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inside the in-store experience

powered by The Integer Group® and M/A/R/C® Research1.10issue

in focus: 2009 Holiday ShoppingThis month we asked shoppers about their holiday shopping plans this season. Do they expect to spend more, less, or the same compared to last year? Which retail channels will be most a!ected?

• Frugal shopping behaviors may be easing—slightly• ‘Tis the season to be practical• Use of coupons continues to increase• Are private-label brands the new reality?• Shoppers become more sophisticated to find best value• Shoppers favor contests they think they can win• Shoppers love deals—any deals.

In focus: Name BrandsTightening budgets, lowered consumer sentiment, and an unsure economic future—to remaincompetitive in this challenging shopping environment, name brands have an arsenal of tacticsat their disposal

• Properly communicate value• Prepare to win back your shopper when the economy imporoves—starting now• Continue to actively issue coupons, awareness messages, and rebates in store• Offer a breadth of product varieties and special editions• Concentrate on at-shelf messaging and in-store promotions, since more decisions are being made at shelf• Be aware that contests with a higher chance of winning appeal to a larger number of shoppers— even if the prizes are smaller• Be ready to make a deal

IN THIS ISSUE


2page


Buying more/moreExpensive items

Buying fewer/cheaper items

61 237

52a 345

54 344

56 342

46 252

52 346

1Q’09

2Q’09

3Q’09

Oct

1Q’09

2Q’09

3Q’09

Oct

1Q’09

2Q’09

3Q’09

Oct

Total

Males

Females

56 343

51 347

66 134

No Charge

56 242

60 38 3

58 37 5

Arrow indicates signi"cant di!erencefrom previous quarter

at 95% con"dence level

indicates signi"cantdi!erence between

males/ females at 95%con"dence level

Frugal shopping behavior may be easing—slightly

In the past three months, how has your shopping behavior changed?

Shopping Behavior Compared to Three Months Ago

? =

Shopping behavior, while continuing to skew toward reduced spending, appears to be #attening out—with a slightly larger number of shoppers moving away from buying few/cheaper items in October. While spending among both males and females is loosening some,men appear to have been much more resilient going into the holiday season.

(%)


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2

When thinking about your everyday shopping needs (food, cleaning products, etc.), what would you say is the primary goal you are trying to meet from each trip you take?

Get everything in asingle trip, saving

need for more trips

Spend aslittle as possible

Comprehensiverestocking of theitems I have used

Satisfy theneeds of all myfamily members

Quick fill-in tripsto replace the

things I use as I go

Find thefreshest and

best-quality items

Spend as littletime in the store

as possible

Be entertainedand have a fun time

Predominantly men

29 29

2625

28

23

2624

12 12 1213

8

11 1112

810

11

13

78

76 6

76

4

1 2 23

Predominantly women

Everyday Shopping-Need Goals

? =

Shoppers are still torn between convenience and saving money as primary shopping goals. Tightening budgets, lowered consumer sentiment, and an unsure economic future has resulted in a shift in shoppingbehaviors from performance (quality and shopping experience) to conservation of resources (time and money) accompanied by changing expectations. Retailers (dollar stores, discount mass) and brands (private-label and value players) that focus on lower prices will be better positioned to face this challenging selling environment. But strongly entrenched name brands can still compete by properly communicating value to their shoppers.

This newfound practicality is further exempli"ed by the steady increase in quick "ll-in trips during the course of the year, suggesting that shoppers are taking a spend-only-when-necessary position. This attitude toward spending as little money as possible is most prevalent among female shoppers, while their male counterparts place a higher value on spending as little time as possible.

However, practicality has not yet taken hold of our younger shoppers (18-24) who are in store more often and have a higher tendency to make "ll-in trips and seek entertainment compared to their older counterparts.

‘Tis the season to be practical

Arrow indicates signi"cant di!erence fromprevious quarter at 95% con"dence level

1Q’09

Q2’09

Q3’09

Oct’09

(%)


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directional signs above the aisle

coupons from a manufacturer

shopper-card discount

self-checkout

coupons from the store

newspaper circular

circular from inside the store

floor ads in store aisles

message on the shelf

a poster hanging from the ceiling

in -store associate

leaflet

touch-screen device

electronic kiosk

in-store PA announcement

in-store TV

Thinking about your most recent shopping trip for groceries, which of the following did you use in the store to help you shop?

mobile phone

4847

4643

4142

3940

4543

3737

3434

3635

3535

3331

3133

2723

2624

1715

4544

1617

1618

1011

1312

66

76

66

67

67

35

55

56

22

33

22

23

11

22

Coupon usage continues to increase

? =Everyday Shopping Goals

(%)1Q’09

Q2’09

Q3’09

Oct’09

Arrow indicates significant differencefrom previous quarter

at 95% confidence level

Coupons, always one of the more popular shopping aids, have become even more important in the second half of 2009, indicating the economic e!ect of the recession on shopping behavior. Use of mobile phones, while still relatively limited, has nonetheless increased over the course of the year potentially due the growing usage of smart- phone shopping and information-seeking applications. This is especially true with younger shoppers (18-24), 15% of whom report using mobile phones as shopping aids versus 5% for those aged 35 and over.


