Lang Chen has spearheaded China Resources Corporation’s (CRC) integrated retailing business since 2003 and is widely credited with turning around the business with his relaxed style of management and strategic vision. Taking over from Gang Xu, Chen had a rocky start to his tenure as CEO of CRC’s retail powerhouse China Resources Vanguard (CRV) but soon proved he had the right stuff to turn the company into the powerhouse it is today.

Today, China Resources Vanguard is the leading grocery retailer in China, with

over 2,400 stores comprising of hypermarkets, superstores, supermarkets, convenience stores and department stores in major regional markets across the country. Under Chen’s management, CRV is expected to reach its ambitious goals set in 2003 of investing CNY5 billion (USD0.7 billion) and generating sales of CNY50 billion (USD7 billion) and profit of CNY5 billion (USD0.7 billion) by 2008.

Chen graduated from Anhui University in China and received his MBA from the University of San Francisco. He joined China Resources Corporation in 1989 as general manager in the corporate development department and later became CEO of China Resources Logic, a furniture manufacturing and trading business. With no retail experience, Chen was believed to be only a transitory replacement for Gang Xu. After CRC’s acquisition of Vanguard, conflict arose between the two management teams and suppliers were starting to lose faith in the company. Adding to the strain, CRV’s parent group outlined an ambitious five-year development plan for CRV.

But Chen quickly proved to be a different kind of leader. In his first few months as CEO, Chen ate and worked together with his staff on the shop floor to fully understand the dynamics of retailing. “To me, who has zero experience in retailing, sufficient information is most important,” Chen explained. Less than six months later, he eliminated 2,300 employees and recruited people with strong retailing experience and talent.

At the same time, Chen suspended the ambitious five-year plan and decelerated the pace of expansion while he took time to better understand the business. CRV switched its focus from expanding store networks to improving performance and maximizing profitability, also choosing to focus on hypermarkets and supermarkets instead of department stores. Chen also introduced a more relaxed, informal style of management, contrasting with the militaristic style of the previous owners. Staff began referring to him as “My New Colleague - Lang Chen.”

Chen’s strategy paid off, proving that he was more than just a transitory leader. CRV reported a profit of CNY58 million (USD8 million) in the first quarter of 2004. Once CRV was back on track, the five-year plan was reinstated. With great support from its parent group, CRV started to move from south to east and north China and from major cities to lower tier cities by acquiring successful local retailers such as Suguo in east China.

With his experience in mergers and acquisitions from his days in corporate development, Chen has been instrumental in helping the retailer to achieve its expansion program largely through acquisitions of local retailers. Between 2005 and 2008, CRV moved into Ningbo, Hangzhou (both in east China), Tianjin (north China) and Shanxi (west China) by acquiring local retailers.

Industry Affairs News

Industry Supports Efforts to Measure Environmental Sustainability Progress

A new tool to measure, compare and communicate the progress made on environmental sustainability by the CPG industry is in the works by GMA. In June, The Sustainability Leadership Committee – composed of members from the GMA IAC, GAC, Science Institute and Board -- began seeking RFPs for the development of data, a measurement tool and an associated report on environmental sustainability for the CPG industry. The project will involve selecting a representative market basket of CPG products sold at retail, including packaged foods, beverages and consumer products, and then analyzing key data to consider the “environmental footprint” of the products. The analysis will look at areas such as energy use, greenhouse gas emissions, packaging (e.g. volume of packaging, recyclability) and water use through a “lifecycle perspective” to convey the evolution of the environmental footprint of CPG products.

“GMA members have voiced strong support for increased exploration of the industry’s environmental sustainability progress,” said GMA’s Senior Vice President of Industry Affairs, Stephen Sibert “This project really marks the first major effort undertaken by an industry association to measure, track and communicate the industry’s environmental sustainability efforts.” GMA knowledge partners McKinsey & Co., Deloitte Consulting, IBM, GE Fanuc Intelligent Platforms and SAP have all submitted proposals to lead the project. In addition, one non-GMA member has submitted for the project. For more information, contact Stephen Sibert.

Supply Chain & Technology

GMA, FCPC, IBM Partner for Fuel Roundtable

A new joint roundtable with GMA and its Canadian counterparts will address rising fuel prices and their long-term impact on the CPG supply chain. GMA, the Food and Consumer Products Group of Canada and IBM will host the invitation-only roundtable this October in Chicago for leaders of top North American companies to share experiences and address ways to sustain an efficient supply chain. Facilitated by Rick Lenny, former chairman and president and CEO of The Hershey Company, the roundtable will explore best practices to minimize cost impact and to achieve fuel savings, developing future value chain strategies. For more information, contact Michelle Marcoot.

GMA DSD Committee Releases New Report on

Powering Growth

Five key factors – higher revenue, greater contribution margin, accelerated working capital, better return on trade deals and improvements in shopper loyalty – are driving Direct Store Delivery (DSD) sales growth at the store level, according to a new study. The newly released “Power Growth Through DSD” study, completed for GMA by associate members Clarkston Consulting and AMR Research, provides data points on what DSD offers retailers as well as in-depth information on driving innovation at the shelf, shaping the shopper experience and building collaborative relationships.

