Grocery & canned foods

Discount Store News, Oct 20, 1997

discounters, particularly Kmart, may be in high gear turning out food departments within their discount stores, but consumers still don't associate the units with places to buy groceries.

According to responses from this year's Top Brands Survey, consumers have little confidence they'll find the brands they want most at their local discount store. When consumers were asked to rate their confidence on a scale of one to nine (with nine meaning they are sure of finding the brands they seek and one meaning they're not likely to find those preferred brands), shoppers gave the groceries and canned foods department a mean score of 6.29, among the lowest in the survey. Groceries and canned goods rated higher than only computer software or entertainment software products (5.99) and computer hardware products (4.76).

Unfortunately for Kmart, and to a much smaller degree, Target and even Wal-Mart, the survey results are particularly stunning given the fact that this year's mean score of 6.29 is lower than it was in 1996 (6.98) and only fractionally higher than it was in 1995 (6.22), before Kmart's The Pantry was introduced. Among shoppers over age 55, the confidence score dropped to 5.48.

Kmart introduced The Pantry department of limited grocery items in August 1996 in Gaithersburg, Md. The retailer now operates over 450 stores with The Pantry program in place and by year end will have more than 600 in its arsenal. Target's program is much smaller than Kmart's, with less than 30 stores open or getting ready to open. Wal-Mart decided not to invest in a wide scale grocery program for its traditional discount stores preferring instead to keep those stores largely stocked with snack foods.

As a result of the poor showing for traditional grocery products at discount stores, 47% of survey consumers said they would skip a purchase entirely if they couldn't find what they were looking for at their preferred discount store; that's up three percentage points from 1996. On the other hand, 53% said they would simply switch brands in order to complete their shopping. With essentially an even split between those who would switch and those who would skip the purchase, retailers can take some solace in the results: many shoppers are being satisfied with the limited offerings, and as the pantry-type departments become more numerous, shoppers undoubtedly will satisfy more of their convenience grocery needs at their local discount store. Discounters must be aware, however, that shoppers will scrutinize them accordingly.

Consumers do have a strong brand preference in groceries and canned foods regardless of the kind of store they shop. Nearly three-fourths (73%) of respondents in this survey said they shop for groceries and canned foods with specific brands in mind, among the highest in the survey. However, this year's results are eight percentage points lower than they were in 1996, indicating that consumers are more willing to try private label goods.

And when consumers were asked to assess their willingness to buy private label goods, 59% said they would make such a purchase. Last year, 66% said they would do so, indicating that consumers expect their favorite discounter to stock the same brands as the traditional supermarkets--although private label is accepted.

According to consumer responses, grocery favorites Del Monte and Campbell's have once again made Discount Store News' exclusive Power Brands list, receiving high mention rates from both consumers and retailers. Two brands, Starkist and Libby's, received enough mentions to identify them as near Power Brands in groceries and canned foods. These brands performed well with consumers but received weak support from retailers in this survey.

Overall, both retailers and consumers agree on eight of the top 10 brands, led by Del Monte in first, Campbell's in second and Libby's in third. For retailers, Nabisco was mentioned often enough to make the best performing brands list, in the fourth position; Hormel is No. 8. On consumers' list but not on mangers' top 10 line-up is Bush and Prego, at night and tenth, respectively.

Consumers appear to have a range of feeling about the brands in this category. When shoppers were asked to identify their favorite brands, only 13 specific labels were mentioned. (Retailers mentioned 32 brands.)

Overall, winning the top brand spot on consumers' shopping list was Del Monte, followed by Campbell's, Libby's and Starkist. Tied for fifth was Green Giant, Folgers and Kellogg's, and tied for eighth was Hunt's, Bush and Prego. Breakdowns by specific retail outlet shopped by consumers looked similar. At Kmart, Del Monte and Campbell's were in the top two spots, and Libby's and Starkist were tied for third. Green Giant was fifth with Folgers and Kellogg's tied for sixth, Bush and Prego were tied for eighth and Hunts Hormel, Ragu and Dole were tied for tenth.

Wal-Mart shoppers also gave Del Monte, Campbell's, Libby's and Starkist the top four spots. The list was similar at Target where shoppers' No. 1 was Del Monte, and Campbell's and Libby's tied for second followed by Starkist in fourth and Green Giant and Folgers tied for fifth.