New reports from two respected consulting firms offer
insights on how both consumers and consumer packaged goods companies (CPGs) are
adjusting to the bad economy.More...
New reports from two respected consulting firms offer
insights on how both consumers and consumer packaged goods companies (CPGs) are
adjusting to the bad economy.
Deloitte and Harrison Group
recently releasedThe 2010 American Pantry Study: The New Rules of the Shopping
Game. The study posits that shoppers have been forced by
economic pressures to become more “strategic, informed-and even calculating,”
and less likely to be “driven by impulse.”
Highlights of the survey behind the
study include:
•
89% of shoppers say they have become “more resourceful” when they shop.
• 84%
say they are “more precise.”
• 65%
said that although they are spending less, they don’t feel they are sacrificing
much.
• 93%
said they will remain cautious and keep spending at their current level, even
if the economy improves.
• 75%
are more open to trying private label products than two years ago.
The report establishes four
categories of shopping habits. “Super Savers” hunt for the best bargains at the
cash register, often though sophisticated coupon management. “Sacrificers” do
more comparison shopping, use more store brands and are more likely to forego
convenience. “Planners” draw up grocery lists and menus, and set spending
limits. “Spectators” are the most loyal to store brands, but “still strive to
be resourceful” through means like in-store discounts.
The second report, from Pricewaterhouse
Coopers (PwC), details the recession-related behavior of CPGs.Forging Ahead in the New Economystates that the food and beverage sectors are maintaining their status as
“counter-cyclical” industries, meaning that they resist the downward pull of
recessions better than other sectors (while not growing as much as others
during expansions).
Specifics of their performance
include:
• The
food sector as a whole cut spending, with a nearly 2 percentage point drop in
median selling, general, and administrative costs as a percentage of sales.
• Beverages
experienced a 1.6% drop in sales, the first decline in five years.
• Nevertheless,
food companies had a median five-year shareholder return metric of 6% last
year, while beverage companies had a 5.3% increase.
Despite their resistance to
recessionary pressures, food and beverage companies still have to make
adjustments, says Lisa Feigen Dugal, PwC’s North American consumer packaged
goods and retail advisory leader: “CPG companies are operating in a new
environment, characterized by more cautious, value-driven consumers and
volatile commodities. It will be tough to succeed using the same tactics
employed during the recession.” Possible adjustments include new trade
promotions programs for retailers, social networking campaigns, and products
targeted toward emerging markets.
