Why retailers are hurting too

Above: National Restaurant Association's Restaurant Performance IndexValues Greater than 100 = Expansion; Values Less than 100 = Contraction

Many of the headlines we have been seeing lately point to the laggardly performance of the foodservice sector. We can list them in some detail. Here is a feature by the Wall Street Journal on "brown bagging it" From the story:

Ms. Snider is part of a growing tide of midday restaurant regulars who are changing their habits to save cash. Instead of indulging in a roasted portobello sandwich and gourmet chips at a nearby bistro, many workers are now brown-bagging it.

TK: I brown bag it from time to time, but the trouble is having the ingredients on hand to make a respectable sack lunch, not to mention the time it takes to put it together. One can't bring a peanut butter and honey sandwich alone and be too happy about it.

Back to economic troubles; here is a link to the National Restaurant Performance Index for May. Here is a link to an ACNielsen report about global consumer confidence.

You may assume that the struggles of foodservice operators would seemingly translate to good times for supermarkets. You would be mistaken - at least based on a couple of conversations I had today for news coverage for The Packer. The devastation wrought on the tomato category in June, combined with a short cherry deal, are working a double whammy on tonnage and dollar sales. Higher transportation costs have probably had the most impact on retail pricing this summer. Retailers are offering deals that don't flip the switches of consumers, even though margins might be tighter.

Shoppers could be making less trips to the market and therefore picking up fewer impulse purchases of fruit.

Price-sensitive consumers are pushing back already, and now retailers must worry about costs associated with soon-coming country of origin labeling regulations and traceability initiatives.

It will be revealing to see how the market share for retailers will change this year. Everyone now assumes that Wal-Mart's business is benefiting from the economic malaise, but I wonder if hard discounters like Aldi may see big sales gains and if those gains translate in the produce department as well.