 |
 |
|
|
It's possible for marketers to get too carried away.
Case in point, in late February it was reported that experiments
being done at Caltech could change the path of advertising and
marketing.
Twenty-one volunteers were strapped into Caltech's $2.5 million
functional magnetic resonance imager (fMRI) and shown images of
products and celebrities to determine which ones were "cool" and
"uncool" by scanning the brain to determine which parts and cells of
the brain are stimulated by which images.
In this study, "cool images" include Apple's iPod, Uma Thurman
and Al Pacino; while some of the "uncool images" included Barbara
Streisand, Justin Timberlake and Patrick Swayze (who was identified
as very uncool).
Baylor College of Medicine is also conducting similar experiments
with even more of a brand focus.
In Baylor's testing the Coke label appeared to activate the
brain's memory region which is known to compute the likelihood of
rewards. No surprise, as Coca-Cola was the first sponsor of the
Olympics, gave its beverage away to soldiers in WWII and is credited
with inventing the modern image of Santa Claus.
As science and technology become more sophisticated, there is
little doubt that these kind of tools will replace the insight and
intuitiveness that made advertising great. Just the way the Macintosh
computer eliminated much of the need for the services of
professionally trained typesetters and graphic designers, these brain
scans can direct which colors, names and even shapes will be the most
effective to get shoppers to buy.
David Ogilvy and Bill Bernbach would not be proud.
CLARIFICATION: An alert reader pointed out a mistaken number
in Michael Sansolo's column last month concerning Hispanic shoppers.
Hispanics spend 34 percent of their food dollar outside all
supermarkets (not just their primary store.) Compared to all
shoppers, Hispanics spend nearly twice as much of their food dollars
at bakeries, butchers and other specialty shops.
|
|
|
 |
|
There's still time to register for the CPG industry's premiere
education and networking event: Consumer 360. For more information
and to register,
click here.
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.
ACNielsen's latest Private Label Trends Report is now available. For
information,
click here.
|
|
|
|
March 14, 2005
|
|
The Harsh Reality
Perhaps the biggest single issue impacting the retail environment
for the past decade is the on-going shift of shopper dollars and
trips to value or price driven retailers. In case anyone was
curious, that issue remains bigger than ever.
McKinsey and Co. released a new study at the FMI Midwinter
Executive Conference examining the challenges of competing in today's
value driven world, and the results are enough to alarm any operator.
(A summary of the study can be downloaded at
www.fmi.org. Look for information on
the 2005 Midwinter Conference.)
The McKinsey report, a follow-up on a similar study conducted
just two years earlier, showed that despite all the competitive
counterthrusts retailers are mounting, shoppers continue to move an
increasing amount of their spending to value players.
Today, 22 percent of shoppers who cite superior experience as
their main goal in shopping have switched to value retailers; that's
up from 18 percent two years ago. Similar gains were reported for
nearly every type of shopper.
The percentage of shoppers who avoid value retailers because
of their poor quality of fresh foods has dropped dramatically. It
was seven percent two years ago; it's one percent today. The only
growing reason to avoid value retailers is because those stores are
getting too crowded - a problem many retailers might envy.
Certain product categories continue to be lost to the value
merchants, while others - including pizza products, ready-to-eat
cereal, and salty snacks - are in increased jeopardy.
Possibly the most troubling finding in the McKinsey report is
that shoppers underestimate the price advantage offered by value
retailers. McKinsey believes that if shoppers properly understood
the gap, the flow of shoppers out of traditional stores would
actually accelerate.
McKinsey points out that hope is not lost and that some retailers
are successfully bucking the trend; outlining suggested actions to
build points of differentiation and customer retention. The 10
suggested steps range from customer awareness issues to improved
relations with partners and better use of technology. However,
retailers must adapt a comprehensive plan of attack that clearly
demonstrates to shoppers the reason switching doesn't make sense. In
short, it's not one of the happiest reports you'll ever read.
But that only makes it more important.
|
|
The $1 Trillion Question
How much impact comes from your company's marketing efforts?
Coming up with a definitive answer to that question has been a
perennial challenge. There's never been more at stake with total
U.S. marketing expenditures now topping $1 trillion. And it's never
been more difficult now that advertising is being sent to people's
cell phones, appearing in video games, and getting embedded into the
content of TV programs and movies.
