Second Half 2011 Focus on the Horizon - Kantar Retail

<strong>Second</strong> <strong>Half</strong> <strong>2011</strong> <strong>Focus</strong> on the Horizon

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Jennifer Zipp 

Lisa Weiderman 

© <strong>2011</strong> – Kantar Retail LLC. All Rights Reserved. 

Disclaimer: The analyses and conclusions presented herein represent the opinions of Kantar Retail. The views expressed in this publication do 

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96 Breakthrough Insights 

/ Research Team 

Sara Al-Tukhaim 

Frank Badillo 

Jessica Campbell 

Wilson Chen 

Alida Destrempe 

Karolina Fiedler 

Ray Gaul 

Bryan Gildenberg 

Kaina Hamed 

Doug Hermanson 

Yi Ting Hu 

Rema Iyer 

Simon Johnstone 

Laura Kennedy 

Vadim Khetsuriani 

Amy Koo 

Jim Leonard 

Stephen Mader 

David Marcotte 

Alexandra Mansfield 

Rachel McGuire 

Leon Nicholas 

Ivana Nikolic 

Mike Paglia 

Himanshu Pal 

John Rand 

Bryan Roberts 

Kate Senzamici 

Robin Sherk 

Steve Spiwak 

Xue Fei Sun 

Lynne Vantassel 

Mary Brett Whitfield 

Lisa Wiltshire 

Fan Zhang 

Anne Zybowski

In This Issue 

Foreword 2 

Retail Insights 

UK Online Grocery: Comparison Shopping Trips 5 

Online Retail in China: Getting Ahead of the Curve 14 

Adding Clarity or Clutter? A First Look at Walgreens and CVS’s 20 

New Private Brands, “Nice!” and “Nuance” 

What Target’s Suppliers Need to Know about Walmart Canada 24 

Getting it Right: Anticipating Amazon’s Growth Trajectory 34 

Tesco Price Drop: Seismic Shift or Smoke and Mirrors? 39 

Safeway’s Strategic In-Store Marketing 44 

Beyond the Box: Costco’s Digital Dive 49 

Shopper Insights 

Value Discounters Continue to Attract More Shoppers 59 

Where the Men Are/Aren’t 67 

Shopping Through the Eyes of a Low-Income Shopper 73 

Economic Insights 

The Global Macroeconomic Outlook for Retail: Danger from Europe to China 80 

The Macroeconomic Outlook for U.S. Retail: Pushed Toward Recession 88

FOREWORD 

Welcome to Kantar Retail’s semi-annual collection of 

Breakthrough Insights—our recent research pieces that we 

feel best reflect the key issues in the rapidly changing retail 

landscape. 

Many years ago, my father took me deep-sea fishing for the first time, 

and during the voyage I began to feel more than a little queasy. My 

Dad looked down at me at one point and saw me closing my eyes, 

hoping that the swells rocking the boat would pass. His simple instruction 

to me at the time is something that has stuck with me ever 

since:“The only way you’ll feel better is if you keep your eyes open and 

focused on the horizon. Your eyes will see the movement you feel in 

your head, and you’ll stop feeling sick.” 

I’ve thought of that advice many times over the years, and quite frequently 

recently as the queasiness has come back with a vengeance 

in the second half of <strong>2011</strong>. Those of us in the northeastern United 

States have experienced hurricanes, earthquakes, tornadoes, floods, 

and a freak late autumn blizzard in this six-month period, and that’s 

even before we think about the turbulent global economic and retail 

landscape! I’ve written many times in the last six months about the 

need to cope more effectively in uncertain and volatile times, but I have gradually come to realize a simple point 

that to some degree contradicts that characterization of the world today: only infrequent volatility is uncertain. 

What we are faced with today, and what Kantar Retail believes will be the modus operandi for the global retail 

marketplace in 2012 and beyond, is a sort of perpetual volatility—at which point volatility becomes a known that 

needs to be planned for, not an unknown that surprises. Management guru Jim Collins builds on this idea in his 

writings on why formerly great companies fail. Great companies are rarely derailed by the unknown, as the unknown 

tends to relatively evenly impact all companies and their competitors. Great companies that avoid failure 

do so with one simple skill: the ability to sift through the known to find the truly important, and to plan and act in a 

way that deals with and capitalizes on that “known.” 

In pursuit of that theme, what you will find in Kantar Retail’s H2 Breakthrough Insights collection is a series of 

works that define the major factors that are shaping the retail landscape and what the strategies should be that 

surround those “great big knowns.” To establish the case for this more permanent volatility, our Chief Economist 

Frank Badillo has contributed two pieces that highlight its root causes and effects: the first on the uncertainty 

associated with many of the major retail markets around the world and the second focusing on the continued 

troubled outlook for the U.S. retail environment. 


Figure 1: The 5 Shares Map 

Share of 

Real Growth 

Share of 

Solution 

Retailer/ 

Landscape 

Market Evolution 

and Conditions 

Share of 

Wallet 

Information 

Post-Desktop 

Information 

Shopper 

Post-Recession 

Digital Shopper 

Share of 

Engagement 

Share of 

Decision 

Source: Kantar Retail

Two framing perspectives provide a lens to view the remaining articles. The first is Kantar Retail’s proprietary “5 Shares” 

framework, and the second is those shares married with the fundamental questions companies will need to grapple with in 

order to thrive in this era of perpetual volatility. 

Share of Real Growth: Where Will I Grow? 

Fans of Kantar Retail’s analysis will be familiar with our oft-repeated phrase that growth is going to continue to come from 

less comfortable places. Phil Smiley and Justin Cook profile one of those uncomfortable “knowns”: online retail/e-commerce 

in China and how digital commerce today is going to make the Chinese retail landscape of tomorrow look foundationally different 

than other major global markets. We also know that U.S. retailers are increasingly going to be pushed to intensify international 

expansion as U.S. retail market growth sputters, and Robin Sherk maps out the showdown we expect to see as Walmart 

and Target square off against one another in the Canadian market. 

“Where will I grow” also is a relevant question even for U.S.-centric companies. There are unexplored channels, segments, 

and niches that though unfamiliar can be sources of real growth. Mary Brett Whitfield previews our findings about arguably 

the largest under-served shopping population in the United States today—men—by drawing conclusions from our recently 

augmented ShopperScape ® monthly U.S. shopper panel that has been expanded to more precisely analyze male shopping behavior. 

For the first time, channels such as home improvement, consumer electronics, and convenience get a fair shake from 

our analysis as the male voice is heard more clearly. Gen Xers redefining gender roles at home and marriage-delayed Gen Ys 

are responsible for the dramatically increased men’s involvement in shopping and shopping decisions. Kantar Retail’s work 

here can help our clients develop strategies to capitalize on this key known. 

Share of Engagement: How Will I Cut Through the Clutter and Connect to Shoppers? 

The risk of focusing on the known is in resorting to lazy cliché or not challenging conventional ideas, and nowhere is this 

risk greater in a “known” which needs more dimension: the idea that retailers need to make their stores “more experiential” 

to compete with online competitors. Some retailers do, but in fact, some may compete by making their stores simpler and 

faster to shop instead of more interesting and engaging. Retailers that are enhancing their store experience need to do so 

with a firm eye on how that improved experience causes sales increases. As our Kantar brethren at TNS are fond of reminding 

us, keeping people in the store longer doesn’t necessarily sell more—most retailers that are successful sell and close quickly 

and effectively. With that screen in place, Alida Destrempe evaluates Safeway’s attempts to re-invigorate its store experience 

and value communication in a photo-based study. 

Share of Decision: Why Will Shoppers Choose Outlets and Brands? 

Price today remains a cornerstone of shopper outlet choice, and there is no concept more fundamental to the relationship 

between retailers, suppliers, and shoppers than price. To a casual reader of the newspaper, a short-duration extreme discounting 

concept like Groupon having a market capitalization of more than USD10 billion should highlight one simple known: 

list price and average selling price are going to become increasingly disassociated from one another. The implications of this 

known are massive and impact virtually every core retail industry process—pricing strategy, promotion, placement, product 

availability, branding, and new item strategy. Our price-based analysis this month takes us to the United Kingdom, where 

Bryan Roberts highlights the offline grocery price battle that has turned into an Orwellian state of permanent total war, and to 

the United States, where Leon Nicholas investigates how low-income shoppers are getting price signals from retailer opening 

price point (OPP) assortments and pricing models. 

Breakthrough Insights 3

Share of Wallet: How Much Will Shoppers Spend? 

Building on the OPP theme, the rise of discount formats in various retail markets around the world is another key known. The 

United States in particular is susceptible to this, as it by far the largest retail market in the world and one with a relatively 

large disparity of income (otherwise known as a Gini coefficient). To understand this phenomena in much more detail Dave 

Marcotte profiles the rise of discounters in the United States and shares insights on both who is shopping in these stores 

and what is driving them there. A few key categories—such as party, occasions and greeting cards—are responsible for a 

surprisingly high amount of destination traffic. Understanding this is key to understanding this channel in the United States, 

Walmart’s continued attempts to respond to it, and to understanding low-income shoppers in general. U.S. shoppers making 

less than the median household income would be the third-largest retail market in the world (behind only the wealthy U.S. 

shoppers and China) if they were a standalone country. 

Share of Solution: What Will We Sell Shoppers? 

Share of wallet’s long-term cousin is really share of solution:what can our share of wallet be over time? Brendan Langan 

takes this discount phenomenon on from a different angle and investigates the increased competitive intensity as the value 

channel continues to expand into areas traditionally dominated by drug. In particular, this overlap is now exacerbated by the 

senior leadership at both major U.S. non-food discount operators being veterans of the drugstore industry. In this case, the 

major known is that low-income shoppers are increasingly looking to alternative vehicles to stay healthy or cure ailments in an 

economically challenging environment, and the value channel will almost certainly play a critical role in this adaptation by the 

bottom tiers of the economic pyramid. 

Another retailer seeking to aggressively expand its footprint from a solution perspective is Amazon.com, and our final article 

for this period is Anne Zybowski’s overview of how Amazon.com used its 2010 acquisition of Quidsi (soap.com, diapers.com, 

and yoyo.com) to expand its footprint into conventional replenishment categories. There is no thinking observer of shopper 

behavior who would deny that a massive amount of volume in categories that have predictable replenishment, low shopper 

engagement, and high shopper benefit for their household being in-stock on those items (diapers, toilet paper, etc.) increasingly 

is going to move to some sort of online-facilitated auto-replenishment model. Today, it remains somewhat surprising 

how few retailers, suppliers, or agencies have addressed this fundamental “known” with specific action steps to compete with 

or leverage this inexorable sea change in shopping behavior. 

We hope that these articles motivate you to attack these specific issues of course, but more importantly perhaps we hope 

that this overview gives you the confidence to act, convincingly and boldly, in this world of perpetual volatility. Closing your 

eyes or pretending that the seas aren’t rough is only going to make you sick. Vision firmly focused on the horizon of the Great 

Big Knowns and a dedication to turning insights around those knowns into action appear to be the core survival skills for the 

bumpy ocean of 2012 and beyond. 

Best of luck, and hope to see you somewhere soon, 


Chief Knowledge Officer, Kantar Retail 

4 Breakthrough Insights

UK Online Grocery: 

Comparison Shopping Trips 

By: Bryan Roberts / Originally published: September 19, <strong>2011</strong> 

While it is relatively easy to complete 

comparison shopping trips at bricks & 

mortar stores, a comparison of online 

grocery retailers (all the way from 

browsing online to receiving the products) 

is a slightly more complex, not to mention 

expensive, affair. To conduct a genuine 

comparison, we felt it was necessary to 

actually complete a series of shopping 

trips with all of the major online grocers 

in the UK. Here we present the findings 

from our experience shopping all of the 

major online grocers, covering issues 

such as the online shopping experience, 

pricing, delivery, and accuracy. 

Tesco App Enables Shoppers to Scan Ads and Add Them to Online Shopping Lists 

Survey background 

Our survey comprised a series of online shopping 

trips conducted over a two-week period, at Tesco, 

Asda, Sainsbury’s, Waitrose, and Ocado. We 

selected 15 SKUs (Figure 1) across a variety of 

categories that we assumed would be available 

through all of the retailer’s e-commerce sites. For 

the sake of price comparability we selected only 

branded items and avoided categories such as fresh 

produce where product weights and pack sizes 

are significantly variable and/or where branded 

penetration is low. 

We registered as a first-time customer at all of the 

sites, so, in effect, these were all first-time shops 

with the online retailers. During the shopping 

process, we timed how long it took to find and 

Source: Tesco 


Figure 1: Selected 15 SKUS Across Variety of Categories 

1 Shower gel Original Source Lime Shower 

Gel 250ml 

2 Dishwasher tabs Finish All In 1 Regular 28 Pack 

3 Kitchen roll Plenty Kitchen Towel White 

2 Roll 

4 Laundry tabs Ariel Liquitabs Colour 23’s 

5 Tea Yorkshire 80 Teabags 250g 

6 Water Highland Spring Sparkling 

Water 6x500ml 

7 Fruit Squash Squash Robinsons No Added 

Sugar Orange Drink 1l 

8 Baked beans Heinz Baked Bean In Tomato 

Sauce 415g 

9 Brown sauce HP Brown Sauce 425g 

10 Cider Strongbow Cider 4x440ml 

11 Bread Warburtons Wholemeal Bread 

Medium Sliced 400g 

12 Cheese Cathedral City Extra Mature 

350g 

13 Wine Wolf Blass Yellow Label 

Chardonnay 75cl 

14 Sausages Walls Classic 8 Pork Sausages 

454g 

15 Toothpaste Colgate Max White Toothpaste 

100ml 

Source:Kantar Retail 

select the 15 SKUs and kept separate timings of 

the check-out process. Throughout the process, 

we were keeping an eye out for features such as 

the hierarchy of brands/private labels as they 

appeared in each category, product suggestions or 

recommendations, special offers and multi-buys, 

any evidence of vendor investment in terms of 

“space on shelf,” availability of the 15 SKUs, and any 

hints or reminders that were intended to prompt us 

to exploit special offers. 


In terms of price comparisons, the fact that some 

of the SKUs were not stocked by some of the 

retailers meant that exact comparisons across all 

retailers was not possible. But in order to achieve 

comparability, we made the assumption that when 

a retailer did not carry a particular item, the item 

would be included in that retailer’s basket at the 

lowest non-promotional price offered by one of 

the other retailers. While we acknowledge that 

this methodology is not strictly watertight, it was 

preferable to simply deleting four SKUs from our 

15-SKU basket. Throughout, we have ranked the 

retailers on the various criteria featured, with 5 as 

the best score, and 1 as the worst. 

Availability 

The 15 SKUs were selected 

with the assumption that 

as well-known brands and 

routine pack sizes, they 

would be available through 

all of the retailers. Alas, this 

was not to be, creating the 

Availability scores 

Asda 4 

Ocado 4 

Sainsbury’s 3 

Tesco 5 

Waitrose 5 

aforementioned complication in price comparisons. 

Waitrose and Tesco offered all 15 products; there 

was one SKU missing from the Asda shop (Highland 

Spring water was available in a 9-pack rather than 

a 6 pack); Ocado did not sell the 80-pack Yorkshire 

Tea bags; and Sainsbury’s did not offer Finish 

dishwash tabs in the required pack-size and Wall’s 

sausages were simply unavailable in a category 

dominated by brand leader Richmond, private label, 

and more upscale ‘gourmet’ ranges.

Shopping trip duration 

The relative navigability of 

stores clearly had an impact 

on the length of time each 

shopping trip took. We 

expect subsequent trips to 

be faster as we get the hang 

of the vagaries and quirks 

of navigating each site. 

That said, there were clear 

Shopping trip 

duration scores 

Asda 3 

Ocado 5 


Tesco 4 

Waitrose 2 

disparities in shopping trip duration. Sainsbury’s 

and Ocado came out on top as the easiest/fastest 

sites to shop, with Tesco and then Asda offering the 

next fastest sites to navigate. Rounding out the pack 

is Waitrose, a site where we believe there is still 

a huge amount of work to be done to improve the 

shopper experience. 

Checkout 

The next stage of the 

Checkout scores 

shopping process was 

Asda 5 

checkout and, again, there 

Ocado 3 

was a marked variation in 


the speed of this process. 

Tesco 3 

Coming in last was 

Waitrose 4 

Sainsbury’s, with around five 

minutes needed to complete our order. The Tesco 

experience was marred by the site crashing midway 

through checkout, although we were quickly able 

to log back in and thankfully retrieve the shopping 

basket and restart checkout. Asda was the clear 

winner, offering a rapid and effective checkout 

process that took just two minutes. 

Delivery time-slots: Proximity 

While not necessarily 

something that is within 

a retailer’s control (a 

successful service will be 

heavily booked up), there 

were some real differences 

in terms of how quickly 

the retailers were able 

to provide delivery. Asda 

was able to offer us a delivery later in the day of 

our order, while Ocado, Tesco, and Sainsbury’s 

were all able to fit our delivery on the following 

day. The biggest lag was for Waitrose, where the 

nearest available timeslot was two days from the 

time of order. A useful feature offered by Asda 

allows shoppers to choose a timeslot (indicated 

by a van symbol on the scheduling tool) for when 

a van is already scheduled to be in your area— 

enabling shoppers to coordinate their deliveries 

with other shoppers in their area, minimising 

the environmental impact of their deliveries and 

increasing efficiencies for Asda. A similar feature 

also is offered by Ocado. 

Delivery Timeslots: Duration 

One of the inconveniences 

associated with any sort 

of home shopping is the 

requirement for someone 

to be in at the delivery 

address to receive the order. 

Indeed, this is one of the key 

drivers behind the growth 

Time-slots: 

proximity scores 

Asda 5 

Ocado 4 


Tesco 4 

Waitrose 3 

Time-slots: 

duration scores 

Asda 4 

Ocado 5 


Tesco 4 

Waitrose 4 


of the “drive-thru” grocery ecommerce model in 

markets as diverse as the US, Germany, France, 

the UK, and Spain; such services provide all of the 

convenience of online shopping without the burden 

of being housebound. In ranking timeslot duration, 

higher scores have been awarded for the shortest 

timeslots, the logic being that these shorter slots 

are more convenient for time-pressed shoppers. 

Sainsbury’s and Ocado triumphed thanks to the 

availabilityof one-hour slots as opposed to the two 

hours offered by the alternative services. 

Communications 

A common theme with 

home shopping in general 

is the need for confirmation 

and reassurance on 

orders and deliveries. The 

supermarkets in question 

here varied enormously 

in the way that they 

communicated between the 

time the order was placed and the time the delivery 

was received. All of the supermarkets issued a 

confirmation email upon receipt of the order. This 

is where Waitrose and Asda both stopped: the next 

time we heard from them was when our groceries 

were delivered. Ocado was much more active in 

communicating with us: as well as the confirmation 

e-mail, we received a reminder SMS message 

the day before delivery. On the day of delivery, we 

received an SMS telling us of changes to the order 

and another SMS on the day to remind us of the 

delivery time and to assure us that there were no 

unavailable items. Both Tesco and Sainsbury’s 


Communication 

scores 

Asda 3 

Ocado 5 


Tesco 4 

Waitrose 3 

sent a reminder SMS on the day before delivery. 

The clear winner here was Ocado—we were fully 

informed throughout the process and were left 

confident that our delivery would be timely and 

accurate. 

Pricing 

As referenced above, the Pricing scores 

fact that not all of the Asda 4 

retailers stocked all of the Ocado 5 

SKUs meant that we had to Sainsbury’s 3 

improvise slightly in order Tesco 2 

to construct comparable 

baskets. We accept that 

Waitrose 1 

this might not be the most scientifically rigorous 

piece of analysis, but it was either this solution or 

disregarding the SKU for all of the retailers. The 

instances of unavailability are highlighted in red in 

the Figure 2, while promotions are highlighted in 

green. Where products were replaced by items of a 

different value, we have included the original price 

of the item, again for the sake of comparability. And 

finally, as was the case with Tesco, when a retailer 

ended up not processing/delivering an item, we 

have included that item’s price as though it were 

delivered. 

Surprisingly, perhaps, the clear winner in terms of 

basket pricing was Ocado. This is a clear result of 

its brand price-matching with Tesco plus a couple of 

fortuitous promotions (on wine and dishwash tabs) 

that brought its basket in at the lowest price by far. 

Without the promotions, Ocado would have been 

beaten on price by Asda—its EDLP strategy coming 

through—as well as by Tesco and Sainsbury’s.

Figure 2: Price Comparisons 

Product Waitrose Asda Tesco Ocado Sainsbury’s 

Original Source Lime Shower Gel 250ml £1.94 £1.94 £1.94 £1.94 £2.00 

Finish All In 1 Regular 28 Pack 7.65 5.00 6.00 3.83 5.00 

Plenty Kitchen Towel White 2 Roll 1.87 1.86 1.87 1.87 2.00 

Ariel Liquitabs Colour 23’S 7.09 6.79 6.79 6.79 7.09 

Yorkshire 80 Teabags 250g 2.28 2.28 2.28 2.28 2.28 

Highland Spring Sparkling Water 6X500ml 2.39 2.34 1.99 2.34 2.39 

Robinsons No Added Sugar Orange Drink 1l 1.25 1.10 1.25 1.25 1.25 

Heinz Baked Bean In Tomato Sauce 415g 0.69 0.69 0.50 0.69 0.69 

HP Brown Sauce 425g 1.99 1.68 1.69 1.50 1.69 

Strongbow Cider 4x440ml 3.83 3.50 3.99 4.79 3.99 

Warburtons Wholemeal Bread Medium Sliced 400g 0.70 0.70 0.70 0.70 0.70 

Cathedral City Extra Mature 350g 4.50 3.98 3.98 3.98 4.48 

Wolf Blass Yellow Label Chardonnay 75cl 9.99 7.98 9.99 6.66 7.49 

Walls Classic 8 Pork Sausages 454g 2.28 2.28 1.14 2.28 2.28 

Colgate Max White Toothpaste 100ml 2.00 2.00 2.00 2.00 2.00 

Total basket 50.45 44.12 46.11 42.90 45.33 

Key: Unavailable; Promotion 

The most expensive by far was Waitrose, which 

comes as a surprise as it also price matches Tesco 

on 1,000 branded SKUs. This price matching was 

claimed by the Waitrose website to apply to baked 

beans, squash, tea, sausages, bread, shower gel, 

and sauce, but it became clear when we shopped 

Tesco that Waitrose was 19p more expensive on 

baked beans and 30p more expensive on brown 

sauce. For sausages, Tesco’s half-price offer meant 

that Waitrose was really off the mark. It might be 

the case that we shopped Waitrose at a time when it 

was in between Tesco price comparisons (although 

it claims to check prices twice per week), but even 

so, we are not left with a huge sense of confidence 

in Waitrose’s price matching claims. 

Delivery charges 

The issue of delivery charges 

can be a complex one, as 

many of the retailers have 

a sliding scale of delivery 

charges depending on size of 

shopping basket, day of the 

week, and time of day. We 

therefore acknowledge that, 

Source:Kantar Retail 

Deliver charges 

scores 

Asda 3 

Ocado 4 


Tesco 2 

Waitrose 5 

if we had spent more money, or chosen another day/ 

time, then some of these charges might have been 

lower or not have existed at all. It’s clear that online 

retailing is more economical for larger trolley-style 

shops than it is for the relatively small basket such 

as ours. A larger basket will often avoid delivery 


charges, or at least reduce them in terms of cost 

per item. 

