The Checkout 4.10 - Shopping List Issue

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Issue 4.10 powered by The Integer Group® and M/A/R/C® Research

ISSUE 4.10 | SHOPPING LISTS

• Two out of three shoppers regularly shop without a list

• The person making the shopping list and the shopper are not always one and the same

• Shoppers have signifi cantly disparate levels of receptivity when it comes to media infl uence on the shopping list

• Having a shopping list doesn’t prevent most shoppers from making impulse purchases

Continued recessionary conditions have prompted shoppers to develop various coping mechanisms to stretch the family budget. These new behaviors af-fect the way they become aware, research, plan, and ultimately shop for groceries and CPG products. Not surprisingly, these changes in behavior are largely focused in the Pre-TailTM phase of the shopping pro-cess.

This issue of The Checkout examines the shopping list and its role in guiding the shopper throughout the Shopper ContinuumTM (page 8). As a shopping aid, lists have been traditionally used to rein in impulse purchas-es, navigate the store, and keep household spending under control. But, given the increased pressure of a prolonged recession, are modern shoppers still using shopping lists the same way?

Shopping lists: How shoppers are using traditional tools in the new economy

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The focal point of product decision-making is gradually shifting from store to home

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!ITS NO SURPRISE THAT THE ECONOMY HAS CHANGED THE WAY PEOPLE SHOP

PEOPLE ARE DEVELOPING MONEY-SAVING BEHAVIORS TO STRETCH THEIR BUDGETS

MOST OF WHICH INVOLVE PREPLANNING

ENTER THE

THE SHOPPING LIST

Despite a slight uptick in leading economic indicators, residual economic pressures on house-hold budgets and discretionary spending will most likely affect the wallets and psyches of the American shopping public for the near-term.

On the tail of the worst recession in the last 15 years, beleaguered shoppers have dramatically altered the way they consume, plan, and shop for grocer-ies and basic household goods. A prominent effect of prolonged recessionary pressures has been a shift to a home-centric and self-suffi cient lifestyle, trading nights at the movies for DVD rentals, restaurants for home cooked meals, and specialty treatments for home remedies. From the kitchen and the living room to the garage and closet, brands and retailers alike are challenged with bringing consumer-driven solutions to micro-economic realities. The prevailing shopper mind-set has shifted to one of conservation and retrenchment, exemplifi ed by a greater emphasis on premeditated shopping behaviors and increased in-volvement in channel, retail, and at-shelf decision-making. The most signifi cant change is that households are making more shopping decisions at home. For

retailers and brands, the question is: Where is the critical point where the consumer becomes a shopper and is most receptive to a marketing message?

The First Moment of Truth (FMOT), a term originally coined by Procter & Gamble, is defi ned as the critical three-second decision interval where shoppers are exposed to brand messaging and can potentially be converted from a shopper to a buyer. It is at this moment that shoppers consciously and unconsciously as-semble a mental consideration set of competitive and substitute products; weigh pros and cons; and suc-cumb to emotional reactions, which ultimately lead to one brand being selected over another. Given the vast amount of information available to the general public, the lines between Pre-TailTM and Retail are blurring. This, coupled with economic pressures placed on most American households, has caused a shift in aspects of decision-making from store to home. Many marketers have dubbed this shift the emerging “Zero Moment of Truth.” As the decision-making process evolves, brands and retailers that decipher the emerging Zero Moment of Truth will be best positioned to reap the rewards now and, more important, when the economy recovers.

Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,203 www.shopperculture.com

Graphic 1: Segment Defi nitions

Demographic Translation

Attached Couples Married; Living together; other

Female Shoppers Gender: Female

Anglo America Ethnicity: Caucasian

Focused Boomers Age: 46 - 64

Generation X Age: 39 - 49

Hispanic Thrivers Ethnicity: Hispanic/Latino

Unattached Singles Status: Single, divorced, widowed

Networked Millennials Age: 18 - 24


For one out of four men, shopping and list-making duties are split

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1 in 4The number of men who shop off a list made by someone else

In-store marketing takes the leadPenetration of the shopping list is fairly substantial, with 43% of general market shoppers reporting that they “always” rely on a shopping list. Still, more than half of consumers (57%) are shopping-list-free at least some of the time making impulse buy-ing and in-store promotion a larger part of the buying decision. Though it’s good for shoppers, list usage can potentially have negative effects on retailers and brands by limiting time in store, reducing exposure to in-store marketing materials, the number of items in the basket per trip, and the number of shopping trips– especially the one-bag or impulse-trip types. However, some retailers, such as Whole Foods, have responded in clever ways by supporting shoppers’ use of lists via digital applica-tions that provide recipe-driven ingredient lists, in-store specials, and coupon support, which serve to guide shoppers through the store and extend the amount of time they spend there.

