The Nielsen Company has released the top five consumer goods spending trends retailers can expect to see in 2010.
1. Restraint will become the new normal in the coming year. Americans’ confidence has been slower to rebound compared to other countries. As a result, expect customers to continue to save money as unemployment and other economic issues remain a primary concern. A return to past shopping behavior may take some time, if it fully returns at all.
2. Value will remain a top priority. Customers want the best deals they can find right now. But if retailers focus on low prices at the expense of all other variables it threatens margins. Value messaging must also include some point of differentiation beyond pricing, Nielsen warned. Manufacturers and retailers that “drive the recession wave” and take an active role in innovation and ad spending are likely to come out on top.
3. Store brand growth will continue. Retailers are cutting prices to gain a competitive edge, unit share growth is continuing and retailer focus has never been stronger.
4. Grocery consolidation will intensify. Local and regional players that struggle to maintain profits in the tough economy will be prime acquisition targets and some larger national and regional grocers will divest unprofitable formats and banners, in order to strengthen investments behind formats and banners that are solid.
5. Expect assortment wars to 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,” Nielsen reported. Retailers could lose sales as they move away from in-store merchandising that inspired impulse buying. Brands strongly focused on store brand and optimizing product assortment may end up making alliances with key retailers, become store brand suppliers or explore direct-to-consumer sales.