This week, I attended the CCGD West Annual Conference held in Calgary. This gathering of the Western Canadian grocery industry is a great networking function and also includes interesting and relevant speakers for the Grocery / CPG industry.
The two speakers in the morning session tackled big-picture insights and their relevance to our industry.
Leading off was Dr. Thomas Homer Dixon, a professor at the Centre for Environment and Business in the Faculty of Environment, University of Waterloo. His presentation, “Global Trends and Groceries: Shock, Resilience and Innovation” talked about how two major stresses, climate change and energy supplies could have a dramatic effect on the grocery industry in the future.
Specifically, the climate changes that we are seeing around the planet have the potential to create food shortages not just locally, as we saw with the major famines of the last decade, but across the global food supply chain. This is due to the interdependence of he food supply where a drought in the wheat belt in China could drive up prices for this essential commodity around the world.
Secondly, Dr. Homer Dixon linked the availability of cheap fossil fuels to the progress that we have made in increasing food yields in the 20th century, which allowed us to support the unprecedented population growth on the planet.
As known oil supplies dwindle and the risk of conflict risks choking off world supplies, a fuel shortages would almost immediately affect food production due to lack of supply for equipment and increased prices which would drive many farmers out of business.
His key message was that the industry must build resilience into the food system to protect against shocks / failures to the system.
The second speaker, Carman Allison, Director of Consumer Insights for AC Nielsen highlighted three major trends in his presentation titled “The Connected Consumer”.
After a look at the confidence of the Canadian consumer, which has hit a plateau in the neutral position in recent periods, Allison explored the development of the Discount channel in Canada and its effect on promotional pricing across the country.
The discount channel has blossomed in Canada over the past few years but Nielsen sees sign of slowing in this sector. Market share results for the Discount channel in the latest quarter are as follows:
Discount Grocery Market Share Q3 2010
The evolution of Discounters has resulted in an ever-increasing level of promotion with promotion accounting for 42% of units and 31% of dollars in the latest quarter.
As a result, promotions are becoming more aggressive and less efficient at the same time. In fact Nielsen believes that retailers in Western Canada lost $51 million in sales (and profit) in the latest quarter due to inefficient feature pricing.
Allison’s other two points were linked to the continued evolution of how consumers are using social media in their everyday lives including shopping.
This trend bodes well for the grocery industry as the main target shopper, females, over-index at all age ranges for the use of social media.
In order to take advantage of this Allison suggested that the industry must move quickly to embrace social media and adapt marketing and promotional plans accordingly – to 50% of expenditures or even beyond.
Overall, CCGD West 2011 was an interesting and efficient session and its sister conferences in Quebec, Ontario and Atlantic, as well as the National conference being held in Ottawa this May, should be on your agenda for the remainder of 2011.
Find out more details about these conferences here.