The Family Dollar Saga Part Two: Choosing The Better Suitor

InfoScout-Dollar-Stores

In Part One we showed why we believe antitrust concerns are a non-issue in the battle to acquire Family Dollar. In Part Two, we assume that both Dollar General and Dollar Tree could overcome any potential attempts by the FTC to block their acquisition of Family Dollar, and focus entirely on the question of which bid Family Dollar’s Board should support. Certainly Dollar General’s higher, all cash bid seems more attractive in terms of immediate return for Family Dollar shareholders. But which suitor would make integration easier?  Which suitor is more likely to ensure operational and financial success once the companies are combined? Again, we look to our data for answers.

Product Assortment and Pricing

Dollar Store Product Category Ranks

When we look at product assortment, Dollar General and Family Dollar have the most overlap in terms of items they sell, with a significant emphasis on grocery items such as chips, soft drinks, milk, pet food, paper products, and candy at both retailers. As we saw previously, their pricing models are also closely aligned. Dollar Tree on the other hand, depends more on party supplies and seasonal items, while sticking to the $1 price point. There is assortment overlap between Dollar Tree and Family Dollar in categories such as candy, soft drinks, paper products, and household cleaning products.

Dollar General’s wide assortment overlap with Family Dollar would give it several advantages over Dollar Tree. For one, it would potentially lead to better purchasing power with its existing vendors given the higher volumes it would be ordering. This could allow it to save costs and/or lower prices for consumers (again the FTC is going to have a tough time arguing that prices will rise for dollar store consumers!). Further, the combined Dollar General & Family Dollar supply chain would be less complicated than with Dollar Tree due to increased volumes with fewer vendors, resulting in more full truckload logistics for lower costs as well as having less dependence on hard to plan seasonal and closeout merchandise.

Lastly, if Dollar Tree wins and decides to migrate Family Dollar stores to its pricing and assortment model, that could potentially drive away existing customers or introduce operational risk at the very least. Perhaps instead, Dollar Tree sees a Family Dollar acquisition as a path to reducing its own dependence on managing constantly changing seasonal and closeout merchandise – a strategy that must be difficult to scale much further. Either way Dollar Tree seems to be at a disadvantage from a merchandising integration standpoint given its very different assortment and pricing model.

Overlapping Footprints

Geographic Overlap

As a recent Bloomberg Businessweek article points out, Dollar General and Family Dollar also share a high degree of geographic overlap. We ran our own analysis based on store zip codes and found that 65% of Family Dollar stores share their zip code with at least one Dollar General store. On the flip side, only 35% of Family Dollar stores share their zip code with a Dollar Tree store. It is to Dollar Tree’s advantage to have lower geographic overlap, because it means they will be getting access to more new territories. Of course it’s what also allows them to say that they have fewer chances to remove competition from markets they operate in after the acquisition. That all being said, even with higher existing overlap, a Dollar General-Family Dollar combo would reach 2,400 more distinct zip codes in total than a Dollar Tree-Family Dollar combo because of sheer size.

Of course what really matters is not just proximity, but the extent to which consumers already cross-shop the potentially merged retailers. As we saw in Part One, many dollar store chain shoppers tend to stick to one chain in any given month – despite shopping for groceries several times each month.  According to our data, while Dollar General and Family Dollar have significant geographic overlap, only 21% of Dollar General shoppers also shop at a Family Dollar store in a given month.

Financial Considerations

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The financial ramifications of either deal will be interesting. The goal of nearly every acquisition is to obtain synergies, both on the revenue side and the cost side. Dollar General has promised nearly double the cost synergies as Dollar Tree, with a target of $600 million by year three. Revenue synergies will be more difficult since price hikes are a non-starter for dollar stores, but perhaps synergistic promotional opportunities exist. For example the merged entity should garner more trade funds from vendors, allowing greater economies of scale to be achieved through each promotional dollar spent. By virtue of its assortment variety and different pricing model, Dollar Tree might have an edge with cross promotions across, except that it has less geographic overlap and its shoppers are less likely to also shop at Family Dollar. The Dollar General deal would lead to a combined company with a higher initial debt level of about 4.3X net debt to EBITDA (Earnings Before Interest Taxes and Depreciation & Amortization) versus roughly 3.75X with Dollar Tree.

