retail news in context, analysis with attitude

by Susan Viamari, editor, “Times & Trends,” SymphonyIRI Group, Inc.

The quest for affordability is driving consumers to seek out better deals no matter the cost. However, counterintuitive that statement may seem, it is spot on. Even as the price of gas continues to soar ever higher, 75 percent of shoppers still visit five or more stores to meet their CPG needs.

Consumers’ cross channel search for the best deals clearly underscores the mindset of today’s CPG shopper—a mindset in which consumers are living with less and making purchases deliberately and cautiously.

Consumers’ attitudes and behaviors today differ rather significantly from days gone by, when many Americans lived “outside their means,” drawing upon credit to keep up with the Joneses. Today’s attitudes and behaviors were shaped by prolonged economic downturn, and by the longest and deepest recession to hit this country since the Great Depression. Today, a full year after the recession has passed, aftershocks are still shaking the nation. Key economic indicators, including unemployment and inflation, remain less than favorable, and, consequently, consumers are firmly entrenched in savings mode.

During the beginning of the economic downturn, shoppers flocked to value retailers, particularly supercenters and mass merchandisers, demonstrating a willingness to drive the extra distance in a desperate effort to save money. Today, grocery, drug, dollar and club stores are enjoying increased shopper visits, at the expense of supercenter and mass stores. Share trends reflect these shifts in shopper behavior.

Across CPG channels, purchase frequency increased by 2 percent during the past year, with grocery, dollar and club channel trends closely mirroring industry average. Across other channels, though, trends vary significantly. For example, frequency within the drug channel accelerated sharply within the last year, increasing by 6.7 percent. This growth is being driven by a number of factors, including shifting trip mission trends.

Quick trips, small “need-it-now” excursions with an average basket size of less than $40, have become more common as consumers look to minimize large one-time outlays of cash. With a broad assortment of health and wellness solutions and a growing assortment of food and beverage offerings, close-to-home drug stores are a logical destination for shoppers looking to quickly pick up needed items with only minimal gas and time investment. Dollar stores also are benefitting from this trend due to generally convenient locations and broader, expanded assortments. These efforts are clearly paying off, with dollar channel frequency increasing by 2.6 percent during the past year.

When thinking about channel migration trends, CPG and retail leaders must consider changes in the channels themselves and how those changes will impact shoppers. For instance, as ‘big box’ retailers open smaller format stores, such as Target opening CityTarget, closer to downtowns, will shoppers continue driving to traditional value formats that tend to be located in more out-of-the-way locations?

In the CPG industry, channel lines have definitely blurred during the last couple of years. As strategists, formats and technologies evolve, and as CPG prices continue to rise, this blurring is expected to continue.

For more information about channel migration trends, download SymphonyIRI Group’s Times & Trends Report, “Channel Migration: A Quest for Affordability” by CLICKING HERE.
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