Shopper Survey 2008

Apr 24, 2008 11:36 AM

by MARK HAMSTRA

An exclusive SN survey shows retailers are increasingly concerned about inflation and the economy.

Supermarkets will face more food-cost inflation in 2008 than they did in 2007, and the increases will be difficult for many operators to pass on to their customers, according to a survey conducted last month by SN.

For the most part, food retailers in their recent earnings calls have indicated that they have been able to pass their cost increases along to their customers in the form of higher retail prices, but nearly 80% of respondents to SN’s online survey said they expect rising food costs to impact their margins to some degree in 2008...more

A Cautious Consumer

In a fourth-quarter earnings conference call with investors, Steve Burd, chairman, president and chief executive officer, Safeway, Pleasanton, Calif., said consumers have become "more cautious."

"I think some of that caution stems from the fact that they are a little bit concerned about the economy," he said. "Everybody is forecasting some kind of recession, and then we have an unusual situation where you add to that the uncertainty of more inflation than consumers have seen in some time. We see some evidence of consumers trading down."...more

A Consumer Paradigm

Retailers for the most part seem to be convinced that for every dollar that consumers save by substituting a cheaper product, a new dollar lands in the till from increased spending on higher-cost product and from customers cutting back on dining out.

Mona Doyle, president, The Consumer Network, Philadelphia, said she doesn’t see consumers cutting back on their market baskets or food-at-home purchases. Instead, consumers have cut back in other areas, especially eating out at fine dining restaurants...more

Non-Necessities Go First

Leibtag of the USDA also said he thinks consumers will be reluctant to cut back on their grocery spending.

"The general economic view tells us that food overall is a relative necessity, and grocery store shopping, vs. eating out, is more of a necessity, or one area that consumers can fall back on," he said. "So, with the weakening economy and higher prices for food, it is the non-necessities that go first. If consumers are cutting back, it is probably not on basic food staples."...more

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