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Alan Greenspan talks in terms of a "market correction"...for me the
times are all about a "nutritional correction!"
We seem to be in the midst of a time where brands, retailers and
shoppers are all in agreement that our foodstuffs need to evolve to
meet the dietary needs of the current American population. And just
what does that mean? Reduced fat, reduced sugars, reduced sodium,
reduced carbs, and yes, even reduced portion size.
My belief, based on talking to consumers, is that we are in fact
going to make the change and begin to reverse the obesity epidemic,
diabetes and the other diseases that are onset from our current
physical conditions. It's a great time to be in the food business; at
least for those brands and retailers that are listening to the
shopper.
Now that the LA Supermarket strike is over, retailers are
struggling to pick up the pieces...and pick up the shoppers. Already
aggressive pricing and radio ads are trying to get the business back
where it was over four months ago. But there are challenges. This
issue of Facts, Figures & the Future explores the financial
impact over the first thirteen weeks of the strike, and we will
continue to track and report the shift in sales and customer visits
in upcoming issues.
The latest survey on Frequent Shopper Programs delivers some much
needed insight into the programs that have promised so much but under
delivered when it comes to building an on-going relationship with
shoppers. As RFID and other technologies take hold, the question is
just how Frequent Shopper Programs will evolve or be left holding a
dozen plastic cards that have no future.
This month's Channel Watch focuses on that "older" shopper, you
know...us! Those aging baby boomers who continue to shop and make the
trends. The only question is if our stores and brands are prepared to
serve this generation's needs?
A reminder...two significant conferences are coming up. Be sure
to register for the FMI Convention (May 2-4) at
www.fmi.org. This year's convention
program is an outstanding one and features more cutting edge and
informative workshops. And, don't miss the best insights into
consumer shopping behavior at the the Consumer 360 conference put on
by ACNielsen, Spectra, and other companies of the VNU Marketing
Information Group (April 13-15). Just click the button below for
program and registration information.
See you there!
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Registration is now open for the Consumer Packaged Goods industry's
most important educational conference, Consumer 360.
Click here for more
information and to register.
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For more information and to order your copy of the new 2003 ACNielsen
Consumer & Market Trends Report click on the report cover
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March 8, 2004
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What Shoppers Want
Listen: Opportunity is knocking. The question is, will we let it
in?
American shoppers have a really big problem and they think
supermarkets can help them solve it. The question is this: will
supermarkets -- already starved for ideas on how to build sales and
better relations with shoppers -- act?
This picture comes through clearly in FMI's recent Shopping for
Health report, co-authored by Prevention magazine. Shoppers know
they have a problem with their weight. Of course perception and
reality have their differences here. A greater percentage of women
believe they are overweight than the body mass index study finds is
correct. Men are opposite: with 51 percent saying they aren't
overweight, while the body mass index study says only 38 percent can
make that claim. But either way the numbers are clear: America is
badly overweight.
That leads to the opportunity. Asked where they turn for
information on better health and nutrition, shoppers rank healthcare
professionals first, followed closely by books, magazines and the
people they know (friends, family and neighbors.) Supermarket
personnel are used least often, by only 15 percent of shoppers. It's
a situation shoppers would love to change.
Asked to design their "ideal" supermarket, shoppers paint a
picture full of opportunity, provided we take the health issue
seriously. For example:
Two-thirds of shoppers say having staff who could answer
nutritional questions would be part of the ideal store. Contrast
that with the 15 percent currently talking to staff.
81 percent of shoppers think it is very or somewhat important
that their supermarket carry health and nutrition information. Only
35 percent feel their store currently does an excellent or even good
job of this now.
Some 57 percent would like to see information about weight
loss, while only 15 percent say this is done well now.
And nearly half would welcome counseling from a nutritionist
or dietician in the store. Only 11 percent say their store currently
provides good service in this area.
