Snow already has fallen across a good portion of the country, reminding us that the year is winding down at a fast pace.
But, no matter how fast time seems to move, it's often a good idea to pause for a moment to see what events are telling us. And there's no better time to do that than this week -- Thanksgiving week.
So in that spirit, let's declare this the industry's Thanksgiving week and think about the many indicators that now are moving in the right direction, starting with holiday sales. Year-end holidays always usher in a time of increased sales, but some years are better than others. Luckily, it's starting to look as though this holiday period will be one of strong sales.
Many retailers are expecting solid sales this season because they are positioned to cater to consumers' holiday needs by offering both ingredients and better home-meal replacement items.
Moreover, there seems to be a more buoyant mood in the economy, perhaps because the cloud of uncertainty caused by the protracted national-election period was lifted earlier this month.
It's during relatively good times such as these that retailers might take a look at shaking off the seemingly irrational practice of virtually or actually giving away holiday meals' central component -- turkeys. Should that practice go the way of triple couponing, there could be even happier holidays for the industry in years to come.
As for industry fundamentals, there's good news on several fronts, much of it being driven by the fact that the industry is actually becoming more efficient. And it doesn't matter much if new efficiencies are springing from consolidation, management initiatives, well-deployed capital expenditures, or whatever. What's important is that they're happening.
According to the Food Marketing Institute's Annual Financial Review, the industry's declining net cost of sales and operations spawned an increase in operating income to 3.05% of sales, up from the previous period's 2.68% and, in fact, that's the highest the measure has been since this report was inaugurated nearly a quarter century ago.
Several other measures such as shareholder equity, earnings, the taxation rate and so on look good and, in every instance, are better than previous reporting periods.
In part, the industry is earning these advances the honest way -- by means of increased capital spending that's resulting in better stores and product offerings more attuned to what customers want. The best part is that well-executed capital plans result in better years down the road.
By the numbers, capital spending rose to 2.71% of sales from 2.54% a year earlier. (More detailed information on these financial findings appeared in last week's SN.)
Let's not forget the wholesaling side of the business.
According to a newly issued report from Food Distributors International, wholesalers generated a 16% pretax return on net worth, up from 12.2% the previous annual period. Sales growth inched up 3.3% as well, and in a measure that's most likely closely related, inventory turn increased to 14.6 times against 13.4 for the year-earlier period. (There's also more detailed information on these statistics in last week's SN.)
All in all, then, there's good reason for the industry to be pleased with this Thanksgiving week. Let's enjoy it.