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By Don Longo
NEW YORK -- Restraint is the new consumer mantra even as the worst of the recession seems to be over, according to Nielsen CEO David Calhoun, one of several speakers on the last day of this year’s World Food Summit held here in New York.
Calhoun noted consumers still fear about their future employment, but the "free fall is over." He noted—based on The Nielsen Co.’s vast array of research capabilities—the eventual rebound in the national economy will most likely depend on whether consumers fundamentally change their behavior. "Will they continue to save more and pay down debt? How will that effect discretionary spending?" he asked.
Noting the growth of private label or store brands, Calhoun observed that retailer brands will continue to gain at the expense of secondary and smaller brands. "U.S. retailers are still in catch up mode toward world class brand strength," said Calhoun, who added retailers’ move into store brands is "not a zero-sum game. It’s a partnership to fulfill consumer needs."
He also noted marketers will explore new ways to engage consumers—reaching across all three "screens"—the television, computer and mobile phones. "It doesn’t matter which one [TV, computer or phone] wins. It’s how you use them together," said Calhoun, who added a growing number of consumers are using more than one device at the same time, according to research from The Nielsen Co., which is the parent company of Convenience Store News. "Discreet ROI (return-on-investment) metrics won’t matter in the future. Holistic ROI matters when ads are running in multiple media," he noted.
Calhoun also discussed the enormous power of social communities on the Internet—particularly Facebook—and added most of the growth in users is coming from older consumers.
The Nielsen CEO urged attendees to consider the opportunities of the moment. "The really big share shifts happen in these points in time."
Earlier in the morning, Justin King, CEO of J. Sainsbury, the large U.K.-based supermarket and convenience store chain, discussed the 140-year-old retail institution and why it is important in difficult times to look back at the strengths—and the "DNA"—of the business for clues on how to service customers better.
King pointed out research showing one-third of consumers won’t change their behavior at all, despite the slumping economy. He also took the opportunity to blow up three "myths" about consumer expectations during a recession.
-- Myth No. 1: Consumers downtrade. "Our sales are up 50 percent in basics; but they’re up 300 percent at the high-end."
-- Myth No. 2: Consumer revert to selfish behavior. "For our customers, ethical food is still a very important factor in their buying decisions."
-- Myth No. 3: The middle erodes. "Consumers are in the middle most of the time. It’s all about execution. Middle-market retailers (like J. Sainsbury) are positioned well for the downturn."
Jean-Jacque Lebel, president of consumer products for France’s L’Oreal, the huge international cosmetics company, talked about the "irresistible and universal quest for beauty and well-being," and how this consumer need has buttressed cosmetics sales throughout the worldwide recession.
Other speakers on the closing day included Marjorie Yang, chairman of Esquel Group, the China-based shirt maker; Marion Nestle, an author, academic and food industry critic; and Lee Scott, former CEO of Walmart, the world’s largest retailer.
Nestle garnered surprising agreement from several retailers on her criticisms of the food industry’s contribution to obesity and poor nutrition.
Highlights from day two of the Summit included:
-- Gregory R. Page, chairman and CEO of Cargill, and Brenda Barnes, chairman and CEO, Sara Lee Corp., and Irene Rosenfeld, chairman and CEO, Kraft Foods, pledged their support for the Global Food Safety Initiative (GFSI). Speaking during a panel discussion, Page criticized the proliferation of proprietary standards and schemes. "GFSI is the simplest way to eliminate the unnecessary uniqueness [of schemes] that do not do anything except complicate and add cost."
Harmonization of standards is needed to strip cost from the supply chain and free resources for prevention and remediation, the panel agreed.
-- William V. Hickey, president and CEO, Sealed Air Corp., urged for agility and an end to inertia in combating food waste. "Food has never been more in abundance. But if there is enough food, why do one in seven people go hungry? I believe we can feed all of the world's hungry people without cutting down another rainforest. The issue is not how much food we produce but how much we waste." Some 40 percent of food produced globally is never eaten. Food is wasted at each stage in the supply chain: either damaged during production; or oversupplied, spoiled or poorly stored at the retailer; or not eaten in time by the consumer, sometimes due to excessive portion sizes, sometimes through poor storage.
-- Antonio Coto, CEO, DIA Latin America, said the key to winning in a downturn was getting the team on your side: "Don’t make them more nervous than they already are. Be convinced about your victory." During Argentina's economic crisis at the beginning of the century, instead of laying off staff, Dia raised salaries.
The move may seem contrary in a climate where stores were being looted, but Coto insisted teams must be motivated. "You have to let them know they're on a winning team."
International Retail Thought Leaders Meet in New York