ECR Europe Forum report 2013 by ECR Baltic

BRUSSELS CONFERENCE & MARKETPLACE Volume 3 Number 3 2013

the future’s

bright

2013 ECR CONFERENCE REPORT

the conference programme DAY ONE PLENARY 1 Opening remarks and welcome Vincent Carton, Managing Director, ECR Europe The future is bright! Thomas Hübner, Carrefour; Jan Zijderveld, Unilever; Dame Lucy Neville-Rolfe, EuroCommerce The case for optimism Joanne Denney-Finch, IGD Towards a sustainable future Jan Peter Balkenende, Dutch Sustainable Growth Coalition Ingredients for growth Dominique Reiniche, Coca-Cola

Crazy? How to capitalise on shopper irrationality Ken Hughes, Glacier Consulting Manufacturers and retailers: How can they both improve? Professor Marcel Corstjens, INSEAD The route to sustainable consumption Valérie Séjourné, AISE; Anne Vandenbergen, Colruyt; Neil Coles, CSCP; Franz Speer, Malte Turk, Henkel Facilitated by Henkel PLENARY 3 WORKING TOGETHER… RESPONSIBLY Welcome and introduction Christian Verschueren, EuroCommerce

PLENARY 2

Competitive elements Joaquin Almunia, European Commission

COLLABORATING FOR A BRIGHTER FUTURE Introduction to five finalists of Best Activation Award Thomas Hübner and Jan Zijderveld

Panel discussion Anna Maria Corazza Bildt, MEP; Véronique Hombroekx, Mondelëz International; Léandre Boulez, Auchan; Ursula Pachl, BEUC

Germany: Overcoming obstacles together… a win-for-four model Kay Schiebur, Lekkerland; Thorsten Rodehüser, Mondel¯ ez International

The retailer and sustainability Luis Reis, Sonae

Greece: What’s for dinner tonight? Giorgos Dedes, Marinopoulos; Andreas Aslanidis, Unilever Italy: Collaborative transportation and asset sharing Matteo Gasparini, Carrefour; Antonio Malvestio, P&G Netherlands: Speed docking: a step-change in efficiency and breakthrough in value chain acceleration Tom Tillemans, Heinz; Frans van den Boomen, Mars UK: Job swap – a way to embed collaboration in the next generation of supply chain leaders Tony Mitchell, Tesco; Wendy Manning, Coca-Cola Consumers: the heart of ECR Professor Marcel Corstjens, INSEAD BREAKOUTS 1 Cutting waste from the supply chain… profitably Thomas Hübner, Carrefour; Francisco Comino, DIA; Sophie Fourchy-Spiesser, Foundation Carrefour; James Tupper, IGD; Jésus Nunez, Mahou San-Miguel; Nestlé; Karl Donnan, Unilever, Alan Williams, Waitrose Facilitated by IGD

ECR Europe 2013

Sustainability: the state we’re in Jonathon Porritt, Forum for the Future AWARDS DINNER Guest speaker: Luc Vandevelde, Change Capital Partners

BREAKOUTS 3 21st century OSA and shrinkage management: choices, challenges and opportunities John Fonteijn, Ahold; Stefan Winter, Oliver Wyman; Colin Peacock, P&G; Adrian Beck, Megan Bornman, University of Leicester Facilitated by University of Leicester E-commerce – the potential for retailing Thomas Bachl, GfK; Oliver Koll, Europanel Facilitated by GfK Germany Shopper insights and in-store action Barry Carty, BWG Foods; Declan Carolan, ECR Ireland; Iñigo Anton, Findus; Rob Mullen, Kerry Foods; Shay Leonard, Unilever Facilitated by ECR Ireland Critical areas for change Onno Fransse, Ahold; Sabine Ritter, CGF; Megan Hellstedt, Delhaize; Britta Gallus, Metro Group; Saliha Barlatey, Nestlé; Nigel Bagley, Unilever Facilitated by Consumer Goods Forum The bright future of consumer goods talent Christophe Gattegno, Hervé Gomichon, Carrefour; Vincent Carton, ECR Europe; Stephanie Penning, ECR LaB; Maggie Chan, Unilever Facilitated by ECR LaB and INSEAD PLENARY 4

DAY TWO BREAKOUTS 2

TRANSFORMING THE SHOPPER EXPERIENCE

Improve efficiency and sustainability with collaborative logistics Antonio Bianchi, Colgate Palmolive; Tom Tillemans, Heinz; Peter Jordan, Value Chain Vision; Frans van den Boomen, Marleen van Vilsteren, Mars Facilitated by ECR Poland

Smart thinking Serpil Timuray, Vodafone Turkey Keynote presentation Professor Kjell Nordström, Stockholm School of Economics

Top topics, top priorities Dirk Vanderveken, GfK Collaboration in practice Alain Galaski, AIM; Christian Verschueren, EuroCommerce; Ian Blandamer, GlaxoSmithKline; Luis Reis, Sonae; Véronique Hombroekx, Mondelez International Mobile, social, big data: The next frontier? Benoit Golay, Icare Institute; Sylvain Rebet, Bobst; Derren Sequeira, Facebook; Ken Venn, Indaba; Geoffroy de Myttenaere, Jean-Albert Nyssens, McKinsey Facilitated by McKinsey

