Consumer habits are shifting as economic uncertainty, technological advancements and evolving demographics all push shoppers in new directions. Consumer spending habits were influenced dramatically by the economic crisis in 2008 and have permanently changed in the U.S. since that time.
Certain segments of our economy are very vibrant and other segments are clearly flat. Online retailers continued to experience double-digit growth, even though they didn’t experience the immediate shift that some predicted. Deal-of-the-day sites, such as Groupon, can deliver huge short-term bumps in purchases, but they create challenges of inventory management and uncertainty about longer-term purchasing. Retailers are also seeing broader shifts in shopping behavior driven by e-commerce.
Cause-marketing programs, such as promoting breast cancer awareness, for example, drive special promotional products and have gained traction. Meanwhile, social media can transform unknown brands into must-haves seemingly overnight, making it more challenging to stay on top of the latest trends.
The convenience-store segment continues to compete with conventional retailers and quick-serve restaurants for customers and is experiencing double-digit growth as well. Private labels/store brands continue to grow, but not at the rapid pace we’ve experienced over the last four years. Most premium retailers have multiple levels of private-label or store brands, including a premium brand equal to or greater than the national brand in quality.
Consumers are forced to pick between fueling their vehicles and seeking lower-cost food alternatives to compensate for their budget shortfalls. Other retailers are leveraging fuel pricing linked to store promotion to drive store traffic, i.e. fuel saver cards.
Venture capital companies continue to buy up mature and aging brands, stripping out much of their marketing funds. Clearly their model creates short-term growth. However, some basic spending on marketing and improving the brand image would improve their short-term results.
Retail markets are changing rapidly, making it more important than ever for retailers to be flexible and responsive.
Retailers have a massive amount of data about their customers’ purchase habits that they have yet to begin to really leverage for their benefit. Companies like Tesco in the U.K. have done a great job of using data to communicate with their customers and improve their competitive posture.
Demographics are also bringing dramatic changes to the retail sector. In the United States, for example, the mass retirement of “baby boomers” is changing everything from purchasing priorities to the time of day when stores can expect crowds. Adapting to the tastes and priorities of changing populations will be a critical task for retailers and food processors.
Aside from the daily meals, consumers today indulge in grazing/snacking, which has become a permanent part of their daily routines and activities. Families seldom sit down and have a meal together as a unit, as they formerly did. There are fewer traditional family units and more two-person households than ever before. All these trends affect portion sizes and will further fragment the products that consumers will demand. Ethnic populations continue to show rapid growth in the U.S., creating segments that marketers need to identify and focus on.
Many of today’s consumers attempt to watch what they eat and purchase healthy products. They are aware that the information available on the Internet is not always accurate, so smart consumers make a conscious effort to validate what they’re learning.
Personal, geographical and social network influences, among others, also have a huge impact on consumer consumption. A new perception of the quality and value of products correlates to an improvement in consumer knowledge. This trend requires better information on packaging. As manufacturers we are required to print the ingredients, content and nutritional information on the back of our food products, allowing consumers the opportunity to make an educated decision. The roles of the government and consumer groups are all widely linked and aim to inform the public consumer about the safety of products.
In viewing economy on the global scale, conditions are improving. However, the uncertain recovery is making it difficult to predict future consumer behaviors worldwide. Sudden developments, such as the recent government shutdown in the U.S., can cause massive, unexpected changes in consumer behavior not just here in the U.S. but internationally as well. Planning for these contingencies is difficult.
Technology is creating a change as well. Smartphones are an increasingly integral part of the conventional “brick and mortar” shopping experience. Retailers around the world are using mobile apps to let customers know if an item is in stock, help them locate it within the store, and recommend alternatives if an item is out of stock.
Online coupons (apps and sites) can be downloaded and used with ease, providing consumers with instant access to promotions and discounts. QR codes give consumers instant access to a company’s Web site with the company being able to control what is being shown to the consumer while monitoring the amount of interest that is being generated about the product.
Social media now plays a significant role in consumer activation. Whether it’s YouTube, Twitter, Facebook, blogs or Pinterest, more consumers view these personal experiences as product reviews. Consumers weigh the input from many of these sites as heavily as they would a product recommendation from friends and family. Essentially, creating a good buzz about a product via these methods is free exposure for your product. However, this exposure cannot be controlled and can create havoc.
Considerations for the future:
- Have viable options that include your brand, and don’t close your mind to entering the private-label sector also.
- Pay attention to the details; continue to support your brand and compete in multiple segments.
- Support your brand intelligently.
- Leverage consumer data to emphasize your unique selling proposition as it relates to consumer interest.
- Create an ethnic marketing plan to encompass the various groups within your target.
- Consider a healthy product line or re-focus health features of existing products.
- Global products should include common messaging.
- Embrace technology to maximize consumer messaging.
- Social media is great, but it should be monitored closely and is not a substitute for conventional marketing programs.
In closing, Buckminster Fuller created the “Knowledge Doubling Curve”. He noted that up until the 1900s knowledge doubled every 100 years. According to this year’s calculations, overall knowledge is doubling every 13 months. Those who can adapt to change will thrive. Those asleep at the wheel will join the dinosaurs in extinction.