CHECKOUT 1996-05-06

JOHN KAROLEFSKI

The supermarket industry gathers in Chicago this week for the annual Food Marketing Institute convention. Beyond the official agenda of seminars and speeches, there's always a hot topic that everybody talks about. Most often, this subject takes the form of a threat to the grocery business. The hot topic for many years has been Wal-Mart. Everybody has always referred to this threat collectively as "other classes of trade," or "alternate trade channels." But it was Wal-Mart all along that everybody was worried about. Now that the threat has grown rapidly from nonfood categories (Wal-Mart, the traditional discounter) into the entire food business (Wal-Mart, the supercenter operator), the threat is bigger than ever. The grocery establishment responded to this with a well-planned initiative called Efficient Consumer Response. These business practices were designed to improve efficiency and lower prices. The result would have consumers shopping in supermarkets instead of in Wal-Mart stores, which always have the best prices. There's another hot topic this year -- Boston Market and its clones. The growth of these meals-to-go places is taking away "share of stomach" from supermarkets. The grocery establishment is countering this threat with something called "meal solutions." These new food options are designed to get consumers to continue to buy food in supermarkets instead of in the new trendy eateries. Wal-Mart and Boston Market are the wrong hot topics for this year's FMI convention. The right one is trade relations. According to a new survey, some brand marketers are being asked to pay for the privilege of being captain of a category management "partnership" (see story on Page 1). There's more. In November, Brand Marketing's parent publication, Supermarket News, published the results of a survey of retail marketing executives. When asked to rate the importance of a dozen topics to their everyday business, they listed "obtaining manufacturer allowances" as the most important. What's going on here? Hasn't the grocery industry been there and done that? Let's hope that "category captains for sale" is not as widespread a practice as cynics would like to believe. Let's hope that there's more to retail marketing than an outstretched palm. At its shining best, a trade partnership results in the ECR advances of a Kraft Foods (see story on Page 38) and the bold new strategy of a Ralston Purina (see story on Page 26). But there's a dark side to trade relations that won't go away. It has nothing to do with stomach share. It has everything to do with stomach ache.

John Karolefski is editor of Brand Marketing. Comments? E-mail: [email protected].