Published by ECR Europe 85 Avenue des Nerviens 1040 Brussels Belgium Reporting: Chris Whitehorn Photography: Anthony Faure Design: Creative Thinking Additional reporting: Katrin Recke, Frits van den Bos, Franz Speer Copyright: ECR Europe

news

‘landmark’ conference Cannes do! opens in Upbeat mood

t would be a gross exaggeration to say the sun shone brightly over Brussels on the morning of Tuesday 14 May for the opening of ECR Europe’s annual Conference & Marketplace. In truth it was grey, damp and dreary. But the mood inside the Square Meeting Centre was distinctly upbeat. More than 600 delegates from over 30 countries – some of them well beyond ECR’s natural European boundaries – squeezed into the auditorium to hear a succession of speakers explain why Europe’s consumer goods industry should face the future with optimism. Under the conference theme The Future’s Bright, the ECR Europe Cochairs, Thomas Hübner (Carrefour) and Jan Zijderveld (Unilever), set the tone with a positive but realistic assessment of the opportunities and challenges ahead. For the first time, the event was being shared with the retail organisation EuroCommerce, which celebrates its 20th anniversary this year, and the EuroCommerce President, Dame Lucy Neville-Rolfe, joined them in welcoming delegates to what she described as a “landmark event” for her organisation. She captured the mood of the event, predicting a “jovial conference”, and pointed out that although commerce has been hit by the tough economic climate it remains one of the few industries that is recruiting. “We represent a sector that is an engine of growth,” said Dame Lucy. From the ECR Co-chairs came the reminder that the food and drink industry plays a vital role in everyone’s lives. With a turnover of some €2.4 trillion, it also amounts to one of Europe’s biggest industries as well as being the continent’s biggest employer. Reiterating the ECR “10 for 20” targets, they identified the areas to focus on in the coming years: n Transforming the shopper experience, particularly for a younger generation growing up in a digital world; n

orking together responsibly – W collaborating to improve the service to consumers and ensuring food safety; ustainability – with targets on CO2 S emissions, deforestation and food waste; and People development – acknowledging the fundamental importance of the industry and making it more attractive to the brightest talents.

ECR Europe 2013

Dame Lucy Neville-Rolfe

Jan Zijderveld

russels may not quite be Cannes, and the consumer goods industry may lack a little of the glitz and glamour of Hollywood, but its own version of the Oscars came to the Square Meeting Centre on the opening night of the conference when the first ECR Europe Awards were presented at a special dinner. Against a starry backdrop and with candelabra and best china and crockery on the tables, delegates cheered and applauded as the Co-chairs, suitably attired in dinner jackets, handed out three awards, for Lifetime Achievement, Next Generation Leader and Best Activation. The Lifetime Achievement Award, chosen by the ECR Europe Board for an individual judged to have made an outstanding contribution to driving the ECR agenda, went to one of ECR Europe’s pioneering co-chairs, Luc Vandevelde, a former chairman of Carrefour and Marks & Spencer. With an eye to the future, the award for Next Generation Leader – as voted for by colleagues on the recent ECR Leading across Boundaries education programme – was presented to Maggie Chan (Unilever). And the Best Activation Award, for the collaborative project judged the most outstanding by delegates following presentations by five finalists earlier in the day, went to the UK team for their job-swap project at Tesco and Coca-Cola. Report and pictures – page 10

Thomas Hübner

contents Towards a brighter future Page 4 Caught on camera Page 8 Working together Page 9 Awards Page 10 Marketplace Page 12 The breakout sessions Page 13

how was it for you?

elegates judged the 2013 conference one of ECR Europe’s best ever in surveys carried out during and after the event. Eighty-nine per cent of respondents described the conference as excellent or meeting their expectations. The breakout sessions all scored at least seven out of ten points, with most rated eight or above. The plenary speakers received equally high marks, with many scoring 8.5 or more. Eighty-three per cent said they will return next year and 86 per cent would recommend it to others.

towards a brighter future

Six of the best… reasons to be cheerful

Joanne Denney-Finch

ant to hear some good news? Things are going to get better. Much better. For a sector that’s grown accustomed to talking more about challenges than opportunities in recent years, the opening presentation by Joanne Denney-Finch must have come as a welcome breath of fresh air. True, we are faced with challenges every day, but with them come opportunities and this, she suggested, is a time of “unprecedented opportunity” for our industry. We are, she predicted, heading for a markedly better future. As head of IGD, the UK-based international consumer goods market research specialist, Denney-Finch is as well placed as most to discern trends and opportunities, and she identified “six big reasons to celebrate”. The first, surprisingly perhaps, was the economy. European growth may have stalled but she urged delegates to look at the bigger picture. Asia’s emergence as the world’s most dynamic force and its swelling middle-class ranks – China’s middle class is now said to outnumber the entire US population – meant demand for meat, dairy and vegetables was soaring.

