Thursday, November 06, 2008

So What's Left in the Supermarket Basket?

In my usual market-defying fashion, I have spent the last few weeks shopping – yes, that’s right, shopping. In these economic times and everything. After all, what better way is there to avoid the mordant news, panicky marketing reports, and palpable fear of falling that emanates from every newspaper and web screen I open?

I admit I had an excuse: a big upcoming event involving visitors from out of town, relatives staying over, and me cooking for the likes of 100 people. Nothing too out of the ordinary, but it is a bit odd to be celebrating in the midst of economic chaos. At the same time, it’s helpful for those in the business of watching the market to remember that weddings, bat mitzvahs, and births all keep happening and people keep eating.

Over the next few weeks I’m going to comment a bit about the kind of spending I observed in my own less-than-systematic retail excursions and compare that to the news that coming out of business and marketing research and media outlets.

One of my main forays in the last few weeks has been to grocery stores. I did the usual cart watching as I debated the kind of food I intended to cook for the horde of guests. In general, I still see the same amount of people in the supermarket aisles on the same days as I did prior to the big Wall Street meltdown. Eating well is still important, even if it's being re-defined.

Indeed, there are a lot less carts packed to the brim. Are people buying less? I think so. In my retail excursions I made some of my first-ever buying trips to one of those big discount clubs (you know the like: Sam’s Club and Costco being the most familiar) – and yes, the section of computer printers, pots and pans, dishwares, and other gadgetry were empty enough to drive a truck down the aisles. A few yards over in the laundry detergent and soda sections, though, and people were stocking up as usual. I asked one woman about her choice of a six jar package of tomato sauce and she said, “Well, I don’t use this kind normally, but it’s here, it’s cheap, it tastes pretty good, and there’s a lot of it.”

Ketchum’s Global Food and Nutrition Practice did a recent study of food attitudes across the globe (see this link for more information about the study’s methodology), which demonstrated that price was way up there as a concern for US consumers when it came to food choices. That’s no surprise, as it’s common knowledge that people in the US are accustomed to paying less for groceries than their European counterparts. Cheap food is one of those unstated American values. To be fair, Ketchum’s study did show that Americans put taste and quality right up there as key factors in their food choices. But my informant at Costco captured one other trend that has marketers – and especially those brand spanking gurus – worried about how things will shake down in the ongoing crunch for consumer dollars: “brand names are increasingly considered inadequate as a ‘proxy or shorthand’ for this growing list of factors that matter to consumers.” Linda Eatherton, Ketchum’s director of Global Food and Nutrition argues that marketers will have to rely a lot more on social media and an appeal to successful consumer research in order to sell their products.

Indeed, high-quality private label brands from Safeway, Kroger and Publix to name a few have seen very strong growth during the first few months of this recession, clearly indicating that when taste and quality are about even, the cost difference between private- and brand-labels has tended to shift consumers towards the lower-priced goods. Expect to see more private label brands boost their presence in the coming months. As the line in Field of Dreams suggests, “if you build it, they will come.”

No comments: