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New Year's Resolutions for the CPG Industry
I know what you are thinking ... the list of resolutions is
supposed to come out before the turn of the New Year. But this year I
decided to wait, let the dust settle and let everyone forget about
everyone else's list!
Do what you say you are going to do. We constantly
read food companies' or fast food chains' press releases saying all
the terrific things they are going to do to improve the taste or
nutritional profile of their products...in three months, or six
months. Months later, they've received the press clips, and because
of operational issues, put the idea on the backburner until the
existing packaging is used up, or they wait for that new equipment
that's been on order for months. The topline is that sometimes that
new and improved version never seems to get to the consumer.
Watch, listen and read your own ads. What ever
happened to food advertising being about food? Enough pseudo-celeb
ads implying endorsement, that just smacks of too much money being
paid to someone who is out of work, and who we know never even tried
your products. Refocus in 2006. Tell us about your food: How it
tastes, the nutritional benefits and why the consumer should buy it!
Pay attention to ME - the shopper. With all of the
resources at our finger tips there is no reason to introduce food
products that no one wants or buys. Understand how customers - young
and old, loyal or brand switcher, Black, White or Latin, educated or
not, acculturated or not, online or not - are different. Ask
yourself, what are the products for each of these group? How can you
best communicate your message? We are not a nation of middle aged
white men anymore, and you had better understand that if you want to
survive!
Test EVERY cow. The potential of BSE (mad cow
disease) keeps me up at night. Please, do what Japan does...test
every cow that is destined to be in our food supply BEFORE they enter
our food supply. Yes, I know the cattlemen are working hard to
prevent the problem, and consumers are buying beef ... but think
about it. In Japan, where they test every one of the 1.3 million cows
slaughtered for food, they've discovered three BSE-infected cows in a
year, and 12 overall. In the US, only about 40,000 are expected to be
tested this year ... and we've found two cases of mad cow disease.
Considering 36 million cattle are slaughtered in the U.S. annually,
how does that add up for you?
For every new product you introduce - eliminate one.
Have you been into a supermarket lately? Too many me-too products.
Same price, same taste, same, same, same ... 'nough said.
Be nutritionally correct. We have enough research
that supports the fact that Americans are too fat, out of shape and
on the verge of a serious health dilemma with increases of heart
disease, cancers, diabetes and osteoporosis. Time to look at those
recipes and get out the added sugars, high fructose corn syrup,
artery-clogging fats, sodium and all those other ingredients that are
responsible for setting us in this downward spiral. And by the way
... one additional benefit might well be the cleansing of the
American Palate, and we can once again discover how to enjoy foods
that are not sweet and loaded with fat.
Understand technology. We do, and that means that
soon we will be scanning every item BEFORE we buy it with a handheld
device and read, in a nano-second, everything we want (and need) to
know about your product. When it was made, where it was made, where
it came from. We will even be able to tell YOU what those secret
codes on bottles and cans actually mean. And by the way, what's up
with the check-out? Have you ever used a Mobil Speed Pass or EZ Pass
toll device? It's time.
That's it ... ideas that can make a huge difference in the health
and wellness for all Americans!
What would YOU like the food industry to change in 2006? Send me
an email and let me know.
CLICK HERE.
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CLICK HERE for more
information about Consumer 360.
ACNielsen's new book on category management, published by John Wiley
& Sons, is now available. To order, click on the image above. Or,
for discounted orders of 10 or more, contact Jeff Gould at Wiley at
jgould@wiley.com.
U.S. Hispanics are emerging as the marketing opportunity of the 21st
century. The fastest growing ethnic group in the United States,
Latinos far outspend the average U.S. supermarket shopper. Learn more
about U.S. Hispanic spending patterns, importance of products and
services, coupon usage and influence of advertising. Click on the
image above for more info.
FMI's Speaks is the annual state of the industry report for food
retailers. Included are the latest trends in sales growth, general
operations, supermarket company operating costs, employee turnover
and advertising methods. Click on the image above for more info.
