Grocery Retailers and Meat Suppliers Working Together. Presentation to the Canadian Meat Council Annual Conference 2009.

1. The Canadian Grocery Landscape
Viewpoint from a Retail Executive
CMC Presentation
April 2009

2. • Agenda
• The presentation will explore areas three sections:
1. What Canadian Retailers Do Well
2. What They Could do Better
3. How This Applies to the Meat Department
• It will focus on areas that, if improved, would enhance profit.
• The views are not exhaustive - It is a macro view.
Presentation Summary: What to Expect Today

3. •Merchandising Executives
•The following comments are from two Canadian retail
executives with 15 years and 22 years experience in
ambient, frozen and fresh categories.
The Source of the Views

4. •International View
• After working in Canada, she transitioned to the manufacturing sector, and is
now working for a leading UK chilled ready meals manufacturer.
• 21 factories supplying biscuits to pizza to chilled foods.
• Private label driven; owns the leading pizza brand.
• Industry leaders in food safety; the only company the UK government solicited
to contribute to recent food safety legislation (BRC Version 5).
• Canadian View
• After working in retail in several provinces, he transitioned to distributor world,
and mow providing products and services to the retail industry.
• Participated with George Morris Centre and Agri-culture for several project as
retail perspective, consumer data report, value chain management, etc.
• Chaired as a participant in the Agriculture Summit of New Brunswick
representing retailers.
• Assistant and collaborate in the Lamb round table in conjunction with CSC.
• Certification in food safety and Prerequisite to build a HACCP plan from Guelph
university.

5. Price Competitiveness
Relative to Europe, Canada is price
and promotion driven.
Merchandising Flair
Perishables merchandising in
produce and proteins.
Logistics
Seasoned navigators of the
Canadian climate and distances.
Heritage
Top 2 chains have combined two
centuries of trading experience.
• Leaders. The market leaders have
a long history, well developed
internal resources, including a
strong cash position.
• Competition. Given the Canadian
consumer’s habits to shop at
multiple chains, aggressive
competitors keen to grow share
keep the market price-driven. High
barrier to entry.
Industry Competencies

6. IT Integration
Retail time data delivers faster
and wiser decisions.
Market Rationalisation
Consolidation allows chains to
grow economies of scale.
Labour Pool
Employee base is generally healthy,
willing and not fully unionised.
• Labour. While it is the habit to
‘complain about the employees’
Canadian employees have a good
work ethic.
• Employee Benefits. Employee
medical and pension benefits at the
major chains are satisfactory and
promote workforce stability.
• Internal IT Systems. Data is power,
knowing how to use it - and quickly -
is another thing!
Industry Competencies

7. Areas for Development

8. • NPD Cycle. Development is 12 – 24 months. UK is 2-4 mos.
Innovation drives margin growth.
• Relationships. Retailers can benefit from being opened
minded & supportive of manufacturer-led innovation.
• Canadian retailer and manufacturing relationships are
not as symbiotic, compared to UK, where the
relationship is a partnership that allows for innovation.
• Hierarchy. Some retailers operate decentralised/consensus
style system that delays decision making and is more costly
for manufacturers to service.
• Knowledge. New product development teams would benefit
from understanding food development (and the impacts
changes have on manufacturing, costs, shelf life etc).
Merchandising: Private Label Speed to Market
Innovation Speed
Manufacturing

9. • That Was Then. In the past, Britain served up bland,
traditional food.
• This is Now. Britain is now a leader in food retail. The
public’s palate has evolved considerably. Chicken Tikka
Masala is on every pub menu. If conservative Britain can
lead in food, what about Canada – what’s delaying us?
• Food Culture. Canadian retailers continue to promote a
regional/traditional/safe view of food. One chain has made
stronger efforts to explore creative prepared food options.
However, a lack of chilled meal manufacturers limit options.
• Geography. Given Canada’s population density, innovative
offers cannot reach each location.
Keeping an open mind.
Mindset
‘That Won’t Work
Here!’

10. • Training Methods. Retailers tend to deliver training at the
store level via tedious manuals. Minimal hours, if any, are
assigned to training. Consistency of service delivery is
generally inconsistent in fresh departments (deli, meat,
seafood etc).
• The younger generation have embraced the internet,
Flipcam home videos/You Tube/Twitter/Facebook.
Retailers have yet to fully harness this avenue.
• Store Operations. It is not uncommon to see employees
repackaging perishable stock to address over-stock inventory
or in fewer cases, date coding infractions.
• Discipline at store level encourages and/or does not
correct this behaviour.
Operations Discipline
Training

