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As the retail and consumer packaged goods industries prepare for what
is arguably the most important convention of the year, it's critical
to underscore one of the most important benefits of attending this
year's FMI Convention.
There is no doubt that the FMI made doing business more efficient
for retailers by coordinating its convention with the Fancy Food
Show, U.S. Food Export Showcase, United Produce Expo and Conference,
and All Things Organic. But how many of the attendees take full
advantage of the synergy? Yes, most of us will walk the aisles and
taste hundreds of foods from across the globe; however, there is a
key resource that must not be ignored - the exchange of ideas and
information between these new alliances.
Too often we limit our discussions to those with whom we already
work.
It's comfortable, and not very challenging; and typically does
not lead to the out-of-the-box thinking that creates innovation and
new businesses. My suggestion is to use the upcoming FMI Show as a
springboard to the future by going out of your way to talk to
suppliers that you don't know or one that has a different channel
focus than your organization. Talk to retailers from around the globe
and build on each others' ideas.
Talking about ideas...
The Consumer 360 Conference, sponsored by ACNielsen and Spectra
and held just a few weeks ago in Hollywood, Florida, shared with
attendees from the leading consumer packaged goods companies new
insights into consumer trends as well as brand equity strategies for
both the retail and consumer products industries. In this issue of F3
we share the findings from a few sessions including: Warehouse Club
Sales Update, Grocery Channel Fragmentation and Retailer Equity.
Future issues of F3 will continue to highlight other Consumer 360
presentations.
The National Retail Federation's Big Show held in January offered
attendees a look into the future of retail: X05. This high tech/high
touch exhibit included RFID technologies that bring the shopping and
marketing experiences to life as well as intelligent in-store systems
to increase efficiency. For a free copy of a DVD that showcases X05
as well as interviews with leading-edge retailers
CLICK HERE.
Looking forward to seeing you at FMI's Convention May 1st!
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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.
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April 18, 2005
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Desperate Shoppers
In today's tough competitive market, good ideas - or even just
different ideas - can come from anywhere. Even Wisteria Lane.
Wisteria Lane, for those who don't know, is the fictional street
that is home to the characters on ABC's hit comedy
Desperate Housewives. However, the lessons aren't about the
strange doings on that show, but rather the insights that caused its
creation in the first place.
Start with the simple reality that ABC was ranked fourth among
the major networks in ratings a year ago, so the need to try
something new was pretty apparent. In an interview with
Fortune magazine, the show's creator half-jokingly explained
why he thinks the quirky show so quickly found an audience. "I
thought about the percentage of the population that's made up of
forensic scientists and people who work in law enforcement, and I
thought perhaps there's a demographic that is being ignored."
He was right. Women trying to balance home, work and family is
the largest demographic; and on Wisteria Lane they have to deal with
issues that you just can't believe.
It raises the question, are there demographics the supermarket
industry might be missing?
African Americans may no longer be the nation's largest minority
group (Hispanics have the title now), but this remains an enormous
demographic group, with great diversity, growing spending power and a
tremendous interest in shopping and cooking. FMI's
Shopping for Health study found that African Americans report
a higher than average rate of obesity and all the accompanying health
problems and therefore pose a great opportunity for retailers.
Likewise, lower income households also have specific needs, from
health to balancing the budget. The large size of this sector of the
population explains the ongoing strength of dollar-type stores and
limited assortment operations.
And no group is as large as the desperate housewives, or more
correctly, the female heads of households who, in much less dramatic
fashion than the characters on television, are trying to balance the
demands of a busy life. FMI data shows these shoppers are looking
for a large range of benefits, from price to health, and from
convenience to excitement at mealtime.
Critical shopper insights will be offered at the annual FMI
convention (starting May 1 in Chicago) when FMI releases its
comprehensive study of shopping behavior: Trends. It's a lot
to take in, but it is also THE data which helps us all understand
where the opportunities truly lie.
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It's 10 PM - Do you Know Where Your Buyers Are?
Most likely, many of them are on the Internet.
