With all eyes on the economic recession in the U.S., it’s easy to underestimate the major trends currently reshaping the consumer packaged goods (CPG) industry. According to The Nielsen Company’s Retail 2015 Forecast, the pace of change is only accelerating as technology, marketing trends and retail formats converge to redefine how CPG retailers and manufacturers interact with consumers.

Big Winners
By 2015, we predict mass supercenters and e-commerce to be the big winners by dollar share gains, growing by a combined five share points between 2009 and 2015. Warehouse club, dollar store and pet store share will also grow share positions. Nielsen forecasts that supermarkets will continue to lose share, but at a declining rate. While both high-end and low-end niche grocers will grow share, overall share positions will remain fairly low given lower per-store sales compared to larger formats. Other key CPG channels, including drug stores, mass merchandisers and convenience stores, will grow dollar sales but will suffer share losses.

Nielsen expects to see further CPG retail consolidation as retailers look for scale and opportunities to expand their footprint into existing and new areas. Retail consolidation will be most active within the supermarket and convenience channels in the race for scale. Today’s big players will only grow bigger. Industry change will grow faster and more intense in the next five years, requiring advanced, future-focused change management skills among CPG professionals.

Out with the Paper Shopping List, in with the Smartphone
One of the biggest CPG shifts by 2015 is already underway: the use of smartphones to engage consumers and help them make better shopping choices. According to Nielsen, smartphone penetration stands at 23% of all mobile subscribers and is expected to overtake feature phones in the U.S. by the end of 2011. Nielsen predicts that by 2015, smart phones will be the primary enabler of consumer shopping engagements and new technology innovations will generate additional opportunities for retailers and manufacturers.

Coming to a Smartphone Near You: a Personalized Shopping Experience
Driving the rapid adoption of smartphones is the seemingly endless variety of apps, which take full advantage of the smart phone’s geographic location and interactive capabilities. Retailers are already using smartphones as a replacement for frequent shopper cards, sending store coupons and deals directly to a shopper’s phone. Nielsen expects CPG companies to further leverage the smartphone’s location tracking abilities to target communications and promotions to shoppers both in and out of stores, and up sell consumers on other items based on prior purchases. In addition, consumers will have the ability to locate the best available price for a given item, access real-time product reviews and promotions and manage everything from household budgets and pantry inventory to tax preparation and filing.

Prepare for the Future
Consumer packaged goods retailers and manufacturers should focus on the following initiatives now to position their businesses for future success:

• Develop or buy online/digital/social marketing expertise. If you don’t have this expertise today, get it.
• Plan for diminishing returns from traditional media. Newspaper feature ads and free standing insert (paper-based) coupons dominate today, but for how long?
• Nurture retailer/supplier relationships. Have contingency plans dealing with consolidation impact.
• Get more flexible with format planning. Consumers today are flexible and completely mobile, which means we need to get more flexible about how and where we sell our products. Study emerging economies to understand flexible markets. Think about future format planning for your next one to three generations of formats.
• Demand forecasting by category and consumer segment. Understand how changes in demand at the category and consumer level will provide risks or opportunities
• Expand via regional or global opportunities. With slowing domestic population growth impacting sales growth, seek opportunities outside traditional geographies to reach more households.
• Make future management a company strength. Given the pace of change that we will experience over the next five years, future management needs to be a core competency or the chances of your stores or brands being a part of the future will be in serious jeopardy.
• Understand the new faces of opportunity. With an increasingly aging and ethnic population, you can’t afford to ignore generational and multi-cultural consumers. It is critical for marketers to adapt in order to gain the attention and brand/shopper loyalty of diverse generations and multi-cultural families of the future.

Gone are the days when online marketing was led solely by the dotcoms of the world. Today, many CPG companies have embraced online and social marketing and are pushing the envelope further each day. In the midst of considerable consolidation and change, the future will be owned by those companies that harness technology to the make the consumer shopping experience easy, efficient and fun.

SUMMARY: Trade promotions are the 800 pound gorilla of marketing spending, representing 60% of the marketing budget and accounting for more than $100 billion per year. Getting the right mix of pricing and promotion for each channel can be like playing five-dimensional chess, with all the parts moving at once: price elasticity, price gap elasticity, promotion type, frequency and discount level. What consumers buy, where and when can be influenced with the right game plan.

