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Retail Leadership And PMA:
What Is The Future For Buy-Side Involvement?
Rotating Careers And Anti-Trust Concerns

Jim Prevor’s Perishable Pundit, November 7, 2017

Coming off another highly successful PMA convention in New Orleans and with the association sure to succeed this year under the joint stewardship of Cathy Burns as CEO and Jin Ju Wilder of LA and SF Specialty as Chairman of the Board, it is worth considering what the future for this incredible industry resource is likely to be.

PMA is unique in a way unlikely to survive industry changes. It was built back from near bankruptcy on the strength of a simple insight: Create an association where the buyers felt at home and the vendors would follow. Thus developed a vertically integrated association unlike any produce association in the world.

In most of the world, there are grower/shipper/marketer groups and there are retail groups; even when there is nominal retail membership in the vendor group, those buyers don’t drive the agenda.

PMA was different. It entered its period of flourishing at a time when regional, often family-owned, chains dominated the landscape, and produce directors or VPs, typically deeply committed both personally and professionally to the industry, dominated the board and drove the agenda of the association and, thus, the industry.

Names like Harold Alston of Stop & Shop, Tony Misasi of Grand Union, Bob DiPiazza at Dominick’s and Dick Spezzano at Vons were the heart and soul of the association, and their collective procurement heft, coupled with their acknowledged dedication to the produce industry, let them create an agenda that led to the most successful produce association in the world.

Things have changed. PMA once had a rule that the majority of the board of directors had to be from the buy-side of the industry. On the new board of directors, there are 33 people. Of those, not one officer is from the retail or foodservice operator side. And even on the broader board, only Shawn Baldwin, who works for Wal-Mart but Wal-Mart announced would transition from the produce side to lead an Hispanic initiative, Robin Fisher of P.F. Chang’s from the foodservice side, Bernadette Hamel of Metro Richelieu in Canada, Ruth McClennan, Southeastern Grocers, Scot Olson at Grocery Outlet, and Joe Don Zetzsche, who runs floral for HEB, are on the board. So, six people out of a 33-person board. Only three who are US produce retail executives. In the old days, the majority buyer rule would have called for at least 11 more buy-side executives on the board.

But we are unlikely to see people like that or an institution driven in that way again for several reasons:

First, the individuals growing up in retail today, though in many ways far more sophisticated than those giants of yore, are not really produce people. They went to better schools, have more degrees and credentials, maybe even have higher IQs, but as the fresh component of food retailing has grown in importance, it has led retailers to adopt formal or informal policies that time spent in produce and perishables is a wise career investment.

In other words, just as some companies have long had a requirement that to obtain a certain executive level, say to become a VP, one must spend time overseas, so, in food retailing it is a big plus to have experience with perishables.

This is in many ways a plus for the industry. It used to be that grocery CEOs came up through grocery, accounting or, once in a while, front-end. There was almost never a supermarket CEO who had much experience with produce. Soon experience with produce or, at least, a perishable department, will be much more common.

But feeling one needs to punch the card that says “I did my three years on perishables” is very different from self-identifying oneself as a produce person. Although Harold Alston and Tony Misasi have passed, both Bob DiPiazza and Dick Spezzano are still in the produce industry. It was assumed that most of these retired produce VPs, if they didn’t continue as produce retailers in another company, would move to the supply side. This idea that produce defined their career led them to want to enhance their knowledge and network in produce.

Many of today’s generation of young retail executives — and of course, there are exceptions, with Dave Corsi coming to mind — enter the business in their 20’s and expect to do a few years in produce and then are thrilled to be offered a raise and a promotion to handle the frozen food category.

This doesn’t mean these young executives will run the department poorly; it means they will run them differently. Instead of relying on their personal knowledge, they will rely on data.

And, fortunately, we have more and better data than ever before, with more and better tools to help analyze it. It is quite possible that subjecting decisions to this kind of data-driven world will result in better decision-making than relying on one’s gut — no matter how knowledgeable and experienced that gut might be.

But even if produce departments thrive at retail, it is hard to see these retail executives being very motivated to guide a produce trade association.

Second, even if these individuals wanted to do the job, structural changes in the industry may well make it impossible. People like Alston, Misasi, Spezzano, DiPiazza could all serve on the board because they didn’t compete and were highly unlikely to do so. As a result, they could share quite freely and didn’t have much worry about anti-trust concerns.

But today, the chains everyone want to sell are increasingly national concepts, Aldi, Lidl, Dollar General, Whole Foods, Amazon Fresh, Costco, Wal-Mart, Trader Joe’s. Even Kroger is now in 34 states.

There was a time that the old A&P company, having been attacked for alleged antitrust violation, declined to participate in trade associations.

Today, with cell phone cameras ubiquitous, is Lidl really going to risk having its executives in a venue where they could be perceived as fixing prices with their industry colleagues from Aldi? Even assuming everyone is an angel, the optics are terrible.

So, the need to rotate individuals through different retail departments, combined with the growth of national chains, lead to a world where we can’t expect retailers to engage in leadership in the produce industry as much as in the past.

Is this a problem? Some would say no. They have always questioned why retailers should have such influence in an association paid for by producers. This is part of the issue that led to merger talks between United and PMA over the years.

But we would say yes. Here is dirty little secret: The produce industry is to a not-insignificant degree a retail creation. A papaya grower in Hawaii and a potato grower in Maine are mainly united by the fact that both of their products are sold in the retail produce department. And only the influence of buy-side customers can lead to the kind of industry unity that makes PLUs and standardization likely.

An industry association not driven by the buying end will find consensus on priorities and methods more difficult to obtain.

This may be better, or it may be worse, but it is most certainly a sea change in industry organization.

 

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