Nielsen Unveils Retail 2015 Forecast

LAS VEGAS -- Convenience stores, as well as drug stores and mass merchandisers, will grow dollar sales but suffer share losses over the next five years, according to The Nielsen Co.'s Retail 2015 Forecast, revealed yesterday at its Consumer 360 Conference.

By 2015, Nielsen predicts mass supercenters and e-commerce will be the big winners in dollar share gains, growing by a combined five share points between 2009 and 2015. Warehouse clubs, dollar stores and pet stores will also grow share positions.

Supermarkets will continue to lose share, but at a declining rate, according to Nielsen. While both high-end and low-end niche grocers will grow share, overall share positions will remain fairly low given lower per-store sales compared to larger formats.

Nielsen also expects to see further consolidation within consumer packaged good (CPG) retail, as retailers look for scale and opportunities to expand their footprint into existing and new areas. Consolidation will be most active in the convenience and supermarket channels, according to the forecast.

"Today's big players will only grow bigger," said Todd Hale, senior vice president, Consumer & Shopper Insights for The Nielsen Co., based in New York. "Industry change will grow faster and more intense in the next five years, requiring advanced, future-focused change management skills among CPG professionals."

One of the biggest CPG shifts Nielsen sees by 2015 is already underway: the use of smart phones to engage consumers and help them make better shopping choices. According to Nielsen, smart phone penetration stands at 23 percent of all mobile subscribers and is expected to overtake feature phones in the U.S. by the end of 2011.

Nielsen predicts that by 2015, smart phones will be the primary enabler of consumer shopping engagements and new technology innovations will generate additional opportunities for CPG retailers and manufacturers.

"Without question, the smart phone has revolutionized how consumers leverage technology to simplify their lives and make better, informed shopping decisions," said Hale. "At the same time, CPG manufacturers and retailers have developed online and social marketing and brand/banner-specific apps to increase consumer loyalty, build sales and create a competitive advantage. This trend will undoubtedly continue and bring about game-changing innovations to our retail world."

Driving the rapid adoption of smart phones is the seemingly endless variety of apps, which take full advantage of the smart phone's geographic location and interactive capabilities. Retailers are already using smart phones as a replacement for frequent shopper cards, sending store coupons and deals directly to a shopper's phone.

Nielsen expects CPG companies to further leverage the smart phone's location tracking abilities to target communications and promotions to shoppers both in and out of stores, and up-sell consumers on other items based on prior purchases. In addition, consumers will have the ability to locate the best available price for a given item, access real-time product reviews and promotions, and manage everything from household budgets and pantry inventory to tax preparation and filing.

"When technology enables consumers to quickly locate the best price in their area, retailers will be forced to compete and differentiate themselves through factors other than price," Hale said. "We're at the beginning of a whole new world when it comes to consumer online and social marketing, and companies need to be developing and updating their digital and social media strategies now to remain competitive."

According to Nielsen, CPG retailers and manufacturers should focus on the following initiatives now to position their businesses for future success:

-- Develop or buy online/digital/social marketing expertise.
-- Plan for diminishing returns from traditional media.
-- Nurture your retailer/supplier relationships, and have consolidation contingency plans.
-- Think about future format planning for your next one to three generations of formats.
-- Utilized demand forecasting by category and consumer segment.
-- Expand via regional or global opportunities.
-- Make future management a company strength.
-- Understand the new faces of opportunity. With an increasingly aging and ethnic population, retailers can't afford to ignore generational and multi-cultural consumers.

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