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It’s been a tough year … a very tough year … it's picked up a bit recently and I’d like to say all the tough times are behind us … but no-one believes that.
The future is challenging … and daunting.
But I remain positive about this industry...
because it’s going to be about leadership … leadership in adversity …
...which is what I want to talk about today.
According to a forecast from the Institute of Fiscal Studies … the time it will take to bring public debt back down to the level before the Credit Crunch … is 20 years.
They estimate by 2018 reducing this debt will cost the average household almost £3000 a year.
On top of that, is the public sector pension deficit … and that’s around £19000 per UK citizen
Meanwhile, Moody’s … the credit rating agency … has said the banks have written off less than half of their bad debts.
And beyond the economy, John Beddington, Government Chief Scientist, has some sobering warnings.
Over twenty years … world food demand will rise by 50%, energy by 45% and water by 30%.
And yet according to the UN, an area the size of Ukraine is lost to producing food each year because the land is degrading.
And if the water table falls at its current rate, almost a third of the world’s cereal production will be lost by 2025.
By then the UK’s oil and gas supplies will be fully depleted … and according to Ofgem we need to invest up to £200 billion to secure our energy supplies and cut carbon emissions.
By 2050, to meet our national commitment on carbon, we’ll have an allowance of about 2 tonnes per person.
That’s about the same as people currently in Tunisia, Brazil or the Dominican Republic … all much warmer places.
So … I think you’ll agree … there can be no let up.
These issues affect everyone but our industry will be at the heart of them.
And when things go wrong … people always look for someone to blame.
Our industry is already under constant attack.
Our critics treat us as part of the problem instead of an effective partner in creating and delivering the solution.
They accuse us of being blinded by profit.
They impugn our integrity and they ignore our achievements.
Add all this together and it’s a very daunting equation … but as Justin reminds us, we’re no strangers to adversity.
We’ve faced enormous problems before and thanks to strong leadership we’ve surmounted them.
And I’m sure we’ll solve today’s problems too … and our industry will again play a leading part.
I mentioned how we’re painted by our critics.
But consider the reality.
We make a big difference … and we have huge resources.
We’re the largest manufacturing sector in the UK … and grocery is almost half of the retailing sector.
In a slumping economy … grocery companies have been amongst the few still recruiting … and investing in the future by upping their training and development budgets.
We are a world class industry.
We’re recognised across the globe for our consumer focus, food safety standards, supply chain efficiency and product & technical innovation.
And our pace in picking up sustainability has left others trailing in our wake.
Our companies have made some groundbreaking commitments … like zero waste to landfill and even zero carbon … and these companies are delivering along their journey.
Many have taken some extremely brave decisions.
Almost overnight some of the big chocolate companies, the big coffee and sugar companies and the leading retail own brands have moved to Fairtrade or the Rainforest Alliance.
Some detergent manufacturers took a big risk when they introduced concentrates.
And a vast number of food products have been reformulated to reduce salt, sugar and fat.
And that’s high risk … and so is front of pack labelling … introduced here in the UK, completely voluntarily.
Beyond these shores the world has seen us as a highly progressive force … but domestically we don’t get the credit we deserve.
In the past few weeks I’ve been travelling round the country listening to Chief Executives and Chairmen … many of you here today.
Everyone I‘ve seen agrees that these are extraordinary times and we face momentous choices.
These leaders of the industry are radical in their thinking, accepting of a new world era and ready to make some really big decisions.
They’re also going back to first principles … challenging the markets they’re in and the activities they’re undertaking.
They’re asking about where they buy raw materials and where they produce.
They’re asking about the way they produce and how many points of touch before products reach the consumer.
So there’s major restructuring … and new ways of working ahead … and it could unfold very quickly.
So that’s a viewpoint from industry … but I want to give shoppers pride of place.
How do they feel about the big global issues?
We asked shoppers which, from a list of issues. concerned them the most.
Poverty and hunger came top … more proof that people don’t suddenly become selfish and insular in a recession.
And the score for ‘corruption in high places’ is also striking … trust has been badly dented this year.
