CPG Chatter

As 2011 winds down, it is always interesting to look back and decipher how shopper behavior has changed.  Economic conditions certainly didn’t get any better and buyers felt the impact on their wallets and lifestyle.  As we head into 2012, most pundits are predicting more of the same.  So how can we expect consumers to respond?

All you have to do is look at Black Friday and its record shattering $52.4 billion weekend.  Spend increased a whopping 16% over the  previous year.  Given the current environment, does this make sense?   ABSOLUTELY.  Many of today’s consumers have changed their approach, building on strategies they have been refining since the 2007 recession. These consumers have taken control of the situation and have adopted a lifestyle of ‘smart living’.  They purposefully planned and waited for Black Friday and the savings and value that could be gained.

Today’s younger generation now realizes that they need to making smarter choices — healthier, sustainable, environmentally friendly and so forth. They are willing to pay more in some cases, and that means allocating monies from one place to another. The same is true for the baby boomer generation. They have seen the reports predicting a lower life expectancy due to eating habits (amongst other things) and they are now looking for healthier choices to try to ‘better their odds.’

Because ‘better’ choices often cost more in the marketplace, it has become all about tradeoffs. There is less loyalty to one particular brand. Instead, shoppers build a ‘consideration brand-set’ such as I am willing to buy Jif or Skippy peanut butter, but not x,y or z brand.  As consumers plan and shop, they choose the best value from among the set.

Consumers also are planning meals more carefully, creating each meal with a ‘target’ cost. The more spent on meat, the less spent on side dishes or desserts. They also do research ahead of time and have a pretty set shopping list going into the store. Shoppers are willing to change their mind based on seeing a better value on the shelf, but the purchase still must fit into the overall plan.

For retailers and manufactures to gain a competitive advantage, marketing and trade promotion are critical.  They must understand this new way of thinking and be very visible throughout the consumer’s planning process.  Expect a lot more targeted campaigns, especially among different types of buying segments.  Timely information about sales and promotion effectiveness will be more critical than usual.  Are you ready to deal with the ‘Smart Living’ consumer?