Consumers rely upon multiple channels when shopping for CPG products, but they are beginning to narrow those channels, per an August 2012 study [download page] by SymphonyIRI. The percentage of consumers who relied upon fewer than 5 channels was up significantly in Q2 2012, rising to 49.2% from 44.5% in Q1. Conversely, the percentage of shoppers who relied upon 5-9 channels dropped from 52.4% to 48.9%. The report suggests that consumers may have identified the channels that offer the greatest perceived value, and are limiting their spending to those channels.
Supercenters, Dollar Stores Win With Shoppers
Consumers have numerous options available to them, but supercenters, dollar stores and drug stores showed the strongest point gains for the 52 weeks ending in mid-April 2012. Measured by percentage of households buying in those channels, mass merchandisers lost 2% points to 74.5% of consumers. Conversely, supercenters gained 1% point, to 73.9% of consumers, while dollar stores rose 1.3% points to attract 65.1% of CPG shoppers.
The researchers conclude that consumers who seek bargains from dollar stores for dry goods are easily upsold to grocery and refrigerated items. In a difficult economy, dollar stores are feeling the benefit of having a strong value proposition.
Dollar Stores Lead Gains In Frequency Of Visits
Consumer trips are down 1% across all retail outlets, and have declined in the grocery, supercenter and mass merchandise channels – likely due to a corresponding decline in pantry stocking trip frequency. From May 2011-2012, pantry stocking missions declined 1.7% overall.
The dollar-store channel saw a boost of 6% by trip frequency, followed by drug stores (2.7%) and club stores (2.1%). Convenience stores gained slightly (0.4%). The gain at dollar stores reinforces the notion that consumers view them as a smart choice for affordable CPGs.
Different Consumer Segments Select Different Channels
Channel behavior across key consumer segments is a mixed bag. In terms of dollar share point change by consumer segment, from May 2011 to 2012, drug stores, club stores and dollar stores all gained among every segment identified.
The most dramatic gains were in the club channel, which gained 1.1% points in Hispanic dollar point share, and 0.8% points in dollar share for households earning between $70K and $100K.
Dollar stores were up across all segments, from the least wealthy (under $35K; +0.3% points), to the most wealthy (over $100K; +0.1% points).
Drug stores gained most strongly among households with children, up 0.6% points, followed by a two-way tie between Hispanic consumers, and households earning $100K or more (+0.5% points).
The short story – no demographic, from lowest-earning household to the highest, is above finding the most convenient and lowest-cost shopping experience.
That affects retail channels, and brands as well. Nielsen data released in July 2012 revealed that between late September 2011 and mid-April 2012, 50 of 64 major food and non-alcoholic beverage categories had declining unit sales. CPG retailers and manufacturers are challenged by the rise of alternative channels (club, dollar, online); a prepared-meals focus from retailers; an aging population; gas prices; and sales for the top 150 fast casual restaurants which were up 8.4% to $21.5 billion in 2011, to near pre-recession levels.
