Make no mistake about it, the competitive landscape in the grocery and convenience store industry is as competitive as it has been in years. Most reports on same store sales nationally (and I think it holds true in Iowa based on the discussions I have had with various retailers) peg sales decreases and increases in a narrow range of one to two percent on average. In fact, FMS Solutions reports that food inflation is now deflation, in the range of one to two percent. That means for every $100 in sales you got in August 2009, you are getting only $98-99 dollars for the same goods sold today. Obviously, there are exceptions to the sales data (it’s an average, remember!) with stores that are exceptionally aggressive picking up sales gains and those that may be dealing with highly competitive scenarios with even tougher sales decreases.
In an economic environment like this, a retailer looks to squeeze any costs it can, to reduce expenses and possibly hold onto profit margins with a tough sales environment.
One suggestion I would make is to take another look at the IGIA Natural Gas Program with Seminole Energy. The IGIA started the program last fall and many stores and businesses looked at it. In a real surprise, many stores had Seminole Energy run an analysis of their natural gas usage, which revealed many stores did not use as much gas as was originally projected because of heat reclaim systems and other energy efficiencies. Even though the natural gas cost was less than they were currently paying through utilities (because of various fees and charges), it did not make sense for many to switch onto the gas program.
Seminole Energy got together with the IGIA this spring and the association is now looking at putting together a special program for small users. If the IGIA can bundle together enough small users of natural gas, Seminole Energy will waive some of the fees to make the program advantageous for small IGIA members. First, the IGIA has to see if it can put enough natural gas volume together to see if the program will work. Then, the association will need to get commitments from IGIA members.
If you are interested, please contact Michelle Hurd in the IGIA office at mhurd@iowagrocers.com or 800-383-3663. The IGIA has plans to send out letters with more detail to targeted members, but please contact the office as soon as possible your company is interested. Again, Seminole Energy will put together a no cost analysis for you to see if there is money to be saved. No expectations; other than the IGIA wants to see if it can help you and your business!
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