SHOPPER REPORT MARCH 2001

Today's Convenience

On The Go

Feeling The Slow Down

Food, Foodies, Fooding

Store Brand Push Alarm


TODAY'S CONVENIENCE
Is pasta that requires boiling water convenient enough for today's consumers? Boiling pasta is the ONLY cooking that some thirty-something's do and the kind of "scratch" cooking that many twenty-something's only do for special guests - and even then only at times when a romantic interest is involved. Kraft's Easy Mac, Pasta Anytime!, and now Ragu Express are among the products responding to these expectations. These micro-ready mini-meals are just that - ready to zap without pot, water or colander. They are almost as ready to eat as Oscar Mayer's Lunchables or a bag of Fritos.

Star-Kist's pouch-pack of tuna is another example of less work formulations - in this case the work reduction and time saving based on not having to open or drain a can. The Star-Kist pouch confused lots of shoppers by failing to explain its label claim that the tuna packed in oil or water didn't have to be drained. ("Huh?") In spite of confusion, a higher unit price, and failing to provide reseals that many consumers would find useful on the 7-ounce size -- the new package is reportedly doing well - added testimony to the presence of convenience needs that are almost insatiable.

If convenience is so desirable and compelling, why wasn't Boston Market as successful as McDonald's? Why did Eatzi fizzle? Why are cooking shows and Cable TV's Food Channel continuing to attract larger audiences? Why haven't take-out foods and what supermarkets call Home Meal Replacement taken over the supermarket instead of limping along with slow gains?

Among the answers to those questions:

  • No one in this country has gotten take-out food right. No one has delivered yummy foods that didn't get boring at attractive prices. Certainly no one has set taste standards that held up over time like McDonald's Fries or Burger King's Whopper or KFC's Chicken.
  • No one has developed take-out foods with a brand name that consumers associate with "yumminess."
  • Food consumption patterns change faster than generations succeed each other but slower than pundits and researches expect and report.
  • Contrary to the truth of our experience, the government swears that food is not really price elastic. Even though we believe that consumers load up on ice cream and steak on sale and gorge on height-of-season corn, tomatoes, peaches and cherries at bargain prices, in statistical terms we eat pretty much the same amounts whether prices are high or low.
  • Exotic names create excitement. Brits buy take-out food from Prêt a Manger shops that seem to be everywhere. The French shop at Le Drugstore and eat in and take out from Quick in Paris and the countryside. Mexicans seems to be laughing at us or at themselves by welcoming Taco Bell to the home of real tacos. Now we learn that McDonald's has bought into the British owned, French named Prêt a Manger!

The selling power of foreign food names here in the U.S. is best illustrated by the sizes of coffee initiated at Starbucks (Small, Grande, and Venté) and now used by many of its copycat competitors as well. Isn't having a Grande grander than having a medium or even a large? And even a Venté, which is mysterious but somehow even larger and grander than Grande! That takes us back to Prêt a Manger. It's not only French but also a take-off on French Fashion's Prêt a Porter or ready-to-wear industry. Somehow, both Prêts sound much more chic than Ready to Eat or Ready to Wear. And a LOT more appealing than Home Meal Replacement or the English Take-Away which always sounds a bit like steam table Prepared Foods.

CONVENIENCE DRIVES MORE PURCHASE DECISIONS
Is the demand for convenience going to slow down with the economy? The answer depends on how much of a slow down we experience. Many consumers do sacrifice work and time saving when they themselves are out of work or worried a lot about making ends meet. But convenience has become so important in so many categories that consumers are likely to continue to want and feel they need almost all of the conveniences they have gotten used to. Here are the top ten convenience-driver categories among our consumers:

Convenience Needs Driving Purchase Decisions
1) Laundry products
2) Cleaning products
3) Medical services
4) Lunch food
5) Breakfast food
6) Dinner food
7) Lawn/garden care
8) Home furnishings
9) Lawn/garden care
10) Cleaning services

Topping the list, laundry detergents have gone from large to condensed boxes of powder to tablets, which failed, then to liquids, and most recently to tablets again with more success. Where measuring out the detergent became too time consuming, measuring cups were put into the package. When liquids were introduced, the cap became the measure. Then the need to measure was eliminated with pre-measured tablets which are gaining market-share for both dishwasher as well as clothes washer applications. Consumers will have drug-style cases of "tablet" confusion if the dish and clothing brands fail to stay on their own turf. Some multi-tasking consumers are almost sure to drop Wisk tablets into the Kitchen Aid, turning their kitchen into a bubble-filled Nick at Nite rerun of anything from I Love Lucy to The Three Stooges.

In cleaning products, the widely perceived need for more convenience and time saving explains the continued popularity of pumps and sprays and triggers and the minor roles played by money-saving refills because of the time they take to fill. It's faster and easier to spray!

