Post-Recession Consumers Adapting to New Economy
Amid the dark cloud of high unemployment, home foreclosures and the global credit crisis, a transformation has taken shape: the modern consumer has undergone a makeover of sorts and adapted to the new economy. As consumers evolve, product marketers must keep a finger on the pulse of what’s driving consumer behavior in order to rise above growing competition.
There’s No Place like Home
Cutbacks on travel and dining out have driven a growing number of consumers to reinvest in their homes to make it a more welcoming and inviting space. Where families were once constantly on the go, the modern family has rediscovered the comfort of home, and the evidence has emerged in some fairly mature product categories.
Less dining out also meant more dishes to wash: unit sales of dish detergents increased more than 3%, with dollar volume growing 7.5%. Spotting an opportunity, many brand marketers not only increased their prices, but also reduced package sizes, forcing consumers to replenish their supply more often.
The escape to home trend has also sent the U.S. home fragrances market into recovery mode, posting a 0.4% growth rate in 2009 – a meager increase, yet considerably better than the 2% decline in 2008. As consumers’ instant-gratification mentality released its grip, sales of candles-the quintessential home fragrances mainstay-rebounded from a tough 5.5% decline in 2008 at the hands of faster-acting room sprays and diffusers.
The Private Label Draw
Across the board, consumers are drawn to value, and through the aggressive marketing tactics of many major retailers – including Walmart, Target, and Costco – private-label products have emerged as brands themselves. While private-label products surge in nearly every economic downturn, they have historically tumbled in the aftermath as consumers return to their tried-and-true favorites. However, this time may be different.
In nonprescription drugs, private-label sales grew by nearly 9% in 2009 – almost four times the overall market growth in the United States. The convergence of price-conscious consumers, aggressive private-label marketing by mass retailers, and conservative ad spending by the big brands have created a perfect storm, allowing private-label products to thrive. With the added blow of several nationwide large-scale recalls from Johnson & Johnson for most of its major OTC brands, private-label OTC medications are being substitutes for branded products more readily.
The private-label growth trend has also been at play in the U.S. personal care market. Sales of private-label personal care products surged nearly 6% in 2009, compared with an overall market decline of 0.8%. As consumers traded down for lower-priced products, brand manufacturers scaled back on domestic advertising and shifted their focus to burgeoning international markets. As a result, categories once thought to be infallible have declined. On the bright side, skin care and makeup are both showing signs of growth spurred by innovative combination/anti-aging formulas that promise near-professional results at an affordable price.
Naturals and Corporate Responsibility
The growth in natural personal care and cleaning products has maintained a steadily upward trend throughout the recession, and most marketers have faced the fact that this is no passing fad. Growing consumer awareness for natural products, coupled with a growing supply of natural raw ingredients, helped this market segment expand by nearly 12% through even the most difficult economic crunch.
Even beyond the actual products, consumers have also grown increasingly aware of and concerned about the environmental and sustainability practices of their favorite brands. Reducing waste, packaging, and energy consumption is on everyone’s minds, forcing companies to evolve their operations to meet consumer demand. While today’s consumers are concerned about value, they also seek products and brands from companies whose values they can identify with. This movement has shaped the trend toward value packaging, concentrated and combination products, as well as reformulations-such as the eradication of phosphates from dishwasher detergent.[Source: Mellage, Carrie. “The New Consumer: Post-Recession Recovery Demands New Approach from Consumer Products Brands.” Kline Group. Jul. 2010. Web. 30 Jul. 2010.]