It's also clear that shoppers put of a lot of faith in their
supermarket. When asked which store currently does the best job in
providing products to maintain health, 35 percent of shoppers name
their supermarket, compared to 22 percent naming discount stores, 15
percent for drug stores and 13 percent for natural food stores. Even
Generation X and Y shoppers surveyed ranked supermarkets ahead of
nutrition stores.
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The Way Forward
Not long ago, Forbes magazine compared the 100 largest companies
in the United States in the year that it began publishing, 1917, to
the list 80 years later. Only 15 companies made both lists. The
other 85 were bankrupt, liquidated, acquired, or simply left behind
as the world around them changed faster than they adapted.
Where will your company be in 80 years? Will it be twice as
large? Will it have entered completely new markets? Will it still
be around? If an 80-year view is too hard to imagine, consider where
your company will be in ten years, or even next year for that matter.
Is your organization adapting to societal changes, the ever more
intense competition in the CPG industry, and the evolving consumer
landscape? Are you innovating or just trying to keep up?
One key to the future success of all of our organizations is a
passionate focus on the customers we serve. The good companies adapt
as their customers' needs change. The great companies anticipate
future customer needs and, as G.E.'s former CEO Jack Welch
encouraged, change before they have to.
At ACNielsen, we are uniquely positioned to provide the most
complete coverage and understanding of consumer behavior - past,
present, and future. As we more fully harness the collective power
and insights of our sister companies such as Spectra (consumer
segmentation), ACNielsen BASES (new product success forecasting),
Nielsen//NetRatings (Internet audience measurement), and Nielsen
Media Research (television audience measurement), the depth and
breadth of consumer understanding we provide to our clients will grow
exponentially.
Insights generated from our integrative work to date will be the
focus of our second annual Consumer 360 conference April 13-15 in
Boca Raton. Taking the podium to demonstrate the real world
profitable application of those insights will be numerous clients,
including: Kellogg, Kraft, Heinz, General Mills, Kroger, and more.
Where your company will be next year, ten years down the road -
even 80 years into the future - has everything to do with your
ability to understand and predict your consumers' needs and desires
and change before you have to. Come join us for Consumer 360 where
the fuel for successful change - consumer understanding - will take
center stage.
For more information on the Consumer 360 conference and to
register, go to:
www.consumer360.com.
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Strong Online Grocery Activity
Several sources have reported that online grocery sales are expected
to reach nearly $9 billion in 2004, and annual growth levels of 20
percent are expected for the next 4-5 years. While this level of
sales represents a small fraction of all grocery sales, it is a
significant level of consumer spending. It also represents an
opportunity for grocery retailers who are looking to satisfy the
hunger of time-starved consumers who are leveraging the Internet to
save a trip to the grocery store and who don't mind paying extra for
the added convenience.
Nielsen//NetRatings tracks online behavior across a large sample
of individual (at-home) as well as business (at-work) Internet users.
The December 2003 online grocery audience (among at-home users) fell
just shy of 4 million individuals - up a whopping 41 percent over the
prior December.
Click on thumbnail to enlarge, or click here.
Schwans - the frozen food company that offers home delivery - was
the leading web site within Nielsen//NetRatings' measured set of
grocery retailers. They were followed by the top three U.S. grocery
banners - Kroger, Safeway and Albertsons. Note that not all of these
retailers offer online grocery shopping, but they have built web
sites that allow consumers to visit and obtain information about
weekly store specials, store locations, and recipe ideas. Many
grocery retailers are also using their web sites to acquire new
members into their frequent shopper or store loyalty programs.
Click on thumbnail to enlarge, or click here.
During December 2003, other top ten online grocery sites included
Trader Joe's, Hannaford Brothers, Whole Foods, Peapod, HEB and
Publix. So, the top ten list included activity from the national
grocers, regional grocers, and a couple of companies very focused
against home delivery.
Click on thumbnail to enlarge, or click here.
