Digital CPG Blog

Significant findings of the  How America Shops MegaTrends report, “Moving On 2012″ report, by WSL/Strategic Retail, an authority on shopper behavior and retail trends, include:

·   Youth market no longer retail’s golden ticket. The youth market, 18-34 year olds, has the highest percent of those who do not have enough money to cover their basic needs, with close to a quarter (24%) in financial turmoil. Compared with people over 35, who were able to launch their careers 10 years ago, when times were good, this group is a long way from recovery, compelling retailers targeting this group to seriously rethink their strategies.

·      Branded products under threat. Shoppers in general are placing a greater focus on price, with two thirds (67%) of women agreeing that trusted brand names are not worth paying more for. More than a quarter (26%) of women admit that while they used to buy brand names they could not afford, they are no longer giving in to this indulgence. This figure is up 7 percentage points from 2010.

·       Six-figure incomes struggle. It takes a significantly higher income to feel financially secure in this economy, with nearly 30 percent of Americans in the $100-150K income bracket claiming they can only afford the basics. Once considered affluent, six-figure income shoppers are now identifying themselves as middle-income.

“There is a huge fundamental issue when more than half of Americans can only afford basic necessities and people who earn up to $150,000 think they are poor,” said Wendy Liebmann, CEO of WSL Strategic Retail.

Candace Corlett, president of WSL Strategic Retail, continued, “The youth market, which has traditionally been known for its enthusiastic spending of discretionary income, has virtually dried up. As today’s young adults struggle to find employment and pay down student loan debt, this demographic now represents the largest percentage of Americans who are challenged to afford even basic necessities.”

Key Additional Findings

A stunning 75 percent of women now say it’s important get the lowest price on everything they buy, up 12 percentage points from 2008 and up 22 percentage points from 2004. Some old and new methods of ensuring they get the lowest price include:

• 68 percent regularly use coupons to reduce costs — up 7 percentage points. vs. 2010.
• 45 percent claim they only buy items that are on sale — also up 7 percentage points
• 43 percent make a point to search online for store discounts before they shop — up 10 percentage points
• 14 percent of women say they use their mobile phones while in store to see if they can find a lower price, before they buy.
• The “cautious pause” before buying to ask, “Is this a smart use of my money?” (Total: 66%, HHI $150K: 47%)
• Managing their aspirations by sticking to brands and stores they can afford (Total: 58%, HHI $150K: 36%)
• Staying out of stores where they might be tempted to overspend (Total: 48%, HHI $150K: 28%), and,
• Buying less when they go shopping (Total: 43%, HHI $150K: 26%)

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The Internets… they keep changing things. Like making shoppers more prepared when they reach the store, and less apt to be enticed to products they didn’t come in for:

It’s no secret that technology has changed in-store shopping behavior. Whether it be through mobile phones, barcode scanning, or price comparison shopping sites; consumers are more prepared than ever in the store aisle. According to a new study released from Deloitte, nine in 10 shoppers know what they’re buying before they arrive at a store, and more than eight in 10 (83 percent) have a set of brands in mind that they will consider.

Of course, when considering the holiday shopping season ahead of us, we know in-store shoppers are more mindful of finding online deals or coupons. According to the study, 80 percent of surveyed shoppers say they do their own research online and have a pre-determined price point and a potential savings amount in mind before they step into a store. Furthermore, two-thirds of consumers shop when they know products will be on sale.

Three-quarters (75 percent) of survey respondents assert that they are smarter shoppers than they were a year ago, and nearly nine in 10 (86 percent) believe they are getting more precise in what they buy.

Procter & Gamble is interviewing consumers who are struggling to pay their bills as well as ones who don’t worry about money as they consider how to adjust to a marketplace that is increasingly divided. A wealthy consumer who says she has never kept a budget said she doesn’t buy the company’s Gain detergent because the low price means “it can’t be that good.”