11. • Merchandising. Equipment is generally not retrofit to build
the correct display for the product.
• Packaging. Manufacturers do not always provide fixture
solutions for the product display in the chiller cabinets/shelf.
When they do, execution is often the responsibility of the
store. (Fixtures can then be broken, lost, discarded, which is
costly).
• Execution. Displays and planograms are haphazard and
built in the interest of using data and turns, (which are all
important) but are less concerned with improving the
dreaded shopping experience and visual appeal.
Fit for Purpose Merchandising
Packaging &
Display
Disconnect

12. • RFID. Not widely yet available in Canada for the
improvement of inventory tracking and stock management.
(Retail Frequency Identification).
• Service Levels. Underperforming service levels affect
everyone’s profitability.
• Lowest Cost, Best Cost. Retailers are a ‘lowest cost’
culture, which will affect at a minimum, quality and
packaging performance.
• Auction processes can terminate long term supply
relationships.
• Trade Funds. Allowance funds are addictive, are budgeted
and do not account for other intangible efforts by suppliers.
Distribution & Procurement
RFID
Procurement

13. How Does this Apply
to the Meat Department?

14. Freshness &
Rotation
Retailers have strict rules
for meat cases yet store
practises can impact
image of industry.
• Industry and Retail. The meat industry
focuses on product freshness and rotation.
Retail store employees may push the limits of
the product without taking into account any
negative impact it may have on the meat
industry.
• Culling Rules. Retailers have strict rules for
culling of cases. This applies to fresh and cold
cut/cured meats.
• Reduced for Quick Sale! Retailers still sale
meat at 30-50% reduction when inventory is
heavy or product is close to date.
The Meat Department - Observations

15. Butcher on Site
Retailers believe the
best way to show
freshness is to have a
butcher on site.
• The Butcher. Retailers expect great things from
one of the most important departments in the
store. Yet, butchers with limited skills are hired.
• Meat Manager. S/he is expected to reduce the
amount of labour hours. S/he is expected to train
new staff and offer exceptional service delivery.
• Cleaning. One of the most important tasks,
properly cleaning the meat premises is often left to
untrained employees.
The Meat Department - Observations

16. Preparation of
Primals
• Adding Value. To help a meat manager who has
reduced labour hours and under-trained
employees, the industry must continue to look at
different ways to cut and prepare primal products
for retailers. Product could be ready-to-cut or pre-
cut and packed.
• Cleaning. The industry can assist with improving
the clarity about what is proper cleaning in a store
and how to train employees to do a thorough
cleaning of the meat shop.
What Changes Would Assist Retailers?
Cleaning Regimes

18. Food safety
• Margin issues and cost cutting
• Master case to the retail pack
• Veterinarian syringes
• Local buying

19. Food safety
• Food illnesses reported to retailer
• Grind separation
• The attitude of older meat cutter
• Use of foam cleaners and sanitizers

20. Explore The Challenges
•Retail
•Labour
•Profit
•Responsibility
•Based on last recalled retailer had to review address some of their policy and
operation practice.

21. What do you really
know about your customers
1) Their business, their customers and their market, their primary product.
2) How big they are and their place within the market?
3) Who does the real buying? Did they change their behaviour lately?
4) Who and what has influence on those buying decisions?
5) How often do they buy and in what quantity?
6) What was their revenue last year? How much of that was spent on food?
7) What’s their financial standing? Do they spend less in restaurant?
8) What trend have they followed that might affect the sales and innovation?
9) Do they value your company or your just convenience?
10) What other problems do they have that you can sell the solution for?

22. Generations
change and
so do
shopping
habits
Baby boomer born 1945 to 1960 (Meaningful)
Generation X born 1960 to 1982 (keep it real)
most importantly
Millennial Generation Born 1982 until now. (The smart
generation)
Consumers aged 18 to 30 tends to be more immature in their decision
versus consumers aged 30 to 65 who will look for healthier product.
Retailer are working hard to understand their consumers and the big
change on how shopper are spending today.
•Used coupon’s wherever possible
•Buy only what is needed
•Switch from national brands to private label.
•Buy items on sale
Today’s Generation

23. FMI Source March 2009
•Consumers are 25 - 39
•No or very minimal culinary skill.
•High income smaller household category.
Focus on Ready to Eat

24. FMI Source March 2009
Does In-Store Signage Drive Sales?

25. FMI Source March 2009
Signage Drives Sales on Promotions

26. o
Survey: What Motivates You to Buy More Meat?
None of the Above
Info on Origin
Nutrition Info
Understanding the
Cuts/Taste
Variety
Quality
% How Can We Help?
• Recipes
• Value – Added Product
• A Professional Butcher &
Clean Environment
• Sales & Promotions
• Quality – No Deception
• Portion Sizes

27. CMC Presentation 2009
Naomi Matthews Michel Picard
Northern Foods plc C & C Packing
London, UK Montreal QC
Naomi.mattthews@yahoo.com mpicard@ccpacking.com
011 44 780 959 5816 514 461 5221