Will Grocers Weather the Storm?

We have written a lot lately about store closings, reduced expansion plans
and lagging sales. But one sector that seems to have done well as of late is the grocery business. In a Q&A interview we did last week, Claes Fornell, a University of Michigan professor who specializes in consumer behavior, said that US supermarkets tend to do better in that area than other retail sectors.

Financially, they aren’t doing that poorly, either. Safeway recently reported positive quarterly same-store sales and is launching a new concept. Kroger, though it has not released Q4 results yet, had a strong third quarter and keeps expanding. And though many of them are private, specialty and regional chains across the country, like Wegmans, keep expanding and creating a huge buzz.

At an ICSC meeting yesterday in Hollywood, FL, speakers concurred that the sector can withstand an economic downturn and still generate strong anchor traffic in a shopping center.

But will the emergence of foreign chains like British grocer Tesco or rising food costs mean trouble for supermarkets in already disparaging times?


1 Response to “Will Grocers Weather the Storm?”

  1. 1 Don Todd February 29, 2008 at 9:51 am

    Yes, grocery chains will weather the storm as they have before, people have to eat, they may buy less, but, food is not something that is optional. Profits may dip because of less impulse buying, and non-essential buying, however, the chains will not see the same losses as other retail stores. The chains may lean out their staff with cuts in non-essential personnel, but, the core business will survive and continue on.

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