This annual report provides you with a complete financial picture of
the supermarket industry as well as the external business
environment, including key ratios, balance sheet, income statement
and statement of cash flow. The results are provided for the entire
industry as well as by annual sales for more accurate benchmarking.
Click on the image above for more info.
This annual report presents five-year financial data on key pharmacy
topics such as sales, margins, generic drugs and third-party plans.
Click on the image above for more info.
The FMI U.S. Grocery Store Shopper Trends 2005 is available. Click on
the image above for more info.
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January 16, 2006
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A Day Worth Celebrating
Every now and then, we need these F3 columns to go beyond
examining straightforward research.
This column is dedicated to Sept. 25, 2006 and a relatively new
holiday that just might become the most interesting of the year for
the food industry.
This holiday has nothing to do with religion, the season or any
historical event. It's about American families and is a cause
supermarket retailers should quickly embrace. September 25th is
"Family Day - a day to eat dinner with your children."
For many of us, that might seem like a non-event, but for a
growing portion of American families it is anything but. The time
pressures of modern living have taken a massive toll on America's
eating habits over the past few decades.
The supermarket industry knows all too well how this has played
out as we've seen an increasing share of meals and food spending move
annually to fast food, quick-serve and other restaurants.
And increasingly, that move is being questioned. While this
could mean an enormous marketing opportunity for the industry, it
also presents the possibility of partnering with and helping shoppers
on some of their most important family issues.
Family day is the creation of the National Center on Addiction
and Substance Abuse (CASA) at Columbia University. (Check out
www.casacolumbia.org.) As the
group's website explains, Family Day has two purposes.
First, it's a fun concept to focus families on the joy of eating
together and the time that is provided to sharing activities and
talking. But the second is where the impact becomes dramatic.
CASA's studies find some real differences for children who grow
up in homes that regularly have family meals around the table. These
kids have lower incidence of smoking, drinking and drug abuse. Other
studies find that family meal time can be a direct link to better
performance in school, better manners and better eating habits.
The challenge, of course, is getting those meals on the table
because the social changes that have increased family time pressures
aren't going away anytime soon. Marialisa Calta has an idea on how
that can be attacked. Calta authored a creative cookbook,
Barbarians at the Plate, for busy families that aims right at
the issue of time pressures and the need to eat with our kids.
Read more about Barbarians at the Plate below...
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What's Next in Consumer - Centric Marketing?
Consumer-centric marketing (CCM) has become a widely used buzz
phrase in the FMCG industry. But what is the current state of CCM -
what's working and not working, and where do we go next?
Let's first ground ourselves in the four basic steps of CCM:
insight gathering, segmenting to find the best consumers, targeting
marketing & sales efforts to reach those consumers, and finally,
measuring results. P&G, Kraft and other leading marketing
organizations are driving to more intimate consumer knowledge. This
consumer intimacy is resulting in exciting growth in
"non-traditional" targeting efforts, such as internet advertising,
opt-in email groups, branded entertainment, and even the resurgence
of direct mail for larger, multi-brand manufacturers. These highly
targeted marketing efforts are alongside the more traditional mass
spending methods that are used to get cost efficiency and broader
reach.
How is the breakthrough consumer insight research connected to
your specific selection of mass media, or, for that matter, your
measurement of business results? How well is this consumer research
connected to specific retailers' shoppers?
Spectra's version of consumer-centric marketing is grounded in
connectivity. We use our new behavior-based segmentation method,
BehaviorScape, to explain complex purchasing behavior by providing a
window into why households behave the way they do. We then connect
this consumer definition to volume-driving marketing and sales
recommendations to focus our clients' spending. Importantly, we use
a common language to connect a manufacturer's best consumer to a
retailer's best customer through proprietary Consumer Trade Area
methods.
We complete the marketing cycle by tracking the purchases of
these consumers and predicting the likelihood a marketing strategy
will influence targeted consumers over time. Using CCM tools such as
ACNielsen's Target Track, which analyzes retail measurement
data to quantify sales among particular demographic segments, we can
determine growth among key consumer segments. Consumer Marketing Mix
then can decompose which component of the marketing mix was most
effective among the target consumers.
