A recent Wall Street Journal article suggested that the trend of U.S. consumers making more frequent shopping trips, but buying less each trip was new, a result of the continuing tough economic conditions and a desire by consumers “to keep cash on hand.” What’s more, the article noted that food and consumer packaged goods companies as well as retailers have been introducing smaller package sizes and changing displays to attract shoppers interested in smaller sizes. Nielsen’s research supports findings in the article and we’ve taken a deeper dive into the issues to identify trends for small and large trips within specific retail channels and consumer segments.

We can confirm that the biggest increases in small trips to the big-box supercenters and club retail channels have increased and Nielsen’s research shows that those increases are driven by affluent consumers. On the flip side, while smaller trips are of greater importance to the grocery, drug, convenience/gas and dollar channels, larger trips are gaining ground. Here too there are differences across income classification, providing opportunities for retailer/store-specific and consumer segment trip-type solutions.

Looking at differences in trip capture across retail channels and retailers, Nielsen’s long-standing research reveals insights that quantifies the categories that are strong drivers of certain trip types and identifies the categories that are likely to be included in those shopping trips.

In this current work, shopping trips are segmented into four types:

• Immediate: low-value, instant -need driven baskets with an average basket ring of $15 per trip
• Fill-In: slightly higher value baskets averaging $51 per trip
• Routine: weekly, high-value shopping trips averaging $98 per trip
• Stock-up: large trips averaging $242 per trip

It’s All About the Size of the Basket

Looking at how Americans shop, the vast majority (82%) of trips are smaller – either immediate need or fill-in trips.

Larger basket trips are more important for the affluent, but smaller trips are important to all income groups. That said, smaller immediate trips declined slightly in importance from 2008 to 2010, losing one percent, while the other three categories rose, led by fill-in trips, which went up 0.7 percent.

As might be expected given differences in product and service offerings, consumer trip patterns vary greatly by retail channel. Convenience-oriented channels such as c-stores, drug and dollar stores are more reliant on immediate trips. Meanwhile, supercenters and warehouse club stores are the go-to points for those seeking to stock-up. In the middle are the mass merchandisers and grocery stores, which capture a fair number of immediate, fill-in and routine trips.

Who’s Buying What Where?
To get a better sense of what exactly is happening in the marketplace, it is useful to look at the trends by retail channel and across demographic segments such as household income:

By Channel

• Grocery – Immediate trips fell in importance by almost one percent as the channel saw minor gains in fill-in, routine and stock-up trips.
• Supercenters – Immediate and fill-in trips have gained in importance over the past two years, while routine and stock-up trips declined.
• Mass merchandisers (excluding supercenters) – Fill-in trips showed slight gains, while all other trip types posted minor declines.
• Drug – Fill-in and routine trips were up, while immediate trips declined.
• Warehouse Club – There was an up-tick in immediate trips, but the staple of club stores – routine and stock-up trips declined.
• Convenience/gas – Immediate trips – the hallmark of this channel – have declined by more than two percent, most likely due to rising gas prices.
• Dollar – Basket size increased, but the immediate trip type continued to dominate.

By Household Income

• Affluent ($100k+) – Increased the percentage of smaller trips within supercenters and club stores, and drove more frequent and larger trips in smaller formats such as drug, convenience and dollar stores.
• $70k – $99.9k – This group reduced larger trips across most channels, but increased smaller trips within supercenters and club stores. Stock-up trips were generally off among these households.
• $50k – $69.9k – Middle income households shopped less frequently overall while increasing their trips to value-centric supercenters and dollar stores.
• $40k – $49.9k – Trips declined across most channels, but these households increased their immediate, fill-in and routine trips to club stores, with smaller and stock-up trips to dollar stores also up.
• $30k – $39.9k – Small trip growth within supercenters, while stock-up trips declined by 10% in that channel and in all measured channels. All but the very large dollar store trips grew among these households.
• $20k – $29.9k – Smaller supercenter and club trips grew slightly, while stock-up trips declined by 10% in all measured channels. Dollar stores are performing well among this income group that retailers are targeting.
• Less than $20k – Drastic cutbacks on small grocery trips, while increasing larger grocery and club trips. This may be indicative of pay period buying behavior. This income group shows big drops in larger supercenter trips and softness in dollar store trips.

In addition to assessing trends in basket size purchasing, Nielsen identified the types of shopping trips U.S. consumers are making to not only demonstrate the importance of the immediate or quick trips, but to also identify the types of shopper missions consumers are making based on the composition of their shopping baskets. Food-dominant missions, while driving fewer trips, account for the largest percentage of dollar sales.

The Takeaway
Smaller immediate trips continue to capture the greatest share of Americans’ shopping trips. The interesting trend, though, is how the smaller trip is gaining in importance at the larger formats such as supercenters (which have seen an erosion in larger trips over the past two years), while formats such as grocery are seeing increases in larger trips. There are differences across income groups, with more affluent consumers hitting the big-box retailers for more immediate needs and trip compression among lower income consumers.

From beer or milk runs to large stock-up food trips, Nielsen’s findings isolate opportunities for retailers and manufacturers to collaborate on the right store layout, assortment and promotional support to attract consumers who are in need of solutions to fulfill their unique shopper missions.

