The global food-retailing landscape is changing dramatically. How can retailers at the local level respond, to survive and thrive in this new future? That was the subject of a panel discussion held at Fresh Connections Australia-New Zealand 2014.
Setting the stage: global retail forces, trends
Anthony Barbieri, PMA’s U.S. senior vice president of member relations/business development, set the stage by exploring global retail trends. While retail markets are lukewarm to flat in established economies such as Australia, Japan, the United States and the European Union, retail is growing in countries with rising middle classes and growing urban areas such as China, Brazil and Russia.
Four categories of macro forces are driving global retail trends, Barbieri reported:
• Societal: Global food demand is growing along with the world’s growing population. For example, by 2025 China will have 100 new cities that do not exist today.
• Technology: Mobile and internet-enabled devices are “absolutely disrupting retail,” Barbieri said.
• Environmental: Climate change and severe weather are driving up food prices beyond forecasts; access to water is a common agricultural issue around the globe.
• Economic: Increased food demand, and competitive demand for biofuels crops, is inflating food prices.
Meanwhile, the global retail landscape is evolving as conventional supermarkets face competition from hypermarkets at one end of the spectrum and convenience stores at the other – with online shopping challenging them all.
“If [conventional supermarkets] aren’t evolving and adapting their formats, they are getting squeezed,” said Barbieri, who joined PMA after a 30+-year career in U.S. supermarket retailing.
Regardless of format, all retailers must address consumer demand for trust and transparency. For example, food safety problems in China have caused consumers there to have trust issues, Barbieri noted. As a result, branding – from the chain, to the producer brands it stocks, to branded packaging at store level – has become a new retail opportunity there.
Panel: How local retailers are staying ahead
Four fresh produce retailers with operations in Australia, New Zealand and the nearby Asian market then offered insights on how they are staying ahead in today’s evolving retail landscape. Panelists were:
• Shane Bourk, Wal-Mart China’s vice president fresh food
• Tristan Harris, Harris Farm Markets co-CEO (Australia)
• Stephen Sexton, Countdown produce merchandise manager (New Zealand)
• David Stewart, My Greengrocer owner (New Zealand)
All of the panelists’ companies are involved in online food sales in some capacity:
• Stewart started his single-unit My Greengrocer online order and delivery business because his retail store’s delivery vans were underutilized.
• Harris Farm Markets entered the online space in 2010; its online business will equal the group’s largest store sales within the year.
• Countdown, New Zealand’s largest single supermarket chain, offers online shopping, mobile shopping and Click to Collect – online ordering with consumer pick-up.
• Wal-Mart China’s e-commerce business is extensive and growing, reflecting the deep penetration of online shopping for everything there. Its ASDA unit in the United Kingdom delivers orders to tube (subway) stations.
Harris, Sexton and Stewart all noted that they sell more fruits and vegetables online than in their retail stores, and online customers buy premium rather than value items. “The fact of the matter is that an online consumer spends more,” said Sexton. “By a considerable margin,” noted Stewart. “We are surprised by the volume of fruit and veg people will buy,” said Harris. All of the panelists agreed that product quality and consumer trust are critical to successful online retailing.
All of the panelists increasingly rely on social channels for customer communications. Countdown uses email, text and Facebook; they just added a full-time staff person for Facebook. Harris Farm Markets focuses on email, website and Facebook because of privacy issues in New Zealand. Bourk noted that WeChat is the dominant social platform in China.
“Learning to reach the digital customer is an entirely new way of retail marketing. Everything you did know is no longer relevant. Its all about making sure that you hit the right customer at the right time, in the right place with the right story,” said Harris. “The more that online becomes part of our business, the less we will use traditional media.”
“[Social] can help you, but it can also kill you. If a customer has a bad experience, before you know it 10,000 people know about it – it’s a double-edged sword,” added Bourk.
“So if retailers aren’t in this [online] arena, they are losing out,” summarized Barbieri.