Shoppers Will Reduce Number of Channels They Visit
Published in CSP Daily News
SymphonyIRI recaps 2012, predicts 2013 CPG trends
CHICAGO -- Shoppers will reduce the number of channels they visit as reverberations from the nation's economic rollercoaster ride have been felt throughout the consumer packaged goods (CPG) industry for several years now, said SymphonyIRI Group. And 2012 was no exception, as consumers are still attempting to ease budgetary strains and are embracing a variety of money-saving strategies.
Research from SymphonyIRI's Times & Trends, "2012 CPG Year in Review: Finding the New Normal," provides insights into today's capricious consumers and the effect their behaviors are having on CPG growth trends.
"For 2012, we forecasted that shoppers would continue to define value largely based on price, manufacturers and retailers would pass ongoing commodity price increases on to the shopper, and private label sales would continue in their current ranges," said Piyush Chaudhari, president of the Americas for SymphonyIRI. "These predictions largely came to pass, and we expect 2013 to resemble these same trends in many ways."
SymphonyIRI predicts shoppers will remain frugal in 2013, even though there will be continuing signs of economic recovery and strengthening.
In addition, the following trends identified in 2012 will continue in 2013:
- Shoppers will reduce the number of channels they visit. Share of consumers shopping at fewer than five channels grew three percentage points between first-quarter and fourth-quarter 2012, and SymphonyIRI said it believes this will continue as shoppers limit spending to channels that are perceived as offering the best value.
- While an increasing number of positive economic signs are emerging, shoppers will remain intensely focused on value. There is enough negative news about the federal budget deficit and costs of the new healthcare law, for example, to reinforce shoppers' frugal behaviors left over from the last recession.
- Millennials are becoming the new baby boomers. They are a 50-million-strong-shopping group now forming habits and loyalties. Tailoring offerings to this group and providing outstanding service will pay dividends for decades to come, both literally and figuratively.
- "New" media is rapidly becoming traditional media. The trend of shoppers leveraging the Internet for information and deals is growing and will continue to gain momentum, as millennials age and a new generation that is even more tech savvy than the millennial generation enters the market.
"The nation is far from having a firm foothold on growth and stability, and consumers and marketers alike are very aware of this reality," said Susan Viamari, editor of Times & Trends for SymphonyIRI. "Consumers' pursuit for value is as intense as ever, and it has served to amplify industry competition. Innovation that supports key shopper rituals, such as those around self-driven, home-based living, is being well received in the marketplace and will continue to help spur growth."
To effectively compete in 2013, CPG manufacturers and retailers should consider the following action items, said SymphonyIRI:
- Identify opportunities and risks: Manufacturers should closely track the evolving competitive set at the channel and retail level, including traditional brick-and-mortar as well as the online arena, to ensure appropriate alignment of distribution strategies. Retailers should use value-oriented pricing and promotion programs to protect and grow share, particularly across categories that are most closely aligned with the needs and wants of key shoppers.
- Evaluate pricing and promotional strategies: Manufacturers should continually re-assess and adjust pricing to maintain optimal price gap between private label and name brand offerings. Retailers should adopt everyday pricing strategies that underscore their value proposition and rely on promotional pricing to address short-term tactical opportunities.
- Enhance new product development initiatives: Manufacturers should constantly evaluate product development opportunities at the value and premium ends of the spectrum, including those that address key consumer trends. Retailers should explore opportunities to partner with manufacturers to develop complementary national and private label assortments across categories.
Chicago-based SymphonyIRI is a global leader in innovative solutions and services for the CPG, retail and healthcare industries.