Global retail trends and retailer strategies which will impact on the future of food and drink retailing are the focus of a two-day global Leadership Summit being hosted by Bord Bia from today (Monday, 19th May). Speakers at the Summit include senior directors from global market leaders including US retail giant Costco, the 8th largest retailer in the world; brand leader Procter & Gamble and internationally renowned retail thought leaders, RetailNet Group USA.
“One of the big challenges facing leaders in the Irish food and drink industry is forecasting the future strategies of their key clients – retailers” according to Dan Browne, Chairman, Bord Bia. “Building successful retail relationships will be critical to the future development of Ireland’s €8.6 billion export business.” Mr Browne went to state that “over the past number of years retailers have re-invented themselves from being traditional merchants to sophisticated brand owners. The Summit sets out to provide new insights to interpret the future strategies of the industry’s major customers.”
Speakers at the Summit identified a number of pre-requisites for sustainable future growth for global retailers, which manufacturers need to embrace to secure their own future. These include:
- Format Innovation and Shopper Experience: understanding consumer trends, changing lifestyles and adapting the shopper experience accordingly. Costco sold $75.6m worth of hot dog and soda combinations in 2007 – its foodservice offering is currently valued at $1bn per annum, with a 30% year on year growth
- Brand Control: retailers moving from housing a number of brands to becoming a brand themselves
- Services Innovation: broadening service range beyond packaged goods to include banking, insurance, telephone operators etc. Costco sold 2.6m pairs of glasses in 2007 and filled 28.9m prescriptions
- Global Development: successful retailers are driving these strategies into the global marketplace which affects the opportunities of manufacturers. Costco has 26% of its 534 stores outside the US and source produce from 28 countries worldwide
- Emerging Strategies: retailers and manufacturers need to be at the cutting edge of technology to target audiences increasingly immune to traditional marketing methods. Costco.com sales are currently valued at $1.24 billion, up from $76 million in 2001
- Environment: Climate change and the sustainability agenda are driving retail strategies towards more involvement in packaging and shipping; fair trade programmes; organic offerings and natural ingredients
Aidan Cotter, Chief Executive, Bord Bia commented “The challenge for the Irish food and drink industry in this changing environment, and one which it is well positioned to meet, will be to demonstrate the sustainability of its supply chain. Similarly, recent Bord Bia research into alternative “food futures” points to a need to focus on the concept of personalised nutrition and the emergence of consumers as “discoverers” who will play an increased role in product design and the evolution of brands. “
The research, carried out by Innovaro on behalf of Bord Bia, enables Irish food and drink manufacturers to move beyond the short term business horizon and look to identify future growth opportunities. The research examined innovative solutions to market challenges within and outside the food and drink industry.
“The ageing of the global population and new “affluence classes” in the Far East are also set to mark the arrival of new market segments with new and less predictable behaviour and needs. Convenient, easy to eat formats, providing “real” food that goes “beyond the sandwich” will challenge food producers for the attention of the time-pressed but increasingly discerning and demanding consumer” he added.
Strong global food prices are set to benefit the Irish food and drink industry whose exports onto the world market last year reached €8.6 billion for the first time. As a net exporter of food, a sustained increase in world prices, and a positive outcome to world trade talks, would represent a net gain to the Irish economy and provide the industry with a new stimulus for future growth.