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Happy Valentine's Day!
Most retailers have been preparing for this day by planning
in-store displays with heart shaped boxes of chocolates and other
candies that would both increase sales as well as add some fun to
their aisles.
I happen to love Valentine's Day. It's one of the few annual
events that brings a smile to almost everyone's lips. True, you can
find a few anti-Valentine's Day nay sayers...but when pressed, even
they admit that their negativity has less to do with the holiday than
a relationship gone bad.
Ever wonder why Valentine's has become synonymous with chocolate?
Well consider this: Chocolate is a source of quick energy and can
even elevate some people's moods.
Want to know which part of the country is most likely to use
chocolate to boost the Valentine's spirit? Well, the folks at
ACNielsen analyzed the top cities in the United States to see which
one buys the most chocolate per capita for Valentine's Day ...and the
winner in 2004 was Portland, Oregon! (By the way, the area with the
lowest Valentine's chocolate sales was New Orleans/Mobile.)
As lots of Portlandites will know, chocolate contains two related
alkaloid stimulants - theobromine and caffeine. It is also rich in
PEA, or phenylethylamine, a naturally occurring compound that has the
effects similar to an amphetamine.
But the connection betweenn foods and the heart doesn't stop with
chocolates.
Thousands of years ago, Egyptian priests were forbidden to eat
onions.
Onions? Were the authorities worried about bad breath in the
palace? No, the pharaohs were concerned that the temptation for sex
might become too great!
Onions an aphrodisiac? Well, maybe the chefs on the Nile had a
special recipe. But the plain fact is that many foods over the years
have acquired a reputation for creating desire. And while some of
that may be based in science - increased blood flow and enhanced mood
brought on by some foods - much of the aphrodisiac effect would
appear to be psychological.
According to Encyclopedia Britannica an aphrodisiac can be
explained as: "The psychophysiological reaction that a well-prepared
meal can have upon the human organism. The combination of the various
sensuous reactions - the visual satisfaction of the sight of
appetizing food, the olfactory stimulation of their pleasing smells
and the tactile gratification afforded the oral mechanism by rich,
savory dishes - tend to bring on a state of general euphoria
conducive to sexual expression."
Indeed, it's a combination of several senses that create these
aphrodisiac qualities, so setting the proper mood on Valentine's -
candles, an attractively set table and so forth - can be just as
important as the foods.
So, while it might be too late to reset your in-store displays -
it's not to late to make sure you have your own wonderful Valentine's
Celebration at home. Most researchers who have looked into the
romance-inducing qualities of various foods all agree on one thing:
the mind is the most powerful aphrodisiac.
Enjoy!
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Registration is now open for the CPG industry's premiere education
and networking event: Consumer 360. For more information and to
register,
click here.
http://www.fmi.org/events/may/2005/
ACNielsen's latest annual Consumer & Market Trends Report is now
available. For information and to order
click here.
Warehouse Clubs have established themselves as a major retail channel
that is here to stay. Find out everything you need to know about the
consumers who shop this channel in ACNielsen's latest study.
Click Here
for more details.
The FMI/Rodale Shopping for Health survey of consumers is available.
Click here for more details.
ACNielsen's latest Private Label Trends Report is now available. For
information,
click here.
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February 14, 2005
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The Language Of Sales
There are many good reasons why both retailers and manufacturers
are speaking with a Spanish accent these days. The size and spending
power of the U.S. Hispanic population continues to explode, and those
who can properly serve this market are looking at a number of
positive signs for future business.
El Mercado, a new FMI report (done in conjunction with
Advo) that is being released this month, details many of the key
reasons to get excited about the Hispanic marketplace. More
importantly, it helps outline some of the key differences between
different groups of Hispanic shoppers to help even the most Anglo of
merchants understand how to speak this new language of sales.
By the year 2020, the Hispanic population of the U.S. is
expected to top 60 million or about 20 percent of the total
population. Just as importantly, the spending power of this group
continues to soar. In 2004, Hispanics spent $686 billion - up 36
percent from just five years earlier. By the year 2009, Hispanic
spending is expected to approach $1
trillion.
Hispanic consumers are a dream come true for the supermarket
industry, spending far more on groceries each week than their Anglo
counterparts. The average U.S. consumer spends $91 per week on
groceries, while the average Hispanic spends $133. This gap holds
true for all segments of the Hispanic population, whether the
shoppers are acculturated (Americanized) or non-acculturated. Even
less affluent Hispanic households manage to spend $128 per week or
nearly $40 more than average shoppers.
