IDDBA 2000 PREVIEW

ROSEANNE HARPER

MADISON, Wis. -- Meal centers may represent the first step in breaking down walls and getting supermarket department managers to think in terms of total-store profits.

That's what Carol Christison, executive director of International Dairy-Deli-Bakery Association here, told SN in a recent interview.

"When departments agree to multimeal merchandising like displaying meal components and ingredients in one spot in the store, it's a mini version of selling the whole store. We're seeing them [meal centers] more and more and I believe the success of those baby ventures will lead to total integration. We just have to unlearn a lot of territorial stuff," Christison said.

In just two weeks, IDDBA will hold its Dairy-Deli-Bake 2000 annual seminar and expo in Anaheim, Calif., where it will feature a Show & Sell Center that showcases actionable meal-merchandising ideas. The focus: selling the whole store. A roster of speakers who will zoom in on how to do business in today's overdrive environment also takes top billing at IDDBA's Dairy-Deli Bake. So does a summary of new, IDDBA-commissioned research that focuses on the increasing prevalence and purchase power of the Hispanic consumer.

SN interviewed Christison as she prepared for the event that's set for June 4-6.

Christison talked about the speed of change in the marketplace and what that will bring. Demographics, technology, competition, the way people eat, and a diminishing workforce are factors that are rocking the industry and will influence case design, product sourcing and preparation and methods of operation and marketing, she said.

Embracing the Internet as a business tool wasn't seen as a necessity even two years ago, she said. Now it is. Things are moving so fast, it would be prudent to have two business plans -- one for today's operation and one for tomorrow's, the IDDBA executive director said.

"Studying the past to try to predict what products will sell, what consumers will want, is like driving by looking in the rearview mirror. It'll work for a while, but you'll never see what's coming at you."

Highlights of SN's interview with Christison follow:

SN: What do you see as the major issues facing the industry this year?

CHRISTISON: I wish I could say that we've solved the labor, food safety, and consolidation issues, but we haven't. Those will still be uppermost in our minds and will have a major impact on our business strategies. New to the list of major issues is the struggle to determine how the Internet is going to be incorporated into our daily activities.

Please note that the issue isn't whether or not it's going to be a part of our business, but how it's going to be a part of our business. We've gone straight from "should we?" to "we must." Like it or not, Internet access is just another portal in our business-to-business and our business-to-consumer communications. Companies who don't realize and embrace the opportunities won't have a company to worry about for very long.

SN: What current trends are apt to have the most impact in the next 10 years?

CHRISTISON: I'm not sure anyone has a crystal ball that can look out 10 years. However, one of the major consumer trends that's going to drive us is the consumer push for more leisure time and more leisure-type activities. I recently read that 15 million people visited Disneyland in 1996 and only 10.8 visited the nation's capitol. Shorter work weeks and more holidays are going to be in demand as consumers question the role work plays in their lifestyles.

Other trends that are going to carry us forward are the aging population, the speed of doing business, changing ethnic populations, the need for convenience foods and services and the lack of people to act in service or production capacities.

Our reality is that changes are happening so quickly that we must have two business plans. One for today's operational issues and one for tomorrow's.

SN: How will these issues and trends be addressed at Dairy-Deli-Bake 2000? And throughout the year by IDDBA?

CHRISTISON: We've brought in some top experts to talk about issues affecting our industry and affecting our lives and those of our customers. We're looking at the big picture and our speakers are focusing on the trends that are driving purchase patterns and buying behaviors for consumers and technological changes that are increasing buying efficiencies and production.

We want to challenge people to think and to dream and to understand that our world is changing faster than they think. We're not teaching a skill; we're teaching how to anticipate the "what-if" scenarios and how these "what ifs" will change our operation today and tomorrow. It's that double-business plan again.

We use our publications and our Web site to alert our members to issues, new ideas, merchandising concepts, legislative action and a myriad of other business issues all year long. We provide the information in short sound bites and in-depth articles, including research and our annual trends report, "What's In Store."

SN: Are there changes in the format of your show this year?

