A new shopper marketing study is scheduled to be released next week at the MSM Conference in Phoenix. To prepare for the meeting, review last year's landmark study, Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive Advantage. Click to download here.

Bringing the voice of the shopper to the sales and marketing process.

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Is the Bloom Off Russian Retailing?

By Planet Retail & IAR Staff

Many are now asking if some of the luster hasn’t worn off the Russian retail picture for foreign companies.

A year after the worldwide economic slump and credit crunch hit the Russian economy, many domestic retailers have ended up in the hands of the banks. Owners of several retail chains have put their assets in the custody of VTB of Sberbank banks owned by the government.

The world’s second largest retailer – Carrefour – this month suddenly decided to sell its business in Russia after only four months in the market. And the largest global retailer Walmart has had numerous executives in Russia for years but has yet to enter the marketplace.

Experts say sluggish sales, widespread corruption, red tape, the slow process of removing the barriers of doing business, and infrastructure weaknesses all contribute to dash cold water on outside retailers’ expectations. Another key factor is said to be that mergers and acquisitions – which require foreign investors to deal with banks rather than retailers – are much more complex here than anticipated and are being controlled by the government to a certain extent.

Meanwhile, domestic retailers, such as No. 1 retailer X5 Retail Group, have time to improve their efficiency and expand before other competitors enter or grab market share.

All in all, Russia’s market of some 142 million with its huge oil and gas reserves no longer looks quite so promising to outside investors.

Top retailers in Russia – X5 Retail Group, Magnit and Metro Group—appear to be doing well, despite the economy. So does French retailer Auchan, which has been expanding rapidly. This privately held big-box chain is the world’s 14th largest retailer with 1,200 stores in 12 countries and annual sales of $59 billion. Apparently against all odds, Auchan entered the Russian market in 2002 and now has 34 outlets, making it the top western operator of big-box stores in Russia.

Retreat From Moscow: Carrefour this month in a surprise move withdrew from the Russian market just months after opening its two hypermarkets in Moscow and Krasnodar. The first market opened in June. Europe’s biggest retailer said its departure was due to “the absence of sufficient organic growth prospects” and the lack of acquisition prospects.

Walmart Trying Harder: Walmart’s teams have maintained an office in Moscow for five years, but they have made no market entry so far. They have been trying. Having failed to acquire St. Petersburg’s hypermarket operator Lenta, Walmart is reported negotiating with Kopeika, which operates a strong network of price-oriented supermarkets in Moscow and environs. However, earlier this autumn, the owners stepped back from the transaction.

Russia for the Russians? Before the economic crisis, which began here in the summer of 2008, few acquisitions were closed as foreign retailers were unwilling to pay the high price asked by Russian retailers. And this may not change if the Russian government decides to maintain control of the retail sector. Although retail is not considered to be one of the country's key industries – such as gas and oil – the highly-confident Russian government may aim to keep retail in Russian hands. Its tendency to control or at least regulate the retail landscape is highlighted by the drafting of the new trade law limiting the expansion of retailers.

Mergers/Acquisitions at Standstill: It is becoming clear that to enter into Russia or expand there through mergers and acquisitions is not as easy as many foreign retailers expected. The shareholder structure of the leading retailers such as X5 Retail Group is too complex, and it is difficult for foreign investors to gain a majority stake. There are not many great deals for foreign investors at the moment. Any internationalization of the Russian retail scene on a large scale is unlikely, at least in the short term.

Industry Affairs News

MSM: A Must-Attend Meeting Nov. 2-3 in Phoenix

Finishing touches are being put on what promises to be one of the best GMA Merchandising Sales and Marketing (MSM) Conference ever. There’s still time to attend the two-day event Nov. 2-3 at the Arizona Biltmore in Phoenix. Contact Cindy Baker for late registration information or register in person at the Arizona Biltmore Hotel.

The Product Innovation and Growth panelists will probe what companies can do to capitalize on product innovation and growth. The panel features Dennis Mullahy, group vice president of merchandising and supply chain management at Meijer Inc.; Terry E. McDaniel, president and CEO, The Iventure Group Inc; Mike Gorshe, partner, consumer goods and services at Accenture; Thom Blischok, president, innovation and consulting at IRI; Laura Barry, vice president of consumer insight and shopper engagement at Kraft North America; and Darian Prickett, executive vice president of sales optimization at Acosta Sales and Marketing.