The good news is that either Dollar Tree or Dollar General will likely bring operational efficiencies and margin enhancement to Family Dollar because both chains have higher annual revenue per store and higher operating margins than Family Dollar. That would help either combined company pay down debt faster with increased operating income. Dollar General’s commitment to sell a significant number of overlapping Family Dollar stores while shuttering significantly under-performing stores would seem to increase the likelihood of its ability to improve Family Dollar’s operating margins. In addition, our data indicates that among dollar store buyers, the dollar store channel has seen a slight “share of wallet” increase so far this year. That bodes well for all three chains.

Our Closing Thoughts

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Though it depends how you weight each decision factor, it appears the the Family Dollar board is going to have a hard time justifying its rejection of the higher Dollar General bid to its shareholders based on what we have shown here in part two of our Family Dollar Saga blog series. If you are curious to know more about what our data shows, give us a shout at contactus@infoscout.co!

The Family Dollar Saga Part One: Why Antitrust Concerns Are Overblown

Family Dollar Tug of War

There’s a fierce tug of war happening this month between Dollar General and Dollar Tree over the future of Family Dollar.  In late July, Dollar Tree announced its intention to acquire Family Dollar.  Not content to sit idly by and watch the two smaller chains combine forces, Dollar General extended a higher bid of its own for Family Dollar. Despite General’s offer being roughly $460 million richer, the Board of Directors at Family Dollar rejected the higher offer in favor of Dollar Tree’s lower offer. In doing so, Family Dollar’s Board claimed that a Dollar General-Family Dollar combination would face more significant antitrust hurdles with federal regulators. We are data geeks at heart over here at InfoScout, sitting on a treasure-trove of consumer shopping data, so we decided to put this antitrust claim to the test.

Though the official merger guidelines of the FTC are long, broad, and a better sleep inducer than a glass of warm milk, in practice antitrust concerns typically revolve around a Key Findingsfew key principles relating to “market power”. The FTC seeks to limit mergers that would enhance market power in a manner that leads to higher prices, reduced output, less innovation, or reduced service for consumers. The FTC puts particular emphasis on anticipated pricing effects, and takes a negative view of mergers that they believe will lead to higher prices.  So, how likely is it that a Dollar General acquisition of Family Dollar would lead to higher prices for consumers?

Dollars and Sense: What We Can Learn From Each Retailer’s Prices

Infoscout Dollar Store Data

Our consumer panel includes 78,957 households who have shared with us their receipts from over 470,000 shopping trips to the three major dollar store chains thus far in 2014. The first thing we looked at in our analysis was average item level pricing levels for these three major dollar chains across the country. We found that Family Dollar’s average price per item purchased was the highest, at $2.20 each. Dollar General came in next at $2.08, and finally Dollar Tree at $0.97. This isn’t too surprising given the business models of each chain, with Family Dollar and Dollar General offering plenty of merchandise above $1.00, while Dollar Tree tends to stick to the traditional dollar store model by offering a unique rotating assortment of smaller packaged items that can be offered at a price point below $1.00. Dollar General and Family Dollar carry a very similar assortment of products (as opposed to Dollar Tree), as they both sell a significant amount of grocery type consumable products. This allowed us to drill-down into specific, popular products where they overlap to compare prices. For most products, Family Dollar’s average sales prices were higher than Dollar General’s corresponding prices.  Given Dollar General’s already lower pricing, it seems unlikely that the Federal Trade Commission could successfully argue that their acquisition of Family Dollar would result in higher prices at Family Dollar stores.  If anything, we would expect Dollar General to leverage its purchasing power and economies of scale to drive down prices even further.

Dollar Store Item Pricing comparison

But what might happen if Dollar General did raise prices at Family Dollar stores after an acquisition?

