Retail food sales outlook promising

Published on
March 24, 2009

Even as a new report forecasts a slight increase in sales for food, discount and mass merchandise stores in 2009, the grocery industry's troubles continue.
 
Bi-Lo, a 215-store supermarket chain based in Greenville, S.C., filed for voluntary Chapter 11 bankruptcy earlier this week. Despite "strong cash flow" this year, the company said in a statement that reorganization is the only way to handle upcoming debt maturity in the credit crisis.
 
Fortunately, Bi-Lo intends to keep all of its stores open during the reorganization, continue paying its suppliers, and move through the bankruptcy process as quickly as possible, according to the statement.
 
Bruno's Supermarkets, a 164-store chain in Birmingham, Ala., also filed for Chapter 11 bankruptcy in February and said it would close four stores in central Alabama.
 
Meanwhile, a new report from Pricewaterhouse Coopers LLC and Retail Forward projects that sales of retail goods (excluding automobiles and gasoline) will grow 2.4 percent in food, drug and mass merchandise outlets in 2009. Still, this growth is nearly a 3 percent decline from the annual sales growth rate from 2003 through 2008, according to the report, "How Will This Recession Affect the Future of Retailing." In addition, sales growth in all retail outlets - food, drug, mass, home goods and soft goods - will remain flat at 1.8 percent in 2009.
 
Seafood suppliers can look to certain types of retail outlets for growth, however. The report found that supercenters and club stores will generate the strongest sales growth in 2009, while discount department stores and conventional supermarkets will be the weakest performers.
 
The PWC and Retail Forward forecast also offered some hope for retail sales later this year.
 
"What should be expected is a pattern of weakness that finds a bottom in the first three quarters of the year. If certain factors fall into place, the first signs that things are getting better should emerge by the end of 2009," says Frank Badillo, a senior economist at Retail Forward in Columbus, Ohio.

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