Trade promotions include products featured in ads and in-store circulars, products displayed on end of aisle caps or away from their normal self location and products with temporary price reductions.

“Although we shouldn’t be surprised by an increase in promoted sales during a recession, it’s stunning to see an additional 1.3 billion purchase decisions being influence by in-store promotions,” said Tom Pirovano, Director, Industry Insights at Nielsen.

Other key findings from Nielsen’s study:

• Chicagoans buy the most on promotion, with 55.9 percent of products sold on promotion, followed by Phoenix, Oahu and Indianapolis.
• San Antonio, Oklahoma City/Tulsa and Birmingham have the lowest promotion sales.
• Impulse purchases such as ice cream, crackers and carbonated beverages sell the most on promotion.
• Conversely, magazines, ice and tobacco sell the least on promotion.

In other promotional activity, Nielsen found that coupon activity – -which has seen a strong resurgence among American consumers over the last year – was highest is disposable diapers (21% of which were sold with a coupon), dough products (14%) and sanitary protection (12%).  By measuring the average number of units purchased per trip, Nielsen identified canned cat food, baby food and canned dog food as the best candidate for buy-one-get-one (BOGO) promotions. This same measure found that coffee makers, baking powder and dishwasher rinse aids are the weakest categories for BOGO promotions.

“The key for consumer product manufacturers is to set goals for each trade promotion, and then measure the results to determine which promo events are the most efficient and effective,” said Pirovano.  “Retailers who can drive their feature ads with the right mix of products, price points and display support will have success with both their vendors and shoppers.”

Sales across all of the company’s key divisions – Walmart Stores, Sam’s Club and International – grew on a year-to-year basis by more than 6 percent.  Comparable store sales in the U.S. grew 2.8 percent in 2008.

“Every player in the CPG industry is affected by Walmart in some way,” said Tom Pirovano, Director of Industry Insights at Nielsen.  ”By combining several Nielsen services, we can measure Walmart store count growth, Walmart advertising, Walmart shopper demographics and what shoppers are buying.”

The key to Walmart growth: food departments.  Sales of dry groceries, perishable foods and alcoholic beverages all showed strong results (11%, 11.5% and 18.5% respectively).  The top five food and beverage categories were pet food, bread and baked goods, carbonated beverages, snacks and packaged meat. Top growth categories were flour, pasta, vegetables & grains -dry, wine and shortening/oil.

Like many retailers, Walmart has seen solid growth in sales of private label (PL) products as consumers look to get the most value for their money.  Private label sales share was 15.8 percent across all Nielsen categories, with milk, sugar/sugar substitutes, unprepared meat/seafood, shortening/oil and canned fruit making up the top five categories.  Additionally, Walmart’s PLs outperform the grocery channel in a number of channels and can serve as a benchmark for other retailers.

Although Walmart has significant operations across the country, southern and western regions have most of the markets where Walmart dominates total sales:

While many top retailers have cut back advertising spending, Walmart actually increased spending by 56 percent in 2008, with a focus on groceries, furniture and health and beauty. More than 21 percent of their spending is on network television, with another 20 percent on cable. Almost 7 percent of their spend is on Spanish language network TV.

But Walmart is not immune to changing consumer behaviors: shoppers are making fewer trips.  And the company remains under-developed with higher income households.  Walmart continues to adapt to the market environment with a number of innovations such as their new Marketside format to attract upscale shoppers without the Walmart name or the “Big Box” image.

Interestingly, sales of general merchandise such as homeware, electrical and clothing showed improvement after months of softness. Over 2008, average growth in this category was just over 2 percent; in January 2009, sales grew 4.4 percent.

“Non-foods have struggled in supermarkets for months and it was one of the first categories to suffer as shoppers cut back on discretionary spending. Over the next few months, we will see whether this upturn is simply deferred December spending, ever more shoppers moving away from the high street or whether ‘green shoots’ are indeed sprouting,” said Mike Watkins senior manager, retailer services at Nielsen.

For more detailed information about January 2009 UK Sales, including data for the top grocers, please read the full release.

