He’s bringing home the bacon… and other groceries

Trend Observation:  A story from today’s Marketing Daily suggests that men are doing more of the supermarket sharing in many consumer households… at least from his point of view.  But in a significant number of households, she acknowledges that he is helping more at the grocery store.  Click here to see the story.

Marketing Implications:  This is a great example of why we recommend that you revisit issues like your target audience, what kinds of benefits they seek and purchase priorities they have; these things evolve over time.

Does your consumer look the same as she (or he) did a few years ago?  Are they buying based on the same purchase priorities?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The dumb bell economy hits the food aisle

Observation:   This morning’s newsletter from Phil Lempert explains that food retailers have their own version of the “haves” and “have-nots” landscape.  He divides consumer sentiment into the two groups of pessimistic and optimistic.  The latter group is feeling better about the economy, more likely to try new products and experiences, and indulge a little more freely.  Pessimists might be more likely to change retail channels frequently (going from grocery stores to club, discount and dollar stores), clipping coupons more religiously, and taking extreme measures to maintain a frugal lifestyle.  Click here to see the story.

Implications:   I’ve written pretty extensively about the Dumb Bell Economy, and you can review those past stories by clicking here.  This Phil Lempert piece does a good job of reminding us that—just as was the case with the recession—the economic recovery is a very personal thing, and might look drastically different from one household to the next.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Deciding where credit is due

Observation:  If it did anything at all, the Great Recession exposed flaws in the way both lenders and consumers decide how much debt they can handle.  Well, it seems that one consortium is about to expand the scope of financial behaviors that are scrutinized in the act of building a credit report.  Click here to see that story, which appeared in a recent issue of the New York Times.

Implications:   It has been suggested that many consumers have been working to shore-up their financial affairs, and be more careful with credit.  It would appear that lenders, too, will have better tools to gage their credit practices.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Will the changing definition of retirement alter food shopping?

That was the question posed by FMI’s Facts, Figures and the Future, and as published in today’s newsletter from Phil Lempert.  Click here to see it.

Implications:   Of course, the question is rhetorical, and the answer (for many consumers) is “yes.”  But not all of the changes in planned retirement behavior have to do with the recession.   Many of the changes have more to do with the fact that we’re going to live longer.

In 1950, when someone was getting old enough to retire, the common fear was often, “Oh no!  What if I die?”  In 2011, with lifespans for many folks reaching into their 80’s, 90’s and beyond, the more common concern is likely, “Oh no!  What if I live?!”  Once upon a time, a nest egg had to last five or ten years.  Today, it might have to last thirty or more.

That’s why people will likely look for ways to be re-hired after they’re retired.  A small income to supplement their nestegg (investments, social security, etc.) is a no brainer.  And their spending is likely to be adjusted, also, to reflect their evolving financial situation.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Higher food prices likely

Today’s USA Today includes a story about the prospects for higher corn prices due, in part, to a challenged U.S. crop this year.  Click here to see the story.

Implications:    The other part of this equation is higher world demand on a weaker world supply.  With such a commonly used commodity feeling the effects of at least short term (2011-2012) inflation, consumers are likely to spend more for the same grocery store staples and restaurant favorites.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Supermarkets: Expect smaller trips and more planning

Supermarket Guru Phil Lempert suggests that consumers will continue to carefully manager their grocery budgets… as prices on the shelves are expected to rise.  Click here to see the video.

Implications:    If customers are going to plan more carefully, are you offering tools online (and elsewhere) that help them plan?  And if prices are expected to continue their rise, we can expect consumers to continue their scrutiny.  Does it make sense to start bundling more products into a “meal cost,” much as one might see on the menu at a restaurant?  Just a thought:  Consumers continue to change the way they think about buying; that fact should influence the way we think about selling.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

One shift that seems to be sticking: Store brands

Even though the recovery is underway, consumers continue to choose private-label (store branded) products at grocery, according to this story from Marketing Daily (click here to see it).

Implications:  Little comment is needed here, except to acknowledge that people don’t buy brands for the brands’ sake.  They choose a product or service they believe will deliver the benefit they seek better than other alternatives.  Absent that distinct selling proposition, the consumer has little choice but to use price as the main criteria in their decision-making process. 

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Coupon use (and other savings strategies) remains strong

An article from this morning’s Research Brief indicates that coupons remain popular, as food product prices continue to rise. Click here to see the story.

Implications: During the recession, coupon use (and the other shopping behaviors mentioned in the article) were the consumer’s way of defending against lower household incomes. During the recovery, those same behaviors are helping defend against inflation.

What behaviors are you noticing about your customers now that the recovery is gaining momentum? Are they shopping/deciding the same way they did a couple of years ago? Are they motivated by the same reasons?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Store brands remain strong

Private label goods received a lot of trial thanks to the recession. And it appears they remain popular as the recovery gains momentum, according to Nielsen data as published in this recent story from Daily Finance (AOL). Click here to see the story.