For further insight into key consumer trends, please contact Todd
Hale at ACNielsen at 859-905-4615 or
THale@ACNielsen.com
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ACNielsen's 8th Annual Frequent Shopper Survey
In the fourth quarter of 2003, the Homescan Consumer Panel surveyed
nearly 45,000 households to determine their usage and perceived
attitudes towards frequent shopper programs. Nearly three-fourths of
all cardholders reported that they have more than one "loyalty" card,
suggesting that the premise of this type of program, which is to
build a unique relationship which induces shoppers to limit the
retail outlets they shop to just one banner, may need to be
reevaluated.
Click on thumbnail to enlarge, or click here.
At the same time, we note that the percentage of households
participating in these programs have leveled off at 81 percent,
indicating that a decline in usage may be around the corner unless
retailers add new features and benefits to their loyalty programs to
both reward present users and attract new ones.
Click on thumbnail to enlarge, or click here.
It is important to note that 70 percent of the surveyed
households felt that their membership in their loyalty program, which
they use most often, is either "valuable" or "very valuable." The
challenge for retailers is to expand the membership benefits beyond
paperless couponing and into those arenas where a more personal and
unique reward system keeps shoppers more loyal (as we have seen
proven in the various airline reward programs).
Click on thumbnail to enlarge, or click here.
According to the results of this survey, the primary reason for
shopping in a grocery store continues to be location, followed by
everyday low price. Having a frequent shopper program ranked number
five, with just 4 percent of households reporting it as their number
one reason; suggesting that it is time to relook and enhance these
programs or convert them to a more sophisticated RFID based reward
approach.
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The Power of Retail vs. the Power of Congress
Wal-Mart has announced that it plans to voluntarily comply with
country of origin labeling (COOL) regulations for fruits and
vegetables even before the federal government mandates compliance.
In a recent SupermarketGuru quick poll, 92 percent said that they
believe fresh products, like produce and meat, should include
information on country of origin. In addition, 91 percent said that
they believe packaged food products should include information on
country of origin labeling.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/
Mar04cool1.gif) and this link for graph two (
http://www.factsfiguresfuture.com/enlarged/
Mar04cool2.gif)
Unlike Wal-Mart, The federal government doesn't seem to think
that country of origin labeling is that important to consumers as
Congress approved a delay in COOL mandates from September 2004 to
September 2006. A recent SupermarketGuru quick poll showed that
consumers disagree. 84 percent said that they believe the delay does
not make sense.
Click on thumbnail to enlarge, or click here.
Wal-Mart is creating what it calls a "traceability protocol" and
plans to have it in place by the end of this year, which will allow
the company to know where its products come from. The next step will
be to develop a labeling program.
Bruce Peterson, Wal-Mart's senior vice president and general
merchandise manager of perishables, recently was quoted as saying
that "a lot of people think that country-of-origin labeling is a dead
issue for two years, and it's not." He also said, "I feel it's always
better if the industry can come up with a solution rather than let
our legislative bodies decide for us."
This move does not mean that Wal-Mart is being solely altruistic
in its behavior. One of Wal-Mart's objectives must be to create the
image that it is pro-consumer while the rest of the food industry is
debating the COOL issue, which creates a pretty compelling case to
shop at Wal-Mart.
By the way, there are isolated instances where the company
already is showing what can be done. Look at the Wal-Mart private
label trail mix, and you'll see every item in the bag accounted for
in terms of country-of-origin. Sure, it is a long list, but for
consumers, it is information increasingly viewed as "need to know,"
not just "nice to know."
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Food Choices in Restaurants
It's well documented that each product on the average supermarket's
shelves has about 1/26th of a second of a shopper's attention. But,
what about consumer food decision behavior in restaurants?
In a recent SupermarketGuru.com quick poll, consumers were asked
to share facts about their ordering behavior in "white table cloth"
restaurants. The survey results pointed out that while the psychology
of menu pricing (using odd numbers to increase sales, for example)
seems to be getting a lot of attention, respondents did not indicate
that those strategies were effective in impacting
decisions.
The number one influence for menu selection was a "unique and
different (item), something that could not be made at home" followed
by the power of words..the "description of the selection on the
menu." What these two answers reflect is that consumers want the
dining experience to be a "special event."
