I cringed.That's what happened as I read the capsule summaries of the previous nine SN financial analyst roundtables, printed on Page 30 to mark the 10-year anniversary of these annual gatherings. Reading about the progression of roundtables evoked the feeling of watching a horror movie that begins with scenes of happy folks in an idyllic town, but you can hear ominous music playing in the background and you know things are about to go very wrong.
The roundtables started in 1996 with optimistic forecasts about the supermarket industry, but it wasn't long before perspectives turned dark as the industry became challenged on all sides.
What went so wrong and where is the industry at this point? Those were key questions as analysts gathered recently for our 10th annual event, which is excerpted in this issue.
The first time the analysts converged on our offices we heard comments such as, "Overall it's just very clear sailing." It wasn't long before a gloom set in. Excitement over mergers led to concern about integration woes. By the turn of the millennium, Wal-Mart Stores was the biggest worry, with the impact of supercenters and the specter of a Neighborhood Market rollout top of mind. That would soon be followed by a deeper angst about non-conventional retailers, particularly dollar stores, and the impact of a struggling economy.
A decade ago, supermarkets seemed unprepared for the hurdles they would face. Roundtable veteran Mark Husson of HSBC Securities said conventional retailers were lacking in knowledge of basic strategies, ranging from category management to full truckload buying to private label. "Ten years ago, you just talked about what was in the circular, and that was really about as strategic as you got," he said.
Where does that leave us today? This year's roundtable (story and text begin on Page 16) was marked by the first upbeat tones in a long time. Maybe upbeat is stretching it. We heard assessments such as "selectively optimistic" and "cautious optimism," with qualifiers such as, "We must guard against getting too giddy." But, hey, we'll take any hint of optimism we can get.
Analysts are finding it harder to predict the industry's course in the face of variables such as rising fuel prices and relentless competition. In fact, it's now harder to talk in terms of industry performance in general. There's increasing recognition that this is a game of individual company performance.
So lets' call the present state a situation of wait and see. Check back with us in 10 years.
Gulf Coast Devastation
It will be some time before we know the full impact of Hurricane Katrina. It's hard for outsiders to grasp the devastation and suffering in Louisiana, Mississippi and elsewhere in the region.
As of late last week, food retailers and wholesalers were largely unable to gauge the level of damage to their facilities as access was impossible.
Supermarkets will reprise a familiar role of pillars to the communities as attention turns to relief and rebuilding. Already many firms have pledged financial assistance through relief agencies.