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seek out lowest possible price

save money by shopping around

save today,buy tomorrow

stick with familiar brands or items

buy individual-sized items

seek out American-made

spend more but save time

buy now on credit

switch brands or try new brands

more often

buy in bulk

Q1’09

Q2’09

Q3’09

Q1’09

Q2’09

Q3’09

Q1’09

Q2’09

Q3’09

Q1’09

Q2’09

Q3’09

Q1’09

Q2’09

Q3’09

Q3’09

describes more

41

37

39

35

31

30

35 41 19 6

32 44 19 6

33 42 18 6

22 44 26 8

22 47 25 6

22 47 25 6

14 34 37 15

14 36 38 13

13 37 37 13

43 21 5

45 19 5

Oct 29 45 22 4

42 19 5

40 16 5

41 17 5

Oct 37 41 17 5

39 15 6

buy private-label/store brands buy national/

name brands

15 46 32 7

Oct 16 47 30 7

Oct 14 35 40 11

Oct 22 47 26 5

Oct 32 44 20 4

Consumer behavior continues to skew toward lower spending, with males more apt to make credit purchases and seek out American-made products. Single shoppers are more willing to spend money to save time. Higher-income households ($100K+) are more likely to purchase name brands, while 28% of younger shoppers (18-24) report that they are more loyal to their usual brands and less apt to switch.

Indicates significant difference from previous month at 95% confidence level.

Currently, where do you believe you fall between the following?? =Shopping Preferences

Consumers are still in the mindset of saving money

(%)


6page

october

7

8

10

20

54

july

7

8

10

19

56

Buying more store brands, and will probably buy even more

Buying fewer store brands than last year

Buying more store brands, but probably will switch back to name brands

Buying more store brands, and will probably stock with them

Buying store brands about the same amount as last year

Store-Brand Descriptors

Which statement about store brands best describes you?? =

(%)

Have store brands become the new reality?

The number of shoppers switching to store brands seems to have reached a plateau with no signi"cant changes after steadily increasing until the second quarter 2009. The question is: will those people who have been prompted to switch to store brands due to the recessionswitch back when the economy improves?


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There were signi"cant drops in shoppers reporting that they always consider trust in their name brand, sale prices, and coupons as reasons they do not buy store brands, potentially alluding to the growing strength of private-label products. The overall ranking for the top "ve reasons shoppers gave for not buying store-brand alternatives remained relatively the same, with brand often being on sale, trust in the brand, and satisfaction with the regular price making up the top three. However, this month saw two major changes at number four—shoppers are less doubtful of the quality of store brands, but they are less likely to switch from their name brands due to the di!erent varieties of product available. As the sophistication of store brands catch-up, name brands will have to justify their higher prices with continuing innovation and engaging product o!erings.

Shoppers increasingly consider variety as areason not to switch to private label brands

If you've seen a store-brand option for some of your groceries orhousehold goods but decided to stay with a name brand, what arethe reasons for not buying the store-brand option?

314

Indicates significant difference from previous month at 95%

confidence level

sometimes a reason

always a reason

never a reason

(%)

35

53

12

65

20

15

52

20

28

70

13

17

67

19

52

40

8

32

64

4

48

49

3

315

31

59

10

63

16

21

59

20

21

70

14

16

62

23

56

34

10

28

69

3

51

46

3

JUL

OCT

9

68

23

11

62

27

It’s (name brand) just a brand I trust

My brand is often on sale

My brand has special

versions or varieties that I can’t get in store brands

I can get coupons for

my brand

The regular price of my brand is fine

Doubts about quality

of store brand

product

I use the product so

little that it’s not worth switching

I don’t like the store

brand packaging

Other

? =

Reasons Not Buy Store Brands


8page

Arrow indicates significant difference

from previous month at 95% confidence level

Strongly Agree

Agree

Private label brands continue to gainstrength with shoppers and their families

Compared to store brands, how much do you agree with the following statements about name-brand groceries or household goods?

37%

Name brands aremore expensive

Name brands offer more newproducts, varieties, and innovations

Packaging of name brandis more attractive

Name brandsare more reliable

Name brands arebetter-quality products

Name brandspackaging works better

Name brands are whatmy family expects to get

Name brands better reflectmy values and attitudes

? =

Name-Brand Statement Agreement

While most consumers continue to perceive name brands as more expensive (80%) while o!ering greater variety and innovation (57%) than store brand alternatives, this number has signi"cantly decreased since last quarter. Shoppers also perceive less di!erence in product quality and their families are becoming more used to having store brands in the shopping basket. High income shoppers ($75,000+) and younger (18 – 24 year old) shoppers have a greater a$nity for name brands and are more apt to feel that they are more reliable, o!er greater breadth of products, and have packaging that is more attractive or that works better.

