CSNews/Nielsen Exclusive: Frugal Consumers Return to Eating at Home

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CSNews/Nielsen Exclusive: Frugal Consumers Return to Eating at Home

By Don Longo, Convenience Store News - 11/03/2009
NEW YORK -- While the restaurant industry continues to get burned by the recession, supermarkets and other food retailers, including convenience stores, are taking advantage of consumers' move back into their homes at meal times.

According to Jeffrey S. Gregori, vice president, solutions consulting for The Nielsen Co., restaurant operators enjoyed a solid 2008, but by midyear 2009, more than 4,000 had closed and the average guest check plunged more than 8 percent. Where did all the diners go? Grocery stores, supercenters and club stores -- to pick up meat, seafood, produce, deli and bakery goods for a home-shared meal.

According to Nielsen, reported household deli spend for year ending September 2009 was $200 -- a 5-percent increase from last year. Bakery whipped up average annual household sales of $174 per year with a 3-percent increase. Fresh meat and seafood cooked up sales of $437 per year for a 4-percent gain, produce increased 3 percent based on annual average sales of $279 per household. Perishable departments are becoming one of the most productive departments at retail and channels outside of supermarkets are taking notice.

Forty-six percent of American households said they are eating out less, according to a 2009 Nielsen survey. The recession has caused a transfer of dollars away from dining out toward spending more on prepared meals at retail. Value-priced prepared meals at retail are posting double digit increases in supermarkets, supercenters and club stores. Other recessionary strategies include reducing unnecessary spending (27 percent), driving less (14 percent), shopping for bargains (13 percent), using coupons (12 percent), combining shopping trips (8 percent), going out less for entertainment (6 percent) and purchasing more private label goods (5 percent).

Meaty Matters
Supermarkets hold a dominant share position with perishables in the meat and seafood department with a 70 percent market share. More importantly, shoppers are spending more with grocers. Key factors fueling supermarket meat and seafood sales include promotions -- 51 percent of meat and seafood is purchased on sale -- and prominent circular placement noted by 41 percent of shoppers.

Deli Delights
In deli, where supermarkets hold 50 percent of the business, all major departments are posting strong growth. Deli cold cuts and cheese are up 7 percent and prepared foods are up almost 5 percent vs. year ago.

Notably, supermarket dollar share erosion has been more severe than other perimeter sectors in this broad but expanding market. However, smaller formats (convenience stores, delicatessens, etc.) that offer shoppers "in and out" convenience are posing the biggest threat to supermarkets. Some of the hottest selling prepared deli items include turkey entrees, pot pies and chicken salad. At the service counter, shoppers are buying American as pre-sliced cheese is posting double-digit unit and dollar sales increases.

Retailers exploring ways to differentiate their brand should turn to the deli department, where service counts, personality shines and the area is generally underdeveloped as a driver of retail brand equity. Adopting an "alternative to eating out" strategy has paid off big time for retailers such as Wegmans, which scored well in a 2009 study as a top choice for prepared meals, as well as for offering a wide range of fruits and vegetables, high-quality fresh food, well-presented displays and a broad assortment of fresh meat and seafood.

View the complete Nielsen Co. report on food spending here. Convenience Store News is a unit of Nielsen.

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