From Walmart to 7-Eleven, Retailers Respond to Post-Recession Reality

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From Walmart to 7-Eleven, Retailers Respond to Post-Recession Reality


NATIONAL REPORT -- A post-recession nation is adapting to higher food and gasoline prices and a still-shaky employment picture by continuing many of the ultra-value-conscious shopping habits adopted during the Great Recession.

Using a Marietta, Ga., family with a six-figure income as an example, an article in today's USA Today pointed out that even relatively well-to-do consumers have little choice but to follow a new value-shopping mantra.

As a result, America's largest and most familiar retailers -- from Walmart to Target to 7-Eleven -- have been forced to bend to this new reality, according to the article.

The Whited family makes more than $100,000 per year, but shops together for groceries at Walmart once a week.

The paper quoted Jamie Whited, who is a mother of two young boys and vice president of client services at a software marketing company, as saying, "We used to shop wherever we wanted and throw whatever we wanted into the basket. Now, we're very conscious of where we shop and what we buy there."

However, the article points out that like a growing number of Americans, the Whiteds don't measure value only by price. They examine how much is actually in a container, factor in family preferences and still demand the kind of quality they used to get in pricier products. This new American shopper is changing the way retailers market and merchandise.

"It's a new game, with America's retailers and manufacturers trying to satisfy consumers on multiple levels," said James Russo, vice president of global consumer insights at The Nielsen Co. "There's a fundamental shift in consumer behavior, and retailers have had to adapt."

Russo, a member of the Convenience Store News Forecast Council, has described consumers as standing at the crossroads of recession and recovery. At the last Forecast Council meeting in December 2010, he noted that consumers have moved from a mindset that said, "I'll trade down even if it means sacrificing what I really want," to "I will weigh the costs/benefits of my spending." Seventy percent of consumers continue to "only buy when on sale," according to Nielsen research at the time.

Adding more credence to the reality of the "new reality," a May consumer survey by BIGresearch found that nearly 45 percent of consumers say they have become "more practical and realistic" in their purchases. That's an increase from 43 percent in May 2010 and up from 37 percent five years ago.

Nielsen figures show an increase in coupon usage as well. Before the recession, 22 percent of households reported using them. During the recession, the figure ballooned to 35 percent. Now, even with the recession supposedly over, an even higher 37 percent of consumers said they use them, Nielsen reports.

Russo told USA Today that "the stigma is gone," as higher-income shoppers clip coupons too.

Among retailers, even low-price-leader Walmart has had to refocus on value after an ill-fated attempt to court upscale shoppers with prettier stores and more fashion and electronics products. The Bentonville, Ark.-based retailer has gone back to cramming its aisles with bargain merchandise and increasing SKU count by 8,500.

The focus on value has also led to growth in private label. The Whiteds told USA Today that in November they decided to start economizing by substituting store-brand and value products for name brands. "We definitely prefer quality," Jamie Whited told the newspaper. "But if we can get quality at a cheaper price, we'll go for that."

Walmart has plenty of company among retailers hammering the value message -- even 7-Eleven.

Convenience Chain Gets Value Message

7-Eleven is hardly the only convenience store chain to start touting value, but in 1998 it created the 7-Select store brand. That line, which started with a handful of products, now tops 300 and more are coming, said Jesus Delgado-Jenkins, 7-Eleven's senior vice president of merchandising.

"Since the recession, consumers have been asking us for more value, and we've had to respond," Delgado-Jenkins told USA Today.

For example, a 2.5-ounce bag of Lay's potato chips sells for 99 cents to $1.29 at 7-Eleven stores. But the chain's 7-Select brand in a 2.5-ounce bag consistently sells for 89 cents.

7-Eleven is not limiting its value play to its own brands either. According to the article, a store near Southern Methodist University in Dallas was offering two 20-ounce Gatorades for $2. "It was a no-brainer," said one college student interviewed. "One bottle usually goes for $1.79."

The article pointed out four other retailers who are responding to the new reality:

Target -- The Walmart rival is rolling out value and store brands for food and household products.

Domino's. The pizza delivery chain is beating its familiar $10 pizza deals with a Monday through Wednesday offering of $7.99 for carryout pizzas.

Jos. A. Bank Clothiers. For the first time in its 106-year history, the 500-unit apparel chain not only put its entire stock of suits on sale at half price, but also threw in a free suit with each one purchased. In other words, for $275, folks walked off with two suits.

Seattle's Best. The value brand owned by Starbucks is growing at a double-digit pace. A bag of Seattle's Best coffee at the grocery store typically costs as much as $2 less than its big sister Starbucks brand.