Waitrose’s approach is much simpler (free delivery 

for shops of over £50), while the other retailers 

have a sliding scale depending on order value and 

schedule of delivery. Asda charges between £3 and 

£5. Ocado deliveries can be free (in the graveyard 

slot of 10:30–11:30 p.m.) but usual charges vary 

from 49p to £4.99. Tesco’s scale ranges from £3.00 

to £6.00, while Sainsbury’s has a similar range of 

£3.50 to £6.00. 

What our shopping experience revealed is that 

there are a number of trade-offs available to online 

shoppers. The Waitrose delivery is free, but we 

are likely to pay a higher price for our groceries. 

Similarly, a higher delivery charge will be levied 

for those times of day that are convenient for most 

shoppers: we must trade off between low cost and 

convenience. One trade-off becomes very clear: 

for online grocery to be at its most economical 

from the shopper’s perspective, shoppers must 

purchase high-value, large-basket orders. Funnily 

enough, we suspect that the same logic holds from 

the retailer’s perspective—by baking in delivery 

charges based on basket size and schedule, 

shopper behaviour is being shepherded in the 

direction desired by the retailers. 

Timeliness 

Clearly, a key performance attribute for grocery 

e-commerce operators is timeliness, and none of 

the providers let us down here. Sainsbury’s was 

actually a few minutes early, while Asda, Waitrose, 


and Tesco all arrived within 

their allotted time slots. 

Ocado demonstrated some 

typically elegant customer 

service: our driver (James in 

the Odette Onion Van) called 

to say that he was in the 

area and asked if we were 

willing to accept an early 

Timeliness 

scores 

Asda 5 

Ocado 5 


Tesco 5 

Waitrose 5 

delivery. We answered in the affirmative, and he 

arrived 30 minutes ahead of schedule. 

Delivery service 

The basic distinction here 

Service scores 

is: will the driver offer to 

Asda 4 

take groceries into the 

Ocado 5 

customer’s kitchen, and 


possibly even offer to help 

Tesco 3 

unpack? The experience 

Waitrose 5 

here varied from extremely 

good (Waitrose, Ocado, 

and Sainsbury’s all delivered the bags into the 

kitchen), to the moderate (Asda dumped our bags 

on the front door mat) to the less than ideal (we 

had to unpack our own bags from a Tesco crate 

on the front step). While we appreciate that there 

might be certain legal/insurance/safety concerns 

with delivery staff entering customers’ homes, the 

delivery experience actually can have a significant 

effect on the entire process. 

Bags 

The UK press has periodically had a field day 

over the excessive bagging perpetrated by online

grocers. We certainly had a mixed experience. The 

second-best performer here was Ocado, which 

used four bags for 15 items. The delivery, from 

the main Hatfield fulfilment centre, came in four 

colour-coded bags (purple for ambient and red for 

fridge) and our excellent Ocado driver was keen to 

point out the bag recycling service that the company 

offered. 

Asda was the worst for bagging—using seven bags 

for 14 SKUs. One bag was dedicated to a single 

substitute product (“Substitutions are easy to spot— 

they’re always delivered in a separate bag and are 

clearly marked on your delivery note”), although, 

as there was no bag colour-coding, this was not 

immensely helpful. 

Tesco’s bags were colour coded: green for 

chilled products; white for ambient, and blue for 

substitutions. Some of the bagging was faintly 

ridiculous, obviously based on the picking regimen 

in the Greenford dark store: baked beans and brown 

sauce came in their own bags, while some products 

were loose in the crate. A total of five bags were 

used. 

Waitrose did very well here: four bags were used for 

15 items. They were colour-coded (blue for fridge 

and green for ambient) and the driver reminded us 

of the bag recycling service offered by the retailer. 

Accuracy 

Aside from the issue of substitutions (see next 

section), we only had one example of poor accuracy. 

Despite ordering a bottle of wine on Tesco.com, 

and despite this bottle of wine being featured in 

our email confirmation 

from Tesco, the delivery 

receipt omitted the wine 

and, indeed, the wine was 

nowhere to be found in the 

delivery. For the purposes 

of the pricing comparison, 

we have assumed it was 

delivered at the same 

price, but this explains Tesco’s poor standing in the 

accuracy scores. The only consolation was that we 

were not charged for the missing item. 

Substitutions 

Product substitutions have 

been another contentious 

issue for online grocers, 

with assorted inappropriate 

and/or comedic substitutions 

making the press. Ocado 

and Sainsbury’s were 

the only two retailers to 

escape unscathed in this 

Accuracy 

scores 

Asda 5 

Ocado 5 


Tesco 4 

Waitrose 5 

Substitutions 

scores 

Asda 4 

Ocado 5 


Tesco 4 

Waitrose 3 

way, delivering exactly the products as ordered. 

Waitrose made two substitutions for out of stock 

items, replacing Plenty kitchen towels at £1.87 with 

Thirst Pockets at £1.22 and the 350g Cathedral City 

Extra Mature with a Mature 600g pack (charging 

the lower price of £4.50 rather than £5.29), slightly 

compensating us for the wrong flavour of cheese 

with extra volume. A nice touch here was that the 

substitutions brought us below the free delivery 

threshold of £50, but we were still given free 

delivery. Asda’s one substitution saw them replace 

the dishwasher tabs with Finish’s Lemon variant 


at same price, while Tesco also substituted this 

product. The £6.00 28 pack was unavailable, so 

(according to the delivery receipt) we were given 

two 15 packs for £7.76, the £1.76 difference being 

refunded. One problem here is that we were 

actually given two packs of 14. 

Shelf-life 

The final criteria the 

retailers were judged on 

was shelf-life. Some of the 

retailers (e.g. Waitrose) use 

the longest possible shelf 

lives as one of their selling 

points, while others have 

been castigated for using 

online shopping as a complex stock rotation system, 

foisting near-expired products on the unsuspecting 

public. In this basket, this criteria boils down to the 

sausages, as the cheese ordered lasted a couple of 

months from all of the retailers. 

Sainsbury’s did not stock the sausages, so they 

get the benefit of the doubt here, while Asda was 

the only retailer with an issue here. A use-by date 

of August 20, with the delivery occurring on the 

evening of the August 18, meant that an enforced 

change of menu planning was in order. Only two 

days’ shelf life compared poorly to the eight from 

Tesco, seven from Waitrose and five from Ocado. 

We have arbitrarily given Sainsbury’s the same 

average score as Ocado as they did not stock the 

item in question. 


Shelf-Life 

scores 

Asda 2 

Ocado 3 


Tesco 5 

Waitrose 4 

Final scores 

Having judged the various 

services on 14 criteria, 

Ocado , the only onlineonly 

specialist under 

consideration, emerges as 

the clear winner. All three 

of the “Big Three” retailers 

scored level points, with 

Waitrose pipping them at the 

Final 

scores 

Asda 52 

Ocado 62 


Tesco 52 

Waitrose 54 

post in second place. Asda was let down by a poor 

show in terms of bagging and shelf-life; Ocado’s 

only real weakness was the checkout experience; 

Tesco was undermined by pricing, delivery charges, 

and accuracy; Sainsbury’s fared badly on the cost 

of delivery and availability; and Waitrose has work 

to do on improving its website and sharpening its 

pricing. 

The good news for all operators is that not one of 

them had an absolute shocker; most were let down 

by one or two facets of their online operations. 

Implications for suppliers: 

There was not a great deal of evidence throughout 

our shopping trips that suppliers are currently able 

(or perhaps willing) to secure a more prominent 

place “on shelf” in the online shopping experience. 

Indeed, most of the sites/categories we shopped 

were in alphabetical order or were front-loaded 

with private brand.

There are clearly some ways of bolstering a 

presence in these retailers’ online stores. Securing 

space to announce new products or promotions is 

commonplace, and we encountered several ‘sticky” 

product advertisements that followed us around a 

shopping trip, even into different categories. 

In terms of the alphabetical-order issue, and 

this might sounds like something of a fatuous 

recommendation, ensuring that brands (or 

rebrands) are named with an early letter in the 

alphabet might be a relatively simple way of 

ensuring online prominence. 

Another way of securing prominence will be to 

ensure a brand’s participation in online features 

such as recipe-based shopping lists and pre-made 

shopping lists. At the moment, these pre-made 

features are extraordinarily skewed toward private 

brands. 

Sampling is an opportunity with online. Rather than 

relying on the hit and miss approach of instore 

sampling, which is untargeted and dependent on 

traffic flow in the store, delivering free product 

or product miniatures alongside e-commerce 

deliveries enables manufacturers to send samples 

directly into shoppers’ homes, often targeted by 

shopper group or by geography. 

Impulse, contrary to popular belief, can still be 

achieved online, such as with Tesco’s “Goes Nicely 

With” feature that can lead shoppers into new 

categories and new adjacencies. This appears to be 

a currently underutilised function by both retailers 

and suppliers. 

Online also appears to be a more favourable 

arena for multi-brand or multi-category suppliers 

to implement cross-brand or cross-category 

promotions. These win favour with retailers through 

basket-building but are often difficult/expensive 

to achieve instore as space constraints mean that 

displaying the participating SKUS in close proximity 

is often problematic, meaning that shoppers 

might have to visit four or five different aisles. By 

displaying these promotions during the online 

shopping trip or at check-out, shoppers, retailers, 

and brands should be able to more readily benefit 

from trans-category promotional programmes. 


Online Retail in China: 

Getting Ahead of the Curve 

By: Phil Smiley and Justin Cook / Originally published: August 2, <strong>2011</strong> 

Rapid growth in China’s fledgling modern 

retail market will drive companies—both 

retailers and manufacturers—to invest 

heavily in gaining market share. Online 

retailing still represents a fraction of total 

retail sales in China. However, online 

retailing represents a very large and 

fast growing portion of modern retailing 

in China. Kantar Retail predicts that 

many executives will learn that investing 

heavily in online business platforms will 

be a requirement for retailers wishing 

to dominate share in China’s rapidly 

evolving modern trade. The result will be 

a modern trade environment the likes of 

which we’ve never seen before. 

When Walmart had just 300 stores in the United 

States, the Internet didn’t exist. Today, Walmart 

operates 338 stores in China, a country with more 

than 400 million Internet users and one where the 

online shopping bug is spreading fast. 

Online retail is going to play a major role in the 

development of China’s retail market. It will 

likely occupy a larger share of transactions than 


in Western markets. Online shopping in China is 

already gaining adoption faster than we have seen 

in Western markets. 

Consequently, online retail will play a disruptive 

role in the development of modern retailing in 

China. Many Chinese cities don’t have a modern 

retail store and are unlikely to get one soon, but 

they do have extensive Internet access. These cities 

also have millions of consumers with a desire for 

convenience and value. Online retail can and will 

deliver for these consumers.

Could it be that offline store networks of the size we 

see in other markets, such as the US or European 

markets, will not materialize in China due to the 

early and fast penetration of online retail? 

Judging by recent events, Walmart China along with 

other leading local and global retailers may already 

be thinking this way. Walmart operates more than 

4,300 stores in the US and 338 stores in China. But 

will Walmart build more than 4,000 stores in China? 

It is more likely that Walmart and other leading 

retailers will operate a two-tier strategy. First, they 

will develop an online retail network that can reach 

all 400 million modern trade consumers. <strong>Second</strong>, 

they will invest in growing and connecting this 

network to ‘online-integrated’ brick-and-mortar 

stores. They’ll grow both businesses at the same 

speed. The result is a very different business model 

from what is seen in Western markets. 

Because the business model is different from 

models we’ve seen before, it is hard to visualize. 

For example, recently, Walmart acquired a stake 

of China’s largest “online hypermarket” called 

“Yihaodian,” which means “No.1 store.” Yihaodian 

is a promising company with a promising online 

platform. Yihaodian has grown online sales 

from USD 0.64 million (RMB 4.17 million) in 2008 

to USD 125 million (RMB 805 million) in 2010. 

They have recently set up an online retail team 

in Shanghai to handle online operations in China. 

This move indicates Walmart China’s plans to 

focus on ecommerce operations in the future. This 

ecommerce center joins Walmart’s original center, 

located in New York. 

Other leading retailers are setting up and expanding 

their online businesses. In addition to Walmart, 

Tesco and Carrefour also have announced plans to 

expand their online retail operations in China. 

Taobao, the leading online retail site which hosts 

B2C and C2C transactions, has experienced rapid 

growth in recent years. Taobao revenues in 2010 

were estimated to be USD 60 billion. In fact, if we 

classed Taobao as a retailer it would be by far the 

largest retailer in China, dwarfing the sales of high 

profile retailers such as Walmart, Carrefour, and 

Tesco. 

China’s Online Consumers 

China has a huge base of Internet users, and it 

is still growing at an amazing speed. Retailers 

in China are finding it easier to reach remote 

consumers via ‘clicks and ship’ retail models 

Figure 1: Penetration of Shopping Online (% HHs) - Personal 

Care 

18% 

16% 

14% 

12% 

10% 

8% 

6% 

4% 

2% 

0% 

12% 

National 

Urban 

China 

16% 

4 Key 

Cities 

10% 

11% 

13% 

8% 

A Cities B Cities C Cities D Cities 

Source: Kantar Worldpanel China: 52 weeks ended 

25 March <strong>2011</strong> 


ather than by building new stores. China’s 

Internet-savvy consumers are willing to accept 

new technology and innovation in their life and 

are already accustomed to Internet shopping. In 

some categories, such as Baby, it is estimated 

that up to 15% of sales are taking place through 

online channels. Kantar Worldpanel reported that 

17% of National Urban Chinese households have 

used the Internet to purchase grocery products 

online with sales growing at 59% year-on-year. 

Personal care products are more sought after online 

compared with food and household cleaning items 

(Figure 1). The proportion of households who shop 

online for personal care items is actually higher in 

the C cities compared with A cities (13% vs. 10%). 

This is because shoppers in the lower tier cities 

may struggle to find the products they want to buy 

in traditional brick and mortar stores, so as an 

alternative, seek them out through online stores. 

Kantar Worldpanel identifies two key motivations 

for purchasing FMCG products online: price and 

convenience. The key personal care categories, 

which are more likely to be sought after, are the 

more expensive ones, such as cosmetics, facial 

skincare, perfume, and hair colorants. Within these 

categories, shoppers are opting for more premium 

brands, but are actually paying a much lower price 

per item. Therefore, shoppers want premium but at 

a value price. 

Convenience also plays a key role, particularly for 

categories which are heavy or bulky in their nature. 

For categories such as soft drinks, laundry powder, 

and instant coffee, shoppers are purchasing much 


bigger pack sizes to take advantage of the items 

being delivered to their home. For example, the 

average pack size for soft drinks is 2.3 liters in 

traditional stores but 3.5 liters online. 

Making Sense of the Online Retail Market 

The online market can be a confusing place, littered 

with different terminology and jargon. Kantar Retail 

analysts break the online retail market in China into 

four segments, as illustrated in Figure 2. 

The first segment is B2C key accounts which would 

include internet retailers such as Amazon.cn, 

Buy 360, Dang Dang, and the online operations of 

retailers such as Tesco, Carrefour, and Walmart. In 

this segment products are selected by the retailer 

who then takes full control of assortment, price, 

promotion, website design, and the user experience. 

The second segment is what we call the online 

B2C General Trade. This segment is effectively 

the small, independent business traders operating 

and selling directly to consumers via the Taobao 

exchange. 

Figure 2: Online Retail Market Segmentation 

B2C 

Key Acc 

Amazon.cn 

Buy 360 

Dang Dang 

Tesco.com 

Carrefour.com 

ONLINE RETAIL 

B2C 

GT 

B2C FLAGSHIP C2C 

Taobao 

Small 

Business 

Trader 

Eg L’Oreal 

Flagship Store, 

Wyeth Flagship 

Store 

Taobao 

Exchange 

Source: Kantar Retail Analysis

The third segment is B2C Flagship. These are 

online stores that are generally operated by 

manufacturers and hosted on Taobao Mall. In 

this case, manufacturers are selling their brands 

directly to the consumer via proprietary online 

stores. As such, Taobao is effectively operating 

as an online broker between manufacturers and 

consumers. 

The fourth segment is online retail from Consumer 

to Consumer. This is most prevalent through the 

Taobao exchange where consumers sell goods and 

services to each other, much in the same way that 

eBay operates in other markets. 

How Will China’s Online Channel Evolve? 

There is no doubt that Taobao leads the game 

at the moment, yet B2C online retailers such as 

Amazon and Dang Dang and the online operations 

of retailers such as Tesco, Carrefour, and Walmart 

are making strong progress in the market. Kantar 

Retail forecasts that while Taobao will retain its 

dominant position, online retailers such as Amazon 

and the major hypermarket retailers will grow 

faster in coming years and wrestle business away 

from Taobao. 

Taobao, China’s largest online retailer, has already 

recognized the threat from growing B2C Online 

retailers such as Amazon and Dang Dang and has 

taken steps to restructure its business model. 

Taobao has recently split into three separate 

companies to better address its target markets, 

according to parent company Alibaba Group. The 

restructuring creates Taobao Marketplace, a 

Consumer-to-Consumer platform designed for 

consumers and small businesses; Taobao Mall, 

a business-to-consumer marketplace; and eTao, 

which will target the shopping search market. All 

three companies will continue under the Alibaba 

Group. 

In an e-mail to Alibaba employees, company CEO 

Jack Ma said the company is making the move 

as e-commerce has faced “disruptive changes,” 

pointing to social trends and the entrance of new 

companies in the market. He stated that “significant 

change has taken place in customer demand … we 

need to offer consumers more sophisticated and 

customized services.” 

Online Can Change the Rules of the Game 

Traditional marketing models don’t necessarily 

apply in online retail. An example of this is the 

diapers category in China, where Procter & Gamble 

dominates the offline market with its Pampers 

brand. P&G has gained its position through heavy 

marketing expenditure alongside strong in-store 

presence and promotion. Yet for certain online 

retailers, the Mamy Poko brand challenges the 

dominance of Pampers. This is due to two reasons. 

First, Mamy Poko’s lower price point appeals to 

value-seeking online shoppers. <strong>Second</strong>, Mamy 

Poko receives online consumer reviews and ratings 

that are equal to or better than Pampers’ ratings 

(Figure 3). Consumer recommendations go a long 

way to helping sell the brand. 



Figure 3: Diaper Wars on Amazon 

What Are the Prospects for Online Retail in 

China? 

Online retail is set to continue its exponential 

growth in China with little in the way to stop it. 

The potential introduction of taxes and the lack 

of infrastructure in some parts of the country 

may inhibit the speed of growth. However, these 

potential changes pale in comparison to some 

factors driving growth such as: 

High Internet usage and rapidly expanding 

broadband network 

High mobile phone penetration—it is estimated 

that 300 million consumers go online via their 

phones in China 

Source: Amazon.com 

Growing consumer desire for convenience and 

value 

Poor access to offline retail stores in rural 

areas 

Rapidly improving national infrastructure 

Improving online payment systems 

These factors will ensure that online retail will 

enjoy a strong and enduring growth trajectory. 

Supplier Implications 

All suppliers need to form a point of view on how 

their category fits with China’s online retail market. 

This will help frame up the potential opportunity of

doing business online. This can be done in three 

steps. 

First, suppliers need to consider which products 

are best suited to the servicing the needs of online 

shoppers. Within personal care, for example, 

shoppers are seeking more premium products 

at a value price. Also, shoppers will look to take 

advantage of the convenience of delivery and 

purchase larger pack size which is particularly 

important for drink and baby categories. 

<strong>Second</strong>, suppliers need a plan to develop their 

business in this fast-growing and unfamiliar 

channel. Without one, they risk getting left behind 

or missing the opportunity to convert offline brand 

share to online brand share. Developing a plan 

means figuring out “where to play” and “how to win” 

in the online retail market. 

Third, companies need to learn before moving 

ahead in online brand promotion. In many ways 

online brand promotion is unchartered territory. 

Most suppliers have mastered the art of brand 

promotion via key customers using the annual joint 

business planning process. However, most online 

retailers do not even conduct annual planning. 

Kantar Retail Point of View 

A Checklist for Suppliers 

Prepare a strategy for online retail 

Identify which sectors of online retail you want to focus on 

Get to know the B2C retailers early 

The business is much more spontaneous and fast 

moving. As a result, no manufacturer has built an 

institutional understanding of how to drive business 

with online retailers. Manufacturers struggle to 

build visibility and meet the dissimilar needs of 

online retailers. 

This third activity is critical. Online retailers 

operate differently from offline retailers and have 

different requirements from suppliers. A good pack 

shot and product description can be the difference 

between success and failure. Yet many suppliers 

fail to provide adequate support to online retailers. 

By the same token, some online retailers, such 

as Amazon, offer a national distribution service 

to the consumer (i.e., if the product they order in 

Shanghai from the Shanghai fulfillment center is 

not available, Amazon will ship to the consumer 

from another city such as Beijing). In this case, the 

product may be handled many times in the supply 

chain and without special packaging to protect it the 

chances of it arriving at the consumer damaged are 

greatly increased. 

Prepare a learning plan for online retail—understand what drives sales in online retail, understand 

shopper needs and drivers 

Figure out how to drive demand for your brands in an online retail environment 


Adding Clarity or Clutter? A First Look 

at Walgreens and CVS’s New Private 

Brands, “Nice!” and “Nuance” 

By: Brendan Langan / Conversation originally published: August 2, <strong>2011</strong> 

Conversations 

Walgreens and CVS have stepped up the pace of private brand development over the past few months, cutting-in hundreds of 

new items across the store. Recent additions to the shelf have included new economy brands (Nice! and Just the Basics) as well 

as more fully developed proprietary brands (Good & DeLish and Nuance Salma Hayek). For now, it remains to be seen whether 

these brands will add useful choice and clarity to the merchandising ladder, or merely add to the clutter on the shelf. Either way, 

neither Walgreens nor CVS intend to take their foot off the accelerator anytime soon, with aggressive plans to increase private 

brand share of sales and shelf space. 

Figure 1. Chain Drug Private Label Comparison 


Walgreens Duane Reade CVS Rite Aid 

Front Store Sales (billions) $21,995.6 $979.4 $18,350.4 $8.1 

National Brand Sales (billions) $17,486.5 $866.8 $15,230.8 $6.8 

Private Brand Sales (billions) $4,509.1 $112.6 $3,119.6 $1.3 

Private Brand % Front Store Sales 20.5% 11.5% 17.0% 16.0% 

Est. Private Brand SKUs N/A 2,000 5,100 3,300 

Priate Brand % Front Store SKUs N/A N/A 26.2% 13.2% 

CAGR 2005–2010 CAGR 2005–2009 CAGR 2005–2010 CAGR 2005–2010 

Front Store Sales 8.2% 4.4% 12.6% 5.0% 

National Brand Sales 7.3% 3.3% 11.5% 4.0% 

Private Brand Sales 12.4% 14.7% 18.8% 11.6% 

Primary Private Brands 

Walgreens, W, Good & Delish, Pet 

Shoppe, Café W, Deerfield Farms, 

Big Roll, Casual Gear, Penway, 

Pure American, Big Flatts 1901, 

Men’s Zone, Xcel, Details, Bioinfusion, 

Studio 35 

Duane Reade, DR, DR Delish, 

Good & Delish, Apt. 5, Apt. 5 Goes 

Green, Pet Shoppe, Prevail 

CVS, Gold Emblem, Just the 

Basics, Essence of Beauty, BIG 

CHILL, Nuance Salma Hayek, 

Absolutely Divinie, Blade, Fuel, 

Earth Essentials, Pet Central, 

Caliber, 24.7, skineffects, Christophe, 

Ellin Lavar, Fruitopia, 

Bioluxe 

Rite Aid, Simplify, Pantry, HOME, 

Renewal, tugaboos, Pure Spring, 

PharmaAssure, Thrify, Rx Suncare 

Source: Kantar Retail research and analysis, company reports

Increased <strong>Focus</strong> on the Bottom of the Ladder 

Recent efforts to establish a more consistent opening price point (OPP) value proposition have been apparent 

across the Big 3 drugstores, beginning with the introduction of Rite Aid’s new private brand architecture in 2010, 

featuring its new price fighter brand, Simplify. In February <strong>2011</strong>, CVS rolled out approximately 100 new items 

under the Just the Basics name, spanning various categories and departments across the store. The range was 

positioned as a functional, value-priced, opening price point offering, with a “smart simplicity” appeal, priced at 

a discount between 40% to 70% vs. the national brand. 

