December 18, 2007
2007: The Year of Consuming Dangerously
As 2007 winds down, RetailWire looks at the stories and issues that shaped the year in retailing.
It wouldn’t be difficult to come to the conclusion that 2007 has not been a very safe year for consumers (and their pets) based on a simple search of RetailWire headlines for the past 12 months.
Two separate searches using the terms “safety” and “recalls” turned
up the following:
- Counterfeits Causing Real Damage in Human Terms
- Congress Looks at One Agency
to Protect Food Supply - Melamine Contamination Links Port Security to Food Safety
- Will Changes Make
Recalls More Effective? - Safe Toys High on Consumers’ Wish Lists
- What Effect Has Consolidation Had on
Food Safety? - Wal-Mart
Plan Looks to Keep Toys Safe for Kids
As the headlines clearly suggest, many of the discussions over the past year have focused on China and what needs to be done to protect consumers from unsafe imports.
It would be a mistake, however, to suggest that product safety is strictly an “outside” issue. The year 2007 brought with it many recalls for products “Made in the USA.” Among these was the recall of Peter Pan and Great Value peanut butter brands after 625 people in 47 states were stricken by salmonella poisoning connected to the products.
In another domestic incident, more than 21 million pounds of ground beef from Topps was recalled due to E. coli contamination. Ultimately, the recall forced the meat processor to shut its doors.
Discussion Questions: How do you explain the steady stream of product safety stories in 2007? Have the numerous recalls and reports of unsafe products created a crisis of confidence on the part of consumers? What impact has all this had on retailers?
Separately, we came across a Hunter Public Relations press release that said
food safety was the number one story of the year based on a survey of food
editors.
BrainTrust
Recent Discussions
Discussion Questions
Poll
People are becoming more aware of the ingredients and the processes in which products are being produced. The recent stream of product safety stories raises awareness. If we were to investigate how long some products were being produced with such ingredients and processes we would be appalled.
Almost everything is getting a second evaluation and analysis. This is a wonderful thing! As we look back and do an analysis of such products, we’ll find things that are not up to par and wah-lah!…better, safer products. It is a shame that it took serious illnesses and even deaths to make us aware but it is what it is, and we’ll move forward with better and safer standards.
I don’t believe consumers are in a crisis, they are becoming more aware and intelligent buyers. The good thing that has come out of this is that some are willing to pay for quality vs. cheap imports.
I think that while we could spend our time blaming someone, it is important to note how vulnerable the food industry to errors and omissions, whether done by mistake or on purpose. It is also important to understand and find new methods to track where food comes from, who is handling it as well as how it is handled, and what systems are in place to stop tainted food and other products from being distributed.
The world relies on food and products being made by others and believes these items are safe. If we lose that trust, it will be a pretty paranoid world to live in.
Over the past few years, consumers are becoming more demanding and more informed, especially with regard to price.
Consumer and competitor pressures have led manufacturers to take shortcuts or outsource to reduce production costs. As a result, the recalls are flowing in.
Now, with the increased demand for quality and safety–and everyone from the manufacturer to the retailer promising to run safety tests on their offerings–we’ll see the pendulum swing the other way. The consumers will pay again…in terms of price.
One thing our data shows us is that retailers are collaborating more with suppliers on product design to speed up time to market. That collaboration brings with it a lot of risk–particularly if your supplier is not quite as careful as you might want them to be around quality–whether that be fit, finish, ingredients or safety.
It’s imperative that better controls be put in place at every step of the process to insure compliance to specifications–both retailer and legal.
Good insight from Ron, as usual.
This may well be another arrow in the Congressional quiver as they move toward substantial additional regulation not just of foreign sourced product but of product produced right here at home. This and food labeling and health and wellness, obesity…big companies might just be too tempting a target for idle minds.
Several factors converge to bring product safety concerns to their present high level:
1. Ongoing concentration and industrialization of the food supply in the name of productivity makes the consequences of errors very large. A contaminated carload of of a product will make many more people sick than a contaminated pallet-load. When an entire ground beef factory is unsanitary, the risks are shared and consequences are felt by huge swaths of the population.
