Consumer Spending Contiues to Fall - So What Will the CPG Industry Do?

Consumers have been slashing their spending for the last several months, feeding the already painful recession as millions of households are opting to save rather than buy. Within the consumer packaged goods (CPG) industry, escalating prices and stagnant wages are also causing consumers across all income levels to be extremely price sensitive, so they are turning to private label and lower-tier brands to save money or are deciding not to purchase items at all.

To help retailers and manufacturers succeed in this new environment, Information Resources, Inc. (IRI) just released its latest research report that analyzes this industry. The data provides a comprehensive review of which categories are most important to shoppers and which categories are at risk of shoppers trading down and/or trading out.

“Consumers are continuing to feel the pinch, and they are looking at all of their purchases through a new lens of affordability,” says IRI Consulting and Innovation President Thom Blischok. “Consumers are no longer asking themselves, ‘Do I want this?’ They are asking, ‘Do I really need this?’ Retailers and manufacturers need to truly understand today’s shoppers like never before and respond to their affordability-driven needs and attitudes to succeed in this challenging environment.”

The following are just a few key areas of the market status:

• A robust retailer action plan to help retailers drive differentiation through improved messaging and merchandising strategies that are geared towards affordability-driven consumers.
• A manufacturer “affordability roadmap” that provides a systematic, disciplined approach to identifying categories that are vulnerable to trade-down and trade-out behavior, stemming losses from private label and lower-tier brands, and winning more than your fair share of affordability-driven spending within key categories.
• Detailed category-level analyses that focuses on which categories are “safe” in today’s economy and which are at risk for trade-down and trade-out shopper behavior.
• New insights linking shopper attitudes to trend-based category metrics, including private label share, household penetration, trip frequency, etc.
• A series of 14 case examples taken from best-in-class manufacturers and retailers that are achieving success in serving “affordability-driven” shoppers.

Hey, Walmart is making money and growing in this environment, so they must have figured something out. Hang in there retailers, our shopping days will return.

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