Channel blurring taking a greater toll on retail sales

by Keith Nunes
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CHICAGO – There is no longer an “average shopper” in today’s retail environment, according to Information Resources, Inc. How consumers shop, where they shop and when they shop is changing, because consumers have so many options from which to choose.

“Following years of economic trials, the ‘golden ring’ of C.P.G. (consumer packaged goods) shopping is value,” said Susan Viamari, editor of Thought Leadership for I.R.I. “Today, more than 80% of shoppers visit three or more channels to carry out their C.P.G. shopping journey. And, as more nodes crop up along the path to purchase, capturing shoppers’ attention and wallet will become increasingly complex. Retailers and manufacturers must provide value to each and every shopper through individualized targeting and flawless execution.”

During the past year, grocery and drug channels experienced flat to negative trip frequency and declining basket size, while the Internet saw a modest uptick in both frequency and trip spending, according to I.R.I. Dollar channel trips also were largely flat. However, the average basket size rose considerably, with an increase of 3%. Club trips slipped slightly, but spending growth outpaced the industry average at 0.9%.

The shifts underscore the depths of consumers’ willingness to try new channels and banners along their pursuit for value, according to I.R.I.

Grocery share of spending was similar across consumer segments compared to other C.P.G. channels, where share trends sometimes vary rather drastically across consumer segments. The drug channel, for example, wins a disproportionate share of spending from Hispanic shoppers, who spend heavily on beauty and personal care products. Lower-earning households spend disproportionately in the dollar channel – nearly double the average rate. While higher-earning households still index on the low side, the channel is defending its base effectively across this wealthier segment, thanks to ongoing efforts to hone assortments, spruce stores and diversify formats.

Internet share of spending is fairly consistent across most consumer segments. Generation X, households earning $70,000-$99,999 annually and those with children are notable exceptions. Here again, though, retailers are defending the base effectively.

During the past several years, trip mission patterns have changed as well. The club channel is getting more of its dollars from pantry stock-up missions, and the drug channel is playing more of a fill-in role. The shifts underscore the channel-blurring phenomenon that is taking place, according to I.R.I.

In addition, the grocery channel has lost share in core food and beverage departments, including refrigerated, general foods and beverages. Club is winning in beverages and general food while also gaining nearly one-half share point in liquor. Mass/super lost ground in a number of departments, including home care and general merchandise, once again to the benefit of club. The dollar channel is holding steady across major departments, with slight up-ticks here and there, such as gains in beauty.

“Consumer engagement and the C.P.G. journey have forever changed,” Ms. Viamari said. “C.P.G. marketers must adopt a strong multi-channel relevance, including a strong and seamless digital presence, or they will undoubtedly become obsolete. To ensure growth, marketers must execute well against four key strategies: protect and grow the base; maintain solid availability against existing and evolving channel preferences and behaviors; optimize marketing mix by media and retail channel; and develop channel-specific products and packages.”
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