Hispanic shoppers also put a premium on fresh foods, which
drives them to shop for food far more often than other shoppers.
Hispanics make 26 food shopping trips each month, nearly three times
as many as the average shopper. However, those trips will take them
to many different stores: Hispanics spend 34 percent of their food
dollars outside their primary store, nearly double the percentage for
the average shopper.
That primary store is most likely to be a traditional
supermarket, but Hispanics are avid shoppers of all types of stores,
from big format supercenters to small butchers and bakers
(carnicerias and panaderias.)
El Mercado can help explain some of the differences in
shopping patterns across this large population group as well as some
of the key drivers. As the government has tracked, the Hispanic
population continues to explode, especially in parts of the country
far from the traditional areas of Hispanic migration. Understanding
the needs and wants of these diverse and important shoppers is
essential to helping you speak their language.
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Stemming the Decline of Grocery Store Shopping Frequency
Supermarkets continue to be the retail channel of choice in terms
of shopping frequency. But the industry is facing trip decay as
alternative channels become increasingly popular.
When ACNielsen began tracking shopping patterns in 1995, shoppers
made an average of 92 visits annually. Last year, the figure was down
to 69. And, faced with further proliferation of alternatives ranging
from dollar stores and specialty shops to supercenters, weekly
shopping is likely to become even more scattered.
This polarization of shoppers stems from two factors. First, the
consumer's continuing search for products and value that seemingly
can't be satisfied at one store. At the same time, people's
lifestyles increasingly revolve around convenience, making one-stop
shopping an attractive proposition.
Problematic to be sure! But erosion within the supermarket
channel can be stopped by refocusing on the distinct buying habits of
different consumer segments. This means targeting assortment,
advertising and promotions that take advantage of cross channel
shopping opportunities rather than being at the mercy of them. There
are ways to leverage food and nonfood departments and categories that
will increase shopping frequency and the size of the sale.
Information gleaned from ACNielsen's Homescan consumer panel
shows that top-spending grocery store shoppers also make many trips
to alternative retail channels. This is an opportunity for
supermarkets to examine store-within-a-store concepts or joint
promotions with specialty retailers to provide their most valuable
customers with one-stop shopping options and capture a greater share
of their overall spending.
Along the same lines, cross-channel buying between supermarkets
and drug stores highlights an opportunity to increase prescription
drug services to some consumers. The tendency for top-spending
specialty grocery shoppers to also make frequent visits to warehouse
club stores opens up opportunities for periodic club pack offerings
as well as better promotion of regular-sized products that consumers
don't like buying in bulk.
But these ideas are only part of the solution. It is more
important than ever for retailers to assess consumer attitudes not
only toward supermarkets, but toward other stores as well in order to
determine why some are shopped more than others. Is it a matter of
price, variety, convenience - or a combination of all three? Find
out what's most important to your consumers and you can begin to see
how to capture more of their business.
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Drink to Your Health!
The Oldest Beverage on Earth Is the New Age Beverage Leader
The consumer stampede toward healthy beverages is hardly a recent
phenomenon. Back in the late '70s, a small New York brand, Snapple,
took over the Big Apple and started a movement in the beverage
industry that became known as "New Age." While several different
categories are included under the "New Age" banner - including
ready-to-drink tea, bottled water, fruit juices and drinks, and
sports drinks - the common thread is that all are generally
non-carbonated single-serve offerings sold at a premium price point,
and, most importantly, offer at least the perception of being "good
for you."
Of all the New Age beverage segments, none has performed better
over recent years than good ol' bottled water. According to ACNielsen
Strategic Planner (Total U.S. - food/mass/drug, excluding Wal-Mart
data), the still water category grew by 73 percent in dollar volume
over the four-year period between 12/30/00 and 12/25/04 ($1.84
billion to $3.18 billion). However, it was the 1.5-liter-and-less
bottle segment that saw its stock really skyrocket. Over the same
period, the single-serve water segment grew by over 130 percent
($1.04 billion to $2.39 billion). Even more significantly, during the
52-week period ending 12/25/04, those smaller packages accounted for
over 75 percent of all dollar rings.
The reasons for bottled water's continued success - and the
1.5-liter-and-less segment, in particular - are myriad. Many experts
point to the public's lack of confidence in municipal water supplies,
convenient packaging, increased availability and moderating price
points.