The future of marketing is a measurable return on investment, and
with Spectra's connected consumer-centric marketing, our
clients can make targeted marketing as practical as it is profitable.
For more information on Spectra's BehaviorScape Segmentation and
other consumer-centric marketing tools, visit
www.spectramarketing.com.
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Barbarians at the Plate ... More Than Just a Book
The book, Barbarians at the Plate, is directed at the "taming
and feeding of the modern American family." Calta's book is filled
with strategies for meal preparation and discussion of how mealtime
at home addresses many of the social issues that American
families must tackle. (Calta isn't talking about reheating prepared
meals or take-out from restaurants. Her book is about how busy
families can begin cooking again.)
At FMI's Midwinter Executive Conference, Calta will take part in
a panel discussion about the reclaiming and rebuilding of mealtime.
That discussion is only the beginning. We'll have more at the FMI
convention in May, but you can start before then.
Already, there are retailers who are jumping on these concepts
and celebrating Family Day in their stores. There are retailers
featuring the easy-to-cook recipes of celebrity chefs like Rachael
Ray who target meals in minutes. And, clearly, there are families
who are receptive to the message.
This change won't happen easily. Americans have learned to like
restaurant meals for a host of reasons; some related to the decline
of cooking and some related to the quality of the eating out
experience. The latter, especially, should not be taken lightly
because many restaurants have done a terrific job in staying current
with eating trends, in building their appeal to families and in
serving the needs that today's Americans have. Supermarkets need to
be just as trendy, to work with shoppers to point the way to easy
recipes and easily prepared meals.
But as authors like Calta or Miriam Weinstein (author of
The Surprising Power of Family Meals) explain, mealtime is a
prize worth the fight - for families and for retailers. It's not
just about September 25th, but that's a pretty good place to start.
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Super Bowl Beer Sales Can Drive Allied Categories
Since its inception in 1967, the Super Bowl has grown from a fairly
insignificant football contest between two warring leagues into a
sporting institution and virtual national holiday. This year the
champions of the American and National Football Conferences will
square off at 6 p.m. ET on February 5th in Detroit.
It's called Super Bowl Sunday, and for a good portion of the
American citizenry, that means one thing: Super Bowl parties. The
result over the past years has been an annual spike in beer sales
during the coldest portion of the winter when one might expect hot
cocoa and hot toddy to be the beverages of choice.
ACNielsen data corroborates the importance of Super Bowl Sunday
to winter beer sales. Last year, beer sales during the week leading
up to Super Bowl Sunday yielded a healthy $13.2 million over the
previous week in the food/drug/mass channels (excluding Wal-Mart
data). And while dollar sales data can often be misleading,
reflecting price fluctuations and promotions rather than incremental
SKU sales, that's not the case here. Super Bowl week saw over 900,000
incremental cases of beer sold during Super Bowl week in 2005.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Jan06Beer1a.gif) and this
link for graph two (
http://www.factsfiguresfuture.com/enlarged/jan06Beer2a.gif)
The party culture that has evolved around the Super Bowl has
created cross-merchandising opportunities that can enhance the
creative retailer's bottom line.
The Snack Food Association expects that over 30 million
pounds of snacks will be consumed on Super Bowl Sunday.
Domino's predicts a 42 percent bump in pizza deliveries.
According to The Beer Institute, nearly 3.5 percent of annual
beer sales are consumed around the Super Bowl period. (This includes
on-premise sales.)
According to the Hass Avocado Board, two-thirds of all
avocadoes sold in the U.S. each year are purchased within three weeks
of the Super Bowl.
It's critical to understand that nearly 50 percent of Super Bowl
party attendees are women. And while women are also beer drinkers,
many choose alternatives, offering the opportunity to cash in on the
Super Bowl sales phenomenon by merchandising wines, primarily white
wines, as well as malt-ernatives (malt-based citrus concoctions)
close by the main beer displays.
