Consumer Shopping Backlash Could Reverse ‘Misery Effect’

November 20, 2008

This article is included in these additional categories:

CPG & FMCG | Media & Entertainment | Newspapers | Radio | Retail & E-Commerce | Television

Shoppers are tired of bad news and will open their wallets this holiday season: Consumers say holiday rituals are more important this year as they take comfort with friends and family, according to research by IRI, reports Retailer Daily.

Moreover, consumers say they plan to make better use of merchandising and promotions to maintain appearances.

Among the main findings of IRI’s survey, “Rethinking Retail: Holiday Shopper Insights and Recommendations”:

  • 94% state spending time with family is more important this year than last.
  • 80% plan a greater emphasis on holiday meals and entertaining than last year.
  • 74% state they plan to give the same number or more gifts.
  • 65% will focus more on religious celebrations.
  • 63% plan to buy as many or more expensive gifts.

“We expect a consumer backlash this holiday season and a reverse of the misery effect consumers have felt this year,” said IRI Consulting and Innovation President Thom Blischok. “Shoppers have affirmed…they will continue their holiday rituals, but will temper their spending through increased use of merchandising and promotions.”

Additional findings from the IRI study, below.

Shoppers to Take Advantage of Promotions

Some three-quarters (74%) of shoppers will take more advantage of in-store promotions this year over last year, demonstrating shoppers’ desire to preserve rituals but their attempt to do so more affordably. Consumers also noted:

  • 56% will take advantage of sales or promotions seen on TV or heard on the radio.
  • 53% will use coupons in newspapers more.
  • 43% will seek out more “2 for 1” and similar promotions.

“In addition to promotions, consumers will make better use of credit card or store reward points and utilize the websites, blogs and social-networking media to find deals,” Blischok said.

Private Label – It’s What’s for Dinner

More than two-thirds (69%) of shoppers will spend the same on holiday meals this year, and consumers will rely on private label more than ever before to preserve the holiday meal ritual:

  • 91% will use at least some private label products to prepare their holiday meals.
  • 79% of those who will use private label products state they will do so to help them extend their budgets.
  • 51% will use private label products whenever possible.
  • Shoppers will turn to coupons and in-store promotions as well to extend their budgets, with 58% saying they will use newspaper coupons more, and the same proportion saying they will take more advantage of in-store promotions.

“The consumer’s focus on private label this season both reflects their desire to keep up appearances on the holiday table and represents a significant opportunity for CPG manufacturers and retailers,” added Blischok. “If positioned correctly, superstores and club outlets have the potential to use promotions to dominate this holiday season.”

Recommendations for CPG Manufacturers and Retailers

IRI recommended the following four strategies for CPG manufacturers and retailers:

  • Identify and align on most important shopper groups: It will be more critical than ever to have quality ongoing shopper insights; manufacturers and retailers should focus 80% of their resources on these primary targets and just 20% on other groups.
  • Ensure that market messaging is driven by telling a story about affordability as well as functionality: Deliver unique experiences to make targeted shoppers feel as if manufacturers and retailers know their changing needs.
  • Make promotions compelling: Develop imaginative ways to promote products and experiences–motivate vs. manipulate. Initiate merchandising and promotions now to attract those shopping early.
  • Collaborate to maximize shopper share of wallet: Manufacturers and retailers should work together as never before and remember that “winning” is a function of the offering, timing, relevance, and value to the shopper.
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