Festive but frugal holiday celebrations on the menu for consumers

Shopper sentiment took another hit in the third quarter of 2015, marking the second consecutive quarter for a sharp decline in confidence, according to the latest IRI MarketPulse survey. Consumers are feeling the pinch from strained personal finances, stagnant wages and rising health care and education costs, said Chicago-based IRI, which will impact upcoming holiday celebrations.

The new IRI Point of View, “Holiday 2015: Making a List and Checking it Twice,” reveals that 32 percent of consumers are planning to spend less money on holiday celebrations this year.

“We’re taking a deep dive into those four crucial weeks following Thanksgiving that span Hanukkah and Christmas to determine how merry the holidays will be for CPG retailers this year,” said Susan Viamari, vice president, thought leadership, IRI. “Unfortunately, it’s shaping up to be a rather lackluster season.

"Still, marketers must keep in mind that two-thirds of U.S. consumers say they want to prepare the best meals possible," she added. "The trick to capturing maximum share of wallet this season will be to target consumers carefully and get on the all-important shopping list.” 

Constructed against a benchmark of the first quarter of 2011, IRI’s Shopper Sentiment Index provides deep insight into how the economy is impacting consumers and changing how they approach grocery shopping. The index provides perspective in terms of price sensitivity, brand loyalty and changes in spending required to maintain desired lifestyles, IRI said. With a benchmark score of 100, a Shopper Sentiment Index score of more than 100 reflects consumers who are less price-driven, more loyal to favorite brands and better equipped to maintain their desired lifestyles without changes, as compared to the first quarter of 2011.

The index dropped to 119 in the third quarter of 2015, versus 123 in the second quarter, IRI noted. It’s also lower than it was one year ago, when it came in at 121, leading up to the 2014 holiday season.

Sentiment is down across all age groups, with millennials indexing at 103. While this is still a low index compared with the index as a whole, it is higher than it was in 2011, 2012 and 2013, and also up from the third quarter of 2014, when millennials indexed 95, IRI said. However, millennials still index well below that of older shoppers, with those ages 35-54 indexing 123 and those ages 55-plus coming in at 122 in the third quarter of 2015.

Consumers are heading into the holiday season with a conservative mindset, IRI said. While they still want to make a splash with holiday celebrations, 32 percent said they expect to spend less this year than they did in 2014. Overall, this adds up to relatively flat sales for the upcoming CPG holiday season. To make the most of opportunities this season, it’s important for marketers to reach consumers before they head out the door, because pre-planning and deal seeking will play a major role in their money-saving efforts.

Sixty-two percent will prepare a list at home before heading out to the store; 54 percent will clip coupons from newspapers/circulars; and 29 percent will redeem credit card/store points for product savings, IRI noted. And store brands also will be important — 34 percent said they will rely on store brand solutions.

Even though consumers are currently feeling a bit strapped, they are optimistic about 2016. Overall, 29 percent of 18- to 34-year-olds expect the economy to improve during the next six months, IRI said, compared to 21 percent of those ages 55-plus. While all age groups feel that these improvements will boost their financial health, millennials are showing solid optimism in this area. More than half (57 percent of 18- to 34-year-olds) expect their financial health will be better one year from now, compared to 37 percent of 35- to 54-year-olds and 21 percent of those ages 55-plus.

“It’s fantastic to see millennials so optimistic about the future, since they struggled the most throughout the economic downturn,” Viamari added. “If these optimistic expectations come to fruition, it will go a long way in encouraging younger consumers to open their wallets more. They will be able to spend more on what they want, not just what they need. And millennials will finally feel more comfortable about making those impulse buys and even splurging now and again.”

To download the free report, visit: www.iriworldwide.com/en-US/insights/Publications/Holiday-2015-Making-a-List-and-Checking-It-Twice.