There is no doubt that U.S. store brands benefited greatly from the Great Recession of 2008-2009. The quality of today’s store brand offerings coupled with more value-conscious consumers looking to stretch their dollars ignited a sales boom. In the U.S., private label sales increased 1.8 share points from the end of 2007 to the end of 2008 to reach a 22.3 percent market share.

The reputation of store brands today continues to improve. Nielsen research shows that three-quarters of consumers believe store brands are a good alternative to name brands and two out of three agree that quality is also on par. And fewer consumers view store brands as those geared towards people on tight budgets who are unable to afford “the best”.

But since the end of 2008, store brand share growth across food, drug and mass has been fairly flat as brands stepped-up their promotion support and innovation efforts and some retailers took on a “build it and they would come” strategy. Today, national brands still command 78 percent of CPG unit sales.

Store brands may have reached a new share plateau, but long-term growth will be fueled by both consumers’ interest in value and retailers’ focus to drive margin and build banner equity. Retailers need to manage their store brands like manufacturers do – by investing in research to identify the best new products for roll-out combined with the most effective marketing/merchandising support to build awareness, generate trial and repeat purchasing to yield sustainable and profitable volume levels.

Strategies to Grow Store Brands:

• Expand the variety. Half of consumers said they are willing to buy more store brands if there is greater variety. Do your homework to assess opportunities among your core shoppers. Don’t introduce new lines or items at the expense of high penetration and/or high frequency brands, which can drive your shoppers to competitive retailers.
• Keep prices affordable. The majority of consumers are not willing to pay more for store brands. The same is true for brands, but an assessment of price level and price gaps between your store brands and brands can yield stronger sales and profits.
• Invest in quality. Value is important, but quality goes hand-in-hand. Consumers dissatisfied with quality will buy less. Store brands don’t need to be just about low prices; a tiered store brand approach can allow you to build sales among diverse shoppers.
• Build strong brand equity. About 40 percent of consumers claim to only trust store brands from retailers they have confidence in. Enhance your shopper connection with a strong store brand program.
• Connect with younger consumers. Younger generations are strongly committed to store brands and low prices. Not only do they view them as good alternatives to name brands, but almost half (42%) said that some store brands are higher quality. These shoppers are also more engaged in online information seeking, so look for opportunities to connect with them via digital communication vehicles.
• Reach older consumers. The “Greatest Generation” leads the way in believing store brands are “extremely good value for money”. This group is a prime segment for trial programs. Leverage in-store sampling programs, money-back guarantees, and communications through your paper circulars.
• Appeal to lower-income consumers. Necessitated by a need to stretch dollars further, lower-income consumers have a stronger commitment to store brands. These shoppers are also less inclined to believe that store brands should always include a retailer’s name on store brand products. Have some fun naming your store brand items.
• Understand Hispanic consumers. Hispanics place great importance on getting the best price and say they will buy more store brands provided there is more variety available. Based on population projections, Hispanic households will represent the single biggest growth opportunity for years to come; now is the time to make an investment to understand how your store brands connect with Hispanics.
• Broaden appeal for African American and Asian consumers. African American and Asian consumers are very committed to brands, so look for opportunities to co-promote the right combination of branded and store brand items and be careful not to invade a branded space with a store brand offering and turn away shoppers.

Nielsen’s Todd Hale, SVP Consumer & Shopper Insights, shared new research at the U.S. Consumer 360 Conference about the benefits of both print versus digital circulars and outlined the steps required to optimize both.

Shoppers prefer paper, but digital has strong conversion rates

Sixty percent of shoppers from a recent Nielsen survey say they look at printed paper material either mailed to the home or in newspapers at least once per week. The only electronic tactic that matches printed paper’s weekly reach is email. But while far fewer people are looking at sales and product information from digital methods like social media sites, store sites using a tablet PC or from smart or mobile phones, the weekly usage conversion rates are strong.