The Internet audience continues to grow in size and experience as
consumers spend more time online and less time using traditional
media. With an average monthly Internet audience of over 200 million
people, the Internet now ranks third in media consumption, higher
than both newspapers and magazines combined.
The medium is attracting users from across the demographic
spectrum. Women 25-54, parents, ethnic groups and seniors are
transitioning to the Internet in record numbers and are using a wide
range of tools and applications.
With the Internet working into the fabric of our daily lives,
some CPG manufacturers are beginning to see the value of the Internet
as a marketing vehicle. However, most CPG manufacturers remain
tentative. In fact, although consumers devote almost 20 percent of
their media time to the Internet, CPG manufactures, on average, spend
less than two percent of their media advertising budgets on the
Internet.
Homescan Online is helping CPG clients make the Internet part of
their overall media plan.
It's the first ongoing Internet measurement service that
integrates actual off-line consumer purchase behavior with their
surfing activity. Leveraging the industry-leading Internet
measurement capabilities of Nielsen/NetRatings and the all-outlet
purchase measurement service of the ACNielsen Homescan consumer
panel, for the first time, CPG Manufacturers can gain valuable
insights into what sites their category and brand buyers visit
online, how much time they spend there and whether certain sites
attract more high-volume buyers than others.
In addition to linking purchase behavior with surfing activity to
create media-based segmentations, ACNielsen now offers clients the
unique ability to create highly customized buyer segmentations that
integrate clients' registered user information with actual purchase
and surfing behavior. This approach has been extremely successful in
helping clients measure the actual sales impact of their registered
users and to further refine and evaluate these buyers based on
product spending levels and site preferences. Clients have used this
information to develop and enhance their media-based marketing
strategies.
Is the Internet part of your marketing strategy? With Homescan
Online, you can now effectively and efficiently reach your category
and brand buyers on the Web.
For more information, contact your ACNielsen representative.
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The Next Big Diet Trend: The Glycemic Index Moves to Replace "Low Carb"
We've come off a two-year period where Atkins and South Beach became
mainstream and searching labels for carb counts was the rule. As the
sales of "low carb" foods have waned (according to ACNielsen
LabelTrends both unit and dollar volume were down by more than 10% in
the 4th quarter of 2004) many of your shoppers found that this quick
fix diet wasn't so easy to follow.
Click on thumbnail to enlarge, or click here.
The Glycemic Index (GI) has already become commonplace in Europe
and is being discussed in the boardrooms and product development labs
of America's food brands as the next big diet trend for the masses.
The GI was originally conceived to help diabetics regulate their
blood sugar levels by helping them understand the impact that
carbohydrates from individual foods have on their blood sugar, as
compared to the impact of digesting pure glucose (which enters our
blood stream almost instantly).
Eat pure glucose, and the result is a glucose spike - followed by
a glucose drop - commonly called unstable blood sugar, which creates
energy highs and lows. This then calls on our body's insulin levels
to be adjusted to help transport the excess glucose to our cells.
Eat a carbohydrate that is lower in sugar and contains fiber --
for example, blueberries -- and the glucose enters our blood stream
slower and more steadily, and doesn't require that extra insulin, nor
cause a change in energy.
Not only do people who follow the Glycemic Index tend to lose
weight, but researchers have also found that it can reduce the amount
of LDL (the so-called "bad" cholesterol).
While using the GI has been complicated, food companies are about
to uncomplicate the process. Expect to see packaged food which lists
GI numbers, and there are already cell phone services that offer GI
counters.
Here's how the Glycemic Index works:
The GI is a ranking of carbohydrates (on a scale from zero to
100) based on their immediate effect on blood glucose (blood sugar)
levels. The importance of this is that high blood sugar levels lead
to the production of insulin, a hormone that leads the body to store
excess carbohydrates as fat.
Recent studies from Harvard School of Public Health indicate that
the risks of diseases such as type 2 diabetes and coronary heart
disease are strongly related to the GI of the overall diet. In 1999,
the World Health Organization (WHO) and Food and Agriculture
Organization (FAO) recommended that people in industrialized
countries base their diets on low-GI foods in order to prevent the
most common diseases of affluence, such as coronary heart disease,
diabetes and obesity.