Whatever the reason, it's more than a little ironic that the
oldest liquid on earth is the flagship of today's New Age beverage
movement.
Looking Forward
Today, perhaps the hottest beverage segment is another New Age
offshoot - "enhanced waters." The word "enhanced" can mean anything
from flavored water to added oxygen to added nutrients. All the
attention on enhanced water isn't surprising. According to ACNielsen
Three-Channel(food/mass/drug, excluding Wal-Mart data), "enhanced
waters" have been nearly as vibrant as their more traditional
counterparts.
The enhanced segment of the bottled water category grew 149
percent in dollar sales between 12/30/00 and 12/25/04 ($371 million
to $925 million). And while the dollar growth may be slowing (21
percent in 2000-01, 15 percent in 2001-02, 11 percent in 2002-03 and
9 percent in 2003-04), expect those rates to climb again in 2005 when
the three largest companies in the bottled water busines -- NestléWaters North America, PepisiCo and Coca-Cola -- enter the category
driving volume, sales and excitement.
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Amazon and Food: All About Consumer Opinion and Interaction
While the headlines in the world of Internet food retailing may be
focused on the success of Fresh Direct or Albertson's, many shoppers
are surfing over to Amazon.com where they can purchase almost any
non-perishable food product while exchanging opinions about the items
on an open "bulletin board."
Amazon.com only has one toe in the food business water with a
"beta" site that serves as a portal for other retailers, processing
orders and handling payments but using outside merchants to handle
actual fulfillment. Still, there are two facets of its approach that
make the company a paradigm that traditional retailers should
carefully examine.
One of the more intriguing elements of the Amazon.com offering -
and the one that conceivably empowers consumers in a way that can
have a profound impact on both retailers and manufacturers - is the
ability of purchasers to comment on, recommend or criticize products
sold on the site. This isn't any different from the functions that
Amazon offers in other sections of its site; one of the more popular
features of its book, CD, and DVD sections is when people comment
positively or negatively on items.
For example, one shopper had this to say:
"I lived in Southern California for many years, but moved away in
1995. I forgot about how I used to go to the mall with my best friend
and we'd always make a trip to the See's Candy store! I was so happy
when I saw Amazon selling See's candy, as I never see it here in
Missouri. I bought a TON of candy and have been pigging out! This
chocolate is so good! I particularly love this box, with all the nuts
and caramel chews. Also guys, chocolate is almost always a GREAT gift
for your girl! I know I am never unhappy receiving a box of
chocolate! And See's is one of the best out there!"
That would be a rave, and no doubt had an influence on other
shoppers.
In essence, these kinds of conversations are replacing the old
back fence, where moms used to exchange recipes, household tips and
create the most powerful selling tool - word of mouth through
personal recommendations! Today the world has changed, and many moms
are using the Internet to build relationships and to communicate in
this time-starved world.
What should traditional food retailers learn from this? The
average supermarket has roughly 50,000 items - and that includes
everything from chewing gum sold at the checkout to the most
expensive cut of meat. Amazon.com, on the other hand, serves as a
retailing portal through which more than 79,000 items are available -
many of which would fall into the "gourmet grocery" category.
But it isn't just the range of items that is extraordinary. It
is also the ease of navigation, which provides a variety of routes to
the desired SKU. You can find products by type of cuisine (there are
304 products identified as African food, 4,018 as low-carb and
sugar-free, 316 as Oceania cuisine, and 2,376 as vegetarian). Or you
can choose products by brand or retailer, ranging from well-known
names such as Dean & Deluca, Godiva, and Harry & David, to more
obscure entities such as The Baker's Catalogue or Pacific Rim Gourmet.
You can even shop by price point; Amazon is helpful enough to let
customers know that more than 60,000 of its offerings are $24 or
less, and that two of them are more than $5,000. For the record,
those two happen to be a crystal caviar server that goes for
$7,499.95 (a real steal considering its $10,499.00 retail price!),
and 12 months of caviar, reduced to $6,749.95 from its list price of
$9,449.93.
There's one thing that Amazon isn't offering food shoppers,
though, and that's the ability to experience the aromas, colors and
sampling of the in-store experience. Brick and Mortar retailers need
to embrace the tools that competitors like Amazon have developed and
use these as ways to refocus themselves as the center of their
shoppers' communities - both on and off-line.
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What's Hot, and What's Not
A new report from ACNielsen identifies global trends among food and
beverage products. Not surprisingly, the hottest trends are
health-driven.
