Retail And CPG in 2013

by Jack Loechner, Oct 18, 2012, 5:25 PM

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The Retailing Today annual Insights issue, in conjunction with Chain Store Age and Nielsen, provides insights into market moving trends and a thought provoking view on where the retail and consumer packaged goods industry is headed in 2013.

The report shows that, among the winning practices of top-performing companies, the common theme that emerged was a high level of focus in:

• Placing forward-looking strategic bets
• Leveraging data and advanced analytics to drive decision-making 
• Collaborating more effectively with top retail customers
• Building industry-shaping capabilities

Key findings from Todd Hale, Nielsen’s SVP consumer and shopper insights, and the most recent version of a report titled “Retail 2016” show that:

• Saving and paying off debt are top priorities for most Americans with spare cash after they cover essential living expenses. The bad news is nearly one-third of those surveyed said they don’t have any spare cash
• As gas prices of gas head higher, retailers  know with a high degree of certainty that shopper behavior will fall into a familiar pattern of trip consolidation, less eating out, a greater focus on value and increased coupon usage. However, Supermarket retailers that sell gas are able to capitalize on the trend by linking their reward programs to gas incentives. The number of shoppers who said they are buying more gas where they buy food has risen to 32% from 19% in 2007
• There is a growing disparity between upper and lower income levels, with 1-in-7 Americans relying on supplemental nutrition assistance programs, and 15% of U.S. households earning less than $15,000 per year. As of June 2012, there were 46.7 million people receiving food assistance benefits, compared with 30.8 million in October 2008
• Consumption of key categories isn’t necessarily increasing due to price inflation that creates the appearance of growth, even though unit volumes are down. Concerns about the impact of weak crop yields on food prices are overblown. In fact, commodities make up about 14% of the average retail food purchase with such factors such energy and transportation costs, labor costs, processing and marketing costs all playing a more significant role
• Private brands are significant as sales reached $107.5 billion for the 52-week period ended Aug. 4, 2012. Brand sales during the same period reached $518.6 billion. In terms of unit volumes, brands captured 78.9% of consumer packaged goods unit sales and 82.8% of dollar sales for UPC-coded product categories tracked by Nielsen. Private brands captured 21.1% of unit sales and 17.2% of dollar sales
• Traditional print circulars remain influential in helping shoppers choose where to shop, across both young and old generations. However, they are leveraged primarily by deal seekers to find sales on the items that they prefer to buy. Current digital methods have rather low reach, but high weekly conversion or use among those who use them, especially younger consumers, particularly Millennials
• While increased consumer diversity brings expanded product offers, growth of older population segments is causing a shift in pack sizes and packaging. Pack sizes are shrinking and print is getting larger on products geared toward older Americans. And, CPG companies remain on a never-ending quest to deliver time-starved shoppers the increased convenience of fully cooked and ready-to-consume offerings
• The growth of online retail remains on an upward trajectory with no limit in sight. Online sales currently account for only about 5% of total retail sales, so pure-play companies, as well as conventional retailers, have ample digital growth ahead. Even so, physical store expansion also remains intact, with such sectors as warehouse clubs, supercenters, dollar stores and c-stores adding the most units
• No longer can CPG companies only concern themselves with direct competitors. These companies  understand how cyber companies are enhancing or disrupting the future of the retail industry and altering the way companies engage with shoppers

According to the study’s authors, talent development is the key area of focus for CPG leaders. Sales leadership at top-performing companies spend twice as much time as their peers at lower performing companies on talent development and talent management. These winning practices enable leading CPG companies to optimize their current performance while looking ahead and planning for future growth, concludes the report.

For the free PDF file from Retailing Today, please visit here.

 

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