Supercenter food impact debated at ACNielsen event - Brief Article

DSN Retailing Today, Sept 9, 2002 by Doug Desjardins

LOS ANGELES--Shifting demographics and the relentless growth of Wal-Mart were hot topics at the annual ACNielsen Category Masters conference in Los Angeles Aug. 19 to 22. Three days of speeches and seminars covered a wide range of topics, with much of the discussion focused on the impact that warehouse clubs and supercenters are having on drug store chains and supermarkets.

"You talk to anybody these days and they're talking about Wal-Mart," said Timothy Hammonds, president of the Food Marketing Institute. "They're moving into new areas with their supercenters and putting pressure on a lot of people."

ACNielsen analyst James Russo said grocery retailers in California are bracing for the arrival of Wal-Mart, which plans to open 40 supercenters in the state over the next five years. "They're really going after that market and that's why you see retailers like Albertson's and Safeway trying new things and retrenching for their arrival," said Russo. A recent ACNielsen study shows nearly one-third of the sales that supercenters capture in a new market come at the expense of local grocery chains.

Warehouse clubs are expected to impact sales at drug stores and grocers as they continue to move into new areas and put more emphasis on food and pharmacy. ACNielsen projects the club sector will grow by 9% to 10% in 2003, second only to the 11% growth expected at dollar stores.

The expansion of dollar stores and their move from rural areas into large cities also could affect food and drug. ACNielsen's Todd Hale noted that candy accounts for the majority of sales at most dollar stores and that the shift of even 1% of the candy business to dollar retailers would mean the loss of $103 million in sales. "Even though they're small players, there's going to be a lot of money changing hands as they continue to grow," said Hale.

The explosive growth of two key demographics--aging baby boomers and Hispanics--were cited as vital areas for retailers and suppliers. Jack Kilduff, president of Dr Pepper/Seven-Up Inc., said his company is targeting the fast-growing Hispanic market with its new soft drink, Red Fusion. "We're going after the growing, urban, ethnic market, particularly Hispanics," said Kilduff, noting that the Hispanic population in the United States is expected to increase 22% during the next decade.

The makers of Excedrin are planning to target consumers outside their traditional audience of women aged 18 to 49 for a new pain relief capsule that can be taken without water. Gary Matthews of Bristol-Myers Squibb said new commercials for the product will go after young couples and older people in the all-important demographic of over-50 baby boomers, the fastest-growing segment of the population.

On the technology front, Microsoft's Jan De Jong predicted in-store checkout using cash registers and scanners would soon be replaced by radio frequency ID (RFID) technology. "The technology we're using at retail today is not what we'll be using 10 years from now," said De Jong. "Radio frequency ID will replace scanning and right now we're just waiting for the first retailer to implement it."

At an awards ceremony Aug. 21, Target Stores was recognized as the Category Master of the Year among retailers. Kraft Foods took home the award in the supply sector.