States institute candy tax
To help cover budget shortfalls, in March, Colorado started taxing candy and soft drinks at 2.9 percent. The move follows a similar Illinois measure implemented last year, and proposals to tax candy and soda were recently floated in Massachusetts and in the city of Philadelphia.
What’s next: Other cash-strapped states aren’t far behind in implementing their own candy taxes. The Streamlined Sales Tax Governing Board has drafted a model candy and soda tax law to help make the new rules uniform nationwide.
What this means for retail: While a junk-food tax might seem laudable, naturals retailers are crying foul over its specifics. The new tax rules in Colorado and Illinois, as well as the national tax law being used as an example for states, define candy as food that contains sweeteners but not flour. That means candies that have flour, such as Twix or Twizzlers, may not be taxed while more healthful products like dark chocolate and chocolate-covered goji berries could be. Figuring out how to implement these new regulations will likely prove a considerable headache for small retailers. To get ready for such taxes, encourage customers to choose healthy alternatives to junk foods—especially choices that contain flour.
In-store digital display screens increase grocery sales
A recent Nielsen study of digital display screens installed in German grocery stores found that sales significantly increased for four out of five products advertised on the screens. The study also determined that screens located at the point of sale produced additional brand awareness.
What’s next: Expect to see more of these digital ads—many more. The public display market, which includes digital signage, is expected to grow from 1.7 million units in 2009 to 7.4 million units by 2015, according to Display Search, a display-market research firm based in Austin, Texas. Information technology firms like Hewlett-Packard and Intel are reportedly jumping into the business as well, producing their own line of displays.
What this means for retail: While digital displays are becoming cheaper, they’re still pricey at about $1,000 a unit. If the time’s not right to invest in digital signage, develop other inventive in-store advertising, such as creative promotional signs at the point of sale or eye-catching banners above registers.
Food costs to drop in 2010; grocery prices to rise
Economists predict the effects of the recession will moderate food prices this year—at least in some categories. The U.S. Department of Agriculture forecasts a 2.5 percent to 3.5 percent decrease in total food costs in 2010. However, food costs at the grocery store are expected to rise by 2.5 percent to 3.5 percent, according to the USDA.
What’s next: Expect more sticker shock at checkout from customers. Bill Lapp, president of Advanced Economic Solutions, and Michael Roberts, an economist at North Carolina State University, told dailyfinance.com that other global factors are at play in these rising prices. Between suffering meat and dairy producers reducing their herds and flocks, global food commodity markets heating up, and the growth of ethanol and other alternative fuels inflating the value of corn and soy, prices in your aisles will likely rise before many shoppers feel they have the income to handle it.
What this means for retail: Thanks to the current recession, many consumers understand better than ever how the changes of the global marketplace can directly affect their weekly shopping budget, and know how to scope out a store in search of great deals. Faith Weiner, spokeswoman for Quincy, Mass-based Stop & Shop, told The New York Times that her store’s shoppers are snatching up bulk items and two-for-ones like crazy.