In spite of lukewarm demand and pricing and tough competition, the supermarket industry has been performing well. Profits are improving thanks to efficiency gains and a better merchandising mix. Merger activity has been strong. The outlook for industry performance in 1996 is positive, with continued consolidation as competitors seek market share and scale. Most of the industry's growth has come from adding stores.
Comparable stores are stores that have been open for at least one year.
But changes in consumer buying patterns are imposing limits on retail grocery demand. Increasing spending on food away from home To make matters worse, the grocery share of consumers' food budgets is shrinking. For the sake of convenience, consumers increasingly prefer eating at restaurants to cooking at home. Pricing remains weak. Competitive forces and the decline in food preparation at home prevented supermarkets from raising prices even to match inflation.