CPG Industry Will Focus on Consumers Wanting to Live Well with Less in 2012, According to SymphonyIRI Report
March 15 2012 - 11:37AM
Business Wire
From the unstable economy and stubborn unemployment rates to
frugal consumers and high commodity prices, there has been endless
discussion around the challenges facing CPG marketers during the
last few years. All is not doom and gloom, though. The latest
research from SymphonyIRI Group’s Times & Trends, “CPG 2011
Year in Review: The Search for Footing in an Evolving
Marketplace,” uncovers several exciting trends taking place in
everything from new product development and technology to store
layouts and consumer shopping patterns.
“Evolving economic conditions have brought a polarity to the CPG
marketplace,” says Susan Viamari, editor, Times & Trends,
SymphonyIRI. “There is a sizable consumer segment that is feeling
more optimistic about the road ahead, while a similar sized group
is expecting a continued deterioration of economic and personal
financial health. Among optimistic and pessimistic shoppers alike,
all indications point to continued frugality and conservatism in
2012. CPG marketers need to actively respond to these trends with
products and strategies that really emphasize their understanding
of consumers’ most pressing needs and wants in order to drive
purchase behavior and loyalty.”
SymphonyIRI predicts the following trends will be prominent in
2012:
- Shoppers will continue to define value
largely based on price. According to SymphonyIRI’s MarketPulse™
consumer survey, more than half of shoppers still choose their
store based on lowest prices, and three-quarters note that price
weighs heavily in brand decisions. However, SymphonyIRI anticipates
that some shoppers will start to open their wallets more if
positive economic reports continue.
- Retailers in the drug channel will
accelerate their format evolution process. Walgreens, for example,
plans to convert at least 500 stores into “food oases,” where space
devoted to food and beverages will grow as much as 35-40 percent.
These stores are located largely in lower-income neighborhoods,
where access to fresh foods is limited.
- Manufacturers and retailers will pass
manufacturing price increases on to shoppers, but reaction to
potential commodity price deflation is yet unclear. When commodity
costs began to rise in 2008, much of these were absorbed by cutting
other costs and streamlining the supply chain. Running out of
efficiencies and sensing the shopper’s ability to pay more,
SymphonyIRI expects manufacturers and retailers to become more
aggressive about passing costs along to consumers.
- Private label will continue to account
for unit sales in the 22-23 percent range and dollar sales in the
18-20 percent range. Retailers will increase assortments and retain
the tiered product strategies that have worked so well in the
past.
- Manufacturers will expand their focus
on innovation as the primary private label mitigation strategy. One
example comes from the coffee category. Single-cup coffee, such as
that offered by Keurig, is partly responsible for the fact that 14
percent of the most successful new beverage launches came from the
coffee and tea sector in 2010, versus an historical average of just
8 percent, as reported in last year’s SymphonyIRI New Product
Pacesetters report.
“It’s no secret that conservative consumers are embracing a
variety of money-saving behaviors, such as making shopping lists
before entering a store,” says John McIndoe, senior vice president,
Marketing, SymphonyIRI. “Digital media will play an increasingly
integral role in the pre-planning process and helping consumers
find new ways to save in 2012. Like coupons, the Internet is being
leveraged as a list-making tool. Though penetration is much lower
versus coupons, we expect it to rapidly and steadily increase this
year.”
To effectively compete in 2012, CPG manufacturers and retailers
should consider the following action items:
- Identify opportunities and
risks: Manufacturers should re-evaluate sourcing and inputs
resources and be on the lookout for opportunities to lower
manufacturing costs through innovative sourcing, packaging and
product sizing strategies. Retailers should closely track the
evolving competitive set at the channel and retailer level to
ensure appropriate product mix and inventory management strategies
are maintained.
- Evaluate pricing and promotional
strategies: Manufacturers should continually re-assess and
adjust pricing to maintain an optimal price gap between private
label and name brand offerings. Retailers should work with key
manufacturer partners to develop cross-promotional opportunities
with high-growth categories/brands and/or with key staple
products.
- Explore opportunities to enhance
product assortment: Manufacturers should consider exploring
product development opportunities at both ends of the product
spectrum, based on existing and emerging product trends. Retailers
should align assortment strategies with changing trip mission and
product usage trends.
About the Report
This month’s Times & Trends Report, “CPG 2011 Year in
Review: The Search for Footing in an Evolving Marketplace,” is
a free report available from SymphonyIRI, the world’s leading
innovation partner that enables CPG, retail and healthcare
companies to create and maximize new opportunities. The findings of
this report were compiled based on information from SymphonyIRI
InfoScan Reviews™, SymphonyIRI Consumer Network™, SymphonyIR
AllScan Convenience Store Tracking™, SymphonyIRI Shopper Insights
Advantage™, and SymphonyIRI ShopperSights™. To download the report,
visit:
http://www.symphonyiri.com/Insights/ArticleDetail/tabid/117/ItemID/1432/View/Details/Default.aspx.
About SymphonyIRI Group, Inc.
SymphonyIRI Group, formerly named Information Resources, Inc.
(“IRI”), is the global leader in innovative solutions and services
for driving revenue and profit growth in CPG, retail and healthcare
companies. SymphonyIRI offers two families of solutions: Core IRI
solutions for market measurement and Symphony Advantage
solutions for enabling new growth opportunities in marketing,
sales, shopper marketing and category management. SymphonyIRI
solutions uniquely combine content, analytics and technology to
deliver maximum impact. SymphonyIRI helps companies create, plan
and execute forward-looking, shopper-centric strategies across
every level of the organization. For more information, visit
http://www.SymphonyIRI.com.