ECR Europe 2013

And Europe, with its products and expertise, was well equipped to meet that demand. “We can revive the economy in Europe if we fully unleash our capacity to trade – with our industry at the forefront.” Sustainability was her second big reason. She highlighted several ways in which companies such as Nestlé, Heinz, Tesco and PepsiCo were improving resource efficiency – reducing water consumption, cutting packaging, using solar energy or recycling waste materials. “Europe has what it takes to lead the world in this area, delivering a huge financial payback and new exportable skills,” she said. Then there was transparency. For supply chains, the rules of the game had changed. We had to make our chains as watertight as possible. “But,” she added, “if we’re open, honest and committed to improve then people will understand.” Trade relationships were another cause for celebration. An annual survey by IGD revealed a greater appetite than ever for teamwork along the supply chain. Innovation – and what she termed “this golden age of technology” – was

yet another. No fewer than 78 per cent of shoppers across Europe believe their food shopping experience will improve through technology, she said. The starting point was to listen attentively and connect more effectively with them. She gave several examples of innovative developments – Coca-Cola’s vending machine that allows customers to mix their own drinks, Ahold’s concept store in the Netherlands, Evian drinkers re-ordering water simply by pressing a fridge magnet, and nitrogen-fixing crops that reduce the need for fertilisers. Her final reason to celebrate: our people. There is now the perfect case to attract more of the most talented into our industry, she argued. “We can say, ‘if you want to make a really positive impact on the world, to health, the environment, ending poverty… come and join us'.” Europe might be known as the “old world” but there was no need to be old in our thinking. “Europe is still vibrant, diverse, highly skilled, still full of ideas,” Denney-Finch suggested. “The future of our industry is particularly bright, especially if we harness all the positive energy running through our companies.”

Balkenende - 69 future towards a brighter

What a time to be alive!

Kjell Nordström

ohannes Gutenberg has a lot to answer for. Once upon a time, if you didn’t like an idea, you simply killed the person and the idea died with them. But after Gutenberg invented the movable printing machine, 500-odd years ago, that all changed. You might still kill the person but their idea would live on, in print. That’s machines for you! Kjell Nordström’s theory slightly overlooks the pre-existence of quill pens and papyrus, it’s true, but his point was entertainingly made. Machines and technology change everything. Look at your bank account. Even your money is handled by machines these days – 50 to 70 billion machines all talking to each other, all day long. Machines sort things out, he said. They identify the smallest inefficiencies. Talking of money, Professor Nordström suggested we are all capitalists now. The vast majority of countries are today capitalist states, he said, and we’re “probably about to enter the fourth stage of capitalism”. The last stage, which was financially driven, hit the buffers spectacularly a few years ago. The next, he said, would be based on trust (although possibly not where bankers are concerned) and would be a liquid form of capitalism. Professor Nordström, an economist, writer and professor at Stockholm School of Economics, was a late replacement for Carrefour CEO Georges Plassat, who had had to cancel at the

last minute. He proved an entertaining and thought-provoking substitute. As technology and human intelligence advance, generation by generation, so we will see increases in the amounts of data and the complex “multi-polarity” of business. In this scenario, he said, we would need to collaborate more than ever, as companies in future would not be able to do everything on their own. Turning to social implications for the future, he said that as women gained more freedom they were increasingly seeking more education. This was already being seen in the proportion of female graduates emerging from university. “Women study,” he said. “What men do, we don’t know.” He offered another simple fact about women: “Women always pay back. Men sometimes pay back. Do you remember Lehman Brothers? Think Lehman Sisters!” Other social considerations: more than 85 per cent of the world’s population will live in cities by 2050. And people in cities live up to five years longer than in the country. In his own city of Stockholm, he

added, 64 per cent of all households are single people. The propensity to live alone, he added, is coupled with a “propensity to create children through several partners”. Everything is becoming more liquid, families included. “All of us are becoming richer too, and technology is the prime suspect,” he added. In the next four to five years, he predicted, we would see the roll-out of 3D printing, which would simplify and cut the cost of manufacturing. “It’s kind of Harry Potterish but I would argue that there is no supply chain that will not be affected by it,” said Professor Nordström. He predicted we would also see China’s progress hampered by its inability to switch from low-cost manufacturing to innovation, simply because its central control doesn’t foster innovation. And we’d see the rise “for the umpteenth time” of the US. “I am an optimist,” he concluded. “I think there has never been a better time to be a human. In the last 30 years we have done more than in the previous 100, and life expectancy is also longer. Technology has made it possible.”

A future based on trust and transparency

Dominique Reiniche

e talk the talk about collaboration but do we always “walk the walk”? Are our partnerships really based on mutual trust? Dominique Reiniche (Coca-Cola) posed the question when she examined the nature of relationships between retailers and manufacturers. “We are at a turning point,” she suggested. “We have to re-question ourselves and the way we work in order to prepare for a bright future for Europe.” The question about trust was partly rhetorical, and she recognised that “mutual trust is all the more difficult to >>

