Driving growth continued to be a challenge for the consumer packaged goods (CPG) industry in 2015. Manufacturers and retailers had to deal with the ebbs and flows of the economy and its impact on consumer spending as well as the increased demands of digital-savvy shoppers. IRI’s latest Times & Trends report, “Taking Stock of CPG Past and Future: Gear Up Now for a Year of Growth,” analyzes the lessons learned in 2015 and provides insight into several key trends that will drive growth in 2016.

“At the beginning of each new year, we all reflect on our past a bit and vow to find ways to make improvements in the coming months,” says Susan Viamari, vice president of Thought Leadership, IRI. “IRI’s latest research does just that with the CPG industry. We are taking a hard look at the peaks and valleys of 2015 and using these learnings to make a new plan for the coming year. We’re offering up insights into several trends that will provide growth opportunities for 2016 and beyond and are taking a deep dive into the three trends that we think will make a big impact.”

2015 CPG Year in Review

The CPG industry has been searching for growth for the past several years due to the challenging economy and conservative shopper spending. Last year was no exception. Volume sales continued to slide, and dollar sales growth was fed largely by inflationary pricing trends. When looking across channels, mass merchandisers posted sharper-than-average declines and the club channel showed some resilience. The grocery and drug channels held volume flat, outperforming the industry average of negative 1.7%.

The grocery channel continues to capture the lion’s share of total CPG spending at 43%, while club seized 11%, drug took 7%, mass/super picked up 4% and dollar netted 2%. Sales momentum continued to be slow across CPG aisles. Performance was weakest in the frozen food sector, where unit sales declined 1.5%, and strongest in beverages, where unit sales increased 2.9%. Growth was weak in non-food departments. The tobacco sector was boosted by electronic smoking products, which grew 23.9% for the year, and the health care department grew 2.1% thanks to the latest new products that help consumers tackle common ailments and conditions, such as colds, allergies and weight control.

Private label share of overall CPG spending changed very little during 2015 and remained relatively flat at the store level. Some CPG categories that did show some notable changes included refrigerated meats, with a 3.2% unit sales increase, and fresh eggs, with a 3% increase.

Growth Opportunities for 2016

Consumers will remain entrenched in their conservative purchase behaviors in 2016 even though one-third of Americans feel their financial situation will improve this year. Fifty-seven% of consumers will make their purchase decisions before they enter the retail store, so marketers must continue their efforts to engage shoppers early in the planning process.

One-third of shoppers will choose brands based on coupons they have at home, and 29% will base purchase decisions on shopper loyalty card discounts. Of course, they’ll leverage a number of Internet-based tools, such as smartphone apps and online advertising and promotions, to keep their grocery budgets in check in 2016.

Finding pockets of growth in 2016 definitely presents its challenges, but it’s not impossible. IRI research and analyses uncovered the following top 10 trends that will offer growth opportunities for 2016 and beyond:

• Circle the Wagons: Omnichannel retail is turning the CPG industry on its ear. Harness in-depth insights about how consumers travel online to understand the new path to purchase and drive in-store growth.

• Melting Pot Gets Hotter: The growth and transformation of U.S. households are altering shopper attitudes and behaviors. Keep a finger on the pulse of increasing ethnic diversity and the explosion of non-traditional families.

• Doing More with Less (Media): Consumers are constantly barraged with marketing messages. Cut through the noise in the marketplace and focus on quality versus quantity.

• Lean & Mean Growing Machine: Manufacturer consolidation will continue as CPGs look for new revenue streams. Consider specialized acquisitions to fill white-space growth opportunities.

• Big Opportunity in Small Packages: The urbanization of America will drive growth of smaller footprint stores. Meet urban shopper needs with localized specialty outlets.

• On the Highway to Health: Consumers are embracing a wide variety of healthier-living strategies. Look across CPG aisles for new ways to deliver healthier options for shoppers and the environment.

• Get Real: Consumers want to know what they’re putting into and onto their bodies, what they’re feeding their pets and exactly what is making their houses cleaner. Answer consumers’ thirst for transparency and authenticity.

• Snack Attack: On-the-go lifestyles continue to have a profound impact on consumer eating behavior. Tap into grazing, the new sit-down meal.

• Go Smart or Go Home: The focus on big data is rapidly giving way to smart data that will drive smart growth. Marry big data with technology and analytic know-how to pave the way to growth.

• Growth Comes from Within: There is no shortage of retail outlet options, so driving growth by adding stores is an ineffective strategy. Find growth by improving efficiency and productivity from within current stores.

”Despite challenging market conditions, CPG marketers really do have reason for optimism in 2016,” concludes Viamari. “Advancing technology has really given retailers and manufacturers a distinct advantage during these times of rapid and widespread change. By investing to understand how best to leverage new advances to really tap into the change, marketers throughout the CPG industry will identify exciting new ways to create real and lasting market advantages.”