Unlike past recessions, few countries have been spared from the economic downturn. Nielsen's top industry thought leaders recently discussed how shopping patterns around the world have been affected by economic conditions, how consumer packaged goods manufacturers and retailers are adapting to the new marketplace realities and what lies ahead.
The participants were Todd Hale, Senior Vice President, Consumer & Shopper Insights, Nielsen U.S.; Jonathan Banks, Director, Retail Insights, Nielsen Europe; James Russo, Vice President of Marketing, Nielsen U.S., and; Jean-Jacques Vandenheede, Director, Retail Insights, Nielsen Europe. Key themes were:
Consumers: It does not matter where consumers live - they share a common goal: to get the most for their money. They are focused on value and are taking advantage of deals. And they have re-focused on the essentials: "If you can't eat it, you don't need it." Higher incomes have not been immune: the shopping and spending habits of all income levels have been affected by the economy.
Retailers: As a result of this changed consumer behavior, food retailers are faring better than most others. Private labels' share is growing in many categories and in many countries, and offers an avenue of growth for many retailers. In the U.S., Kroger has gone head-to-head with Walmart with matching prices on food basics. Supercenters and dollar stores are also benefiting from the shift in consumer behavior.
Consumer product manufacturers: Brand development and innovation are more important than ever: "History tells us that really great brands have been launched in the middle of recessions where advertising can cost less." Manufacturers are struggling with determining the duration of the recession and how to plan for recovery. Opportunities will be found by aligning with evolving consumer behaviors such as fulfilling basic over discretionary needs, trading down and a focus on value.
Looking Ahead: Caution and uncertainty are the operable words. Now is the time to plan ahead and develop an exit strategy out of a crisis. The biggest opportunities will be found by aligning with the deepening consumer behaviors that have been occurring since the beginning of 2008. As the economy slows, these behaviors will intensify.
Read the whole discussion in the February issue of Consumer Insights.