IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This issue of Times & Trends explores current and emerging pricing and merchandising trends that define CPG marketer attempts to serve and satisfy consumers in a recessionary market.
Consumer response to first difficult, then recessionary economic conditions and escalating CPG costs has run broad and deep. At-home meal behavior has increased significantly, self-care health and beauty rituals have become commonplace and a myriad of money-saving strategies have been embraced.
The economy has shown signs of improvement over the past several months. The financial markets have made positive movement, housing and credit markets have improved, and gas prices have moderated. Commodity prices have fallen, but manufacturer list prices remain elevated. Instead, promotional activity intensified.
Consumers are fully entrenched in savings mode. To make things more difficult, analysts expect that the deflationary period is coming to an end.
This year will be fraught with opportunity and risk for CPG marketers. The need for strategies which address conservative spending and consumption patterns is high. CPG marketers that deliver will reap great rewards.
CPG retailers and manufacturers are locked in a dance that seeks to bring much sought-after price relief to consumers without jeopardizing thread-bare margins. Following inflation of 3.9% in 2007 prices spiked dramatically in 2008, increasing 5.4% over the prior year. In 2009, relief arrived. For the year, prices were up 3.6%, largely in line with historical trends. Projections call for food prices to increase throughout 2010, but the forecasted magnitude of that increase varies. It is unlikely that the industry will suffer increases as stark as those seen at the height of the recession.
Lift from drug channel merchandising fell more sharply versus other channels in 2009. Across channels, 54% of categories experienced reduced lift in 2009 versus 2008. In the drug channel, 61% of categories experienced reduced merchandising lift versus year ago. The channel is rewiring strategies in an effort to reinvigorate response
See the complete report in the "Price, Promotion & Merchandising: Balancing the Call Between Value and Price Relief" pdf.