In her annual state of the industry address, FMI President and CEO Leslie Sarasin addressed how the food industry is reinventing itself and embracing a future-forward agenda that reflects the new possibilities the reordered food world holds.
Sarasin began her keynote at the recently wrapped FMI Midwinter Executive Conference in Phoenix with a glimpse of FMI’s annual Food Retail Industry Speaks research, which she said is underscored by sentiments of “an industry getting its feet back under it. More than half of food retailers feel strongly that their same-store sales will grow,” with 31% believing net profits will advance, and 39% projecting increased online sales.
The food industry’s collective leaders are proving themselves to be adaptable, and thus, “cautiously optimistic and feeling a bit more adventurous about future possibilities.The encouraging financial forecasts are an indication that industry leaders are acclimating to this environment of constant change, challenge and new competition, and feeling more confident they are choosing the appropriate paths forward for their teams," Sarasin said.
While that’s good news, Sarasin identified four areas in which the food industry is in varying stages of development, which she framed through “the lenses of what we need to learn, what we must unlearn and what we need to relearn,” beginning with the omnichannel supply chain. “What we need to learn in this area is that the old linear supply chain just isn’t a viable model for us any longer. Omnichannel means there are many paths to get food from production to the consumer," she said.
As opposed to the bygone model where “the farmer grows the base product for it to then be harvested and sent to the manufacturer, who would then mix, produce and package the product for the shelves” and onward to a distribution center “before making its way to the store,where we hoped consumers would purchase it, take it home and cook and eat it,” today’s “consumer-driven, convenience-at-all-costs” supply chain is vastly different, Sarasin said.
“We now see many deviations from the old linear supply chain, with some links in the chain being bypassed entirely,” said Sarasin, who described how some retailers are confronting the challenges presented by the last mile with “smaller and smarter distribution centers, some even with robotics,” which can not only cater to stores but can also serve as a hub for home delivery and click-and-collect.
The scenario thus “necessitates unlearning the old linear model and instead beginning to think in multidimensional ways,” Sarasin said. “We simply cannot afford to let nostalgia, nor familiarity, limit our ability to imagine how best to move food into the hands and mouths of our customers.”
In terms of what is needed to relearn and building “a new omnichannel means of moving food” amid technology-based efficiencies and mechanized speed, Sarasin urged conference attendees to “remember the retail conviction that customer service, at its core, is about relationships. It’s knowing whom you serve and how you can serve them better.”
Key to the mission of relearning to establish and sustain consumer trust requires retail trading partners to more skillfully manage online relationships, which Sarasin said “has some very different nuances to it," particularly as it pertains to “the rules of engagement governing interactions on social media.”
Likening it to “trying to figure out how we interact and behave” on elementary school playgrounds, Sarasin said a new mindset is also needed to “relearn civility, social graces, respectful exchanges and means of honoring boundaries in the new cyber ways we serve our customers and connect with consumers. While face-to-face encounters carry the added benefit of allowing us to read body language in assessing receptivity to our messages, internet communications don’t fully have that capacity—at least not yet.
“We must learn new means of relating, carefully reading and testing the limits of technology so that it remains within the range of being helpful and doesn’t cross over into being considered invasive,” Sarasin said. “This calls for us to relearn the lessons in being an honest and transparent broker while learning anew how to do that with our digital customers as well as our physical customers.”
Marketing in a Digital World
Another critical area of unlearning for retailers, according to Sarasin, is “the one-size-fits-all approach to marketing that we’ve known and loved. The world of the one circular or the one coupon or the one deal that fits every customer is gone” and personalization has taken over. “In the tech-driven digital world, all information, all deals and marketing is expected to be targeted, contoured to me and relevant to my situation and my needs.” Both retailers’ and brand makers’ promotions “must have a complete digital strategy,” said Sarasin, and with it, having access to the appropriate resources “to know exactly what your customer wants to know and his or her favorite way of receiving that information, as well as how their various communication channels overlap and reinforce each other.”
To that end is the ability to speak fluently “in the digital languages your customer prefers” while accentuating the ways the various platforms “interface and talk to each other to bolster the message,” said Sarasin, be it a website, Twitter, Facebook, Instagram, Pinterest, a blog or mobile app, e-marketing and, “in some cases, even the old reliable circular. And all of this requires that we relearn customer respect and the limits our customers place on personal intrusion.”
Noting that one of the most important takeaways from FMI’s most recent U.S. Grocery Shopper Trends research revealed “a myth that shoppers want everything done for them in the name of personalization,” Sarasin said. “There is definitely truth that customers like some individualized attention, but the statement moves from truth to hyperbole if you interpret it to mean that shoppers want retailers to do everything for them. While there are mixed signals being sent from shoppers on this front, the trick is that the help we provide must empower our customers to make their own decisions, and not appear to be forcing or dictating a choice.”
Accordingly, she added, “We must relearn that our marketing should be more about helping the shopper discover what they want to buy, and less about what we want to sell,” as well as “how to speak it with a digital accent.”
With all aspects of the industry being touched or transformed by technology, Sarasin spoke for many when acknowledging that “the level of knowledge required, and even the language needed, can be daunting and scary. Yet it’s another area where we must learn a different approach,” which she said is best done by “embracing and engaging with it to the point it’s no longer fearful. Our industry stands to reap tremendous rewards of the efficiency that technology, digital intelligence and machine learning can offer if we are willing to lean into it and adapt it thoughtfully.”
Omnichannel vs. ‘Omnishopper’
While food retailers have long clung to a pattern of getting shoppers “to conform to the ways we do things, we must instead consider how each of our shoppers wants us to do things,” said Sarasin, citing FMI Trends data, which shows that the average person shops for groceries at 3.1 different outlets and 4.4 different retail banners each month.
“We don’t anticipate this trend will diminish in the near future because shoppers are drawing on these different options to fulfill their grocery needs each month for a reason,” she said, noting that the most successful food marketplaces of the future “will be the ones that develop superior capacity to listen to their customers [and] adopt the ability to mine all that data for the bona fide nuggets of truth they contain ... and engage the most efficient and effective methods to quickly activate around what they learn.
“Consumers who can take their business anywhere are looking for the food marketplace that will continually woo them, gain their trust and prove [their worth] as trusted partners. And that’s something we all must continue to learn, unlearn and relearn,” Sarasin said, citing the “comparable path” FMI is on, as evidenced by its recently announced rebrand. “The noble work of feeding and enriching lives deserves nothing less than the best—from all of us.”