Ever wish your favorite team could know in advance if a critical play would work? Unfortunately, not possible. How would you like to run your next trade promotion in advance to determine the right temporary price reduction and duration? Fortunately, very possible, thanks to predictive analytics that enable marketers & sales teams to simulate consumer sales and project the impact on manufacturer and retailer financials before committing dollars in the real world.

Displays and Deals
All promotions are not created equal. Nor do they have equal impact. Consider the effect of a display on the following four categories: beer, toilet paper, toothpaste and yogurt. Will the same size and located display generate the same lift? No—not by a long shot. Toilet tissue wipes up the competition with an 82% display-driven lift, with yogurt a distant second at 28%, beer at 15% and toothbrushes at 14%. Further analysis reveals that display-sensitive categories tend to be “must have” products or “easy-to-eat” meals that are stockable and traditionally demonstrate above average sensitivity to promoted price changes.

Another factor influencing the ability of displays to drive sales is unit price. Consumer shopping patterns expose the fact that shoppers are less likely to purchase expensive items on display or with a temporary price reduction (TPR). Products typically less than $5 per unit enjoy significantly more lift from both promotional options. Nielsen simulation capabilities can take the guesswork out of promotion planning, pumping up sales volume and stretching available dollars.

Multiple Effects
Offering multiples is a popular promotional technique, but one with a distinct success profile. Multiples work for items with expandable consumption, that are easily stored, where the multiple number makes sense (e.g. a five-pack lunch item that corresponds to a five-day work week). The total price should come in under $10 with a unit price no greater than $1.00, such as a 10 for $10 offer.

Channeling Value
Channel differences can dictate promotional success. On the pricing front, food shoppers like deals and are highly responsive to promotions. Drug channel consumers, on the other hand, value convenience over price and mass merchandiser patrons expect lower regular prices, rendering TPRs less valuable for these segments.

On the display front, food shoppers prove to be high impulse/unplanned utility item buyers. Drug channel consumers plan their purchases and look for features, but are less responsive to displays, and mass merchandiser patrons exhibit an average response to displays, seeking overall value from the channel on the regular price.

Consumer Views
When considering the promotional mix, factor in some salient shopper facts:

• Consumers demonstrate lower price sensitivity for products with high brand loyalty that are infrequently purchased or niche offerings with few competitive options.
• Display-based promotions work for stockable, must-have and easy-to-eat products.
• When placed on feature, utility products like paper goods and detergents can draw shoppers to the store.
• Food store shoppers tend to be impulse-driven, drug store shoppers come with a purpose and mass merchandiser patrons seek everyday value.

Case in Point
Manufacturer X noted a decline in base volume for its premium product, while private label value brand sales continued to grow. Assessing promotional options, the company articulated four objectives:

1. Maintain or grow category sales
2. Build base sales for its premium product line
3. Maintain or grow retail profit
4. Maintain or decrease trade spending

Historically, TPRs were the most common promotion type in the category, usually featuring a 20% discount. The standard category TPR ran for three weeks, and at the 20% discount level, generated about the same lift as a one week feature at a 30% discount. Manufacturer X typically opted for eight weeks of TPRs each year and four weeks of feature advertising.

Assessing Options
To stir things up in the category and drive sales to its premium offering, manufacturer X considered three alternative promotional schedules. Option 1—eliminate two weeks of feature activity and replace them with two TPR periods of three weeks each. Option 2—increase the private label base price and raise promo prices by $0.10. Option 3—increase the private label base price, but hold promoted prices at current levels.

Running the simulation, manufacturer X discovered a clear winner. Only Option 1 delivered against every objective: growing unit and category sales by 0.9%, increasing CPG profit margins by 2.4%, boosting retailer profits by 0.8% and decreasing trade spending by 3.1%.

Predictable Success
Price and promotion simulations succeed because they begin with the consumer behavior needed to shape an outcome. Knowing that consumers shop products and channels very differently, simulations should be preceded by an analysis of sales tendencies by product and retailer. This will enable the composition of a plan that leverages product strengths and minimizes weaknesses in different retail environments. While tactical, event-by-event simulation and planning is a requirement, take the time to simulate entire planning periods with different combinations of price and promotion activities to decide the approach that best fits your objectives. The definition of a truly successful promotion plan is one that delivers results for retailers and manufacturers alike. By looking at sales from a consumer perspective, you’ll be able to do just that.