The MSM conference will see the launch of two GMA reports: (1) A new study entitled Shopper Marketing: Driving the Next Wave of Value is a project of the GMA’s Sales Committee, Booz & Company and SheSpeaks, an online consumer forum. The new study highlights the approaches marketers, agencies and retailers use today to ride the wave of value that is shopper marketing. The report will be the subject of a special MSM conference session featuring Matt Egol, partner at Booz & Company, and Aliza Freud, founder and CEO, SheSpeaks. (2) A special report on the performance of CPG companies before and after outsourcing to sales and marketing agencies is also being released at the conference by sponsors GMA and the ASMC Foundation. The Bain & Company study is a followup on two previous reports dealing with outsourcing to sales and marketing agencies. Kara Gruver, partner, Bain & Company, will lead an MSM session on the findings of the report.

Contact: Brian Lynch

Seminar for Suppliers to Learn about Rapid Recall Exchange

GMA Industry Affairs Director of Sales and Sales Promotion Brian Lynch will be a presenter during a free online seminar Nov. 5 from 2 to 4 p.m. (EST) on the Rapid Recall Exchange – a new online service applying industry best practices and expertise to standardize product withdrawal and recall among retailers, wholesalers and suppliers. The exchange offers rapid and accurate exchange of information to protect consumers and save trading partners time and money.

Tamara Kenney, vice president of solutions for GS1 U.S., will also be a presenter.

Contact: Brian Lynch

Manufacturing Share Group Meets Nov. 18-19 in Kansas City.

The Manufacturing Excellence Share Group will meet Nov. 18-19 in Kansas City, MO., to discuss overall equipment effectiveness and packaging machinery with executives from the Packaging Machinery Manufacturers Institute. Also scheduled are a roundtable sharing on change management and a plant tour by Tim Lethcoe, vice president of manufacturing at American Italian Pasta.

Contact: Jennifer Finci

TPA Unveils Impressive Agenda for Inaugural Supply Chain Conference

An almost complete schedule of sessions and speakers is available online for the first-ever Trading Partner Alliance (TPA) Supply Chain Conference, a industrywide meeting sponsored jointly by Grocery Manufacturers Association (GMA) and Food Marketing Institute (FMI). The conference is slated for the J.W. Marriott Desert Ridge Resort in Phoenix Jan. 31- Feb. 2.

The conference – with the theme of Bringing It All Together – combines the best of the GMA yearly Information Systems and Logistics/Distribution Conference (IS/LD) with FMI’s annual Supply Chain Conference. The meeting will unite manufacturers and distributors in a forum showcasing the latest issues, emerging trends, case studies and collaborative initiatives.

Two breakout sessions highlight the diversity of the program. In the first, Christopher West, director of U.S. transportation for McCormick & Company Inc., outlines his company’s three-year transportation strategy. In the second, effective product recall execution is probed by panelists Shawna Wills, senior manager of customer planning for Campbell Soup; a representative from Associated Food Stores; and Adam Mussomeli, principal of Deloitte.

Motivational speaker and former marketing executive and top trainer for IBM Keith Harrell, author of Attitude Is Everything, is the keynoter.

For an up-to-the-minute schedule of conference events and speakers, click here.

Left to right: Shawna Wills, senior manager of customer planning, Campbell Soup Company; Adam Mussomeli, principal, Deloitte Consulting, LLP; Keith Harrell, author of Attitude Is Everything.

Contact: Jeanne Iglesias

Two Studies Launched for TPA’s First-Ever Supply Chain Conference

GMA and FMI – working together through the TPA – announce the launch of two surveys that will be released at the new joint Supply Chain Conference in the new year.

Logistics Survey: The biennial manufacturer-specific Logistics Benchmark Survey is open for participation by CPG suppliers. The every-two-year report highlights supply chain issues, trends and solutions employed to provide industry executives with a benchmark for measuring their company’s performance. To participate in the survey, contact Jennifer Finci, jfinci@gmaonline.org.

