Price 'a key driver' for recession shoppers
To cope with adverse economic conditions over the past 18 months, US consumers have been forced to make significant changes in how and where they shop, according to the latest Times & Trends Report from IRI, which found that shopper loyalty has become a far more complex issue as consumer buying habits change.
The report, entitled 'Channel migration: The blurring of shopper loyalty', noted that the days when shoppers selected retailers based on convenience, merchandising, promotions and affordability are gone.
"When we studied channel migration in 2008, we noticed sizeable share gains by supercentres across all departments and income levels, because consumers were trying to stretch their dollars," explained IRI's consulting and innovation president, Thom Blischok. "But, while supercentres are continuing to do well, we are also finding that competing retail channels have really been turning up the heat."
In fact, from new everyday low price (EDLP) programmes to expanding drug store programmes, retailers are fighting harder than ever to provide for consumers' rapidly changing needs and behaviours. According to Blischok, now is the time for retailers and manufacturers alike to conduct frequent and granular consumer and market assessments, and to develop consumer-centric marketing strategies.
When mortgage and financial markets weakened, and energy and food prices spiked, shoppers flocked to supercentres and focused on finding the lowest prices on everyday CPG products. However, during the past few months, as energy and food prices have decreased and the economy has begun to show a glimmer of hope, shoppers have calmed down and are once again reassessing their shopping attitudes, behaviours and strategies.
Grocery, drug, dollar-store and other channel managers are now more intently focused on winning back shoppers. For many retailers, newly evolving strategies have been successful. For example, thanks to lower fuel prices, some three-quarters of consumers now shop using five or more channels.
The importance of winning shoppers in an environment marked by rapid changes in purchase attitudes and behaviors is underscored by another trend. Consumers are making more frequent visits, but the rate of basket growth has moderated. Even so, some channels have seen particularly strong growth in per-trip expenditures. The average sale value per purchase at dollar stores, for example, has grown 5% in the past year. Channels that don't react quickly to changing consumer attitudes and needs stand to lose significant business.
"Even though shoppers are assessing their needs more rationally and are visiting a wider range of channels, they still view their purchases largely based on price," concluded Blischok. "This mindset is not lost on CPG marketers. In fact, several grocery retailers are now focusing on an EDLP format. Because increases in hiring typically trail recovery after a recession, IRI forecasts that price will continue to be a main driver in shoppers' decision-making processes even after the recession ends."
The full report has been made available to download from IRI's web site - click here (free registration required).
More Info:
