Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- The bottom line
- Mass merchandisers are fueling growth in retail sales, and economic conditions indicate consumers will continue to favor these retailers
- Competitive context
- Wal-Mart excels by offering the lowest prices
- Target emphasizes style and low prices
- Kmart rebuilding customer base and image
- Costco, mass merchandiser of the affluent
- Sam’s Club, the everyman’s warehouse club
- Brand qualities
- Custom consumer groups
Insights and Opportunities
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- Exceptional food/beverage and medicine prices are key decision-making criteria
- Maintain clean, easy-to-navigate store layouts
- Use fun, interactive displays to communicate the value of products
- Connect with local communities
- Embrace sustainability in all phases of the business
- Show consumers how to live a sustainable lifestyle by growing food and reducing fuel use
- Fresh, premium and green: Consumers are buying the goods as well as the experiences
Fast Forward Trends
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- Over-optioned consumers
- What’s it about?
- What we’ve seen
- How does this apply to mass merchandisers?
- The paradox of choice
- Implications for the mass merchandiser segment
Market Size and Forecast
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- Key points
- Mass merchandiser sales are outpacing overall retail sales
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- Figure 1: Total U.S. sales and forecast of mass merchandisers, at current and inflation-adjusted
- Total retail sales growth has slowed over the review period
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- Figure 2: Total U.S. retail sales, at current and inflation-adjusted prices, 2003-08
- Warehouse clubs and supercenters account for the largest share of the mass merchandiser channel
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- Figure 3: Proportion of total U.S. retail sales from mass merchandisers, 2003-08
Segment Performance
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- Key points
- Sales through warehouse clubs and supercenters expected to increase by more than a third through 2008
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- Figure 4: Total U.S. sales at warehouse clubs/supercenters at current and inflation-adjusted prices, 2003-13
- Discount department stores that do not sell food are slowing overall retail sales growth rate
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- Figure 5: Total U.S. sales at discount department stores at current and inflation-adjusted prices, 2003-13
Market Background
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- Key points
- Cost of fuel is driving people into Wal-Mart and other mass merchandisers
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- Figure 6: Change in gas prices, all types and regular, 2000-08
- Increase in global demand for goods, rising fuel prices drives up CPI
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- Figure 7: Change in selected Consumer Price Indices, 2000-08
- A drop in household income is compelling people to shop more at mass merchandisers
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- Figure 8: Median household income, by race/ethnicity, 1980-2006
- Rising unemployment undermines confidence in the economy
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- Figure 9: Work force and unemployment statistics, 2000-08
Competitive Context
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- Key points
- Price, location, store cleanliness/layout – critical influencers
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- Figure 10: Primary factors that drive consumer channel decisions, agree summary by household income, May 2008
- When money is tight, the price must be right
- Location, location, location
- Store appearance is a top concern
- Customer service
- One-stop shopping
- Product mix and brand availability – secondary influencers
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- Figure 11: Secondary factors that drive consumer channel decisions, agree summary, May 2008
- Popular brands: if you stock them, customers will come
- Specialty offerings
- How green is your retailer?
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- Figure 12: Target’s Rogan clothing line television ad, 2008
- Wanted: retailers concerned about the local community
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- Figure 13: Target and the community television ad, 2008
Leading Companies
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- Key points
- Wal-Mart leads mass merchandiser category in terms of sales, but Costco the leader in sales per outlet
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- Figure 14: Sales for leading mass merchandisers, 2006/07-2007/08
- Figure 15: Number of outlets for leading mass merchandisers, 2006/07-2007/08
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- Figure 16: Sales per outlet for leading mass merchandisers, 2006/07-2007/08
- Wal-Mart dominates the channel, but Target and club stores have high appeal to affluent consumers
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- Figure 17: Mass Merchandisers shopped at during the last three months, by household income, May 2000
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- Figure 18: Mass Merchandisers shopped most often, by household income, May 2000
- Costco’s super premium offerings/Wal-Mart’s low prices to propel future growth
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- Figure 19: Whether retailers will be shopped with more, less or the same frequency in next year, May 2008
Brand Analysis—Wal-Mart
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- Key points
- Food and beverage offerings propel Wal-Mart’s dominance
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- Figure 20: Trends in departments shopped at Wal-Mart, 2003-07
- Clothing and accessories is Wal-Mart’s most commonly shopped category, but perhaps not the most lucrative
- Little difference in departments shopped at Wal-Mart by household income
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- Figure 21: Departments shopped at Wal-Mart in last three months, by household income, January-November 2007
- Wal-Mart’s personal care/household product offerings – another key to success
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- Figure 22: Whether Wal-Mart is first choice for selected product categories, May 2008
- Most influential factors for shopping at Wal-Mart shared by the average mass merchandiser shopper
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- Figure 23: Importance of factors that drive decisions of what mass merchandiser to shop at Wal-Mart only, May 2008
- Families with children represent Wal-Mart’s core customer base
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- Figure 24: Incidence of shopping Wal-Mart in last three months, by custom consumer groups, January-November 2007
- Asian respondents least likely to shop Wal-Mart
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- Figure 25: Incidence of shopping Wal-Mart in last three months, by race/ethnicity, January-November 2007
Brand Analysis—Target
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- Key points
- Target competes effectively in clothing/accessories, but incidence of key category purchases is far lower than at Wal-Mart
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- Figure 26: Trends in departments shopped at Target, 2003-07
- Target to make more room for its most lucrative categories
- More affluent Target shoppers purchase a wider range of categories
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- Figure 27: Departments shopped at Target in last three months, by household income, January-November 2007
- Target is less likely to be first choice in most categories
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- Figure 28: Whether Target is first choice for selected product categories, May 2008
- Cleanliness and layout more important to Target shoppers
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- Figure 29: Importance of factors that drive decisions of what mass merchandiser to patronize, Target only, May 2008
- Young, affluent women represent core Target shopper segments
