New FMI Research: The Food Industry Increases Strategic Investments While Tackling Financial Challenges
June 27 2024 - 8:00AM
Business Wire
Food Industry Sees Improvements in
Transportation Capacity, Supply Chain Efficiency, and Employee
Recruitment, But Inflationary Pressures, Credit Card Fees, Rising
Theft, and Regulatory Burdens Impact Profitability
The food industry is instituting innovative strategies to
modernize the grocery shopping experience while dealing with
increasing asset protection concerns and inflationary challenges,
according to FMI – The Food Industry Association’s annual
comprehensive research analysis The Food Retailing Industry Speaks
2024.
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The food industry is instituting
innovative strategies to modernize the grocery shopping experience
while dealing with increasing asset protection concerns and
inflationary challenges, according to FMI – The Food Industry
Association’s annual comprehensive research analysis The Food
Retailing Industry Speaks 2024. (Graphic: Business Wire)
The 75th annual report surveyed food retailers’ and suppliers’
2023 developments and expectations for the year ahead, finding that
while the industry made key strides in addressing longstanding
labor and transportation capacity issues, inflation and other
financial hurdles caused industry profit margins to fall to
pre-COVID-19 pandemic levels.
“The food industry continues to demonstrate its collective
resilience and adaptability in solving persistent transportation
and employee turnover issues so it can focus on operational
efficiencies,” said FMI President and CEO Leslie G. Sarasin.
“Inflationary pressures and other challenges continue to squeeze
profit margins, but even these obstacles do not stop the industry
from its investment commitments to sustainability, emerging
technologies, and marketing and modernization strategies that
improve the in-store shopping experience.”
The report found large operational improvements across the
board. Both retailers and suppliers reported significant declines
in the negative impacts of supply chain and transportation capacity
issues that have plagued the industry. The percentage of retailers
emphasizing negative impacts from trucking/transportation
challenges declined from 79% to 35%, while suppliers noted a
decline from 72% to 58%.
By addressing these persistent supply chain issues, retailers
also reported a dramatic drop in out-of-stock rates, falling from
10.7% in 2022 to 6.5% in 2023, which is even lower than the typical
historic rate of 8%.
Retailers and suppliers report employee retention, another
persistent hot-button issue for the industry, improved in 2023.
Food retailers and suppliers offered more positive feedback about
their ability to recruit and retain quality talent, with average
turnover rates for food retail employees falling slightly from a
historic high of 65% in 2022 to 58% last year.
As supply chain, transportation, and labor pressures eased, the
number one challenge currently facing the industry has become asset
protection, with 85% of food retailers citing increasing theft and
fraud as the biggest problems negatively affecting business.
Additionally, two-thirds (64%) of retail respondents cited societal
challenges, including a lack of civility, drug use, and violence,
as issues that negatively impact operations. However, despite these
concerns, FMI's Asset Protection Survey found that more than 80% of
retailers have plans in place to address many of these
challenges.
Retailers and suppliers also note the negative impacts of
inflation and the increasingly complex regulatory environment on
net profits. Food retailer profit margins fell from 2.3% in 2022 to
pre- COVID- 19 pandemic levels of 1.6% in 2023, with both retailers
and suppliers anticipating that operating costs will increase in
2024, leading just 13% of food retailers to believe their profits
will increase this year. Sixty-five percent of retailers also
expressed concerns that inflation and economic challenges will
change shopper behaviors.
Yet this murky economic outlook is not preventing investments in
innovative strategies to improve customer experience and increase
growth. Top initiatives include experimenting with in-store
technologies to enhance the shopping experience (81%). Retailers
are also responding to changing consumer habits by increasing
in-store space for freshly prepared grab-and-go items (79%) and
carrying more private brand items (67%) and locally sourced foods
(57%).
Technology is also playing a bigger role in the grocery shopping
experience, with 41% of food retailers and 69% of food suppliers
reporting using artificial intelligence (AI) for parts of their
businesses—the retailer usage percentage nearly doubling year over
year. Food industry companies are often using AI for assortment
planning and replenishment, as well as supply chain logistics.
For Media:
- Members of the media may contact FMI for a gratis copy of The
Food Retailing Industry Speaks 2024 report.
- To learn more about how the investments food retailers and
suppliers are making to improve the grocery environment and
customer experience, visit www.FMI.org/GrocerySpeaks.
About FMI
As The Food Industry Association, FMI works with and on behalf
of the entire industry to advance a safer, healthier, and more
efficient consumer food supply chain. FMI brings together a wide
range of members across the value chain — from retailers to
producers to companies supplying critical services — to amplify the
collective work of the industry. www.FMI.org
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version on businesswire.com: https://www.businesswire.com/news/home/20240627079587/en/
Heather Garlich, media@fmi.org, 202-220-0616