Kantar report debunks grocery retail, shopper myths

by The City Wire staff (info@thecitywire.com) 33 views 

Supermarkets are the great-grandparents of all modern retail. And while they face on onslaught of increased competition. experts don’t expect them to become extinct anytime soon.

That said, a recent report by Kantar Retail seeks to debunk several myths surrounding the grocery store industry, while another report from Catalina suggests that those retailers who survive will the be ones that cater to the individual shopper on a personal level. Kantar notes that supermarkets have undergone an evolutionary change during the past three decades and some of the industry norms may no longer be the rule.

Following are some new trends, according to Kantar.
• More than 5% of total supermarket sales growth will come from pure natural/organic formats, which continue to grow more than twice as fast as the rest of the “channel”.

• 47% of the growth in the “channel” will come from value-oriented operators, while more than will come from retailers who position themselves as premium

• Mainstream retailers have the slowest growth rate in the channel

• 7 of the top 15 supermarket retailers run multiple formats

Kantar said the myth that supermarkets will always lose share, simply isn’t true. The retail analysts project the compound annual growth rate for supermarkets to grow faster than supercenters over the next five years.

Using U.S. government statistics for edible and non-edible grocery, company figures and Kantar’s own research, the report suggests the supermarket industry is holding a 52% share in edibles with no projected losses through 2017. At the same time they see the non-edible product share growing from 37% to 38% by 2017 in the supermarket group.

Another myth Kantar disputes is that the circular drives the business. Kantar notes that the circular is not dead, and it’s not likely to become extinct entirely, but its impact is is lessened with the low price strategies used by many retailers. They also note that savvy consumers today may be more apt to use technology-based e-coupons, and digital forms of discounts which can be more easily tied to loyalty programs to targeted consumers.

Catalina Marketing, a shopper research firm, recently release a study that analyzed shopper habits over a 52-week period for some 32 million consumers. This study found that despite a time of unparalleled choice in the grocery store, consumers ignore all but a tiny fraction of available products:

• On average, during an entire year, consumers buy just 0.7% of available items.
• Even top shoppers, who account for 80% of all store purchases, buy just 1% of products available.

Catalina also notes that shoppers are selective about their purchases in every department in the store. An analysis of seven key departments showed that the average department shopper buys just 1.7% of dairy products and 0.2% of health and beauty care products over an entire year. WIth that background, Catalina claims that one-size-fits-all promotions do not typically resonate with a majority of shoppers.

Catalina examined a major retailer’s Memorial Day shopping circular and found that two-thirds of all shopping baskets didn’t include a single item among the 1,172 advertised. Looking at the following week circular from the same retailer, 74% of shopping baskets did not include a single item, the study notes.

The notion that the size of the box matters is quickly changing as various formats continue to evolve, according to Kantar. Wal-Mart, the supercenter king, has aggressively built out smaller format Walmart Neighhborhood Markets. Texas-based HEB and national grocery giant Kroger continue to erect stores much larger than the conventional grocery store, and urban retailers are building more hybrid stores.

This blurring of the lines is a reaction by grocers to compete head-to-head with mass retailers and dollar stores that inundated the U.S. landscape over the past decade with gigantic sprawling supercenters and smaller convenient store models that sell food and other consumables.

Kantar’s research indicates the smallest formats will record the biggest percentage sales by 2017, as consumers will likely want to spend less time shopping for groceries in smaller formats. The study found the small grocery format (under 20,000 square feet) recorded a compound annual growth rate of 3.3% in sales between 2007 and 2012. These small formats recorded $502 billion in sales in 2012, with the number expected to hit $635 billion by 2017.

Stores between 20,000 and 40,000 square feet reported a dip of 0.1% in sales from 2007 to 2012. Kantar expects this subgroup will see a 3.3% annual growth rate by 2017 to $363 billion in sales.

Those stores between 50,000 and 100,000 square feet posted a 1.7% annual growth rate in sales from 2007 to 2012. This group is expected to see sales top $298 billion by 2017, growing at 3.8% annually.

Supercenters between 100,000 and 150,000 square feet posted a 5-year growth of 0.7%, but are poised to reach $454 billion in sales by 2017, up 3.3% annually. The largest supercenters above 150,000 square feet posted a 5-year annual growth rate of 3.5% are expected to top $372 billion by 2017, up 3.1% annually.