Consumers Embrace Varied Cost Saving Tools to Tighten Spending

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July 7, 2011

Consumers are taking even more steps to save money due to ongoing financial stress with high gas prices and job stability concerns, according to SymphonyIRI Group’s MarketPulse survey findings.

Shopping list making, coupon clipping, private label purchasing and pre-shopping on the Internet are becoming deeply entrenched consumer habits.

"Consumers are feeling bumps in the road as the country continues to strive towards an economic recovery,” said Susan Viamari, editor, Times & Trends, SymphonyIRI Group. "Americans are still leery about their job stability and are finding it necessary to save even more money as they face uncertain times.”

Even though the Great Recession officially ended a full year ago, consumers continue to spend cautiously:

• One in three consumers expect their financial position will deteriorate in the coming year, and 50 percent of consumers anticipate no change in their finances during that timeframe;
• More than half of consumers expect the cost of daily living to rise, including food (70 percent), utilities (62 percent) and gasoline (58 percent);
•  Eighteen percent think their job stability will deteriorate in the coming year.

Price Inflation & Coupons
With national gas prices 40 percent higher on average today than a year ago, many shoppers are having difficulty affording their weekly groceries. Food prices are also on the rise due to rising commodity and processing prices, and transportation costs.

Private label, however, is showing small signs of a “potentially major change in trends,” according to Symphony IRI. While private label dollar share increased 0.4 points during the first and second quarters of 2011, unit share declined slightly during the periods. “Whether these trends continue remains to be seen, as national and brand named marketers continue to vie for consumer spending,” SymphonyIRI Group noted.

Consumer are spending a lot more time pre-shopping and looking for deals on the Internet and are utilizing more coupons -- print and digital ones.

“Since there is an ‘app’ for everything in today’s world, CPG retailers and manufacturers must stay ahead of the digital curve to meet shoppers’ needs,” said Srishti Gupta, executive vice president, Emerging Media Solutions, SymphonyIRI Group. “For instance, mid- to upper-income households (earning $55K-$99,000 annually) use the Internet more than most other consumer segments for various day-to-day activities, yet the wealthiest shoppers (earning more than $100,000 annually) are slightly behind this segment.

“The mid- to upper-income segment has higher broadband as well a larger number of devices, such as laptops and smart phones, at their fingertips,” Gupta added. “The wealthiest shoppers, a segment which skews a bit older, has not yet embraced digital coupons with the same fervor, so their usage is not quite as high. Also, across a wide variety of demographics and income groups, consumers are increasingly value and deal conscious, so they are looking for the same information. It’s just where they look for it that might be different.”

Retailers and CPG manufacturers seeking to maximize opportunity within the new, emerging retail environment should consider the following action items, according to SymphonyIRI Group:

• Market Assessment: Conduct frequent and granular assessments of key and target consumer groups in order to improve responsiveness and speed-to-market opportunities.
• Strategy Development and Execution: Retailers should invest in creating a “halo brand” to drive private label growth and further develop multi-tiered private label lines, ensuring a strong value brand for lower-income shoppers. They should also understand trip shift dynamics across income segments and the specific value proposition offered by competing retailers for each segment. Manufacturers should develop a private label risk strategy, focused on their own and competing categories where private label threat is strong and growing. Manufacturers should also ensure distribution, assortment and merchandising support efforts are closely aligned with shifting trip mission trends.
• Measurement: Retailers and manufacturers should leverage modeling/simulation to gain perspective on cause and effect prior to rolling out new marketing strategies as well as monitor actual versus expected impact frequently after rollout.

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