We have made the decision to move the ShopperWonk Community into Nielsen Wire & Nielsen.com. The new name for our community will be Nielsen Shopper Management. The primary reason for the move is to give our strong content more exposure via NielsenWire which reaches a broad spectrum of clients, thought leaders, and marketing mavens. Please look for our shopper management content under the tag: Shopper Management. http://blog.nielsen.com/nielsenwire/tag/shopper-management/ Many of us already have a presence on Nielsen Wire and there will be more to come this summer. http://blog.nielsen.com/nielsenwire/tag/tom-pirovano/ http://blog.nielsen.com/nielsenwire/tag/todd-hale/ http://blog.nielsen.com/nielsenwire/tag/jay-stockwell/ Thank you for your support of the community. We look forward to your feedback. See you on Neilsenwire.com!
06/05/2009
05/30/2009
Wonk Contributor Pirovano Interviewed on BNET on the Rise of Private Label
Mike Duff of BNET recently interviewed our own Tom Pirovano on the rise of private label.
See entire interview here: http://tinyurl.com/psu9zm
Here is an excerpt:
Nielsen Co. director of industry insights Tom Pirovano noted that, after many years, it’s the turn of national brands to play catch up. By the middle of 2008, dollar and unit sales growth figures demonstrated that consumers had began replacing national brand products with private label equivalents as concerns about a recession deepened.
Since then, store brands are up 10 percent to $84.4 billion in annual sales across categories reported by Nielsen. Marketers of national brand packaged goods concede that private label switchers will be reluctant to return when the economy improves, Pirovano observed. That should encourage new thinking among retailers and even national brand producers, many of which also manufacture private labels, to build on what will be an ongoing shift in consumer behavior.
Retailers need to commit resources to more firmly establish their private labels, but they also can build alliances with national brand producers, even if they might not be easy to forge at this juncture. Through partnerships, though, national brand producers can protect key brands by tying them into private label promotions, while retailers can retain the manufacturer marketing support – including dollars that pay for store circulars and other advertising — they have become accustomed to receiving. Pirovano detailed how the relationship between national brands and private labels might evolve in a Bnet interview.
Bnet: What are the most critical factors retailers need to consider when developing a private label?
Pirovano: This depends on the intended role of the private label products in question. Many store brands are less expensive versions of top-selling brands. In this case, the focus is on developing a product extremely similar to the targeted category leader, and then determining the optimum price gap. When developing a premium store brand, the role of the product can shift from a cheaper alternative to a destination product. While premium private label offerings can build retailer loyalty, they require significantly more research. This includes a much deeper understanding of consumers, how they shop, how they use/consume the product and how they perceive brands.
Bnet: How can retailers ensure that their private label products will gain trial among the widest range of consumers possible?
Pirovano: Getting shoppers to try a private label brand — especially premium private label — is a huge missed opportunity for many retailers. If a store brand is really as good as the national brand, or better, retailers need to get shoppers to try it. Retailers can offer a free package with a $50 purchase. They can also consider a trial size or in-store product demos.
Bnet: Can retailers and national brand manufacturers tailor their individual product programs to be complementary of one another and create a win-win?
Pirovano: Yes. We already see this at some retailers with cross-category promotions on products like branded cereal with private label milk or branded hot dogs with private label buns. These partnerships can help retailers gain trial usage for their store brands while consumer product goods manufacturers may gain additional facings [shelf space] or displays. The next step may be holiday recipes that call for specific brands, including a mix of national brands and store brands.
- Jay Stockwell, TheShopperWonk
05/28/2009
05/26/2009
Rich Man, Poor Man and the Recessionary Impact on Shopping Behavior
As the recession intensified in the U.S., value retail channels (i.e., dollar stores,
warehouse clubs and supercenters) continue to win shopping trips – particularly from more affluent shoppers. During the second half of last year and through the first (4-week) periods of 2009, these three retail channels drove stronger year-over-year trip growth than the grocery, drug and mass-merchandiser retail channels.
Note: Click on graphics and they will expand.
More affluent households (incomes of $70K +) were shopping the grocery channel more often and account for the largest share (42%) of total basket ring dollars versus middle income ($30 to $69.9K) and low income (less than $29K) households. For the past 11 periods, affluent households posted trip growth in every period, while grocery trips by middle income households were about flat and grocery trips among low income households were off in all but two periods.
While many grocery retailers followed the success of Save-A-Lot’s meal deals with their own higher- priced version, these findings suggest opportunities beyond a series of me-too offerings. How about stepping up activities for on-
line recipes, in-store cooking demonstrations and cooking classes in stores serving more affluent consumers? In a April 2009 Nielsen Homescan survey, 50% of adult consumers with incomes of $70K + stated they were eating out less to save expenses – four percentage points higher than the 46% rate for all adults.
