Thought Leadership conference highlights industry insights

11/29/2011

Some 265 of the industry’s top leaders gathered at the Fairmont Royal York on Monday for Canadian Grocer’s 125th anniversary Thought Leadership Conference.

The sold-out event started with Alannah Virtanen, Nielsen’s lead consultant in the area of segmentation and ethnicity, who presented a snapshot of the emerging ethnic consumer.

Of Canada's population of 34 million, only five million today are visible minorities. However, within two decades, 14 million Canadians will be visible minorities. More staggering is that visible minorities will double their worth to $128 billion by 2020, up from $65 billion today.

“Seventy-two per cent of population growth will stem from visible minorities,” said Virtanen.

“Immigration is going Asian,” she added, with the highest proportion of growth coming from: South Asians, 3.6 million; Chinese, 2.7 million; and Blacks, 1.8 million. Virtanen said that on average, immigrants are a decade younger than the average Canadian. And while birth rates are low in Canada, visible minorities often buck that trend.

Income levels among visible minorities are lower, taking until the fourth generation for incomes to be on par with Canadians.

Virtanen pointed out to the attendees that they must include Alberta in any ethnic strategies as that province will grow its ethnic population the fastest and will eventually be more ethnic than Ontario and B.C. are today.

Media reach is quite varied among different ethnic groups. For example, francophones watch more TV and use the Internet less than Anglophones, while Chinese are light users of TV, radio and magazines but "off the chart" for Internet usage.

Next, Virtanen looked at the two biggest ethnic groups in Canada: South Asians and Chinese. While South Asians have many kids; the number of children Chinese have is below the Canadian average. South Asians are quite a varied group, speaking a combined 75 languages in Canada. Meanwhile, 15 per cent of Chinese can’t speak English or French.

Both groups are highly educated, however. Chinese represent nine per cent of all PhD holders in Canada.

When grocery shopping, Chinese and South Asians prefer finding the right price on brand-name items, buying 25 per cent more on promotion.

Shopping trips are family outings with three generations participating. They search primarily for assortment, brands and deals. Chinese shoppers prefer stores that offer a wide range of fruit and vegetables; good staff service, quick checkout lines; high-quality brands; and attractive promotions.

Interestingly, these shoppers are not looking for private label, which they often perceive negatively.

Next to speak was Heart and Stroke Foundation of Canada CEO David Sculthorpe. He spoke about the need to better the health of Canadians by improving their diets.

One attendee said afterwards that he felt like he had just undergone a physical, recognizing that his lifestyle choices make him a prime target for heart disease. The statistics Sculthorpe presented were sobering: heart disease and stroke will take one in three Canadians; heart disease and stroke causes more deaths in women each year than all cancers combined; Canadians collectively lose 250,000 years of life each year to these diseases.

But Sculthorpe said the risk factors behind heart disease and stroke are mostly controllable. “A staggering 80 per cent of premature heart disease and stroke are preventable,” he said. “Heart disease is essentially a lifestyle disease.”

About 30 per cent of our risk of heart disease and stroke can be attributed to what we eat. “What you eat determines what you get,” he said.

He urged the grocery industry to help reduce sodium levels in food since high blood pressure is the No. 1 risk factor for stroke. “Canadians consume more than 3,400 milligrams of salt each day–way above the recommended levels,  with 77 per cent of the sodium they consume coming from processed foods sold in grocery stores.”

By merely reducing daily salt intake by three quarters of a teaspoon, risks for stroke and heart disease could be greatly reduced.

Sculthorpe pointed to his organization's Health Check program, which has worked with food makers to remove “20 dump trucks of salt from foods” thanks to new product development and reformulation processes between 2004 and 2008. He praised Campbell for its sodium reduction strategy that has “been nothing short of remarkable.”

He urged companies to partner with Heart and Stroke to enhance brand reputation and promote health and wellness. “Our goal, and I’m talking to everyone in this room, is to convince Canadians that the healthy choice is the right choice.”

Next to present was Janine Keogh, vice-president of consumer insight & strategy at Kraft Canada.

She said that when we give our shoppers a gift they value, they become advocates for us.

“Any company can buy data and conduct research,” she said. “This is not where the advantage comes into play…It takes a creative skill set to turn this learning into stories.”

The goal, said Keogh, is to avoid having your shopper feel like they are being marketed to. She pointed to Kraft’s Hockeyville project that linked shoppers, the brand, and stores.

