Times & Trends

MERCHANDISING TRENDS 2008

EXECUTIVE OVERVIEW

September 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 reveals that the changing shopping habits brought about by a transforming economy have combined with marketers efforts to enhance the shopping experience and communicate with consumers on a more intimate level to create a defining moment for in-store merchandising. A free summary is also accessible via the GMA website at www.gmaonline.org.

INTRODUCTION

Several years ago, CPG marketers realized that creating an enhanced shopper experience is an effective consumer draw. Brighter lights, new product assortments, and wider, uncluttered aisles are just a few examples of these efforts. For consumers, it meant easier-to-navigate aisles. For CPG marketers, it meant escalating competition for diminishing display space.

Then came the latest economic struggle. Consumer confidence has taken a major hit: gas, energy and food prices have all risen dramatically. Belts have been tightened to the breaking point. Value is now, more than ever before, at the forefront of the consumer decision-making process. While an affordable product mix is paramount to the value equation, merchandising is also a critical lever.

This report provides insight into current and emerging trends that will arm retailers and manufacturers with a solid foundation on which they can develop powerful merchandising strategies to compete successfully in a transforming economy and beyond.

KEY FINDINGS

»The most powerful in-store merchandising tactic remains much under-leveraged. A transforming economy has reinvigorated merchandising efforts, but the primary tactic increased is price reduction.

The retail landscape is marked by intense competition for limited merchandising space as clean store policies persist. While the decline in grocery channel displays moderated in 2007, a look at display count this year reveals a return to a more accelerated decline. Over time technology will bring in-store marketing to a whole new level. In the meantime, traditional displays are critical.

Prominent consumer trends, such as increased prevalence of self-care in lieu of doctor visits, are key motivators of merchandising activity. Strategic merchandising has enabled drug retailers to capture a favorable position in HBC, but grocers are fighting back.

Private label merchandising activity is generally lower versus nationally branded products. Though private label remains at the forefront of retailers’ differentiation strategies, private label goods are experiencing merchandising activity declines that closely mirror declines in branded products.