Just as the economy has been slow to recover, consumers have been slow to loosen their purse strings. Though consumer confidence rose drastically in Q1 2014, IRI’s Q2 MarketPulse study found consumer confidence leveling off, with 46 percent of consumers stating they feel the “same” about their current financial situation as they did the previous quarter. Sixteen percent of consumers indicated they feel “a little better,” while 22 percent feel “a little worse,” and 13 percent feel a “lot worse.”
Despite having suffered greater economic hardship than other groups, millennials have reported feeling more comfortable over the last two quarters. Sentiment among baby boomers and Generation Xers, on the other hand, dipped slightly this quarter as compared to Q1 2014.
This quarter’s continued cautious optimism aligns with many consumers’ expectations that their homes and investments will increase in value this year, as well as their ability to save. Though cutbacks are still widespread, IRI’s MarketPulse shows an uptick in splurging:
|Q2 2011||Q2 2014|
|Cutting back on nonessential items||60%||51%|
|Buying more private label than previously bought||47%||43%|
|Trying new brands priced below regular brands||46%||39%|
|Giving up some favorite brands||39%||31%|
|Buying fewer healthier products because more expensive||31%||28%|
|Splurging on premium or gourmet products||19%||22%|
Though calculated splurges are on the rise, thriftiness has become engrained in our culture over the past several years, so most spending will still be done cautiously. Additionally, consumers remain dedicated to finding the best value: one-third of consumers say they will continue shopping at multiple stores to find the lowest prices.
As consumers continue to focus on value and savings, CPG marketers must constantly apply new tactics to attract customers, and should focus their product and pricing strategies around addressing consumers’ most pressing needs and ensure that they’re doing so in a highly targeted fashion. For more details on how CPG retailers and manufacturers can demonstrate value and incite more instances of splurging behavior, please read our Q2 2014 MarketPulse press release.