LAS VEGAS — U.S. retail food sales will be under continued stress this year as the economy recovers from recession, according to industry analyst Bruce Peterson.

Peterson expects retail food sales to be flat in 2010 — anywhere from up 1% to down 1% — compared with 2009, the former Wal-Mart Stores Inc. executive said during the United Fresh Produce Association’s annual convention in Las Vegas.

Retailers’ ongoing struggles are among key trends fresh produce growers and shippers should be watching for this year, said Peterson, president of Bentonville, Ark.-based Peterson Insights and former senior vice president and general merchandise manager of perishables for Wal-Mart.

Additionally, rising fuel prices are likely to further crimp retail margins, while private-label foods will continue to proliferate, Peterson said April 21 during the “Building More Effective Retail Relationships” session at the convention.

The recession that began in 2007 weighed on retailers, as unemployment soared and consumers sought out lower prices.

U.S. grocery store sales, excluding convenience stores, totaled $491 billion in 2009, according to Census Bureau data. Last year’s sales were up 0.3% from 2008 and lagged the 4.4% average growth rate of the two previous years.

With retailers seeking to cut costs and lure customers, having a private-label strategy is becoming more important for suppliers, Peterson said, as national brands become less important.

“It’s a margin issue,” Peterson said. “If you can execute a private-label strategy, you will have a leg up.”

Shipping to cost more

Fuel prices by summer may increase 10%-15%, raising shipping costs, Peterson said.

Rising gasoline and diesel prices reflect a rally in crude oil this year. On April 26, regular-grade gasoline averaged $2.86 a gallon nationwide, up almost 40% from $2.05 a year earlier, according to AAA.

Peterson said relationships between food suppliers and retailers today are probably more challenging than at any time he can remember.

That’s partly because most of the U.S. retail food business is now controlled by publicly traded companies under pressure to deliver strong returns for shareholders, rather than family run operations, he said.

Given today’s business climate, it’s important for fresh produce growers and shippers to consider the “relative experience” of buyers and understand what drives their decisions, Peterson said.

“At most public companies, the things keeping buyers awake at night are margins and inventory control,” Peterson said. “They’ve been assigned an inventory figure they can’t exceed.”

Retail challenges to continue, consultant says

Tom Karst

Bruce Peterson (left), president of Peterson Insights Inc., Bentonville, Ark., and Roger Pepperl, marketing director for Stemilt Growers, Wenatchee, Wash., visit after the general session April 21 at the United Fresh Produce Association's 2010 convention.