Implications: One by-product of the recovery can be a surge in prices. Many companies delayed price hikes for fear they would further scare consumers during an already difficult time. But as the recovery gains momentum, those companies are more likely to move forward with those price increases.

Sticking with the store brands they discovered during the recession could be one way that consumers are managing in a more expensive world. This issue illustrates on lesson learned during the recession that is likely to stick around a while.

[Thanks to friend and fellow trend-watcher JoAnne Naganawa from Seattle for sending this link.]

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

The consumer might not be who you think

Back in September, 2009, I offered some thoughts about how the unemployment issues of the Great Recession were impacting men in different ways that women [see “Déjà Vu, Women in the Workforce”]. It simply asserted that companies did not just fire people during the downturn, they fired paychecks… seeking not to reduce headcount, but to dramatically cut payroll. This put a target on the backs of a lot of men in management and in the C-suite. Also, the recession was particularly tough on people whose jobs were tied to manufacturing and construction.

Yesterday, Advertising Age offered a story that explains one of the possible implications of that shift, explaining that more men are in control of the household’s grocery shopping chores. Click here for the full story.

Implications: It’s not enough for a company to understand who their target consumers are. They must understand, also, how their target consumer groups are changing over time. And this isn’t just about groceries and packaged goods. Who’s taking the kids to the doctor? Who’s more likely to have a commute (and thus, decide on the next vehicle the household will purchase and the gas station/convenience store/coffee shop to stop at)? Who’s more likely to purchase business apparel, and who’s more likely to plan the next family vacation? Who will balance the checkbook and pay the household’s bills?

Who will drive the decision about the product or service you sell?

Mike Anderson

Consumers have a plan. Do you know what it is?

More consumers are arriving at the grocery store with a plan in hand, according to data from NPD and featured in a Marketing Daily article just yesterday. (Click here to see the story.)

Implications: From cars to gifts to groceries, many consumers have held-on to the recession-inspired habit of planning for more purchases, and making fewer purchases “spontaneously.”

In your category, what does that buying cycle look like? Will they replace the vehicle when they hit a certain mileage point? Or are they waiting for the first major repair, and then ready to dump the vehicle they have now? How thin or dated must their wardrobe become before they’ll replenish the closet?

A grocery shopping list is not just a logical, tangible example of planned purchasing. It is emblematic of a new way of life for lots of folks. Is your product or service category impacted by this practice?

Mike Anderson

UPDATE: Companies cleaning-up, continued

Earlier this month, I offered a posting about the sustainability efforts at P&G [see “Companies like this could clean up,” October 4, 2010]. Today, Marketing Daily offered another story about corporate sustainability efforts, this time from Walmart. Click here to read the story.

Implications: This seems like another example of a company that is fixing the inside of its operation before telling it’s “sustainability” story to the outside world.

Smart.

Mike Anderson

Even affluent consumers like to save money

A story in Marketing Daily last week suggests that affluent consumers (HH income of $100K+, in this case) also shop at Walmart. (Click here to read the story.)

Implications: I enjoy any report that reminds us of the danger behind over-generalizing an audience or consumer group. People who are broke still find ways to splurge if the priority is strong enough. And people who are rich still like to save money.

I think consumers are becoming much more compartmentalized in their thinking. We’re trying to save money at a club or discount store when it comes to undifferentiated sweat socks or laundry detergent or other products that are available almost anywhere. That way, we’ll have some money when it is time to make a purchase of distinction, whether that is a nice restaurant, a jewelry or other gift to mark a very special occasion, or a suit that we can preserve for particularly important business meetings.

The popular term for all of this is channel-jumping (shopping at a variety of supermarkets, discount stores, club outlets, dollar stores, department and big box stores… to get he best deal on products that might be available in a variety of locations and store types). And it leads me to this question: If they’re available everywhere, are brands the new generics?

Seriously, is a same-sized jug of Tide laundry detergent worth more from one store than another? Why? What value is being added by the more expensive store, in terms of service or convenience to the shopper? If there is no answer to that question, there is no distinction for the store and no reason for the customer to pay more.

Clipping coupons, jumping channels, opting for store label goods rather than brand-name items. These are not the behaviors only of low-income consumers. They are the conditional behaviors of the wealthy, which allows money to be saved for a later purchase of greater distinction and priority.

Mike Anderson

Insight into how and why consumers buy (groceries)

For years now, we’ve been talking about the way consumers have become more strategic and methodical in the way they set their purchasing priorities. A story from Marketing Daily this week sheds light on some of the motives and methods that drive consumer behavior in the grocery store. It cites research from NPD Group, and you can click here to read the story. If you're interested, you can click here to see the press release about the report at the NPD website.