Click on thumbnail to enlarge, or click here.
Supermarket retailers should be analyzing their prepared foods
offerings and including a second-tier of more interesting and
exciting selections in order to capture the food service dollars that
are currently going to restaurant take-out. In addition, it is
important to include -- on packaging -- a restaurant menu type
description of the foods, in addition to the commonplace ingredient
listing, nutrition information and heating instructions. Too often
these descriptions are reserved for in-store signage in the deli
case, and as retailers continue to build their self-service prepared
foods merchandising areas, it would be wise to include these directly
on the package as well.
When asked which category of "main dish" entrees are ordered most
often, seafood was ranked number one by 49 percent of respondents.
Click on thumbnail to enlarge, or click here.
Seafood continues to be one of the categories in the supermarket
with the highest potential for growth. While many retailers struggle
with ways to increase sales in their fresh seafood departments
(especially since the recent reports on toxic levels of pesticides or
chemicals in some species), effort should be directed to include
those seafood items (with no health warnings attached) as the main
ingredient in the store's prepared food offerings.
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ECONOMIC SNAPSHOT: Economic Recovery Strengthens Retailer Optimism
As we analyze the first two months of economic data for 2004, we see
a continuation of the trends that began in the 3rd qtr of 2003. Our
compilation of leading indicators (see corresponding chart) is
trending upward with the same laggard still in place. While layoffs
have slowed as evidenced by the weekly jobless claims, hiring has yet
to fully materialize.
Click on thumbnail to enlarge, or click here.
We are also reminded that the presidential election will be sure
to impact datapoints throughout the year, most noticeably measures of
consumer sentiment. As the media and candidates bring job concerns to
the forefront, consumer sentiment has and will react in concert.
Retailers, however, are not sharing this same volatile view. An
advanced look into the results of a yet to be released survey of 500
retailers, across various classes of trade, illustrates a steady
trend of improving optimism in current and future economic
conditions. With retail sales being a critical driver of our economy,
this optimism bodes well for ongoing growth. Interestingly, the class
of trade with the highest level of optimism is the supermarket
sector, which was one of the hardest hit in 2003.
So what are these retailers reporting as their top challenges?
Far and away, close to 50 percent cite the increasingly
competitive environment as their number one concern.
Although a distant second, pricing pressures or the inability
to pass along price increases is impacting corporate earnings.
While citing an improving economy, there is still a degree of
cautious optimism, which can be seen in inventory levels.
Noticeably absent in this list of challenges to earnings growth,
is the revenue component. Revenue attainment was only mentioned by 4
percent of retailers. It appears retailers are more focused on the
expense control side of the equation. While this is necessary in the
short term, long term growth and market performance will be driven by
innovative approaches to sales generation.
For further insight into the State Of The U.S Economy and its
implications on consumer spending, Please contact James Russo at
ACNielsen at 516-429-8086 or
James.Russo@acnielsen.com.
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Los Angeles UFCW Strike Data
On October 11, 2003 one of the most expensive supermarket strikes in
history began and changed the economics and consumer shopping
patterns in the Los Angeles market. This strike, estimated to have
cost the supermarkets involved over a billion dollars, had even an
even greater impact as it kept many shoppers from their favorite
stores over Halloween, Thanksgiving, Christmas, Hanukah, New Year's,
Super Bowl and Valentine's Day - the largest food holidays during the
year.
Total outlet sales are up 17 percent as compared to the thirteen
weeks prior to the strike, due to a combination of factors including
holiday sales volume and a higher cost of goods in the alternative
outlets.
Click on thumbnail to enlarge, or click here.
