Making a List, and Checking It Twice

According to the old saw, the three most important characteristics of a store's success are location, location and location. However, recent studies have shown that this is eroding. Today, different measures of value-especially price-can convince a shopper to go to a store that is a little less convenient.

With that in mind, FMI annually examines the key shopper behaviors each year to see what is on the rise and bears extra attention. This year's edition of FMI's Consumer Trends offers some interesting insights on how shoppers are stretching their food dollar.

The percentage of shoppers who engage in various forms of economizing has remained fairly stable over at least the last 10 years. However, the 2004 Trends found a modest increase in many of these actions, so the possibility exists that new patterns are slowly emerging.

The number one economizing practice for shoppers is making a list. Just over half (56 percent) say they do this almost every time they shop. However, relatively few shoppers (15 percent) say they stick to their list almost every time, which means even the most focused shopper is open to interesting merchandising ideas.

The second most frequently practiced economizing step is the percentage of shoppers looking for grocery specials in newspapers or advertising inserts. Some four in ten say they do this almost all the time. Next on the minds of budget conscious shoppers is their use of frequent shopper programs and, in almost equal numbers, shoppers stocking up on items when they find a bargain. Each of these tactics is done by about one in three shoppers almost every time they shop.

It's interesting that only one of these top behaviors elicits a different response from shoppers based on where they do their primary shopping, although the result is hardly surprising. Just over half of those whose primary store is a supermarket say the use a frequent shopper program almost every time they shop, compared to only 36 percent of shoppers whose primary store is a discount store.

Coupon use has been steady for many years, although it is not among the top four economizing behaviors. Just over 20% of shoppers say they use coupons received in the mail or store coupons fairly often on shopping trips. Industry executives expect coupons to be around for a while, but like the trading stamp programs that dominated 40 years ago, coupons could disappear someday. In FMI's Speaks 2004 survey, some 60% of industry executives predicted that all coupons will be eliminated in the next 10 years. (A much smaller proportion forecast their disappearance in the next five years.)

Advances in Category Management for Perishables

While many departments in grocery have lost significant sales to other channels, supermarkets still capture a high percentage of total perishables sales. According to ACNielsen, nearly 35 percent of total store sales come from perishables departments (produce, meat, dairy, bakery and deli), and consumer research shows that shoppers choose their primary supermarket largely on the perceived quality of its perishables categories. This key competitive advantage can be further leveraged through category management.

The category management process is part of almost every conversation we have today with retailers, wholesalers, grower/shippers and commodity boards. But until now, progress has been hindered by the lack of quality data needed to track the performance of perishables categories.

While produce has been in the best position to adopt category management practices because of the standardization of PLU codes, rapid progress is now being made in the other perishables categories, especially meat, deli and bakery.

This is a quantum leap forward for perishables department suppliers and their retail partners! We are now able to provide the type of sales information, such as census-level chain data and rest-of-market comparisons, needed to drive the category management process.

Lack of consumer information was another historic void in the category management process for perishables, but that too is now being addressed. With the assortment and complexity of these categories increasing (average item assortment in produce has gone from less than 200 items to more than 500 in the past five years), segmenting categories based on consumer purchase and usage behavior is becoming a vital step in improving performance.

Category management should no longer be thought of strictly as a center store activity. Expanding the use of category management along the perimeter of the store via the availability of better data and consumer information offers the promise to grow sales and stem the flow of grocery channel shoppers to other channels.

The Perishables Group works with ACNielsen to provide perishables suppliers and retailers with comprehensive insights into the fresh foods marketplace.