If history repeats itself, it's a given that beer sales will
increase in the week leading up to Super Bowl Sunday. With a little
creative merchandising, sales in ancillary categories can score major
points toward a retailer's bottom line in a traditionally soft sales
period.
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Has "antioxidant" become the most powerful word in the supermarket?
Antioxidants have made quite a name for themselves. With all the new
research linking antioxidants to the prevention of diseases,
consumers have been bombarded with a slew of new antioxidant claims
and products. The food industry has added "rich in antioxidants"
labels to foods that have always contained antioxidants ... as well
as to other products. Even the cosmetic industry now boasts
antioxidants in their face, body, and hair care products, claiming
wrinkle and sun damage fighting benefits.
Antioxidants have been heralded as magic health bullets, and
indeed they do play a role in disease prevention. And while there is
some controversy of just what antioxidants can and cannot do for our
bodies, the truth is that this health message has created a fast and
significant shift in some categories.
Click on thumbnail to enlarge, or click here.
While it may be true that the dollar volume of those products
labeled for their "antioxidant" benefits increased by 19 percent in
the 52 week period ending 11/5/05 according to ACNielsen Label Trends
(Total US - Food, Drug, Mass, excluding Wal-Mart) - Equivalized
Volume actually decreased by 6.1 percent.
But the sales and volume story has a twist.
Consumers seem to be searching and buying their antioxidants
differently than they were just a few years ago. It was the vitamin
category, which seemed to be riding the wave with mega-doses of
antioxidant capsules, powders and even ready-to-drink cocktails. As
more non-vitamin products touted their free radical fighting powers,
sales of the "antioxidant rich" multiple vitamins declined - over 14
percent - or almost $16.5 million in just one year, which accounted
for most of the decline in Equivalized Volume.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Jan06Antioxidants2.gif)
and this link for graph two (
http://www.factsfiguresfuture.com/enlarged/Jan06Antioxidants3.gif)
Nutritional supplements, RTE Breakfast Cereals and Tea appear to
have taken over the "antioxidant" trend. Lipton, having developed and
marketed the "AOX Seal" effectively, was able to establish in the
minds of shoppers the health and black tea connection.
Pomegranate juice advertised heavily for its antioxidants grew
almost 88 percent in the same period ... and blueberries, the fruit
highest in antioxidants, saw sales of its frozen product grow almost
30 percent with no advertising.
Long term, it is possible that the public relations and
educational efforts being made by the produce companies, and their
trade groups, may create even more change as they promote their
message: that colorful, balanced diet from a variety of plant sources
provides one with a wide array of antioxidants and phytochemicals
that are most effective at fighting free radical damage.
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Beyond Demographics - Behavior-Based Segmentation
Today's consumers are more complicated and harder to reach than ever.
The path once followed by consumers in building the 'traditional'
family has branched off into more varied family units created by
delayed marriages, divorce, extended families and more. As a result,
it is no longer enough to know just the age or generation of a
consumer. You need to understand the pressures and priorities
influencing their daily life.
Spectra's new BehaviorScape addresses this challenge by
transforming its LifeStyle/LifeStage Grid, used by the majority of
leading CPG brands since 1988, into a behavior-based framework.
Anchoring this new framework are BehaviorStages.
To arrive at its BehaviorStages, Spectra looked at hundreds of
possible segmentations to see where meaningful product purchasing
volume shifts occurred. The resulting BehaviorStages are unique
household segments that are described through a combination of
demographic variables that motivate consumers' day-to-day purchasing
behavior. Using the BehaviorStages in concert with six LifeStyles
completes the framework by capturing the impact of affluence and
urban density.
Let's look at the carbonated beverages category as an example.
It's a huge category at just over $14 billion in sales through the
combined food/drug/mass (excluding Wal-Mart) channel, according to
ACNielsen Strategic Planner data. But, with growing concerns over
the healthfulness of such beverages, the category has been relatively
flat for the past four years. Clearly, it's a category that could
benefit from improved target marketing.
