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February 10, 2002
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A Market You Can't Miss
One of the best possible reasons for optimism in the food
industry these days should be the growth of the Hispanic market. It
takes very little review of statistics to demonstrate why.
Hispanics, now the largest minority segment of the population,
spend more on groceries than any other consumer group-$20 a week more
than the average shopper according to FMI's consumer research. In
addition, these shoppers put a premium on fresh products and on
preparing meals from fresh foods, all major points of differentiation
for supermarkets.
Not All Hispanics Are the Same: Don't even think you can market that way!
But winning over Hispanic customers requires some focused effort.
In a special study of this important market some clear points of
guidance emerge.
First, Hispanics are not a homogeneous group. They hail from
many different countries and have a wide range of needs and tastes.
Failing to match up with the right group is a recipe for disaster.
Second, generational differences are very important. New
immigrants put extra emphasis on ads and store help speaking their
language. More acculturated Hispanics-those who were born in the
U.S. or have been here for years-feel very differently and might well
want exactly the opposite. You can draw considerable insights on
all these topics from FMI's special study of the Hispanic shopper
released in 2002. Information is available at
www.fmi.org.
However, there is much more to learn. Start by mixing these
broad insights with local research. One store manager in New England
told me recently how his store was impacted by changing populations.
His neighborhood changed in just a few months to mostly Hispanic, yet
his company was unable to provide the kind of products these shoppers
desire. Most of their "Hispanic" merchandise included items the
Anglo population likes. That doesn't work for Hispanics. So in this
one New England city these shoppers are taking their buying power to
small merchants, and this large chain store is struggling.
If you are developing or offering products or services for ethnic
consumers, know your shopper first and know them well. Observe how
they buy, what products and in what quantities. How do they cook, and
how many people are they cooking for? Digging deeper into the
cultural habits and likes of this very important ethnic group will be
more difficult and challenging than retailers and brands have
experienced before -- but the rewards will be worth the effort at the
checkout.
And don't forget this population shift is happening throughout
the country and not just in California, Texas, Florida and New York.
It's a market you can win, but only if you are ready.
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It's All About In-Store Execution...
The retail environment today is challenged by advances in
technology, changing consumer preferences, the blurring of channels
and an ever-increasing volume of data and information from a network
of sources. Supermarket Category Managers are hard-pressed to make
split-second decisions on literally hundreds of pricing, promotion
and display issues every day.
The good news is that you're not alone. Help is just 15-days
away, if you make one additional, very smart decision to join us at
the premier CPG industry event of the year...Consumer 360.
Below are just a few of the 20-plus Concurrent Sessions that
focus on providing you solutions to real business issues. Be sure to
sign-up today at
www.consumer360.com
Optimizing In-Store Execution
Discover how the marriage of innovative technology, data and
field force capabilities has provided retailers and manufacturers
timely, cost effective and actionable in-store merchandising
execution. See a breakthrough means of mitigating out-of-stocks and
ensuring optimal in-store merchandising. These unique capabilities
will produce incremental sales and profits.
The Changing Face of the Hispanic Consumer Insights
from ACNielsen Scantrack, ACNielsen Homescan, Spectra and Scarborough
services will uncover the true differences in behavior that exist
among Hispanics based on cultural origins and acculturation levels,
as well as demographic, geographic and psychographic trends that will
change the appearance of the Hispanic population and America itself
during this century.
Driving Return on Investment at Point of Sale
Placing the right point of sale materials in the right accounts
and stores is the key to maximizing retailer and manufacturer
returns. But, how do you know which consumers will respond to your
POS materials? And how do you know which stores these consumers shop?
This session provides client case studies where the client generated
over $1M in incremental sales. This session demonstrates how to find
the most responsive consumer to all your POS materials and determine
the financial payback. Learn how to optimize your POS material
utilizing innovative consumer insights.
Applying Assortment and Space Management to the Shelf
The results of analyzing a retailer's current shelf set with
internal financial data and comparing against the market will allow
manufacturers and retailers to effectively make decisions based on
assortment, inventory, sales and movement in order to maximize
category productivity while automating the shelf management process.
Category analysts will learn how to identify efficiencies that will
streamline the assortment or shelf management process in virtually
any retailer's or manufacturer's daily decision process.
