Economic News Not All Bad for Retailers

The annual trends report from Carol Christison, executive director for the International Dairy-Deli-Bakery Association, presented here at the association's 2008 trade show and expo, began on what has become an all-too-familiar note for food retailers and suppliers. American consumers are feeling tapped out. The bursting of the housing bubble has sapped away nest eggs, while an ongoing

NEW ORLEANS — The annual trends report from Carol Christison, executive director for the International Dairy-Deli-Bakery Association, presented here at the association's 2008 trade show and expo, began on what has become an all-too-familiar note for food retailers and suppliers.

American consumers are feeling tapped out. The bursting of the housing bubble has sapped away nest eggs, while an ongoing credit crunch is hurting both businesses and consumers as money becomes more difficult to borrow for investment or major purchases. Prices for gas and food are soaring. The cost of a loaf of bread is up 32% since January 2005; the price of a carton of eggs has risen 50% since that time.

Citing recent news reports, Christison noted that consumers are cutting back on non-essentials and discretionary purchases. There are signs that the economic stimulus checks recently sent out by the Internal Revenue Service have been spent on necessities, such as groceries, gas and debt payments.

But amid the economic gloom, there is a silver lining for food retailers. Some discounters, like Wal-Mart and Aldi, have drawn more traffic simply by cutting prices even further on key items, she noted. And signs are promising for retailers that continue to innovate, offering their shoppers a combination of convenience, quality and value.

Notably, shoppers appear to be eating at home more often. Research consultancy Technomic recently lowered its growth projections for the foodservice industry from 3.6% to 2.2% for 2008, Christison said. And consumers ate an average of 861 meals at home in 2007, compared with 817 meals in 2002, she added, citing data from the NPD Group.

These shoppers are still pressed for time, and still need help in the kitchen. Many prepared-food departments are thriving in this environment. And Christison pointed to several innovations during the past year, such as meal-assembly centers located inside some Publix Super Markets and Piggly Wiggly Carolina Co. locations. There, shoppers pay a fixed amount to attend group sessions, where they are guided through assembling the ingredients for a week or more of prepared meals, which they then can take home and freeze.

“Consumers are looking at convenience as being able to buy several meals at once rather than going out every night to buy food,” Christison explained.

Other retailers have been developing meal stations, where entrees and side dishes are grouped together in grab-and-go stations — perfect for moms and dads looking to put a balanced meal on the table after a busy day. Price Chopper is even testing evening meal delivery, she noted.

On the expo floor, retailers that stopped to talk with SN were generally in agreement, noting that in the current economic climate, supermarkets have an opportunity to regain ground against the restaurant industry.

“I believe we are getting an increased share of the [consumer's] food dollar,” said Ed Meyer, vice president of meat and seafood for Schnuck Markets, St. Louis.

Meyer added that there has been a noticeable increase in sales of items that are promoted on special.

“If rotisserie chicken is on sale, they may buy two or three in a week,” he explained.

One independent from the south Louisiana region said that he had attended the IDDBA show partly to stay current with cheese trends, since entertaining at home seems to be becoming more popular with his customers, and they seem to be cooking at home more often as well.

“We've got a lot of great restaurants in our area, but we've also got a lot of people who know how to cook,” said Bobby Cade, owner of Cade's Market, St. Martinsville, La. “I think that's a trend that's going to happen — people staying home and eating more often.”

Others agreed, noting the importance of keeping up with trends and new products, even in a tough economy.

Each year at the show, “we always get at least two new lines that we've never handled before into our warehouse,” said Mike Halley, meat, bakery and deli director for Supermarket Operations, Natchez, Miss. “And there's always great merchandising ideas.”