Although it is often analyzed as one entity, there are actually two looming components to the mass channel: the traditional mass stores sans full grocery formats and the souped-up versions — the supercenters that are giving supermarkets quite the channel-blurring run for their money.

What the two mass versions have most in common with one another are the chains that comprise them — they are both led largely by Wal-Mart, Target and Kmart, although the traditional mass channel is also made up of several formidable regional players. Their obvious physical difference is that supercenters compete on a true grocery level with perishables; the traditional mass channel may have dry goods, limited refrigeration, and some quick beverage and meal “pick-ups,” but certainly not a full-scale food offering.

Channel Leaders*
Chain	Annual Sales (in billions)
1. Wal-Mart Stores**	$210.0
2. Target Corp.	$52.6
3. Kmart Corp.	$19.7
*For 2005 **(not including Sam's)

As retail channel competition has heated, mass/supercenter differences are beginning to take on two defined shapes within the channel — and may soon be competitive with one another. Thus, analysts have recently started to report on them as separate influences. Generally speaking, supercenters are growing in store count, shopper penetration, and annual trips per household; conversely, those are all declining in the traditional mass channel.

Then again, because they both operate with the most powerful force in the retail industry as their leader — Wal-Mart — there are still many positive operating/logistics/value similarities.

Overall, the mass channel is shrinking in store count, but that’s due to conversions of Wal-Mart Division 1 (discount) stores, the closing of more than 600 Kmart stores, as well as closures for a number of other retailers in the channel. In other words, it is coming from the non-supercenter side. On the positive side, Wal-Mart and Target have led the way in terms of new store openings; Target is looking to add 600 stores over the next four to five years with about one-fourth of them to be in a supercenter format. What’s more, Target announced that they will be increasing the space devoted to food and beverage by 50 percent across most stores.

With the conversion of some mass stores to supercenters and the closure of certain mass chains, shopping frequency is on the decline, according to ACNielsen’s “Channel Blurring and Consumer Trends Report” for 2006. “Although new store openings may be holding down shopping frequency in supercenters, average shopping frequency within this channel is relatively low, but growing nicely,” reports Todd Hale, senior vice president of Consumer & Shopper Insights for ACNielsen in a report on channel blurring.

The mass/supercenter channels are really in touch with their feminine sides. That is, they draw over half of their top-spend shopper sales from females 44 and under, according to ACNielsen. Unlike other channels, which are clearly going after the baby boomers and more mature customers, the mass channel has a strong youth pull. Target penetration among Gen X and Gen Y households is about 70 percent in the mass channel, according to ACNielsen, compared to 59 percent for boomers and only 49 percent for pre-boomer households. Wal-Mart and Target, especially, have used a younger approach in their advertising copy and messaging over the past several years.

One who analyzes the mass channel as two-sided is Frank Dell, CEO of Stamford, Conn.-based Dellmart & Co. The distinction, as he sees it, is that “the basic stores have done a very good job of cherry-picking — taking the major national brands and selling them at everyday low prices. Part of that success is that consumers got tired of all the promotions surrounding supermarkets — the deal addiction. If it’s one thing consumers hate, it’s to buy something this week at regular price, and then next week, it’s on special. So a lot of the consumable items in the basic mass stores have EDLP (everyday low price) appeal; from a candy point of view, they’re almost exclusively the top sellers.”

The supercenters, on the other hand, have more room and perhaps more opportunity for SKU exploration. “Because supercenters sell perishables and operate somewhat differently from the basic stores, they have the opportunity for a broader offering,” Dell maintains. “They don’t tend to do it enough, but from a consumer perspective, they could certainly offer more than just the top-selling brands,” he stresses.

Of course, if the traditional mass stores were wise, they’d follow the lead of the supercenters and go beyond the top sellers in each category.

One way that some are wisely mixing it up is through organic foods. Not surprisingly, Wal-Mart was the first to “go green” in a dedicated way — with its own branded items. Then last month, Target followed suit with its line of organic foods.

“Introducing a private label organic brand is absolute genius,” maintains David Fields, managing director of Ascendant Consulting, LLC, based in Ridgefield, Conn. “The word ‘organic’ is like the word ‘kosher’ — they both imply high quality, and so when retailers associate their own brand with organics, they are getting fabulous, built-in equity,” he says. Because candy has thus far been “fairly well insulated from private label,” Fields believes that organics/health/functional foods and snacks present a new opportunity for the confectionery industry — especially with retailers grabbing more share through their own store brands.

But perhaps organic/private label opportunities are best left to those mass retailers who first have their regular candy aisles in the proper position. Right now, too many of them “have moved their everyday candy aisles to the back of the store, resulting in sales being down significantly,” according to Jenn Ellek, director of trade communications and marketing for the National Confectioners Association. Using findings from a recent NCA/Dechert-Hampe report, Ellek maintains that “one out of three shoppers who goes down the everyday candy aisle will buy some candy, but if you prevent them from going down that aisle, you’ve lost those sales.

“There is no reason for a retailer of any kind to bury candy in the back of the store,” she continues. “While the mass market is very good at selling seasonal products — stores are always well-decorated in holiday themes — it is not so good in everyday candy.”

One analyst entrenched in the industry agrees that “the mass market is very routine with candy. I don’t even see Target or Wal-Mart standing out as a clear player. Both try to offer broader varieties, and yes, they’re putting in more dark chocolate and trying to become more of a destination there, but it is still something they are striving to maintain. I think they both will start to carry more premium stuff. It will be interesting to see how far they can go with it.”

Another mass channel opportunity is tied in to that — carrying more “emotional SKUs” — a la Target. And actually, Wal-Mart is already doing it with ads geared towards fashion and lifestyles — rather than price. “Right now, Target is the poster child for well-designed, impulse items that hit consumers’ hearts,” says Barry Seifer, principal of strategy for retail design firm Cubellis Marco Retail Design, based in Northville, Mich. “But Wal-Mart is evolving with a more segmented strategy that will start to capture more emotionally-based shopping decisions.”

“If Wal-Mart can pull this off,” than others in the channel will quickly follow suit, Seifer speculates. He has his doubts, though. “For Wal-Mart to be going after the heart of consumers seems a little oxymoronic,” he admits.

Heartless or not, there is no rest for retailers, especially the big mass kind that may one day be viewed as brontosaurus-like. The goal is to stay as sharp as they can for as long as they can. “Right now, Wal-Mart dominates, but at some point, it could become a dinosaur, too, just like the Sears Roebuck catalog,” says Fields. “We all have a tendency to forget that, but that is a very real threat. Wal-Mart will be challenged, and at the least, it will shrink in importance. That’s what the big sweep of history tells us.”