In early August, Walgreens threw its hat into the OPP ring, cutting-in a dozen items under the Nice! brand in dry 

grocery as part of a broader department reset. The new brand replaced tertiary brands and select Deerfield 

Farms items. Packaging has been revamped, featuring a stripped-down and cleaner look and feel. In-store 

signage and packaging have been designed to position the brand as “smart. quality. everyday.” 

Figure 2. Walgreens Introduces Nice! Dry Grocery Brand 

Source: Kantar Retail store visit 


Walking Walgreens, Nice! Execution Inconsistent 

Although still early, execution has been inconsistent and the shelf crowded with Nice! positioned alongside 

other private brands (W, Café W, Deerfield Farms, Good & Delish, etc.). It may stand out on the shelf, but its 

value proposition is not immediately clear. Further, operational execution and presentation at the half dozen 

locations visited were all over the place. While this is not that uncommon in the early weeks of a launch, these 

issues were compounded by this week’s circular that featured a coupon for Nice! Macaroni & Cheese for 49¢ 

(with a 3 piece limit) versus the $1.29 shelf 

price (a 62% discount). With one facing and a 

very deep discount, it was not surprising to 

see numerous out of stocks on the first day of 

the ad. Addtionally, the store visited indicated 

they would not receive a shipment until Friday, 

resulting in a poor first impression and lost 

sales. Several other stores did not yet have 

the item in stock and were instead offering a 

branded equivalent. When asked about the new 

brand, most store associates had not heard of it 

(despite the radio loop) or were not aware that it 

was a Walgreens item. 

Outside of spotty in-store signage, radio, and 

the one coupon in this week’s ad, Walgreens has 

yet to invest in marketing or online resources to 

build awareness, which leaves customers and 

associates ill-informed. For now, it remains to 

be seen whether Walgreens is adding clarity or 

clutter, but in the interim, it looks like the latter. 

That being said, I do not feel this will be the case 

for long as they leverage learnings from Duane 

Reade and work to significantly rationalize 

their portfolio of private labels while building 

standalone brands and accelerating private 

label sales growth. 


Figure 3. Walgreens Introduces Nice! Dry Grocery Brand, Early 

Execution Mixed 

Source: Kantar Retail store visit

CVS Introduces Holistic Beauty 

Solution: Nuance Selma Hayek 

On the other end of the continuum, 

CVS has introduced a holistic beauty 

solution and integrated campaign with 

the launch of its Nuance Salma Hayek 

product range. 

CVS has invited its shoppers and 

beauty bloggers to “Discover Nuance 

Salma Hayek,” a unique collection 

of products designed for women 

who seek high-quality, efficacious 

beauty products customized to 

address their personal needs. The 

line includes approximately 100 items 

spanning skincare, body care, hair 

care, and cosmetics, and features 

reasonable pricing ranging from $7.99 

to $19.99. This line is one of the most 

comprehensive for CVS to date, and 

has been in development for the past 

three years. The launch has been 

supported with a comprehensive 

campaign leveraging online, social 

media, beauty advocates, in-store 

signage, and sampling. 

Conversations Is Your Personal 

Connection to Kantar Retail’s 

Experts ... Online 

To join the Conversation, visit 

Kantar Retail iQ and click on the 

“Conversations” tab. All Kantar 

Retail iQ members have full access to 

Conversations. 

Figure 4. Introducing Nuance Salma Hayek 

Figure 5. CVS Begins Cutting-In Nuance 

Source: cvs.com 

Source: Kantar Retail store visits 


What Target’s Suppliers Need to 

Know about Walmart Canada: The 

Overview 

By: Robin Sherk / Originally published: September 19, <strong>2011</strong> 

Although Walmart Canada may be familiar to Target teams, Walmart’s Canadian operations are distinct from its 

U.S. counterpart. Overall, Walmart Canada will be a formidable competitor to Target across grocery, consumables, 

and general merchandise. It has a wide reach in the market in terms of stores and audience penetration, and its 

footprint is expanding as a one-stop grocery shop. Moreover, Walmart Canada is investing in insights and leveraging 

Wal-Mart Stores, Inc.’s best practices, particularly from the U.K. and the U.S. Although Walmart Canada presents 

challenges for Target, its positioning also allows Target opportunity to gain traction in the market. 

24 24 Breakthrough Breakthrough Insights Insights

Store Locations and Formats 

Walmart entered Canada in 

1994 with the acquisition of 

122 Woolco locations from 

Woolworth Canada. The 

chain comprised only discount 

stores until 2006, when 

Walmart Canada began adding 

Supercentres. By mid <strong>2011</strong>, the 

retailer had stores (190 discount 

stores and 135 Supercentres) 

in every province and territory 

except the far northern 

territory of Nunavut. Figure 1 

illustrates that its overall store 

presence is concentrated in 

Ontario, though there also is a 

significant presence in Quebec, 

Alberta, and British Columbia. 

Its Supercentres are primarily 

in Ontario, Alberta, British 

Columbia, and Saskatchewan, 

with recent introductions 

in Manitoba and Quebec 

as well. Unlike in the U.S., 

Walmart does not operate any 

supermarket or convenience 

formats in Canada. 

In terms of format expansion, 

Walmart Canada is focused 

on the Supercentre. The 

retailer continues to convert 

its discount stores into 

Supercentres, as Walmart 

Canada’s Chief Executive, David 

Cheesewright asserted in June 

<strong>2011</strong>, “other than a handful 

we think every store can be 

converted to Supercentre.” 

As a result, over the last five 

years, though Walmart Canada 

added 36 net new stores in total, 

it added over 135 Supercentres 

due to conversions. In short, 

Walmart Canada is leveraging its 

store base to better serve onestop, 

stock-up shopping trips. 

Figure 1: Walmart Canada’s Store Presence 

Walmart Canada’s stores are 

smaller than in the U.S. In 

2010, they averaged 129,000 

square feet, with a range of 

70,000 to 200,000 square feet. 

Comparatively, Walmart US 

discount and Supercentres 

average 169,000 square feet. 

Its Canadian stores accordingly 

tend to carry fewer items, 

averaging 100,000 SKUs, with 

a range from 65,000 to 120,000 

SKUs. 

325 Stores: 

• 190 Discounts 

• 135 Supercentres 

Note: Walmart has stores in Yukon and the Northwest Territories, but it does 

not have enough locations to reach 1% of the store base. 

Source: Walmart.ca, June <strong>2011</strong>, Company reports 


In Canada, Walmart operates 

Supercentres across the 

spectrum of urban, suburban, 

and rural areas. Though the 

majority of Walmart Canada’s 

stores are in areas analogous 

to the U.S., such as in shopping 

plazas and on the outskirts of 

smaller towns, it has an urban 

presence across a number 

of cities, including Toronto, 

Vancouver, Calgary, Winnipeg, 

Halifax, Ottawa, and Quebec 

City. Walmart, therefore, has 

a proven ability to serve urban 

customers in Canada, a key 

difference compared with its 

U.S. counterpart. 

Store Services 

As in the U.S., additional store 

services offered by Walmart 

Canada include the Pharmacy, 

PhotoCentre, and McDonald’s. 

Many of the retailer’s stores 

also offer a Portrait Studio, 

Tire & Lube Express service 

for cars, and Vision Centre. 

Services targeted to local needs 

and tastes also are prominent, 

including hair salons, wine 

shops, Tim Horton’s coffee and 

doughnuts, travel services, and 

dry cleaners. Figure 2 outlines 


Walmart’s services and the 

proportion of stores with each 

offering. 

A key difference between 

Walmart’s U.S. and Canadian 

stores is the latter’s bank. 

Launched last year, it currently 

offers only a credit card that is 

mainly promoted in stores; 90% 

of new applications are taken 

through its cashiers. This year, 

Walmart Canada is looking to 

expand its offering to other 

products such as insurance, but 

its first priority is to develop the 

credit card’s penetration among 

shoppers. The retailer also 

offers gift cards and money 

transfer services. 

Walmart US’s efforts to start a 

bank have long been thwarted 

by regulatory authorities, 

leading it to expand its 

MoneyCenter services. As 

Walmart Canada’s credit card 

expands, it also gives the 

retailer a tool to offer shoppers 

rewards for their loyalty. 

Currently, Walmart Canada’s 

credit card gives Walmart 

Rewards that amount to 1.25% 

for every purchase at its stores 

and 1% wherever else the card 

is used. As more shoppers 

adopt the card, the retailer 

may also gain insights into its 

shoppers’ spending behaviors. 

Overall, Walmart Canada has 

an added tool to contend with 

Target’s practices should Target 

bring a 5% REDcard Rewards 

program to Canada. 

Figure 2: Online Retail Market 

Segmentation 

Service 

# of 

Stores 

% of 

Walmart 

Canada 

Stores 

Pharmacy 321 99% 

PhotoCentre 314 97% 

McDonalds 305 94% 

Portrait Studio 228 71% 

Tire & Lube Express 

Centre 

217 67% 

Vision Centre 201 62% 

Connection Centre 133 41% 

SmartStyle Hair Salon 66 20% 

Magic Cuts 55 17% 

Lotto (Good to Go!) 35 11% 

Marlin Travel 27 8% 

Hear at Last 26 8% 

Regal nails 24 7% 

Medical Clinic 19 6% 

Tim Hortons 16 5% 

Wine Rack 12 4% 

Fun Factory 10 3% 

Cadet Cleaners 8 2% 

Sussex Insurance 3 1% 

Dental Office 2 1% 

Bubble Tea 1 0% 

Source: Walmart.co, June <strong>2011</strong>

Of the differences in services 

between Canada and the U.S., 

the most striking is the lack 

of a website-to-store pick-up 

option in Canada. In the U.S., 

this service, called “Site to 

Store,” accounts for 60% of 

Walmart.com’s orders. Online 

ordering through Walmart.ca 

only began in mid <strong>2011</strong>, and the 

retailer’s website currently offers 

a limited selection of general 

merchandise for home delivery 

only. Accordingly, the multichannel 

experiences advancing 

at Walmart US are not (yet) 

reflected in the Canadian market. 

Figure 3: Collage of Walmart’s Fresh, Prepared Food Options 

Assortment and Private 

Labels 

Last year, just under half of 

Walmart Canada’s sales were in 

Grocery and Health & Wellness 

(including Baby) categories. 

While this is a smaller 

proportion than in the U.S., 

consumables’ share of sales 

will rise due to Supercentres’ 

continued expansion in Canada. 

Walmart Canada’s general 

merchandise assortment, 

which is analogous to the U.S. 

in covering apparel, home, 

entertainment, and hardlines, 

will accordingly comprise a 

smaller proportion of Walmart 

Canada’s sales over time. 

Though Target is increasing 

its focus on consumables 

(currently at 41% of sales in the 

U.S.), its emphasis remains on 

discretionary items. Its focus 

on consumables in Canada 

remains unclear at this time, 

but Walmart’s proportion 

will likely allow it a point of 

differentiation compared to 

Target’s customary discount 

store offerings (even if PFresh 

is introduced in Canada). 

While maintaining a “house 

of brands” proposition, 

Walmart Canada leverages 

best practices in private 

label from both its U.S. and 

U.K. operations. In grocery 

and consumables, Canadian 

shoppers can purchase 

Walmart US’ biggest private 

Source: Kantar Retail Store Visits 


lines, including Great Value, 

Equate, Ol’ Roy, and Parent’s 

Choice. Walmart Canada’s 

private grocery lines generally 

maintain opening price point 

(OPP) propositions. It does not 

have the Marketside, Prima 

Della, or World Table offerings 

that are available in the U.S. 

However, the retailer does 

carry select grocery items from 

ASDA’s Extra Special line, and it 

is adding a more premium, “Our 

Finest” line in frozen (shown in 

Figure 3, left-hand side), fresh 

prepared foods, and non-edible 

grocery. In fresh, prepared 

meal options, Walmart Canada 

also takes a lead from ASDA, 

offering options appealing to 

Canadian tastes (Figure 3, 

middle and right photos). 

Looking at other key categories, 

its apparel positioning is 

anchored by an expansive 

George brand. Launched 

as a monobrand in the fall 

of 2010, it now covers junior 

fashions, mainstream, and 

more traditional clothing 

offerings for men, women, and 

children. Walmart Canada 

works closely with Walmart 

US for sourcing and ASDA 


for its styles. In June <strong>2011</strong>, 

Cheesewright explained that in 

preparation for Target’s entry 

into Canada they have “stepchanged 

the fashionability of 

our core ladies [apparel]” as 

they “want to be ready for when 

Target arrives.” Supported with 

mass media advertisements 

and a noticeable placement 

on Walmart.ca’s landing page, 

its awareness with shoppers 

is rising. Walmart Canada 

reports that recognition of its 

George brand is now over 60% 

of Canadian consumers. 

The private label Home 

category offering also 

establishes a unique position. 

Similar to the U.S., its range 

includes Mainstays, Better 

Homes and Gardens, and the 

more stylish Home Trends line. 

However, instead of featuring 

Canopy, Walmart Canada 

emphasizes George brand 

home items, ranging from desk 

lamps to kitchen mitts. In this 

way, the home department 

leverages the equity of its lead 

apparel brand while refining its 

assortment to match the styles 

of its audience. 

Audience Reach and Shopper 

Analytics 

In June <strong>2011</strong>, Cheesewright 

explained that about 80% of 

Canadians shopped its stores 

last year. He added that 

everyone shops at Walmart 

Canada, stating, “It’s a bit 

of a myth that we only have 

low affluent [lower income] 

customers.” Brandz’s 2010 

Brand Equity Study adds detail 

about the Supercentre shopper, 

explaining that 65% of primary 

household grocery shoppers 

report having shopped at a 

Walmart Supercentre. Though 

below Walmart US’s levels, 

Walmart Canada nonetheless 

has wide shopper penetration. 

Regarding target audiences, 

Walmart Canada segments its 

shoppers similarly to the U.S. 

In <strong>2011</strong>, the retailer reports that 

57% of Canadian consumers 

fall into one of its three target 

clusters; in the U.S. this 

proportion is comparable at 

59% (Figure 4). Examining 

these segments further though, 

Walmart Canada has more 

“Price Sensitive Affluents” 

(higher income shoppers that 

like receiving deals) and fewer

“Price Value Shoppers” (lower 

income shoppers that need the 

deal) relative to the U.S. This 

difference likely reflects the 

two countries’ varied economic 

conditions, as Canada never 

experienced the severity of 

the U.S. housing crisis, and 

its unemployment rate is 

currently lower than in the 

U.S. Canada’s relatively more 

affluent audience is noteworthy 

because recent Kantar Retail 

ShopperScape® data indicates 

Figure 4: Shopper Segment 

Comparisons—Walmart Canada 

Walmart Canada’s Shopper Segments 

Lower % of Price Value Shoppers than in Walmart US 

Shopper Segment: Proportion of Audience 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

Walmart US Walmart Canada 

Other 

Price Value Shoppers 

Price Sensitive Affluents 

Brand Aspirationals 

Source: June <strong>2011</strong>, Company 

Presentation and Kantar Retail Analysis 

that higher income Walmart 

US shoppers who are shopping 

the retailer less favor moving 

to Target vs.other retailers. If 

this tendency parallels across 

markets, then Target Canada 

should anticipate greater 

head-on competition for its 

more affluent, price sensitive 

audience. 

Looking broadly, Walmart 

Canada is advancing its use of 

analytics. Over the past three 

years, Cheesewright has made 

it a priority to develop the 

retailer’s insights capabilities, 

establishing metrics to 

analyze everything from 

the store experience to the 

company’s image. Wal-Mart 

Stores, Inc.’s Executive Vice 

President of Global Consumer 

Insights, Cindy Davis, also is 

working with Walmart Canada 

to evaluate its metrics and 

develop best practices across 

countries. 

Marketing Message 

Walmart Canada tailors 

Wal-Mart Stores, Inc.’s 

marketing themes to fit its 

audience. A comparison of 

recent circular covers (shown 

in Figure 5) illustrates how 

Walmart Canada’s approach 

mixes Walmart US’s light 

blue imagery, low price, and 

Ad Match assertions with 

stark red and yellow text and 

a unique, slanted Rollback 

arrow. The Walmart Canada 

cover also replaces the tagline, 

“Save Money, Live Better” 

with the functional subhead of 

“Supercentre.” The in-store 

messaging (Figure 6) similarly 

includes modifications. For 

instance, the “Everyday Low 

Price” sign shown in Canada 

puts a greater emphasis on the 

word “Everyday.” There are 

also different signs in Canada, 

such as “Limited Time Only” 

promotions and shelf tags to 

highlight specific price points. 

Viewed broadly, Walmart 

Canada’s marketing materials 

tend to have a relatively stark 

presentation around price, 

reinforcing the notion that its 

items are inexpensive. 

Moreover, its marketing does 

not facilitate online social 

communities and engagement 

around its brand to the same 

extent as in the U.S. For 

instance, in recent years both 

Walmart US and Wal-Mart 


Figure 5: Circular Cover Comparison: Walmart US versus Walmart Canada 

Walmart US Circular Cover Walmart Canada Circular Cover 

Figure 6: In-Store Signage: Walmart US versus Walmart Canada 

Walmart US, Promotional 

Signage (July <strong>2011</strong>) 


Source: Walmart 

Walmart Canada, Promotional 

Signage (August <strong>2011</strong>) 

Source: Kantar Retail Store Visit 

Stores, Inc.’s Sam’s Club have 

held online campaigns to let 

Facebook fans vote for which 

American communities and 

charities will receive grants 

for causes related to its “Live 

Better” brand message. 

Comparatively, Walmart 

Canada does not even have 

an established social media 

presence on Facebook outside 

of its U.S. counterpart’s 

umbrella. In this way, Walmart 

Canada’s leverage of social 

media is relatively under 

developed, allowing Target 

Canada a means to develop 

a rapport with Canadian 

audiences distinct from 

Walmart Canada. 

Implications for Target 

Canada 

Overall, Walmart Canada will 

be a formidable competitor 

to Target across grocery, 

consumables, and general 

merchandise. It has a wide 

reach in the market in terms 

of stores and audience 

penetration, and its footprint 

is expanding as a one-stop 

grocery shop. Moreover, 

Walmart Canada is investing

in insights and leveraging 

Wal-Mart, Stores, Inc.’s best 

practices, particularly from 

the U.K. and the U.S. Although 

Walmart Canada presents 

challenges for Target, its 

positioning also allows Target 

opportunity to gain traction in 

the market. 

Walmart Canada’s Advantages 

vs. Target: 

Tailored Services, 

Assortments—The ethnic 

profile of Canadian 

audiences is quite different 

from the U.S., and the 

diversity of both its services 

and assortment at Walmart 

Canada is increasingly 

accommodating its 

markets. Accordingly, 

suppliers that can offer 

advice around what tailored 

assortments mean at 

Canadian sites will be 

valuable as Target looks to 

meet the needs of its new 

guest. 

Established Grocery 

Presence—Already, nearly 

half of Walmart Canada’s 

sales come from grocery; 

as the Supercentre 

Walmart Canada vs. Walmart US 

Formats 

Locations 

Services 

Private Label 

In-Store 

Messaging 

Target 

Audience 

77% are Supercenters, as of 2010. 

Store formats: 

Walmart US Walmart Canada 

58% are Discount stores, as of 2010. 

Store formats: 

Stores almost exclusively in Rural and Suburban markets Stores present across Rural, Suburban, and Urban markets 

Unique services include: 

Site to Store 

MoneyCenter 

Unique services include: 

Newer lines include… Newer lines include… 

Examples: Examples: 

140 million shoppers a week, which is 45% of the population* 

Segments: 

Price Value Shoppers = 20% 

Brand Aspirationals = 26% 

Price Sensitive Affluents = 13% 

Bank and credit card product with Walmart Rewards 

8 million shoppers a week, which is 24% of the population* 

Segments: 

Price Value Shoppers = 13% 

Brand Aspirationals = 28% 

Price Sensitive Affluents = 16% 

*population of the country from the CIA factbook, <strong>2011</strong> estimates 


expands, this proportion is 

set to rise. For Target to 

assert its position in this 

space, it must consider 

that Canadian’s familiarity 

with Target might be 

limited to mass media 

advertisements that focus 

on discretionary goods or 

cross-border shopping that 

would restrain a grocery 

trip. Accordingly, Target’s 

messaging in Canada must 

acknowledge the audience’s 

perception of the retailer 

and seek to shape it. 

Coordinated Distribution 

Network—In market for 

nearly two decades prior 

to Target’s entry, Walmart 

Canada has had time to 

establish a distribution 

network for both grocery 

and general merchandise, 

setting Target’s 

inexperience (particularly 

in grocery) as a relative 

disadvantage in serving this 

audience. 


Walmart Canada’s Relative 

Weakness … and Target’s 

Opportunties: 

Lack of Private Brand 

Equity in Apparel, Home— 

Though Walmart’s George 

brand has widespread 

awareness, this does 

not ensure the brand’s 

appeal. Given the recent 

repositioning of the line 

as a monobrand, it hasn’t 

had the time to establish 

a position with shoppers. 

Target’s strong apparel 

and home lines have an 

opportunity to develop 

affinity with Canadian 

guests, especially those 

guests familiar with their 

U.S. offering. Target 

has trumpeted research 

indicating that “70% of 

Canadians are already 

familiar with the Target 

brand,” so Target has a 

foundation on which to 

build. 

Underdeveloped Social, 

Online Presence—Walmart 

Canada’s online presence 

is limited, lacking a distinct 

Facebook page from its 

U.S. counterparts, for 

example. Target Canada 

should evaluate developing 

a differentiated position 

in this space, building 

communication with its 

audience to advance its 

contact and loyalty with 

guests. Its recent relaunch 

of Target.com in 

the U.S. demonstrates its 

ability to tailor its online 

presence to guests’ needs. 

Target may accordingly 

want to develop its online 

offering in tandem with its 

store offering, as Target 

has recently suggested that 

its .ca services will likely 

follow store openings in 

2013. 

Stark Message of “Cheap”— 

In Canada, Walmart’s 

messaging starkly 

emphasizes its inexpensive 

price, distracting from 

the “live better” side of its 

brand promise in the box. 

Target has an opportunity 

to balance its “Expect 

More” quality and service 

dimension, as well as its 

“Pay Less” assertion, thus 

differentiating itself in the 

market.

