By: Leslie Sarasin, President and CEO, FMI
“It was the best of times, it was the worst of times…” -anyone reflecting on life from the beginning of 2019 to now, feels an instant sympathetic resonance with that iconic opening to Charles Dickens’ classic, ”A Tale of Two Cities.” While there have been shining moments in the past twenty months, there have also been numerous instances that tested our personal and professional resolve.
The most recent The Food Retailing Industry Speaks report identifies a striking similarity between ”A Tale of Two Cities” and a tale of two years, 2019 and 2020, for the food industry. Both relay the story of how stark change and challenging times can be approached in very different ways and how opportunity can still be recognized, even when it appears to be hiding in the shadows.
This year’s The Food Retailing Industry Speaks report is unique in that it has two chapters. Speaks first looks at the food industry’s operational and benchmarking performance in 2019. The story here is promising — food retailers saw strong performance numbers, including same store sales that rose to 3.3%. At the same time, food retailers continued to face challenges that impacted their bottom lines. More than half of retailers surveyed said international trade and tariffs had negative effects on their businesses. Credit/debit card interchange fees and health care costs continued to cut into profits, as did higher wages and employee benefits costs. As a result, net income averaged only 1.0% of sales, down slightly from 1.2% in 2018, and at its lowest point since 2010.
In 2019, we also see a hint of where retailers recognize hope for the future with their making investments in new technologies, online sales, and health and well-being initiatives. These investments have proved to be a bit prescient, foreshadowing some of the major themes in chapter two — a look at the first half of 2020.
For the first time, The Food Retailing Industry Speaks report goes beyond analyzing operations data for the food industry in a single year and includes results from survey questions of food retailers in the early part of 2020, when COVID-19 pandemic interventions were in full swing. The story here is one of innovation and resilience as food retailers sprightly reacted to unprecedented demand and supply chain disruption. The report outlines some of the initial lessons learned by food retailers and where the industry plans to invest for the future in light of these pandemic learnings and new consumer food-purchasing patterns.
In particular, I see this year’s The Food Retailing Industry Speaks report as an important historic document , capturing this unique moment in the development of the food retail industry. The Speaks survey represents more than 37,000 food retail stores and comes at a moment when change is creating opportunity at an unprecedented rate. It’s a page- turner; and while it might not be a Dickens classic, it’s certainly a report for the record books.