From the unstable economy and stubborn unemployment rates to frugal consumers and high commodity prices, there has been endless discussion around the challenges facing consumer packaged goods marketers during the last few years.
The following trends will be prominent in 2012:
• Shoppers will continue to define value largely based on price. More than half of shoppers still choose their store based on lowest prices, and three-quarters note that price weighs heavily in brand decisions. However, some shoppers will start to open their wallets more if positive economic reports continue.
• Retailers in the drug channel will accelerate their format evolution process.
• Manufacturers and retailers will pass manufacturing price increases on to shoppers, but reaction to potential commodity price deflation is yet unclear.
• Private label will continue to account for unit sales in the 22 percent to 23 percent range and dollar sales in the 18 percent to 20 percent range. Retailers will increase assortments and retain the tiered product strategies that have worked so well in the past.
• Manufacturers will expand their focus on innovation as the primary private label mitigation strategy. One example comes from the coffee category. Single-cup coffee, such as that offered by Keurig, is partly responsible for the fact that 14 percent of the most successful new beverage launches came from the coffee and tea sector in 2010, versus an historical average of just 8 percent.