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1 Copyright © 2010 The Nielsen Company. Confidential and proprietary. Title of Presentation Copyright © 2012 The Nielsen Company. Confidential and proprietary.

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Presentation on theme: "1 Copyright © 2010 The Nielsen Company. Confidential and proprietary. Title of Presentation Copyright © 2012 The Nielsen Company. Confidential and proprietary."— Presentation transcript:

1 1 Copyright © 2010 The Nielsen Company. Confidential and proprietary. Title of Presentation Copyright © 2012 The Nielsen Company. Confidential and proprietary. The New Consumer Economy: What to watch and What to do James Russo, Nielsen

2 The world has changed

3

4 Consumers over 65 watch the most TV, close to 7 hours a day Only 5% of advertising targets them, despite being the top buyers in 97% of CPG categories Boomers showed less brand loyalty than their younger counterparts Satisfying their unique need fuels growth for this consumer segment

5 By 2050, ethnic household will be the majority in the United States Today, 22 of 100 metros are majority minority populations Reaching requires resonating With unique connection preferences

6 Women control $12 of $18 trillion in global consumer spending close to 70% Women in 95% of countries say quality is the #1 driver of brand loyalty Transitions strategic conversations from pricing to quality; includes production, marketing, packaging, in-store

7 By 2020, the global middle class will be more than half of the worlds population By 2030, 79% of the middle class will be in the emerging world Business models move from fixed to flexible

8 Available Accessible Connected Mobile Customized

9 Consumer Confidence: Still a global concern

10 HOVERING NEAR PRE-RECESSION LEVELS Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012 Global Consumer Confidence Index

11 EMERGING MARKETS LEAD OVERALL CONFIDENCE 91 Source: Nielsen Global Omnibus Survey 2Q2012 AP 101 MEA 98 LA 96 EU 73 NA 87

12 GROWTH, ONCE AGAIN, BEING DRIVEN BY EMERGING MARKETS INDONESIA120 INDIA119 PHILIPPINES116 S. ARABIA115 MALAYSIA111 U A EMIRATES108 BRAZIL106 CHINA105 THAILAND104 HONG KONG104 HUNGARY30 PORTUGAL40 ITALY41 GREECE43 CROTIA45 SOUTH KOREA50 SPAIN52 JAPAN57 FRANCE61 ROMANIA62 FRANCE+11 BELGIUM+10 GREECE+7 EGYPT+6 FINLAND+6 SWITZERLAND+6 POLAND+6 AUSTRIA+6 MALAYSIA+5 U A EMIRATES+4 Leaders Laggards Movers Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012, movers vs 1Q2012

13 U.S. Consumer Confidence: Precarious

14 14 Copyright © 2012 The Nielsen Company. Confidential and proprietary. Whats In Store: 2012 LETS GROUND THE CONVERSATION Recession Officially Ends June 2009 NBER 75% of consumers say we are in a recession May 2012 NIELSEN

15 20012002200320042005 200620072008200920102011 Source: The Conference Board - Nine census regions, 5,000 US households; 1985 = 100; conducted by Nielsen 2012 5 YEARS OF A NEW NORMAL CONSUMER CONFIDENCE SIGNIFICANTLY OFF PRE –RECESSION NORMS Great Recession

16 HEIGHENTED ECONOMIC CONCERNS WHAT ARE YOUR BIGGEST CONCERNS OVER THE NEXT SIX MONTHS…… Economy 27% Debt 11% Jobs 11% Fuel prices 9% Health 8% Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012 vs year ago

17 REPAIRING BALANCE SHEETS ONCE YOU HAVE COVERED YOUR ESSENTIAL LIVING EXPENSES, WHAT DO YOU WITH YOUR SPARE CASH….. Savings 40% Paying Debts 33% No Spare Cash 30% Apparel 27% OOH Entertainment 19% Source: Nielsen Global Omnibus Consumer Confidence Survey 2Q2012 vs year ago

18 UTILIZING COPING MECHANISM 52 % 47 % 41 % +6 +14 compare prices before deciding what to buy use store circulars use coupons increase in the coupon redemptions growth of Store Brands in the past 3 years Source: Nielsen Scantrack & Homescan – US Buying Trends June 2012

19 UNCERTAINTY PERSISTS BUT LESS VOLATILE Source: Yahoo Finance; DQNews; ChicagoFed.org; EIA.gov FUEL COSTS EQUITY MARKETSLABOR MARKETSHOUSING INFLATION

20 U.S. HOUSEHOLD WEALTH DECLINED BY $12 T BETWEEN Q4 2007-Q4 2008 0 -5 -10 -$9T ALL OTHER -$3T HOUSING DECLINE Source: US Federal Reserve Board Flow of Funds

21 THE WEALTH EFFECT WILL NOT DRIVE RECOVERY EVERY $100 Δ IN HOUSING WEALTH LEADS TO AN ESTIMATED $7 Δ IN OVERALL CONSUMER SPENDING. $500B LOST IN CONSUMER SPENDING BETWEEN 2006 AND 2011. LOW HOUSE PRICE GROWTH FOR AT LEAST 5 YEARS. Source: The Demand Institute