Part 1 of 5 on Healthy Eating Trends and Myths

Tom Pirovano, Director of Industry Insights
Consumers in the U.S. might be trimming the fat from their budgets and diets, but contrary to predictions, they continue to demonstrate a healthy appetite for foods featuring health and wellness claims. From alpha (antioxidants) to omega (omega 3 fatty acids), foods touting the kind of heart-healthy, joint-buffering, free radical-extinguishing properties that appeal to aging Baby Boomers dominate the rapid growth list.

The big winners on the healthy eating front, each posting double digit growth, were products with label claims for omega, high fructose corn syrup free, antioxidants, gluten-free, probiotic, calcium, fiber and low glycemic and no salt/sodium added.

Still champions
Many longstanding health claims maintained their popularity even as upstart health and wellness claims debuted on the healthy eating scene. Chief among them: products with fat claims—generating 2009 sales of $46.1 billion—slid a modest 3% vs. 2008 results. This dip was attributable in large part to milk, which contributes $11.5 billion to all fat-claim product sales. Even though milk unit sales remained relatively flat (-0.5%), lower prices dried up milk dollar sales, which ended the year down 16.7%.

Other popular claims holding their own included products labeled “natural,” with $22.8 billion in annual sales representing 4% growth vs. 2008. The natural claim demonstrated real star power, outselling organics by more than a 4:1 margin in food, drug and mass merchandise retailers. Sodium claims—a $14.9 billion category dominated by soda products—kept its effervescence, recording no change in dollar sales over the last 12 months.

The “better-for-you” health movement to reduce saturated and trans fats resulted in a slender 1% uptick in products with an absence of a specific fat label claim—a $14.8 billion category. Products with a preservative claim still resonated with shoppers, resulting in a 1% sales gain to $14.5 billion. And that perennial favorite claim of “reduced calories” sold $11.7 billion in 2009, up 6% as consumers pursued the elusive goal of weight loss.

Losing favor
“Lowers cholesterol”—one of the established knockouts among widespread health claims—lost ground in 2009. Dollar sales for all products featuring cholesterol claims dropped 5% to $10.6 billion. The uptick in effective statin drugs used to lower cholesterol may be a primary contributor to the decline in popularity—a trend to watch. If an equally effective weight-loss drug is ever developed, it may have a similar impact on “low-fat,” low calorie and sugar-free products.

Hormone/antibiotic-free food claims—a $2.2 billion category—declined 2%, but with milk representing the largest contributor of hormone-free products, this finding is more a reflection of milk pricing than a shift in consumer preference. The low-carb movement was put on a diet, with sales dropping 5% in the $1.8 billion category as the popularity of the Atkins Diet continues to wane. And soy claim popularity dipped in both traditional food/drug/mass merchandise outlets (down 6% per Nielsen) and natural food channels (down 4.1% per SPINS).

Other claims that failed to gain traction included products with flax or hemp seed—a comparatively small category generating only $137million in traditional channels—showing a sales decline of 8%.

The pattern was reversed in the natural food channel, where flax seed sprouted a 1.2% sales increase and hemp products roped in 9.0% more sales than the prior year, according to SPINS. Although sales trends in the natural food channel may differ from mainstream retail channels, natural outlets may help marketers identify the newest trends in healthy eating. One such trend is Stevia, which has recently found its way onto the food/drug/mass sweetener aisle and into major brands. Can Kombucha—a fermented beverage made of tea and bacteria cultures—(up 18% / $6.7 million) in natural food stores be far behind?

Healthy impact
Savvy marketers understand that being part of a healthy lifestyle solution reflects positively on almost any brand—or retailer. Retailers can further leverage and deepen their relationship with shoppers through programs ranging from Wii Fit exhibitions on-site to light cooking demonstrations and product tastings. With no shortage of news stories on child obesity, families will continue to seek out brands and retailers offering healthy alternatives.

