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A turn for the industry: Tony de Angeli at the IGD Convention.

IF you choose the title "The Winds of Change" for a conference you run two risks: you will have to put up with a few references to backed beans, particularly when they are on sale at 4p a can, and more dangerously, there is a possiblity that such a cliche will attract a series of equally cliched presentations with little more than wind.

So to the bad news first. Miss Sue Lawley, the elegant TV presenter with the ice-cool manner, who manages to convey constant detachment with keen interest, could not resist the tempation.

While introducing the subject matter to 410 top executives at the IGD conference in London on Tuesday she broke out with the nudge-nudge joke that many hoped would be silent -- including the 4p-a-can reference. That apart, her introduction was crisp and to the point, with promises on behalf of the speakers which they now had to fulfil. Would they?

Sir Alistair Grant, IGD president, and the big wheel at Argyll was, as always, urbane and to the point. Like Mlle Lawley, he set the scene, emphasising the influence the IGD now wields, and its ever increasing coverage of the industry's expanding interests. He generously alluded to Sir Ian MacLaurin, who, when president, launched the IGD Policy Issue Council which is dealing with packaging, openability, the aged, waste management... a sort of conscience that every industry should be displaying and doing something about.

And so to the first speaker: David Reid, Tesco finance director. His subject was Financial Performance in the Changing Market.

The problem was that he did not want the notional tables and figures in the presentation to be reported for fear that once in the public domain through the Trade Press, they might fall into the hands of anti-supermarket lobbyists, who would twist them in some way. His secrets will be hopefully kept by the 400 delegates, but it must be said the presentation merited reporting. He detailed the birth, growth and plateauing of the superstore industry -- and gave the reasons, costs, margins and return on capital, from the 1980s to the present. Good news so far.

Next came Cees H van der Hoeven, the CEO of Royal Ahold, the [pound]10 million retail conglomerate based in Holland which gets half its volume from the US. The new challenges he described could not have been new to the audience... competition, growth of discounters, sales pressures, more private label, need for innovation, and dozens more.

There were sighs of encouragement from the predominantly supplier audience when he swore (well, almost) that Ahold did not intend to squeeze out suppliers. He did say "squeeze out", but it was obvious that "squeezing" was permissible in the normal cut and thrust of negotiation.

As a checklist of what you have to do it was good text book stuff, worth a listen, a read and a study. One surprise was the Ahold policy to build supermarkets with a five year life -- then pull 'em down and start again. It's cheaper and you can keep up with the times. Another mild shock was the degree of decentralisation. He has 125,000 employees. "We have 80 people in our central office, and there are only four executive layers between me and a supermarket manager!"

After coffee came the David-in-the-Lawley-den routine that many of us had been anticipating in much the same spirit that car racing buffs go to a Grand Prix never wanting to see a crash.

But before the confrontation David Sainsbury, JS chairman, was allowed 15 minutes on his own to give us his views on Food Retailing in the New World.

Instead of the usual sucking up to the consumer, which so many speakers (not on Tuesday!) believe can replace imagination, good guesswork and testing the potential, young David came out straight. "Customers are notoriously lacking in foresight." And he rammed it home. "Ten or 15 years ago, how many people were asking for cellular telephones, fax machines, copiers at home, or hand held global satellite positioning receivers?"

Not many of us knew about this last mentioned gadget, but the three others made the point, which was that operators have to understand technology, demograpohics, lifestyles, trends and so on to get it right for the punters.

Then came the history lesson about social change. Others might have bored us. He didn't. There was a surprise -- in fact two. Could a Sainsbury ever get it wrong, or admit it? At the risk of lese-majesty, such behaviour is not what we are used to. But let me quote him exactly.

"I believe that the major retailers allowed the pendulum to swing too far in two areas. In the race to open up edge-of town-supermarkets which could respond to the needs of the carborne shopper, they closed a number of their older out-of-date stores in town centres.

"We were perhaps too mesmerised by the efficiency and popularity of edge-of-town supermarkets, and forgot that there will always be some business which will be located in town centres. The market did, however, work extremely effectively and a number of chains, including the discounters, moved in to fill the gap that we had left.

"We are now taking a different view about the closure of town centre stores, believing that by remodelling and refurbishing these stores we can give them a new lease of life. We also believe that as an industry we should seek to locate more of our stores near high streets while making certain that they have good car parking."

But that was not all. How about the discounters? "The major food retailers in the eighties concentrated heavily on meeting the demands of customers for convenience, service and quality, and in so doing we allowed the prices on some basic commodities to drift upwards, and this proved an opportunity for discounters to undercut us.

"In the last year we have taken action to return to what has always been the historical position where the gross profit on basic commodities is very small because the costs of selling them is very low."

