IGD’s centenary convention is now over. Delegates heard from eleven senior leaders from the UK grocery industry, with additional input from HRH The Prince Of Wales and Lord Coe.

The event was an opportunity to celebrate the achievements of the grocery industry over the last 100 years, which have transformed the lives – and the lifespans – of shoppers.

However, it was obvious that, in view of the challenges now facing the industry – and humanity as a whole – there is no time for complacency or self-congratulation.

Speakers came from a diverse collection of businesses but were all in agreement about the scale, urgency and nature of the task ahead. Clearly the next 100 years will be every bit as challenging as the last.

This article provides a brief summary of the points covered, along with some additional input from IGD.

Justin King, President, IGD

Summary:

Welcoming delegates to IGD’s Centenary Conference, Justin reflected on the astonishing progress which has been achieved by the grocery industry over the last 100 years, globally and – especially – in the UK. This progress was attributed to seven key factors:

• Science / technology
• Managerial / innovation
• Regulation / enforcement
• Investment
• Customer focus
• International trade / globalisation
• Leadership

There is, however, no time for self-congratulation or introspection; the industry - and humanity as a whole - is facing a new and daunting collection of problems, including:

• Weak economic growth
• Fiscal reform
• Nutrition
• Resource scarcity
• Climate change
• Population expansion

These were the challenges which were addressed by the other speakers and which will also provide the agenda for IGD for many years to come.

Think about this: Are you fully aware of everything which IGD can do to help you manage through change? What can your business offer to help solve common problems, perhaps working via IGD?

Joanne Denney-Finch, Chief Executive, IGD

Summary:

Echoing the words of Justin King, Joanne celebrated success whilst warning of future challenges.

She began by reminding delegates of the formidable challenges which are pending - fiscal, financial, environmental, resource security – these are, indeed, formidable.

On the positive side, however, the UK grocery industry is world class; the rest of the world sees UK grocery businesses as a leader, although its achievements are not always appreciated by the industry’s critics.

Turning to IGD’s unique and specially-commissioned shopper research, she highlighted clear differences in perceptions and priorities that remain between shoppers and business leaders.

For example, poverty and hunger were top priorities for shoppers, which business leaders participating in the pre-event poll highlighted the importance of global economic change, with poverty in fifth place.

The research also revealed that recent economic and political events have left shoppers in the UK seriously demoralised, with many reporting a lack of trust in institutions, a lack of confidence in the future and a feeling that they lack control over outcomes.

Not all are so pessimistic, however – a large minority were more hopeful and outward-looking and these will be in the vanguard of change, receptive to positive messages and likely to adopt new practices readily.

This is also the community which business leaders will need to appeal to within their own organisations: the ambitious, the ingenious and the progressive.

Looking ahead, shoppers anticipated that food prices in 2012 would be higher than at present, and that they would be likely to shop more carefully in response.

On the other hand, “careful shopping” does not necessarily imply “price obsessed” – shoppers emphasised that ethical issues would remain a key factor in shopping decisions. Some changes in shopping habit and – interestingly – dietary choices were also expected.

Pleasing shoppers is becoming harder over time, as shoppers consider a wide range of factors when choosing goods and services.

Encouragingly, however, it is clear that shoppers are increasingly considering the long term sustainability of their lifestyles and, at least in some cases, to take personal responsibility.

In this, at least, the aims of grocery businesses and grocery shoppers are converging – in grocery, success is about creating systems that deliver in the long-term as well as the short.

	Think about this: What is the state of morale within my own business? Are personnel well-informed regarding current challenges and do they have the skills required to overcome them? Is my company doing everything it can to publicise “good news” stories and to explain its activities to interested parties outside the grocery industry?

Paul Polman, Chief Executive Officer, Unilever

Summary:

Paul highlighted the role of government in creating an environment where businesses may prosper, emphasising the need to invest – as a nation – in education and R&D.

He described his attitude and management style as “optimistic realism”, combining a sense of urgency with simple, realistic plans. Volume and cash flow are protected at all times.

Credible long-term objectives are set, but these are pursued through a series of shorter-term projects with frequent updates and checks.

Commenting on his relationship with investors and city analysts, Paul emphasised the need to focus on long-term goals, without allowing short term interests and objectives to influence decisions unduly.

Finally, he explained the value of a wide brand portfolio in allowing manufacturers – and, presumably, retailers as well – to “play the price piano”, offering options at multiple price points.

	Think about this: Are the objectives of investors / business owners fully aligned with management? Do both share the same long term vision for the business? Does responsibility for sustainability run through your entire organisation, or does it remain the preserve of a few specialists?

Sir Terry Leahy, Chief Executive, Tesco

Summary:

Sir Terry was cautiously optimistic regarding the future, emphasising the view that the UK and global economies have now passed their nadir and that a return to growth now seems likely.

Future growth will, however, prove fitful and must be pursued in a responsible and sustainable fashion, which will place some limits on business freedom – do not expect a return to “normal” as we once knew it, expect a “new normal”.

This places still greater onus on businesses to continue pursuing long-term strategic objectives – especially sustainability and resource management - rather than being distracted by shorter-term “fire fighting”.

