"While analysts may disagree on whether or not the U.S. economy is in recession, there is no question that the economy is in transformation," said Thom Blischok, president of IRI Consulting & Innovation. "U.S. consumers have been hit on all sides with record-breaking gas prices, dramatic increases in grocery prices, high unemployment and declining home values."
He added, "These burdens are driving fundamental shifts in what consumers buy and where they shop. Consumers are forced to make tradeoffs. Competing in this new, evolving economy requires fine-tuned pricing, promotion, assortment and brand development strategies that are built on an in-depth understanding of a changing consumer in a transforming economy. The challenges of growing in this economy are significant, but there are windows of success. This IRI study reveals where those windows are and how to push them wide open."
Chicago-based IRI conducted an in-depth analysis of the current and projected economic environment and its consumer and market impact to provide manufacturers and retailers with a foundation for successful strategy development and refinement.
Key findings included:
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. Longstanding consumer purchase drivers, including convenience and health and wellness, are losing some momentum; consumers are foregoing ultra-convenience, and some shoppers are unable to afford healthier foods. Consumers are increasing purchases of basic ingredients and meal components due to reduced restaurant spending and are decreasing purchases of "nonessentials." Changes in consumer shopping and purchase behavior vary widely by segment, such as income, presence of children and life stage.To download the Times & Trends study, click here.
Meanwhile, a Kraft/CSP Daily News Poll earlier this week asked, "What, if anything, are you personally 'doing without' because of rising prices/the slowing economy? (Pick the most 'painful.')." Although 15% (of 234 total respondents) said "nothing, I don't feel the need," more than 27% said "not driving as much/combining trips/using alternative transportation"; more than 24% said "not eating out as much"; about 11% said "cancelling trips/vacations"; nearly 11% said "cutting back on entertainment"; almost 3% said "cutting back on/giving up cigarettes"; and nearly 2% said "cutting out/cutting back/downgrading coffee purchases." Approximately 7% said "other."
[Editor's Note: For in-depth coverage on how the economy is affecting convenience retail, see the June cover story of CSP magazine.]
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