Retail Leadership & PMA: What is the Future for Buy-Side Involvement?

The Perishable Pundit

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 chief executive 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 brought 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 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 flourishing period at a time when regional, often family-owned, chains dominated the landscape, and produce directors or vice presidents, deeply committed both personally and professionally to the industry, dominated the board and drove the agenda 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 the majority of the board had to be from the buy-side. On the new board, there are 33 people. Of those, not one officer is from the retail or foodservice side. 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, individuals growing up in retail today, though in many ways more sophisticated than giants of yore, are not really produce people. They go to better schools, have more degrees and credentials, but as the fresh component of food retailing has grown in importance, it has led retailers to adopt policies that time spent in produce and perishables is a wise career investment.

It used to be that grocery chief executives came up through grocery, accounting or, once in a while, front-end. There was almost never a supermarket chief executive who had much experience with produce. Soon experience with produce or, at least, a perishable department, will be much more common.

Many of today’s generation — and 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 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.

Fortunately, we have better data, with more and better tools to analyze it. It is possible subjecting decisions to this data-driven world results in better decision-making than relying on one’s gut.

But even if produce departments thrive at retail, it is hard to see these executives being motivated to guide a 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 and DiPiazza could all serve on the board because they didn’t compete. As a result, they could share quite freely and didn’t have much worry about anti-trust concerns.

But today, the chains everyone wants to sell are 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 the A&P company, having been attacked for alleged antitrust violation, declined trade association participation.

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.

The need to rotate people through different retail departments, coupled with national chains’ growth, lead to a world where we can’t expect retailers to engage in leadership as much as before.

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 the 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 both of their products are sold in the 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.