New report finds brand loyalty poised to survive downturn, new habits to be maintained

Posted by Daniel Palmer on 27th August 2008

Cost-conscious grocery store habits US consumers developed during the faltering economy in the first six months of 2008 are destined to have a long-term impact on national shopping behavior, according to research results issued by retail analytics firm Precima.

Eighty-four per cent said they’ll keep looking for specials in store flyers; 80 per cent outlined plans to use coupons as much as possible and 78 per cent said they were determined to make fewer trips to the store in order to save on fuel. A significant 82 per cent claimed they intend to continue cooking at home more often even after the economy improves. Historical data, however, would indicate otherwise with restaurant sales typically bouncing in the wake of an economic recovery.

The Precima survey asked consumers to identify shopping practices they’ll continue and those they’ll drop if the economy improves. In positive news for national brand owners, just 54% of respondents currently purchasing private label intend to continue to buy generic or store brands, although 44% suggest they will continue to switch from national brands to private label. Additionally, only 32% claimed switching to private label was a practice they had already employed to any extent to cope with a deteriorating economy, implying brand loyalty remains reasonably strong in the grocery sector.

“Above any other money-saving strategy, consumers use specials in store flyers to determine where they shop. With the majority of consumers trying to make fewer trips to fewer stores, it’s more important than ever for grocers to capture every possible visit,” Precima General Manager Brian Ross advised. “Retailers with customer purchasing data from their loyalty programs can really use it to their advantage by picking the right products and providing the right incentives to attract customers to their stores versus competitors.”

“Also, despite the challenging economy, consumers are very reluctant to switch brands to save money. That’s a factor that reinforces grocers’ critical need to understand which brands are most important to their customers,” Mr Ross added. “Retailers who use data from their most important customers to determine new product opportunities, and to identify which brands to promote and which to give the most in-store presence, will have a significant advantage.”

Women were found to be more likely than men to continue the frugal shopping practices they engaged in during the past six months. The comparative numbers are (women vs. men): cook at home 83%-81%, make fewer trips to the store 80%-74%, shop at low-price stores 68%-61%, use more coupons 81%-78% and look for specials in store flyers 84%-83%.

Categories under pressure 

Convenience foods like frozen dinners (50%), snacks including chips and cookies (46%) and dessert items such as ice cream and cake (44%) were the categories consumers said they would most likely cut back on when budgets were tight. Alcohol sales could also take a hit with 40% of respondents planning to reduce purchases of beer, wine and spirits when they have less to spend on groceries.

Environmentally Friendly Products 

Another topic which has received considerable attention over the past couple of years is the desire for environmentally friendly products and the willingness of consumers to pay more for such products. A clear discrepancy was established between males and females in this regard, with 32% of women believing environmentally friendly products to be worth the extra cost, compared to a mere 21% of men.