And demand goes up for high tech information sources when shoppers are asked what they want for the future. While nearly 90 percent of consumers still want print, more than 70 percent want email and traditional websites and about one-third are interested in social and smartphone applications. These numbers are even higher among younger generations of shoppers who say they still want paper, but they are more accepting of all information sources.

The research showed that while printed material gets shoppers in the store, digital tactics reinforce and reward loyal shoppers. Printed campaigns help shoppers find deals about their favorite products and locate widespread sales and high-tech touch points such as tablets, social sites and in-store kiosks are used to more so for research purposes.

Today, printed circular response promotion lifts are less effective than five years ago, delivering about a 20 percent return on investment in 2010, compared to a 28 percent boost in 2005. An improved mixture of items with an overall higher lift profile and/or timing improvements can counterbalance smaller average lifts. Don’t underestimate the impact your competitive advantages/disadvantages have.

A Move to Improve Online Offerings

For many brick and mortar retailers, figuring out how to effectively draw people to online offerings and then determining what contribution online efforts are having to offline sales is a challenge. In fact, few of these retailers get more than 20 percent of store shoppers to visit their site, despite the fact that the majority of shoppers spend 25+ hours per week online.

In study after study, Nielsen finds that the online circular is the most widely used part of a grocery/drug retailer’s web site, but the lift gained is a bit less than the lift seen for the site overall. The research also shows that:

• Online display ads drive offline sales
• ROI is generally higher than traditional media
• Every online campaign does not work
• Success is driven by new shoppers, not greater spending among existing shoppers
• The best responding offline segments are not always the most responsive to online ads

The Secrets to Success

Put a process in place for both print and media campaigns that tracks ongoing optimization. For print, start by defining who won the week – know what you did and what your competitor did in terms of attributes page-by-page. A department-by-department win/loss scorecard that includes display compliance should be deployed to get below the surface of the ad.

For digital, an understanding of past shopping behavior makes a big difference in the ROI of online campaigns on driving offline sales. Customer-based reach tactics can also be effective, but often requires a level of analysis beyond what is known about existing brick and mortar segments. Creative messaging with price and promotion on specific items is particularly effective.

While print will remain a strong part of the circular mix for five to 10 years out, it needs to be a leaner and more precise vehicle. Digital is necessary to bring about the type of consumer relevancy that future shoppers will expect. It will evolve along with development on the web and in social media and will be driven to a large degree by younger and more diverse population segments.

The stats still show that women do the majority of shopping in the U.S., but with men facing a higher unemployment rate than women (8.8% compared to 7.9%, according to a February 2011 U.S. Bureau of Labor Statistics report), more men are at home than in the past and in many cases, they are taking a more active role in household duties. While women continue to dominate shopping trips in all retail channels except for convenience stores, men have increased trip shares between 2004 and 2010 in all retail channels but drug stores.

Nielsen recently took a closer look at the differences in shopping and media behavior between the sexes and found some surprising results.

Women are the biggest spenders per trip, an indication that they are more likely to go on the weekly planned shopping trips for their families. But in many channels, the difference between the spending of men and women is not that great. For example, at the grocery store, women spend an average of $44.43 per trip while men spend $34.81. And despite dominating the dollar and warehouse club channels, women spend just over $3 and $5 more respectively per trip than men.

Regardless of gender, Sunday is the most important shopping day of the week, although at warehouse club stores, Saturday is almost as important. Younger women shop mostly on the weekends, while women aged 55 and over spread their trips out more evenly over the course of a week (a pattern we also see for men).

Screen Wars
It’s a long-held fact that older people watch more TV than others, and this shows no sign of changing anytime soon. This can be largely attributed to the fact that many aged 65 and over are retired and have more time at home to watch TV. By gender, women watch more live TV than men at every age over 18, as well as more time-shifted programming recorded on a DVR. While DVD viewing is more popular among younger women, after age 45, men are slightly heavier  DVD users. And males of all ages dominate video gaming, especially in the younger years where playtime reaches over four hours a day for those aged 18 to 24.

