The New Consumer Economy:
What to watch and What to do
James Russo, Nielsen
1
Title of Presentation
Copyright © 2012
2010 The Nielsen Company. Confidential and proprietary.
The world has changed
Consumers over 65 watch the most TV, close to 7
hours a day
Only 5% of advertising targets them, despite being the
top buyers in 97% of CPG categories
Boomers showed less brand loyalty
than their younger counterparts
Satisfying their unique need fuels growth
for this consumer segment
By 2050, ethnic household will be the
in the United States
Today, 22 of 100 metros are
“majority minority” populations
Reaching requires resonating
With unique connection preferences
majority
Women control $12 of $18 trillion in global consumer
spending—close to 70%
Women in 95% of countries say
quality is the #1 driver of
brand loyalty
Transitions strategic conversations from
pricing to quality; includes production,
marketing, packaging, in-store
global middle class will be
more than half of the world’s population
By 2020, the
By 2030, 79% of the middle class
will be in the emerging world
Business models move from
fixed to flexible
Accessible
Available
Mobile
Customized
Connected
Consumer Confidence:
Still a global concern
HOVERING NEAR PRE-RECESSION LEVELS
Global Consumer Confidence Index
102
94
90 90
85
84
92
94
89 88 89
91
77
2H'06 2H'07 2H'08 Q1
Q3
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2009 2009 2010 2010 2011 2011 2011 2011 2012 2012
Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012
EMERGING MARKETS LEAD OVERALL
CONFIDENCE
AP
101
MEA
98
LA
96
91
NA
87
EU
73
Source: Nielsen Global Omnibus Survey 2Q2012
GROWTH, ONCE AGAIN, BEING DRIVEN BY
EMERGING MARKETS
Leaders
Laggards
Movers
INDONESIA
INDIA
PHILIPPINES
S. ARABIA
MALAYSIA
U A EMIRATES
BRAZIL
CHINA
THAILAND
HONG KONG
120
119
116
115
111
108
106
105
104
104
HUNGARY
PORTUGAL
ITALY
GREECE
CROTIA
SOUTH KOREA
SPAIN
JAPAN
FRANCE
ROMANIA
30
40
41
43
45
50
52
57
61
62
FRANCE
BELGIUM
GREECE
EGYPT
FINLAND
SWITZERLAND
POLAND
AUSTRIA
MALAYSIA
U A EMIRATES
Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012,
movers vs 1Q2012
+11
+10
+7
+6
+6
+6
+6
+6
+5
+4
U.S. Consumer
Confidence:
Precarious
LET’S GROUND THE CONVERSATION
June 2009
NBER
May 2012
NIELSEN
Recession
Officially
Ends
75% of consumers
say we are in a
recession
14
What’s In Store: 2012
Copyright © 2012 The Nielsen Company. Confidential and proprietary.
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0
Great
Recession
20
Source: The Conference Board - Nine census regions,
5,000 US households; 1985 = 100; conducted by Nielsen
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
140
2001
120
100
80
60
40
Consumer Confidence Index
5 YEARS OF A “NEW NORMAL”
CONSUMER CONFIDENCE SIGNIFICANTLY OFF
PRE –RECESSION NORMS
HEIGHENTED ECONOMIC CONCERNS
WHAT ARE YOUR BIGGEST CONCERNS
OVER THE NEXT SIX MONTHS……
Economy 27%
Debt 11%
Jobs 11%
Fuel prices 9%
Health 8%
Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012 vs year ago
REPAIRING BALANCE SHEETS
ONCE YOU HAVE COVERED YOUR ESSENTIAL LIVING
EXPENSES, WHAT DO YOU WITH YOUR SPARE CASH…..
Savings
40%
Paying Debts
33%
No Spare Cash 30%
Apparel
27%
OOH Entertainment 19%
Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012 vs year ago
UTILIZING COPING MECHANISM
52%
compare prices before deciding what to buy
47%
41%
use coupons
+6
+14
use store circulars
increase in the coupon redemptions
growth of Store Brands in the past 3 years
Source: Nielsen Scantrack & Homescan – US Buying Trends June 2012
UNCERTAINTY PERSISTS BUT LESS VOLATILE
HOUSING
EQUITY MARKETS
FUEL COSTS
Source: Yahoo Finance; DQNews; ChicagoFed.org; EIA.gov
LABOR MARKETS
INFLATION
U.S. HOUSEHOLD WEALTH DECLINED BY $12 T
0
-5
-10
-$3T
HOUSING
DECLINE
-$9T
ALL OTHER
BETWEEN Q4 2007-Q4 2008
Source: US Federal Reserve Board Flow of Funds
THE WEALTH EFFECT WILL NOT DRIVE RECOVERY
EVERY $100 Δ IN HOUSING WEALTH LEADS TO AN ESTIMATED $7
CONSUMER SPENDING.
Δ IN OVERALL
$500B LOST IN CONSUMER SPENDING BETWEEN 2006 AND
2011.