ECR Europe 2013

Balkenende - 69 future towards a brighter

>> nurture in a difficult economic climate”. Even so, she argued, we need to do more if we are to make a significant difference in “the real world where it all happens – our stores”. Although growth in the beverages sector was forecast to be smaller in Europe than in other parts of the world, there was still the potential to increase volume sales. But it was important to convince authorities not to create more barriers and constraints to trade. Health and wellness, and

ingredient safety, were key issues too. Reiniche saw three prerequisites for growth. The first was to act collectively and transparently. “Creating good value products is no longer enough. Today we need to be transparent. Consumers demand it. We have to live in glass houses.” The second was to switch from a “share-gain war game” to a “grow the category pie game”. With more consumers – including one billion more middle-class consumers – globally

in the next 10 years, there was clear potential for growth. Finally, we needed to establish a new value creation collaborative model based on mutual confidence and trust. Inviting all retailers and manufacturers to “join in a leap of faith”, she said the industry had “a huge responsibility to set the foundations for growth for future generations” and create a stronger Europe. “It’s up to us,” she concluded. “And let’s not forget that trust is a fragile thing.”

Sustainability depends on us

o we face a bright, sustainable future? Hmmm, maybe. “I don’t want to rain on anybody’s parade but I can only give [that question] a resounding possibly,” the eminent environmentalist Sir Jonathon Porritt suggested in an appraisal of sustainability issues. In a long and distinguished career as a writer, broadcaster and commentator on sustainable development, Sir Jonathon has advised government ministers, run seminars for companies, been a trustee of WWF UK and director of Friends of the Earth, and co-founded the charity Forum for the Future. He is also co-director of The Prince of Wales’s Business and Sustainability Programme. But these days, he told delegates, he looks increasingly at businesses to cheer himself up, having had the energy “sucked out” of him by governments over the years. And there were several reasons to feel encouraged. An important change he had witnessed was the growing leadership role being played by businesses. “There are now many people in sustainability today who look to industry to drive it,” he said, praising the work of the Consumer Goods Forum in particular on deforestation. In the past, consumers had largely been passive observers in the debate. “Mythology will tell you consumers are active in getting companies to change,” he said. In fact, it needed businesses to take the lead. “We are getting good at behaving more sensibly and sustainably,” he said, “but the idea of the word ‘less’ when there are more people coming into the world presents us with difficulties.” Another important change concerned science. In the ‘70s, scientists had been blind to sustainability. But innovation was critical, and today a great deal was being done.

ECR Europe 2013

He worried, though, that science could often be set aside when it became inconvenient. “In the US there is a profoundly anti-scientific feeling, which is disturbing. A lot of people and politicians are unconcerned about the issues that concern Europe, such as climate change. “In fact a lot of them never use the dreaded words ‘climate change’,” he added. We were living in a world that was moving from what scientists called a “two-degree world” to a four-degree world – a reference to the Stockholm Agreement in which countries agreed to

act to keep the predicted increase in the global climate to within two degrees. “There is no scientist – no real climate scientist – in the world today who believes we can keep it below two degrees now,” he said. “Let’s be clear. Sustainability depends on radical de-carbonisation. Government leaders have to articulate that.” Traceability was becoming more and more important. It built trust, and trust depended on truth. And the inconvenient truth for us all was that unsustainable consumption could not continue.

Sir Jonathon Porritt

Balkenende - 69 future towards a brighter

The future? it’s Mobile and super-connected

he internet and mobile phones are at the centre of the transformation taking place in our lives, Serpil Timuray (Vodafone) told delegates Today, she said, there are as many mobile phone subscribers in the world as there are people, and more people have access to a mobile than to water and electricity. She had some other mind-boggling statistics too: 91 per cent of users keep their phone within one metre of themselves and 66 per cent keep it next to them at all times. Twenty-six per cent admit they check it while eating, while 23 per cent said they would rather lose their wedding ring than their mobile. Making a welcome return to ECR, Timuray – who worked for Procter & Gamble and Danone and served as co-chair of ECR Turkey before joining Vodafone Turkey where she is CEO – described the main trends in mobile phone use and their relevance to retailers and manufacturers. Among these were social networking, which she said provided a gateway to contact with the consumer, digital window-shopping, the migration from “voice” to “visual” with mobile devices

ushering in personal computing, and the phenomenon of the “m-wallet” – mobile wallet – enabling shoppers increasingly to pay via their phone. Already, some $600bn worth of transactions are handled this way, she said, and the figure is growing. Another pressing issue for manufacturers and retailers was the management of “big data” – data too large to be processed by conventional systems. Timuray warned of a coming “explosion” in data traffic, with a more than 40 per cent annual growth expected. “Big data is the next frontier for the FMCG industry,” she said. In our “super-connected” future, she listed some of the mobile capabilities that would add to this explosion – such as cross-selling (allowing us to analyse incoming data), micro-segmentation (detailed data analysis), locationbased marketing (localised marketing initiatives) and in-store behaviour analytics (enabling retailers to work out how much a customer buys in each aisle via their mobile phone). Mobile technology also helped to improve supply chain efficiency, for instance in inventory management,

Time to shape the debate

Jan Peter Balkenende

ECR Europe 2013

he future is indeed bright – if we can learn to live sustainably. That was the message from Jan Peter Balkenende, a former prime minister of the Netherlands, speaking on behalf of the Dutch Sustainable Growth Coalition. ECR Europe conferences have heard from a few politicians over the years but Balkenende, now a partner at Ernst & Young and professor at Erasmus University in the Netherlands, is the first ex-premier to grace its stage. The Coalition, which numbers Heineken and Unilever among its partners, seeks to connect economic profitability with social and environmental progress in promoting sustainable growth, and Professor Balkenende spoke entertainingly and endearingly of the virtues of working together to “shape, share and stimulate” the debate.

