The Brita Factor

Exclusive IRI data reveals shifts in consumer rituals brought on by new economic reality

Greg Lindenberg, Editor, CSP

OAK BROOK, Ill. -- Declines in the sale of bottled water in c-stores, primarily attributed to larger-package sales in other channels vs. single-serve sales, can also be attributed to the Brita factor. "The fastest-growing category for bottled water is Brita [filtered tap water]," said Thom Blischok, president of Information Resources Inc.'s Consulting & Innovation practice, during a CSPNetwork CyberConference entitled How's Business? Shoppers in Crisis: Finding Opportunity in Convenience. "It is growing hugely, quickly.... The biggest shift we are seeing in bottled water right [image-nocss] now is the movement toward buying a 24-pack, taking it home, drinking it, filling it with Brita and putting it back in the refrigerator." [To view an OnDemand replay of this CyberConference, pleaseclick here (free for retailers and wholesalers; $49 for others).]

This was one of many findings that illustrated Blischok's data-rich presentation, which explored the effect of the current economic recession on consumer and shopper habits and spending with an eye toward finding the silver lining of retail opportunities within that financial cloud in 2009. "There are tremendous opportunities which exist for c-store retailers and their manufacturing partners to build a new level of loyalty and relevance with shoppers," he said.

Many changes in consumer behavior brought on by this economic downturn are permanent, he said. "There is a growing fear of uncertainty and a fear of long-term survival. A lot of tradeoffs are being made: 'How do I afford to eat,' 'what do I not purchase,' 'how do I stretch my dollar' and 'what other possible economic burdens could I be faced with as this economic environment continues?'."

Unemployment, availability of credit, price inflation, commodity costs, property values and investment depreciation are issues the IRI calls the new "affordability lens," said Blischok. "If you are not integrating affordability into your [strategy], you are not seeing their struggle to stretch the dollar through their lens.... Affordability is the new shopper mantra. We are moving away from availability to affordability."

Private label is an enabler of affordability, and Blischok said it provides a major opportunity for retailers. "Private label has continued to flourish in its expansiveness, as well as in its ability to take price increases. In Q3 [08], we have seen across the overall FDMx [food, drug and mass merchandising channel excluding Wal-Mart] channel the consumer accept private label as an acceptable, affordable choice. Across all income levels, whether people are doing well, living comfortable or getting by, private label continues to mature. We see that continuing to develop as we race into 2009. Private label is, in fact, a growth option for [retailers]. We're going to see a balancing between national brands and private label in 2009, which has been previously unheralded. It will be across many of the categories that you offer in the c-stores, and it will be taken up by virtually all of the consumers that visit the c-store market."

And, of course, fuel prices play a part in affordability; however, although gasoline has dropped from about $4 per gallon to $2 a gallon and below, shoppers told IRI that the decline "hasn't eased up on [their] decision to be very cautious about spending overall." Most said, "I try to conserve gas, even though prices have gone down. Many also said they are "not making big changes, because lower gas prices are temporary."

Blischok also focused on opportunities around the holidays. "'There's no place like home for the holidays' will ring more true than ever" this year, he said, referring to "a definite and broad reaching movement to the family." More than two thirds of shoppers plan to spend the same or more on holiday meals this year. "So there's not a lot of fundamental downshifting, but there is a desire to return to the home."

More people placing a greater emphasis on spending time with the family and on holiday meals and entertaining gives convenience retailers another opportunity, he said. They can create promotions inside the store "to help people recognize that [they] are helping them spend time with the family, helping them with the entertaining process."

It also creates what Blischok called "the reminder play." He said, "I could easily see [a list posted] on the window of a c-store: 'Have you forgotten these 10 items for you holiday meals?' Success is going to be driven by your ability to serve the shopper and understand behavior differently than you do today."

He also devoted a major portion of his presentation to c-store performance metrics, which he called "Leaders & Laggards Revealed." Much of the data is brand new. Vitamins, weight control/nutrition liquid/powder, refrigerated salads/cole slaw, refrigerated teas/coffees and frankfurters are among the top leaders. Teas/ready-to-drink coffees, cough drops, weight control candy/tablets, sports drinks and bottled water are among the top laggards.

And "15 of the top 20 categories gained and only five declined in the c-store, which is a very promising trend; the ones that declined in the c-store, most of them also declined in FDMx," he said.

Meanwhile, "quick trips," when five or fewer items are purchased, are also in jeopardy in the convenience channel, said Blischok. "We're seeing some quick-trip shifting over to food, drug and mass. You need to protect your trips."

IRI is about to officially debut the "IRI Misery Index." It will discuss the level of misery that the shopper is experiencing based on a variety of economic factors. Blischok said the Misery Index increased with the recent financial bailouts and reduced post election. "But we think that as we go into 2009, misery will continue to be at an all-time high."