Implications: From broader family involvement in “getting items on the shopping list” to cost-based spontaneous purchasing, or shopping multiple channels to achieve a purchasing objective… we know the consumer has become more sophisticated in their approach since the onset of the great recession.

This Marketing Daily story is well worth the read.

Mike Anderson

UPDATE: About today's earlier post on store brands

In Media Post's Marketing Daily this morning, there was another story discussing the strength of store brands. I think you'll find it supports the piece I offered on the topic earlier today.

Click here to read the MD story.

Implications: If you're a brand, it might be time for more than branding. Consider messaging that includes both Strategy (why buy), and Tactics (why buy now).

Mike Anderson

Store brands no longer syonymous with "generic"

According to a recent story from United Press International, more and more companies are doing what they can to improve the quality of store branded goods. The story provides important perspective about the store-brand category… which was launched, for the most part, during the oil shortage of the 70’s as a means of helping the consumer stretch their budget. Click here to read the story.

Implications: As the popularity of private label and store brand goods have increased, it only makes sense that the category would become more competitive and sophisticated. (The UPI story—among others—suggests that consumers can seldom distinguish a difference in quality between name brand or store brand goods.) Thus, the circle of popularity and consumer acceptance is only likely to expand.

[Note: Thanks to friend and trend-watcher JoAnne Naganawa for sharing the UPI story!]

Mike Anderson

A perspective on the erosion of brand loyalty

There has been much speculation about the harm that has been done to brand loyalty over the past three years, as the Great Recession caused many consumers to consider true benefits and needs against casual preferences and wants. This greater consideration for price and “trading down” is summarized well in a study from comScore, explained in yesterday’s Research Brief from Media Post. Click here to read the story.

Implications: While the focus of this comScore research was primarily packaged goods, I’m thinking about the wider realm of consumer purchasing right now. From automobiles to restaurants, from shoes to office supplies and everything in between, we can agree that many consumers were more price-sensitive during the great recession. Indeed, the Research Brief story suggests that the focus on “benefit versus brand” was beginning even before the recession.

In return for this focus, consumers were rewarded by many packaged goods companies with steep discounts on branded goods, as companies worked to mitigate the effects of the recession on their brand sales.

Now, as the recovery takes hold, companies focus not just on retention, but customer re-acquisition (bringing consumers who may have abandoned their brand for cost-savings back to the fold).

Where does your company sit on the name brand/value alternative spectrum? Whether you are a restaurateur, car dealership, bank, grocer, furniture store, doctor… did you benefit from the shift to value-focus during the recession? If so, should you be thinking about how to keep those consumers you acquired from going back to their previous habits? Or, were your products and services among the revenue casualties of the economic downturn? Do your customer acquisition efforts include a “welcome back” re-acquisition plan?

Mike Anderson

Store brands enjoy the dividends of frugality

And they might not be just for groceries anymore.

Evidence suggests that use of private-label (or “store brand”) goods is one of the recession-induced behaviors that is likely to remain strong long into the recovery.

In a recent Media Post Marketing Daily article, a survey (of 800 supermarket shoppers) by GfK Research indicated that 62% of consumers intend to purchase more private-label products going forward. 43% of those polled said they had recently ditched a national brand in favor of a generic purchase… up from 35% a year ago.

Another story focused on the topic of store brands just last week, this time in the Research Brief
from Media Post. One conclusion drawn by the article is that the idea of "lesser performance" by store brands, compared to name brands, is beginning to fade.

Implications: What interests me about this issue is the idea that store brands are no longer limited to backaged goods. Recently, I’ve noticed greater creativity and diversity when it comes to the idea of “store brands.” For example, I love to go camping and kayaking. So over the past year or so, it’s been easy to notice the new “store brand” at Dick’s Sporting Goods: Field and Stream. Specifically, I’ve been tempted by a Field and Stream hybrid solo canoe… and I’ve studied it closely enough to know that it was actually manufactured by Old Towne, a reputable boat maker. (I already own a larger Old Towne.)

If you abide by the laws of supply and demand, you will likely be giving your private-label goods a higher profile than you did before the recession… at least for the foreseeable future. But I’m wondering what other “next creative steps” might be in the realm of store-brand merchandise.

For smaller retailers, would it make sense to form (or grow their) buying groups to create greater leverage with manufacturers, so that more and diverse private label goods can be offered, even among smaller stores?

For packaged goods companies, does it make sense to partner with certain retailers to focus on specific products that can be sold as if they were store-brands? (For example, “Bounty, now the official store-brand paper towel of ____ supermarkets. And that means greater value for you.”)

[My thanks to friend and fellow trend watcher JoAnne Naganawa in Seattle, for emailing the Media Post story to me!]

Mike Anderson