“While many retailers will likely scale back expansion plans in 2009 and 2010, aggressive and forward-looking retailers will use this time to test new formats and look for opportunities to expand in existing and new markets as weaker retailers close their doors or put themselves up for sale.  Americans will continue to look to stretch their dollars further given the current economic uncertainty, creating larger markets for discount retailers and grocers alike.  At the same time, we expect to see continued contraction among electronics, toy retailers and other discretionary retailers,” said Todd Hale, Senior Vice President of Consumer & Shopper Insights at Nielsen.

Since 2001, value and convenience stores increased store count by the largest percentages.  But that trend is not likely to continue.  Since the end of 2007, the number of convenience stores declined by more than 1,400.  Additionally, the number of toy stores has declined by 60% over the eight year period (from 2,458 to 999).  Electronics stores dropped by 5%, and with the recent announcement from Circuit City that it will liquidate all of their 567 stores, that retail format will likely continue to decline.

On a more positive note, several retail channels showed solid growth:

• Warehouse Clubs
• Supercenters
• Dollar stores

Additionally, pet stores, book stores, office supply, hardware/home improvement and liquor stores all posted growth as well.

Walmart and Target led expansion over grocers, which expanded more slowly and in different ways, such as opening new, smaller formats.

The niche grocery segment has shown tremendous growth, with expansion from high-end (Whole Foods and Trader Joe’s) and low-end (Aldi and Save-A-Lot).  Aldi, the deep-discount German grocery chain is looking to add 75 stores in the US in 2009, and its sales grew 21% to $7 billion in 2008.  Aldi and Save-A-Lot, which has also expanded during the eight-year period in question, offer budget-conscious consumers extreme value across a reduced assortment set with strong emphasis on store brands.

In the drug store segment, Nielsen finds rapid new store openings as well as acquisitions from three big chains.  Walgreens opened or acquired 2,952 stores between 2001 and 2008, while CVS expanded by 2,158 stores and Rite Aid expanded by an additional 1,316 locations.  CVS will get another boost in store count when they close the deal to acquire Longs Drugstores.  Warehouse stores also continued to be popular, with BJ’s, Costco and Sam’s all showing significant growth.

Perhaps the most interesting finding of Nielsen’s research is the tremendous growth within the Dollar channel.  While Walmart corporate opened up 1,025 stores between 2001 and 2008, the five leading dollar store chains opened 8,291 locations during the same period.  Companies like Dollar General, Family Dollar and Dollar Tree opened thousands of stores each.  And in the process, some of the companies, notably Dollar General and Family Dollar, have evolved to offering more mainline brands than in the past to position themselves as a destination trip among their core shoppers.

Growth (by value) of British food sales for the four-week period ending December 27 was up by 2.6% year-over-year overall and by 4.5% year-over-year for grocery multiples.

“The consumer was much more cautious this year, and it was a back to basics Christmas,” Mike Watkins, senior manager, retailer services, Nielsen, noted.  “Sales of packaged grocery (+11%), frozen (+10%), and confectionery (+8%) were buoyant, while sales of liquor (+4%), heath and beauty (+1%), and deli counter (+1%) were more muted.”

Overall, “Out of Town” super stores (25,000 square feet+) were the star holiday performers, with sales up by 8% in the two weeks ending December 27, according to Nielsen.  The data suggests that shoppers held back on Christmas shopping, waiting until last minute and then maximizing their spending at larger stores.

Among “Out of Town” retailers, Asda had particularly strong sales growth (+6.7%).  The chain increased its market share from 15.7% during December 2007 to 16.1% this December, according to Nielsen.

Morrisons also showed impressive growth (+9.1%) during the 12 weeks ending December 27.  The retailer increasing its market share from 10.1% during Q4 2007 to 10.6% for the fourth quarter of 2008.

“Retailers with keen pricing and a value for money offering have really performed well over Christmas,” Watkins noted.  “It is evident that consumers really did cut back on the luxuries and make do this year.”

View the full press release.

So are consumer packaged goods (CPG) manufacturers and retailers, who have struggled in recent months to balance consumer demand for low prices and high value with abnormally high raw materials and transportation costs.