Honest stuff. And now to the piste where La Lawley would pierce him with eyes and rapier questions. The thrusts came quickly. "Why did you allow the discounters the room they needed?" "Why aren't you in Europe?" "Are you not devastating the environment?" "When will City confidence return to the supermarket sector?" Plus a series of accusations about the JS Classic Coca-Cola look-alike. But young David, like his biblical predecessor certainly has quick feet. Yes, they were complacent in the eighties but the public would always want to do the big shop by car. Retailers were responding to their needs. Why should they go past Calais? There was no rule about it, especially when the better opportunities were in America. The City was getting a clearer view on price pressures, which was a short-term problem.

He suffered a minor scratch in the Coca-Cola session, but considering the evidence (the two cans really are alike and JS has changed its Classic version) his ripostes were adroit. If there is a dispute "we will always talk". There was no customer confusion. Of course Coca-Cola was upset about a high quality cola in competition. Customers wouldn't buy it again and again if they didn't like it. Many brand packs are similar in shape, colour, taste etc.

After the bout, he left. He wasn't even sweating lightly, after a professional and entertaining performance. To be fair, our Sue wasn't perspiring either.

By this time we needed a change of pace, and we got it. Sir Michael Perry CBE, the chairman of Unilever, must be the nearest man to God in the industry. And he didn't let us down. His thesis on what makes a brand -- and how it must be exploited to mutual benefit by both manufacturer and retailer -- was a lesson in the use of the English language and logic. His piece will be cut up and quoted extensively without attribution by marketing men everywhere. What greater compliment is there than having one's work copied? (Coca-Cola please note.)

So to lunch, which was not up to the standard of the morning's work. A tasteless fruit cocktail, salmon in soggy breadcrumbs, disgusting peas, overcooked potatoes. Why shouldn't we complain now and again?

The new Agriculture Minister, William Waldegrave, was on first. Now there's a man with a good wit, an easy, likeable manner, who proved it with a lengthy story about a conference in Italy. Pity he had to revert to the script about "The Food Chain". He proved that he could be good company. But there was little new. Perhaps next time?

The Somerfield address (remember Gateway?) came from David Simons, chief executive. The IGD certainly got his title right... The Role of Customers in Turning Round Companies. And he didn't shirk it. He took delight in explaining just how bloody awful things had got... "Our sales were heading off the cliff... we rolled over and played dead... we had no goals... we had been written off." They didn't even fight competitors' planning applications.

And then, Ta Ra, Ta Ra, Ta Ra, the new team came and they set about identifying problems by asking customers' opinions. But the company also took some precautions "by initiating changes in virtually every aspect of the business: systems, productivity, central overheads, attitude and behaviour."

Hygiene was lousy, f&v poor, freshness mediocre, bread range miserly... etc.

All these observations came from customer research, and we heard the percentage numbers. They took the necessary action and now the numbers are brighter and constantly improving. The research also showed customers want successful high streets.

This was a good piece in spite of admissions that are always retrospective and only made after improvements. But he left us with the feeling we should wish the company well because it was doing the right things.

Colin Smith, the Argyll chief executive, also conveyed some self criticism. His demands were long... he wants more answers about customers' motives, about price, range, distance travelled, convenience, reasons for store choice, perceptions... He even wants to know when choosing a pound of carrots is the alternative "higher quality ones, a pound of peas or something altogether different?"

Of course his theme was the essential need to develop information systems, databases etc. He's not happy about the understanding of product performance. In fact he's not very happy at all, and that is what made his address so refreshing. No smugness here.

And certainly none from the last speaker, dressed in light brown boots, jeans and loose shirt. Allan Leighton, ASDA's retail director, spent 30 minutes entertaining us with the account of the roguish, quirky, highly successful US South West Airlines which believes in simple objectives; getting lots of people on planes quickly, using just one sort of aircraft (mechanics, pilots don't need much training!), turning them round in 15 minutes (average 50 minutes elsewhere), not losing luggage, and low, low prices.

Another magic ingredient is FUN! Stewardesses hide in the luggage lockers (Peeka Boo!), sing-songs accompany the safety instructions, everyone is dedicated -- and it's the most profitable airline in the States.

What's that got to do with ASDA? Well, like me and millions of others, Leighton thinks shopping is boring. And company attitudes -- within and without -- are often soulless and pathetic. The former Mars man is introducing fun and understanding.

Recruitment drives are "auditions"; the in-store security guards are now "greeters"; there are Tannoy Stars who amuse and interest customers with instore offers and messages ("Why not do it well")... and here's a novelty: he says supermarkets have fast checkouts for the people who spend least. "What sort of incentive is that? You only get good service if you spend next to nothing! We have checkouts for Big Spenders -- with full trolleys. We give them extra packers and the chance to win prizes..."

It was an unusual way to end a conference, to hear an executive who is changing the culture of a company. It was also a reflection on a worthwhile day that highlighted changes.

Compliments to the IGD executive, but not to chef.
COPYRIGHT 1994 William Reed Ltd.
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Copyright 1994 Gale, Cengage Learning. All rights reserved.

 
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Title Annotation:IGD conference
Publication:Grocer
Date:Oct 22, 1994
Words:2018
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