CHICAGO -- The supermarket industry has a number of reasons for optimism, despite hefty challenges ahead.
The positive signs range from sales data to consumer outlook trends, Michael Sansolo, group vice president of education and industry relations at the
Food Marketing Institute, said last week during FMI's annual convention here.
Sansolo said one reason for encouragement is that only 16% of operators surveyed by FMI reported a sales decline in 1994, compared with almost 30% in each of the two prior years.
Moreover, FMI's "Trends in the United States: Consumer Attitudes & the Supermarket, 1995" study indicated that consumers are cautiously optimistic, he said. Trends also indicated that only 7% of respondents said they shop at discount or warehouse food stores, compared with 6% last year, and only 4% said they shop at membership club stores, compared with 2% a year ago, Sansolo said.
"And of those who shop clubs, two in 10 are shopping there less often," he added.
He said U.S. shoppers' satisfaction with their primary supermarket's overall performance held steady in 1995. Some 71% of respondents gave their store an eight, nine or 10 on a scale of one for lowest and 10 for highest.
Sansolo said FMI's outlook is optimistic, "or, more precisely, cautiously optimistic."
Despite a wide range of changes, "our industry in general is in sound shape," Sansolo explained. "The reason: We face the consumer every day in an industry that deals with the public more frequently and more closely than any other, and this daily accountability has led us to become accustomed to change."
Sansolo's comments were part of FMI's "The State of the Food Marketing Industry: Speaks 1995" session.
Elaborating on Trends survey results, Sansolo said, "When we look deeper into those statistics, we find there are still some shoppers who need more attention and some areas of the store that we can make better still.
"This is a clear message -- we have to drive ourselves to be better than ever. Our customers are demanding nothing less," he said.
He pointed to some survey results that could provide opportunities for retailers:
While 94% to 99% of respondents continue to say quality produce, clean stores, quality meat, friendly employees and good selection are the most important factors they use in selecting where to shop, the percentage of customers who rated those categories "excellent" or "good" was only 85% to 91% -- a performance gap of eight to 10 points.
Sansolo said the gap is especially large in the areas of checkout speed (where the excellence rating is off 21 points from the importance rating); pricing (off 24 points); readable shelf tags (off 18 points), and attention to special requests (off 15 points).
In terms of variety, Sansolo suggested that consumers don't want every choice but only the right choices.
"New efforts like category management offer us a direction for the future," he said. "Category management demands that we understand the role products play in our stores and forces us to examine our product mix the way customers see it.
"If we can learn to use these new disciplines in concert with the information generated through frequent shopper programs, we can continually learn more about what it is our customers want and what it is they buy."
For the second year in a row, more consumers named social issues as a greater concern (46%) than economic issues (25%), Sansolo said.
Among social issues, 19% cited crime (including concerns with guns and youth violence) as their primary concern -- a contrast with 1992 and 1993, when unemployment was cited as a top concern, Sansolo pointed out.
According to the survey, 88% of shoppers said their markets are doing a good or excellent job in ensuring their personal safety. "But we can do better," Sansolo said, "and we must do better if we are to keep certain shoppers."
Sansolo said the fear of crime is changing the way consumers shop, citing a USA Today report that said 43% of Americans are no longer shopping after dark and 40% indicated they expect to begin using electronic shopping from the safety of their homes in the next year and a half.
"Let's try to make our customers feel as safe as possible," Sansolo said. "Let's make certain we have good lighting outside our stores and in the parking lots, and let's try to have an employee working outside after dark to assist shoppers to their cars or to load cars at the curb."
More men and youngsters are doing the family's grocery shopping, with men doing the shopping in 17% of households surveyed and children ages 9 to 15 buying food for the family in 33% of households.
Interest in nutrition is rising, with 65% of consumers surveyed expressing concern about fat content in foods -- almost as much as the 66% that expressed concern about calories, cholesterol, sugar and sodium combined, Sansolo pointed out.
The survey also indicated that 62% of consumers expressed concern about nutrition and said they were doing something about it, Sansolo said.
The survey indicated that 45% of consumers said they are taking more responsibility to ensure that what they eat is nutritious, compared with 40% a year ago. Fifty-three percent of all shoppers said they always read the label on a product, while 34% said they sometimes read labels.
In addition, the survey found that 66% of shoppers with annual incomes of more than $50,000 said they always read the labels.
The signs of optimism for supermarkets emerge against the backdrop of some frustrating problems. In a presentation at the same Speaks session, Tim Hammonds, president and chief executive officer of FMI, said one challenge for the industry is to fully capitalize on gains in the national economy.
Despite improvements in the national economy, most supermarket operators have not seen real dollar sales increases exceeding 1.5% in seven years, Hammonds said.
"The state of the industry in 1995 is a paradox," Hammonds asserted. "To paraphrase Charles Dickens, it is the best of times and it is the worst of times.
"We have on the one hand this year a national economy that continues to improve in most regions, and on the other we have the fact that the typical grocery distributor in our survey has not seen real dollar sales increases over 1.5% since 1988."
He based his comments on an FMI study titled "State of the Food Marketing Industry '95," which indicated that supermarket sales in 1994 increased 4.4% in current dollars but only 1.5% in real dollars, compared with 1993 gains of 3.3% in current dollars and 0.8% in real dollars.
The study also found that same-store sales rose 3.3% in current dollars and 0.4% in actual dollars last year, compared with a 1993 increase of 1.9% in current dollars and a drop of 0.5% in actual dollars.
At the beginning of the Speaks Plus presentation, Roger E. Stangeland, who is retiring as chairman of FMI, formally introduced his successor in that role, Robert E. Bartels, president of Martin's Super Markets, South Bend, Ind. Bartels will serve a two-year term in that capacity.