Turbulent Times, Reexamined Actual Behavior vs. Expectations

When Unilever reported the results of its Trip Management Report last April, the threat of recession had consumers worried but, for most, the reality hadn't yet hit. Unilever felt that the rich insights derived from that study warranted a deep dive into the data later in the year to see how CPG categories were actually shopped in 2008.

Unilever's Mike Twitty, presenting at the National Grocers Association convention this winter, highlighted "key takeaways" from April's original Trip Management Report prior to sharing results and recommendations from the follow-up research. Of course, even in March of '08, consumers expected that economic circumstances and rising prices would change the way they would live and shop. Shoppers recognized that "quick trips" were uneconomical and hoped to do more planned, stock-up shopping to save money. Also, retailers were advised, given the results, that top and bottom tier positions would do best, while consumer propositions that appealed to the mid-tier would have to struggle more in order to maintain market share. And since both high and low income shoppers were in many cases "swapping habits," it would be essential that operators looked at the effect of changes category-by-category.
That was then, this is now...
In order to get a handle on what shoppers were actually doing in 2008, vs. what they assumed they'd do, Unilever turned to cluster analysis - simultaneously considering the shoppers' savings tactics across 120+ Nielsen categories. What was revealed were seven distinct patterns of CPG shopping in 2008. For retailers and manufacturers, a look at these macro-trends can help determine which categories shoppers are abandoning, cutting back on, and which are continuing to prosper.

Six Shopper Strategies During Tough Economic Times

1. Dropping Out of the Category

Of 122 categories examined (essentially a view of the whole store), a staggering 87 experienced penetration declines. But at the same time that most categories were losing buyers, the buying rate appears to have increased - indicating that most leaving the category were the lighter users.

2. Trading to Private Label

A good deal of the switching came in "commodity" food categories, such as dairy, where there is an absence of dominant manufacturer’s brands and which, not coincidentally, experienced the highest rise in retail prices.

3. Buying Less of the Category

Some in this group, such as soda, candy and gum, could be considered "indulgences" and therefore understandably among the first to go when times get tough - whereas declines in pet food and baby food may reflect shoppers narrowing their purchases to bare essentials within the categories.

4. Stocking-Up and Buying On Deal

Non-perishable categories, such as hair care, household supplies, tea, and sugar/sweeteners, are good candidates for pantry stockpiling when the price is right.

5. HBA Essentials Competing on Deal

These are categories in which shoppers may wait for deals, buy "whatever is on sale" or leverage coupons, that tend to be the higher priced non-food categories. Examples are: medications, cough/cold remedies, batteries and cosmetics.

6. Consumer Staples That Grow in Turbulent Times

This is, obviously, an important group to watch, as penetration is not declining, plus trip frequency and buying rates are increasing. Fresh produce, cereal, detergents, beer, soup, coffee, frozen vegetables... these categories are benefiting from the reduction in eating-out, less dry cleaning and, yes, fewer visits to Starbucks.

Quick Advice for Grocers
The new research revealed that there is certainly "trading down" going on, but it is the penetration declines that are most troubling to CPG categories. It should be noted that food categories are most resistant to decline.
Grocery retailers should

• Find SIMPLE ways to increase their value to shoppers and make sure that these are communicated clearly and often;
• Come to understand the types of sacrifices their shoppers are making and find ways to help them cope and feel better. Shoppers need to feel that you understand their pain and want to work with them in these difficult times;
• Understand how shoppers are treating important categories to help determine retail strategies;
• Leverage "Categories That Grow in Turbulent Times";
• Drive buying rates in other food categories.

About the research: 
The objective of the 2008 Unilever Trip Management Report was to uncover unique insights into the shopping tactics that would emerge under the stresses of the recessionary economy. Research, conducted in March of 2008, covered 47,000 U.S. households and 36 key categories.

Later in the year, Unilever used cluster analysis to understand the patterns of change in actual buying behavior that had occurred across 120+ Nielsen categories.

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