Wobbly economy changing shopper habits … and network strategies?

July 18, 2008 by Dave Haynes

MediaPost has an article this morning about how the recession is changing the way consumers have been shopping for the last many, many years.

A new study shows that consumers are reversing decades-long trends, shunning convenience and healthier foods in search of bargains.


For example, the IRI study, called “IRI Times & Trends Special Report: Competing in a Transforming Economy,” finds that 53% of consumers report that they are cooking from scratch more now than they were six months ago. About 59% say they are buying fewer single-serving products, and 55% say they are buying fewer prepared meals, “marking a turning point in the convenience trend,” says the report. And 52% say they are buying fewer organic products.

As a result, stores are seeing a resurgence in sales of frozen foods, perishables, and those so-called “center store” items that have languished. And while no one will be surprised that private-label products are still showing strong gains, with 50% of consumers saying they have stepped up their spending on such products in the last six months, it may pain marketers to see that a sizeable minority–42%–specifically say they have given up their favorite brands.

Certainly, the main driver to some of these changes is the economy: Roughly half of all consumers with incomes under $55,000 per year say they have trouble affording the groceries they need, as do nearly a quarter of those earning between $55,000 and $99,000.

But prices are driving consumers to channel-hop in ways that are hard to predict. Escalating prices “have bred exceptionally high price sensitivity, driving declining demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated channel migration,” the study finds.

While the total number of shopping trips has fallen 3% in the last year, shifts among types of stores are dramatic. Gas price shock, for example, has caused sales at gas-station convenience stores to drop sharply, falling 6% in the first quarter of the year. The number of trips to grocery and drug stores has also slipped, and even trips to warehouse clubs–long a retail growth category–have slowed. The big winners are SuperCenters, which have seen trips increase 5.7% in the last six months.

These are the sorts of consumer dynamics that everyone, in pretty much every sector of our business, and the risks and benefits could be spun any number of ways.

In a retail network, are the screens still in the right sections? Is the content mix still right in a store where more and more shoppers are not looking for convenience, but savings? Are the sales people chasing ad and trade dollars still chasing the right people. With traffic numbers dropping, is this the right place to be?

You get the idea.

There is also much to argue that retailers never needed this stuff more to help move product, adjust swiftly to market conditions and drive down overall costs.

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