Consumers continue to look across retailers and aisles for deals; non-edible sales struggled more than CPG industry as a whole in Q2 2017
CHICAGO — Aug. 8, 2017 — From job growth picking up and income lagging behind to weak housing investments and the current political climate, consumers are being bombarded with a slew of mixed indicators that are making them less willing to open their wallets and spend. According to the latest IRI Consumer Connect™ survey results released today, 55 percent of consumers say their household financial health is good; however, 49 percent say they are making sacrifices and looking for deals to make ends meet. IRI® also released “Mid-Year Reflection 2017,” which examines how consumers’ shopping behaviors and attitudes are affecting the CPG industry’s non-food sector.
“Since consumer spending accounts for about 70 percent of the U.S. economy, consumer hesitation to spend is a really big deal, and it is leaving CPG marketers struggling to find true and sustainable growth in a low-growth marketplace,” said Susan Viamari, vice president of Thought Leadership for IRI. “This also is playing out in the non-food sector, where consumers are taking a very cautious approach to their purchases. They are buying what they need rather than stocking up and purchasing those nice-to-have items in the beauty/personal care, health care, general merchandise aisles.”
Let’s make a deal
Results from the Q2 2017 IRI Consumer Connect survey reveal that 49 percent of consumers are making sacrifices to make ends meet compared to 51 percent in Q2 2016. Generation X and millennials have been hit the hardest, at 54 percent and 53 percent, respectively, but other generations don’t lag far behind. To stretch their dollars, deal-seeking remains high and is essentially unchanged compared to 2016:
|| Q2 2016
|Buying lowest-priced items:
|Buying non-preferred OTC medication brands due to sale:
|Buying non-preferred beauty/personal care brands due to sale:
|Buying non-preferred OTC medication brands due to coupon:
|Buying non-preferred beauty/personal care brands due to coupon:
Non-food sector struggling
Non-edible sales struggled more than the CPG industry as a whole during Q2 2017, with unit sales down in all three months of the quarter: 0.4 percent in April; 1.5 percent in May; and 1.9 percent in June. May/June declines cut across all non-edible departments but were sharpest in beauty and general merchandise:
In addition, consumers are selecting which retailer to shop based on money-saving opportunities offered. Millennials, who have struggled more than others since the economy took a downturn, are the most discerning about which store they will shop (total, millennials, Generation X, baby boomers, seniors).
- Able to fulfill my needs at the lowest possible cost: 95%, 96%, 95%, 96%, 94%
- Good selection of store brand products: 82%, 86%, 84%, 80%, 79%
- Strong loyalty/discount program: 74%, 79%, 79%, 74%, 66%
- Good selection of health care products: 62%, 62%, 58%, 64%, 60%
- Good selection of beauty/personal care products: 51%, 54%, 49%, 53%, 44%
Overall, the grocery channel is outpacing the industry average and the mass market/super channel when it comes to both number of shopping trips and per-trip spending for non-food items.
The appeal of store brands
Store brands continue to be viewed as a quality product for a good price. These products appeal to all generations, especially millennials, who tend to be more concerned with meeting their needs than the actual brand name, and are inclined to view store brands most favorably (total, millennials, Generation X, baby boomers, seniors).
- Store brands are just as good in quality as national brands: 75%, 83%, 78%, 72%, 68%
- Store brands are a better value than national brands: 69%, 76%, 69%, 67%, 64%
As a result, spending on non-food store brand solutions is outpacing national brands. While store brand trips are lower, trip performance has been stable.
“Everyone is battling for growth in the CPG industry, so marketers need to constantly communicate with their consumers, tailor their offerings and target their messaging to succeed,” concluded Viamari. “Targeting against high-potential consumers is critical. For instance, millennials will pay more for online ordering with home delivery, and wealthier shoppers will pay more for nutrition density and eco-friendliness. Getting the right message to the right consumer will help pry those wallets open.”
About the IRI Consumer Connect Survey
IRI provides new survey results at the end of each calendar quarter covering shoppers’ behaviors and attitudes as they directly relate to their strategies for learning about, purchasing and utilizing CPG and health care products, as well as information regarding perceptions of economic conditions and their ability to provide for their families. For more information about customizing the research for a particular category or industry, please contact IRIMarketing@IRIworldwide.com.
About the IRI Partner Ecosystem
IRI fundamentally believes that delivering differentiated growth for clients requires deep, highly integrated partnering with a variety of best-of-breed companies. As such, IRI works closely with a broad range of industry leaders to create innovative joint solutions, services and access to capabilities to help its clients more effectively compete in their various markets and exceed their growth objectives. IRI is committed to its partnership philosophy and continues to actively enhance its ecosystem of partners through alliances, joint ventures, acquisitions and affiliations. The IRI Partner Ecosystem includes such companies as 84.51°, Adobe, The Boston Consulting Group, comScore, Experian, GfK, Gigwalk, GuestMetrics, Ipsos, Kantar Millward Brown, Kantar Shopcom, MarketVantage, Mastercard Advisors, MaxPoint, Mu Sigma, Oracle, Pinterest, PlaceIQ, Research Now, SPINS, Univision and others.
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