The index alone is not perfect in making day-to-day food choices
because it does not take into consideration portion sizes (we all
know that large portion sizes are one of the leading causes of
America's obesity problem).
That is why the Glycemic Load (GL) was created, which adds
another layer of complexity to the diet plan. This is a formula that
builds on the GI to provide a measure of total glycemic response to a
food or meal, taking the quantity of "available carbohydrates" into
account.
Available carbohydrates are those that provide energy, i.e.
starch and sugar, but not fiber. A typical American diet contains
about 100 GL units per day.
To illustrate, the following grid categorizes some basic foods
based on where they fall in a low-medium-high GL to low-medium-high
GI ratio based on the data reported in the "Revised International
Table of Glycemic Index (GI) and Glycemic Load (GL)" published in the
July 2002 issue of The American Journal of Clinical Nutrition.
The first number listed is the GL, followed by the GI, for example;
All-bran cereal (8,42) means a glycemic load of eight and a glycemic
index of 42.
Click on thumbnail to enlarge, or click here.
Unlike the "low-carb" fad, (the USDA has still been remiss and
never authorized the use of the term, nor identified what 'low-carb'
actually meant), the Glycemic Index is actually a proven formula that
could help those people with diabetes select the foods that are best
for their day-to-day health. For the rest of your shoppers it may
just be the tool to help in the fight to shed those unwanted pounds -
and keep them off while improving heart health.
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Consumer 360: Shopper Attitudes and Retailer Equity
Understanding shopper attitudes is critical to the success of
retailers and manufacturers. It is truly not enough to just
understand what consumers say is important. We need to understand
what really drives loyalty. At Consumer 360, Ken Greenberg of
ACNielsen Homescan and Manjima Khandelwal of ACNielsen International
Research explained how quantifying the impact of shopper attitudes on
retailer equity and actual behavior is a key factor for future
business success.
Most retailers utilize consumer panel data to address key
retailer questions; this tool can indicate where households shop, how
much they spend, and what they buy. But, consumer panels also leave
key questions unanswered.
It is important to know why shoppers are not shopping in your
store more, why they aren't taking certain trips to your store, and
why they are not purchasing certain categories or services in your
store. And even more important in today's retail space: How
vulnerable is your store to current competition and potential new
entrants?
Shopper Trends uses ACNielsen's Winning Brands globally
recognized brand equity model and applies it to retailers' equity.
In the US, a survey is fielded to Homescan consumer panel members to
enable a longitudinal linkage of attitudes and behavior along with
the Winning Brands model, which has been developed based on
theoretical work of Professor Kevin Keller, a brand management guru.
Click on thumbnail to enlarge, or click here.
The Store Equity Index measures the long-term potential of the
retailer. It is based on consumer emotive outcomes - namely, emotive
loyalty, willingness to pay a price premium and willingness to travel.
A Store Equity Index can range from zero to 10. How do you
interpret these values? Suppose you were mineral water and had
equity of zero; it means you are no different from tap water.
However if you had equity of 10, you could command any price premium
and consumers would remain loyal to the brand.
It is not only important to establish the store's equity, but
also to diagnose what drives equity for a store. The most critical
drivers for growing brand equity are:
Brand saliency - i.e. has a strong top of mind and
spontaneous awareness.
Has a large store format and offers a wide selection of
products
Price
Accessibility
By looking at the relationship between stated importance and
derived importance, we can truly understand what matters, and in many
cases it is not what consumers say is important. Many store
attributes that consumers say are not important appear to be very
important in driving retailer equity, while some attributes that
consumers say are important aren't really. This suggests that it just
isn't enough to set up focus groups and take everything that your
consumers say as gospel.
As an example, we analyzed the Houston market.
Click on thumbnail to enlarge, or click here.
Looking at how the retailers perform on store attributes helps
explain their equity scores. This analysis reveals how each retailer
is distinctive.
