Grocery Shopper Presentation V13

Grocery Shopper BehaviorGrocery Shopper BehaviorQ2 2009Q2 2009

- - Baseline of shopper behavior todayBaseline of shopper behavior today- Changing shopper in the face of economic stress- Changing shopper in the face of economic stress- A new shopper segmentation- A new shopper segmentation

July 2009

2

Recession Changing a GenerationRecession Changing a Generation

3

““The Great Recession”The Great Recession”

4

But Real Concern ExistsBut Real Concern Exists

5

Yet Overall Grocery Sales are FlatYet Overall Grocery Sales are Flat

What’s Going On? Has Nothing Changed?

6

ObjectiveObjective

• The purpose of this study is to ascertain the current economic mood of consumers and how the economy has affected grocery shopper behavior in the United States– What behaviors have surfaced?

– What categories have been most affected?

– What is anticipated for the future?

• It is also designed to introduce a new American grocery shopper segmentation

METHODOLOGYMETHODOLOGY

7

8

MethodologyMethodology

• An online survey was conducted between May 28th and June 4th, 2009 among 1,106 grocery shoppers. – Nationally representative sample drawn from the DRI Online Panel

– Questionnaire designed by Thinkvine and DRI

– Survey programmed and hosted by DRI

– Segmentation/advanced analytics by Thinkvine

• Sixteen grocery categories analyzed– Milk, paper towels, bread, cookies, crackers, rte cereal, orange juice, salty

snacks, juice beverages, pasta sauce, yogurt, laundry detergent, soft drinks, salad dressing, pet food, and coffee

• Cluster analysis identified six distinct segments of shoppers based on economic impact, lifestyle changes and shopping behaviors

OVERALL FINDINGSOVERALL FINDINGS

9

10

No Surprise Today’s Shoppers are No Surprise Today’s Shoppers are Down on the EconomyDown on the Economy

Q4. What is your perception of today’s economic climate? 100-pt scale

6%

2%

49%

43%

"Great"

"Good"

"Fair"

"Poor"

N=1106

11

……As a Result, ¾ Are Changing Their BehaviorAs a Result, ¾ Are Changing Their Behavior

Q5. In recent months, have you changed your lifestyle at all to stretch your dollars more?

31%

42%

9%

19%

Yes, I've madesubstantial changes

Yes, I've made somechanges

Yes, I've made minorchanges

No, I have not changedmy lifestyle

N=1106

73%

1212Q22. In the past six months, has anyone in your household been affected by any of the

following? Please check all that apply.

Affects of Economy

26%

4%

4%

5%

8%

11%

13%

21%

23%

26%

30%

32%

36%

None of these

Other financial issue

Difficulty selling a house

Home foreclosure/mtg issue

Serious illness

Difficult access to credit

Financial support to family or friends impacted by economy

Job loss/unemployment

Investment losses

Job uncertainty

Credit Card Debt

Income reductions

Difficulty in paying bills

And ¾ of These Shoppers Claim to be And ¾ of These Shoppers Claim to be Negatively Impacted by Today's EconomyNegatively Impacted by Today's Economy

N=1106

131313

Cuts Span All Spending CategoriesCuts Span All Spending Categories

Q6. In what areas have you made changes?

29%

37%

60%

71%

79%

80%

53%

42%

Healthcare expenditures

Home maintenance

Charitable giving

Large expenditures

Vacations

Clothing

Small cutbacks toeverday expenditures

Entertainmentexpenditures

But concentrated on entertainment and the everyday

N = 1010 Made Changes

141414

A Return to Higher Levels of Spending is Not A Return to Higher Levels of Spending is Not Anticipated for This YearAnticipated for This Year

Q7. Do you anticipate making additional cutbacks in the next six months?

47%51%

3%

Yes, I expect to makeadditional cutbacks

No, I expect to be spendingabout the same

No, I expect to increase myspending

N = 1010

15

Even an Economic Recovery is Unlikely to Even an Economic Recovery is Unlikely to Bring Back Old Spending HabitsBring Back Old Spending Habits

Q8. Once the economy improves, do you anticipate that you will continue to use the saving strategies you are implementing to weather this tough economy or will you return to your previous spending habits?

52%

41%

5%2%

I w ill continue to use mysaving strategies

I w ill spend a little more,but try to be more

conservative than before

I w ill return to myprevious spending habits

Don’t know

N = 1010 Made Changes

16Q19. In what ways, if at all, have your grocery shopping habits changed during this economic downturn? Please check all that apply.