CHRISTISON: The format of educational programs in the morning and open exhibit floor in the afternoon works very well for our attendees and we haven't changed it. Getting new ideas and finding new products and suppliers allows them to take care of both aspects of business, without infringing on either.

SN: Please comment on the new research Rosita Thomas conducted for IDDBA.

CHRISTISON: We are so excited about Dr. Thomas' new Hispanic research study. I've seen the preliminary report and there's a lot that's actionable. The key to really good research is getting actionable ideas and developing a better understanding of the customer. For example, we discovered that 67% of Hispanics eat at home, more often than Anglos. About 56% cook dinner at home an average of 5.6 times a week and 53% cook every night. Friends' and family's birthdays are celebrated with cake by 95% of Hispanics, and more than half would like their supermarket to offer traditional Hispanic foods for Hispanic and Anglo holidays.

American-style stores that sell a large variety of Hispanic products are patronized by 45% of Hispanics, 26% shop at American-style stores that sell a few Hispanic products, 14% at Hispanic supermarkets, 9% at neighborhood stores and 2% someplace else. Fifty-six percent prefer Hispanic products located in one area of the supermarket, 22% like them displayed throughout the store and 21% have no preference. Eight in 10 are willing to pay more for quality products. More than eight in 10 read English language supermarket ads; 73% listen to Spanish language radio; 65% watch food ads on Spanish language television; 57% buy products advertised on Spanish language TV and 47% read Spanish language supermarket ads. The whole study will offer a lot of insight into this growing segment.

SN: How was your Show & Sell Center, with its emphasis on selling the whole store, received last year? Will it differ this year?

CHRISTISON: The response to last year's Selling the Whole Store concept was so positive that we're doing it again with a focus on different departments, age groups and tastes. Retailers loved the executable ideas they saw and especially appreciated the companion Show & Sell Center resource book that we gave away free last year. The book included detailed drawings of the cases, planograms, product layout, signage, menus and tip sheets. Retailers were able to photograph and videotape the displays and then also use the Resource Book as a blueprint to re-create things when they got home. First of all, they couldn't believe we'd put the book together for that purpose and then they couldn't believe it was free. We'll do that again this year.

We have new Show & Sell departments this year but we're still using our trademarked "Regional Flavorites" concept to focus on a different area of the country. Some of our themes are Caliente (hot and spicy); Mi Queso, Su Queso; Singled Out -- Party of One; Serv'n USA (California cuisine); Wonton Mountain; Juice Bar; Soup it Up, Junkyard Food; Puffed Stuff; Breakfast on the Beach; Rise 'n' Dine; No-Ge-Mo (nongenetically modified); Enchanted Eatings (South Pacific/Oriental); Fresh 'N' Natural and Kid Stuff.

SN: What retailers will be involved in operating Show & Sell?

CHRISTISON: These fun ideas came from an incredibly talented team of retailers from Supervalu, Dorothy Lane Markets, D & W Foods, Randall's/Tom Thumb, and Fred Meyer. They've put in many, many planning hours and will show up in Anaheim Thursday before the show opens on Sunday to put everything together.

SN: Speaking of selling the whole store, from your observations, what is the state of cross-department cooperation in the industry these days?

CHRISTISON: Sad to say, it's not what we'd like it to be -- but it is getting better. When the corporate culture sets up artificial internal boundaries, it makes it difficult to remember that the goal is to satisfy the customer's needs and to fill the basket. If a department manager looks at only his or her operation and those profit margins and not how the whole store is doing, it creates natural conflict. The message must come from the top. No where else can it be changed or mandated.

SN: On another subject, what can be done about the worsening labor shortage? I know you have a CD-Rom training program for deli and bakery and I know retailers who are using it, but do you have any ideas on recruiting people to work in those departments?

CHRISTISON: We have great new training programs but it's true they only help when you've actually found someone to train. In fact, several of the topics at Dairy-Deli-Bake 2000 will deal with these very issues and offer insight into recruitment and retention. We've invited Wal-Mart to come and talk about their successful programs. Is there a quick fix? No. But there are a lot of tools being tested and borrowed from other industries.

