Business and Operations
2007: As Functional for Industry as for Food
By Barbara Lauer
By Barbara Lauer
I’ve always liked this time of year … and not just because of the approaching holidays and general outpouring of human kindness
I’ve always liked this time of year … and not just because of the approaching holidays and general outpouring of human kindness, but because of the building sense of anticipation of a new year. And the mysteries of what it holds for each and every one of us.
While I’m not a frequenter of Tarot-card readers, I do peruse every report on consumer or industry trends that comes across my desk or computer, trying to glean information and insights that I can pass along to you. In our globally competitive marketplace, every drop of market intelligence we can wring from various sources and pass along to you could mean a marketing inspiration that builds a deeper connection with your customers, a stronger loyalty for your product within your community.
This fall, we watched the entry of Wal-Mart into the retail supermarket segment – with its own on-site bakery. The new concept, already established and successful in the U.S., will be watched closely for its effect on Canadian food retailers, since grocery stores have been progressively losing market share in their core product category since 2000. The increased competition from non-traditional sources has undermined gross margins in the U.S. – something that could be repeated here all too easily, given the forecast for Canadian profit margins to remain stable, averaging 1.8 per cent. A report from Deloitte Canada noted that this is significantly less than the retail food industry’s average profit margins from the previous five years.
Though our average consumer often can’t tell you what they’ll be serving for dinner tonight (and this at mid-afternoon), some crystal ball gazers are predicting that if deconsolidation is to happen, food retailing will likely be the first industry where “small is beautiful.” The Hartman Group, pre-eminent North American consumer researchers, shared with us that there is new (almost extreme?) consumer fragmentation – to members within the family – so that we need to be quick, flexible and “real” to capture these customers who prefer to shop daily for “authentic” food experiences. Yes, we’ve moved beyond products to experiences, so we’re advised to learn to tell a story around what is baked and sold – it’ll bring back customers, who tell other friends in their social network. Soon enough, you won’t be worrying about the mass retailer who moved into your community, because you’ve built a loyal following all your own, willing to pay a premium price for your “authenticity.”
The increase in popularity of farmers’ markets, for instance, shows us that consumers enjoy the “simple,” “real” and “fresh” aspect that buying direct from growers gives them. Translate that into choosing baked goods, and whether they pick from the healthy spectrum of whole grains or something indulgent – it’s all part of their ideology of “balance” – if you deliver delicious baked goods that meet your customers’ wants and needs, small is not only beautiful, it’s a profitable future.
Whether you’re a David or a Goliath, consumers in 2007 will present their own challenges – fragmented, emotional, irrational – that will require focus, determination, follow-through and marketing savvy like never before. We haven’t stopped at consumer trends. Thanks to a contributor, we have an overview of trends from IBA 2006. Fast, fresh and good taste seem to be the pillars critical to success for European manufacturers – and from our contributors’ reviews, the proof was in the dough – baked to a perfect, healthy, natural loaf, of course.
Don’t miss our exploration of functional food – it will help you respond to your consumers in the year ahead. And speaking of January 2007 – we’re looking at “Tools of the Trade” – what’s your favourite? Let me know by e-mail: firstname.lastname@example.org.