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Top retailing trend: Frugal is the new normal

December 17, 2009 |  1:46 pm

While the recession may be ebbing, it continues to linger in the minds of consumers and will dictate spending trends well into next year, according to Todd Hale, a senior vice president at Nielsen Co., the market research firm.

Here’s his view of how continued consumer thriftiness will influence spending trends for groceries and packaged goods into next year.

Restraint reigns: The need to save money, unemployment and other economic issues continue to be top of mind, suggesting that any return to past behavior may take some time — if at all.

Value is a top priority: Retailers and manufacturers must figure out how to break through the current focus on low prices to demonstrate some point of differentiation beyond pricing. That’s their best bet for improving profit margins squeezed by falling demand and prices.

Private-label growth continues: Store brands will grow in market share, volume and dollar share as retailers cut prices across the store to be more competitive.

Grocery consolidation intensifies: Local and regional players, unable to drive profits in the soft economy, will become acquisition targets. Some larger national and regional grocers will divest unprofitable formats to focus on better performing divisions.

Assortment wars escalate: Retailers are reducing clutter in their stores in the belief “that less is more” will create a better experience for consumers. But this reduction in the number of items on store shelves is setting off a war for space and reducing consumer choice. For some manufacturers, these losses may cause them to become contract manufacturers of the private-label brands that are still getting space. If you can’t beat them, join them.

-- Jerry Hirsch