Viewpoints

Meat Departments Benefit as Shoppers Cook More

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This week, retailers and suppliers will gather in Denver for the American Meat Institute's annual Meat Conference, and, understandably, several of the program's educational sessions will focus on the recession and how it is impacting consumer behavior.

Fortunately, supermarket meat departments have been bucking recessionary trends in recent months. During the fourth quarter of 2008, retail volume sales of beef were up more than 3%. Chicken volume was up more than 9%, and pork volume was up almost 5%, according to data from the Fresh Look Marketing Group. Meanwhile, wholesale prices for beef, pork and chicken have been softening.

A number of factors are responsible for this rare situation — rising demand and falling wholesale costs — but flagging restaurant sales deserve much of the credit. In an effort to conserve household budgets, consumers are eating out less, and the massive U.S. restaurant industry, in turn, is buying less meat. Supermarkets benefit on both ends, with prices falling even as shoppers purchase more center-plate proteins from their meat departments.

Last month, several retailers told SN that Valentine's Day promotions in their prepared-food departments had been disappointing, but that meat department sales had been doing much better, with promotions on items like premium steaks either meeting or beating expectations.

This could reflect a trend for the coming year. In 2008, many — though not all — supermarket prepared-food departments benefited as their customers traded down from restaurant dining. But shoppers have begun to reacquaint themselves with their kitchens, and many have suffered a job loss in the family. These customers have more time available to prepare dinner, and they're looking to save even more money.

The New York Times last week reported that sales of cube steak were up almost 10% in the fourth quarter. And, as Amy Sung reports in this week's Fresh Market section, lean ground chuck alone accounted for $450 million in sales during that time period. Shoppers are clearly looking for inexpensive meal solutions in their meat departments, and, if the anecdotal evidence from our Valentine's Day report is any indication, they're still willing to splurge a little when celebrating holidays and special occasions at home.

Retailers cannot rest easy, though. As this downturn deepens, shoppers will likely become more and more price conscious. Retailers that pass along savings to shoppers will be rewarded with traffic. As shoppers cook at home more, they will crave variety, making recipe ideas, cooking demos and grab-and-go meal centers more relevant than ever. Shoppers may not be as pressed for time during this recession, but coming up with new ideas for dinner is a new source of stress.

As times get tougher, meat department managers who put themselves in their customers' shoes, and meet their expectations with smart promotions and smart cross-merchandising, will stand to benefit the entire store.

Contributors

Julie Gallagher

Julie Gallagher’s delicious foray into coverage of the food industry was purely accidental. With a background in technology, she joined Supermarket News as associate editor of its Technology...

Mark Hamstra

Mark Hamstra is the editor of the Retail/Financial section of Supermarket News covering mergers and acquisitions, quarterly earnings reports, executive changes and other significant events and trends...
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