May 5, 2002
Chicago, IL — May 5, 2002 — Food retailers are aggressively improving safety throughout their operations and using technology to increase productivity and enhance customer service, according to the annual state-of-the-industry report released here today by the Food Marketing Institute (FMI) at the 2002 FMI Show.

Food retail sales increased 3.7 percent last year, according to the Food Marketing Industry Speaks, 2002. The report also found, however, that same-store sales increased 2.2 percent and, after discounting inflation, sales decreased 1.1 percent — the third decline in real-dollar sales over the past five years.

“The sales figures reflect a change in shopper buying habits,” said FMI Senior Vice President Michael Sansolo. “As is almost always the case in hard times, consumers are dining out less and shopping more at supermarkets. This trend, however, is not ringing up more retail food sales because consumers are stretching their food dollars, buying more lower-cost items and economizing in other ways.

Turning to food safety, he said, “The industry’s strong commitment appears to be registering with consumers, according to FMI’s newest research. Despite the intense focus this year on food safety and security, consumer confidence in food safety increased: 81 percent are now confident their food is completely or mostly safe, up from 77 percent in 2001.”

Retailers Improving Food Safety With Audits, Training and Science

Speaks 2002 documented the numerous measures that food retailers are taking to address food safety concerns. Nearly all retailers (95.7 percent) monitor equipment temperatures. And seven in 10 retailers (68.8 percent) monitor incoming perishables to ensure that products are safe to eat, and even more (72.9 percent) monitor food-contact surfaces in the store.

Eight in 10 retailers (80.0 percent) conduct regular food safety audits, and well over half (58.1 percent) use outside firms to perform them.

More than nine in 10 food retailers (93.6 percent) provide food-safety training for employees, and well over six in 10 (66.7 percent) educate food-handlers how to use the science-based safety discipline known as the hazard analysis and critical control point (HACCP) system.

Using this system, companies apply controls, such as temperature requirements and sanitation practices, where food safety measures are needed most.

Speaks 2002 also found that the industry is using technology to improve food safety, particularly irradiation. Although only 13.0 percent of food retailers currently sell irradiated products, 29.5 percent plan to do so in the next 12 months.

Technology Uses Proliferate, Driving Gains in Efficiency, Consumer Service and Profits

Food retailers are leveraging technology to improve efficiency and consumer service. More than four in 10 retailers (41.8 percent) offer online shopping. Nearly all (91.5 percent) use scanning data to measure their advertising impact. Nearly eight in 10 retailers (78.8 percent) use frequent-shopper data to target mailings to customers most likely to need the items advertised.

Over half of food retailers (55 percent) use computer data to schedule labor. Scanning data, for example, reveals the peak shopping times showing retailers when to have the most checkouts open and the low-traffic periods when the aisles are clear so shelves can be restocked without disrupting customers.

Retailers are using technology to control unpredictable energy costs. The vast majority (84.8 percent) use electronic systems to control heating, ventilating and air conditioning, to defrost cooling equipment (81.0 percent) and to manage lighting (78.8 percent).

Technology and efficiency initiatives contributed to industry’s after-tax net profit of 1.25 percent of sales in 2000-2001 — a three-decade high first reported last fall. Such initiatives also helped drive increases in two key productivity measures: median weekly sales per square foot of selling area ($10. 83, up from $10.29 in 2000); and median sales per labor hour ($130.00, up from $127. 96).

Future Growth Opportunities: Hispanic Shoppers and Nonfood Offerings

Speaks 2002 looked to the future, highlighting Hispanic shoppers — the fastest growing market in the U.S. From 1990 to 2000 the purchasing power of U.S. Hispanics increased 160 percent to $542 billion. The nation’s 35 million Hispanics spend much more on groceries than the average U.S. consumer, $117 per week vs. $85, according to the new FMI report U.S. Hispanics: Insights Into Grocery Shopping Preferences and Attitudes, 2002.

Supermarket size has leveled off to a median of 44,000 square feet, according to Speaks 2002, and the typical store carries 30,580 products. Among those offerings are many nonfood products and services, such as in-store banks (featured in 21.2 percent of supermarkets) and pharmacies (30.0 percent), floral shops (59.2 percent), child care (7.5 percent) and dry cleaning (4.9 percent).

“As food retailers increasingly offer nonfoods,” said FMI’s Sansolo, “just about every other type of retailer is selling food, blurring the lines separating the segments of this industry toward a future that is extremely hard to predict.

“The winner in this evolutionary process will be the consumer and the retailers who are smart enough see the changing demands and agile enough to seize the opportunities first.”

Methodology

The report is based on data primary from five industry surveys: retail operations, food safety, energy management, advertising and marketing, and distribution center productivity. Questionnaires were sent to FMI member executives at companies with 20 or more stores and to those at companies with fewer than 20 stores.

Food Marketing Industry Speaks, 2002, is available for $30 to FMI members, $63 to associate members and $75 to nonmembers, with multiple copy discounts. Contact the FMI Publication and Video Sales Department at 202-220-0723 for more information.