Healthy Eating Trends

• Part 1: Commitment Trumps the Economic Pinch
• Part 2: Organic Enthusiasts Remain Loyal
• Part 3: Eating Healthy Doesn’t Have To Cost More
• Part 4: Store Brands Expand Healthy Offerings
• Part 5: Healthy Eating Index Debuts

“After the last few periods where U.S. consumers were showing some signs of going into the black in terms of positive trip growth, all outlet trips in the period ending late November showed the biggest decline we’ve seen in the last year and a half,” notes Todd Hale, Nielsen’s SVP of Consumer & Shopper Insights.

SUMMARY: Purchasing decisions in 2010 will be affected by factors such as brand innovation, retailer assortment, proliferation of store brands, and healthy eating preferences. Walmart’s “Project Impact” strategy and other similar retailer initiatives will test consumer preferences for clean aisles and lower prices vs. broader product selection. In the first few months of 2010, sales of healthier eating alternatives should be a good indicator of consumer confidence. As 2009 brought an increase in coupon activity, CPG manufacturers will look for more efficient and effective ways to reach consumers vs. traditional trade spending. Time will tell if new product innovation will be enough to drive shoppers back to traditional brands.

Throughout the recession, retailers and manufacturers have stepped up efforts to bring about innovation that seize the moment and “drive the recession wave” rather than “ride the recession wave”. Winners in 2010 will continue to innovate in the form of new formats, service offerings and differentiated products—a list of best bets for 2010 is described below.

Winning Brands Will Innovate and Differentiate
Sales of store brands have grown by $12 billion (up 17%) vs. two years ago as shoppers focus on value. As the economy improves, value is still important, but smart marketers are differentiating brands through innovation—with new products, new flavors, new packaging and with marketing/media campaigns with a heavy emphasis on social media to build rapid awareness and product trial. Brands that fail to innovate may also fail to win buyers back from store brands.

Product Assortment is a Point of Differentiation
Some retailers have followed the lead of Walmart’s “Project Impact” with cleaner aisles and limited assortment. Others have an opportunity to set themselves apart with a wider selection of products. Supermarkets that struggle to compete with Walmart’s prices will find an advantage with shoppers looking for variety. The trick is finding which categories require the broadest selection.

Healthy Eating Is a Solid Measure of Consumer Confidence
As the economy improves, consumers will focus on health and wellness priorities. An increase in sales of foods labeled “organic”, “natural” and “high fiber” as well as diet aids and reduced calorie/fat frozen dinners and entrees will be an indicator that consumer confidence is growing. Look for the first signs after the holidays, when consumers tend to start those New Year diets.

Manufacturers Get Stingy with Trade Promotion Spending
A whopping 50 million products each year—43% of supermarket purchases—are sold with a feature ad, display or price reduction funded primarily by manufacturers. An increase in coupon activity and new advertising opportunities such as cell phone apps and in-store TV networks will stretch promotion budgets. Retailers need to demonstrate sales performance to get their fair share of trade funds.

Direct to Consumer Options Thrive
Online price wars and the squeeze on in-store assortment will fuel large and small manufacturers to give consumers options to buy direct from manufacturers or from online services from the likes of Amazon, Drugstore.com and Alice.com.

2010 U.S. Outlook

Part 1: Cross Media

• Big Screen, Smart Screen, Small Screen: Top 5 Cross-Media Trends
• You Can Take It With You: Future Trends In Media

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Part 2: Consumer

• Winner Winner Chicken Dinner – Top 5 Consumer Goods Spending Trends
• Innovation Creates Opportunities for CPG Growth
• Aging Puts a Wrinkle in U.S. Marketplace

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Part 3: Advertising

• Talking Back – Top Five Advertising Trends
• Get Ready for the Audience-Centric Web
• What Would John Wanamaker Say Today?

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Part 4: Entertainment

• There’s No Business Like Show Business – Top Five Entertainment Trends
• Game On – The World is Watching More Than Ever
• Video Games in Play

In today’s economy, U.S. consumers continue to feed on a back-to-basics and a “more meals at home” mentality. With consumers across all incomes looking for grocery deals, how are they shopping? Key findings from Nielsen’s most recent shopping survey and behavior-tracking insights reveal:

• Only nine percent of the primary shoppers in U.S. households dislike or hate shopping; 38 percent “get in and get out.”