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- Figure 30: Incidence of shopping Target in the last three months, by custom consumer groups, January-November 2007
Brand Analysis—Kmart
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- Key points
- Trends in departments shopped show little change from 2003-07
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- Figure 31: Trends in departments shopped at Kmart, 2003-07
- Departments shopped at Kmart differ notably by age
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- Figure 32: Departments shopped at in Kmart in the last three months, by age of head of household, January-November 2007
- Key consumer cohort: grandparents
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- Figure 33: Incidence of shopping Kmart in the last three months, by custom consumer groups, January-November 2007
- Even those who tend to favor Kmart over other mass merchandisers rarely cite it as a first choice retailer
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- Figure 34: Whether Kmart is first choice for selected product categories, May 2008
- Kmart falls short on key consumer measures
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- Figure 35: Importance of factors that determine Kmart as mass merchandiser of choice, May 2008
Brand Analysis—Costco
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- Key points
- Costco attracts affluent customers and performs well on premium products
- Food/drug department is where Costco excels
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- Figure 36: Trends in departments shopped at, at Costco, 2003-07
- Age plays a role in departments shopped at
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- Figure 37: Departments shopped at Costco in last three months, by age of head of household, January-November 2007
- Costco is the first choice for food/beverage among frequent shoppers
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- Figure 38: Whether Costco is first choice for selected product categories, May 2008
- Costco customers motivated by the same factors that drive competitors’ customers
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- Figure 39: Importance of factors that drive decisions to shop at Costco, May 2008
- Costco shoppers are an active and cultured group
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- Figure 40: Incidence of shopping Costco in the last three months, by custom consumer groups, January-November 2007
Brand Analysis—Sam’s Club
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- Key points
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- Figure 41: Incidence of shopping mass merchandisers in past three months, by household income, May 2008
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- Figure 42: Trends in departments shopped at, at Sam’s Club, 2003-07
- Departments shopped varies by household income
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- Figure 43: Departments shopped at Sam’s Club in last three months, by household income, January-November 2007
- Sam’s Club first choice for food for nearly half of respondents who prefer the store
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- Figure 44: Whether Sam’s Club is first choice for selected product categories, May 2008
Brand Analysis—BJ’s Wholesale Club
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- Key points
- Despite strong northeastern presence, BJ’s can still compete nationally
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- Figure 45: Incidence of shopping at BJ’s Wholesale Clubs in last three months, by region, January-November 2007
- Incidence of shopping food/drug department up since 2003
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- Figure 46: Trends in departments shopped at BJ’s Wholesale clubs, 2003-07
- Younger shoppers surprisingly more likely to visit clothing and cosmetics departments
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- Figure 47: Departments shopped at BJ’s Wholesale Club in last three months, by age of head of household, January-November 2007
Brand Analysis—Big Lots
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- Key points
- Big Lots – not your typical mass merchandiser
- Key customer base includes young adults and families with kids
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- Figure 48: Incidence of shopping Big Lots in last three months, by selected demographics, May 2008
Brand Qualities
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- Key points
- Costco’s premium store brand resonates with shoppers
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- Figure 49: Incidence of buying store brand products, May 2008
- Wal-Mart’s pitching to families creates brand affinity
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- Figure 50: Wal-Mart Graphic Tees television ad, 2007
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- Figure 51: Wal-Mart Tailgate television ad, 2008
- Wal-Mart’s green offerings create a sense of community
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- Figure 52: Wal-Mart Green television ad, 2008
- Target’s chic ads emphasize youth and energy
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- Figure 53: Target Messages television ad, 2008
- Target focuses on the “whole” consumer
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- Figure 54: Target Long Live television ad, 2008
Innovation and Innovators
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- Key points
- Wal-Mart’s sustainability mission
- Costco’s appeal to the affluent
- Wal-Mart cashes in on customers’ windfalls
- In-store media creates new opportunities to communicate value
Appendix: Other Useful Consumer Tables
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- Retailers patronized in last three months
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- Figure 55: Incidence of shopping at mass merchandisers in last three months, by selected demographics, January-November 2007
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- Figure 56: Trends in retailers shopped in last three months, 2003-07
- Repertoire of retailers shopped
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- Figure 57: Repertoire of discounters and warehouse clubs shopped at in last three months, by race/ethnicity, January-November 2007
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- Figure 58: Repertoire of discounters and warehouse clubs shopped at in last three months, by age of head of household, January-November 2007
- Retailers shopped most often
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- Figure 59: Retailers shopped most often, by household income, May 2008
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- Figure 60: Retailers shopped most often, by gender, May 2008
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- Figure 61: Retailers shopped most often, by age, May 2008
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- Figure 62: Retailers shopped most often, by race/ethnicity, May 2008
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- Figure 63: Retailers shopped most often, by region, May 2008
- Frequency of shopping selected retailers in previous four weeks
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- Figure 64: Trends in number of times discounters and warehouse clubs shopped per month, 2005-07
- Departments shopped at discounters
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- Figure 65: Departments shopped at discounters and warehouse clubs, January-November 2007
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- Figure 66: Products bought at discounters/warehouse clubs/supercenters in past three months, May 2008
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- Figure 67: Whether retailer is first choice for selected product categories, May 2008
- Importance of factors in determining which retailer to shop
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- Figure 68: Importance of factors that drive decisions of what mass merchandiser to shop at, by retailer, May 2008
Appendix: Simmons Cohorts
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- Figure 69: Married couples cohorts
- Figure 70: Single women cohorts
- Figure 71: Single men cohorts
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Appendix: Trade Associations
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