Research services are available to look at certain pieces of the
marketing puzzle, but there's no single source of insight into the
complete picture. That's why we're excited about Project Apollo, the
working title of a new marketing information service being explored
by VNU and Arbitron in collaboration with Procter & Gamble. Through
a single source, Project Apollo is being designed to collect and
connect three types of consumer data: multi-media message exposure,
brand recognition and preference, and actual purchase behavior.
In essence, Project Apollo would analyze a "day in the life" of
thousands of consumers. Marketers would get their best read on when
and where key consumer segments receive marketing messages and their
subsequent related behavior. What food commercials did a busy mom
see while watching a morning news show, flipping through a magazine,
and listening to the radio on her way to work, and what did she pick
up at the store that evening? What beverage messages reached a
teenager as he played a video game, surfed the Web, and listened to
the radio, and what has become his drink of choice?
As currently envisioned, Project Apollo would utilize the
ACNielsen Homescan consumer panel, monitoring media usage and
packaged goods purchase behavior. Those insights would be enriched
with cutting edge technologies such as the Arbitron Portable People
Meter, a pager-like device that records a wearer's exposure to any
medium that has inserted an inaudible code into its audio
programming. This revolutionary device captures everything from
pre-coded TV/radio commercials and programming, to coded in-store
promotional announcements, audio in video games, and streaming media
on the Internet.
While still very much in development, Project Apollo holds great
promise to help marketers understand the reach and impact of today's
highly fragmented marketing universe.
To learn more about becoming a Project Apollo Charter Client,
contact me at 859-905-4730 or Linda Dupree of Arbitron at
212-887-1387.
|
|
|
|
 |
|
ONE-ON-ONE: Seth Godin on Purple Cows and Free Prizes
Seth Godin has become America's Agent of Change. Godin is the author
of six books that have been bestsellers around the world and changed
the way business leaders think about marketing, change and work.
Permission Marketing has become a bible for
marketers. His 2003 bestseller, Purple Cow, is all
about how companies can transform themselves by becoming remarkable,
a critical step for survival and success.
Free Prize Inside, Godin's latest book, describes how
every single person in your organization is in the marketing
department...and teaches how to make things happen.
Business Week called him "the Ultimate Entrepreneur for
the Information Age;" I call him my friend, and as he prepares to
share his thoughts as a keynote speaker at the upcoming Consumer 360
Conference, F3 asked him for a preview.
SG on products: Walking down supermarket aisles
illustrates just how much marketing is being driven by clutter. There
are too many new products - too many mediocre products. The consumer
packaged goods industry needs to wake up to the fact that the
opportunity is here and now for enticing and exciting products.
Without true innovation, without remarkable products, their brands
will not be bought by shoppers.
SG on the retail environment: When was the last time you
noticed a cow? Saw a cow on the side of the road, pulled over and
gawked? Probably not recently. Cows, after you've seen them for a
while, are boring. They may be well-bred cows, Six Sigma cows, cows
lit by a beautiful light, but they are still boring. The world is
full of boring stuff (as are supermarket shelves) like brown cows,
which is why so few people pay attention. A Purple Cow, though - now,
that would really stand out. The essence of the Purple Cow - the
reason it would shine among a crowd of perfectly competent, even
excellent cows, is that it would be remarkable. Something remarkable
is worth paying attention to, talking about - even buying. As
supermarkets now stock 40,000+ products, and the average shopper
spends less than 22 minutes on each grocery shopping trip, it's easy
to see how a Purple Cow will succeed while brown cows collect dust.
SG on being boring: Boring stuff, boring packaging, boring
advertising and boring products quickly become invisible. Big ads are
a problem because advertising doesn't work like it used to. Big
innovation is a problem because R&D is too expensive. The key to
success is what I call a Free Prize. A soft innovation. A clever,
insightful or useful small idea that just about anyone can think up.
It may solve a problem that's peripheral to what your product is
ostensibly about. It's the second reason to buy a particular product,
but sometimes it's the first reason to talk about it.
