Low food prices and razor-sharp competition are creating bargains for shoppers -- but killing profits for grocery chains.The next time a progressive tells the entire private sector has huge profits... show them this article.
"It’s created a price war among everybody. This is great news for consumers, but bad news for businesses who sell food," said Phil Lempert, a supermarket analyst who is the founder of supermarketguru.com, a Web site tracking industry news and trends.
At the same time, supermarkets are destroying their profit margins as they fight for new shoppers -- and fight off deep discounters like Walmart and online sellers.
It becomes a spiral. As food prices fall, retailers become more aggressive in trying to sell higher volumes in order to maintain revenue.
"To do that, they’re putting things on sale and getting people into the store and hopefully selling them more quantity,“ says Jon Stringer, retail editor at Supermarket News. "As long as sales are growing, you’re able to get a little more out of fixed costs.
Prices of supermarket items declined 1.3% last year, compared to the year before, says the Agriculture Department's Economic Research Service. It was the first annual decline since 1967. Just about every family will feel the impact since weekly household grocery expenses in 2016 were $107.34, according to the Food Marketing Institute.
Monday, March 20, 2017
The Detroit Free Press reports:
Posted by Steve Bartin at 3:12 PM