Where Did The Volume Go?

‘Isn’t it time they consider shaking up total store layouts and promotions to deliver consumer-centric solutions that could benefit total store sales?’

Throughout most of 2011 and into 2012, inflationary pressures from rising commodity prices drove dollar growth in a number of food and beverage departments and unit declines in more. While price-elasticity analytics would predict consumers to reduce volume purchasing during these situations, those of us who follow the industry have been wondering where the volume could be going. Are consumers eating less? Are they eating out more? Are they buying more from non-measured channels?

Then I saw a report from the newest addition to the Nielsen family, Nielsen Perishables Group. A comparison of price and volume changes between Nielsen and Nielsen Perishables Group shows that departments and categories are similar in many instances. But in other instances, a very different picture emerges — one that cannot be explained easily, as Nielsen presents its data somewhat differently than Nielsen Perishables Group does (unit sales vs. pounds, food/drug/mass channels vs. grocery channel, etc.).

First, what's similar? UPC-coded fresh produce in Nielsen's food/drug/mass channels for the 52 weeks ending Dec. 31, 2011, showed a 5 percent increase in dollar sales and a 0 percent increase in unit sales. UPC- and PLU-coded fresh produce in Nielsen Perishables Group's grocery channel for the same time period showed a 4 percent increase in dollar sales and a 1 or 2 percent increase in pounds.

Also, for fresh meat, the same Nielsen channels realized a 9 percent increase in dollars and 0 percent growth in units, while Nielsen Perishables Group's grocery channel reported 5 percent growth in dollars and a 4 percent decline in pounds (This reality might suggest consumers are cutting down when it comes to pack size).

Within the deli segment, however, things get interesting. Nielsen channels registered 1 percent dollar growth and 0 percent unit growth during the same time period. But Nielsen Perishables Group registered growth of 7 percent in dollars and 4 percent in pounds of deli prepared meals (again, not apple-to-apples, as Nielsen Perishables Group captures PLU-coded prepared snacks and meals served from the deli counter).

Over the past few years, retailers have invested considerable space and effort against prepared meals, but the results of those efforts is a story that has gone largely untold. The double-digit growth posted in categories ranging from deli snacks to sushi suggests some of the unit volume is going into these categories.

The same holds true for the growth in value-added fruit and vegetables and the solid gains being made in the deli cheese area — another category flirting with double-digit growth numbers.

So, what are you doing as a store brand manager to capitalize on this shift? And maybe more importantly, how are you collaborating with your manufacturer partners to promote total store sales rather than focusing on a single department?

Without question, retailers differentiate through their perimeter departments, but the majority of sales and profits come from center store categories. While we've seen retailers put bananas in the cereal aisle and roasted chickens near the front of store, why haven't we seen them place cereal displays next to bananas or dry pasta, pasta sauces and recipe ideas next to the meat/ seafood case?

Many retailers are winning by shaking up their perimeter. But isn't it time they consider shaking up total store layouts and promotions to deliver consumer-centric solutions that could benefit total store sales?

Acting on some of these ideas will help you capitalize on this shift, but it won't help you anticipate the next one. Make sure you're using all the tools at your disposal to run your business better, including top-notch research and analytics. A complete view of in-store activity is crucial for any effort to track shifting trends and capitalize on opportunities,

Straight Talk delivers monthly store brand insights from Nielsen, New York. Todd Hale is Nielsen's senior vice president, consumer & shopper insights.