Progressive Grocer - March 2009 - (Page 76)

Fresh Food 2009 Meat Operations Review PG’s annual “state of the meat department” study tracks a 5.3 percent net growth rate in overall department sales in spite of a skyrocketing CPI, which has risen to all-time highs. Solid Ground By Debra Chanil and Meg Major hile the industry continues to grapple with the realities of the economic turmoil that has thrust consumers toward a back-to-basics approach with food shopping, the meat department held its ground as the backbone business for many grocers in a year-to-year comparison, according to insights revealed in Progressive Grocer’s 2009 Meat Operations Review. Indeed, while fresh meat sales haven’t been immune to the sweeping impacts of the economic downturn, the department has been one of the few supermarket categories tracked by Nielsen that 76 • Progressive Grocer • March 2009 W experienced consistently rising unit sales from July through November of 2008 — a finding validated by 67.4 percent of this year’s Meat Operations Review respondents, who forecasted increased total meat case sales during 2008. Drawing on the expertise of a diverse range of retail meat executives from around the country, the annual “state of the meat department” survey evaluates key sales and operations trends alongside performance and demand patterns in retail meat departments over the past year, inclusive of samestore sales and profits, departmental challenges and opportunities, production and labor issues, and fastest-selling items, among others. Survey participants, representing an equitable proportion of chains and regional and independent food retailers, were asked to evaluate and project percentage estimates for their average meat departA H E A D O F W H AT ’ S N E X T ment for the 12-month period ended Dec. 31, 2008. As noted above, nearly three-quarters (67.4 percent) of survey panelists estimated total meat department sales increases during 2008, with 11.6 percent projecting decreases, rounded out by 21 percent who expected meat sales to remain the same. All told, retailers responding to this year’s meat study anticipated a net 5.3 percent growth rate in overall department sales for 2008. The contributing culprit of rising costs can be seen in the Consumer Price Index (CPI), which has been rising at accelerated rates throughout 2007 and 2008, and is expected to continue into the first half of 2009. Spurred by higher commodity and energy costs that translate into higher retail prices, many meat executives said they weren’t able to raise prices much when grain and oil prices soared, instead choosing to absorb the costs in their margins. When asked to weigh in with reactions to rising costs, nearly 70 percent said they were unable to avoid raising retail prices to offset margin losses. Yet 37.5 percent conversely said they held the line on prices and absorbed the margin losses, while still others said they reduced pack sizes and portions, and switched vendors to deal with wholesale price hikes. Among other responses relative to price increases tracked in this year’s survey, some meat directors told us they eliminated products/lines that can’t be competitively priced to sell, while others said they implemented different merchandising/display strategies and began selling larger pack sizes to keep packaging and labor costs in line. www.progressivegrocer.com http://www.progressivegrocer.com

Table of Contents for the Digital Edition of Progressive Grocer - March 2009

Progressive Grocer - March 2009
Contents
Front End: Ahold Banners Launch 'Major Consumer Wellness Initiative'
Nielsen's Shelf Stoppers/Spotlight: Frozen Foods/One-Food Oriental Entrees
Market Snapshot: Miami-Ft. Lauderdale, Fla.
Independents Report: The New Agenda at FMI - And in Washington
Lempert Report: What Shoppers Will Demand in 2009
Wake-Up Call: Back to the Future
Progressive Views: Looking Forward
Frozen & Refrigerated Trends: Staying Cool
Store of the Month: Straub's Newest Family Member
FutureView Introduction: Great Expectations
Futureview: Magnetic Core
Honey: Sweet Sensation
Organic/Natural Cereal: The New Face of Breakfast Sales
FutureView: Home-Cooked Homecoming
2009 Meat Operations Review: Solid Ground
2009 Seafood Operations Review: Rough Seas
Pharmacy: A Destination for Health
Technology FutureView: Retail 3.0
Equipment FutureView: Sustainable Differentiation
What's Next: Editors' Picks for Innovative Products

Progressive Grocer - March 2009