Continued investment and innovation is required – in fact, recession may be a powerful driver of business change. Some measure of entrepreneurial risk is acceptable, provided that it is clearly understood and carefully managed. The lessons of failure should be taken fully on board.

Sir Terry celebrated the grocery industry’s role as a driver of social progress. He stressed that there are many ways in which government might learn from businesses in terms of streamlining organisations and processes.

He also emphasised the need for the education system to provide workers that are fit to face future challenges (a point later taken up by Andy Clarke of Asda).

	Think about this: Is your business tapping into the revolutionary potential of the shopper? Is the shopper an active participant in the process of transitioning to a more sustainable way of life? Is your business living up to its responsibility to share the benefits of progress more widely, such as access to modern products, improved food experiences and lower prices?

Charles Wilson, Chief Executive, Booker

Summary:

Charles emphasised that marketplace “shock” events are not over and that businesses should anticipate further disruptive change originating from the economy, financial markets and the grocery industry itself.

Returning to a theme which he has discussed before, he noted that improved information, better communications and intense business pressures may cause healthy businesses to run into trouble more quickly than was once the case: the “cycle of distress” is accelerating.

Recovery is slow, but collapse can be startlingly quick. Businesses must therefore taker a long view and ensure that they have a coherent and realistic understanding of risk.

Charles also noted that even businesses that lead their field may still have much to learn from others – Booker’s recent foray into India has been valuable as much for the learnings which have been delivered as for the immediate financial return.

	Think about this: Staff are a business’s antennae, able to spot potential problems long before management. Are staff sufficiently informed and empowered to identify and deal with problems before they become disruptive?

Gwyn Burr, Customer Director, Sainsbury's

Summary:

As Customer Director, Gwyn noted that her company’s shoppers expect businesses to project a positive, energetic and “can-do” approach to any problem, whether economic or environmental. Staff expect the same from their managers.

Like Charles Wilson, Gwyn explored the importance of accurate, timely information and rapid decision-making. Agility and awareness are key competitive factors and are also essential is responding to external pressure on the industry.

In view of urgent sustainability pressures, the grocery industry must learn new means of interaction. Competition is, of course, essential as a means of delivering value to shoppers, but co-operation must occur in areas of public interest.

Grocery businesses should not imagine that consumers will pay a premium for ethics – they expect businesses to be ethical as a matter of course.

A clean bill of health on ethics is no different from a clean bill of health on hygiene – it is now a basic requirement, a “ticket to play”. Bigger businesses must take the lead and shoulder larger responsibilities.

	Think about this: What is your business doing to help the attention of shoppers, to reassure them of value and to meet their changing needs? Are your ranges and communications optimised to appeal to a stressed and nervous shopper? Are your ranges clearly “tiered”, allowing shoppers to buy at different price points without needing to switch to another retailer / supplier?

Andy Clarke, Chief Operating Officer, Asda

Summary:

Andy’s bold presentation built upon a theme explored by Rick Bendell at last year’s IGD Convention, the question of how grocery businesses interact with their host societies and the responsibilities that they must bear.

He highlighted the problems facing an entire generation of young people, many of whom feel socially and economically excluded, especially in less affluent areas.

This, he saw as a direct threat to the interests of retailers, since it implies low economic growth, shrinkage, poor staff performance and so on.

It is understandable that businesses may prefer to recruit older workers – who are often of high quality – but clearly this stores up problems for the future.

Andy called upon grocery businesses to lead by example, investing in young, socially excluded people in order to create a new generation of trained and ambitious employees.

	Think about this: Does your business suffer from a “skills gap”, with difficulty recruiting staff of the right calibre? If not, is such a gap likely to emerge later? Does your business offer a compelling blend of conditions, challenge, training and status, which make it competitive versus alternative employment?

Sebastian Coe, Chair, London 2012 Organising Commitee

Summary:

Describing his leadership of London’s successful bid to hold the 2012 Olympic Games, Lord Coe noted a sense, early in the project, that other cities may have held the upper hand - a novel and distinctive approach was needed.

This approach focused primarily upon developing sport as an inspiring endeavour for children and young people around the world and, of course, this proved to be the most compelling “story”.

Difference from rivals or from the accepted approach is not necessarily something to be feared, although the more unorthodox the approach the more carefully it must be thought through and communicated.

	Think about this: Does my business have a clear end goal or vision? Does it have a narrative, explaining how this will be achieved? More importantly, are the objective and the narrative credible and clearly communicated to all staff? Do they have “buy in”?

Peter Kendall, President, NFU

Summary:

As leader of a political body, Peter pressed the interests of his members, gently challenging delegates, especially those from the retail community.

He suggested that appointment of a Grocery Ombudsman was necessary as, in his view, major retailer had so far shown little enthusiasm for developing more equitable and transparent buying practices.

He also suggested that the need to greatly expand global food supply over years to come might mean that UK farmers will be in a much stronger negotiating position in future.

On the subject of EU reform, he called for redevelopment of the CAP which would tackle not only issues of trade liberalisation but which would also address gaps in scientific knowledge and give UK farmers the confidence to invest for the future.