(%)

22 62 22 58

7 50

8 41

3 34

4 31

2 21

2 15

1 14

9 55

9 43

4 33

4 35

3 19

3 18

2 12

84

64 57

49

37

35

23

17

15

52

37

39

22

21

14

80

JUL OCT


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Arrow indicates significant difference

from previous month at 95% confidence level

Shoppers appear to be growing in sophistication andbecoming more involved in the decision making process

Thinking about your most recent shopping trip for groceries, which of the following did you use in the store to help you shop?

I regularly compare prices betweenname brands and store brands

I’ll look at what’s on sale first andthen compare that to other options

I look for my usual brand on shelf,thenlook around for store-brand alternatives

I’ll look for what i have coupons for first,then compare that to other options

I get information from friends and familyabout store brands before trying them

I go right for the name brands andget what I want

I’ll try whatever’s being featured by thestore (such as display on end of aisle)

I go right for the sotre brands andget what I want

I ask sales associates which brandoffers the best quality for the price

Strongly Agree

Agree? =

While most shoppers still indicate that they are price sensitive, this month saw signi"cant changes in shopping behavior with fewer shoppers going straight to the sales items, to their usual brand, or even store brands – indicating that they are making more of their decisions at shelf. Decision-making between name and store brands encompasses a variety of price considerations – including comparing on-shelf prices and checking sales and coupons before buying. Their shopping sophistication appears to be further increasing as shoppers reported that they are less in#uenced by sales features (such as end-caps), asking associates for product opinions.

(%)

26 54

24 57

9 59

18 45

2 19

4 23

3 20

2 20

2 7

80

81

68

63

27

21

22

9

23

26 52

21 56

9 55

17 46

2 22

3 19

18

2 16

15

78

77

64

63

22

24

18

6

19

JUL OCT

Store-Brand Shopping


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More than half (56%) of shoppers "nd a modest prize with a reasonable chance of winning to be more appealing than a larger prize with worse odds or a greater chance of winning a small prize. However, when considering how to structure your promotion and the value of your prize, consider your target shopper—male shoppers have a higher a$nity for contests with modest prizes and reasonable chances, while female shoppers prefer having a higher chance of winning a small prize.

Surprise! Shoppers prefer conteststhat they actually think they can win

When considering promotional contests in a store, which type of offer is most appealing to you?

OCT

Small prize withhigh likelihood

of winning

Large prize,even if chances of

winning are slim

Modest prizewith reasonable

chance of winning

? =

Most Appealing Promotions

33

11

56

(%)


11page

Consumers appear to want to take advantage of any deal they can "nd; however, buy-one-get-one-free o!ers or clearly marked reduced prices are the ones most likely taken advantage of. Women are more likely than men to take advantage of promotional o!ers, whereas older consumers are more willing to invest time in money-saving activities with a larger use of rebates, mail, and newspaper coupons. However, not all shoppers respond with the same fervor to all types of deals—younger shoppers reported that they do not readily change their behavior based on coupon o!ers but were signi"cantly more likely to shop clearance items.

Which money-saving techniques are you most likely to take advantage of in a store?

BOGO free or at reduced price

66

65

57

55

53

44

42

41

68

68

80

Rebate offers

Coupons from magazines

Coupons from internet

Money off if purchase two or more

In-store circulars

Coupons from mail

Coupons from newspaper

On-pack instantly redeemable coupons

Clearance items

Store savings from loyalty/rewards card

? =

Shoppers love deals—any deal

Money-Saving Techniques

OCT (%)


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The Integer Group® (www.integer.com) 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, telecommunications, fast food, home and shelter, and power sports. Join Integer® in a conversation on shoppingculture and brand strategy at:

M/A/R/C® Research is a brand development firm 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 accurately explain and predict market share, revenue, and bottom line impact of a client’s actions. We help our clients address consumer, channel, and B2B marketing issues to launch better products and services, attract and retain valuable customers, and build stronger brands. Our proven, marketing-issue focused solutions support clients’ brand building efforts.

www.shopperculture.com

www.MARCresearch.com/thecheckout

The Integer Group

Craig Elston

Sr. VP, Insight & Strategy

[email protected]

7245 West Alaska Drive

Lakewood, CO 80226

tel +1.303.393.3474

contact:

M/A/R/C Research

Randy Wahl

EVP, Advanced Analytics

[email protected]

1660 North Westridge Circle

Irving, TX 75038

tel +1.972.983.0436

contact:

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.

checkout 1.10

Documents

lowered consumer sentiment

recent shopping trip

shopping behavior

significant difference

integer group

store brands

mobile phones

usual brand