I knew that climate change was a divisive issue but I didn’t appreciate quite how divisive.
One group is dismissive … another fatalistic … and the final group believes in climate change and thinks we can solve it.
Here’s how you answered the same question in our pre-event poll.
So there’s a challenge!
If we want to bring consumers with us … there’s a lot of convincing still to do … we even need to prove it to ourselves.
But whatever people’s views on climate change, there’s a tide of opinion and we’re all getting swept up in it whether consciously or not.
Austerity and eco-awareness have been reinforcing each other.
We asked shoppers what changes they’ve already made to contribute to a better world … and two answers stood out.
40% say they use their cars less … so that’s good news for local shops … although please, people say, don’t ask me to stop flying.
30% are now more likely to keep using products until they wear out.
So people are changing their lifestyles … but … do they feel it’s making a difference?
We asked shoppers where they think their choices make a real impact.
Health came top … domestic issues next and sustainability last.
Look at the low score for sustainable fishing … that’s really disappointing!
It shows that providing a clear choice isn’t enough … we need to make the message louder.
We compared these answers with two years ago.
Shoppers now feel less empowered … with a huge drop in confidence over global warming and the environment.
So how can we address this?
I’ve heard various suggestions … more certification, more information … more symbols, fewer symbols … more choice, reduced choice.
So we asked shoppers for advice … and as you can see the jury is still out.
We’ll have to take the lead ourselves and supply the right answers.
And we know that simple solutions are always the most popular.
We also asked shoppers how optimistic they felt for future generations and I was seriously shocked by the response.
Only 9% are confident that life will improve.
They’re outnumbered by people convinced that life will deteriorate!
The majority though are cautiously hopeful … but it still goes to show … people are very uncertain about the future and they’ve lost their compass.
We’ve segmented shoppers based on two key factors … interest in world affairs and optimism for the future.
The outward looking optimists will be in the vanguard.
These are the people most prepared to adapt … but they’ll be difficult to satisfy and they’ll always want more from us.
Outward looking pessimists are willing to change but need to be reassured that their efforts are worthwhile.
For this group, we have to keep demonstrating progress … and bringing it to life through personal stories.
Inward looking optimists are the biggest group.
They need guiding through some of the big issues like food waste, fishing and water footprints.
Whereas the final group feels disadvantaged and trapped.
They need us to keep delivering on price.
So we’ll have to balance our attention, between the needs of all four groups.
Of course we’re all particularly interested in how shopping habits will evolve from here.
So we asked shoppers to picture themselves in 2012 … it’s Olympic year and the Credit Crunch, we hope, is a receding memory … how will their shopping and consumption habits have changed?
Here are some of the headline predictions from shoppers.
First, food will be a little more expensive.
And shoppers expect to be even more careful in making their choices than today.
Does that mean trading down? Not according to shoppers.
Almost half expect to enjoy a better quality of food by 2012 … only 7% think it’ll get worse.
So shoppers intend to keep changing their habits … seeking more from less … and they expect us to keep delivering better value.
Here are some other shopper expectations for 2012.
- More diversity in food retailing.
They expect to spend a lot more with discount retailers, farmers’ markets, specialist shops, neighbourhood stores and of course online.
- More growth in ethical shopping … in particular local food, animal welfare and Fairtrade … but not much change for organic.
- More fruit, veg and fish in the diet and less meat.
- More spending on both budget and premium own brands … ... so careful shoppers still expect to find value in quality products
- But they do predict a testing time for the High Street, premium only stores and some mainstream brands.
Shopper predictions don’t always come true.
We asked the same questions a year ago but looking six months ahead.
Shoppers correctly predicted growth for discount retailers, own brand, Fairtrade and animal welfare.
But they also expected big dietary changes and we haven’t seen that.
People always aspire to change their diet but struggle to make it happen!
In some cases … shoppers were right in the short term … but then the market reacted.
So the big brands fought back … as did some of the premium retailers.
The future isn’t predetermined … it’s there to be forged … but these predictions do show who’s swimming with the tide and who needs to redirect it.
