Lessons from the IRI Retail-CPG Summit

By Al McClain

There were lots of speakers at the recent IRI Summit, with various thoughts on how to navigate the challenging economy, connect better with consumers, etc. So, I thought I'd pick out some of the more interesting ideas and see what you think.

• From Tim Hammonds (formerly of the Food Marketing Institute): Many baby boomers won't be able to retire as soon as planned, so tap them as a resource.
• From the "mom blogger" panel discussion: More purchase decisions are being made from home (using the internet), before the shopping trip - but shoppers are still susceptible to impulse purchases.
• From Jeff Martin (Stop & Shop): Private label is here to stay and on the rise, so CPG manufacturers need to provide retailers with a long-term vision as to how their brands fit with the retailer's private label strategy.
• From Mike Salzberg (Campbell Soup): Major consumer ritual changes are occurring, including 53 percent eating at home more, 36 percent bringing snacks from home when they go out, 35 percent extending personal care portions, 33 percent bringing lunches from home, 31 percent eating smaller portions, and 30 percent spending more time at home.
• From Tim Hammonds: For retailers, quality and cleanliness are still important, but price and location are dominant.
• From Christa Farin (Mintel): There is an opportunity to shift consumers' frames of reference - for example, celebrity chefs are lending their names to prepared foods lines. The idea is to get consumers to compare the prices on these lines to meals eaten out, instead of comparing prices to other lines of prepared food. Other examples of "brand-stretching" include hair coloring from spas, restaurant-branded meals, home laundry products that offer savings vs. dry cleaning, Dunkin' Donuts and Starbucks' brands of ground coffee, etc.
• From Mike Salzberg: Five top aspects of the shopping experience - this is an enjoyable place to shop; I trust the store; they value my business; store offers good selection/value; they make me feel welcome.
• From "mom bloggers": Pet peeves: over packaging, lack of transparency (i.e. reducing product size without making it clear), "deals" that aren't really good deals, internet coupons that aren't accepted
• From Mike Salzberg: Five major purchase decision criteria - "Price," 87 percent; "Like Product," 84 percent; "Weekly Flyer," 75 percent; "Coupons," 68 percent; "Loyalty Discount," 66 percent.
• From Tim Hammonds: Increasing - store brands, coupons, sticking to a list. Decreasing - stocking up, buying larger sizes, buying unplanned specials.
• From Christa Farin: Home becomes more relevant in times of uncertainty - consumers focus on experiences vs. materialism and indulge in less costly hobbies, and spend time reconnecting with friends and family.

So, if you put all these comments together, what do you have? Obviously, consumers are staying at home more, looking for deals, stretching their dollars, etc. But, the recession is beginning to show itty-bitty signs that it may be on the wane. And, whether it's in a few months, next year, or whenever, it is going to end. So, I would think it's in the best interest of retailers and manufacturers to convince consumers that their offerings are a solid value, while marketing the low price part of "value" now, and shifting more towards the "quality" part of the meaning as the economy improves. It seems to me that the worst thing a retailer or manufacturer can do now is discount out of desperation and have no easy way to climb back up the price hill as the economy improves.

Discussion questions: What changes in consumer spending habits listed above do you see as providing retailers and manufacturers with the most opportunity? Which habits do you think will stick around once the economy improves, and which won't?