Times & Trends

PANTRY STOCKING IN A DOWN ECONOMY

EXECUTIVE OVERVIEW

DECEMBER 2008

IRI's Times & Trends highlights new developments and critical events across all major CPG categories and channels, providing powerful benchmarking data to help guide your strategic decisions. This edition of Times & Trends provides insight into the consumer mindset during the single largest CPG shopping mission: pantry stock-up. A free summary is also accessible via the GMA website at www.gmaonline.org.

INTRODUCTION

For more than a year, the United States has struggled to quell a financial storm. Debt has skyrocketed, personal wealth has plummeted, workforce reductions are frequently in the news headlines, gas prices spiked and then fell sharply, and food and energy prices remain well above historic levels.

Packaged goods manufacturers and retailers are struggling to absorb significant increases in commodity, fuel and energy costs. Some consumers have moved from belt-tightening to belt-notching in an effort to make ends meet. Other households have realized that a sharp downturn in the value of their retirement investments means they need to change their spending habits today in order to enjoy a comfortable retirement tomorrow.

IFor CPG marketers changes in consumer shopping rituals brought about by the weak and uncertain economy have made the already difficult task of staying abreast of consumer attitudes and behaviors even more difficult- and critical.

This report provides insight into the consumer mindset during the single largest CPG shopping mission: pantry stock-up. An intimate understanding of current and emerging trends within this trip mission will enable manufacturers and retailers to develop and execute strategies that align with overall corporate goals while simultaneously addressing the complex and changing needs of U.S. shoppers in a recessionary environment.

KEY FINDINGS

»The complexity of understanding consumer shopping patterns and behavior increased exponentially with the country’s present recessionary status. Difficult and unstable economic conditions have driven consumers to reevaluate old shopping habits and brand loyalties, resulting in an escalating evolution of attitudes and behaviors across trip missions, including stock-up missions.

»CPG trip mission has a significant impact on channel selection. Retailers across channels have broadened product assortment in order to effectively serve multiple trip missions; pantry stock-up missions represent a sizable share grocery and supercenter channel trips/sales.

»Pantry stock-up strategies are varied, and are changing in the face of the country’s latest economic recession. A significant average basket ring has consumers across demographic and psychographic breaks making changes to their pantry stocking missions; motivators of change are varied across these boundaries.

»Everyday low price strategies are ringing loud and clear to consumers in a recessionary economy. Supercenters, led by Wal-Mart, are capturing sizable share of pantry stock-up efforts across categories that have met with particularly high price increases over the past year.

»Despite a decline in CPG units and total CPG trips, stock-up basket rings, driven by CPG price increases, have increased over the course of the recession. Discretionary purchases are likely to slide as consumers focus on limiting expenses wherever possible.