By Susan Viamari
Many of us find ourselves feeling more optimistic at the beginning of each new year, especially when it comes to personal finances. But this enthusiasm has a tendency to fade into reality after a few months. We certainly see that to be the case when reviewing consumer responses to IRI’s latest MarketPulse survey, which provides a quarterly snapshot of consumers’ perceptions of economic conditions and how their personal finances are impacting CPG-related attitudes and behaviors. While there was a slight dip in positive consumer sentiment in the second quarter of 2015 compared to the first quarter of the year, shopper enthusiasm is still higher than second quarter 2014. This tells us that consumers overall are feeling better about the direction of the economy and their own financial future, even if they are remaining careful in their shopping and spending habits.
Overall, 24 percent of consumers feel their financial situation has improved during the past year, and 24 percent think their situation hasn’t changed. Twenty-three percent expect improvement over the next six months, which is consistent across all groups – 22 percent of millennials, 27 percent of those age 35-54 and 21 percent of baby boomers expect this positive progression to continue throughout the end of 2015.
The Great Recession obviously made consumers more cautious about opening their wallets, and that isn’t going to change anytime soon. They’re still prudently planning their purchases to ensure they don’t overspend yet get their grocery staples and other items they need.
- 64 percent of shoppers make a list prior to going to the store
- 52 percent chose the store they will shop at because it offers the lowest prices on needed CPG products
- 45 percent stock up on certain items when they are on sale
While shoppers love to get a good deal, what they are really focused on right now is value. They want brands that will offer them a good experience that is highly tailored to their needs throughout their purchase journey. In fact, for two-thirds of shoppers, less than 50 percent of the shopping basket is purchased based on deals. This is a big deal (pun intended). Since value means different things to different people, it’s absolutely critical for manufacturers and retailers to get the base price for products just right. From there, deals can be used for short-term, tactical opportunities.
- 83 percent will choose brands based on price in the coming year
- 80 percent will choose brands based on previous trust/usage
- 58 percent will choose brands based on household requests
So how do retailers and manufacturers meet the needs of the value-conscious shoppers? First and foremost, they must work together to create holistic pricing strategies that emphasize value to consumers while still meeting share, margin and growth goals. It’s not always easy though. Marketers need to look across categories and aisles to understand where price cuts make sense without negatively impacting sales volume and also think about how they can creatively convey the idea of value, separate from the sticker price, to their customers.
To learn more about how manufacturers and retailers can work together on pricing strategies to meet consumer needs, read Drive Margin Growth of 1 to 3 Percent with Collaborative Pricing Strategies.