Meager sales spark anxiety among retailers: FMI
November 9, 2010
by Meat&Poultry Staff
ARLINGTON, Va. – The Food Marketing Institute announced that supermarket sales grew only .12 percent in 2009 and same-store sales decreased .82 percent. The disappointing figures, which were published in FMI's State of Food Retailing 2010, demonstrate how severely the recession has impacted food retailers, according to the organization.
"Shoppers' overwhelming focus on price and value has led to fierce price competition among food retailers," said Leslie Sarasin, FMI president and chief executive officer. "As a result, supermarkets are focused on trying to distinguish themselves from the competition by fine-tuning their private label strategies, SKU reduction and price differentiation in order to retain their current customers and attract new ones."
Among FMI's other findings:
- Net profits among retailers dropped to 1.22 percent in 2009 compared to 1.43 percent in 2008. Twelve percent of retailers posted net losses in 2009.
- The industry experienced a median loss for identical store sales of .82 percent, down 4.3 percent from 2009
- More than half, or 56.9 percent, of retailers reported negative identical-store sales growth, up significantly from 16.9 percent in 2008.
The recession has heightened retailers' anxieties about how local and the national economies will impact their businesses, according to FMI. The three issues of most concern to retailers are the economy, competition and healthcare costs.
Food retailers have adopted several strategies to cope with the complexities of the current economic climate, and shoppers' focus on value and price. The most-used tactic retailers employ to differentiate themselves is to emphasize quality produce, fruit, meat and poultry. The second technique is to focus on private-label brands. This strategy was used by 90 percent of retailers surveyed for the FMI report. Finally, price differentiation was used by 86.9 percent of retailers.
Another way retailers seek differentiation in the marketplace is to focus on health and wellness.
"Pre-recession, the vast majority of retailers described its impact on their marketing and merchandising as profound," the FMI report states. "In 2010, 74.3 percent of retailers say it is one way they seek differentiation in the marketplace, up from 68.4 percent in 2009."
PepsiCo sponsored the report, which incorporated additional research from FMI. The report was based on surveys of 76 food retailers operating 24,075 stores in addition to Securities and Exchange Commission filings, financial data from an additional 2,000 independent operators and information from the U.S. Bureau of Labor Statistics and the U.S. Census Bureau.