A former brand marketing executive at Heineken is turning around the fortunes of the UK's fourth largest grocery retailer, Morrisons, and is proving his detractors’ wrong. Mark Bolland, who took over from Bob Stott as CEO in September of 2006, is using his extensive brand marketing experience to re-brand products and improve Morrisons’ image, with the brand now more firmly associated with quality food at keen prices.

With his background in brand marketing, Bolland initially faced opposition from those who questioned his lack of operational food retail experience. Others wondered whether a Dutchman could fully understand the subtle differences in consumer preferences across the UK following the failure of several high profile foreign CEOs such as former M&S Chairman Luc Vandevelde and Carlos Criado-Perez of Safeway. However, commenting on his successor, former Chairman Sir Ken Morrison said: “I was impressed that he had spent 20 years with Heineken. I do not want someone who stays for three years and then disappears.”

Under Bolland’s leadership, Morrisons' brand values of fresh, choice and service have braced the retailer to weather the current downturn in the retail market and consumers’ enhanced price sensitivity. Morrisons aims to be adaptable, pushing the value principle in the bad times and the freshness principle in the good times.

From Heineken to Morrisons

Bolland was born in Appeldorn, the Netherlands in 1959. He studied for an MBA at the well regarded Groningen University and joined Heineken in 1987, where he held a variety of positions as he worked his way up to board level. In 1995, he was appointed Managing Director for Heineken in Slovakia and became Managing Director for the Heineken Export Group in 1999, where he had global responsibility for Heineken exports.

In 2001, Bolland was appointed to the executive board of Heineken, a position he would hold for four years, and by 2005 he was appointed Chief Operating Officer responsible for marketing strategy and innovation in addition to regional responsibilities for the USA, Latin America and Europe. After failing to get the top job at Heineken, Bolland decided to join Morrisons. “He was disappointed not to get the top job and there just was not a big enough job for Marc to do,” said fellow board member Michel de Carvalho.

Marc Bolland inherited Morrisons as it was facing up to the difficulties associated with the acquisition of Safeway

Source: The Telegraph: www.thetelegraph.co.uk

Integration of Safeway

set the scene

When Bolland joined Morrisons, the retailer was struggling to address the costs and upheaval associated with its earlier acquisition of UK grocery retailer Safeway – a deal that turned into the biggest retail conversion exercise ever undertaken in the UK. Morrisons fought to overcome problems with the supply chain, buying contracts, product range and the store network, as well as major differences in company culture. These and other issues resulted in a string of profit warnings culminating in the retailer posting its first ever loss in 2005.

Turning the business around

In addition to helping re-brand the retailer, Bolland is credited with driving Morrisons’ Optimization Plan, which sets out its strategy until 2010. The plan focuses on getting the best out of the enlarged business; having a sales-led, value driven program; maintaining a successful customer-focussed trading mentality; improving margins; and saving costs.

Under Bolland, Morrisons has enjoyed a period of strong growth

Source: PlanetRetail: www.PlanetRetail.net

Despite the difficult trading environment in the UK, Morrisons has performed exceptionally well, completing a store refresh program on schedule by July 2008 and reporting good like-for-like sales growth of 7.6% (excluding fuel) in the 26 weeks ended August 2008, outperforming the wider market and beating larger competitors such as Tesco.

Looking ahead, Bolland will likely continue to focus on the economic environment to ensure that the business remains adaptable and resilient. He will also continue to focus on delivering the initiatives laid out in the Optimization Plan thus ensuring they are completed on schedule.

Industry Affairs News

Council Updates

Chairman’s Advisory Council Learns More about

Grocery Outlet Model

GMA member executives heard more about the “value-seeking” consumer from Grocery Outlet co-CEOs MacGregor Read and Eric Read as part of the Chairman’s Advisory Council (CAC) meeting held in October in Berkeley, CA. “With today’s bleak economic conditions, more consumers are shopping at the chain’s 133 stores, so our members are keenly interested in learning how to use the Grocery Outlet’s model to move product,” said GMA Senior Vice President of Industry Affairs Stephen Sibert.

On day two, the council was also joined by Safeway’s Jim Lewis, senior vice president and group general manager of meals and dry grocery, and Linda Nordgren, senior vice president of strategic sourcing and supply chain strategies, to hear about merchandising and supply chain issues. Council Vice Chairman Brian O’Malley, President & CEO of Domino Foods led a roundtable discussion on the customer, the consumer and other industry issues. GMA’s Director of State Affairs Caroline Silveira briefed the council on state-level issues such as labeling, chemical contaminants, green chemistry and solid waste.

