FMI’s Midwinter Executive Conference is just around the corner, Jan. 18-21 at the JW Marriott Marco Island in Marco Island, Fla. Supermarket News Executive Editor Chloe Riley sat down with FMI President and CEO Leslie Sarasin to talk industry trends as well as what’s ahead in 2024.
SUPERMARKET NEWS: It’s almost 2024. The COVID-19 pandemic is now almost four years behind us, and yet the industry is still dealing with supply chain issues, increased demand for prepared foods and foodservice at retail. What do you see as some of the biggest challenges facing fothe retail industry today?
LESLIE SARASIN: Well, I think we have challenges on a couple of different fronts. From the industry perspective, we are continuing to be challenged with labor shortages. That was not exactly new when the pandemic started, but it was certainly not at the level that we’ve been experiencing for the last couple of years.
I think the other big challenge we have on the industry side is making sure we have a resilient supply chain. If there’s anything we learned during the pandemic, it was that there were better ways that we could be doing things in addressing the supply chain. One of the things in the labor availability issue that also feeds into the supply chain is the lack of truck drivers and so I think the trucking capacity sort of feeds into what’s going on in the supply chain.
SN: FMI recently released two big reports, one on foodservice, one on bakery. Both are areas we just continue to see growth. What are some other highlights from those reports, and also then what are some other big
opportunities right now for the industry?
LS: One out of every four shoppers, or 25%, cite replacing restaurant meals with foodservice options from their grocery store, and that’s up from 17% the previous year. We also know that the in-store bakery department provides our shoppers with indulgence at a good value, great convenience, and an ability to sort of take a look at all the options available and come up with that experiential kind of eating that they’re looking for. We know that our shoppers are cooking more at home, they’re spending less on eating out.
The kinds of investments that our companies are making in their food service departments, whether it’s on fully made meals or sides or somewhat-made meals that you take home and do a little bit more to, this hybrid nature of what’s going on with our customer base, I think is a tremendous opportunity going forward.
SN: Private label is another area that’s just been exploding. Is that something you are seeing your membership take advantage of?
LS: Private brands are here to stay. I think many of us learned through the pandemic through trial and error that store brands can be great options, and they have historically been options and sales have gone up during recessionary times or economic-challenging times. But I think what we’ve learned is that they can be consistently good tasting and they are at many times more economical, and as a result, I think what we’re seeing our retailers do is invest in those brands more. I think the customer base is ready for it and I think to the extent retailers will continue to invest in those brands, that will continue to grow over time.
SN: So many acquisitions in the industry right now. Aldi acquiring Winn-Dixie and Harveys, the pending Kroger, Albertsons merger, whatever that will end up looking like. Is this kind of consolidation a good thing for grocery?
LS: As you can imagine, representing all those companies that you just referenced, it’s difficult for me to comment on how companies are approaching their consolidation and merger activity and how it’s going to shake out for any of them. But let me just say about competition, that I think competition is alive and well in the industry. We’re not perfect, no question about that. But let me just mention that I think we need to keep in mind the number of places where you can buy food these days. Historically, we bought food at the grocery store, period, the end. That is no longer true and hasn’t been for quite a long time. You’ve got mass retailers that in many cases, 50%-plus of their sales are in grocery.
I think anybody who thinks there’s not competition in the food space is not paying attention because I think there clearly is and I think there’s a disincentive for any retailer to raise their price on a particular product because if a customer doesn’t want to pay that price in that retailer, they can go down the street to a different one and pay a better price.
SN: Sure, and especially right now given
inflation, the power of price is so real right now.
LS: No question, no question about it.
SN: What’s ahead in 2024? What do you have your eye on?
LS: The impact that Washington has on the industry and on the consuming public in an election year shouldn’t be understated. We’ve got a farm bill that we haven’t addressed yet. There’s legislation called the Credit Card Competition Act that hasn’t been addressed yet. We’ve got legislation related to pharmacy benefit managers, PBMs, that hasn’t completely been addressed yet.
There’s a lot of policy decisions that are going to affect the food retail sector and therefore affect our customers at the end of the day. But I think, as I talked about earlier, there are opportunities that will help with private brands, with competition, with other things going on in the industry that make the coming year an interesting one and exciting one, and so we’re looking forward to 2024 with a lot of great interest.
SN: What’s next for FMI? Any reports or anything grocery should kind of have their eye on coming from FMI in the new year?
LS: Our FMI Midwinter executive conference is in January, so we have a lot of work going on right now getting ready for that. I’m happy to say that our registration numbers are off the charts at this point, so it promises to be a very successful event. Our goal, of course, is bringing the industry together at the beginning of the year to really talk about the issues we’re facing and ways that collectively we can address them and move forward positively for our customer base. One of the newer issues that we’re sort of leaning into is generative AI, and I think that will be very prominent on our midwinter program. We are having internal discussions with our board leadership right now of the ways that FMI can provide guidance and leadership to our companies as they approach decision-making about how to further engage AI in their operations and also how to use it in conjunction with their customer base.
The other area I would say we’re spending a lot of time getting ready for and continuing to advance is our work in health and wellbeing. We know that the grocery store is and should be and can be a destination for health and wellbeing for our customers. Being able to work with our companies to make sure that the combination of food as medicine, medicine as medicine, using our pharmacies, using our registered dieticians, the plethora of availability of registered dieticians in our grocery stores is amazing and so to the extent our customers learn more about that option and the availability of that resource to them, I think we as an industry can continue to make a positive impact on the health and wellbeing of the nation.
