Consumer trends reshape the retail landscape
The consumer and retail environments are changing rapidly, and CPG brands need to evolve their strategies in order to stay relevant. That was the message Brian Owens, vice president of retail insights at Kantar Consulting, brought to his presentation at the recent Emerson Group Industry Day conference, held in Philadelphia in late September.
Among the key consumer trends to consider is the growing divide between low-income and high-income consumers, he said. “We also have to understand that the big middle class is shrinking,” Owens said. “It’s about high income and low income, and there are different needs for each.”
That trend will impact CPG companies, Owens said, because there are fewer opportunities for “one-size-fits-all” products, and more opportunities for items that appeal to either end of the income spectrums.
The trend also is evident among retailers, as demonstrated by the growth of such discount formats as Aldi and Dollar General.
At the same time that retail formats appealing to low-income consumers are growing, so is spending on more high-end products. People are willing to spend money to indulge, said Owens, who noted that the No. 1 reason people trade up to higher-end CPG products is indulgence, cited by 73% of shoppers in a recent survey.
Another key consumer trend to be aware of is the shift toward spending on services, with healthcare services leading the way, Owens said. Additionally, Owens noted that Health care represents 27% of the amount households spend on services, followed by financial services and food services at 9% each.
“These are all things that people need to outsource,” he said. “They need help.”
Shoppers ultimately are looking for stress-free shopping experiences, Owens said. That impacts how retailers and CPG companies should be approaching their omnichannel strategies.
“We all should be stress-free brands, at the end of the day,” he said. “There’s value in that. It’s important for us to understand how our brand fits into that stress, and how it unlocks it and alleviates it.”
Another important consumer trend to consider is the fact that many millennials are waiting until they are older to have children. This means that often young mothers have advanced further in their careers and have more money to spend, and, at the same time, are looking for convenient shopping solutions.
“That is a cohort that we all need to really consider differently — that 40-plus mom,” Owens said.
In addition, retailers and brands need to consider the upcoming “centennial” generation, which Owens described as those between ages 0 and 19 years old. Like the millennials before them, this group will be evaluating products based on their purpose.
“They’re looking for the value you’re providing them, and we have to understand how they define that,” Owens said.
Retailers and CPG brands also need to understand the health-and-wellness journey of the consumer, Owens said. People are transitioning “from sick care to self-care,” he said, which has ramifications for the products they are selecting as they focus on prevention and overall wellness.
Retailers and CPG brands need to be increasingly familiar with such emerging digital technologies as voice-based ordering and auto replenishment, Owens said, noting that by 2025, 30% of CPG purchases will be through auto replenishment. As a result, those products that are auto replenished will no longer be a part of consumers’ basket consideration, and it will be difficult to get those shoppers to replace those items with different offerings.
“If you’re not influencing them when they want to be influenced in an e-commerce environment, which is increasingly is digital, the cost of getting them back is going to be too high,” Owens said.
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