How's business in the supermarket industry? You might first ask: Which supermarket industry?
A recent SN article quoted financial analysts delivering some pessimistic outlooks for the big publicly held chains and the economy (April 19, 2004, Page 1). In contrast, a story on Page 1 this week quotes top executives of some regional supermarket retailers with far more bullish forecasts about their sales and regional economies.
Why the big difference?
The largest public supermarket companies are challenged by the financial impact of the California labor battle and the prospect of having to sacrifice margin to recoup business. If you only listen to the comments of the major financial analysts, you'd be missing the outpouring of supermarket industry optimism coming from chief executives at major regional retailers:
"Consumers are buying up, trading up, buying a bigger variety of products, and they are quicker to spend. Our average sale is up...We're just really positive that the economy is making a difference."
-- Ron Pearson, chairman, Hy-Vee, West Des Moines, Iowa
"We project, now going forward, the economy is going to do well. We think we'll have a very active summer season."
-- J.H. "Jay" Campbell, president and CEO, Associated Grocers of Louisiana, Baton Rouge
"Particularly in our area, the economy seems to be picking up. Unemployment's going down, and consumer confidence seems to be on the rise."
-- Craig Schnuck, chairman and CEO, Schnuck Markets, St. Louis
These positive comments are a welcome sign from retailers who have been struggling with the competitive challenges posed by Wal-Mart and alternative formats. In fact, many CEOs are reserving their greatest fears not for Wal-Mart, but for something entirely different: the prospect of more terrorism in the United States and an expansion of war. Fear is palpable in their comments:
"My greatest fear for the economy concerns Iraq and the possibility the U.S. may get into a full-blown war alone. Some of our stores are in high military population areas of Southern California, so our customers are very close to what's happening over there."
-- Jack Brown, chairman, president, CEO, Stater Bros. Markets, Colton, Calif.
"My biggest fear is us getting deeper and deeper into a war that extends around the world. Terrorism is everywhere, and it jumps at you when you least expect it, and that's a scary thing for people."
-- Neil Golub, president, CEO, Price Chopper, Schenectady, N.Y.
"My greatest fear for the economy is that there will be some type of cataclysmic event in the U.S. from terrorists -- I don't feel we have that situation totally under control."
-- Al Plamann, president, Unified Western Grocers, Los Angeles
So the overall outlook is a strange mix of optimism over business and fear of an uncontrollable event that can quickly change everything. It's all about hope and fear. Living with fear is the sad state of affairs of today's world. I'd like to think that hope is the emotion that will ultimately carry the day as the industry converges on Chicago for the annual Food Marketing Institute Show and all the business dealings that result.