Jul 10, 2008 3:54 PM

by JULIE GALLAGHER

Supermarkets are adjusting prices and catering to budget-minded shoppers with better meal solutions and enhanced private-label lines.

Strategy Shift

The majority of retailers (55.1%) polled as part of SN’s fifth annual survey of Center Store performance reported that higher commodity costs have had a fairly significant effect on the retail cost of groceries in their stores. More than one-quarter (26.1%) said food price inflation is impacting shelf prices significantly, 11.6% described the consequence as very significant, and 5.8% categorized it as not significant.

"Margins are getting tighter, with the numerous cost increases from product suppliers," one anonymous respondent told SN. "The cost of fuel has a big impact on operating and distributing costs. Competition is keen, so the costs don’t immediately reach the consumer segment. But the increasing costs are impacting...more

Sales Outlook

Both factors may contribute to retailers’ optimistic sales projections in the face of higher costs and strained consumer budgets. More than one-quarter of retailers (26.1%) polled by SN expect Center Store sales to increase between 2% and 3.9% this year vs. last.

An increase of between 0.1% and 1.9%, and a rise of between 4% and 9.9%, tied as the second most popular responses;
both were chosen by...more

Loyalty Builders

The presentation of meal solutions was the most frequent choice of both retailers (26.1%) and manufacturers (38.1%) when they were asked about the services that can best build loyalty in Center Store. The response was followed by loyalty clubs/targeted offers, which were chosen by 24.6% of retailers and 23.8% of manufacturers, and in-store cooking demonstrations/ recipe distribution, which were chosen by 17.4% of retailers and 14.3% of manufacturers...more

Where There's Smoke

Some retailers have also reconsidered their tobacco sales policy.

About one in 10 supermarkets (10.1%) plan to phase out their sale within the next year, the survey indicates. More than three out of four respondents (75.4%) will not adopt a tobacco-free policy, and 8.7% do not sell tobacco products...more

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