Consumers are shopping less frequently in traditional grocery stores, but increasing their trips to supercenters like Wal-Mart and dollar stores, according to a recent study.
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Accordingly, supercentres and dollar stores are showing gains both in the percentage of households who shop in those channels and in the number of trips consumers take to them each year.
Todd Hale, senior VP consumer insights of ACNielsen US, the company which compiled the “channel blurring” study, commented: “More than ever, grocery retailers have to create a unique reason for shoppers to choose them. The consumer has to associate the name on the store with something very positive and very different from the competition.
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“Retailers could be doing much more with their frequent shopper databases to segment their customers and to develop strategies around each segment to grow their overall business.”
As detailed below, all US households still shop in traditional grocery stores, but the annual number of trips households make to such stores is continuing to decline. At the same time, both supercentres and dollar stores have shown strong gains in household penetration and smaller gains in annual trips.
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By GlobalData———————————————————————-
Household Penetration (%) Trips Per Year
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Channel 1998 1999 2000 2001 1998 1999 2000 2001
————- —- —- —- —- —- —- —- —-
Grocery 100 100 100 100 85 83 78 75
Mass Merchandise 94 95 94 93 28 26 25 23
Drug 86 87 86 86 15 15 15 15
Supercentre 47 52 54 63 14 15 17 18
Dollar 47 52 55 59 9 10 10 11
Warehouse 49 50 49 50 9 9 10 10
Convenience/Gas 52 50 48 45 13 13 14 15
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Source: ACNielsen Homescan 52 weeks ending 12/29/01
Among supercentres, Wal-Mart has been especially successful at converting grocery-store customers to Wal-Mart customers. An analysis of ACNielsen Wal-Mart Channel Service data shows much of the retailer’s supercenter sales growth coming from traditional grocery-store shoppers. While 7% of 2001 Wal-Mart Supercenter sales growth came from new shoppers and 21% came from existing shoppers who increased their Wal-Mart Supercenter spending, the majority – 72% – came from a direct shift of dollars that had previously gone to other channels. As the chart below shows, almost one-third of that “channel-shift” revenue growth came from the grocery channel.
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Source of 2001 Percentage of 2001
Wal-Mart Supercentre Wal-Mart Supercentre
“Channel-Shift” Revenue Growth “Channel-Shift” Revenue Growth
———————————————————————-
All Other Channels 33
Grocery Stores 32
Wal-Mart Division 1 Stores 22
Other Mass Merchandisers 13
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Source: ACNielsen Wal-Mart Channel Service 52 weeks ending 12/29/01
Hale said it is important to note that the degree to which Wal-Mart is gaining at the expense of the grocery channel is actually somewhat less than would be expected. “When you exclude the supercenter channel, grocery stores generated 40% of all-outlet revenue in 2001. Therefore, of the channel-shift revenue growth experienced by supercentres, we would expect 40% to come from the grocery channel.
“The fact that it was 32% means grocers are having at least some measure of success defending their turf.”
