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7/7/2009
Latest IRI Research Finds a New Consumer Equilibrium Emerging as Economy Continues to Transform
IRI Uncovers Key Consumer Segments Driving Cost-Saving Strategies
CHICAGO, July 7, 2009 - It is no secret that the ongoing economic turmoil is dramatically affecting consumers' shopping and purchase behaviors. Consumers are eating out less, reducing the number of doctor visits and foregoing vacations to stretch their limited dollars. But, which consumer groups are driving these cost-saving strategies? The latest research from Information Resources, Inc. (IRI), "Competing in a Transforming Economy 4.0: The New Equilibrium," leverages post-inaugural survey results to identify key consumer segments that are leading the change and helps retailers and manufacturers connect with their most important consumers.
"Since the beginning of 2009, a new consumer equilibrium has emerged in which behaviors initially implemented to weather the storm have the potential to last well beyond an economic recovery," says IRI Consulting and Innovation President Thom Blischok. "In this phase of our research, we went beyond studying the common spending, self-reliance and self-health strategies that are becoming common place in today's environment and examined how economic pressures have driven different types of consumers—by income level, household composition and even varying consumer mindsets—to change their strategies."
The "Misery Index," which captures current consumer economic well-being and expectations of future economic conditions, remains high for U.S. consumers at more than 14 percent versus 13 percent in March 2008 and less than 8 percent in March 2007. Forecasts indicate that 2009 will continue to be challenging and 2010 will improve slowly, which leads one to believe that consumers' current spending strategies are not a flash in the pan. Perhaps even more important than the strategies themselves, though, are the consumer groups who are driving them. IRI has maintained an ongoing dialogue with consumers since the economy began declining and has found that the following consumer segmentations play an important role in understanding the drivers of saving strategies:
Income Level
IRI closely examined how income levels drive commitment to saving and cash management strategies. For instance, do higher income households feel less pressure to cut back with higher cash inflow? Or, do they experience more pressure with the concern of replenishing their shrunken investments quickly to support the leisurely retirement they had planned before the recession?
During the fourth quarter of 2008, IRI asked consumers if they were postponing non-grocery purchases, such as electronics, furniture and clothing, and found a whopping 69 percent of those earning under $35,000 were delaying these purchases versus 63 percent earning $35,000-$54,00, 59 percent in the $55,000-$100,000 level and 46 percent in the over $100,000 bracket. In addition, 60 percent of consumers earning under $35,000 are changing their definition of what is essential compared to 58 percent earning $35,000-$54,000, 46 percent earning $55,000-$100,000 and 34 percent in the over $100,000 bracket.
Household Composition
IRI also studied which spending strategies are driven by households with kids versus households without kids. For example, do households without kids stick to their preferred brands and products since they have fewer mouths to feed, or are households with kids bending to picky eating habits and sticking to their preferred products in certain categories?
While households with kids are most likely to reduce or postpone spending on non-grocery purchases, affordable indulgences are quickly becoming a theme for these stressed out consumers. In fact, 78 percent of households with kids earning under $55,000 are postponing non-grocery purchases, but 64 percent of this same consumer segment is treating themselves to affordable indulgences compared to 54 percent earning the same income without kids.
Consumer Sentiment
Understanding the mindset of consumers who are driving strategies is a key to success for retailers and manufacturers. IRI uncovered three emerging categories of shoppers: optimists, maintainers and pessimists. Is the optimist the first to adopt dramatic saving strategies, thinking the economy will get better soon, and they won't have to employ them for long? Or, is the pessimist driving the trends in expectation of a long recession?
From its post-inaugural survey, IRI discovered that pessimists exemplify many of the attitudes that are driving behavioral change across channels and categories, such as searching for sale prices (87 percent versus 82 percent for all households), making personal care products last longer (62 percent versus 55 percent for all households), and buying fewer prepared meals at grocery stores (61 percent versus 55 percent for all households).
"Learning more about the specific consumer segments that are leading change empowers both retailers and manufacturers to craft marketing messages targeted towards their most important consumers and will also help to get these messages in front of their consumers at the right time and the right place," adds Blischok.
IRI Webinar
IRI is offering a free mini-webinar, entitled "Competing in a Transforming Economy 4.0: An Update on Critical Watch Points" on July 9 at 1 p.m. CT. To register for the webinar, hosted by John Porter, please visit: http://us.infores.com/NewsEvents/EventsWebinars/CompetinginaTransformingEconomy/tabid/184/Default.aspx
About the Report
IRI's "Competing in a Transforming Economy 4.0: The New Equilibrium" study is now available. The study includes research results from multiple IRI sources, including the company's IRI AttitudeLink™ survey of 1,000 consumers, the IRI Economic Purchase Longitudinal Database™, IRI Consumer Network™, IRI InfoScan® Reviews, IRI Economic Trend Database™ and select outside sources.
To learn more about the study, visit: http://us.infores.com/ProductsSolutions/AllProducts/AllProductsDetail/tabid/159/productid/122/Default.aspx. For pricing and additional information, please contact John Porter at john.porter@infores.com.
About IRI
IRI is the world's leading provider of consumer, shopper, and retail market intelligence and insights supporting 95 percent of the FORTUNE Global 500 consumer packaged goods (CPG), retail and healthcare companies. Only IRI offers the unique combination of integrated market information, automated and predictive analytics, innovative enabling technologies, and domain expertise. With IRI, leading retailers and manufacturers are able to quickly discover breakthrough insights driving smarter decisions and actions across the enterprise for breakthrough results. Companies around the world depend on IRI for improved productivity, stronger brands, and dramatic revenue growth. For more information, visit http://us.infores.com.
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IRI CONTACTS:
John McIndoe
E-mail: john.mcindoe@infores.com
Phone: (312) 474-3862
Fax: (312) 726-1091
Shelley Hughes
E-mail: shelley.hughes@infores.com
Phone: (312) 474-3675
Fax: (312) 726-1091
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