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TAKING STOCK

To put the survey responses in perspective, SN ran the questions by several equity analysts.Here are some of their assessments.Growth will be slow. Jonathan Ziegler, a principal in PUPS Investment Management, Santa Barbara, Calif., said he was inclined to come in at the low end of the slow-growth estimate. "I think it's going to be 1% to 2%," he observed. "There are going to be no major acquisitions,

To put the survey responses in perspective, SN ran the questions by several equity analysts.

Here are some of their assessments.

Growth will be slow. Jonathan Ziegler, a principal in PUPS Investment Management, Santa Barbara, Calif., said he was inclined to come in at the low end of the slow-growth estimate. "I think it's going to be 1% to 2%," he observed. "There are going to be no major acquisitions, supercenters are going to continue to take market share, independents are going to continue to fold, and there will be fewer aggressive new-store programs. In a way, perhaps 1% or 2% growth is too aggressive an estimate."

Home meal replacement represents a strong potential source of profit, if supermarkets can learn to do it well. Chuck Cerankosky, an analyst at McDonald Investments, Cleveland, said supermarkets still have work to do to bring HMR programs up to speed. "Hopefully, we will see the chains do a better job in prepared food. That's continued to be a challenging area. Supermarkets need to get comfortable with the cost structures of supplying those products because they are much more labor-intensive."

Value-added produce will increasingly mean a lot more than salad-in-a-bag. Andrew Wolf, an equity analyst with BB&T Capital, Richmond, Va., said, "Fresh-cut salad has grown to be a $2 billion category in the last 30 years. It continues to grow about 10% a year. And now the cutting technologies are finally being developed, so that fruit can be done on a precut basis. There's much more fruit sold in a supermarket than lettuce. Obviously, there's a consumer demand for this product."

Case-ready meats will replace the in-store meat cutter. Ziegler said, "Supermarkets are in a major, major squeeze on operating costs with very negligible topline growth. I think case-ready meat is one solution."

Everybody loves self-checkout, even analysts. Cerankosky observed, "The equipment now is able to handle larger orders, [and] it's been made more intuitive for the customer, so we're going to see that rolled out. Plus customers always think it's faster, even if they're holding up the line in their confusion. If you keep a customer occupied, everything seems to move faster."

And online shopping did not die in the dot.com crash. Wolf noted, "Believe it or not, online shopping will continue to grow. Online grocery will never be a big deal, but it's going to be an adjunct business."

Commented Ziegler, "I think the audience is getting more and more sophisticated. People are generally time-starved, and this is a way traditional supermarkets are able to differentiate themselves from price-impact guys like Wal-Mart."

Still, some analysts are skeptical of how much customers really want the service. Cerankosky said, "I think it's an excellent idea wherever customers are willing to pay for it. Apparently, that's not a lot of places."