Contact: Stephen Sibert

IAC Met Jointly with Gov’t Affairs, Science Councils

GMA’s Industry Affairs Council (IAC) met jointly with the GMA Government Affairs Council and the Science Institute Council this week and heard updates on the association efforts on product safety, environmental sustainability, recall management and other topics. The IAC also worked to set their top priorities for 2009 and to set guidance on work plans to the various Industry Affairs committees.

Contact: Stephen Sibert

Associate Member Council Meets at MSM Conference

The GMA Associate Member Council (AMC) held its fall meeting during the 2008 Merchandising, Sales and Marketing Conference, hearing updates from GMA Interim President and Chief Executive Officer

C. Manly Molpus and discussing the request for proposal review process for Industry Affairs Committees. The council also heard from The Clorox Company – one of the winners of the 2008 CPG Award – about how Clorox would use the award to promote its Green Works program. The AMC will meet again in spring 2009.

Contact: Jill Johnson

Industry Performance

General Mills Senior Executive to Lead GMA's

New CFO Committee

The Chief Financial Officer of General Mills has stepped into a new role as chairman of GMA's new CFO Committee. Donal L. Mulligan, executive vice president and CFO of General Mills, will lead the committee, along with The Hershey Company's Senior Vice President and CFO Humberto Alfonso, who serves as the committee's vice chairman. During the committee's inaugural meeting in May, the 19 members covered topics such as direct and indirect tax implications in a global economy, commodities and the regulatory landscape, sustainability reporting and transparency and International Financial Reporting Standards. GMA's Brooke Weizmann, who serves as the staff liaison to the committee, says "the group will meet bi-annually and maintain an ongoing dialogue regarding financial realities, trends and business challenges in the economic landscape." The next CFO Committee meeting is scheduled for November 14 when the committee will hear from experts on the state of retail, credit availability, creating shareholder value in a tough economy and 2009 tax and financial regulations and establish the committee's agenda for 2009.

Contact: Brooke Weizmann

Supply Chain & Technology

GMA and IBM Host Roundtable on Fuel Costs

The GMA Fuel Roundtable, held in partnership with IBM in October, provided nearly 80 industry participants with views of macro-economic conditions impacting the cost of fuel and best practices shared by Nestle, Dean Foods and Delta Airlines. The roundtable, moderated by Rick Lenny, former chairman, president and CEO of The Hershey Company and former chairman of the GMA Board of Directors, also covered logistics cost management strategies based on a GMA/IBM pulse survey and evolving consumer shopping patterns in the face of higher gas prices. Lenny challenged attendees to take learnings of the day back to their company; participants also broke into share groups to discuss first-hand experiences in managing volatile fuel costs. Transcripts, speaker presentations and IBM’s Logistics Cost Management in the Face of Extreme Fuel Price Volatility study are available at gmaonline.org.

Contact: GMA’s Michelle Marcoot or IBM’s Ralph Jacobson

Data Sharing, PLM Solutions Covered at

IS Committee Meeting

A new white paper under development by the GMA Information Systems (IS) Committee will explore data sharing between manufacturers and retailers. The white paper is currently in review by the retail partners working on the project and will be released later this month; the paper was one of several subjects covered during the IS Committee’s fall meeting last month in Healdsburg, CA. Guest speaker Lora Cecere of AMR Research discussed how Product Lifecycle Management (PLM) solutions are used and the role IS can play in optimizing a PLM solution. The committee will now explore project work on PLM as an enabling technology for growth and innovation. The fall IS Committee meeting was hosted by E. & J. Gallo Winery in California and sponsored by GMA associate member Siemens.

Contact: Jeanne Iglesias

Supply Chain Vanguard Focuses on Peer Collaboration to Drive Logistics

Driving market-based logistics opportunities through collaboration was a key topic during the recent Supply Chain Vanguard group meeting in Chicago. Council of Supply Chain Management Professionals President and CEO Rick Blasgen led a discussion on how peer companies can work together on this front, while Steve Ball, supply chain manager for Wegmans Food Markets, Inc., discussed details on the industry initiative, New Ways of Working Together (NWWT). Kraft North America’s Vice President of Customer Service and Deployment Agnes Feliciano provided examples of manufacturer and retail collaboration and discussed why it is important for manufacturers to identify actions they can be repeated with all retail customers so that collaboration can be commercialized. Attendees also toured the Accenture Consumer Innovation Center and saw leading-edge examples of “what’s next” in customer-focused innovation. The GMA Supply Chain Vanguard serves to set the agenda of GMA supply chain activities and steer the CPG industry into the future.

