The Retailing Climate is Better Than You Might Think

Dear Specialty Food & Kitchenware Marketer:

What would you do if you learned that, despite the dismal news about the current economic downturn and its effect on consumer spending, your independent specialty food and kitchenware retailer-customers' sales have not been as negatively affected? 

It is a fact, they haven’t!

Over the closing months of 2008, members of The Gourmet Retailer’s Retailer Advisory Board, other retailers interviewed for news stories and occasional retailer e-mails to our editors reported that store sales were performing better than expected — in some cases, beating the previous year’s results. So, with that in mind, we fielded a brief survey to the retailer subscribers of The Gourmet Retailer’s Dispatch newsletter to quantify if what we had heard anecdotally was proving true on average. And the news is really good.

• More than half reported same or better sales for the third quarter of 2008 (35% reported higher sales than same time last year).
• Just less than half (41%) reported that they expected fourth-quarter sales would be same or better than same period last year (respondents were surveyed in mid-December).
• The vast majority were undertaking pricing specials, increased local marketing and more in-store events to help bolster sales.
• More than half of responding retailers were adding new products/merchandise to help bolster store sales.
• Almost two-thirds (64%) reported that in-store sales were the greatest source of growth in the last six to 12 months.
(Survey questions and answers can be viewed in their entirety at the following link:TGR Survey Results

How could this be? Consider these three reasons:

Reason #1: Customers who shop in specialty food/kitchenware retailing stores are affluent, upper-middle-class consumers with average household incomes of $100,000/year. Related research shows this segment may be reducing their meals out-of-home (restaurant dining), but show no indication of lowering their spending on gourmet cooking — and, economically speaking, they don’t have too, either.

Reason #2: The majority of retailers responding to this survey were small independent retailers (cookware shops, gift gourmet shops, cooking schools & gift basket shops, specialty food stores, delicatessens, cheese shops, confection shops, wine shops) that have one or more stores, which constitute the majority of retailers serving this segment. These retailers have developed loyal customer bases that are more likely to reduce their spending with larger chain store operators than at the familiar smaller retailer that they often know by name and who is now a member of their community.

Reason #3: Independent retailers are more likely to have focused personal attention on shoppers, which is the cornerstone of good customer service. As a result, these retailers are highly tuned to their shoppers’ needs/tastes and market/merchandise their store offerings accordingly for better success than large, mainstream retailers.

What should you do with this information?

Well, we asked retailers in the survey what they thought you (suppliers) could do to help them, and they were pretty forthcoming: pricing specials; in-store marketing and merchandising programs; improved packaging and shelf displays; providing demos or increasing demo allowance; and free shipping were at the top of their lists. In other words, help them sell more of your products.

What about how retailers view your company’s advertising during these times?

Again, what you would hope to hear — the largest responses focused on the fact that your advertising serves to “remind them of the value your products and services deliver to their stores and their customers” if they already stock your products, but it also “creates interest in trialing new products in their stores” if they currently do not stock them.

So, fortunately, our retail segment is actually weathering the economic storm better than we had thought or hoped; and now, more than ever, you should be supporting their efforts.

Best Regards

Scott J. Seltz
Vice President – Publishing Director
The Gourmet Retailer
Nielsen Retail Food Group