2012 EMEA Events Calendar 

Q1 

Kantar Retail Events | Less Opinion, More Insight 

NEW Digital Retailing Session—Amsterdam, 

Netherlands 

Jan 26 Geographical Coverage - Europe 

Carrefour Middle East Session—Dubai, UAE 

Feb Geographical Coverage – Middle East 

Carrefour Turkey Session—Istanbul, Turkey 

Feb 22 Geographical Coverage – Turkey 

Spanish Retailing Forum—Madrid, Spain 

Apr 24 Geographical Coverage – Spain 

Tesco Global Session—London, UK 

Apr 26 Geographical Coverage - Global 

NEW Russian Hypermarket Session—Moscow, Russia 

May 15 Geographical Coverage – Russia & Ukraine 

NEW Russian Discounter Session—Moscow, Russia 

May 16 Geographical Coverage – Russia & 

Ukraine 

NEW Retailer Financial Models Session— 

Istanbul, Turkey 

Feb 23 Geographical Coverage - Turkey 

Carrefour G5 Session—Paris, France 

Mar 20 Geographical Coverage – G5 

(Belgium, France, Greece, Italy and 

Spain) 

UK Retailing Forum—London, UK 

Mar 28 Geographical Coverage – UK 

Breakthrough Insights 33 

For more information - Email CustomerService@KantarRetailiQ.com or Call +44 (0)207 031 0272 

Q2 

Walmart Africa Session—Johannesburg, 

South Africa 

May 22 Geographical Coverage – South 

Africa 

European Retailing Forum—TBD 

Jun 14 Geographical Coverage – Europe

Getting it Right: Anticipating 

Amazon’s Growth Trajectory 

By: Anne Zybowski / Originally published: October 26, <strong>2011</strong> 

One year ago on Nov. 8, 2010, Amazon announced its 

plans to acquire Quidsi (parent company of diapers. 

com and soap.com among newer sites), giving it 

another strong foothold in a specialty e-commerce 

business. In the Breaking News Insight article we 

wrote that day, we identified three moves that were 

significant about this acquisition: 

1. Driving penetration of key categories 

2. Targeting mom and the replenishment trip 

3. E-tailers: moving from online to bricks & 

mortar? 

A year later, it’s as if Amazon continues to work 

from our playbook and has made significant 

progress against each one of these plays. Let’s take 

a look at the highlights: 

1. Driving Penetration of Key Categories 

Heading into <strong>2011</strong>, Amazon was trying to get its 

head around selling CPG—how could shipping 

anything less than a club pack make sense? 

Amazon started testing “eaches” (individual pack 

sizes) vs. club packs to see both the impact on sales 

and profitability. Results exceeded expectations as 

sales took off and handling costs were lower than 


expected due to high attachment rates. As of July 

<strong>2011</strong>, HBC is one of the top categories shopped 

online by Amazon shoppers with 43% of monthly 

shoppers looking for HBC (vs. 23% across all 

primary shoppers) (Figure 1). 

While baby supplies is one of the lowest-ranked 

categories, with only 11% of Amazon’s monthly 

shoppers having shopped for the category, stay 

tuned for #2.

2. Targeting Mom and the 

Replenishment Trip 

While Subscribe & Save was 

launched in 2007 with grocery 

items, the program really took off in 

<strong>2011</strong> as more participating vendors 

means more eligible products 

online, and “Mom” became 

the gateway to new purchase 

behaviors. Mom, coveted by bricks 

& mortar retailers like Target and 

Babies R Us for the basket that 

comes with the frequent stock-up 

trip for diapers, is the lynchpin for 

the online basket as well. 

Launched in September 2010, the 

Amazon Mom program (which 

offers 30% off diapers and wipes 

and gives shoppers an Amazon 

Prime membership for up to a 

year based if monthly spending of 

USD25+ is maintained) has had a 

significant impact on shopping and 

purchasing behavior because of 

its tremendous value offer. By July 

<strong>2011</strong>, 4% of all shoppers and 10.9% 

of monthly Amazon.com shoppers 

are members of the Amazon Mom 

program (Figure 2). 

Figure 1. Products Amazon Shoppers Shop for Online: CPG Scores High on the List 

All 

Primary 

Shoppers 

Monthly 

Amazon.com 

Shoppers 

Sample Size 4061 814 

Women’s apparel/shoes 33% 50% 

HBC 23% 43% 

Hardcover or paperback books 21% 42% 

DVD or Blu-ray movies 15% 34% 

Consumer electronics (e.g., digital camera, 

television, DVD player) 

13% 26% 

Men’s apparel/shoes 12% 23% 

E-books 12% 27% 

Grocery Non-Food items 11% 20% 

Laptop/desktop/netbook computer 11% 22% 

Furniture (assembled or ready-toassemble) 

9% 17% 

Video games 9% 20% 

Prescription drugs 9% 11% 

Toys/dolls/games 8% 18% 

Infants/toddlers/kids apparel 8% 17% 

School/home office supplies 7% 14% 

Tablet computer (e.g., iPad, Galaxy Tab, 

PlayBook) 

6% 15% 

Grocery Food items 6% 13% 

Home textiles 5% 11% 

Building products (e.g., paint, flooring, 

cabinets, plumbing supplies, etc.) 

5% 8% 

Baby supplies (e.g., diapers, wipes, etc.) 5% 11% 

Hand tools or power tools 4% 9% 

None of these 35% 9% 

Bolding/highlighting indicates a significant difference between column 

percentages (96% CL) 

Source: Kantar Retail ShopperScape®, July <strong>2011</strong> 


And in case you are wondering if membership 

changes shopping behavior: 

49% of Gen X women who are Amazon program 

members shop weekly, as compared with only 

16% of Gen X women females who are NOT 

members 

Figure 2. Monthly Amazon Shoppers Who Are Members of 

Amazon Mom/Subscribe & Save 

Neither of these 92.9% 81.9% 

Source: Kantar Retail ShopperScape®, July <strong>2011</strong> 


All 

Shoppers 

Monthly 

Amazon 

Shoppers 

Sample size 4061 815 

Amazon Mom 4.0% 10.9% 

Amazon Subscribe & Save 4.7% 13.5% 

BOTH Amazon Mom Subscribe & Save 1.6% 6.3% 

Figure 3: Amazon is Penetrating Trip-driving Categories 

All 

Shoppers 

Baby 

food and 

supplies Toys* 

From the perspective of shoppers who purchase 

key consumables categories, the highlighted areas 

in Figure 3 indicate the category purchaser groups 

that over-index with Amazon program members. 

19% of shoppers who purchased baby 

supplies in the past four weeks and 15% of 

toy purchasers are Amazon Mom members— 

strong penetration in a short time. 

Shoppers of personal care and household 

cleaning products over-index with Subscribe & 

Save membership at 6% and 5%, respectively. 

Given the digital nature of Amazon as well as 

the instant access to movies via Amazon Prime, 

it is no surprise that 10% of all shoppers who 

purchased video games and 9% of those who 

purchased DVDs/movies also are members of 

Subscribe & Save. 

Purchased Category in the Past 4 Weeks 

Video 

games 

DVD / Blu-Ray 

Movies 

Sweet 

snacks 

Color 

cosmetics 

Personal 

care 

products 

Sample Size 4061 320 322 288 491 2391 971 2268 

Amazon Mom 4% 19% 15% 7% 7% 5% 4% 4% 

Amazon Subscribe & Save 5% 14% 9% 10% 9% 5% 5% 6% 

All 

Shoppers 

Pet 

supplies 

Household 

cleaning 

products 

Purchased Category in the Past 4 Weeks 

Dry / 

canned 

groceries 

Salty 

snacks 

Household 

paper 

goods Pet food 

Non - 

prescription 

drugs 

Sample Size 4061 913 2574 2985 2841 2616 1850 1561 

Amazon Mom 4% 4% 4% 4% 4% 4% 3% 3% 

Amazon Subscribe & Save 5% 5% 5% 5% 5% 5% 4% 4% 

Source: Kantar Retail ShopperScape®, July <strong>2011</strong>

3. E-tailers: Moving from Online to Bricks & 

Mortar? 

Far-fetched, right? Amazon is a pure-play, onlineonly 

retailer, but there is something to be said for 

physical proximity. Multi-channel is often (lazily) 

used to describe a store-based retailer that also 

runs an e-commerce business to drive growth, but 

the same works in reverse. True “multi-channel” is 

about leveraging the best of each channel to meet 

the shopper where they want to interact with the 

brand. 

Our initial speculation was that Amazon’s initial 

physical presence would be a drive-thru location. 

That may yet materialize, but until then Figure 4 

shows the locker presence that Amazon is testing 

in the US (via 7-Eleven) and the UK (in shopping 

centres). 

These lockers began testing in September <strong>2011</strong> and 

here’s how it works: 

Choose a “locker” location at checkout (vs. a 

home address) 

Your package is delivered to one of 

approximately 40 PO box–style lockers centered 

around a monitor resembling an ATM interface 

Scan an emailed barcode at the locker to get a 

pin and locker # 

If rumors are true, potential US rollout to 

7-Eleven locations nationwide could be summer 

2012 

Figure 4. Amazon lockers – coming soon to a shopping mall 

(UK) or 7-Eleven (US) near you 




Our coverage of Amazon will continue 

to evolve as this retailer continues 

to test, learn, implement, and then 

iterate again. Remember, as Jeff 

Bezos reminds shareholders every 

year by attaching the 1994 Letter to 

Shareholders to the annual report— 

“It’s still Day 1”. 

As we head into 2012, our online 

coverage (beginning with the 

December Year-End Forum event) will 

increasingly explore the implications 

of Amazon’s growth and changes in 

both technology and shopper behavior 

on bricks and mortar retailers. These 

customers are increasingly looking 

to their suppliers to help “stop the 

leakage” to online. Smart suppliers 

will recognize that competing against 

Amazon as well as other e-commerce 

business models isn’t just about 

helping your customers sell online, 

but is more importantly about 

adapting existing business models, 

integrating digital presence with 

physical presence, and highlighting 

unique and differentiated value 

propositions. Digital represents 

a huge opportunity to lead in 

partnership with your bricks and 

mortar customers. 

38 38 Breakthrough Breakthrough Insights Insights 

Source: Amazon.com

Tesco Price Drop: Seismic 

Shift or Smoke and Mirrors? 

By: Bryan Roberts / Originally published: September 28, <strong>2011</strong> 

Never has a major pricing offensive by a leading 

retailer been so badly kept under wraps or so 

widely documented. A combination of ill-advised 

comments on an unofficial Tesco employee forum 

(concerning managers’ leave being cancelled on 

Sunday 25th September plus inordinate amounts of 

point of sale being delivered) and some mischievous 

social media activity meant that Tesco’s planned 

“reveal” of its Big Price Drop campaign was brought 

forward from Monday, September 26, to Friday, 

September 24 (Figure 1 and 2). 

Despite fevered speculation for the best part of the 

week that Tesco was poised to unleash a seismic 

EDLP-led price war that would destabilise its 

competitors and tip the playing field back in its 

favour, what was actually revealed by beleaguered 

Tesco UK CEO Richard Brasher was 3,000 price cuts 

across a mix of branded and private label SKUs. The 

UK business press, full of talk of a price war, has 

since recast the move as a price skirmish. 

Why was anticipation so fevered and expectations 

so high over Tesco’s move? Simply put, the UK 

business has been underperforming competitors 

in terms of like-for-like sales growth and market 

Figure 1. Price Drop Campaign Signage 



share performance: Morrisons has been making 

steady progress with an excellent reputation for 

fresh, value and service; Sainsbury’s has retained 

a combination of quality and strong promotions; 

and Waitrose has augmented its undoubted quality 

credentials with those of value and affordability 

through private label innovation and price-matching 

Tesco on brands. Asda, which has not been setting 

the world on fire in performance terms either, still 

trumps everyone else on price—due to both its 

EDLP stance and its 10% Asda Price Guarantee. 

While modest in scale if not in influence, Aldi and 

Lidl have also been gaining share at a mercurial 

rate as British shoppers continue their flight to 

value. 

The Tesco model is not broken (it is still growing, 

it still has a virtually unassailable lead in the UK 

grocery market, and it makes double the operating 

margins of everyone else), but it is not where it 

used to be. It has lost its place at the vanguard 

of innovation and best practice, it has let the 

pricing lead slip to Asda, and the industry is awash 

with talk of falling in-store standards and overcentralisation. 

All of these have combined to see 

a gradual, but steady, erosion in the retailer’s 

market share and the unfamiliar and uncomfortable 

experience of like-for-like sales declines (excluding 

VAT and petrol). 

There have already been some efforts to regain 

momentum in <strong>2011</strong>. Tesco has invested in some 

potentially successful innovation in private brands it 

has continued to improve its already world-leading 

grocery e-commerce business and, now, it has 

sought to re-establish its pricing credentials. 


Figure 2. Price Drop Campaign Signage 


Its relative stagnation led many to believe that Tesco 

was readying itself for a dramatic and potentially 

redefining moment of pricing action. At a time when 

consumer spending is weak (particularly in nonfood), 

the major supermarkets continue to open new 

space at a record rate, leading us to believe that the 

net effect has been a cannibalisation of each other 

and themselves. While like-for-like sales in the UK 

market have been surprisingly buoyant compared 

with other mature markets such as France, 

Germany, and the US, there is a sense that the UK 

might start flattening and perhaps even declining 

in general terms as turgid consumer demand 

combines with increasing overcapacity. 

The current environment was seen as one in which 

Tesco could launch a hugely aggressive price 

offensive that would be difficult for its competitors 

to equal. With industry-leading buying power and 

margins, Tesco would be uniquely placed to be able

to unleash a fierce price campaign that would be 

unable to be matched by its competitors without 

them devastating their already razor-thin margins. 

Instead, what we have seen has been something of 

an underwhelming halfway house that has already 

been dismissed by Sainsbury’s as “smoke and 

mirrors” and by Asda as “spin,” the latter hitting 

back at Tesco’s Big Price Drop newspaper ads with 

its own full-page ads proclaiming that “only one 

supermarket is … always 10% cheaper.” 

The three main thrusts of the Big Price Drop are: 

1. Shoppers want more help with the cost of their 

weekly shopping. Tesco therefore “reduced 

the prices of more than 3,000 products that 

customers need to buy every day—such as 

milk, bread, fruit and vegetables. Future cuts 

will also focus on products that families need 

most.” 

2. Shoppers are turning away from expensive 

brands to more affordable own label ranges. 

Tesco will focus most of the investment in the 

Big Price Drop on reducing prices on more than 

1,000 Tesco brand products. Tesco branded 

products are already considerably cheaper 

than comparable brands. As a result of this 

move they will be even better value, in many 

cases more than 50% cheaper than the brands. 

Buying Tesco brand can significantly reduce the 

rate of inflation that customers are currently 

experiencing in their weekly shop. 

3. Shoppers have said that they are weary of 

having to shop around for the best deals and 

prices changing too often. Tesco stated that, 

“We are going to simplify promotions, reducing 

the number of multi-buys particularly in fresh 

foods where customers have said they can drive 

waste.” 

Having given it a day to let the dust settle and to get 

out and see the Big Price Drop in a variety of Tesco 

store concepts, here’s our take on the initiative and 

some of the related issues. 

The first assertion that Tesco will be saving 

shoppers money on the items they buy every day is 

a noble one and one that is hard to argue about, at 

least for existing Tesco shoppers who will continue 

to shop at the retailer. There are plenty of examples 

where the branded price cuts mean that Tesco is 

now cheaper than Asda on some branded SKUS, but 

there also are examples of where—even after the 

cuts—Tesco remains more expensive. 

Figure 3. Price Cuts on Custard 



Around a third of the cuts were applied to Tesco 

private label, which makes comparability a shade 

more problematic, but the fact remains that the 

mighty 2p price cut on Tesco Value Custard now 

means that it costs the same as Asda Smart Price 

tinned custard (Figure 3). Will a cut in the price 

of Red Square Vodka from £14.32 to £14.29 get 

shoppers deserting Waitrose and Aldi and flocking 

into Tesco? Perhaps not. 

Another criticism is that Price Drops are to be found 

in a category such as dried herbs & spices, which 

we are not convinced falls into the “need to buy 

every day bucket.” 

A further complication arises from Tesco’s multiformat 

strategy and the price differential that it 

executes across its different trading platforms. 

Across its different formats—such as Express 

convenience stores, Tesco superstores, and the 

Tesco.com e-commerce store—Tesco states that 

the “was” (pre-Price Drop) prices were charged at 

“most Tesco stores in GB.” One query we have is 

that “most Tesco stores in GB” are Tesco Express 

units (there are around 1,300 Express stores 

compared to 870 Tesco, Tesco Metro and Tesco 

Extra outlets in the UK) and our research has 

indicated that Tesco Express prices are 4% higher 

than in larger Tesco stores or Tesco.com. 

So, when we visited a Tesco Express unit, we were 

confronted with a price tag for Tesco Luxury quilted 

toilet tissue of “was £2.08, now £1.92,” while larger 

stores were showing ‘was £2.00, now £1.85’: both 

price tags assuring us that the ‘was’ price was 

charged in “most Tesco stores in GB” (Figure 4). 

Confusion reigns supreme. 


Figure 4. Toilet Tissue Price Drop 


Despite Tesco stating that the split in Price Drop 

was to be 2:1 in favour of branded SKUs, the 

sensation in store (helped by the Price Drop POS 

which almost exclusively highlights Tesco brand 

items) is one of Price Drop being used as a private 

brand vehicle rather than a value mechanism. 

This makes sense for a couple of reasons (more 

headroom in PL margins for price cuts and it 

also muddies the waters to thwart Asda’s Price 

Guarantee comparisons), but it also has meant that 

in some categories, the “Price Drop” private brand 

is located alongside a branded competitor on deal 

that is only pennies more expensive—once again 

creating confusion and something of a muddled 

value proposition. 

As with any price initiative, speculation has been 

rife that Tesco might well have manipulated 

prices in an upward direction ahead of the Big 

Price drop, or has used the campaign in a less 

than straightforward way to actually engineer the

average selling price in an upward direction. A 

4-pint bottle of milk was at £1.43 before the Price 

Drop, with a 3 for £3 multi-buy also available. The 

Price Drop saw the price fall from £1.43 to £1.25, 

although the multi-buy was removed (meaning 

that for some shoppers, the Price Drop here was 

actually a 25% Price Increase). Elsewhere, milk 

is 2 for £2 at Asda and 3 for £3 at Sainsbury’s 

and Morrisons. One of Brasher’s comments at 

the launch was: “We’re giving customers a more 

straightforward shop—reducing the number of 

promotions and putting the emphasis on clear and 

reliable savings that everyone can benefit from.” 

With milk, there are certainly less promotions, 

but we’re not convinced on the “clear and reliable 

savings” component. 

Perhaps the most controversial aspect of the 

initiative—at least to the mind of Sainsbury’s, 

which described the move as “giving with one 

hand and taking away with another”—has been the 

removal of Double Clubcard points (effectively a 2% 

retrospective discount given to shoppers in voucher 

format). The 2% has been halved to the traditional 

1%, but Tesco has increased the “exchange 

rates” available to Clubcard holders for trips to 

restaurants and theme parks. Quite how restaurant 

and theme park discounts sit with Brasher’s 

assertion that “across the country people are saying 

they need more help with the cost of living. With 

rising utility bills and soaring petrol prices, families 

are having to cut back on the staples, not just the 

extras” is another question altogether. 

Sainsbury’s proposed £350 million as a valid 

estimate of how much Tesco would be saving by 

axing double Clubcard points, suggesting that the 

£500 million “investment” in the Price Drop was 

largely a reallocation of marketing spend rather 

than a meaningfully aggressive price reduction 

programme. In February <strong>2011</strong>, the week that 

Brasher took the reins as UK CEO, Tesco unveiled 

a £200 million price-cutting programme. The 

previous October, it unleashed an £800 million price 

reduction/promotional programme, preceded by a 

£280 million round of price cuts in December 2009 

and £250 million in November 2009. So, taking out 

the purported £350 million saving from halving 

Clubcard points, the resultant £150 million price 

investment appears relatively modest in contrast 

to the £1.5 billion that preceded it over the previous 

two years. 

The issue with the Big Price Drop programme 

is that it indicates to us that Tesco continues to 

preoccupy itself with retaining UK margin rather 

than regaining market share. Its sleight of hand that 

sees Clubcard points being halved will generate 

substantial annual savings (the Double points 

scheme was initially launched in Summer 2009) 

and will undoubtedly benefit Tesco’s profitability. 

While £500 million is a big number, Tesco’s main 

goal is to increase its return on capital: a genuinely 

destructive price war that eroded gross margin 

would not have sat well with this aspiration. 


Safeway’s Strategic 

In-Store Marketing 

By: Alida Destrempe / Photo album originally published: September 11, <strong>2011</strong> 

Safeway is one of the largest food and drug retailers in the United States. The retailer’s core market is the 

Western half of the US, with approximately 30% of its store base located in California. Historically, Safeway’s 

growth has been driven by factors such as sales, cost reductions, and private brand innovation. Yet since the 

downturn of the economy, Safeway has suffered from financial distress, losing its value perception on top of 

store traffic. 

Today, Safeway is in the process of changing shoppers’ conceptions of it being too expensive. The retailer has 

developed several new and creative marketing campaigns to separate itself from its competitors in order to 

help persuade buying behaviors. 

Safeway “Ready in Three” 

In 2010, Safeway launched 

“Ready in 3 or It’s Free,” a 

campaign for its in-store, 

prepared meals offering. It 

appears that the retailer is 

attempting to align itself better 

to current shopping trends by 

offering products for quick, 

convenient shopping trips. The 

signs and ordering department 


are located near the entrance to enhance convenience. 

Prepared Meals Marketing 

Quality produce, a scratch bakery, 

a deli with an ordering department, 

cheese bar, and seafood are commonly 

found around Safeway’s perimeter. 

Many stores feature prepared meals, 

but Safeway has used its prepared 

foods as an addition to its catering 

services. The “quick additions to 

any party” tag line places further 

emphasis on pre-packed and pre-cut 

party platters from its Signature Café 

label. The retailer also has cleverly 

positioned its marketing in an area 

of the store that has high traffic and 

volume. 

Safeway Pantry Essentials 

Safeway is currently transitioning some 

Value Red private label products into 

a new label called Pantry Essentials. 

The new label is slowly being revealed 

as items from the retailer’s Value Red, 

low-price brand are absorbed into 

the brand. It appears that Safeway is 

re-assorting its current private brand 

structure to create a solid mid-tier 

brand. Safeway has created in-store 

marketing, such as shelf talkers, to 

help introduce the new brand through 

the transition. 

Breakthrough Breakthrough Insights Insights 45 45

Safeway Kitchens 

At the beginning of <strong>2011</strong>, Safeway 

launched Safeway Kitchens, an addition 

to its line of private labels. The label 

features bread and bakery products, 

which are marketed through a crossmerchandising 

tactic. Safeway not only 

advertises the new product through 

shelf talkers, but places the marketing 

signs with other Safeway brands that 

pair well with the new bakery line. 

Cupcakes & Wine 

It appears that Safeway has built a 

strong supplier relationship through its 

“Cupcakes and Wine” marketing campaign 

in the bakery department. The retailer 

created its own specialty, gourmet 

cupcakes that would pair well with the 

national brand wine. The campaign 

includes signage as well as supplier 

funded merchandising displays around the 

bakery/wine department. Safeway has an 

extensive wine collection, where suppliers 

are challenged in getting a message out 

to catch the shopper. With a category 

that creates so much “white noise,” this 

marketing campaign is a smart way to 

show product attributes, as well as catch 

the attention of shoppers. 


