As the effects of economic uncertainty continue to reverberate throughout the consumer packaged goods (CPG) industry, consumers are still attempting to ease budgetary strains and embrace a wide variety of money-saving strategies.
The latest research from SymphonyIRI Group’s Times & Trends, “2012 CPG Year in Review: Finding the New Normal,” provides insights into today’s capricious consumers and the impact their behaviors are having on CPG growth trends.
“For 2012, we forecasted that shoppers would continue to define value largely based on price, manufacturers and retailers would pass ongoing commodity price increases on to the shopper, and private label sales would continue in their current ranges,” said Piyush Chaudhari, president of the Americas, SymphonyIRI. “These predictions largely came to pass, and we expect 2013 to resemble these same trends in many ways.”
SymphonyIRI predicts shoppers will remain frugal in 2013 despite continuing signs of economic recovery:
- Shoppers will reduce the number of channels they visit. Share of consumers shopping at fewer than five channels grew three percentage points between Q1 and Q4 2012, and this trend will continue as shoppers limit spending to channels that are perceived as offering the best value.
- While an increasing number of positive economic signs are emerging, count on shoppers to remain intensely focused on value. There is enough negative news about the federal budget deficit and costs of the new healthcare law, for example, to reinforce shoppers’ frugal behaviors left over from the recession.
- Millennials are becoming the new baby boomers. Millennials are a 50-million-strong shopping group now forming habits and loyalties. Tailoring offerings to this group and providing outstanding service will pay dividends for decades to come.
- “New” media is rapidly becoming traditional media. The trend of shoppers leveraging the Internet for information and deals is growing and will continue to gain momentum, as millennials age and a new generation that is even more tech savvy than the millennial generation enters the market.
"The nation is far from having a firm foothold on growth and stability, and consumers and marketers alike are very aware of this reality,” said Susan Viamari, editor of Times & Trends, SymphonyIRI. “Consumers’ pursuit for value is as intense as ever, and it has served to amplify industry competition. Innovation that supports key shopper rituals, such as those around self-driven, home-based living, is being well received in the marketplace and will continue to help spur growth.”
To effectively compete in 2013, CPG manufacturers and retailers should consider the following action items:
Identify opportunities and risks: Manufacturers should closely track the evolving competitive set at the channel and retail level, including traditional brick-and-mortar as well as the online arena, to ensure appropriate alignment of distribution strategies. Retailers should use value-oriented pricing and promotion programs to protect and grow share, particularly across categories that are most closely aligned with the needs and wants of key shoppers.
Evaluate pricing and promotional strategies: Manufacturers should continually re-assess and adjust pricing to maintain an optimal price gap between private label and name brand offerings. Retailers should adopt everyday pricing strategies that underscore their value proposition and rely on promotional pricing to address short-term tactical opportunities.
Enhance new product development initiatives: Manufacturers should constantly evaluate product development opportunities at the value and premium ends of the spectrum, including those that address key consumer trends. Retailers should explore opportunities to partner with manufacturers to develop complementary national and private label assortments across categories.
SymphonyIRI Group is a global leader in innovative solutions and services for the CPG, retail and healthcare industries. SymphonyIRI’s full report is available for download online.