Men “fl ying blind” more often Though in many instances, the shop-per and list-maker are one and the same, when it comes to attached male shoppers, there is a slight dis-parity. Nearly one out of four (23%) male shoppers report that while they are the primary grocery shopper, they are not the primary grocery shop-ping list maker as shown in graphic 3 (right). For retailers and brand manu-facturers alike, this highlights one of the main tenets of shopper market-ing–having a clear understanding of the differences between the shopper and the consumer–indicating that male

Source: The Integer Group | M/A/R/C Research 2010 March Checkout Study N = 1,203 www.shopperculture.com * Statistical signifi cance indicated by outline

Graphic 2: How Often Shoppers Use Shopping Lists [% of all shoppers]

32%

35%

37%

38%

44%

46%

46%

52%

Networked Millenials

Unattached Singles

Hispanic Thrivers

Gen X

Focused Boomers

Anglo America

Female Shoppers

Attached Couples

Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,203 www.shopperculture.com * Note: Due to rounding, percentages may not add up to 100%

Graphic 3: Mens’ Weekly Chores


The Zero Moment of Truth?

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grocery shoppers may present a greater opportunity to be infl uenced by in-store marketing ma-terials. Because two-thirds of list-makers (66%) do not record specifi c brands on their shopping lists, marketers can use this opportunity to provide assistance to male shoppers facing at-shelf confusion due to vague shopping lists written by someone else.

It is clear that lists are a popular shopping aid and that shoppers are using them to guide their predetermined purchases in store. However, to what extent are they using their lists to make brand-level decisions?

Product buy planned–brand not so muchWhen creating a shopping list, more shoppers (81%) include the type of product, and not the brand, leaving the door open for brands and retailers to drive brand switching in-store via com-pelling marketing materials at-shelf. Respondents also report that their shopping lists also typi-cally include the quantity needed (67%), but not details like the size of an item or its price. This may indicate that most price-based decisions (price and/or price-per-unit valuations) are being made at shelf. Because the majority of brand (66%) and unit size (73%) decisions are being made at shelf, there is a substantial opportunity for shopper marketing programs to persuade value-concerned shoppers to reconsider brand-name products and entice unit size trade-up in that location. This can be especially potent when considering that most name brands will be compared to their private-label counterpart a few inches away.

Brand inertia carries from home to storeWhen building their shopping lists, most shoppers (74%) are infl uenced primarily by the brand of the product currently in use. However, one in four list makers is not brand-driven and makes the decision of what goes on their shopping list based on other factors such as price, advertisement, or word-of-mouth recommenda-tion. While it is not surprising that discounting plays a signifi cant role in list development, roughly a third of all list-making shoppers are infl u-enced by recipes (34%) and product recommendations (31%) from friends and family.


Graphic 4: Details Shoppers Write on Their Lists [% of list makers]

81%

67%

34%

27%

27%

22%

Product types

Number of items

Brand names

Size of package

Store names

Prices


When it comes to list-making, shoppers are creatures of habit

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This fi nding presents retailers and brand manufacturers with yet another opportunity to en-gage shoppers with more experiential shopper marketing tools built around meal solutions and occasion-based product assortments – other than margin-eroding price promotions.

TV and Internet ads not making “the list”While the infl uence on list-making from the Internet and mobile phones is relatively small (11%) when compared to other factors, the explosive growth in shopping-list Web sites and mobile applications will have a sizeable impact on shoppers’ list-making habits in the near-term. The proliferation of mobile devices and technologies will only serve to redefi ne shopping-list making and usage as brands and retailers begin coordinating their marketing campaigns both in and out of the store–aisle-based shopping lists, anyone? Some retailers have already been making substantial headway into the list-making space, Whole Foods, Kroger, Safeway, King Soopers. Not to mention the proliferation of shopping-list Web sites like grocerywiz.com and grocerylists.org and applications such as Ziplist, GroceryIQ, and Epicurious.