Serpil Timuray

sustainability (tracking energy consumption) and in logistics efficiency (using GPS to monitor truck movements). With mobile phones, she concluded, everyone is a winner.

We are living in a world in which sustainability should be high on the agenda, he suggested, but is it always really part of a company’s DNA? In the case of the Coalition’s members, it clearly is, he said, praising Unilever’s Paul Polman as an example of someone who had become an influential speaker and advocate on the subject. Company CEOs had a licence and responsibility to lead the debate on sustainability. It should not be left to politicians. The financial crisis that erupted in 2008 had also been a moral crisis. In future, profits would need to be made in a sustainable way. If the 20th century was the age of technology, the 21st would emerge as the age of responsibility, he believed. He urged the consumer goods industry to take up its responsibilities and help shape the debate on sustainability, and said he had been impressed by the enthusiasm shown at the ECR Europe Leaders’ Forum on the previous day. “The future is bright,” he told delegates. “But it will have to be a sustainable future.”

caught on camera

ECR Europe 2013

working together The importance of the proposed voluntary scheme for implementing good practice in the food supply chain was the subject of a panel discussion during the plenary session on Working Together Responsibly. With the MEP and consumer champion Anna Maria Corazza Bildt joining the debate by video link from Stockholm, conference moderator Louise Minchin, left, led the discussion. With her on the panel were Véronique Hombroekx (Mondelëz International), Léandre Boulez (Auchan) and Ursula Pachl, deputy director of BEUC, the European consumer organisation.

Joaquín Almunia

Competition watchdogs on the prowl

he food and drink industries play a vital part in everyone’s lives – and so does competition control. And in the current economic climate, we can be sure Europe’s competition watchdogs are keeping the closest possible watch on the consumer goods supply chain. That was the clear message from the man who leads on competition policy in Brussels. Opening a plenary session shared with EuroCommerce on Working Together Responsibly, Joaquín Almunia, Vice-President of the European Commission and European Commissioner for Competition, said he viewed the economic crisis as a good opportunity to sort out old structural problems in Europe’s economy, and was confident Europe would rise to the challenge. Even so, the situation was extremely serious in many parts of Europe and, after five years, the crisis was taking a “heavy toll” on people. “The organisations you represent have a special responsibility towards the growing number of Europeans who see their standards of living fall,” he told delegates. Despite diversification, food and

ECR Europe 2013

other consumer goods still accounted for about 15 per cent of household expenditure in Europe, and more like 30-45 per cent in less affluent areas, he pointed out. This meant, to quote ECR’s mission statement, it had never been more urgent to find better, cheaper and more sustainable ways to bring consumer goods to market. As for competition policy, it also meant “we will continue to watch food and consumer goods markets closely. In the current conditions, keeping these markets free from illegal and harmful anti-competitive practices is a litmus test for us. “At bottom,” he added, “competition control is about consumer welfare. We will show to the people that competition control can bring real benefits when they most need them.” A report published last year showed that the Commission and national competition authorities had been “very active in the food and retail supply chain”. Between 2004 and 2011, more than 180 anti-trust investigations were carried out, almost 1,300 mergers reviewed, and over 100 marketmonitoring actions taken. Some 30 per cent concerned processing, 25 per cent retail and 16 per cent manufacturing. In response to complaints received by the Commission, a specially created task force had been looking into recurring allegations of unfair trading practices in food and consumer goods, Commissioner Almunia reported. The European Retail Action Plan was another initiative. This was aimed at eliminating the obstacles that “still hamper the creation of a genuine Single Market in retail”, and also helped to keep consumers better informed on prices, quality and sustainability. Additionally, a High Level Forum on food, set up in 2010, had led last year to a self-regulatory enforcement initiative which was now being implemented. This,

he said, had the Commission’s support. “I believe that conducting a largescale exercise to test flexible solutions to the unfair trading issue is a good idea. If you all implement the mechanism, this will produce results for everyone else in the chain. The ball is in your court now to make the mechanism work as intended.”

Luis Reis

Sustainability and survival

“W

hen the going gets tough you need to make sustainability a stronger bet,” Luis Reis, Chief Corporate Center Officer of the Portuguese retail group Sonae, suggested. Describing how the group’s performance had benefited from sustainable practices during the difficult economic times, with turnover remaining stable as CO2 emissions and water consumption fell, he argued that sustainability played an important role in bad times as well as good. “Social responsibility is something we take very seriously – it’s been in our DNA for a long time,” he told delegates. Measures included a sustainable fishing policy, developed with help from Greenpeace, close co-operation with farmers, and a variety of local community activities involving employees.

