Katherine Rich: Hold on – the new reality is starting to bite

20/5/2013

mcThe Food and Grocery Council’s annual general meeting in Auckland this month was attended by more than 300 grocery supply leaders – a record for FGC.

Cameron Bagrie, the Chief Economist for ANZ, was at his colourful best in explaining the economic reality for New Zealand and what to expect over the next 12 months, while our other two guest speakers opened eyes and minds to the realities of the online world and how it is starting to affect the food and grocery sector.

The first of these was Maile Carnegie (pictured), Managing Director Australia New Zealand of Procter & Gamble, one of the top consumer goods companies in the world and the owner of some of the best-known brands in beauty & grooming, household care, and health & well-being.

Maile spoke about the new reality for grocery suppliers and how this is changing the way people shop and the way retailers sell goods. And that new reality is driven largely by new technology.

She said that in a very short space of time, the face of consumers/shoppers had completely changed. Today’s mobile devices and the online environment means shoppers are fundamentally different to what they were even just five years ago – they are now connected to communities and to the world and to more information, all at the click of a button, and this is changing the way they shop.

It has put them into a position where they basically can get whatever they want, wherever they want to buy it, and for whatever they want to pay for it because they can now compare prices, see what others are paying, and shop around, often online. It’s something Maile called “price transparency” across international markets.

She predicted that because of the spread of new technology we will soon be in a world where there is 100% price transparency,  where not only can shoppers see products and shop in New Zealand, they can also see what’s available in Australia, the US, or anywhere, check the price and purchase it. And this will change the way retailers operate.

This new technology is also ushering in the world of what she called “limitless shelves”, where an online retailer can carry a much wider range of products than can be fitted into a physical space. For example, in the US, shoppers can walk into a store and if they don’t like the price on a particular product they can click on a QR (quick response) code and check out its price elsewhere, and have someone else can send it to them for free – and for a better price.

The explosion in technology and the impact of the online environment has also resulted in a fundamental change in the profile of shoppers, from being “typically a female” who did all the shopping, to everyone doing the shopping, with even children now buying goods online.

She said this revolution has resulted in shoppers knowing what good value is because they can see when others are paying less than they are. As such, she predicted that food and grocery shoppers are not going to see the type of price increases they have seen in the past, and that a world of flat or even lower prices will be the new norm.

Maile also warned about the effect that the online world is having on parallel importing, particularly in Australia, which it is reaching “insane” levels. The trend of consumers buying more and more goods from overseas because they can see where goods are cheaper was starting to damage the retail industry and local manufacturing. She said that was the reality of the way the world is going, and suppliers and retailers alike would have to concentrate their focus on value to survive. (FGC has noted a similar trend developing in New Zealand around parallel imports, and is constantly monitoring it).

Maile also talked about the importance of ensuring all product advertising campaigns are appropriate for all sorts of media, and how the need to think laterally included using online tools such as Facebook for marketing and creating advocates for businesses and products.

All of which led to another speaker, Cameron Slater, one of New Zealand’s top users of social media and the founder of the Whale Oil blog-site.

He gave members a great insight into the secret world of bloggers and pulled no punches around the dangers that social media poses to companies with any sort of public profile. He talked about the death of traditional media such as newpapers, and urged companies present to use social media to counter the often unfair and underhand attacks on them and their products. In particular, he talked about the importance of  companies setting the record straight and responding to issues as they arise online.

All plenty of food for thought and a reminder to all those who thought they had things under control to not be complacent!