Substitutes for Consumers and a Lack of Market Power

Do adequate substitutes exist for consumers?   To answer this question, we looked at both shoppers’ opinions and their actual shopping behavior, and found overwhelming support that dollar store customers have good substitutes which they are already shopping.

Family Dollar consumer survey data

When surveyed through our mobile platform, Family Dollar shoppers made it clear that low pricing is the primary reason for their patronage.  So, given Walmart’s de facto status as America’s low price leader, we then asked Family Dollar shoppers if they consider Walmart a good substitute. Over 80% of those surveyed responded that yes indeed, they consider Walmart a good substitute. In fact, less than 10% of the Family Dollar shoppers surveyed said they would be unlikely to switch to Walmart if Family Dollar raised prices. Clearly, raising prices would be a very bad strategy for Family Dollar, and would likely send a slew of their shoppers Walmart’s way.  It is interesting to note, however, that only 44% of Family Dollar shoppers consider traditional grocery stores to be a good substitute.

Dollar Store Cross Channel Shopping

Of course it’s not just what consumers say, but what they actually do that really counts. When it comes to actual shopping trip behavior, the data is even more conclusive. We studied those consumers who have shopped at dollar stores so far this year and found that in any given month, over 90% of dollar store shoppers also shopped at supercenters such as Walmart, Target, or Kmart. Dollar store buyers do not appear to have a lack of access to stores they consider substitutes. Additionally, over 90% of dollar store shoppers also visit traditional grocery stores each month. Further, we found that for dollar store shoppers specifically, dollar stores as a whole have only accounted for roughly 2.5% of their total spend on fast moving consumer goods thus far in 2014. This tiny share of wallet across the industry, combined with consumers active shopping at potential substitute stores, means that it would be very difficult for a dollar store chain to raise prices and not lose customers en masse.   Consumers, therefore, would not be trapped if prices were raised at Family Dollar.

dollar_store_vists

Interestingly, although dollar store customers cross shop other mass and grocery retailers, most do not typically shop at more than one dollar store in a given month. Close to 80% of the shoppers at these three major dollar chains only shop one of the chains in a given month. Antitrust regulators would have a difficult time arguing that merged dollar chains will have an incentive to reduce customer access by consolidating or shutting down stores. By shutting down large numbers of stores, dollar chains would be unlikely to retain affected customers, and would instead be losing them to other retailers.

Whole Foods’ 2007 acquisition of Wild Oats is a useful and comparable case study. The FTC tried to challenge that combination on the grounds that Whole Foods and Wild Oats compete in a tightly defined natural food grocer market, but ultimately lost that fight because the reality is that natural food grocers compete in a larger price competitive grocery market. Our data conclusively shows that the same factors apply to Dollar General’s bid for Family Dollar.   Simply put, the combined chains would still hold less than 4% of the US market for fast moving consumer goods – insufficient to justify an antitrust-based challenge by the FTC.

Although we find no basis for the Board of Family Dollar to reject Dollar General’s offer on the grounds that the acquisition could be blocked by the FTC for antitrust reasons, there may be other reasons why a merger with Dollar Tree could make more sense.  Which suitor should the Family Dollar board ultimately pick?  Stay tuned for Part Two where we will present more consumer insights around who’s the better business fit.

 

It Takes a Hurricane to Stop Hawaiians from Buying Fish, Pork, and Beer

As sophisticated as my Sales & Marketing Specialist job title sounds, I will forever be a simple island boy at heart. Long before I was crunching market-research numbers at InfoScout, I was a pidgin-speaking, slipper-wearing, opihi-picking kid growing up in Kauai.

Prior to Hurricane Iselle’s strike on August 7th, the last big storm to hit Hawaii was Hurricane Iniki back in 1992. I was 11 years old at the time, and while I’m able to remember really obscure details of the event (like my dad picking me up from soccer practice the day before and saying something fatherly, like, “Storm’s coming”), I don’t remember doing any stock-up shopping before the storm. Now, with data from America’s largest purchase panel at my fingertips, I decided to analyze Hawaiians shopping habits in the weeks and days leading up to Hurricane Iselle.

