Nielsen retail industry experts Jonathan Banks, Todd Hale, Tom Pirovano, James Russo, and Jean-Jacques Vandenheede review the key trends that defined the U.S. retail sector in 2008 — and offer their predictions for the new year.
2008: Staying In Is The New Going Out
Americans are spending more time in front of their computers and televisions. The reach and frequency of TV, Internet, and time shifted TV use increased notably in 2008, as consumers on tight budgets opted to save money by staying home.
2008: Economizing Strategies Go Digital
In 2008, 20% of consumer discussions online referenced strategies for managing grocery budgets. Visits to price comparison websites were also up significatnly this year.
2008: Private Label Reigns Supreme
As the economy worsened, consumers continued to shift dollar and unit spending to private label products. The result: private label shares hit all time highs in both units and dollars at year’s end. Private label dollar sales averaged about 10% growth in the five four-week periods near the end of the year. Meanwhile, unit sales growth accelerated, averaging 4% to 5% growth. In comparison, branded products saw 3% average dollar sales growth and 3% unit sales decline.
2008: Value Trumps Variety, Convenience
“Value” categories and brands saw greater growth in 2008, compared to the previous year:
– Spam: dollar sales up 14% vs. year ago
– Ramen Noodles: dollar sales up 30% vs. year ago
– Dry Pasta: dollar sales up 25% vs. year ago
– Bulk Rice: dollar sales up 38% vs. year ago
– Margarine: dollar sales up 21% vs. year ago
– Canned Vegetables: dollar sales up 9% vs. year ago
– Frozen Vegetables: dollar sales up 7% vs. year ago
2009: Retail Stores Close, Consolidate
“A rising tide raises all boats” — the opposite exposes weaker businesses. The grocery channel may be “recession resistant,” but no channel is “recession proof.” In 2009, expect further consolidation in retail outlet ownership, as flawed businesses go to the wall or are selectively gobbled up at low prices by “retail winners” looking to expand their presence in key neighborhoods and markets.
2009: Premium Brands Lose Ground; Genetic Modification Gains New Acceptance
In 2009, consumers will become more discerning and discriminating, and the premium charged for more expensive lines will be questioned more frequently. This will retard the growth of some organic and fair trade products, and maybe even increase acceptance of genetically modified products.
2009: Food Waste Reduction Is A New Priority
With food waste running at 30% in the U.K. and 40% in India, consumers and manufacturers will make greater efforts to reduce avoidable losses in 2009. Look for growth of the frozen food category, and smaller portions in food service and single-serve ready meals.