Spectra's former LIfeStyle/LifeStage grid showed that most
households with kids index high for purchasing carbonated beverages,
particularly those in which the head of household is 35-54 years old,
as opposed to households in which the head of household is younger
(18-34). The assumption, as is intuitive, is that households with
older kids are the better targets for carbonated beverages. Only one
non-kid household segment skewed high for carbonated beverages using
the former grid - so-called "Downscale Rural" households with a head
of household aged 35-54.
The new BehaviorScape segmentation platform confirms more
precisely that it is households with kids over age 6 that skew
highest for carbonated soft drinks. What's less intuitive is that it
also identifies four non-kid segments that are good targets.
Click on thumbnail to enlarge, or click here.
For more information about Spectra's new BehaviorScape consumer
segmentation platform, contact Sean Jafar at
sean_jafar@spectramarketing.com.
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Latin Lessons
To understand how profoundly the Hispanic consumer is going to affect
U.S. retailing, consider the following statistics: At 13.7 percent of
the total U.S. population, Hispanics currently comprise the nation's
largest minority. By 2009, nearly one in six people in the U.S. will
be of Hispanic origin, and by 2050, that figure will rise to one in
four people. Further, the purchasing power of this group has jumped
by about 50 percent in less than five years, growing at a much faster
rate than other ethnic populations. In 2004, Hispanics had $686
billion in spending power, and that number is estimated to grow to
$992 billion by 2009.
Click on thumbnail to enlarge, or click here.
While clearly lucrative, this market may not be quite so simple
to serve. Jim Perkins, founder of ULATAM Solutions Group and author
of the new book
Beyond Bodegas: Developing a Retail Relationship with Hispanic Customers,
noted that in reaching the Hispanic consumer, the challenge for the
retailer is to learn to drive the necessary changes and innovations
mandated by these consumers while understanding and marketing to
their cultures.
The Hispanic demographic group is made up of a variety of
countries of origin, cultures, and traditions.
For example, in the Hispanic community in Atlanta, which is in
comparatively early stages of development, shoppers are more
price-conscious and favor discount/value retail brands. These
shoppers are light media consumers who tend to favor Spanish media.
Retailers who emphasize the value of the brand will do well, but
Hispanic consumers must be communicated to on their own terms, in
their language, where they live. Despite the diversity of cultures
contained within the Hispanic population, there are many similarities
including family structure, communal leisure, meaning of time, work
ethic, tradition, home, religion, loyalty/conservatism, food, and
music.
Another hallmark of the Hispanic market is its relative youth --
with 34 percent of the Hispanic population under age 18; skewing
younger than the total U.S. population, with the median age of the
former at 26.3, compared to 35.9 for the latter.
The relative youth of this population also indicates their
willingness to embrace technology. Hispanics apparently are more
Internet savvy than most marketers realize. A recent study showed 69
percent of U.S. Hispanics go online to learn about products' features
and benefits, up from 61 percent a year ago. Furthermore, 63 percent
go online for advice on which brands to buy, up from 56 percent last
year.
The next Hispanic Retail 360 Conference is slated to be held in
Chicago in early August, 2006. For more information, go to
www.HispanicRetail360.com.
For those who could not attend this year's conference, CDs
containing audio and power point presentations are available for sale
on the web site.
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The Buzz on Milk
A new study - "Changes in US Milk Consumption/New Milk Products"
conducted by the marketing firm BuzzBack Market Research in
conjunction with Dairy Management Inc. (a consortium consisting of
the American Dairy Association, National Dairy Council and U.S. Dairy
Export Council) and Dairy Foods Magazine - reveals that while
dollar sales may not have yet skyrocketed, to borrow a phrase from
Bob Dylan, "The times, they are a-changin'."
Over 900 consumers participated in the survey, released in late
November, which reveals, among other things:
The popularity of milk is unchallenged.
Two-thirds of respondents drink milk at least three times a week,
with 42 percent consuming the product at least once a day.
Interestingly, milk seems to be a passion-driven product: You either
love it, or hate it. Very few respondents to the survey consider
themselves "occasional milk drinkers." And given the aforementioned
consumption rates, milk lovers would seem to have it all over milk
haters.
