Retail tide turning

A retailing panel at the Solae Executive Conference urged poultry companies to get involved with customers.

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April, 2006- Making customers more profitable is the path to success for poultry companies, a panel of four food retailing industry gurus told a crowd at the Solae Company’s 13th Annual Executive Poultry Conference. The panel, moderated by the National Chicken Council’s Bill Roenigk, advised poultry executives to get involved and help retailers differentiate themselves in a changing and difficult marketplace.

Todd Hale, vice president, Consumer Insights, ACNielsen, told poultry executives in attendance that the continuing changes in retail grocery formats represent opportunities for poultry marketers. As “value retailing” wins in the marketplace, new opportunities are being created for poultry suppliers willing to help retailers adjust their programs and products, Hale said. He identified an aging population and health issues as two promising areas ripe for solution development. Hale chided poultry marketers for not aggressively seizing opportunities presented during the “low carb” diet phenomenon. “Meat manufacturers missed opportunities presented by the ‘low carb’ diet fad. You need to grab onto opportunities like that, whether or not they are a fad,” he said.

Art Turlock, president, Art Turlock & Associates, told poultry executives that taking cost out of the channel is becoming less relevant today than in the past. Retailers are putting more emphasis on sales growth and market differentiation over cost reduction. “Sales growth will be as important or more important to bottom-line profitability as cost reduction three years from now,” he told listeners. Turlock cited survey results showing 72 percent of retail executives saying the need for business reinvention is critical to their success—tactical adjustments are not enough.

Retailers say that suppliers—poultry companies included—are not effectively collaborating with them in growing sales and developing new business models, according to Turlock. While suppliers get high marks in order accuracy and new product development and introductions, key areas of dissatisfaction include promotion design and execution, as well as customer insight development.

Turlock suggested three potential areas of collaboration for poultry companies and retailers—in-store marketing and merchandising; development of products that address a growing tide of chronic illness among American consumers; and new solutions for enhancing food safety. Saying that cooking is a lost art, companies need to get poultry included in in-store demonstrations and merchandising, he said. Also, with chronic illness now representing a mainstream market, poultry marketers need to emphasize chicken’s healthy attributes, he added.

Paul Weitzel, vice president, Willard Bishop Consulting, said that more and more food retailers want suppliers to talk with them about their shoppers. “Getting closer to your customers is critical to your future success,” he advised the poultry executives. “Retailers need to understand where they are strong or weak, and where your products fit in with helping them differentiate their stores. Supermarkets are caught in an undifferentiated middle ground, and they want your help in addressing this challenge,” he told listeners.

Noting that fresh poultry ranks seven among 256 categories in contribution to cash flow in the retail grocery store, Weitzel encouraged the poultry executives to be willing to engage retailers in dialogue about poultry’s role in defining and creating value in their stores.

Tom Demott, COO, Encore Associates, congratulated poultry companies for their diverse footprint in retail stores. Poultry appears in more departments and in a broader variety of forms than either beef or pork. Saying that further market segmentation opportunities exist for poultry, he encouraged marketers to consider vegetable-fed chicken, organic chicken and air-chilled chicken.

“Vegetable-fed chicken is the next logical step from current branded commodity products without going organic,” DeMott said. “The product is more affordable than organic chicken and has already proved successful in the marketplace.”

DeMott told the poultry suppliers, “Retailers must change and are changing, and your companies can play a role in that change. Be thought leaders. Be willing and able to work to develop products and strategies that help differentiate your companies and your customers.”

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