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HISPANIC MARKETING: Canned Soup Case Study
The 2000 Census revealed the tremendous growth in the U.S. Hispanic
population over the previous 10 years; and looking into the future,
we can easily see that Hispanics will grow by 80% over the next 25
years (while the White, Non-Hispanic population will grow only 5%).
What the census does NOT indicate are the very real implications,
opportunities and challenges for food marketers.
Click on thumbnail to enlarge, or click here.
E2E Hispanic Marketing Solutions is an external model created by
ACNielsen and Lumina Americas, which combines quantitative and
qualitative knowledge of the Hispanic consumer.
An E2E Hispanic Marketing Solutions study performed in the Los
Angeles market on the Canned Soup Category resulted in some important
findings. A regression analysis was performed to understand what
variables were the biggest predictors of canned soup usage.
Click on thumbnail to enlarge, or click here.
The one variable that stands out is Country of Birth; not a
complete surprise given that Canned Soup is not frequently used in
Mexico and other Central American countries. The surprising finding
was that when a similar regression analysis was performed at the
brand level, the biggest predictor of Brand A's usage was 'language
spoken'. Spanish speaking households had an inverse relationship
while English speaking households had a direct relationship, i.e.,
the brand did a good job with English speaking households not Spanish
speaking ones (no matter what country of origin, US or foreign).
This information may very well suggest that this brand has not spent
effectively in reaching the Spanish speaking market in Los Angeles.
Click on thumbnail to enlarge, or click here.
Through the use of a 4-quadrant analysis, we were also able to
see that the Spanish Only/Preferred language segment represents a
significant opportunity, in that while canned soup penetration is
low, those Spanish Only/Preferred language consumers who do buy soup
are heavy category spenders.
Bottom line: Work diligently to understand and choose your
consumer target intelligently, and you can establish a profitable and
brand-loyal franchise.
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Economic Snapshot
With the initial market gains of 2003 wiped out, the economy remains
in a holding pattern driven by geopolitical uncertainty, sluggish
economic growth and uninspiring corporate guidance for 2003.
The most recent dip in consumer confidence for January
illustrates the concern consumers are experiencing related to
longer-term hiring prospects. These sentiment measures, while not
always directly correlated to actual spending, are important gauges
of our economic recovery as consumer spending accounts for
approximately 2/3rds of our Nations GDP.
Click on thumbnail to enlarge, or click here.
Year-end 2002 insights into consumer spending are now available
with the Advance Total Retail Sales release that was reported by the
Dept. of Commerce on January 14, 2003. The attached chart offers an
analysis into the 10-year sales trends and the relationship between
economic cycles and consumer spending. The dichotomy between the boom
period of the late 90's and the bust period of 2001 and early 2002
are highlighted.
Click on thumbnail to enlarge, or click here.
Along with consumer spending, analysts are also focusing on the
4Q02 earnings results for insights into 2003 corporate spending and
profit outlook. Overall the results across the S&P 500 are coming in
at respectable profit levels (+7% to +10%) driven by cost-cutting
efforts and weak year ago comparisons. However, the earnings guidance
and prospects for 2003 have been cautious and guarded. With the
majority of leading retailers reporting 4Q02 results over the next
several weeks, and given the previously mentioned importance of
consumer spending on our economy, it will be very informative to
track the guidance provided by these retailers and the corresponding
impact on their current stock prices.
Click on thumbnail to enlarge, or click here.
*For Further Information;
For further information or to arrange a comprehensive
presentation on the State of the Economy and its impact on the Retail
sector please contact James Russo at
James.russo@acnielsen.com
or 516-682-6068
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YOU'VE COME A LONG WAY, BABY! Part One: Private Label and Alternative Channels
Once thought of as a poor substitute for branded products, private
label product quality and packaging has improved significantly --
enough that shoppers now have ultimate confidence and trust in the
store brand.
Deciphering Private Label success is not as straightforward or
simple as it was twenty years ago, when the primary Private Label
shopper's motivation was simply price... and these products were
available just in supermarkets.
Click on thumbnail to enlarge, or click here.
What we can learn from looking at the shopper segments where
Private Label sales are overdeveloped and sizable is that sales are
disproportionately strong in households with 3+ members, those with
kids, and households with younger female heads of household; groups
that may not be 100% motivated by price savings. Others, such as
blue-collar and poorer households, are presumably heavy users based
on price.
