Unsaleables are almost always a touchy subject, but the mood was cordial this morning as representatives from trading Winn-Dixie and Heinz broached the topic at GMA’s MSM show.

Apparently dented cans of beans, expired meat and stolen infant formula aren’t the only unsaleables that retailers and manufacturers have to contend with. As supermarkets more frequently swap out underperforming product for new or proven items, unsold discontinued items can carry a pretty hefty price tag.

When Gary Regina joined Winn-Dixie in 2000, the process for getting rid of the old product went something like this: Discontinued items were shipped back to the manufacturer who was on the hook for a price equal to about 130% of the list price. Ouch.

Luckily Regina had a simple but brilliant idea to help minimize the manufacturer’s burden while salvaging some profit. He suggested that manufacturers could fund a 50% price reduction on the discontinued product for a four week period leading up to the new items’ introduction. Product was sold off and manufacturers only had to fund the discount, so it paid 50% of the list price rather than 130%. Winn-Dixie’s end of the bargain was a promise that it wouldn’t send any product that was left over at the end of the promotional period, back. Everyone wins.

Today the process is even more efficient since inventories are adjusted eight weeks in advance of the switch meaning that fewer products have to be discounted during the four week period. So what happens if Winn-Dixie drops the ball and doesn’t let its supplier know about its plans far enough in advance? It’s trade funds are at stake.

But planning stages aren’t the only time the plan can falter. Heinz’s senior manager of reverse logistics, Gene Schachte said that a few weeks ago shelf tags designed to draw attention to the 50% off discount weren’t applied to the shelf. As a result, what should have cost Heinz $10,000 ended up costing it $100,000. It’s unclear whether Winn-Dixie was the retailer or if its trade funds were affected.

Retailers who’ve battened down the hatches in the hopes of weathering the economic storm need to rethink their strategies.

That’s according to the folks at McKinsey & Co. who say that retailers’ response to consumers’ financial hardships has only just begun. The firm projects that consumer spending will remain muted for the next five years.

“This is not a change you can weather, this is a new norm you’ll operate on for years to come,” said Katie Doyle, principal at McKinsey, this morning at GMA’s MSM show.

Here’s a preview of how things might look in 2016: Wal-Mart, other top grocers and members of the club channel will achieve 27% private-label penetration, which is on par with countries like Germany but a far cry from the 40% to 50% achieved by grocers in the U.K. McKinsey’s Kari Alldredge explained that language and other trade barriers make it harder for national brands to make inroads with European retailers and effectively leverage scale.

Cognizant of competitive pressures, CPG companies are beginning to hone their strategies. Among those beginning to emerge, says McKinsey:

* More aggressive pricing — Tide Basic, a powdered, lower-priced version of liquid Tide, is an example of this.

* Reframe value — DiGiorno Pizza doesn’t compare itself to other frozen pizzas, but its price relative to takeout.

* Innovate where consumers are willing to pay — Green Giant Valley Fresh Steamers’ steaming innovations differentiate it from store brands.

* Reshape your distribution model — Iams produces store brands and effectively reduces distribution costs of its branded product as a result.

Kraft Foods has kept a close watch on the ways shoppers are coping with fewer resources through stages of awareness, anxiety, retrenching and now, bright siding. The current mindset is categorized by confidence, resourcefulness and optimism.

Shoppers are less concerned with material things, and more into spending time with family and friends, according to Laura Barry, vice president of consumer insight and shopper engagement at Kraft. She presented findings at the GMA MSM show today that indicate the attitude isn’t fleeting. In fact 61% of consumers agree that the events of the past few months have permanently changed their behaviors.

Shoppers are discovering fun ways to make ends meet. “We had a few crazy meals, but we really saved money,” one shopper who engages in a game of “eating down the pantry,” or creating as many meals as possible with ingredients already on hand, told Kraft. Its research shows that about 49% of shoppers are doing more of this now than they did three months ago.

It sounds like fun at first, but shopper enthusiasm surely dwindles along with available ingredients. That’s why Kraft is making strategic shopping all part of the fun. It’s lending a hand by investing in programs that let shoppers know how they can do things like get five dinners from one bag of groceries. “Meal solutions she learns now, she’ll take with her,” Barry said.

Programs like these are beneficiaries of funds that Kraft has shifted from traditional marketing to shopper marketing. The manufacturer has more than doubled the money spent in this area, zeroing in on programs that are “experiential, differentiated and offer value,” noted Barry. It’s tailored specific meal idea promotions for retail partners like Publix, Dollar General, Target and Wegmans.

Kraft’s emphasis on value is nothing new. Barry related that five or six years ago the manufacturer increased its investment in quality after discovering that some of its products were inferior to branded and/or private label competitors. The investment has “made a huge difference in repeat eats and keeping people loyal to our brand,” Barry said.

Although Kraft feels store brand pressure in categories like natural cheese, in the frozen pizza category “retailers haven’t been able to beat us,” she said.

The Grocery Manufacturers Association’s Merchandising, Sales and Marketing Conference gets underway today in Phoenix at the Arizona Biltmore Hotel.