• More than half (53 percent) of U.S. consumers tell Nielsen they really enjoy or like grocery shopping. Eighteen percent of the consumers in this category regularly browse the entire store when shopping.
• Approximately 30 percent of grocery items are purchased on deal, with deal rates up nearly 11 percent for high-income households, nearly 10 percent for middle-income households and 7 percent for low-income households.
• Thirty-eight percent of consumers report that grocery shopping is a chore, but not a difficult one. These consumers know which parts of the store have the items they want.
• Planning is key, with a large percentage of U.S. households using shopping lists (58 percent), store circulars (47 percent) or coupons (37 percent) and comparing prices (50 percent) on most grocery store trips.
• Only nine percent of consumers purchase from end-aisle displays on most grocery trips, and three-quarters of consumers never ask for assistance in the meat or produce department, requiring retailers to get their product assortment right.

“Retailers must seize the opportunity as U.S. consumers recalibrate their behaviors to respond to the tough economy with home as the new normal,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company. “Knowing consumers’ attitudes toward grocery shopping is critical for retailers to understand how to encourage shoppers to spend more each trip, thereby helping grow their business. For example, retailers shopped by consumers who dislike shopping or think it is a chore, consider simplified store layouts. Adequate staffing at registers and shelf check-out are a must. Retailers shopped by more consumers who like to shop have more flexibility to drive sales across the store. Leverage sights and smells with cooking and demo stations in strategic sections of stores.”

Frugal consumers continue to look for deals both in-store and online. At grocery, almost one-third of purchases are bought on deal and online visits to coupon and reward web sites are surging. It’s important to take note of the demographics behind the growing numbers of online deal hunters:  Consumers visiting couponing and rewards sites tend to be women, over the age of 55, residing in smaller households, without children and their household income skews toward the affluent ($100K+).

While beleaguered shoppers will be looking for ways to make the season bright, retailers can do their part by bringing some much needed holiday cheer to the shopping experience:

1. Tempt taste buds with in-store tasting and cooking demos.
2. Savor the smells of the season with aroma therapy.
3. Lighten moods with music from local school bands or choirs.
4. Touch the lives of others by collecting food bank donations.
5. Switch out in-store TV ads with broadcasts of holiday classics.
6. Reward frequent shoppers with holiday prize drawings.
7. Partner with manufacturers on donations to local charities.
8. Enhance the décor with holiday decorations.
9. Serve up a smile and an appreciative attitude.
10. Respect staff workers with reduced holiday hours.

As the Internet and social media continue to play a critical role in how consumer make purchase decisions, tune into the webinar, 2009 Holiday Season: What Consumers Have In Store for Retailers This Season on November 16 to learn more.

As we previously noted, consumers have re-embraced coupons as a way to get more for their money.  In the third quarter, year-to-date coupon redemption was up 26 percent to 2.4 billion redemptions, making it the fourth consecutive quarter of growth, according to new research from Inmar in collaboration with The Nielsen Company.  During 2006-2008, coupon redemption stagnated at 2.6 billion each full year.  Inmar, which provides logistic management solutions to retailers, wholesalers and manufacturers in the consumer goods and healthcare markets, is forecasting that 3.2 billion coupons will be redeemed this year, marking a significant increase over recent years.

But while food coupons have typically driven activity, non-food coupons for general merchandise, household items and personal care drove growth in the third quarter, up 45 percent over the same period last year (food items were up 26 percent over the same period last year).  While supermarkets remain the traditional coupon redemption channel, representing 64 percent of redemptions, the dollar/discount/variety and mass merchandiser channels are up at a faster rate.

“It’s clear that coupons have increasingly become an important way for consumers to save some money when shopping.  Digital coupons are driving a huge increase in redemptions but still represent a small percentage of distributed and redeemed coupons.  Meanwhile, freestanding inserts account for almost 90 percent of distributed coupons, but just over half of redeemed coupons,” said Todd Hale, Senior Vice President, Consumer and Shopping Insights at Nielsen.  “Moreover, coupon enthusiasts buy more products per trip and generally have a higher spend per trip in the grocery and supercenter channels.  The fact is, coupons can yield a significant return on investment, and savvy consumer goods manufacturers should seriously consider how they may be able to play a role in driving sales.”

