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In the second installment in Progressive Grocer’s lead news story on Monday detailing FMI’s 2009 “Industry Speaks” report card, food retailers made significant adjustments to their product mix in 2008 in an effort to keep pace with changing customer demands in a recessionary economy. In fact, 69 percent of consumers say the recession is affecting their grocery shopping, according to FMI’s “2009 U.S. Grocery Shopper Trends” report.
The typical company added 2,000 new products to store shelves and removed the same number, according to FMI’s annual study, which found one-quarter of food retailers adding and removing at least twice as many items, changing the mix of more than 20 percent of the products in their stores.
These efforts were reflected in improvements in key productivity and efficiency measures as product assortment was better aligned with consumer needs. For example:
-- Inventory turns for the total store increased to 16.43, up from 15.60 in 2007 and 13.50 in 2006
-- Sales per hour increased to $145.51, from $138.90 and $133.31
-- Sales per square foot rose to $8.32, from $8.01 and $7.32
Supermarkets continue to pursue strategies other than discounting prices. Nearly all (97 percent) emphasize perishables to gain a competitive advantage and give it the highest success rating at 8.1, although this figure is down from 8.4 in 2008. In addition, 68 percent are focusing on consumer wellness and family health as a competitive strategy, rating its effectiveness at 5.6. These figures decreased from 85 percent and 6.5, respectively.
The recession didn’t lead to a decrease in advertising, as spending remained at a median of 1 percent of sales. Retailers continued efforts to spend their ad dollars more effectively, relying less on the mass media and more on targeted campaigns. In fact, newspaper advertising fell below half of ad spending to 48.6 percent, from 52 percent the previous year. Radio and television advertising also declined.
Supermarkets increased direct-mail campaigns, including mailbox-delivered circulars, to 19 percent of ad sales, from 17 percent the previous year. Companies are targeting delivery to specific ZIP codes to allocate ad dollars to high-potential customers. Retailers are also devoting more ad dollars to community donations, which increased to 5.8 percent of their advertising budgets, up from 4 percent.
The data for this report is based on surveys of 87 companies operating 13,641 stores, filings with the Securities and Exchange Commission and information from the U.S. Bureau of Labor Statistics and Census Bureau. The analysis is also based on other FMI research, including “2009 U.S. Grocery Shopper Trends,” “Facts About Store Development 2008” and the “2007-2008 Annual Financial Review.”
To purchase the 2009 Food Retailing Speaks: The Annual State of the Industry Review ($95 for FMI Retailer/Wholesaler Members, $175 for FMI Associate Members and $250 for nonmembers), contact 202-220-0723 or visit www.fmi.org/store/.