0%

10%

20%

30%

40%

50%

60%

70%

80%

Female Shoppers

New Millenials

Focused Boomers

Anglo America

Attached Couples

Gen X Unattached Singles

Hispanic Thrivers

General Market

Brands in use

Coupons

Mobile/Internet

Graphic 5: Infl uence on Making the Shopping List [% of list makers]


Shopping basket bulk-up still common

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Graphic 6: Number of “Off-List” Purchases [% of list makers, per trip]

1-3 items; 61%

4-6 items; 21%

7-9 items; 5%

10 or more items; 3%

None; 10%

Despite pre-planning, most shoppers still make “off-list” purchasesIt is no surprise that when properly de-signed and executed, in-store marketing is an effective way to communicate with the shopper and drive incremental pur-chase. Nine out of ten shoppers routinely make impulse purchases with nearly a third (30%) adding four or more items to their basket per trip. The magnitude of the implication is tremendous, consider-ing that the average shopper makes 6.9 grocery-shopping trips per month and that most large-format grocers only real-ize meaningful economic benefi t when consumers make three or more addi-tional purchases. For a leading retailer like Safeway, getting an additional 10% of existing shoppers to add three more items could amount to more than $1.5 billion in banner sales a year.

The shopping list is not a barrier to impulse purchasesShoppers were most often (78%) driven to make “off-list” purchases by sales, indicating that the old adage of “priced too low to resist” is even more relevant in today’s economic environment. However, even the staunchest of penny pinchers were receptive to in-store marketing efforts with nearly a fourth of all shoppers citing that their purchase was driven by something they saw or read at-shelf. The visual appeal for 17% of shoppers was rooted in fun and/or attractive packaging and signage. In

terms of effective messaging platforms, communications playing to entitlement and pampering drove three out of ten shoppers to make an impulse purchase. Interestingly, the strongest factors linked to off-list purchases–sales information, promotion messaging, and coupons–can be specially tailored to each shopper and delivered to digital shopping lists on mobile devices. This provides retail-ers using branded shopping lists with a way to encourage impulse shopping by promoting smarter shopping. Ultimately, the shopping list is not a barrier but an in-cremental touchpoint to promote further engagement among the retailer, brand, and shopper.Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,122 www.shopperculture.com

Graphic 7: Primary Reasons for “off list” Purchases [% of list makers]

78%

33%

28%

24%

17%

16%

7%

6%

Was on sale or special promotion

Found a good coupon for it

Wanted to pamper myself

Something on shelf convinced me

Looked fun and attractive

Thought someone else would like it (gift)

Didn't buy anything not on the list

Other


Shopper summary tables


*Per trip spend differential compared to sample average Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,203 www.shopperculture.com

Graphic 8: Data Summary by Shopper Segment Lower income

>$25k personal income/annumMillennials

18-24 years of age

DATA SHOPPER BEHAVIOR DATA SHOPPER BEHAVIOR

Shopping-list usage

Shopping-list usage slightly above average

Increased preplanning, price-watching, and shopping involvement

Shopping-list usage greatly below average

Much higher incidence of preplanning and shopping involvement

List components

Higher emphasis on package size and prices, and less on brands

Retrenchment into basics-only mode with package downsizing

Slightly higher emphasis on brand

While much more brand loyal, will remain experimental but within existing brand tiering

Influences Less brand loyalRefocus on value brands and private-label offerings

Higher influence exerted by existing brand, word-of-mouth, mobile/Internet, and TV commercials.

Social shopping and group decision-making will be bolstered by in-store usage of digital shopping aids

Off-list shopping

Significantly less impulse purchases; purchases driven by coupons with less “indulgences”

Stringent adherence to shopping list and meal planning with increased receptivity to in-store marketing vehicles

Significantly higher frequency of impulse purchasing, but less items per trip; driven largely by attractive packaging and at-shelf messaging

Emphasis on fun, and instant gratification, with higher emphasis on self-identification with brand

Shopping frequency

Lower shopping frequency but higher spend* at:Walmart: +$25.64Grocery: +$22.48C-store: +$19.12

Higher incidence of cross-channel substitution and stock-up trip types

Lower shopping frequency and spend across all channels

*Per trip spend differential compared to sample average Source: The Integer Group | M/A/R/C Research 2010 February Checkout Study N = 1,203 www.shopperculture.com

Graphic 9: Data Summary by Shopper Segment

Hispanic Boomer46-64 years of age

DATA SHOPPER BEHAVIOR DATA SHOPPER BEHAVIOR

Shopping-list usage

Shopping-list usage significantly below average

Increased in-store shopping involvement with less preplanning

Shopping-list usage on par with average

Casual usage of the shopping list with slightly higher preplanning

List components

On par with averageRetrenchment into basics-only mode with package downsizing

Slightly higher emphasis on brand, price, and retailer

Higher brand loyalty and overall shopping inertia will keep this segment stable

Influences

Greatly influenced by TV commercials, word-of-mouth, and existing brands

Slight refocus on value brands and private-label offerings

Slightly higher influence from store ad or circular

Stick with familiar brands but will seek the best price

Off-list shopping

Average impulse purchasefrequency; significantly driven by at-shelf messaging

Longer time spent in store and more frequent shopping trips will translate into even greater shopper marketing receptivity

