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FMI, ACNIELSEN &
LEMPERT F3 Newsletter
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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).
 
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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?
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Dollar
Stores have grown more popular with shoppers and it 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? 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? Grocery Store Channels lost $103 million
dollars during the same period in their candy sales.
Paper Products (gift wrapping materials and bags)
category decreased the most dramatically in grocery stores by
5 points and went up more than any other category by 3 points
in Dollar Stores, certainly an alarm bell that warns Grocery
Stores that the profitable non-foods arena is a 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
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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 this shopper's needs. A recent ACNielsen report
found that Hispanics spend less than Non-Hispanics (per
household) on UPC items in most channels except convenience
stores and gas stations, and is especially true for less
acculturated consumers.
Hispanics make fewer shopping
trips annually, but increase their shopping frequency as they
acculturate more. Theses shoppers have a tendency to shop in
ONE channel for many categories. For example, 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 category loyal shopper -- 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
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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."
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. |
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On October 21st New Federal Regulations Take
Effect For Organics -- Will Sales
Increase?
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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.
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.
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ACNielsen
reports that one-third of U.S. households have bought organic
foods in the past six month,s with the Asian shopper fueling
the growth in this category.
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 organisms. Manufacturers have an opportunity to
market their products through campaigns that educate consumers
on the benefits of products with no pesticides and GMOs.
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
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Normal
practices state that the market leads the economy.
However, there is definitely a disconnect between
economic news, which on balance is good, and the stock market
performance, which on balance is bad. Economic data fluctuates
from what is good to what is now uncertain yielding a market
which does not react favorably to good news and does not work
through bad economic data.
This chart is a key gauge
as consumers drive the recovery question of relationship
between confidence and spending. The month of June shows the
sharpest one-month decrease since September 11th that can be
attributed to an uncertain stock market and crisis in
corporate America. At 97.1, June was the biggest fall since
October and lowest level since February proving that
expectations are not all optimistic. The number of consumers
describing current conditions as bad went from 19.5 to 22.1%.
Consumer Pre*View is designed to look 9 months into
the future and add 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.
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on thumbnail to enlarge
How do we know if
consumers 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. For example, in tracking actual "healthier product"
purchase behavior in four categories against what shoppers had
predicted in March of 2002, those households did in fact spend
a larger percentage of their category dollars on the
"healthier/better-for-you" segment.
It also appears
that households citing "yes" to eating healthier were less
deal sensitive when it came to purchasing salad dressing or
ice cream, but much more deal sensitive on purchases of frozen
dinners. Highlighting an opportunity to shift promotion
dollars to brand equity marketing resulting in greater
long-term margins. |
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CHANNEL WATCH: Supercenters and Club
stores
 Since April, Supercenters and
Club stores have registered the only acceleration.
-A
dramatic deceleration in growth in Dollar stores has occurred
most recently.
-All three channels continue to outpace
the industry. |
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CHANNEL WATCH: Decline in number of
trips
 Growth in number of trips
has declined among all channels
-This may be a
function of pressures on leisure time.
-Convenience
and ease of access could drive business performance in the
future. |
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CHANNEL WATCH: Club
Stores
 Club continue to fuel its
growth by gaining new shoppers
-The challenge is to
provide a buying experience not available in Club stores
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CHANNEL WATCH "Future"
Recomendations
Conventional channels need to
counteract price with valued experiences.
-The challenge
is to provide a buying experience not available in Club
stores.
-Conventional channels need to counteract price
with valued experience. |
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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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