SIIA 2005

Robert Vosburgh

CHICAGO -- Why are supermarkets losing Center Store sales to competing channels? The answer lies in stock-up trips.

That's among the findings of a "holistic," trip-based study of 2,400 shoppers by Unilever Foods, Englewood Cliffs, N.J.

Mike Twitty, senior manager of shopper & channel insight for Unilever, presented the company's findings here at the Institute for International Research's Shopper Insights In Action conference.

"What we're trying to do is to capitalize on the understanding of the different needs on different trips and sharing it with retailers to help them succeed," he said.

The study, a mix of proprietary and supplied research, found four major groups of trips. The findings also validate what has long been suspected -- so-called "quick trips" are increasingly dominating the American food-shopping experience:

- Major stock up (13% of all trips).

- Fill-in trip (25%).

- Quick trip -- few items specifically for a pending meal.

- Quick trip -- few general items (62% combined).

Researchers determined that shoppers are now making an average of 10 shopping trips per month, with six devoted to purchasing only a few items. Three trips were reserved for fill-ins, and only one for major stock-ups.

While supermarkets still perform strongly in each group, Center Store items are primarily purchased during the major stock-up outings -- and those are going to club stores and supercenters, Twitty said.

"Supermarkets are the generalists; they live on the middle ground and serve all kinds of food needs," he said. "They're being squeezed on top by big-box, value-oriented retailers to get those bigger trips, and they're being squeezed on the bottom by other classes of trade."

Indeed, the study found that only 13% of all shopping forays were classified major stock-ups. Supermarkets capture 72% of that business, but supercenters are getting 13% and club stores 9% -- up from prior years.

"This is where they seem to excel," Twitty said of the competing formats. "People going to club stores and supercenters are definitely shopping for the long haul."

The major stock-up dilemma is particularly acute for high-low operators as their pricing model has lost effectiveness in the face of supercenters, the champions of everyday low prices.

"We say that Center Store items are much more likely to be purchased on the bigger trips," Twitty said. "But we see bigger trips more and more driven by value, and we see bigger trips migrating more to supercenters and club stores. So the center of the store shrinks accordingly for a high-low grocer because shoppers are buying more of those items on bigger trips, and the bigger trips are taking place more at big-box, value-oriented retailers."

During in-and-out dashes, shoppers are avoiding the dry grocery aisles and patronizing the perimeter, where fresh foods reign. The study found that quick trips now account for as many total food dollars as fill-in or major stock-up visits. They are also more profitable, since shoppers prefer to save time and are less likely to comparison shop.

"Speed trumps price," Twitty said.

One grocery category, however, is performing well. Twitty pointed out that sales of frozen foods are up. The survey found that shoppers like the taste, improving nutritional content and the convenience that frozens provide. Consumers feel they can stock up on these items and enjoy top-quality eating later. Again, frozens are likely being purchased during those major stock-ups in supercenters and club stores than in traditional supermarkets.

Retailers may be acutely aware of the phenomenon, but suppliers may not be.

"The Center Store category decline that grocers are experiencing is much greater than the decline manufacturers might see," Twitty noted. "In many cases, there are no declines; it's just that the products are being sold elsewhere."

Twitty urged retailers to move toward models that emphasize a niche and away from their tendency to be all things to all people.

"When you say 'Wal-Mart,' everybody knows what their niche is. It's a razor-sharp message: 'Low prices. Always.' Many retailers don't have that luxury," he said. "Many haven't focused on building that niche among their shoppers, and that's what they need to do. If they don't, they're going to continue to lose trips, because generalists will always be vulnerable to specialists who do one aspect of their job better."