Comprehensive Study Of Consumables Finds Weak Promotional Deals Cause Of Industry Malaise
Female Millennials Also Buying Less In The Category
SHELTON, CT – Weaker promotional deals and a growing disinterest among women in the millennial age group are causing sluggish sales of consumable products, such as fruit juice, carbonated beverages, yogurt, and ice cream, according to the second Consumer Value Study of Consumables conducted and sponsored by TABS Group in conjunction with the Promotion Optimization Institute (POI).
Consistent with other industry sources, the TABS Group study showed that total purchases of consumables are flat when compared with a year ago. Consumables categories are defined as carbonated beverages, salty snacks, cereal, yogurt, water, ice cream, cookies, fruit juice, refrigerated juices, crackers, frozen pizza, frozen novelties, candy, popcorn, and isotonics.
The heaviest deal users account for more than 70% higher consumables purchases per buyer than the lightest deal users. Households with kids and females ages 35 to 54 continue to be the lifeblood of the industry.
Shoppers increased their search for deals across multiple retailers, but lower levels of quality deals in the consumables sector contributed to weakness in sales. Among specific deal tactics, participation increased only in rebates and comparison shopping for better deals across retailers. The lower levels of participation vs. last year were private label purchasing, usage of store circulars, Sunday coupons and loyalty card programs, among others.
In addition, the only type of outlet that had a big increase in consumable purchases was dollar stores—up 23%. The survey found a shift of consumables shopping to smaller format channels also including drug stores and C-stores. The lack of the everyday low price deals has been inhibiting consumables sales at grocery stores.
The study found a clear cause and effect between higher deal activity and higher consumable purchasing. TABS Group CEO Dr. Kurt Jetta said: “More promotions mean more sales. But it’s not that simple. The promotions have to be easy for the shopper to carry out and represent enough savings for them to cause a big jump in corporate profits.”
There is a divergent trend in average purchases of consumables among male and female millennials: Among females, sales are down 14% overall, but they are up 6% among males.
Women in this age group are becoming more health-conscious when making eating decisions. They are living at home longer, leaving them with more money to spend on expensive, healthy food choices. They are also spending more of their money on technology-related items.
“Searching for deals is a fundamental need of most shoppers,” says Michael Kantor, CEO and founder of the POI, who encourages CPG and retailing executives to take bold steps, as leading change requires new approaches to intra and inter-organizational collaboration. “The study also affirms TABS Group’s research that ‘loyalty’ as it exists today is an illusory concept in CPG retail. The shoppers will go to where the best deals are. Today, versus just 5 years ago, optimization and predictive capabilities are being implemented, and utilized across internal and external teams with greater consistency by over 25% of CPG manufacturers/retailers, and growing.”
Jetta also said that online success with consumables may still be many years away—it currently represents only a 1.3% share of the category and is down slightly from 2013.
“Retailers need to embrace the fact that consumers will always want and need quality deals,” Jetta concluded. TABS Group’s study found that both active tactics (consumers must do something like clip a coupon) and passive tactics (on-shelf price markdowns or everyday low prices) are important. “Sellers of consumables should have a promotional strategy that includes both active and passive deal tactics and aggressive promotional discounting.”
About TABS Group, Inc.
Operating since 1998, TABS Group, based in Shelton, CT, is a technology-enabled analytics firm. Its mission is to simplify and improve the way analytics are conducted in the consumer products industry. Primary services are TABS CatMan Advantage™, an outsourced category management solution, TABS WorldView™, a global business intelligence tool, and TABS Promo Advantage™, a software and consulting service that helps companies measure, plan and optimize trade spending. Please visit www.TABSGroup.com.
About Promotion Optimization Institute (POI)
POI brings together manufacturers, retailers, solution providers, analysts, academics and other industry leaders. Members of POI share cross-functional best practices in both structured and informal settings. Additionally, members benefit through industry alliances and events, the Certified Collaborative Marketer (CCM) ™ program, and research. POI aims to instill a financial and metrics-based discipline not typically found with other trade groups. The goal of its innovative approach is collaborative promotion optimization with the focus on the customer/shopper through sales, marketing, and merchandising strategies.