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Food retailers up for challenge of future events

There are still many challenges faced by the grocery industry through the recession and beyond but the major companies in the sector have shown great ability in the past to deal with adversity and this pedigree will continue to see the industry succeed through these tough times.


Food retailers up for challenge of future events

This was the view of Joanne Denney-Finch, chief executive of IGD, when speaking at the IGD Convention 2009 in London this week: “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.”

She painted an apocalyptic picture to delegates – highlighting the fact that between now and 2018 it will cost each household £3,000 per year to help reduce the country’s large public debt, and the pension deficit is calculated £19,000 per UK citizen.

This all equates to a dire economic backdrop for consumer spending, which is made worse for the food industry as Denney-Finch says it is typically “treated as part of the problem instead of as an effective partner in creating and delivering the solution”.

But this should not deter the industry because she suggests it has surmounted such issues in the past and is recognised around the world for its ability to take action with pace. Its innovations include food safety standards, supply chain efficiency, and product and technical innovations.
Further efforts are required as the industry is headed for even more restructuring, she suggests, and points to IGD research as evidence that shopper thinking is changing and the food sector has to adapt to accommodate it.
Among respondents to its shopper survey only nine per cent believe life will be better for future generations. The majority are pessimistic for the future, with Denney-Finch suggesting this indicates a high level of uncertainty among consumers.

The research also showed, positively, that only seven per cent believe that food quality will get worse by 2012. Shoppers also expect it to get more expensive over this timeframe with 77 per cent predicting higher food costs. Other findings included shoppers expecting more diversity in food retailing, more growth in ethical shopping, healthier diets, and more spending on both budget and premium lines.
Although it is clear that change is inevitable and there is an undoubted level of uncertainty in the industry she suggests there is still “massive opportunity” for retailers – provided they can overcome three challenges.

Firstly, there is the need to build trust with consumers. Helping this is the fact the food sector is well placed as its members already hold five out of the top seven places in the most admired companies table, according to the Reputation Institute.  And despite the recession these reputations have not suffered a dip.

Following on from this, Denney-Finch says the second challenge for retailers is to give more of a personal touch: “We are most effective when we communicate with a personal touch and are more honest and open. We need to show this personal face more often.”

Finally, she believes the industry has to work more together. “More than ever in this new world we must stand together on critical things... the way we’ve combined forces on sustainable distribution is a great model. On other topics we also have to pull together, with people outside our industry,” says Denney-Finch.

Overcoming these challenges should put the industry in a strong position for the future: “This is an industry which is willing to lead, has the capability to lead and is up for the challenge.”

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