Inside This Issue - News
September 3rd, 2012
CHICAGO – Though it’s hardly news that today’s consumers are shopping at a variety of retail outlets to fit their budgets and meet their personal needs, they may be channel switching even more than retailers might think, according to a report from SymphonyIRI Group Inc.
The market researcher’s Times & Trends study “Channel Migration: Charting a Course on the Voyage for Value,” released last month, found that a lot of consumers are shopping as many as seven consumer packaged goods (CPG) channels to snare the best value for their hard-earned dollars.
Consequently, such behavior is churning up the market share alignment among retail channels.
For example, SymphonyIRI said, dollar stores continue to gain favor with consumers, with two out of three Americans shopping those outlets over the past year. As a result, dollar stores are challenging other types of retailers for routine shopping trips and are siphoning share from across the retail spectrum — especially from drug stores.
Symphony IRI reported that heavy drug store shoppers — who represent the top one-third of spenders within that trade class — are migrating to dollar stores. The research noted, however, that such a shift isn’t a big surprise, since both channels carry many of the same CPG categories and are well positioned geographically for convenient, fill-in shopping trips.
Also during the past year, consumers have been making less frequent but larger CPG shopping trips. The report said trips were down in the supermarket and mass merchant channels, likely decreasing because of an ongoing decline in the frequency of pantry stocking trips.
While a swoon in stock-up trips would lead one to think that warehouse clubs would feel the pain, SymphonyIRI found that club trips have actually risen 2.1% over the past year. That stems from a confluence of factors, the researcher explained. For one, warehouse clubs are expanding their number of outlets. In addition, club trips have gotten a lift from fuel purchases as well as from moderating food inflation, which makes it easier for consumers to absorb bulk-item pricing, the researcher said.
Meanwhile, the dollar channel saw the number of shopping trips surge during the past year as well, which SymphonyIRI said reflects that consumers deem dollar stores a “smart” choice for affordable CPG purchases.
Overall channel share shifted slightly over the last year, with drug, dollar and club channels each gaining ground at the expense of grocery and mass merchandise, according to the report. The supermarket sector continued to lose dollar share and now captures 47.9% of grocery dollars, down 0.3% from 2011, which illustrates that channel’s struggle against nontraditional outlets for share of food and beverage sales.
"Even though the recession has long since softened, the economy is far from stable, so consumers are holding onto the frugal behaviors they adopted earlier in the downturn," stated Susan Viamari, editor of Times & Trends at SymphonyIRI. "Shoppers’ ongoing quest for low-cost CPG solutions is evidenced in share gains by supercenter and dollar store channels, which are both successfully acquiring shoppers from across competing retail channels."
To safeguard share, retailers should track shifts in trip mix at the market level and across key shopper segments, SymphonyIRI said. Retailers should also make sure that their assortment and merchandise strategies are tailored to their most valuable shoppers’ preferred trip missions and store locations, as well as have a strong grasp of emerging shopper patterns and competitive threats among key shopper and target segments.