Join Seth at Consumer 360 and you might just walk away with your
brand's Free Prize. For more Seth, visit his blog at
http://sethgodin.typepad.com/.
|
|
|
Nutrition Label Reading Does Not Translate into a Healthier Diet for Adolescents
A new study focuses on the relationship between reading nutrition
labels and fat intake among adolescents - an important issue since
the percentage of calorie intake from fat in U.S. adolescents has
been found to be approximately 33.5 percent; the recommended range
for daily fat intake is 20-35 percent.
The study, reported in the
Journal of Adolescent Health and funded by the USDA's
Agricultural Research Service, found that boys who always read the
labels actually ate more fat as compared to boys who did not. The
researchers speculate this may be because boys tend to eat more
protein to build muscles and amp up their body image. In the sample
of girls, fat intake did not differ by frequency of nutrition label
reading. In terms of race, African-Americans in the study ate more
calories from fat than Caucasians.
Click on thumbnail to enlarge, or click here.
This new research is consistent with a 1997 study published in
Adolescence, which found that nutrition labels - compared with
taste, habit and price - factor very low in how adolescents determine
their food choices.
Almost 80 percent of those surveyed reported 'sometimes' or
'always' reading labels. A higher percentage of females were found to
read nutrition labels as compared to males.
As brands embrace the new Recommended Daily Allowances and Food
Guide Pyramid, it is important to note that comprehension and
accurate use of nutrition labels remain low, even in adults, and many
shoppers say they want nutrition labels to be easier to understand.
This study underscores the need for clearer nutrition information on
product labels. CPG companies need to stress their products' health
benefits in advertising and publicity, especially when marketing to
children.
|
|
|
Does Your Category Give "Satisfaction"?
Just how full certain foods make consumers feel might make all the
difference when it comes to dieting and the amounts of food people
consume.
Dr. Susanna Holt at the University of Sydney has created "The
Satiety Index." Designed to measure how full a particular food makes
a person feel after eating it, the index could provide invaluable
guidance to CPG marketers who are targeting dieters.
Holt studied 38 different foods, putting them all on a level
playing field by measuring how full they made a person feel after
consuming a 240-calorie portion. After eating one of the foods,
participants were monitored to see how much they ate from a buffet
two hours later. The subjects were also interviewed to see how full
they felt immediately after eating each of the 38 foods and in
subsequent 15-minute intervals to see if what they said matched their
eating patterns.
The scale used white bread as the baseline and assigned it a
satiety index of 100. Foods that were more filling per calorie had a
higher index. Ice cream, a product most would think of as being very
satisfying, was found to be less filling than white bread with an
index of 96. Foods that had a high index (around one and a half
times as filling as white bread or greater) included popcorn,
all-bran cereal, oatmeal, grain bread, whole-meal bread, brown pasta,
potatoes, cheese, eggs, baked beans, beef, fish, grapes, apples, and
oranges.
Click on thumbnail to enlarge, or click here.
As a general rule, the more fiber, protein, and water a food has,
the higher the index. The "bulkiness" of an item makes it more
filling, which is the case with popcorn and potatoes (although fried
potatoes did not rank nearly as filling as plain potatoes, which had
the highest score by far).
Surprisingly, the study found that foods high in fat caused the
participants to feel hungrier after a shorter period of time. In the
body's metabolism, fat is absorbed as "storable" energy - to be used
by the body later. Foods that are high in complex carbohydrates or
protein are seen as "use-it-now" energy and therefore signal to the
body that it is satiated.
Foods that are high in fiber and/or protein (e.g., grain bread,
brown rice, oatmeal, lentils/beans, fish, eggs, and cheese) not only
registered as immediately satisfying, but they also took longer to
digest and kept the testers fuller for a longer period of time per
calorie.
It's important to note, especially for those brands attempting to
capitalize on the dieting opportunity, that foods which participants
reported were most filling did deter them from snacking. The
findings of the Satiety Index, especially when coupled with the new
Recommended Daily Allowance of three servings of whole grains per
day, gives credibility to the opportunity for healthy foods that are
low in fat and rich in fiber.
|
|
|
Hit Film Spurs Pinot Noir Sales
Released last fall, Sideways is a "coming of age" film for the
40-something set. The film won an Academy Award for Adapted
Screenplay and picked up two Golden Globes, including Best Motion
Picture - Music or Comedy.
It also created a windfall for Pinot Noir wines.
