Abstract
This report provides a consumer-centric analysis of the mass merchandise channel. The focus is primarily upon supercenters (i.e., discount retailers who sell a wide variety of goods, including perishable foods) and club stores, which provide discounted rates on bulk items to customers who have paid a membership fee.
The discussion begins with an analysis of how macro-level economic factors such as the rising unemployment rate and faltering consumer confidence are serving to drive increasingly frugal customers into discount stores. Specifically, the report addresses the following questions:
- What decision making criteria commonly influence consumer decisions about where to shop?
- What is the influence of price and location compared to other factors such as the retailer' s commitment to sustainability or the local community?
- How is the demographic composition of club store shoppers similar to or distinct from that of supercenters?
- Which mass merchandisers do the affluent shop at and why?
- What categories have the greatest influence on decisions of which mass merchandiser to shop at?
Table of Contents
- Scope and Themes
- What you need to know
- Definition
- Data sources
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
- Executive Summary
- 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
- Market Size and Forecast
- Key points
- Mass merchandiser sales are outpacing overall retail sales
- 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
- 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
- Figure 3: Proportion of total U.S. retail sales from mass merchandisers,
2003-08
- Segment Performance
- Key points
- Sales through warehouse clubs and supercenters expected to increase by
more than a third through 2008
- 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
- Figure 5: Total U.S. sales at discount department stores at current and
inflation-adjusted prices, 2003-13
- Market Background
- Key points
- Cost of fuel is driving people into Wal-Mart and other mass merchandisers
- Figure 6: Change in gas prices, all types and regular, 2000-08
- Increase in global demand for goods, rising fuel prices drives up CPI
- Figure 7: Change in selected Consumer Price Indices, 2000-08
- A drop in household income is compelling people to shop more at mass
merchandisers
- Figure 8: Median household income, by race/ethnicity, 1980-2006
- Rising unemployment undermines confidence in the economy
- Figure 9: Work force and unemployment statistics, 2000-08
- Competitive Context
- Key points
- Price, location, store cleanliness/layout -- critical influencers
- 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
- 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?
- Figure 12: Target' s Rogan clothing line television ad, 2008
- Wanted: retailers concerned about the local community
- Figure 13: Target and the community television ad, 2008
- Leading Companies
- Key points
- Wal-Mart leads mass merchandiser category in terms of sales, but Costco
the leader in sales per outlet
- Figure 14: Sales for leading mass merchandisers, 2006/07-2007/08
- Figure 15: Number of outlets for leading mass merchandisers,
2006/07-2007/08
- 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
- Figure 17: Mass Merchandisers shopped at during the last three months,
by household income, May 2000
- 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
- Figure 19: Whether retailers will be shopped with more, less or the same
frequency in next year, May 2008
- Brand Analysis--Wal-Mart
- Key points
- Food and beverage offerings propel Wal-Mart' s dominance
- 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
- 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
- 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
- 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
- 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
- Figure 25: Incidence of shopping Wal-Mart in last three months, by
race/ethnicity, January-November 2007
- Brand Analysis--Target
- Key points
- Target competes effectively in clothing/accessories, but incidence of key
category purchases is far lower than at Wal-Mart
- 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
- 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
- Figure 28: Whether Target is first choice for selected product
categories, May 2008
- Cleanliness and layout more important to Target shoppers
- 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
- Figure 30: Incidence of shopping Target in the last three months, by
custom consumer groups, January-November 2007
- Brand Analysis--Kmart
- Key points
- Trends in departments shopped show little change from 2003-07
- Figure 31: Trends in departments shopped at Kmart, 2003-07
- Departments shopped at Kmart differ notably by age
- 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
- 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
- Figure 34: Whether Kmart is first choice for selected product
categories, May 2008
- Kmart falls short on key consumer measures
- Figure 35: Importance of factors that determine Kmart as mass
merchandiser of choice, May 2008
- Brand Analysis--Costco
- Key points
- Costco attracts affluent customers and performs well on premium products
- Food/drug department is where Costco excels
- Figure 36: Trends in departments shopped at, at Costco, 2003-07
- Age plays a role in departments shopped at
- 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
- Figure 38: Whether Costco is first choice for selected product
categories, May 2008
- Costco customers motivated by the same factors that drive competitors'
customers
- Figure 39: Importance of factors that drive decisions to shop at Costco,
May 2008
- Costco shoppers are an active and cultured group
- Figure 40: Incidence of shopping Costco in the last three months, by
custom consumer groups, January-November 2007
- Brand Analysis--Sam' s Club
- Key points
- Figure 41: Incidence of shopping mass merchandisers in past three
months, by household income, May 2008
- Figure 42: Trends in departments shopped at, at Sam' s Club, 2003-07
- Departments shopped varies by household income
- 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
- Figure 44: Whether Sam' s Club is first choice for selected product
categories, May 2008
- Brand Analysis--BJ' s Wholesale Club
- Key points
- Despite strong northeastern presence, BJ' s can still compete nationally
- 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
- Figure 46: Trends in departments shopped at BJ' s Wholesale clubs, 2003-07
- Younger shoppers surprisingly more likely to visit clothing and cosmetics
departments
- 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
- Key points
- Big Lots -- not your typical mass merchandiser
- Key customer base includes young adults and families with kids
- Figure 48: Incidence of shopping Big Lots in last three months, by
selected demographics, May 2008
- Brand Qualities
- Key points
- Costco' s premium store brand resonates with shoppers
- Figure 49: Incidence of buying store brand products, May 2008
- Wal-Mart' s pitching to families creates brand affinity
- Figure 50: Wal-Mart Graphic Tees television ad, 2007
- Figure 51: Wal-Mart Tailgate television ad, 2008
- Wal-Mart' s green offerings create a sense of community
- Figure 52: Wal-Mart Green television ad, 2008
- Target' s chic ads emphasize youth and energy
- Figure 53: Target Messages television ad, 2008
- Target focuses on the "whole" consumer
- Figure 54: Target Long Live television ad, 2008
- Innovation and Innovators
- 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
- Retailers patronized in last three months
- Figure 55: Incidence of shopping at mass merchandisers in last three
months, by selected demographics, January-November 2007
- Figure 56: Trends in retailers shopped in last three months, 2003-07
- Repertoire of retailers shopped
- Figure 57: Repertoire of discounters and warehouse clubs shopped at in
last three months, by race/ethnicity, January-November 2007
- 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
- Figure 59: Retailers shopped most often, by household income, May 2008
- Figure 60: Retailers shopped most often, by gender, May 2008
- Figure 61: Retailers shopped most often, by age, May 2008
- Figure 62: Retailers shopped most often, by race/ethnicity, May 2008
- Figure 63: Retailers shopped most often, by region, May 2008
- Frequency of shopping selected retailers in previous four weeks
- Figure 64: Trends in number of times discounters and warehouse clubs
shopped per month, 2005-07
- Departments shopped at discounters
- Figure 65: Departments shopped at discounters and warehouse clubs,
January-November 2007
- Figure 66: Products bought at discounters/warehouse clubs/supercenters
in past three months, May 2008
- Figure 67: Whether retailer is first choice for selected product
categories, May 2008
- Importance of factors in determining which retailer to shop
- Figure 68: Importance of factors that drive decisions of what mass
merchandiser to shop at, by retailer, May 2008
- Appendix: Simmons Cohorts
- Figure 69: Married couples cohorts
- Figure 70: Single women cohorts
- Figure 71: Single men cohorts
- Appendix: Trade Associations
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