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Good Value Trumps Low Prices, Even in Tough Economy

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Good  Value Trumps Low Prices, Even in Tough Economy;  Bigger Pack Sizes Preferred When It Comes to Battling Rising Commodity Prices; Consumers Are Employing Different Saving Strategies Around the World

NEW YORK – October 10, 2011  – Nielsen, a leading global provider of insights and analytics into what consumers watch and buy, today released a report that shows consumers around the world employing different saving and shopping strategies for consumer packaged goods.  Consumers indicate getting a good value for the money takes a slightly higher priority over low prices when deciding where to shop.

Nielsen’s 2011 Global Online Shopping and Saving Strategies Survey of more than 25,000 Internet respondents in 51 countries show that 61 percent of global online consumers rated “good value” over “low price” (58%) as the most influential reason to shop at a particular consumer packaged goods retailer. 

“While low prices are undoubtedly important, consumers around the world tell Nielsen that good value matters,” said James Russo, vice president, Global Consumer Insights, Nielsen.  “Value is not about price alone. Retailers and manufacturers who offer good values tailored around benefits of the product beyond price will resonate with consumers who continue to look for ways to stretch their money in a tough economy.”

Respondents indicate a preference for value over low prices when choosing a retailer in Asia Pacific, Europe, Latin America and North America, while slightly more Middle East/Africa respondents preferred lowest overall prices (59%) to good value (54%). Other attributes rated as “highly influential” by more than half of global online consumers were convenient location, great sales/promotions, well-stocked shelves and high-quality fresh produce.

Bigger is Better

As commodity and raw material costs continue to rise, there is a clear preference among consumers around the world for consumer packaged goods manufacturers to offer larger, economy-sized packages, with lower price per serving (36%). Half as many respondents (18%) say they prefer new, smaller-sized packages at lower prices, and about one-in-ten (12%) indicate a preference for modestly downsized packages at the existing price level.

While roughly one-third of consumers in every region around the world say they prefer larger, economy-sized packages, the sentiment is most pronounced in North America, where 39 percent of consumers indicated a preference for value packs, 20 percent for smaller packages at lower prices and 11 percent for modestly downsized packages at current prices.

The option least favored among consumers across all regions surveyed is offering slightly lower quality products at current price levels, followed closely by proportionately raising prices.

Coupon Use Varies Around the Globe

Nearly half (48%) of global online consumers surveyed report using coupons to save on household expenses, the second most popular saving strategy after buying items when on sale (59%). Reported coupon use is most prevalent in North America (65%) and Asia Pacific (55%), with the United States (66%), China (67%) and Hong Kong (65%) as the three leading markets.

“In the U.S., coupons are back in vogue,” said Todd Hale, senior vice president, Consumer & Shopper Insights, Nielsen. “More consumers are looking for savings and with an increased focus on technology to deliver coupons, such as smartphone downloads and in-store kiosks, manufacturers and retailers are making it easier for consumers to use coupons. Across all U.S. households, coupon usage tends to be concentrated versus widespread. But these coupon enthusiasts are young, affluent, have large households and are big spenders across the storeall attractive demographics for consumer packaged goods companies.”

“With inflation running high in China, particularly on food, coupons are a great way to attract consumers on key items at discounted prices,” said Dale Preston, managing director, Retail Measurement, Greater China, Nielsen.

While 38 percent of European consumers surveyed indicate they use coupons to save, there is wide variation within the continent.  At least half of consumers reported coupon use in several western and southern European countries, such as Belgium and Portugal (63% each), Greece (55%), France (53%) and Spain (50%), yet in other markets, particularly in northern and eastern Europe, reported coupon use is much less prevalent.

“Belgians are the record holders in terms of coupon redemption, but in countries such as Germany and the Netherlands, coupon use is very marginal,” said Jean-Jacques Vandenheede, director, Retail Industry Insights, Nielsen Europe.  “Many European retailers are rather reluctant toward coupon use, as they feel burdened by the handling and processing of coupons.  However, with the advent of digitally-driven solutions such as electronic coupons and social media we may see new forms of coupons that remove these historic barriers.”

