New Strategies for Establishing Long-Term Shopper Loyalty

The year 2008 may be gone, but it is definitely not forgotten. Every American is feeling the impact of the country's economic battle and is making substantial changes to their everyday lives and shopping habits to stay afloat. Because changes have been broad and deep, businesses must stay on their collective toes and respond to continually changing rituals with a new level of deftness, according to a new IRI Times & Trends Report.

"Consumers reacted with sharp cutbacks to purchases overall and began a re-evaluation of what, why, where and when they buy food and center store items," says IRI Consulting and Innovation President Thom Blischok. "Shoppers took a new look at old spending habits and started to make significant changes."

With the continuing rise in unemployment, ongoing weakness in the banking system and credit structure, and a belief that energy prices will increase again in the near future, consumers remain extremely skeptical. Among consumers earning more than $100,000, there are few signs that shoppers are backing away from their most extreme cost-cutting behaviors; but among all other income groups, the wallet remains closed.

"Recessions expose the health of CPG manufacturers and retailers," continues Blischok. "Innovative companies thrive, while weaker companies struggle and fail. To be a success in this recessionary environment, you must anticipate and respond to change before it happens. This is instrumental in establishing long-term shopper loyalty even after the economy gets back on track."

IRI recommends the following action steps that retailers can take to improve market share, shopper loyalty and financial position in today's economy:

Planning: Shoppers are making most decisions before they enter the store. Manufacturers and retailers should shift merchandising and promotion strategies into people's homes via traditional media and online social media.

Purpose: Consumers have changed their rituals and are cooking more at home with fresh ingredients and are bringing snacks and lunches from home to work. Manufacturers should make fresh ingredients more available and rewire their snack strategy. Retailers must make it easy for shoppers to find these ingredients and supporting products in their stores.

Price: Shoppers demand good prices and quality in what they buy. Manufacturers and retailers should redouble their collaboration strategies to offer consumers the best value possible.

Product: Shoppers are buying familiar products, so new product experimentation is at an all time low. Manufacturers should consider an enhanced brand-extension strategy. Retailers can increase shelf space of existing brands at the expense of new products.

Promotion: Shopper direct marketing has arrived and will become a strategic differentiator. Manufacturers and retailers should develop new media strategies which will ensure consumers' maximum exposure to marketing messages.

Place: Shoppers are looking for the best deals wherever they can find them. Loyalty to a channel/banner is only as good as 'what have you done for me lately?' Manufacturers and retailers must review and update the value proposition of products and stores.

Permanence: Shoppers are deeply worried about the future, and many changes they are currently making will last. Manufacturers must update their management structure in a way that facilitates an ongoing ability to offer new shopping experiences that address evolving consumer needs.
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