Reinforcing The Case

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Reinforcing The Case

02/01/2013

Though higher beef prices blunted discernible gains, other fresh meat categories fortified the fortunes of many retailers responding to this year's annual meat department report card.

Research by Debra Chanil / Analysis by Meg Major

Faced with higher prices, tighter supplies, and ongoing frugal consumer spending patterns resulting from fewer store visits and less volume per trip, retail meat executives are performing a delicate balancing act to hone value-oriented tactics while enhancing premium offerings, as revealed in Progressive Grocer's 2013 Meat Operations Review.

While commodity prices remained relatively stable for most categories during the annual meat department study's 12-month measuring period, lingering high retail prices blunted discernible sales gains for most retailers responding to this year's survey, particularly with the key department cash cow, beef. From smaller steaks to value-added convenience items and premium poultry offerings, retailers dug deep to defray drastic meat department declines, which by and large proved successful.

Insights gleaned for PG's annual Meat Operations Review were again tabulated from a survey fielded in late 2012 from the collective input of a diverse range of retail meat executives from around the country. In addition to polling a cross-section of national chain, regional and independent meat retailers about overall category performance and demand trends over the past year, the annual study provides a snapshot of benchmark sales and operations trends, inclusive of same-store sales and profits, top departmental challenges, and shifting retail meat demand patterns, among other factors.

In a closer look at results of the latest retail meat department survey findings, 42.1 percent of survey panelists estimated total meat department sales increases during 2012, with a sizably smaller 11.6 percent reporting decreases, rounded out by 46.3 percent reporting status quo meat sales, collectively good for a net 2.7 percent growth rate in overall department sales.

Retaining its near 20 percent share of the overall supermarket sales pie, total retail meat sales rang up an estimated $93.1 billion — roughly $2 million higher than the previous year's survey.

Meat department profits increased among 35.2 percent of survey respondents during the past year, while 28.4 percent of respondents reported lower profits. The highest percent of panelists (36.4) detected unchanged meat profits.

In assessing the key challenges facing retail meat executives — who were again asked to rank the seriousness of various issues on a scale of one to six, with six indicating an extremely serious problem — profits grabbed the top slot this year, paced by customer confusion/perception, which ranked as the second most vexing issue. Retail pricing landed on the third rung, while the bid to attract more shoppers to the meat department placed as the fourth-leading concern. Food safety, meanwhile, rounded out the top five meat department hot spots.

The Case for New Names

Consumers are as confused as ever when it comes to purchasing fresh meat — particularly as it pertains to the various cuts available in the case and how to prepare them. Instead, many shoppers often rely on a handful of staple cuts they are most comfortable preparing.

To close the gap, the National Pork Board and the National Cattlemen's Beef Association have been working on a major revamp of fresh meat names and scale labels during the past two years, to enhance consumer messaging with more cooking methods for each cut in promotions to consumers.

The protein partner groups will reveal a new platform for fresh meat nomenclature with more simplified Uniform Retail Meat Identification Standards (URMIS) during two workshops at the upcoming 2013 Meat Conference at the Gaylord Opryland Resort and Convention Center in Nashville, Tenn., slated for Monday, Feb. 25. New in-store and in-lab eye-tracking research will be shared during the sessions, which supports the new platform, inclusive of new qualitative and quantitative consumer data identifying key consumer issues with meat cuts, and an overview of the development of more simplified URMIS monikers.

Meating Expectations: Perception vs. Reality

New to this year's Meat Operations Review is customer service intercept data from the STRONG study, conducted by New York-based ICC/Decision Services. This information is based on evaluations of in-store experiences at the retail meat case across four different grocery store types, using professional field representatives posing as typical shoppers. Each representative measured his or her experience through defined questions and scenarios based on the outline of the STRONG study. Each field rep then submitted his or her findings back to ICC/Decision Services through online survey reporting.

Each grocery store chain that qualified for this study had to meet certain specifications to be part of one of the four store types:

  • National chains consist of stores that have a market presence in 10 or more states.
  • Regional stores are grocery chains that have a market presence in 1-5 states.
  • Specialty stores are small stores that specialize in specific foods and gourmet-related varieties.
  • Independent grocery chains have market presence in only one specific state or region of that state.
  • Multiple store locations are chosen across their entire market to ensure the capture of a diverse and representative store sample.

$ 93.1 billion Estimated total retail meat sales