Today, the Big 4 national carriers are increasingly challenged by regional carriers that exclusively sell unlimited plans. These “All You Can Eat” (AYCE) carriers offer unlimited service in the $40-$50 per month range. Their services lack many of the capabilities of the Big 4’s offerings, but for budget-challenged consumers who don’t travel frequently, they are an attractive option.

The largest AYCE carriers, MetroPCS and Cricket, serve 13 and 78 metropolitan markets, respectively. Boost Mobile, a subsidiary of Sprint, recently launched a similar service nationwide. In total, there are only 12.1m subscribers on AYCE plans in the US or 5% of the total wireless market. However, because the AYCE carriers only provide service in certain markets, the national subscriber numbers don’t tell the real story.

Nielsen measures subscriber counts and market share in each of the top 75 metropolitan areas in the US via its Subscriber Flowshare Metrics service, and tracks growth of AYCE carriers to analyze their long-term impact on the category. One of the most interesting markets is Las Vegas, where both Metro and Cricket launched over a year ago. Boost launched its unlimited service there in January 2009.

Across the U.S., AYCE services still claim a relatively low 6% of total market [chart]. However, AYCE carriers have been gaining subscribers [chart] (positive net additions) for each of the last 12 months while the Big 4 as a group have lost subscribers (negative net additions) for every month except during December’s holiday push.

Why Does It Happen In Vegas?

There are several reasons Las Vegas is an extra attractive market for AYCE carriers. It has been hard-hit by the recession. Its flat topology allows new carriers to build network coverage cost effectively. It is an insular market without any closely adjacent metropolitan areas, making local-only wireless service more attractive.

However, even considering these local factors, subscriber growth in AYCE services in Vegas has been impressive and the message for the Big 4 is cause for concern. Both Cricket and Metro acquired significant amounts of new spectrum aiding their reach. T-Mobile is clearly concerned that what happens in Vegas may not stay in Vegas. The smallest of the Big 4, T-Mobile began offering an Unlimited Loyalty plan that provides unlimited calling for $49.99 to subscribers with longer than 22 months tenure.  Most recently, TracFone has launched its Straight Talk service on Verizon’s network at $30 per month for 1,000 minute, 1,000 text messages and 30 MB data, clearly aimed at the more budget-conscious buyers of the AYCE target audience. This offer is a competitive response from Verizon to increase the pressure on AYCE providers in their existing markets and scorch the earth in their expansion markets.

Last November and December, supermarket shoppers in northern markets like Hartford and New Haven, Conn. and Buffalo and Rochester, N.Y. spent almost one-third more, percentage-wise, on baking supplies than average American consumers, Nielsen reports.

During the same period, shoppers in southern markets like Birmingham, Ala. and Memphis dominated sales of flour, spending 106% and 78% more, respectively, than average Americans.

Consumers in Memphis and Birmingham also dominated sales of sugar, spending 57% and 46% more, respectively, than average Americans on that most basic of holiday baking ingredients, according to Nielsen.

West Texas, Little Rock, Ark., Nashville, Tenn., and Atlanta were also among the top markets for flour and sugar sales.  Shoppers in these markets spent 30% to 52% more on flour, and 19% to 28% more on sugar than average Americans.

Top 10 U.S. Markets: Baking Supplies

Top 10 U.S. Markets: Flour

Top 10 U.S. Markets: Sugar

Nielsen’s Dollar Sales Index reflects a category’s share of total dry grocery sales for a Nielsen market versus the total U.S., using supermarket dollar sales over the most current 52-week period.

The Memphis market’s index of 157 for the Sugar product category, for example, reveals that supermarkets in that particular market sell 57% more sugar, relative to total dry grocery purchases, than the national average.

According to Nielsen Claritas, they might start by taking a closer look at large, fast-growing metro areas, like Atlanta, Dallas, and Phoenix. 

These three markets ranked as the top three fastest growing U.S. markets in the last eight years — and could offer the retail industry some hard-to-come-by expansion opportunities, Nielsen reported in a new study released Monday.

“While some of these markets like Phoenix and Los Angeles have been hard hit by the recent wave of foreclosures, there has been no mass exodus from these markets or anywhere else.  People who have foreclosed most likely have not left the market but rather have just become renters,” Mike Mancini, Vice President of Data Product Management, Nielsen Claritas, and co-author of the new study, noted.  “Faltering markets, such as these, will likely rebound and continue to grow — and their underlying demographics are solid.”

As part of the study, Nielsen also identified seven key factors that correlate strongly with fast-growing, high-potential retail markets:

1) large land areas
2) booming suburban rings
3) widespread affluence
4) a growing Hispanic population
5) diversified employment
6) long commutes
7) the presence of lifestyle shopping centers

These indicators can be combined with demographic projections to identify markets that are likely to lead the way to economic recovery in the coming years.

In the meantime, according to Nielsen’s study, retailers looking for expansion opportunities should focus on booming college towns and resort locations, like Las Vegas, Austin, Texas, and Bend, Oregon; underdog college towns, like Columbia, Missouri, Corvallis, Oregon, and
Greensboro, North Carolina; knowledge worker havens, like Los Alamos, New Mexico, San Jose, California, Boulder, Colorado, and Minneapolis; and up-and-coming communities, like New Orleans, Coeur d’Alene, Idaho, and Brownsville, Texas.

View the study and accompanying press release and presentation. 

Download Nielsen Claritas’s October 30 Webinar, “New Leading Indicators of Growth — Finding Opportunity in a Slow-Growth Environment.”

Learn more about finding growth in challenging times, in the December issue of Nielsen’s “Consumer Insight” online newsletter.