Industry-Level Redesign: Will They Ever Reinvent the Dairy Aisle?

They claimed it was a $1 billion opportunity for dairy. That was back in October 2009.  Now, 2 years later, the $1B opportunity is still there. There is renewed effort behind the initiative but can they make it happen?  Without a strategic, unbiased, collaborative path to industry redesign, I’m not so sure.

It’s not surprising that Kraft Foods teamed up with Dairy Management, Inc. and Dannon to consider dairy aisle reinvention. Cheese and dairy is a $7.0B business in the Kraft Foods portfolio, Dannon is the largest part of $26B Danone, and Dairy Management, Inc. is the leading non-profit planning and management organization serving the dairy industry in the U.S. The result was a comprehensive study that identified a $1B opportunity for the dairy industry. They teamed up in 2006 and completed the study in 2009. I saw a presentation at the 2010 Shopper Insights in Action conference in 2010 sponsored by IIR USA and again at the same conference in 2011.  To their credit, Kraft was still pushing the initiative but the presentation was nearly the same.  Little visible progress had been made.

Most people would agree the dairy aisle needs reinvention. From a shopper perspective, it’s visually unappealing, difficult to navigate, and lacks clear shopper communication.  In other words, it’s a commodity purchase with very little time or thought.  From the retailer perspective, dairy provides the most net profit per foot and the second best return on inventory investment offering more than enough incentive, it would seem, to invest in bettering the shopper experience.  In fact, the model of a reinvented dairy aisle moves it more center-store and is much more appealing.  You can take a look here.

But, there’s no doubt that even the incentive of a $1B opportunity has not rushed in a new era of dairy aisle reinvention.  What’s slowing the effort?  Well, there’s no doubt there are lots of obstacles in bringing any idea to market. But likely as not, the issues are more systemic.  With Kraft as the leader of the effort, it’s likely Kraft’s competitors aren’t automatically lining up.  One would wonder if retailers might consider the possibility of differentiating with dairy, but will they?  And retailers are understandably cautious given the capital, floor space and operating cost issues, not to mention the implications for their private brands.  That leaves the dairy industry trade associations as the likely leaders of the effort, but that doesn’t seem to be happening either.

Redesigning an industry’s go-to-market approach is a huge undertaking.  It requires strategic business design skills, unbiased and facilitative project guidance, and industry association leadership.  The strategic design skills are rare, it’s unlikely someone inside the industry can be unbiased, retailers aren’t apparently seeing the dairy aisle as a competitive differentiator and the associations aren’t currently stepping up.  So, my bet is the dairy aisle will look pretty much the same next year, the year after and for more years to come.  If you think differently, why?  Leave your comments here.