At Nogales convention, panel assesses impact of economy on retail
At Nogales convention, panel assesses impact of economy on retail
NOGALES, AZ -- "We have heard every bad economic piece of news that is to be heard. Some of them are even true, unfortunately," said John Pandol, vice president of special projects for Pandol Bros. Inc. in Delano, CA, and chairman of the grape committee of the Fresh Produce Association of the Americas, here, who moderated a retail and foodservice panel discussion held Nov. 14 during the 40th annual Nogales Produce Convention & Invitational Golf Tournament.
"We read about stores doing better or doing worse" in today's economic environment, "but everyone has to adjust" to the changing situation, Mr. Pandol said. He asked panel members to talk about what has been changing in their operations, what is different from a year ago and how they are adjusting their strategies or what they are doing differently to deal with today's challenging economic climate.
"What we have going on at retail is inflation that is for most quarters 8 to 10 percent, so everyone is hitting their sales numbers and everybody is feeling quite good about themselves, until you look at tonnage, which is way down," said Steve Wright, wholesale category manager at Spartan Stores in Grand Rapids, MI. "That means the consumer is not buying as much, and we are not doing a good job of doing what we are supposed to be doing, [which is] selling product."
Inflation means that costs are rising for the retailers, and "consequently you are seeing lower margins, because we cannot possibly raise the retail here quick enough to cover the cost of inflation," Mr. Wright said.
"There are a lot of things we are doing about it," he continued. "I think the number one thing we all have to do is remain flexible and adapt."
Mr. Wright said that one specific change that Spartan Stores is considering is "downsizing some pack sizes to still provide a value equation to the consumer." For example, rather than offering one-pound clamshells of strawberries, "why can't it be a 12-ounce and be sold at a cheaper price?" he asked.
"What we are seeing is produce has become more of a luxury item on certain items," said Brian Sekenske of Supervalu in Fresno, CA. Supervalu services stores with formats ranging from large to small and from high-end to low- end. Overall, "we are seeing increases" in staple items such as apples, bananas, oranges and potatoes, which offer consumers the best food value for their money, he said.
Mr. Sekenske added that consumers are making fewer trips to the grocery store than in the past, typically "once a week vs. two to three times a week," and that they are tending to focus more of their purchasing on products that are on ad.
"One of the things that we are doing" to try to capture more sales and increase profits is to offer "a premium and a value item," Mr. Sekenske said. For example, Supervalu may offer premium large-sized grapes and also smaller grapes at a "significant price difference because we are trying to appeal to everybody." Like Spartan, Supervalu is offering products in smaller package sizes to keep price points lower.
Consumers are "finding ways to save money," said Melissa Hooper, a dietician for Stater Bros. in Colton, CA. "In Southern California, we have had super-high gas prices in the last few months, and a lot of people are making fewer trips to the grocery stores. They are also eating out less in the restaurants and cooking more foods at home."
Robert Sorenson of Baugh Supply Chain Co-op, a subsidiary of Sysco Corp., said, "I think in an economic downturn, the first thing anyone looks at is managing their expenses and costs, and in a big corporation like ours, that is something they saw coming down the road about five years ago and started preparing for."
Among the adjustments at Sysco, said Mr. Sorenson, are looking at ways to "develop better partnerships with our customers in finding ways to help them be more profitable in their menus."
On the supply side, Sysco has "modified our approach to purchasing, and we have begun rationalizing our supplier base and consolidating our volume, which is new for our company," said Mr. Sorenson.
In the past, all Sysco distribution centers "purchased independently without any centralized control, but we are modifying our approach to that," he said. "We are trying to have more impact with fewer suppliers."
Mr. Sorenson also noted that as a consequence of the current economic downturn, for the first time in 25 years Sysco is seeing business transition away from foodservice and back to retail.
Among the other topics discussed by the panel were the importance of Mexican-grown produce in their programs, the "tremendous" improvements in the quality of produce from Mexico in recent years and the impact on the retail industry of the new country-of-origin-labeling legislation.
The convention's opening gala Nov. 13 was a Mexican-style fiesta held at the Kino Springs Country Club near Nogales. The annual golf tournament was held Nov. 14-15 at Tubac Golf Resort and Rio Rico Country Club.