Click on thumbnail to enlarge, or click here.
Health and taste drive milk consumption.
Over 50 percent of respondents say they choose to drink milk
because of the calcium, protein, vitamin A, fat content, potassium
and vitamin D offered therein. And over 50 percent say they choose
the product because it simply tastes good.
Variety is the spice of life.
Nearly 50 percent of respondents keep two percent milk in the
fridge, while 33 percent have whole milk on-hand. What's most
impressive is that 25 percent of the study's participants have three
or more different kinds of milk in their refrigerators at any given
time. And roughly 20 percent stock some sort of flavored milk, with
chocolate being the flavor of choice by a wide margin.
A women's drink.
While there are no significant differences between women and men
regarding their frequency rate of milk consumption, women favor milk
by a wide margin for its calcium content (78 percent, vs. 68 percent
of all men surveyed), while 18 percent of women say they drink milk
as an aid in weight reduction compared to just nine percent of men
surveyed. And interestingly, women are ten percent more likely than
men to choose milk as a beverage option simply because they like its
taste.
Click on thumbnail to enlarge, or click here.
Another interesting finding is that older milk consumers often
are aware of the health benefits, but that health isn't the only
factor driving consumption. Indeed, among respondents age 55 or
older, 78 percent select milk because it tastes good, while 77
percent cited health reasons for choosing the beverage. Calcium and
vitamin D are the two primary health benefits, according to the study.
The study is an important breakthrough in the analysis of milk
consumption in the U.S. because it goes beyond sheer numbers to
incorporate consumers' emotional responses to the product.
While ACNielsen data (food, mass, drug, excluding Wal-Mart) shows
that overall dollar volume has increased two percent over the
four-year period spanning 11/10/01 to 11/05/05 (from $9.9 billion to
$10.1 billion), much of that dollar growth can be attributed to an
increase in retail prices in 2004, which saw dollars jump 7.4
percent. Indeed, equivalized volume consumption (based on 16-ounce
units) has decreased in each of the last four years.
Still, there is hope. With consumers - male and female, young and
old - choosing milk for both health and taste reasons, an emotional
bond seems to exist which very well might bode well for future growth
in the category.
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Slowing Birth Rate and Increased Health Interest in Baby Nutrition Translates to a Burgeoning Subcategory
It was back in 1945, at the start of the Baby Boom generation, when
the nation's focus shifted towards the needs of what would become,
over the next 19 years, the largest generation ever. Seventy-six
million boomers invigorated the Baby Foods category with the demand
for a more convenient (and speedier) way to feed these tiny, but
hungry, mouths.
Baby food brands grew steadily and mirrored the birth rate.
But in 2002, the Centers for Disease Control reported the lowest
annual birth rate (13.9 per 1,000 population) since national data
first started being reported; continuing a twelve-year decline that
began in 1990 and a 17 percent fall off.
Fewer births naturally translate to less Baby Food sales, but
with the change in ethnic composition and the increase in births to
older mothers (aged 35-44) the product mix has changed as well.
Of the 4,019,280 U.S. births in 2002, 57.3 percent were reported
as White (non-Hispanic), 21.7 percent as Hispanic and 14.7 percent as
Black. It's notable that in comparing just one year (2001 to 2002),
birth rates of Whites dropped almost one percent, Hispanic births
increased by almost 2.5 percent and Black births declined by about
the same amount.
Older White new mothers and Hispanic mothers may have a lot in
common when it comes to buying Baby Food. Older mothers are more
knowledgeable (and possibly concerned) about nutrition while more
authentic Hispanic foods have less additives. These two very
different shoppers may well share the desire to feed their infants
foods without growth hormones, high fructose corn syrup, genetically
modified ingredients or pesticides - and while the Hispanic mom may
not be "looking" for organic baby food specifically, a quick read of
the product labels may be bringing her into the only growth
subcategory in the sector.
Click on thumbnail to enlarge, or click here.
