Rising unemployment predicted to hurt food sales
Los Angeles Grocery sales "could drop further and remain negative longer than they did during the last downturn" due to the severity and depth of the current economic downturn, Pali Research said on Tuesday, according to a report by Reuters.
"The industry is at the beginning of its sales challenges rather than toward the end," Pali Research analyst Robert Summers said in a client note.
Among the major U.S. food retailers predicted to feel an impact are Wal-Mart Stores, Kroger Co., Supervalu, Safeway, Whole Foods Market, Target Corp., Costco Wholesale Corp., Publix and Winn-Dixie Stores.
Summers pointed to the correlation between unemployment trends and grocery industry sales.
The U.S. jobless rate hit 8.5% in March, the highest level since November 1983. Since the recession began in December 2007, about 5.1 million jobs have been lost, with almost two-thirds of the job losses occurring in the last five months, according to the U.S. Bureau of Labor Statistics.
Some local markets are running higher than the U.S. average. In February, 104 metropolitan areas had jobless rates of at least 10% -- up from 12 areas a year earlier, according to BLS data.