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A SUBTLE CHANGE IN TONE BODES WELL FOR THE INDUSTRY

It's difficult to detect, but if you listen carefully you can hear the tone of the food-distribution industry changing, and it's all to the good.The many developments that lead to this change have been reflected in the pages of SN, but let's take a moment to sweep them all together and see what this change means.It all started a year or so ago when the term "insult pricing" had a brief but telling

It's difficult to detect, but if you listen carefully you can hear the tone of the food-distribution industry changing, and it's all to the good.

The many developments that lead to this change have been reflected in the pages of SN, but let's take a moment to sweep them all together and see what this change means.

It all started a year or so ago when the term "insult pricing" had a brief but telling currency. That term was used by a number of food-distribution executives and others to describe something that should have been obvious on its face, but somehow went unacknowledged in some quarters, namely the growing price spread between pantry staples offered in supermarkets and the same products offered by other classes of trade. Some retailers actually seated consumer focus groups to make this discovery.

At the same time, they found something far more grave. They discovered that many young consumers were so habituated to obtaining goods, such as paper and laundry products, at shopping venues other than supermarkets that they didn't really recognize that supermarkets offered such products.

What had happened was that the price spread had opened to such an extent that something akin to a generational shift had happened: They had grown up in families that had simply never been patrons of certain supermarket aisles.

These discoveries came in the wake of several years of inattention on the part of some supermarket executives. Some had been busy attenuating inefficient practices. Others were busy seeking growth by ignoring grocery staples and concentrating on more-profitable perishables departments. Others were busy building the top line through acquisitions. All through this period, shopper loyalty was eroding.

The discovery that something was amiss at supermarkets came at a time when much was changing. It's difficult to know which change had the greatest influence. Maybe it was that the price-point advantages offered by other classes of trade became too great to ignore, or maybe it was that the economy slowed, rendering price more important, or maybe it was that the ability to obtain growth through acquisition diminished. Maybe it was all of these. But the tone changed.

Now there's much less blaming of others or of circumstance for the flat-to-sinking top lines at many food-distribution companies. Instead, there's a renewed commitment to get busy with the business of retaining shoppers and winning new ones.

And there's no reason this can't be done. There are many companies in the food-distribution industry with mass that's more than sufficient to compete head-to-head with the price points to be found at, say, a Wal-Mart Stores' supercenter. Naturally, it will take a huge force of will and much effort to make that happen. More than that, there's no reason conventional operators can't far outpace other trade channels when it comes to in-store merchandising. Many other trade channels have become so dependent on the price offer that they are vulnerable to competition that arrives in the form of merchandising.

The change in tone, then, is all to the good and is a reason for optimism for the future of the industry.

TAGS: Walmart