Changing Grocery Shopping Patterns

Overview 1
Catalyst 1
Summary 1
EXECUTIVE SUMMARY 2
TREND: Value has become the most important influence over store choice 2
TREND: The desire to trade-up is also shaping shopping behavior 2
TREND: The types of shopping trip are changing 2
INSIGHT: Stores have become more specialized in response to the key trends shaping shopper preferences 2
INSIGHT: Differentiation is noticeable through private label, convenience and healthier eating 3
INSIGHT: Although most people demand range, for many expanding choice is now too great 4
INSIGHT: Retailers are adapting to new patterns of grocery shopping 4
ACTION: Boost your value offerings 4
ACTION: Help supermarkets to compete other than on price 4
ACTION: Focus on in-store tactics 4
Table of Contents 5
List of Tables 6
List of figures 7
THE FUTURE DECODED 8
INTRODUCTION: Grocery shopping in Europe, North America and indeed around the world is changing in two main ways 8
Shoppers' attitudes towards the different elements of the retail offer are shifting 8
Changing attitudes are encouraging the development of new forms of retail channel which shoppers are using in new and different ways 8
TREND: Value has become the most important influence over store choice 10
Evidence points to a growth in value-oriented shoppers 10
The changing nature of the store mix accentuates the influence of value 11
TREND: The desire to trade-up is also shaping shopping behavior 12
The rise of the 'sacrificial consumer' reflects the tendency to both trade-up and trade-down 13
The emerging demand for superior customer service reflects the quality and experience focused shopper 14
Take-outs and implications: mass market grocery retailing is all about value-for-money 16
TREND: The types of shopping trip are changing 16
The average number of shopping trips is increasing 18
Differences in the frequency of grocery shopping by demographic are minimal 20
A demographic group that is one of the fastest-growing shopper segments is men 21
Take-outs and implications: FMCG industry players need to respond to the growing diversity and spontaneity associated with grocery shopping 21
INSIGHT: Stores have become more specialized in response to the key trends shaping shopper preferences 22
The rise of grocery discounters reflects the trend towards price-led value 22
The continuing rise of convenience stores has been an established feature of developed consumer markets 23
Specialist natural food stores still account for a small proportion of sales but are gaining in popularity 25
More specialist types of store that cater to the specific needs of their target market tend to be rewarded with greater customer loyalty 27
Supermarkets and even hypermarkets are under pressure as consumers switch to specialist stores 28
Take-outs and implications: it is no longer a case of making products available for retail but ensuring the right products are available in the most appropriate channel formats 29
INSIGHT: Differentiation is noticeable through private label, convenience and healthier eating 29
Private labels are increasingly considered credible options in the same manner as 'famous brands' 29
Private label is satisfying shoppers' contradictory demands for premium goods offering good value 30
The depth and quality of home meal solutions is a big draw for convenience driven consumers 31
Natural & organic ranges become an increasingly important factor shaping store choices and point-of-purchase behavior 31
Freshness is a key trend with particularly strong relevance for retailers 32
There are potential problems associated with expanding ranges 33
Take-outs and implications: leading retailers are responding to big issues influencing consumers at large 34
INSIGHT: Although most people demand range, for many expanding choice is now too great 35
More than half of European and US shoppers agree that there is too much choice 35
Overwhelmed by choice, consumers are 'speed shopping' and deliberately using a screening filter 36
This is leading to a more passive approach to shopping 36
Take-outs and implications: the paradox balance between offering range variety and simplifying the shopping experience is an important issue for retailers to resolve 37
INSIGHT: Retailers are adapting to new patterns of grocery shopping 37
Experiments at Wal-Mart reflect the success of fresher, healthier offerings in traditional supermarkets 37
Discount natural & organic stores are emerging 38
Tesco is targeting an unmet need with Fresh & Easy stores in the US 38
Take-outs and implications: the speed of change in the grocery retail landscape is increasing, creating evermore new product development and sales opportunities for manufacturers to seize 39
ACTION POINTS 40
ACTION: Boost value offerings through emerging distribution opportunities and new product concepts 40
Make concerted efforts to supply discounters 40
Develop value brands 41
Develop 'everyday luxury' products 43
Take-outs and implications 44