Text or Talk – Women Do More of Both
Texting doesn’t have the same appeal for consumers over age 55 as it does for everyone else. In fact, all consumers under age 55 use their devices far more for text messages than for phone calls, with woman texting 30 percent more overall than men. Meanwhile, men lead high-end monthly data activity on their devices with activities such as surfing the Internet (31% for men vs. 29% for women), reading and sending e-mail (33% vs. 30%) and downloading apps (24% vs. 21%).

Online Shopping is for Everyone
Online shopping is popular among both sexes, with almost three-fourths of women (72%) and more than two-thirds of men (68%) having shopped online in the past 30 days. Consumers of both sexes age 35 to 54 had the highest levels of online shopping activity (74%). Women led most online purchase categories except music, auctions and computer hardware.

Innovation is the Fuel for Growth
While the old stereotypes still hold true: women shop the most, senior citizens watch the most TV, men play video games and women and the young like to text, in many cases, the picture is not as black-and-white as in the past. Baby Boomers, who are comfortable with technology, will increase online and mobile activity for seniors as they age. And as new technology further changes, younger consumers will stay on the cutting edge. It’s not likely that suddenly one day men will be the predominant shopper at the grocery store, but they are shopping more. Now more than ever is there a need for marketers to determine the appropriate method to connect with target shoppers.

These levels of connectivity also beg the question of when retailers will flip the switch on traditional feature ads in newspapers to digital versions. Differences in basket composition, planned versus impulse shopping and response to promotions are valuable tools toward designing the right level of shopper engagement. A number of retailers have already used their web sites to target senior citizens with special online promotions, clubs that offer discounts and other features. And one major consumer-packaged-goods manufacturer has even developed a site targeted toward male homemakers – a nod to the fact that more men are engaged in managing more of the day-to-day household chores than ever before. By using innovative approaches to target consumers, the results are not only more accurate, but they can be more effective too.

Findings from a 2010 Nielsen global online survey of more than 27,000 respondents across 53 countries show that the private label phenomenon is here to stay. In fact, while more than half of online consumers surveyed said they purchased more private label brands during the economic downturn, fully 91 percent said they will continue to do so when the economy improves.

Global Progress is Continual
On a global scale, the impact of the economic environment on private label has played a more marginal role. Looking at a comparison across markets, there is a slow, but steady continuation of private label progress, which is actually the result of more retailers deploying private label products in a growing number of categories, a phenomenon that’s continued for more than two decades.

The victims of this transformation are the small and medium brands that get de-listed in favor of private label. Generally, the leading brands in the category are not suffering and private label isn’t fatal for healthy brand leaders. Consider this: In Europe where private label is most developed, store brands still only capture an average 35 percent market share. In the U.S., private label’s market share is still under 20 percent.

As retailers continue to become more adept at using national advertising to build store brands, growth will surely continue. The advertising of retailer banners has grown over time and this has a positive impact on the brands that these retailers carry. The evolution of private label products has also resulted in these brands operating above the lowest price band. Increased store visibility through facings and a proliferation of SKUs has resulted in greater familiarity and awareness of these brands among shoppers.

National manufacturers will realize that the best way to guard their brands’ turf will be to treat private label as legitimate competition and reactionary price reduction measures will only provide a temporary reprieve. Clearly, national brands still command a greater proportion of their categories at an overall level and private label usually takes the place of ‘challenger’ to a vibrant and dynamic market for shoppers.

Private label brands are in a position to compete on value and quality—key attributes that today’s consumers seek. The opportunity for retailers is to use private label to differentiate themselves and lead the way with innovation to help build and sustain the image of the entire franchise.

