Dollar stores continuing to win new shoppers
Data from New York-based ACNielsen U.S. shows that the fastest-growing retail channel in the consumer packaged goods industry - the dollar store channel - is continuing to attract new shoppers at a rapid pace.
According to an analysis of ACNielsen Homescan consumer panel data, fully two-thirds of all U.S. households now shop at dollar stores - up from 62 percent in 2002. Shopping frequency in the channel is growing as well.
In part, growth in household penetration for dollar stores is a function of the channel’s growing availability to more shoppers. According to TDLinx, a retail location and hierarchy information source, store count for the channel grew from 13,342 in 2002 to 15,703 in 2003 - an increase of 18 percent.
While dollar stores are especially popular with low-income households, they are making their greatest gains with more affluent shoppers. Nearly half (49 percent) of all households earning $70,000 per year or more now shop at dollar stores - up 9 percent versus 2002. The higher income groups are also showing growth in shopping frequency.
“Aggressive store-count growth among the leading dollar store retailers is certainly a big part of the channel’s success in reaching new shoppers,” says Todd Hale, ACNielsen senior vice president, consumer insights. “But there are other factors as well. The variety of products carried by dollar stores is growing, especially in consumables. And, dollar stores are benefiting from the curiosity factor. People want to see what’s available on deep discount.”
An analysis of the top 10 product groups sold in dollar stores in 2003 shows that the channel continues to take share away from other retail channels. The chart shows each channel’s share of the dollars spent in each product group in 2003 and the percentage change from 2002. As the chart shows, in all 10 product groups, dollar stores are continuing to grow their share of sales.
Most of the product groups in the chart generate over $1 billion in annual all-outlet sales, so even small share changes are significant. For example, paper products is a more than $16 billion product group. When the dollar store channel grew its share from 3.1 percent in 2002 to 3.6 percent in 2003 - a 16 percent gain - it captured nearly $809 million in new revenue. For more information visit www.acnielsen.com.
America’s favorite sports and activities in 2003
Fitness is king once again - as 12 of the top 30 sport/activity categories are fitness related. That’s the conclusion of SGMA International’s analysis of the Sports Participation Topline Report. SGMA International is the global business trade association of manufacturers, retailers and marketers in the sports products industry. Listed are the top 30 sports activities and recreational endeavors in the United States, based on participation in 2003.
This information has been abstracted from the annual Superstudy of Sports Participation conducted by American Sports Data, Inc., which monitors 103 sports and fitness activities. SGMA International’s Sports Participation Topline Report is available at www.sgma.com.
Youth marketers foresee more in-school advertising
A survey of professionals working in youth-related fields shows that although youth marketers don’t necessarily see marketing to children during school time as important, 74 percent of them expect to see the level of advertising in schools rise in the future. Results of this poll indicate that: 64 percent feel that reaching children during school time is not very or not at all important; 20 percent feel that reaching children during school time is somewhat important; and 16 percent of respondents feel that reaching children during school time is extremely or very important.
These are some of the findings of the Harris Interactive/Kid Power Poll of Youth Marketers conducted online by Rochester, N.Y.-based Harris Interactive in February 2004 among 878 individuals working in youth-related fields. Survey participants included professionals in youth marketing, market research, advertising/public relations, media, education and at non-profit organizations. The poll covered a number of topics regarding commercialism and youth, marketing in schools, youth obesity, and sexual and violent content in media.
“The media world has fragmented, and many marketers see schools as a way to effectively reach children and support education at the same time,” says Candi Schwartz, managing director of the Kid Power Exchange. “The poll shows that some in-school marketing tactics are seen by youth marketers as much more appropriate than others.”
Individuals working in youth-related fields feel that the following are appropriate ways to reach children in school environments: 84 percent feel that sponsoring school sports competitions is appropriate; 83 percent say loyalty programs that reward schools for gathering product labels are appropriate; 77 percent feel that purchasing sports equipment for the school with brand names on them is appropriate; 73 percent say advertising in school newspapers is appropriate; 65 percent feel that outfitting school sports teams with gear on which corporate logos were placed is appropriate.
