I continue to see countless articles on how the U.S. economy is affecting everyday purchases – especially groceries. But very little is written about how shopping patterns are tied directly to paychecks. This started me thinking: Do paydays at the start and end of each month create spikes in supermarket sales? How much of a lift can retailers expect on the first week of each month? Which categories are most likely to spike at the beginning of the month? Has the average first-of-the-month spike increased in recent years?
Fortunately, I have access to Nielsen’s Strategic Planner database, where was able to measure weekly sales over time. Although many months begin in the middle of the week, it was clear see the supermarket sales spikes at the start of each month. Of course Thanksgiving and Christmas drove their own sales spikes, but nearly all other months started stronger than they finished.
The chart clearly shows a first-week-of-the-month lifts, but the next step was to quantify these sales spikes. By calculating the average weekly sales for the first week of the month vs. other weeks (excluding November & December) I measured a lift of 4.3%. It was sometimes higher, sometimes lower, but there is clearly a spike for each non-holiday month.
I wanted to be able to show how this first-week-of-the-month effect has grown as the economy struggles, but the year-ago 52-week period shows a slightly higher lift at 5.2%. The lift was only 3.5% two years ago. These differences may be attributed to months starting on different days of the week each year, making it difficult to measure this sales lift over time.
So how does this vary by category? I found that by tracking weekly category sales, several Nielsen categories showed much higher sales spikes. Categories with the strongest first-week-of-the-month spike include food staples and ingredients for cooking from scratch. Many of these skew to lower income or older or Hispanic households.
See supermarket products most likely to sell first week of month at right:
*Index reflects average weekly sales for first week of the month vs. remaining weeks. Excludes last 8 weeks of 2008 (holiday season). Download First-Week-of-the-Month
So now what? Both retailers and manufacturers can use this information to fine tune their promotion strategies. Some brands may want to adjust their timing for FSI drops, advertising, and in-store promotions. This average 4.3% lift may not seem like much, but smart CPG leaders are looking for any advantage they can find as our industry continues to get more competitive.
- Tom Pirovano, TheShopperWonk
-email: tom.pirovano@nielsen.com
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