Minneapolis Star-Trib: As shoppers cut back, grocers feel the squeeze

[marmar]

As shoppers cut back, grocers feel the squeeze
The worst inflation in nearly two decades has changed the way people shop for food -- and grocers are scrambling to catch up.

By CHRIS SERRES, Star Tribune



As late as this spring, some market analysts thought a sharp rise in food and energy prices would actually benefit a giant supermarket company like Supervalu Inc.

Belt-tightening consumers, the thinking went, would react to rampant inflation by eating out less and cooking more with fresh food purchased at grocery chains like Cub Foods and Albertsons. Besides, some argued, Supervalu was large enough -- particularly after its acquisition of Albertsons in 2006 -- to pass on higher costs to shoppers.

But investors who listened to these Wall Street experts would have gotten hammered. Shares of Supervalu have plunged 31 percent this year as consumers fundamentally changed the way they shop for food.

U.S. consumer prices have surged 5 percent in the past year, the largest jump since 1991, largely on rising food and energy costs, the U.S. Labor Department said July 16.

In response, people are buying cheaper, generic products instead of the more expensive national brands. They're also buying more items on sale, and using more coupons. In retail jargon, this is called "trading down," and it's occurring to a degree that few experts expected even a year ago. .........(more)

The complete piece is at: http://www.startribune.com/business/25756674.html?location_refer=Business:highlightModules:2

[opihimoimoi]

1. And those MBA types got their degrees from Harvard too? Hmmmm

[NJCher]

2. the comments by the retail insiders

below the story are worth noting.



Cher

[dkf]

4. The comment about DVDs was interesting.

I don't know why people buy DVDS anyway. Much better to rent.

[Muttocracy]

3. Americans are not as dumb as they hoped. nt

[CC]

5. The "Wall Street experts" obviously do not

shop for their own groceries.

[SpiralHawk]

6. 2009 is going to make 2008 look like the 'good old days'

Republiconomics has screwed the pooch - big time.

[marmar]

7. Yup.

n/t

[truedelphi]

8. We spend eighty percent less now at the local grocery market

they actually ahve good prices on many things - despite being a small local venue.

But they do not take food stamps - and like many other Americans, we are now using those as the main "currency" we use to obtain our food.