Supermarket profitability slipped to a new low in 2010 as consumers increasingly focused on bargains and made fewer trips to the store, according to data released at Food Marketing Institute’s Future Connect.Median profits before income taxes and extraordinary items fell to 1.57% last year, FMI’s 2011 Speaks survey of retailers found. It was the lowest margin reported in the last 10 years, falling slightly below 2009 levels of 1.62%.
In addition, FMI’s 2011 Trends survey of consumers found that consumers reduced their frequency of grocery shopping trips to 1.69 per week, the lowest in the 62-year history of the survey. About 34% of shoppers only bought groceries once a week, up from 29% a year ago, and those shopping only once every other week increased to 20%, vs. 12% a year ago.
While the industry grew total sales 3.1% in 2010, adjusted for inflation, median same-store sales fell 0.6% on a weighted basis and were down 0.1% on an unweighted basis, according to Speaks. The weighted median weekly sales - adjusted for company size - totaled $444,390 per week, or $278,760 on an unweighted basis.
Still, customers seem to appreciate their primary supermarket more than ever, overall satisfaction rose to 8.4 on a scale of 1 to 10, and 95% of shoppers said they would recommend their primary store.
The willingness to shop multiple stores dropped significantly in 2010, and consumers indicated they made fewer trips to convenience stores and drug stores to buy groceries in 2010.
In addition, the number of consumers indicating that a traditional supermarket was their primary grocery-shopping destination rose slightly, to 57%, in 2010. The number of shoppers indicating that supercenters are their primary grocery-shopping destination also rose slightly, to 29%.
Shoppers spend an average of $97.30 per week on groceries, more than three-quarters of it at their primary store.
Source: Supermarket News
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