DALLAS — Although the state of the economy on the national and local level is the top concern of the food retail industry, supermarkets are emphasizing private brands to offset the negative effects of the volatile situation, according to data presented by the Food Marketing Institute.
Although the state of the economy on the national and local level is the top concern of the food retail industry, supermarkets are emphasizing private brands to offset the negative effects of the volatile situation, according to data presented by the Food Marketing Institute.
The document, The Food Retailing Institute Speaks 2011, was released in conjunction with FMI’s recent Future Connect show.
The report notes that supermarkets are reshaping their merchandising and marketing efforts through expanded use of social media and by expressing interest in health and wellness.
"While the economy has colored consumer decision-making for the past four years, food retailers have responded heroically to address the complicated financial picture confronting their customers," FMI president and chief executive officer Leslie Sarasin told the Dallas gathering. "They are providing more affordable private brands and loyalty program rewards, are focusing on buying locally grown products, and are offering educational opportunities to consumers regarding strategic meal planning and food conservation.
"In spite of belt-tightening times for consumers and retailers, the industry remains committed to providing safe food, reliable nutritional information and healthy choices for American families."
Food retailers are also emphasizing perishables and enhancing the consumer’s shopping experience through improved store design and product selection.
Besides the economy, other factors listed on FMI’s “worry index” include health care costs and interchange fees. Escalating health care costs pose a particular challenge for the labor-intensive food retailing industry: 66% of retailers reported rising health care costs in 2010, with the average increase hovering near 9%.
And 80% of retailers indicated they anticipate cost increases again in 2011.
According to FMI, health care costs average 1.5% of total food retail sales.
After dropping from the retailer worry list for a year, interchange fees returned to take third position on this year’s compilation of concerns. With 46% of shoppers making grocery payments with their debit cards, food retailers remain challenged by what FMI characterizes as the anticompetitive practices in the debit card interchange fee system.
Although the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) includes provisions correcting the way interchange fees are established, delay tactics instigated by financial institutions are preventing a timely implementation of the provisions and are the root cause of interchange fees returning to the retailer worry list.
In her remarks at Future Connect, Sarasin also emphasized the need for retailers to gain and maintain consumer trust.
"We know it intuitively and explicitly as the key ingredient in establishing, cultivating and retaining store loyalty," she remarked. "Trust must be established early and maintained faithfully if we expect customers to keep coming back to our stores."
One area in which supermarkets have secured trust, noted Sarasin, is food safety.
"The good news is that your vigilance in presenting safe products has been recognized — 88% of shoppers report being somewhat or completely confident in the safety of food from the supermarket," she said, adding that a low percentage of shoppers stop buying certain food products because of safety concerns.
Still, she cautioned that the high percentage of confidence in safe products "is a very fluid metric that can change overnight in the light of the food retail industry’s Jabberwock — a major food recall."