PARIS (FNS) -- The food retailing of today won't work tomorrow, a group of young industry executives said at the 39th CIES Annual Executive Congress here last week in a presentation by the CIES Management Development Program.
"We are losing the war to nontraditional competition," said Eamonn Quinn, marketing director of the Superquinn chain in Ireland. "We must get on with winning the war and not just a few battles. We are sacrificing potential growth strategies because of a focus on logistics strategies."
Quinn and his colleagues said many food retailers are failing to notice and adapt to new competitive challenges. Fast-food restaurants are capturing more market share and are growing at 1% a year in volume, while many food retailers' sales have plateaued or are declining, noted David Marsh, director and general manager at the LoBill Foods division of Marsh Supermarkets, Indianapolis. The portion of the U.S. food dollar spent outside the home was 44%, or $57 billion, in 1995, vs. 36% in 1980, he said.
"We are facing similar pressures in Europe. A petrol retailer in Belgium recently opened with a bakery inside, and Marks & Spencer is in the meal-solutions business," Quinn explained. "We are losing business because we have not decided to go after that business. We are too focused on logistics and gross margins. That has created an inflexible cost structure that has limited our response to newcomers."
To prosper, today's food retailers must develop their own new retail concepts, not just copy other successful formats, Quinn warned. That could blur the lines between retailers and manufacturers as they cater to consumers.
"We think the current business model is going further and further away from the customer," said Eric Mestdagh, sales director at Mestdagh SA in Belgium. "Our marketing stops at the store. We basically are still a mass-marketing industry. The markets are saturated with stores that look the same, and it is feeding on itself."
Each retailer must decide if it is in the food distribution business or the meal-solutions business and adapt accordingly in terms of marketing, distribution and merchandising, Quinn said. "It is time to create a marketing-productivity curve. It is time to make a breakthrough."