A Business View - What Development Means to the Food Retailers
IDS Convening Space
About the presentation
The presentation provided an overview of the implications for the private sector and for those seeking to influence them. Chris Anstey considered the role of the consumers and the role they have in influencing food retailers.
He also discussed the Regoverning Markets programme, which was a new global network with coordinators in nine regions around the world. The group created a relevant and powerful understanding that provided evidence based policy guidance.
Listen to the speakers
Listen to Chris Anstey (speaker), John Humphrey (chair) and Sayoko Fukushima (attendee) discuss what they think the future challenges of business and development are and what they took from the seminar discussing the business view of what development means to the food retailers. Hear the interviews on mixcloud above.
The food industry face the challenge of a developing world
With over thirty years experience in the food industry, Chris Anstey now works as an independent consultant in the space between retailers, Non Governmental Organisations (NGOs), academics and governments.
Anstey offered the business perspective on the relationship between development and food retailers. He used examples from his work at Tesco, which he describes as ‘the most interesting retailing case study since Wal-Mart.'
Consumers always win
Anstey outlines how consumers make (and break) food retailers. ‘You as consumers always get what you want', he explained. Increasingly, the emotional aspects of a product, such as animal welfare or how the producers are treated (fair trade) are becoming more important to consumers. As a result, these aspects are also becoming more crucial to retailers. Anstey explained how consumers' perception of quality has changed, ‘It's not just an egg - it's an organic egg.'
How retailers are transforming
Anstey explores some of the ways in which food retailers are transforming, and taking control of the food industry. For example, retailers are increasingly cutting out the middle tier of agents who act between producer and retailer. He says, ‘Wal-Mart has announced a surprising target: they expect to be buying 80 per cent of their food in direct relationships with producer groups in due course.'
Another example of retailers changing is in the area of private labels (such as Tesco Value, Sainsburys Taste the Difference etc.) According to Anstey, private label market share is increasing, with ‘retailers owning their own shelves, rather than just selling shelf space.' Because of quality improvements and price competitiveness, private labels are proving more and more attractive to consumers, and many feature ‘development labels' - such as fair trade - too.
Anstey gave the details of the massive sales revenue generated by food retailers around the world. Tesco's banner sales during 2009 were €75 billion, more than Norway's entire GDP. Food retailers are expanding into emerging markets, which provide an ‘incredible growth opportunity'. Anstey also explained how food retailers have tended to bounce back from the financial crisis much quicker than other retailers, because food is seen by consumers as an essential product.
Anstey went on to discuss the Regoverning Markets collaboration, which researched the impact of advances in technology on small scale farmers. He outlines the findings of the collaboration, including examples of how modernisation did not always mean exclusion of small scale farmers, such as in China. In addition, the collaboration found that food safety amongst small scale farmers is very expensive to assure.
Opportunities and challenges
The challenge of meeting the dual goals of high human development and low ecological impact into the future is huge. Anstey explains how working with small scale farmers brings competitive advantages for food retailers, such as low cost, attention to detail, and corporate responsibility. In addition, Anstey outlined the opportunity that a growing ‘middle-class' brings, wealthier people buy premium products, meaning higher profits for retailers.
On the other hand, retailers are facing a number of challenges: food safety, efficiency, availability and proliferation. Anstey believes proliferation is a key agenda for business policy, as retailers realise the challenges of prioritising carbon, water, biodiversity and livelihoods.
By Sarah Nelson, Communications Team, IDS
Chris Anstey has worked in the food business for thirty years, first in farming, then retailing and now helping change as an independent consultant. Previously, he spent 15 years at Tesco working on policy, supply chain standards, supplier performance and technical competence for food and non food. As a qualified horticulturalist, Chris spent fifteen years in farming around the world including managing large fruit farms and pack houses supplying supermarkets.
For more information on this seminar, or any others in the series, please contact Vivienne Benson. This event forms part of the 'Changing Perceptions of Business and Development' seminar series, hosted by IDS' Globalisation Team.