LOS ANGELES -- The supermarket chain of 2010 could consist of a network of specialized retailing units, with one focusing on high-quality produce, another on home-meal replacement and still another on convenience items.
This was just one possible view of supermarket retailing in the next millennium expressed at "Year 2010: Vision of the Future," a panel discussion at the Food Marketing Institute's MarkeTechnics convention here last week.
Executives were unwilling to bet on the future success of HMR, unless technology enables retailers to reallocate more store personnel to food-service and presentation functions.
Moderated by Michael Sansolo, senior vice president at the Washington-based FMI, participants included Hugh Farrington, president and chief executive officer at Hannaford Bros., Scarborough, Maine; Michael Julian, CEO at Jitney-Jungle Stores of America, Jackson, Miss.; and Al Carey, chief operating officer at Frito-Lay, Plano, Texas. They warned that customer needs would be the ultimate designer of the supermarket of the future.
"If you sit in a senior management office and think you know what the store will look like in five or 10 years, you won't be there in five or 10 years," said Julian.
"The best measure of success is foot traffic," he added. "We need to provide what customers want in the form they want it."
Julian predicted that the network concept of retailing could make sense, especially in a fast-growing urban environment such as Las Vegas.
"I could see where a good food distributor would have a network of stores: some large stores people would drive 30 or 40 miles to shop in, then others with produce only, another offering HMR, another like a convenience store," he said.
Farrington said traditional supermarkets could continue to serve rural or smaller communities while a network-style arrangement might be more appropriate for urban markets with more diversity.
"It could be [a network of] large supermarkets and specialty shops for people willing to pay for quality perishables, for example," Farrington said.
Multiple methods of serving consumers could include selling dry grocery items over the Internet, a process that will become easier as young people who have grown up with computers become shoppers.
"The next generation won't think twice about Internet shopping," said Julian. "I'll take whatever proportion of sales come over the Internet -- and I've heard it will be as low as 2% of total sales to as high as 15%. Whatever it is, I'll figure out how to do it profitably."
Besides increasing computer comfort, another trend affecting retailing is that "we're becoming a country of 'haves' and 'have-less,' " said Farrington. The former group will be willing to pay more for convenience and extra services, while the latter group will be squeezed just to pay for staple items, he added.
Retailers and indeed the entire industry need to broaden their knowledge of customers and put that knowledge to use at a market and even a store level, said the participants.
"We need joint [manufacturer-retailer] consumer research," said Frito-Lay's Carey. "We'd like to partner with retailers, even doing research specific to individual stores, asking consumers why they do or don't buy a specific product."
Such granular data would also benefit retailers. "There are lots of people seeking a share of stomach besides supermarkets," said Farrington. "We need to understand the demographics of a particular store and target customers specifically in those markets."
Participants were unsure if the current hot trend, HMR, would still retain its freshness in 2010. They agreed that long-term success for HMR would depend on the use of labor-saving technologies in other areas of store operations, which would free personnel to focus on food preparation and presentation.
"Preparing fresh food in an attractive way is a big idea," said Carey.
The retailers agreed with this broad statement but expressed skepticism about serving food in the store environment.
"We can provide outstanding food that's easily prepared, but we're not in the restaurant business," said Farrington. "I've never seen a restaurant in a supermarket make a nickel."
The participants said that technology's crucial role in retailing would be to take costs out of the system, which would help retailers adapt to a fast-changing environment. To achieve this goal, information-technology executives need a better understanding of the total business.
"The business is retail, not technology," said Farrington. "A basic 'Retailing 101' course would be a good prerequisite for an IT person."
Julian called on IT executives to become more involved with other key departments, such as sales, marketing and operations. "IT people need to stop being victims. There's nobody stopping you from implementing projects," he said.
"But the corollary word for involvement is accountability," he added. "If you're involved, you must make sure your product or system works."