• For more detailed country-by-country review, download the complete report: The Rise of the Value-Conscious Shopper – A Nielsen Global Private Label Report

While Americans have had many things to worry about during the recession and now the sluggish recovery, fast-rising prices at the supermarket were not one of them. The U.S. Department of Agriculture’s all-food index showed a modest 0.8 percent price increase from 2009 to 2010, and just a 0.3 percent increase in the price of foods consumed at home – the lowest levels of food price inflation since the 1960s. But at a time when many countries around the world are facing double-digit inflation on basic food items, can the U.S. be far behind?

The simple answer is no. The USDA is forecasting overall food prices to go up between two to three percent in 2011, due largely to the rising cost of commodities and lower supplies of basic ingredients – higher than the past few years, but certainly not the levels being encountered around the world. Demand for corn is at the highest levels in recent memory: supplies of the U.S. crop are at 15 year low as increasing demand from the U.S. ethanol industry is using existing resources. To get a better sense of how price increases could affect the average American household, it makes sense to look at overall food spending and how it compares to other countries.

Cost of Food
According to the USDA, Americans spent more than $607 billion on food consumed at home in 2009, and another $575 billion in food consumed away from home. For most of the decade, food eaten outside of the home was making steady gains, and by 2008, in-home and out-of-home food consumption was essentially on par. But the recession changed all that, and as consumers sought ways to save money, outside dining was one easy way to reduce household expenses.

The cost of food for the average U.S. household makes up a lower percentage of income than almost any other nation. Food accounts for just 6.9 percent of the average American household’s expenses, compared to more than 11 percent for the average Austrian household, 15 percent in a South Korean home, 42 percent in a Ukrainian home and 45 percent in a Pakistani home. On a per capita basis, that amounts to $2,208 in the U.S., $2,860 in Austria, but just $701 in Ukraine and $309 in Pakistan.

Inflationary Impact on Families
With that in mind, how might inflation affect the average American family? If the USDA’s forecast holds true, inflation of 2–3 percent would add $178 – $267 to the food bill per year. If inflation goes a bit higher than expected, say 4–6 percent, food would cost the average household another $356 to $554 each year – not an insignificant amount. But the real story is more complex. Consider the reduction in the social security tax rate for 2011: the decrease in the rate from 6.2 percent of income to 4.2 percent equates to an additional $1,000 in the average American’s wallet, enough to cover increased food costs and then some. And, we should expect increased demand for products and services in the U.S. as unemployment subsides throughout this year and consumer confidence builds.

With the cost of basic commodities such as meat, wheat, milk and eggs rising by high-single or low double digits, CPG manufacturers will need to raise prices. We think that most retailers will simply pass those costs on to consumers – a move that may prompt more households to shift to less expensive private label goods, which have already enjoyed solid growth over the past three years. A smaller percentage of retailers will resist price increases and will look to turn lower prices into a competitive advantage.

The stability of food prices during 2010 was a small blessing for families looking to control expenses during a time of economic uncertainty. But for retailers and CPG manufacturers, it has come at a cost. Unable to pass on cost increases to consumers, they have had to find new, innovative ways to maintain sales and margins. Some of this came through new product innovation, while others reverted to adjusting ingredients and package size. Now, however, it looks as if they may finally be able to justifiably increase prices as the economy improves and consumers show a renewed willingness to spend.

Cautionary Note: Global Oil Price Impact
With continued unrest in the Middle East and northern Africa and the resulting impact on global oil prices, we will likely see increased inflationary pressures from rising fuel prices have a similar impact on U.S. consumers as experienced in 2008 (i.e., shopping trip compression, more at-home consumption, value buying and increased coupon usage). Global demand for U.S. food in developing countries is great for U.S. exports, but those gains may also lead to higher food prices for U.S. consumers.

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.

The summer of 2008 seems like a distant memory given all that has happened in the past two years. But one thing most Americans are unlikely to forget about that year was the average price of gas reaching $4.11 per gallon. Fortunately, the price level settled back to $1.61 by the end of that year. But just two years later, the average price of gas has crept up to $3.05 per gallon, and some analysts expect the price to continue to rise to near 2008 levels.

