After a year of sluggish economic growth in 2013, it is no surprise that consumers are beginning the new year with a conservative outlook. In fact, IRI’s MarketPulse survey found that shopper sentiment dropped in Q4 2013, and this gloomy attitude is spilling over into 2014 across all age groups. It is particularly evident among millennials, who reported a 10-point decline since Q3 2013 and have consistently struggled since the economic downturn began.
“The economy is slowly returning to a healthier state, but the road has been longer and harder than anyone expected, and it has been littered with obstacles,” says Susan Viamari, editor of Thought Leadership, IRI. “As a result, consumers are holding strong to the strategies that saw them through the worst of the downturn.”
IRI Shopper Sentiment Index Declines at Close of 2013
IRI’s Shopper Sentiment Index provides deep insight into how the economy is impacting consumers and changing how they approach grocery shopping. The index provides perspective in terms of price sensitivity, brand loyalty and changes in spending required to maintain desired lifestyles. With a benchmark score of 100 based on Q1 2011 information, a Shopper Sentiment Index score of more than 100 reflects consumers who are less price driven, more loyal to favorite brands and better equipped to maintain their desired lifestyle without changes.
The latest index for Q4 2013 is 102, which dropped after hitting a two-year high of 109 in Q3 2013. The fourth quarter also marked the first negative quarter of 2013. A number of factors likely contributed to shopper confidence being shaken, such as the debt ceiling crisis (73 percent awareness), the rollout of Obamacare (75 percent awareness), and the conflict in Syria (90 percent awareness). In addition, the reduction of food stamp benefits, otherwise known as the Supplemental Nutrition Assistance Program (SNAP), will increase financial pressures for 48 million Americans.
Consumers Not Loosening Purse Strings in 2014
Going into the fourth year post-recession, consumers are still finding it difficult to maintain their desired lifestyles and are struggling to make ends meet. The Q4 2013 MarketPulse survey results clearly point to why many consumers continue to face tough times:
83 percent of consumers are having difficulty affording their regular groceries
39 percent feel their financial situation is worse today than one year ago
43 percent say their financial position is unchanged versus one year ago
As a result of these ongoing difficulties, consumers will continue to trim expenses by following conservative usage patterns throughout 2014:
53 percent are working to make personal care products last longer
51 percent are finding ways to make cleaning products last longer
49 percent are cooking from scratch more/using fewer convenience items to save money
40 percent are making beauty care products last longer by using fewer, using less frequently, etc.
29 percent are sharing more products
And, it doesn’t stop there. When making purchases, consumers also are demonstrating adeptness for saving that has been honed over the course of the downturn. For instance, 90 percent are eliminating unnecessary purchases, and 67 percent are making shopping lists prior to going to the store.
“Our results clearly indicate that 2014 will be yet another challenging year for consumers and CPG marketers alike,” concludes Viamari. “But, both parties have demonstrated resilience and the ability to adapt quickly to challenges and opportunities. CPG marketers must hold on to that resilience this year and continue to provide shoppers with exciting products that make life easier and more affordable with a targeted value proposition.
IRI Point of View
To dig deeper into the Q4 2013 MarketPulse survey and learn forward-looking insights about 2014 consumer trends, IRI just released a new Point of View: “A Percussion of Conservatism as the New Year Bells Chime,” which examines how consumers will be using their common money-saving tools and making the most of new media to facilitate their CPG shopping endeavors throughout 2014. To download the free report, click here.