ONCE AGAIN, THE WORLD CHANGES IN UNPREDICTABLE WAYS

David Merrefield

For the second time in 18 months, world events are so portentous that it seems nearly churlish to even think about happenings in the small cosmos of the food-distribution industry.

The first time, of course, was the tragedy of Sept. 11. Now, as of this writing, initial salvos have been fired in the U.S. military campaign against Baghdad.

There is utterly no way to even imagine what that campaign may set in motion and how it will change our lives and change the industry. But it's true enough that the food-distribution industry doesn't sit in isolation.

To the contrary, it's involved more fully in the economy and is more beholden to consumers' propensity to spend, or not, than many others. At best, it seems that some form of challenge will be presented to the industry simply because of the distraction to ordinary life it will present. To those of us in midtown Manhattan, the evidence of distraction is far too apparent.

Life has taken on a different hue if only because of the presence of a large and heavily armed police force arrayed everywhere. They're on foot, in cars, on scooters and on horseback. Not far away, New York harbor is host to a flotilla of Naval and Coast Guard vessels. No doubt Washington and other key cities in the nation look much the same.

Nonetheless, a quick analysis of the industry's mood shows there's hope that if conflict is successfully and quickly prosecuted, not too much economic damage to the industry will be done. Indeed, some predict that consumer spending will quickly rebound, or even increase, as soon as hostilities are concluded or stabilized. Some companies, though, will experience added costs owing to security considerations. See Page 1.

And there's evidence that the move to action, and the conclusion of the six months of runup to this moment, can give the economy something of a boost. One straw in the wind is the several-day-long lift seen on Wall Street last week and earlier. It was the longest-sustained winning period in nearly three years.

So let's hope that events play out like that, and it will develop that other issues that have arisen in recent weeks will be the most important ones with which we must deal. As good a summary of those challenges as any was offered by Unified Western Grocers' Al Plamann at that company's annual meeting March 11.

The industry now faces "increased government scrutiny of the industry's financial dealings and disclosures, accounting procedures, executive-compensation policies, corporate governance and trade practices." See Page 10. And it's true that as we enter the current reporting season, food-distribution companies increasingly are likely to make some statement about recognition of allowances.

Such statements have been heard in recent days from Unified, Kroger and Albertsons. There's nothing unique about those companies. It's just that they happened to issue numbers recently.

As Al pointed out, these matters are less about individual companies and more about the regulatory events that will be left in their wake. Let's hope the days when such considerations were paramount quickly return.