Pinot Noir is produced from the pinot grape, a member of the
Burgundy family, and requires extreme nurturing from vintners.
Indeed, because of its sensitivity and, ultimately, its quality,
Pinot Noir becomes a metaphor for the state of mind of Paul
Giamatti's character, Miles.
The film, which depicts the adventures of two free spirits and
their nouveau companions through the vineyards of central California
seems to have added to the momentum of Pinot Noir sales. According to
ACNielsen data, sales of the varietal for the 12 weeks between
October 24, 2004 and January 15, 2005 were up nearly 16 percent
versus the same period a year earlier. The movie was released on
October 22, 2004.
Click on thumbnail to enlarge, or click here.
ACNielsen also reports that before the film's release, Pinot Noir
represented 1.1 percent of all table wine sold in the U.S. through
the combined food/drug/liquor store channels. In the four weeks
ending January 15, 2005, sales of Pinot Noir grew to 1.4 percent of
the category. In California, Pinot Noir has grown by almost a full
point to just over two percent of total table wine sales.
Furthermore, the spike has been driven by sales of domestic brands.
"It's difficult to quantify the exact impact that
Sideways has had on wine sales," said Danny Brager, vice
president, ACNielsen Beverage Alcohol Team. "However, given the
movie's focus on Pinot Noir, it looks like more than a coincidence
that this varietal's sales have been stronger than ever since the
movie's release."
What's more, ACNielsen Homescan(R) consumer panel data reveals
that more people are trying Pinot Noir -- especially in California,
where the number of households buying the varietal grew by half a
percentage point in the 12 weeks ending January 15, 2005. That
represents an increase of over 50 percent more buying households.
Repeat purchasing is up as well.
Click on thumbnail to enlarge, or click here.
And much to Miles' consternation, Merlot continues to sell well
and still ranks as the largest red varietal, ahead of Cabernet
Sauvignon. Though dismissed by Miles, the varietal grew from 11.6
percent of all table wine sold in the U.S. through the combined
grocery/drug/liquor store channel prior to the movie's release to
12.2 percent for the 12 weeks after the movie's release.
|
|
|
Organic Produce Costs More But The Gap Narrows
It's easy to understand why organic produce has become a popular
choice in the supermarket: consumers want their food grown without
harmful synthetic (chemical) pesticides or fertilizers and without
GMOs. In many instances, organic also translates into locally grown,
fresher, and better tasting foods (as reported by some consumers).
But the big issue facing the industry, and retailers, is whether
farmers can reduce costs to be more competitive with conventionally
grown produce.
Organics now occupy a solid presence in mainstream supermarkets.
According to ACNielsen LabelTrends, sales for UPC-coded products that
include the USDA seal or an organic claim on the front of the package
topped $3.7 billion in 2004 and showed an increase in unit volume of
3.3 percent (versus the unit volume decrease of 2.0 percent over the
same period, across all food and non-alcoholic beverage categories).
The Food Marketing Institute's Speaks 2004 report on the State
of the Food Industry found that 57 percent of supermarkets now offer
a separate natural/organic food aisle or section in their stores; and
as a vehicle to expand their consumer base, nearly eight in 10 said
they have a strategy in place to attract more health-conscious
shoppers to their stores.
According to Dr. John Raganold of Washington State University,
only 1½ percent of produce now sold is organic, but the segment is
growing at the rate of 20 percent each year.
Organic produce can cost upwards of 20 to 50 percent more than
conventionally grown produce. A conventional apple grown in
Washington State, for example, costs about 89 cents each at the
supermarket, compared to one grown organically which costs about
$1.11 (seasonal prices.)
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Mar05organic1.gif) and
this link for graph two (
http://www.factsfiguresfuture.com/enlarged/Mar05organic2.gif)
One aspect of the market that is driving organic costs down is
the move to private label by such companies as Whole Foods, Trader
Joe's, and traditional supermarkets who are selling everything from
organic fruit juices to frozen enchiladas.
A SupermarketGuru.com consumer panel survey conducted in the fall
of 2004 revealed that 26 percent of the respondents said they
currently consume organic foods of some variety. Over 30 percent said
they intended to buy more organics in 2005 than they had in 2004. The
organic trend is being fueled by a number of factors: no pesticides,
no GMOs, sustainability for the earth, lower retail prices and
(perhaps most importantly) a "better taste" as reported by many
shoppers.
