June/July, 2003

From the Editor

The Retail Responsibility

This month’s cover story focuses on a key industry issue: shelf life, particularly for refrigerated fresh foods. The issue that it raises is specific: that the industry should adopt a standardized protocol for determining shelf life. This is most assuredly the case.

If each manufacturer is simply permitted to claim whatever shelf life it will, and if retailers value longer shelf life, in a classic demonstration of Gresham’s law, the manufacturers who are willing to stretch reality and cut a few corners will eventually supersede manufacturers who are more conservative. This is not merely hypothetical. Already there have been several substantial food manufacturers that have, after extensive investments in product development and market studies, stopped the launch or rollout of refrigerated fresh food product lines. These manufacturers could not, in good conscience, meet the shelf life representations of competitors and would not, as a business practice, use anything but conservative assumptions on an issue as vital as shelf life.

Although manufacturers assume some liability by gilding the lily in this area, the concentration of retail chains and the consequent increase in the power wielded by large buyers has increasingly led manufacturers to think that this liability is a risk worth taking. Indeed for some, the alternative to declaring that products meet retail shelf-life requirements could be bankruptcy.

Yet, although it would be wonderful if the industry would voluntarily adopt a protocol in this area and more wonderful still if retailers would enforce it by refusing to purchase products not shelf-life tested according to this protocol, the whole issue points to a far larger problem: the lack of responsibility accepted by retailers for the products sold.

It is absolutely astonishing – particularly given the growth of non-food retailers in the food business – how low the shelf-life standards are for getting placement in the deli case.

I’m not talking about slotting fees or financial issues, or even liability-driven programs to inspect for food safety violations before putting a company on the approved purchase list. The issue is really a question of putting the consumer first.

You may think it is easy to get a chain such as Target or Wal-Mart to sell a product like underwear. But it is quite difficult. Not only does the chain have internally developed standards on how the product should wear, but also it will make sure the product is tested before it would consider carrying it. So if the retailer expects that an undershirt should last 100 washes without falling apart, that will be tested before that product is an approved carry.

Yet such standards are virtually non-existent in fresh foods. To start with, the standards that do exist are not driven by consumer needs but by distributor and retail needs. So the retailers who demand extended shelf life are often doing it because of their own distribution issues. It is very rare that retailers have studied their own customers’ behavior and determined that they need another two days of shelf life for the lasagna because consumers use it more slowly than anticipated or because consumers store it more poorly than anticipated.

Then, the chains rarely actually test manufacturer claims to make sure they are true. All the forms sent out in this industry demanding that producers attest to everything from HACCP programs to lack of pesticides are not genuine efforts to produce better or safer product; they are principally efforts to shift liability in the vent of a lawsuit.

When the HMR/Home Meal Replacement boomlet hit the deli industry, much attention was paid to the idea of providing “restaurant quality food.” Unfortunately, though the phrase was thrown around frequently, there was little agreement on precisely what “restaurant quality food” meant or why restaurants provided it and most deli departments did not.

Few retailers have succeeded with these programs, and those that have tend to be chains like Wegman’s, chains with leadership that is willing to accept responsibility for making product choices. And that just may be the key.

What distinguishes a restaurant mentality from a retail mentality is the willingness to take responsibility for product selections and quality. If a restaurant chooses to carry salmon, the restaurateur is saying that salmon is something worth trying and that this is a good and tasty salmon. The restaurateur makes a decision that salmon is better to offer than halibut and taking responsibility that this finished product is a good one. The representation to the consumer that the fish is “fresh and flaky” is the restaurateur’s, not the fish supplier’s.

Retailers still think of their job as simply getting product on the shelf and reordering what sells and eliminating the slow movers. Any representations as to quality, shelf life or anything else, are deemed those of the manufacturer, not of the retailer.

And as long as that attitude prevails, retailers will never sell “restaurant quality food” because retailers will never care as much as an organization that has to stand behind these types of representations.

Once upon a time, in a highly fragmented retail market-place, retailers were small and without resources compared to major national food manufacturers. At that time, it might have been possible to believe that producers could generate the standards for products.

With today’s highly concentrated retail environment, this is mostly ludicrous. The carrot and the stick wielded by large retailers are just too great.

So retailers must stand up and accept responsibility.  DB