The fact that laundry and cleaning products still score even higher than medical services on the needs for convenience and time saving reflects the time that both of these chores continue to take. The robot that puts away the clothes and/or the dishes is what is really needed to save time - and that may still take a few years.

Top

ON THE GO
In the mean time, there is room for yet more convenience and time saving in food shopping and preparation - especially for breakfast but also for lunch and dinner. Snacks have come closer to satisfying consumers' total convenience needs than meal foods, and convenience stores have been doing a better job of responding to this need than supermarkets.

Anyone who doubts that faster and easier is better and more compelling should consider the growth of Lunchables and its competitors. These products are ready to eat whenever the consumer is ready to eat them. Even the seconds it might take to warm things up have been eliminated!

Consumers who are at the leading edge of the push for greater convenience are exploring and using Internet services and delivery whenever they are available. Some are complaining about the mega stores and "the time and energy it takes to search through numbers departments to find the food I want. I want smaller, friendlier stores where you can find things quickly and establish owner-customer or manager-customer relationships over a period of time."

Dashboard dining is one of the most visible forms of convenience-driven changes. Beverages that aren't car-friendly are no more acceptable than cars that aren't beverage friendly. As if to put a double explanation point on the whole phenomenon and make sure that we get it, the new Toyota Sequoia has more cup-holders than seats!!.

Top

FEELING THE SLOW DOWN
Almost two thirds of the shoppers we polled for this issue say the economy slowdown is very real or somewhat real for them. One third say they don't see or feel it. Of those who are experiencing it, some talk of buying more store brands and fewer national brands as one of their responses to the slowdown. But the most frequent response to our question suggests that supermarkets and clubs might take back a few points from restaurants during this downturn. The question we asked was "ARE YOU CUTTING BACK ON ANYTHING OR BUYING ANYTHING DIFFERENTLY BECAUSE OF THE ECONOMY?" "Eating out less" was the most frequent response but we also heard a good bit about (in frequency order):

  • Trying to use less gas, oil, electric
  • Turning down the thermostat
  • Buying less gourmet and luxury items
  • Trying more store brands and generics
  • Cutting back on travel

One consumer told us that she had started baking bread again. But aside from that one comment, giving up convenience products was not what consumers were thinking about doing.

Top


STORE BRAND PUSH ALARM
More retailers are using anti-theft programs that trigger alarms when consumers cross a threshold line without paying for the merchandise. In a parallel universe, retailers could/would give their consumers whistles to blow or buttons to push when they feel pushed to buy store brands to an irritating degree.

Knowing that store brands traditionally rise as the economy falls, more U.S. retailers than ever are pushing their store brands these days. And the temptation to push consumers gets stronger as traditional retailers face with tougher than ever competition from each other as well as from other formats, monoliths and e-tailers.

Consumer feedback tells us that showcasing signature store brand items and special store brand deals is a win-win strategy. It also tells us that pushing store brands throughout the store is a strategy which can lose customers faster than it builds profits. The downsides of pushing store brands are multiple:

  • Some consumers really don't like store brands.
  • Many consumers don't like to be pushed.
  • Consumers who are open to store brands like having the choice. They like feeling that they've made a smart choice.
  • Not all store brand items are as good as the retailers who distribute them would like them to be.
  • Paying more for something consumers like makes sense.

Cab drivers can be good sources of regional consumer perceptions, and a February trip to Louisville, Kentucky paired me with a driver who loved to talk. He give me a welcome-to-Louisville rundown on area supermarkets which included his belief that Kroger was the dominant store and generally good but nowadays "messing up" on their stocking. Messing up, he explained, meant not giving customers what they wanted. His main example was keeping the store brand vending units in-stock at all times while leaving the Coke, Pepsi, and RK machines routinely empty.

A few days later, a different cabdriver took me to two Kroger's en route to the airport. I found the first cab drivers report accurately reflected in the vending machines at these stores and asked the second driver what he thought about the vending machines. He was quick to reply "They only want to sell their K brand so they don't fill the other machines."

Two stores and two cabbies aren't much of a sample, but they underscore consumer grumbles along these lines that we've been hearing for months - even before a slowing economy signaled many retailers to "Sell the store brands!"

As competition in the retail marketplace gets tougher and more brutal, retailers are pushing store brands for more reasons, some of which are emotional ("We'll show 'em!") while others are economically rational ("We'll find some way to make money!") The emotional response is easy to understand in this frustrating era of Wal-Mart dominance. Both big and small retailers feel betrayed by the brands that they helped to establish through decades of distribution. Feeling betrayed, they can de-list the brand altogether or give it short shrift wherever they can - outside the store if not inside.

