FMI'S HAMMONDS PRESENTS A BACK-TO-BASICS APPROACH

DAVID ORGEL

HONOLULU -- Supermarkets wading through a glut of industry information and advice need some basic guideposts for thriving in today's confusing environment. How about a Top 10 list?

Timothy Hammonds, president and chief executive officer of the Food Marketing Institute, Washington, has devised such a roster, which he presented here at the annual convention of the Western Association of Food Chains. Hammonds outlined a back-to-basics approach in which healthy organizations will focus on relationships with consumers and employees and view the big picture when it comes to marketing and technology. Smart operators also will make sure that in-store merchandising continues to sizzle. Complicating the picture is the growing urgency of many issues facing the supermarket industry.

"There are no shortages of challenges to think about," Hammonds said. "The biggest change today is an increase in the pace of change. So the need to be able to address issues quickly and get them resolved and move on has never been greater. The window that we have to respond is getting tighter and tighter. The time frame for competitors -- whether it's Home Shopping Channel or supercenters -- to move into the area is getting tighter and tighter. So if there's one thing to do, it's to organize to handle an ever increasing pace of change."

Hammonds' approach amounts to something of a checkup for supermarkets. Following in reverse order is his Top 10 list (without apologies to David Letterman) of areas supermarkets should look at in improving their businesses:

10. Look outside the box:

"How long has it been since you've taken your whole management crew in to look at places like Starbucks, Nike Town, PetsMart -- the kinds of outlets that are not food stores at all, but are generating excitement for the shopper. Go look at them to see how you can bring some of that excitement into your store."

9. Show a caring approach to shoppers:

"No detail is too small. One example is the crime issue. We're finding shoppers say they won't go to supermarkets anymore in the evening because they think it's too dangerous. Are your cost control people telling you to turn down the lights at night in the parking lots to save more money? How about your level of security personnel at odd hours of the morning? Would you want your family shopping there at that time? There are ways to say to the consumer 'we realize crime is a big issue in your life and we want the supermarket to be a safe place to shop.' That kind of message is powerful for shoppers and it will help bring them into your store."

8. Be fashionable:

"It's easy to modify the look of your store without having to do major construction. Are there ways with color schemes or signage, for example, that you can bring a new look to your store? Today merchandising has an element of fashion about it, and we can capture that in the supermarket."

7. Communicate with your employees:

"If you asked your executive team 'what kind of company are we?,' and then you went into the store and asked the cashier or shelf stocker the same question, would both give the same answer? The successful company of tomorrow will get the same answer from the frontline employees that they will from the executive suites. Lots of competitor organizations are driving that kind of focus. We can do it too. If there were a food safety crisis, would store employees understand the issue well enough to provide answers?"

6. Don't underestimate the challanges ahead:

"We talk about ECR, but that's just a jumping off point for further changes in the next decade. So while it seems like a big obstacle

to implement now, it will be the starting point for lots of other things that happen in this industry."

5. Embrace and use new technology:

"Not just as a way to implement ECR or cost-cutting moves but as a way to drive increased sales and consumer excitement in the stores. Examples are frequent shopper programs, electronic coupons, in-store broadcasting, electronic rebates, electronic signs, home shopping. Technology needs to be used not just as a backroom tool but right up front where the customer sees it as a way to increase sales volume in-store. And the driving force is to find out what the customer is looking for."

4. Please your best customers before all:

"It's a lot easier to sell more to existing customers than it is to lose people and have to attract new customers. Everyone -- not just supermarkets -- is trying to find out how to identify their best customer and reward them and make them feel good about shopping at the store. That is a tremendous growth opportunity and a tremendous area where technology can help us immeasurably."

3. Take care of your employees:

"How long has it been since you addressed the kinds of education programs you offer your employees? And when you educate them about E. coli or nutrition signs posted in stores, what's your message to them? Is it that 'you'd better learn this and we'll check up on you' or is it 'we want to invest in your education so you can do a better job and feel better about what you do and have a better chance for advancement?' "

2. View your store the way customers see it:

"Get your management team into the stores. Independent operators don't have this problem: half of FMI members have one store. But the larger the company the harder it is to get the whole management team into the stores on a regular basis, and at odd hours to see what the customer sees."

1. Do what it takes to make the customer happy:

"Sometimes you just have to push through the objections, all the reasons you can't do something. Focus on what it is that makes people spend money in our stores and come to us as customers."