Doug Baker, VP of industry relations for FMI – The Food Industry Association, spoke to The Shelby Report during the association’s recent Midwinter Executive Conference on Marco Island, Florida.
Baker touched on three topics that are of interest to FMI’s membership and the food industry as a whole – private brands, technology advancements and asset protection.
Private brand growth yields supply challenges
Private brands are “a big focus area for consumers today, as they’re trying to mitigate some of the inflationary pressures,” Baker said.
When he joined FMI 10 years ago, retailers typically viewed private brands as a way to drive profits; now they are a way to cultivate loyalty. A decade ago, the percentage of shoppers who chose a retailer based on their private brand selection was in the low 30s, he said; today, it’s about 56 percent.
“That’s significant, because that drives loyalty to that retailer,” he said.
Because of their significance, many retailers are making sure their private brands are meeting consumers’ need to stretch their dollars while also investing in innovation, according to Baker.
But there are challenges on the supply side; “we don’t have increasing capacity in the manufacturing community” to match the growth, Baker said. “As a result of that, they’re having to cast a much wider net to find that capacity.”
To help, FMI’s Private Brand Leadership Council formed a subcommittee focused on strategic sourcing. For the past year, it has been working to assist manufacturers that wish to do business in the U.S. in navigating the complexities of 50 states with varying regulations.
To assuage language barriers, FMI’s senior director of digital communications, Kelli Windsor, has been working with the committee to update the Food Industry Glossary. Some terms were revised and about 700 new ones added. There are now 2,000-plus terms in the glossary – available at fmi.org – to help bridge communication gaps for international suppliers.
The committee also created a list of general requirements the suppliers would need to meet to partner with a U.S. grocer.
“When that retailer wants to work with them, they don’t have that huge learning curve to doing business in the United States,” Baker said of the new resources.
In an effort to draw new talent to private brands, FMI’s education subcommittee is working on an “industry attractiveness” project. Each member of the Private Brand Leadership Council is doing a video vignette on their industry journey, including what brought them to the food industry and their path to private brands and the role they’re in.
The videos will be available on fmi.org for academic institutions to use as well as the association and its members.
It’s a way to “celebrate all of the possibilities within our industry,” Baker said.
Technology
FMI’s Technology Leadership Council met during the conference, and members were asked about the biggest challenges in the technology realm, Baker said.
One is the pace of change. On one hand, that’s a positive because new efficiencies are constantly being created.
On the other hand, “every single time you get into one investment, there’s a new technology that comes out that might be more advanced than the one that you’ve invested in, so you now have to figure out how that’s going to fit in your technology roadmap,” he said.
Artificial intelligence continues to become more and more prevalent. AI is being used to make companies “more efficient, more profitable and to help the relationship between the retailer and the brand and the consumer,” Baker said.
A newer development is agentic AI. An AI agent can “remember” questions it has been asked, so when it is asked additional questions, “it adds on … so it’s creating an ‘intelligence,’” Baker said.
On the horizon is AGI – artificial general intelligence, which is “humanlike intelligence,” he said. “It’s fascinating, it’s exciting, it’s scary.”
Windsor and the team at FMI have been working on how to approach AI responsibly and set up “guardrails” that protect the association and its members, said Baker, adding that it’s vital to have a policy in place outlining which technology to engage with and how to do so.
No question, AI can play a role in improving efficiency, he said. Using FMI as an example, he noted the association does 32 research projects each year that utilize “tons and tons” of data.
“How nice would it be for FMI staff, and eventually our members, to be able to ask AI a question, and it can filter through all of that data and come up with an answer?” he said.
In the meantime, the Technology Leadership Council will continue to look at ways retailers can remove friction for the consumer in the store, he said. “How do we give them more options to buy those products they want and leave the store with an experience that they’ve found very pleasing?”
Geolocation, scan-and-go technology, smart carts – “all of that stuff is really coming along,” Baker said. But eventually a consumer may be able to shop through an AI agent without so much as a keystroke.
“I still have to give it the prompts that I want, I still have to give it enough information to be able to make a decision, but I don’t have to actually touch a keyboard [or] click on a website – I just have the conversation,” Baker said. “It already knows the things I like and where I like to shop, and it just goes to work for me. We as retailers, as brands, need to start thinking about that day where that consumer is just having a conversation with their AI agent.”
Asset protection
Baker said that FMI’s Asset Protection committee team focuses on both cyber security and people security.
On the cyber side, fraud these days takes on many forms – “skimmers and shimmers and impersonations – so you’re constantly having to be on your toes from that aspect,” he said.
On the people side, mental health struggles can show up in public settings like grocery stores.
“We’re struggling with dealing with stress as a society and, unfortunately, that continues to show up in our stores – whether it’s an individual that was going there to do something nefarious in the first place, or they just couldn’t handle something while they were there,” Baker said.
Training associates on how to de-escalate such situations is important, and computer vision may be able to provide intel that will help store staff to either stop attacks or at least “mitigate the amount of carnage that comes from the attack,” Baker said.
“It’s something that is really going to be front and center because people need to feel comfortable, and we’re not going to put metal detectors in our stores. Our stores are going to remain open. They’re the center of the community, and we need people to feel comfortable coming into them.”
Organized retail crime also continues to be a significant issue for retailers across the country, but the solution is not clear-cut.
“How do we secure our products in the store without creating friction for the consumer?” Baker said. “That’s another daily discussion, and technology continues to advance there to be able to help us address that and get back to the environment that the consumer is used to having when they go into a grocery store.”
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