Consumers are showing more retail confidence -- especially Millennials, the group hardest hit by the recession, according to IRI’s quarterly MarketPulse survey.
The first quarter of 2014 showed the first increase in consumer confidence since the economic downturn began. All age groups across the board are reporting a sunnier outlook.
IRI has been monitoring the struggles of Millennials and is taking a closer look at this notable increase in a special Point of View, “Millennial Shoppers: Positive Mindset Points to Future Growth,” which is available here.
“Consumers say they are feeling more confident about their household finances and don’t feel like they need to sacrifice as much in order to make ends meet,” says Susan Viamari, editor, Thought Leadership, IRI, in a release. “However, it’s important to remember that consumers are still entrenched in their conservative shopping strategies, so CPG marketers still need to work at finding pockets of opportunities.”
The index provides perspective in terms of price sensitivity, brand loyalty and changes in spending required to maintain desired lifestyles. With a benchmark score of 100, a Shopper Sentiment Index score of more than 100 reflects consumers who are less price-driven, more loyal to favorite brands and better equipped to maintain their desired lifestyle without changes.
The latest index for Q1 2014 is 121 versus 103 in Q1 2013 and 100 in Q1 2012. This is the all-time highest point since the inception of the index. In addition to Millennials’ rosy outlook, those ages 35-54, whose outlooks have been rather volatile, also posted a sizeable jump this quarter. Those ages 55 and older also showed an increase.
Consumers remain comfortable with the shopping strategies they adopted earlier in the downturn, which reinforces that the conservative “new normal” is here to stay regardless of confidence levels. With this in mind, 70% of savvy consumers make a shopping list before they enter a store, and 75% make their purchase decisions before entering the store. These figures have not changed since 2011, so it’s absolutely critical to begin the conversation early with consumers.
Because 19% of all consumers and 26% of Millennials are having difficulty affording groceries today, shoppers are still buying a lot of items on deal. For instance, 33% of all consumers and 40% of Millennials are buying more than one-half of their baskets on deal. And, 19% of all consumers compared with 25% of Millennials say they are buying more on deal in 2014 than in 2013.
“While it’s great that sentiment is on the rise, marketers must stay on top of their game and continue to deliver solid value that enables consumers to live well while remaining conservative,” Viamari says. “The diversity of this quarter’s survey results clearly demonstrates there is no single path to recovery, and marketing strategies must recognize and reward the variability out in the marketplace.”