(Editors' note: This is part one of a five-part series)
Consumer confidence is higher than it’s been since 2000, and it appears to be bolstering the mood of the nation’s grocery retailers.
Responses to Progressive Grocer’s 85th Annual Report of the Grocery Industry indicate that grocers are more optimistic about the current retailing climate than they have been since 2011. They started the year emboldened by tax reform that promised to free up cash to invest in their businesses and put more money in consumers’ pockets.
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Still, this rosy outlook may come as something of a surprise, considering events that have shaken the industry in the past year, including etailing giant Amazon’s emergence as a full-on player in grocery, from soup to nuts, through its acquisition of Whole Foods Market in late 2017; two regional grocery chains –Southeastern Grocers and Tops Markets– filing for bankruptcy; and German hard-discounter Lidl, which was expected to turn markets upside-down, scaling back its U.S. invasion plans after meeting less-than-expected success.
And while most of our survey respondents expect their net profits and gross margins to stay consistent with, or rise above, year-ago levels, the clear majority expect to be paying more in wages and benefits.
But despite a retail environment that promises to vanquish anyone caught napping, retailers, for the most part, are rising to the challenge. They’ve been forced to reassess their operations from every angle, accelerate the pace at which they innovate, streamline processes to free up resources for customer-focused initiatives, and bend over backwards to engage their shoppers, who crave convenience and excitement.
Just look at some of PG’s recent headlines on the news roller coaster leading up to this issue:
- 38 percent classify themselves as independent retailers, while 62 percent are self-distributing chains.
- Of the total respondents, 44 percent operate fewer than 50 stores, while 56 percent operate 50 stores or more.
- Additional store count and sales data are provided by Nielsen TDLinx, which maintains a national database of supermarket and other retail format locations.
Progressive Grocer’s 85th Annual Report of the Grocery Industry is based primarily on an exclusive survey conducted among executives at supermarket chain and independent operators across the United States. Among this year’s 144 retail executive participants: