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She’s A Moody Consumer

06/01/2010

Consumers are not buying. Consumers are holding off on discretionary spending. You’ve heard it before. The media reports the economy is improving – but where’s the proof?

The Nielsen Co. stated that consumers’ fundamental spending adjustments are likely to last well into 2010, either by choice or necessity. Almost one-third of consumers (30 percent) say they will use credit less even when conditions improve, while 19 percent say they intend to save more money.

Back in December 2009 Nielsen predicted tie Top Five Consumer Trends for 2010. Let’s see how their predictions have held…

Restraint remains the new normal. The need to save money, unemployment and other economic issues continue to be top of mind, suggesting that any return to past behavior may take some time if at all.

Value is a top priority. With no signs of readiness among consumers to open their wallets, a focus on low prices at the expense of all other variables threatens margins. Value messaging must also include some point of differentiation beyond pricing.

Store brand growth continues. Even with year-end 2009 softness in store brand dollar share growth, as retailers cut prices across the store to be more competitive, unit share growth continues and retailer focus has never been stronger.

Grocery consolidation intensifies. Local and regional players, unable to drive profits in the soft economy, will become acquisition targets.

Assortment wars escalate. Retailer efforts to simplify the consumer shopping experience by eliminating aisle and shelf clutter will cause market share land grabs for small and medium-sized brands in pursuit of elusive revenue growth.

Here’s where consumers are nearly 6 months into 2010. “The typical customer has a lot of fear in her heart, and she is still being very cautions”, says Michael Silverstein co-author of “Women Want More,” which argues that women control the lion’s share of household spending. “She had over-consumed before the recession. At the bottom of the recession, she had nothing unworn, nothing new. This spring she looked at her closet, her kitchen, said ‘Goddamit, I still have a job’, and decided to loosen the purse strings.” As a result spending on lingerie, dresses, coats, etc. even the higher sales at Home Depot suggest her interest in initiating redecorating sprees.

It appears the Nielsen predictions are on-target (although I can’t really say about the “grocery consolidation” one).

Mom’s buying but cautiously, discounted and using cash. We’re not out of the woods – for sure!

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