IRI: Consumers still holding back despite promising outlook

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IRI: Consumers still holding back despite promising outlook

By Michael Johnsen - 08/08/2017
CHICAGO — Despite a promising economic outlook, consumers aren't necessarily loosening the pursestrings, IRI noted in its latest Consumer Connect survey released Tuesday. According to the survey, 55% of consumers say their household financial health is good; however, 49% say they are making sacrifices and looking for deals to make ends meet.

“Since consumer spending accounts for about 70% 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,” stated Susan Viamari, VP 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.”

Results from the Q2 2017 IRI Consumer Connect survey reveal that 49% of consumers are making sacrifices to make ends meet compared to 51% in Q2 2016. Generation X and millennials have been hit the hardest, at 54% and 53%, respectively, but other generations don’t lag far behind. To stretch their dollars, deal-seeking remains high and is essentially unchanged compared to 2016.

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% in April; 1.5% in May; and 1.9% 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.

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.

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. 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.”

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