Titled “Resilience & Relevance: Winning Strategies for a New Economy” the theme suggests reason for optimism, and that marketers who’ve successfully weathered the storm have turned a corner and are headed toward a new beginning.

While Wal-Mart, Sam’s Club, Winn-Dixie and Meijer are among the retailers scheduled to share their strategies for minimizing costs, reinventing the shopper experience and getting the right product in the right place at the right time, there are countless other examples of retailers successfully preparing for a new economy.

On Sunday Wegmans launched a new campaign focused on highlighting prices that are now even lower than they were last year when the retailer slashed hundreds of prices on commonly used products. A drop in transportation costs made the new cuts possible in categories like beef, pork, chicken, bread, dairy and produce, according to the retailer.

“I have a sense that shoppers need to be reassured,” said Wegmans CEO Danny Wegman, in a statement. “They need to know that we have kept our eye on the ball. That we monitor prices very closely and take steps to control our costs so we can keep prices low, and that what has happened to food prices is a cause for celebration.”

While many shoppers remain committed to grocery lists, a shelf tag indicating that the per pound cost of a Club Pack of boneless chicken breast has dropped 26%, from $2.69 per pound, to $1.97, is probably enough to convince them to whip up some chicken parmesan and other tasty recipes with the five pounds of chicken that hadn’t counted on.

Among the other examples; Sirloin Steak Club Packs, last year $3.89 per pound, this year $3.49 (down 10%); tomatoes on the vine, last year $2.49, this year $1.99 (down 20%); and Wegmans Sharp cheddar shredded cheese, 8 ounces, last year $2.49, this year $1.99 (down 20%).

The strategy is particularly clever since it zeros in on products for which Wegmans has the most cost control: store brands. Price comparisons will appear in-store and in sales circulars through the next few weeks.

In the meantime, stay tuned for coverage of economy-inspired strategies from GMA’s MSM show.

Between bites of samples gathered on the Fancy Food Show floor today (not literally from the floor, but from exhibitors there), I got to chatting with some retail buyers about what they’re in the market for.

While I tasted a dark chocolate bar that counted chipotles and popping candy (like Pop Rocks) among its ingredients, Lisa Bruce told me she was keeping an eye out for an industrial-sized tahini that can be used by Wegmans’ prepared food chefs.

An army of about 30 or 40 folks from the chain converged on N.Y. for this year’s show, which offers a great opportunity to meet with existing suppliers, she said. New partnerships were also in the works as “fun things” like flake salt caught the eye of one of Wegmans grocery buyers, according to Bruce.

Meanwhile, Bill Vella, a fresh foods department manager for a ShopRite store in Lincoln Park, N.J., was keeping his eyes peeled for goat and sheep cheeses, and complimentary fare like fancy crackers.

“Grafton had some nice cheeses,” he said of the Grafton Village Cheese Company which makes hand crafted cheese in small batches from the milk of Jersey cows that graze on farms in Vermont. Spanish cheese brought by The Cheese Works Company, which imports and distributes items in the category, also got his attention.

After a year of slow sales, Jacob Rasmussen made the trip from Albuquerque, which is home to one-store Fremont’s Fine Foods, which he owns. He was in search of hard cheese and blue cheese, that might help turn things around. “Any [retailer] who says they’re doing great is lying to you,” he said.

Andrew Laske, a perishable buyer for Target, wasn’t willing to reveal the contents of his shopping list, but he did comment on traffic at the show. The eight time attendee noted that it was heavier than usual.

Participants in a roundtable discussion about kosher foods were very opinionated this morning when the discussion turned to supermarkets and their private labels. The consensus: Trader Joe’s does a great job catering to kosher consumers, while Whole Foods, not so much.

“You would think Whole Foods would be more knowledgeable,” said Susan Berlin of Susan Sez it with Cake. She estimates that about nine in 10 products in the chain’s 365 Everyday Value store brand line aren’t certified Kosher. The news is surprising considering the chain’s reputation, and ironic given the line’s name and the session’s title: Kosher isn’t just for Passover anymore.

“I’ll take a look at a beautiful 365 Everday flavored oil and 90% of the time I’ll turn it around, can’t find the kosher symbol, and it’s back to the shelf,” Berlin said.

Trader Joe’s on the other hand isn’t only making sure its corporate brands are certified kosher. It also takes the very simple and thoughtful step of producing a list of the kosher items sold throughout its stores, the certifying body that okayed its kosher production process, and how to contact that particular group.

Price Chopper, Schenectady, N.Y., is also doing a great job, noted Marty Stein, an account manager for specialty food distributor Tree of Life. He said the retailer’s store brands are certified kosher wherever such a designation is possible. It also advertises in local Jewish papers and includes information related to the certification bodies in its ad circulars.

Stein explained that indicating whether a product is certified through the Orthodox Union or other kosher certification body is important since some kosher consumers will only trust certain certification bodies.

Like most 9 to 5ers I usually hit the snooze button a few times on Monday mornings, but not today since I’m headed to the National Association of Specialty Food Trade’s Summer Fancy Food Show! My mouth’s been watering all weekend.