Shopper Trends' value is not just staying at the total shopper
level, but truly understanding what 'core', 'occasional' and 'never'
shoppers think of you as well as your competitor's shoppers. We know
what these shoppers spend in your store, in the competition, and in
the channel. By combining behavior and attitudes we can now better
quantify the risks and opportunities that exist as well as help you
hone your marketing/advertising messages.
For more information about Shopper Trends contact
Ken.Greenberg@acnielsen.com.
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Rx Shopper: Consumer Ailments Can Be Healthy For The Bottom Line
There is an enormous opportunity for retailers and manufacturers to
develop marketing programs and products geared to consumers with
specific medical conditions, not just by offering appropriate
prescription and OTC products, but also products elsewhere in the
store that are relevant to their maladies.
This is no niche market. The fact is that even though Americans
are becoming more health-conscious, many also suffer from chronic
ailments. Eight percent of US households have someone who suffers
from migraines, nine percent have someone with asthma, and 11 percent
have diabetic family members. Twenty percent of households have
someone with arthritis, 25 percent have high cholesterol, 32 percent
have high blood pressure, and another 32 percent have some kind of
allergy. These numbers add up to fully 63 percent of US households,
or almost two-thirds, that suffer from at least one chronic ailment.
Click on thumbnail to enlarge, or click here.
As an example, let's take a snapshot of the diabetic consumer.
Diabetes, while not the health condition with the largest incidence,
is a chronic ailment that is becoming increasingly serious for more
and more Americans. About 18.2 million Americans have been diagnosed
as having diabetes, but another 41 million have what is called
"pre-diabetes," with elevated levels of blood sugar that are not yet
high enough for the diagnosis of diabetes.
Diabetes sufferers can deliver a huge opportunity for retailers,
not just as loyal customers, but also because they spend more dollars
overall. However, for retailers to build relationships with these
shoppers, the time to act is now, since many health care providers
are "motivating" their members to purchase maintenance Rx items
directly through on-line and mail order sales.
Click on thumbnail to enlarge, or click here.
There are a number of categories in the supermarket in which
consumers buying for a diabetic person spend more than is spent by an
average person unconcerned with diabetes - not just medications,
where diabetic households spend an average of more than $168 a year
compared to the $61 a year spent by total US households, but also
carbonated beverages ($155 a year compared to $118), packaged
meat/deli items ($113 compared to $86), and frozen novelties ($33
compared to $24).
The impact on the retailer can be geometric rather than
arithmetic, as the number of chronic ailments multiplied by the
number of affected categories adds up to improved sales that can move
the needle on the retailer's bottom line - as long as the retailer
can keep these invaluable shoppers coming to their stores!
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Why Natural Products are Flying off the Shelves of Conventional Retail Stores
Household penetration for Natural Products has now reached 95 percent
with Organic at 46 percent. The industry has matured and the Natural
Products consumer base continues to evolve. An increase in awareness
of obesity and other health-related issues, food-safety concerns,
National Organic Program standards, and preventative medicine
practices have driven the industry's growth of 17 percent each year
since 1994. More than ever, people are looking to not only improve
their health and that of their families, but to make conscientious
choices that benefit others and the environment. This is shown by
the growth in awareness for and the availability of sustainably
produced products, such as those meeting Fair Trade Certified
criteria or produced using recycled or biodegradable materials.
The growth of this $45 billion US industry for Natural Products
and its coveted consumer base has caught the attention and acceptance
of Conventional retailers as they merchandise more and more of these
products. Clearly, this strategy has worked, with research showing
that over half of committed Natural Product consumers are now
shopping in Conventional outlets. Sales of Natural Products through
Conventional stores are now twice that of the Natural Product
supermarket stores.
The Natural Product Consumer
According to the 2004 SPINS/Mintel survey of Natural Products
Consumer Drivers, these consumers are not only seeking products that
are better for their health, they are also making conscious decisions
to avoid products they deem not as healthful, such as those
containing trans-fats, high fructose corn syrup and artificial sugar
substitutes. After health reasons, supporting the environment is the
second most common reason that consumers choose to buy Natural
Products, and promoting sustainable business and manufacturing
practices is in the top ten.