First, it’s helpful to understand how islanders were shopping before the preparations for Hurricane Iselle began. Would it be stereotypical to guess that three of the top categories where Hawaiians out-bought the rest of the nation were Fish, Pork, and Beer? Maybe, but check out the comparison below between the weekly grocery purchases of islanders versus the rest of America.

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Not surprisingly, the Pork and Fish categories saw some of the most significant declines (39% and 35% respectively) in the final days before Iselle as shoppers shifted their attention and wallets toward emergency preparation. Beer saw only an 11% decline because, you know, necessities. What did increase, however, was the percentage of Hawaiian households purchasing Water, more than doubling in the week before the storm. As the hurricane drew nearer, islanders also out-bought mainlanders in what are typically camping-related product categories such as Batteries, Paper & Plastic goods, and Sports Drinks.

consumption_versos_rest_of_usa

I’ve always told friends how Costco has changed the dynamic of the Hawaiian potluck (what with their fancy pop-in-the-oven-for-immediate-deliciousness items). The massive store chain has always been a go-to locale for stock up trips, outshining every other retailer in terms of amount spent per shopping trip. Though most retailers saw increases in spend per shopping trip just prior to Iselle, Costco’s shoppers opened up their wallets the most, with average trip spending increasing by nearly $18 there. Costco’s dominance as a stock up destination for its shoppers was even more evident just prior to the hurricane.

Spend Per Shopping Trip by Retailer

 

In 1992, I didn’t fully grasp the magnitude of the storm’s destruction, but as the hurricane left the island without electricity, I was really excited to have an excuse to use a battery-powered flashlight every night. Prior to Iselle’s strike last month, Duracell and Energizer basically split the lead for share of Hawaii’s Battery dollars, but in the final days before the storm, Duracell decisively decimated its competition. The numbers in this section are even more impressive than the alliteration.

 

DuracellStorm

 

What drove shoppers to purchase Duracell so heavily in the final seven days before Hurricane Iselle? Does Duracell’s recent “Storm” TV campaign deserve the credit? Or, how about their in-store “Be Prepared” displays? Was it the TPR promotion Duracell was running at a couple key retailers that made all the difference? And how many questions can you ask in a row before losing the attention of your audience? While we can’t answer that last question, the team at InfoScout can help you answer all the others and more through our unique combination of consumer panel purchases and associated shopper surveys. And, if you’re still reading, we’d welcome your comments and questions at contactus@infoscout.co!

Cruel Summer

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Summer is in full swing, and in this new, warmer season, most of us would care to shed not just a few layers of clothing, but also a few pounds. Thus begins the inevitable annual fitness battle against inertia and bad habits…all for the sake of the desirable ‘bikini body’ (and the male equivalent!).

84% of Americans surveyed by InfoScout stated they wanted to lose weight or get in shape for the summer. Yet 67% also said they don’t get enough exercise. If only someone could wave a wand and allow us to get fit without all that excruciating effort!

No pain, no gain…

The simple truth is that most Americans plan to lose weight through a tried and true formula of more exercise (81%), healthier eating (68%), and nutritional supplements (16%).

In terms of exercise, women were much more likely to favor walking (49% of surveyed women vs. 35% of men) while men were more likely to favor weightlifting (26% vs. 9% of women).

You are what you eat…

In terms of supplements…not surprisingly, when we investigated sales among InfoScout shopper panelists, we also found that weight/fat loss products peak in sales dollar volume from January through June in the run-up to summer (and quickly trails off after that).

supplements

This makes sense given typically different fitness goals of weight/fat loss (70% of women vs. 58% of men) and muscle building (3% of women vs. 16% of men).

supplement_most_prefer

On store shelves in time for the summer

We’re also keeping our eye on several new ‘healthy’ snacks that recently launched.  We invited InfoScout panelists who had tried the products to rate them, including:

shakes

Are we in the midst of a gummy supplement bubble?

