Retail flat as consumers remain cautious
by Ron Sterk
STOWE, VT. — The retail landscape has been nearly flat the past five years as consumers grapple with more bad news than good news, Todd Hale, senior vice president of consumer and shopping insights for North America at Nielsen Co., said Aug. 5 at the International Sweetener Symposium.
“There’s a lot more bad news than good news,” Hale said. “Flat is kind of where we are right now.”
He noted reduced SNAP benefits, rising natural gas prices, lost extended unemployment benefits, low pay raises and 17 percent of homeowners still “deeply underwater” as factors contributing to slow retail sales growth. In the 52 weeks ended June 7, 2014, most growth was in convenience stores, at 2 percent, and value stores, at 1.2 percent, compared with drug stores, at 0.9 percent and supermarkets, at 0.8 percent, he said.
Hale noted that sales of snacks, candy, fresh produce, coffee, packaged meats, cheese, wine, beer and tobacco have increased.
Hale said growth in supermarket sales have been on the perimeter of the store for items perceived as fresh while sales of dry goods in the center of stores have tended to decline. There has been dollar sales growth in all fresh departments except seafood, he said.
Sales of private brands “took off” with the economic downturn in 2008, Hale said, but have been nearly flat since 2010.
Despite the slow overall retail growth, e-commerce, led by Amazon, has been the big winner with 12 percent annual growth compared to supermarkets at less than 4 percent, he said.
Consumers’ increasing focus on convenience is driving the rise in e-commerce, Hale said, with 20 percent of North Americans using on-line ordering for home delivery compared with 37 percent as the global average, with only grocery sales also on the rise. On-line grocery sales are expected to double in five key European countries by 2016, and also are growing in the United States with Walmart investing in on-line ordering and texting receipts to collect buying data and offer loyalty incentives.
The use of subscription services and low or free delivery charges show retailers’ willingness to capture consumer dollars amid growing competition, Hale said.