Click on thumbnail to enlarge, or click here.
Private Label is making it into the shopping cart on a greater
number of occasions - no matter what the retail channel. Gains are
especially notable in SuperCenters (137%) and Club Stores (135%),
which should be cause for alarm to the supermarket operator who, in
the face of alternative channel competition, may be relying too much
on its own brands to keep customers.
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YOU'VE COME A LONG WAY, BABY! Part Two: What Private Label Categories are Growing
Analyzing and drawing conclusions about the product mix for Private
Label is as interesting as it is confusing.
Certain categories, such as natural cheeses, frozen vegetables
and packaged meats are commodity based - and in the eyes of a shopper
identical to the brand-name counterpart. But other Private Label
categories, especially paper products and carbonated beverages, which
are traditionally supported by high levels of brand advertising and
do have real product differentiation, are surprisingly on the
upswing.
Click on thumbnail to enlarge, or click here.
Categories to watch closely are over-the-counter medications and
vitamins, which traditionally have been high-margin. With the
onslaught of the advertising-influenced, brand loving, and aging
boomers (whose consumption of these products is expected to drive
these categories into double-digit growth) we may well see a shift
away from Private Label and back into branded products. Boomers are
looking for the 'fountain of youth'; question is,"do they want it at
a discount?"
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Kinesthetics of the Supemarket: Lighting
Does the amount of daylight in a retail environment have an effect on
buying performance? A study, commissioned by Pacific Gas & Electric
focused on the sales performance of a chain retailer who operates 108
nearly identical stores. Two-thirds of the stores have skylighting
(allowing the sun's natural rays to enter the store) and one-third
does not (the electric lighting in all stores was primarily
fluorescent).
The findings were dramatic. An average non-skylit store in the
chain would be likely to increase its sales by 40 % with the addition
of skylights.
The monthly gross sales per store were averaged over an 18-month
period that went from February 1 of one year to August 31 of the
following year. This average sales figure was transformed into a
"sales index" that was statistically reliable, but that did not
reveal actual dollar performance.
Click on thumbnail to enlarge, or click here.
The presence of skylights was the best predictor of the sales per
store of all the controlled variables considered, after the number of
hours open per week. If a typical non-skylit store was averaging
sales of $2/square foot, the findings show that the store's sales
might be expected to increase to somewhere between $2.61 to $2.98
with the addition of a skylighting system.
The skylights are seen to have a major impact on the overall
operation of the chain. Heschong Mahone Group, the firm that
conducted the study, suggests that if the chain was to add the
skylighting system to the remaining third of their stores, their
yearly gross sales would increase by 11%. The difference between
having none of their stores skylit and all their stores skylit is a
40% increase in gross sales for the retail chain. Just reinforcing
the strategy that if shoppers can see your goods, they will buy your
goods.
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From e-Revolution To e-Evolution
88% of Internet users shopped online during this past holiday season,
up from 81% in 2001. Some of the big winners were BizRate and Amazon.
BizRate (a comparison shopping site) reported a total online sales
increase of 23% with the largest increase coming from Entertainment
(62%), Toys & Games (37%), Computer Hardware (29%) and Electronics
(19%). At Amazon, consumers ordered more than 56 million items from
the online retailer between Nov. 1 and Dec. 23, making it the
company's busiest holiday shopping season in its history.
Click on thumbnail to enlarge, or click here.
As the shopper becomes more comfortable with the online shopping
experience, there is little doubt that retailers like Albertson's and
Safeway will see success with their e-evolutions of online shopping.
One of the fastest growing e-commerce categories is supplements;
which is shifting dollars (and profits) from bricks and mortar
grocery.
It's important to understand (and explain to your shoppers) the
differences and dangers in buying vitamins and supplements online.
Companies can literally put anything on their web pages to promote a
product, and until they get caught, many consumers can get ripped off
and may jeopardize their health.
All foods that are sold on the Internet are subject to the Food
and Drug Administration (FDA) regulations for interstate commerce;
but there is no proactive effort from the agency to monitor these
sites. The FDA will handle complaints on a case-by-case basis, but
with the enormous number of sites available, it is improbable that
much more can be done with present staffing and resources.
