In this week's SN, and in last week's, there is extensive news coverage of a series of talks given by top managers of many of the nation's largest food distribution firms.
These top-level executives gathered in New York to attend the two-day Food Retailing Conference, hosted by Donaldson, Lufkin & Jenrette Securities Corp. A team of SN editors and reporters was there.
Attending the forum -- and talking strategies -- were executives holding titles of chairman, chief executive officer, president and the like, representing some of the biggest companies in the land, such as Kroger, Safeway, American Stores, Albertson's and about a dozen more.
Aggregate sales volume generated by companies represented at the conference is in excess of $115 billion. As a benchmark, consider that sales generated by those companies is fully a third of the entire sales volume netted by the largest 75 retailing and wholesaling companies in North America.
In short, the event distilled a huge percentage of the industry into a single place. The presence of such executive horsepower poses an opportunity to raise a key issue: What do the big guns see as the direction in which the industry will move?
In a word, the answer is "growth," in terms of company size, sales and profits.
But how is growth best obtained at the moment? Let's find out by taking a quick look at a trio of growth strategies sketched out by several executives during their talks:
Grow sales by acquisition: Not surprisingly, this is the tack being followed by several major operators. The advantage is that a company capable of making acquisitions can immediately add big numbers to the top line; it's far easier to acquire retailing and distribution assets in a chunk than to edge into new markets a little at a time.
The downside is that it takes a lot of management energy and skill to fold an existing company into another. And unless that integration is done well, a company can end up with an increased top line, but no proportional addition to the bottom line.
Moreover, no addition to the industry's net wealth is created.
Grow through self-investment: Some companies in the industry have been focused on building profits by reducing operational costs.
But, of course, the gambit of achieving affluence through operational economies has sharp limits: There's no substitute for a flourishing top line. So some companies are taking a new look at capital expenditures with a view toward making sure they're sufficient to guarantee that the companies will move forward with the kinds of facilities the future will demand.
This is optimistic and welcome commentary about the industry's future.
Grow by knowing consumers: For some of the same reasons that led companies to seek profitability by saving, some also forgot what customers really wanted out of their shopping experience.
So, certain companies have been taking a new look at what attracts customers and are catering to what they want by fine-tuning product offerings, tinkering with formats and reconsidering price-point structures.
This, in the end, is the outlook that will secure real growth.
These are just a few of the very broadest themes that surfaced during the executive colloquy. There's a lot more about what industry executives said in this week's SN, and last week's.