ECR EUROPE AWARDS

Jon Woolven (centre) collects the Best Activation Award on behalf of the UK team, flanked by the other finalists. With them are ECR Europe Managing Director Vincent Carton (third from left) and ECR Europe Co-chairs Jan Zijderveld (fifth from right) and Thomas Hübner (right)

job-swappers get the people’s vote

fter 21 submissions from 13 countries, a rigorous elimination process by an independent panel of judges, and a series of strictly timed 10-minute presentations in front of the assembled delegates by the five shortlisted finalists, it was left to the people to choose on the winner of the Best Activation Award. That’s democracy. Winston Churchill famously observed that democracy may be seen as the worst form of government “except for all the other forms that have been tried from time to time”, and it proved well up to the task once more as the collection boxes were quietly passed along the rows and some 600 delegates without fuss dropped their voting slips into them. While the conference continued, the count got under way in a back room. A few hours later, at the awards dinner, the winners were announced. Step forward the UK team. Except the UK team – Wendy Manning (CocaCola) and Tony Mitchell (Tesco) – were no longer in the building, having been summoned back to base by their companies for meetings. In their absence, Jon Woolven of IGD, which runs the UK National Initiative, stepped up to receive the award on their behalf from the Co-chairs, Jan Zijderveld and Thomas Hübner, and praise all five entries for their impressively high standard. Earlier in the day, the German team of Kay Schiebur (Lekkerland)

ECR Europe 2013

and Thorsten Rodehüser (Mondele ¯z International) had led the presentations with their joint cross-docking project, which they described as a “win-for-four model”, offering benefits for supplier, retailer, consumer and environment alike. They were followed by the Greek team of Giorgos Dedes (Marinopoulos) and Andreas Aslanidis (Unilever) who explained how, with the Greek economy on its knees and many Greeks no longer able to afford to indulge in the favourite family pastime of eating out, they had developed a programme to revive the art of cooking at home. The Italian team of Matteo Gasparini (Carrefour) and Antonio Malvestio (P&G) came next with a collaborative logistics and asset-sharing project aimed at reducing the number of trucks on the road and thus cutting pollution and costs. Fourth up were the Dutch team of Tom Tillemans (Heinz) and Frans van den Boomen (Mars), whose speeddocking initiative launched in 2011, with cost and environmental benefits, had developed into a national championship with many other companies joining in. Last on to the stage were the UK’s Wendy Manning and Tony Mitchell with their explanation of how Tesco and Coca-Cola had swapped two of their managers for a year to gain a deeper understanding of each other’s company and see the partnership from the other’s perspective. “ECR has for many years promoted

collaboration, but one barrier has been the deep-seated cultural differences between companies,” said Manning. “How can people understand other people’s cultures if they are not exposed to them?” Video interviews with the chosen job-swappers, Samantha White, Customer Demand Manager at Coca-Cola in Nottingham, and Mark Honey, Central Promotions Manager at Tesco’s HQ, testified to the challenges and ultimate success of the project. It had strengthened the companies’ relationship and exceeded all expectations, said Mitchell. “A groundbreaking experiment… and a revolution in the making?” Wrapping up the presentations, INSEAD marketing professor Marcel Corstjens had praised all five and offered his own “wish-list” for 2014: “let’s have more projects, more multidimensional collaboration, and more outcome measurement.”

ECR EUROPE AWARDS

Luc Vandevelde (left) receiving the Lifetime Achievement Award from the Co-chairs

Maggie Chan, who received the Next Generation Leader Award

Past and future in the spotlight (and sorry about the kilt!)

friendly word of warning: if Enrico Toje ever phones you and invites you to be guest speaker at an ECR dinner, exercise extreme caution… Luc Vandevelde, smiling ruefully, said as much when he got to his feet to speak at the ECR Europe Awards dinner. By then, of course, it was too late. We’d already enjoyed a slide show from the archives: Luc on holiday; Luc in his swimming trunks; Luc with glass of wine in hand; even Luc in a Scottish kilt with sporran and long woolly socks (from the ECR conference in Glasgow in 2001). Vandevelde, one of the early cochairmen of ECR Europe and an influential figure in its formative years, had merely expected to be guest

ECR Europe 2013

speaker at the inaugural ECR Europe Awards night. He hadn’t also expected to be the recipient of the first Lifetime Achievement Award. Or, consequently, the subject of an entertaining introduction by his old friend and fellow ECR stalwart, Enrico Toje (Johnson & Johnson). All good fun, though, and a reminder for those with long memories of how far ECR Europe has come in a decade or so. Vandevelde echoed that sentiment. From what he had seen at the conference that day, ECR Europe had made a lot of progress since his time in the chair. But he felt there was still a long way to go. Out-of-stocks, for example, remained a big problem. “Why is it,

when there are so many tools around to help us, the OOS problem is still not resolved?” he asked. Ten years ago, another concern had been the industry’s declining “share of wallet”, and he worried that we were continuing to lose our share both of wallet and talent. He also felt the industry should do more to help farmers. It was wrong that farmers got poor prices, particularly when they were losing crops to bad weather. Competition, of course, was healthy. So too was collaboration. Vertical collaboration through the supply chain should pose no competition problems, and remained as important as ever. If the former Carrefour and Marks & Spencer CEO represented ECR’s early days, the arrival on stage of Maggie Chan hinted at the future. Chan had participated in ECR’s Leading across Boundaries (LaB) executive education programme in Singapore and Paris earlier this year and during the course had been voted by her fellow participants as most outstanding student. Receiving the Next Generation Leader Award, Chan – who has worked for Unilever in Hong Kong and China and now oversees the company’s Wal-Mart account in the US – joked that in Chinese, ECR would appear as RCE, which she translated as Responsible Consumer Enjoyment. Among all the other worthy and necessary things we should be doing for shoppers, bringing enjoyment to the experience was high on her list. “We have to excite the shoppers too,” she suggested.