With this in mind, how will consumers react to higher gas prices, especially in an economy fraught with uncertainty? During the summer of ’08, U.S. consumers told us how they responded by reducing shopping trips, eating out less, buying for value and using more coupons. And what they told us they were doing aligned perfectly with their behaviors.

It was during that year that the “staycation” came into existence as consumers cut-back on unnecessary travel and did more at home in an effort to save money. We saw a flurry of meal deals from food retailers and manufacturers as they aggressively fought to win trips that restaurants were losing. Will past consumer reactions to gas prices come into play in 2011? We think so, so how are you preparing for another round of opportunities for increased at-home consumption?

A number of the habits consumers formed in response to the high gas prices then have remained in place, and are likely to accelerate if gas prices go much higher, including buying gas linked to spending levels at grocery stores and purchasing gas at outlets offering other incentives.

Retailers and manufacturers should look back at how their core shoppers and buyers responded to past gas price increases in 2008 and begin planning now for 2011. While it’s not yet clear how high gas prices might go, any further rises coupled with elevated levels of unemployment are likely to drive consumers to take additional steps to save money. It’s never too early to have the strategy in place to respond.

The U.S. retail scene in 2010 was mixed. While the country was technically not in a recession, American consumers nonetheless remained skittish as uncertainty about the economy and jobs persisted. For retailers, this meant finding new ways to get shoppers into stores and retaining the loyalty of those already patronizing outlets. While the economy is expected to grow at a higher rate in 2011, high unemployment and rising commodity prices (including gasoline) are likely to negatively impact consumer confidence and spending patterns. In 2010, winning retailers didn’t sit on the sidelines, they innovated. In 2011, we can expect more from those areas where innovation occurred as retailers evolve their macro strategies in three key areas:

1. Evolving infrastructure for profit growth
2. Reaching consumers more effectively
3. Driving loyalty by delighting the customer

Evolving the Infrastructure

Collaborative Formats: Why invest in reinvention when you can leverage expertise from others? Significant opportunities exist for retailers to evolve and take advantage of current consumer trends, particularly when it comes to collaborating with partner organizations. Over the past several years, many coffee, donut and fast-food retailers have collaborated with grocery and other retail channel operators to expand their reach via co-branding efforts. And last year, a large grocery chain and a large drug chain announced the launching of a new format, which included significant features from both, enabling the two companies to test a co-branding and integration strategy.

Flexible Formats: Brick & mortar retailers are giving shoppers greater flexibility to choose where they want to shop – online, in-store or both. They are also offering customized technology featuring discounts, product alerts and other tools to make the shopping experience more convenient and personalized. Look for pop-up retailing, which exploded this past holiday season within toy stores, to find its way into other retail channels.

Store Brand Focus: The explosion of private label goods is one of the big stories of the last few years, and consumers – who have come to accept that these goods as high-quality – continue to view them as offering great value. This is good news for retailers as private label products are profitable and with commodity prices on the rise in 2011, expect another strong year for store brands.

Reaching Customers More Effectively

Continuity-Based Shopper Engagement: Loyalty cards are a treasure for retailers – provided they are mining the data effectively. It is critical to deliver the right promotions to the right shoppers to keep them coming back. Providing kick-backs on credit card purchases or gas rewards are the incentives that keep on giving. Expect to see more retailers leveraging the shopper insights from these data to create up-selling opportunities and shopping list and home inventory management tools, which provide shoppers with reasons to keep shopping without pushing the item sale button as often.

Win Ethnic Consumers: Retailers can also win more shoppers by appealing to ethnic consumers as African American, Asian, and particularly Hispanics will post strong population growth over the next several decades. Look for new retail formats and modified assortment along with increased advertising and promotions to appeal to population growth segments.

Compete in the Digital World: To effectively reach today’s media-savvy consumers, it is critical to develop expertise in the online space. Retailer-specific mobile apps save time and provide self-service options for consumers – tools like these are win-win strategies for both shoppers and retailers. Using technology to enable more efficient shopping is key as more consumers are using their smartphones to help organize their lives. Look for an explosion of computer and mobile-based videos, which teach shoppers how to lead healthier lives, become better cooks and find more savings. They will demonstrate how connected shoppers interact with retailers who are best-in-class in this area.

