“I have been blessed to be in South Africa for the past ten days; a country that is so rich in history and where I’ve had the chance to have amazing conversations filled with optimism about the country’s future. I’ve also been able to experience South Africa’s many retail formats for the first time, including the farm and the informal market.”
According to Cathy, the Produce Marketing Association (PMA) has rich resources in research and development, which often derive into insights that may help ignite some creativity regarding ways to go into business or motivate entrepreneurs to take some risks.
“It is essential to really get connected to what is going on globally. There are certainly parts of the world experiencing flat to declining growth in the retail sector. In the EU, for example there is retail consolidation and contraction, as well as a higher tax base, which is a hurdle to consumer spending; Japan is still recovering from the aftershocks of the earthquake and trying to stabilise its production; and India suffers from its lacklustre support to foreign investments.”
“Meanwhile, in the United States there is some optimism about a market uptake, although rather lukewarm; Australia and New Zealand are experiencing pressure on retail pricing, and South Africa suffers from a high unemployment rate and 6% retail inflation.”
“On the other hand, there is also growth in some countries. Brazil and China are pretty parallel in terms of middle class expansion, and Africa has huge potential for growth, while at the same time there are challenges relating to infrastructure and the supply chain.”
Cathy explains that in the developing markets, there are multi-national retailers, such as Walmart, Carrefour or Tesco, that are being very aggressive in terms of growth plans and where they are investing their money. “What is causing these retail trends? Is it supply and demand, population growth, or customer preferences?”
“Overall, the most beneficial factor is political stability, which combined with the greater opportunities for cross-market trade make access to the market a lot easier, and companies take advantage of that. Investors definitely look at the agricultural world, with its steady growth over the past five years, as a secure bet for the future. Last year alone, the revenue generated by exports globally reached 1.8 trillion dollars and it is expected to continue increasing.”
“The population growth and urbanisation of developing nations are also determining factors,” assures Cathy, “as population drives consumption, and urbanised societies, with generally higher wages and better access to education, are likely to have more access to disposable income and to move from growing to buying their food, placing a greater importance on brands. The world’s middle class is in fact expected to grow from 1.7 to 4.9 billion by 2020.”
Going into the key driving forces for today’s retail industry, Cathy affirms that “multiculturalism is the first great force and multinationals nowadays are likely not to put you in a leadership position unless you have some global experience. In a multicultural world, palates also change, and the access to different types of food, not only at restaurants, but also at home, has changed consumer dynamics. Companies should consider what they can do to get ready for diversity and engage consumers across the world.”
“Another very important aspect is transparency. Consumers globally expect a deep personalisation; they want to be able to choose the products they want, when they want them and at what price. Most importantly, they want to know what’s in their food. Technologies that we didn’t have before allow retailers to create a connection with local growers, through signage, the Internet or QR codes; technology has additionally allowed consumer associations to have a much greater impact.”
The president of PMA states that “the only thing you own as a retailer is the relationship you have with your customers. In the end of the day, what we are most daunted and passionate about is gaining their trust, because consumers are connected and they trust each other.”
The third key aspect, according to Cathy, is convenience. “People have less time and are trying to live more active lifestyles, and going to the supermarket is not their top priority. The challenge here is to make the experience unique, thoughtful and engaging; statistics show that 2.3 billion customers already do their groceries on-line each year.”
“But the challenge of convenience is also that it is very personal; for some people it means being able to prepare meals easily; for others, it is related to packaging, serving sizes, being able to choose where to eat. There are also great opportunities in helping people assemble nutritious meals at affordable prices, taking also into account that household sizes are getting smaller.”
The retail industry’s last great driving force nowadays is health. Cathy assures that “we are at a real crisis point when it comes to health. Consumers are also more educated about what food does to their bodies, but what is really clear is that we have an issue with obesity, which affects 1.5 billion people worldwide.”
Cathy affirms that “the horticultural industry is one of the better equipped to tackle this issue, although it also has to fight the marketing power of big brands. On average, children watch 5,500 advertisements for junk food a year, but less than a hundred for healthy food. Here lie great opportunities to make a difference.”
“As I think about consumers searching for healthy, nutritious foods, how creative are we being? What innovations are we using? And how are we looking to promote and market our products; our great, healthy products? The real opportunity is in innovation, but I invite you to do it with a purpose; to establish a relationship of trust with consumers and help them make the healthy choice the easier choice,” concludes Cathy Burns.