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Less of the Same


 In what’s proved to be a big boon for consumers, the ongoing cycle of food deflation has given just about everyone else in the food chain — from farmer to grocer — Grade A fits.

Amid the din of food shoppers’ glee, the transition to a turbulent, deflationary environment has found many food retailers flummoxed, as shown by the recent rounds of quarterly financial reports from several key players — including Sprouts Farmers Market, Target, Whole Foods Market, Supervalu, Smart & Final, SpartanNash, Dollar General, and even the seemingly bulletproof Kroger — all of which cited deflation, to greater and lesser degrees, as an obstinate thorn in their sales performance. The same can be said of the aforementioned retailers’ fellow regional, independent and wholesaler brethren, which also have no place to run or hide when confronted by the sharp pinch of falling prices in the all-important staple categories of milk, eggs, beef, poultry, coffee, cereal and bakery products.

The most recent figures from the Bureau of Labor Statistics provide a succinct snapshot of the rough sledding felt over the past 12 months, when the food-at-home price index slid 2.2 percent overall — the largest 12-month slump in seven years — courtesy of declines in all six major grocery store food groups. 

With the current backdrop “beginning to look a lot like 2009, when meaningful deflation resulted in an industry price war that stretched well into 2010,” per Credit Suisse analyst Edward Kelly in a research note earlier this fall, it remains to be seen whether race-to-the-bottom price campaigns will come to define 2017 in similar fashion — let alone overshadow a variety of important long-range strategic activities currently in play at a majority of leading grocery organizations.

Confronted with the solid possibility that deflationary trends might well persist for the foreseeable future — at least through mid-2017, according to many economists — it’s likely we’ll hear more of the same about performance declines being attributable to deflationary headwinds, competitive openings, challenging sales and operating environments, inclement weather, and fluctuating timing of seasonal holidays.

As I see it, however, the majority of the above are constants in the food industry, and the rinse/repeat refrains have begun to sound more like expedient explanations that are potentially masking far bigger challenges in play long before the unwelcome arrival of deflation’s extended sojourn.

With this in mind, following is a trio of my top recommendations, in reverse order, for retailers to ponder at the outset of the most important weeks of the industry’s calendar year: 

3. Less Lamenting About Deflation, the Weather and Holiday Timing

Progressive, adaptable retailers, much like Noah, built their arks before the flood, and are thus far better equipped to manage periodic or prolonged turbulence. For everyone else, the best bet is to regroup and focus on that which can be controlled, namely, running good operations with sharp merchandising, well-trained front-line teams and convenient solutions across the entire store.

2. Better Use of Social Media for Genuine Engagement

Social media offers unlimited opportunities to engage and converse directly with shoppers; however, most retailers are failing to use it as a strategic conduit for collecting and harnessing customer insights to improve planning decisions, per a recent report from Boston Retail Partners (BRP). Rather than squandering prime communication opportunities by employing powerful social platforms as toothless mouthpieces for one-sided, yes/no, love/hate queries, use them to inform and engage customers about your mission and brands, as well as their needs and expectations.

1. More Innovation

Necessity is the mother of invention. What are you doing to reinvent and remain competitive?

In its pre-election holiday forecast, the National Retail Federation anticipates that November and December sales (excluding autos, gas and restaurants) will increase 3.6 percent from last year to more than $655 billion. Let freedom ring!

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