Supply Chain Effectiveness: GMA and FMI are releasing the 2009 Survey of Collaborative Trading Partner Supply Chain Effectiveness, a study that updates the previous industrywide survey of manufacturers, retailers and wholesalers taken in 2002-3. This updated study will be used to guide the work of GMA's and FMI’s supply chain committees and of joint industry committees during the coming years. To participate in the 15-minute survey, e-mail jfinci@gmaonline.org.

Contact: Jeanne Iglesias

CAC Hears Speakers on US Foodservice, Aldi and Much More

President Patrick Mulhern of the Monarch Food Group (pictured left), a division of US Foodservice, told the Chairman’s Advisory Council last week that the $217 billion foodservice industry had predictable growth each year until the financial crisis of 2008 hit. Since then, he said, restaurants and dining-out establishments have been hard hit, with grocery retailers “eating our lunch.” He said growth is “tough” and focused on survival, adding that manufacturers must continue to offer value. (Monarch Food Group is the category management function in US Foodservice with regional and CPG brand sales of $13.3 billion and private label sales of $5.8 billion annually.)

Vice President of PRTM Rich Miskewicz facilitated a pre-meeting workshop on the impact of private-label on the manufacturer-retailer relationship. Noting that in the last few years, private-label brands have surged, Miskewicz said in some estimates private label has grown four times faster than branded products. “So far this year, nearly 1,800 new U.S. private label foods have appeared on retail store shelves, accounting for 27 percent of all food products introduced in 2009…(compared to) only 13 percent of new food product launches in 2005.”

Other CAC speakers included Sabina Saksena, senior vice president and CMO of GS 1 US; Pam Bailey, president and CEO of GMA; Capt. Denny Flanagan of United Airlines; Bob Byrne, partner of A.T. Kearney Inc.; Kristy Cunningham, partner of Bain & Company Inc.; and Joan Kavanaugh (pictured left), vice president of corporate purchasing for Aldi Inc. (Watch next month’s Industry Affairs Review for a special feature on Aldi USA.)

Contact: Stephen Sibert

Sustainability Advantage Conference Declared Success

Senior Vice President for Industry Affairs Stephen Sibert said GMA’s Sustainability Advantage Conference in Dallas earlier this month was an unqualified success. “The first ever one-day conference drew CPG industry leaders to discuss strategies to act on commitments to reduce corporate and industry environmental footprints,” he noted, adding that the reception co-sponsored with the Retail Industry Leader Association’s (RILA) sustainability conference added a valuable dimension to the event. Learn more from presentations on the conference Web site.

Joint Industry Coupon Committee Sets Three 2010 Initiatives

The Joint Industry Coupon Committee (JICC) Co-Chair Jackie Broberg, coupon control management, General Mills Inc., said that three initiatives were selected for the organization’s 2010 focus at its meeting earlier this month at GMA headquarters. The initiatives include: GS 1 DataBar implementation and the readiness of all segments of the industry for launch of the new coupon barcode Jan. 1, 2011; development of guidelines for paper and digital coupons; and improved collaborative liaison with the Coupon Information Center and the Association of Coupon Professionals.

Contact: Logan Kastner

GMA Webinar Set for Managers of Food Safety Consumer Complaints

A special GMA Webinar is scheduled for Nov. 5 for CPG employees dealing directly with consumer food safety complaints and also for those responsible for implementing standards for investigating such complaints. Register today.

Contact: Steve Leslie

GMA Leadership Profile

KPMG’s Gregory L. Smith

Current Position:

Greg Smith is one of KPMG’s elite group of Global Lead Partners who serves the firm’s largest and most prestigious multi-national clients. As the global lead partner for Walmart and Warburg Pincus, he is responsible for all KPMG services to the world’s largest retailer and a top five international private equity firm. Smith also is a member of the Consumer Markets Global Steering Committee at KPMG, a company that employs more than 135,000 professionals in over 140 countries.

Industry Leadership:

Chairman, GMA Associate Member Council (AMC).

