In the early to mid 1990s there was great concern in supermarket circles about so-called "alternative channels." Of particular concern, as I recall, was the rise of warehouse clubs. At least one year at FMI's annual convention (BTW, it's coming back annually) was largely dedicated to the club threat. There were numerous pronouncements that traditional grocers were about to go the way of the dinosaurs as this emerging new retail species was coming in to drive them out.
Well, as everyone knows, warehouse clubs have been very successful, although not to the point of driving supermarkets out of business. Costco, as well as Sam's Club and BJ's, have found niches within the vertical to achieve success on somewhat different terms.
Now comes a study from Deloitte, which shows that consumer packaged goods (CPG) executives — 89 percent in fact — see clubs as the channel where they will achieve the most growth over the next three years.
Only 49 percent of execs who spoke with Deloitte see sales growing through grocery channels in the next three years and 18 percent expect sales through supermarkets to decline over that period.
"Club retailers have been remodeling existing stores, including allocating more space for food — particularly organic, healthy and fresh offering — and personal care products," said Pat Conroy, vice chairman and consumer products leader, Deloitte, in a statement. "These retailers also continue to provide a variety of services and benefits to members — whether it is for personal consumption or for the member's business.
CPG execs believe that clubs are doing more than other channels to make themselves attractive shopping destinations for a wider range of consumers. Previous research by Deloitte found that clubs are especially attractive to higher income households.
"Economic uncertainty and consumers' focus on value has made club stores a more important channel for many consumers, including those who are at the higher end of the income scale and represent a more lucrative target customer for retail and consumer products brands," said Mr. Conroy.
Which channel selling CPG brands do you think is most likely to grow its share of market most substantially in the next three years?