The weekend just past represents the dead center of the year - the moment at which there are as many days spent as remain in the year.
So what better time to take a look at what's happened so far this year and to assess what might be ahead for the last half of the year?
To do that, SN asked a number of highly placed food distribution executives to proffer some thoughts about such matters. You'll see results of that survey referenced on the front page of this week's SN. Let's take a brief look at some of what they think is going on, and what will go on later this year.
It's clear that the top-of-mind business concern so far this year centers on fuel: How much it costs, how efficiently it's used and, conversely, whether rising fuel costs represent advantage by keeping shoppers closer to their home stores, boosting sales.
Some retailers are working to reduce the effect of fuel costs on operations. To reduce the cost of operating the delivery fleet, one retailer cited in the feature installed speed regulators, paid more attention to tire pressure and the like to produce savings.
As for the sales effect, a retailer remarked that, "We're seeing same-store sales up because customers are buying more judiciously, with fewer trips and larger orders. It also seems like they're making fewer trips to restaurants and fast-food places." Another is encouraging that trend by advertising products used for barbecues or dinners at home.
As for getting into the fuel business, many food distributors are working that end of the spectrum. One that is in the business in a big way is Kroger Co., which, it was reported lately, plans to open a few freestanding gas stations, some as far as three blocks from its supermarkets. That chain now has about 1,200 fuel operations, half at its supermarkets, half at owned convenience stores. Smaller operators are more skittish, though. One quoted in SN's report this week asserted that there is little profit in fuel, given product, operational and transactional costs. So for that operator, anyway, it seemed better to enter the business obliquely, by partnering with fuel stations in a program that offers shopper rewards.
Here are a few of the observations, opportunities and concerns seen by executives surveyed concerning the balance of the year: The economy seems to be stable, home values are falling slightly, talk of increasing the minimum wage is in the air, sales growth in perishable categories will continue, inflation could boost top lines even on flat tonnage and, finally, the breakup of Albertsons doesn't seem to perturb operators too much.
Many, though, foresee that transactions affecting large chains will continue, with many predicting that the net effect will be to reduce the size of many mass retailers. Some foresee growing retailer consolidation.
All in all, then, it seems as though these executives aren't too alarmed about the future and even find a bit of a silver lining on the high-fuel-price cloud. That relatively bright outlook was reflected in a broader way earlier when, as was mentioned in this space on March 10, that retailers' capital expenditures are expected to increase this year. That's a strong leading indicator of confidence in the future. Let's hope this continues.
