Global survey outlines the grocery categories under greatest pressure

Posted by Daniel Palmer on 20th January 2009

Global market intelligence firm Synovate has released data from its global economy and prices survey, revealing where people were intending to or already had switched brands and which market categories were most likely to suffer as people come to grips with living on a budget.

Synovate’s Global Director of Knowledge Management and Insight, Mike Sherman, said the year ahead was going to prove difficult for most. “The old rules no longer apply. But in times like this, brands should show what they’re made of. Some will fall by the wayside, some will survive and others will thrive,” he noted. “To make sure a brand is one of the winners, marketers first need to know what people are doing, feeling and buying. That’s why Synovate asked more than 11,500 people across 18 markets of the world.”

Which categories are feeling the pinch?
By definition it’s a challenge to compare categories to each other; they are separate categories for a reason, but it’s fair to say that some have been or will be harder hit by spending cuts than others. The survey asked people whether they have been spending more, less or the same across 12 categories including dairy, alcohol, canned goods, cosmetics and others.

Overall, 27% of people say they have spent less on cosmetics, more than any other category, although it should be noted that the survey covered both genders. Following cosmetics was soft drinks (26% say they have spent less) and alcoholic beverages (25%).

Mr Sherman made the point that compromises may be made in quantity, quality or both. “Take alcohol as an example: The people who have compromised their spending the most are the French (48%) and the Brits (46%). These are both countries where drinking is part of the culture, albeit in differing ways. I suspect the story behind these numbers is that people are choosing to drink cheaper, rather than drink less,” he stated. “Then there are the people who will still allow themselves little luxuries like perfume or new music or whatever. These consumers may compromise across categories, for example preferring own-brand groceries so they can still treat themselves to personal items.”

“Marketers really need to understand the motivations of the people they are trying to sell to, to get inside their heads. This is always the case, but never more so than when times are tough. The mistake would be to assume that everyone will respond in the same way,” he suggested.

Private label growth
Mr Sherman noted that this is equally a time of danger and of opportunity for brands, as many consumers are open to change in times of crisis. “There are more changes in brand leadership in a downturn than in good times. Clearly there are good opportunities for generic or cheaper brands; and for the more expensive brands it is a time to build on loyalty and protect, maintain and build on position,” he said. “Either way, the brands that market themselves the most appropriately during this time will do the best. It’s all about building a recession-proof brand. Fast.”

Just over half (51%) of all respondents say they are now comparing prices before making a decision, led by Greece (70%), Belgium (68%), France and the UK (both 67%), and the US (66%).

The Synovate ‘Economy and Prices’ survey also asked people whether they had already switched to a cheaper brand, were planning to switch to a cheaper brand or planning to use the same brand across the same 12 categories.

In general, more people have already switched to cheaper brands than are still planning on doing so. However, there is still significant numbers of people planning to switch and room to manoeuvre for marketers.

For example, an overall 10% say they are still planning to switch to a cheaper brand of canned goods, 18% already have and 58% will stay with the same brand(s).

Bob Michaels, US-based Senior Vice President of Synovate’s Consumer Insights group, pointed out that in virtually all categories, the US is among the highest in terms of proportion of consumers who say they have already switched to cheaper brands. “The challenges for marketers are multiple: Ensuring coverage of multiple price points to retain customers who are seeking cheaper brands, effectively targeting shoppers who are price sensitive versus those who are less so and doing so differentially by product category, capturing consumers who are now open to new brands and building loyalty – and then retaining that loyalty through the inevitable economic recovery,” he stated.