Latest grocery trends from ECRA Convention

By Kelly Smith

Each year the ECRA Retailer and Supplier Convention brings together leaders from the FMCG industry to examine, discuss and debate current and emerging trends.

Changes to the business environment have been increasingly disruptive – and there’s probably even greater disruption to come. The enormous challenges of the current financial reality, soft consumer sentiment, food safety and security concerns, supply chain risks, and an increasingly competitive market are impacting on how we view our industry and how our joint consumer views our businesses.

The changing way shoppers engage with one another and with companies, coupled with the role and impact of key influencers, provides new opportunities, threats and realities.

  • Why is it that consumers trust each other more than retailers and brands?
  • How do our businesses better meet shopper needs and answer the question "who can I trust?"
  • How do we as trading partners deliver real value by collaborating to deliver real benefits within a framework of trust?

The 2015 ECRA Supplier and Retailer Convention explored these themes and much more.  Convention delegates gained insight to the challenges and opportunities ahead, and to real-world strategies through interactive discussions and content rich sessions addressing the critical industry issues.

Highlights of some of the Speaker sessions are captured below.

Session 1 – What’s happening globally?

Daniel Lucht, Global Research Director, ResearchFarm UK

Daniel spoke around four emerging trends in Europe. First, the decline of the hypermarket and ways in which retailers are reinventing their businesses, followed by an investigation of the ‘discounter surge’ which included a case study history of Aldi, its business model, and why this has proved so successful.

Daniel’s third topic was wearable technology and the impact it is starting to have on health and fitness, GPS tracking, and even mood and emotions monitoring. Finally, he talked about the online revolution and the various models being employed globally, the emergence of Amazon Fresh, and strategies that retailers might take to develop competitive online businesses.

Pier Luigi Sigismondi, Chief Supply Chain Officer, Unilever Global

Pier Luigi described strategic approaches to delivering profitable, sustainable, growth, particularly in an environment of complexity in a highly globalised business such as Unilever, and how this drives his company to use an agile and responsive supply chain to manage geopolitical issues as well as increasingly competitive trading environments.

A highlight of the convention was his discussion relating to “the strong purpose at the heart of what Unilever does”, which included a focus on reduction of waste with targets to achieve zero waste to landfill – showing that the “strong purpose” at Unilever goes beyond simply financial performance.

Session 2 – What’s happening locally?

David Thomas, Head of Australian Consumer Research, CLSA

David posed the question “supermarket wars – are we there yet?”, and reviewed the

performance of the major Australian retailers over the past 15 years. His message was that clearly price is going to be a key battleground for the market and its participants in the years to come. David then covered a variety of current “hot topics, including the Australian Food and Grocery Code of Conduct, the role of independent grocery going forward, and the key retail battle grounds for the next several years. He suggested that 2016 will not necessarily be the year of the “price war” but that it is coming fast off the back of discounter growth.

David Zehner Managing Partner, Bain & Company ANZ

David discussed a “new reality for grocery suppliers in Australia”, noting that Australians have paid higher prices for groceries than similar markets, a situation which has invited competition such as Aldi and niche suppliers into the market. He suggested that multinational suppliers in Australia had been setting unrealistic growth and profit targets. Utilising some “crystal ball gazing”, he saw a role for branded products as being price leaders combined with the rise of niche/premium products to drive profit based on similar approaches taken by UK retailers to combat discounters. His “four rules for the new reality” included playing the game right, focus (not scope), know your place on the shelf, and reset relationships.

Session 3 – Trust in the FMCG Retail World

Trent Duvall, Partner, Consumer & Industrial Markets, KPMG

Trent gave an overview from KPMG’s recent ‘Top of Mind’ survey of C-suite executives. Top-line growth and data analytics featured in the top three critical issues both globally and locally, while consumer health and wellness was also a ‘Top 3’ issue for Australian executives in place of talent management for their global counterparts. Consumer trust was noted as another emerging area of critical importance. He outlined what senior executives who were surveyed considered to be areas for increased investment over the next few years. These included consumer trust, omni-channel and technology, consumer knowledge, the supply chain, data security, and corporate social responsibility and sustainability.

Neil Rechlin, Partner, NextGen Group

“Conflict inhibits growth” and “tomorrow is going to be tougher than today”, noting that as conflict increases it becomes difficult to develop and promote a growth agenda. Neil discussed the Food and Grocery Industry Code of Conduct and advised that while business may not get easier, the introduction of the Code facilitates a positive change in the conversation.

Session 4 – An Afternoon with the Retailers

Adam Stapleton General Manager, Merchandise Transformation, Coles; Ron Volpe, Head of Central Transformation & Supplier Collaboration, Coles

Adam reviewed the “strategic bridge” model Coles is pursuing to become “the best food retailer in Australia”. Key strategies include cost savings being invested into price, better availability in store, speed to shelf to promote longer shelf life and quality, and reinvesting of cost savings into the business. He discussed Coles’ supply chain Project Unity, aiming to promote a faster, simpler, more reliable and collaborative end-to-end supply chain with aligned KPIs and longer-term planning. Coles’ focus is on collaboration, availability, simplicity, freshness, creation of trusted value, and its supplier charter through a variety of initiatives being undertaken with suppliers.

Linda Venables, Chief Logistics Officer, Metcash David Dyer, Director, Dyer’s Distribution

In a presentation headed ‘Safety – preventing death on the road’, Linda discussed Chain of Responsibility legislation and noted this is a key area of importance for Metcash because there are ever more trucks on the road, and in particular the importance of managing issues related to fatigue, speed, and load restraint. David described his company’s journey to comply with the Retail Logistics Supply Chain Code and the benefits to a carrier in terms of a level playing field and improved sharing of data and best practices in the industry. Linda supported this with a case study showing processes Metcash has employed to strengthen its chain of responsibility compliance.

Tim Donaldson, General Manager, Retail Operations (Designate) Foodstuffs South Island Tim provided an overview of Foodstuffs’ business in New Zealand, describing each of the different retail outlet banners serviced by Foodstuffs in the South Island from ‘big box’ to convenience stores.  He also highlighted a raft of consumer trends which are impacting on both retailers and suppliers in New Zealand, and flagged the key dynamics shaping the market in 2015 and Foodstuffs’ response to these. They included retiring baby boomer generation, generation X and Y seeking better shopping experiences, changing consumer expectations in store, the growth of online shopping, ranging for healthy and dietary needs, and ethnic population expectations. He noted Foodstuffs’ appetite for supplier collaboration in meeting these challenges and opportunities.

Jack Hanrahan, Retail Relations GM, Westfield Group

Jack spoke of the “tectonic shift” in retailing over the past 10 years, driven by the technology boom, consumer generations, increased globalisation, and advanced business models being employed.  The trend will continue apace through a second era of digital retail encompassing the use of robotics, smart shelves, accurate in-store locating, drones, and automated delivery vehicles. He highlighted what he saw as key disrupters to the market. These included mobile – shop anywhere, anytime; in-store digital technologies and sensient stores, smart shelving in store, smart packaging technology, on-demand merchandise, near field communication and wearable devices, “vibrant” data, and artificial intelligence.

If you would like any of the convention presentations, email Kelly Smith.