Every indication points to more brands and consumers going
organic.
|
|
|
The Yogurt Category Continues to Evolve
Yogurt continues to be one of the most innovative categories in the
food world. Think back: fruit on the bottom, then on the top, then
mixed in. Then came flavor combinations, followed by packaging
innovations and yogurt designed for kids to eat on-the-go. Most
recently, yogurt-based drinks in both family size and single serve
have captured nearly $400 million in 2004 sales. The total yogurt
category, according to ACNielsen's Strategic Planner, reached the
all-time high of $2.87 billion in sales during the 12-month period
ending 12/25/04.
Click on thumbnail to enlarge, or click here.
But now the attention is shifting away from the flavors and
packaging of yogurts to bacteria - the good, healthy kind -
probiotics. Research conducted by the California Dairy Research
Foundation indicates that some possible probiotic benefits include
preventing intestinal diseases, minimizing the symptoms of lactose
intolerance and improving immune function. More preliminary studies
suggest that probiotics may also reduce the incidence of colon
tumors, decrease hypertension and ameliorate allergic reactions.
Probiotics are bacteria which, when administered in adequate
amounts in a food source or dietary supplement (tablets, capsules or
powders), confer a health benefit on the host. Derived from fermented
dairy products like yogurt or kefir, probiotics usually contain
bacteria from the genera Lactobacillus or Bifidobacterium.
To help consumers identify which products contain probiotics, The
National Yogurt Association (NYA) has established the Live and Active
Cultures (LAC) seal. This seal, which appears on refrigerated and
frozen yogurt containers, is a voluntary identification. Companies
opting to use the seal can only do so on products that contain at
least 100 million bacterial cultures per gram. However, since the
program is voluntary, some products may contain this amount of active
cultures but choose not to carry the seal. Products that are labeled
"heat-treated" after fermentation will not contain significant active
culture levels, and hence, will not be labeled.
Furthermore, the LAC seal does not necessarily indicate high
levels of probiotics, unless otherwise noted. Currently, there are no
FDA approved health claims for probiotics, but they do allow the LAC
seal to appear on appropriate products.
Still, the exploding research and consumer interest surrounding
probiotics has fueled an entire new category. One of the most popular
probiotic foods on the market is DanActive, manufactured by Dannon. A
fermented milk labeled with 10 billion L. casei cultures per
serving, DanActive was originally launched in Belgium in 1994 under
the name Actimel, or "active milk." Now available in 26 countries
worldwide, more than six million bottles are consumed every day.
DanActive products are clearly labeled with both the LAC seal and the
term "Probiotic."
Also on the cutting edge of probiotic products is Stonyfield
Farms. Their yogurts contain four probiotic strains in addition to
standard yogurt starter cultures, whereas other major brands add only
one or two additional strains. Other well-known probiotic
manufacturers include Lifeway Foods, the largest U.S. seller of kefir
(a fermented milk beverage), and Horizon Organic Dairy.
Labeling is key in soliciting a profitable response for these
products. As the term "probiotics" becomes more pervasive, consumers
will seek out items that clearly indicate possible health benefits,
probiotic claims and/or the LAC seal. Meanwhile, with the goal of
reflecting the needs of consumers and the emerging probiotic
industry, the NYA will continue to petition the FDA for a "yogurt
standard," which will identify yogurt as a food that contains a
minimum level of healthful LAC's.
|
|
|
Let Consumer Behavior Drive Your Category Plans
How consumers purchase products provides terrific direction for what
categories a retailer should carry as well as how retailers should
place, price and promote categories. The components of buying
behavior (penetration, buying rate, purchase frequency and purchase
size) provide a simple but extremely powerful formula for driving
sales successes down to the category, brand and item level.
- household penetration: the percentage of households
buying an item, brand or category within a defined period of time
(penetration can be measured within a retailer, channel, market,
region, demographic segment, etc.)
- buying rate: the amount purchased or spent on an item,
brand or category (per buying household) within a defined period of
time (usually expressed in terms of either dollars, units, or an
equivalent volume measure). This measure is a function of:
- purchase frequency: the average number of trips in
which an item, brand or category is purchased
- purchase size: the average amount of item, brand or
category volume purchased per trip
As we've discussed in past issues of Facts, Figures & the Future,
Grocery retailers command large shopper bases and high shopping
frequency, but Supercenters and Warehouse Club retailers drive larger
shopping baskets.