DSD products are a driver for retail innovation, according to the report, which showed that 48% of the 1,700 new products launched in 2007 were introduced using the DSD process. Of those new products, DSD was responsible for successfully commercializing 50% of the top 10 Pacesetters (those products with $7.5million in year-one sales). The promotional effectiveness of the DSD process, coupled with the ability to deliver freshness, strong shelf presentation and tailored assortments, all lead to the role DSD plays in the shopper experience, according to the report’s analysis.

“With DSD representing 24 percent of unit sales and 52 percent of retail profits in the grocery channel, this report is an important industry tool to demonstrate how DSD is positioned to continue powering growth for retail,” said GMA’s Direct of Supply Chain, Michelle Marcoot. “DSD plays an invaluable role in in-store merchandising and contributes significantly to the store labor demands at retail.”

The report, conducted by GMA’s DSD Committee, included more than 40 interviews with manufacturers, retailers and others who are involved in the DSD process. In addition, 37 retailers and 42 manufacturers participated in the study’s survey that serves as the basis for the report’s findings. To download a copy of the “Power Growth Through Direct Store Delivery,” visit the publications page of www.gmaonline.org or contact Michelle Marcoot.

Sales & Sales Promotion

MSM Conference Preview: New Insights for Tomorrow’s Retail Landscape

GMA’s Merchandising Sales and Marketing (MSM) Conference, September 21-23 in St. Petersburg, FL, is shaping up to be a must-attend event for sales and marketing executives. Retail Network Group President and CEO Dan O’Connor will reveal the latest insights on capabilities manufacturers and retailers will need to succeed in tomorrow’s retail landscape. O’Connor’s work focuses on researching new technologies and business models from venture capital, technology and research companies, as well as government and non-governmental organizations that could change chain retail business models.

Food Lion to Share How Collaboration has Increased Sales

Food Lion, one of its key suppliers and Retail Solutions will reveal how the joint use of point-of-sale, inventory and supply chain data can lead to increased sales, reduced inventory levels, lower out-of-stocks and better store execution. Food Lion Supply Chain Manager Troy Prothero and Retail Solution Chairman & CEO Dr. Jonathan Golovin will be featured speakers.

All-star Panel to Discuss Sustainability Practices

GMA continues to lead on sustainability issues with an all-star panel of industry leaders slated to discuss challenges and opportunities at the MSM Conference. The session, moderated by Conservation International’s Glen Prickett, will also feature Ben Packard, vice president, global responsibility, Starbucks Corporation; David Haft, group vice president, sustainability and productivity, Frito-Lay, Inc.; and Alex McIntosh, director, corporate citizenship, Nestle Waters North America.

For more information or to register for the GMA MSM Conference, visit www.gmabrands.com.

At Unsaleables Conference, Retailers to Lead Discussions on Policies, Shelf Life

The lead unsaleables executive for Delhaize banners Hannaford Bros. Co. and Sweetbay Supermarkets will outline three types of unsaleables policies available to manufacturers and share insights into the perceived advantages and disadvantages of each policy at the upcoming Joint Industry Unsaleables Conference. Michael Gadbois, manager of corporate unsaleables management and reclaim operations for Delhaize, will provide context on the policies – swell, JIR and ARP – and discuss the state of unsaleables today and in the future. In a separate session, Gary Regina, supply chain-replenishment support manager for Winn-Dixie Stores, Inc., and George Thrower, manager of unsaleables for Harris Teeter, Inc. will discuss how they are combating the increase in expired unsaleable product in the supply chain by implementing remaining shelf life requirements for products shipped into their warehouses. For more information or to register for the Joint Industry Unsaleables Conference, September 22-23 in St. Petersburg, FL, visit www.gmabrands.com.

Trend Snapshot

GMA’s Industry Affairs Review has teamed up with consumer research firm NPD Group to provide readers with a monthly snapshot of consumer trends and eating patterns. Check out the latest research in this space each month and visit www.npd.com for more market research.

Overall Use of Restaurants Has Peaked

Source: The NPD Group

Based on 1 year ending February 2007

SmartRevenue.com

New Report Shows Revenue Growth Depends on Exceeding Shopper Needs

Grocery marketing has come a long way from the big brand dominance of decades past, with today's marketers operating via multiple retail channels, dozens of marketing vehicles and a more savvy, information-rich consumer. A new position paper by SmartRevenue examines the benefits of using "Shopper-Centric" knowledge to build models of the most effective ways to deliver what shoppers want, when and where they want it. The model looks at the shopping trip as the confluence of all promotional activity, starting from the home and/or workplace and leading to the store shelf and the POS. SmartRevenue's paper explores how marketers can move beyond existing demand creation paradigms and begin converting data into competitively useful insights and shopper-centric strategies to increase conversion at the customer, category and brand levels. Click here for the full report.

Datebook

Sept. 21 - 23

Merchandising, Sales and Marketing (MSM) Conference

St. Petersburg, FL

Renaissance Vinoy Resort & Golf Club

Contact: Jessica Martin

Sept. 22 - 23

Joint Industry Unsaleables Management Conference

St. Petersburg, FL

Renaissance Vinoy Resort & Golf Club

Contact: Troy Beeler

Oct. 7

Fuel Roundtable

Chicago, IL

McDonald's Campus Hyatt Lodge

Contact: Michelle Marcoot

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