Health & Wellness Interrupters 

Safeway has incorporated large 

interrupters that assist in delineating 

products within the dairy case. Safeway 

categorizes its products by “proactive 

health,””organic/natural,” “light,” all 

messages that promote wellness. For 

a retailer that has a strong health and 

wellness initiative, these marketing 

signs are practical and can assist 

shoppers in making healthy shopping 

decisions. This illustrates Safeway’s 

ability to take conventional marketing 

and align it to in-store initiatives. 

Safeway New Items 

Safeway recently added in-aisle 

displays to its mix of merchandising in 

order to better market newer products. 

It is essential for retailers to provide 

different forms of marketing when 

incorporating new merchandise to its 

existing product mix and call attention 

to shoppers. Whether that product 

will be successful is dependent upon 

how shoppers respond, so it is a smart 

marketing tool for shoppers to easily 

recognize new items. 


Safeway’s Promise Campaign 

In 2009, Safeway revamped its pricing 

strategy and developed the “Promise 

Campaign,” which offered low prices 

on “thousands of products.” The 

retailer invested heavily in advertising 

the new, low-price position, yet still 

struggles with how that perception 

ended up playing out. Today, the yellow 

“everyday low price” signs remain a 

prominent marketing scheme within 

stores. Signs call out specific products 

and point to where they are in the 

aisle. Safeway does a fairly good job at 

promoting lower prices at a store level. 

The main issue is the price shoppers 

actually see on the shelf, and whether 

they recognize Safeway as having a 

lower price within the market. 

Enhanced Media Gallery: Retail Photos, 

Albums and Analysis 

Bringing our insights to life 

Explore new stores and formats and global innovative merchandising trends without 

having to leave your desk with our interactive Media Gallery! The enhanced Media Gallery 

seamlessly integrates dynamic photos and albums throughout the Kantar Retail iQ 

website. Improved functionality allows user to better explore our photos and albums, 

as well as easily download, save to myiQ or email photos and albums. Learn from our 

expert’s as they analyze, compare and contrast various retail competitors with our photo 

albums. Gain insights into new and seasonal trends and best practices in merchandising 

and marketing by browsing through our rich photo library. 


Beyond the Box: Costco’s 

Digital Dive 

By: Sara Al-Tukhaim / Originally published: August 9, <strong>2011</strong> 

Long-praised (and often prodded) as a consistent and disciplined retailer, Costco 

seldom departs from its proven and successful model. While the “if it ain’t broke, 

don’t fix it” mentality has served them well through the years, the combination of an 

aging member base along with the emergence and adoption of new technologies has 

prompted Costco to leverage more innovative member appeals to stay connected in 

a digital world. As this article reveals, Costco’s recent initiatives in the digital realm 

point to key shifts in strategy moving forward. 


Ranging from the mundane (e.g., creation of 

a Facebook page) to the more innovative (e.g., 

testing of sharing-enabled Web videos), Costco has 

significantly, albeit quietly, ramped up its memberfacing 

digital initiatives during the last two years 

(Figure 1). Costco’s efforts signify an important 

departure from its conservative adherence to the 

no-frills club model and open up the possibility of 

extending member value through digital means in 

and beyond the club. 

In seeking to maximize visibility with members 

across their paths to purchase, Costco’s digital 

initiatives span three key touchpoints: 

In the Club: Kantar Retail has noted increased 

mobile coding both on products and on various 

promotional vehicles, like the Multi-Vendor 

Figure 1. Costco’s Digital Initiative Timeline 

• Text message offers 

introduced (Sept) 

• Mobile site 

launched 

(Nov) 

FALL 2010 


WINTER 2010 

• Facebook page 

formalized 

Mailer (MVM) and The Costco Connection. 

On the Go: Beyond the club, Costco has 

introduced text message offers, launched 

its mobile site, and is developing an app with 

several features in consideration. 

Across the Network: Costco has taken 

important steps to improve member 

transparency and access to the retailer at home 

and via emerging digital touchpoints, including 

increased monitoring of and responsiveness to 

social networking platforms. 

In the Club 

Mobile codes provide members with a platform to 

assess product value, thereby influencing purchase 

decisions on the spot and appealing to Costco’s 

upper-income, tech-savvy shopper. 

• Social 

media 

feedback reported in 

Connection (Apr) 

• Sharing-enabled 

Web video testing 

SPRING <strong>2011</strong> 

SUMMER 

<strong>2011</strong>/EARLY 

2012 

• Mobile app to launch 

prior to year end 

(Aug) or 

early FY 

2012 at 

the latest 

Source: Kantar Retail research and analysis; Company reports and collateral

A. Mobile Coding on Products and Fixtures 

Costco’s use of mobile codes spans departments, 

from produce to electronics and seasonal. More 

recently, mobile coding has been found on product 

packaging for computerware, charcoal briquets 

(Figure 2), and even watermelons, all of which 

extend and enhance the member experience. 

Mobile codes are not only appearing on products, 

but also directly above or beneath a product on 

the store fixtures themselves. As Figure 3 shows, 

this particular code provides members with the 

opportunity to instantly compare products and 

reviews. 

B. Mobile Coding in Promotions 

Mobile codes also are increasingly prevalent in 

coupons and other promotional material regularly 

distributed to Costco’s members. 

Figure 2. Using Mobile Codes to Enhance the Member 

Experience: A Case Study 

Case Study: code Links to “Costco Grilling Center” 

Source: Kantar Retail research and analysis; Costco multivendor 

mailer (March <strong>2011</strong>) 

Figure 3. Displaying Mobile Code Messaging on the Steel 

Source: Kantar Retail club visit (April <strong>2011</strong>) 

MVMs: Between January and May <strong>2011</strong> alone, 

two of four Costco MVMs featured an ad with 

a mobile code, compared to none that were 

available the previous year—a small but key 

indication that this is a strengthening trend. 

The Connection: Most recently, Costco also 

began featuring mobile codes in its Connection 

magazine, leveraging a 2D barcode (in at least 

two separate locations) that links members 

directly to the issue’s online edition. 

As Figure 4 shows, the use of mobile codes in 

Costco’s promotional material provides a broader 

platform for vendors to demonstrate the value-add 

that is so vital to selling to club. 

On the Go 

In response to a notable increase in mobile device 

traffic to its site, Costco has significantly ramped up 

its mobile strategy to become and stay relevant to 

its tech-savvy member base. 

A. Introduction of Text Message Offers 

To increase online and in-club traffic and improve 


Figure 4. Using Mobile Codes to Demonstrate Value 

Source: Costco Multi-Vendor Mailers (February and March <strong>2011</strong>) 

TAKEAWAY: In the Club 

The use of mobile coding on products and fixtures 

and within promotions provides Costco vendors with 

cost-effective means to extend the club offer and 

demonstrate unique added value. 

Mobile coding on products offers members a 

real-time response to lingering questions that 

may otherwise inhibit purchase—questions 

that may be addressed in the form of a 

solution, pricing transparency, and/or extended 

demonstration of unique value. 

Mobile codes in promotions provide a quick, 

relatively cost-efficient way for vendors to 

demonstrate product value and maximize 

member appeal where space for messaging 

and promotional signage is otherwise tight, as 

these examples illustrate. 

When combined with broader social media and/or 

club-specific initiatives, mobile codes pose unique 

opportunities to innovate in club and deepen your 

alignment with Costco beyond the product itself. 


overall ticket values, Costco began delivering text 

message offers in September 2010 to members who 

opt in to them (Figure 5). Distributed at a maximum 

of eight messages per month, the offers share the 

following features: 

New and Featured Items: These offers appeal 

to members with a promise that they “will be 

the first to learn about new + featured items @ 

Costco.” 

Calls to Action: Texts heavily promote MVMs, 

seasonal items, online exclusives, Costco 

services, and Kirkland Signature products. 

Club Openings and Happenings: Alerts for new 

club openings, closures, and local road shows 

or demos are provided. 

For Costco, the introduction of text message offers 

extends an essential component of its model—its 

reliance on member-driven word of mouth. 

Figure 5. Examples of Costco’s Text Message Offers 

Source: Kantar Retail analysis of Costco text message offers; 

Costco.com

B. Mobile Site Launch 

In response to a 1400% increase in mobile-device 

traffic to its PC site, Costco launched its mobile 

site in November 2010 (Figure 6). The site currently 

enables users to: 

Shop costco.com “on the go” 

Access online product descriptions, shipping 

information, and reviews 

Identify the nearest club warehouses 

Check the status of their current order(s) 

Learn what is new at the clubs 

Browse The Costco Connection 

Costco’s launch of its mobile site aligned with its 

introduction of text message to promote on-the-go 

holiday shopping. Currently, Costco is promoting its 

mobile site through its website and Facebook pages. 

Figure 6. Costco.com Mobile Web Features 

C. Smart Phone App in Development 

A natural progression for any retailer in today’s 

digital world, Costco has indicated that it will 

launch a smart phone application (app) at some 

point in fiscal <strong>2011</strong> (ending August 28). Costco is 

considering several features for the app (Figure 7) 

and has probed member preferences for the types 

of information that would be most valuable to them. 

The development of a Costco app is eventful 

but not surprising given its members’ growing 

technological savviness. Nearly one third (30%) of 

Costco members own a smart phone, compared 

with 25% of all shoppers (according to Kantar 

Retail’s ShopperScape® survey of members 

shopping monthly at the retailer in 2010)—and this 

figure is on the rise. 

Source: Costco.com (May and August <strong>2011</strong>) 


Figure 7. Smart Phone App for Costco: Features in 

TAKEAWAY: In the Club 


Note: Features are grouped according to categories established by Kantar Retail 

Note: Features are grouped according to categories established by Kantar Retail 

Source: Kantar Retail research and analysis; Costco Connection (October 2010) 

Costco’s efforts to go mobile pose opportunities for suppliers to co-promote, tie-in to social media, and conduct more 

sophisticated member data analysis. 

In “mobilizing” word of mouth through text message offers, Costco not only further promotes the value of its 

membership but also empowers the members to pass on (forward) the word (text) at the click of a button. For 

vendors, Costco’s text offers also help validate participation in MVMs and seasonal promotions. 

With plans to launch apps for BlackBerry, Android, and iPhone, despite the lack of Apple products in its 

clubs, Costco’s app will serve as a key vehicle for communicating with and appealing to members, in addition to 

enhancing online traffic and sales. 

Suppliers seeking to partner with Costco should leverage these mobile opportunities to engage Costco’s member 

base at this increasingly significant touchpoint along the path to purchase.

Across the Network 

Over the last several months, Costco has taken 

important steps to provide members with greater 

transparency and access to the typically hands-off 

retailer, while increasing oversight and monitoring 

of its online and social media presence. 

A. Formalization of Social Media Platforms 

Despite being late to the game, Costco entered the 

social media realm with the launch of its Facebook 

page toward the end of 2010. Costco’s presence on 

Facebook, its only formal social media platform 

to date, provides important insight into the roles it 

seeks to play with its member in the digital realm. 

Facilitator: Facebook as a member-to-member 

and vendor-to-member platform 

Moderator: Facebook as a platform for 

empowering “the collective voice of a portion of 

the member community” 

Promoter: Facebook as a platform for 

promoting seasonal offers, regularly distributed 

MVMs, and mobile site access and awareness 

Researcher: Facebook as a platform for 

understanding member and visitor interests 

(e.g., via live polls) 

As Figure 8 highlights, many of the features of 

Costco’s Facebook page are focused on creating 

a dialogue with and among members while also 

appealing to prospective members. 

Through <strong>2011</strong>, Costco has continued to probe social 

media and technology usage among its members, 

Figure 8. Formalization of Costco’s Facebook Page 

Source: Costco’s official Facebook page (May <strong>2011</strong>) 

indicating it is carefully monitoring how its 

members relate to Costco beyond the club. Specific 

areas of focus have included members’ social 

network usage and adoption of technologies such 

as smartphones and tablets. Most recently, Costco 

has been testing the use of sharing-enabled web 

videos as an online promotional vehicle—revealing 

a willingness to innovate beyond the traditional 

adherence to its model. 

B. Incorporation of Social Media Feedback 

Not only is Costco monitoring its online presence, 

it is actively incorporating social media feedback 

and commentary through key promotional vehicles, 

such as The Costco Connection. In a first for the 

Connection, Costco began regularly featuring 


“Off-the-Network” member comments starting 

with its April <strong>2011</strong> issue. As Figure 9 shows, these 

comments originate from member Twitter feeds 

and blogs, proving to readers that even when they 

are not in club, Costco “gets” them. 

Figure 9. A First for the Connection: “Off-the-Network” 


Source: Costco Connection (April <strong>2011</strong>) 


TAKEAWAY: Across the Network 

Nurturing relationships with members is essential to 

the success of a limited assortment, renewal-driven 

retailer such as Costco; this goal has no doubt driven 

its growing attention to social media. 

In formalizing and monitoring its digital 

presence, Costco is doing what is so vital to its 

model: Affirming itself as a retailer who “gets” 

its members—accordingly, it will prioritize those 

vendors who equally “get” them and who can 

translate this understanding online. 

Costco is looking to the social network to 

empower its members: <strong>Focus</strong>ed on extending its 

reach, Costco is leveraging the digital network 

to empower current members, attract new 

members and promote solutions—It will expect 

similar behavior of its suppliers. 

Costco is clearly keeping a close eye on member 

adoption of social networks, despite a past reluctance 

to jump on the digital bandwagon. This will pose 

unique opportunities for suppliers with the foresight 

to extend and deepen Costco’s dialogue with members 

beyond the box. 

Costco’s recent digital initiatives reveal much more than a growing digital sophistication; they signify a notable 

transition from its usual hands-off approach to member outreach toward the more dynamic and formalized facilitation 

of member interaction. Given the time it has taken Costco to get here, the question remains: Why now? 

Despite its success, Costco is contending with a more intense battle for members’ share of wallet today than in 

the past. A number of marketplace dynamics are in flux: 

More intense competitive landscape: Economic uncertainty has aggravated the competitive pressure 

that Costco faces, especially online, where much of its online-only assortment tends to be discretionary. 

This is most apparent in Costco members’ increasing propensity to also shop on Amazon. According to 

ShopperScape®, the percentage of Costco members who regularly shop Amazon jumped from 38.4% in 

2009 to 47.5% in 2010. With competitive pricing and comparable products to Costco, the threat of Amazon 

has intensified the need for its vendors to demonstrate unique club product, value, and experience.

More fiscally conscious, tech-savvy shoppers: As members have become more fiscally conscious, they 

have not only shifted their spending toward less discretionary, smaller ticket items, but they also are much 

more adept at using social media and mobile technology to enable them to compare across retailers to 

obtain the best prices. 

More digitally engaged members: Member behavior is undergoing a key shift, forcing Costco to reconsider 

how it attracts, engages, and retains members. Between 2010 and <strong>2011</strong> alone, the percentage of club 

members who purchased a product online jumped from 64% to 71%; those who spent time on social 

networks increased from 45% to 52%; those who researched a product online prior to in-store purchase 

grew from 48% to 54%; and those who accessed a retailer site on their mobile device increased from 8% to 

14% (Source: ShopperScape®). 

To respond to these and other marketplace shifts, it is clear that Costco needs to ramp up its digital strategy. 

Though online represents a higher percentage of total sales vs. its club competitors, Costco’s online sales growth 

also has historically lagged its club competitors (Figure 10). With an aggressive goal to reach USD 5 billion in 

online sales in the next five to 10 years (compared with the USD 1.8 billion it produced in 2010), Costco will have to 

increase its pace of growth. 


Figure 10. Costco’s Online Sales 

0.3% 

0.1% 

0.0% 

Online Sales as % of Total Sales 

Costco Sam's Club BJ's 

1.9% 

1.1% 

0.1% 

3.5% 

2.5% 

0.8% 

4.7% 

3.5% 

1.2% 

81 24 

2001 2006 <strong>2011</strong> E 2016 E 2001 2006 <strong>2011</strong> E 2016 E 

0 

Online Sales (USD, Millions) 

costco.com samsclub.com bjs.com 

Online 

Sales 

CAGR 

(USD, ‘01-’06 ‘06-’11E ‘11-’16E 

Millions) 

Costco 60.9% 19.8% 12.2% 

Sam’s 79.4% 24.2% 11.1% 

BJ’s N/A 52.1% 17.2% 

874 

446 

11 

2,160 

1,316 

3,836 

2,230 

Note: US sales only; Costco excludes Business Centers and 

Home; BJ’s excludes ProFoods; Sam’s Club excludes Mas 

Source: Kantar Retail research, analysis, and estimates 

90 

198 


Given the word of mouth power that Costco’s members boast, this poses several implications for its suppliers 

(Figures 11). 

This also poses several opportunities for Costco’s vendor partners to deepen member engagement, broaden 

member touchpoints, and nurture member loyalty (Figure 12). 


Figure 11. Digital-Related Implications for Partnering with Costco 

Takeaway Implication(s) 



Across the 

Network 

• Costco’s growing mobile integration enables the retailer to connect with members on a deeper level 

than product packaging and messaging alone. 

• For a retailer whose model is based on successful member recruitment and retention, each 

opportunity to deepen its connection with members is key. 

• For vendors, there are several upsides to Costco’s growing use of mobile codes: It is cost-effective, 

easy to incorporate and, perhaps most importantly, places power in the supplier to facilitate member 

interaction. 

• Through the introduction of text message offers, launch of a mobile site and development of a smart 

phone app, Costco has acknowledged the need to get and stay relevant to members beyond club 

walls. 

• Increasing member touchpoints while they on the go provides quick and cost-effective opportunities 

to improve overall engagement and drive online/in-club traffic. 

• For vendors, consider the opportunities for cross-collaboration that Costco’s push toward digital 

poses. 

• Costco’s efforts to connect with members beyond the club, such as through its Facebook page, are 

largely focused on creating a conversation with members while also appealing to prospective 

members. 

• As it continues to monitor and probe its members’ online behaviors, vendors who understand and 

incorporate these insights will serve a particular asset to the retailer. 

Figure 12. Digital-Related Considerations for Partnering with Costco 

Takeaway Consideration(s) 



Across the 

Network 

Source: Kantar Retail research and analysis 

• Create Calls to Action: Deepen digital engagement via mobile coding and/or social media initiatives on 

product packaging, pallet displays or the product itself 

• Promote Broader Solutions: Reconsider the broader, seasonal and/or more customized member 

solutions your product(s) offer and the multi-channel opportunities for promoting them 

• Extend the Experience: Leverage digital to extend the in-club experience beyond the box (e.g., use a 

mobile code on your pallet to direct members to a related online initiative offered exclusively to Costco 

members) 

• Drive Traffic Online: Support Costco’s online sales goal by driving traffic to its PC or mobile site (or 

partner with Costco to establish a page on its site, to which members are directed to via a text offer or 

mobile scan) 

• Enable “Word of Mouth”: Design in-club and/or online events, initiatives and offers with the goal of 

sparking word of mouth, both on and off the network 

• Monitor Progress: Measure and demonstrate to Costco the ROI of your digital-related club efforts as 

they relate to member recruitment and retention 

Source: Kantar Retail research and analysis

Value Discounters Continue 

to Attract More Shoppers 

By: David Marcotte / Originally published: August 23, <strong>2011</strong> 

Value discounters continue to attract more shoppers, an extension of 

a trend that has been several years in the making. Overall, the only 

loser to date in regards to shopping penetration is Big Lots. With 

its focus on close-outs and deal merchandise, it suffers from direct 

competition from all the other channels that have adopted more aggressive 

price positions to appeal to recession-weary, value-oriented 

shoppers. Growth for all others continues to be strong, and 

ShopperScape® data indicates shoppers now think of the channel as 

a primary and secondary location for purchasing a range of items. 


The question for this group 

of retailers has always 

been success outside of the 

recession. Nearly two years 

into the recovery after the 

Great Recesssion (albeit a very 

modest recovery), it is clear 

the changes made by the value 

discounters to stay in front of 

consumer needs have worked 

well, and leading players have 

kept and grown the market 

share gained in hard times. The 

question that now rises is if they 

will continue to be successful if 

the economy shifts to recession 

again. An excellent indicator 

may be that many low-income 

shoppers now see this channel 

as “the best shopping option 

given my personal economic 

situation.” Given the current 

economic environment, all 

indications are that low-income 

shoppers will continue to 

be significant component of 

shoppers overall, which is a 

key factor that supports Kantar 

Retail’s strong five-year growth 

forecast for the channel. 

Dollar General’s strategy of 

moving into a more predictable 

convenience and groceryrich 

store format appears to 


be paying off, but at the cost 

of general merchandise and 

“treasure hunting”’ sales. 

Dollar Tree is having equal 

success but far more so with 

the last two types of trips than 

grocery trips. Family Dollar is 

somewhere in between, with 

shoppers using them for all 

trip types somewhat evenly. 

What seems not to be working 

for Dollar General and Family 

Dollar is their investment in 

store space and product quality 

for apparel and OTC, both which 

show poor scores and even 

willingness to experiment and 

try. All of them are doing well 

with office and school supplies. 

The back-to-school period has 

become a major promotion 

and display event for each, 

with Dollar Tree moving to 

permanent aisle positions for 

these products. 

Growing shopper base 

The value discount channel 

continues to show strong 

shopper base growth, with 

Dollar General and Dollar Tree 

sustaining growth through <strong>2011</strong> 

(Figure 1). Family Dollar had 

the strongest growth from 2009 

to 2010, but is tailing off in <strong>2011</strong> 

in contrast to competition. Big 

Lots, which took a hit during 

the recession when it had to 

compete with major retailers’ 

major markdowns, continues to 

weaken with shoppers. 

Figure 1. Past Four-Week Shopper Trends: Value Discount/Dollar Stores 

PPT Change 

May-09 May-10 May-11 2009-11 2010-11 

SMALL-FORMAT DISCOUNT (NET) 47% 49% 50% 3.1 0.8 

Dollar General 19% 21% 22% 3.0 1.5 

Family Dollar 13% 16% 17% 3.7 0.7 

Dollar Tree 21% 23% 25% 4.0 1.6 

99 cent only 5% 4% 5% 0.3 0.9 

Big Lots 13% 11% 11% -2.1 -0.9 

Tuesday Morning 2% 2% 2% 0.2 0.0 

Source: Kantar Retail ShopperScape®, May 2009, May 2010, and May <strong>2011</strong>

Planned general merchandise 

impulse trips no longer 

as important 

Overall, shoppers making 

planned trips to retailers in 

the channel has dropped with 

the slight exception of grocery 

trips (Figure 2). Though 

down from 2008, planned 

general merchandise trips 

have recovered slightly from 

2010, but treasure hunting 

has dropped considerably, 

reflecting Dollar General 

and Family Dollar’s move to 

predictable value and stock-up 

grocery options. 