There are retailers who do it right and who have minimized turnover. One recent study showed that the cost of turnover was greater than the total profit for supermarket retailing. That's pretty sad.

The retailers who are successful have built a corporate culture that says, "This is a great place to work. We like you. We respect you. We'll help you grow. And what's more, we have fun." I've been in those stores and it's a great feeling. But again, this is a top-down commitment that not only pays lip service to employees being their greatest asset but actually practices it. If your business feels good to your customers, you won't have any problem finding people who will be proud to work for you.

SN: Now that we're in the new millennium, technology is in the forefront; everybody, it seems, has a Web site. How is it impacting the supermarket business, especially fresh foods?

CHRISTISON: I wish everybody did have a Web site. Many do, but a great many don't even have e-mail and won't for some time to come, if ever. I believe that having a Web site is the price of admission to doing business in today's economy. It's not necessarily synonymous with selling to consumers on the Internet but it is a necessary part of the dual business plan for success. Those who choose business-to-consumer Web sites will find that it's just another way of reaching a segment of customers.

Even if only 3% of your customer base chooses to buy your product on the Internet, that's 3% you can't afford to lose. And that doesn't even touch on the business-to-business aspects of electronic data interchange, ordering, inventory, electronic benefits transfer, etc. And then there's the competitive angle. Right or wrong, if your competition, your customers and your suppliers are doing business on the Internet, you must have a presence. Or you won't have that relationship -- or your business -- for very long.

SN: How will e-commerce specifically affect the dairy, deli and bakery departments?

CHRISTISON: The early impact will deal more with sourcing and ordering product than with consumer-direct applications. That's only because shipping perishables is still pretty risky, and most delivery systems are limited in their application. However, if you look at the hundreds of millions of dollars that are being invested in e-commerce for the food industry you can't help but see that a lot of very successful companies are banking on the future. Currently, there are many major on-line buying networks that connect sellers and buyers of all sizes and all product categories. Most of them are dealing with categories that are source-coded with UPC numbers. The perishable departments are the next big category to tap into those opportunities and unite the industry.

In preparation for this interview, I placed my first on-line order with a major Internet grocer. Now, you need to realize that I was an early adopter when it came to the Internet and have been on-line for many, many years. I'd just never chosen to order groceries that way. I prefer squeezing the tomatoes and sniffing the melons to see if they're ripe. I like to see what I'm getting. Anyway, just for you, I placed an order and it was an OK experience. Parts of it were fine (logging on, setting up an account) but parts of it were downright annoying.

One of the bannered feature items was called Cow in the Cupboard. Sounded like a neat item so I "clicked" on it. Instead of pulling up the info. or putting it in my shopping basket, it put me back to the main menu. I tried again. This time it put me in the grocery aisle. I made five tries before I ever got to the right item and, remember, this was a featured special. I forgot to click quantity on one of the items I ordered. It showed up on my verification as "0" quantity. I tried to go back in and correct it, but my options were "cancel order" or "place new order." So I just left it as "0" ordered.

It took me about 30 minutes to find and order 7 items. Too long in my book, but I'm sure the process will get easier. The order arrived a day before [it was] promised. I checked the price at my local store and two ordered items cost fifty cents more, one item was ten cents less, and the others were "club" sizes and not carried. Add the $5.99 shipping charge and I didn't save money -- the total cost was about $7 more than if I drove to the store. I didn't have fun. I might have saved a little time. It's that time thing that will entice me to try again. Delivery to my door is very tempting and price isn't an issue when I want convenience.

SN: You've said your IDDBA Web site gets an extraordinary number of hits. What are most of those concerning?

CHRISTISON: We're averaging between 95,000 and 100,000 hits a month. Our publications (we have five newsletters), research, educational programs, member and exhibitor lists, and JOBS section get the most visitors. We recently added both the deli and the bakery UPC lists to our Web site. Visitors can print the numbers for free (vs. purchasing the books and disks). This is driving adoption of the use of standardized codes. We're also having dialogue with information providers such as IRI and Nielsen to determine what we as an industry can do to promote the standardization and use of these numbers.