Natural Products consumers are willing to pay a 20 percent
premium on Natural Products and are not accustomed to purchasing on
deal. However, as products are offered in more channels, consumers
are becoming more price sensitive. They are willing to shop around
in various channels to find the products they desire at the right
price. In fact, 37 percent of respondents make a special trip to
purchase Natural Products while 58 percent of consumers already buy
them in conventional supermarkets and 18 percent purchase through
mainstream drug stores.
Although Natural Products have been a tremendous success,
Conventional retailers still face their challenges. For example,
while supplements in the Natural Channel continue to see growth,
their sales are flat overall in Conventional FDM. SPINS attributes
this to the educational resources that Natural Products retailers
provide their customers such as staff people trained to address
consumer health concerns with natural remedies.
Growth indicators
Food categories are driving the growth of Natural Products in
Conventional channels, lead by organic produce, organic dairy, and
fresh juice. In addition, key categories are different in both
channels: water and other ready-to-drink beverages and packaged fresh
produce are leading Conventional store sales, while prepared foods
like frozen entrees and baked goods are leading sales in Natural
stores.
Click on thumbnail to enlarge, or click here.
Conclusion
The best way to drive sales with Natural Products is to
understand market dynamics and provide your category management or
new product development teams with solid sales tracking information.
SPINS has partnered with ACNielsen since 1998 to report on the sales
of Natural Products in the Conventional retail channel at the UPC
level. We have recently made significant enhancements to the service
at
http://us.acnielsen.com/news/20050322.shtml,
formerly NaturalTrack, and given it a new name:
SPINSscan Conventional. The service provides access to
account-specific reporting on over 60 retail accounts with promotion
and baseline measures, helping clients make targeted, successful
business decisions.
Contact Mike Movitz at SPINS to learn more.
mmovitz@spins.com.
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Let Consumer Behaviors Drive Your Category Focus - Part Two
Last month in this space we looked at some of the core metrics around
consumer buying behavior (household penetration, buying rate,
purchase frequency and purchase size) and how they help retailers
decide what categories they should carry as well as how they should
place, price and promote those categories. This month we will
examine differences in buying frequency and purchase size to
illustrate how retailers can use these two consumer measures to make
better category decisions around pricing, promotion support, store
placement, and private label/branded emphasis.
An examination of the frequency with which categories are
purchased and the amount purchased per trip can identify the best
categories to bring shoppers back to stores more often or those
categories that drive high per trip spending to yield larger shopping
baskets.
The first chart below visually depicts how approximately 120
ACNielsen-defined "mega-categories" perform in terms of driving
shopper purchase frequency or per trip spending. The categories
represent consumer packaged goods that can be found on the shelves in
Grocery, Mass Merchandise, Drug, Supercenter, Warehouse Club, Dollar
and Convenience/Gas stores. A couple of observations: We see that
most categories cluster together, but a few categories are very
strong at impacting either high buying frequency or high per trip
spending.
Click on thumbnail to enlarge, or click here.
For the categories that drive high buying frequency, we would
recommend that retailers price these categories competitively &
promote often. Due to their high buying frequency, consumers have
more reference points to know when they are getting a good deal or
are being charged a premium. For the same reason, these are terrific
categories to promote frequently to help drive store traffic and
larger baskets. These are also categories that are deserving of
prime in-store real estate to drive shoppers through stores in such a
manner as to expose them to other categories that retailers want them
to purchase.
Click on thumbnail to enlarge, or click here.
For the categories that drive high per trip spending, the faster
moving categories may require a value-pricing approach as many of
these categories have seen volume shifts out of the Grocery channel
to Mass, Club and/or Specialty retailers. These are also categories
where retailers might offer tiered private label brands and/or where
a blend of premium and value-priced national brands is important.
For the slower moving items, look for opportunities to charge a
premium as consumers don't have a good reference point. That will
help cover the cost of carrying slower turn inventory.
