Decrease in promotional deals causing consumers to flee, households with children still life blood of consumer packaged goods industry not millennials, online sales stagnant
Shelton, CT – September 30, 2015 –The TABS Group “Third Annual Consumer Value Study of Consumables” found a significant four percent decline in reported purchase transactions over 2014 across 11 out of 15 consumer packaged goods (CPG) categories. Carbonated beverages, cereal, and cookies saw the sharpest declines of eight percent each. Yogurt, ice cream and frozen pizza also experienced sharp declines, sliding 6 percent over 2014. Out of the 15 categories surveyed, only water saw a robust growth of four percent.
The TABS Group “Third Annual Consumer Value Study of Consumables” was conducted in August 2015, and was developed to uncover detailed information about the U.S. CPG consumables categories and how consumer buying patterns of these categories are shaped by the promotions offered. The survey panel consisted of 1,000 geographically and demographically dispersed consumers between the ages of 18 to 75. The 15 consumables categories analyzed were carbonated beverages, salty snacks, cereal, yogurt, water, ice cream, cookies, fruit juice, refrigerated juices, crackers, frozen pizza, frozen novelties, candy, popcorn, and isotonics (sports drinks).
Declining Volume and Transactions, Drawback in Promotional Deals
The reason for the declines in purchases was due to lower numbers of the heaviest category buyers purchasing consumables over the last 12 months. The study found that in all but three categories – fruit juice, refrigerated juice and crackers – the actions of heaviest buyers (defined as once per month or more) had the biggest effect on the growth or the decline of each consumable category.
The study looked at 10 deal tactics that consumers use. Eighty nine percent of shoppers use at least one deal tactic regularly with 35 percent of consumers using at least five regularly. There was a 17 percent drop in consumers using five or more deal tactics in 2015. Nine out of the 10 deal tactics declined in consumer participation with consumer purchasing of large, value sizes remaining flat versus 2014. Rebates (-25 percent), free standing insert (-18 percent), circular (-13 percent), and private label purchases (-13 percent) saw the steepest declines. The TABS study found that the percentage of people using digital coupons dropped 10 percent. In addition, there was a big jump in the total number of consumers not participating at all in any deal tactics. In 2014, eight percent of consumers did not participate in any deal tactics and in 2015 that percentage jumped to 11 percent.
“This study points to a troubling trend that marketers need to view as a wake-up call for their promotions,” said Dr. Kurt Jetta, CEO and founder of the TABS Group. “Consumers have increasingly become discouraged deal-seekers as they appear to have stopped participating in deals due to deals becoming more confusing, unattainable or just less compelling in terms of the discounts offered. This study clearly demonstrates that lower deal participation is a major cause of the weak CPG industry trends.”
Households with Children, not Millennials, Predicts Heaviest Purchasing
According to the study, the most important demographic variable for predicting heavy purchasing is the presence of children in the household. This fact is seen across all 15 categories. Thirty-eight percent of the households with children account for heavy consumables buyers versus just 20 percent of households without children account for heavy consumable buyers - an index of 190.
In the TABS Group Second Annual Consumables Study released in October 2014, the key demographic news was the big drop (11 percentage points from 42 to 31) in heavy buyers among millennial women. In 2015 that trend continued. Millennials have below average purchasing and those levels declined compared to 2014. Thirty-one percent of millennial women were heavy buyers in 2014 and that number dropped to 26 percent in 2015. Millennial men plummeted from 38 percent of heavy buyers in 2014 to just 23 percent in 2015.
More importantly though, households with children – the most involved demographic group for consumables - saw a second straight decline in those reporting to be heavy consumables buyers, dropping six percentage points from 44 percent in 2014 to 38 percent in 2015.
Grocery Channel Up, Mass Merchants Decline, Online Flat
The grocery channel continues to lead all shopping channels for the second year in a row in the TABS survey with reported percentage of people buying at 78 percent. This year the study also found a decrease in shopping trips to mass market outlets including Walmart, Target and Sam’s. Discount grocery outlets, such as Aldi, were included for the first time in the study and showed to be a significant presence. Natural foods increased from 12 percent to 17 percent. Based on recent news of weakening same store sales growth in this sector, TABS Group infers that the gain in the survey was a function of expanded store count in the channel. Online continues to be a small factor in the industry with only four percent of respondents shopping online at least six times per year. This figure has remained flat at four percent since the inception of the study in 2013.
“Not everything is out of CPG manufacturers and retailers’ control to improve sales,” said Jetta. “Marketers need to quit chasing the niches – millennials, loyalty programs, digital promotions, e-commerce, organic foods, wellness, and natural channel ideas – to the exclusion of innovation and marketing against the mainstream. The core target is the same as it has always been -- households with children. Marketers also need to realize that deals matter to consumers. Take away the deals for consumers and you will take away the sales for your brand.”
The TABS Group white paper “Third Annual Consumer Value Study of Consumables” is available for download online here.
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 Insight™, a cloud-based software and consulting service that helps companies measure, plan and optimize trade spending. Please visit www.TABSGroup.com .
For TABS Group