WASHINGTON -- The downward spiral in the U.S. economy will result in a tougher environment for all consumers but will produce a variety of opportunities for supermarkets to grow sales, according to Tim Hammonds, chairman and chief executive officer of Food Marketing Institute here.
Speaking with SN in an interview preceding next month's FMI convention, Hammonds said the slower economy will mean people will eat out less and take more meals at home, giving retailers the opportunity to increase sales.
"And as consumers become more price-sensitive, it may be a propitious time for operators to add gas stations. A lot of our members have found that gas stations drive many price-sensitive consumers into their parking lots because people will drive long distances to save a few pennies on gas, and that's an opportunity to use merchandising tie-ins and coupons to get them into the market."
In addition, some operators may consider shifting to more price-impact, low-service formats to drive sales, he said.
Hammonds said he is not sure how long the downturn will last, "but I suspect people will tighten their budgets going into next year."
To help retailers cope with the downturn in a positive way, Hammonds said, FMI plans to focus on opportunities to promote top-line growth during its upcoming convention, scheduled for May 6 to 8 in Chicago.
"The industry has spent the last few years focusing heavily on the cost-control side of the business to achieve greater efficiencies, and it's made great progress," Hammonds said. "But we now have a great opportunity to refocus on growing the top line and paying more attention to driving sales, and that focus will be reflected in convention programs and on the exhibit floor."
Most of the 30 workshops at this year's convention will be organized around the theme, "Reach for New Growth," Hammonds said. That theme will also be part of the convention's newest wrinkle this year -- a series of workshops right on the convention floor.
"For the first time we are creating an educational space -- a theater, if you will -- on the exhibit floor, on the consumer products side, where we will highlight some specific sales growth opportunities," Hammonds told SN.
Those "category closeup" workshops will take place during exhibit hours, beginning Sunday morning, May 6, with successive sessions on petroleum marketing, private label, snacks, loyalty marketing and specialty foods. Monday will feature sessions on category management, product trends, natural and organic foods and merchandising. On Tuesday, workshops will focus on ways to use technology as entertainment and ways to market to adults through their children.
Other topics Hammonds discussed with SN during the pre-convention interview included the following:
The Bush administration, which he said is giving more consideration to the industry's viewpoint.
Web sites, which he indicated have the potential to drive additional supermarket sales.
IGA's 75th anniversary, which will be observed during the convention.
Hammonds said he is optimistic that the Bush administration offers the industry greater opportunities for positive momentum than the Clinton administration did.
"Under Clinton, the business community was in a damage-control mode," Hammonds said, "where we would wait to see what the administration would attempt to do and then try to limit the damage, so there was little opportunity to get a fair hearing for the business agenda.
"But with Bush in the White House and a Cabinet that understands that a healthy economy requires a healthy business community, at least we can now get a fair hearing. That doesn't mean business will carry the day on every issue, but we know there are people there who are more willing to listen -- and that makes it easier to get people in the industry more actively involved than they have been over the past eight years."
Hammonds said the issues of primary concern to FMI include the following:
Repeal of the estate tax, which has already been approved by the House but still faces a tough road in the Senate.
Opposition to new minimum-wage legislation, which would increase the minimum by $1.50 over two years. "We would prefer no mandated increases in the federal minimum wage," he explained, "because such increases would make it uneconomical to hire high school-age workers and get them involved in the food industry -- and inevitably, minimum wage increases put in jeopardy entry-level jobs and those most in need of help."
Concern with health care reform proposals, "including making sure that legislation does not needlessly expand employer liability, forcing companies to cut back on their health benefits programs."
Hammonds said the industry was elated that the ergonomics legislation passed during the Clinton administration has been repealed. "It would probably have reduced warehouse capacity by at least 20% by requiring companies to raise the level of the lowest pallets from the floor to knee height," he said.
"And at the retail level, because it limited the weight of grocery bags to 15 pounds, it might have required retailers to install scales at each checkstand, which could have made the cost so high that retailers would no longer be able to afford to bag groceries for their customers."
Internet opportunities will also be spotlighted at the convention, Hammonds said, with an exhibit called "SuperTechMart: The Power of e3," which will offer an overview of a trio of e-commerce initiatives designed to improve the basic efficiencies of doing business, including business-to-business exchanges, business-to-consumer opportunities and business-within-business applications (the use of technology to improve internal offerings), Hammonds said.
Hammonds was unwilling to comment on the potential growth of on-line grocery shopping but said he sees considerable potential in Web site uses. "We're just beginning to see the potential there as companies explore ways to use their Web sites," he said.
"A lot of companies have used them so far to promote store locations, but some more creative companies are tying in seasonal promotions and recipes to drive customers into the stores. So we're starting to see companies learn to cross over from supplying information to driving sales, and that's where the real potential for these Web sites is in the future."
Looking ahead, Hammonds said he expects trade associations and the various B-to-B exchanges to develop a set of standards so all industry partners can talk the same language. "There will be a lot of progress possible as companies go global to take advantage of B-to-B e-commerce," Hammonds said.
Sharing the spotlight to some degree with FMI during the convention will be IGA, the Chicago-based network of retailers and wholesalers in the United States, Canada and worldwide. IGA, which will be celebrating its 75th anniversary this year during the convention, has held its retail recognition dinner in conjunction with the FMI convention for the last several years.
The connection between the two organizations will be even stronger beginning in July, when all of IGA's U.S. members automatically become FMI members as part of FMI's Independent Operators Division, Hammonds pointed out. There have been no discussions to date about expanding FMI membership to IGA retailers in other countries, he added, "but IGA brings a large group of international people to our convention every May, and they have been very supportive of us."
Concerning the Independent Operators Division, Hammonds said, "Half of FMI's members are single-store, family-owned companies, and while the large, merger-oriented companies get a lot of publicity, we felt it was time to put the spotlight back on these smaller operators, who have a solid place in our industry, and to emphasize our commitment to support programs to help them grow.
"The Independent Operators Division gives them a way to have a national identity, even if they are single-store operators."