58% 57% 55%

47%44% 42% 40%

I stock up on saleitems

I reducedspending on non-essential items

I use morecoupons/

promotions

I reduced impulsepurchases

Buying fewerconvenience

foods

Make fewer tripsto the grocery

store

Trade down tostore brands

Shoppers are Focusing on Buying Needed Shoppers are Focusing on Buying Needed Essentials – On Sale/With CouponsEssentials – On Sale/With Coupons

N = 1106

17Q19. In what ways, if at all, have your grocery shopping habits changed during this economic downturn? Please check all that apply.

24%

20% 20% 19% 18%

15%

Shop at DollarStores more often

Shop at a closerstore to save gas

Buy cheaper cuts ofmeat

Shop at Whse clubsmore

Switched to a lowerpriced store

Buy less fruits/vegetables

But Shoppers are Least Likely to Give Up But Shoppers are Least Likely to Give Up Healthy Fruits/VegetablesHealthy Fruits/Vegetables

N = 1106

18

Half of Shoppers are Spending Less on Half of Shoppers are Spending Less on Groceries This YearGroceries This Year

Same40%

More13%

Less47%

Q10. Is this about the same, more or less than you spent at this time last year?

Avg. spending per

week $108

% Spending less on grocery shopping

Spend $100 or less each

week

Spend >$100 each

week

51% 41%

Focused on lower income/lower spenders

19Q14. How important is it for you to get the absolute lowest prices when you are grocery shopping?

38% 39%

0%3%

19%

5 - ExtremelyImportant

4 3 2 1 - Not at all important

Absolute Lowest Prices are a Requirement Absolute Lowest Prices are a Requirement for Today’s Shopperfor Today’s Shopper

Importance of Absolute Lowest Prices

N = 1106

77%

20

Q15. Sometimes in order to get the lowest prices, you have to make some changes to how you shop. Please allocate 100 points across these attributes based on how likely you would be to make these changes. Note: asked among those desiring absolute lowest prices.

N = 1064

……Coupons/Specials are Key to Getting Coupons/Specials are Key to Getting These Absolute Lowest PricesThese Absolute Lowest Prices

0.4

0.6

0.9

1.5

1.5

1.8

2.0

2.8

3.6

6.0

6.5

6.6

7.3

8.7

10.2

11.1

11.6

16.8

Store has poor reputation

Shop at unclean store

Poor customer service

Slow checkout

General poor selection

Poor selection of natural/organic

Shop at a crowded store

Choose avg quality meat/produce over highest

Drive to store that is not the closest

Drive to multiple stores to get best deals

Bag own groceries

Browse Internet coupons

Switch to lower cost brand

Compare store flyers

Switch to store brand

Shop at a store w/better weekly specials

Buy only sale items

Clip coupons

Avg. 6.7 willing to make changes

More desire to switch to store brand or lower-priced

national brand

But Won’t Give UpCustomer Service

21Q21a. With regard to grocery shopping, how well does each of the following statements describe you?

21%

29%

32%

38%

51%

55%

62%

74%

81%

Buy what I like regardless of price

Prefer name brands even if more than store brands

Try to buy natural/organic

Look for quick, convenient foods

Get shopping done as quickly as possible

Read store circulars and choose the store w/ best deals

Healthy eating is very important to me

Always try to buy products on sale

Pay close attention to prices of purchases

N=1106

So Name Brands are Falling Short in This So Name Brands are Falling Short in This Atmosphere of Cost CuttingAtmosphere of Cost Cutting

Top 2 Box

22

Q21. Now please think again about the specific categories that you purchase. In the past three months, how would you describe your purchasing of each of these categories? Response options: I have made no changes, I only buy my preferred brand with a sale or coupon, I buy a different size of my preferred brand, I buy a lower priced national brand, I buy generics or store brands, I buy my preferred brand in a lower cost store

36%

40%

43%

43%

44%

46%

49%

49%

49%

52%

53%

53%

53%

53%

54%

57%

Milk

Pet Products

Coffee

Bread

Carbonated soft drinks/soda

Yogurt

Laundry Detergent

Orange Juice

Pasta Sauce

Paper Towels

Salad Dressing

Juice Beverages

Salty Snacks

Ready to Eat Cereal

Crackers

Cookies

Purchasing Behavior Changes Seen Most in Purchasing Behavior Changes Seen Most in Snacks, Cereal, Juice Drinks, Salad Dressing Snacks, Cereal, Juice Drinks, Salad Dressing and Paper Towelsand Paper Towels

