner efficiency gains.  Without the data, you don’t have a shared supply chain visibility, which is one of the primary drivers to partner cost containment and partnered efficiency gains.

“All of this is driven with a focus on the consumer, because with the right data you have all the insurances you need to reduce inventory, cut out-of-stocks and costs, and guarantee that the consumer wins.”

The report is authored by Shawn Dolley, founder, Vision Chain Inc.; Holly Gonzales, chief information officer, CROSSMARK; and Keith Henry, vice president of solutions, Teradata Corporation.  It is available for free download.

Datebook

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Industry Affairs Review is produced by the Grocery Manufacturers Association in cooperation with Planet Retail. Current and past issues may be found here. If you wish to add colleagues’ names to the mailing list or if you wish to unsubscribe, please click here, or write to jdowney@gmaonline.org.

@ Copyright 2009 by GMA, 1350 I Street N.W. #300, Washington, D.C. 20005. All rights reserved. The content and copyright for the lead profile is owned by Planet Retail, a leading provider of grocery retail intelligence— www.planetretail.net.