Beak & Johnston's David Beak had a message to share at Food & Drink Live's Industry of the Future Forum. It is a message for every business that wants to succesfully navigate the rapid changes that are occurring in today's world. It is simple to do, yet few businesses do it. It's act fast.
One of the first changes to which Beak & Johnston adapted was globalisation. The new retail paradigm includes the tearing down of borders. Most retail changes, he stated, impact a global market. And if they don’t impact us [Australians] now, they will in the near future.
The company uses the whole world as a pool for idea and innovations, and chief executive officer, David Beak, has a whole world view of how retail is changing, and why.
Retail change is being driven by change in everyday lives worldwide. Three characteristics of life do not have national boundaries: people are time poor and stressed, computing (and therefore information) speeds double every year and money is tight. House prices are at record levels here and in the UK; in China the average house is thirty-one times an average wage; and Australia's average mortgage/rent to income ratio is at a peak (The RBA put the household debt to income ratio here at 149% in December).
Food expenditure is currently about 20% of the average Australian income.
Where and why people spend money on food has changed. Australia tends to follow larger markets, like the UK and the US, Beak stated. He cited the UK market as a predictor of what is likely to happen here. Discount supermarket, Aldi, grew 35% in the UK last year. Big supermarket chain, Tesco declined 3%. Morrisons shrank 10%. The small stores of big chains grew, while their big sisters declined. Marks & Spencer built Simply Foods stores through the UK. Little Waitrose, Little Sainsbury's and Tesco Express thrived. Consumers are looking for value and discounts. And they are looking for rewards. The top and bottom ends of the retail markets are being rewarded.
In Australia, one third of the products in an average weekly shop at Coles and Woolworths are now on sale/on promotion. And the kinds of foods in an average weekly shop has changed too. Potatoes have gone from 72% in the ‘80s to 39%. But pasta has moved from 17% to 37% and rice from 12% to 24%. As a nation, we have moved from Anglo meals to Asian and Mediterranean, with ready meals and cook-in sauces benefitting by providing cooking confidence and time saving options.
Beak & Johnston has benefitted from this change by a simple, age-old strategy – look, listen and learn. The company sends “the best teams” to visit suppliers and retailers throughout the world, with one primary purpose: to identify and grab change wherever, and as often as, it can. One of the ways in which Beak & Johnson is innovating, therefore is by copying products as fast as it can. It finds the best new ideas and the best new products out there, wherever in the world out there is, develops them here and launches them - quickly.
40% of its sales in the last year have been products launched in the last three years. It puts 250 new products into development every year. And launches 100 of them. In a world changing rapidly, the secret to success is beating others to market, Beak stated.
You need extraordinary IP to protect your products these days, so just be the first.
