Retailers Move Into More Profitable Territory

After trending in line with retail food inflation since the third quarter of 2011, sales growth at the nation’s food stores exceeded that rate for the past three quarters, according to exclusive Food Institute analysis of government data. The gap between the year-over-year changes for both indices expanded to 1.8 percentage points in the first quarter of 2013 – the largest positive gap for retailers since the second quarter of 2011.

After trending in line with retail food inflation since the third quarter of 2011, sales growth at the nation’s food stores exceeded that rate for the past three quarters, according to exclusive Food Institute analysis of government data. The gap between the year-over-year changes for both indices expanded to 1.8 percentage points in the first quarter of 2013 – the largest positive gap for retailers since the second quarter of 2011.  

This indicates that food retailers are finally selling more product rather than just post sales growth gains reflecting higher food prices. And this is borne out be another Food Institute calculation called the “Real” sales change – essentially an index deflating the year-over-year change each month in retail sales. For the first quarter 2013, The Food Institute calculated that “real” (deflated) growth, at the nation’s grocery stores, rose 2.5% from a year earlier. That’s a significant jump considering “real” sales growth was completely flat in the last quarter of 2012 for this group and was just 0.6% in the first quarter of 2012.

Retail sales data for indicates traditional food retailers, including supermarkets, outpaced growth at other retailers, particularly the supercenter/warehouse club sector, which Census reports posted sales under year-ago levels each month for the seven months ended in February of this year. This is good news for the traditional grocery sector, and is likely also coming from a reduction in growth at eating and drinking places which saw sales increase only 3.8% in the first quarter compared with a 9.9% increase in the first quarter of 2012, and a 6.2% in 2012’s final quarter.