Lastly, according to a study of transaction data from InfoScout’s panelist shopper database, sales of adult gummy and chewable nutritional supplements grew 4.5x faster than the nutritional supplements category in January, February, and March 2014, suggesting adults are increasingly embracing their inner child.  To dig deeper into the data, InfoScout surveyed consumers and asked respondents their preferred format for taking nutritional supplements. Most respondents stated they preferred their supplements in capsule form (28%), although chewable gummies and candies ranked second most popular (20%), beating out bars, cookies, gels, powders, and ready-to-drink items. Once a bribe to entice kids, gummy vitamins have taken off with sweet-toothed adults.

The trend is picking up steam. Even Martha Stewart, who was always best known for cooking and crafts, has jumped into the market. Around June 2014, she launched a new line of Martha Stewart gummy supplements, which included an email blast with the following announcement:

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http://www.marthastewartessentials.com/shop/martha-stewart-essentials-vegetarian-gummies/

InfoScout Closes $16 Million Series B Funding

InfoScout Closes $16 Million Series B Funding

 Bain Capital Ventures and Multiple Strategic Investors Fuel Growth of America’s Largest Consumer Panel and Fund Expansion Abroad with the Acquisition of Out of Milk. 

SAN FRANCISCO, June 19th, 2014 - InfoScout, a mobile-powered retail market research provider, today announced that it has closed a $16-million round of Series B financing. The round includes participation from Bain Capital Ventures who led InfoScout’s Series A, as well as Horizon Partners, MHS Capital and multiple strategic investors.  To date, InfoScout has raised $21 million.

The company will use the infusion of capital to grow America’s largest consumer panel to one-million participants and expand into key international markets through the acquisition of the world’s most-used and top-rated shopping list app, Out of Milk.  The app has nearly one million active users who add 12 million items to their shopping lists every month, thus expressing their purchase intent before they go shopping.

“InfoScout has created fun and rewarding smartphone apps that incentivize shoppers to take pictures of their itemized receipts, and we now capture over 50,000 grocery shopping trips daily – more than five times the next largest all-retailer consumer panel,” said Jared Schrieber, InfoScout CEO.  “Now, with the addition of Out of Milk and a powder-keg of capital, we’re prepared to fuel the next phase of explosive growth in our panel and expand the types of data and survey responses these shoppers share along their daily path-to-purchase.”

Since launching its real-time shopper insights solutions in October 2013, InfoScout has experienced incredible momentum, and the company’s client list now reads like the who’s who of the consumer goods industry:  Procter & Gamble, Anheuser-Busch, Unilever, PepsiCo, Kraft, Nestle, and others.  These clients leverage InfoScout’s path-to-purchase insights to guide brand innovation efforts, optimize their marketing mix during new product launches, and course-correct major promotional campaigns as they happen.

“The InfoScout team has the technical ability, vision and execution required to change the way consumer data fuels the retail experience,” said Ajay Agarwal, managing director at Bain Capital Ventures and InfoScout board member. “We’ve believed in their vision since the very beginning, and the users, insights and momentum they’ve built over the last year has been unprecedented. We’re excited to work with the team as they continue on their phenomenal trajectory.”

Want to see the data in action?   Visit InfoScout’s free grocery brand and retailer dashboards for insights at InfoScout.co.

InfoScout Dashboard

 

About InfoScout

InfoScout’s real-time shopper insights make brands better marketers by providing the industry’s largest, richest and most actionable source of household purchase information across all retailers at the item-level.  The company’s proprietary consumer panel, launched in the summer of 2012, is designed from the ground-up to provide marketers with a broader and more representative ‘mini-America’ while enabling deeper dives into specific subsets of the population than traditional panels support. Leading consumer goods companies such as Procter & Gamble, Anheuser-Busch, PepsiCo & Unilever leverage InfoScout’s data and analytics to monitor changes in shopper behavior and better understand the ‘why behind the buy.’

 

Media Contact

Cristin Zweig

619-865-7019

Cristin@infoscout.co

Healthy Eating Is Not A SNAP

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The White House and USDA are strong advocates of healthy eating, providing U.S. citizens guidance on how to achieve balanced nutrition on a reasonable budget. But is the federal government’s food assistance program able to help those most in need meet its own recommendations? In light of the recent changes to the Supplemental Nutrition Assistance Program (SNAP), the team at InfoScout wanted to find out.

