How retailers can fight the slump in grocery sales

Dive Brief:

  • BMO Capital Markets reported that U.S. grocery sales slumped in December, continuing a trend of deflated pricing and slowing volume, according to Supermarket News.
  • IRI reported that dollar sales were down by 1.7% and volume was down by 2.3% for U.S. grocery stores, excluding mass merchants like Wal-Mart, in the four-week period that ended Dec. 18. Overall, volume has fallen by 1% on a 0.8% decline in dollar sales  in the past three months.
  • California saw particularly slow sales. Year-over-year sales fell by 5.6% in the month of December. Over the last three months of 2016, the decline was 4.1%, and a total of 3% in the last half of the year.

Dive Insight:

The decline in grocery sales over the last few months has some analysts baffled, since numbers aren’t showing increases in spending at restaurants or Wal-Mart, which is usually the yin to the grocery yang.

Declining sales are impacting all aspects of grocery in the U.S., according to the IRI. In the past six months, yogurt fell 17%, cereal 3%, baking products 7% and snack foods 1%. Companies like General Mills and Yoplait are feeling the sting of that dip and are trying to reverse the tide with innovations such as organic yogurt and new packaging options.

An "eat healthier" consumer trend — which ultimately amounts to eating less — could have something to do with the declining numbers. Some analysts also say the anemic sales could be the result of fewer promotions from CPG companies, as many are focusing on low pricing programs. 

Still, the downturn is not expected to last. Retailers continue to come up with innovations to fight the slump and entice people to their stores, whether it’s marketing to a particular segment of society, such as the bilingual Whole Foods, or by increasing loyalty programs.

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Filed Under: Grocery
Top image credit: Flickr User: gmnonic