Brand marketers leverage the above-mentioned sales components to
set strategies around how they should focus brand growth efforts.
That is, should marketing focus attention on building the size of a
brand's buyer base, the frequency with which the brand is purchased
and/or the amount purchased per buying occasion? Once strategic
direction is set, marketers can consider adding new flavors and
sizes; increasing advertising spending; acquiring new channels or
retailers to carry their products, etc. to increase the percentage of
households buying a brand. Brand marketers can modify their
promotion frequency, alter package sizes, etc. to drive changes in
buying frequency. Finally, two-for deals, bonus packs and cents-off
promotions are tools that can be leveraged to increase the amount of
brand volume purchased per buying occasion.
Let's talk about how retailers can use the components of buying
to drive their merchandising activities. The first chart below
visually depicts how approximately 120 ACNielsen defined
mega-categories perform in terms of driving penetration or dollar
buying rate. The categories represent consumer packaged goods that
can be found on the shelves in Grocery, Mass Merchandiser, Drug,
Supercenter, Warehouse Club, Dollar and Convenience/Gas stores. A
couple of observations:
1. Most of the 120 mega-categories reach 50% or more of U.S.
households in a year and many categories have penetration levels of
70% or more.
2. Annual dollar buying rates for most of these mega-categories
are under $50 per buying household.
3. The boxed section highlights the mega-categories that we have
labeled "power categories" as they reach a high percentage of U.S.
households and also drive high buying rates.
Click on thumbnail to enlarge, or click here.
The next chart focuses on the "power categories" that fall within
the box on the first chart. We see that they are all purchased by at
least 92% of U.S. households and annual spending rates exceed $60 per
household. With the exception of paper products and medications &
remedies, food and beverage categories dominate the list. As you
review the list, think about how many traditional non-food channels
have increased their efforts to drive sales in these categories.
Because of their strong reach and spending levels, these categories
are terrific categories to drive store traffic, increase
account-shopping frequency and build larger basket rings in many
retail channels.
Click on thumbnail to enlarge, or click here.
|
|
|
e-Grocery: Act Two...and better than ever for traditional supermarkets
There are two basic business models in the e-grocery segment - the
multi-channel approach, which has certainly become both more common
and less risky, and the pure-play approach, which seemed in danger of
dying off after the Webvan conflagration, but now has resurfaced with
a much smaller presence.
Click on thumbnail to enlarge, or click here.
Albertsons and Safeway are the most aggressive in their rollout
plans for e-grocery. Albertsons.com currently offers online ordering
and delivery in twelve major markets. Safeway.com is serving six
markets (just announcing their roll-out in Phoenix last week)and
through its Vons.com operation, another ten. According to
Nielsen/NetRatings, Albertsons.com has increased their Unique
Audience (online) by 54 percent and Safeway.com increased 60 percent
for the twelve month period ending January 31, 2005. At this point in
time, projected Unique Audience size for both is approximately
412,000 people.
Kroger has been testing online shopping only in Denver through
its King Soopers division since 2003, and almost two years later
there has been no indication of a further roll out.
Peapod (acquired by Ahold in 2001) is doing business in eight
states mostly as the e-commerce arm of existing Ahold banners such as
Giant and Stop & Shop, and reports that the division generated $183
million in sales last year, up 25 percent from the $147 generated in
2003. Bob Clare, a New Jersey ShopRite retailer with a single 80,000
square foot store, has licensed out the NetGrocer name and is
shipping orders all over the country and even abroad. NetGrocer also
is marketing its products through Amazon.com's gourmet food section,
though that remains a "beta" site that has not received much
attention.
In business for almost six years, SimonDelivers.com has put a lot
of its marketing emphasis on providing fresh foods - produce, meat
and seafood - to shoppers in Minnesota and parts of Wisconsin. The
company is an aggressive marketer; one program offered shoppers that
spent at least $80 a week for seven weeks $80 worth of groceries free
in the 8th week (the equivalent of a 15 percent discount).