In 2013, SNAP – also known as food stamps – provided an average monthly benefit of $133 per person and $275 per household in 2013, reaching 48 million people across 23 million households. SNAP benefits were decreased by about $10 per month per person in November 2013, reducing the maximum benefit to $189 per individual. Given this reduction in benefits, we decided to explore the extent to which beneficiaries of the program could eat healthily on the reduced budget of $189. Let’s find out.

The USDA’s ChooseMyPlate.gov website provides a plethora of information for a healthy lifestyle, from weight management and physical activity tools and guidelines to tips for eating healthy when eating out. The site showcases various cookbooks including a 7-day meal plan that meets a recommended 2000-calorie diet with the right balance of food groups and nutrient intake, all at a “moderate cost”.

healthy_eating_menu

So we try to answer the question: can an individual relying solely on government benefits afford to follow the government’s recommendations regarding a balanced diet?

Over the past two years, InfoScout has established America’s largest and richest source of household purchases across all retailers at the item level. With this data we are able to dig into real-world food spending patterns to find out.

We began by looking at each recipe and its ingredients within the USDA’s 7-day meal plan. We took each ingredient from the USDA recommended menu and paired it with the top-selling product corresponding to that ingredient from our InfoScout database, where we’re able to see per-basket SNAP purchases. Factoring in the packaging sizes and prices per serving of each ingredient, we calculated the price of each meal.

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We found that a single adult following the USDA recommended 2000-calorie diet would spend nearly $8 per day, or $240 per month at current food prices. That’s $51 more per month than the maximum benefit allowable under the SNAP program. Put in practical terms, this means that even with a perfectly-planned and executed grocery budget, a SNAP recipient would only be able to feed themselves until the 24th day of the month, and run out of financial support before dinner.

healthy_eating_cal

This gap becomes even more prominent as the household size grows. For each additional household member, the incremental allotment decreases. So while an individual can get $189 each month, a household of two gets $347, or $173.50 each. As these per-person benefits decrease, the cost of feeding each person remains the same. So as you can see, that gap grows tremendously as the need increases.

As the household size grows, so does the gap between the home's benefits and its food expenses.

With healthy diets clearly so far out of reach for the 47 million Americans relying on the government for support, it is no surprise that those in the lower income brackets turn to higher-calorie, though often nutritionally-poor, meals. We found that, compared to high-income consumers, lower-income Americans have a 30% shift in their food expenditures towards snack foods (like potato chips, cookies, and candy) and away from nutritional foods (like yogurt, fruits, and vegetables). While the USDA-suggested diet clocks in at about 247 calories per dollar, our study of the most purchased snack foods yielded an average of 672 calories per dollar, with popular brands of chips leading the pack at an incredibly efficient 752 calories per dollar.

Calorie counting doesn’t stop at the grocery store, especially with more and more fast-food chains accepting food stamps. A quick study of Burger King, KFC, and Subway, where a standard meal-deal includes an burger or sandwich, side of fries or chips, and a soda yielded an average price of around 250 calories per dollar – effectively the same cost per calorie as the buying groceries to follow the USDA suggested meal plan. And since fast food doesn’t require any meal-planning, grocery-shopping, or cooking, it’s unsurprising that low-income consumers often prefer a meal on-demand. The problem, of course, is that a fast food diet can easily result in 230% excess fat and 370% more sodium than recommended, all while offering fewer key nutrients.

Moreover, low-income consumers can stretch their food budgets further with choices like McDonald’s McDouble sandwich which packs 390 calories for just $1 – that’s 58% more calories per dollar than buying healthy foods at a grocery store. If a person could live off McDouble’s alone (not that anyone is suggesting that’s a good idea), they’d save $90 per month compared to a healthy diet of home-cooked meals and be able to feed themselves via food stamps throughout the entire month.

