It is often hard to relate our work on the farm to the retail sector, but it is important to do so. As every bovine ends up as beef or a beef product at some point in their life, it serves us well to look at all that we do and how that may impact retail sales.
To get comfortable with retail, we need to know a little about it. What does the retailer want? What does the retailer need? In the North American retail scene, success is measured in terms of sales per square foot and includes food, technology and clothing.
Of the top 10 North American retailers, Apple is the largest in terms of sales per square foot. The stores are basically playrooms where you can try its products. This is called an “experience economy,” and Apple has tapped deep into it. Folks want to see, hear, touch, smell and taste and by just simply allowing consumers to play on computers in an uninterrupted fashion, Apple sells more product than anyone else on the continent.
What is interesting here is that there is very little product in sight. Unlike Wal-Mart, which overwhelms the senses with floor-to-ceiling merchandise, Apple just puts a toy on a table.
Coach is the second-largest retailer in terms of dollars per square foot in North America. When you enter a Coach retail outlet, you will see just one or two handbags on display. The idea in this kind of exclusive marketing is to elicit a desire to belong. Whether you can (or cannot) afford a $2,000 handbag is irrelevant. What is relevant is the fact that you have one and therefore are a member of the “club.” High-end marketing like this is very successful in the food industry as well. We see it especially in wine and spirits but also in specialty fruits.
Whole Foods and Costco
In the top 10 there are two beef retailers. One is Whole Foods, which has been able to charge a premium by marketing its products as important to the health and wellness of the consumer.
Whole Foods goes beyond regular label claims and also includes labels that assure the consumer of animal welfare protocols. As consumers move away from caring about the farmer and into caring about the animal, these labels are important drivers at the retail shelf. In researching consumer trends, consumers have repeatedly said that they will pay up to 20 per cent more for food animal products that have not been penned, caged or crated.
Costco also made the top 10 and has a different appeal to the consumer and that is one of value. By shopping the world over and bringing the best products in at wholesale prices, Costco has been successful in capturing all the cultural and economic demographic in a community. It is sensitive to what sells regionally and has stringent quality control. It also employs some of the most robust foodsafety measures at the meat case in the industry. You don’t really get the club or experience culture at Costco, nor will you see targeted health and wellness claims, but you will get guaranteed good value for your money and that has a universal appeal.
Ethnic demand growing
Culture in North America is changing and we now need an abundance of diverse products to meet the needs of the consumer. Now one-third of all retail in Canada is ethnic.
Economics, especially regional economics, makes retailing a nightmare. For the beef industry to say that a striploin is a great steak and expect someone to buy it in an economically stressed community is sheer folly.
Attending the Canadian Food Summit was an eye-opener as 594 “foodies” and six farmers entered into discussion on the future of Canadian food policy. Most attendees felt that a city could be fed with a farmers’ market. Most speakers put the issue of retail success, food safety and food security squarely on the farmer’s shoulders. In the absence of double-digit growth in retail food sales, Michael McCain grasped at straws and claimed that farmers would simply have to get bigger. Galen Weston preached that farmers would have to be more innovative.
What they perhaps did not realize was that the technology of the day had passed them by and they were still struggling with outdated retail philosophy. You can’t even get into the Loblaw site to shop online.
Today, one-third of the Canadian population is single and shops online one-third of the time. In European consumer studies, a full 74 per cent say they will buy all grocery items online. This has a huge impact on the retail industry, which has not tuned into this rapidly spreading trend and to the beef industry which has no idea how to process and present product for a single consumer who buys using a mobile device. That mobile device also may reveal all we do as an industry that appeals or repels the consumer.
It is not fair to say that the beef industry is part of the problem at retail, but we are part of the solution. By understanding a little on how successful retail thinks, we can combine these targeted marketing programs with technology for success.