Overall, however, the market is flat with Total Outlet sales up
just 0.1 percent versus a year ago. The Grocery Channel is down 16
percent, and Dollar Stores are up 13 percent - both over the previous
year. Within the Grocery Channel, as to be expected, several
non-striking grocery retailers have experienced large increases in
share, dollars and shoppers. The Convenience Channel appears to be
benefiting the most, trailed by Dollar, Club, and Drug. Club is up 13
percent and has picked up almost two share points - a result of both
incremental strike business and an increase of market penetration of
3 points. Mass shows a decrease of 3 percent, which remains
consistent with the trends reported in our monthly Channel Watch over
the past year.
Click on thumbnail to enlarge, or click here.
Now that the strike is over and the price and value advertising
has begun, it will be critical for the previously struck retailers to
focus on the shopping experience for the returning customers. After
discovering new outlets to buy their groceries, Los Angeles shoppers
have experienced four months of new shopping environments; stealing
them back may prove more difficult than just promoting deep
discounting.
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Shopping for Cosmetics in the Supermarket
The Health and Beauty Aid offerings in the Food/Drug/Mass Combined
outlets (as reported by ACNielsen Strategic Planner, excluding
Wal-Mart data) represented a little over $41 billion dollars in the
year ending January 24, 2004. What is remarkable is that this
department reports a negative growth in dollars of 0.8 percent and a
unit loss of 3.3 percent indicating that the retail pricing may need
adjustment.
The Food Channel alone represents approximately one-third of the
sales, but its dollar change is almost twice as high at -1.3 percent
and a unit decline of 4.1 percent.
As supermarkets struggle to maintain market share against non
traditional food retailers, it is important to analyze each
department to insure its strength. Clearly, when it comes to HBA,
supermarkets are at risk.
We queried the SupermarketGuru.com Consumer Panel to ascertain
their level of awareness, interest and usage of the cosmetics
department in their supermarket, and the results indicate that
supermarkets have an opportunity to capture more HBA Cosmetic dollars.
Click on thumbnail to enlarge, or click here.
Over one-third of shoppers reported that they never purchase
cosmetics in the supermarket, which in the past year, for this
channel, was a $450 million business registering a decline of 3.4
percent. Unit sales were also down 5.3 percent. The number one reason
(29 percent) given that these shoppers did not purchase cosmetics in
the supermarket was that they "just never associated the supermarket
as a place to purchase cosmetics" underscoring the opportunity that
could be realized with a face-lift (pardon the analogy). The second
most listed reason was that the cosmetic section in the store was
either "nonexistent or too limited."
As supermarket retailers continue to reevaluate their future
directions, it may well be time to look within the center store and
carefully look at those opportunities that could be realized with
just minimal effort and customer awareness. Taking a page from the
traditional cosmetic counter marketing, in which retailers invite
manufacturers to staff sections within the department to offer
shoppers make-up lessons and other beauty tips, could quickly reverse
the decline in unit sales and at the same time create a more
interesting shopping experience.
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COUNTRY-TO-COUNTRY: A Look at the Fastest Growing Categories in France
At the risk of busting open a consumer myth, this month
Country-to-Country shows that in fact it's the US consumer that is
fueling the sales growth (327 percent over the previous year) of
cologne type Deodorants, due to the huge success of the new brand
AXE. Comparing the two country's sales growth of the "hit parade"
categories, those with sales of over $10 million, shows little
similarities of the two cultures.
Notable however, is that in the US, a dramatic 18.5 percent
growth in the $2.5 billion egg category is being fueled by the
branding and value-added offerings coupled no doubt with the low-carb
diet phenomenon. We also see significant increases in the growth of
two categories with heritage in the foodservice world: Deli Salad
Dressings (20.5 percent) and Liquid Coffee (19.3 percent).
In France, the growth in Sausages, Charcuterie, Minced Meat and
Delicatessen continues to reinforce the French tradition for high
fat, high taste foodstuffs. Only the category of Light Margarine,
with a growth rate of 15.1 percent, shows up on the top ten growth
areas, indicating what may prove to be a glimmer of interest in
health related products.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Mar04c2c1.gif
) and this link for graph two (
http://www.factsfiguresfuture.com/enlarged/Mar04c2c2.gif
)
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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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