Nonfoods Up for Grabs among Retail Channels: IRI Study

CHICAGO -- No retail channel dominates the nonfoods business, and retailers that implement strong marketing and merchandising initiatives stand to gain a greater share of general merchandise and HBC sales, according to a new study by marketing information firm Information Resources Inc.

IRI's latest Times & Trends report, "Channel Migration: A New Turning Point in Consumer Shopping Patterns," examines channel migration in nonfoods and other CPG categories. The research reveals that channel migration has reached a crossroads, as grocers are successfully maintaining market share, with supercenters now gaining share predominantly from traditional mass merchandise stores.

"Consumer drive for convenience and value-based pricing, coupled with the increased number of shopping outlets carrying CPG products, have fueled channel migration for the past decade," said IRI global c.m.o. Andrew A. Salzman. "We are beginning to see a shift in consumer shopping patterns as supercenter markets become increasingly saturated and grocers reposition their efforts through new upscale formats that offer an expanded selection of fresh foods, prepared foods, and organic products."

According to the study, during the past three years, supercenters had gained nearly three share points among CPG products at the expense of the grocery and traditional mass merchandise channels. More recently, the pace of change has slowed significantly, however. Supercenters gained only 0.7 share points this past year versus 1.2 in 2004, and grocery share loss this year was minimal versus a 1.1 point loss in 2004.

Consumers' shopping trip shifts have been less dramatic than market share changes, but they follow a similar pattern. During the past three years, supercenters earned a nearly two-point gain in trip share, while grocers had lost 1 percent of total shopping trips, and traditional mass merchandisers had lost 2 percent. This past year, the trend shifted as grocers successfully kept consumers in their stores--a major win in the face of long-term, intense cross-channel competition.

High-ticket, stock-up, and impulse purchases characterize the most "hotly-contested" cross-channel categories, according to the report. Snacks and beverages exhibit the highest degree of channel fragmentation. Within snacks, chocolate and non-chocolate candy--heavy impulse purchases--have the most widespread channel share mix. Higher-ticket wine and spirits have the least share concentration among beverages.

Within nonfoods, the cross-channel battle for share is particularly intense. Consumer spending is much more widely dispersed across channels among nonfoods, versus food and beverages. Since many nonfood categories are well suited to stock-up and advance purchase, consumers appear more likely to purchase these products when they see a good deal.

Price and promotion are critical tools in the cross-channel battle for nonfoods Categories with strong cross-channel competition are typically high-ticket items for which consumers seek deals, such as beauty and personal care. With the exception of healthcare products, consumers are not turning to private label for these deals. As with food and beverages, name brands appear to be an important component of retailer initiatives to capture share within these categories.

To download the full report, visit
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