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?

 

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 :

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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