How can you market to customers with discerning tastes and those with a thin wallet? Well, you can’t be everything to everyone, first and foremost. I would focus on finding rabid fans wherever they may lie and the rest will follow. It seems P&G is doing just that–

Procter & Gamble executives said a shrinking middle class is prompting them to focus more on high- and low-end products, “where a lot of the growth is happening.” The company recently introduced bargain-priced Gain dish soap. Other companies, including H.J. Heinz, also are betting that the shopping public is dividing into high and low.

This talk about the customer’s budget comes at the heels of talk about P&G’s restructring and “analysts say thousands of jobs may be cut. CEO Bob McDonald said the changes will be announced later this year after the company completes the $3 billion sale of Pringles to Diamond Foods.”

“CPG brands’ biggest challenge is the rapid adoption of eCommerce, and needing to align its brick-and-mortar infrastructure (sales force) with a new focus of providing more insights, and helping its retail partners who are losing high margin sales to eTailers,” says Bonnie Carlson, President of PMA Marketing (Promotion Marketing Association). “eCommerce is on a rapid ascent, with shopper benefits of convenience, assortment, and pricing, and is changing the retail playing field for giants like Amazon and WalMart, and their respective vendors. I would advise marketers to focus on content and authenticity to meet consumers’ needs — the rest will follow, and consumers will spread the word socially.”

Bonnie and her team conceptualized and brought to life  the The Smarter Shopper: Marketing to the Digital Consumer conference, which she desrcibes as “a confluence of two trends: digital marketing and shopper marketing. It is a recognition that consumers are increasingly using digital technology in every sphere of their lives, including retail, and that both smarter shoppers and smarter retailers are increasingly experimenting with new technologies to enhance the shopping experience.”

“Digital technologies are making the shopper experience more efficient and more convenient,” Carlson says, “making it easier for the shopper to find the products and services they want. Whether it’s helping the shopper to navigate the aisles, comparison shop, generate coupons, get more information, or check out without lines, all the technologies are being developed to improve the shopper experience.”

The Smarter Shopper: Marketing to the Digital Consumer
Tue – Wed, September 20-21, 2011
Stamford, CT
Register now >
Don’t forget – Use the code “digitalcpg”  at registration for a 10% discount just for DigitalCPG.com readers!

“How fast is e-commerce growing for consumer packaged goods? Fast enough that a new shopper-marketing agency has launched to focus solely on the channel. Packaged goods is now a $12 billion business across a host of pure-play e-commerce players,” reports AdAge.

“Some 10% of consumers bought consumer packaged goods via e-commerce last year, double the amount from 2009. Nielsen Co. projects e-commerce will rise from around 6% of total packaged-goods sales in 2009 to 10% by 2015 in the U.S., surpassing club stores and matching drug-stores’ share.”

So how can shopper marketing help you take advantage of e-commerce market?

E-commerce presents a far different landscape for shopper marketing than offline retail. For one thing, growth in e-commerce is coming largely from stockup “trips,” with the average online cart about three times the value of an offline cart, largely because of free or reduced shipping incentives for bigger purchases, Mr. Katz said.

Store navigation is another key factor. About 30% of online packaged-goods shoppers go through online “aisles” in a fashion similar to offline shoppers — 40% primarily use the online search box to look up categories or brands and another 30% work off auto-replenishment lists or saved shopping lists, Mr. Katz said.

Search and auto-replenishment offer the biggest opportunities — and challenges — for brands. Etailing Solutions research finds that among those 40% of shoppers using the search box, 95% of sales go to products that come up on the first page of search results. And it’s not always the market leader that comes out on top, particularly with “virtual shelves” often being much more crowded with also-rans.

Among those 30% of shoppers using auto-replenishment or saved lists, Mr. Katz said, winning offers huge and potentially long-lasting rewards.

“There’s a sense of urgency when you think of auto-replenishment,” he said. “If you’re Colgate, and Crest gets on the auto-replenishment list, that’s instant loyalty. It’s very hard to get a product off an auto-replenishment list and a new product on. It’s kind of a race to get on the auto-replenishment list right now.”