Dollar Tree’s evolution 

drives planed general 

merchandise trips 

The pattern of trips shoppers 

make to Dollar Tree shows 

the trade-offs of going with 

a richer mix of products in 

standard store formats results 

in greatly improved grocery 

scores overall but with a 

discernable hit to the bargainhunting 

trips that in the past 

have been so profitable (Figure 

3). Dollar General continues to 

push its general merchandise 

offer with marketing and via 

Figure 2. Reasons for Last Value Discount/Dollar Store Trip* 

(among shoppers who shopped a value discount/dollar store in past 4 weeks) 

35% 

31% 

25% 

19% 

16% 

17% 

Planned general Impulse trip; no Planned grocery 

merchandise trip particular 

purchase in mind 

fill-in trip 

2008 <strong>2011</strong> 

15% 16% 

25% 

15% 

Planned grocery Planned bargain- 

stock-up trip hunting/treasure 

hunt trip 

16% 

12% 

Some other 

reason 

*Multiple answers allowed 

Source: Kantar Retail ShopperScape®, May 2009, May 2010, and May <strong>2011</strong> 

Figure 3. Reasons for Last Value Discount/Dollar Store Trip* 

31% 

28% 

32% 

35% 

19% 

Planned general 

merchandise trip 

19% 

15% 

16% 

21% 

30% 

Impulse trip; no 

Particular 

purchase in 

mind 

17% 

26% 

19% 

13% 

Planned 

grocery 

fill-in trip 

7% 

16% 

19% 

15% 

14% 

Planned 

grocery 

stock-up 

trip 

All Shoppers Dollar General Family Dollar Dollar Tree Big Lots 

9% 

15% 

9% 

17% 

14% 

Planned 

bargainhunting/ 

treasure 

hunt trip 

24% 

*Multiple responses allowed 

Source: Kantar Retail ShopperScape®, May <strong>2011</strong> 


store placement; the retailer 

especially focuses on general 

merchandise solution areas 

such as school supplies and 

hobbies. 

Younger shoppers using the 

channel for grocery shopping 

Using the channel for general 

merchandise shopping is 

under-indexed in shopper 

groups younger than 45, while 

shoppers 18- to 24-years- 


old over-index significantly 

in impulse and grocery trips 

(Figure 4), another sign that 

younger generation shoppers 

are changing their selection 

criteria for grocery shopping 

in general. Though bargain 

hunting trips are less prevalent 

overall, they still register as 

part of the shopping expectation 

in the channel. 

Figure 4. Reasons for Last Value Discount/Dollar Store Trip*, By Age 

(Shoppers who shopped a value discount/dollar store in past month) 

Shopping behavior patterns 

by income do not lead to the 

expected relationship between 

wealth and shopping 

this channel 

The expectation that lowerincome 

shoppers are the 

core of the discount channel 

weakens when higher-income 

shoppers are clearly shopping 

the channel for planned general 

merchandise trips and impulse 

shopping (Figure 5). Though 

higher income shoppers shy 

away from food trips, they 

Over/Under-Index vs. All past four-week value discount shoppers (index +/- 10% shaded) 

Over-index by >10% Under-Index by >10% 

Past 4- 

Baby 

Week 

Gen Y Gen X Boomers Seniors 

Value 

(born (born (born (born 

Discount 

1982 to 1965 to 1946 to before 

Shoppers 18-24 25-34 35-44 45-54 55-64 65+ 2002) 1981) 1964) 1946) 

Planned general merchandise 

trip 

31% 25 95 85 97 119 125 58 91 108 125 

Impulse trip; no particular 

purchase in mind 

19% 132 88 92 97 121 90 100 95 109 90 

Planned grocery fill-in trip 17% 128 120 111 99 102 64 122 113 101 64 

Planned grocery stock-up trip 16% 132 91 116 118 91 73 102 111 104 73 

Planned bargainhunting/treasure 

hunt trip 

15% 69 102 90 112 100 102 98 90 107 102 

Some other reason 16% 121 120 112 84 78 104 123 112 82 104 

*Multiple responses allowed 

Source: Kantar Retail ShopperScape®, May <strong>2011</strong>

clearly are looking to the 

treasure hunt as part of their 

experience. 

Category purchasing reflects 

changes in merchandising in 

past year 

Greeting cards continue to 

build a display space in value 

discount while the reference to 

household cleaners as being a 

“best buy” at value discounters 

in various consumer magazines 

has shifted that product to more 

endcaps and displays (Figure 

6). Seasonal goods have been 

a stable in all companies in this 

channel as has party supplies. 

One of the surprises that 

emerge is the rise of school/ 

office supplies, again another 

Figure 6. Category Purchasing at Value Discounters 

(among past 4-week value discount shoppers) 

Figure 5. Reasons for Last Value Discount/Dollar Store Trip*, By Household Income 

(Shoppers who shopped a value discount/dollar store in past month) 

Over/Under-Index vs. All past four-week value discount shoppers (index +/- 10% shaded) 

Buy 

Category at 

Dollar Store 

Don't Buy 

Category at 

Dollar Store 

Greeting cards or gift wrap/bags 77% 23% 

Household cleaning products 73% 27% 

Seasonal 72% 28% 

Snack foods 69% 31% 

Household paper products 67% 33% 

Candy/gum 67% 33% 

Party supplies 63% 37% 

School/home office supplies 62% 38% 

Small housewares 50% 50% 

Boxed or canned food items 49% 51% 

Beauty or skin care products 47% 53% 

Home textiles 45% 55% 

Soft drinks or other non-alcoholic beverages 43% 57% 

Toys/dolls/games 38% 62% 

OTC drugs 35% 65% 

Pet food and supplies 29% 71% 

Adult basic apparel 24% 76% 

Adult casual apparel 19% 81% 

Baby supplies 17% 83% 

Kids clothing 16% 84% 

Infants and toddlers clothing 15% 85% 

Beer and wine 8% 90% 



Past 4-Week 

Value Discount 

$25K - $50K - $75K - 

Shoppers

merchandising shift, especially 

for the back-to-school season. 

And given the investment in 

space in many of these stores, 

the expectation would be that 

clothing, pet, and OTC would do 

better overall. 

<strong>Second</strong>ary store preferences 

are where the new strengths 

in value discount show best 

Beyond greeting cards, value 

discounters are more likely to 

be a secondary store of choice 

than the primary store where 

shoppers purchase the category 

(Figure 7). 

The low scores against clothing, 

especially the high percentages 

of channel shoppers who don’t 

buy the category there at all is 

problematic for Dollar General 

and Family Dollar given that both 

retailers have doubled the space 

devoted to that category in many 

stores. 

Dollar Tree, with its greater 

coverage of stores in all 

neighborhoods, shows greater 

primary scores for basics (Figure 

8). About half of all Dollar Tree 

shoppers use the store as their 

primary store for greeting cards 

and party supplies. 


Figure 7. Category Purchasing at Value Discounters 

(among past 4-week value discount shoppers) 

Use Dollar Store as 

Primary <strong>Second</strong>ary 

Don't Buy 

Category at 

Store Store Dollar Store 

Greeting cards or gift wrap/bags 45% 32% 23% 

Seasonal 34% 38% 28% 

Party supplies 33% 31% 37% 

Household cleaning products 28% 45% 27% 

Household paper products 24% 43% 33% 

Candy/gum 22% 45% 33% 

Snack foods 20% 48% 31% 

School/home office supplies 19% 43% 38% 

Small housewares 13% 38% 50% 

Beauty or skin care products 12% 35% 53% 

Home textiles 12% 33% 55% 

Soft drinks or other non-alcoholic beverages 10% 33% 57% 

OTC drugs 10% 25% 65% 

Boxed or canned food items 9% 40% 51% 

Toys/dolls/games 8% 30% 62% 

Pet food and supplies 8% 21% 71% 

Adult basic apparel 5% 19% 76% 

Baby supplies 5% 13% 83% 

Kids clothing 4% 12% 84% 

Infants and toddlers clothing 3% 12% 85% 

Adult casual apparel 3% 16% 81% 

Beer and wine 2% 6% 90% 

Deciding factors for shopping 

the value channel have 

less to do with item pricing 

then personal assessment of 

economic conditions 

Item and basket pricing are not 

as important as factors that 

drive shoppers to the channel 

as would be suspected, with 

lower-income shoppers only 

slightly more concerned than 

average and that concern 

dropping off as income levels 

rise (Figure 9). 


“Best shopping option given 

personal economic situation,” 

shows as the highest driver for 

those with household income 

less than $25k, closely followed 

by “limited assortment reduces 

buying temptations,” which 

appears to indicate those with 

a self-assessed lack of income 

shopping in these stores, but 

not with the same feeling about 

low prices. Easy to shop also 

shows as important among 

lower-income shoppers,

Figure 8. Use Dollar Stores as Primary Store for Product/Category, By Retailer 

All 

Shoppers Dollar General 

Last Trip was to ... 

Family 

Dollar 

Dollar 

Tree Big Lots 

(a) (b) (c) (d) 

Greeting cards or gift wrap/bags 45% 42% bD 35% 56% ABD 32% 

Seasonal 34% 29% 30% 38% Abd 31% 

Party supplies 33% 23% 24% 45% ABD 24% 

Household cleaning products 28% 35% CD 34% CD 22% 18% 

Household paper products 24% 30% CD 27% CD 20% 17% 

Candy/gum 22% 25% D 22% d 21% d 15% 

Snack foods 20% 23% C 22% 18% 17% 

School/home office supplies 19% 20% D 16% 21% D 12% 

Small housewares 13% 13% 14% 12% 11% 

Beauty or skin care products 12% 14% CD 15% CD 9% 7% 

Home textiles 12% 12% 14% 11% 8% 

Soft drinks or other non-alcoholic beverages 10% 12% CD 11% cD 8% 5% 

OTC drugs 10% 14% CD 11% C 7% 7% 

Boxed or canned food items 9% 10% C 8% 6% 7% 

Toys/dolls/games 8% 9% 6% 10% b 6% 

Pet food and supplies 8% 13% CD 12% CD 2% 4% 

Adult basic apparel 5% 10% CD 6% C 2% 3% 

Baby supplies 5% 6% C 5% C 2% 3% 

Kids clothing 4% 5% C 6% C 1% 3% C 

Infants and toddlers clothing 3% 4% Cd 5% Cd 1% 1% 

Adult casual apparel 3% 4% C 5% C 1% 3% c 

Beer and wine 2% 2% 3% c 1% 2% 

Superscript letters indicates significant difference from number in column corresponding to letter; upper case = 95% CL, 

lower case = 90% CL 

Figure 9. Importance Factors—When Shopping a Dollar Store 

(% of shoppers rating factor “Very Important”) 

Source: ShopperScape®, May <strong>2011</strong> 

Importance Factors -- When Shopping a Dollar Store 

(% of shoppers rating factor "Very Important") 


$25K - $50K - $75K - 

Total 18-24 25-34 35-44 45-54 55-64 65+

which may be a factor of store 

placement in lower-income 

areas along with changes in 

merchandising to appeal to a 

more convenience-oriented 

shopper by most of the chains 

in this channel. 

Among all shoppers, item 

and basket pricing top the 

list of drivers, followed by 

convenience and speed of 

shopping (Figure 10). “Best 

shopping option for my personal 

economic situation” drops as an 

overall driver but still shows as 

somewhat or very important for 

80% of the respondents. 

Shopper concerns and drivers 

show little variation 

based on retailer 

Dollar Tree is dominated by 

item pricing versus other 

banners which is expected 

given its fixed price mission 

(Figure 11). Aside from that, 

scoring is reasonably close 

across the banners with Big 

Lots scoring in all save ‘Thrill of 

the Hunt.’ 


Item pricing (individual items cost less) 

Basket Figure pricing 10. Importance (less expensive Factors for overall When basket) Shopping a Dollar 57% Store 

Convenient location 

Quick in-and-out 

Best shopping option given personal economic … 

Easy to shop 

Friendly neighborhood atmosphere 

Wide variety of national brands 

"Thrill of the hunt" 

Limited assortment reducestemptations 

24% 

24% 

18% 

36% 

30% 

45% 

38% 

52% 

66% 

36% 

40% 

46% 

46% 

41% 

47% 

Very important Somewhat important Not at all important 

43% 

34% 

37% 

28% 

40% 

41% 

23% 

30% 

20% 

11% 

13% 

18% 

6% 

9% 

Source: ShopperScape®, May <strong>2011</strong> 

Figure 11. Importance Factors When Shopping a Dollar Store, By Retailer 

(% of shoppers rating factor “Very Important”) 

Last Trip was to ... 

All Dollar Family Dollar 

Shoppers General Dollar Tree Big Lots 

(a) (b) (c) (d) 

Item pricing (individual items cost less at $store 

than elsewhere) 

66% 65% D 64% D 73% ABD 53% 

Basket pricing ($store is less expensive for 

overall basket) 

57% 57% D 55% d 60% D 45% 

Convenient location 52% 61% bCD 55% D 49% D 38% 

Quick in-and-out 45% 55% BCD 48% cD 41% d 33% 

Best shopping option given personal economic 

situation 

38% 41% D 41% D 37% 30% 

Easy to shop 36% 43% CD 39% cD 33% D 23% 

Friendly neighborhood atmosphere 30% 36% CD 36% CD 26% 23% 

Wide variety of national brands 24% 30% CD 27% C 20% 20% 

"Thrill of the hunt" 24% 20% 23% 24% 25% 

Limited assortment reduces buying temptations 18% 22% C 19% 16% 19% 

Superscript letters indicates significant difference from number in column corresponding to 

letter; upper case = 95% CL, lower case = 90% CL 

Source: ShopperScape®, May <strong>2011</strong>

Where the Men Are/Aren’t 

By: Mary Brett Whitfield / Originally published August 31, <strong>2011</strong> 

Findings from Kantar Retail ShopperScape’s ® 

new male shopper database reveal male heads of 

household and the “average” primary household 

shopper have different store sets in terms of channels 

and retailers shopped. Walmart tops the list of 

retailers shopped by a wide margin for both primary 

household shoppers and male shoppers; Amazon.com 

ranks #2. The respective “male” and “all-shopper” 

lists then begin to deviate with a shuffling of retailer 

positions, and some additions and omissions. The 

male Top 10 retailer list includes Best Buy, eBay.com, 

and Kroger. But Kohl’s, JC Penney, and Dollar Tree, 

which make the all-shopper Top 10, miss the cut on 

the male list. There are some noticeable differences 

too when looking at retailers shopped by males of 

different generations—findings which could impact 

retailer and supplier merchandise and marketing 

decisions. 

Like all shoppers in general, the top two retailers where 

male shoppers are most likely to be found are: Walmart, 

with 62% of male shoppers being past-month shoppers; 

and Amazon.com, with 43% of male shoppers as pastmonth 

shoppers. 


Many Stereotypes Hold When Looking for Male 

Shoppers 

Among the Top 10 most-shopped retail channels, 

channels that disproportionately draw male heads 

of household shoppers vs. all primary household 

shoppers include (Figure 1): 

Home improvement retailers (attracting 62% of 

male shoppers in the past month vs. 52% of all 

primary household shoppers, a +10 percentage 

point swing) 

Electronics retailers (+9 ppts) 

Convenience stores (+6 ppts) 

Retail channels where disproportionately fewer 

male shoppers vs. all primary household shoppers 

are found include: 

Apparel specialty stores (-17 ppts) 

Value discount/dollar stores (-10 ppts) 

Department stores (-6 ppts) 


Like all shoppers in general, the top two retailers 

where male shoppers are most likely to be found 

are: Walmart, with 62% of male shoppers being 

past-month shoppers; and Amazon.com, with 43% of 

male shoppers as past-month shoppers (Figure 2). 

The Top 10 retailers shopped by male shoppers 

include some retailers that do not make the Top 

10 among all primary household shoppers: Best 

Buy, eBay.com, and Kroger. Retailers on the allshopper 

Top 10 list that miss the cut on the male 

list include: Kohl’s, JC Penney, and Dollar Tree. 

Among the Top 25 retailers shopped by male 

heads of household, men over-index most 

at The Home Depot, Lowe’s, Best Buy, Office 

Depot, and liquor stores. Other retailers where 

more male than female shoppers are found 

include Sears, warehouse clubs Sam’s Club 

and Costco, eBay.com, Safeway, and Staples. 

Male shoppers under-index relative to all 

primary household shoppers most at Kohl’s, 

Dollar Tree, and Macy’s. 

Figure 1. Top 10 Most-Shopped Retail Channels 

Male Heads of Household Age 18+ vs. All Primary Household Shoppers 

(Shopped retail channel during past 4 weeks) 

Male Heads of Household All Primary Household Shoppers 

1 Supermarkets 88% 1 Supermarkets 88% 

2 Mass channel 78% 2 Mass channel 83% 

3 Home improvement/hardware retailers 62% 3 Drug stores 63% 

4 Drug stores 57% 4 Department stores 55% 

5 Department stores 49% 5 Home improvement/hardware retailers 52% 

6 Electronics/computer retailers 45% 6 Value discount/dollar stores 50% 

7 Convenience stores 43% 7 Apparel specialty stores 42% 

8 Amazon.com 43% 8 Amazon.com 42% 

9 Warehouse clubs 40% 9 Convenience stores 37% 

10 Value discount/dollar stores 39% 10 Warehouse clubs 36% 

NOTE: Shading indicates retail channels where shoppers over-index vs. other shopper type by more than 10% 

Source: Kantar Retail ShopperScape®, March—June <strong>2011</strong>

Figure 2. Top 25 Retailers Shopped by Male Heads of Household Age 18+, Compared with All Primary Household Shoppers 

Shopped Retailer during 

Past 4 Weeks 

All Primary 

Index vs. All 

Primary 

Male Heads of Household Household 

Household Shoppers 

Shoppers 

1 Walmart 62% 65% 95 

2 Amazon.com 43% 42% 102 

3 The Home Depot 38% 30% 126 

4 Lowe's 34% 28% 121 

5 Walgreens 34% 37% 90 

6 Target 32% 39% 83 

7 CVS/pharmacy 29% 31% 92 

8 Best Buy 26% 19% 135 

9 eBay.com 24% 21% 114 

10 Kroger (all supermarket banners) 23% 23% 102 

11 JCPenney 22% 27% 83 

12 Kohl's 21% 27% 77 

13 Netflix 20% 19% 106 

14 Dollar General 20% 22% 91 

15 Sam's Club 20% 17% 115 

16 Costco 19% 17% 111 

17 Liquor/wine stores 19% 15% 129 

18 Staples 18% 16% 111 

19 Barnes & Noble 17% 18% 93 

20 Sears 16% 14% 118 

21* Dollar Tree 16% 24% 64 

22* Safeway (all aupermarket banners) 15% 14% 112 

23 Macy's 15% 19% 77 

24* SuperValu (all smkt banners, excl SAL) 15% 13% 111 

25* Office Depot 14% 11% 126 

NOTE: Yellow shading indicates retailers where male shoppers over-index by 20%+ vs. all shoppers (index of 120+); gray 

shading indicates retailers where they under-index by 20%+ (index ≤ 80) 

*Retailer makes Male Shoppers’ Top 25 Retailer list, but not All Primary Household Shoppers’ Top 25 

Source: Kantar Retail ShopperScape®, March—June <strong>2011</strong> 


Figure 3. Top 25 Retailers Shopped by Male Heads of Household Age 18+—By Generation 

(Shopped retailer during past 4 weeks) 

Male Heads of 

Household Gen Y Gen X Baby Boomers Seniors 

a b 

c 

d 

1 

2 

Walmart 

Amazon.com 

62% 

43% 

65% 

56% 

63% 61% 59% 

CD 

50% CD 

39% D 

3 The Home Depot 38% 30% 37% 

31% 

a 

41% Ab 

39% A 

4 Lowe's 34% 23% 33% A 

36% A 

37% Ab 

5 

6 

Walgreens 

Target 

34% 

32% 

31% 

41% 

32% 35% 34% 

CD 

41% CD 

28% d 

7 CVS/pharmacy 29% 33% 

24% 

c 

8 Best Buy 26% 40% 

29% 28% 30% 

BCD 

30% CD 

24% D 

9 eBay.com 24% 40% 

17% 

BCD 

29% CD 

22% D 

10 Kroger (all supermarket banners) 23% 21% 24% 25% 

14% 

d 

11 JCPenney 22% 25% 

21% 

d 

24% D 

22% 19% 

12 

13 

Kohl's 

Netflix 

21% 

20% 

24% 

34% 

22% 21% 19% 

BCD 

25% CD 

17% D 

14 Dollar General 20% 25% 

12% 

bCD 

15 Sam's Club 20% 17% 

20% 

19% 

20% 

19% 

17% 

23% AbC 

16 Costco 19% 22% c 

19% 17% 21% C 

17 Liquor/wine stores 19% 24% CD 

19% 18% 18% 

18 

19 

Staples 

Barnes & Noble 

18% 

17% 

20% 

30% 

17% 18% 20% 

BCD 

22% CD 

14% d 

20 Sears 16% 20% 

11% 

D 

17% D 

16% D 

21 Dollar Tree 16% 21% 

12% 

CD 

17% Cd 

14% 14% 

22 

23 

Safeway (all aupermarket banners) 

Macy's 

15% 

15% 

19% 

27% 

15% 15% 16% 

BCD 

18% CD 

12% 11% 

24 

25 

SuperValu (all smkt banners, excl SAL) 

Office Depot 

15% 

14% 

14% 

18% 

16% 15% 13% 

C 

15% 13% 14% 

Note: Letters represent significant difference with corresponding column; lower case at 95% confidence level, upper case at 90% 

confidence level 


Young Males Adopting New Shopping Routines 

Generally speaking, ShopperScape ® finds a higher 

percentage of young males (especially Gen Y) 

shopping across the board (at most retailers) vs. 

their older counterparts (Figure 3). Likely reasons: 

Higher percentage of young single males who 

don’t have a female partner with which to share 

shopping duties 

Busy lifestyles of older males in family 

lifestages limit shopping around 


Shopping as a social activity for young males 

Looking at the male Top 25 retailer list, key 

differences among generations emerge: 

Compared with older shoppers, a significantly 

higher percentage of younger male heads of 

household—specifically Gen Y and Gen X (who 

today are 18–46 years old)—shop the following 

formats/retailers:

- Online/non-store shopping options, e.g., 

Amazon.com, eBay.com, Netflix 

- Best Buy 

- “Fashion” retailers Target and Macy’s 

- Value discounters Dollar General and 

Dollar Tree—a finding which seems at 

odds with conventional wisdom that the 

format draws typically female shoppers, 

and in particular older ones with fixed/ 

constrained incomes 

More male shoppers in older generational 

cohorts tend to shop the following formats/ 

retailers: 

- Home improvement centers—The Home 

Depot and Lowe’s draw significantly more 

Baby Boomer and Senior males than Gen Y 

males, largely because older shoppers are 

more likely to be married home-owners 

with maintenance responsibilities and long 

“honey-do” lists 

- Club retailer Sam’s Club—likely because 

older shoppers tend to be more affluent 

shoppers, a core characteristic of the club 

shopper base 

Top Retailer Lists Differ By Generation 

A different set of retailers pop as the Top 25 

shopped by males of different generations (Figure 

4). Key findings: 

The Gen Y male heads of household Top 25 list 

differs the most from the “all-male” list. Five 

retailers make the Gen Y list that are absent 

from the all-male list: GameStop, Apple, 

7-Eleven, Family Dollar, and Kmart. Apple 

and GameStop’s presence suggests that Gen Y 

males prefer gadgets more than groceries since 

those falling off the list include several food 

retailers: Safeway, Supervalu, and Sam’s Club. 