According to
What's Hot Around the Globe: Insights on Growth in Food and Beverages
2004, among the seven categories that experienced worldwide
double-digit growth, five offered perceived health and/or
weight-management benefits. The top two growth leaders, soy-based
drinks (31% growth from 2003-2004) and drinkable yogurts (19%) were
also "hot growth categories" in 2002, which signals a long-term
"good-for-you" worldwide food-and-beverage movement. Among the
"good-for-you" products cracking the list in 2004 for the first time
are sports/energy drinks (10%), ready-to-drink non-carbonated
beverages (8%) and fresh vegetables (7%).
Click on thumbnail to enlarge, or click here.
"Our study shows that consumers the world over are concerned
about diet and health," says the author of the report, Jane Perrin,
ACNielsen's managing director, Global Services. "It shows that food
and beverage companies that develop healthy products which also meet
consumer demand for good taste and convenience will find receptive
markets."
The report identifies three key trends driving global food &
beverage growth:
A continued focus on health;
The need for convenience;
The growing impact of private label brands.
In all, 89 categories were monitored in 59 markets, including
Asia-Pacific, Europe, Latin America, North America, and "Emerging
Markets" (made up of 19 nations, including Russia, Saudi Arabia,
Poland, Nigeria and the Czech Republic).
2002's Winner Losing Steam
One category that has seen its growth slow significantly since
2002 is "Prepared Alcoholic Beverages," including Flavored Alcoholic
Beverages (FABs) or so-called "malternatives." Overall, the category
grew at a 33 percent rate in 2002, and was identified as the
fastest-growing global category at that time. Since then, however,
growth has slowed significantly, ending the 2004 reporting period at
two percent growth.
Click on thumbnail to enlarge, or click here.
"Product innovation can drive excitement and and trial, but only
those enhancements that meet more sustainable consumer needs,
particularly health and convenience, will enjoy long-term success,"
notes Perrin.
The jury is still out on high-protein/low-carbohydrate diets.
Driven by sales in the more established markets (such as Europe and
North America), some high-protein categories, such as eggs, grew at a
healthy 16 percent rate globally, while high-carb categories, such as
"non-sweet carbohydrates," floundered. In fact, none of the 10
"non-sweet carbohydrate" categories grew by more than five percent.
However, in the U.S., where the diet first took hold, there are signs
that the tide may be turning. Sales of products engineered for a
low-carb claim have been tapering off in the last few quarters.
ACNielsen's Executive News Report
What's Hot Around the Globe: Insights on Growth in Food and Beverages
2004 can be found at:
http://acnielsen.com/reports/documents/2004_whatshot_food-bev.pdf.
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Holiday Candy: Much More than Decorations on the Tree
The year-end holidays bring out the sweet tooth in shoppers. 2004
ACNielsen candy sales data shows significant increases in candy sales
beginning a couple of weeks before Christmas and staying strong
through the end of the year.
During the holiday season, candy plays multiple roles: stocking
stuffers, holiday gifts, decorating, etc. In a quick poll conducted
by SupermarketGuru.com during the 2004 Christmas season that examined
why people buy candy, 73 percent of respondents said that they buy
"candy dish" candy such as red & green M&Ms, ribbon candy and red &
green chocolates all of which not only satisfy a craving for sweets
but they also enhance the holiday spirit in the household. Coming in
second place, 61 percent of respondents said they like to buy
decorative candy such as candy canes for the Christmas tree and gum
drops for a gingerbread house. Gift box chocolates were the third
place answer (60%) followed by stocking stuffers (58%).
Click on thumbnail to enlarge, or click here.
How intentional are consumers about their candy buying?
Sixty-four percent said they bought candy during the holidays as a
"planned gift." The #2 answer was "impulse" (57%) followed by
"in-store display" (48%), suggesting that retailers can do a lot to
drive incremental candy sales.
Clearly, candy is on a lot of shoppers' lists during the
holidays. But if shoppers enjoy buying candy, how do they feel about
receiving candy? In the same SupermarketGuru quick poll, 39 percent
said they love receiving expensive chocolates, 26 percent view candy
as "an old stand-by," 22 percent feel that "nice chocolates mean the
gift-giver really cares," and 13 percent see receiving candy as a
message that the "gift-giver didn't know what to get me."
Click on thumbnail to enlarge, or click here.
