• by Sarah Mahoney  @mahoney_sarah, April 2, 2010

With consumers keeping their food budgets under steady surveillance, a new report from Nielsen shows that retailers need to do more to win fans than just compete on price.

"We're seeing a continuation of people pulling back from making shopping trips," Todd Hale, Nielsen's SVP/Consumer & Shopper Insights tells Marketing Daily.

But while consumers are still very focused on price -- planning their trips by making lists, and clipping coupons -- stores that focus only on price are making a mistake. "If all you do is focus on price and value, you're not going to win. To make you chain a place people want to shop, you need other points of differentiation."

Nielsen reports that the downward trend of consumers shopping less hit a new low in February, with a 4% year-over-year decline in monthly trips to all types of food stores, including supercenters, club stores, grocery stores, dollar stores, and drug and mass merchandisers.

Plus, consumers consistently shopped fewer retailers each period in 2009 than they did in 2008. "Our attitudinal research shows that in addition to shopping at fewer stores, planned shopping is the norm," he says. "They are paying attention to store circulars, doing comparative store checks, and making lists."

While grocery store trips are down in the last four months, it continues to be the most popular channel, with shoppers heading to the grocer two-plus times more often than other store types.

Although supercenters and club stores had positive trip growth in each period in 2009, they have declined slightly in 2010, "because consumer confidence is low and people are holding back, and there were some poor weather conditions early in the year," he says.

The continued emphasis on price, including the recent news that Wal-Mart Stores is working to cut prices even further, "means that grocers are struggling with declining same-store sales growth. It's going to be difficult for retailers to drive profitability in that cost-cutting mode," he says, "yet if they don't keep prices down, they will lose business."

But by differentiating themselves, stores can find ways to boost sales, he says. "Retailer Web sites that have tools that make shopping easier are one example. We're seeing that consumers are getting tired of all the work it takes to save money, so stores need to remember that shoppers value other things, too, whether it's convenience, variety and assortment, or a focus on health and wellness."