Retail Pressures and the Consumer
At the start of every new year, brands of all sizes should assess the current retail reality and plan accordingly to set up a successful year of sales. 2023 should be no different.
In partnership with NielsenIQ, the Startup CPG community gathered for a webinar on December 13th to hear firsthand what the data says about the realities CPG manufacturers face. In the webinar, “Retail Pressures and the Consumer,” attendees gained critical insight into the pressures on today’s consumer and heard insider advice for the best ways their brands can support them. Steve Zurek, Director of Sales Development at NielsenIQ, along with Marc Santos, North America VP of Growth at NielsenIQ, led this insightful, future-forward presentation.
Watch the complete presentation now or keep reading for some key takeaways.
Consider the current pressures on your consumer.
Today, and for the near future, pressures are building on consumers’ wallets. From rising grocery and fuel costs to increased interest rates and electricity costs to ongoing supply restrictions, consumers – and surely you too – are feeling the pain. These factors have led to more cautious consumers and changed consumer priorities and preferences. In fact, NielsenIQ data found that as consumer confidence continues to drop (down 11.7 points Nov ‘22 vs Nov ‘21), the savings rate has fallen (down 5 points Oct ‘22 vs YAGO), despite higher average wages (up $1.52 Oct ‘22 vs YAGO).
Avoid putting excessive pressure on yourself.
Too often, brands think they need to give their consumers more to encourage sales, especially in times like these. But, if you aren’t careful when planning promotions, you could take on more costs than you can handle.
“If you’re promoting, make sure that you’re moving your promoted price up as well,” said Steve Zurek. “If you don’t, and the delta between the base price and the promoted price starts to get too wide, it’s putting too much pressure on your trade fund. That’s something that, over time, is not going to be sustainable.”
Zurek added that in recent years, promotions were anything but profitable.
“We’ve had a lot of promotions as manufacturers that just got built into our plans over a long period of time,” he said. “Some of those were not returning on investment. 72-75% of all trade dollars going into the pandemic were not profitable.”
Keep retailers’ needs top of mind.
Consumers are the driving force for your brand, but it’s the retailers that will help you get in front of them. However, given the constraints on consumers, shelf space has become even more valuable. Today’s retailers can’t afford to keep slow-moving items that take up valuable retail space. Space is at a premium – they don’t have the footprint to dedicate to a greater depth of assortment. We’ve seen it with even the biggest retailers, who have reported concern over holding excess inventory. Their goal is to get low-velocity, low-turn items off their shelves and highly profitable, easy-to-turn items on.
In addition to a lack of space, retailers are struggling with a workforce deficit. In 2021, retailers saw incredibly high turnover (64.6%) and this year’s final numbers are expected to be even higher. Consumers are feeling this lack of employee presence. That’s why, in today’s economy, it’s all the more important to support sales even on their online platforms, which leads us to our next takeaway.
Think beyond store shelves.
Thanks to the pandemic, more consumers than ever were exposed to omnichannel shopping. Now, around 80% of every generation, from millennials to the silent generation, have shifted their shopping habits to online. As online adoption has grown, consumers have begun to see firsthand that the depth of assortment lives online, now considering categories that they never would have before.
With this shift, every retailer now has some sort of omni presence, whether that be through their own app, online ordering, etc. The majority of omnichannel shopping comes from online sales that are delivered directly (79% US & Canada), while click-and-collect (35% US & Canada) and in-store pickup (22% US & Canada) provide some opportunity for in-person sales.
Set your sights on future sales in 2023.
What does all this mean for small brands like yours? Don’t worry, as Zurek said, “It’s not doomsday.” Rather, it’s an opportunity to tell every retailer how you can help them. Coming off the pandemic and moving into 2023, we need to plan ahead as these shopping behaviors will continue to snowball in the future.
First and foremost, you need to understand your retailers’ goals and make sure they understand yours as well. That will get you to a plan that is mutually beneficial. You must be able to prove to retailers that you deserve valuable shelf space so you can be where consumers are, both in-store and online.
Reflect: are you able to prove to retailers:
- Your brand is highly incremental to the category
- You bring a shopper that is unique or highly desired by the retailer
- Your shopper brings more value to the retailer than the average shopper
- Your innovation in the category is important and highly profitable
You can with the right data.
“There’s information available to all of you out there that costs less than what you’ll lose on the 75% that you don’t get in the gains,” said Marc Santos. “Please, reach out to me; reach out to my team. All we are about is helping you get as smart as those big brands that are spending millions of dollars on databases.”
NielseniQ Byzzer is priced based on your tracked volume. The smaller you are, the less you pay. And, as an emerging brand member of Startup CPG, you can run 3 free reports now, powered by NielsenIQ. This data will help you better react to future retail pressures and get ahead in 2023. You’ll be able to confidently answer questions including:
- How do I understand how my shoppers are using click -and -collect to manage household expenses?
- What is the right assortment for in-store?
- Is now the right time to launch innovation?
- When I start promoting, what should my promoted price be?
- …and more
Speak with a NielsenIQ specialist to learn how you can use this data to face retail pressures and connect with your consumers.