Deloitte: Consumers abandon national CPG brands
New York - Consumers are continuing to abandon national food, beverage and household brands. According to Deloitte's annual American Pantry Study of more than 354 brands across 34 product categories, nearly three in four (73%) consumer packaged goods (CPG) categories show an overall decline in their brands' "must-have" status, meaning that shoppers would purchase whether on sale or not.
However, the 2015 study also showed a drop in store brands' appeal, improved consumer perceptions of the economy, and shoppers' willingness to pay a premium for attributes such as health and convenience – which Deloitte says may signal a turning point that is set to further disrupt the CPG industry after years of consumer caution.
While previous years of economic stagnation fueled consumers' interest in store brands, this year's study revealed that trend may be reversing as recession-weary consumers loosen their purse strings. The number of consumers who view store brands as a sacrifice (43%) jumped 10 percentage points, while fewer consumers (65%) indicate they are more open to trying store branded products, an eight percentage point decline.
Moreover, 25% of consumers indicate they are willing to pay 10% or more for a product that is new or innovative, and 33% will do so for a craft version of food or beverages.
More than half (55%) of consumers are turning to digital tools to research products, up from 45% in 2014, and ahead of the number who do so to compare prices (48%), which remained flat. Additionally, four in 10 (37%) use devices to make shopping lists or meal plans.
There is a noticeable gap between consumers' interest levels and current activity. For example, 38% of consumers are interested in online grocery orders for in-store pick up, but only 11 % already use this service. Similarly, 27% are interested in home delivery orders placed online for recurring purchases, but only 11% already use such a service. The study suggests there may be a shortage of services consumers seek, creating significant unmet demand that CPG companies can pursue for growth.
Understanding the drivers of at-the-shelf purchases can help brands improve their promotional strategies and better connect with consumers, according to Deloitte's study. Roughly half (51 %) of consumers make purchase decisions at the shelf, and while discounts and promotions are important, they are not the only deciding factor. When asked what triggers an impulse buy, 89% of shoppers cite discounted prices, but many also indicate that they bought an item because they remembered it when they spotted it in the store (81%), and nearly two-thirds (63%) say they did so because they wanted to try a new product.
Health and wellness attributes also rank high on consumers' shopping lists. Nearly nine in 10 consumers (86%) prefer convenient options that are also healthy, and 25% are willing to pay a 10% premium or more for healthier versions of a product. Furthermore, 41% chose the product at the shelf because the label addressed their health and wellness concerns.