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October 15, 2002
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Welcome to the first edition of what I hope will become a much valued
source of consumer insights that will help you better identify
merchandising and promotion opportunities in your stores.
Each month, we will provide you with a wide array of relevant
topics such as: dollar stores; multi-cultural marketing to Hispanics,
Asians and African-Americans; implications of whole health foods and
organics growth; and new product trends. Thanks to the integrated
capabilities of the entire VNU organization, we are the only
marketing information and media company that can provide you with a
"360 degree View of the Consumer."
Drawing from the depth and breath of our consumer information
database, ACNielsen analysts will share both rich content and
insights with editor and industry friend, Phil Lempert. He in turn
will add his perspective and then compile and produce this
e-newsletter for distribution to you.
I look forward to building upon this partnership with the FMI in
the months and years ahead. I encourage each of you to contact me
directly with any and all feedback as to how this e-newsletter could
better serve your needs.
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Consumers are getting better at food safety, according to the Food
and Drug Administration and Fight Bac, a program supported by FMI,
the government and consumer experts is getting the credit. A recent
FDA survey found a dramatic improvement in consumer behavior
throughout the past decade.
Fight Bac is an easy way for retailers to help consumers tackle
this very important topic. More information is available at FMI.org.
It's time to fight bacteria together.
Even on tricky issues like food safety, information can be a
powerful weapon in improving behavior, long a frustration for your
industry. But the evidence is clear.
Education and information are keys to improving relations
throughout our industry and even with our consumers. It's one of the
reasons why FMI is pleased to offer our members this newsletter;
Facts, Figures & the Future to help provide additional insights that
we hope can help all of you sell more products and satisfy your
shoppers' needs, wants and desires.
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Store Within A Store VS. Integrated Merchandising
An in-store audit of primary stocking locations of selected
natural/specialty items showed how sales rates differ when products
are located (1) in the primary aisle (mixed with non-organic brands),
(2) in the primary aisle but in a special Natural section, or (3) in
a separate Natural/Specialty section (a store within a store).
Click on thumbnails to enlarge
Use this link if you've received the text version
for graph one (
http://www.factsfiguresfuture.com/enlarged/STORE1.jpg
) and this link for graph two (
http://www.factsfiguresfuture.com/enlarged/STORE2.jpg
)
About half of the 3,000 traditional Grocery stores that ACNielsen
audited applied a "store within a store format." The categories
observed were natural soup, aseptic soy milk, organic baby food,
wellness tea, natural chips/snacks, and natural cold cereal. Out of
these categories, baby food organic products and wellness bagged teas
were most frequently mixed with non-organic/ national brands. Chips,
canned soup, and soy milk were most frequently stocked in a separate
section (Natural Foods Section/Store within a Store). The data
reveals that, soy milk, wellness teas, and cereal sales rates are
optimal when placed within a natural foods section. However, sales
rates for chips/salty snacks, canned soup and organic baby food were
highest when they were stocked with mainstream brands.
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How Much Of YOUR Business Are You Losing To Dollar Stores?
Dollar Stores have grown more popular with shoppers, and it's about
more than just the "novelty" of paying a buck. These stores are
keeping consumers stocked in low cost household products and giving
the traditional retail channels a reason for concern. The big
question is what are people buying in Dollar Stores instead of in
supermarkets? The ACNielsen ranking shows the top selling
mega-categories with CANDY at number one and PAPER PRODUCTS in second
place. The increase of just 1 point in the candy category makes a
difference of $103 million in absolute dollar sales for the Dollar
Store Channel. Where did those dollars come from?
Click on thumbnail to enlarge, or click here.
Paper Products (gift wrapping materials and bags) category
decreased the most dramatically in grocery stores (5 points) and went
up more than any other category (3 points) in Dollar Stores,
certainly an alarm bell that warns Grocery Stores that the profitable
non-foods arena is at risk. Eight out of the ten categories in the
Dollar Store channel increased while the Grocery Store Channel had
losses in all categories except batteries and flashlights. These
trends are enough to induce stores like Wal-Mart to test
"dollar-only" sections.
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Don't Assume You Can Attract The Hispanic Shopper
The 2000 Census proved that Hispanics are the largest ethnic segment
in the U.S., who now represent 12.5 % of the total U.S. population
and will continue to grow rapidly with a fertility rate of 2.7% (as
compared to 2.0% for whites and 2.5% for blacks).
Projections indicate that by 2010 Hispanics will represent 27% of
the U.S., putting this ethnic group securely on the path to leading
tomorrow's mainstream American market.
Hispanic consumers exhibit different behaviors, which retailers
and marketers must understand in order to meet these shoppers' needs.
A recent ACNielsen report, from the Homescan LA Hispanic panel, found
that Hispanics spend less than Non-Hispanics (per household) on UPC
items in most channels except convenience stores and gas stations,
and this is especially true for less acculturated consumers.
Click on thumbnail to enlarge, or click here.
Hispanics make fewer shopping trips annually, but increase their
shopping frequency as they acculturate more. These shoppers have a
tendency to shop in ONE channel for many categories. For example, an
analysis of Hispanic shoppers of the coffee category shows 69% shop
in only one channel as compared to 60% of Non-Hispanics. Grocery is
the primary channel for all Hispanics, which is good news for
supermarkets now faced with more alternative competitors. However,
even among this channel's loyal shoppers -- alternative channels are
used to supplement shopping, especially with the acculturated
Hispanics who tend to shop more for "convenience." For the less
acculturated Hispanic consumer, shopping is an important family event
that is most popular on Sundays.
