According to IRI, the big gains made by supercenters last year -- as commodity and fuel costs drove consumer goods prices up then the economic tumble drove incomes down -- have moderated. In the meantime, consumers have settled into new purchasing routines.
The trends evolving arise from consumer behavior and retailer response, and it seems as if the grocery sector, where widespread price cutting and concurrent private label expansion have taken hold among major chains, has turned a corner after multi-year share losses, IRI noted. Still while the grocery store sector managed a slight share increase, supercenters, clubs and dollar stores also secured a slightly larger portion of the consumer product spend. Most of the gains came at the expense of the mass-merchandise â€" or the discount store -- sector, yet, given the Wal-Mart shift to supercenter operations, that's hardly surprising. In fact, as Target shifts its business from mass-merchandise to what are essentially mini supercenter operations, the trend should become more pronounced.
IRI stated that detailed analysis of what's happening behind the macro-trends in retailing reveals other, critical changes that are occurring. For one, supercenters' continuing expansion of meal-related categories is gaining the favor of consumers and suggests they are winning the battle as to which sector will be the main shopping destination for grocery purchasers. IRI said supercenters advanced 1.5 percent in dollar share of refrigerated entrees, for example, in 2009 versus 2008 even as grocery stores lost 0.8 percent. However, it isn't just the numbers that suggest the supercenter approach to the market will hold consumers in the post-recessionary environment. IRI notes that the shift among supermarket operators such as Stop & Shop and Wegmans â€" and more recently Supervalu â€" to something closer to Wal-Mart-style everyday low prices indicates that those companies recognize a need to make fundamental changes to compete in the long run.
Additionally, drug chains are becoming bigger players in beauty care, which may reflect a recessionary shift that plays on factors already in the market, including the upgrades the drug chains have been making to those operations over the past decade. Also, convenience plays a roll. Supermarkets are losing share in beauty while warehouse clubs are struggling to hold on to it. In the recession, shoppers are making smaller beauty care purchases more frequently, IRI notes, and drug chains, providing more, better product at good prices, have gained their favor. Convincing consumers to make bigger purchases, in terms of both package and dollars, in the recovery when they know they can make a quick trip to the corner drug store and get a price they like may be a hard task for supermarkets and warehouse clubs, IRI suggests.