It seems as though good news is a rare commodity right now, so let's take a closer look at some unusually good news published in short form in last week's SN, namely the fact that the supermarket industry has turned in its best financial performance seen in years.
The Food Marketing Institute has published its annual "Financial Review," which assesses several industry financial measures. Maybe the most important one is that the industry posted its highest net profit seen in nearly 30 years: 1.25% of sales during the current 2000-2001 period. That compares to the previous period's 1.18%.
As compared to the 1999-2000 period, the current net-profit level got a boost in several ways, such as a drop in the cost of sales and operations. That's especially good news since it implies greater efficiencies are paying off. Other cost centers that declined include interest expense and, particularly, the rate of taxation. Total tax on income fell to 0.68% of sales, from 0.87% the previous period.
And, owing to obvious social factors, it's quite possible to predict that the performance of the industry stands to get even better in the future, on rising sales. Here's something about those factors: A Deloitte & Touche survey conducted between Oct. 30 and Nov. 4, and issued last week, shows that a considerable proportion of the population intends to spend aggressively on supermarket product categories in upcoming months: Some 93% plan to spend more or the same on groceries and 84% plan to spend more or the same on health and beauty care items. An increasing amount of spending is likely to go into emergency supplies, too, which includes food and water.
One curious economic factor that's well worth bearing in mind, though, has to do with the emergence of a form of deflation.
During the third quarter, the economy shrank at an annualized rate of 0.4% as measured by the price of goods for personal consumption. This marks the first time such a decline has been registered since 1954.
Deflation is not necessarily the industry's friend, since it tends to lower top lines and remove the masking effect low-level inflation can put over cost inefficiencies that could creep in.
Moreover, consumers could stall purchases under the presumption that tomorrow's prices stand to be lower than today's.
SN's New Look
Now let's turn our attention to this week's SN. As you can see, a few things have changed concerning its appearance. SN's art directors have taken a careful look at layout, typography and the use of color. Each of these design criteria has been upgraded to enhance the appearance of SN's pages. More important, the changes should result in increased readability and clarity.
In those regards, the location of several standing features has changed, such as this very editorial page. From now on, you'll find the week's editorials on Page 8. The financial tables that used to be here will shift to the back of the book. In this week's issue, you'll find them on Page 62. These changes were made to make way for an expanded table of contents, which you'll find each week on Page 3. The contents page should be considered a navigation bar that will make it easier for you to find your way around each week's information. We hope you'll find these changes useful.