TOP-TO-TOP 1994-07-25

Burt Flickinger

The mass market is dead. A new generation of consumers is bypassing Safeway and other successful supermarket chains of today to shop at stores, many of which did not exist 10 years ago.

Francois Borgrand of Bretagne, Prisunic and Bon Marche in Europe predicts that successful future stores will "trade as either big box or small box specialty formats." Successful big box formats include Fred Meyer's prototype and Wal-Mart's and Ahold USA's supercenters. Small box specialty stores are thriving, drawing a broad spectrum of people, from those with limited or fixed incomes to the more prosperous, with high levels of education. Albrecht's Aldi stores and Trader Joe's in California provide strong examples of successful limited assortment stores. Other small store retailers, including Fresh Fields, Whole Foods, Alfalfa and Wild Oats, trade very high dollar sales per store.

Exclusive brands drive business growth in all the large and small box examples. Procter & Gamble, Johnson & Johnson, Kraft General Foods, and the other manufacturer marque players on Main Street do not have many core stockkeeping units in any Aldi, Fresh Fields, Whole Foods, Trader Joe's and Alfalfa & Wild Oats.

Specialty stores and large box formidable format retailers target their markets better than manufacturers that market to the masses. As the rainbow of consumers of color replaces European/Anglo-American population as the majority group, a unique League of Nations approach to the differentiated consumer bases will determine one's level of profitability.

Direct and data base marketing, utilizing a Market Metrics consumer profile within the trading area of every store, can deliver a very profitable payout for both manufacturer and retailer. Electronic in-store marketing can build profits further using, as an example, a Catalina system with retail chain and syndicated service analytics.

Retail chains can manage the consumer data to drive profitable volume and share. As retailers invest in category management and aggressively market the store (and its unique elements) as "the star," the retailer and its individual stores will control more of consumer marketing.

The large manufacturers will need to share research and marketing resources to successfully co-market with the retailer.

P&G, Unilever and Colgate won the earlier marketing wars with slice-of-life," high gross rating points advertising campaigns. The mass market that those ad campaigns reached is dying along with many of the older stores the supermarket chains designed to serve the mass market.

Manufacturers and retailers now have either the opportunity to share resources to profitably "co-market" to a wider range of consumer constituencies or pursue monolithically the old mass market as it declines even further.

Burt Flickinger 3rd is a management consultant in consumer goods practice at A.T. Kearney.