“Although gas prices are not as high as they were in mid-2008, they have been edging up for some time and continue to impact how consumers shop and buy,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company. “Consumers continue to employ money-saving strategies, such as using coupons and gas purchase incentives, as means to deal with gas costs given overall economic concerns.”

Key findings of the survey show that the economy still has consumers looking for cost savings across the board, even as they revert to some pre-recession spending habits.

• 63 percent of consumers said they continue to combat high gas prices by combining errands/trips, 39 percent said they’re doing more at home and 29 percent noted reducing spending to a small degree — moderating from levels seen at the peak of the recession.
• Eating out less (46 percent) and coupon use (38 percent) ranked high as money-saving strategies due to gas costs, elevated from pre-recession times.
• Supercenters are losing some appeal for consumers seeking gas savings; only 26 percent of households say they shop more at supercenters to save on gas compared to 28 percent a year ago.
• Sixteen percent of households say that gas prices have no impact on their driving or spending; double the response in June 2008.
• Some consumers buy gas at locations because of incentives tied to their spending at stores where they shop, such as grocery (24 percent); convenience stores/gas (19 percent); warehouse/club (14 percent) and mass merchandisers (7 percent).

“Consumer packaged goods (CPG) retailers continue to demonstrate good marketing and merchandising tactics by linking in-store spending to gas savings at their pumping sites or with participating petroleum companies,” said Hale. “Some programs have been extended to reward shoppers with gas discounts and in-store savings based on gas spending. Other programs include participation from manufacturer brands. While gas prices are a bargain compared to mid-2008, filling up a 15 gallon tank represents a significant cash outlay and an opportunity for CPG retailers and manufacturers alike to offer saving solutions.”

Results are based on Nielsen online survey responses from nearly 52,000 U.S. households, geographically and demographically representative of the total U.S. population. The survey was conducted in June and July 2010 when regular gas prices averaged between $2.70 and $2.75 per gallon.

In an age where shopping trips are increasingly being replaced with mouse clicks, it’s become vital for brand managers to fully understand the evolving world of eCommerce. In this podcast, Brian Wiegand, CEO of Alice.com, speaks with Jeff Cail, SVP, CPG Market Leader, The Nielsen Company, to provide fresh insight into the future of online groceries.

Wiegand and Cail discuss what it takes for online groceries to be successful, why other companies have struggled in the space and how Alice.com is building a captivating digital brand. Click below to learn how Alice.com is changing the way consumers shop for the goods that keep their homes running.

Todd Hale, Senior Vice President, Consumer & Shopper Insights &
Dan Brady, Director, Insights Consulting, The Nielsen Company

SUMMARY: A consistent pattern of reduced shopping trips continues to be a major element of consumer’s economic coping strategies. In the latest battle for share of wallet, those retailers who satisfy consumers through differentiation will gain more of less.

The recession continues its ravaging effect on retailers. According to Nielsen, the downward trend of consumers shopping less hit a new low in February 2010, reporting a 4% year-over-year decline in monthly all-outlet shopping trips. And while per trip shopping basket rings began to pick up during and after the holidays, February remained static with a 1% increase compared to last year. Retailers’ focus on store brands and retail price cuts helped keep spending levels in check driving more value for shoppers.

A closer look at monthly shopping trips shows that trends have virtually flat-lined in total and across all major retail channels. Grocery stores have been shopped two plus times more often than competitive retail channels. Other Nielsen trends show that consumers are not shopping more stores looking for deals as consumers consistently shopped fewer retailers each period in 2009 than they did in 2008. It is a tough market and breathing life into a different retail environment will take new strategies that keep shoppers satisfied and spending while they are in the store.

Food Matters
As consumers are eating in more and out less, retailers are converting lost restaurant trips into grocery trips. And while grocery trips were up in the last eight of twelve periods ending February 2010, trips in the last four months are down. Value channels such as dollar stores, warehouse clubs and supercenters have fared the best showing growth in most periods in the last year and one-half. In fact, only supercenters and club stores had positive trip growth in each period in 2009. Both, however, declined slightly in 2010 as consumer confidence remained low and poor weather conditions plagued major population centers.

Continuing to take a hit are drug, convenience and regular mass merchandiser formats, although drug trips are showing signs of improvement as consumers stock up on meds to combat the effects of the cold and flu season.

Shopping trips to discretionary retailers such as toy, electronic, department, liquor and home improvement stores continue to feel the economic pinch. Electronic, toy and department stores have been hit especially hard, with year-over-year shopping trip declines in the latest four-week period ending February 2010 of 33%, 18% and 7% respectively.

Do More With Less
With less store traffic, retailers need to capitalize on consumers’ time in the store like never before. Three priorities should top the list for every retailer:

1. Satisfy loyal shoppers with savings linked to shopping frequency and spending levels.
2. Entice new shoppers with promotional offers such as a free reusable shopping bag or product.
3. Offer value and low prices, but more important, stake a claim to at least one or two points of differentiation to maintain a competitive advantage.

“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.

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.