Channel Shift: Where Are Shoppers Going Now?
July 21, 2009
The economic downturn has changed shopper behaviour. There are opportunities, and there are 
risks. What are the impacts on YOUR business?
On July 1st, Nielsen released research results indicating that nearly two thirds of Australian consumers believe the country is in a recession.
Despite recent economic data showing that Australia is not in a technical recession, shoppers are still battening down the hatches and cutting back on spending.
The losers – Out of Home Channels and ‘Nice to Have’ Categories
Some 63% of Australian consumers say they have changed their household expenditure versus last year. The big losers are take-away meals and out-of-home entertainment, with almost two thirds of respondents saying they have cut back on these items.
Aussies are staying home to eat, socialise and entertain themselves.
Other losing categories are new clothes (59%), premium grocery brands (56%) and gas & electricity (55%).
The winners – In Home Channels and Categories
Supermarkets, and many grocery suppliers are the winners, as are retailers in the discount and mass channels.
According to Nielsen, there is strong growth in ‘back to basics’ food categories aligned with a shift back to in-home cooking (and the phenomenon that is Masterchef!). Frozen meats, tomato paste and purees, salad dressings and pudding and cake mixes are all performing extremely well.
This is quite a change from data over the past few years that had indicated supermarkets were losing ‘share of stomach’ to out of home channels (like cafes) and specialty stores. Now, the supermarket, mass or discount department store is seen as the best value proposition. Small retailer = expensive, in the new mindset.
Anecdotally, we hear that the in-home entertainment categories are also performing well versus their cinema and theatre counterparts.
Shoppers we’ve spoken to are also indicating their current premise for off premise rather than on premise liquor channels – again it’s all about home.
The opportunities: negotiating the shifting sands
Tip #1 recession buster: occasion-based messaging at point of sale directly speaking to in-home occasions
* Are you in a category that can capitalize on the in-home trend? Right now there are more in-home occasions than ever. For example, we spoke to one shopper who was in a supermarket ‘buying mystery box ingredients’ (Masterchef game of culinary skill) for her husband to make a mystery box surprise dinner. Now we have a new in-home occasion: the mystery box dinner!
* We have spoken to other shoppers buying things for in-home entertainment ‘because it’s cheaper to entertain the whole family at home’. Not only films and music, also applies to ‘activities’ (whether sport, craft etc), old-fashioned board games as well as the newer Wii wonders of the world, books… the list goes on.
* Keep your POS messaging simple, compelling and occasion-based. ‘New ideas for creative cooking’. ‘Fun stuff for rainy days’.
Tip #2 position yourself as the light at the end of the tunnel; the reward for noble frugality
* If you’re in a premium / luxury category, it’s tempting to deep discount so hard that your brand equity is damaged in the long term.
* The fact is, shoppers will still allow themselves SOME treats. They will trade down on some things in order to trade up on others. So, if this is you, focus on being in their consideration set when they allow themselves a treat.
* Base your messaging around earned reward and move away from any previous positioning around overt flashiness and status symbolism (this is now officially ‘on the nose’ along with all those glitzy handbags with designer names spray painted all over them). Remember, we’re in a time of austerity, but a little naughtiness is allowed as long as it is earned and as long as it still represents ‘value’ in a broader sense. Still focus on quality – quality NEVER goes out of fashion.
* Hang in there and keep communicating. The Nielsen survey showed that consumers say some of their behaviour is considered a ‘short-term fix’. Almost 80% don’t believe they will still be curbing entertainment spending in the longer-term, for example.
Tip #3 Review your channel strategy
* Have you changed your trade spend in each channel and segment according to how it is performing in the current climate? Have a short, medium and long-term plan to adapt and move through the current shifting sands.
* Who is your primary shopper, and where are they NOW? Is it the same as 12 months ago? Find out where shoppers are looking for your products in the current climate and put your immediate focus there. Conduct shopper research.
* Short-term, you should be spending more of your focus and budget in your in-home channels and less in your out-of-home channels than you normally would, but with a weather eye on timing and your long-term strategy to leverage OOH channels when Australians venture out of the house again.
Tip #4 Review your business big picture
* Now is the perfect time to think about your business regeneration.
* What sorts of new systems, tools, structures, processes and strategies do you need to meet the challenge of the post-GFC era?
* There is no doubt that the GFC has changed the way we think about business, and that change is likely to be permanent.
* Time to get the mothballs out of the cupboard and renew with an eye firmly on the horizon (and beyond).
How we can help
* Channel strategy and route to market
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