marketplace

ECR Europe 2013

breakouts

Consuming responsibly TACKLING

y 2050 we will have nine billion mouths to feed – two billion more than today. And as Neil Coles, of the Centre on Sustainable Consumption and Production pointed out, we will need the equivalent of six planets Earth to do so if we continue at current rates of consumption. With that sobering thought in mind, a Henkel team led by Franz Speer, Malte Turk and Bernhard Koospingraven, in a session on The Route to Sustainable Consumption, posed the question: just how do we create more sustainable consumption patterns? Drawing on the findings of a Henkel European shopper study,

they concluded that sustainability has little influence on shopper behaviour and argued the need for consumer education by industry. It should be about responsible consumption rather than less consumption, they suggested. They were joined by Valérie Séjourné, of the International Association for Soaps, Detergents and Maintenance Products, who gave practical examples of initiatives, and by Colruyt’s Anne Vandenbergen, who described how the Belgian retailer succeeded with a project to inform and educate staff and consumers on the sustainable use of concentrated liquid detergent.

Avoid ‘value incontinence’

NSEAD professor Marcel Corstjens studied the food industry for many years and still thinks collaboration is the key to value creation for all parties involved – retailers, manufacturers and, perhaps most important, consumers. Discussions between retailers and manufacturers about how to divide the created value can be a major obstruction to efficient collaboration, he said. Although retailers often have the buying power to get the best part of the deal, in practice they end up with a low return on investment because, he added, they “suffer from value incontinence”. Because of fixed costs and low switching for their customers, retailers can’t hold on to the value they created or negotiated. One way to avoid this “value incontinence” is to focus collaboration on creating a personalised offer for the consumer. A more targeted (and perhaps smaller) assortment,

ECR Europe 2013

Marcel Corstjens

promotions, loyalty programmes and overall shopper experience will result in higher (perceived) switching costs for the consumer so retailers can better hold on to the value they created and manufacturers can use shared loyalty data to benefit from more targeted and therefore more efficient marketing. He identified new areas for collaboration as e-commerce and sustainability. Personally, he added, he would love to see retailers and manufacturers start a collaborative effort against obesity.

THE OOS HEADACHE, HEAD ON

ne of the root causes of out-of-stocks still plaguing the FMCG industry is the high level of shrinkage – theft, damage and waste, often resulting from lack of efficient processes. This is particularly true for the fresh sector, where waste – up to one in seven truckloads at Stop & Shop in the US – is a real headache for store managers. Through a six-point programme focusing on product freshness, the company managed to reduce shrinkage by 30 per cent and thereby increase availability, lifting sales by four to five per cent. The role of the store manager is crucial for such a turnaround. ECR Europe recently decided to expand the remit of the Shrinkage team, which has been working for over 10 years on providing best practice recommendations to the industry, to include on-shelf availability. Both issues can be tackled through applying operational excellence in-store and throughout the supply chain, in particular through better staff morale. Results of a study on the topic are expected in the summer and a workshop for the ECR community will follow.

breakouts

The talent spotters

Critical areas for change

ith almost 10,000 stores and 365,000 employees spread across 33 countries, discovering, nurturing and managing talent is no simple task at Carrefour. In a session on The Bright Future of Consumer Goods Talent, the man responsible, Carrefour’s Talent Manager Chris Gattegno, explained that the group’s HR strategy – “to be the employer of choice” – is linked to its business strategy. At its simplest, he said, it’s about getting the right people in the right job and having succession plans in place. Staff were “measured” by the Carrefour core values – commitment, caring, positive. He described the group’s “three speed” fast-track programme for high flyers – jump, high jump and pole vault – and gave examples of the training given in China, where he said Carrefour had some 220 stores and was growing rapidly. There, some 500 people had been promoted to manager positions

Hervé Gomichon

since 2000, and 40 to 50 people were being trained as store managers each year through courses and on-the-job training. He was joined by a Carrefour manager, Hervé Gomichon, and the first winner of the ECR Next Generation Leader Award, Maggie Chan (Unilever). Both had taken part in the most recent LaB (Leading across Boundaries) course in Singapore and Paris, and described the course and its benefits, particularly the networking and sharing of ideas. The final word was left to ECR Managing Director Vincent Carton, who outlined the characteristics of good leadership – food for thought for the young students in the room.