Click on thumbnail to enlarge, or click here.
While much of the news in the retail world today is about
Wal-Mart and what other retailers are doing in the area of store
count expansion and/or introducing new formats to drive competitive
advantage, we can't lose sight of the fact that what drives shoppers
to Wal-Mart and other retailers are the products on the shelves.
Product categories, because of the consumer demand and buying
behaviors that they drive, are an extremely important component of
what makes retailers successful.
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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The Increasingly Fragmented Grocery Channel
Even though many food retailers believe that people are shopping less
often than they used to, a new study from ACNielsen points out that
in 2004, the average American household made 189 shopping trips per
year, or about 3.6 trips per week - exactly the same number of trips
they made back in 2001.
That's the good news.
The bad news is that while 75 of those trips were to the grocery
store in 2001, only 69 of them were to the grocery store in 2004.
Ironically, there was only one other retail category that suffered a
decline in the three-year period: traditional mass merchandisers,
which dropped from 24 trips a year to 20 (which may speak more to the
hemorrhaging of Kmart's business than to any problems afflicting
Wal-Mart).
Click on thumbnail to enlarge, or click here.
The two formats that have seen growth in annual visits are, no
surprise, supercenters (up from 20 to 27, or more than twice a month)
and, also no surprise, dollar stores (up from 11 to 13). Warehouse
clubs have seen a slight increase, from 10 to 11 trips a year.
There's been no change to speak of in a number of other retailer
venues such as c-stores and drug stores, each of which gets 15 visits
per year.
But these are all just statistics. The fact is, plain and
simple, that the only way grocery stores are going to reverse this
trend is by being willing to make fundamental changes in how they
operate, creating compelling and innovative shopping experiences that
will appeal to shoppers and bring them back again and again. The
trends won't change all on their own; rather, retailers looking to
compete need to be both aggressive in their strategies and ambitious
in their vision.
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Warehouse Club Stores Growing by Leaps and Bounds
The warehouse club store channel is growing in significance for one
simple reason: sales are booming. As channel blurring continues to
accelerate across the retail landscape, more and more families are
realizing significant savings by making volume purchases in a channel
formerly frequented primarily by small businesses.
Warehouse club store retailers are showing strong year-to-year
sales growth as well as solid same-store sales increases. Retailers
in the channel had solid years in 2003 and 2004 and are poised for
even greater growth as the U.S. economy continues to improve.
The channel is dominated by four players: Costco, Sam's Club (a
unit of Wal-Mart, Inc.), BJ's and Smart & Final. According to data
sourced from the companies' annual reports and web sites, the channel
now consists of over 1,200 stores (and counting), with combined
annual sales of $93 billion, ranging from a high of $47.1 billion for
Costco to $1.95 billion for Smart & Final, including its Cash & Carry
Warehouse stores. (Revenues are for sales only - they do not include
membership fees.)
Click on thumbnail to enlarge, or click here.
Annual revenue growth rates were impressive last year, with
strong same-store sales increases too. All four chains saw
significant same-stores sales bumps, with Smart & Final (11%) and
Costco (10%) leading the way. Interestingly, channel leader Costco
drives higher revenue with a much smaller store count than Sam's Club.
Store expansion continues across the board. Sam's Club has 551
stores in 48 states. Costco features 333 locations in 37 states with
major emphasis on the West Coast. BJ's is an East Coast operator with
157 stores in 16 states, while Smart & Final has 235 stores in six
states, with a heavy concentration in California.
BJ's and Smart & Final carry nearly twice as many SKUs as Costco
and Sam's Club. In terms of footprint, all three major chains
(Costco, Sam's and BJ's) dwarf Smart & Final in average store size.
Advantage, Grocers
Several high-frequency CPG categories, however, seem destined to
remain favorites of the Grocery channel. Take carbonated beverages,
for example. According to ACNielsen, heavy club shoppers spend $81
more per year on carbonated beverages in grocery stores than they do
in warehouse club stores. Bread and baked goods also saw a
significant spending advantage to grocers, as did milk, ice cream and
cereal. Meanwhile, the so-called "negative" spending gap was only $18
in frozen prepared foods and $22 in salad dressings.