Examples of inappropriate school marketing tactics included: advertising on school buses (69 percent say this is inappropriate); advertising on school book covers (65 percent); providing instructional material that integrates brand names and products into the lessons (61 percent); in-school location media, which show upcoming events at the school as well as advertisements (54 percent).
Establishing vending contracts in schools, which has become a hotly debated topic nationally, is viewed as appropriate by 46 percent of marketers and other youth industry professionals surveyed, and inappropriate by 54 percent.
“Of all the subjects this poll covered, marketing in schools was the one that seemed to elicit the most disagreement among our respondents,” says John Geraci, vice president of youth research at Harris Interactive. “Some feel that schools should be a safe haven from advertising, while others see in-school marketing as providing needed funds to save school programs. Respondents were split as to whether the benefits schools receive from in-school marketing programs outweigh the negatives.”
Additional findings from the study include:
- More than half of those surveyed (58 percent) feel that decisions regarding advertising in schools should be left up to local school officials and school boards.
- 47 percent feel that schools should be a protected area and that there should not be advertising to students on school grounds.
- 45 percent feel that today’s young people can handle advertising in schools.
“There are two forces coming together that will lead to increased school marketing in the future,” says Geraci. “First, school funding situations have become an ongoing challenge. District leaders are pressed to find alternative funding sources for any program that isn’t core to the educational mission of the schools. Second, youth marketers are seeking alternative media to reach young consumers. As long as it is done in good taste and with appropriate tactics, we see educators as supporting an increased corporate presence in schools.” A summary of the results of this poll is available at www.harrisinteractive.com/news/newsletters_k12.asp.
Pharmacists fear drug re-importation
American pharmacists estimate that they have lost 10 percent of their business to Canadian pharmacies, and most expect that loss to increase substantially, unless the government limits drug re-importation. According to a new Event Flash poll conducted by NOP World Health, East Hanover, N.J., one-third of uninsured patients who compare prices when buying drugs tell pharmacists they will fill their prescriptions through Canadian pharmacies, usually via the Internet.
The study shows that a small proportion of pharmacies - usually independents, rather than chains - are trying to compete with their less expensive Canadian competition by negotiating prices with customers. The American pharmacies usually will not discount prices, however, by more than 10 percent. When faced with complaints about high-priced drugs, pharmacists are most likely to suggest that patients contact their doctors to get prescriptions for less costly alternatives.
Patient concerns about price vary by drug class. Cholesterol and hypertension are the most price-sensitive categories - and the ones most likely to spur discussions about cost between patients and pharmacists.
“The trend toward purchasing prescription products through Canadian online pharmacies is growing - and may become a serious threat to American drugstores,” says Andrea McDonough, senior director of market events at NOP World Health. “According to the Roper Reports Market Pulse - conducted by our sister company, NOP World Consumer - while just 6 percent of Americans acknowledge buying their drugs outside the U.S., three out of four believe people should have this option, and two out of three are willing to consider it for themselves.”
Even though two-thirds of pharmacists believe re-importation will lead them to lose increasing amounts of business, less than half want to see laws preventing U.S. citizens from buying drugs outside the U.S. The vast majority, however, would like to see purchasing prescription drugs over the Internet better governed.
The survey was conducted March 17-26, 2004, via the Internet, with 175 pharmacists employed at U.S. pharmacies - 117 at chain pharmacies and 58 at independent pharmacies. All participating pharmacists reported having at least three customers in the last 60 days who said they would get their prescriptions filled elsewhere because of price. For more information visit www.nopworld.com.
Americans unaware of biodegradable plastics
Many consumers are unfamiliar with biodegradable plastics, according to a survey by New York-based FIND/SVP’s Guideline Research division. The survey of a representative group of online consumers also found that about 36 percent of participants have never purchased biodegradable plastics products despite knowing about them.