SN: There's a lot of emphasis on ready-to-cook recently. How will that affect the deli department?

CHRISTISON: Ready-to-cook is one more great example of selling the whole store. When value-added, cook-and-eat products make it to the dining table, it means a bigger ring at the front end. You have the entree and you have the veggies, salads, sides, breads, wine, flowers, candles, dessert and maybe some new cooking utensils from housewares. Creating a meal is creating an experience. Sometimes, all you want is speed and convenience, but other times you need to create a mood or a feeling of the family coming together. Time is still a factor, but a lot less so when all you have to do is cook or assemble dinner and the directions or other meal suggestions are included.

I think consumers are getting to the point where they want to revisit family dining as a way of reconnecting with the family. It can only mean good things for the deli and all other departments. Supermarkets have been struggling with how to create a meal identity since HMR grabbed us by the nose. It's still there, but it just has a different name.

SN: From your observations of the industry, what's the status of, and what are the opportunities for, private label in dairy, deli and bakery?

CHRISTISON: These are all growing segments. Whether you call them private label or store brand, they appeal to a certain segment of customer. They also appeal to the retailer who gets about a 34% gross margin vs. 24% for branded. Consumers like it because they save money and believe that the private label or store brand is the same quality or better than branded. They're smart, too. They know that branded manufacturers often provide the same product under a different label.

Private label used to look generic. The packaging and labels have gone upscale and compete with national brands. The packaging wouldn't have helped if the quality hadn't increased as well. The name of the game is enhancing value.

SN: As mergers continue to create retail giants, what's the future for the little guy?

CHRISTISON: I think the little guy is perfectly poised to stake out a claim to a big piece of the pie. The very size of the giants will make it difficult to be all things to all people. There are many, many consumers who want specialty or niche products that have been customized to their tastes. The operators who identify and fill these needs will do very well. The key to their success, if not their very existence, will be focus -- they have to understand their customer base and focus on what has made them successful in the past.

SN: What have your members this year told you they want from IDDBA?

CHRISTISON: In terms of what our members want, we actually ran 10 focus groups this winter and asked just that. Two of the many projects to come out of those focus groups are our new Bakery Basics CD Rom (for new hires) and the new "Sell More" video training series. The retailers told us they really needed short, punchy, learning segments that would teach specific topics or skills. We've identified eight topics and are producing 10-minute video capsules to teach employees. The retailers wanted something that was intense in terms of learning content and short in terms of time. The reality is that training time must be grabbed in snatches and this format was an effective way of using a coffee break or team meeting to teach a topic. We're looking at food safety, sanitation, suggestive selling, product knowledge, meat, cheese and bakery basics. The retailers who have reviewed the concept like it.

SN: Are you implementing any new strategies to get input from members?

CHRISTISON: Our Web site has a "Talk to us" e-mail response feature that has generated a lot of communication from members and nonmembers. In fact, many of the changes that we make on our Web site come from member suggestions and requests. An example: We added a "what's new" button to our home page so that repeat visitors could see what's been added since their last visit without having to look at every section. There's so much info on there that looking at everything to find "what's new" would be cumbersome.

SN: What, in your opinion, is the most important thing IDDBA has done for its members in the past year? And what's the biggest challenge ahead?

CHRISTISON: The most important thing we have done is to expand our Web site to include all of our five newsletters, to update the site on an almost daily basis and to publish information that usually requires a fee. And it's not just for our members since everyone can access the Internet. It's hard to pick just one thing because we're like the supermarket; many departments serve our customers and make up the whole organization. Our training programs and original research have been very important.

SN: How many exhibitors do you have at Dairy-Deli-Bake this year? What's your projection, based on preregistration, for attendance?

CHRISTISON: This is another record year for us, with more than 475 exhibiting companies in more than 1,000 booths. In fact, at this very minute, there are 30 companies on our waiting list for exhibit space. In terms of attendance, our biggest problem is finding the time to get everyone entered into our computer system. We've had to add on extra staff just to handle the volume. We're looking for 6,500 to 7,000 attendees. I wouldn't be a bit surprised if it went over that number.