Shoppernomics 2.0: The Not-So-Perfect Storm

There’s a host of ingredients contaminating the retail environment these days, with shoppers dogged by rising costs in energy, food and basic necessities. As a result, shopping habits are being radically reshaped in this new and uncertain environment, said Thom Blischok, president of consulting and innovation at Information Resources Inc. (IRI).

"We are living in a very troubled time," Blischok said. "We see a couple of interesting perfect storms occurring."

For manufacturers, the perfect storm includes rising prices of commodities, fuels, packaging and other staples. For consumers, the storm is marked by surges in food and fuel prices that are chopping away not only at discretionary purchases, but the bare necessities, too. Inevitably, it’s exacerbating an already recessive economic environment.

"What that’s translated to is the single largest shift in shopping behavior in any time we can recall," said Blischok, who after studying consumer trends for the past 25 years said he couldn’t recall an American economy in such a state of "transition."

A surface-level primer on commodity prices shows the ticket price for eggs has increased 33% over last year, followed by milk at 18.3%, cheese at 11.3% and flour at 10.8%. The cost of fuel hit an all-time average high the last week of June when the price of regular unleaded was $4.086 per gallon.

Blischok and other researchers dub it "Shoppernomics 2.0." "There’s no parallel in the history of the U.S.," he said. "This is unprecedented."

The net result: Economic winds are blowing consumer spending in an entirely new direction, to a place where soul-searching, budget-crunching and redefined eating habits are becoming standard practice.


A Penny Saved…

Blischok’s research shows consumers resorting to strange tactics to save money. They’re extending use of short-term products such as razor blades and toothbrushes, while trips to beauty care providers, such as salons and barbershops, are dropping as consumers opt for more at-home solutions. Single-serve and personalized products like special shampoos or soaps are being avoided as consumers opt for bulk-sized products the entire family can share.

There’s resurgence in self-care at home, too, with shoppers snatching up vitamins, medicines and medical supplies and extending these products’ use beyond their actual intent. "In some cases, they’re upscaling the purpose of the product so (they) can get more use out of it," Blischok said.

Exorbitant gas prices, too, are prompting many would-be c-store shoppers to buy gas but drive away without an in-store visit. Across the board, shoppers are "selectively deselecting" and rationalizing spending, Blischok said.

Trips are eroding from every retail channel. The c-store industry itself witnessed a 6% decline in trips in the first quarter this year. Consumers are saying, "Ultra-convenience at a price is not necessarily something I can afford today," Blischok said.

It isn’t a harbinger for disaster, yet it certainly doesn’t mean it’s a good time to sit back and twiddle thumbs. "None of these channels are in this death knell that people talk about," Blischok said. "We’re not anywhere near that."

What it does mean is c-stores can focus on key convenience items, maybe 25 to 30 items among roughly 100 essentials found in any basket: shampoo, nylons, health products, baby formula, fresh breads or pasta noodles and sauces. People also have a perception, justified or not, that private-label is more affordable than brand name.

But simply stocking these new products won’t be enough. Signage and digital messaging at the fuel pumps is critical to convey a store’s value to consumers deciding whether they should go inside the store, Blischok said.


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