It’s no secret that consumers nationwide have been forced to alter their behavior and spending patterns due to the weak economy in 2008. But, specifically, just how are they coping?
Based on its extensive research in the Consumer Packaged Goods and Entertainment categories, The Nielsen Company has some answers.
The New Mantra: If You Can’t Eat It… You Don’t Need It
Consumers are relying more and more on food staples and “value” items such as rice, noodles, and pasta, which dominated Nielsen’s list of the fastest-growing categories in 2008.
Dollar sales vs. a year ago:
- Bulk rice up 38 percent
- Ramen noodles up 30 percent
- Dry pasta up 25 percent
- Margarine up 21 percent
- Spam up 14 percent
- Canned vegetables up 9 percent
- Frozen vegetables up 7 percent
- Macaroni & cheese up 7 percent
Consumers Are Cooking From Scratch…
Noteworthy is an 8.2 percent increase in unit sales of Canning & Freezing Supplies. Consumers are now growing and storing their own foods, as well as cooking from scratch rather than buying more expensive prepared “convenience” foods.
And Drinking More Alcohol
Consumers are buying more Wine (7.9 percent increase in unit sales) and Liquors2.6 percent increase in unit sales).
…But, Are Taking Their Vitamins
During these hard economic times, consumers are buying more vitamins (4.3 percent increase in unit sales). In fact, for most of 2008, the vitamin category was the only Health & Beauty category to grow unit sales by more than 2 percent. Nielsen predicts that vitamin sales will outpace other categories in 2009. As the U.S. population gets older and time-stressed families supplement less than desirable eating habits, vitamins will continue to grow unit volume, though competitive pricing may keep dollar growth lower.
However, the growth of organic products will slow dramatically. Unless organic marketers can do a more effective job of demonstrating better taste or concrete health benefits, expect the growth of UPC-coded organics to decline less than +10 percent.
“Going Green” Is Now Optional
“Going green” will be motivated more by cost-cutting than planet-saving intentions. Families on a tighter budget will be less likely to pay extra for environmentally-sustainable “green” products, but they will improve the environment as a by-product of cost-cutting strategies, such as saving money on gas by combining errands (lowering car emissions), and by purchasing less non-essential goods (producing less waste).
Consumers Are Trading Down… Or “Out”
Consumers are shifting dollar and unit spending in favor of less expensive private label/store brands as opposed to purchasing established name brands. Store brands hit an all-time high in unit sales and dollars at the end of 2008. Also, 48 percent of consumers consistently cited that they prefer larger sizes of items with lower pricing per serving over downsized products at historic price levels.
Nielsen predicts that national established brands will try aggressively to win back store brand business from consumers by using innovative packaging, unique flavors, and additional health and wellness claims.
50 percent of consumers are dining out less often, while more than 30 percent are “trading down” to less expensive restaurants.
…And Are Paying With Cash
Nielsen predicts that cash will be king, especially at convenience stores. As credit card companies continue to raise fees on retailers, there is more motivation to offer discounts for shoppers paying cash. Convenience stores will take the lead on cash discounts, as many already offer lower gas prices for cash purchases. As other retail channels offer cash discounts, credit card companies may get enough pressure to reduce fees for retailers.
…But Still Love Going To The Movies, Especially 3D Movies
2008 box office sales are up 1.6 percent year over year, and 3-D cinema admissions will increase due to the growing availability of 3-D movies and theaters. While many families are likely to keep a tight rein on their entertainment budgets in 2009, Nielsen predicts that 3-D movie theaters might be the exception because consumers appear to love 3-D films. Gross sales increased more than 60 percent in 2008 for 3-D films compared to traditional films due to higher prices and higher attendance. There are already more than one thousand 3-D theaters in the U.S., and as many as eleven major 3-D movie releases expected to hit screens in 2009.
…And Downloading Music
Though overall CD sales are down 14 percent, consumers are digitally downloading music tracks at a feverish pace – up 27 percent, while sales of digital albums are up 32 percent.
Ironically, in the new digital age, sales of vinyl LPs were at an all-time high (1.88 million). There has been a resurgence of vinyl due to the new turntables on the market that enable consumers to play an LP and also transfer the music onto their mp3 players/iPods or flash drives. All of the turntables today have this digital transfer capability.
…And Watching TV
Television viewing is at an all-time high among Americans, with the average person watching 4 hours, 45 minutes per day during the 2007-2008 season.