Hi, I’m your new shampoo

n a world where there are more mobile phones than toothbrushes and more active SIM cards than people, and where Africa has become the second largest market for mobile phones, communication is big. Whether it is about creating customer communities who can exchange free messages to build brand loyalty or about more targeted marketing through social media, the challenge for our industry is to link on a one-to-one basis with customers on line. Consumers talk through their mobile phone, express themselves on social media and expect to be served on a personal basis. Technology enables companies to analyse consumer behaviour on the internet to create that link with the consumer even though handling huge amounts of data is involved. Real-time systems will have to handle this “big data” to create the right personal answers to the consumers’ questions and build customer loyalty. Next frontiers: POS data will be linked to Facebook accounts and products

ECR Europe 2013

Ken Venn

will have their time line on Facebook, stating their origin, ingredients, fan club, manuals, recipes and even a personal message from a buyer who wants to give the product to a friend. When the friend scans the received product they can read every bit of information about the product, including a friend’s message: Hi Happy birthday. I am your new shampoo. Don’t think this is a vision of the future, delegates were told. It’s here already.

he Consumer Goods Forum has identified sustainability, health and wellness, and food safety as critical areas for change in our industry. Where sustainability is concerned, the focus is on avoiding deforestation, reducing the impact of refrigeration, reducing solid waste and developing a common language and measurement. In a session on Critical Areas for Change, delegates heard that companies such as Unilever and Wal-Mart have set ambitious goals to reduce their environmental footprint. This started not with extensive business plans, they were told, but with commitment from their CEOs, who have a clear vision of the important role of their companies in today’s society and the obligations this brings. Delhaize stated its commitment to reduce its CO2 footprint by switching from ODS to ozone-friendly HFC. Through a joint effort with other equally committed retailers and manufacturers, the company wants to influence the business case in a positive way. Nestlé and Ahold showed their work on the topic of health and wellness. Within the Consumer Goods Forum, they and other companies agreed to offer consumers a range of products that support healthy living, supply product information and are marketed responsibly, especially towards children. The last critical area for change was illustrated by Metro, which explained how the Consumer Goods Forum has helped the industry to improve food safety through work with third-party certification schemes and traceability solutions. Metro explained its vision on a new approach on traceability using unique GS1 identifiers and the EPC information systems to trace products and the relevant information from the parties involved.

Sabine Ritter

breakouts

IMAGINATION… THE MISSING INGREDIENT

OTHER HIGHLIGHTS n

uccessful initiatives to cut waste S from the supply chain, saving costs and reducing the industry’s impact on the environment, were explored in a session which highlighted the progress being made by ECR-active companies across Europe.

ompanies are now committing C their voluntary support to an agreed set of principles on good commercial practice, and in a session led by Christian Verschueren (EuroCommerce) and Alain Galaski (AIM) delegates heard about the thinking behind the agreement and the progress made so far.

Online channels are now widely used as part of marketing strategies. A session on e-commerce’s potential in retailing examined how Europe’s FMCG industry is making use of online marketing.

ow do you create new sales H growth in mature markets? This was the starting point for a session which looked at how real and close collaboration between trading partners can stimulate demand and lead to new opportunities.

Across a crowded room… Ken Hughes holds the audience’s attention

hoppers are not as imaginative as we might think. Nor, suggested Ken Hughes (Glacier Consulting), are shopkeepers. “You come into the store and they say ‘Here’s the trolley; buy what you want’. That’s our marketing. We do some point-of-sale, put down a few floor stickers, but not much more.” As for the shoppers, they like routine. They shop as quickly as they can because they have other things to do. And they prefer to play safe and buy what they’ve always bought. All of which leaves little scope for stores to increase sales. Last year, in two sessions, Hughes looked at experiential marketing and the use of our senses – taste, smell, touch and so on – to attract shoppers. This time, in a session on How to Capitalise on Shopper Irrationality, he explored what he called “behavioural economics” – how our shopping habits are dictated by normal human behaviour.

He described the routine approach to shopping – product recognition, information, evaluation, purchasing intention and decision. “Many supermarket products fail because people don’t try them – they are happy with what they already buy and are afraid to experiment.” Stores needed to “turn off” that human emotion of fear. Hughes gave some examples of the ways shoppers behave: for instance, the endowment effect, in which people place a higher value on what they already know or own; the herding effect (choosing to eat in busy restaurants and ignoring the empty ones); selfherding (following our own previous behaviour); and the priming effect (people do what they are told to do). “By using [shoppers’] expectations we can load the dice in our favour,” he said. “But we don’t set, let alone manage, expectations.” Understanding shopper behaviour was the starting point in building sales.

Alain Galaski

WHAT’S ON THEIR MIND?

C Dirk Vanderveken

ECR Europe 2013

onsumer marketing is more likely to keep Europe’s senior executives awake at night than corporate responsibility, regulations or food and product safety, it seems. In a survey of 400 executives across 22 countries, GfK asked for their opinions on 12 main topics. The most pressing was consumer marketing, with well over 50 per cent judging it, in the words of the survey, the subject most likely to keep them awake at night. Next came product/brand/formula

offer (just over 40 per cent), closely followed by the economy/consumer demand, industry/distribution relations, and the competitive landscape. Least likely to keep them awake, it appeared, were human resources, food/product safety, and regulations. In a crowded round-table session, GfK’s Dirk Vanderveken led delegates through the findings, picking out particular issues within each of the 12 topics and showing how different countries voted on them.