Green Shoppers Like Warehouse Clubs
By Tom Ryan
According to a study from The Nielsen Company and the Natural Marketing Institute (NMI), green consumers spend more in warehouse clubs, whereas non-green consumers prefer supercenters and dollar stores.
Nielsen and NMI’s analysis found that LOHAS consumers (Lifestyles Of Health And Sustainability) and CONVENTIONAL consumers (those driven to environmental sustainability by traditional means such as cost savings) spend more in warehouse clubs than other channels, such as grocery stores, drug stores, or supercenters. For example, LOHAS consumers spend 10 percent more in warehouse clubs.
On the other hand, NATURALITES (more health-motivated consumers) and UNCONCERNED consumers (consumers not on the eco-radar) tend to shop in price-focused formats such as supercenters and dollar stores.
“Knowing where green and non-green consumers are shopping provides retailers with an advantage in capturing these consumers’ purchases,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company.
One in five U.S. consumers can be defined as LOHAS consumers, according to the study. LOHAS products are a $209 billion business today, and are expected to exceed $400 million by 2010.
The research shows that LOHAS consumers are not only early adopters and loyal to companies who match their values, but spend more than non-green consumers in nearly every store department. The exception is the meat department, “perhaps as a reflection of their vegetarian lifestyles,” noted Mr. Hale.
Not surprisingly, produce, cereal, soup, eggs, pasta, nuts and light bulbs are all heavy purchase categories for LOHAS consumers. Also ranking high are non-carbonated soft drinks, such as isotonics and sports drinks; baking mixes; indulgences such as frozen novelties and syrups; and items making health claims such as gluten-free, multi-grain and probiotic.
“CPG companies looking to engage or expand their sustainability efforts need to know what the LOHAS consumer is buying – and where – in order to meet the needs of this influential consumer segment,” said Mr. Hale.
Discussion Question: Why do you think warehouse clubs may be more appealing to green consumers than other formats? What type of shopping experience are green shoppers looking for that might be different from non-green shoppers?
I am a passionate environmentalist and I do a lot of shopping at Costco, Smart & Final and Target–as well as Whole Foods and my local Farmers Market. A lot of my choices are made around cost and many of the products that I use are available at lower prices. I bring my own reusable bags into every store so that is not a consideration. I try to make choices around reduced packaging and in many instances Costco and Smart & Final win on that score. The club format is highly energy efficient. I have switched from Costco to Target for cleaning products and Target wins hands down with the best selection of eco-friendly cleaning products at the best prices.
Pretty simple:
1. Costco is generally just considered “cool.”
2. The spartan interiors of all of them somehow just connote green-ness more so than do traditional stores.
3. I suppose the bigger packaging may have the same effect.
Warehouse Clubs appeal to “green” consumers because of the compatible demographics and the make-up of the customer. Warehouse Club consumers are middle to upper middle income, educated, practical, and family minded. The mood for “green” is just right.
Less packaging, recycling boxes as grocery bags, larger volumes of healthy food at a good price…I can imagine there are several factors that make a club store attractive.
I also wonder if the club store customer demographic just happens to be in the green shopper RTA. Unfortunately, the lower the socio-economic neighborhoods tend to have fewer grocery shopping options.
One additional appeal to green consumers Club’s excel at is seasonally fresh produce. Costco in particular has a very attractive assortment of “natural” and healthy dairy as well. Perhaps this has as much to do with Costco’s Pacific Northwest heritage as anything. But the dairy, seafood, meat and produce sections, complemented by things like organic peanut butter and high end wine, just seem to shout “Birkenstock!”
Warehouse Clubs do many things right for their target consumers. “Green” shoppers are looking for healthier food choices, fresh produce, and good value in their staple purchases, and minimal packaging–as are many club store shoppers. Club stores deliver in these areas, adding a few well chosen, good quality organics, fair trade coffees and a range of fresh, refrigerated foods. Larger packages of many items, particularly canned goods and paper products are perceived as better value by reducing shopping trips. Most club stores have only provided their used corrugated shipping containers for carrying items home, not plastic grocery bags, encouraging reuse and recycling.
Making the club store their destination for the weekly stock-up trip rather than super centers or discount venues chosen by other consumers makes sense in terms of shopping preferences for this group.
Expanding on J. L. McNamara’s comment above: the Nielsen study didn’t state the average income for any of their shoppers’ profiles. That omission seems very odd. It wouldn’t be easy for a low income family to make ecological sustainability their #1 priority. They need to sustain themselves, first.
This is a fascinating question and one which may have not been looked into before by consultants or retailers. I wonder if those who responded earlier felt driven to go to the warehouse clubs because they are “green”, or because after they got there, the displays, building design, and product selection fit with their already determined LOHASness?
Did Costco design their stores with the green movement in mind, or did that customer find them? With the knowledge of what attracts a green customer, will Costco leverage these attributes? Will Wal-Mart, supermarkets and ‘dollar’ stores learn and react to these findings?
I believe that the category of store doesn’t draw the customer, as much as the way the store conducts its business.
The plastic bag vs. cardboard box issue that other writers have mentioned illustrates how far mainstream supermarkets have to go. Even industry standout Publix doesn’t really get it yet. My local Publix has a recycling bin for plastic bags but they place it in such a hidden location that I have never seen anyone but me use it. And they don’t promote the option at all, as far as I can tell.
The article sites that Green shoppers “spend more” in the WHC channel, but I would argue that perhaps this is because ring levels are higher for WHC stores in general. I would be wary of jumping to any conclusions without further basket measures or other consumer data measuring attitudes such as Simmons. Maybe because LOHAS consumers may have have higher incomes, they can afford to bulk shop in places at Costco, but they may not necessarily be buying green items at Costco. Also, we know LOHAS consumers are in high concentrations in both cosmopolitan and very rural areas. I would guess that Costco has a very high suburban consumer because you need large cars and houses for storage, etc, etc. This would allude to a disconnect in the data.
Because they can afford it. Let’s face it, Costco has wealthier and more educated customers than Wal-Mart or the 99 cent only store. Customers of the latter are just trying to get food on the table and for them it is a pure luxury to be “green.”
Warehouse Clubs do not do any bagging of merchandise–paper or plastic–which is a very overt statement, intentional or otherwise, about conserving resources. Also, eco-friendly consumers who have a high preference for dried goods, cereal, etc, per the research can buy those items in bulk at warehouse clubs and not have to worry about being a perishable item. The atmosphere is also one of no-frills, clean and efficient which may be characteristics of an eco-friendly consumer.