A mix of small-box retailers appear on the lists 

of older male shoppers: Ace Hardware and 

Family Dollar make the male Baby Boomer 

list; Ace Hardware, Rite Aid, and Trader Joe’s 

make the senior males list. This finding 

helps to prove the Kantar Retail hypothesis 

that older shoppers find the quick and easy 

shopping convenience of small-box formats 

appealing. Falling off the senior males list: 

Macy’s, Netflix, and Barnes & Noble, suggesting 

that maintenance of health and home takes 

precedence over fashion and fun for older 

shoppers. 


Figure 4. Top 25 Retailers Shopped Differs by Generation, Male Heads of Household Age 18+ 

(Shopped retailer during past 4 weeks) 

Males Head of Household Gen Y Males 

Gen X Males 

Baby Boomer Males 

Senior Males 

Top 25 

Top 25 

Top 25 

Top 25 

Top 25 

1 Walmart 62% Walmart 65% Walmart 63% Walmart 61% Walmart 59% 

2 Amazon.com 43% Amazon.com 56% Amazon.com 50% The Home Depot 41% The Home Depot 39% 

3 The Home Depot 38% Target 41% Target 41% Amazon.com 39% Lowe's 37% 

4 Lowe's 34% Best Buy 40% The Home Depot 37% Lowe's 36% Walgreens 34% 

5 Walgreens 34% eBay.com 40% Lowe's 33% Walgreens 35% Amazon.com 31% 

6 Target 32% Netflix 34% Walgreens 32% Target 28% CVS/pharmacy 30% 

7 CVS/pharmacy 29% CVS/pharmacy 33% Best Buy 30% CVS/pharmacy 28% Target 24% 

8 Best Buy 26% Walgreens 31% eBay.com 29% Kroger (all 

supermarket 

banners) 

25% Sam's Club 23% 

9 eBay.com 24% GameStop 31% CVS/pharmacy 29% Best Buy 24% Costco 21% 

10 Kroger (all 

23% The Home Depot 30% Netflix 25% JCPenney 22% Kroger (all 

21% 

supermarket 

supermarket 

banners) 

banners) 

11 JCPenney 22% Barnes & Noble 30% JCPenney 24% eBay.com 22% Staples 20% 

12 Kohl's 21% Macy's 27% Kroger (all 

supermarket 

banners) 

24% Kohl's 21% JCPenney 19% 

13 Netflix 20% 7-Eleven 26% Barnes & Noble 22% Dollar General 20% Kohl's 19% 

14 Dollar General 20% Dollar General 25% Kohl's 22% Sam's Club 19% Liquor/wine stores 18% 

15 Sam's Club 20% JCPenney 25% Dollar General 20% Staples 18% Best Buy 17% 

16 Costco 19% Kohl's 24% Costco 19% Liquor/wine stores 18% Dollar General 17% 

17 Liquor/wine stores 19% Liquor/wine stores 24% Sam's Club 19% Netflix 17% Ace Hardware 16% 

18 Staples 18% Lowe's 23% Liquor/wine stores 19% Costco 17% Safeway (all 

aupermarket 

banners) 

16% 

19 Barnes & Noble 17% Costco 22% Macy's 18% Sears 16% Rite Aid 14% 

20 Sears 16% Kroger (all 

supermarket 

banners) 

21% Dollar Tree 17% Ace Hardware 15% Dollar Tree 14% 

21 Dollar Tree 16% Dollar Tree 21% Sears 17% Safeway (all 

aupermarket 

banners) 

15% eBay.com 14% 

22 Safeway (all 15% Family Dollar 20% Staples 17% Supervalu (all smkt 15% Office Depot 14% 

aupermarket 

banners) 

banners, excl SAL) 

23 Macy's 15% Kmart/Big Kmart 20% Supervalu (all smkt 


16% Family Dollar 15% Trader Joe's 13% 

24 Supervalu (all smkt 15% Staples 20% Office Depot 15% Dollar Tree 14% Supervalu (all smkt 13% 



25 Office Depot 14% Apple 20% 7-Eleven 15% Barnes & Noble 14% Sears 12% 


Shading represents retailer new to the Top 25 list vs. all-male heads of household list 


T 

s 

r 

e

Shopping Through the 

Eyes of a Low-Income Shopper 

Cross-Retailer Opening Price Points 

By: Leon Nicholas / Originally published: September 30, <strong>2011</strong> 

he stock-up trip is not dead, but on a weekly basis fewer shoppers make them. Instead 

hoppers opt Kantar for more, Retail smaller recently trips. conducted Most a pre-trip study to planning still happens offline. But 

etailers and discover suppliers how must selected prepare retailers for are next-generation meeting the shoppers who prepare differ- 

needs of low-income shoppers seeking the best 

ntly for grocery shopping trips. 

price to meet their cross-category needs. With 

shoppers increasingly stretching budgets to 

purchase everyday needs, retailers are asserting 

their value messaging and emphasizing low 

prices. At the same time, a lower-income shopper’s 

ability to take advantage of such assertions 

is limited, as retailer strategies such as multipacks 

with low price/volume ratios or bundled 

solutions are not helpful to shoppers who can’t 

pay the often higher price points. For this shopper, 

the requirement to satisfy cross-category 

needs is fulfilled through the achievement of 

the lowest possible price point, often sacrificing 

volume purchase savings. 

Toward this end, Kantar Retail selected 20 categories 

across the edible grocery, non-edible 

grocery, and HBA segments at six retailers located 

within a five-mile radius of each other in the 

Northeast U.S. For each retailer, we assessed 

the lowest price point available to the shopper in 

that category (excluding trial sizes) so that she 

could minimally meet her purchase requirement. 

This article will assess how each retailer enables 

the shopper to meet basket requirements at the 

opening price point (OPP) level. 


73 Breakthrough Insights

Total Basket Findings 

Among the six retailers, the study results indicated 

that Walmart had the least expensive total basket, 

driven by lower OPPs in its edible grocery and HBA 

baskets. Walgreens had the most expensive total 

basket, driven by sharply higher edible grocery 

basket OPPs (see Figures 1.1 and 1.2). 

Of note, Walgreens’ higher total basket was driven 

in part by the type of promotions it ran, requiring 

in some cases that the shopper buy more than one 

item in order to achieve the lower price point per 


Figure 1.1 Total Basket Table 

Figure 1.2 Total Basket Chart 

item, something that a low-income shopper may not 

be able to afford. 

Stop & Shop offered the next cheapest overall basket 

at only 2% more expensive than Walmart’s. With the 

lowest basket in non-edible grocery, Stop & Shop 

achieved its pricing position through featured price 

cuts totaling USD 7.52 across segments; had these 

cuts not been in place, Stop & Shop would have been 

nearly one-third more expensive than Walmart 

overall, and Family Dollar would have been the next 

cheapest relative to Walmart. 

Edible Non-Edible HBA Total 

Index to 

Walmart 

Walmart $ 8.74 $ 12.59 $ 4.55 $ 25.88 - 

Stop & Shop $ 10.14 $ 11.13 $ 5.21 $ 26.48 102 

Family Dollar $ 12.45 $ 12.25 $ 5.00 $ 29.70 115 

Aldi $ 8.97 $ 12.64 $ 10.55 $ 32.16 124 

Target $ 11.42 $ 16.39 $ 7.36 $ 35.17 136 

Walgreens $ 20.81 $ 17.16 $ 6.18 $ 44.15 171 

$50 

$40 

$30 

$20 

$10 

$- 

Edible Non-Edible HBA 

Walmart Stop & 

Shop 

Family 

Dollar 


Aldi Target Walgreens 

Source: Kantar Retail Store Visits

Importantly, the opening price points were largely 

achieved through everyday pricing. Only selected 

Walgreens and Stop & Shop OPPs were reached 

through price cuts. 

Finally, we saw no clear pattern of achievement 

of lower OPPs through private labels or national 

brands, other than in the case of Aldi, whose 

business model is built upon private brands. 

Figure 2.1 Edible Grocery Basket 

Edible 

Grocery Eggs 

Walmart 0.82 

Aldi 0.69 

Stop & Shop 1.59 

Target 1.19 

Family Dollar 1.90 

Walgreens 2.39 

Pasta 

Sauce 

$ $ 0.98 0.48 

$ $ 1.19 0.49 

$ $ 1.00 0.75 

$ $ 1.12 0.64 

$ $ 1.00 0.65 

$ $ 3.29 1.69 

Canned Canned 

Vegetables Ketchup Tuna Bread Cereal 

$ $ 1.00 $ 0.60 $ 0.98 1.00 

$ $ 1.19 $ 0.55 $ 0.79 1.39 

$ $ 1.00 $ 0.80 $ 1.00 1.00 

$ $ 1.17 $ 0.59 $ 1.14 2.34 

$ $ 1.00 $ 0.75 $ 1.30 2.00 

$ $ 3.79 $ 1.19 $ 1.49 2.99 

Figure 2.2 Edible Grocery Brand Composition 

Walgreens 

Family Dollar 

Walmart* 

Stop & Shop 

Target 

Aldi 

Edible Grocery Segment Findings 

Walmart provided the least expensive edible 

grocery basket, beating Aldi by approximately 

3% (see Figure 2.1). The retailer was able to 

provide a reasonable split between private 

labels and national brands for its entry level 

assortment within edible grocery (see Figure 

2.2). 

National Brands Private Labels 

Dry 

Pasta 

½ 

Gallon 

Milk Total 

$ $ 1.00 $ 1.88 $ 8.74 - 

$ $ 0.89 $ 1.79 $ 8.97 103 

$ $ 1.00 $ 2.00 $ 10.14 116 

$ $ 1.09 $ 2.14 $ 11.42 131 

$ $ 1.00 $ 2.85 $ 12.45 142 

$ $ 1.69 $ 2.29 $ 20.81 238 

0% 20% 40% 60% 80% 100% 

*Walmart offered the same size and price for an item that 

was available both as a private label and a national brand 

within edible grocery. 


Index to 

Walmart 



After Aldi, we saw a very steep price gap 

between Walmart and Stop & Shop (16%), 

followed by Target at 31%. Both Stop & Shop 

and Target achieved their OPPs largely through 

private brands. 

Due to its limited assortment of edible grocery 

items, Walgreens delivered the most expensive 

OPPs in the segment. With OPPs comprising 

national brands, Walgreens’ edible grocery 

OPPs registered a 238 index to Walmart. 

Non-Edible Grocery Segment Findings 

Stop & Shop had the least expensive non-edible 

basket, driven by temporary price cuts of USD 


Figure 3.1 Non-Edible Grocery 

Figure 3.2 Non-Edible Grocery Brand Composition 

5.08 (see Figure 3.1). The retailer offered an 

even split of national brands and private labels 

for its non-edible grocery basket (see Figure 

3.2). 

Leveraging private label, Family Dollar was the 

second least expensive for non-edible grocery, 

at roughly 10% more expensive than Stop & 

Shop. 

Though it offered the lowest total basket, 

Walmart’s non-edible OPPs were 13% more 

expensive than Stop & Shop, followed closely by 

Aldi at a 114 index to Stop & Shop. 

Liquid Blue 

Index to 

Non-Edible Toilet Paper Dishwashing Laundry Window 

Stop & 

Grocery Paper Towel Soap Soap Cleaner Diapers Total Shop 

Stop & Shop $ 0.85 $ 1.00 $ 1.29 $ 2.50 $ 1.50 $ 3.99 $ 11.13 - 

Family Dollar $ 1.00 $ 1.00 $ 1.00 $ 1.75 $ 1.00 $ 6.50 $ 12.25 110 

Walmart $ 0.86 $ 1.94 $ 0.87 $ 1.98 $ 0.97 $ 5.97 $ 12.59 113 

Aldi $ 1.29 $ 0.69 $ 1.79 $ 2.39 $ 0.99 $ 5.49 $ 12.64 114 

Target $ 2.99 $ 0.99 $ 1.24 $ 2.34 $ 2.34 $ 6.49 $ 16.39 147 

Walgreens $ 0.89 $ 0.99 $ 1.00 $ 3.29 $ 2.00 $ 8.99 $ 17.16 154 

Target 

Walgreens 

Stop & Shop 

Walmart 

Family Dollar 

Aldi 



0% 20% 40% 60% 80% 100% 

Source: Kantar Retail Store Visits

Both Target’s (147 index to Stop & Shop) and 

Walgreens’ (154 index to Stop & Shop) nonedible 

OPP baskets were significantly more 

expensive. In the case of Walgreens, the index 

was achieved despite USD 3.99 in temporary 

price cuts. 

HBA Segment Findings 

Walmart had the least expensive HBA segment 

basket (see Figure 4.1). All items in the HBA 

basket were priced under USD 1, and three of the 

four SKUs were national brands (see Figure 4.2). 

Figure 4.1 HBA 

Figure 4.2 HBA Brand Composition 

Family Dollar had the second least expensive 

basket in this segment, registering at 10% more 

expensive than Walmart. 

Stop & Shop followed Family Dollar closely at a 

115 index to Walmart, including a total of USD 

1.99 in temporary price cuts. 

Compared to the other segments within the 

study, Walgreens managed a narrower price 

gap in HBA with only a 136 category basket 

index to Walmart. 

Bar 

Disposable Index to 

HBA Soap Toothpaste Shampoo Aspirin Razor Total Walmart 

Walmart $ 0.97 $ 0.85 $ 0.78 $ 0.98 $ 0.97 $ 4.55 - 

Family Dollar $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 5.00 110 

Stop & Shop $ 1.23 $ 0.99 $ 0.99 $ 1.00 $ 1.00 $ 5.21 115 

Walgreens $ 0.89 $ 1.00 $ 1.00 $ 1.29 $ 2.00 $ 6.18 136 

Target $ 2.19 $ 0.94 $ 0.97 $ 0.97 $ 2.29 $ 7.36 162 

Aldi $ 1.49 $ 2.49 $ 1.59 $ 1.99 $ 2.99 $ 10.55 232 

Walmart 

Walgreens 

Stop & Shop 

Target 

Family Dollar 

Aldi 



0% 20% 40% 60% 80% 100% 



Could the Savvy Shopper Save More? 

Although Walmart delivered the least expensive 

total basket available in one location, a shopper 

could save more money through cross-shopping the 

different retailers. If a shopper were to purchase 

all of her OPP edible grocery and HBA items at 

Walmart and all of her OPP non-edible items at 

Stop & Shop, then she could save 6% relative to a 

Walmart-only basket. Without longitudinal data, 

though, it isn’t clear if the segment-level savings 

would be consistent over time. 


Taken further, if a shopper were to cross-shop the 

six different retailers to get the least expensive 

item in each of the twenty product categories, then 

the savings would be 19% relative to buying all of 

Walmart’s OPPs. However, each week the shopper 

would have to shop each retailer separately in 

order to record the lowest price points per category 

and then re-visit each store to buy the cheapest 

respective OPPs. 

Over time, technology may enable more efficient grocery cross-shopping, balancing trade-offs of distance and price 

savings across baskets with customized criteria. For now, though, our study made clear that Walmart is the least 

expensive one-stop shop for a cash-strapped shopper. Importantly, Walmart achieved this distinction without the 

use of any rollbacks. This lends credence to Walmart U.S. President Bill Simon’s claim of providing an “every day low 

price on the entire basket.” Shoppers could spend less by shopping around, but without the knowledge of price points 

in advance, the time spent gathering this data alone would be prohibitive. 

Clearly, Walmart’s recent efforts to bolster its value positioning through smaller sizes and an increasing number of 

value-positioned SKUs is paying off. While it may have featured larger sizes with a favorable price/volume ratio in the 

past, it can now lay claim to saving the shopper money on an absolute basis in a single stop. 

Though Aldi came close to matching Walmart’s OPPs in edible grocery, and Family Dollar was the second least 

expensive in both non-edible grocery and HBA, neither retailer was able to lay claim to a low OPP position overall. 

The study’s findings, with respect to these retailers, were unexpected given their extreme value positioning. Perhaps 

the positioning assumes larger pack sizes at competitive retailers, an advantage that Walmart seems to have 

overcome. 

Stop & Shop’s positioning as a close runner-up to Walmart (on an overall basis) was perhaps surprising. Achieved 

through price reductions, the retailer’s near parity with Walmart demonstrates the effectiveness of leveraging price 

cuts at the OPP level to meet the needs of the shopper on the lower rungs of the socioeconomic ladder. 

For suppliers, it will be critical to align with retailers’ efforts to provide low entry-level price points to draw in the 

price-conscious shopper. Whether through small pack sizes, temporary price cuts, or private labels, retailers are 

keen to compete at this level. Savvy suppliers will partner in these efforts, making up margin losses elsewhere on 


the category pricing ladder.

2012 Americas Events Calendar 

Kantar Retail Events | Less Opinion, More Insight 

Q1 

Chain Drug SuperSession—Orlando, FL 

Jan 31 Sessions TBD 

Feb 1 General Session 

Feb 1 CVS Workshop 

Feb 1 Walgreens Workshop 

Feb 2 Sessions TBD 

NEW HEB Workshop—San Antonio, TX 

Q2 

Feb 28 NEW HEB Workshop 

Walmart SuperSession—Rogers, AR 

Apr 3 Sessions TBD 



Shopper Forum—Chicago, IL 

Apr 25 General Session 

Costco Workshop Series—Seattle/Bellevue 

May 8 Sessions TBD 

May 9 Partnering with Costco 

Value Discounters Workshop Series—Charlotte, NC 



Latin American Retailing Workshop—Miami, FL 

Mar 6 Latin American Retailing Workshop 

Kroger SuperSession—Cincinnati, OH 

Mar 20 Sessions TBD 

Mar 21 Kroger Workshop 

Mar 22 Sessions TBD 

NEW Lowe’s Workshop Series—Charlotte, NC 

May 17 NEW Lowe’s Workshop 

Mid-Year Forum East—East Coast 

June 5 Sessions TBD 

June 6 General Session 


Mid-Year Forum West—West Coast 


June 13 General Session 



For more information - Email CustomerService@KantarRetailiQ.com or Call 1.617.588.4100

The Global Macroeconomic 

Outlook for Retail: Danger from 

Europe to China 

By: Frank Badillo / Originally published: September 15, <strong>2011</strong> 

With macroeconomic trends weak in the United 

States, still weaker in Europe, and precarious 

in China, the global outlook for retailing among 

countries will be especially uneven over the coming 

year and the years beyond. 

Europe is most at risk of recession re-emerging 

before the end of the year as the euro zone’s slowmotion 

financial crisis takes a growing toll. 

At best, the United States will see a sharp slowdown 

with a high risk of recession, depending on potential 

government action—both fiscal and monetary. 

The wild card will be the emerging markets led by 

China. If China’s inflation-fighting steps slow its 

economy too much, then recessionary conditions 

could worsen in developed markets and pull 

emerging markets into a sharp slowdown if not a 

downturn. 

The short-term unevenness in global trends is 

evident across a scorecard of macroeconomic 

indicators for the largest economies, as well as in 

terms of key trends in GDP and consumer prices. 


The impact on the long-term outlook among 

countries is evident in an index and mapping of 

Global Retail Opportunity as measured by Kantar 

Retail. These measures show the euro zone 

countries losing ground, primarily to emerging 

markets such as Brazil as well as to select 

developed markets such as Canada and Australia. 

Russia also appears to be losing ground amid 

recent conditions.

Implications 

Suppliers and retailers operating internationally 

should anticipate all their markets being affected by 

the developing slowdown or recession. 

China and emerging markets cannot be counted 

on for sustained strong growth. Teams in those 

markets should prepare for a potential hard 

economic landing. 

Price pressures are diverging among countries as 

much or more than growth prospects. Suppliers 

and retailers should expect pricing power to 

weaken starting first in Europe and ultimately 

weaken with a lag in China and emerging markets 

as those markets slow. 

Among the long-term implications of current 

trends is that the disparity will widen between 

slower-growing markets—particularly the euro 

zone countries—and the faster-growing emerging 

markets. But the extent of the disparity depends 

on how countries perform relative to one another. 

The disparity will be minimized if emerging markets 

suffer a hard economic landing. 

Scorecard by Largest Economies 

A scorecard of indicators across the world’s 

largest economies shows the particularly weak 

environment in Europe as well as Japan (Figure 1). 

The broad GDP measures as well as the more 

focused consumer spending measures have 

deteriorated most in Japan and the European Union, 

including the euro zone countries. Amid softening 

demand, inflationary pressures are easing fastest 

in these countries—especially in terms of core 

prices excluding food and fuel. 

In contrast, GDP and spending measures in the 

United States have held up better compared 

with Europe. And in China, GDP, spending, and 

investment measures have continued to improve at 

a strong pace through the second quarter. 

The flashing warning sign in China is evident in 

the price inflation measures, which suggest an 

overheating economy. Another sign is the recent 

drop in consumer confidence, which is somewhat 

surprisingly akin to the recent steep dropoff in 

confidence in Europe and the United States. In 

Japan, the post-tsunami dropoff in confidence has 

started to bottom out in recent months. 

First <strong>Half</strong> GDP by Quarter 

GDP growth for the first half of <strong>2011</strong> highlights the 

particular risks in Europe and China (Figure 2). This 

inflation-adjusted growth measure is quarter-toquarter 

growth at an annualized rate, which is the 

way GDP growth is commonly reported in the United 

States. 

In Europe, this growth measure plummeted from 

a pace of about 3% in the first quarter of <strong>2011</strong> to 

less than 1.0% for both the euro zone as well as 

the broader European Union. In the euro zone, 

the momentum toward flat or falling growth in the 

second half of the year is strong, given the ongoing 

debt crisis that has spread from Greece. 

The same measure calculated for China, 

meanwhile, accelerated slightly despite the 


Figure 1. Selected Indicators by Country 

█ = IMPROVING█ = MIXED █ = DETERIORATING 

European Union * 


Period Y-to-Y 

Growth 

Q-to-Q or 

M-to-M 

GDP (Inflation-Adjusted), Annualized Growth Rate Q2 '11 1.7% 0.9% 

Residential & Business Investment (Inflation-Adjusted) Q2 '11 1.9% 1.4% 

Consumer Spending (Inflation-Adjusted) Q2 '11 0.3% -0.4% 

Consumer Confidence (Points) Aug-11 -5.6 -4.4 

CPI Headline Index, Not Seasonally Adjusted (NSA) Jul-11 2.9% -0.4% 

CPI Core Index, excluding food and fuel (NSA) Jul-11 1.5% -0.7% 

Euro Zone * 

Period Y-to-Y 

Growth 

Q-to-Q or 

M-to-M 



Consumer Spending (Inflation-Adjusted) Q2 '11 0.5% -0.9% 


CPI Headline Index, Not Seasonally Adjusted (NSA) Jul-11 2.5% -0.6% 

CPI Core Index, excluding food and fuel (NSA) Jul-11 1.2% -1.0% 

United States 

Period Y-to-Y 

Growth 

Q-to-Q or 

M-to-M 



Consumer Spending (Inflation-Adjusted) Q2 '11 2.2% 0.4% 


CPI (Headline Index) Jul-11 3.6% 0.5% 

CPI (Core Index, excluding food and fuel) Jul-11 1.8% 0.2% 

Japan 

Period Y-to-Y 

Growth 

Q-to-Q or 

M-to-M 

GDP (Inflation-Adjusted), Annualized Growth Rate Q2 '11 -0.9% -1.3% 

Residential & Business Investment (Inflation-Adjusted) Q2 '11 -0.8% 1.9% 

Consumer Spending (Inflation-Adjusted) Q2 '11 -0.6% -0.3% 

Consumer Confidence (Points) Aug-11 -4.9 0.0 

CPI (Headline Index) Jul-11 0.8% 0.1% 

CPI (Core Index, excluding food and fuel) Jul-11 0.3% 0.0% 

China 

Period Y-to-Y 

Growth 

Q-to-Q or 

M-to-M 


Residential & Business Investment (Inflation-Adjusted), NSA Aug-11 25.6% -0.7% 

Consumer Spending (Inflation-Adjusted), NSA Q2 '11 10.5% 1.5% 

Consumer Confidence (Points) Jul-11 -2.8 -3.1 

CPI (Headline Index), NSA Aug-11 6.2% 0.3% 

CPI excluding food prices, NSA Aug-11 3.0% 0.2% 

Sources: EuroStat, Japan National Statistics Center, National Bureau of Statistics of China, U.S. 