The total sales for the Baby Food category measured almost $3.6
billion (Total U.S. - Food, Drug, Mass combined excluding Wal-Mart
for the 52 week period ending 7/16/05) and registered a sales volume
increase of 2.5 percent; but the reality is that the dollar growth
was achieved through price increases and not volume. The Equivalized
Volume (16 ounce basis) was actually down 4.7 percent.
However, the subcategory of Total Organic Baby Food showed an
increase of 4.9 percent in Equivalized Volume and Dollar Sales
increase of 11 percent.
Baby Food brands are responding. Gerber, the leading brand of
baby food products, is meeting the trend head on with their organic
Tender Harvest line, which features fruits, vegetables, cereals with
fruit, and dinners, as are Horizon (for infant formula), Earth's Best
(the brand that started the trend) and Healthy Times (with a special
category available just for teethers).
The baby foods showing the greatest opportunities are the organic
baby milk and organic strained baby food categories. Organic baby
milk went up an impressive 543.6 percent from 2003 to 2004, and is up
an additional 261.1 percent so far this year. Organic strained baby
food was up 8.1 percent in 2004, and 17.4 percent in 2005.
The U.S. Department of Agriculture (USDA) implementation of the
National Organic Standards program, which mandated clearer labeling
of organic products, has made it far easier for these time pressed
shoppers to clearly identify these "purer" products. The big picture,
according to ACNielsen LabelTrends is that dollar sales for the total
organic food category jumped 15 percent in a single year for the 52
weeks ending 08/13/05.
With the expectation of a steadily declining U.S. birth rate, we
can safely predict that baby food consumption will also decline; and
the only bright spot will be in the organic baby food SKUs.
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'Clipping' RFID Tags for Greater Consumer Confidence
As RFID grows in supply chain penetration from the pallet to the case
to the individual SKU, IBM is offering a solution that promises to
alleviate consumer security concerns. Recently, IBM researchers Paul
Moskowitz and Guenter Karjoth presented a report on what is referred
to as a new "clipped tag" design.
While RFID has been hailed for its efficiency in tracking product
movement from the point of origin throughout the supply chain - right
to the retailer's shelf - advocacy groups have been concerned about
the technology's potential for tracking a product's location for an
indefinite period of time beyond its sale. While consumers have shown
a willingness to accept RFID technology in certain situations - such
as with EZPass, which can offer shorter lines and discounted trips
through toll booths - there have been reservations raised that the
technology (albeit passive) could be used to track a person's
movement beyond the point of sale.
Currently, RFID tags are embedded with a deactivation process
known as the "kill command." This is executed by an RFID reader at
the point of purchase, and renders the tag null and void. There are
weaknesses in this process, however.
For instance, once the "kill command" is executed there can be no
going back, even if it includes a post-sale benefit for the consumer.
Also, there is no visual proof to the consumer that the kill command
has, in fact, been executed. IBM's solution to this quandary is
called the "clipped tag," a process performed manually by the
consumer.
The clipped tag is offered in three basic varieties -
scratch-off, perforated and peel-off. The first method would require
consumers to scratch off a portion of the tag with a coin or
fingernail at which point, according to the report, "the tag is open
for visual confirmation that the tag has been deactivated."
Furthermore, the process is reversible. "Subsequent communication
with the tag may be made using mechanical probes to contact the
antenna stubs," says the report.
The second method is for the tag to be manufactured with a line
of tiny holes (or perforation) - like a postage stamp - that easily
can be detached at the point of sale. A pull-tab may be used to
effortlessly facilitate the separation.
The third method calls for the RFID antenna to be sandwiched
between two layers of packaging material. The lower half of the tag
is affixed with adhesive. A pull-tab on the top half facilitates the
process, effectively tearing the tag in half and deactivating the
antenna.
While the tags can be restored with all three methods, doing so
would require a conscious effort on the part of the owner of the
item, thus ensuring that person's security.
Ultimately, "We believe that physical structures described here
can be embedded in today's manufacturing process at minimal extra
cost," says the report. And that adds a layer of consumer confidence
into the RFID process without any significant effect on the final
cost of the product.
