A number of developments in the final quarter of this year have prompted major changes that will follow the food industry into the new year. Many of these changes could not have been anticipated just a few months ago.
The most obvious development was Sept. 11 and its influence on the consumer. It turns out the early predictions about a new shopper mood were on target. Retailers are moving into 2002 with food-at-home sales on the rise and comfort foods charting strong gains. That's why shepherd's pie, chicken pot pie, double-crust apple pies and hamburgers were among strong sellers for one retailer quoted in a recent SN holiday report. But if this trend takes us back to prior decades, it also has the 21st century stamped all over it. Convenience is still the name of the game. So it shouldn't be surprising that shepherd's pies and chicken pot pies were being merchandised out of a grab-and-go case.
Another development that picked up momentum in the final few months of the year was the launch of new store formats, especially those devoted to price-impact retailing. The upward growth in the numbers of these units was inversely proportional to the downward direction of the economy. A&P unveiled a limited-assortment store under the Food Basics banner, the first U.S. version of a concept that has worked for the company in Canada. Winn-Dixie said it is considering converting some or all of its Atlanta-area stores to the Save Rite Grocery Warehouse format. That banner has worked for the company elsewhere, so Winn-Dixie was evaluating how many of its 40 stores in the area would be good candidates for this strategy. Meanwhile, Eagle Food Centers created a price-impact format called Foodco and is evaluating existing stores for possible conversion. These launches aren't only the direct result of the rocky economy. They seek to benefit from the successful experiences of other retailers who have stepped into this price territory. Look for a continued proliferation of these types of stores in the coming year.
Also notable as the year winds down is that some retailers are finding themselves in strategic transitions that are leading to new sales-building efforts. Look no further than Page 1 of Supermarket News from last week. In a story on Kroger, the company said that it has fully realized the benefits from its 1999 merger with Fred Meyer and its new goal will be to build same-store sales an annual 2% to 3% above inflation. The company was less descriptive on how it would reach this goal. In another story, Penn Traffic reported that much of its existing store base has now been refurbished and it is ready to funnel more dollars into new and replacement stores. These examples reflect the widespread strategizing now occurring in corporate suites about how to grow the top line with no help from the economy or inflation. Expect to read about more of these scenarios next year. Keep in mind that plenty of things will happen next year that no one anticipates today. That's a rule of journalism that helps guarantee lots of news in magazines. But it should also be a rule of business that the only way to be prepared for unanticipated developments is to remain flexible and nimble.