We’re all grimacing visibly every time we have to fuel up at the pump. As the gauge whirs steadily past $30, $40, and $50, the depleting affect that gas prices are having on bank accounts is shockingly clear.
Many articles about rising gas prices point to a correlating rise in food prices, due to production costs and transportation costs – both tractors and tractor trailers both guzzle gas. With average gas prices a whopping 40 percent higher than they were last year, many shoppers are having trouble affording their weekly groceries. To alleviate budgetary strain, they are making many changes to how, when and where they make their grocery purchases.
This morning, SymphonyIRI hosted a webinar, entitled “The Ripple Effect: High Gas Prices Bring Pain Beyond the Pump,” that provides a detailed look at how rising gas prices are putting the crunch on shoppers, retailers and manufacturers alike.
In fact, nearly half of consumers feel their grocery budgets are being squeezed by higher prices at the pump. Here are some of the ways that grocery shopping patterns are changing:
- Shopping trips are being consolidated, allowing for a reduction in overall trips.
- Consumers are showing a growing affinity for closer-to-home retail options, with four out of 10 shoppers being reducing or completely eliminate trips to their preferred retailers due to high gas prices.
- Shoppers are making their pantry stocking trips at supercenters and club stores instead of at their local grocers. choosing to drive “the extra mile” in search of the lowest everyday prices on key items
So, what are CPG manufacturers and retailers to do in the face of even smaller margins at the hands of rising oil prices?
In today’s webinar, we proposed three action items:
- Market Assessment: Manufacturers and retailers should conduct frequent assessments of key and target consumer groups to improve responsiveness and speed-to-market.
- Strategy Development and Execution: Manufacturers should develop a strategy within their category, and ensure distribution, assortment and merchandising support efforts are closely aligned with shifting trip mission trends. Retailers should drive private label growth through further development of multi-tiered private label lines, with focus on departments/categories that fit shifting trip mission dynamics.
- Measurement: Manufacturers and retailers should leverage modeling/simulation to gain perspective on cause and effect before making strategy adjustments, then monitor actual impact after rollout.
Want more insights from SymphonyIRI? Don’t miss SymphonyIRI’s next webinar on July 12!
