ALEXANDRIA, Va. Today’s shopper is predominantly buying less and will continue to buy less for the foreseeable future, according to Thom Blischok, president of consulting and innovation for Information Resources Inc., who discussed the changing paradigm of today’s cash-crunched shopper as part of the National Association of Chain Drug Stores Retail Advisory Board’s ECON09 Webinar presented last month.
That doesn’t mean anyone should throw in the towel, however. What it means is that savvy marketers will pick up on the new paradigm and capture those new shoppers. “You need to expect these [emerging] trends to continue for at least the next 12 to 18 months. They could last as much as the next three to four years,” he said. “Ritual changes to stretch every dollar are here to stay [and] the search for the best deal is absolutely in play today.”
That deal-dependent paradigm will present challenges to suppliers as more consumers realize the value in private brand — the average store brand penetration today falls between 19% and 20%. For retailers, the challenge is in capturing that shopper trip, currently at an all-time low.
As the current recession shapes shopping behaviors going forward, there are three critical shopper segments health-and-wellness purveyors ought to understand and target. Two are ones that most marketers already know about, and in many cases have developed strategies to reach them — the baby boomers and Hispanics. The third, which overlaps both boomers and Hispanics, is “Millenials,” a category of consumers that may be somewhat difficult to target specifically, as they are not defined by such traditional demographic markers as age or ethnicity, but by purchasing patterns and ideals.
Some other important trends to be aware of include a shift around the de facto point of care for many consumers — the retail pharmacy. According to IRI research, 50% of Americans are using over-the-counter medicines to avoid the cost of visiting their family practitioners. As many as 44% are using the Internet in search of those answers they would have been posing to their doctors around their conditions, a fact that justifies the significant investments retailers and suppliers are making in online marketing. As many as 33% of Americans are putting off trips to the physician for routine examinations, suggesting that more pharmacists and nurse practitioners in convenient care clinics may become the first healthcare practitioners with an opportunity to identify potential health problems. “And very importantly, about 20% of Americans are currently using the medical services in drug as their new emergency room,” Blischok added.
Today’s shopping behaviors are being shaped by a less-than-rosy “lens of affordability,” Blischok said. Some of the more prominent behavioral shifts include the creation of a shopping list prior to going to the store — a factor that cuts down on impulse purchases once consumers reach their outlet of choice, and makes in-store merchandising a little less effective. As many as 63% of millenials are making shopping lists, compared with 60% of boomers and 51% of Hispanics.
“[However], it doesn’t irradicate the need for in-store decision making,” Blischok said. “We also see that 43% of millenials are also making unplanned purchases after seeing deals in the store. So, we see here that they make a list but that they can be influenced very heavily by deals in the store.”
More shoppers also are choosing the retail outlet around perceived lower pricing (51% of boomers), gravitating toward store brands (38% of Hispanics), reviewing a retailer’s circular for deals (49% of boomers) and stocking up on items because they were on sale (50% of millenials). “Millenials, by the way, are coping [with the recession] by using online resources to find coupons; online is a major part of their lives,” Blischok said. “They’re also purchasing larger quantities earlier in the month.”
In his closing remarks, Blischok outlined five strategies for both retailers and suppliers:
1) Simplify the shopping experience – 78% of shoppers want this, Blischok said. As today’s consumer is bombarded with messaging and discounting, the retailer/supplier who makes the shopping trip easy ought to come out a winner;
2) Redefine end-to-end shopper communication. “It is clear to us that today’s shopper increasingly uses Web sites, blogs [and] social media sites such as Twitter and Facebook to learn about what products to buy,” Blischok said. “Linking your current and future brand promises with [a home on the] Internet with a loyalty card, social media options and in-store messaging is critical,” he said. “Social media plays a major role in influence-based marketing,” Blischok said;
3) Recognize and capitalize on changing rituals now. “We know that there are about 70 major rituals that have changed right now,” Blischok said. “From what shoppers are telling us, as many as 50% of those will become permanent,” he said. “Shoppers continue to gravitate to brands and rituals that help [consumers] fulfill their new rituals,” he added, rituals such as more consumers making up a shopping list at their kitchen tables – with the laptop very likely opened to Facebook and other Web sites right next to them. Retailers or suppliers may want to seek out ways to get on that shopping list in the first place instead of attempting to convert an impulse purchase at the store;
4) Focus on familiar products. Primarily because trial outside of trusted name brands is somewhat inhibited right now, Blischok suggested. Three-out-of-4 consumers last year reported they did not try more than five new products; and
5) Prepare for the new conservative shopper long-term – because the dollar-saving shopping behaviors consumers are learning today are not likely to fade even after the economy begins its recovery. “[These shoppers] basically spend less; they eat and they use beauty and healthcare products more cautiously; they waste less. We believe from what we are hearing that they will continue to do so for the foreseeable future [the next four to eight years],” Blischok said.