Enticing recession-weary consumers

Articles
April 02, 2009

Enticing recession-weary consumers

To say that 2009 has been a watershed year for consumer spending would be an understatement. Though food suppliers and retailers haven’t been hurt as badly as others yet, they’re fending off the worst of today’s tight spending realities with sharp offers that keep people buying. How long and how deep they have to go to keep their fans will hinge on which consumer behaviors endure as long-term shopping practices and which savings strategies vanish at the first economic upturn. Nobody knows what will happen. But a new study, Point of View: How Will This Recession Affect the Future of Retailing, by PriceWaterhouseCoopers and Retail Forward, suggests a rebound will take shape by 2010 and retail winners will be operators who “tailor existing stores to specific customer segments and local markets as opposed to adding stores,” said Lisa Feigen Dugal, PWC’s U.S. retail and consumer advisory leader. “They need to adopt more creative strategies such as breaking the 80/20 rule with more limited editions and small runs to generate shopper excitement.”

To say that 2009 has been a watershed year for consumer spending would be an understatement.

Though food suppliers and retailers haven’t been hurt as badly as others yet, they’re fending off the worst of today’s tight spending realities with sharp offers that keep people buying.

How long and how deep they have to go to keep their fans will hinge on which consumer behaviors endure as long-term shopping practices and which savings strategies vanish at the first economic upturn.

Nobody knows what will happen. But a new study, Point of View: How Will This Recession Affect the Future of Retailing, by PriceWaterhouseCoopers and Retail Forward, suggests a rebound will take shape by 2010 and retail winners will be operators who “tailor existing stores to specific customer segments and local markets as opposed to adding stores,” said Lisa Feigen Dugal, PWC’s U.S. retail and consumer advisory leader.  “They need to adopt more creative strategies such as breaking the 80/20 rule with more limited editions and small runs to generate shopper excitement.”

Packaging, store footprint and growth expectations will downsize going forward, added John Maxwell, PWC’s U.S. retail and consumer practice leader. For example, the report anticipates that food-drug-mass channels will fare relatively well, though their growth will slow tremendously to 2.4% in 2009, a near three-percentage-point decline from their average annual rate during the 2003-2008 period.  Supercenters and warehouse clubs ought to post the highest rates of sales growth, while supermarkets and discount department stores will be weaker.

“Near-term shifts in shopping habits resulting from this economic crisis could significantly alter the consumer mindset in the long-term,” noted Mary Brett Whitfield, senior vice president at Retail Forward. “This shift will give evolving retail trends greater momentum. Retailers and suppliers will have to closely monitor and manage the complexities associated with these changes.”

SupermarketGuru.com agrees that a steady stream of innovative, limited-run products could stand out as small, affordable indulgences. These items could serve an escapist role from our daily pressures and bring small relief to a tense populace holding on for dear life. So much the better if these items help to puncture ‘limiting shopper behaviors’ cited by a majority of respondents to a Retail Forward survey, such as: buying only things I truly need (65%), buying fewer things (55%), shopping less often (54%) and buying fewer luxury items (51%).