“Smartphones, digital coupons, online retailers and the Internet combined with financial pressures and shifting marketplace dynamics are forever changing how consumers shop,” says editor of Times & Trends.
Consumers have drastically changed their approach to grocery shopping during the past decade. They combine online and offline planning with in-store visits and make more informed and cost-effective purchasing decisions.
Since this new path to purchase is completely reshaping how consumer-packaged-goods (CPG) manufacturers and retailers have to communicate with shoppers, SymphonyIRI Group is examining common and emerging merchandising trends that marketers can implement to satisfy consumers in its latest Times & Trends report, “Merchandising Trends: Supporting the Value Proposition.”
“Smartphones, digital coupons, online retailers and the Internet combined with financial pressures and shifting marketplace dynamics are forever changing how consumers shop,” said Susan Viamari, editor of Times & Trends, SymphonyIRI. “If you want to reach and resonate with shoppers today, you need to do more than traditional in-store merchandising. Emerging and evolving technologies have enabled innovative marketers to begin reaching shoppers in their homes while they are researching products and making their lists, and then reinforcing their messages on the way to the store and in the store when consumers are making their final selections. Marketers that keep pace with and embrace this opportunity will achieve success, while those who fail will find it difficult—even impossible—to remain relevant and competitive.”
The Pace of Merchandising Activity
Merchandising has long played an important role in the CPG industry. It builds excitement, educates consumers and drives awareness. For those reasons and more, many categories rely heavily on merchandising activity to spur purchase behavior.
During the past couple of years, more than one-third of CPG categories sold considerable volume—30-50%—with merchandising support. Still, on the whole, the past year has seen mixed trends. Merchandising, defined as display, feature ad, feature and display combined and price-only actions, increased across just more than half of CPG categories and declined in 47% of categories.
Trends in grocery and convenience channels closely mirror the industry average, but the drug channel has a different story to tell. During the past few years, merchandising support has been declining within the drug store channel. In 2012, support declined in 60% of the categories within the channel.
Marketers are investing merchandising dollars in an effort to raise the profile of categories that cater to prevalent consumer rituals, including home-based eating and drinking, and underscore the value propositions they offer across key ritual-related categories. With consumers placing an increased focus on preplanning their shopping trips, embracing promotional strategies that begin to impact the shopper before she enters the store is well-advised. Ice cream/sherbet marketers are on top of this opportunity, as evidenced by an increase in share of ice cream/sherbet volume sold with the feature-only support of nearly one point during the past year. This type of strategy is also being embraced by marketers in other high-activity level food and beverage categories, including breakfast meats and carbonated beverages, which saw volume sold with feature support increase by one point and one-half point, respectively.
Obviously, the purpose of merchandising is to spur consumers into action and make a purchase. Merchandising that accomplishes this goal is said to have achieved sales lift. In recent years, merchandising lift has changed dramatically. In fact, average lift has declined across 80% of categories within the U.S. multi-outlet geographies, which include Walmart, military commissaries and select club and dollar retail chains along with the traditional food, drug and mass merchandise outlet coverage. Grocery and drug channels have seen average lift fall across 70% and 73% of categories, respectively.
Even some of the most heavily merchandised categories had declining lift in 2012. For instance, the carbonated beverages category, which sells more than 60% of its volume with merchandising support, saw lift decline by 14 points during the last year. And, Mexican foods, which sell half of its volume with merchandising support, saw lift slide more than five points during the same period.
Trends to Watch
Resonating with shoppers begins by reaching out with the most effective media, but preferred media can sometimes vary significantly across CPG categories. While above-average heavy newspaper readership spans many major categories, fewer categories show above-average heavy Internet usage.
On average, one-in-five consumers consider themselves to be a heavy user of the Internet, while only 25% of razor blade consumers fall into this category. This group also over-indexes in the consumption of outdoor media, while being much less likely than average to be heavy users of television. In contrast, among analgesics buyers, television and newspapers are leveraged much more frequently than the Internet. And, cold/allergy/sinus buyers are much more likely than vitamin buyers to get their coupons on the Internet.
“The ‘old way’ of doing things is simply not as impactful as it was in the past,” Viamari added. “To capitalize on new and evolving opportunities, marketers must enmesh the broad and rapidly growing array of old and new media tools at their disposal. They must take chances and not be afraid to make mistakes.”