By David Merrefield
VP, Editorial Director
The annual presentation of the Food Retailing Industry Speaks report proceeded as regularly as clockwork at last week’s Food Marketing Institute Show in Chicago.
The report featured statistics about the economic production of the industry. In brief, the news was fairly good with chains recording solid gains in sales. There was some slippage in average same-store sales reported by all retailers, with nearly half registering declines when inflation is factored in. For more on this, see Page 16.
Let’s take a closer look at data that suggest what stores are doing to establish competitive differentiation. The report shows that retailers are moving fast to various forms of meal solutions. In rounded numbers, 89% of retailers have hot-service counters, 84% have self-service refrigerated cases, 72% have made-to-order sandwiches, 68% have soup bars, 62% have catering, 58% have separate checkouts for prepared foods, 57% have salad bars, 53% have sushi stations and 50% have bars offering snacks, juice or coffee. The median number of items offered in stores’ prepared-foods department is 62.
These results show an industry that’s increasingly responsive to consumer demands. The question the results raise is this: What will be next on the differentiation front as stores increasingly have the similar meal-solution services?
According to the report, by large percentages, retailers have common strategies about what they’ll do next: Nearly all intend to address competitive concerns by emphasizing perishables (99%), and by developing store brands (88%), and by offering natural and organic products (84%), and by improving the shopping experience (74%), and by catering to health and wellness concerns (73%) and by lowering prices (72%).
Looking further to the future, the report also assessed strategic issues and the amount of concern they generate among retailers. Retailers were asked to rate concerns on a scale of 1 to 10. More issues than ever before scored 6 or higher. Indeed a number scored higher during the current reporting period than the previous one. Included are health care costs, competition, credit-debit interchange fees, staffing issues, technology and food safety. The sole prominent issue registering a slight decrease in the concern level was energy costs.
Now let’s take a closer look at food safety. Another report aired at the Speaks presentation is the Trends report. That report showed that consumers who are “completely” or “somewhat” confident in the safety of supermarket food declined to 66% during the most recent research period as compared to 82% the previous year. This represents a remarkable tumble. See Page 14.
Clearly, the drumbeat of negative occurrences, and attendant publicity, has finally started to have an effect. That’s reflected in the increased sophistication of how consumers assign blame. Shoppers this year identified manufacturers or processors as a likely problem point, 45% now against 32% previously, and farms 6% now against 1% previously. Restaurants were also identified as a more likely problem source than were supermarkets.
To some extent, it’s good news that consumers assign blame widely, instead of focusing on supermarkets, but, unfortunately, food safety scares have the eventual effect of making consumers leery about the safety of food in general, regardless of its source.