The shopper in the recession

Wednesday, 17 December 2008

As economic pessimism tightens its grip on British shoppers' purses, Siemon Scamell-Katz, TNS Magasin, shows that an understanding of shopper behaviour is indispensable for manufacturers and retailers dealing with the implications

The shift to cheaper brands

Shoppers' need to save money has led to many switching to cheaper brands or own-brand, particularly for commodity products.

This makes it increasingly important to offer - and communicate - value for money.

Visibility, in terms of shelf location and stand-out on the shelf, is more important than ever. It's therefore vital to understand the visual cues that your shoppers use in decision making.

Increased usage of the discounter channel

Shopping dynamics are very different in this channel: very poor retail environments make products and categories harder to see, with poor adjacencies, poor merchandising and poor in-store marketing.

Understanding how these stores are shopped is the first step towards success within them.

A move from the convenience channel to multiples and from multiples to discounters

More and more shoppers are turning to the discounters for all their regular shopping, while a majority is now using them as alternatives to convenience stores, doing top-up shops for perishable items.

Brands should reassess their channel strategies and review where their channel priorities are. What type of shopping missions are multiples losing to discounters in your categories?

Fewer, more planned shopping occasions

We're seeing the start of a reversal of the erstwhile trend towards smaller basket shops, particularly for those with families: UK shoppers may adopt a mission emerging in the US, the monthly bulk shopping trip.

With funds more tightly controlled, shoppers are pre-planning, thus reducing impulse opportunities. Brands need to know how to ‘get on the list' through proper evaluation of decision making, both in-store or earlier.

They also need to understand the circumstances in which true impulse occurs and what triggers it.

Location - now even more important

The rising cost of fuel means location becomes more important: the switch from convenience is probably due to price perception.

The convenience operators need to make the most of their location advantage by changing shoppers' perception of their prices; for them the question is how to use the store environment more effectively to communicate their price parity with the multiples.
In this context, discounters tend to have location advantages too.

Ensuring availability

Availability is always an issue, of course, but in tough times shoppers are more likely to do without in non-commodity categories. On-shelf brand availability is therefore even more important, for brands and retailers alike.

Sustainability issues

TNS figures show the biggest and most consistent fall in organic food and drink sales for a decade - by nearly a fifth from their all-time peak in February 2008.

Shoppers are saving money and maintaining their ethical sensibilities by switching to free-range and sustainable products. Unlike in the 1990s recession, sustainability is therefore likely to remain important.

Taxation

Watch out for government taxation on easy targets - for example, in Australia there has been a massive increase in tax on ready-to-drink alcoholic beverages - to fill the looming hole in the budget.

The internet

Web sales are soaring and will continue to do so as shoppers save fuel and enjoy 24/7 shopping.

In response, some big-name brands are considering manufacturing bulk packs of household products for sale exclusively online: 50 or more toilet rolls and supersize packs of nappies.

What are your shoppers doing on the Internet?