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For more information and to order your copy of the new 2003 ACNielsen
Consumer and Trend Report click on the report cover
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November 12, 2003
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The Healthy Choice
Two of the most powerful trends in the food industry today can
actually be put together by supermarket operators to create a winning
formula for consumers. The two are the industry's need to build
sales and consumers' increasing desire to find a way to live and eat
healthier.
Supermarkets should have a natural advantage in appealing to
shoppers looking for healthy foods as our stores provide all the
choices that anyone could want. But shoppers have a challenge in
trying to balance their goals of better eating with the realities of
the modern, time-crunched lifestyle. In FMI's new
Shopping For Health report, 87 percent of shoppers say in many
cases they believe eating healthy can have a greater impact on their
health than taking medication. Yet, convenience, cost and confusion
lead them to non-supermarket choices and at times, less healthy
choices.
The same study lays out the opportunity, however, especially on
the subject of confusion. Nearly half the shoppers surveyed say they
would go out of their way to shop for food in a store that teaches
them about healthful eating and features products that supports those
ideas. Supermarkets have the products, but our shoppers want more.
They want guidance.
The scope of the opportunity comes through in nearly every
section of this report. For instance, the vast majority of all
shoppers say a "wide selection of vitamins and minerals" is extremely
important to them in picking a store. The percentage looking for
these products was highest among African-American and Hispanic
shoppers, single parents and Generation X and Y shoppers, all groups
supermarkets are targeting to win greater loyalty.
Shopping For Health is full of information like this that
the entire industry can use to see just how powerful a topic healthy
eating is becoming and what an incredible sales and customer service
opportunity it may offer. You can order at
fmi.org through the link to publications.
It could be good for your shoppers' health and your store's.
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Mega*Panel to Deliver New Insights
Let's face it, business isn't getting any easier. Consumer
segmentation is no longer just about demographic variables; it's
about attitudes, lifestyles, and more. For grocery retailers, the
competition is no longer just the grocer across the street or the
Supercenter up the road; it's the dollar store downtown and even the
video rental store that's been nibbling away at your snack sales.
And category managers can no longer afford such a high degree of
focus on the category captains; today's niche brand could very well
be tomorrow's super brand.
That's why I am so excited about the ACNielsen Homescan
Mega*Panel initiative, in which we plan to more than double the size
of our Homescan consumer panel. The Mega*Panel promises to yield
significant new consumer insights that are essential to your success.
If you're a retailer, you need a better understanding of
competitors within your trading areas and more detailed cross-channel
shopping analysis. If you're a manufacturer, you need to know more
about the retailers and growth channels such as dollar stores and
club stores that support your brand management initiatives. Whether
you're a retailer or a manufacturer, the ability to analyze your
customers in ever more precisely-defined, high-potential segments
such as teens, households with babies, and new product early adopters
is fundamental to your success. The Mega*Panel will help address
these issues and more.
Now more than ever the ACNielsen Homescan consumer panel is all
about equipping marketers with consumer insights on which they can
take meaningful action. Through our recently launched Consumer
Direct Online initiative with Yahoo!, for example, Homescan is
helping CPG companies conduct online marketing programs in a more
successful and measurable manner than ever. Planned in the near
future is a linkage of our Homescan information content with retail
frequent-shopper databases to drive more effective in-store
marketing.
Success depends on a thorough understanding of your customers and
prospects. The Homescan Mega*Panel is being built with that
objective as the cornerstone.
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Mid-Year Channel Blurring Update - A Calm Before the Storm?
As we view mid-year 2003 measures on U.S. household channel-level
shopping behavior, a couple of things are worth noting:
Consumers have a large number of retail channels from which to
choose, and they clearly take advantage of their options. This is
demonstrated in part by the size of the shopper bases within Grocery,
Mass Merch, and Drug Channel. Shopper penetration levels within
these three channels are at or near 100 percent of U.S. households -
providing excellent opportunities for retailers in each of these
channels to increase their share of shopping trips and basket rings
made by their "captive" shoppers.
With the closure of nearly 600 Kmart stores in 2002/2003 and the
continued conversion of Wal-Mart Division 1 stores into Supercenter
formats, household penetration decline continued for the Mass channel.