2. Big recall events generate big stories. The specter of millions of lead-contaminated toys or tons of unsanitary ground beef flowing into the distribution chain conjures terrifying imagery. The necessary publicity given to recalls adds credibility to the fearsome scenario. This give the news media something to chew on and it sets the populace and their government representatives on edge.
3. Global markets that depend upon differentials in labor and production costs eventually bring the risks home to roost. The greater the distance traveled by a product, and the more intermediary hands it passes through along the way, the less accountable the original producer will feel. Our interconnected markets add more variables to the equation, and localized mistakes or frauds therefore have widespread and enduring consequences.
4. Perceived risk of sabotage. The complex distribution system offers numerous points of access to bad actors should they wish to create havoc for a manufacturing or retailing institution. In fact, such events have been exceedingly rare (or well covered up), but our post-9/11 mindset seems to make us believe that the risk is imminent. Chalk one up for the conspiracy theorists.
These trends force a mandate on customs officials, brand marketers, and the final sellers of consumer products (retailers) to take prudent steps to check the goods they sell out of a responsibility to its shoppers. I say “prudent” because we all know absolute guarantees are not possible. But hey, life is risk.
Whether or not products sold in the US are safer now than a year ago is open for debate, but one thing for certain is that the American consumer is more aware of the issue. How can they not be with headlines blaring out that China is exporting toys with high lead content and the fish farmed there have high levels of several different types of toxins? In addition, the current administration has done precious little to show leadership in this vital area, which is shameful.
The one bright spot is that retailers have, to a certain degree, taken matters into their own hands to ensure safe products are sold to the nation’s shoppers by instituting testing and other measures throughout the supply chain. They do need help from customs and other agencies whose resources have dried up due to other administration priorities.
Looking forward, I expect product safety to be a top 10 issue in the campaign next year, probably #7 or #8. It’s a topic that Republicans are going to have to condemn the Bush administration on and Democrats are going to blame the Republicans for.
Food safety issues are getting lots of publicity after years of regulatory laxity. Federal, state, and local governments in the US don’t want to increase their spending on food safety, and there isn’t the political will to force the industry to do it, either. Legislative attention will grow as the number and seriousness of the scandals grows. Furthermore, it’s politically easier to regulate foreign suppliers because they aren’t voters and their lobbyists aren’t as well funded (yet).
While the question is addressed to the U.S. experience, I would like to say that the same situation applies in Canada, too. Industry leaders and association heads agree that food safety is the number-one issue in the industry. We have experienced practically all the same food recalls that you have on your side of the border. With globalization, it’s inevitable that we would go through labour pains as the system adjusts itself to vastly new conditions.
It’s worth stressing that this is not just a China Syndrome. The developing and developed world are also sometimes lax in their production processes. Permanent vigilance is the answer–vigilance at the source, not when the product crosses our borders.
Governments at every level have been trying to save money and subsequently became too lax on this important issue. At the same time, retailers want lower costs. And consumers have come to expect/demand cheap prices for non-luxury goods. These three items came together in 2007 to form a perfect storm.
If we want safer food and goods, we must be willing to pay for them. Sadly, I don’t see a sea change in that direction any time soon.
Yes, 2007 did have more, well published consumer products recalls. That is the bad news. The good news is, they were handled professionally with companies stepping up and taking responsibility. The result is a reduction in consumer trust but not a crisis, except as it relates to China. Just watch consumers shop for toys this Christmas and you’ll see they are being careful as it relates to goods made in China.
We use the term, “crisis,” too loosely. Liberals use it, for instance, to describe everything from a hangnail to a nuclear standoff, the objective being to encourage citizens to make government bigger in order to protect them. Well, big government has certainly dropped the ball on this one. Imports go largely uninspected–although the law forbids it–and there are less than five percent of the needed food inspectors available. And even then their equipment and techniques are outdated. Is this an honest-to-goodness crisis, or a media-generated panic that sells print and broadcast advertising? It’s some of both, but not nearly as out-of-control as we’re led to believe. The BSE scare, for instance, was essentially baseless.