SUMMARY: What a difference a year makes. Restaurant operators enjoyed a solid 2008, but by mid-year 2009, more than 4,000 had closed and the average guest check plunged more than 8%. Where did all the diners go? Grocery stores, supercenters and club stores—to pick up meat, seafood, produce, deli and bakery goods for a home-shared meal.

There is nothing like staying home for real comfort. – Jane Austen

Home. It’s our refuge when the world gets to be too much. The upside of a recession is that we come together around the kitchen table to share our meal and our day, taking comfort in the safe harbor of home. While that’s bad news for restaurants, from white table cloth to casual dining, it’s good news for retailers.

Through September 2009, Nielsen reported total store sales—which includes the Rx, perishables, center store grocery (UPC food & beverage), health & beauty care, and general merchandise departments—are expanding. The perishable department is growing faster than all retail sectors in the total market.

According to Nielsen, reported household deli spend for year ending September 2009 was $200—a 5% increase from last year. Bakery whipped up average annual household sales of $174 per year with a 3% increase. Fresh meat and seafood cooked up sales of $437 per year for a 4% gain, produce increased 3% based on annual average sales of $279 per household. Perishable departments are becoming one of the most productive departments at retail and channels outside of supermarkets are taking notice.

Recession reaction
What the recession has wrought, among other things, is a transfer of dollars away from dining out toward spending more on prepared meals at retail. A 2009 Nielsen survey finds that 46% of American households say they are eating out less. And the sales data supports that statement as value-priced prepared meals at retail are posting double digit increases in supermarkets, supercenters and club stores. Other recessionary strategies include reducing unnecessary spending (27%), driving less (14%), shopping for bargains (13%), using coupons (12%), combining shopping trips (8%), going out less for entertainment (6%) and purchasing more private label goods (5%).

Meaty matters
Supermarkets hold a dominant share position with perishables in the meat and seafood department with a 70% market share. More importantly, shoppers are spending more with grocers. Key factors fueling supermarket meat and seafood sales include promotions—51% of meat and seafood is purchased on sale—and prominent circular placement noted by 41% of shoppers.

Shoppers are trading down, up and side-ways as less expensive non-red-meat and seafood protein options such as turkey, chicken and pork sourced primarily from beef department sales. This trade down is occurring in both fresh and fully cooked product categories. Retailers should offer shoppers ideas to enhance the dinner menu with add-ons such as marinades, sauces and seasonings, which are posting double digit increases on both a dollar and unit basis.

Alternative channels are also making a strong push for this business. Supercenters have done a super job with new perishable formats, growing both the purchase size (up 2% to $11.80) and frequency of perishable purchases (from 18.4 to 18.7 trips per year). This holds true in particular for the meat and seafood departments, where supercenters snagged a 0.6 share point change.

Produce picks
Supermarkets hold an even stronger share of produce with more than 72% of the business and growing, posting a 0.3 share increase versus year ago. Supercenters are turning the competition green with envy capturing 12% of the market. Club stores are still underdeveloped in produce (7.9% share) versus comparable department share levels.

In the produce aisle, shoppers appear to be sticking with core vegetables as tomatoes, potatoes and corn are among the few leading categories posting dollar and unit growth. The same holds true for fruits—shoppers are less likely to experiment these days as specialty and stone fruits are down in favor of tasty favorites such as berries, cherries, grapes and avocados.

Retailers have a unique opportunity via their produce department to build their health and wellness equity and market position. The Natural Marketing Institute has identified 25% of the population as “Well Being” shoppers that are health and wellness focused, do the best job of eating right and use quality as their purchase barometer, not price or brand image. Indeed, the Nielsen sales data affirms these results as these shoppers buy 25% more produce than any other perishable sector and prefer random weight items at their freshness peak.

Deli delights
In deli, where supermarkets hold 50% of the business, all major departments are posting strong growth. Deli cold cuts and cheese are up 7% and prepared foods are up almost 5% versus year ago. Notably, supermarket dollar share erosion has been more severe than other perimeter sectors in this broad but expanding market. However, smaller formats (convenience stores, delicatessens, etc.) that offer shoppers “in and out” convenience are posing the biggest threat to supermarkets. Some of the hottest selling prepared deli items include turkey entrees, pot pies and chicken salad. At the service counter, shoppers are buying American as pre-sliced cheese is posting double-digit unit and dollar sales increases.

