Knowledge shared at IEC Business Conference
Professor David Hughes, IEC’s Global Food Marketing Analyst, led the newly styled Customer Focus session at IEC Business Conference. The new format included an informal interview between Professor Hughes and each speaker at the end of their presentation, allowing Professor Hughes to really drill down into the details that matter to egg businesses.
Johann Morwald, former CEO and board member of ALDI, provided delegates with invaluable insight into the way discount retailers work, and how to maximise a business’s opportunity of becoming a supplier. He told delegates that within Central Europe, 80% of eggs are sold through grocery retail stores, and that the two leading discount stores account for 60% of this market share.
Hard discounters, such as ALDI and Lidl have grown their market share during the recent years. Professor Hughes told IEC delegates that research shows that in many countries consumer confidence is still fragile following the global recession. He referred to consumers as now being “savvy shoppers”, reducing their basket size in the big superstores, explaining that the middle market stores, such as Walmart’s Asda, Morrison and Tesco in the UK have been squeezed for market share. Professor Hughes explained that it is the retailers at either end of the spectrum that are thriving in today’s market: premium retailers are doing well at one end and convenience stores, hard discounters and on-line retailers are thriving at the other end.
Johann Morwald told the IEC that ALDI’s aim to offer the best retail price to customers is of course linked to them achieving the best purchasing prices. Morwald explained that ALDI has an accomplished system of providing “the lowest price, best quality, limited range of daily necessities”. He explained that this system offers great strategic benefits and achieves the highest profit margins per item of all market participants.
Johann Morwald told the IEC: “Please accept that purchasing directors of supermarket chains act as administrators of a limited space which is to be awarded to the highest bidder.” Due to the scarcity of floor space the purchasing director must achieve the highest possible attainable profit for the lowest possible allocation of space. Morwald told the IEC delegates: “It is therefore an important commandment of all negotiations to be well prepared, with sophisticated layouts and design concepts, to convince the purchasing director of additional value to sales and profit by eggs.”
He said that communication between the supplier and the end consumer is key, telling the IEC it is the responsibility of the supplier and producer to create excitement with the customer – not the retailer: “It is a requirement of the time to develop innovative sales and communication concepts to show convenience aspects for the modern society.”
He stressed the importance of being involved in decision making processes and standard setting that impact on the industry, saying as well as promoting the benefits of eggs, it would also help to gain consumer trust.
Johann Morwald concluded his presentation to the IEC voicing his support for the egg industry, saying: “I want to encourage you to be proud of your work as producers and marketers of one the most important foods in the history of mankind.”
The next International Egg Commission conference is being held in Edinburgh, Scotland, 7th – 11th September.
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