The US Consumer Landscape and Strategies for Creating Brand Resilience
Consumer behavior will continue to evolve in response to the volatility of macro trends like inflation, economic downturn, climate change, and geopolitical instability. Consequently, CPGs will work to combat these challenges while adapting to impacted consumers. Implementing strategies that create resilience for their brands will take precedence.
Changing Consumer Behavior
Common themes in shifting consumer behavior include:
● Price-conscious consumers
○ In a 2022 survey conducted by Snipp, a company in the global loyalty and promotions sector, key insights revealed that 73% of U.S. consumers are buying products on promo more than a year ago, and 57% of them have switched to a new retailer to save money. Whether on-shelf promotions, third-party promotions apps, or trading down to private label brands, consumers are hunting for deals to combat the strain of inflation on their wallets. Without tangible differentiation, brands may struggle to maintain fragile consumer loyalty.
● Return to brick-and-mortar
○ With the COVID-19 pandemic three years removed, consumers are returning to physical stores. The 2022 Snipp survey reported that 60% of consumers mentioned they shopped more in physical stores nowadays than at the same time last year. Increased brick-and-mortar shopping demonstrates a consumer desire to make up for the time lost during the pandemic, seeking an experience when engaging with brands on-shelf. Furthermore, being physically present in a store simplifies comparison shopping for consumers as they can confirm in the aisle that they are receiving the best deal. This shift emphasizes the importance of traditional shopper marketing tactics such as point-of-sale signage and in store demos.
● Value tunnel vision
○ With low to middle-income consumers cutting back on discretionary goods (a majority of these consumers being Millennials and Gen Z), according to Mckinsey’s 2022 consumer survey, value has never been more important for premium-priced products. Even though the price of discretionary goods has not increased as much as consumers may perceive them to, diverting money away from pricier essentials is now a budgetary dilemma for consumers. Consumers are seeking products that, at the very least, are reliable and, at the most, continuously create value through their lifecycle.
Strategies for Weathering Volatility
The only constant across current macro and micro trends is volatility. Result-focused strategic planning will help armor CPGs as these changes persist. Strategies to consider implementing are:
● Focus on creating and communicating a differentiated value proposition that aligns with consumer wants/needs.
○ Consumer loyalty has little pull in an uncertain economic environment. CPGs must be realistic when evaluating their product and their position amongst competitors. Amplifying their efforts to differentiate themselves from the pack is crucial to sustaining market share in a trade-down economy. Going back to the basics about what consumers perceive as value while identifying opportunities to take advantage of consumer trends, such as sustainability, are a couple of ways to get started. For a more targeted approach consumer data has never been more valuable, so investing in attaining it will keep a brand’s finger on the pulse.
● Invest in improving the supply chain.
○ After years of supply chain headaches, CPGs are eager for reliability. Deloitte’s 2023 consumer products industry outlook stated, “More than nine in ten companies in our survey are investing in supply chain improvement and operational excellence.” Nearshoring is one of the investments that some CPGs have made to help mitigate the risks of dealing with volatile markets. With this increased oversight, brands can attain better data to utilize within the business. Using this data to create scenario-based plans to react quickly to changing market conditions can prove beneficial. All of these efforts can better position a brand to keep its items on the shelf so they may remain top-of-mind to fickle consumers.
● Strengthen an omnichannel consumer experience.
○ With consumers returning to brick-and-mortar and the rise of the Metaverse, there has never been a broader spectrum of places to interact with consumers. Meeting consumers where they are with an omnichannel experience is essential to increasing brand exposure, potential sales, and cross-marketing. Keeping a close eye on the performance of channels can also help brands decide where to invest or divest to better align with their business down the line.
2023: The Year of Action
No one can accurately predict the future, yet we can learn from the past. As mentioned in the Mckinsey & Co report:
“A look at past recessions makes one thing clear: companies cannot just sit and wait. Companies that outperformed their peers through and beyond the 2008 recession moved harder and faster on productivity, took action to preserve growth capacity, divested more heading into downturns, acquired more as the recovery started, and created operational and financial buffers.”
Uncertainty will continue to obscure the way forward in these upcoming months, but action is necessary to remain competitive.