Research Shows New Shopping Patterns Emerging
What do Target, CVS, Dollar Tree and Starbucks have in common?
These days, they all share the desire to sell groceries. A trip to any of these in your neighborhood will reveal how they are encroaching on grocery sales that had once been reserved for traditional supermarkets.
The New York Times reports that Target invested about $500 million in 2010 to push more groceries into their stores. Target shoppers may visit a couple of times a week for various items, and the addition of groceries heightens the likelihood that they will pick up items that are outside the scope of their original shopping intentions.
Drug stores are aware of these tendencies as well and have significantly increased the amount of groceries they sell. While prescription drugs may still be their mainstay, groceries now account for about 30 – 35% of their sales. According to the St. Louis Post-Dispatch, “CVS has already doubled the food assortment in more than half of its stores within the last year and a half and Dollar General and Family Dollar have been adding more coolers for frozen foods, too.”
Starbucks is the newest entrant in this effort, as it now offers bistro-boxed snacks, lunches and a wide selection of packaged beverages. They also recently announced that they will begin to offer a new line of grocery merchandise.
We wondered if having grocery items available in more places than just supermarkets changes how consumers shop for these staples. At Perception Research Services International (PRS), we recently unveiled results from our shopper research survey focused on grocery sales and the related shift in shopping trends*.
PRS’ survey results indicate that while most shoppers (92%) say they’ve purchased groceries in supermarkets or grocery stores in the past 3 months, many (76%) also indicate they’ve purchased them at Mass Merchandisers, and nearly half (47%) mention Drug stores as a venue for purchasing grocery items. Importantly, one third of shoppers interviewed (32%) reported buying groceries in Dollar stores in the past 3 months.
Given the considerable efforts on the part of retailers such as Wal-Mart and Target to bolster their grocery offerings, it’s not surprising to see the shift to Mass outlets for grocery purchases. However, rather than stating a benefit or preference for buying groceries at these stores, shoppers cite price as the primary reason for doing so, followed by the fact that they’re already there, buying other merchandise or waiting for a prescription to be filled.
Drug stores are a convenient alternative to larger grocery and megastores, and shoppers say the ability to get in and out quickly or pick up a grocery item while shopping for non-grocery items is the reason for buying groceries in drug stores.
As would be expected, price is the primary motive for purchasing groceries in Dollar stores.
Interestingly, purchase shifts by product category are evident as shoppers indicate buying less cleaning and personal products in supermarkets in the past 3 months. They claim to be buying more of all grocery items in Mass outlets – primarily food; while in Drug stores, they buy more personal products, and more of both personal and cleaning products in Dollar stores.
Many factors are contributing to this ‘channel-crossing’ trend. Principally, shoppers are both streamlining and consolidating several shopping trips into one to save both time and gas. Also, the recent spate of mergers and acquisitions has left fewer competitors within channels, and so the focus of competition has naturally shifted across channels.
Another reason many outlets are selling groceries in their stores may have to do with First Lady Michelle Obama’s quest to eradicate “food deserts”. She’s been working with various retailers to ensure that neighborhoods lacking fresh food choices have more options. This focus aligns well with the desire of retailers to increase register rings by offering more types of non-customary items, bringing more shoppers into their stores; as well as encouraging them to buy more while there.
All of this suggests important implications for retailers in the various classes of trade. Supermarket chains must be concerned about losing traffic to other retailers that provide more of a reason to visit such as price or convenience. While supermarkets are generally credited with offering a large selection at present, they can be out-maneuvered by Club Stores and larger “super store” versions of Mass merchandise outlets.
If Mass Merchants truly want to play in this space, they will need to become a destination for grocery shopping and not simply count on shoppers buying groceries while in the store buying other things; nor will they be able to cling to their low price point-of-difference as Dollar stores continue to surge. And Drug chains will need to balance the benefit of providing a broader array of products so as to enlarge each shopper’s basket, against losing the benefit of a quick and easy shopping experience that they now enjoy as a point-of-difference.
As the non-grocery retailers continue to expand their grocery offerings, they will begin to contend with issues that may be foreign to their normal business activities. In addition to making major investments in displays, including refrigeration, these retailers will also need to consider which items to carry and of these, which package sizes or configurations would best entice shoppers, as well as how much advertising should be allocated to their grocery offerings compared to their traditional wares.
As all of these factors continue to play a role, retailers will need to apply their skills and expertise in new ways, learning how to merchandise products they had not previously carried or paying new attention to items that have been collecting dust on their shelves for a long time.
Unlike building a baseball field in a corn field, it may not be safe to assume that, if you stock it, they will come.
*This online study was conducted among over 1,500 shoppers, aged 18+, during May, 2011.
About the author
Jonathan Asher has over 25 years of consumer goods marketing experience.
Jonathan is Senior Vice President at Perception Research Services International (www.prsresearch.com), a packaging and shopper research firm that conducts over 800 packaging and shopper marketing studies annually.
Jonathan is a recognized industry expert and a frequent speaker at marketing, research and design conferences.