Career Highlights:

Smith began at the front end of the supply chain – working on his family’s livestock and grain farm, which sold grain to ConAgra and livestock to IBP, now Tyson Foods. After a career begun in sports, he received his MBA and took a job with Arthur Andersen’s Houston office, where he worked in the energy field from 1984 to 1992. He joined KPMG’s Charlotte office in 1993 and became involved with the consumer packaged goods industry for the first time.

Smith has held numerous leadership positions within KPMG, including national sector leader for food, retail and distribution, national tax leader for consumer and industrial businesses, a member of the National Tax Leadership Team, and a member of the National Industries Leadership Team. As national sector leader for food retail and distribution, Smith successfully added new KPMG client relationships with such companies as Campbell Soup, Tyson Foods, Best Buy, Albertsons, Kroger, ConAgra and Walmart. Because of Smith’s ability to grow business, in 2007 he was asked to join and help build KPMG’s newly formed private equity practice.

He is author of Effective Management of Supply Chain Taxes, author of Utilizing Technology in Tax and creator of KPMG’s National Industry Share Forums for CFOs, tax and internal audit executives.

Personal:

“My career began in basketball, before taking a detour in the early 1990s into CPG. At 6’3” and being from Indiana, I, of course, played high school basketball, and was fortunate enough to gain a basketball scholarship to the University of Houston. After I graduated, I was assistant head coach in one of the largest high school districts in Texas for two years while I finished my MBA. After a detour in energy, I finally arrived at the CPG industry in 1994. When not on the road, I can be found with my wife Amy at our home in Charlotte or fishing on the Gulf Coast of Florida. Of course, I am still an avid college basketball fan.”

Education:

B.S., University of Houston, degree in physical education.

MBA, University of Houston, accounting and taxation.

First Job:

“I worked on our family farm, raising livestock plus corn, soybeans and wheat in Converse, Indiana.

How’d you get where you are today?

“First, I have been blessed with an outstanding set of mentors throughout my life. Principal among these were Ray Jones, Tom Moser and Jack Keefer. Ray Jones was Andersen’s leader of the oil and gas industry practice who helped me get involved in working with T. Boone Pickens and the Mesa Petroleum Group. Tom Moser had just been promoted to lead the retail practice at KPMG and he brought me in on special assignment to build the retail tax practice and get me started in the consumer products industry. It is more interesting to work with companies whose products impact your daily life than, if you’re in the energy business, to be drilling for oil in some far-away place that seems unconnected to your daily existence. Finally, Jack Keefer, my high school basketball coach, instilled the ability to compete – to set goals and work hard to achieve them.

“Secondly, I believe that a 'can-do' attitude is extremely important – a willingness to take on projects that others may avoid, because most of the time positive things will happen for those who can improve results, grow new business and innovate.

“Finally, sports taught me early in my life the importance of a willingness to compete, to work extremely hard and do whatever it takes to get the job done – on the basketball court or in the business boardrooms and backrooms.

“I especially want to reiterate the importance of mentoring and early training in the spirit of competitiveness. When I became aware of the Students for Free Enterprise organization’s track record in this area and its heavy concentration in the CPG industry, I became active in this very worthwhile organization.”

Brand Camp

Datebook

Nov. 2 - 3

Nov. 5

Nov. 18-19

Jan. 31 - Feb. 2

Merchandising, Sales & Marketing (MSM) Conference

The Arizona Biltmore

Phoenix, AZ

Contact: Brian Lynch

Rapid Recall Exchange Online Seminar

Contact: Brian Lynch

Food Safety Consumer Complaint Webinar

Contact: Steve Leslie

Manufacturing Excellence Share Group

Kansas City, MO

Contact: Jennifer Finci

Joint GMA-FMI TPA Supply Chain Conference

J.W. Marriott Desert Ridge Resort

Phoenix, AZ

Contact: Jeanne Iglesias

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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.

The Grocery Manufacturers Association (GMA) represents the world’s leading food, beverage and consumer products companies. The Association promotes sound public policy, champions initiatives that increase productivity and growth and helps to protect the safety and security of the food supply through scientific excellence. The GMA board of directors is comprised of chief executive officers from the association’s member companies. The $2.1 trillion food, beverage and consumer packaged goods industry employs 14 million workers, and contributes more than $1 trillion in added value to the nation’s economy. For more information, visit the GMA Web site at www.gmaonline.org