Guest Series Article 3: Winning The New Consumer - The Merchandising Perspective

By Robert Dyer, President - Dyer & Associates, LLC

In the "new economy" the consumer demand for products has changed, with the consumer seeking value focused more on need vs. want. The retailer has experienced this shift through sales and profit margin slippage, and has detailed the impact through scanner data analysis of its key categories and shopper data analysis of their lower average basket sizes. The supplier has a view to this through its market share slippage, due to the shift towards more private label and value brand sales. Both the retailer and the supplier have worked to address this shift through promotion, with both sides of the desk increasing their promotion levels to record high percentages of promoted sales to non-promoted sales. IRI has substantiated these observations in their recent Times & Trends report, which reported that 88% of grocery categories experienced increased merchandising activity in 2009. This increased merchandising was consistent across temporary price reductions, displays, and features. According to the report, "CPG marketers are leveraging merchandising to raise the profile of discretionary and other struggling categories in hopes of spurring sales in a tight economy."

Independent studies and observations have also shown that consumers have shifted their list making habits, with more than 63% of shoppers now making a list prior to their shopping trips. However, this list is no longer focused on just one retailer. Now the list consists of items under the headings of the retailer that the shopper plans to purchase the product. We have witnessed consumers scanning several retailer ads and developing the list from each ad. As gasoline prices have stabilized, I see this consumer behavior continuing.