Publix president says work needed to ensure bread shelves stay full

by L. Joshua Sosland
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BOCA RATON, FLA. — While reducing waste is a worthwhile objective, bakers must be careful to maintain adequate baked foods inventories at supermarkets, said Todd Jones, president of Publix Supermarkets. In a provocative presentation, Mr. Jones served as keynote speaker at the general session March 15 during the annual meeting of the American Bakers Association.

The bakers met March 14-17 at the Boca Raton Resort and Club in Boca Raton.

Mr. Jones addressed a wide range of topics in his presentation, including food safety, organics and how the economy has affected supermarkets.

“We are looking for ways to improve supply chain efficiencies,” he said. “The first and most important thing you can do is make sure you have product available for the customer when they go down the bread aisle and reach out for the bread hoping it’s there. We have to do a better job of forecasting our customers’ demand.

“We all want to manage shrink, but sometimes I think we want to minimize shrink. In this business you must have shrink. The customer shopping at 7 or 8 or 9 at night needs as positive a shopping environment and inventory level as the customer shopping at 7 in the morning. As a matter of fact, there are more customers shopping at 7 at night than at 7 in the morning.”

Driving this point home, Mr. Jones showed a bread aisle photo taken at 6:30 p.m. on Sunday, March 7, at a Publix store in the Atlanta area. The disheveled image showed bread shelves largely depleted of product.

“Our busiest three hours are 4 to 7 on Sunday,” he said. “As a matter of fact, Sunday is our busiest day of the week. It’s 19% of our business. Not only did we not provide the customer with the inventory (including our own Publix store brand product), we disappointed them on ads, things we said not only are we going to have in stock but things we are going to have at a discount.”

Mr. Jones then showed the same shelf a day later, fully and neatly stocked.

“If you truly want to collaborate for success, you have to realize that Saturday and Sunday and nights are a big part of our business,” he said. “We do more business from 4 to 7 Monday through Friday than we do from 11 to 4 during the day. And we do more business on Saturday and Sunday, 39% of our business, than we do on three days. I don’t know that we as an industry have embraced the idea that our customers shop nights and weekends. So if there is anything you can do, and if you want to talk about how we can improve this, I’d be happy to sit down with you.”

Mr. Jones said Publix has been developing technology to forecast customer needs, creating a system that has looked 12 weeks into the future with 98% accuracy, 6 weeks with 99% accuracy and 4 weeks over 99%.

Mr. Jones said the company has spent five years developing and optimizing its automated replenishment system.

“We’ve now partnered with three D.S.D. companies (Coca-Cola, Nabisco and Tree of Life), forecasting and replenishing their inventory needs in about 12 of stores,” he said. “We began with a 94.5% service level, meaning 5.5% of the time the customer came into the store the product was not there. After six months, the service rate climbed to 98%. There are hiccups and there will be hiccups, but we may come to you and your industry to see if you can partner with us to make it work.”

Discussing current supermarket trends, Mr. Jones said bread sales at in-store bakeries have been strong but decorated cakes and desserts have slipped. As a result, the company has introduced smaller decadent cakes (5 inch), which have done well.

Another shift has been around coupon redemptions, which for many years held consistently in a 2.5% to 3% range.

“Now we are roughly in the 8% to 9% range,” he said. “Growth is about 70% per year. We redeem more coupons than you can imagine. So here’s an

insight — if you want to turn some inventory, put some coupons out there.”

While Italian bread traditionally has been the leading stock-keeping unit at Publix bakeries, “multi-grain is rocking for us,” he said. “Multi grain is catching up quickly, and Italian is falling back.”

In organics, what was a crazy situation for supermarkets only a few years ago has leveled off considerably, Mr. Jones said.

Food safety issues affect the retail business in several ways cited by Mr. Jones, beginning with employees at supermarkets.

“I can’t stress enough how all of us need to educate all our associates on the proper way to handle product,” he said. He told the bakers that if any are not part of the Rapid Recall Exchange Program to reconsider. The recall notification program was created by the Food Marketing Institute.

“The industry is working diligently to make recalls not a competitive advantage for anybody but a competitive advantage for our customers,” he said. “In 2009, we had 130 severity one recalls at our company. We need to make sure that when we move that inventory in reverse logistics that we can do it as quick and efficiently as possible.”

Wide range of restaurant trends

Offering perspectives on trends in food service was Ellen Koteff, the former editor-in-chief of Nation’s Restaurant News magazine. Ms. Koteff noted there are nearly 1 million food service locations in the United States, serving 130 million customers per day.

Among emerging trends in baked foods identified by Ms. Koteff was crack pie, which she said has become a sensation in New York despite a price of $44 per pie. Celebrated on television by Anderson Cooper and Martha Stewart, the pie has an oatmeal crust and a fairly simple but rich filling containing egg yolks, butter, cream and sugar.

By contrast, Ms. Koteff said the nation’s current love affair with cupcakes may not endure.

“It’s showing every sign of going through a bubble cycle, though the fad is alive and well,” she said.

What remains to be seen is what will succeed cupcakes as the treat of choice, she said. Without speculating, she said the product will almost certainly share key qualities of cupcakes — easy to grab and eat, small in size and offering the potential for unlimited variety.

The steady growth in breakfast sales at restaurants, up 47% between 2001 and 2006, represents a good opportunity

for the baking industry, Ms. Koteff said. She quoted a Panera executive who told her, “Increasingly, breakfast is the daytime meal of choice for people eating out. Breakfast is the new lunch.”

Breakfast sandwiches are a staple menu item, she said. Separately, “upscale sandwiches” have been gaining traction across many segments of the restaurant business.

Looking at overall trends for food service, Ms. Koteff said she was wary of prospects for 2010.

“The leading indicator for the business is the unemployment rate,” she said. “I don’t believe there will be a significant pickup for restaurants without a 2 percentage point drop in the jobless rate.”

Gaesser: Evidence still supports carbs

Forcefully making the case for the healthfulness of grain-based foods was Glenn Gaesser, a professor at Arizona State University. Dr. Gaesser is associated with the school’s College of Nursing and Health Innovation where he is director of the Exercise and Wellness Program and the Healthy Lifestyles Research Center.

“There is incontrovertible evidence that those who consume more carbohydrates tend to weigh less,” Dr. Gaesser told the bakers.

Much of Dr. Gaesser’s presentation was devoted to data in support of this premise. He reviewed recent NHANES (National Health and Nutrition Examination Survey) research indicating that men who had the highest intake of carbohydrates weighed significantly less than men with the lowest intake. Men who consumed 313 grams of carbohydrates per day had an average body mass index of 25.9 and weight of 180 lbs, compared with men who consumed an average of 191 grams of carbohydrates and had a B.M.I. of 27.3 and weighed 190. Women and various demographic groups had similar results, he said.

Beyond carbohydrates in general, Dr. Gaesser said the data is similarly supportive for sugar alone.

“Higher intake of sugar is inversely associated with rates of obesity,” he said. He reviewed decades of studies exploring the healthfulness of sugar, concluding that the only health problem is a higher rate of dental carries.

“The conclusion from all this research is that there is no evidence that sugar is fattening,” Dr. Gaesser said. “The evidence supports the opposite conclusion. Certainly at the extremes you have issues, but you could make a solid scientific claim that consuming more sugar could help control weight.”

Turning to grains, Dr. Gaesser said high consumption of whole grains is associated with three to five pounds lower weight in adults. High consumption of refined grains has only a modest negative impact on body weight in adults, he said.

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