Reported coupon use is even less common as a saving strategy in Latin America (25%) and the Middle East/Africa (18%).

“In the Middle East, price cuts are the most popular promotional vehicles used by retailers, along with volume discounts,” said Bassel Adel, director, Retail Services, Nielsen Middle East/North Africa/Pakistan. “However, consumers are gaining a greater awareness of leaflets, which are driving store visits and prompting retailers to actively advertise promotions in newspapers.”

Are Consumers Stocking Up or Making Quick Trips?

Many consumers report they stock up on groceries and other consumer packaged goods as a way to save money, yet stocking up as a primary reason for making a trip to the store is not uniformly widespread across the globe.

Sixty percent of North American consumers indicate that the primary reason to make a trip to the grocery store is to stock up on staples, such as bread and milk.  By contrast, 18 percent say they make a trip to pick up a few items, and seven percent say they shop when they run out of something at home.

“High gas prices in the U.S. have led consumers to combine errands and trips,” said Hale.  “As a result, consumers are making fewer ‘small’ grocery trips in the U.S.”

In Europe, 37 percent of online consumers say they stock up on grocery trips, while one-in-five (21%) shop when needing a few essential items and 25 percent make a quick shopping trip when they run out of an item.

“Retail trip missions in Europe are dictated by store infrastructure,” said Vandenheede. “In countries where shoppers have a high density of stores to choose from, such as in Italy or Germany, consumers tend to shop more often. In countries that are dominated by hypermarkets with less retailer availability, stocking-up is the more dominant shopping pattern.”

Stocking up for groceries is less common in Asia Pacific, Latin America and in the Middle East/Africa where approximately one-in-five consumers indicate that is the primary reason for the shopping trip. Across both the Asia Pacific and the Middle East/Africa regions, about one-third of online consumers say a quick trip for needed items is the primary reason for shopping trips (32% and 33%, respectively). Other trips are made to purchase a few essential items (28% of trips in Middle East/Africa and 29% of trips in Asia Pacific). Similarly, in Latin America, the most commonly reported reason for making a shopping trip among one-third of respondents is to pick up a few essential items and one-quarter say they make a quick trip to replenish.

The Future: Flexible Formats

When considering new and flexible retail formats for grocery shopping, consumer preferences for online delivery options emerge. While more than half (52%) of global online consumers say they are likely to place a grocery order online if it is delivered to the home, less than one-third feel the same if they are required to pick up the online order curbside (27%) or via a drive-thru window (30%). More consumers—over one-third (36%)—say they are willing to pick up an online order inside the store.

In Asia Pacific, more than three-quarters (77%) of respondents say they are likely to take advantage of the online shopping/home delivery option, contrasted with one-fifth of North Americans (20%) and one-third of Europeans (35%). About half of consumers in Middle East/Africa (48%) and Latin America (51%) indicated they are likely to shop for groceries online for home delivery.

“The main resistance to online grocery shopping in developed countries in Europe and North America is primarily due to the high volume of available grocery stores,” said Vandenheede. “In Asia Pacific, fewer physical stores and a very digital consumer base create a fertile ground for online formats.” 

Using hand-held scanners to record purchases while shopping to avoid waiting on checkout lines was welcomed by half of global online consumers. While interest is highest among Asia Pacific consumers (60% interested and 14% unlikely to try it), in each region, more consumers indicate they are likely to try it than not. 

About the Nielsen Global Online Survey

The Nielsen Global Online Shopping and Savings Strategies Survey was conducted between March 23 and April 12, 2011 and polled more than 25,000 consumers in 51 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10M online population for survey inclusion. The Nielsen Global Online Survey, which includes the Global Online Consumer Confidence Survey, was established in 2005.

About Nielsen

Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit www.nielsen.com.