Contact: Michelle Marcoot

Quick Insights

Understanding Where Purchase Decisions Are Made

By John Dranow

Determining where category and brand decisions are made is increasingly critical to the way merchandisers and their trading partners are promoting products. This is because shoppers need to be influenced differently pre-store versus in-store because not only are the potential methods of reaching them different, but also the content that will have an impact is different.

Consider a shopper who has it in her mind to buy pasta. Prior to the store visit, she knows based on past experience what type of pasta her family prefers, but she also know there are acceptable alternatives. At this point, a coupon or temporary price reduction listed in the weekly flier might be effective. When she gets to the store, things may change. A new package design, a shelf teaser or even the shelf position of a product may impact her decision, or a display featuring a box of pasta and a jar of sauce may encourage a cross-buying opportunity.

To establish which merchandising tactics are going to work best in both cases, retailers and suppliers need direct shopper-centric insights, which can be gained through behavioral observation and attitudinal interviews. Only once data has been collected and analyzed, can these marketers work to optimize the merchandising and boost sales lift.

Shopper-centric insights help marketers better understand how the pre-store to in-store journey plays out. By using these insights, marketer can generate actions that result in profitable sales lift and gains in market share. One example of this is a classic brand that found brand equity was not enough to prevent the product line from losing shoppers to other brands with strong in-store offers. By understanding how shoppers reacted to messaging, the brand was able to supplement pre-store strategy with more targeted in-store strategy.

A second example finds the packaging of a brand that appears old fashion and uninspiring, leading shoppers to look for more interesting products. In this case, the brand redesigned the core line to serves as an anchor on the shelf and to communicate innovation and intrigue.

Because more than 50% of purchase decisions are now made in-store, there has been a paradigm shift from an era where the big brands win, big media works and traditional research is effective to one where differentiation is essential, impulsivity is required and smart media wins. Retailers and suppliers who understand the implications of this shift are going to have the best insight into the shopper’s mind and will be able to enact strategies that expand market share.

Contact: SmartRevenue

Association Leadership

Upcoming Executive Forum to Focus on Sustaining Growth in Tough Economy

On November 18, GMA Senior Vice President of Industry Affairs Stephen Sibert will join other industry thought leaders for the Consumer Products and Retail Executive Forum, which will focus on ideas for sustaining growth and competitive advantage during tough economic times. Sibert will share GMA’s perspective on collaboration with retailers, product recall management and environmental sustainability. The event is hosted by GMA Associate Members SAP, Accenture and Vision Chain. Other featured speakers include:

Ranjay Gulati, Professor, Harvard Business School and Prolific Author
Gary Williams, Founder and CEO, wRatings
Terry Assink, Former CIO, Kimberly-Clark Corporation

As part of the Forum, participants will explore how to identify the business priorities their organization needs to execute on; understanding how Business Network Transformation is impacting the industry; delivering superior profitability through durable competitive advantage with consumers; and how to lead a customer-centric organization.

Contact: SAP’s Anne Argenbright

GMA Leadership Address Accenture Partners

GMA Interim President and Chief Executive Office Manly Molpus and Senior Vice President of Industry Affairs Stephen Sibert addressed more than 300 participants at the Accenture Global Partners Meeting in Washington, DC early this month. Molpus and Sibert provided perspective on various GMA activities, including retail collaboration, shopper marketing insights and environmental sustainability leadership.

Contact: Jill Johnson or Stephen Sibert

Sales & Sales Promotion

New Research, Conference Wrap-ups Available at GMAOnline.Org

Three new reports from GMA’s Sales and Sales Promotion practice are now available for download at GMAOnline.org:

A revised version of the Sales Agency Committee’s popular study on the value of outsourcing can also be found at www.asmcfoundation.org.

The October 20 issue of GMA Executive Update covered in-depth the 2008 Merchandising, Sales and Marketing (MSM) and Joint Industry Unsaleables Management Conferences. Archives of the Executive Update newsletter can be found here, as well as presentations from the MSM Conference and Joint Industry Unsaleables Management Conference.

Contact: Jessica Martin

Trend Snapshot

GMA’s Industry Affairs Review has teamed up with consumer research firm NPD Group to provide readers with a monthly snapshot of consumer trends and eating patterns. Check out the latest research in this space each month and visit www.npd.com for more market research.

The Long-Term Trend Remains "Easy Meal Preparation"!

Source: The NPD Group's National Eating Trends Service

Datebook

April 5 - 8

Information Systems/Logistics Distribution Conference

Miami, FL

Marriott Doral Golf Resort and Spa

Contact: Jennifer Finci

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