Kmart, Target and Wal-Mart Supercenters are now shopped by 60
percent of households - up from 54 percent in 2000. Penetration
growth within this channel was impacted by Kmart closing 12
Supercenters in 2002 and 57 Supercenters in 2003. Shopper
penetration within the Supercenter channel softens as we see the
impact of the 69 Super Kmart store closings. With store growth
continuing on a rapid pace, Dollar Stores expanded their shopper base
to 64 percent of households.
It would appear that penetration within the Convenience/Gas
channel is being impacted by pay-at-the-pump offerings (a NACS report
states that 65 percent of all fuel transactions made in 2000 were
made with some form of payment at the pump) and gasoline offerings in
channels like Grocery, Mass & Club.
Click on thumbnail to enlarge, or click here.
The Grocery Channel has a significant advantage over other
channels in terms of shopping frequency. However, as seen in prior
years, shopping frequency within this channel is on the decline. By
mid-2003, the average household made 73 trips to the Grocery channel
- five fewer trips versus 2000 but ten fewer trips from 1999.
However, this is the first time that we have seen Grocery channel
shopping frequency stabilize versus the latest annual period.
Shopping frequency in the other channels remained fairly stable
over the past three years. With the rapid expansion of new store
openings in the Dollar Stores segment, overall shopping frequency is
being understated. As no retail channel is posting large increases
in shopping frequency, pace of life and competition from restaurants
and other retail channels are having an impact. However in 2002 and
through the first half of 2003, we see a reversal of a negative trend
in overall outlet shopping frequency.
Although new store openings may be holding down shopping
frequency in Supercenters, average shopping frequency within this
channel is relatively low but growing. This may also be driven by
the distance with which rural shoppers must travel to shop in
Wal-Mart Supercenters. Have we reached the bottom of decline in
Grocery Channel shopping frequency or is this simply a calm before we
see the full impact of the Wal-mart Supercenter expansion storm?
Click on thumbnail to enlarge, or click here.
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.
*Note: Improvements in classifications of Supercenter shopping
trips led to a re-statement in 2001 and 2002 household penetration
for this channel.
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Where For Art Thou Fleming?
Once the highest volume wholesaler in the country and a mighty
supplier to over 10,000 stores, Fleming declared bankruptcy in April
this year. While industry pundits are interpreting the economic
rationale of the demise, the rest of the world is asking: Where did
all that business go?
Click on thumbnail to enlarge, or click here.
TDLinx reviewed locations that were supplied by Fleming in
January 2003 versus where they pulled from in October. For the
purpose of this report, the convenience stores supplied by Core-Mark
were removed. Last month, Fleming officially put this free-standing
entity up for sale.
"The Fleming fallout is quite the opposite of most grocery
stories about acquisitions, multi-channel expansion and consolidated
buying," said Scott Taylor, TDLinx EVP and GM. "Before...Fleming was
the single buying point for these stories; now you have over 100."
Fleming's exit has reconfigured wholesaler share and presence in
over 187 DMA markets. Of the 5,080 tracked stores, 2,626 were
industry-standard supermarkets ($2MM+/year). They represented over
80 percent of the Fleming-supplied volume and have a 5.1 percent
share of the entire supermarket channel. 562 of the remaining stores
were small grocery locations, 1,727 were convenience (not supplied by
Core-Mark), 14 were mass merchandisers, and 165 were pet supply. 361
of these stores are closed as of the end of October 2003.
Click on thumbnail to enlarge, or click here.
This single company, Fleming, with 32 distribution centers has
been replaced by over 100 suppliers with over 200 supply points. 10
percent of the volume went to small suppliers (companies that supply
25 stores or less). Some accounts were forced to go direct losing
the logistical efficiency of having Fleming supply their outlying
locations. Other operators went to the big wholesalers who are now
getting bigger.
The most dramatic is C&S Wholesaler. Once supplying only New
England and parts of New York, C&S, with all deliberate speed, has
integrated supply points in Ohio, Wisconsin, California, and Hawaii
-- 6,000 miles from the autumn leaves of Vermont.
The Fleming fallout is quite the opposite of most Grocery Channel
stories about acquisitions, multi-channel expansion and consolidated
buying. But, there is no time to mourn the passing of this giant.
In our industry supply is in demand.
Trivia Question - What other top ten wholesalers did Fleming
acquire to become number one? What year did it happen? Email your
answers to
scott.taylor@tdlinx.com.
If you are one of the ten correct answers we pull out of a barrel,
you'll win a cool SupermarketGuru tote bag and a nifty TDLinx
baseball cap.
