BUYER CONVERSION TO DISCOUNTERS CONTINUES IN GROCERY

BOB BAUER

Though experiencing a slight gain in its numbers, Center Store nonetheless lost ground to discount stores in the 10 product groups with the highest buyer conversion rates in those outlets.

Each of the 10 categories recorded increases in buyer conversion rates in the discount channel in 1995 over 1994, according to A.C. Nielsen, Schaumburg, Ill. Buyer conversion is defined as the percentage of shoppers who buy from the product group within a class of trade. While the average buyer conversion rate across the 10 categories in supermarkets rose from 88.4% to 88.8%, the average in discounters rose by 2 percentage points, to 60%.

While the numbers show how discount stores are gaining strength, they also demonstrate the willingness of consumers to shop around, a Nielsen official told SN. "These categories, though rising somewhat in discount stores, are still bought -- particularly the food items -- by well more than 90% of grocery store shoppers," said Todd Hale, vice president of national sales and service at Nielsen's consumer information division.

In spite of increased efforts by grocers in the pet food aisle, the pet food product group tied as the biggest gainer for discounters in terms of buyer conversion, up 3 percentage points to 55%. Detergents were the other big gainer, also rising from 52% to 55%.

Those targeting buyers of pet food, however, may be on the money. The purchase frequency of pet food buyers is 20.5 times per year, nearly double the 10.8 rate for detergents.

"Clearly, successful grocery stores are going to be those who take advantage of the inherent frequency advantage they have," Hale told SN.

"As they have people in the stores, they need to get them to buy the products they want to buy. Pet food is one of those categories that is bought so frequently that the probabilities of it are that you're going to have a greater chance to buy it in grocery if the grocery stores do the right thing to keep them there," he said.

The product group with the largest buyer conversion rate in discount stores is candy. At 78%, it's up 1 percentage point from 1994 when it was 77%.

Paper products are the next-largest product category in terms of buyer conversion. At 73%, the category experienced a rise of 2 percentage points last year. Paper products rank second in the 10 categories being examined in terms of purchase frequency, with the category being purchased nearly 25 times a year.

The leader in that area is carbonated beverages, with a purchase frequency of 32 times a year. That product group experienced a lift of 2 percentage points, to 52%, in buyer conversion in discounters last year. In the studied categories, carbonated beverages have the highest buyer conversion rate in supermarkets, tied with snacks at 98%. However, more people -- 63% -- buy snacks in discounters.

In these 10 product groups, candy -- already with a 92% buyer conversion rate in supermarkets in 1994 -- experienced the largest gain, up 2 percentage points to 94%.

On the whole, supermarkets realized gains of 1 percentage point in four of the product groups and a loss of a percentage point in pet food. The remaining five categories held steady.

Citing research he did on five large grocery categories, Hale said buyer conversion information is useful because it helps track consumer shopping patterns.

"The bulk of the volume, particularly among heavy category buyers, is coming from people who buy in two or three or more channels," he said of the studied categories.

Hale said that while it's important that manufacturers have a channel strategy, grocery stores must become familiar with other channels as well.

"[Grocers] can't just think of themselves as competing only against other grocery stores. They have to think about PetSmart and Wal-Mart and the like."

Slip-Sliding Away [chart]

Though supermarkets had mixed results, discount stores experienced a rise in buyer conversion in each of the top 10 product groups (in terms of buyer conversion percentages) in which they sell grocery products.

Where Purchases Were Made

1994 1995

Supermarkets Discounters Supermarkets Discounters

Candy 92% 77% 94% 78%

Carbonated Beverages 98 50 98 52

Cookies/Ice Cream Cones 95 52 96 55

Detergents 90 54 90 55

Disposable Diapers 73 54 73 56

Gum 70 57 71 59

Household Cleaners 85 52 86 54

Paper Products 97 71 97 73

Pet Food 86 52 85 55

Snacks 98 61 98 63

Source: A.C. Nielsen