We also asked shoppers how they’ll judge food and grocery companies in the future.
Cost came top … no surprise … but lots of other factors scored highly especially the ethical ones.
Quality, convenience, health and taste have always been sacrosanct … they’re a given.
But people continue to change and the list of what it takes to satisfy shoppers keeps getting longer.
We could view that as a problem … or we could embrace it.
Because shoppers are saying that food and grocery plays a central and varied role in their lives.
And they’re looking for businesses to prove that they can be a force for good.
Surely that’s a massive opportunity.
Shoppers are pointing us towards new ways that we can add value.
The more value we add, the stronger our relationship becomes.
And that relationship will be critical to our future.
It’s one of the factors I want to focus on as I draw my conclusions about leadership in adversity.
In the conditions we face, some classic leadership characteristics are vital.
We have to be more decisive than ever before.
We have to help shoppers through this maze.
We have to force the pace.
We can’t wait for others to tell us what’s needed … we have to think ahead.
We have to be quick to take up new technology and ideas.
We have to keep finding ways to get more from less.
We cannot compromise our standards … “value for values” remains the priority.
All this is true … but all this you know.
So let me concentrate instead on three thorny challenges … building trust, better teamwork through the chain … and inspiring your workforce.
Relative to others … our industry is highly trusted.
According to the Reputation Institute, five of the top seven most admired British companies are IGD members and ten of the top twenty.
And although some industries have suffered a big dip in trust lately, we haven’t.
We recently took a sounding on trust and compared it with some similar research from ten years ago.
We’ve held firm … although to view it another way … we’ve put in a huge amount of work just to stand still in the ratings.
So if we’re to make a breakthrough we need a different type of climate change … a change in the climate of opinion.
The road ahead is going to be stressful for the whole of society.
The more our industry is trusted … the better we’ll be able to stay calm and make the fastest possible progress.
We’re in a good place to build trust because we touch everybody’s lives every single day.
We’re most effective when we communicate with a personal touch and when we’re open, transparent and prepared to acknowledge where we need to improve.
Day by day the public gets a drip feed of anti big business sentiment.
Big companies are often depicted as faceless corporations.
But big business consists of people too … just more of them … and we need to show our personal face more often.
On nutrition, the UK food industry has been setting the pace.
We’ve led the world in taking out fats, sugar and salt.
But have we got credit for it?
No … because the whole debate has been around front of pack labelling.
More than ever, in this new world, we must stand together on the critical things … if not … we’ll always be picked off separately.
The way we’ve combined forces on sustainable distribution is a great model.
Lots of companies are doing their bit, some individually and some in partnership and IGD is piecing it all together.
We’re able to tackle this topic within industry but on other topics we also have to pull together with people outside our industry.
It’s going to take the best brains … wherever they reside … to solve the world’s challenges.
So it’s pointless, for example, to waste time arguing about today’s farming systems when we could be pooling our knowledge, combining our wisdom and developing together the new methods we urgently need.
To minimise waste in the food chain, we need everyone working as a team … sorting the system from end to end.
And to turn the tide on obesity we need national government working with industry, the health profession, NGO’s and local activists … better co-ordinated than ever before.
And IGD will always be there to bring people together.
I’m an optimist … and so are most of you.
Here’s your outlook on the future .. compared with shoppers.
This ‘can do’ attitude is our greatest strength.
Many of our industry’s pioneers are still famous today through the names of their companies.
They inspired their employees to great accomplishments … and so must we.
We need to recognise the challenges … we need to be realistic about the tough times ahead … but we need to give our teams the self-belief that they can win … because they can.
People and companies placed in difficult circumstances can be hugely ingenious.
Our industry is fantastically adaptable … we’re used to moving fast … we’re used to reacting to what shoppers want and we’re used to taking brave decisions.
This is an industry which is willing to lead, has the capability to lead and is up for the challenge.
We may face adversity but together, we will win through.
Ends
Notes to editors:
If you would like to interview Joanne Denney-Finch or for further information, please contact a member of the IGD press office:
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