The past 18 months has been a whirlwind of economic uncertainties…we’ve all heard it before. But, take a closer look and despite some of the upticks in spending during holiday periods, like Easter and Christmas, and you’ll see that the general consumer purchasing patterns has not changed. We don’t predict any change happening in the near future and, surprisingly, today’s savvy consumers aren’t too fazed by it.
There are four things driving this spending stagnation. The first is fairly obvious. Consumer angst with the current economy and its stability is driving consumers to spend more deliberately and less frivolously. Making matters worse is the continued negative news on lack of available jobs. This has led to shoppers pausing before they purchase. These shoppers have learned a new series of shopping rituals and regimens to achieve better value for the dollar their spending. Most have learned to live with less and are happy about it.
This new behavior suggests that a new shopper norm has arrived. What this means for retailers over the next 18 months is that there will need to be a refocus on redesigning the shopper experience given this slower pace of shopping. It will be critical to demonstrate better value and put in place better programs to show consumers that retailers understand their plight. Retailers like HEB, Publix and Redmans provide examples of how to better service shoppers by bundling cost-efficient meal solutions, for instance.
For manufacturers, the new shopper value equation where quality is received for every dollar spent, means the need to reposition products around value. As such, private label is developing in the shoppers’ minds as a “better value” equation. Manufacturers must consider details, such as the type of information highlighted on labels, and make the case for the quality benefits of products. Platforms like “better for you” will help justify value for today’s choosy consumer. Some manufacturers have already begun to address this, such as Clorox who highlights the importance of home essentials and how shoppers can use their products to easily keep their home healthy and clean. Sara Lee provides options to simplify breakfasts and Campbell Soup offers meal options such as their Quick & Easy $4 Dinner Ideas.
Despite this new shopping standard, there is still room for success in CPG. It’s just a matter of flexibility in strategy and understanding of the shopper’s plight.