New York-based e-grocer FreshDirect.com believes that the way to
build sales is to add higher-margin items, including wine and
prepared meals - and to position themselves as much against
restaurants as supermarkets. FreshDirect generated more than $100
million in revenues in 2004, and has more than 250,000 customers,
with an average transaction of more than $100.
Gristede's CEO John Catsimatidis has gone on the record as saying
that he launched an online business because he saw that FreshDirect
had stolen about $20 million of his chain's $300 million in sales. He
also has said that if FreshDirect fails, he'll immediately shut down
his online operations.
It seemed safe five years ago to predict that online grocers
would encourage a revolution in how people shop, but the reality is
that shoppers are visiting more channels than ever to purchase their
foods - and having an online resource just adds one more acquisition
method - rather than creating a shopping revolution. Online grocery
shopping is likely to continue to grow steadily, perhaps reaching as
high as $10 billion in annual revenues by the end of the decade.
|
|
|
C-Stores Drive Success With a Focus on Key Categories
Convenience stores continue to expand their offerings to include
organics, fresh produce and even sushi in an effort to attract a
broader and more diverse shopper. And the strategy seems to be
working.
The 144 categories that ACNielsen Convenience Track monitors in
C-Stores measured a collective increase in sales of 5.9 percent
versus the same categories' growth of just 0.9 percent in the
combined Food/Drug/ Mass (excluding Wal-Mart) channel for the 52
weeks ending 1/22/05.
Click on thumbnail to enlarge, or click here.
Beverage products, including carbonated beverages, water, juice
drinks, beer and coolers, continue to rank as five of the ten top
sellers in the Convenience Channel; in fact, this channel now enjoys
a 53 percent dollar share of beer sales in the combined Food, Drug
Mass and C-Store Channels.
Those categories which amount to more than the average 26 percent
of FDM/C sales highlight additional profit opportunities for C-Store
operators but risks for other retailers. On average, the top 35
C-Store items are priced seven percent higher than the grocery
channel and nine percent higher than drug, representing an
opportunity for grocery and drug retailers to highlight their price
advantages.
Click on thumbnail to enlarge, or click here.
While some retailers may not be too concerned that C-Stores
represent almost 83 percent of the $2 billion Chewing Tobacco
category, most would agree that those categories showing declines in
FDM and increases in C-Stores may be at risk.
Analyzing category sales growth in C-Stores vs. FDM is a telling
exercise and reinforces the opportunity for traditional supermarkets
to include a "mini convenience department" in their footprint near
the front of the store for easy access. New formats such as Bloom and
Marsh Lifestyle have built such departments and are reporting strong
incremental sales.
|
|
|
COUNTRY TO COUNTRY: Fastest-Growing Food & Beverage Categories in Brazil
South America is quickly becoming one of the world's most important
regions; lush with natural resources, stronger economies and more
stable governments has propelled many Latin countries, in particular
Brazil, to center stage. The only South American country with
Portuguese as the primary language, Brazil's ties with its European
ancestry are stronger than the rest of South America, and also
influence its cuisine.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/Mar05C2C1.gif) and this
link for graph two (
http://www.factsfiguresfuture.com/enlarged/Mar05C2C2.gif)
As we continue to see increased immigration to the United States
from all of Central and South America, it's critical to identify the
food cultures of these peoples. Their brands, flavors, methods of
preparation, times they eat, focus on family meals and even the way
they shop (more fresh foods and more variety of commodities such as
fish and produce) are already having a major influence on the US
retail marketplace.
|
|
 |
ACNielsen estimates that in 2004, over $2.47 billion was spent across
all retail channels in the jams/jellies/spreads category, which
includes peanut butter, preserves, jelly, jams, fruit spreads,
marmalade, honey, butter-fruit & honey, and garlic spreads.
The following charts indicate the percentage of households who
buy each type of jams/jellies/spreads; each retail channel's share of
overall category sales; and a sampling of higher indexing household
types who buy products in the category.
This category may be at risk for traditional supermarkets as many
of these products have retail prices hovering around one dollar -
making it particularly attractive to Dollar and Supercenter
competitors.
|
|
Click on thumbnail to enlarge, or click here.
|
|
Click on thumbnail to enlarge, or click here.
|
|
Click on thumbnail to enlarge, or click here.
|
|
|
|
|
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
|
|
|
