IN THE TRENCHES: Factors to watch in the days ahead
IN THE TRENCHES: Factors to watch in the days ahead
As the U.S. presidential primary races continue, one of the debate topics has been "change." The candidates are being challenged with questions about change. But how will any changes influence business, especially the food industry?
What will happen in produce? Do growers, shippers and retailers have any idea of what lies ahead? Is change expected to have an impact on today's management, or will it be business as usual?
A year from now, some companies will be looking back at 2008 and wondering why they didn't see certain challenges coming at them with those changes. Many will be spinning their wheels as a result of getting caught in the same old operating rut. These particular companies will struggle, and some may even fail completely.
Whether the country falls into a recession as some predict, and whether that results in profits collapsing, the housing industry weakening further and oil prices shooting up to $150 per barrel, change will take place and will affect the way consumers spend money. Business is headed into a double-trouble zone of how to capture consumer dollars and how to control the cost of operations at the same time.
The food industry will encounter some major demands that will compel companies to keep pace with the transformations around them. Consumers will become frustrated over increases in the cost of living, which will likely force them to put the brakes on spending for certain products and services. Rather than paying a premium price for filet mignon, lobster, asparagus or strawberries, they may have to spend it on gasoline and settle for stew meat instead.
How consumers spend their money in the future will be crucial to the produce industry. Shoppers are already feeling uneasy about news reports of the tough times that lie ahead. The soaring oil prices alone are enough to diminish spending and freeze any investment savings consumers may have.
One recent Internet business news report I read stated: "Wall Street plunged again amid renewed fears that the financial sector's troubles with bad credit won't soon end and that some consumers are buckling under the effects of a slowing economy. The arrival of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market."
With the unpredictable economy closing in and a definite slowing period developing, there is no guarantee that sales and profit commitments will be a cakewalk this year. However, there are certainly ways to prevent business operations from totally collapsing.
This is going to be a very perplexing year of not-so-pleasant events combined with many unknowns. Let's consider a few factors that will involve the food and produce industries based on "change." Some will play vital roles in making the bottom-line profit somewhat of a tough go.
* Business as usual: Using the same old methods of advertising, marketing gimmicks, merchandising strategies and clock in-clock out attitudes are just not going to work this time around. Companies will need to regroup and simply operate much differently in all areas. Know what the consumers are thinking and adjust to their needs. Lean toward the customer. Tweak something, anything.
* Increasing gross margins (again): Whom are you kidding? It's not going to work this year. If raising prices is where you think it's going to come from, forget it. You're in Bizzaro World.
* Crude oil prices: $100 per barrel? Try $150. Oil prices will increase the cost up and down the line on not only fuel and utility expenses but also as an ingredient in plastic materials, construction, roads, automobiles and even packaging supplies.
* Mega-size superstructures: Are you still thinking bigger? All those huge packinghouses, warehouses and supermarkets will see the cost per square foot skyrocket in order to operate. If you're going to build new gigantic complexes, be ready to pay gigantic money to operate them. Supermarkets of tomorrow will be smaller.
* Luxury upscale pricing: Before the economic problems began, many retailers moved to the premium upscale merchandising theme. Now, consumers may back off from those uneconomical ritzy retails. Think hard if you are considering this. You may end up chasing your customers away.
Nobody can anticipate what really lies ahead for business 10 days or 10 years from now. The only thing we all know for sure is that it is going to change and change will play a big role in our food business. Try to focus on at least these five areas in order to stay in the game: change something -- anything, market differently, keep current customers satisfied, watch every penny like an armed guard and be price-friendly.
Most importantly, understand how new changing demands will affect your business. Differentiate yourself from your competitors by preparing for it right now.
What will happen in produce? Do growers, shippers and retailers have any idea of what lies ahead? Is change expected to have an impact on today's management, or will it be business as usual?
A year from now, some companies will be looking back at 2008 and wondering why they didn't see certain challenges coming at them with those changes. Many will be spinning their wheels as a result of getting caught in the same old operating rut. These particular companies will struggle, and some may even fail completely.
Whether the country falls into a recession as some predict, and whether that results in profits collapsing, the housing industry weakening further and oil prices shooting up to $150 per barrel, change will take place and will affect the way consumers spend money. Business is headed into a double-trouble zone of how to capture consumer dollars and how to control the cost of operations at the same time.
The food industry will encounter some major demands that will compel companies to keep pace with the transformations around them. Consumers will become frustrated over increases in the cost of living, which will likely force them to put the brakes on spending for certain products and services. Rather than paying a premium price for filet mignon, lobster, asparagus or strawberries, they may have to spend it on gasoline and settle for stew meat instead.
How consumers spend their money in the future will be crucial to the produce industry. Shoppers are already feeling uneasy about news reports of the tough times that lie ahead. The soaring oil prices alone are enough to diminish spending and freeze any investment savings consumers may have.
One recent Internet business news report I read stated: "Wall Street plunged again amid renewed fears that the financial sector's troubles with bad credit won't soon end and that some consumers are buckling under the effects of a slowing economy. The arrival of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market."
With the unpredictable economy closing in and a definite slowing period developing, there is no guarantee that sales and profit commitments will be a cakewalk this year. However, there are certainly ways to prevent business operations from totally collapsing.
This is going to be a very perplexing year of not-so-pleasant events combined with many unknowns. Let's consider a few factors that will involve the food and produce industries based on "change." Some will play vital roles in making the bottom-line profit somewhat of a tough go.
* Business as usual: Using the same old methods of advertising, marketing gimmicks, merchandising strategies and clock in-clock out attitudes are just not going to work this time around. Companies will need to regroup and simply operate much differently in all areas. Know what the consumers are thinking and adjust to their needs. Lean toward the customer. Tweak something, anything.
* Increasing gross margins (again): Whom are you kidding? It's not going to work this year. If raising prices is where you think it's going to come from, forget it. You're in Bizzaro World.
* Crude oil prices: $100 per barrel? Try $150. Oil prices will increase the cost up and down the line on not only fuel and utility expenses but also as an ingredient in plastic materials, construction, roads, automobiles and even packaging supplies.
* Mega-size superstructures: Are you still thinking bigger? All those huge packinghouses, warehouses and supermarkets will see the cost per square foot skyrocket in order to operate. If you're going to build new gigantic complexes, be ready to pay gigantic money to operate them. Supermarkets of tomorrow will be smaller.
* Luxury upscale pricing: Before the economic problems began, many retailers moved to the premium upscale merchandising theme. Now, consumers may back off from those uneconomical ritzy retails. Think hard if you are considering this. You may end up chasing your customers away.
Nobody can anticipate what really lies ahead for business 10 days or 10 years from now. The only thing we all know for sure is that it is going to change and change will play a big role in our food business. Try to focus on at least these five areas in order to stay in the game: change something -- anything, market differently, keep current customers satisfied, watch every penny like an armed guard and be price-friendly.
Most importantly, understand how new changing demands will affect your business. Differentiate yourself from your competitors by preparing for it right now.