Click on thumbnail to enlarge, or click here.
In an effort to capture more of the dollars being spent in the
Grocery channel, warehouse club store retailers have been
aggressively expanding their perimeter sections. According to
ACNielsen Homescan data for the 104-week period ending December 25,
2004, dairy departments saw a 23 percent sales increase, closely
followed by meat (22%) and fresh produce (19%). Most other CPG
departments saw single-digit increases, while alcoholic beverages saw
no change.
Click on thumbnail to enlarge, or click here.
Company Profiles
According to ACNielsen's "The Warehouse Club Consumer," Costco,
listed No. 33 on the Fortune 500, is the sixth largest U.S. retailer
and ninth largest retailer in the world. The chain's U.S. store sales
averaged $122 million, with 65 stores doing $150 million+ and 11
units topping $200 million. Membership renewal rates ran 86 percent,
and Costco.com is seeing very strong online sales and sales growth.
Ancillary product & service offerings include: food courts (in 313
U.S. stores); one-hour photo (309); pharmacy (307); optical (306);
gas stations (198); hearing aid centers (126); copy centers (9); and
print shops (2). According to Costco, ancillary business had "sales
topping $4 billion" in 2004 - up 20 percent versus the previous year.
Sam's Club has shifted its focus from the family to small
business customers. That's because small businesses spend as much as
50 percent more per shopping trip than family shoppers. Like other
Warehouse club store chains, Sam's Club offers a wide array of
benefits & services (from travel to a service to help small
businesses with their web sites) and specialty departments (from Rx
to fine jewelry to tire and battery centers).
Ranked No. 277 on the Fortune 500, BJ's focuses on women
and families as its core consumers by offering a wide selection of
designer apparel, brand name appliances and electronics, and by
upgrading its "fresh foods" areas: produce, bakery, seafood and
imported cheeses. Differentiating itself from Costco and Sam's, BJ's
tries to appeal to smaller households by offering smaller package
sizes, particularly in the perishable departments, and by accepting
manufacturer's coupons and major credit cards. As part of its "family
friendly" initiative, BJ's is the only Warehouse club store retailer
with self-checkout lanes. The chain also offers gas in over half its
stores and is testing a supervised play area. Among the services
offered are food courts (in 150 stores), cell phone sales (149),
optical (136), home security (115), propane tank refills (85), gas
stations (78), one-hour photo (70), brake & muffler service (29),
pharmacy (14), and full-service mini-banks (6).
Smart & Final offers a much different model from the three major
Warehouse club store players. Its focus is on foodservice
professionals as well as households. A major differentiator is that
annual membership fees are not required. Smart & Final has a much
smaller footprint (an average of just under 18,000 square feet), but
carries a broad selection of goods.
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Changing Sleep Patterns Creates Mealtime "Blurring"
A recent ACNielsen global study on sleep habits suggests that one of
the most profound lifestyle changes affecting many Americans has to
do with when and how much they sleep - a shift that, while it may
result in red eyes and cranky psyches, also can mean some real
marketing opportunities for retailers.
More than one-third (34%) of U.S. adults go to bed after midnight
during the week, while nearly the same number (29%) are out of bed by
six in the morning. And it isn't just Americans who are burning the
midnight oil; in fact, the ACNielsen numbers indicate that when
comparing the percentage of adults who go to bed after midnight, the
U.S. ranked 11th out of the 28 markets studied across three major
geographic regions. An average of 37 percent of adults the world
over aren't usually tucked into bed until after midnight. By region,
40 percent of adults in Asia Pacific burn the midnight oil compared
with 32 percent of Europeans. The top five sleepless countries are,
in order, Portugal, Taiwan, South Korea, Hong Kong, and Spain.
Click on thumbnail to enlarge, or click here.
