Private label's share of overall CPG spending changed little during 2015
According to IRI, a Chicago-based provider of solutions and services for consumer, retail, media and over-the-counter health care companies, consumers continued to spend conservatively on consumer packaged goods (CPG), including store brand products, during 2015.
In its January 2016 Times & Trends report, "Taking Stock of CPG Past and Future: Gear Up Now for a Year of Growth," IRI stated that private label share of overall CPG spending changed very little in 2015 and remained relatively flat at the store level. Categories that did show notable here were refrigerated meats, with a 3.2 percent unit sales increase, and fresh eggs, with a 3 percent unit sales increase.
Overall, CPG sale performance was weakest in the frozen food sector, where unit sales declined 1.5 percent, and strongest in beverages, where unit sales increased 2.9 percent, IRI said. Growth was weak in non-food departments. The tobacco sector was boosted by electronic smoking products, which grew 23.9 percent for the year, and the health care department grew 2.1 percent, thanks to the latest new products that help consumers tackle common ailments and conditions such as colds, allergies and weight control.
Consumers will remain entrenched in their conservative purchase behaviors in 2016, even though one-third of Americans feel their financial situation will improve this year, IRI noted. Fifty-seven percent of consumers will make their purchase decisions before they enter the retail store, so marketers must continue their efforts to engage shoppers early in the planning process.
According to IRI, one-third of shoppers will choose brands based on coupons they have at home, and 29 percent will base purchase decisions on shopper loyalty card discounts. Consumers also will leverage a number of Internet-based tools such as smartphone apps and online advertising and promotions to keep their grocery budgets in check in 2016.
"Despite challenging market conditions, CPG marketers really do have reason for optimism in 2016," stated Susan Viamari, vice president of thought leadership, IRI. "Advancing technology has really given retailers and manufacturers a distinct advantage during these times of rapid and widespread change. By investing to understand how best to leverage new advances to really tap into the change, marketers throughout the CPG industry will identify exciting new ways to create real and lasting market advantages.”
IRI said it believes the following trends could offer growth opportunities to retailers in 2016 and beyond:
1. Circle the Wagons: Omnichannel retail is turning the CPG industry on its ear. Product marketers should harness in-depth insights about how consumers travel online to understand the new path to purchase and drive in-store growth.
2. Melting Pot Gets Hotter: The growth and transformation of U.S. households are altering shopper attitudes and behaviors. Product marketers will want to keep a finger on the pulse of increasing ethnic diversity and the explosion of non-traditional families.
3. Doing More with Less (Media): Consumers are constantly barraged with marketing messages. Product marketers will need to cut through the noise in the marketplace and focus on quality versus quantity.
4. Lean & Mean Growing Machine: Manufacturer consolidation will continue as CPGs look for new revenue streams. Companies might want to consider specialized acquisitions to fill white-space growth opportunities.
5. Big Opportunity in Small Packages: The urbanization of America will drive growth of smaller footprint stores. Product marketers will want to meet urban shopper needs with localized specialty outlets.
6. On the Highway to Health: Consumers are embracing a wide variety of healthier-living strategies. Product marketers should look across the retail aisles for new ways to deliver healthier options for shoppers and the environment.
7. Get Real: Consumers want to know what they’re putting into and onto their bodies, what they’re feeding their pets and exactly what is making their houses cleaner. Product marketers will want to answer consumers’ thirst for transparency and authenticity.
8. Snack Attack: On-the-go lifestyles continue to have a profound impact on consumer eating behavior. Opportunities that tap into grazing, the new sit-down meal, can be found.
9. Go Smart or Go Home: The focus on big data is rapidly giving way to smart data that will drive smart growth. Companies could marry big data with technology and analytic know-how to pave the way to growth.
10. Growth Comes from Within: There is no shortage of retail outlet options, so driving growth by adding stores is an ineffective strategy. Retailers could find growth by improving efficiency and productivity from within current stores.