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Nielsen: In Troubled Economy, Supercenters Showing Gains Against Other Retail Channels as U.S. Consumers Shop and Buy Less

Schaumburg, Ill., February 3, 2009 – Shopping and buying less in a troubled economy, U.S. consumers are increasingly relying on supercenters according to The Nielsen Company.  Nielsen’s analysis of 2008 unit sales shows budget-conscious consumers increased their supercenter spending across nearly every department, including dairy, dry grocery and prescription drugs. (See chart “Supercenter Gains Primarily From Grocery & Mass Merchandisers” in Full PDF Download version of release).

According to Nielsen’s research, the supercenter channel was the only retail channel to post overall unit sales growth at one percent.   While four retail channels (drug stores, supercenters, club stores and dollar stores) recorded sales gains from consumers shifting department purchases across channels, these gains were offset by consumers cutting back on purchases for an overall decline in unit sales.

“Mass merchandisers and grocery stores are feeling the impact of the supercenter,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company.  “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 Gains
The grocery channel was not without bright spots.  Tens of thousands of conveniently-located grocery stores helped some grocers grab general merchandise sales from mass merchandisers, dollar stores and other channels.  Some grocers also experience prescription drug shifting gains from drug stores.  Promotions tying in-store spending to discounted gas prices helped the channel capture sales from convenience and gas retailers. 

“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 Hale. (See chart “Where Shifting Occurred, The Majority of Grocery Departments Lost to Supercenters” in Full PDF Download version of release).

Shifting Allegiances
Warehouse clubs and dollar stores have also reaped significant benefits from a recession-minded consumer base.  Warehouse clubs saw increases across the board, while dollar stores racked up gains in all but two departments – – general merchandise and health and beauty aids.

“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 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.”

2009 Expectations
Not surprisingly, most major industries are struggling with lower consumer spending and will continue to do so as unemployment increases in 2009.

“All retail channels are being impacted by consumers cutting back on purchases to cope with tough economic conditions,” said Hale.  “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.”