Opening speaker Dr. Romesh Wadhwani, chairman of IRI, noted [image-nocss] that "the turmoil we face," including the recently reported 6% drop in consumption (and 15% drop in food consumption) in the United States, presents a unique set of trends that, if capitalized upon, could open doors for retailers and manufacturers.
"We want to show you how to protect yourselves and advance yourselves even in these challenging times," he said, before listing five significant trends.
"The first moment of truth is now in the home." It used to be that products and brands had a pretty good chance of being grabbed off a store shelf based on familiarity and placement in the store. That's not the case anymore, according to Wadhwani, who noted that 65% of all shoppers are now making shopping lists at home. "If you're brand name is not on that list, you're toast," he said. "Shopper loyalty is an oxymoron." After pointing out that the average consumer already shops in eight different stores, Wadhwani said, "It gets worse now because affordability is much more important. The urge to find deals reduces loyalty to brands, while private-label brands are enhanced." "Manufacturers are losing pricing ability." A year ago when commodity prices rose, manufacturers could bump up product prices accordingly without risking backlash. Not so today, providing an opportunity for retailers with strong store brands. "Stores are promoting private label much more than before," Wadhwani said. "Private label in the U.S. is going the direction it is in Europe." In Europe, private-label brands can account for as much as 35% of sales, and that will likely grow to 40% in the near future. Similarly in the United States, private label now accounts for up to 25% of sales in key categories. "We see retailers doing a fabulous job of driving attention to their private-label [products]." "Big changes are happening in retail channels." A year ago, Wal-Mart was in trouble; now it's one of the few retailers growing," Wadhwani said, noting how quickly retail realities are changing. "Things are changing at such a fast pace, it's tough to remember what happened six months ago." 7-Eleven president and CEO Joe DePinto echoed Wadhwani's sentiment on change as he reiterated his company's drive to keep up and prosper. "Last year, we were talking about customization, premium products, organics; today, that's out the door," said DePinto during his presentation. "We continue to grow by remembering one thing: We need to adapt to consumer needs." DePinto also updated the crowd on 7-Eleven's private-label initiatives. (Click here for previous CSP Daily News coverage.).
And author and consultant Ram Charan offered a five-point check list to provide company leaders with the ground work for keeping employees focused during this trying economic time.
Sense the mood of the people with you. "If you sense anxiety, talk to your people, share information about how your company is performing," he said. Provide credibility and trustworthiness. "Develop your view point of where the market is going. Share so that your vision is clear," said Charan. "Share what you know and what you believe, but also admit what you don't know." Protect your talent. "Work with them, engage them," Charan said. "If they don't have enough to do, now is the time to consider those projects that are 18 months down the road." Remember that cash is king. "Companies that have control of their cash have the support of the financial community." Remember that change can be a good thing. "With the world changing as fast as it is, it's more important than ever to remember that change is a friend. Change is a source of innovation. Change is a way to change the game [for your industry]."
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