Cautious Consumer Spending
IRI says consumer confidence was relatively flat in Q2 2014 after dramatic gains in Q1 2014.
Consumer confidence was relatively flat in Q2 2014 after dramatically increasing in Q1 2014, according to Information Resources Inc.’s latest MarketPulse™ survey. Sentiment remains consistent for millennials, while it dipped slightly among baby boomers and Generation Xers.
“Even though the economy is gradually rebounding, consumers are cautiously optimistic about their financial health,” says Susan Viamari, editor, Thought Leadership, IRI. “We are seeing the ranks of those consumers who are experiencing and even expecting economic improvement slowly beginning to rise. Of particular note are millennials, who have suffered more and longer than others, and are reporting that they have been feeling more comfortable for the last two quarters. Time will tell, but, for now, this indicates that the stabilization of the economy is reaching a bit deeper across consumer segments.”
Optimism with a Pinch of Skepticism
Just as the economy is slow to rebound, the same can be said for consumers’ confidence. After a significant jump in Q1 2014, confidence is leveling off. Whether this stability continues remains to be seen, but for now, 16% of consumers say they feel “a little better” about their current financial situation compared to 13% in Q2 2011, the first year IRI began conducting the MarketPulse survey.
In addition, the skeptics are becoming fewer in number. This quarter, 22% indicate they feel “a little worse” compared to 25% in Q2 2011, and 13% say they feel a “lot worse” in Q2 2014 compared to 15% in Q2 2011. Those who feel “a lot better” remained flat at 3% compared to Q2 2011, while consumers who feel the “same” is 46% in Q2 2014 compared to 43% during the same time period in 2011.
Consumers across the board are expecting their home values, value of investments as well as their ability to save improve in the coming year.
“Seeing your nest egg not only stabilize but grow goes a really long way in boosting confidence,” adds Viamari. “Consumers are feeling a bit more comfortable about loosening their grip on the purse strings, but they will be very pragmatic about increased spending and splurging.”
IRI’s MarketPulse survey illustrates that cutbacks are still widespread, but the stronghold is easing a bit. Simultaneously, there is an uptick in splurge behaviors:
|Cutting back on nonessential items||60%||51%|
|Buying more private label than previously bought||47%||43%|
|Trying new brands priced below regular brands||46%||39%|
|Giving up some favorite brands||39%||31%|
|Buying fewer healthier products because more expensive||31%||28%|
|Treating self to small indulgences to ease stress||31%||31%|
|Splurging on premium or gourmet products||19%||22%|
|Purchasing only preferred brand, though others less expensive||12%||15%|
“A critical takeaway from our latest MarketPulse survey is that, while optimism is emerging, consumers’ continued commitment to find maximum value is as strong as ever,” concludes Viamari. “One-third of consumers tell us that they will continue to shop multiple stores to find the lowest prices.”
IRI’s Shopper Sentiment Index Remains Relatively Steady in Q2 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 lifestyle without changes as compared to Q1 2011.
The latest index across all ages surveyed for Q2 is 117 versus 121 in Q1 2014. Sentiment among millennials remains consistent at 102 in Q2 versus 101 in Q1 2014. And, sentiment slipped slightly for boomers (117 in Q2 versus 120 in Q1 2014) and Generation Xers (122 in Q2 versus 127 in Q1 2014).
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.