Tuesday, September 08, 2009Posted by Guest Blogger Susan Viamari, Editor of Times and Trends, Information Resources, Inc.
Recent reports point to an improving U.S. economy, but battle-weary shoppers remain fully entrenched in savings mode. Consumers are looking to trim back expenditures wherever possible. Dining out is down sharply, self-care is pervasive, and trading down—even out—is an increasingly common part of consumers’ money-saving strategies. Today, consumers are infinitely more aware of how and where their money is being spent.
Last year, when Information Resources Inc. (IRI) explored channel migration trends within the monthly Times & Trends report, supercenters were securing sizable share gains across every major CPG department. These gains cut across income segments, reinforcing the notion that reaction to economic turmoil ran broad and deep.
The recession continues to play out. Consumers are evolving rituals and CPG shopping strategies based on their current financial situation, confidence in the future, prices, promotion and a rapidly changing value perception. Many of the rituals that are developed in response to today’s difficult economic environment will remain long after the recession has ended. IRI’s August issue of Times & Trends, “Channel Migration 2009: The Blurring of Shopper Loyalty,” clearly illustrates that shopper loyalty has become an exponentially more complex phenomenon over the past two years.
Supercenters play a major role in providing U.S. consumers with affordable CPG solutions and continues to gain share of consumers’ CPG dollars. But, retailers from competing channels have stepped-up efforts to attract and retain shoppers, and supercenter share gains have waned over the past year. Innovative marketing efforts, such as every-day low price strategies being developed and rolled out across several large grocery retailers, and CVS’s Beauty 360 concept, are being well-received by deal-seeking shoppers, resulting in mitigated losses and/or slight gains across a majority of retail channels. (Note: Gains come largely at the expense of the mass merchandise channel, which is in a multi-year slide due to consumers’ increasing preference for one-stop shopping and the on-going conversion of traditional mass merchandise stores to supercenter formats.) The battle for share of CPG spending continues.
Retailers and manufacturers are notching up their efforts to connect with and influence consumers with the help of a powerful—and growing—marketing tool: the Internet. One of the early CPG players to the game was Walmart. The retailer’s first foray into the social media scene was an internal social network where employees could share ideas and get answers to questions. The idea gained traction and has led to several new online initiatives, including free classifieds on Walmart.com and several theme-based blogging sites. Other CPG marketers are joining in, showing presence on Twitter, Facebook and other online blogging sites. Reach and impact is multiplied greatly by non-affiliated bloggers posting their thoughts and experiences online for all to see.
And consumers are certainly logging on to the Web en masse. According to Internet World Stats, three-quarters of Americans are now online. Penetration has increased 60 points since 1995, and migration to online living remains strong. In IRI’s recent “Consumer Dynamics” survey, shoppers predicted that 76% of their shopping decisions will be made before they get to the store. In a recessionary economy, and likely beyond, consumers are embracing the Internet as a money-saving tool. For example, IRI research reveals that 44% of shoppers are using the Internet to find coupons, and 52% rely on Internet-based research to obtain basic healthcare information.
The Internet has brought immediacy to shopping discovery efforts. A rapidly growing number of shoppers indicate that information from the Internet or email has influenced their health and beauty care product purchases. The medium provides an excellent opportunity to connect with consumers in the privacy of their own home, and it serves as a central repository for comments from other shoppers. The power of the Internet is vast and quickly intensifying. CPG marketers that are able to effectively leverage this tool to understand and connect with key shopper and target groups will have a powerful competitive advantage in the battle for share of CPG spending.
For more on the burgeoning battle for share of CPG spending, and the important role the Internet is playing in informing and influencing fiscally-weary shoppers, read IRI’s August 2009 issue of Times & Trends, “Channel Migration 2009: The Blurring of Shopper Loyalty”.
For more great insights into critical trends impacting the CPG industry, be sure to check out IRI's CPG Blog.