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The Channel Dilemma for Private Label
In 1997, 80 percent of all Private Label sales occurred in
Supermarkets. Today that share has fallen to just 67 percent of the
total. The reason is simple; more Private Label goods are being
offered and sold through Supercenters and Club Stores. Grocery
Stores continue to show the most developed Private Label dollar share
within all outlets at 18 percent of total outlet sales. But for how
long?
One question to ask is whether shoppers, given the choice of
buying quality Private Label food staples in addition to their
non-food purchases at Club Stores and Supercenters, would further
erode the Grocery Channel's share of the business. In anticipation of
the trend, Grocery needs to scrutinize their non-food Private Label
products, quality and merchandising to understand why paper products,
nutritional supplements and dry dog foods are topping the sales at
these other outlets.
Click on thumbnail to enlarge, or click here.
Within the Grocery channel the largest Private Label categories
continue to be food staples; including Milk, Eggs, Bread, Ice Cream,
Cereal, Cheese, Butter, Sugar and Frozen Poultry. But in other
Channels, the mix is different, which highlights the potential
threats and opportunities for Grocery.
In Club Stores it's the non-food products (except for Milk) which
dominate sales. In Club Stores, Private Label paper products rule,
and in some cases, their quality surpasses Private Label in Grocery.
Private Label toilet paper, jumbo size paper towels, and disposable
diapers yield over $300 MM in sales. (Nearly the size of one of the
Grocery Channel's largest Private Label categories: Processed
American Cheese Slices) We also see sizable Private Label sales for
nutritional supplements and vitamins, shelf stable chicken, kitchen
trash bags, and trail mixes.
Click on thumbnail to enlarge, or click here.
Supercenters, however, have developed sizable Private Label
businesses on both sides of their selling floor. In the
Food/Beverage section they generate significant dollar sales from
milk, bread, cookies, sugar, and cheese. In the Non-Food section
their big Private Label businesses include dry pet food, nutritional
supplements, and diapers. If Supercenters can do it, why can't the
traditional Grocery outlet?
Click on thumbnail to enlarge, or click here.
Understanding Private Label sales is critical for all three
Channels. On average these products are bought on 30 percent of all
shopping occasions. This trip conversion rate is considerably higher
for the Food/Beverage focused channels of Grocery and Supercenter.
For some shoppers, Private Label is just not acceptable; and for
most retailers changing that behavior is just too costly. What is
doable is to offer a more complete line of Private Label products to
the current Private Label shopper who is currently crossing channels
to complete their Private Label shopping trip.
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The Latest User Profile Of Self Check-Out Lanes
61 percent of U.S. households have used self check-out lanes, with 32
percent of those agreeing, "they are great." Many more shoppers who
have tried the do-it-yourself check-out lanes (52 percent) said "they
are okay," and 16 percent called them "frustrating" according to the
new ACNielsen Homescan(R) consumer panel survey of 61,500
nationally representative U.S. households.
According to the FMI's 2003 Consumer Trends in the U.S. Study, 29
percent of all supermarkets now offer self check-out. As more
retailers continue to install these units, the success of this
technology will be determined through understanding which shoppers
actually use self check out, and for which reasons. This year alone,
it is predicted by some industry consultants that more than $155
billion worth of sales will go through self-checkouts and that by
2007 that amount will increase to $1 trillion.
Among the most significant findings, and opportunities for
retailers to use this technology to further their relationships with
shoppers is that usage of self check-out lanes is greatest among
larger, higher income, younger, and more educated households.
Click on thumbnail to enlarge, or click here.
As for the future, 70 percent of those who have tried self
check-out lanes plan to use them again. Just 25 percent of those who
have never tried the lanes plan to do so in the future. But there are
pitfalls especially for the mid-income and mid-level educated average
American shopper. For many shoppers self-checkout is intimidating.
Retailers must be proactive in demonstrating the units and pointing
out the time-savings for shoppers. Unfortunately, if a shopper does
experience a problem-not having a price ring up correctly, for
example, or having to wait for a customer service person to correct a
malfunction-odds are they will never return to the self check-out
lane again. Consumers have zero tolerance for new technologies that
don't meet their needs.
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Know Your Customer...And Their Cholesterol Count
According to the Centers for Disease Control, an estimated 105
million American adults have total blood cholesterol levels of 200
milligrams per deciliter (mg/dL) and higher, which is above desirable
levels. This statistic is important to all retailers that sell
prescriptions, OTC and foods that could help lower cholesterol.