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Poll Reveals Consumers' Grocery Shopping Habits
A recent survey conducted by the FMI and SupermarketGuru.com ranks
the top five ways consumers best describe their shopping experience
in each channel. The number one answer for warehouse club stores was
"great value" followed by "good bargains." They also feel like they
spend more money from making impulsive purchases. For the
supermarket poll, more popular answers were "planned purchases" and
"many choices."
Click on thumbnail to enlarge, or click here.
As shopping habits change and more attention is given to the
better values found in warehouse clubs, they could become a routine
part of consumers' shopping choices. Janice Jones, FMI's Director of
Research states, "consumers are shopping differently in 2002 than in
the past. They are willing to shop in more types of stores and are
willing to take the time to seek out value. Supermarket operators
cannot assume a weekly stock-up market basket from every shopper as
they did years ago." If retailers continue to assume consumers will
pay higher prices in supermarkets out of routine or for the
convenience, they may start to feel their customer base slip away
into the hands of their competitors.
Click on thumbnail to enlarge.
Use this link if you've received the text version:
http://www.factsfiguresfuture.com/enlarged/super2.jpg
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On October 21st New Federal Regulations Take Effect For Organics -- Will Sales Increase?
Most organic manufacturers have been patiently waiting to see their
sales increase and hope to follow the consumer trend of "wanting to
eat healthier" that Homescan's Consumer Pre*View Panel has been
tracking for almost a year. The marketing and PR frenzy is about to
begin, already led by a very positive cover story in Newsweek in late
September. The expectation is that the appearance of the new labeling
will drive millions of shoppers to the category.
As the federally mandated labeling requirements for organics go
in effect, there are new issues for manufacturers and retailers to
contend with. Officials from the USDA will officially announce the
new labeling guidelines and introduce a new USDA logo on October 21st
that is designed to help shoppers identify those foods that have been
grown, processed and packaged in accordance with organic practices.
Products with a minimum of 95% organic ingredients will be allowed to
use the USDA seal.
There are four new organic categories:
* "100 percent organic;"
* "Organic," defined by the USDA as containing 95% of organic
ingredients;
* "Made with organic," that include products with at least 70%
organic ingredients; and
* products with less than 70% organic ingredients are only
allowed to list the organic items in the ingredient panel on the side
of the package.
Consumers may find themselves confused about the four organic
designations, opening up an opportunity for relationship building for
retailers by educating the shopper and testing organic private label
products.
Click on thumbnail to enlarge, or click here.
ACNielsen reports that one-third of U.S. households have bought
organic foods in the past six months with the Asian shopper
particularly likely to buy organics.
Consumers were also asked why they chose to buy organics. 32%
felt that organics were healthier than non-organics, 18% said no
pesticides, and only 3% said no genetically modified organisms
(GMOs). Manufacturers have an opportunity to market their products
through campaigns that educate consumers on the benefits of products
with no pesticides and GMOs.
Click on thumbnail to enlarge.
Use this link if you've received the text version:
http://www.factsfiguresfuture.com/enlarged/organics2.jpg
However, consumers also feel that in order to stay healthy they
have to pay a higher price.
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UPDATE: Economic Trends And Purchase Behavior
Normal practices state that the market leads the economy.
As we progress through the current economic times, it seems that
the rules have changed. Strong housing markets, a weak stock market,
strong unemployment, and day-to-day fluctuation of the health of
businesses now co-exist; seemingly in conflict with each other. The
result is a now uncertain market situation which does not necessarily
react favorably to good news, nor one that works through bad economic
data.
Click on thumbnail to enlarge, or click here.
This chart is a key gauge as consumers drive the recovery
question of relationship between confidence and spending. A read of
consumer sentiment in early October showed the fifth straight month
of declines in consumer sentiment. The University of Michigan's
preliminary October consumer sentiment index fell sharply to 80.4
from 86.1 in September, far below analysts' forecasts.
Consumer Pre*View looks into the future and adds insight and
guidance into consumers' future purchasing behavior in food,
health-and beauty aids, and non-food product categories.
The latest Consumer Pre*View Study found a consistent nine-month
lag between changing consumer attitudes and actual non-durable goods
purchases. Richard Curtin, Director of the University of Michigan's
Surveys of Consumers, says, "This is the first evidence we have ever
seen that the Index predicts changes in purchasing of non-durables."
In the first three quarterly surveys, we have found that all
grocery categories are NOT created equal, and the consumer sentiment
action towards future purchasing is much more sensitive in the
categories of: entrees, fruit juice, pasta and yogurt (as compared
with a low sensitivity towards corn chips, shave cream and butter).
Future Eating Trend:
"Dining Out" has seen steady declines since the attack on
September 11th; with the African-American population the most likely
to cut back -- representing a strong growth opportunity for "at home"
consumption with this consumer.
When it comes to eating "healthier" 71% of all shoppers and 83%
African-Americans said that they PLAN to eat healthier over the next
6 months.
Click on thumbnail to enlarge.
Use this link if you've received the text version.
http://www.factsfiguresfuture.com/enlarged/ECO2.jpg
How do we know if consumers are doing what they say they will?
Consumer Pre*View allows for hearing what consumers say they are and
will be doing. The 60,000+ Homescan Panel enables us to validate
these claims.
In looking at those who said they would eat healthier, their
actual purchases were indeed somewhat healthier than others.
Importantly, the consumers were also less deal sensitive when it came
to making these healthier purchases, highlighting an opportunity to
shift promotion dollars to brand equity marketing resulting in
greater long-term margins.
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Facts, Figures and the Future is coprighted 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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