Delighting the Consumer

Solution-Based Formats and Promotions: Consumers choose their stores on more than location: a good experience is critical. By devoting sections of the store to areas such as beauty care, home cleaning and meal solutions and by using promotions, retailers have the opportunity to build baskets from across the store. There has been some good work in this space where retailers (and in many cases due to the collaborative efforts with their manufacturer partners) have enhanced the center and perimeter of the store experience, but look for a few retailers to blow-up the store and create dramatically new formats based on shopper-centric mission-based shopping behaviors.

Enhancing the Shopping Experience: Big and small retailers are using technology to enable more efficient shopping. They are also modifying formats to make the shopping experience more enjoyable to increase trips and build baskets. And while some grocers have launched self-scanning devices to help shoppers avoid lengthy lines at check-out, when will check-out lines disappear altogether, allowing shoppers to avoid the part of the shopping experience they dislike the most? Mobile apps designed for shoppers to locate products in stores will provide smaller retailers (who may not have the space on budget for wholesale changes to their store formats) with a means to provide a more convenient shopping trip. Some retailers have added in-store dining options and broadened carry-out meal options. And some retailers are even creating formats that serve alcoholic beverages with live entertainment. In 2011, retailers will create radically new formats to elevate the shopper experience and enhance the connection between store personnel, the retailer and the shopper.

The year ahead is not likely to see any sea changes in terms of retailers’ strategies, but rather an expansion and refinement of tactics launched over the past year or so. These moves can, however, drive solid growth – even in a continually challenging market. Longer term, winning retailers will look much different than what we see today as we see store formats created to fulfill consumer demand.

SUMMARY: As the economic downturn forced consumers to make trade-offs and buy less, consumers focused greater attention to at-home meals and in-home entertainment. Smart manufacturers and retailers are taking advantage of this trend by offering creative meal solutions, collaborating with partners to co-promote, creating engaging online sites and making it easier for consumers to relish the joy of cooking.

When you think about it, isn’t food the real social network of the ages? Food is, and always has been, that special bonding agent that connects family and friends—with no electronic device necessary! Whether we gather for holiday celebrations, special occasions or the traditional family dinner, food, plain and simple, brings people together. And, as the U.S. economy experienced one of the worst downturns in recent history, consumers showed a renewed focus on back-to-basics in-home cooking.

Food Matters Most
When money is tight, food matters most. Edible departments are growing and non-edible departments are off as consumers are making trade-offs or buying less. Consumers are placing more attention on at-home meals and in-home entertainment options as evidenced by more time spent surfing cooking-related websites, watching food-related TV programming and reading cookbooks. Nielsen reports that each month, food and cooking websites are visited by an average of 70 million unique online visitors, taking into account home and work online activity from year ending September 2010. The number of households tuned to the Food Network during prime time reached over 1.1 million viewers in the first quarter of 2010 — an increase of 9 percent versus year ago. And as total book sales saw a year-to-date decline of 4 percent, cookbook sales rose 5 percent.

Savvy manufacturers are capitalizing on opportunities that demonstrate how brands not only deliver a consumer solution, but also help drive a retailer’s sales efforts. For example, unit sales of womens’ cosmetics have been showing low or flat growth over the past couple of years, but the category is faring better than the entire health and beauty department. Evidently, looking and feeling good is something most women are not willing to sacrifice. Food and non-food retailers need to look for opportunities to win consumer hearts, minds, and dollars with the right assortment, right price, right promotion and right message.

Seize the Opportunity
An all-out food fight is taking place in the industry as grocers are seizing the moment to grab a share of declining restaurant sales through innovations relating to ready-to-eat foods for consumption in and out of their stores. With retailers offering improved quality of prepared foods and in-store food-service programs, this is the initial phase of lifestyle retail formats emerging as retailers look to enhance the entertainment value of a traditional mundane shopping trip and entice shoppers to spend more per shopping trip.