The survey suggests that there is an opportunity for biodegradable plastics makers to educate a significant percentage of the population about “green” packaging in the U.S., says Raye Hazan, a senior consultant for FIND/SVP Inc. who commissioned the survey and discusses the market in detail in her Trend Report titled, “Biodegradable Plastics: Here Today, Gone Tomorrow.”
The study found that 28 percent of people surveyed have never heard of biodegradable plastics. Conversely, 36 percent of respondents said they had heard of the products, and purchased them. In addition, the study found that nearly two-thirds of the respondents said they would purchase products in biodegradable plastics but only if they were priced the same as traditional plastics packaging.
“A general lack of awareness regarding the environmental benefits of biodegradable plastics is a major obstacle facing this industry,” Hazan says. “Nevertheless, consumer awareness could be heightened by providing an understanding that biodegradable polymers clearly contribute to energy conservation and reduce carbon dioxide emissions.”
To be sure, results of the survey suggest that, with consumer acceptance, proper promotion and a ready supply of resources, the biodegradable plastics industry has a number of opportunities to grow exponentially. “U.S. acceptance and promotion of biodegradable plastics could send the whole industry into overdrive,” she says. “But only if consumers buy into the environmental impact of plastics beginning as renewable sources and ending as 100 percent recyclable or compostable products.”
The survey, conducted in February 2004, was administered via the Internet among a nationally projectable sample of more than 1,000 randomly selected adult consumers. Results of the survey were assessed in one of FIND/SVP’s monthly Trend Reports for clients. For more information visit www.findsvp.com/insights/trendlines.cfm.
The smell’s the thing
Most products available to consumers now come in a variety of scents. In a recent CARAVAN omnibus study, Opinion Research Corp., Princeton, N.J., asked 1,026 Americans how important the fragrance of a product is in the decision to purchase it. At least half of the population finds the fragrance of the specified products to be very or somewhat important in the purchase decision process for soap or body wash (77 percent), deodorant (76 percent), candles (74 percent), shampoo or conditioner (71 percent), laundry detergent (65 percent), and dish or dishwasher detergent (49 percent).
In fact at least one-third of adults find the fragrance of all of these products, except dish or dishwasher detergent, to be very important. Similarly, younger adults are more likely than those 55 years of age or older to find the fragrance of five of the items (everything except dish or dishwashing detergent) to be very or somewhat important. Gender doesn’t play as much of a role as one might think when it comes to the appeal of fragrance. Females are more likely than males to value fragrance for only three of the products tested - soap or body wash (80 percent vs. 74 percent), candles (79 percent vs. 67 percent) and shampoo or conditioner (76 percent vs. 65 percent). For more information visit www.opinionresearch.com.
Study shows how reach the rich
They earn an average of $360,000 a year, their net worth averages nearly $3 million, and they control 70 percent of the private wealth in the country. These are the people in the wealthiest 10 percent of all U.S. households. What gives them the most pleasure in their lives? Spending time with family and friends, according to the latest semi-annual Survey of Affluent Americans, conducted by the American Affluence Research Center (AARC), Pinecrest, Fla.
In many ways, the affluent are not so different from other Americans. “How different are they when the stores where they shop most frequently are Home Depot, Target and Costco?” says Howard Waddell, director of AARC.
The national survey of 376 affluent men and women shows that the affluent expect to increase spending for domestic vacation travel, charitable contributions, home furnishings, entertainment and casual dining-out in the next 12 months. However, their spending for photographic equipment, collectibles and personal luxury items is expected to drop.
The survey also found that:
- Of 25 non-news magazines listed on the survey questionnaire, the most likely to be read by affluent men are Travel & Leisure, Architectural Digest, Forbes and Fortune. The magazines women are most likely to read are Bon Appetit, Travel & Leisure, House Beautiful and InStyle.
- In addition to spending time with family and friends, participating in favorite leisure activities, discovering or learning new things and having the respect of others give the affluent their greatest pleasure.