Percent Who Made Changes

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7%

8%

8%

8%

8%

10%

10%

11%

11%

11%

11%

12%

14%

14%

15%

19%

Pet Products

Coffee

Salad Dressing


Laundry Detergent

Yogurt

Pasta Sauce

Juice Beverages

Salty Snacks

Orange Juice

Ready to Eat Cereal

Crackers

Cookies

Bread

Paper Towels

Milk

National Brand Abandonment is Strongest in National Brand Abandonment is Strongest in Milk, Paper towels, Bread & CookiesMilk, Paper towels, Bread & Cookies

Percent Who Purchase Generic or Store Brands

Although store brand milk and bread purchasing are not a new phenomenon

24Q21. Now please think again about the specific categories that you purchase. In the past three months, how would you describe your purchasing of each of these categories?

7%

11%

16%

19%

19%

21%

21%

23%

23%

23%

24%

25%

25%

26%

27%

29%

Milk

Bread

Pet Products

Coffee

Paper Towels

Orange Juice

Laundry Detergent

Yogurt

Juice Beverages


Pasta Sauce

Cookies

Salty Snacks

Crackers

Ready to Eat Cereal

Salad Dressing

Promotion Sensitivity is BroadPromotion Sensitivity is Broad

Percent Who Only Buy Preferred Brand with a Sale/Coupon

NEW SHOPPER SEGEMENTSNEW SHOPPER SEGEMENTS

25

262626

Who is the “New Shopper?”Who is the “New Shopper?”

• As you would expect, not all shoppers are affected by the recession in the same way…nor do they respond in the same way

Some shoppers experience substantial hardship, whereas others are less affected

Some shoppers are more active or aggressive in the response to economic conditions, whereas others take a more passive approach

• Along these two dimensions, cluster analysis uncovered six key segments– Some closely resemble previous segments of shopping behavior

– Others are new to the landscape

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Passive

Les

s d

istr

esse

dM

ore

d

istr

esse

dLifestyle Response

Inte

nsi

ty o

f H

ard

ship

Active

New Shopper Segments Vary by Economic New Shopper Segments Vary by Economic Impact and Shopper ResponseImpact and Shopper Response

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Modest Means28.2%

Optimizer12.2%

Unfazed8.3%

Nouveau Poor4.60%

Hard Times21.1%

Cautious Success25.6%

The Unfazed makes up less than 10% of the The Unfazed makes up less than 10% of the sample…sample…

…which suggests that over 90% of respondents have been affected, at least to some degree

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3.9%

20.0%

39.4%

60.9%70.6%

30.7%

50.2%

60.7%

46.8%

35.2%27.5%

42.1%

44.9%

18.5%13.8%

18.5%

3.9% 2.0% 8.7%

Unfazed CautiousSuccess

Optimizers Modest Means Hard Times Nouveau Poor Total

Substantial Changes in Lifestyle Some Changes in Lifestyle

Minor Changes in Lifestyle No Changes in Lifestyle


Most have altered their lifestyles, with heftier Most have altered their lifestyles, with heftier changes by Nouveau Poor and Hard Timeschanges by Nouveau Poor and Hard Times

However, sacrifice is nothing new for Modest Means

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% Of Households Impacted UnfazedCautious Success

OptimizerModest Means

Hard Times

Nouveau Poor

Income reduction ... 8.7% 15.2% 28.1% 40.7% 47.6% 58.8%

Job loss / unemployment ... 5.4% 7.4% 21.5% 28.5% 24.9% 52.9%

Job uncertainty ... 5.4% 15.5% 20.7% 31.1% 35.2% 54.9%

Investment losses (e.g. stock market) 10.9% 25.4% 25.9% 20.2% 24.0% 39.2%

Difficulty in paying bills ... 7.6% 12.7% 27.4% 47.4% 54.5% 82.4%

Credit card debt ... 9.8% 15.2% 20.7% 35.6% 48.1% 58.8%

Access to credit ... 4.3% 2.1% 5.2% 13.1% 19.3% 27.5%

Home foreclosure/mortgage issues 0.0% 2.8% 4.4% 2.6% 1.3% 66.7%

Difficulty in selling a house ... 0.0% 5.3% 0.7% 0.3% 0.0% 54.9%

Financial support to family or friend 1.1% 6.4% 8.9% 18.3% 17.2% 27.5%

Serious illness ... 3.3% 4.6% 8.1% 11.2% 9.4% 19.6%

The Economic Numbers Paint a Grim Picture The Economic Numbers Paint a Grim Picture – even the “Unfazed” have been Impacted– even the “Unfazed” have been Impacted

Q22. In the past six months, has anyone in your household been affected by any of the following? Please check all that apply.