"The Internet, laptop computers, PDAs, cell phones, and
ever-rising expectations about what one can get done in a day have
created a 24/7 global culture," said ACNielsen Chief Marketing
Officer Tom Markert in assessing the study's results.
Because people are living in a 24/7 world, it also means that
they aren't adhering to traditional mealtimes as in past generations.
While it used to be that breakfast was served between seven and
eight in the morning, lunch around noon, and dinner between six and
eight pm, that's hardly the case these days. People on the go may be
eating breakfast as early as five in the morning, which means they
are ready for lunch a lot earlier; it also means that they may be
"grazing" during the day, eating small meals or snacks whenever they
get hungry. In addition, foods that used to be reserved for certain
times of day - cereal, for example - now may be eaten virtually any
time as either a snack or a meal.
This means that food retailers and even foodservice providers can
create new marketing programs that cater to these changing habits,
much in the same way that diners used to make a big deal out of
"serving breakfast all day." It means that there may be new ways to
market healthy food for people who are hungry at odd hours because of
chaotic schedules, but are looking for nutritious alternatives to
fast or convenience-oriented food. And, it means that retailers can
take advantage of the sleep aids coming into the marketplace,
products that may be able to help consumers alleviate some of their
sleeplessness. It also means that the traditional foods eaten at
certain mealtimes, for example eggs and oatmeal, have growth
opportunities that extend beyond that part of the day.
The blurring of meal times could actually help retailers build
their relationship with consumers as they search for new ways to be
relevant to their shoppers, but the effort means a commitment that
goes beyond just serving cola with breakfast foods.
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COUNTRY-TO-COUNTRY: Philippines
Analyzing the fastest growing products available in the Philippines
underscores how nations, as they become more industrialized, buy more
personal care and convenience products. Gross Domestic Product was up
6.3 percent as compared to the previous year, and economic growth
surpassed both public and private sector expectations according to
the US Embassy in Manila. However, the country faces a vulnerable
fiscal situation because of its high and unstable debt level, its out
of control electricity costs, as well as a high unemployment rate of
11.7% as of 2004. The Philippines is the 14th most populous country
in the world with 84+ million residents and a fertility rate of 3.4
(the highest in the sub-region of Southeast Asia). The population
continues to be dominated by the lower class, whose expenditures
remain largely limited to basic food items.
Click on thumbnail to enlarge, or click here.
Top 10 Category Highlights:
Many of the fastest-growing categories reflect a higher
demand for convenience products, ready-to-eat food, and take-home
food.
There is rapid growth in smaller packages.
The growth of the Hot dog category is being driven by more
competitive pricing from both new entry low priced brands as well as
regional stalwarts.
While low prices have always been a key factor in the growth
of the Luncheon Meat category, there is strong growth being noted for
smaller SKUs such as the 100 gm can, which posted a volume increase
of 31% in 2004. Some of the category leaders have also started
offering variations of the traditional meat/beef loaf.
There was generally higher year-round product consumption of
Hams, with growth led by low price brands.
The Corned Meat category is growing as the lower priced Carne
Norte Segment posts 33% improvement.
The Low priced Creamer segment is primarily responsible for
boosting Evaporated Milk volume It now accounts for 50% of the
entire category.
One future growth arena to keep on the radar is the "health &
wellness" segment. The upper class in the Philippines contains
approximately 8 million people with 3 times the amount of spending
power as the general population. In a 2004 ACNielsen Regional
Consumer Confidence Survey, 83 percent of the upper class reported
that they are "trying to lose weight" - 23 percent are cutting down
on chocolates and sugar, while 39 percent are cutting down on fats.
For insights on over 80 markets, please contact ACNielsen Global
Services on 847-605-5884.
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The following slides use indices to compare retail channel
performance vs. year ago on three metrics:
- Dollar sales, number of shoppers, and shopping frequency
An index of 100 means there has been no change
Among the key findings...
- Average spending in dollar stores continues to outperform all
other channels, but the gap is narrowing
- Dollar stores continue to attract the greatest number of new
shoppers
- Grocery stores continue to experience declines in shopping
frequency
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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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