Affluent households drove faster trip growth in supercenters, warehouse clubs and dollar stores too, but their overall importance to the sales in each channel ranged from a low of 20% for dollar stores to a high of 58% for warehouse clubs. Here too we see opportunity to use different assortment, pricing and promotional programs targeted to the “shopper income” draw of a particular store. And while value messaging needs to be prominent in these tough times, it can’t all be about low prices!
For further information or to arrange a comprehensive presentation on consumer shopping patterns, please contact Todd Hale at 859-905-4615.
- Todd Hale, TheShopperWonk
05/22/2009
Nielsen Shopper Management Thought Leadership
Now that the heat of our Consumer 360 (note: check out video on demand section on the site to see conference general and concurrent sessions) conference has subsided and we officially head into summer, TheShopperWonk team wants to share our plan for continuing our thought leadership program. Thus this summer we are announcing on ongoing program for Shopper Management thought leadership.
05/19/2009
The Future of Media/Communications in Consumer Packaged Goods Retailing
Our CPG world is one where technology is rapidly evolving and transforming how consumers receive, seek and use information to impact buying and shopping decisions making it harder than ever to manage and almost impossible to control. In the March 18, 2009 edition of USA TODAY, an article appeared with this title "Extra, Extra! Are newspapers dying?" with a subtitle of "Closings scare some: others say no way will newsrooms die". The article pointed out that "At least one city – possibly San Francisco, Miami, Minneapolis or Cleveland – likely will soon lose its last daily newspaper." According to the Newspaper Association of America, Sunday circulation has dropped about 20% between 1999 and 2007. From Nielsen Monitor Plus we see how ad spending was off in 2008 as our economy weakened, with three of the four biggest declines from local and national newspapers. As U.S. retailers have relied on newspapers to deliver a major portion of their advertising, these trends obviously suggest a need to look for alternative forms of communication vehicles.
As a researcher and avid newspaper reader, I thought it might makes sense to do an audit of the number of feature ads and coupons my family is exposed to on any given Sunday. For this audit I selected the May 3, 2009 edition of The Cincinnati Enquirer. Maybe a little heavy being the week before Mother’s Day, but nevertheless, I found it to be an eye-opening audit. In the body of the newspaper I found four very good full page ads from Kroger. There were three separate coupon booklets yielding a total page count of 124.
There were 24 inserts from various manufacturers and retailers ranging from just two pages from Aldi to 48 pages each for Kohl’s and JCPenney; total page count of 352. How many of you also receive a plastic bag on Saturday or Sunday mornings that is stuck to your mail box or floating in a pool of water at the end of your driveway on rainy days? Well I do and for this particular week we had ads from five retailers totaling another 62 pages.
So, is this the best way to reach our time-starved and diverse population base? Full page ads and coupon booklets with 124 pages; ad inserts totaling 352 pages; and stuff in plastic bag adding another 62 pages. The final grand total page count (not counting car ads, local specialty shop ads, etc.) was 538 pages. Kind of like being asked to read a Stephen King novel every Sunday in order to find an advertisement or coupon offer of interest to me as a shopper. And, isn’t it kind of odd with all of the discussion around sustainability issues regarding plastic shopping bags, that there has been little mention regarding the amount of newspapers filling our waste dumps? By the way, I clipped one coupon from these 538 pages and put it in my coupon envelope and I just hope I remember to use it before it expires.
While we don’t think we will see the complete demise of newspapers, technology will clearly play a much bigger role in the future as newspapers will diminish in importance or shift to an online or digital delivery mode. So who do you think the winners will be with respect to the future of media/communication vehicles?
- Will it be computers and online engagements?
- What about mobile phones and PDA devices?
- Will the promise of in-store engagements prosper?
- Will traditional radio and television emerge as winners?
- What about the new age of social networks?
- Or, will the promise of frequent shopper or loyalty card programs come to fruition?
The answer is that a well integrated multi-media/communication program will be required to target and reach a diverse and evolving population base. And you will notice that I have put newspapers back into the equation, but we will see dramatic changes in how newspapers are delivered as they go online or are delivered through devices like the Amazonkindle - the electronic book that enables wireless downloads of books, magazines and newspapers in less than 60 seconds. Television is still king in terms of overall audience size and length of engagement. However, usage patterns across the above vehicles can vary considerably by demographic segments and future marketers will deploy sophisticated media planning systems to maximize reach and frequency of their consumer connections.
