Supercenters, E-commerce Will Gain CPG Dollar Share

June 21, 2010

The mass supercenter and e-commerce retail formats will gain substantial CPG dollar share in the next five years, according to the “Retail 2015 Forecast” from The Nielsen Company.

Mass supercenter, which had a slightly less than 10% dollar share of the CPG retail channel in 2009, will grow its share to about 12% by 2015. E-commerce will increase its CPG dollar share from about 4% in 2009 to 7% in 2015. Warehouse club, dollar store and pet stores will also grow share positions.


Supermarkets Stand to Lose
Much of the anticipated mass supercenter/e-commerce CPG dollar share growth will come at the expense of the supermarket sector, which is expected to shrink its share from about 29% in 2009 to 25% in 2015. The rate of this decline will be slower than supermarkets experienced in the previous decade, however. Between 2001 and 2009, supermarkets’ CPG dollar share shrank from 35% to 29%.


Nielsen analysis suggests that while both high-end and low-end niche grocers will grow share, overall share positions in the supermarket sector will remain fairly low, given lower per-store sales compared to larger formats. Other key CPG channels, including drug stores, mass merchandisers and convenience stores, are expected to grow dollar sales but suffer share losses.

Remaining CPG Channels Offer Mixed Performance
The remaining major CPG retail channels will maintain flat dollar share on a combined basis and offer mixed performance when analyzed individually, according to Nielsen analysis. Combined dollar share of the toy, books, pet, office, dollar store, liquor and convenience sectors will remain flat from their 2009 rate of 10% through 2015. This represents a moderate decline from 12% in 2001.


Individually, consumer electronics, pet, and dollar store retailers will gain dollar share. Toy, book, and liquor retailers will lose dollar share, while office retailers will maintain a flat dollar share level.

Smartphone Importance Increases
According to Nielsen, smart phone penetration stands at 23% of all mobile subscribers and is expected to overtake feature phones in the U.S. by the end of 2011. Nielsen predicts that by 2015, smart phones will be the primary enabler of consumer shopping engagements and new technology innovations will generate additional opportunities for retailers and manufacturers.

Driving the rapid adoption of smart phones is the seemingly endless variety of apps, which take full advantage of the smart phone’s geographic location and interactive capabilities. Retailers are already using smart phones as a replacement for frequent shopper cards, sending store coupons and deals directly to a shopper’s phone.

Nielsen expects CPG companies to further leverage the smart phone’s location tracking abilities to target communications and promotions to shoppers both in and out of stores, and upsell consumers on other items based on prior purchases. In addition, consumers will have the ability to locate the best available price for a given item, access real-time product reviews and promotions and manage everything from household budgets and pantry inventory to tax preparation and filing.

Consolidation Likely, Advice for Growing Dollar Share
Nielsen forecasts further CPG retail consolidation as retailers look for scale and opportunities to expand their footprint into existing and new areas. Retail consolidation is expected to be most active within the supermarket and convenience channels.

To prepare for shifts in the CPG landscape, Nielsen advises retailers of CPG products to develop digital and social marketing expertise, plan for diminishing returns from traditional media (such as newspapers and free-standing inserts), prepare contingencies for supplier consolidation, forecast demand at the customer and category level, and seek regional and/or global expansion to combat the negative effect of slowing domestic population growth.

Overall Retail CPG Assortments Shrink 1%
In 2009, the average food channel store decreased SKU variety by 1%, according to another recent Nielsen survey. Results of the March 2010 “Nielsen Retailer Assortment Survey” indicate that in 2009, 40% of food retailers surveyed claimed to have decreased assortment roughly 5% on average. One-third of retailers claimed to have maintained the assortment status quo, while 22% claimed to increase assortment options an average of 3%.

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