Pushing store brands against consumer preferences involves significant risk. Brand preferences can be casual or significant, and when they are significant, consumers who feel pushed toward store brands in one store may also feel encouraged to shop elsewhere. Retailers who offer store brands that they know are equal to national may be frustrated by seeing their consumers persist in choosing the higher price brands. An economist talking to the New York Times about why people continue to eat burgers when they know they are unhealthy said that: "If people accustom their taste so that they enjoy hamburgers, then trading health for taste is a rational preference." If that economist is right, then spending more for what consumers like makes perfect sense and is nearly impossible to fight. We suspect that retailers who sell what they want to sell instead of what consumers want to buy can win only if no one is offering what consumers want.

Stores do put their name on the line with store brands, and mediocre products cast a shadow on trusted names. One consumer writes: "When Wegman's put their name on a product, we knew we would like it. Now we don't think that is true. We don't care for their sausage, poultry, frozen vegetables, and frozen prepared foods."

Top


THE BIG PICTURE FOR CONSUMERS
The giant soft drink brands are losing their share of liquid consumption in this country, but they are still very important to many consumers.

The emotional importance of Coke and Pepsi made the failure of New Coke a media story that rivaled OJ and Monica. The long-standing share wars between Coke and Pepsi don't have a Super Glass equivalent of the Super Bowl but they probably could have. Consider the icon ads and jingles, the variety of optional ingredients, the variety of package styles and size choices to fit a growing variety of lifestyles and use occasions. If that's not enough, consider the life-changing success of Diet Coke which promised consumers calorie-free pleasure. Coke's sales may be flat enough to explain a new joint venture company with P&G but here is the way some consumers still feel about some of the branded soft drinks:

  • I won't live without Coke.
  • Pepsi is the only soft drink I use.
  • My husband will drink nothing but Diet Coke.
  • Diet Pepsi is my elixir of life.
  • There is no substitute for Coke, there is no other cola.
  • Diet Pepsi is the best! Makes me smile.

Big soft drink brands have big! brand power - big enough to foil retailers who want to switch their customers to store brands that work on taste tests and offer better returns on investment. And it isn't only soft drinks. Most strong brands have strong relationships with some of their consumers. Take a look at what how some consumers feel about their preferred brand of crackers:

  • I almost always buy Townhouse because their crispiness and flavor are important to us.
  • Without my mainstay of Premium and peanut butter, I would have to do without eating at times.
  • Triscuits are our favorite: salty, crunchy, love them.
  • Keebler crackers are tasty and make me happy.

Contrast the brand comments above with this store brand comment below:

  • I usually buy store brand crackers because they are cheaper and just as good.

There is a lot of power and equity in those brand preferences. And if the power of the big national brands isn't enough to made trouble, Wal-Mart's own store brands are seen as better and/or cheaper than other retail brands by some consumers. Here's a comment from one of our Indiana panelists that's sure to make some of our supermarket readers reach for a Prilosec or a soon to be available generic equivalent:
"Wal-Mart store brands beat Meijer and Marsh. Kroger store brands are about equal to Wal-Mart but Wal-Mart's soda is better than Coke and Kroger's."

We've done our share of national versus store brand research over the last ten years, and we've seen store brand acceptance grow significantly in many categories. In many categories, we've seen store brands deliver more quality, taste and performance with the help of better packaging and in some cases better labeling as well. We've also seen more consumers become more sophisticated and independent - more able to separate their decisions from brand messages and make decisions that they think are more rational.

Many more consumers are buying store brands that they find fully comparable to nationals and making buying decisions on the "Why pay the higher price if you can't tell the difference?" basis. But even these consumers are paying more for branded items they prefer, and retailers who try to push consumers away from their own pursuits of pleasure are swimming against the tide, even if the long-term growth of store brands seems to be moving in the retailers' direction.

Top

FOOD, FOODIES AND NOW FOODINGS
Noble's Food Channel reports seeing a significant growth of Foodies. (We think of Foodies as folks who expend significant energy in the pursuit and enjoyment of really delicious food). The New York Times reports on a new French fad called "Le Fooding," an exciting new way of looking at food that focuses on the experience and enjoyment - and makes the gourmet quality of the food itself secondary. If it's fun and pleasurable, it's great Fooding, whether it's happening at a fine dining restaurant in Paris or, just imagine, a Great Tastings section of your neighborhood supermarket.

Right now, Le Fooding itself is happening in Paris, the home of haute cuisine and fine dining. Le Fooding means a wonderful food experience that happens anywhere and for any reason. So if the food is so-so but the people who serve it or the dancing on the tables that follows it is wonderful, it could Le Fooding par excellence!

 

Subscriptions to The Shopper Report are available from The Consumer Network at
800/291-0100-Voice or 215/235-6967-Fax.