Annual Meeting Helps Members Fill Consumer Needs : Food Marketing Convention Charts a Changing World of Retail Sales
What was once the neighborhood grocery store is rapidly becoming a memory as the nation’s supermarket industry continues its wholesale evolution from cracker barrels and candy counters to mammoth departmentalized household product centers specializing in a vast array of personal services.
Helping guide the rush to meet the consumer’s every need is the Food Marketing Institute’s annual convention here, which concluded this week after a four-day run at McCormick Place. More than 26,000 people attended the event, which featured dozens of seminars and more than 1,000 exhibits.
Expanded Marketing Approach
Timothy Hammonds, FMI senior vice president, told conventioneers that the expanded marketing approach by supermarkets has begun paying dividends. For the first time since 1980, the growth in supermarket sales has outpaced those of its keen competition in the restaurant industry.
“Food sales in grocery stores rose 2.7% . . . compared to 1.3% increase (for those of) restaurants. Part of the reason for this is certainly price,” according to the group’s annual report. “Prices for food in supermarkets increased only 1.4% in 1985 (whereas) prices in restaurants went up 4%, a sizable difference.”
The report also stated that this is the seventh consecutive year that price increases in restaurants have outpaced those in supermarkets.
FMI’s 1,500 member companies operate 17,000 food stores and thus represent more than 50% of all U.S. grocery sales. Today’s typical food store measures 33,600 square feet in size and stocks 17,459 items, the average price of which is $1.34.
Interest in FMI’s annual convention has almost doubled in the past five years as food retailers have enlarged their sales mission. Concerned at one time with only selling what appears on the dinner plate, store operators here were learning how to sell the plates themselves, in addition to the silverware, the tablecloth and even the dry cleaning for those times when someone spills an exotic gourmet sauce on their clothes.
To accommodate all this expansion, today’s average supermarket is bigger in size, stocks more items and offers more services than ever before, according to information compiled by FMI in its “State of the Industry” presentation.
The assembled food retailers took pleasure not only in the fact that Americans are spending more for foods consumed at home, but that fast food restaurants are beginning to feel the effects of continuing criticism regarding the nutritional quality of their products.
“The image of the supermarket as ‘the best health food store in town’ stands on solid ground at exactly the time fast food restaurants are coming under attack,” Hammonds said. “The heat is on the fast food industry.”
Concerns About Nutrition
This perceived image problem of the major hamburger, chicken and pizza restaurant chains was attributed to responses found in an FMI-commissioned Louis Harris Poll. In a nationwide survey, 28% of those questioned responded that they were “very concerned” about the nutritional content of food served in restaurants. Forty-six percent said they were somewhat concerned about restaurant food’s nutritional profile.
Byron Allumbaugh, chairman of Ralphs Grocery Co., attended the conference and said that his Southern California-based chain of supermarkets was, in fact, benefiting from a decline in restaurant sales.
“I’m not predicting the end of the fast food chains, but I feel that they’ve topped out. Food prepared at home is perceived as being as healthy as it’s been in years--particularly in an area like Southern California where people are diet and health conscious,” he said. “There’s also a growing interest in quality foods (now being regularly offered by supermarkets).”
One new weapon that grocers hope to enlist in their ongoing battle with restaurateurs was much discussed during the conference. This latest innovation carries the unappetizing title of “partially prepared food.” However, the concept is one that food retailers believe consumers hunger for.
Called a major new development, partially prepared foods are primarily meat, poultry or fish entrees that require only a few minutes of work after being brought home. The offerings that have been selectively marketed in some parts of the country include stuffed pork chops, T-bone steaks, rib roasts, stuffed game hens and various veal dishes.
For instance, the idea involves presenting a shopper with a beef roast that needs, say, 15 additional minutes of baking time before being ready to serve. If cooked from its raw state the roast could have required several hours in the oven.
Consumer response to this category has been encouraging. The Harris poll found that 44% of those queried said they would purchase partially prepared foods if their local market offered the products.
An executive from Vons Grocery Co., attending FMI’s convention, said that the company has begun to sell a small selection of partially prepared foods, such as beef Wellington, in its Los Angeles-area Pavilions stores. Roger Stangeland, Vons chairman, said that his company has hired executive chefs with extensive training in upscale entrees to direct the program at each store.
Other Regions Pioneering
Stangeland said this type of innovation has for too long been absent from the Southern California-based supermarkets. More often, companies from other regions have been the firms pioneering many of the services and programs now setting the standards in the grocery business.
“Supermarkets in Southern California could grow without worrying about taking chances. The drive to innovate was there but not as rampant as in other parts of the country,” he said. “Many of the features (being discussed at FMI) have come later to Southern California rather than sooner.”
Stangeland then told how his company was working on having in-store sausage-making plants which are completely visible to meat department shoppers. Coincidentally, on the conference’s exhibit floor was a company marketing a glass-enclosed automated sausage factory suitable for placement in any rapidly expanding supermarket.
