• U.S.

The Mighty Tremble

2 minute read

Food shortages threaten to make a mockery of the merchandising might of grocery chain stores. At Chicago, last week, at the annual meeting of the National Association of Food Chains, goliath grocers like A. & P., Safeway and Kroger heard that the foundations of their greatness were being undermined—huge turnover shrinking, their small but carefully controlled unit profits thrown out of kilter by price ceilings.

Last year the chains sold one-third of all U.S. retail foodstuffs, grossed $3.8 billion. Sales volume climbed still higher this year. Some chains have had the best year on record. Kroger’s sales in August were 26.4% better than the same period last year, Safeway’s up 27.9%, National Tea Co.’s 34.5%.

But the end of these soaring increases is already in sight. The minima of pessimism at Chicago were an estimated 10 to 15% drop in 1943 sales for the chains, and a sickening 25% dive in tonnage volume. Reasons:

1) the shortage of farm labor will reduce next season’s crops and harvests;

2) Government buying will absorb nearly 35-40% of this season’s canned fruits & vegetables, 60-80% of tinned fish, a good part of the canned soup (so that all will get a fair share of what is left, OPA will ration distribution, which will probably mean that independents will get more than their share of what is left);

3) skimpy stocks of coffee, tea, dairy products, eggs, meats, fats, oils, etc. are sure to be rationed next year;

4) gas rationing will cut into the jalopy trade of the chain’s supermarkets;

5) transportation shortages will halt many an established flow of products, leaving bleak bare spots on store shelves.

The profit outlook for the chains is even gloomier. When OPA clamped ceilings on retail food prices the chains’ traditional policy of cheap buying and cheap selling savagely boomeranged. Most farm prices have kept right on climbing, while most retail prices have remained moored at their low chain-store levels. Even big volume is no cure-all for such a price squeeze.

Added pain for the chains is their own labor problem. Many store managers and clerks are skipping out to double their earnings in war industries. The draft has caught others. Women now being hired can do some of the work, but capable store managers and skilled butchers need training. One way out for the chains: more self-service by customers.

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