retail news in context, analysis with attitude

The Nielsen Company has released new research focusing on what the organization feels will be the dominant consumer spending trends in 2010.

“Nielsen research reveals that consumers’ fundamental spending adjustments are likely to last in the next year,” writes Todd Hale, Nielsen’s senior vice president of consumer and shopping insights. “Either by choice or necessity, their new-found thriftiness will continue. Almost one third of consumers (30%) say that they will use credit less even when conditions improve with 19% saying that they intend to save more money.”

The five major consumer trends for 2010, according to Nielsen, will be:

• Restraint...as “the need to save money, unemployment and other economic issues continue to be top of mind, suggesting that any return to past behavior may take some time—if at all.”

• Value...which will be a factor for retailers and manufacturers since “a focus on low prices at the expense of all other variables threatens margins.”

• Private brands...because as retailers cut prices across the store to be more competitive, private brand “unit share growth continues and retailer focus has never been stronger.”

• Consolidation...as local and regional players, as well as some larger retailers, become targets and/or predators.

• Assortment wars...as “retailer efforts to simplify the consumer shopping experience by eliminating aisle and shelf clutter will cause market share land grabs for small and medium-sized brands in pursuit of elusive revenue growth. Retailers may lose sales as they shift away from in-store merchandising that drove impulse buying and built shopper baskets. Look for brands caught in the trap of greater store brand focus and assortment optimization to forge alliances with key retailers, enter or step-up efforts as store brand suppliers, and/or explore direct-to-consumer sales.
KC's View:
What this all really means, in the broadest sense, is that retailers and manufacturers need to have a narrative when they talk to consumers. This is the wrong time to just throw spaghetti against the wall to see what sticks, which sometimes can be the impulse in tough times of contraction, retrenchment and shifting of habits. Rather, it makes sense to take a moment...to think and act strategically rather than just tactically. That is, I think, the best path to sustained and sustainable success.