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Execs Discuss Six Imperative Issues Facing Food Industry

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Last updated on February 1st, 2023 at 02:31 pm

“Navigating the Realities of Imperative Business Issues” was the topic of an executive roundtable industry discussion at the recent FMI Midwinter Executive Conference in Orlando, Florida.

The FMI board of directors and key committees, along with FMI partner Oliver Wyman, have identified the most significant issues keeping food executives up at night.

Mark Baum, FMI chief collaboration officer and SVP of industry relations, facilitated the roundtable with Craig Boyan, president of H-E-B; Sandy Douglas, CEO of UNFI; Terry Thomas, EVP and chief customer officer at Unilever; and Hunter Williams, partner, retail consumer goods at Oliver Wyman. 

As the industry continues to navigate strong headwinds and challenges, Baum said leaders must remain agile and focus on addressing those challenges and the opportunities that lie ahead. 

The six imperative issues impacting the food industry, as identified by the FMI board, include: supply chain disruption; labor shortage and workforce challenges; changing marketplace and societal dynamics; evolving and ever-changing consumer behaviors; rising ESG expectations; and accelerating technology transformation. 

Baum said they discovered there is broad alignment among retailers, wholesalers and suppliers on the significance and hierarchy of these issues.

“This industry alignment provides all of us with significant opportunities to collaborate, to better serve our mutual consumers and get our growth momentum going,” he said.

Williams was involved in the pre-COVID emerging issues strategy the board worked on in 2018. When they were working on refreshing the strategic plan, he said they realized that “emerging issues” was not the right way to describe it anymore.

“Those issues had emerged and many of them were now imperative issues that really had a strong bearing on the industry today, not the future,” he said.

COVID was a big part in accelerating those issues to the imperative category. E-commerce now is “undisputedly” a part of the new normal in the industry, he said, along with ESG expectations. It was “striking,” the degree of alignment across industry members as to what the key issues are.

“I think that speaks volumes about why it’s important to have the whole industry in one tent and to be able to speak with one voice on behalf of the food industry,” Williams said.

Addressing supply chain, labor issues

In discussing supply chain disruption, labor shortage and workforce challenges, Douglas said immediate leverage points are transparency and communication, “working together as a value chain to support retailers and ultimately their ability to serve consumers.”

He added a set of vulnerabilities has been unmasked and needs to be addressed. Investment is needed in technology, people systems, diversity, inclusion, flexible work policies and “really move to where associates are.” 

Longer term, Douglas said there is a public policy opportunity to work on workforce supply through trying to depoliticize the issue of immigration, which he termed as part of the growth engine in the U.S.

ESG moves to center stage

Thomas spoke to ESG, which did not make the list of emerging issues in 2018. He said that about 94 percent of consumers polled said they wanted more sustainable choices, although just 10 percent are willing to make behavioral changes.

He said this is an opportunity for the industry to “make it more seamless, more frictionless” for consumers to be able to find more accessible, affordable choices. To Unilever, making sustainable choices is part of a winning strategy.

“We believe that if you don’t have a healthy planet, you don’t have a healthy society, then you can’t have a healthy business,” Thomas said. 

Along with taking on social issues to make the world a better place to live, Thomas said Unilever is making significant investments toward those goals.

Industry-wide, everyone has to understand that the startup costs are an investment. “If you can build that mindset into your culture and embed it into your business strategy, that’s an important first step,” he said. “The second piece is that we have to come together collectively…driving up participation in getting numbers so that you can have scale in order to meet the third part, which will be systemic change.”

Evolution of consumer and technology

In addressing the evolving consumer and technology transformation, Boyan reflected that the past three years saw strong growth in the industry and consumers were in a better financial position. Today, however, inflation is having a tremendous impact.

It has drained consumers’ savings, and they have increased balances on their credit cards. Growth and consumer spending most likely will be slower in 2023 and beyond. As a result, he said the industry needs to find ways to help the average household, especially low-income families.

“What are the things we need to do to fight on behalf of the pressure they are under? That’s going to be a totally different mindset than what we’ve had over the last three years, and I think that’s a major imperative,” Boyan said.

He added that retailers need to become tech companies. “In my view, the battle that we’re about to face is how can we all become great tech companies before tech companies become great retailers?”

Omnichannel shopping experience

On the question of how the omnichannel shopping experience will change this year, Thomas said consumers already are omnichannel. They are leveraging all aspects available to them to shop. The difference will be in the channels used.

The current fastest growth seems to be curbside pickup. Consumers, often under budget constraints, can order what they want and reduce the temptation of buying more than they need. Thomas said he expects that trend to continue as recession looms.

From an ESG standpoint, he predicts a shift in media spend to be more digital and social as it costs more to offer sustainable products. 

“It’s going to be important for us as manufacturers – and even as retailers – to be able to make those products easier for consumers to see as they’re searching online… and content is going be more important than ever. Otherwise, we’ll make these investments, and we won’t get the return on them.”

Labor shortages and automation

On the question of how to marry chronic labor shortages and automation, Boyan pointed out that grocery is and will always be a people business.

“What’s going to be fundamental, important to our success, is to continue to run great people organizations,” he said.

That doesn’t mean they can’t become great automation companies, according to Boyan. It is important to find those opportunities to automate, such as in warehouses, and still “maintain our core of fantastic people businesses.”

Better collaboration

Douglas, a former senior executive with Coca-Cola and now at UNFI, was asked how trading partners can better collaborate to address the industry’s imperatives.

He said the U.S. is lucky in the structure of its food industry. “The supermarket channel’s diverse, it’s agile, it’s innovative. There are retailers positioned very effectively all over the marketplace.”

As they enter this year of uncertainty, Douglas said there is “an opportunity to collaborate and to value what we have here. And to collaborate in a way that tackles problems in a much more boundary-less way, so that the richness of the customer base continues to be strong and grow.”

He added it is important to start looking again at metrics like units and brand occasions and to make sure companies are serving consumers with products they can afford. Also important is working together to take non-value-added cost out, to collaborate better and to increase visibility. 

“I think it starts with realizing how lucky we are to have this incredibly diverse and vibrant industry here, and then work together to take full advantage of it.”

For more information about FMI, visit fmi.org

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About the author

Treva Bennett

Senior Content Creator

After 32 years in the newspaper industry, she is enjoying her new career exploring the world of groceries at The Shelby Report.

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