|Title:||United States number of unique SKUs stocked per household for 2006 to 2010|
Start of full article - but without data
Number of Unique SKUs Stocked per Household in a XX Week
XXX 2006 XXX 2007 XXX 2008 XXX 2009 XXX 2010
Source: SymphonyIRI Consumer Network[TM]
Since 2006, the average U.S. pantry has been
slashed by more than X%
The golden ring. Everyone on the carousel is striving to get that ring, but only a lucky few will succeed.
In the CPG world, brand loyalty is very similar to that golden ring. All CPG marketers are striving to capture the loyalty of shoppers, but attaining-then holding on to-that loyalty is very difficult, and only a few will succeed. With brand loyalty, though, it is not luck that brings success. It is skill in understanding consumer needs and determination in precise communication that your product will deliver on those needs.
During the past couple of years, the task of establishing and maintaining brand loyalty has become even more difficult. Why? In addition to general economic hurdles, CPG marketers are faced with increased cost of manufacturing, transporting and carrying goods. Initially, marketers looked to absorb such costs by operating more efficiently and cutting costs wherever possible in an effort to hold on to price-conscious consumers. But, many are now passing along costs to the consumer because already-thin margins can absorb no more hits.
All the while, consumer rituals have changed drastically, and their pursuit of value has reached a fever pitch.
Consumers are shopping across channels, and they are making trade-offs-trading down, or even trading out-in a quest to trim CPG spending.
Interestingly, brand loyalty has actually increased across nearly half of the top XXX CPG categories during this tumultuous period of time. Strategies embraced to date are many and varied.
To protect and grow loyalty CPG marketers are rethinking their strategies all along the marketing spectrum. Detailed in the January edition of Times &Trends, promotional activity has been uncharacteristically high and lift has declined. And, for the first time in a long time, innovation efforts have been expanded to include the value end of the product spectrum rather than just higher-end "up-sell" efforts.
Retailers are looking to protect and grow loyalty, too. Many are expanding private label assortment, rethinking everyday pricing strategies, and beefing up loyalty program offerings in an effort to differentiate and deliver ongoing value to their loyal shoppers.
The economic downturn is not over-it has long been predicted that recovery will be slow and difficult. Recent news indicates that the recovery will be even more trying than initially thought.
Consumers are hunkered down for a very long road to recovery. Indeed, the battle to establish and maintain brand loyalty will remain quite arduous. More important, though, is establishing and maintaining the type of loyalty that translates to purchase behavior even in tight financial times: the loyalty that delivers against the bottom line.
This report provides insights into loyalty trends and drivers of those trends, detailing opportunities to ensure that your key categories and brands remain on the "essentials" list, make it into the shopping cart, and translate to sales and share growth.
Note: This report utilizes the following definitions:
* Brand Loyal: Greater than XX% of buyer's total purchasing is of a single brand, not including"private label"
* Private Label Loyal: Greater than XX% of buyer's total purchasing is of private iabel
* Brand Switcher: XX% or less of buyer's total comes from a single brand
Executive Summary: Turning Insights Into Action
* A weak economic environment and inflationary pricing trends are feeding consumers' propensity to experiment with brands outside their "normal" consideration set in some categories, having a negative impact on brand loyalty
* Categories with generally high levels of brand loyalty have demonstrated a diminished sensitivity to price increases that have occurred during the past three years
* Innovation has proven to be a powerful way to protect and grow brand loyalty, particularly across categories where innovation is enabling consumers to trim back expenses yet still indulge/enjoy (e.g., spa at home; quick/easy/delicious at-home dining)
* Private label places considerable pressure on brand loyalty across some categories, particularly low-differentiation categories; as private label assortment expands, this pressure is likely to reach further, threatening loyal
in historically "safe" categories and brands
* Private label loyalty has increased in three-quarters of the top XXX CPG categories during the past three years
* Leverage frequent and granular assessments of core and target shoppers to ensure a comprehensive and always-current understanding of value drivers for key categories and brands
* Invest heavily in establishing and strengthening brand loyalty, focusing in on and delivering against the most meaningful needs of key and target shoppers
* Constantly seek opportunities to innovate, but approach innovation in a strategic and targeted manner in order to address the true needs of target consumer segments
* Base pricing strategies on a market view of pricing dynamics, understanding own targets and margins as well as those of key partners, and competitor and private label availability and pricing structure
* Provide ongoing support across key categories and brands, leveraging promotion tactically, and innovation to ensure that brands continue to deliver against the changing needs and wants in the marketplace
Detailed in the SymphonyIRI's May/June 2011 Times & Trends Special Report, 'The Ripple Effect: High Gas Prices Bring Pain Beyond the Pump," the Consumer Price Index Is expected to rise significantly in 2011, heavily influenced by high gas prices and high and rising food costs.
Recent figures from the United States Department of Agriculture (USDA) and analyses from economists indicate that food inflation this year may surpass initial expectations.' Commodity costs are high, and, after absorbing cost increases earlier in the downturn, many major CPG companies are now passing these increases along to the consumer in the form of higher prices.
Coca-Cola, for instance, announced plans to raise its prices X-X% percent in the second half of this year, following prices increases of X to X% in the first half.
Kroger has recently re-examined its inflation estimates, predicting that prices may rise X-X% for this year, rather than the X-X% percent initially forecast. (X)
In recent weeks, the maelstrom of the economy has been amplified by S&P's downgrading of the U.S. credit rating, the near-default on the country's debt and ongoing turmoil in Europe's financial markets.
It is precisely this type of environment that will test the true power of brand loyalty. In fact, SymphonyIRI's quarterly MarketPulse survey reveals that XX% of consumers are trying brands other than their preferred or usual brand because they were on sale. This type of "switching" behavior is most prominent across younger shopper segments and lower-to-middle income shoppers, but it is rather prevalent across all consumer segments.
This level of broad-spectrum experimentation has the potential to significantly impact market trends. The pages that follow provide a detailed analysis across the top XXX CPG categories. Identifying drivers of brand loyalty, as well as factors encouraging increased switching and private label activity.
Economic Snapshot 2008-2011p
Economic 2008 2009 2010 2011 Measure