US food and grocery retailers face ongoing challenges in 2011 as the economic recovery remains slow and global events cause additional complications, according to retail analyst IGD.
High unemployment levels, a weak housing market and the removal of US stimulus programmes mean US consumers are also being conservative in their spending, IGD’s senior business analyst Stewart Samuel explained in his report.
As a result, Mr Samuels said many retailers are being forced to re-think their strategies, since price and promotional activities may not be enough to encourage US consumers to shop in their stores.
To deliver improved value, IGD said retailers are also investing in innovation to improve the shopping experience and make their stores more relevant for shoppers.
To that end, the US retail market has witnessed the development of new smaller-formats in urban areas, the delivery of increased information on product sourcing, nutritional value and preparation ideas.
However, IGD said pressures on volumes remain as increased commodity costs are being passed through to consumers in the form of higher prices, causing shoppers to switch between stores and brands.
Meanwhile, rising gas prices are pushing up distribution costs which will likely lead to retailers embracing a range of initiatives including rationalising ranges to reduce complexity, and introducing efficiency-based measures such as Retail Ready Packaging (RRP).
For the full report, click here.
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