And if you don’t think food matters, stop into a mass merchandiser retailer where you will notice how some have modified and expanded food sections in their stores by selling fresh perishables (meat and produce). And, take a look at how drug and dollar store retailers are expanding the selling space in their stores devoted to food.

Restaurant brands may have appeared in grocery stores well before the U.S. economy turned south, but more and more of them are finding a spot on grocers’ shelves. And the latest is celebrity chef-inspired brands. Dollar sales for a broad set of selected restaurant and celebrity chef brands are up 12.6% and unit volume is up 10.6% versus two years ago, with annual sales just shy of $4.75 billion. Regardless of the economic situation, this is a great way for food manufacturers and restaurants to collaborate and extend the reach of known brands and drive sales at retail.

Creative Collaborations
Meal-deal programs that help families save can be described as the next generation of recipe marketing. And most grocers are playing “follow the leader” by making recipes ideas and easy meal solutions—featuring manufacturer and store brands offerings—a prominent part of their websites.

Many retailers and some food manufacturers are also doing a great job of merchandising or co-promoting with complementary food categories during key selling periods. Using these categories in continuity-based loyalty programs by rewarding shoppers with discounts based on spending levels to get consumers to spend even more!

Want to Sell More Groceries – Try Cooking Classes
Another way for grocers to drive more sales of groceries and cookware is to teach shoppers how to cook. Since cooking schools won’t work in all banners or locations, retailers should explore options for online cooking lessons. And don’t forget about the kids…or dads. With more men out of work than women and with some families opting to have the husband stay at home with the kids, online cooking tips and online cooking videos gets the whole family involved in the process.

Smart manufacturers are also providing consumers with cooking solutions that include items that go well beyond the products they sell by enabling consumes to purchase kitchen and cooking solutions online. And providing cooking solutions via online established cookbooks using recommended ingredients is a great idea too.

Food for Thought
While our economy has many consumers thinking about the prices they pay for just about everything, it seems that too much emphasis is being placed on low prices and not on the benefits and solutions (real and emotional) consumers can receive from manufacturers and retailers. Here are some thoughts for how retailers and manufacturers can capitalize on these trends:

1. Consider meal solutions for breakfast, lunch and dinner that leverage both center store and perimeter categories.
2. Collaborate on meal solution formats and arrange the store aisles so shoppers don’t have to walk the entire store to find one-stop items.
3. Leverage cooking classes and recipes both in-store and through multi-media (print, online, smart phone apps) outlets.
4. Try in-store and mobile demo and sampling stations so your shoppers and consumers can smell and taste what you have to offer to drive a sale.
5. Cross promote against complementary food and non-food categories to provide value along with solutions.
6. Look to social media sites to attract recipe ideas and feedback from shoppers or consumers and use banner or brand advocates to speak for you.
7. Explore celebrity chef or restaurant alliances to build equity with people who enjoy cooking.
8. Use advertising copy that embraces the joy of cooking and celebrations with family and friends. Be sure to make the brand or banner clearly visible and learn from the growing trend around reality video and leverage banner and brand advocates in your ads.

Pretty deep. According to Nielsen, three-quarters of U.S. households believe store brands are a good alternative to name brands and nearly two-thirds of households say that store brand quality is just as good as name brands. In a recent Progressive Grocer Store Brands article, the depth of store brand buying reveals just how much consumer’s behaviors and attitudes have aligned.

With nearly 70% of store brand dollar sales coming from consumers who are “variety-seekers,” retailers can encourage deeper levels of store-brand buying by:

• Rewarding key consumers with continuity-based promotions.
• Implementing repeat stimuli efforts
• Targeting specific shoppers through direct mail efforts

For more details and tactical examples, continue reading at Progressive Grocer Store Brands.