No rest for the weary: Difficult times continue to present challenges for retailers and manufacturers.
Earlier this month, the dreaded word 鈥渞ecession鈥� led news stories following a grim jobs report and subsequent stock market dive.
While more-recent economic data and reports tempered the specter of a recession, shoppers continue to feel the persistent pinch of inflation. They鈥檙e reining in spending as a result, and they鈥檙e changing their shopping habits to make their dollars stretch further.
But it鈥檚 not all doom and gloom for the retail industry. Retailers and consumer product manufacturers are deploying myriad strategies to drive sales and consumer loyalty 鈥斅� even in tumultuous times, says Jill Blanchard, president of intelligence and insights for 无忧传媒.
Advantage, which serves as a strategic advisor and provider to CPG brands and retailers, has been shepherding many of them through the turbulent economy and shifting consumer preferences.
Blanchard, speaking on a panel at the National Association of Chain Drug Stores鈥� Total Store Expo in Boston on Monday, highlighted some challenges and opportunities in the marketplace, sharing insights from聽. Joining her on the panel were Rachel Marler, U.S. chief customer officer at Haleon and Stephen Carrou, executive sales director, Alcon U.S. OTC Business.
Here are six key takeaways from Blanchard鈥檚 presentation:
痴补濒耻别.听Value means different things to different consumers. Bottom line: Most consumers are shopping with value front-of-mind. Some are trading down in categories and brands, while others are shopping larger pack sizes for a better price, Blanchard says. For retailers, a growing focus on private brands is proving prescient in offering consumers with the value they鈥檙e seeking, she notes. And both retailers and manufacturers are focused on more promotions and larger pack sizes.
鈥淲e hear a lot about inflation, but consumers aren鈥檛 created equal, so manufacturers and retailers have to cater to more than one strategy to meet shoppers鈥� value needs,鈥� Blanchard says.
滨苍苍辞惫补迟颈辞苍.听It鈥檚 back! But it鈥檚 also unclear how it will play in the current economy.
More than one-third of manufacturers are hitting the gas on their innovation pipeline, but retailers are less bullish 鈥� only 13% say they鈥檇 be taking on more national brand innovation. In contrast, 28% of retailers say they鈥檙e committed to taking on more private brand innovation. Additionally, retailers want to see more value-priced innovation than what manufacturers say they鈥檙e bringing to market.
Theft-related shrink.聽Yep, it鈥檚 still a problem 鈥� for retailers, manufacturers and, ultimately, consumers.聽The 2Q 2024 Advantage Outlook found that retailers are continuing to rely on video surveillance and in-store security personnel to deter theft. They also plan to discontinue some products, particularly in the more expensive, smaller-package categories, such as cosmetics and facial, ear and eye care. This is an unfortunate outcome, Blanchard says, because discontinuing these products doesn鈥檛 solve the problem of serving shoppers.
鈥淯ntil there鈥檚 an improved ability to identify and restrict the online sale of stolen items and thwart theft, we鈥檙e going to have to address this by-store, by-item,鈥� Blanchard said.
罢别蝉迟-补苍诲-濒别补谤苍蝉.听When it comes to finding winning strategies, the test-and-learn is an essential tactic that allows retailers and manufacturers to measure the potential of new products or sales approaches before fully implementing them. Retailers are executing more test-and-learns than manufacturers, with three-quarters testing pricing promotions and nearly two-thirds testing new items, according to the Advantage Outlook.
鈥淭est-and-learns are more important today than ever, as retailers and manufacturers scramble to meet consumers in new and sometimes conflicting need states,鈥� Blanchard says.
Omnicommerce priorities.聽First, the good news: Online sales remain strong, and both manufacturers and retailers are embracing omnichannel sales to grow their overall business. But there are ripe opportunities to improve the online shopping experience to convert more shoppers into consumers.
Both manufacturers and retailers say their top omnicommerce priorities are optimizing digital shelf content 鈥� which is as important as having the product priced and merchandised correctly in-store 鈥� and investing in retail media networks.
Differentiation is key.聽The overwhelming majority of retailers and manufacturers have strategies to win that are 鈥� remarkably similar. For manufacturers, it鈥檚 expanded distribution, innovation and promotions; for retailers, it鈥檚 loyalty programs, pricing, private brands and promotions.
鈥淣ot everyone can win employing the same strategies,鈥� Blanchard says. 鈥淚 wish they could, but that probably won鈥檛 happen. So, with similar plans and strategies, winning will require differentiation.鈥�
How are manufacturers and retailers planning to differentiate? According to the Advantage Outlook, top differentiating strategies for manufacturers are new distribution and differentiated innovation, while retailers will focus on differentiated promotions and exemplary loyalty programs.
How will it net out? And will there be winners and losers? 鈥淟et鈥檚 see what happens,鈥� Blanchard says. 鈥淲e are rooting for all of them.鈥�
Ultimately, success will be gauged by how retailers and manufacturers are able to earn and sustain the loyalty of shoppers amid continued economic challenges.