business news in context, analysis with attitude

The Washington Post reports that US shoppers are likely to be hit with a new round of food price hikes, led by inflation expected to hit the price of chicken and pork.

"Food inflation hit 4 percent last year, up from 2.4 percent in 2006," the Post writes. "While beef prices were already high, chicken and pork prices didn't reflect record costs for feed and fuel. That's poised to change as chicken and pig producers who have been losing money slaughter (fewer) animals to decrease the supply and raise the prices they can charge."

Such a trend, according to the Post, "would further challenge shoppers who are already limiting themselves to sale items and store brands as they contend with the worst food inflation since 1990."

And, the Post notes that there seems to be general agreement that a truism in the United States – that its residents spend a lower percentage of their income, 5.8 percent, on food than any other nation – may be coming to an end as high prices and global realities come crashing down on shoppers.

KC's View:
Seems to me that there probably will be three kinds of retailers dealing with these economic issues.

There will be the retailers that focus relentlessly on their price advantages, and value images that have long been part of their offering to consumers.

There will be retailers that have always emphasized the value-added component of their businesses, that have demonstrated real loyalty to their shoppers, and that will have much good will to fall back on. (Of course, they'll have to keep prices sharp or risk losing that good will.)

And, there will be retailers that will do little or nothing, waiting for things to change.

Of the three, the first two groups stand a pretty good chance of surviving whatever happens to the economy. But the last group has almost no shot at all.

I actually overheard a retailer say this week at the FMI conference that he was "waiting for things to get better."

Waiting is a loser's game, I think.