Inflation is back on the offensive, and it looks like grocery retailers haven’t felt the worst of it yet. Nobody wants to be the “prophet of doom,” but forewarned is forearmed. Alexander Wissel looks at September’s troubling numbers and explains why soaring diesel costs could deliver another unwelcome blow to supermarket margins.
Duke Winston examines another potential impact point of rising costs: the venerable banana, a hugely important KVI. Growers are getting squeezed, and the industry’s most dependable bargain may be headed for a pricing confrontation.
There are opportunities amid the headaches, of course. Michael Rathburn looks at Halloween’s $13.5 billion spending bonanza and makes the case that the trade should be chasing considerably more than candy sales.
Finally, I take a hard look at grocery delivery and some new research suggesting that convenience can cost households an additional $1,700 a year. That’s a pretty steep premium for avoiding the supermarket, but the reputational costs could be even bigger.
And switching gears, Maria Maggio went to Hyattsville, Md., on Thursday evening for the big MAFTO event honoring Giant Foods’ 90 years in the business. Don’t miss those pictures.
You can read it all below…
Inflation Is Back, and Food Retail Hasn’t Felt the Worst of It
Just when grocery retailers might have hoped for some relief, inflation is accelerating again. September’s consumer and producer price reports are troubling enough, but I’m particularly concerned about diesel. We’ve been talking with regional chains and independents, and many tell us the full impact of higher transportation costs hasn’t reached them yet. With diesel prices up roughly 70% year over year, there’s more pain working through the supply chain. And grocers have precious little room to pass it along to already price-sensitive shoppers.
Alexander Wissel picks up the story from here…
Bananas May Be About to Lose Their Price Advantage
Bananas are one of those grocery items shoppers expect to be cheap, reliably available and remarkably stable in price. That could become a problem for supermarkets. Fuel, fertilizer and shipping costs are squeezing growers, and December contract negotiations may push those increases further down the supply chain. We’re not talking about imminent shortages, but we are talking about a key value item whose price matters enormously to shoppers. Somebody has to absorb those higher costs, and growers are running out of patience.
Duke Winston has details on the coming confrontation…
Halloween Is a Bigger Grocery Opportunity Than Candy
Americans are expected to spend $13.5 billion on Halloween this year, including $4.1 billion on candy. That’s a lot of money up for grabs, and supermarkets have a natural advantage: shoppers are already coming through their doors. But Walmart, Target and the warehouse clubs aren’t about to surrender those sales. The trick for grocers is making Halloween part of the regular shopping trip, capturing not just the candy purchase but the bigger holiday basket.
Michael Rathburn shows us why there’s much more at stake than chocolate bars…
Grocery Delivery’s $1,700 Convenience Problem
Billions have been spent on making it easier for Americans to avoid grocery stores. Now comes research suggesting we’ve made that convenience awfully expensive. A new study finds weekly grocery delivery can add more than $1,700 to a household’s annual food bill. I use delivery myself, and I’m certainly not arguing against its benefits. But a 21% premium is serious money, particularly for budget-conscious shoppers.
I think retailers ought to be concerned about what those costs do to their price perception…
Gallery: MAFTO Honors Giant Food’s 90th Anniversary
MAFTO’s Fall Retailer Dinner in Hyattsville, Md. honored nine decades of Giant Food’s presence in the community. Maria Maggio was on hand to capture the evening.