Viewpoints

Why Food Retailing Battle Is Again a Free-for-All

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One of the few advantages of this recession was that it led to clear-cut consumer behavior that could be counted on. High gas prices meant consumers would curtail trips to distant stores. High food prices meant shoppers would focus on value-oriented, one-stop-shop retailers, particularly supercenters. For better or worse, all of this created some certainties around which retailers could plan their strategies.

Now, with the recession beginning to ease and prices for many — but not all — categories lower than before, consumer behavior is no longer as predictable. Suddenly, all sorts of retail channels — from convenience to value — eye renewed opportunities to attract consumers, which means competition is heating up.

This week's category-focused issue of SN and a timely report from Information Resources Inc. underscore the new dynamics.

The new IRI report is called “Channel Migration: The Blurring of Shopper Loyalty.” (The full report can be found on the SN website: SupermarketNews.com. Go to the section toward the bottom of the SN home page called IRI Times & Trends.)

This report outlines how the game is beginning to change in comparison to a year ago. Supercenters are still performing well in share of spending across CPG, with slightly slowed momentum. However, supermarkets have reversed a recent trend of declines in CPG dollar share, IRI notes. And dollar stores have seen a 5 percentage point jump in the average dollar sale per purchase over the past year.

In fact, many retail channels seem to be winning in areas they are actively targeting, such as drug stores with health and beauty care, and supercenters with meal ingredients and components.

Meal merchandising represents a growing battleground between supermarkets and supercenters, the IRI report states, given that shoppers still show strong preferences for at-home eating.

This week's SN issue is a one-stop shop of category information from IRI, including a trend story about shifting consumer behavior; dollar sales and unit sales performance for approximately 300 categories; and detailed profiles of 50 categories that SN editors chose because of their large size and/or growth trends.

The information shows, among other things, that meal-oriented categories are performing well; shoppers are actually willing to spend for certain non-essential items, and consumers are buying vitamins as a way to improve their health — possibly with the intent of cutting back on expensive prescription expenditures.

The upshot is that consumer behavior is more complicated, and this is probably a transition phase that will lead to a new balance of market share between channels and categories.

So in the meantime, don't take anything for granted about consumer behavior because it could very well be wrong.

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Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
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In their Viewpoints columns, SN editors give their perspectives on current industry issues.

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