22 RENTAL DEMAND IS LEADING THE RECOVERY 0-2 YEARS STRONG RENTAL DEMAND 3-5 YEARS ACCELERATION OF HOME SALES Source: The Demand Institute

23 SHOPPING HABITS WILL CHANGE MORE FREQUENT SHOPPING & SMALLER BASKETS MORE INTEREST IN LOCAL STORES MORE EXPERIENCE SEEKING MORE ONLINE REPLENISHMENT Source: The Demand Institute

24 CPG DURABLES DEMAND WILL EVOLVE SMALL HOME FURNISHINGS WILL CONTINUE TO THRIVE LARGER DURABLES MULTIFUNCTIONALITY FURNITURE & APPLIANCES WILL BE SMALLER Source: The Demand Institute

25 CPG NON-DURABLES DEMAND IS SHIFTING SMALLER PACK SIZES DUE TO LESS STORAGE DEMAND FOR MORE VALUE-ORIENTED PRODUCTS Source: The Demand Institute

26 CONSUMERS SEEK FLEXIBLE HOME ENTERTAINMENT PORTABLE DEVICESINTEGRATED DEVICES Source: The Demand Institute

27 Sector Insights WHAT TO WATCH

28 CONTRASTING VIEW OF RETAIL SALES Dollar Sales Unit Sales Source: Total U.S. All Outlets Combined, All Depts., All Brands (UPC); % Change vs. Year Ago; 13 wk quarters, YTD 31-wks ending 8/4/2012

29 Source: Nielsen Scantrack, Total U.S. – All Outlets Combined; 52 weeks ending 6/9/2012 (vs. prior year); UPC-coded 2002 - 20072008 - 20092010 - 2011 Economic Growth Great Recession Post Recession 176 Avg Annual Trips Per Shopper 158 Avg Annual Trips Per Shopper 151 Avg Annual Trips Per Shopper SHOPPER TRIPS HAVE NOT RETURNED, BUT OTHER DRIVERS AT WORK

30 1.5 to 2.1 Times Larger with Fresh FRESH DRIVES STORE TRAFFIC AND BASKETS 30% Grocery Store Sales Sources: Homescan, TSV 52 weeks ending December 2011; Nielsen Perishables Group FreshFacts® Total US 52 weeks ending 12/31/2011 (Grocery channel only)

31 AND CAN CREATE A POINT OF DIFFERENTIATION Market Differentiation Quality Prepared Foods Selection of Meat & Fish Quality Fresh Food Customer Service Quality Fresh Food Pleasant Store Environment Long Opening Hours Selection of Fresh Fruit and Veg Pleasant Store Environment Top 3 Shopper Equity Retail Brand Source: Nielsen Shopper Trends 2010 Correspondence Analysis Results Among Dependable Shoppers in retailers primary census region #C360

32 Source: Nielsen Scantrack, Total U.S. – All Outlets Combined; 52 weeks ending 6/9/2012 (vs. prior year); UPC-coded HIGH END RETAILERS MAINSTREAM RETAILERS VALUE RETAILERS 8% Same Store Sales Growth WHILE INNOVATION ACROSS CHANNELS, RETAIL WINNERS AT THE POLES 6% Same Store Sales Growth 3% Same Store Sales Growth Source: Company financials, most recent reporting: Dollar General, Dollar Tree, Costco, Sams, CVS Macys, Target, Kroger, Rite aid, Wal-mart, Whole Foods, Nordstroms INNOVATION

33 H.E. Butt Grocery Co…. opened a new store in the Montrose section of Houston Wednesday that will convert part of its parking lot to an outdoor events plaza on weekends for concerts, movies and artisan markets… the chain's first food truck that will serve gourmet items Fridays and Saturdays in the parking lot. LOCALIZATION AND CUSTOMIZATION

34 URBAN REVITALIZATION – WALGREENS Photos: David Schaper / NPR & John Gress / Reuters/Landov 700 fine wines Fresh sushi & sashimi Manicures and, more! Retail 2016

35 E-COMMERCE : INTENSIFYING AND BLURRING Source: Financial Times & NBC San Diego (photo) U.S. Consumer Trends

36 FORMAT EVOLUTION: NEWER, UPSCALE, SMALL STORE CONCEPTS Source: Sports Authority The sporting goods company describes its S. A. Elite concept as a boutique store with bright lighting, an open layout, on-site footwear and fitness specialists, and tennis, golf and yoga collections.

37 COLLARBORATION: STORE WITHIN A STORE Source: Apple Insider & Wired (photo) Apple currently also operates a "store within a store" at over 600 Best Buy locations with "Apple Shops," some of which feature staffing by Apple Solution Consultants. Best Buy has over 1,000 total stores in the US. Retail 2016

38 RETHINKING MARKETING: DIGITAL BILLBOARDS TO SCROLL CUSTOMER TWEETS Source: Houlihans


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