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Profits Squeezed in ’09: FMI Speaks

ARLINGTON, Va. — Food retailers suffered a decline in profitability in 2009 as many saw their same-store sales come under pressure, according to the annual Speaks industry survey research released Tuesday by Food Marketing Institute here.

Median net income for food retailers in the survey totaled just 1.22% of sales in 2009, vs. 1.43% in 2008, FMI said in the report, as same-store sales were down 0.82%. Total sales were up only 0.12%.

More than half, 56.9% of retailers, reported negative identical-store sales, up from 16.9% who reported negative same-store sales in 2008. Even more retailers — 61.1% — reported growth numbers below the rate of food-at-home inflation.

"Shoppers' overwhelming focus on price and value has led to fierce price competition among food retailers," said Leslie G. Sarasin, FMI president and chief executive officer. "As a result, supermarkets are focused on trying to distinguish themselves from the competition by fine-tuning their private-label strategies, SKU reduction and price differentiation in order to retain their current customers and attract new ones."

The economy, competition — primarily from supercenters and other full-service supermarkets — and rising health care costs were the top three concerns for food retailers. Food retailer health care costs increased an average of 8.1% between 2008 and 2009, and more than one-third of retailers reported a double-digit increase in cost.

"The Food Retailing Industry Speaks: The Annual State of the Industry Review 2010," funded in part by PepsiCo, is available for sale at www.fmi.org/store/.