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Industry Report: Unsaleables Rates Declined in 2003

MIAMI BEACH, Fla. - Food, beverage, and consumer products manufacturers reported that the cost of unsaleable products declined to 1.11 percent in 2003, compared with a record high of 1.18 percent in 2002, according to the Grocery Manufacturers of America-Food Marketing Institute 2004 Unsaleables Benchmark Report. The survey results were released earlier this week at the 2004 Joint Industry Unsaleables Management Conference here.

"Unsaleables had climbed for nine of the last 10 years, so the trend had been steadily upward," GMA spokesman Michael Diegel told Progressive Grocer.

Unsaleables, which include damaged goods, expired or out-of-date products, and seasonal merchandise, cost the CPG industry $2.57 billion in 2003, down from $2.71 billion in 2002. Decreases were most dramatic in the convenience and drug store channels. The unsaleables rate dropped from .97 percent in 2002 to .86 percent in 2003 in convenience stores, and from 2.57 percent in 2002 to 2.02 percent in 2003 in drug stores.

The supermarket industry, which accounts for over 60 percent of retail sales, posted a modest increase vs. the prior year, coming in at 1.36 percent, compared to 1.31 percent in 2002 and 1.27 percent in 2001.

Survey respondents reported several reasons for the decline, including improved collaboration with trading partners, increased focus on managing unsaleables and unsaleables policy compliance (such as creating departments or teams to focus on returns), and improved packaging and logistics.

Damage remains the most frequent cause of unsaleable goods, accounting for 58 percent of the total, followed by expired products (22 percent), discontinued products (13 percent), and seasonal products (6 percent).
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