Whether it’s the relatively cheap meals on-demand offered by quick service restaurants or the low-cost calories of snack foods like potato chips, we should not be surprised to know that lower income Americans (especially women) are more likely to be overweight or obese while also experiencing poorer health and shorter lifespans. With the rapid rise from 11% of American households receiving support from the SNAP in 2008 to 20% of households in 2013, at a cost of nearly $80 billion, it’s no wonder that the programs merits and funding have been hotly debated in Congress. At InfoScout, our intent is not to fuel the debate as to whether SNAP funding should be increased or decreased to support more or fewer participants. Instead, we believe the data begs for further debate over fundamental policy questions such as:

~ Should SNAP offer greater incentives towards purchases of healthy foods such as fruits and vegetables to help improve the healthy outcomes that everyone desires from such a program?

~ Should the Supplemental Nutrition Assistance Program even allow the purchases of junk foods and fast foods that fail to meet basic nutritional standards? (Especially considering the fact that these foods offer lower costs per calorie to those Americans who can’t afford to follow a healthy meal plan.)

~ How should we prioritize healthy eating amid a growing base of people relying on federal support, and the associated growing costs?

In the meantime, we welcome your thoughts and feedback as we continue to study real-world purchasing behavior.

Will the Winter Olympics help Advertisers?

Let the games begin! As the 22nd Winter Olympics kick off in Sochi, we at InfoScout want to understand how the Olympics can impact sales.

Right now, athletes and spectators are gearing up for the competition on the field while advertisers are holding a competition of their own. This competition is for share of your mind and it’s been brewing for years. We asked our highly engaged panel of U.S. shoppers about their interest in the Winter Olympics just before Opening Ceremonies. Some of what they told us bodes well for the Olympic games, however, shoppers may not be as likely to convert this interest into sales for the largest advertisers.

Three-fourths of shoppers indicated that they plan to watch or follow the Olympics. The vast majority (95%) indicated that TV is one way they will follow the Games. Internet News and Social Media follow closely behind and are likely to be the first sources of information that viewers turn to for the latest on Team USA. Let’s hope that advertisers have shifted a large portion of their Olympics ad dollars to new media.

chartupdate

Just over 40% of viewers indicate a high level of interest in the Olympics; the majority may just catch a few highlights here and there. If you are wondering which events will be followed most, that title goes to Figure Skating.

Winter Olympics 2014 Interest and Top Events

Unfortunately, the only thing that shoppers seem to care about is Team USA and not the major sponsors behind them. Only 13% of shoppers indicated that they would be more likely to buy products from Olympics sponsors versus companies that do not sponsor the Olympics.

olympics_purchase

Though the games have just begun, already there are some clear winners emerging from our pre-Opening Ceremony survey. Looking at our Worldwide Sponsor Leaderboard, it looks 40% have already seen Coca-Cola or McDonalds ads, however “None of the Above” is surprisingly taking the Bronze ahead of P&G and Visa.

Winter Olympics 2014 Recall seeing ads from these sponsors

Look for a follow up with actual purchase behavior of our panelists, including how the Olympics is driving share of wallet for the big global sponsors.

Survey Details: 500 InfoScout panelists were given a smartphone-based survey starting on Feb 6th. All 500 responses were obtained in 48hrs.

Walmart’s Millennial Problem: 5 Reasons Dollar Stores are Beating the World’s Largest Retailer

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It’s no secret that Millennials’ widespread adoption of technology has helped transform many industries. Their use of social media has shifted how we communicate, their adoption of smartphones has changed how we shop, and their use of taxicab replacements like Uber and Lyft is altering how we get around. Even Walmart’s tried and true grocery business has not been spared. As Millennials enter their 30s, they are beginning to influence a grocery sector traditionally dominated by multi-person households. 3 factors are driving this:

  1.  The Millennials (born between the early 1980s and 2000s), at 78 MM, are the largest U.S. demographic group today
  2.  As shoppers, Millennials favor convenience and wear their ideals on their sleeves
  3.  Due to societal trends and poor job prospects, Millennials are delaying marriage and family formation