Retailers exploring ways to differentiate their brand should turn to the deli department, where service counts, personality shines and the area is generally underdeveloped as a driver of retail brand equity. Adopting an “alternative to eating out” strategy has paid off big time for retailers like Wegmans, which scored well in a 2009 study as a top choice for prepared meals, as well as for offering a wide range of fruits and vegetables, high-quality fresh food, well presented displays and a broad assortment of fresh meat and seafood.

Bakery boom
Retailers should not forget to finish off their meal planning strategies with dessert options. The bakery department is posting the most significant growth of any perishable sector for grocers. And just as Clemenza famously says in The Godfather; “leave the gun, take the cannoli”, that is exactly what shoppers are doing as cannolis are posting strong growth within the cakes, cookies and specialty desserts department. Supercenters are the primary threat to grocery as they have almost 16% share of this market—more than any other perishable department. Similar to deli, club stores are not a major competitor in the service-driven bakery sector, capturing about 7% of the market.

Meal planning
Everybody cooks, but in today’s world, meal planning is maturing on both web-based resources for recipes and TV chefs for inspiration and technique. Nielsen discovered that more than one million viewers watched the Food Network during prime time in 2009—a 16% increase over full-year 2008. Furthermore, meal planning is one of the largest and fastest growing online activities, with the average browser spending roughly 10 minutes online planning meals. Retailers like Meijer have developed special iPhone applications that let shoppers check specials, locate recipes, consider wine pairings, even search from their smart phones for special needs like fat free, dairy free, gluten free and high fiber.

The lead position
What does it take to succeed with perishables? Retail perishable sales leaders share a set of characteristics including heavy penetration across one or more perimeter sectors. The average department penetration among the Top 25 retailers scored 83% for produce, 80% for bakery, 79% for meat and seafood and 65% for deli. Prepared foods represent an area of under-developed potential because of high-growth rates, strong drivers like working parents on tight schedules, and the fact that fewer than one-third of the Top 25 retailers’ customers currently buy prepared items.

Service remains key to succeeding in areas like deli and bakery, where sales outpace meat, seafood and produce. Across the store, the produce section affords the best climate for delivering health and wellness messaging. Even aside from absolute sales potential, prepared foods are unique in their ability to serve as an avenue for differentiating the retail banner. For a playbook on doing it right, turn to trend-setting retailers that have set both the delivery standard and consumer expectations for high-quality prepared meals and the multi-media formula for promoting them.

Free Webinar: The Consumer Returns to the Home

Register Now

Date: November 19, 2009 – Time: 12 pm EST/11 am CST

Today’s consumer is realizing that the home is their best resource to stretch a dollar in a difficult economy. The “trade down” from casual dining to home meals has created tremendous growth and brand messaging opportunities in perishable departments and specific center store categories for both retailers and manufacturers. In this session, Nielsen will reveal:

• Who are the new and emerging channel competitors and where are the category opportunities in the meat, produce, deli and bakery departments.
• Which center-store categories create more merchandising synergy with the perimeter.
• Why it is critical that brand advertising strategies stretch beyond the store into the emerging food preparation space.

Register Now

“Without a doubt, consumers continue to turn to store brands in a down economy,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company. “What we see with Halloween candy sales, however, is a sign that consumers may be ‘splurging’ with brand name products for the holiday or simply taking advantage of brand name promotions and price reductions. Candy manufacturers invest a great deal of marketing dollars to build brand equity in candy and private label candy has not been able to overcome that investment and grab significant share.”

Halloween is the biggest season for chocolate candy, with nearly 90 million pounds of chocolate candy sold during Halloween week. By comparison, nearly 65 million pounds of chocolate candy is sold during the week leading up to Easter and only 48 million pounds of chocolate candy is sold during Valentine’s week.

Consumers tend to wait until the last minute to purchase Halloween candy, either procrastinating or hoping for a better deal. The biggest candy buying days of the Halloween season are the Sunday before the holiday and on Halloween day. In total, approximately $1.9 billion (or 598 million pounds) of candy is sold during the Halloween season.