31

Employment Status (Respondent)

UnfazedCautious Success


Hard Times

Nouveau Poor

Employed Full Time 44.6% 49.8% 46.7% 42.0% 39.5% 37.3%

Employed Part Time 15.2% 18.4% 18.5% 22.4% 16.3% 19.6%

Unemployed, Looking for Work 4.3% 4.2% 8.1% 12.5% 16.7% 25.5%

Unemployed by Choice 17.4% 19.8% 20.0% 13.5% 19.3% 13.7%

Retired 18.5% 7.8% 6.7% 9.6% 8.2% 3.9%

Single Earner 30.4% 22.6% 23.7% 23.4% 24.0% 33.3%

Unemployment among the Nouveau Poor is Unemployment among the Nouveau Poor is more than twice that of other segmentsmore than twice that of other segments

Note: Retirees make up nearly a fifth of the Unfazed segment

…and over 5x higher than Unfazed and Cautious Success

32

……and Household Income is Greatly Reduced and Household Income is Greatly Reduced for Nouveau Poorfor Nouveau Poor

…despite a high educational attainment

33

20%

9%

58%

69%

40%

48%


Optimizer Modest Means Hard Times Nouveau Poor

Q14. How important is it for you to get the absolute lowest prices when you are grocery shopping?

Absolute Lowest Prices are an Imperative for Absolute Lowest Prices are an Imperative for over half of Nouveau Poor and Hard Times over half of Nouveau Poor and Hard Times

Importance of Absolute Lowest Prices% Rating Extremely Important

3434

8.7%

11.3%12.4%

17.6%

9.8%

12.4%

9.6%

6.1%

9.4%7.8%

11.1% 11.2%


Optimizer Modest Life Hard Times Nouveau Poor

Lower Spend Stores Higher Spend Stores

Higher spend = Publix, ShopRite, Sam’s Club, Costco, A&P, Super Target, BJ’s, Schnucks, Big YLower spend = Aldi, Shaw’s, Jewel, Stater Bros., Weis, Roundy’s, Save Mart, Dollar General, Big Lots, Family Dollar , Save-A-Lot

Q11. Where do you usually do the majority of your grocery shopping? Please check one.

Visits to Lower Spend (i.e. discount) Grocery Visits to Lower Spend (i.e. discount) Grocery Stores are Disproportionately Higher for Stores are Disproportionately Higher for Nouveau PoorNouveau Poor

…but also account for roughly 10% of store visits for the higher income segments

35

Avoid processed food. Buy more organic or all-natural foods 20.7% 36.7% 34.8% 26.6% 35.6% 37.3%

Healthy eating is very important to me 48.9% 65.0% 68.9% 54.8% 68.7% 72.5%

Agreement Rating -describes me completely



Hard TimesNouveau

Poor

Buy name brands even if they do cost more than store brands 40.2% 35.0% 35.6% 23.7% 21.0% 21.6%

Look for foods that are quick and convenient to prepare 44.6% 38.2% 43.7% 38.5% 34.8% 27.5%

Hard Times and Nouveau Poor are Willing to Hard Times and Nouveau Poor are Willing to Sacrifice Name Brands and Convenience for Sacrifice Name Brands and Convenience for Lower Prices…Lower Prices…

…but are reluctant to give up healthy eating

36

Agreement Rating -describes me completely



Hard TimesNouveau

Poor

Buy name brands even if they do cost more than store brands 40.2% 35.0% 35.6% 23.7% 21.0% 21.6%

Avoid processed food. Buy more organic or all-natural foods 20.7% 36.7% 34.8% 26.6% 35.6% 37.3%

Healthy eating is very important to me 48.9% 65.0% 68.9% 54.8% 68.7% 72.5%Look for foods that are quick and convenient to prepare 44.6% 38.2% 43.7% 38.5% 34.8% 27.5%

