Inflation fills the retail food aisles

December 16, 2011

Price hikes drive bigger basket size, although consumers curtail unit buys of the most inflated categories.

Supermarkets grew their average basket size to $42.52 by mid-2011, up from $41.85 a year earlier, showed Nielsen Homescan data, released within the U.S. Retail & Buying Trends report a week before Thanksgiving.??

Attribute the gains to higher food prices and families eating at home more, says F3, also noting that more households have multiple generations living under one roof - often college graduates who returned home due to poor job prospects and their elderly grandparents who need care.??

Over the same period, drug-store baskets (excluding prescription-only trips) climbed to $24.96 from $24.24, warehouse clubs edged up to $98.19 from $97.62, and dollar stores stayed essentially flat at $14.34 versus $14.32. Mass merchants and supercenters both saw declines in average basket size, Nielsen said.

??Inflationary pressures drove a 6.2% increase in at-home food prices, compared with a 2.7% rise in away-from-home food, showed U.S. Bureau of Labor Statistics data for the 12 months ended October 2011. These gains were most evident in dairy (6%), packaged meat (5%), fresh produce (4%) and fresh meat (4%), according to Nielsen Scantrack data for UPC-coded products only sold in food-drug-mass (including Walmart) during the 52 weeks ended October 1, 2011. ??

A few departments on the upswing, where latest-quarter unit volume outpaces the latest 12-month rate, include: alcoholic beverages, up 5% in this latest quarter versus a 4% annual rise; fresh meat, up 2% in this latest quarter versus a 4% annual decline; and health and beauty care, up 1% in the latest quarter versus a 1% annual decline, according to Scantrack.

??Indeed, the month ended October 1 marked the sixteenth straight month of CPG unit price gains, and these hikes have intensified lately, averaging 4.3% in the latest month. The upward pressure is dramatic: of 117 major category groupings measured by Scantrack in the latest quarter, 11 categories jumped in price between 10.0% and 19.1%; 26 climbed 5.0% to 9.9%; 54 rose up to 4.9%; and 26 declined as much as 12.1%.??

Among 16 categories where unit prices rose the most in the latest quarter, 14 grew in dollar sales, not surprisingly. But shoppers responded negatively, and unit sales were off in all but three of the categories - coffee, fresh eggs, and dessert/fruit/tops-frozen, reported Scantrack.??

Overall, the ten fast-growing categories in dollar sales during the 12 months ended October 1 were:  coffee, up 12.6%; seasonal general merchandise, up 12.4%; butter and margarine, up 12.0%; snacks/spreads/dip-dairy, up 11.5%; fresh eggs, up 10.0%; milk, up 7.0%, yogurt, up 5.8%; liquor, up 5.6%; and packaged meat, up 5.4%, the Scantrack data showed.??

Nonfoods were well-represented among the ten fastest-growing categories on a unit-volume basis in the same period. Leading the list was liquor, up 13.9%; it was followed by vitamins, up 6.5%; snacks/spreads/dip-dairy, up 6.4%; seasonal general merchandise, up 6.4%; wine, up 5.9%; breakfast foods-frozen, up 5.0%; tea, up 3.1%; cosmetics, up 3.1%; combo pack, up 2.8%; and diet aids, up 2.7%.

??Private label overall registered a 17.8% share of dollar sales, and posted its greatest share gains in fresh meat (up 3.5% to 22.0%) and fresh produce (up 2.0% to 20.0%), reported Scantrack.