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CHICAGO — Six months into 2017 the latest IRI Consumer Connect survey has found that change and uncertainty among consumers have had an effect on the retail marketplace. However, trends should improve during the remainder of the year.
"January and February are generally softer months for the consumer packaged goods (CPG) industry, but showed sharper-than-normal declines this year," said Susan Viamari, vice president of Thought Leadership for IRI.
Notably, she explained, 45 percent of consumers say their household finances are strained, with lower-income and younger shoppers being hit the hardest.
"Consumers across the board have been avidly seeking deals and, while deal-seeking will remain pervasive, the good news is that economic expectations for the remainder of the year are positive," Viamari added. "With products that offer in-demand bells and whistles, and marketing stories that really connect with their target markets, CPG marketers will entice shoppers to spend and win a fair share of that spending."
According to the results from the first quarter IRI Consumer Connect survey, consumers are struggling. Millennials, especially, are grappling with student loans and economic instability for most of their professional carets.
As the survey found, 33 percent of millennial households are having difficulty affording needed groceries, compared to 26 percent of Generation X, 33 percent of Baby Boomers and 21 percent of seniors.
However, because millennials have entered adulthood in a tough environment, though, this group really does not feel more putout than older generations: 55 percent of millennial households are making sacrifices to make ends meet, compared to 53 percent of Gen X, 54 percent of Baby Boomers and 39 percent of seniors.
In addition to uncertainty, consumers have faced delayed tax refunds, wild weather patterns and significant food price shifts. The combination made a negative impact on CPG sales for the first quarter, according to IRI.
Retail unit sales dropped by 2.6 percent in January and dollar sales dipped by 1.5 percent in January, compared to the same period the prior year, the market research firm added.
As a result of uncertainty and a need to stretch their dollars, consumers are taking several money-saving steps, including buying private label; trying lower-priced brands; clipping coupons from newspapers and circulars; visiting multiple stores; and downloading coupons from digital deal sites.
Looking toward the second half of 2017, IRI said the U.S. economic outlook is healthy for 2017. Key indicators point to gross domestic product growing by 4.3 percent, retail sales increasing by 5.5 percent and unemployment falling.
Overall, 70 percent of consumers feel their household financial position will improve in the next six months. In addition, 84 percent of consumers say they will make additional or unplanned purchases if in-store deals are appealing. This sentiment is consistent across generations, yet slightly lower among Baby Boomers (82 percent), compared to seniors (87 percent), IRI added.
The survey found that CPG consumers are showing a willingness to pay a premium, particularly for items that really hit the mark. For example:
- OTC medications that treat multiple symptoms (48 percent)
- Food and beverages that provide additional nutritional benefits (39 percent)
- Household items with environmentally friendly ingredients (32 percent)
- Environmentally friendly packaging (22 percent)
- Anti-aging beauty care products (21 percent)
Digging into generational differences, IRI found that millennials demonstrate a willingness to pay for bells and whistles that hit their sweet spots, including nutrition density and earth-friendly ingredients and packaging, as well as:
- OTC medications that treat multiple symptoms (54 percent)
- Food and beverages that provide additional nutritional benefits (48 percent)
- Household items with environmentally friendly ingredients (38 percent)
- Environmentally friendly packaging (28 percent)
- Anti-aging beauty care products (19 percent)
"This year got off to a rocky start for the CPG industry, but things are starting to look brighter," Viamari said. "Our same message for marketers is ringing true yet again. Know your customers inside and out and tailor your offerings to meet their needs. By personalizing your products and messaging, you will hit the right note with consumers, encouraging them to open their wallets in support of your brands."