While I am usually in full accord with Ron Margulis, I’m compelled to be contrary toward his comment that “retailers have, to a certain degree, taken [safety] matters into their own hands.” They have not, unless that “certain degree” is almost nil. They do what they have always done, which is to threaten suppliers with dire consequences if product safety falls further. There is neither oversight nor demands for new inspection programs. As long as they can shift the blame when something goes wrong and their costs don’t go up, retailers are essentially complacent and hands-off.
That’s why in these spaces I have often advocated retailer in-house inspection programs. Wal-Mart, for instance, could gain a considerable amount of additional consumer confidence by establishing and promoting a Wal-Mart Safety Center, where samples of all products are spot-checked for shopper protection. Sure, it’ll cost, but not in human lives.
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People are becoming more aware of the ingredients and the processes in which products are being produced. The recent stream of product safety stories raises awareness. If we were to investigate how long some products were being produced with such ingredients and processes we would be appalled.
Almost everything is getting a second evaluation and analysis. This is a wonderful thing! As we look back and do an analysis of such products, we’ll find things that are not up to par and wah-lah!…better, safer products. It is a shame that it took serious illnesses and even deaths to make us aware but it is what it is, and we’ll move forward with better and safer standards.
I don’t believe consumers are in a crisis, they are becoming more aware and intelligent buyers. The good thing that has come out of this is that some are willing to pay for quality vs. cheap imports.
I think that while we could spend our time blaming someone, it is important to note how vulnerable the food industry to errors and omissions, whether done by mistake or on purpose. It is also important to understand and find new methods to track where food comes from, who is handling it as well as how it is handled, and what systems are in place to stop tainted food and other products from being distributed.
The world relies on food and products being made by others and believes these items are safe. If we lose that trust, it will be a pretty paranoid world to live in.
Over the past few years, consumers are becoming more demanding and more informed, especially with regard to price.
Consumer and competitor pressures have led manufacturers to take shortcuts or outsource to reduce production costs. As a result, the recalls are flowing in.
Now, with the increased demand for quality and safety–and everyone from the manufacturer to the retailer promising to run safety tests on their offerings–we’ll see the pendulum swing the other way. The consumers will pay again…in terms of price.
One thing our data shows us is that retailers are collaborating more with suppliers on product design to speed up time to market. That collaboration brings with it a lot of risk–particularly if your supplier is not quite as careful as you might want them to be around quality–whether that be fit, finish, ingredients or safety.
It’s imperative that better controls be put in place at every step of the process to insure compliance to specifications–both retailer and legal.
Good insight from Ron, as usual.
This may well be another arrow in the Congressional quiver as they move toward substantial additional regulation not just of foreign sourced product but of product produced right here at home. This and food labeling and health and wellness, obesity…big companies might just be too tempting a target for idle minds.
Several factors converge to bring product safety concerns to their present high level:
1. Ongoing concentration and industrialization of the food supply in the name of productivity makes the consequences of errors very large. A contaminated carload of of a product will make many more people sick than a contaminated pallet-load. When an entire ground beef factory is unsanitary, the risks are shared and consequences are felt by huge swaths of the population.
2. Big recall events generate big stories. The specter of millions of lead-contaminated toys or tons of unsanitary ground beef flowing into the distribution chain conjures terrifying imagery. The necessary publicity given to recalls adds credibility to the fearsome scenario. This give the news media something to chew on and it sets the populace and their government representatives on edge.
3. Global markets that depend upon differentials in labor and production costs eventually bring the risks home to roost. The greater the distance traveled by a product, and the more intermediary hands it passes through along the way, the less accountable the original producer will feel. Our interconnected markets add more variables to the equation, and localized mistakes or frauds therefore have widespread and enduring consequences.
4. Perceived risk of sabotage. The complex distribution system offers numerous points of access to bad actors should they wish to create havoc for a manufacturing or retailing institution. In fact, such events have been exceedingly rare (or well covered up), but our post-9/11 mindset seems to make us believe that the risk is imminent. Chalk one up for the conspiracy theorists.