But we would be naive to think we understand where technology will take us in the future. The emergence of MP3 players and the success of IPods and IPhones are great examples of how technology can change how consumers receive and seek information in a very short time horizon. The Ipod has grown from a device for downloading and listening to music; to storing photos; to downloading videos clips and movies; to a cell phone with software applications whose end count appears to be almost limitless.
For further information or to arrange a comprehensive presentation on consumer shopping patterns, please contact Todd Hale at 859-905-4615.
- Todd Hale, TheShopperWonk
-email: todd.hale@nielsen.com
05/18/2009
Understanding the Ultimate Shopping Trip
How relevant is the actual shopping experience to consumer purchasing? A new Italian specialty chain in my area creates an incredible, unique, European experience that makes one forget they are actually in a super market. As shoppers enter, they are greeted with sentimental tunes by likes of Dean Martin and other classic crooners. Senses are overwhelmed with savory fragrances of imported cheeses, fresh meats, and baked breads. The lighting, décor, and displays have been intentionally designed to create the illusion of strolling through the outdoor As one woman stepped back into the reality of the parking lot, I asked, "What did you think of that new market?" Dazed and a little irritated as she answered, "I was having a great time until I realized I just spent $15.85 on roasted peppers! I doubt I’ll be buying much here, but I’ll be back to browse." What is most important to shoppers? Does is vary by household type, region, or maybe trip type? Wouldn’t it be great to know why a shopper stopped into a particular store, and how what they thought about the store immediately after they shopped there? With Nielsen’s Trigger Surveys, manufacturers and retailers can keep a pulse on what motivates consumers to shop in certain chains or locations and what they valued or disliked on any particular visit. Homescan panelists with online access transmit their purchasing information via the Internet. Purchase data is instantly interrogated for defined stores or products of interest. Once any of these criteria are met, a brief online survey pops up and the panelist is asked to respond immediately. No other research method allows shoppers to be surveyed in this way and provide the ability to connect their responses/attitudes directly to their actual purchasing behavior. -Janice Linnane, TheShopperWonk -email: janice.linnane@nielsen.com neighborhood markets in the streets of Italy. The selection of culinary delights was endless, and the atmosphere made for a very leisurely and enjoyable shopping trip.
05/13/2009
11 Tips for Retailers to Grow Their Store Brands
I recently shared some thoughts on how CPG manufacturers can protect their brands from private label expansion. It didn’t take long to hear back from retailers asking for tips on growing their own brands. Here are a few private label ideas for our retailer friends.
1. Study the category consumer before going upscale. Consumer understanding is the common thread among top-selling brands. It’s not enough for a retailer to roll out a quality product in premium packaging.
2. Disguise your premium store brands. Many consumers still associate private label with cheap knockoffs. There – I said it. But what if they don’t know it’s a store brand? Look to position premium store brands as exclusive products like Choxie at Target and Canopy at Walmart.
3. Get your pricing right. The price gap between store brands and national brands varies significantly across categories. The same shopper who chooses private label bottled water for a 3% discount may require at least 20% savings for private label barbecue sauce.
4. Offer multiple brands in multiple tiers. Although Costco may be the exception, most retailers are finding growth with multiple store brands. No one brand can stand for value and gourmet and healthy eating.
5. Eliminate weak links. One bad product experience can hurt the entire store brand, not to mention the retail banner itself. Product quality needs to be consistent across each store brand. Your brand’s perceived quality is only as good as its weakest SKU.
6. Drive trial. If your store brand is really as good as the national brand (or better), let your shoppers try it. Offer a free package with a $50 purchase. Consider a trial size or in-store product demos.
7. Promote your store brands. There’s a wide range of feature ad support for private label. Using ECRM’s Marketgate data, we found that private label’s percent of feature ads ranged from 45% at Wegmans to 25% at HEB to only 10% of ads at Publix.
8. Don’t be too quick to drive out value brands. Some value brands can drive lower price and higher margins than retailers can achieve through private label. The shampoo category is an excellent example with some well-known brands at very low prices.
9. Embrace a cause. Use package labeling to show how your store brand supports local suppliers, promotes health & wellness, saves the environment, or funds local charities. You’ll find that many of these causes attract similar consumers. Regardless of sales performance, taking the high road can help to build a retailer’s image.
10. Understand the difference between strong sales vs. strong brand equity. Walmart’s Great Value brand claims to be the #1 food brand across categories, but would shoppers ever choose Great Value over a national brand at the same price point?
(It’s one better than a top 10 list) Sell your store brand in someone else’s stores. Safeway is taking the lead by selling its "Eating Right" and "O" brand at other retailers in non-competing markets. Opportunities exist for retailers to sell their store brands not just in new markets, but in new channels (convenience, hardware, toy stores) in their own.
-Tom Pirovano, TheShopperWonk
-email: tom.pirovano@nielsen.com