For more about the latest in-store technology trends and issues,
go to XR23.
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Generation Marketing
As I read stories last week about the first of my fellow baby boomers
turning 60 this year, I thought it would be interesting to see how
retail channel shopping varies across the generations. In past F3
issues we've looked at how different ethnic or other demographic
groups shop, but not in terms associated with Baby Boomers,
Generation X or Generation Y households. Using the following
definitions, we examined shopping trip records from our Homescan
consumer panel to see how shopper penetration, shopping frequency and
basket ring varied across the generations. In these comparisons, we
segmented households into the generation groups based on the age of
the household head.
Pre-Boomers - individuals born 1945 and earlier
Baby Boomers - individuals born between 1946 and 1964
Generation X - individuals born between 1965 and 1977
Generation Y - individuals born in 1978 or later
I've seen plenty of articles and presentations that have explored
attitudinal and behavioral differences across the generations, so it
is not surprising to see differences in retail-channel shopping
behavior across the groups. For example, a greater percentage of Gen
X and Gen Y households shop Supercenters. A smaller percentage of
Gen X and Gen Y households shop Dollar Stores and Drug Stores, while
shopper penetration levels for Mass Merchandisers and Grocery stores
were similar across the generations. Gen X households were similar
to Boomer and pre-Boomer households in their preference for Warehouse
Clubs, while a much smaller percentage of Gen Y households shop this
channel.
Click on thumbnail to enlarge, or click here.
At the retail account level, we see some large differences in
shopper penetration across the generations. One of the biggest
differences occurs within the Mass Merchandiser channel. Target
penetration among Gen X and Gen Y households is about 70 percent,
compared to 59 percent for Boomers and only 49 percent for pre-Boomer
households. Kmart penetrates the older generations to a much
greater degree than they do the younger generations as levels ranged
from 47 percent to 34 percent. Wal-Mart penetrates the younger
generations slightly better than the older generations, but levels
ranged from 81 percent to 86 percent. Wal-Mart and Target have used
a younger approach in their advertising copy and messaging over the
past several years, while Kmart's advertising copy and messaging (no
offense to Ms. Stewart or Ms. Smith) has been more Boomer and
pre-Boomer focused.
Differences in channel-specific annual shopping frequency
(measured via a calculation of trips per shopping household) are even
more dramatic across the generations. The younger generations shop
most "traditional" channels less frequently than the older
generations. Grocers and Drug retailers appear to be missing the
mark with the younger generations as annual trips by those households
are much lower. Supercenters and Mass Merchandisers have more
universal appeal as annual trips were very similar across the
generations. Some potential reasons for these differences:
The younger generations have more "on-the-go" lifestyles with
less demand for at-home meal preparation and greater demand for
away-from-home meals.
The younger generations are more value-oriented and more
"fashion" and "electronic" focused.
Shopper focus (ad messaging and product offerings) by Grocery
and Drug retailers just don't typically have the same young or hip
appeal as you see for retailers like Target and even Wal-Mart.
Click on thumbnail to enlarge, or click here.
We do see that the younger generations offset fewer shopping
trips with larger baskets to the bigger box retailers. These
households show a greater preference toward making large stock-up
shopping trips in Warehouse Clubs, Supercenters, Mass Merchandisers
and Grocery Stores. Spending levels in the Dollar and Drug channels
were very similar.
Click on thumbnail to enlarge, or click here.
While the economic power of pre-Boomers and Boomers makes them an
extremely viable target for Grocery and Drug retailers, there may be
opportunity for some of these retailers to also consider
incorporating a younger approach to their targeting and advertising
approach. Grocers could also take a lesson at the prepared meal
offerings in more hip retailers like Whole Foods and Wild Oats.
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 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...
-Convenience/Gas stores generated a strong sales performance in
the last half of 2005
-Dollar stores are losing their momentum in attracting new
shoppers
-Convenience/Gas stores shows recent increases 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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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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