Channel Chat With Todd Hale
To introduce our Retail Channel Handbook report, we thought it would make sense to begin with a conversation with the guru of channel blurring, Todd Hale, senior vice president, Consumer and Shopper Insights, ACNielsen.
Confectioner: ACNielsen has been studying retail channel blurring since the mid-90s. Has the tendency for channels to blur — i.e. encroach on each other’s turf — intensified since then?
Todd Hale: “Certainly since the mid-90s it has, because so many retailers these days are trying to leverage the power of fast-moving consumer packaged goods items, trying to leverage the way consumers shop in their stores and the frequency with which they shop. I think it’s more blurred than ever. Consumers have more options these days than ever before.”
Confectioner: What impact did the skyrocketing price of gasoline have on consumer shopping behavior?
Todd Hale: “Gasoline prices over the last year and half have had an impact on how people shop. Certainly this year, there was a consolidation in shopping trips. People were making fewer trips, but bigger trips. Channels with more high-income shoppers like club stores were not affected as much.”
Confectioner: What channel would you say has experienced the greatest transition within the past decade?
Todd Hale: “The grocery channel has taken on tremendous competitive pressures over the past decade as other retail channels have focused energy on categories once owned almost exclusively by the grocery channel. Rapid store count growth from value retail channels (i.e., wholesale clubs, dollar stores, and supercenters), as well as from new formats in the channel from limited assortment/low frills grocers like Aldi and Save-A-Lot, to high-end, niche grocers like Trader’s Joes, Whole Foods and Wild Oats, has eroded the channel’s strength in terms of convenient locations.
“It has caused grocery retailers to undertake massive cost reductions; made them make tough decisions as to which categories they had to give up on or add to survive in the new competitive arena; led them to invest in new technologies (loyalty card programs, self-checkouts); add new service offerings (expanded prescription offerings, on-site gas pumps, coffee bars, home delivery); change their philosophy around carrying a wide assortment of categories, brands, flavors and sizes; and invest in new store formats. Finally, it caused them to make tough decisions about closing underperforming stores, leave entire markets where they didn’t have the scale to survive, and make the ultimate sacrifice by closing their doors altogether or putting themselves up for sale.”
Confectioner: Is it possible for channels that have lost ground in the way supermarkets have to regain some or all of that ground?
Todd Hale: “If you want to look for growth, you need to look for pockets that promote growth opportunities. There are big opportunities to think about segments of the population or consumer trends — aging baby boomers, health and wellness, convenience-driven consumers.”
Confectioner: Do some channels foster more loyalty in consumers than others?
Todd Hale: “Without question, wholesale club retailers like BJ’s, Sam’s Club and Costco, in particular, have brought retail channel loyalty to a different playing field. Where else do you see shoppers willing to pay $50 to $100 a year in membership fees just for the right to shop in a large, rather unattractive big box format, where shoppers are forced to spend very large cash outlays for products in quantities two to three times larger than they typically buy in other retail channels and, if they are lucky, have a store employee provide them with an oversized box to put their purchases in so that they don’t roll around in the back of their over-sized SUV or mini-van.”
Confectioner: ACNielsen’s research shows that per-trip shopping basket spending has increased only modestly between 2001 and 2005. What do you make of that?
Todd Hale: “The small increase in shopping baskets for most channels is indicative of how retailers in those channels have responded to competitive pricing from value-priced retailers. Wal-Mart has had such downward price pressure on other retail channels because they have done such a great job of bringing to consumers everyday low pricing. For other retailers to compete with them, they’ve had to drop prices too. Giant Eagle supermarkets decreased prices on another 1,000 products by 12 percent in September.”
Confectioner: There’s been a lot of buzz about the new Tesco Express stores slated to make their debut next year. What impact will this new fresh foods-focused format have on the marketplace?
Todd Hale: “With Tesco moving into the West Coast, I think it’s a real opportunity to maybe even take some business away from fast-food restaurants.”
We drew the information for our Retail Channel Handbook from numerous sources, including retailers and vendors. The following is a list of sources from the consultant community with contact information for those who have follow-up queries.
Tom Aquilina, President
Aquilina and AssociatesCrystal Lake, Ill.
David Bishop, Vice President
Willard Bishop Consulting
Frank Dell, CEO
Dellmart & Company
David Fields, Managing Director
Ascendant Consulting LLC
Todd Hale, Senior Vice President, Consumer and Shopper Insights
John Matthews, President
Gray Cat Enterprises Inc.
North Barrington, Ill.
Sheila McCusker, Editor, IRI Times and Trends
Information Resources Inc.
Steven Montgomery, President
B2b Solutions LLC
Lake Forest, Ill.
Anthony Raissen, President
Barry Seifer, Principal of Strategy
Cubellis Marco Retail Design