Pay close attention to the price of my purchases 62.0% 71.4% 85.9% 82.7% 91.0% 94.1%

Read store circulars; shop at store with best deals that week. 37.0% 36.0% 76.3% 43.6% 79.8% 84.3%

Always try to buy products that are on sale 60.9% 57.6% 81.5% 77.2% 86.7% 90.2%

However, However, OptimizerOptimizer Finds Ways to Make Finds Ways to Make Name Brands, Convenience and Health More Name Brands, Convenience and Health More AffordableAffordable

…by effectively using sales and promotions

37

Despite Financial Constraints, Promotional Despite Financial Constraints, Promotional Usage of Usage of Modest MeansModest Means Greatly Lags Greatly Lags Hard Hard TimesTimes and and Nouveau PoorNouveau Poor

50%56%

83%88%

11%19%

42%

84%

69%64%

81%

69%


Optimizer Modest Means Hard Times Nouveau Poor

40%30%

86% 82%

7% 1%

99%

1%

97%

77%

40%

82%

Unfazed Cautious Success Optimizer Modest Means Hard Times Nouveau Poor

Always Often Use More than Before

Store & Manufacturer Coupons

Compare Store Flyers

38

15.2%

38.5%

62.5%75.1% 72.5%

46.6%

79.9%

60.0%

35.9%

24.0% 27.5%

50.5%

4.9% 1.5% 1.6% 2.9%

14.1%

76.1%

9.8%0.0%0.9%


Optimizers ModestMeans

Hard Times Nouveau Poor Total

No, I expect to spend more over next 6 months

No, I expect spending to be about same over next six months

Yes, I expect additional cutbacks over next 6 months


Spending constraints are expected to Spending constraints are expected to continue or tighten over the next six monthscontinue or tighten over the next six months

Further cuts even expected by15% of Unfazed and Cautious Success

39

47%44%

61%

41% 48% 45%32% 39%

49%64%

Casual Success Optimizer Modest Means Hard Times Nouveau Poor

I will return to my previous spending habits

I will spend a little more, but try to be more conservative than before

I will continue to use my saving strategies

I don't know

When the Recession is Over, None of the When the Recession is Over, None of the Affected Segments Claim They Will Return to Affected Segments Claim They Will Return to Old Spending HabitsOld Spending Habits

Q8. Once the economy improves, do you anticipate that you will continue to use the saving strategies you are implementing to weather this tough economy or will you return to your previous spending habits?

40

In Conclusion…In Conclusion…

• Less than 10% of grocery shoppers are “unfazed” by the current economic crisis, suggesting that over 90% have adjusted their lifestyles at least in some way

• Out of the crisis, a new class of shopper-- the Nouveau Poor – have joined the ranks of the economically distressed. – Accounting (4.6%) of shoppers, the Nouveau Poor have seen a reversal of fortune,

primarily stemming from the housing and credit issues

– They are willing to put considerable effort into getting the absolute lowest price

– Although willing to sacrifice brand and convenience for a lower price, the nouveau poor shopper is still looking for health – fruits and vegetables aren’t negotiable

• Across segments, promotion sensitivity and brand switching abound, but shoppers draw the line when it comes to their pets.

• The big unknown….. Is this permanent? How long will this last?

41

What’s Next?What’s Next?

• Respondents who participated in this research have been invited to join a private, market research online community to discuss their experiences further in an online qualitative format.

• A fall wave of the quantitative research is planned for September.

• Space is available for proprietary questions in our fall wave. Opportunities also exist to ‘listen’ to discussions on our economy online community.

THANK YOUTHANK YOU

For More Information Contact:

Jeffrey D. MillsVice President, Marketing513-477-1729 [email protected]

42

mailto:[email protected]

43

Past Three Month Category Changes are Past Three Month Category Changes are Highest for Nouveau Poor and Hard TimesHighest for Nouveau Poor and Hard Times

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cookies

Crack

ers

Salty

Snack

s

Juice

Drin

ks

Salad

Dre

ssin

g

Ready t

o Eat

Cer

eal

Paper

Tow

els

Pasta

Sau

ce

Laun

dry

Deter

gent

Ora

nge Ju

ice

Yogur

t

Soft D

rinks

Bread

Coffee

Pet P

rodu

cts

Milk

Unfazed Cautious ComfortOptimizer Modest LifeHard Times Nouveau PoorTotal

(%) Have Changed


Documents

Grocery Shopper Presentation V13