IRI Survey: With Confidence Up, Consumers Willing to Spend

iri logoCHICAGO — Consumer confidence hit yet another high in Q3 2014 after zigzagging in previous quarters this year. This uptick is good news for marketers, since shoppers are rolling into the holiday season on a high note and are willing to spend a bit more, according to the latest IRI MarketPulse survey.

In fact, the National Retail Federation is predicting retail sales will be up by 4.1 percent in November and December. Overall, 2014 holiday sales are expected to rise to $616.9 billion, which is more than a 3.1 percent increase over 2013.

”Marketers have a lot to feel good about as we enter the 2014 holiday season,” says Susan Viamari, editor, Thought Leadership, IRI. “Despite the bumps along the road, consumer confidence is definitely on an upward trajectory, and this is clearly evidenced in holiday spending plans.”

IRI’s Shopper Sentiment Index Reaches Highest Point Yet in Q3 2014

Constructed against a benchmark of Q1 2011, IRI’s Shopper Sentiment Index provides deep insight into how the economy is impacting consumers and changing how they approach grocery shopping. The index provides perspective in terms of price sensitivity, brand loyalty and changes in spending required to maintain desired lifestyles. With a benchmark score of 100, a Shopper Sentiment Index score of more than 100 reflects consumers who are less price driven, more loyal to favorite brands and better equipped to maintain their desired lifestyles without changes, as compared to Q1 2011.

The latest index across all ages surveyed for Q3 is 121.4 compared with 108.5 in Q3 2013, which is the highest point the index has reached since it was launched in 2011. In addition, 20 percent of Americans feel that their financial situation has improved during the past year compared with 17 percent in Q3 2013. And, 25 percent also expect continued improvement in the coming months—a sizable jump versus 19 percent in Q3 2013.

Jollier Outlook Has Shoppers Cautiously Loosening Purse Strings

Consumers’ sunnier sentiment is expected to bring good tidings to marketers. Consumers say they will be getting into the spirit and are planning to spend just a bit more on holiday celebrations. Eight percent of consumers say they will be spending more on celebrations compared to 6 percent in both 2013 and 2012. In contrast, 36 percent of shoppers will be spending less on celebrations in 2014 compared with 43 percent in 2013 and 45 percent in 2012.

What’s Cookin’ for Holiday Dinners?

Nothing says the holidays like a special meal. And, consumers are willing to splash out just a bit this year. Overall, 5 percent of consumers say they will be spending more on food and beverages in 2014 compared with 4 percent in 2013 and 3 percent in 2011. Furthermore, budgetary cutbacks are becoming less pervasive, with approximately one-quarter of consumers (28 percent) intending to spend less this year versus a year ago compared to 33 percent in 2013 and 36 percent in 2011.

“The operative word here is ‘caution,’” adds Viamari. “These aren’t huge gains, but they are cautious gains. And a 2 percent increase in the overall holiday pie for CPG marketers is definitely good news, where a point gain can make a huge difference to the top line.”

The MarketPulse survey also uncovered the following key consumer attitudes regarding the holiday meal:

  • ·         62 percent will prepare the best meal possible but will work to keep cost down
  • ·         18 percent will put on the best meal possible and view holidays as a time to splurge
  • ·         65 percent will buy as many or more gourmet/premium products this year versus last year

When it comes to holiday shopping, nearly everyone is entering the process with a shopping list in hand. And it’s absolutely critical to make it on consumers’ shopping lists, because 33 percent of consumers say they are cutting back on additional/unplanned purchases this year. On the flip side, impulse buying cannot be ruled out completely. With 33 percent of consumers saying they will be leveraging in-store promotions, there is a chance for last-minute purchases. So, compelling in-store promotions are still a must for CPG marketers.

Go Digital or Go Home

Savings are at the top of the wish list for shoppers, so many different savings tools are being embraced this year. The notable point here is that consumers will rely more heavily on online coupons from a variety of cyber locations:

  • ·         30 percent will use more coupons from manufacturer websites
  • ·         28 percent will rely more on coupons from retailer websites
  • ·         27 percent will embrace coupons received via email
  • ·         26 percent will tap into coupons offered on group couponing sites
  • ·         22 percent will leverage more coupons on social networking sites

”Marketers are certainly in a position to unwrap a nice boost in sales this holiday season,” concludes Viamari. “But, maximizing this opportunity will require marketers to communicate a clear and concise value proposition early and often throughout the shopper journey.”

About IRI’s MarketPulse Survey
IRI provides new survey results at the end of each calendar quarter, covering shoppers’ behaviors and attitudes as they directly relate to their strategies for learning about, purchasing and utilizing CPG and healthcare products, as well as information regarding perceptions of economic conditions and their ability to provide for their families. For complete MarketPulse coverage, visit: http://www.iriworldwide.com/Insights/Publications/MarketPulseSurvey.aspx. For more information about customizing the research for a particular category or industry, please emailIRIMarketing@IRIworldwide.com.

About IRI

IRI is a leader in delivering powerful market and shopper information, predictive analysis and the foresight that leads to action. We go beyond the data to ignite extraordinary growth for our clients in the CPG, retail and over-the-counter healthcare industries by pinpointing what matters and illuminating how it can impact their businesses.