Rather than raising prices, some food manufacturers have reduced the size of their products.  Such strategies may minimize sticker shock at the grocery store, but are unpopular with U.S. consumers.

Instead, according to Nielsen, nearly half (47%) of American consumers would prefer to buy large, economy-sized products with lower price points per serving.

In comparison, only 17% of consumers surveyed by Nielsen said they would prefer CPG manufacturers to introduce new, smaller pack sizes at lower prices.  Another 9% suggested that CPG manufacturers downsize or modestly reduce the packaging size of products, keeping the price of the product the same. 

“CPG manufacturers and retailers have few options to manage rising commodity costs beyond absorbing increased costs, passing on increases to consumers by raising prices, or covering increased costs by downsizing offerings,” Todd Hale, senior vice president, Consumer & Shopper Insights, Nielsen, noted.  “Downsizing, in particular, is not a new option — we’ve seen downsizing over the last few years in a number of categories, including ice cream, cereal, candy bars, salty snacks, and paper products.”

View the media alert.

Year-over-year growth at hypermarkets reached 6% during the period, while the smallest convenience outlets declined by almost 2% during the 12-week period.

In comparison, year-over-year growth in the British grocery sector stood at 3.2% during the 12 weeks ending 29 November, according to Nielsen.  Grocery multiples showed stronger growth (+5.6%) during the period.

“In order to save money shoppers are making less visits to grocery stores,” Mike Watkins, senior manager retailer services, Nielsen, noted.  “Nielsen has identified that virtually every major food retailer saw the number of visits per shopper fall in November versus a year ago and the big casualties are those retailers that people visit to do top up, small basket, and indulgence shops.”

According to Nielsen, there are exceptions to this trend.  Retailers like Morrisons and Asda, and value retailers like Iceland drew plenty of shoppers — and even showed accelerating sales in the most recent 12-week period. 

View the press release.

According to Nielsen, the chain increased its market share from 14.9% a year ago to 15.6% during the last quarter — the retailer’s highest ever market share, aside from the Christmas 2007 season.

Asda’s performance (8.7% sales growth) during the most recent 12-week period ending November 1, 2008 easily bested the rest of the British grocery market, Nielsen reported Tuesday.  The chain showed especially strong growth during October, when the global financial crisis reached a boiling point.

Growth (by value) of food sales at British supermarkets continued to slow during the most recent 12-week period, dipping to 5.1%, versus the same period in 2007, according to Nielsen.

During the previous 12-week period ending October 4, food sales growth was slightly stronger in Britain (5.4%), despite especially weak September sales growth (4.5%).

“The topline growths at the Multiples are slowing, when they should, in fact, be accelerating,” Mike Watkins, senior manager, retailer services, Nielsen, noted.  “It’s looking like a tough Christmas ahead for food retailers.”

Among the top UK food retailers, Tesco remained the dominant value retailer, with a 28.1% share of grocery market spending during 12-week period ending November 1, 2008 — up 0.1% over the chain’s 28.0% share of value sales during the same period last year.

Morrisons continued to grow by more than 9% year over year for the quarter, but in the most recent four weeks, the chain’s growth dropped to under 7% year over year.

View the press release.

Flagging sales in September, when growth dipped to 4.5% — a full percentage point below August growth levels, drove the declines.

“Shoppers are still trading down,” Mike Watkins, senior manager, retailer services, Nielsen noted.  “Family shoppers in particular, are trying to save money, with 70% saying on they are looking to economize on grocery shopping — up from 63% in June.” 

Among the top UK food retailers, Tesco remained the dominant value retailer, with a 28.3% share of grocery market spending during 12-week period ending October 4, 2008 — up 4.8% over the chain’s 28.0% share of value sales during the same period last year.

Meanwhile, Asda widened its lead in value sales over Sainsbury (13.9% share), achieving a 15.4% share of value food sales (and 8.3% year over year value growth) versus its 2007 share (14.7%).

Morrisons recorded the strongest year-over-year value sales growth of the top four food retailers (+9.6%), while Iceland showed the strongest overall growth (14.5%) during the 12-week period.

View the full press release.