Wish I could just quote the Jimmy Buffett song but customers are changing, their habits are changing, buying cycles are changing, we are seeing changes in attitudes. MediaPosts "Recession, Retailers Are Changing Your Customers", the latest consumer trend seems to be value....
"Over the past 12-18 months, the average grocery basket has increased about 10%. Bad enough with the fluctuating price of gas, shrinking personal worth, etc. But during that same time period, staples like eggs, milk, bread and pasta have seen price increases anywhere from 20% to 50%. So the "cooking from scratch" solution is not as much of a "stone-cold, lead-pipe lock" (quoting ESPN's Mike & Mike) that it might have been during past downturns. The insight here is that while people are more economically pressed, they don't necessarily have more time for many of the things that can be done to cut costs, i.e., meal preparation, cooking, cleaning, etc.
Recession re-evaluations
A year ago, a consumer might not have thought twice about ordering out for dinner after a long week of work for him and his spouse. Likewise, shoppers would have happily displayed their purchases from Neiman-Marcus or Nordstrom's. No longer.
There's even evidence that women are waiting longer between visits to their hair salon. That's because luxury is now out. Not just for financial reasons, but because "conspicuous consumption" is no longer cool, smart, or fashionable. Cheap is chic!
These are all recessionary re-evaluations consumers and shoppers have made of their own volition. And they are re-evaluations that no amount of discussion, marketing, or other forms of persuasion would have changed 12 months ago.
Research from the Food Marketing Institute suggests that shoppers are becoming more "planful" in their stock-up shopping trips. And a number of IRI studies suggest that shoppers/consumers are rapidly changing many of their behaviors to help cope with the current recession. They are generally in a thoughtful mood and are more open and willing to take action on rethinking and re-evaluations.
Co-opetition Retailers
The challenge comes in several forms. First, retailers are vying for the title of "value retailer" in the minds of consumers/shoppers. To achieve this, they are turning to manufacturers of consumer packaged goods for ways in which to communicate value to their shoppers. Basically, the idea is for the retailer to be perceived as the choice editor and the value guru, rather than the brands. The retailer has become the brand intermediary.
Moreover, as retailers vie for the value merchant title, they are creating "co-opetitive" situations (i.e., both cooperating and competing with the brand manufacturer). To be perceived as the value merchant, retailers are often featuring their own store brands alongside manufacturer brands in an effort to help shoppers manage their expenditures.
For example, retailers are communicating about value in a number of different ways:
- In drug store circulars, it is not unusual these days to see store brand products (e.g., Walgreens' W brand or CVS Pharmacy brand) offering 10 items for $10 or at 50% Off! - and in the same circular to see national brand health and beauty products on sale as well (e.g., Cover Girl or Olay "buy one, get one free" offers).
- In other cases, retailers such as Wegmans supermarkets have created more direct comparisons between national brands and their store brand equivalents (e.g., Wegmans O cookies vs. Oreos) to highlight price differences.
- Another form of value comparison being promoted by retailers is to feature products of two different manufacturers in the same ad (e.g., recent Target circulars feature two different cleaning products: Soft Scrub (Clorox) and Windex (SC Johnson) at "3 for $7"; or Febreze (P&G) and Glade (SC Johnson) at "2 for $9").
- There are also examples where the retailer and manufacturer work together more symbiotically (e.g., Target's "New Movie Night" or Wal-Mart's "Gametime"). In both of these promotions, the focus is on home, and saving money on a number of products.
These kinds of promotions and circulars make it easier for store brands and manufacturer brands to co-exist; and these trends in co-opetition loom even more importantly today given the emphasis shoppers/consumers are placing on price."