One other interesting point is that despite rising awareness and
interest in nutrition, counting carbs, and lowering sugar intake,
when the holidays roll out shoppers aren't as likely to let health
concerns dampen their candy-buying enthusiasm. When asked if
"concerns about calorie and carb consumption affect your decision to
give candy," 73 percent said "no."
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Gourmet Chocolates Outpace Growth of Conventional Chocolates 5-to-1
Gourmet chocolate, defined for the purpose of this report as those
chocolates with higher than typical cocoa content, has not only made
its presence known in the regular and upscale food markets, it has
changed the way chocolates are marketed and has made chocolate buyers
and sellers take notice.
Total traditional chocolate candy dollar sales actually declined
0.8 percent in the twelve month period ending 10/30/04 (Total US -
Food, Drug, Mass, excluding Wal-Mart) while "gourmet" chocolate sales
volume continues to increase. Total sales for gourmet chocolate have
risen from nearly $88 million in 2000 to more than $137 million last
year. To put it in perspective, however, it is important to note that
gourmet chocolates still represent just 3 percent of total chocolate
sales of $4.3+ billion.
Click on thumbnail to enlarge, or click here.
Is this growth spurt the result of more sophisticated palates,
exceptional marketing, or is there more to gourmet chocolate than one
would suspect? The answer is all three.
Chocolate is appearing along with tea, coffee and wine as a 'go
with' item where gourmands use the same language to judge softness,
back of the mouth feel, aftertaste, bitterness, sweetness and, yes,
even fruitiness, not unlike its liquid companions. Retailers should
use the opportunity to integrate displays of chocolates in these
departments, expanding the impulse occasions for shoppers.
While confections from Europe have been available for years at
supermarkets, the growth potential is also present for new
chocolatiers and for smaller domestic candy makers, who are further
fragmenting the market by specializing in organic, hand-made, and
those chocolates that contain over 75% cocoa.
Size has become a factor. While a number of gourmet chocolatiers
are making four to six ounce bars, they are making many more other
choices in small one bite bars of half to one ounce sizes, perfect
for impulse "biting" as well as buying.
Estate origins are prominent in wines, teas and coffees and have
now invaded the chocolate arena as well, as sophisticated consumers
shop for chocolates from the Amazon, Venezuela, Africa (especially
Ghana) and Indonesia. Also driving the shift towards richer
chocolates are consumers looking for health benefits from the foods
they consume. Chocolate has naturally-occurring antioxidants, those
disease-fighting elements also found in coffee, tea, and many fruits
and vegetables, and is rich in flavonoids.
Just as retailers have generated incremental sales by devoting
more and non-traditional display space for specialty cheeses and
coffees, gourmet chocolates offer the same opportunity with one added
plus - chocolate and its aroma affects the central nervous system,
which increases relaxation and produces a feeling of euphoria - which
may help enhance the overall shopping experience and drive sales.
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Know Thy Top Shopper
Who are your consumers? It's one of the most fundamental of all
business questions. More importantly, who are your top shoppers?
All customers are important in an ultra-competitive environment. But
the top spenders need special attention by both retailers and CPG
manufacturers because they shop more frequently and spend more when
they do.
A new FMI/ACNielsen study entitled, Winning Strategies for Your
Most Important Shoppers, examined the attitudes and behavior of
top-spending households in all three grocery formats-Hi-Lo, EDLP and
Specialty stores. It found that the impact of high-spenders is
particularly evident in Specialty and EDLP formats. Trips by top
spenders in Specialty grocery stores was five times greater than
among medium spenders; in EDLP stores, trip frequency was nearly
triple that of medium spending consumers.
Looking at demographics, there are clear differences between
top-spending shoppers based on affluence, size of household, age and
"lifestage." For instance, affluent households account for 53% of
the sales among top-shoppers in Specialty grocery stores, but only
21% of sales among the top-shoppers in Supercenters.
Click on thumbnail to enlarge, or click here.
Top-shoppers in the Hi-Lo, EDLP and Specialty segments make more
shopping trips than top-spenders in supercenters, likely due to the
one-stop-shopping offered by supercenters.
Looking at specific departments, supermarkets have numerous
opportunities to increase shopping frequency among top shoppers.
Top-spending Supercenter customers make more visits to other
retailers for fresh and dry grocery products and this is clearly an
opportunity for Hi-Lo retailers. Approximately 92% of top-spend
supercenter customers buy 320 or less dry grocery items in
supercenters, compared with 88% for top-spend EDLP shoppers and 75%
of hi-lo shoppers. This means that an assortment above 320 items
yields 8% additional top-spend supercenter shoppers, but 12% for EDLP
retailers and 25% for hi-lo stores, according to Homescan research.
