Food inflation is reaching levels not seen in more than 35 years, driven by rising commodity prices. At the same time, employment rates are slow to improve.
The Food Institute on Wednesday held a webinar to explain how these factors will influence the future of food retailing.
Jim Hertel and Craig Rosenblum, both of Illinois-based market research firm Willard Bishop, and moderator and retail food expert Michael Sansolo, past editor-in-chief of Progressive Grocer magazine, provided insights on retail strategies, specific actions retailers are taking, and pointed our the intended and unintended consequences of retailers’ actions.
According to the panelists, food-price inflation will remain an issue for the next three to five years, driven by rebounding commodity costs, mainly corn and wheat.
While national brands are passing the increased costs on to consumers, traditional retailers can keep from pushing consumers away by increasing their private-label offerings, said the panelists. Increasing private-label offerings creates an opportunity to provide consumers a better, faster and cheaper choice, so they don’t have to go through another channel.
“Private label is key to battling through times of price inflation,” said Hertel. “It’s more about assortment than price expansion within the store to satisfy a commodity shopper and providing them a competitive opportunity so they don’t have to go to a discount format.”
The panelists added that educating shoppers on their system also helps prevent consumers from shopping elsewhere.
“Private label can play a huge role for retailers,” said Hertel. “By enhancing price image and leveraging the value tier in every category, retailers can build store loyalty by developing unique premium-tier private labels only they offer.”
