Every once and a while, a Wall Street wag or market pundit boasts about how shoppers have this huge pent-up demand to start spending. They can’t wait to blow their wad on the latest 3-D TV, the latest app-addiction or that new Toyota they always wanted.
Just kidding about that.
Then someone in the know like Todd Jones, president of Publix Super Markets, clears the smoke by providing a dose of reality on the state of today’s consumer.
Jones recently told an audience at the American Bakers Association’s convention that consumers’ behavior has fundamentally changed. They’re using coupons a lot more often than ever before. With discounting by food companies and everyday-low-price programs now the norm, many snacks and baked goods are selling at prices that they did a few years ago.
Something is not right about that.
At the same time, higher priced items such as organic foods hit the skids last year as consumers sought to stretch their budgets. Jones did add, however, that the market for organics is beginning to rebound and might pick up by about 4-5% this year.
Still, that’s hardly pent-up demand.
The study parallels what several research reports have noted over the last year. Consumers are finding every which way to get more bang for the buck. In some cases, consumers report they’ve trimmed what they spent on groceries over the last year. No, they’re not buying less food. Rather, they’re splurging less often, shopping at discount stores for essentials, purchasing this week’s items at extreme values and stocking up on their favorite branded English muffins, potato chips or malted beverage when they go on sale every two to three weeks. As Coca-Cola’s chief executive noted earlier this year, consumers’ shopping behaviors have been “reset” by the recession.
To compete successfully in today’s environment, bakers and snack producers not only need to be more price competitive, but they also should find ways to maximize the shelf space much better than they already do.
That’s because consumers shop differently than they did in the past. In many instances, Jones said, supermarkets like Publix are raking in more money from after-work shoppers between 5 p.m. and 7 p.m. than they do from 9 a.m. to 3 p.m. on most weekdays.
Weekends, and especially Sundays, are now the busiest and biggest days for retailers like Publix. The Monday through Wednesday period is typically slower.
Jones noted that Publix has partnered with Frito-Lay to adjust its direct-store-delivery schedule to better align shipments to when customers shop the most often. That means more deliveries toward the end of the week, including Sundays, and less frequent ones during the first half of the workweek. He offered bakers in the audience the opportunity to contact the company, which would work with them to set up special arrangements like Frito-Lay has to make sure that Publix’ shelves are full when most of consumers are in the store.
Maybe it’s a coincidence, but potato chips and other snack sales are up double-digits in many retail channels as consumers opt for those affordable indulgences. Personally, I recommend Doritos Late Night All Nighter Cheeseburger Flavored Tortilla Chips. While many snack producers have attempted this flavor, Frito-Lay just nailed it with this product.
But I digress.
Overall, the recession has been tough on some categories. Because of competition and the dreaded deep discounting, the bread aisle has been especially challenged from a price perspective, to say the least.
However, there is some positive news. Despite that there were fewer new products introduced last year, there was some big winners in the bakery category. In fact, Arnold’s Select Sandwich Thins was just named one of the most successful new food and beverage brands in 2009, according to Information Resources Inc.’s New Product Pacesetters report.
According to the Chicago-based research firm, the Arnold Select Sandwich Thins line was the No. 3 best selling new food and beverage product, racking up $87 million in total year-one dollar sales across food, drug and mass merchandiser channels, excluding Walmart. Kellogg’s FiberPlus Bars came in at No. 10 with $45 million in year-one sales. Look for thin bagels to be more successful than their square counterparts a few years ago.
Yes, consumers are splurging on the fun items they just got to have, at least occasionally. On everyday food items, however, they’re either trading down to private label or waiting for retailers to “let’s make a deal” on the brands they like.
Dan Malovany, editor