Overall supermarket sales rise, according to F.M.I.

by Keith Nunes
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CHICAGO – Supermarket industry sales increased 5.3% in 2006 and same-store sales rose 4%, according to the Food Marketing Institute’s 59th annual Food Retailing Industry Speaks: Annual State of the Industry Review 2007, a report released during this week’s F.M.I. Show in Chicago. The industry-wide and same-store sales figures were up from 4.6% and 2.4%, respectively, in 2005.

Large chains led in sales growth and dominated overall industry performance, according to the report. While 23.9% of the companies posted sales losses when comparing 2006 to 2005 total retail sales, many of the larger chains posted sales gains of 5% to 7% and up.

The report goes on to note with annualized inflation for food-at-home at 1.7%, the industry sales increased at a much faster pace than inflation, resulting in a real sales gain of 3.6%.

"These results are impressive in view of all the rising costs the industry must bear, including energy, health care, credit card interchange fees and the imperative to keep improving products and services in today’s extraordinarily competitive marketplace," said Michael Sansolo, senior vice-president of the F.M.I. "However, it is also clear that many retailers are struggling to solve the puzzle of cutting costs as much as possible while continually improving customer service."

Supermarkets are continuing to adapt their products and services, with an increased focus on perishable products, according to the report. Stores offer a variety of meal solutions, with 94.3% operating delis, 90.8% offering prepared foods for takeout, 64.4% offering areas inside the store for the consumption of meals, and 36.8% have "quick-stop areas" for consumers looking for prepared entrees and sides for the evening’s meal. Additionally, 52.9% offer sushi stations and 64.4% offer catering.

Natural and organic products have also made inroads into supermarkets. The report indicated that 72.4% of the chains surveyed feature a natural/organic food aisle or section, and 46% of the retailers surveyed are offering private label organic foods.

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