Front and Back Meet at FMI Conference
December 6, 2010
MINNEAPOLIS - Call it the coming together of the front and back. The most recent Food Marketing Institute (FMI) Energy & Store Development Conference was, for the first time, a combined meeting of what had once been the Energy & Technical Services Conference and the Store Development Conference.
It brought together those who design the main part of supermarkets and convenience stores in a way to be eye-appealing, neighborhood-friendly, and customer-focused - the upfront - and those who design, install, and service the HVACR equipment that keeps the temperatures inside the buildings just right for the customers and food product and done so in as energy efficient a way as possible - typically taking place in the ‘backroom.’
As befitting the business-like nature of the conference, it took place in a downtown Minneapolis hotel over several weekdays. So the meetings and corridor conversations of the FMI folks mirrored the meetings and conversations that went on in the downtown area in the numerous high-rise office buildings and the seemingly even more numerous al fresco dining areas up and down the streets.
KEYNOTEAn opening keynote address by Ric Jurgens, chairman and CEO of Hy-Vee Inc., and FMI chairman of the board, focused on top concerns of FMI leadership.
He called governmental activities “turbulent waters on Capitol Hill that FMI is helping [its members] navigate as best we can.” He cited various banking regulations, tax laws, environmental efforts, and issues related to possibly mandating that cases be closed.
He told the some 600 attendees, “You come to prepare your company and the leaders of your company. Efficient stores are going to be more responsive to customers, to the environment, and to profits.”
On the topic of the environment, he said, “You may or may not agree about global warming - and there are conflicting reports and zealots. But using replenishable resources such as solar and wind seems to make sense. Anything we do to save energy is going to save us dollars. And environmental issues fall into our lap.
“I’m not sure what the change will be, but I can assure you it will take place. The upfront cost will be high, but it is what customers want.”
CREATIONThe process of creating such stores requires an across the board involvement, according to five presenters from Supervalu in a discussion on how to design and build profitable and efficient stores.
The presenters encompassed engineering and real estate asset management (Mark Coffin), merchandising (Rich Juliano), real estate and store development (Mark Lavin), and store design (Sharon Lessard) as well as Keith Wyche, president of Cub Foods, whose chain of stores was a specific topic.
• Regarding site selection, “Customers are willing to trade down, so I don’t have to build a Taj Mahal,” said Wyche.
• Store design involves data about customers, merchandising the store to the neighborhood, and tailoring sections of the store to the neighborhood.
• The need for detailed specifications and the need for “every person to know their part in the process,” said Coffin.
• The use of secondary loop technology in refrigeration to lower the charge of HFC refrigerant.
TAKING AIMRich Varda, senior vice president of store design for Target, noted a growing trend for more food products - and thus refrigeration equipment - in not only SuperTargets which are built as supermarkets-department stores, but also conventional Targets which are being retrofitted to add more food products.
“These are expanded food layouts, one-half as much as supermarkets and tailored to local preferences.” Distributed refrigeration technology is used, he said.
REFRIGERANTSTed Gartland of Allied Representatives provided an update on refrigerant matters mainly focusing on stalemated regulatory actions that - if unstalemated - could affect supplies and costs of HFC refrigerants. But while such matters are bogged down at the national and state levels for the most part, he urged attendees to be conscious of the possibility of future forward momentum.
Regardless, he told those in the audience to be pro-active as a way to address possible future regulations. He cited:
• Lower leak rates by seeing issues and problems instantly;
• Lower refrigeration system’s full charge such as by using secondary loop technology with glycol; or CO2, or loop piping case control for less piping or distributed with more systems closer to cases; and
• Use lowest GWP refrigerant with best capacity and energy efficiency in new systems and retrofits.
ENERGY ISSUESThe ‘State of the Energy Market’ was the topic addressed by Brad Christensen, managing director, Portfolio Products for RBS Sempra Commodities.
Regarding the job market he said, “The U.S. economy is just not adding jobs in a healthy way yet. We need to see jobs get added before we see the bullish sentiment in commodities reassert itself. The 431,000 increase in nonfarm payrolls in May was principally due to the hiring of 411,000 temporary workers to help with the field surveys for the 2010 Census. Private sector employment increased by just 17,000 in August . Unemployment shrank only because of people dropping out of the workforce.”
He did say that overall the “U.S. consumer is doing better than sentiment would suggest. Consumers are deleveraging (paying down debt) quite rapidly. Consumer spending is holding up - for now.”
The energy policy remains complex. Among points he made were:
• “We are OK as long as demand doesn’t grow. Policies continue to export industrial capacity to the developing world and this quashes industrial demand.”
• “Smart meters are getting installed. But do energy commissions actually do anything with them?”
• “The modern environmental movement does not believe in economic cost-benefit analysis. [They want to] make gains at any cost, using all means necessary.”
• “Environmentalist war against coal and nuclear will continue. After 2012 new coal capacity will not be built in the U.S. The EPA [Environmental Protection Agency] hates coal. At some point this will show up in higher off-peak electricity prices. This leaves the power grid with nowhere to turn but natural gas … which is fine at current gas prices, but …”
NEW NORMALTodd Hale, senior vice president for consumer and shopper insight for The Nielsen Co., took attendees through changes taking place that may become the “new normal.”
In areas that more directly relate to refrigeration, he predicted mass supercenters and e-commerce “will be the big winners” with the former equating to larger refrigeration configurations. Supermarkets will continue to lose market share to drug stores, home improvement stores, convenience stores, and mass merchandisers, but not at previous recent rates. There will also be growth in low- and high-end stores.
In terms of change, he called for attendees to “be prepared to make tough, gut-wrenching decisions.”
ENERGY EFFICIENCYA presentation by Tom Mathews, president of Baseline, focused more specifically on energy-efficient equipment. He said stores these days “have a daunting number of equipment items and types, with substantial refrigeration storage and displays.”
That is why, he said, those involved in such systems should be proactive and that involves looking at lighting options, putting doors on display cases, using rear-entry configurations for easier stocking, using hydronic refrigeration systems with heat reclaim, and using packaged central plans with hot-/chilled-water systems.
Publication date: 12/06/2010