- The ways that the affluent learn about new products depend on what those products are. Conventional advertising has been significantly more effective for home products while word-of-mouth, print articles and the Internet have been more effective for resorts and travel destinations.
Additional highlights from the survey can be found at www.affluenceresearch.org.
Young, English-speaking Hispanic adults embrace investing
A study from New York-based Scarborough Research found that young, English-language-dominant Hispanics are 29 percent more likely than all Hispanic consumers to live in households that have financial investments. Conversely, Hispanics ages 45+ who primarily speak Spanish are 18 percent less likely than all Hispanics to live in households that invested.
The Scarborough study analyzed 28,000 Hispanics in the 25 local U.S. markets most densely populated by Hispanic consumers. The report found that almost half (46 percent) of English-language-dominant Hispanics ages 18-44 (who account for 29 percent of all Hispanic consumers in the study) live in households that have some type of financial investment. When it comes to diversification, these investments are spread across a wide variety of services. Twenty-three percent have stocks or stock options (they are 34 percent more likely than all Hispanic consumers to live in a household that has made this type of financial investment). Twenty-two percent have mutual funds (38 percent more likely), 11 percent have bonds (36 percent more likely), 12 percent have money market funds (26 percent more likely) and 7 percent have a second home or real estate property (18 percent more likely).
Traditionally, older consumers have accumulated the most wealth and represent a lucrative target for financial marketers. This is also true among Hispanics; however those who are 45+ and English-dominant (who account for 11 percent of all Hispanics in the study) are considerably more likely than their Spanish-dominant contemporaries (12 percent of all Hispanics in the study) to make use of financial investments. Twenty-four percent of English-dominant Hispanics ages 45+ live in a household that has used mortgage services during the past year (versus 12 percent for Spanish-dominant Hispanics ages 45+); 15 percent have IRAs (versus 7 percent of Spanish-dominant Hispanics ages 45+); and 27 percent have mutual funds (versus 9 percent of Spanish-dominant Hispanics ages 45+).
Spanish-language-dominant Hispanics ages 45+ are actually less likely than even younger Hispanics to have investments in their household. Over three-fourths (76 percent) of this group has no household investment whereas 66 percent of all Hispanics ages 18-44 (both Spanish- and English-dominant) have no household investment. Slightly more than one-half (54 percent) of English-dominant Hispanics ages 18-44 have no household investment. The non-investment rate of English-dominant older Hispanic consumers is 44 percent, which is relatively low among Hispanics. This group nonetheless provides much opportunity for financial service marketers as their investment rates tend to lag behind those of the general public.
“Across the board, there are tremendous opportunities for financial marketers to grow business with Hispanic consumers. But lumping together all Hispanics as one homogenous group in a marketing plan is a mistake,” says Bob Cohen, president and chief executive officer, Scarborough Research. “Rather, this is a sector of the consumer marketplace that has complex segments within itself. The key to successful marketing is developing an understanding of the generational orientation, language usage, acculturation patterns, lifestyles and media preferences that exist among the many segments of Hispanics consumers.
“As we see in the study, younger, acculturated Hispanics are likely consumers of financial investment products whereas their older, less acculturated parents are more likely to practice more traditional financial management, including forestalling spending and saving for retirement,” says Cohen. “At the same time, with at least half of Hispanics in each segment reporting that they have no investments, we can see that there is room to grow these services with both the likely and unlikely Hispanic investment consumers.”
“There is obviously an opportunity to create programs that target the younger Hispanic investor,” says Alisa Joseph, vice president of advertiser/marketer services, Scarborough Research. “But financial services marketers will also benefit from establishing relationships with older Hispanics - even the Spanish-dominant segment. For example, with the right messaging and benefit offering, marketers can educate Hispanic consumers about the value of investing as a way of making one’s savings grow and the empowerment that can come with full participation in the economy.”
The data for this report is from Scarborough’s Hispanic Multi-Market study. The study covers 25 DMAs with significant Hispanic consumer presence, representing 74 percent of U.S. Hispanics. For more information visit www.scarborough.com.