Report: Shoppers Scaling Back on Channel Shifting

A new Times & Trends report from Chicago-based SymphonyIRIGroup says shoppers are cutting back on the number of stores they're visiting and concentrating visits on stores known for lower prices. According to the report, “The New Path to Purchase: An Escalation of Channel & Consumption Migration," shoppers also are visiting stores less frequently and spending less money per trip.

“Shoppers are not enjoying the same financial success as corporations this spring and summer, and their continued search for lower-cost retail channels reflects this,” said John McIndoe, SymphonyIRI’s senior vice president, marketing. “In addition to potential pressure on retailer revenues and margins, these trends point to managers having fewer chances to ‘get it right’ with shoppers. If a shopper visits a store and is unhappy with the experience, she will quickly go elsewhere.”

Grocery remains the dominant channel, the report notes, with 98.4 percent penetration during the 52 weeks ending June 27, 2010. Other leading channels include drug (77.0 percent penetration), mass merchandise (71.6 percent) and supercenters (69.5 percent). Supercenters enjoyed the largest penetration increase (1.9 points), followed by dollar stores with a 0.5-point increase. Mass merchandise penetration decreased by 2.3 points, while convenience store penetration declined 1.9 points and drug fell 0.5 point.

The number of shoppers visiting fewer than five stores increased every quarter since the second quarter of 2009, SymphonyIRI said. In contrast, the number of people shopping at five to nine stores in the same timeframe dropped in every quarter but one. The number of people shopping at 10 or more stores has remained approximately the same.

Overall, trip frequency began to decline consistently beginning in the fourth quarter of 2009, the company said, and declined by almost 2 percent in the second quarter of 2010 (versus the same period the prior year). The declines were driven by the convenience store and mass merchandise channels, which experienced slides of 9 percent and 7 percent, respectively. Across most other channels, average purchase occasions remained fairly steady.

Dollars per purchase occasion, which were growing at an approximately 5 percent pace in the third quarter of 2008 versus the same period the prior year, fell flat in the third quarter of 2009, SymphonyIRI said, and are now declining by more than 1 percent. Although grocery, supercenter and club channels have seen the average basket size slide over the past year, convenience, dollar and drug stores enjoyed significant increases — 8 percent, 3.8 percent and 1.7 percent, respectively.

The company noted that a number of factors are driving performance within these channels, including:

•All retailers are instituting aggressive pricing, merchandising and promotion strategies to woo shoppers
•Channels known for low prices are tending to perform better
•Many mass merchandisers are shifting to a supercenter format, temporarily depressing trips and dollar share performance
•Convenience stores, known for carrying more discretionary items, are feeling the pinch as shoppers remain wary about non-essential spending

For more information about the report, which also provides recommended strategies for manufacturers and retailers, visit www.symphonyiri.com/Insights/Publications/TimesTrends/tabid/106/Default.aspx.