Keogh said that "a blurring" is taking place today between insights and marketing. As great examples, she pointed to Tesco’s virtual grocery store in the subway in South Korea; the app Shop Kick that rewards people for going into stores with “kickbucks”; Scan It mobile technology that allows shoppers to scan as they shop; Jatuso, which scans bar codes of the products out of your home; Carrefour's collaboration with brands, with the retailer renting out space to brands; and Makro’s cash and carry wholesale in the Philippines.

“There are lots of ways to gain shopper insight, lots of data sources and certainly innovation both within and outside the four walls of your store,” said Keogh.

She ended with a call to action of putting the shopper first.

The day concluded with a CEO panel discussion with Bill McEwan of Sobeys; Shelley Broader of Walmart; and Eric La Fleche of Metro.

The panelists were asked what they see as the main focus in the short term.

McEwan said there is a fair amount of focus on drives for efficiency. “What’s the world going to look like five or 10 years from now? There’s a solid need for cost efficiencies as we’re in the growth business. Intelligent innovation is something necessary to cut through the clutter,” he said.

Broader agreed that change is faster than ever and elaborated by saying that it used to be that “we would build it, consumers would buy it,” but now we’re no longer in charge. Innovation has to be around product, price, packaging and promotion, she said.

La Fleche said the grocery business is being challenged by a cautious consumer who is searching ever more for value, as well as industry square footage higher than before. “How to adapt and evolve and thrive in that context is the major challenge. It’s about differentiating, and innovating like hell. We have to be cost focused.” He said that costs need to be lowered and technology must play a factor in that.

When it comes to innovating, McEwan said that we can no longer afford to be “middle of the road–it’s where road kill is.” He said that consumers are looking for different experiences in stores, “something other than just price.”

Next, the panel talked about globalization, and Broader said that best practices really are worldwide and increasingly there is price transparency, with shoppers being able to download data and retail pricing on smartphones.

McEwan, a board member on the Consumer Goods Forum, said that in the last few years, global consumer packaged goods companies and retailers have come together to work on issues such as health and wellness, sustainability, and food safety across the entire supply chain. “It’s wise (in Canada) to attach ourselves to a global agenda,” he said.

La Fleche added that we’re competing with global retailers that create competition that is good for business.

Next, the panel discussed the movement in this time of globalization toward local products, or as Broader said, “mass customization.”

McEwan said that products that are regional need to be available to consumers. Through his international travels, he said he’s amazed at how local market connection always trumps this massive move toward globalization.



When it comes to health and wellness the panelists all agreed that it’s about providing choice to consumers. “We are not doctors,” said La Fleche. “Our role is to facilitate and help people make choices.” He said Metro does that through its good, better, best private-label range and added that labeling needs to be more accurate.

Broader said Canadian consumers care about health and wellness a great deal, and that as an industry we need to have a harmonious front when it comes to legislation.

McEwan added that going forward there needs to be co-operation of industry and transparency. “The new generation is demanding information daily,” said McEwan. “We’re not censoring health and wellness but instead providing choice.”

And in grocery, it’s about “innovate or die,” said Broader. “If you don’t reinvent one third of your store every year, you’ll be left behind.”

One way that Metro, Walmart and Sobeys are innovating is through private label. Broader said that early innovators like Loblaw taught consumers a lot about private label. “Private label is a way to differentiate ourselves and drive loyalty,” she said.

La Fleche added that Metro has grown its private-label sales and sees it as more value-added innovation.

Meanwhile, McEwan said that Sobeys looks at private label differently, and sees opportunities for regional and local brands in private label down the line.

Customers are king in grocery and Broader said they are facing economic pressures with disposable incomes decreasing and income levels shrinking. “Our job is to drive costs down, to pass savings to our consumers,” said Broader.

La Fleche said that for Metro’s customers it’s not all about price, as Metro's high-end product and organics sales are growing. “We're big believers in insight and data collection (with partner Dunnhumby), transferring data into action and learnings,” he said.

McEwan said that for Sobeys, it’s about understanding what different types of shoppers are looking for and using customer insights to cater to them. “Costs can’t continue to go down as much as prices are going up,” he said. We’re all working on it to crack the code on shopper insights and exchanging information with vendor partners.”

The next topic discussed was sustainability, with panelists agreeing it’s not only the right thing to do, it also makes good business sense. “We saved $140 million from sustainability,” said Broader.

Afterward, speaking about shopper insights, all three CEOs agreed that consumer research data is increasingly driving their decisions in-store.

Lastly, the panel was asked what keeps them up at night when it comes to their business. La Fleche said industry square footage is a big threat; while Broader said finding talent to work at Walmart keeps her up. McEwan added that for him it’s about how to create a winning environment. “We have a growing obligation to be more aware of engaging people.”

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