Whether increased assortment is worth the expense is always
debatable. However, there appear to be opportunities for grocery
retailers to examine assortment optimization in food, non-food and
health & beauty departments. Many of these departments can be
leveraged to reverse the tide of shopping trip erosion to
supermarkets.
This leads to the question - what do top-spend customers really
want?
Areas in which grocery retailers focus their efforts - fresh
produce, fresh meat, weekly specials, convenient locations and broad
selection - are at the top of the list among top-spend grocery
channel shoppers in terms of importance. However, consumers are mixed
on how the grocery channel performs on value and low price.
Click on thumbnail to enlarge, or click here.
Grocery outlets could address these findings by:
Over-delivering against perimeter departments and taking
advantage of convenient locations.
Stressing the importance of good value and low pricing in
merchandising and advertising.
Maintaining a broad offering of products, but selectively
reducing assortment to enable more competitive pricing.
When it comes to availability of services, departments like
prepared foods, floral, ATMs and in-store pharmacies are among those
most available to top-spending grocery shoppers. Other services,
including self-checkouts, did not appeal to a large percentage of
shoppers. Nonetheless, this technology does present retailers with
the opportunity to reach a more competitive cost structure and also
improve overall shopper satisfaction.
For further information or to arrange a comprehensive
presentation on consumer shopping patterns, please contact Todd Hale
at thale@acnielsen.com or
859-905-4615.
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Tesco's RFID Experiences Yields Cautionary Tale
Consumers Against Supermarket Privacy Invasion and Numbering
(CASPIAN), a well-known consumerist group, has called for a worldwide
consumer boycott against Tesco - and refers to its use of RFID chips
as "spy chips" that will be used to track the behavior of shoppers.
Tesco has, of course, denied the charges...but the boycott call
is out there, leaving the company to play defense.
The Tesco experience with RFID in the UK illustrates how
retailers need to be careful about information on how such programs
are communicated to consumers. The potential benefits of successful
RFID implementation are enormous, and public relations risks can be
significant...unless handled right.
Beginning last year, Tesco began testing RFID technology by
testing item-level tracking in two UK stores only on two categories -
razor blades and DVDs. By most descriptions, the measured approach
by Tesco was likened to dipping its toe in the water...but now, it
appears the biggest retailer in the UK is ready to take the plunge.
Click on thumbnail to enlarge, or click here.
The company recently announced that it is purchasing 4,000
readers and 16,000 antennae, all of which should be in place in 1,300
UK retail locations and 35 distribution centers by Fall 2005.
Reports are that Tesco plans to use the technology at dock doors and
other places where merchandise is received and distributed, with the
movement of cases and pallets high on Tesco's tracking agenda.
Unlike Wal-Mart, though, Tesco has made a point of saying that it
is not requiring its suppliers to implement RFID technology at a case
or pallet level and has set no deadlines. Rather, the company says
it is encouraging tests of the technology by its suppliers.
Simon Palinkas, RFID Project Manager at Tesco, told a conference
recently that the company does not believe a mandate or deadline
would be helpful, but rather would paint the company as being
heavy-handed and forcing the issue. Palinkas also said the intention
is to apply RFID to one category at a time, so that staff can be
properly trained and results effectively tracked.
Tesco has been so concerned about consumer reaction that it
refers to RFID as "radio barcodes," so it seems more accessible to
consumers, and it has made the point whenever possible that it sees
RFID as adding value for customers.
So much for good intentions.
The fact is that no matter how RFID is positioned to consumers,
some people and groups will misinterpret the intentions and
exaggerate the privacy concerns. At the very least, retailers need
to be sensitive to these concerns and issues, being upfront and
public about the technology and its implementation.
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The Retail Gift Card Phenomenon: Part Two
According to the National Retail Federation, $55 billion worth of
gift cards were sold in 2004. The gift card business is a cash cow
for many retailers with an estimated one-quarter of cards that are
sold never being redeemed. But, for retailers it's also a dilemma.
The good news is they have the cash, with a notes payable on their
books. The bad news is that the retailer can't plan. They never
really know when the value of the card will be redeemed or what
merchandise will be bought and the potential impact on inventory. And
it gets worse. Gift Cards also throws a monkey's wrench into sales
tallies because, while they do capture the cash, the sale doesn't
decrease the stock in the store, which makes it impossible to factor
the all-important consumer buying preferences into these sales in
order to make buying decisions for future inventory.
