It’s beginning to look a lot like a recession. But NielsenIQ isn’t waiting around for the government to call it. At Canadian Grocer’s recent GroceryConnex conference, held in-person in Toronto, Carman Allison explained how NielsenQ is now measuring what it dubs a “consumer recession:” when the core habits of traditional consumption have shifted, forcing shoppers to behave as though a recession is already here.
In his presentation, “Gauging a Consumer Recession,” the vice-president of thought leadership, North America said: “We don’t want to wait six months for the government to say we’re in a recession. We want to understand consumers.” The overall consumer recessionary gauge for the third quarter came in at 71%. “We’re actually getting there, and when we get to over that 80% level, we’re knee deep in a recession,” said Allison.
As inflationary pressures continue to squeeze consumers’ wallets, the vast majority of Canadians (94%) are changing how they grocery shop to save money. Nearly half (48%) seek out stores with the lowest prices, 44% shop at retailers with loyalty points, 26% shop at stores closer to their home, and 24% shop more at discount retailers. When it comes to products, 38% of consumers only buy the essentials, 37% buy private-label products, 36% buy less expensive brand-name items, and 34% buy larger sizes for better value.
Bulk buying is also a key savings strategy in a range of categories including paper products (61%); canned foods (54%); laundry and fabric care (46%); coffee or tea (45%); shelf-stable sauces (45%); and beans, rice or pasta (45%). Consumers are also seeking promotions: 66% stock up when items are on sale, 44% only buy items on sale, 31% use coupons, and 27% price or ad match.
While Allison said it sounds like “doom and gloom,” there are opportunities for grocers and manufacturers. For example, as consumers look to save money, some out-of-home meal occasions will shift back into the home. In addition, kids are back in school and many people have returned to the office. “So, convenience, value and meal solutions are going to be a great opportunity moving forward,” he said.
When it comes to private label, Allison said retailers will “continue to benefit” from the current landscape. “If you’re a manufacturer, you need to innovate and differentiate even more. It’s not the time to take your foot off the pedal.” When you innovate, he explained, “a lot of times you can justify the higher price point.”