Imperial Distributors

Commentary From Our President

Looking Great in ‘08

Michael D. Sleeper, President/CEO, Imperial Distributors, Inc.

When Holiday cheers meet the chill of January, the world of retailing, like nature itself, unleashes powerful competitive forces.

And for 2008, indications are promising that supermarkets have turned a corner.

What actions and factors—specifically—have taken place to usher in a great 2008 for supermarkets, and how does it look for the future?

Three major factors appear to be in our favor.

(1) Other Channels Slowing Down. Wal-Mart, making huge new commitments to growth in China, India, Japan and Malaysia, is scaling back its supercenter development in the U.S. It is expected to drop to 170 this year and 140 per year in 2009, instead of the 265-270 outlets originally planned.

Wal-Mart’s expansion in the U.S. is cannibalizing itself, as good, spacious sites become less plentiful. Target has hit a snag as weakness in the economy is hurting sales in the clothing and furniture departments.

Drugstores, are still flying high, but may be facing problems ahead. Among their difficulties are the declines in generic Rx margins and the potential cutting back of Medicaid pharmacy reimbursements. Medicare issues could prove more hurtful as a new administration comes into office. Walgreens stumbled in the fourth quarter, recording its first quarterly earning decline in nearly 10 years, while the intense competition with CVS may prove difficult for both companies.

(2) Upside to the Downside. The outlook is ominous for the overall economy. High gasoline prices and mortgage problems are still resounding, as a constant fear. It’s likely that there will be less spending money for middle-and-lower income workers. If tougher times continue and driving is more expensive, supermarkets that are conveniently located will be the beneficiaries.

(3) Less Eating Out. The decades-long rise of women in the work force—and the related rise in meals purchased in restaurants—have begun to reverse. While there is no increase in scratch cooking; convenience, availability of good-to-excellent quality and variety prepared foods, tighter budgets and the need to take control of nutrition tells the story. Fresh prepared foods (not found in drugstores or discount department stores) along with easily prepared packaged foods are mainstays in supermarkets today.

So as we head into the New Year with well deserved times to come, let’s remember we are looking great for 2008!

For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com

Previous Editorials