Shoppers Cautiously Optimistic
Consumer confidence begins to settle, says IRI
CHICAGO -- Consumer confidence was relatively flat in second-quarter 2014 after dramatically increasing in first-quarter 2014, according to IRI's latest MarketPulse survey. Sentiment remains consistent for millennials, while it dipped slightly among baby boomers and generation Xers.
"Even though the economy is gradually rebounding, consumers are cautiously optimistic about their financial health," said Susan Viamari, editor for thought leadership at IRI. "We are seeing the ranks of those consumers who are experiencing and even expecting economic improvement slowly beginning to rise. Of particular note are millennials, who have suffered more and longer than others, and are reporting that they have been feeling more comfortable for the last two quarters. Time will tell, but, for now, this indicates that the stabilization of the economy is reaching a bit deeper across consumer segments."
Just as the economy is slow to rebound, the same can be said for consumers' confidence. After a significant jump in first-quarter 2014, confidence is leveling off. Whether this stability continues remains to be seen, but for now, 16% of consumers say they feel "a little better" about their current financial situation compared to 13% in second-quarter 2011, the first year IRI began conducting the MarketPulse survey.
In addition, the skeptics are becoming fewer in number. This quarter, 22% indicate they feel "a little worse" compared to 25% in second-quarter 2011, and 13% say they feel a "lot worse" in second-quarter 2014 compared to 15% in second-quarter 2011. Those who feel "a lot better" remained flat at 3% compared to second-quarter 2011, while consumers who feel the "same" is 46% in second-quarter 2014 compared to 43% during the same time period in 2011.
Consumers across the board are expecting their home values, value of investments as well as their ability to save improve in the coming year.
"Seeing your nest egg not only stabilize but grow goes a really long way in boosting confidence," said Viamari. "Consumers are feeling a bit more comfortable about loosening their grip on the purse strings, but they will be very pragmatic about increased spending and splurging."
IRI's MarketPulse survey illustrates that cutbacks are still widespread, but the stronghold is easing a bit. Simultaneously, there is an uptick in splurge behaviors (second-quarter 2011 vs. second-quarter 2014):
- Cutting back on nonessential items (60% vs. 51%).
- Buying more private label than previously bought (47% vs. 43%).
- Trying new brands priced below regular brands (46% vs. 39%).
- Giving up some favorite brands (39% vs. 31%).
- Buying fewer healthier products because more expensive (31% vs. 28%).
- Treating self to small indulgences to ease stress (31% vs. 31%).
- Splurging on premium or gourmet products (19% vs. 22%).
- Purchasing only preferred brand, though others less expensive (12% vs. 15%).
"A critical takeaway from our latest MarketPulse survey is that, while optimism is emerging, consumers' continued commitment to find maximum value is as strong as ever," concludes Viamari. "One-third of consumers tell us that they will continue to shop multiple stores to find the lowest prices."
Chicago-based IRI is a leader in delivering market and shopper information, predictive analysis for clients in the consumer packaged goods (CPG), retail and over-the-counter healthcare industries.