Shoppers are cutting back on the number of stores they visit, concentrating visits to stores known for lower prices, generally visiting stores less frequently and spending less money per trip, according to a new report that sees consumers shifting toward discount retail channels.
“In addition to potential pressure on retailer revenues and margins, these trends point to managers having fewer chances to ‘get it right’ with shoppers,” said John McIndoe, senior vice president, marketing, SymphonyIRI, which conducted the research. “If a shopper visits a store and is unhappy with the experience, she will quickly go elsewhere.”
Grocery remains the dominant channel, with 98.4 percent penetration during the 52-weeks ending June 27, 2010. Other leading channels include drug (77.0 percent penetration), mass merchandise (71.6 percent) and supercenters (69.5 percent). Supercenters enjoyed the largest penetration increase of 1.9 points, followed by dollar stores with a 0.5 point increase. Mass merchandise penetration decreased 2.3 points, while convenience store penetration declined 1.9 points and drug fell 0.5 points.
As a result of the consolidation of the number of stores shopped and the decrease in dollars spent, a variety of trends are emerging, the researchers said.
- All retailers are instituting aggressive pricing, merchandising and promotion strategies to woo shoppers
- Channels known for low prices are tending to perform better
- Many mass merchandisers are shifting to a supercenter format
- Convenience stores, known for carrying non-essentials, are feeling the pinch as shoppers remain wary about spending
The researchers suggest retailer and manufacturers refocus their efforts to follow the migration of customers to new channels and modify their approach to marketing and merchandising to meet the increased demand for lower prices and a perceived increase in value.
"Marketers must understand channel migration patterns at the micro level," said Susan Viamari, of SymphonyIRI.
Retailers and manufacturers need to ask themselves the following questions, Viamari told BusinessNewsDaily.
- Who are my most promising/important targets/buyers?
- What is going on at the category level?
- Where are my most important targets/buyers purchasing my product(s)/competing products?
- What is going on with my brand/competing brands?
- Are my merchandising and distribution strategies aligned accordingly?
"We recommend tracking these components regularly, particularly in a transforming economy," Viamari said.