Sales Data Confirms Shoppers’ Economic Concerns

The increased focused on increased savings in the U.S. has been talked about for months in the general media and trade press.

The increased focused on increased savings in the U.S. has been talked about for months in the general media and trade press. Exactly how consumers are putting more away is a bit harder to determine, however. Although looking at the latest Bureau of Census sales data provides some clues according to Brian Todd, President of The Food Institute.

Looking at the unadjusted data released last week, overall retail sales in the U.S. were up 3.5% in August versus the same month last year to $371.7 billion and being on the positive side is good news but perhaps not as positive when one looks at revised July data, which shows sales were up 5.4% from the same month the prior year. And that trend was also seen among food store and foodservice sales.

On the foodservice side, sales were up just 2.1% from the same month last year during August at $40.4 billion. In addition, The Food Institute estimates that during August sales at limited service (a.k.a. fast food) restaurants topped those at full service restaurant for the third consecutive month this year, after limited service -- falling under full service for the first five months. In 2009, for the first time in 13 years, sales at limited service restaurants exceeded those at full service, certainly spurred by consumers shifting their share of food expenditures away from more costly full service restaurants to fast food meals they can eat on the spot or take home via the drive thru window. And with sales of both segments almost equal at just under $137 billion through the first seven months of 2010, according to Food Institute estimates, 2010 could easily mark the second year since 1996 that limited service outsells full service.

Consumers continue to look for value as they shop and the 5.3% bump in warehouse club, and supercenter sales during July (the latest month for which data is available) versus 2009 certainly reflects that. It marked the largest such increase for these retail formats this year even topped June sales by 2.4% compared to only a 0.4% increase during the comparable months last year. Through the first seven months of 2010, sales at clubs and supercenters were up 3.8% from a year ago, well above the 2.2% growth in foodservice noted above, and the 2.1% gain in overall food store sales.

Largely reflecting the intense competition over prescription medicines, drugs stores and pharmacies saw their sales increase on 1.7% from a year earlier during July and were up only 1.9% from a year ago for the Jan. 1-Aug. 1 period. E-shopping and mail order sales for all products continue to boom meanwhile, up almost 15% through the first seven months of 2010.

And what about food stores? Overall food store sales managed only a 0.8% increase over a year earlier during August, with grocery store (95% of which are supermarkets) faring only slightly better, with sales up just 1% -- marking the smallest such increase in grocery store sales since January of this year. As noted in the report numerous times, retailers continue to absorb a good portion of the price increases at the wholesale level and competition remains fierce in many major markets.  

Census data for just supermarket sales through Aug. 1, the latest available, pegs sales at $287.1 billion or just 1.7% more than year ago July sales alone were up just 1.4% from last year at just under $43 billion. Strong promotions by retailers have certainly had an impact on these sales as well as consumers more carefully monitoring their own expenditures. At least some are turning to warehouse clubs to fill some of their needs and are taking advantage of deals being offered by limited service restaurants as all these operators look to hold on.

For the latest on economic news in the food industry be sure to trun to The Food Institute at www.foodinstitute.com.