This is the opportunity to build a strong relationship and a
credible "whole health solution" with your customers. The Food
Marketing Institute's Survey on "The e-tail Experience" found that
shoppers aged 25 to 34 are the most likely to shop for any type of
products online. They are also the generation that relies on facts
and have little tolerance for being "ripped-off."
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Internet Grocery Shopping Update
Many of our readers probably think that Internet grocery shopping
took the same path of the "dot-com" companies that went out of
business over the past few years. However, Internet shopping options
are alive, and the number of grocery retailers who are using their
websites to grow shopper loyalty and drive sales might surprise you.
Of the top five largest grocery retailers in the U.S., Safeway,
Albertsons, and Ahold (in two of their divisions) offer online
grocery shopping and home delivery within selected areas. While
Kroger and Wal-Mart don't offer online services for home delivery of
groceries, consumers can access their websites and order products for
pick-up at a specific store location or for home delivery via
shipping services.
Click on thumbnail to enlarge, or click here.
These sites allow individuals to shop online for a wide variety
of products including fresh produce, meat/seafood and bakery items.
Store personnel do the shopping and bagging of each order, and orders
are placed in temperature-controlled vehicles for delivery.
Personalized shopping lists are available, and delivery is available
within a 90-minute or 2-hour time window. Home delivery doesn't come
free of charge - the standard service charge at Safeway is $9.95.
Kroger's website can be used to order prescription drugs, arrange
for catering, and order take-home dinners. In these cases, shoppers
must pick up their orders at specific store locations. Their website
can also be used to order flowers, 200 specialty gifts, and gift
certificates for same day delivery (to 100% of the U.S population)
via the FTD network.
Wal-Mart's website allows consumers to order a wide selection of
products (including books, electronics, garden & hardware, jewelry,
movies, music, sporting goods, housewares & appliances, gourmet
foods, etc.) for home delivery. Just like Kroger, consumers can also
order prescription drugs for pick-up at selected store locations.
Wal-Mart also offers online services to help their customers with
vacation planning.
Many other large and small grocery retailers are leveraging the
Internet to communicate with their shoppers and to allow some form of
online ordering. Shoppers at Wegman's can order a wide selection of
gifts including chocolates, fresh produce, flowers and surf & turf
dishes. Even Aldi is using the Internet to inform its shoppers about
its latest low-cost offerings. Aldi has also used its website to
sell computers. Other Internet services available via grocery
retailers' websites include:
The ability to sign up for a retailers' frequent shopper
program
Store locator services
Information on the latest store features or special promotions
Tips on recipe ideas and articles regarding health and
fitness issues
While manufacturers can also use the Internet for information
dissemination and direct-to-consumer selling, consideration should be
given to investing in joint consumer programs with your retailer
partners. Certainly those retailers without websites could be
missing out on a relatively inexpensive means of consumer
communication as well as opportunity to satisfy a customer and
increase sales.
For further information, please contact Todd Hale (SVP Consumer
Insights - ACNielsen) at
thale@acnielsen.com or at
859-905-4615.
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Fast Food Chains Are Out Of Touch, Risking Irrelevance... Opening the Opportunity ?
A SupermarketGuru.com Quick Poll indicates that 59% of
respondents are eating less fast food than they were a year ago, and
more than a third of those who participated feel that chains like
McDonald's and Burger King will be forced to downsize because of the
declining appeal of their trademark products.
In addition, the poll suggests that if these companies want to
improve their competitive position, they need to change with the
times by offering a greater variety of products and healthier, more
nutritious meals. Almost a third of those responding said that fast
food chains should add healthier food to their menus; including
products lower in fat and calories, lower in sodium, and with less
frying used in food preparation. Almost one out of five people
responding said that they wanted a greater variety of foods when they
go to fast food restaurants. Essentially, combining these two
statistics indicates that half the people responding are not
satisfied with the foods they are getting from fast food chains.
Click on thumbnail to enlarge, or click here.
Supermarkets have struggled with 'home meal replacement'
strategies for a number of years with mixed results. Now more than
ever, the timing is right for supermarkets to offer quality, healthy
and convenient foods. Shoppers want these foods and will forego
familiar outlets. For grocery stores to compete and win these
dollars, think front-of-the-store locations, separate registers and
even drive-thru windows will be mandatory for success.
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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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