New Coordinates on FMI’s Map of Food Retail Worries

By: Leslie G. Sarasin, President and CEO, Food Marketing Institute  

Each year, FMI’s The Food Retailing Industry Speaks’ report captures the top concerns confronting the food retail industry in a popular feature called the Worry Index.  This list is more than a simple list of current industry issues, as it is also something of an anxiety GPS, tracking the emotional state of the industry.

The 2015 top ten list of worries (reflecting their impact in 2014) saw a few traditional anxieties lose intensity, some old concerns return and some new alarms surface.  This year’s top concerns are:

Healthcare Costs--7.2

Food Safety--7.1

Healthcare – ACA Implementation--6.8

Cyber Security--6.7

Staffing, hiring, retention--6.7

Local, state and national governmental regulations--6.5

Competition from other food retailers--6.5

Credit card/debit card interchange fees/costs 6.4

Consumer health and wellness trends 6.2

Competition from non-traditional food retailers--6.2

Food retail is such a labor intensive industry, operating on a razor thin profit margin, it is no surprise that rising personnel-related expenses such as healthcare costs retained its  top position on the Worry Index. After ranking number three in 2013, it has been the top concern for the past two years.

What is surprising in the 2015 list is the drop in concern about competition.  Food retail has always been a highly competitive industry and competition worries have traditionally – if not rated number one - at least hovered near the top of the Worry Index. This year’s list tells a different story. A few years ago, FMI began differentiating between traditional competition and non-traditional competition in the Index, as recognition that the field of competitive venues was broadening.  However, the anxiety producing power of non-traditional competition, marked as the number one concern in 2013 and number three in 2014, slipped significantly in the 2015 polling, dropping to the bottom of the top ten. Competition from other retailers was a bit steadier, but even it slipped a bit, moving from the number four concern in 2013 and 2014, down to a tie for sixth place in the 2015 list.

Food safety, added to the list in 2006, has witnessed a steady increase as an area of concern.  It was the number six issue in 2013, cracked the top five at number five in 2014, and in 2015, barely missed top billing with a close second place finish. Likewise, consumer health and wellness trends continues steadily climbing the list of concerns, moving up from 12th place in 2013, to 10^th place in 2014, and holding the 8^th spot in the 2015 rankings.

In recent years, the issue of staffing, hiring and retention has been overshadowed by other concerns and had fallen out of the top five industry worries, but 2015 saw its return to levels last recorded a decade ago.  Reflecting the splash made in both financial and media circles, cyber security issues crashed the list at number three – a troublingly impressive showing for a relative newcomer to the list of anxieties. 

While all the factors on the Worry Index affect operations to varying degrees, only a few, namely customer preferences and staff concerns,  are driven by factors internal to the store.  The larger majority of the top ten concerns are the result of actions and determinations of external forces such as governmental agencies, financial institutions, hackers or competitors.  So, while food retailers may appear to be less anxious about their competition, they are more concerned about the externally driven factors that directly affect their ability to compete.