LOW HOUSE PRICE GROWTH FOR AT LEAST 5
Source: The Demand Institute
YEARS.
RENTAL DEMAND IS LEADING THE RECOVERY
0-2 YEARS
STRONG RENTAL DEMAND
3-5 YEARS
ACCELERATION OF HOME SALES
Source: The Demand Institute
SHOPPING HABITS WILL CHANGE
MORE FREQUENT
SHOPPING & SMALLER
BASKETS
Source: The Demand Institute
MORE ONLINE
REPLENISHMENT
MORE INTEREST IN
LOCAL STORES
MORE EXPERIENCE
SEEKING
CPG NON-DURABLES DEMAND IS SHIFTING
DEMAND
FOR MORE
SMALLER
PACK SIZES
VALUE-ORIENTED PRODUCTS
DUE TO LESS STORAGE
Source: The Demand Institute
CONSUMERS SEEK FLEXIBLE HOME
ENTERTAINMENT
PORTABLE DEVICES
Source: The Demand Institute
INTEGRATED DEVICES
Sector Insights
WHAT TO
WATCH
CONTRASTING VIEW OF RETAIL SALES
Dollar Sales
Unit Sales
Source: Total U.S. All Outlets Combined, All Depts. , All Brands (UPC);
% Change vs. Year Ago; 13 wk quarters, YTD 31-wks ending 8/4/2012
SHOPPER TRIPS HAVE NOT RETURNED,
BUT OTHER DRIVERS AT WORK
Economic
Growth
Great
Recession
Post
Recession
176
158
151
Avg Annual Trips
Per Shopper
Avg Annual Trips
Per Shopper
Avg Annual Trips
Per Shopper
2002 - 2007
2008 - 2009
2010 - 2011
Source: Nielsen Scantrack, Total U.S. – All Outlets Combined;
52 weeks ending 6/9/2012 (vs. prior year); UPC-coded
FRESH DRIVES STORE TRAFFIC AND BASKETS
30%
1.5 to 2.1
Grocery
Store Sales
Times
Larger with Fresh
Sources: Homescan, TSV 52 weeks ending December 2011; Nielsen Perishables Group FreshFacts® Total US 52 weeks ending 12/31/2011 (Grocery channel
only)
AND CAN CREATE A POINT OF
DIFFERENTIATION
Market Differentiation
Top 3
Shopper Equity
Retail Brand
Quality Prepared Foods
Selection of Meat & Fish
Quality Fresh Food
Customer Service
Quality Fresh Food
Pleasant Store Environment
Long Opening Hours
Selection of Fresh Fruit and
Veg
Pleasant Store Environment
Source: Nielsen Shopper Trends 2010 Correspondence Analysis Results Among Dependable Shoppers in retailers’ primary census region
#C360
WHILE INNOVATION ACROSS CHANNELS,
RETAIL WINNERS AT THE POLES
6%
8%
Same Store
Sales Growth
Same Store
Sales Growth
VALUE
RETAILERS
3%
Same Store Sales Growth
MAINSTREAM
RETAILERS
INNOVATION
Source: Company financials, most recentSource:
reporting:Nielsen
Dollar General,
DollarTotal
Tree, Costco,
Scantrack,
U.S. – All
Sam’s, CVS Macys, Target, Kroger, Rite aid, Wal-mart, Whole Foods, Nordstroms
Outlets Combined;
52 weeks ending 6/9/2012 (vs. prior year); UPC-coded
HIGH END
RETAILERS
LOCALIZATION AND CUSTOMIZATION
“H.E. Butt Grocery Co…. opened a new store in the
Montrose section of Houston Wednesday that will
convert part of its parking lot to an outdoor events plaza
on weekends for concerts, movies and artisan markets…
the chain's first food truck that will serve gourmet items
Fridays and Saturdays in the parking lot.”
URBAN REVITALIZATION – WALGREENS
• 700 fine wines
• Fresh sushi &
sashimi
• Manicures
• and, more!
Photos: David Schaper / NPR & John Gress / Reuters/Landov
Retail 2016
E-COMMERCE: INTENSIFYING AND BLURRING
Source: Financial Times & NBC San Diego (photo)
U.S. Consumer Trends
FORMAT EVOLUTION:
NEWER, UPSCALE, SMALL STORE CONCEPTS
“The sporting goods company describes its S. A. Elite
concept as a boutique store with bright lighting, an
open layout, on-site footwear and fitness specialists,
and tennis, golf and yoga collections. “
Source: Sports Authority
COLLARBORATION:
STORE WITHIN A STORE
“Apple currently also
operates a "store within a
store" at over 600 Best
Buy locations with "Apple
Shops," some of which
feature staffing by Apple
Solution Consultants. Best
Buy has over 1,000 total
stores in the US.”
Source: Apple Insider & Wired (photo)
Retail 2016
RETHINKING MARKETING:
DIGITAL BILLBOARDS TO SCROLL CUSTOMER TWEETS
Source: Houlihan’s