It’s not everyday that I get to dine with Food Channel royalty, but breakfast with the Barefoot Contessa, Ina Garten is first on the agenda. She’ll be peddling her line of high-end baking mixes, jams and coffee.

Then it’s off to the Javitz Center where I’ll join 23,000 attendees at the show.

According to NASFT’s estimates more than 2,300 exhibitors, representing more than 70 countries will be there, including newcomers from Sri Lanka and Vietnam. This year’s show also boasts the largest French pavilion to date.

I’m looking forward to hearing about what retailers are shopping for, and getting a sense for what’s caught their eye so far. I’m also hoping to gauge how significantly the economy has effected specialty sales.

From what Ann Daw, president of the NASFT, has heard, exhibitors are hopeful that despite the economy, consumers will recognize the value that their fine teas, olive oil, snacks, chocolates and ethnic foods possess.

“Many exhibitors have expressed cautious optimism that shoppers will increase purchases of specialty and natural foods to enjoy at home, even as they dine out less at restaurants,” she said in a statement.

The results of a recent Information Resources Inc. Times & Trends report shows that there’s reason for their measured confidence. It found that despite the turbulent economy 16% of shoppers are splurging on premium and gourmet products on a regular basis.

But before specialty suppliers toast their fresh-squeezed blood orange juice, they should know that such spending comes with a caveat. IRI reports that since most of these shoppers are still very mindful of price, they’re seeking gourmet fare in wholesale club stores and other value channels.

This morning’s sessions at the 53rd World Business Summit focused on simplicity. To that end roundtable participants Jeff Noddle, executive chairman of the board at Supervalu, Brenda Barnes, chairman and CEO of Sara Lee Corp. and Kraft Foods’ chairman and CEO Irene Rosenfeld, kept the discussion frank.

When asked for her opinion of Supervalu’s Nutrition IQ program that uses color-coded shelf tags to highlight 11 nutrient claims, Rosenfeld, who favors a universal approach to educating consumers rather than independent programs, didn’t sugar coat her response.

“We wish he didn’t have his own system, because as he says he has a system and many of our other customers have different systems” she said referring to Noddle. “It’s somewhat antithetical to the idea of trying to have a common format for consumers that make it simple for them to understand. But we see promise behind it and it’s heading in the right direction.”

Kraft is an adopter of the Smart Choices Program, a front of pack labeling system that offers “guidance at a glance,” and information related to calories per serving and servings per package. The program was created with input from Wal-Mart, Kraft, Kellogg, Nestle, Wegmans and General Mills.

Sara Lee recently announced plans for a different model. Its “Nutritional Spotlight” banner includes calorie, fat and sodium information about its products.

Despite the new introduction, Barnes shares Rosenfeld’s view.

“The consumer is already cynical and if there are [different systems] who do they believe?” she said.

All agreed on one thing: shoppers aren’t just being bombarded with different nutrition information delivery systems, but too many product choices on the shelf.

Rosenfeld’s explanation: “Promoting a product that already exists isn’t as exciting as promoting something that’s new, even though sales on the existing product are [probably] better.”

Noddle added that a variety of package sizes is also responsible.

“We noticed a category in one store with five sizes of the same product with only a few ounces in difference,” he said. “We’ve got to work on the number of SKUs we have.”

CIES’ 53rd World Food Business Summit kicks off this afternoon, right here in the Big Apple, practically in SN’s backyard at the Waldorf-Astoria Hotel. The show — exclusive to CIES members — has adopted for this year’s theme: Ingredients for Success in Turbulent Times, and judging from its list of global speakers and delegates it’s sure to be seasoned with loads of international flavor.

Thinking of visitors who’ve endured exhaustive journeys from Germany, France, Spain, Japan, China and scores of other countries, I feel a little guilt and a lot of fortune, considering the quick subway ride or walk (weather permitting) that separates me from such a bounty of global knowledge.

Last year, 770 CEOs from 49 countries converged on far-away Munich for the show. And recent host cities: Shanghai, Paris, Budapest, Rome and Barcelona have been similarly out of my reach. But now all that separates me from international retail case studies is the $2 subway fare.

While my colleague Mark Hamstra will cover presentations by retail leaders Steve Burd, Jeff Noddle, Lee Scott and Justin King, I’m looking forward to hearing from CPGs—just days after the Food Marketing Institute held its Private Brands Summit at the Waldorf—about their competitive strategies. Brenda Barnes of Sara Lee and Irene Rosenfeld of Kraft are to focus on simplicity; David Mackay of Kellogg on agility; and Indra Nooyi of PepsiCo on resilience.

I’m also hoping to get a taste of the Global Experience. That’s the name given to a handful of sessions that will focus on international retailers. Long Chen, chairman of Suguo Supermarket Company, Antonio Coto Gutierrez, CEO of Dia, Latin America and Simon Susman, CEO of Woolworths Ltd., from South Africa, will be presenting.

Stay tuned for coverage…