Chicago, Illinois (PRWEB) April 27, 2017
Progressive Grocer recently issued its 84th Annual Report on the United States’ $668 billion grocery industry. PG surveyed 125 retail grocery executives including presidents, CEOs, C-level officials, store owners and managers, category managers and merchandisers, along with store operations, sales, advertising and marketing executives.
The key takeaway is that optimism seems to be running much higher than reality would warrant. In fact, responses indicate grocers are more optimistic than they’ve been in recent memory, buoyed by a peak in consumer confidence.
Per store sales volume was up 1.9 percent in 2016, compared to just less than 1 percent in 2015. These figures translate to an average per store sales volume of $17.39 million in 2016, up from $17.08 million in 2015. Square footage and number of checkouts were also up slightly, painting a rosy picture of growth and the freedom with which consumers are spending.
Nielsen’s TDLinx reports a total grocery industry growth of 3 percent in 2016, which is based on the sale increase of 1.9 percent as well as the 1.1 percent increase in store count. But the combination of more stores – a great percentage of which are deep discounters – and current price deflation (which includes lowered egg and meat price adjustments after avian flu and drought a few years back) have definitely softened prospects for many retailers. The retail forecast for 2016 was 69.3 percent on the optimism scale, but in reflection, retailers rated the year a 62.5. Still those pressures aren’t holding them back for 2017, with retailers again rating the coming year a 68.6 on a scale of 100. These numbers have been increasing since the low of 58.4 in 2009, when the country was feeling the full impact of the recession.
Retailers might also be buoyed by The Conference Board’s Consumer Confidence Index, which hit a high of 114.8 in February 2017, up from 111.6 in January, and the highest since July 2001. Including “improved…short-term outlook for business…consumers expect the economy to continue expanding in the months ahead,” according to Lynn Franco, director of economic indicators at The Conference Board.
Optimism is dampened by the prospects of national immigration reform, the proposed Border Adjustment Tax, lingering deflation that has depressed sales numbers, and ongoing competitive pressures that are challenging traditional retailers to innovate, streamline and stay relevant. The Food Marketing Institute, National Grocers Association, BJ’s Wholesale, Target, Meijer and Walmart are among organizations that have joined the newly formed Americans for Affordable Products (https://keepamericaaffordable.com/) coalition to combat the BAT, which The National Retail Federation forecasts will cause prices to rise 15 percent, costing the average American family an extra $1,700 a year.
Grocery retailers are most worried about the rising cost of all aspects of doing business, labor issues and competitive threats. Not the least of those threats is the expanding foothold of online retailers, leading traditional grocers to invest more time and resources into online ordering, click-and-collect and home delivery services. In addition, they’re stepping up efforts to create a seamless experience for consumers, from the brick-and-mortar store to the endless aisle, and engage shoppers more tenaciously along the path to purchase, from home to store and back.
About Progressive Grocer:
Progressive Grocer has been the voice of the retail food industry since 1922. Its core audience consists of top management at grocery headquarters and key store-level personnel. From chain supermarkets and supercenters to regional and local independent grocers, distributors, manufacturers and other supply chain trading partners, readers rely on PG for its authoritative, comprehensive, relevant, research-based editorial content and need-to-know news. By anticipating, reporting and interpreting the grocery industry’s top trends and information, Progressive Grocer fulfills its mission to stay Ahead of What’s Next. Learn more about Progressive Grocer at http://www.progressivegrocer.com.
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