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. Private brands Successful private label brands build customer loyalty and improve margins. Margins on premium private brands can be twice those of national brands because many private label products are made by the supermarkets' own manufacturing facilities. Efficient consumer response Supermarkets are centralizing purchasing to get more leverage over their suppliers. They are also using computer systems to analyze customer buying patterns and electronic data interchange to order products in direct response to customer demand.