Consumers settled into ‘new normal’

PrivateLabel

A new report from Chicago-based Information Resources Inc. (IRI) indicates that consumers have settled into a “new normal” of conservative purchase behaviors and attitudes. The “Great Recession” officially ended in 2009, but the report, which details IRI’s second-quarter 2013 MarketPulse survey, indicates that consumers are still budgeting their money, even though they have a more positive outlook on the economy and their personal finances. This behavior will force consumer-packaged-goods (CPG) marketers to work harder to entice consumers to loosen their purse strings. And it could mean good news for retailers’ store brand programs.

At the beginning of the recession, consumers made several changes out of necessity, including bringing more store brand options into their homes, Susan Viamari, editor of Times & Trends, IRI, told Private Label ⇨ Store Brands. And now, post-recession, consumers are continuing to purchase store brand products due, in part, to their cautious attitude, as well as because the change to store brand products was less “painful” and more rewarding and effective than they anticipated.

“Today, nearly everyone buys some store brand products,” she said. “And, according to IRI’s MarketPulse survey, 45 percent of consumers are buying more store brands today than they did before the downturn began. The convergence of these trends speaks very well to the impact of store brand marketers’ efforts to entice current store brand buyers to buy even more store brand solutions.”

Looking at other shopping behaviors, the report says 56 percent of consumers will decide on most of the products they will purchase before they step foot out of their homes, compared to the 59 percent mentioned in last year’s second-quarter report. And while 58 percent of consumers say coupons and 76 percent say brand experience are important, low price also has a place in shoppers’ decisions. In fact, the report says 52 percent of shoppers choose the store in which they will shop because it offers lower prices on items they need.

The report also notes that shoppers are embracing a variety of tools to find the lowest prices. For example:

· Sixty-five percent use prices advertised in retailers’ weekly grocery circular to compare prices.
· Fifty-six percent compare prices across area retailers to identify lowest prices.
· Twenty-six percent use prices on retailer websites to compare prices.

And, according to the report, not all purchase decisions are made at the kitchen table. The following store-based marketing tactics still influence the final brand decision:

· Loyalty card discounts (48 percent)
· In-store circulars (44 percent)
· In-store signs/displays (28 percent)
· In-store kiosks (10 percent)
· In-store touchscreen digital display (4 percent)

“You really can’t advertise early enough or often enough,” Viamari said. “The key to winning with consumers is to not only begin the conversation before they enter the store, but also to continue the discussion up to and even after the moment of purchase. So, use those traditional tools, such as signs and circulars, but enhance them with new approaches, such as highly targeted loyalty programs, sampling kiosks, etc.”

Fluctuating gas prices also could significantly affect consumer spending habits. According to the report, if gas prices increase by 50 cents, 44 percent of consumers say they are likely to cut spending on groceries. In addition:

· Fifty-seven percent will make fewer, larger trips.
· Fifty-two percent will switch spending to stores that are closer to home.
· Thirty percent will switch spending to discount or club stores, even if those stores are a 15-20 minute drive.

“In general, households dedicate a sizable portion of their income to fueling their vehicles,” Viamari explained. “And, with budgets already tight, an increase of 50 cents per gallon will quickly add to the squeeze. Marketers must be on the watch constantly for ripples spurred by rising gas prices, so that they adjust their assortments, pricing strategies and promotional programs quickly and accordingly.”