A gourmet cooking class at the Tubac Culinary School in Tubac was offered Nov. 14 as part of the convention program.
The closing fiesta and dinner dance were held at the Tubac Golf Resort on the evening of Nov. 15.
"We read about stores doing better or doing worse" in today's economic environment, "but everyone has to adjust" to the changing situation, Mr. Pandol said. He asked panel members to talk about what has been changing in their operations, what is different from a year ago and how they are adjusting their strategies or what they are doing differently to deal with today's challenging economic climate.
"What we have going on at retail is inflation that is for most quarters 8 to 10 percent, so everyone is hitting their sales numbers and everybody is feeling quite good about themselves, until you look at tonnage, which is way down," said Steve Wright, wholesale category manager at Spartan Stores in Grand Rapids, MI. "That means the consumer is not buying as much, and we are not doing a good job of doing what we are supposed to be doing, [which is] selling product."
Inflation means that costs are rising for the retailers, and "consequently you are seeing lower margins, because we cannot possibly raise the retail here quick enough to cover the cost of inflation," Mr. Wright said.
"There are a lot of things we are doing about it," he continued. "I think the number one thing we all have to do is remain flexible and adapt."
Mr. Wright said that one specific change that Spartan Stores is considering is "downsizing some pack sizes to still provide a value equation to the consumer." For example, rather than offering one-pound clamshells of strawberries, "why can't it be a 12-ounce and be sold at a cheaper price?" he asked.
"What we are seeing is produce has become more of a luxury item on certain items," said Brian Sekenske of Supervalu in Fresno, CA. Supervalu services stores with formats ranging from large to small and from high-end to low- end. Overall, "we are seeing increases" in staple items such as apples, bananas, oranges and potatoes, which offer consumers the best food value for their money, he said.
Mr. Sekenske added that consumers are making fewer trips to the grocery store than in the past, typically "once a week vs. two to three times a week," and that they are tending to focus more of their purchasing on products that are on ad.
"One of the things that we are doing" to try to capture more sales and increase profits is to offer "a premium and a value item," Mr. Sekenske said. For example, Supervalu may offer premium large-sized grapes and also smaller grapes at a "significant price difference because we are trying to appeal to everybody." Like Spartan, Supervalu is offering products in smaller package sizes to keep price points lower.
Consumers are "finding ways to save money," said Melissa Hooper, a dietician for Stater Bros. in Colton, CA. "In Southern California, we have had super-high gas prices in the last few months, and a lot of people are making fewer trips to the grocery stores. They are also eating out less in the restaurants and cooking more foods at home."
Robert Sorenson of Baugh Supply Chain Co-op, a subsidiary of Sysco Corp., said, "I think in an economic downturn, the first thing anyone looks at is managing their expenses and costs, and in a big corporation like ours, that is something they saw coming down the road about five years ago and started preparing for."
Among the adjustments at Sysco, said Mr. Sorenson, are looking at ways to "develop better partnerships with our customers in finding ways to help them be more profitable in their menus."
On the supply side, Sysco has "modified our approach to purchasing, and we have begun rationalizing our supplier base and consolidating our volume, which is new for our company," said Mr. Sorenson.
In the past, all Sysco distribution centers "purchased independently without any centralized control, but we are modifying our approach to that," he said. "We are trying to have more impact with fewer suppliers."
Mr. Sorenson also noted that as a consequence of the current economic downturn, for the first time in 25 years Sysco is seeing business transition away from foodservice and back to retail.
Among the other topics discussed by the panel were the importance of Mexican-grown produce in their programs, the "tremendous" improvements in the quality of produce from Mexico in recent years and the impact on the retail industry of the new country-of-origin-labeling legislation.
The convention's opening gala Nov. 13 was a Mexican-style fiesta held at the Kino Springs Country Club near Nogales. The annual golf tournament was held Nov. 14-15 at Tubac Golf Resort and Rio Rico Country Club.
A gourmet cooking class at the Tubac Culinary School in Tubac was offered Nov. 14 as part of the convention program.
The closing fiesta and dinner dance were held at the Tubac Golf Resort on the evening of Nov. 15.
