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September 2002 Times & Trends Executive Summary
Consumer Shopping Trends

CPG recovery from the post-September 11 recession continues.
Following a tumultuous period during the 16 weeks that followed September 11, 2001, consumer spending on CPG products is well into recovery. Reaching 4.3% through mid-year 2002 versus prior year, CPG sales growth is still below the “normal” growth rates of 5-7%; however, trends are favorable for a full recovery. 

Meal solutions continue to bolster food category growth rates.

With solid performance across most food “mega-consumption” groups, food category growth rates have reached pre-September 11 levels.  Dinner solutions, which grew 7.5% at the 2002 mid-year point (versus 5.4% for total food CPG), are a major contributor to food recovery, as consumers continue to eat-in since the tragedy. This may be an optimal time for supermarkets to launch (or relaunch) ready-to-eat meals and components.

While non-food recovery lags food, some categories make dramatic reversals.

Non-food’s 2.3% growth for mid-year 2002 falls short of pre-September 11 growth rates (3.6%); however, a slower recovery of non-foods versus foods is consistent with prior recessions.  “Non-essentials” are typically the last products to be “added back.”  Some categories have enjoyed exceptional growth, however.  Beauty care, for instance, recovered from a 1.5% decline after September 11 to a 4.7% increase for mid-year 2002, as consumers allowed themselves “small indulgences.  Other categories, such as house care, benefited from innovative products that re-defined the category (eg. disposable surface cleaning cloths.)  Innovation will continue to play a major role in accelerating non-food growth.

Wal-Mart drives half of mid-year 2002 CPG growth.

For mid-year 2002, 50% of CPG dollar growth (and 19% of total dollar sales) can be attributed to Wal-Mart.  The retailer’s phenomenal growth has been driven by supercenter expansion, coupled with an increased value orientation among consumers. In just one year, Wal-Mart shopping trips per household increased 5.3% while shopping trips decreased significantly at supermarkets (-4.4%) and drugstores (-3.8%).

Supercenter competitive impact documented.

A recent IRI study of supermarket sales trends following the opening of a supercenter nearby found that supermarket sales declined 11%, on average, as consumers shifted spending.  245 of 265 categories showed sales declines.  The most significantly impacted categories included items that families with children tend to heavily purchase (eg. juice, diapers, baby food, cereal.)

Manufacturer brands revived in 2002.

Despite economic uncertainty and a growing value consciousness, consumers have not flocked to private label.  Instead, since September 11, private label growth rates have slowed while manufacturer brand growth has accelerated.  In a time of general uncertainty caused by terrorism and the war against it, consumers seem to be gravitating towards the familiar – name brands they know.  They are, however, seeking the best price for these brands – which bodes well for additional Wal-Mart growth, given the retailer’s strong price/value image.