Department of Commerce, Conference Board 

Y-to-Y = Year-to-Year change; Q-to-Q = change from prior quarter; M-to-M = change from prior month 

All data is seasonally adjusted unless indicated by “NSA” or Not Seasonally Adjusted. 

*European Union countries 

(€ marks euro zone countries) 

Austria € 

Belgium € 

Bulgaria 

Cyprus € 

Czech Republic 

Denmark 

Estonia € 

Finland € 

France € 

Germany* 

Greece € 

Hungary 

Ireland € 

Italy € 

Latvia 

Lithuania 

Luxembourg € 

Malta € 

Netherlands € 

Poland 

Portugal € 

Romania 

Slovakia € 

Slovenia € 

Spain € 

Sweden 

United Kingdom

government’s attempts to slow down economic 

growth in order to temper inflationary pressures. 

This is not a good sign for China’s outlook. It 

suggests the country’s risk of a hard economic 

landing remains very high. 

The trends for the United States and Japan are not 

positive, but they are not as ominous as the trends 

in Europe and China. In Japan, the continued fallout 

from the March natural disasters was not as severe 

in the second quarter as the initial first quarter 

impact. 

Trends in Year-to-Year GDP Growth 

GDP growth calculated on a year-to-year basis 

tends to show a less dramatic trend than quarterto-quarter 

growth, which can be more volatile 

Figure 2. Inflation-Adjusted GDP by Largest Economies 

(Qtr-to-Qtr Growth, Seasonally Adjusted Annual Rate) 

2.9% 

Q1-<strong>2011</strong> Q2-<strong>2011</strong> 

European 

Union* 

3.1% 

0.9% 0.6% 

1.0% 

0.4% 

Euro Zone** United 

States 

-1.3% 

9.1% 

8.7% 

-3.6% 

Japan China 

*European Union includes 27 countries 

**Euro zone includes 17 countries 

Source: EuroStat, China National Bureau of Statistics and 

Kantar Retail 

Figure 3. Inflation-Adjusted GDP by Major Economies 

(Year-to-Year Growth, Seasonally-Adjusted) 

15% 

10% 

5% 

0% 

-5% 

European Union* 

China 

United 

States 

2007.1 2008.1 2009.1 2010.1 <strong>2011</strong>.1 

Japan 

-10% 


Source: EuroStat, China National Bureau of Statistics and 


and is most affected by revisions (Figure 3). This 

doesn’t change the negative outlook, given the 

importance of falling confidence. But it suggests 

that the starting point for the outlook may not be as 

weak as painted by other indicators. 

Europe’s growth trend, by this measure, appears 

much less negative than suggested by the quarterto-quarter 

growth trend. 

The slowing trend in the United States, on the other 

hand, appears somewhat more pronounced—at 

least from strong 2010 growth—compared with 

Europe. 

China’s strong year-to-year growth remains 

steady by this measure, although relatively modest 

compared with the very strong growth of 2007 or 

early 2010. 


The comparisons to 2007 also are notable for 

Europe and the United States. Both had rebounded 

to pre-recession growth rates in 2010. 

Consumer Price Trends 

The escalating price pressures that have weighed 

on the outlook globally are clearly persisting at 

their worst in China (Figure 4). 

Although China’s consumer price inflation rate 

subsided a bit in August, there is still not enough 

evidence to say that China finally has its inflation 

problem under control—particularly given strong 

GDP and consumer spending growth in the 

second quarter. The high inflation rates remain 

a significant threat for both China and the global 

economy. 

Figure 4. Consumer Price Inflation by Major Economies 

(Year-to-Year Percent Change) 

7% 

6% 

5% 

4% 

3% 

2% 

1% 

0% 

Jan-10 Jan-11 

-1% 

-2% 


China 

European 

Union* 

Japan 

United 

States 


Source: EuroStat, Japan National Statistics Center, National 

Bureau of Statistics of China, U.S. Department of Labor, and 


In contrast, the price pressures in Europe peaked 

in April and have since been subsiding, partly in 

response to weakening consumer demand. This 

should give European central bankers a much freer 

hand to lower interest rates to stimulate economic 

growth. 

The uptick in Japan’s price pressures are focused 

in food, fuel, and services, which likely reflects 

growing scarcity in the wake of the March disasters. 

The United States also saw inflation pressures 

peak through the summer because of food and fuel 

prices for the most part. Those inflation pressures 

should subside into the second half of the year, 

particularly in terms of fuel prices that have come 

down from their mid-May peak. This will give the 

Federal Reserve greater freedom to use monetary 

policy to stimulate a slowing U.S. economy. 

Global Retail Opportunity Index 

The recent and emerging growth trends are having 

a significant impact on the relative attractiveness 

of retail markets in the long term. This is evident 

in a ranking of the markets based on a Global 

Retail Opportunity Index developed by Kantar Retail 

(Figure 5). Based on this index: 

Most euro zone countries (i.e., Ireland, Austria, 

Netherlands, Spain, Belgium, Italy, Portugal, 

and Greece) have sagged toward the bottom of 

the rankings. 

Russia’s outlook also has been hit hard in this 

environment, dropping it to 10 th in the ranking 

from third. Russia’s households appear to be 

particularly hurt by inflation pressures amid

Figure 5. Global Retail Opportunity Ranking 1 

Rank 

Prior-Year 

Rank Country Region Index 

1 1 China Asia-Pacific 85.5 

2 4 Brazil Latin America 69.1 

3 2 United States North America 60.6 

4 5 Malaysia Asia-Pacific 50.9 

5 7 Australia Asia-Pacific 50.4 

6 9 Canada North America 46.3 

7 6 Vietnam Asia-Pacific 45.9 

8 11 Sweden Western Europe 45.7 

9 8 India Asia-Pacific 45.4 

10 3 Russia Central & Eastern Europe 44.1 

11 12 United Kingdom Western Europe 44.1 

12 10 France Western Europe 41.1 

13 14 South Korea Asia-Pacific 38.9 

14 18 Philippines Asia-Pacific 38.3 

15 13 Argentina Latin America 37.9 

16 19 Switzerland Western Europe 37.8 

17 16 South Africa Africa 37.1 

18 20 Germany Western Europe 37.0 

19 15 Indonesia Asia-Pacific 35.8 

20 22 Taiwan Asia-Pacific 35.6 

21 17 Japan Asia-Pacific 33.6 

22 30 Mexico Latin America 33.5 

23 24 Thailand Asia-Pacific 33.2 

24 23 Turkey Central & Eastern Europe 32.9 

25 28 Poland Central & Eastern Europe 32.3 

26 26 Ireland Western Europe 32.2 

27 21 Austria Western Europe 32.0 

28 27 Netherlands Western Europe 31.2 

29 25 Spain Western Europe 30.5 

30 29 Belgium Western Europe 30.0 

31 31 Italy Western Europe 22.0 

32 32 Portugal Western Europe 16.3 

33 34 Nigeria Africa 15.0 

34 33 Greece Western Europe 10.9 

1 The rankings are based on a weighted index of three measures: 

(1) forecasted real growth rates of spending on retail-related 

categories through 2016, (2) measures of market risks, and (3) 

size of the retail market. The weighting is skewed in favor of 

growth (55%) instead of risk (25%) with market size given the 

least weight (20%) 

* Euro zone countries in blue 

uneven growth in the oil industry that’s key to 

the country’s outlook. 

Non-euro zone countries such as Sweden and 

Switzerland have tended to edge higher in the 

rankings. 

Brazil is among the emerging markets that 

have continued to climb in the rankings 

amid developed market woes—although the 

movement among emerging markets overall is 

quite mixed depending on specific situations. 

Some have held steady while others have 

slipped in the rankings. 

Australia and Canada are among the developed 

markets where sustained growth has allowed 

them to edge higher in the rankings. 

Global Retail Opportunity Map 

A mapping of the opportunity index teases out 

the impact that the index’s three dimensions— 

inflation-adjusted growth, market risk, and market 

size—each have on the relative opportunity among 

countries (Figure 6). In this context, four countries 

exhibit an attractive combination of lower-thanaverage 

risk and higher-than-average growth: 

Australia, Canada, Sweden, and the United States. 

Countries are mapped from low- to high-growth 

along the horizontal axis (using inflation-adjusted 

2010–2016F compound annual growth rates for 

consumer spending on retail-related categories) 

and from high- to low-risk along the vertical axis. 

(See the sidebar for more background about the 

risk measures and other data issues). The size 

of a country’s circle on the map is indicative of its 

relative market size in 2016. Other observations 

based on the opportunity map include: 

It’s all relative. Although the United State’s 

long-term growth prospects have deteriorated, 

it retains its relative attractiveness among most 

other countries—which are being hurt as much, 



Figure 6. Global Retail Opportunity Map 

High Risk Low Risk 

-75 

Germany* 

Portugal* 

Greece* 

Italy* 

Low Growth 

Netherlands* 

Japan 

Spain* 

Austria* 

Belgium* 

Ireland* 

Nigeria 

Switzerland 

U.K. 

France* 

Taiwan 

South 

Korea 

Turkey 

Poland 

Mexico 

-95 

Sweden 

Canada 

United 

States 

Indonesia 

Argentina 

Russia 

Australia 

Malaysia 

Thailand 

South Africa 

*Euro zone members 

*Euro zone members 

Explanatory note: The relative size of each country’s retail market is represented by the size of its bubble. The mapping 

horizontally represents the country’s forecasted growth along a continuum of low-to-high growth. The mapping 

vertically represents the country’s risk level along a continuum of low-to-high risk. Where each axis line crosses the 

continuum represents average growth or risk. So countries mapped on the right half represent higher-than-average 

growth. And countries mapped on the top represent lower-than-average risk. The best opportunities are in the top right 

quadrant, which represents low-risk/high-growth opportunities 

Source: Kantar Retail 

India 

Philippines 

Low Risk/High Growth 

“Best” Quadrant 

Western Europe 

Central & Eastern Europe 

North America 

Latin America 

Asia -Pacific 

Africa 

Vietnam 

Brazil 

China 

High Growth

if not more, by the current global economic 

environment. 

PIIGS. Last year, this outlook included Italy 

in a group with euro zone countries that were 

more troubled at the time—Portugal, Ireland, 

Greece, and Spain. That proved to be prescient, 

given Italy’s more recent debt troubles. These 

countries tend to be clustered on the map, 

straddling the two left low-growth quadrants. 

Risky growers. Notable among the risky 

growers in the bottom right quadrant is the 

rightward movement by Brazil and Mexico 

toward a more attractive position and the 

leftward movement by Russia toward a less 

attractive position. China retains its place as 

the strongest growth market. 

Safe laggards. Notable among the safe 

laggards in the upper left quadrant is the 

rightward movement by Germany toward a 

more attractive position. This largely reflects 

Germany’s ability to sustain relatively better 

growth than its neighbors amid the euro debt 

crisis. And in this environment, Sweden has 

edged out of this quadrant into the best growth 

opportunity space to the right. 

About the Global Retail Opportunity Measures 

Market size. Consumer spending data reported by each country are used to define market size. Retail 

sales measures are not used because they can vary significantly in terms of what is included. For 

example, the figures for some countries are inflated by what other countries classify as wholesale sales. 

And some countries do not try to estimate sales of smaller retailers or informal retailers. 

Consumer spending data have a number of advantages. They are a component of each country’s 

national accounts, which tend to be measured uniformly across countries. <strong>Focus</strong>ing on spending on 

goods—and excluding consumer spending on services—is a good proxy of retail sales. Spending on 

automobiles also is excluded. The consumer spending data also are better at including sales in informal 

markets. 

Market risk. The market risk measure leverages data from the World Economic Forum’s Global 

Competitiveness Report, <strong>2011</strong>–2012. Data that measure differences among countries in terms of five 

factors are used and weighted in the following way: 50% infrastructure and institutions, 30% higher 

education/training and business sophistication, and 20% technological readiness. 


The Macroeconomic Outlook for U.S. Retail 

Pushed Toward Recession 

By: Frank Badillo / Originally published: September 29, <strong>2011</strong> 

88 88 Breakthrough Insights 

A bumper sticker slogan may be as good 

a way as any of explaining why the economic 

recovery is in danger of lapsing into 

another recession: “Humpty Dumpty was 

pushed!”

What looked like an economic and retail recovery 

in decent shape—although not necessarily eggshaped—at 

the start of <strong>2011</strong> is in danger of falling 

into recession by the end of <strong>2011</strong> because of 

the accumulating impact of a series of mostly 

unexpected shocks or market disruptions. In 

particular, these include: 

Fuel price spikes/Middle East revolts. The first 

big blow to consumer confidence this year was 

the spike in fuel prices. Prices surged from 

March to their May peak—as oil markets were 

disrupted as revolts spread from Tunisia to 

Egypt and Libya—and remained elevated as the 

Libya conflict dragged on. This fuel price spike 

caused inflationary pressures to shift from bad 

to worse, particularly in emerging markets 

such as China. 

Japan’s disasters. The earthquake and 

tsunami-induced nuclear disaster in Japan 

in March quickly added to global inflation 

pressures as shortages occurred in key 

industries, particularly autos and electronics. 

The disruptions to the U.S. auto industry caused 

temporary job losses that contributed to the 

slowdown in U.S. job growth that emerged in 

May and June. 

Europe’s “slow-motion” financial crisis. The 

European crisis slowly is becoming one of the 

most significant threats to the global outlook. 

The crisis has deteriorated month-by-month 

since the April request by Portugal for a bailout. 

The euro zone’s move to bolster its bailout 

programs has failed to quiet concerns, which 

have instead mounted with new fears regarding 

Italy and renewed fears over Greece. Now, 

the crisis is evolving beyond a sovereign debt 

crisis into a full-blown financial crisis. This is 

evident in growing concerns about European 

banks, which are being shunned in the markets 

because of their exposure to euro-country debt. 

U.S. debt debate. The big falloff in U.S. 

consumer confidence in August and September 

that weighs heavy on the outlook is partly 

attributable to the acrimonious debate in 

Congress over the U.S. debt ceiling and 

deficit reduction. The confidence falloff also 

is attributable, however, to the August and 

September stock market selloffs, which 

occurred in response to broader concerns 

about government debt and growth globally. 

And those global concerns are being driven 

relatively more—and increasingly more—by 

concerns about a euro financial crisis. 

Are China and Emerging Markets Next? 

Next in the string of events in <strong>2011</strong> that may further 

aggravate the U.S. retail outlook is the risk of a 

hard landing in key emerging markets, particularly 

China. The September stock market selloffs in 

these countries have been particularly big—larger 

than the falloff in developed markets. The wealth 

losses in these emerging markets could be the kind 

of shock that aggravates the steps these countries 

are taking to slow their economy as a way to 

dampen inflation pressures. 

The risk of a hard economic landing in China is 

particularly worrisome, given its key supply- and 

demand-side role in U.S. and global markets. A 


hard landing in China also would present risks to 

the global financial markets, given growing concern 

that growth in China is being driven by a U.S.-style 

real estate bubble fed by easy access to credit in 

recent years. 

Confidence Is Paramount Above All Else 

Amid the series of disruptions, the falloff in 

confidence among consumers and businesses 

remains the best window on the retail outlook—and 

the view has not improved based on the latest data. 

The consumer confidence and sentiment numbers 

through September stayed near the lows they fell 

to after the initial stock market selloff in August 

(Figure 1). These measures paint an increasingly 

ominous outlook with each blow the economy has 

taken, starting with the March spike in fuel prices. 

At the same time, it will be important to see how the 

continued letup in confidence among consumers 

affects their spending intentions as tracked by 

Kantar Retail. The letup in spending intentions 

through September has been significantly less 

severe than the other confidence measures. If that 

remains the case, then it suggests that household 

spending likely will weaken in the months ahead but 

not necessarily fall off suddenly and dramatically. 

But it still may be not be enough to avoid a 

recession in the months ahead. 

Private Sector Follows School Job Cuts 

A corresponding falloff in business confidence— 

which may be accelerating in the wake of the recent 

stock market selloffs—appears to be evident in 

the path of job growth amid the year’s market 


Figure 1. Measures of Confidence 

100 

90 

80 

70 

60 

50 

40 

30 

20 

Spending 

Intentions*** 

Consumer 

Sentiment** 

Consumer 

Confidence* 

Jan-08 Jan-09 Jan-10 Jan-11 

*Confidence is through September as reported by the 

Conference Board 

**Sentiment is through September as reported by Reuters/ 

University of Michigan 

***Shopping Intentions from Kantar Retail ShopperScape® is 

through September; represents sum of % of shoppers planning 

to spend about the same or more in the coming month 

Source: Conference Board, Reuters/University of Michigan and 


disruptions. After starting to rebound strongly 

through April, private sector job growth has slowed 

dramatically in most months through September 

(Figure 2). September job growth appeared to 

improve, but is weaker when workers returning 

from a Verizon labor strike is discounted. 

This downshift in hiring highlights the growing risk 

in this increasingly uncertain environment that 

private employers will hold back on investment 

and hiring that they otherwise would have moved 

forward with.

While the private sector job weakness may be 

building, what’s more clear from the data is that 

the job market weakness since May has been led 

by a pickup in job cuts by government. The data 

further show that the bulk of the government job 

cuts in recent months have been local school jobs. 

In other words, also adding to the string of market 

disruptions of <strong>2011</strong> has been the impact of the past 

recession on local school districts. With property 

taxes collected on a lagging basis, school districts 

are only now feeling the full impact of the recession 

and declining home values on their revenues— 

forcing the recent job cuts. 

Impact of Bernanke and Obama Plans 

In the short term, the recession risk posed by the 

year’s market disruptions will not be eliminated by 

the plans laid out by Fed Chairman Ben Bernanke 

Figure 2. Job Growth: Private Sector vs. Government 

Month-to-Month Change in Jobs in Thousands 

300 

250 

200 

150 

100 

50 

0 

-50 

-100 

Total jobs (nonfarm) 

Private-sector jobs 

Government 

Jan-11 Mar-11 May-11 Jul-11 Sep-11 

Source: U.S. Department of Labor and Kantar Retail 

or President Barack Obama. Bernanke’s plan is 

the only one that has a chance of having an impact 

in the next few months—when it can make a 

difference in averting a recession. However, the 

immediate impact of the Bernanke plan has been 

negative because of the way it has raised concern 

among investors about “significant downside risks 

to the economic outlook.” 

The stimulus plans likely will have most of their 

impact in 2012, when they might soften the landing 

of an economic slowdown or downturn. In the very 

near term, the Bernanke and Obama plans will be 

hard-pressed to turn around negative consumer 

and business sentiment that appears to be leading 

the economy toward recession. 

Stimulus to Home Buying and Refinancing? 

Bernanke’s plan could prove to be a powerful 

stimulus that would benefit retailers, particularly 

homegoods retailers. The 30-year fixed mortgage 

rate is likely to fall below 4% in the final weeks 

of the year, which will give households a bigger 

incentive to refinance mortgages and purchase 

homes. Refinancing would free up income to spend 

in the household budget and home buying would 

trigger follow-on purchases of homegoods. 

The success of Bernanke’s plan, however, depends 

on whether enough households can get loans. Many 

of the households that most need refinancing are 

“underwater” in terms of the value of their home. 

Meanwhile, banks would have to loosen their 

stricter credit standards and show more inclination 

to lend money. Unless households and banks are 


able to find some common ground, the Bernanke 

plan is likely to produce mixed results. 

The data suggests the Fed may have been prodded 

to fix a mortgage market further crippled by the 

recent collapse in confidence. Mortgage rates 

had fallen toward 4% before the Fed plan was 

announced and refinancing applications had fallen 

instead of rising as would be expected (Figure 3). 

This suggests the falloff in confidence may be 

keeping households from making big decisions such 

as refinancing even when they work in their favor. 

The Fed action should make the incentives clear 

and help jolt households—and firms—out of the 

inertia that has set in amid declining confidence. 

Figure 3. Mortgage Rate & Refinancing Applications 

Weekly Rate and Index 

5.4 

5.2 

5.0 

4.8 

4.6 

4.4 

4.2 

4.0 

3.8 

Applications for 

Refinancing 

(right scale) 

2010 <strong>2011</strong> 

Source: Mortgage Bankers Association, Federal Reserve 

Board, and Kantar Retail 


30-Year Fixed 

Mortgage Rate 

(left scale) 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

0 

Implications 

Retailers and their suppliers should prepare 

for a recession-like environment, with 

discretionary categories and channels— 

particularly apparel and homegoods—most at 

risk of flat or falling unit volume emerging by 

the holidays. 

Homegoods should benefit more than other 

retail categories and channels as the Fed’s 

stimulus plan begins to have a growing impact 

into 2012. 

Do not expect government stimulus to avert 

a significant slowdown or downturn in the 

months ahead. Government action at best will 

help minimize negative conditions in the short 

term. In the long term, government action may 

help create an environment that accelerates a 

recovery. 

China and emerging markets cannot be counted 

on for sustained strong growth. Teams in those 

markets should prepare for a potential hard 

economic landing. 

The impact of a U.S. downturn will remain 

uneven among states and metro markets with 

those especially dependent on government 

jobs most susceptible. States with companies 

that sell heavy equipment and durable goods to 

emerging markets are at additional risk if those 

global markets sustain a hard landing.

Global Headquarters 

Glendinning House 

1 Station Road 

Addlestone Surrey, KT15 2AG 

United Kingdom 

+44.193.283.3600 

Market Insights, Americas 

245 First Street, 10th Floor 

Cambridge, MA 02142 

USA 

+1.617.588.4100 

Market Insights, EMEA 

6 More London Place, 5th Floor 

Tooley Street 

London, England 

SE1 2QY 

United Kingdom 

+44.207.031.0272 

Asia Headquarters 

The Center, 25th Floor 

989 Changle Road 

Shanghai 200031 

China 

+86.212.405.0132 

/ Contacts 

Leadership Team 

Wayne Levings 

Chief Executive Officer 

Mayer Danzig 

Chief Digital Officer 


Chief Knowledge Officer 

Steve Pattinson 

Chief Executive Officer - Market Insights 

Bryan Roberts 

Director, EMEA Retail Insights 

Phil Smiley 

Chief Executive Officer - Asia Pacific 

Global Sales and Services 

Scott Butterfield, Chief Customer Officer 

Scott.Butterfield@KantarRetail.com 

Michael Pickford, Director, Strategic Global Accounts 

Michael.Pickford@KantarRetail.com 

Media 

Katherine Clarke, Vice President 

Katherine.Clarke@KantarRetail.com

KantarRetailiQ.com / KantarRetailiQ.eu / KantarRetailiQ.cn 

KantarRetail.com

Second Half 2011 Focus on the Horizon - Kantar Retail

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