Shoppers, in general, appear to be more confident in their income outlook and job security and are eating out more often compared to three years ago, according to the fall "The Why? Behind The Buy" report from Jacksonville-based Acosta Sales & Marketing.
A shopper survey comparing July 2009 to August of this year found more shoppers expect their incomes to stay the same the coming year and believe their job is secure.
Still, shoppers face hardships and the "tale of two shoppers continues," said the report, referring to households with annual incomes below $45,000 and those above $100,000.
The twice-yearly Acosta report analyzes consumer trends and habits. The report was subtitled "The Changing Face of the U.S. Shopper."
"While it has been almost five years since the start of the recession, U.S. shoppers still find themselves living in uncertain economic times," reports Acosta, referring to the recession that began in December 2007 and ended in June 2009.
It said "mixed economic news" in the third quarter this year has been followed by a fourth quarter of the same, "with some bright spots offset by continued economic hardships for many."
Acosta said the sixth issue of the report explores changes in shopper behavior the past five years.
"Perhaps because of the long duration of this recovery and the looming threat of another possible recession, U.S. shopper behaviors and attitudes have been permanently impacted," said the report.
"With shopper behavior and attitudes fundamentally changed, the future for the consumer packaged goods industry and the retail landscape is also fundamentally changed," it said.
Acosta provides sales, marketing and retail merchandising services. AMG Strategic Advisors, which compiled the report, is Acosta's growth strategy consulting unit.
Acosta works with more than 1,000 consumer brands in the consumer packaged goods industry, including many of the highest profile products on the store shelves. The company has more than 30,000 employees in the U.S. and Canada.
Acosta reported seven key findings.
The tale of two shoppers continues
Acosta said the study found that nearly half of all households with annual household incomes of $45,000 or less are struggling financially, while the other half "is settling into the new normal."
"Consumer packaged goods companies and retailers will have to consider bifurcating their product portfolios to appeal to both segments with a focus on extreme- value solutions for the struggling lower-income shoppers," Acosta said.
Acosta said that according to 2011 U.S. Census data, 46 percent of all U.S. households "are barely making do" with annual incomes under $45,000, while 21 percent of U.S. households are in the $100,000 or greater annual income bracket.
"The traditional middle-class shopper is disappearing," it said. "Households making $50,000 to $100,000 continue to 'shrink' and now represent less than 30 percent of households," it said.
Shopper segments in the spotlight
Shoppers from 18 to 29 years old, an age group known as Generation Y or Millennials, exhibit some similarities in shopping behaviors to the 45- to 64-year-old baby boomers, although their motivations differ.
"In many ways, the Gen Y/Millennial shoppers are eclipsing Generation X shoppers, who are stuck in starter homes and struggling to make ends meet," said Acosta, referring to the generation of shoppers from 30 to 44 years old.
The Millennials value design and innovation, are less brand loyal, consider product features and benefits, have "adventurous palates," prefer ready-to-eat meals, are heavily influenced by word-of-mouth suggestions and "enthusiastically embrace technology and social media."
The industry will need "to embrace this new breed of shopper and create a two-way conversation with them," the survey said.
Acosta also focused on Hispanic shoppers. "Growing in numbers, U.S. Hispanic shoppers are the eternal optimists," said the report.
"They remain optimistic about the future even while suffering job uncertainties in greater numbers than the total population," it said.
The report said Hispanic shoppers are leading the way in the adoption of mobile and digital technologies, often shop as a family and many prefer Spanish media.
The report found that 57 percent of U.S. Hispanic shoppers use technology for grocery shopping compared with 37 percent of total U.S. shoppers.
"The Hispanic shoppers have strong future purchasing power and represent an untapped growth engine" for many consumer packaged goods companies, according to the report.
The 'digital dawn'
Acosta reported that digital technology and social media, as well as "experiential marketing," which provides consumers an opportunity to experience the product, will become more important in attracting the increasingly influential shopper segments.
Hunger in America
Acosta reported 14 percent of shoppers surveyed have "gone without eating because there wasn't enough money for food."
"Consumer packaged goods companies and retailers have the opportunity to take an increased leadership role in solving this critical issue," said the report.
Acosta and AMG partnered with the Feeding America hunger-relief charity to learn more about the issue.
It reported that 46 million Americans participate in the Supplemental Nutrition Assistance Program, formerly known as food stamps. Of those, 43 percent are white, 33 percent are African-American, 19 percent are Hispanic, 2 percent are Asian and 2 percent are Native American.
According to the report, 20 percent of shoppers cut the size of meals or skipped meals because they did not have enough money.
It found that 14 percent of total shoppers surveyed, and 18 percent of households with children, didn't eat because they didn't have enough money for food.
Brand battlefields
Shoppers continue to seek out store brands as acceptable replacements for national brands, the report found.
"As private labels advance in quality and variety, keeping shoppers loyal to national brands or switching them back becomes a greater challenge," Acosta reported.
It said retailers had opportunities to differentiate store brands "and adopt good, better, best options."
The report said 81 percent of shoppers buy what they bought before, but many switched to private-label brands during the tough economy and a third plan to remain with those private-label brands.
Shoppers in households with incomes of $100,000 and more were the least inclined to switch back to national brands.
More than half of shoppers said they will look for products on sale, seek the lowest price or look through the entire product section for the best value.
Value redefined
Consumer packaged goods manufacturers will continue to invest in innovation and also invest more in economic modeling to understand shoppers' perceptions, Acosta found.
Shifting channels and center-store challenges
Supermarkets find themselves at a crossroads, according to the Acosta report.
"Grocers' attempts to draw shoppers to the perimeter have worked well," it said.
As shoppers shop the "walls" of the store, often featuring fresh produce, meats, fish, dairy, frozen foods, deli and bakery sections, they don't visit the center of the store.
Center-store traffic dropped from 53 percent in 2008 to 47 percent in 2011, leading to lost revenue from center aisles "where margins are greater," Acosta said.
Shoppers also continue to "channel surf," meaning they visit dollar stores and warehouse clubs as well as traditional supermarkets.
Dollar stores saw the greatest increase in store visits from shoppers surveyed, Acosta said.
"Five percent more U.S. shoppers (and a whopping 10 percent more Gen Y/Millennials) made more frequent dollar-store visits than last year, while trip frequency in the drug and convenience channels declined," the report said.
Acosta found three of five shoppers indicated they would switch back from mass merchandisers and supercenters to their regular grocery store if the economy or their financial situation improved.
However, Gen Y shoppers "are leading the channel-surfing trend" and are less loyal to brands and retailers.
Overall, Acosta found the average monthly grocery budget rose from $302 last summer to $311 this summer.
"We find that while most shoppers are still cost-conscious, they are adapting to the financial uncertainties of the changing economy and are increasingly, although cautiously, optimistic about the future," it said.
For more information, visit Acosta.com.
The survey took place in August with a random survey of 2,311 shoppers through a proprietary Acosta methodology.
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