Data Mining (and Saving Money) in a Recession

Data Mining (and Saving Money) in a Recession

Al McClain, CEO & Founder, Retail Wire

With the economy effecting consumers, retailers, and marketers alike, this week’s Nielsen’s Consumer360 Conference presents an opportunity to think about new ways of addressing this marketing challenge.

On Tuesday, a session called “Data Mining the Recession”, presented by Nielsen’s Mark Laceky and Mitch Kriss identified three main ways shoppers are trying to save money:

* Defer purchases/reduce consumption

* Find items at lower priced outlets

* Buy less expensive versions of products

According to Nielsen attitudinal research, the number one strategy for saving money on groceries is to choose less expensive items, mentioned by 46% of respondents, vs. 23% who mentioned switching to private label.

Winning categories and products tend to be meal ingredients, as consumers cook more at home, and comfort/snack food.  Categories such as macaroni, sliced lunch meat, and mayonnaise are going well, while bottled water, frozen dinners, and magazines are doing poorly.  Winning category attributes include ‘canned’, ‘comfort’, ‘preparation’, ‘ingredient’, and ‘kids’.  Losing attributes include ‘beverages’, ‘healthy’, ‘utility’, ‘frozen’, and ‘discretionary.’

By overlaying Homescan data with zip code unemployment data, manufacturers and retailers can get a good idea as to the effect of the local unemployment rate on brand, category, and even item sales.  As consumers presumably eat out less and cook more, supercenters are gaining more trips than grocers but main meal item growth is strong on grocery trips.  Premium items are down, as are super premium, although not to the same extent, while value items are up.

Meanwhile, in a presentation on dollar stores by Nielsen’s Jeff Gregori, we learned that high income shoppers are frequenting dollar stores, although the low income group still accounts for 45% of the dollar store channel’s sales.

Dollar stores have become an intriguing channel for CPG companies because they are increasing sales and are brand-friendly.  Shoppers are switching to the channel from every other channel, except for ‘value grocery’, which includes banners like Save-A-Lot and Aldi.

With top categories such as paper, candy, pet food, snacks, detergents, carbonated beverages, household cleaners, cookies, and laundry detergents having low collar store conversion rates, there is plenty of upside potential for brands willing to work with dollar stores.  Food and beverages seem to have a particularly strong opportunity in this channel, as food has grown to represent 31% of this channel’s sales, and Dollar General has upped their food and beverage share to 34%.  Meanwhile, only 23% of the channel’s dollar sales are with items that sell for under a dollar, so shoppers aren’t literally looking for rock-bottom prices on everything.