Reading the Worry Lines on the Face of Food Retail

A Letter from the President and CEO

Leslie G. Sarasin
"Food retail is such a labor intensive industry that it should be no surprise that concerns regarding healthcare costs retained its hold on the number one slot on the Worry Index list."

Worry is more than a state of anxiety and uncertainty over actual or potential problems. As any reputable student of human nature will tell you, it is also a vibrant indicator of the human mind and temperament. Knowledge of a person's worries provides an unfiltered picture of that which is demanding his or her energy. For this reason the collected answers to one question posed for FMI's The Food Retailing Industry Speaks report continually receive much industry scrutiny. For more than a decade, top food retail executives have been asked to identify the top concerns confronting the food retail industry and their responses are compiled in a list that has become affectionately known as the FMI Worry Index. The longitudinal tracking of worries allows us to capture the ebb and flow of industry concerns such that a review of past lists is a bit like reading old diaries; they constitute a record of the mood at the time and provide some helpful context for existing conditions.

Each year's Worry Index is a true sign of the time, providing a pulse check on the emotional state of the industry and, to an extent, the nation. For instance, during the anxious times surrounding the Great Recession, concern about the local and national economy was the top worry in 2010, registering the highest anxiety score yet recorded in the history of the index. As the economic recovery began, that concern slowly receded, falling to number two in 2013, number seven in 2014, and in 2015, fell out of the top 10 completely, coming in to the 11th slot.

The 2015 top 10 list of worries (reflecting their impact in 2014) saw a few traditional anxieties lose intensity, some old concerns return and some new alarms surface. They are as follows:

Healthcare Costs
Food Safety
Healthcare – ACA Implementation
Cyber Security
Staffing, hiring, retention
Local, state and national governmental regulations
Competition from other food retailers
Credit card/debit card interchange fees/costs
Consumer health and wellness trends
Competition from non-traditional food retailers

Food retail is such a labor intensive industry that it should be no surprise that concerns regarding healthcare costs retained its hold on the number one slot on the Worry Index list. After ranking number three in 2013, it has been the top concern for the past two years.

What is surprising in the 2015 list is the drop in concern about competition. Food retail has always been a highly competitive industry and competition worries have traditionally – if not rated number one – at least hovered near the top of the Worry Index. This year's list tells a different story. A few years ago, FMI recognized the broadening field of competitors brought on by the variety of new non-traditional venues entering the quest to attract food shoppers by differentiating between traditional competition and non-traditional competition. However, the anxiety producing power of non-traditional competition, marked as the number one concern in 2013 and number three in 2014, slipped significantly in the 2015 polling, dropping to the bottom of the top ten. Competition from other retailers was a bit steadier, but even it slipped a bit, moving from the number four concern in 2013 and 2014, down to a tie for sixth place in the 2015 list.

Food safety, added to the list in 2006, has witnessed a steady increase as an area of concern. It was the number six issue in 2013, cracked the top five at number five in 2014, and in 2015, barely missed top billing with a close second place finish. Likewise, consumer health and wellness trends continues steadily climbing the list of concerns, moving up from 12th place in 2013, to 10th place in 2014, and holding the 8th spot in the 2015 rankings.

In recent years, the issue of staffing, hiring and retention has been overshadowed by other concerns and has fallen out of the top five industry worries, but 2015 saw its return to levels last recorded a decade ago. Reflecting the splash made in both financial and media circles, cyber security issues crashed the list at number three – a troublingly impressive showing for a relative newcomer to the list of anxieties.

While all the factors on the Worry Index affect operations to varying degrees, only a few are driven by factors internal to the store – customer preferences and staff concerns. The larger majority of the top ten concerns are the result of actions and determinations of external forces such as governmental agencies, financial institutions, hackers or competitors. So, while food retailers may appear to be less anxious about their competition, they are more concerned about the externally driven factors that directly affect their ability to compete.

For more information contact the FMI research department at [email protected].