Skip to main content

Consumers Want to Live Well with Less in 2012

From the unstable economy and stubborn unemployment rates to frugal consumers and high commodity prices, there has been much discussion around the challenges facing CPG marketers during the last few years.

The latest research from SymphonyIRI Group’s Times & Trends, “CPG 2011 Year in Review: The Search for Footing in an Evolving Marketplace,” uncovers several exciting trends taking place in everything from new product development and technology to store layouts and consumer shopping patterns.

“Evolving economic conditions have brought a polarity to the CPG marketplace,” said Susan Viamari, editor of Times & Trends. “There is a sizable consumer segment that is feeling more optimistic about the road ahead, while a similar sized group is expecting a continued deterioration of economic and personal financial health. Among optimistic and pessimistic shoppers alike, all indications point to continued frugality and conservatism in 2012. CPG marketers need to actively respond to these trends with products and strategies that really emphasize their understanding of consumers’ most pressing needs and wants in order to drive purchase behavior and loyalty.”

SymphonyIRI predicts the following trends will be prominent in 2012:

- Shoppers will continue to define value largely based on price.
- Retailers in the drug channel will accelerate their format evolution process. Walgreens, for example, plans to convert at least 500 stores into “food oases,” where space devoted to food and beverages will grow as much as 35-40 percent.
- Manufacturers and retailers will pass manufacturing price increases on to shoppers, but reaction to potential commodity price deflation is yet unclear.
- Private label will continue to account for unit sales in the 22-23 percent range and dollar sales in the 18-20 percent range. Retailers will increase assortments and retain the tiered product strategies that have worked so well in the past.
- Manufacturers will expand their focus on innovation as the primary private label mitigation strategy. One example comes from the coffee category. Single-cup coffee, such as that offered by Keurig, is partly responsible for the fact that 14 percent of the most successful new beverage launches came from the coffee and tea sector in 2010.

“It’s no secret that conservative consumers are embracing a variety of money-saving behaviors, such as making shopping lists before entering a store,” said John McIndoe, senior VP of marketing at SymphonyIRI. “Digital media will play an increasingly integral role in the pre-planning process and helping consumers find new ways to save in 2012. Like coupons, the Internet is being leveraged as a list-making tool. Though penetration is much lower versus coupons, we expect it to rapidly and steadily increase this year.”

To effectively compete in 2012, CPG manufacturers and retailers should consider the following action items:

- Identify opportunities and risks: Retailers should closely track the evolving competitive set at the channel and retailer level to ensure appropriate product mix and inventory management strategies are maintained.
- Evaluate pricing and promotional strategies: Retailers should work with key manufacturer partners to develop cross-promotional opportunities with high-growth categories/brands and/or with key staple products.
- Explore opportunities to enhance product assortment: Retailers should align assortment strategies with changing trip mission and product usage trends.

SymphonyIRI Group, formerly Information Resources Inc., combines content, analytics and technology to help companies create, plan and execute forward-looking, shopper-centric strategies across every level of the organization.
 

X
This ad will auto-close in 10 seconds