According to the National Institute for Health Care Management
Foundation, Lipitor was the #1 selling drug in the United States in
2002. Zocor was second. These two statins accounted for more than
$10.3 billion in sales in the United States. As Americans gets
fatter, all indications are that the sales and usage of cholesterol
reducing products will continue to grow. An ACNielsen Homescan
Rx/OTC survey of ailments, found that high cholesterol sufferers
account for 23 percent of households; and this is important since
different disease states can have a strong influence on consumers'
overall purchase patterns.
Click on thumbnail to enlarge, or click here.
The ACNielsen service enables us to properly analyze the shopping
basket and see what else chronic sufferers purchase. Cholesterol
sufferers exhibit a stronger tendency to buy olive oil, cooking
spray, and sugar substitutes. This type of analysis enables retailers
and brands to have the information necessary to properly cross
promote and identify (and maximize) in-store merchandising locations.
For example, those Grocery stores with a pharmacy should be tracking
their Cholesterol-reducing prescriptions against these food
categories to insure they are selling these products to their Rx
consumers, and they are not crossing channels or visiting other
Grocery stores to complete their shopping needs.
Click on thumbnail to enlarge, or click here.
With each ailment comes a different set of products that index
above average. However, we can generally say that those retailers
which have a pharmacy could maximize their shelf offerings by
offering more "healthy" food products, nutritional supplements and
sugar substitutes. Products like diet cola, olive oil, margarine,
low calorie salad dressing, and salt substitutes are also products
that index above average with chronic sufferers. Retailers and
brands can also reinforce their relationships and sales with these
consumers by providing ailment-based information, disease management
pamphlets and disease screening events.
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Is It Time For Warehouse Shopping to Evolve?
One of the most successful retail concepts to evolve in the 1980s was
the Membership Warehouse Club. This retail concept was created to
give consumers access to large-sized packages or multi-packs of
various consumer packaged goods - plus everything from televisions to
clothing to trampolines - and with the underlying intention of
convincing consumers that they were saving lots of money. In more
recent times, Club sales have declined (see Channel Watch for the
latest indices on all channel activities) and consumers are comparing
unit prices and sizes more carefully to make sure the savings are
real.
Depending on how often people shop there, the annual fees can
sometimes be more than they save; in an October 2003
SupermarketGuru.com Quick Poll, 53 percent of respondents said they
spend around $35 for an annual membership.
Click on thumbnail to enlarge, or click here.
Warehouse Clubs have proven to be a formidable competitor for
neighborhood supermarkets with Costco and Sam's Club being two of the
biggest operators. BJ's Wholesale Club is a smaller warehouse chain,
but because the competitive landscape is so tough these days, BJ's
has decided to go where the warehouse clubs generally have not gone
before - into small, convenience-sized products in produce, dairy,
meat and baked goods in about half its stores. In the
SupermarketGuru quick poll, participants were asked if they would be
interested in buying supermarket sized products at a club store. 68
% answered yes.
Click on thumbnail to enlarge, or click here.
The questions are many: What is the future for these Warehouse
operators if BJ's test of smaller sized packages is successful? Will
shoppers continue to pay a membership fee to buy regular sized
products? And most importantly, will Brands allow the Warehouse
Clubs to undercut supermarket pricing significantly enough to make a
difference?
If Warehouse Clubs do shift their food merchandising to include
smaller single sized packages, it is possible that the shoppers'
perceptions of the Club benefits and assortment will become blurred.
The beneficiaries of this strategy might well be the Grocery and
Supercenter Channels.
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COUNTRY-TO-COUNTRY: A Look at the Fastest Growing Categories in Greece
In this month's Country to Country we take a look at the fastest
growing Grocery Channel categories in Greece vs. the U.S. marketplace.
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/NovC2C1.jpg
) and this link for graph two (
http://www.factsfiguresfuture.com/enlarged/NovC2C2.jpg
)
As we compare the Fastest Growing Grocery Categories between the
U.S. and Greece, it is important to note that once again there is a
commonality across cultures when it comes to the increased sales in
Yogurt beverages.
Looking at the demographics of both the U.S. and European
population shows an increase in longevity as well as an older average
age consumer. With these changes, we can expect to see additional
growth in categories that reflect these shoppers' health related
lifechanges, such as an increase in dental problems, which will fuel
growth in Dental Accessories and Mouthwashes.
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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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