ACTION: Help supermarkets to compete on factors other than price 44
Learn from the success of natural food specialists 44
Work with retailers to offer best practice meal solutions 46
Help to reinvigorate center store sales 48
Understand that retailers will want to use private label 48
Supply innovative private label products 49
Take-outs and implications 49
ACTION: Develop products for convenience stores 50
ACTION: Focus on in-store tactics to ease choice complexity and communicate with shoppers 51
Increase in-store advertising 51
Use in-store marketing to target men 52
Recognize when choice can be simplified 53
Take-outs and implications 55
APPENDIX 56
Methodology 56
Further reading and references 56
Ask the analyst 57
Datamonitor consulting 57
Disclaimer 57
List of Tables
Table 1: Consumer survey: countries ranked by the growth of value-oriented shoppers 10
Table 2: Consumer survey: the changing role of value in choosing grocery products among European and US consumers, by country 11
Table 3: Consumer survey: European countries and the US ranked by the growth of trading-up-oriented shoppers 12
Table 4: Consumers survey: the changing role of trading-up in choosing grocery products among European and US consumers, by country 13
Table 5: Consumer survey: European countries and the US ranked by the growth of value-oriented and trading-up-oriented shoppers 14
Table 6: Consumer survey: European and US consumers' willingness to pay extra for better customer service by age group and country 15
Table 7: Consumer survey: European and US consumers' willingness to pay extra for better customer service by gender and country 16
Table 8: Types of US grocery shopping trip by frequency and value 17
Table 9: Types of US grocery shopping trip by day of the week 17
Table 10: Consumer survey: average frequency of European and US based grocery shopping by country 19
Table 11: Consumer survey: the composition of European and US grocery shopping frequency by country 20
Table 12: Composition of grocery shopping frequency by age group 20
Table 13: Composition of grocery shopping frequency by household income 21
Table 14: Value share of discounters in western Europe, by country, 2002-07 22
Table 15: Value share of convenience stores by country, 2002-07 24
Table 16: Value share of specialist natural food stores by country, 2002-07 26
Table 17: Specialist natural food store chains in Germany 27
Table 18: Value share of supermarkets and hypermarkets in France, Germany and the UK, 2002-07 28
Table 19: The development of private label, 1970s to 2000s 30
Table 20: Potential winners and losers from the fresh trend 33
Table 21: Consumer survey: the extent that European and US shoppers believe there is too much choice when shopping, by age and country 35
Table 22: Consumer survey: the extent that European and US shoppers believe there is too much choice when shopping, by gender and country 36
Table 23: Presence of private label in different US grocery store formats, 2002-07 40
Table 24: Consumers who seek discounts and express satisfaction from value, by country, 2005 43
Table 25: Penetration of US private label by type of shopping trip 48
Table 26: Industry opinion: ways in which private label could be better promoted 49
List of Figures
Figure 1: Value is an increasingly important motivator of consumer behavior 11
Figure 2: The changing role of trading-up in choosing grocery products 13
Figure 3: Spanish and Dutch consumers embark on the most grocery store visits per week 18
Figure 4: The composition of grocery shopping frequency varies by country 19
Figure 5: Examples of US premium private labels 31
Figure 6: Supermarket traffic at the perimeter versus the center store 34
Figure 7: Discount natural & organic stores are emerging across Europe and the US 38
Figure 8: Tesco Fresh & Easy 39
Figure 9: Two Buck Chuck wines are a real draw for shoppers seeking price-led value 41
Figure 10: Charmin Basic and the possible private label response 42
Figure 11: Larger pack sizes have strong value credentials 42
Figure 12: Giant Eagle's Market District range reflects an emerging product concept: 'everyday luxury' 44
Figure 13: Products that suggest a more personal nature can help mass market retailers counter the selling points of smaller, more specialist stores 45
Figure 14: Featuring actual farmers is a way that Waitrose has personalized its marketing in the UK 46
Figure 15: Best practice meal solutions in the US include Eat Local, Central Market, Apron's 47
Figure 16: Whole Foods Market meal solutions 47
Figure 17: Products developed specifically for the convenience store market 50
Figure 18: Convenience and premium: Harrods 102 convenience store 51
Figure 19: In-store marketing; end aisle display and floor advertising 52
Figure 20: Helping store navigation: Best Cellars 53
Figure 21: Helping consumer choice: Hormel's Custom Kitchen 54
Figure 22: Color blocking and unique shapes can be used to create visual contrast 55