Chin Up in the Downswing

positive economic news during recession

Grocery Store Sales Remain Robust

June 08, 2009 07:55 PM
by Anne Szustek
Grocery stores, from nationwide chains to local convenience stores, are reporting resilient sales figures. Whatever the economic conditions, people need to eat.

Grocery Chains Kroger and Safeway Poised for Expansion

Cincinnati-based grocer Kroger, the parent company of several smaller supermarket chains as well as the one that bears its name, posted 8 percent profit growth during the fourth quarter of 2008, largely on the back of sales from its in-house brands. And despite stiff competition from larger box retailers like Wal-Mart, Kroger, the nation’s largest grocery conglomerate, is planning expansion, including two higher square-footage stores in the Houston area as part of its new Kroger Marketplace concept, which are due to open later this year.

Although another large grocery conglomerate, Pleasanton, Calif.-based Safeway, has recently posted drops in quarterly profit, analysts predict that the stock will pull through.

Smaller Grocery Stores Staying Afloat, Thanks to Convenience Factor

While the sheer volume and low prices offered by big-box retailers may be appealing, some consumers still opt to shop at locally owned grocery stores, despite tighter budgets.

“It is a little more pricey, but I find the convenience, given the constraints of a working schedule, outweighs the few dollars savings,” Leominster, Mass. resident Lisa M. Vallee told the Worchester, Mass. Telegram & Register, referring to her choice to shop at the New England-based supermarket chain Hannaford; she also cited the regional store’s selection of produce and organic goods.

A poll of roughly 20 shoppers at big-box retailers in York County, Penn., conducted by the York Daily Record showed a similar trend: convenience prevails in the minds of the consumer over any price differences. Shrewsbury, Penn., resident Ronald Trump told the paper that he has found little difference in price among Wal-Mart, the Giant supermarket chain and the local Saubel’s Market.

Sustained Demand Has Positive Effects at the Source

The U.S. agriculture sector is also benefiting from the simple fact that there is a sustained need for sustenance. While prices for commodity foodstuffs have dropped from their record highs seen last summer, they remain well above historical price trends, reports Reuters. “Fundamentally, food demand is there. People need to eat, so that helps to stabilize things,” Jim Borel, DuPont’s group vice president of agriculture, told the wire service. This, in addition to relative stability in land prices and access to credit for farmers, has helped keep rural America alive.

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