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

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

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

• Warehouse Clubs
• Supercenters
• Dollar stores

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

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

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

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

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

2008: Staying In Is The New Going Out
Americans are spending more time in front of their computers and televisions. The reach and frequency of TV, Internet, and time shifted TV use increased notably in 2008, as consumers on tight budgets opted to save money by staying home. 

2008: Economizing Strategies Go Digital
In 2008, 20% of consumer discussions online referenced strategies for managing grocery budgets.  Visits to price comparison websites were also up significatnly this year. 

2008: Private Label Reigns Supreme 
As the economy worsened, consumers continued to shift dollar and unit spending to private label products.  The result: private label shares hit all time highs in both units and dollars at year’s end.  Private label dollar sales averaged about 10% growth in the five four-week periods near the end of the year.  Meanwhile, unit sales growth accelerated, averaging 4% to 5% growth.  In comparison, branded products saw 3% average dollar sales growth and 3% unit sales decline. 

2008: Value Trumps Variety, Convenience
“Value” categories and brands saw greater growth in 2008, compared to the previous year:
- Spam: dollar sales up 14% vs. year ago 
- Ramen Noodles: dollar sales up 30% vs. year ago
- Dry Pasta: dollar sales up 25% vs. year ago
- Bulk Rice: dollar sales up 38% vs. year ago
- Margarine: dollar sales up 21% vs. year ago
- Canned Vegetables: dollar sales up 9% vs. year ago
- Frozen Vegetables: dollar sales up 7% vs. year ago

2009: Retail Stores Close, Consolidate
“A rising tide raises all boats” — the opposite exposes weaker businesses.  The grocery channel may be “recession resistant,” but no channel is “recession proof.”  In 2009, expect further consolidation in retail outlet ownership, as flawed businesses go to the wall or are selectively gobbled up at low prices by “retail winners” looking to expand their presence in key neighborhoods and markets.

2009: Premium Brands Lose Ground; Genetic Modification Gains New Acceptance
In 2009, consumers will become more discerning and discriminating, and the premium charged for more expensive lines will be questioned more frequently.  This will retard the growth of some organic and fair trade products, and maybe even increase acceptance of genetically modified products. 

2009: Food Waste Reduction Is A New Priority
With food waste running at 30% in the U.K. and 40% in India, consumers and manufacturers will make greater efforts to reduce avoidable losses in 2009.  Look for growth of the frozen food category, and smaller portions in food service and single-serve ready meals.