Disciplined shopper with slightly less impulse purchasing – except when coupons are involved

Accustomed to fluctuating economic conditions less likely to trade down and more likely to buy bulk

Shopping frequency

Higher shopping frequency and greater spend* at:Club: +$53.04Drug: -$9.86

More frequent fill-in trips to mass and C-stores with much of the stock-up done at club stores

Average shopping frequency but higher spend* at:Walmart: +$45.86Grocery: +$27.39Drug: +$32.71

While slightly more prone to channel switching, bulk buying will keep much of their spending at usual retailers

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powered by The Integer Group ® and M/A/R/C ® ResearchissueIssue 4.10 powered by The Integer Group® and M/A/R/C® Research

The shopping process has changed dramatically in the last decade. Our sources of product and brand information have multiplied exponentially. We trust the opinions of complete strangers, shop online with our social network, and even become “fans” of brands. We watch commercials on YouTube®, then skip over them with TiVo® and satellite radio. We read reviews on Amazon®, then go and play with the products in-store, check in on FourSquareTM, take a vote of Face-book® friends, buy them with our mobile phones, and then Tweet about our experiences with our friends. Where, then, is the First Moment of Truth?

The Shopper ContinuumTM is a proprietary Integer framework that helps us understand and articulate the role of communi-cation and marketing actions during three distinct phases of shopping behavior.

Pre-Tail™ includes all the actions people take when preparing to shop and se-lecting a retailer, including how we respond to all the things brands and retailers do to infl uence us.

Retail is all the activities that take place in a real or virtual retail environment. This includes the behavior of the shopper and the actions of the retailer and brands on the shelves (real or virtual).

Post-Tail™ encompasses what happens after a purchase. It includes what retailers and brands can do to reinforce and celebrate the purchase and encourage shoppers to repeat their behavior.

The Shopper ContinuumTM framework is one of the tools employed by The Integer Group to identify the questions we need to ask about our shoppers, how we go about getting those answers (the data), and then what we do to improve our strategy (the analytics).

Illustration 1.0 The Shopper ContinuumTM

Using the product

Post-Tail™ ing thg tg t Purchase

moment

Retail

Browsing, comparing,

researching and selecting

items

hrchh

Pre-Tail™

Entering a store or Web site

= points of action, behaviors

Copyright © 2010 The Integer Group

Shopper mind-sets and behaviors change along the path to purchase

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The Integer Group® is one of America’s largest promotional and retail marketing agencies and a key member of the TBWA\Marketing Services portfolio. The Integer Group resides At the Intersection of Branding and Selling® and creates strategic marketing solutions for clients in categories that include beverage, packaged goods, telecommunica-tions, fast food, home and shelter, and power sports. Join Integer® in a conversation on shopping culture and brand strategy:

The Integer GroupCraig ElstonSr. VP, Insight & [email protected] West Alaska DriveLakewood, CO 80226tel +1.303.393.3474

M/A/R/C® Research is a brand develop-ment fi rm dedicated to helping clients create, evaluate, and strengthen their brands. Our teams design and execute qualitative and quantitative, traditional, and online solutions while adhering to a client-service ethic built on being easy to work with and delivering what is promised. Our core competency is measuring attitudes and behaviors to accu-rately explain and predict market share,revenue, and bottom-line impact of a client’s actions. We help our clients address con-sumer, channel, and B2B marketing issues to launch better products and services attract and retain valuable customers, and build stronger brands. Our proven, marketing-is-sue-focused solutions support clients’ brand-building efforts.

M/A/R/C ResearchRandy WahlEVP, Advanced [email protected] North Westridge CircleIrving, TX 75038

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The Checkout is based on a nationally representative survey of 1,200 U.S. adults conducted monthly by M/A/R/C Research. Please contact us to learn more about the data we collect or additional analysis.

©2010 by The Integer Group® and M/A/R/C® Research. All rights reserved.The data contained in this report may be reproduced in any form as long as the data is cited from The Integer Group and M/A/R/C Research. www.ShopperCulture.com.


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The Checkout 4.10 - Shopping List Issue

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