US consumers will continue to show restraint and look for value pricing in their CPG shopping habits, while grocery consolidation will intensify and assortment wars will escalate, according to? The Nielsen Company, which recently? issued its list of top five predictions for 2010.
Following is a brief rundown of Nielsen’s major CPG trends this year:
1. Restraint Will Remain the New Normal: US consumers have unemployment and other economic concerns at the top of their mind, suggesting that trends in restrained spending will continue into 2010, reports Retailer Daily.
2. Value is? Top Priority: Coinciding with consumers’ focus on restraint is a focus on value. A desire for low pricing could threaten margins, and widespread discounting across the retail industry will require retailers and brands to differentiate themselves beyond price.
3. Store Brand Growth Will Continue: Store-brand CPG products are growing in terms of both dollar and unit sales, according to separate research by Nielsen. Unit sales are growing more quickly than dollar sales, likely reflecting retailers’ response to consumer demand for value pricing.
4. Grocery Consolidation Will Intensify: Local and regional grocery players, unable to drive profits in the soft economy, will become acquisition targets and some larger national and regional grocers will divest unprofitable formats and banners to strengthen investments behind their winning formats and banners.
5. Assortment Wars Will Escalate: Retailer efforts to simplify the consumer shopping experience by eliminating aisle and shelf clutter will cause market share land grabs for small and medium-sized brands in pursuit of elusive revenue growth. Retailers may lose sales as they shift away from in-store merchandising that drove impulse buying and built shopper baskets. Look for brands caught in the trap of greater store brand focus and assortment optimization to forge alliances with key retailers, enter or step up efforts as store brand suppliers, and/or explore direct-to-consumer sales, Nielsen said.