For consumers, giving a gift card may be the easy way out of a
trying decision or time-starved shopping expedition, but to the
recipient it may not be so beneficial. A gift card from one
particular store may be a delight to one shopper but a mismatch for
another. Some retailers now deduct service fees on the card's balance
based on a lack of use or even charge other service fees. Many
shoppers who shop with gift cards in hand try to purchase products
that are close to the value of the card - but with sales taxes and
odd digit pricing, many purchases leave a small balance on the card,
which often goes unused.
So what's the future of this retail phenomenon?
Gift Cards are here to stay. They may well evolve into the hands
of credit card companies who allow consumers to redeem their cards at
any retailer or even transfer the balance of their card to an
existing credit card account; and for those retailers who do not want
to relinquish the value of this new found marketing tool - gift cards
can be created for specific departments or brands in a store. And its
this idea, brand specific gift cards that the CPG industry needs to
test. This evolution delivers the needed back-end information to the
retailer, helps build loyalty to specific brands and also gives the
recipient a feeling that the purchaser actually gave some thought to
the gift.
And talking about consumers who are a bit frustrated with the
current system, Mike and M.J. Kelly decided to do something about the
gift cards that were lying around after the holidays. The couple
(he's in software infrastructure and she's in sales) created a web
site (think eBay), to introduce buyers to sellers, and for a modest
fee, make the transaction happen. Swapagift.com launched in October
of 2003, and today there are 8,000+ registered users with an average
of four to five gift cards valued between $50 and $75 on the site
each year.
The method is simple. Consumers can list any gift card on the
site for a set fee of $3.99. The company verifies the card amount and
source. The listing cites the amount of its value, say $100, and how
much the lister wants, usually between 70 and 90 per cent of face
value. The listing is posted on the site for 150 days, but
historically sells in less time. Just like other "bidding sites",
buyers may offer less (or more) than the opening price, and the
lister has the right to accept or refuse any offer. All sales
transactions can go through Pay Pal or personal check to the lister;
however the company fees (always a flat $3.99) are paid for by credit
card. And as with any great ideas, others follow; eBay and
CardAvenue.com both offer over 7,500 gift cards and certificates for
sale or auction (or trade on CardAvenue) and have a sliding scale of
fees.
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COUNTRY-TO-COUNTRY: A Look at the Fastest Growing Categories in the South Africa
As we analyze the Top Ten Growing Categories each month and compare
the trends in the United States with other countries around the
world, it's an important exercise which helps marketers decide
whether a foreign marketplace may offer an opportunity for their
brands. It also serves U.S. Retailers well by giving them a snapshot
of those product categories that non-acculturated immigrants are
familiar with and are more likely to purchase in the initial stages
of their U.S. shopping experiences.
A review of the Top Ten Growing Categories in South Africa
clearly shows how Household convenience products (liquid soap,
clothes detergents, air fresheners and disposable diapers) are
becoming mainstream. Food and beverage growth is led by Mineral
Water, Infant Milk and Homogenized Baby Food. And, the growth of
bottled Iced Tea may well indicate an opportunity for other
ready-to-drink beverages within the country.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Feb05C2C1.jpg) and this
link for graph two (
http://www.factsfiguresfuture.com/enlarged/Feb05C2C2.jpg)
Refrigerated Yogurt Shakes and Drinks continue to make a strong
showing in the U.S. With the recent Recommended Daily Allowance
changes and an increasing focus on healthier eating, we would predict
that this category will continue its growth.
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ACNielsen estimates that in 2003, over $2.3 billion was spent across
all retail channels in the tea category, which includes tea bags,
herbal tea bags, instant tea, liquid tea, tea mixes, and packaged
tea. The following slides indicate the percentage of households who
buy each type of tea, as well as a sampling of higher indexing
household types who buy products in the overall tea category, and
channel share of category dollar sales.
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Click on thumbnail to enlarge, or click here.
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Click on thumbnail to enlarge, or click here.
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Click on thumbnail to enlarge, or click here.
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Facts, Figures and the Future is copyrighted and may not be
reproduced without prior permission. For more information about the
publication, please contact Phil Lempert at 323-860-3070 or via
e-mail at
PLempert@FactsFiguresFuture.com
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