Big boxes rule. For all the talk about the shift to smaller box stores, consumers are spending their hard earned money in supercenters more than any other format, according to new research from The Nielsen Company.
An analysis of unit sales in 2008 found that consumers looking to save money spent more across nearly every department in supercenters. In fact, according to Nielsen, supercenters were the only channel to post overall unit sales growth (one percent) last year.
While others, including drug, clubs and dollar stores, posted dollar sales gains, frugal consumers actually purchased fewer units overall.
"Mass merchandisers and grocery stores are feeling the impact of the supercenter," Todd Hale, senior vice president, consumer & shopper insights for Nielsen, said in a press release. "Where we really start to see the expanding reach of the supercenter is in grocery, where a shift is occurring in everything from dairy and produce to meat and frozen foods. While the grocery channel has traditionally been viewed as recession-resistant, it is not recession-proof."
Grocery stores were able to make some gains as convenient locations led to the channel capturing sales from other formats, including mass merchandisers, dollar stores and others.
"Grocery stores have found gas promotion tie-ins to be very successful in capturing shopper trips, especially when high gas prices were putting a serious crimp on consumer spending for the first eight months of the year," said Mr. Hale.
Warehouse clubs have seen sales increases across all departments and dollar stores have achieved gains in all but a couple of categories since the recession began.
"Consumers continue to look for ways to stretch their dollar, and in some areas, that means shifting their spending in traditional grocery departments such as frozen and dry goods to warehouse clubs and dollar stores," said Mr. Hale. "That said the positive shifting trends for the warehouse and dollar channels are not enough to offset losses due to consumers simply cutting back in this difficult economy."
This year promises to be difficult for retailers as the ranks of the unemployed grow and economic uncertainty continues to restrain purchases, according to Nielsen.
"The good news for traditional retailers is that this means consumers will be spending more time at home, serving up opportunities for at-home consumption of food and non-food products," said Mr. Hale.
Discussion Questions: Why did supercenters apparently perform better in 2008 than competitive formats, such as clubs and dollar stores? Do you see another channel gaining similar ground in 2009?
What channel do you think will achieve the best year-over-year improvement when 2009 is complete?