Food Retail and Wholesale Companies Invest in Customers, Employees and Technology, According to FMI’s Annual State-of-the-Industry Report

Washington, DC — October 13, 2005 — Numerous supermarket companies report robust growth by investing in consumer programs, employees and technology to challenge market leaders or serve well-defined niches, according to The Food Retailing Industry Speaks 2005: Annual State of the Industry Review, released today by the Food Marketing Institute (FMI). Top line results from the study were unveiled at the opening of the 2005 FMI Show in Chicago in May.

For the first time, the report includes predictions of future food retailing trends. Notable forecasts include federal requirements for warning labels on high calorie foods, gasoline hitting $5 per gallon and large chains breaking up into smaller companies in order to remain competitive.

The report shows that cost-driven competition remains relentless, and is forcing retailers to innovate solutions for sales growth. Competitive solutions that companies are pursuing include changing the product mix, upgrading technology to improve efficiency and learning more about customers. Categories that are becoming increasingly important for differentiation and for strengthening store identities include perishables, seasonal offerings, private label products, prepared foods, organic and natural items, ethnic foods and fuel service.

Major industry concerns noted in the study include rising credit and debit transaction fees, skyrocketing healthcare premiums, increasing energy costs and labor and training challenges.

Top performing companies exceeded median results of all stores surveyed in key areas:

• Weekly sales by square foot ($9.10 vs. $8.40).
  
• Sales by square foot of selling area ($12.30 vs. $11.40).
  
• Percentage of selling space in the total store (74.6 percent vs. 72.4 percent).
  
• Sales by checkout ($38,100 vs. $37,148).
  
• Transactions by checkout (1,395 vs. 1,350).

To purchaseThe Food Retailing Industry Speaks 2005: Annual State of the Industry Review, please visit the FMI Store at www.fmi.org/store/ or call 202-220-0723.