LAS VEGAS – As consumers remain under financial pressure, they are hunting for a deal; is assembling one, said Nicole Collida, managing director of US Retail & Sales Agencies at NielsenIQ (NIQ).
Speaking at Groceryshop on September 22, Collida said shoppers are combining strategies, such as switching to cheaper brands (39%), shopping more often at discount or value retailers (34%), buying more private labels (32%) and stocking up when items they like go on sale (32%).
“It’s a lasting change in how consumers make deals,” he said. “Promotion is still important, but promotion has to do something different than it did before. You have to provide value to the consumer in a way that the consumer determines.”
Some categories are better than others due to fixed food cost issues. Ahead of next year, consumers want to spend more money on fresh produce, similar to fresh meat and less on prepared foods, according to NIQ’s 2027 Consumer Outlook Study. In particular, every purchase decision will be guided by truth rather than habit.
“The important note here is that consumers should not cut back on spending,” Collida said. “We see them concentrating their spending on the things that are most important to them and their families. And this is an important nuance because consumers will make decisions based on how they define value and put things in the basket, so the definition of value becomes very important.”
The club channel has emerged as a clear winner against this backdrop, growing 9% over the past year while traditional retail remained flat. But only 11% of the club’s sales are driven by promotions, compared to more than 20% in other channels.
The club channel has been a clear winner in the current economic environment, growing 9% over the past year, according to NielsenIQ.
| Photo: ©WOLTERKE – STOCK.ADOBE.COM“Clubs are the clearest, most consistent proof point of structural value in our industry,” Collida said, pointing to membership, crowd economy, stock events and discovery as the channel’s advantages. “Clubs will continue to win, and I think the value equation is very clear to consumers.”
The number of trips per shopper has increased at clubs and mass retailers while declining at grocery and dollar stores over the past three years, according to NIQ.
“Grocery really needs to redefine itself and show up with a different value proposition because size is not enough,” she said.
But scale doesn’t necessarily mean having a national footprint, he said. “This can also mean availability and bandwidth for data action.”
Instead of copying larger competitors, smaller and regional retailers should focus more on unique advantages such as local sourcing and fresh assortment, he added.
“The lesson for all brands and retailers is to make sure you define your value proposition for the consumer before they even walk into the store,” Collida said. “Don’t rent attention with promotions. Instead, focus very much on bringing it to the store by giving value to the event or the country you want to deal with.