How consumer confidence in the economy will shape retail in 2019November 30, 2018
According to the full service CPG sales and marketing agency Acosta, rising consumer confidence in the economy in 2019 will spur sales of more premium products that many shoppers turned away from in 2008 when the recession began. This will include products that are healthier, made with more expensive organic, natural and functional ingredients, as well as items that offer added convenience.
In addition to seeking more premium products, many consumers are seeking more premium shopping experiences both in-store and online.
In this episode of FoodNavigator-USA’s Soup-To-Nuts Podcast, Acosta Strategic Advisor John Clevenger walks us through how these evolving demands will continue to reshape the retail shopping experience and influence which products succeed at market.
The economic landscape
Ten years may seem like a long time ago, but for those who were struck the hardest by the housing collapse and the domino effect it had on the economy in 2008 the road to recovery has been long. But Clevenger suggests that many people are finally at a point where they can spend money more liberally without thinking of the impact of every penny.
“The past few years have been challenging for the industry. We had a period of recession that goes back more than a few years. Then we had a period of deflation. There has been a lot of consolidation of the industry. But I am predicting a pretty positive year next year for both retailers and manufacturers,” he said.
“I get the sense that consumers are feeling a little bit more confident with their pocketbooks and more likely to make choices towards more premium items. And premium can be just an upgraded version of something they normally buy, or it can be a more natural or organic or specialty ingredient item,” he said, adding, “I think people are feeling more comfortable making those expenditures.”
As consumers level up, he predicts, manufacturers will be able to take more price in the market without too much pushback from retailers.
What are consumers going to buy?
While consumers may be willing to spend more, they are not willing to spend more on just anything. Rather, Clevenger says they are looking for products that offer a higher value – whether that be health or convenience.
He explained that shoppers will seek out more natural and organic products and buy from brands that are transparent about where their ingredients come from.
“The other thing that is going on is there is a continuing shift away from preparing your own food from scratch,” and consumers are willing to pay more for this added convenience whether it be fully prepared meals from the steam tray at the grocery store or partially prepped meal kits delivered to their doors, he said.
Manufacturers will continue to mix-up their portfolios
Manufacturers and retailers will navigate these changes two ways. One, some will offer only more premium products and services, and two, some – particularly larger CPG companies and…