Manufacturers and retailers to ignore pantry-stocking trends “at their peril”: Report

Posted by Daniel Palmer on 6th February 2009

Shoppers are continuously adjusting their attitudes and behaviours as the American economy hits the skids. In particular, shoppers are revisiting the largest trip mission they make: the pantry stock-up.

According to the latest IRI Times & Trends Report: “Pantry Stocking in a Down Economy,” manufacturers and retailers ignore pantry-stocking trends at their peril. While stock-ups represent just 14 per cent of shoppers’ trips, these trips account for a whopping 42 per cent of consumer packaged goods (CPG) expenditures.

The pantry-stocking trip, more broadly a household stocking trip, is a shopping excursion characterised by the presence of a wide variety of items-food and/or non-food-in the shopping basket, resulting in a high basket ring. Pantry stocking most frequently occurs in grocery and supercentre outlets. Within these channels, pantry stock-up missions represent 21 per cent of trips and close to half of channel sales.

Supermarket aisle - shopping trolley

“Staying abreast of rapidly changing consumer attitudes and behaviors has never been more critical,” notes IRI Consulting and Innovation President,r Thom Blischok. “The shopper is redefining the components in their pantry each and every day through a ‘new lens of affordability.’ That ‘lens’ is projected to last for at least the next four plus years until the shopper gains confidence that the economic conditions have returned to a degree of normality.”

Consumers initially increased purchases during stock-ups in line with rising fuel prices but, since petrol prices began falling, average stock-up basket size has diminished. IRI anticipates this dip in stock-up rings to be a temporary trend due to several factors. Fuel prices are beginning to climb again as oil producers cut back production and demand increases in response to an improving global economy in late 2009 or 2010. Also, as market forces take hold and recognise anew that oil sources are increasingly rare and more difficult to exploit, energy prices will face renewed upward pressure.

Supercentres are effectively capitalising on the recession to capture pantry stock-up market share from grocery, club and drug channels. Among different income levels, pantry stock-ups at mass merchandisers (such as Wal-Mart) continue to increase as well. It is not a surprise that shoppers, which IRI classifies as “Getting By” (2+ member household with an annual income of US$34,900 or less), and those “Living Comfortably” (2+ member household with an annual income of US$35,00-$55,900) are flocking to mass merchandisers to stock up. More revealing are the “Doing Well” shoppers (2+ member household with an annual income of $55,000+). These shoppers are shifting their pantry stocking dollars away from every other channel and increasing their spending at mass merchandisers, reflecting increased price sensitivity, even among this group. Of course, there is also regionality and seasonality to stock-up trends that retailers must consider.

IRI research also takes into account the hundreds of shopper micro-segments that exist today, and the ongoing shift in the composition of these micro-segments, to develop the following suggestions for retailers and manufacturers:

* Step-up frequency and granularity of consumer and market assessment in order to anticipate and proactively address changes in trip mission rituals
* Assess the risk versus reward equation associated with establishing a product assortment specialised against the pantry stock-up mission
* Create highly targeted marketing strategies to address region- and market-level drivers of consumer attitudes and purchase behaviour
* Re-evaluate pack sizes and pricing tactics; drive basket rings through temporary price reductions and BOGO/multi-pack promotions
* Develop cross-promotion and cross-merchandising strategies, with target messaging and a focus on affordability and value

“While today’s economic transformation makes understanding and planning for shopper behaviors exceedingly difficult, for those who gain an intimate understanding of the consumer mindset and act on it effectively, abundant opportunities exist,” Mr Blischok concluded.