CHICAGO--(BUSINESS WIRE)--In the wake of a mixed economy, the unknown of a new kind of presidency and a complex retail marketplace, U.S. consumers began 2017 with a lot of change and uncertainty. According to the latest IRI Consumer Connect™ survey released today, these factors contributed to 2017 getting off to a shaky start with consumers, but projections for the remainder of the year are positive. IRI also released “Early View 2017” for a closer look at food and beverage trends.
“January and February are generally softer months for the consumer packaged goods industry, but showed sharper-than-normal declines this year,” said Susan Viamari, vice president of Thought Leadership for IRI. “Forty-five percent of consumers say their household finances are strained, with lower-income and younger shoppers being hit the hardest. Consumers across the board have been avidly seeking deals and, while deal-seeking will remain pervasive, the good news is that economic expectations for the remainder of the year are positive. With products that offer in-demand bells and whistles and marketing stories that really connect with their target markets, CPG marketers will entice shoppers to spend and win a fair share of that spending.”
Struggling consumers impacting CPG sales
Results from the Q1 2017 IRI Consumer Connect survey reveal that consumers are struggling, especially millennials, who have student loans and have experienced economic instability for most of their professional careers.
For instance, 33 percent of millennial households are having difficulty affording needed groceries, compared to 26 percent of generation X, 33 percent of baby boomers and 21 percent of seniors. Because millennials have entered adulthood in a tough environment, though, this group really does not feel more putout than older generations: 55 percent of millennial households are making sacrifices to make ends meet, compared to 53 percent of generation X, 54 percent of baby boomers and 39 percent of seniors.
In addition to uncertainty, consumers have faced delayed tax refunds, wild weather patterns and significant food price shifts. The combination made a negative impact on CPG sales for Q1 2017. Retail unit sales dropped by 2.6 percent in January and dollar sales dipped by 1.5 percent in January, compared to the same period the prior year.
To combat this uncertainty and stretch dollars, consumers are in money-saving mode, including:
|
Behavior |
Millennials |
Total Population |
||||||
| -- Buying private label brands: | 89 percent | 81 percent | ||||||
| -- Trying lower-priced brands: | 86 percent | 74 percent | ||||||
| -- Clipping coupons (circulars/newspapers): | 61 percent | 66 percent | ||||||
| -- Visiting multiple stores to keep bills down: | 60 percent | 58 percent | ||||||
| -- Downloading coupons from digital deal sites: | 48 percent | 36 percent | ||||||
Sunnier outlook ahead
The U.S. economic outlook is healthy for 2017. Key indicators point to GDP growing by 4.3 percent, retail sales increasing by 5.5 percent and unemployment falling. Seventy percent of consumers feel their household financial position will improve in the next six months. In addition, 84 percent of consumers say they will make additional or unplanned purchases if in-store deals are appealing. This sentiment is consistent across generations, yet slightly lower among baby boomers (82 percent), compared to seniors (87 percent).
CPG consumers are showing a willingness to pay a premium, particularly for items that really hit the mark:
|
Product Attributes |
2016 |
2017 |
||||||
| -- OTC medications that treat multiple symptoms: | 50 percent | 48 percent | ||||||
| -- Foods/beverages that provide additional nutritional benefits, such as added vitamins and antioxidants: | 41 percent | 39 percent | ||||||
| -- Household cleaners with environmentally friendly ingredients: | 33 percent | 32 percent | ||||||
| -- Environmentally friendly packaging: | 22 percent | 22 percent | ||||||
| -- Anti-aging beauty care products: | 19 percent | 21 percent | ||||||
Millennials clearly demonstrate a willingness to pay for bells and whistles that hit their sweet spots, including nutrition density and earth-friendly ingredients and packaging
|
Product Attributes |
Millennials |
Total Population |
||||||
| -- OTC medications that treat multiple symptoms: | 54 percent | 48 percent | ||||||
| -- Foods/beverages that provide additional nutritional benefits, such as added vitamins and antioxidants: | 48 percent | 39 percent | ||||||
| -- Household cleaners with environmentally friendly ingredients: | 38 percent | 32 percent | ||||||
| -- Environmentally friendly packaging: | 28 percent | 22 percent | ||||||
| -- Anti-aging beauty care products: | 19 percent | 21 percent | ||||||
“This year got off to a rocky start for the CPG industry, but things are starting to look brighter,” concluded Viamari. “Our same message for marketers is ringing true yet again. Know your customers inside and out and tailor your offerings to meet their needs. By personalizing your products and messaging, you will hit the right note with consumers, encouraging them to open their wallets in support of your brands.”
About the IRI Consumer Connect Survey
IRI provides new survey results at the end of each calendar quarter covering shoppers’ behaviors and attitudes as they directly relate to their strategies for learning about, purchasing and utilizing CPG and healthcare products, as well as information regarding perceptions of economic conditions and their ability to provide for their families. For more information about customizing the research for a particular category or industry, please contact IRIMarketing@IRIworldwide.com.
About the IRI Partner Ecosystem
IRI fundamentally believes that delivering differentiated growth for clients, driven by truly personalized marketing activation, requires deep, highly integrated partnering with a variety of best-of-breed companies. As such, IRI works closely with a broad range of industry leaders to create innovative joint solutions, services and access to capabilities to help its clients more effectively compete in their various markets and exceed their growth objectives. IRI is committed to its partnership philosophy and continues to actively enhance its ecosystem of partners through alliances, joint ventures, acquisitions and affiliations. The IRI Partner Ecosystem includes such companies as Adobe, The Boston Consulting Group, comScore, Experian, GfK, Gigwalk, Ipsos, Kantar, MasterCard Advisors MaxPoint, Millward Brown Digital, Mu Sigma, Neustar, Oracle, Research Now, Simulmedia, SPINS, Survey Sampling International, Univision and others.
About IRI
IRI is a leading provider of big data, predictive analytics and forward-looking insights that help CPG, OTC healthcare organizations, retailers and media companies grow their businesses. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand cloud-based technology platform, IRI helps to guide its more than 5,000 clients around the world in their quests to remain relentlessly relevant, capture market share, connect with consumers and deliver market-leading growth. A confluence of major external events — a revolution in consumer buying, big data coming into its own, advanced analytics and automated consumer activation — is leading to a seismic shift in drivers of success in all industries. Ensure your business can leverage data at www.IRIworldwide.com.
