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In the most current Industry Speaks it was reported, “Supermarket industry sales increased 5.3 percent in 2006, and same-store sales rose 4 percent. These figures were up from 4.6 percent and 2.4 percent, respectively, in 2005.” The report went on to say, “The national chains reported a banner year in sales in profit growth. But the picture was far less rosy for many other retailers. In fact, same-store sales decreased for nearly one-quarter of food retailers. Nearly half lost ground in same-store sales after taking inflation into consideration.”
Meanwhile, in the Shopper Trends report, foodborne illness outbreaks and high energy costs “are significantly changing consumer shopping behavior and attitudes.”
INDUSTRY SPEAKSFor those interested in commercial refrigeration, it can be noted that 83.8 percent of retailers now provide self-service refrigerated cases and are relying more and more on made-to-order sandwiches (71.6 percent), salad bars (56.8 percent) and sushi stations (52.9 percent), all of which require specialized and precise refrigeration equipment.
In a set of statistics that can be read as either a plus or minus for refrigeration contractors, FMI noted what it calls ‘level of concern’ on various issues. On a 1 to 10 scale with 10 being areas of greatest concern, energy costs ranked 7.4, about the same as the previous year. Technology investments were up to 6.5 versus 6.0 the prior year. Food safety issues, another aspect mitigated by properly operated refrigeration equipment, also ranked high in concern at 6.0, up from 5.7.
The energy and safety concerns can be addressed by new refrigeration technologies. The question is, “Concern is up, but will it result in more investments in the newer technology, especially in terms of retrofits?”
The willingness of storeowners to commit to such technology is tempered by an even greater concern for rising health care costs for its employees. At 7.9 it was the highest level of concern. Trailing just behind that (7.5) were issues related to credit cards, such as fees charged by the card suppliers for an establishment to use the card.
On a pure plus side for contractors, 98.8 percent of retailers said they are addressing competition “by emphasizing perishable products such as meat, produce, prepared food, and deli and bakery items” most of which need refrigeration.
“These results are impressive in view of the all the rising costs the industry must bear, including energy, health care, credit card interchange fees and the imperative to keep improving products and services in today’s extraordinarily competitive marketplace,” said Michael Sansolo, who at the time of the report was FMI senior vice president. “However, it is also clear that many retailers are struggling to solve the puzzle of cutting costs as much as possible while continually improving customer service.”
The data in the Industry Speaks report is based on a survey of 92 companies operating 14,769 stores, filings with the Securities and Exchange Commission, information from the U.S. Bureau of Labor Statistics and Census Bureau, and other FMI sources.
SHOPPER TRENDSNothing motivates decision-makers in supermarkets to commit to something more than feedback from their customers. Those key officials monitor what shoppers are saying. Often what they are saying relates to the refrigeration equipment.
The strongest evidence is with the concern shoppers express over food safety. Of 2,307 shoppers surveyed, 66 percent said they are “completely” or “somewhat” confident in the safety of supermarket food. This compares with 82 percent the previous year - a trend of concern to the industry. “These findings send a strong message to the entire food industry,” said FMI President Tim Hammonds.
“All of us need to work together to be sure our consumers continue to receive the high-quality, affordable food they have every right to expect.”
The survey said that safety concerns have caused some 38 percent of those surveyed to stop purchasing certain foods in the past year, up 9 percent from the previous year. High on the list was spinach as the survey was conducted in January 2007 when the spinach safety issue was still in the news.
The importance of keeping freezers operating at top effectiveness was noted in a portion of the survey that said 30 percent of those surveyed said they would buy more frozen, canned, or boxed food rather than fresh food.
The lifeblood of conventional supermarkets may also rely more and more on refrigeration, because the survey shows an increasing interest in buying dry groceries and nonfood items from price discount stores, while relying on meat, produce and frozen food at conventional stores.
Publication date: 09/03/2007