The Supply Side: Consumers stick with recession-era shopping habits

Whether it’s buying value-size packages, shopping multiple retailers for lowest prices or avoiding major stock-up trips in general, consumers are holding fast to shopping habits they honed during the sluggish economic recovery in recent years.

Sue Viamari, a consumer analyst with IRI, said recent shopper research indicates that while the economy is improving, “consumers are not reverting to their free-spending ways.” She said whatever devices consumers began using to save money a few years ago, they are likely to keep because saving money feels good anytime. For consumer packaged goods companies and retailers alike, Viamari told The City Wire that this mindset is the new normal and she sees no big changes in shopper habits going forward.

VALUE DRIVEN
The research holds some interesting insights for consumer packaged goods (CPG) companies and the retailers they serve. For instance, 43% of shoppers surveyed said they will buy large packages to get the lowest price per serving. This suggests that CPG companies who can provide value size pricing are poised to benefit. 

Wal-Mart is already playing the value size game. The retailer recently began selling a 65-ounce bottle of ALL Stainlifters laundry detergent for $4.97 which replaced the 50-ounce bottle which sold for $4.87. Having this “new” size also renders this item not eligible for “Savings Catcher” matches with other retailers who don’t carry the new size.

Viamari said value-size packaging is a good way for CPG companies to differentiate their products against competitors. She expects to see more of this trend in the future across multiple retailers and product categories.

“There are opportunities here if retailers and CPGs understand the way their consumers are approaching price,” she said.

For instance some retailers might offer a lowest entry point price with some type of enlightened small package deal because value should not be restricted to bulk quantities. Those shoppers with strict, limited weekly budgets could be endeared to a brand that gave them a value in smaller packaging that fits within their budgets.

SIMPLE SOLUTIONS
One particular category under stress is cleaning supplies, Viamari said. IRI found that 41% of consumers look for multiple purpose cleaners to keep down the total number of cleaning items purchased.

“We know shoppers still look to save money in this category, more are using home-made remedies and all-purposed cleaners, others want more environmental friendly options,” Viamari said.

There are opportunities in this category to simplify things to ensure they have the one or two cleaning products that make it into shopper baskets. The days of Top Job, Spic and Span or Mr. Clean-type liquid cleaners have given way to specific scent formulas of kitchen degreasers and antibacterial options to a plethora of bathroom cleansers. And then there are windows and furniture to consider. Viamari said consumers want simple solutions and product suppliers who can best figure out how to deliver will reap the rewards.

NO STOCK-UP
Another interesting aspect noted in the IRI research was that 41% of shoppers avoid stocking up and instead shop weekly with a controlled list to stay on budget. This behavior shift could mean continued traffic problems for Walmart supercenters and wholesale clubs if the trend continues.

While IRI doesn’t not comment on specific retailers, Viamari said this behavior is vitally important to store channel performance. Viamari said fill-in trips have become the normal because fewer folks can afford to have their budgets disrupted.

“The bottom line here is that consumers are using well-controlled lists when they shop. This cuts down on impulse buying that most retailers try and induce,” Viamari said. “The opportunity here is for retailers and CPG companies to reach out earlier to the shopper when they are making that list. We know shoppers do make occasional changes to the list while they are in-store after seeing better deals,” she said.

Coupons, circulars and social media interaction are some of the ways retailers and CPG companies might ensure the consumers think of them when making their lists of items they will buy each week.

E-receipts like those given by Wal-Mart shoppers who use the “Savings Catcher” tool give that retailer an advantage in helping shoppers create future shopping lists. The e-receipts are available on the mobile devices of the users, but there is no indication the retailer is using that data to prompt future sales at this time. This is a lost opportunity to provide useful help on the front-end of a shopping trip.

However, for shoppers who visit Walmart.com or just about any other online retailer, there is no end to the stalking on social media or email suggestions on deals for the items searched whether it’s Benjamin Moore paint at Walmart.com or new bedroom linens from Overstock.com. 

MULTIPLE STOPS
The IRI research found 41% of consumers still shop at more than one retailer for grocery and household consumables. 

“Shoppers are confining their multiple shopping trips to those stores that consistently offer the values they expect. Out of necessary they began this during the recessionary years and now they operate on auto-pilot,” Viamari said.

She said the days of one-size-fits-all is long gone in retail as consumers made sacrifices that have turned into smart savings strategies they have no intention of abandoning no matter how hard some retailers work to win back lost business.

Consumers may not mind the multiple retailer approach despite the lure of “Savings Catcher” from Wal-Mart, which was recently restricted just six months after the wide rollout of the shopping tool.

Dollar General’s efforts to email $5 coupons off $15 or $20 spent is one way the small box retailer is wooing shoppers who might purchase dog food or diapers that is not restricted to branded coupons. DrugStore chains like CVS and Walgreens offer significant savings with their loyalty programs that can be used in conjunction with manufacturer coupons on everything from allergy meds to mascara.

Aldi continues to pack shoppers into their small no-frill stores who are searching the lowest prices on select and featured produce from 29-cent avocados to $1.99 asparagus. Aldi deals also include organic produce such as bananas for 44-cents a pound or grape tomatoes for $1.69 per carton.

These consistently low prices on limited selections of fresh produce are hurting Wal-Mart’s produce sales. Walmart U.S. CEO Greg Foran said recently he’s bothered by the fact that too many shoppers rush past the “fresh” produce at Wal-Mart and head straight for the packaged foods. That is one area of focus for Foran and his team this year.

Wal-Mart also said it will no longer match produce prices with competitors in its “Savings Catcher” program. 

Niche online shopping services from Dollar Savers Club to Diaper.com that offer subscriptions at a value and the convenience of home delivery are also eating away the dollars spent for these goods during traditional shopping trips.

Viamari said if this trend continues retailers and suppliers will have to rethink how much shelf space they devote to those products in traditional retail stores. She said retailers have an opportunity to work with suppliers to strategically offer the right value sizes and flavors their specific customer base expects, keeping in mind that price matters.