On the other hand, he congratulated the delegates, especially retailers, on their support for British farmers through schemes such as the “Red Tractor”.

	Think about this: In an era of relative resource scarcity, will your business be able to obtain all the inputs required to maintain operations? Where is your next shipment coming from? And the one after that?

Peter Marks, Chief Executive, The Co-operative

Summary:

The Co-operative has had a strong run of success over the last few years, giving Peter a positive story to tell: sales growth, acquisition and a brand positioning that is closely aligned with the zeitgeist.

Peter referred to the devastating Great Depresssion of the 1930s and noted that, once more, we are living in strange and historically–important times.

Just as in the 30’s the decisions made now are likely to shape economic and political development for many years to come.

Like Joanne, Peter believes that the values of shoppers remain stable, whilst the values of businesses are sometimes mutable.

It is therefore necessary for businesses to recognise that the rules of business behaviour are changing; the Credit Crunch has been accompanied by a “Trust Crunch” – shoppers are no longer willing to accept misbehaviour or even a lack of transparency by large businesses.

Peter called upon delegates to join him in shaping a new form of “co-operative capitalism”, in which the disciplines of business are combined with a sense of restraint and responsibility and in which the fruits of success are shared with the community as a whole.

	Think about this: Is your company asking shoppers to sacrifice value for values? Are low prices being achieved by cutting corners? Are better ethics being used to justify higher prices? Are either of these positions sustainable?

Todd Stitzer, Chief Executive, Cadbury's

Summary:

Founded by quakers, Cadbury’s has always been concerned with promoting social welfare and progress, especially for its own workers.

The Cadbury family were “principled capitalists”, an approach summed up in the current company motto “performance driven, values led”.

Like Marc and Paul, Todd said that he had been pressed to adopt specific policies by the financial community but had chosen to ignore this advice.

Specifically, he had developed the Cadbury’s Cocoa Partnership at a time when cocoa prices were already high and when the conventional solution would have been to seek out cheaper supplies.

Today, the international connections of large grocery businesses mean that their responsibilities extend far from the factory gates – those investing in communities must extend their horizons.

It is also clear that investment in communities is not always wholly altruistic – in Cadbury’s case, supporting cocoa-growing communities in Ghana is clearly in the company’s own interests.

Todd discussed the importance of close, consistent contact with shoppers in building brands – after all, there is no brand without the shopper!

He also stressed the need for continued innovation: businesses must hold their nerve and continue to invest for the future, even when times are very hard.

	Think about this: What values drive your business? Are personnel, shoppers and – most importantly – investors all on the same page? Are values which were put in place some time ago still relevant and important today? Should a business change its stance on values according to changing social mores, or should they be set in stone?

Marc Bolland, Chief Executive, Morrisons

Summary:

Marc has delivered consistent and strong growth for Morrisons since taking the reins in 2006, but in his speech he emphasised that his approach to leadership is generally cautious and conservative.

He explained that, on becoming Chief Executive, he was placed under some pressure by market analysts to follow the approach taken by other major supermarkets but that he resisted this, preferring to focus on sharpening-up the proven Morrisons model.

Marc emphasised the importance of retaining business talent through periods of change and to progress through a logical sequence of small steps: “don’t scare the business …. I don’t like the word change … walk the stairs, don’t take the elevator”.

He also stressed the point that all business advertising must be credible – in other words, it must not make promises beyond what the business is able to deliver immediately.

	Think about this: Who is calling the shots in your business - how far is policy dictated by shareholders? Do they really know how to run the business better than those who manage it day to day? How much change is actually needed in your business? Is the desire for change driven by ambition, fashion or a genuine requirement?

Top ten action points:

	Secure supplies of all key inputs; do not rely on the open markets since, in an era of resource scarcity, this may be unable to provide. Make sure that you know where your supplies will come from.   Consider the way in which plans are presented to the business. Clearly, businesses must remain agile in order to cope with future challenges, but the prospect of radical change may be daunting for some. A series of incremental changes, brilliantly executed may be preferable to complex, long-term plans.   Maintain dialogue with investors, analysts and other members of the financial community, ensuring that the objectives and expectations of these critical stakeholders are realistic and are aligned with those of the business itself.   Give thought to ranging – rationalisation may be efficient, but shoppers will wish to buy into categories at a range of price points. Retaining shopper loyalty requires both retailers and suppliers to offer a variety of options.   Review communications to investors, personnel, shoppers and other interested parties in order to ensure that the business’ achievements in non-commercial fields (eg: environment) are fully recognised.   Further review communications in order to promote a sense of mission: ensure that the long-term objectives and ideology of the business are fully understood – and fully shared - by all concerned.   Ensure that communication with staff is not just a one-way process. Check to see that staff are able to pass their concerns and ideas back up the management chain.   Consider succession planning: where will the next generation of talent come from? If the necessary skills are not available, take action now!   Be honest – trust depends on transparency, but transparency requires that businesses share news of failure as well as success.   Review failure; a dynamic business is not afraid to take risks and, inevitably, some risky approaches will fail. However, even a failure may provide valuable learnings, meaning that it is not a total waste.

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