From 2007 to 2012, the percentage of young Americans who are married fell from 30% to 25%.  As Millennials wait to marry and have kids, their grocery behavior deviates from those of past generations. A single-person household has fewer needs than a full family, and thus purchases a smaller quantity of products in a given week. As a consequence, single Millennials can complete their grocery trips more quickly than someone stocking the pantry for an entire family. So why would a Millennial spend close to an hour pushing a cart around a giant Walmart store when he or she can get in and out of a smaller dollar store in half an hour or less? Using InfoScout’s database of U.S. grocery shopping behavior, we determined this is more or less exactly how consumers shop at Walmart and dollar stores. For example, at Walmart, the average basket is 13.5 items while at Dollar General, it’s only 6.3. We also studied where else Walmart shoppers bought groceries in the first half of 2013, discovering that more than 1-in-4 started spending relatively less at Walmart and more at dollar stores over time. Who are these dollar store ‘converts’?

  •  Lower income: 50% earn less than $60K per year
  •  Unemployed: almost 2x as likely to be unemployed
  •  Young: 43% are between age 21 and 34

By means of InfoScout survey data, we also identified the top reasons these customers are leaving Walmart for dollar stores:


spending#1 Consumers are having a hard time making ends meet:
31% of dollar store ‘converts’ either lost a job or had hours reduced within the last 6 months

#2 Their grocery budgets are falling: 37% of dollar store converts decreased their grocery budget over the last 6 months

#3 The Walmart brand doesn’t resonate: converts are 2.5x as likely to complain about the Walmart brand

#4 Dollar stores expanding and getting closer to Walmart’s customers: Family Dollar, Dollar General, and others opened hundreds of new stores in 2013.  24% of converts had a new dollar store open nearby within the last 6 months (often within walking distance, important to Millennials who are less likely to have a car compared to earlier generations at the same age)

#5 Shopping at Walmart isn’t convenient, especially for quick trips: 24% of dollar store converts say Walmart stores are inconvenient, too big, or confusing to navigate.  In addition, 77% dollar store shoppers name location and convenience as the primary reason why they shop at dollar stores versus just 60% for Walmart.

 

This trend is not limited to Walmart – So what can retailers and brand marketers do?

  • Offer great prices on the products that matter most to this segment
  • Invest in new smaller-footprint store formats, and make it easier to get in and out quickly
  • Reach Millennials where they spend their time (online and social media), support causes Millennials care about, offer innovative products to save them time, and reward them for their loyalty

Now what Millennial wouldn’t take interest in that?

 

Want to know what everyone else got for Christmas?

This holiday season, InfoScout tracked the item-level purchases of 125,000 panelists across all brick-and-mortar retailers to identify this year’s biggest winners and losers.  It’s no surprise that those products dominating the sales activity on Black Friday continued to sell well through Christmas.

As mentioned in our previous posts, this year’s top gift was the Apple iPad mini 16GB and the top game console (and second highest grossing product) was the XBOX ONE.  As a direct result, the biggest losers were Android & Microsoft Tablets as well as Sony’s PlayStation 4 which sold well in November, but also sold out before the holiday season.  The year’s biggest surprise goes to Beats by Dr. Dre coming it at #6 with its premium headphones.

Top 15 Holiday Gifts in 2013

 

* Sales Rank based on gross sales in dollars from Thanksgiving Day through Christmas Eve 2013.

InfoScout’s Black Friday Breakdown

It’s been an insightful couple of days here at InfoScout as we monitored & analyzed Black Friday activity in real-time.  With over 100,000 shopping trips captured from our panel of 125,000+ Americans, we had plenty of item-level purchase data to answer some of the most pressing Black Friday shopping questions. By tracking retailer performance, top products purchased & consumer sentiment throughout the day, we found a couple of nuggets worth bubbling up.

So to wrap up the Black Friday shopping frenzy, we’ve created a high-level summary of key findings & insight :

backfridayinfographic_v6-01-01

 

Interested in learning more? Explore our in-depth blog posts deep-diving into consoles, top 20 purchases at Walmart, sources  of iPad purchases, and more.

For more information about how InfoScout captures data & our methodologies, checkout www.infoscout.co/data