These trends force a mandate on customs officials, brand marketers, and the final sellers of consumer products (retailers) to take prudent steps to check the goods they sell out of a responsibility to its shoppers. I say “prudent” because we all know absolute guarantees are not possible. But hey, life is risk.
Whether or not products sold in the US are safer now than a year ago is open for debate, but one thing for certain is that the American consumer is more aware of the issue. How can they not be with headlines blaring out that China is exporting toys with high lead content and the fish farmed there have high levels of several different types of toxins? In addition, the current administration has done precious little to show leadership in this vital area, which is shameful.
The one bright spot is that retailers have, to a certain degree, taken matters into their own hands to ensure safe products are sold to the nation’s shoppers by instituting testing and other measures throughout the supply chain. They do need help from customs and other agencies whose resources have dried up due to other administration priorities.
Looking forward, I expect product safety to be a top 10 issue in the campaign next year, probably #7 or #8. It’s a topic that Republicans are going to have to condemn the Bush administration on and Democrats are going to blame the Republicans for.
Food safety issues are getting lots of publicity after years of regulatory laxity. Federal, state, and local governments in the US don’t want to increase their spending on food safety, and there isn’t the political will to force the industry to do it, either. Legislative attention will grow as the number and seriousness of the scandals grows. Furthermore, it’s politically easier to regulate foreign suppliers because they aren’t voters and their lobbyists aren’t as well funded (yet).
While the question is addressed to the U.S. experience, I would like to say that the same situation applies in Canada, too. Industry leaders and association heads agree that food safety is the number-one issue in the industry. We have experienced practically all the same food recalls that you have on your side of the border. With globalization, it’s inevitable that we would go through labour pains as the system adjusts itself to vastly new conditions.
It’s worth stressing that this is not just a China Syndrome. The developing and developed world are also sometimes lax in their production processes. Permanent vigilance is the answer–vigilance at the source, not when the product crosses our borders.
Governments at every level have been trying to save money and subsequently became too lax on this important issue. At the same time, retailers want lower costs. And consumers have come to expect/demand cheap prices for non-luxury goods. These three items came together in 2007 to form a perfect storm.
If we want safer food and goods, we must be willing to pay for them. Sadly, I don’t see a sea change in that direction any time soon.
Yes, 2007 did have more, well published consumer products recalls. That is the bad news. The good news is, they were handled professionally with companies stepping up and taking responsibility. The result is a reduction in consumer trust but not a crisis, except as it relates to China. Just watch consumers shop for toys this Christmas and you’ll see they are being careful as it relates to goods made in China.
We use the term, “crisis,” too loosely. Liberals use it, for instance, to describe everything from a hangnail to a nuclear standoff, the objective being to encourage citizens to make government bigger in order to protect them. Well, big government has certainly dropped the ball on this one. Imports go largely uninspected–although the law forbids it–and there are less than five percent of the needed food inspectors available. And even then their equipment and techniques are outdated. Is this an honest-to-goodness crisis, or a media-generated panic that sells print and broadcast advertising? It’s some of both, but not nearly as out-of-control as we’re led to believe. The BSE scare, for instance, was essentially baseless.
While I am usually in full accord with Ron Margulis, I’m compelled to be contrary toward his comment that “retailers have, to a certain degree, taken [safety] matters into their own hands.” They have not, unless that “certain degree” is almost nil. They do what they have always done, which is to threaten suppliers with dire consequences if product safety falls further. There is neither oversight nor demands for new inspection programs. As long as they can shift the blame when something goes wrong and their costs don’t go up, retailers are essentially complacent and hands-off.
That’s why in these spaces I have often advocated retailer in-house inspection programs. Wal-Mart, for instance, could gain a considerable amount of additional consumer confidence by establishing and promoting a Wal-Mart Safety Center, where samples of all products are spot-checked for shopper protection. Sure, it’ll cost, but not in human lives.