Consumer Connect Q4 2019

CHANNEL TRENDS
IN CPG TODAY
Joan Driggs
Vice President
Thought Leadership
January 2020
Executive Summary
Despite recessionary fears, consumer
confidence increased in Q4 2019, with
consumers feeling better about their
current and future financial health.
Channel penetration is shifting: Value
retailers like dollar stores and
ecommerce are showing strength, while
traditional retailers like grocery, mass
and drug are losing share. Trip and
spending changes underscore the
ferocity of consumers’ acceptance of
value and online channels.
Convenience and value for the money
continue to guide store choice. Wealthier
shoppers, Gen Zers, millennials and
Asians are also looking for meal-kit
solutions, good selections of organic and
gourmet food, and attractive technology
in their store selection options.
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Experiential concepts, discount stores and easy
navigation through the store are becoming
important across all demographic groups,
especially younger shoppers and Asians.
Grocery and mass are preferred for weekly
needs, but penetration has declined; more
shoppers are adopting ecommerce to meet
weekly and monthly needs. Dollar retailers
are winning heavy shoppers from competing
channels, while mass is losing heavy
shoppers to other channels. Protecting and
cultivating core shoppers is critical to growth.
A slightly higher percentage of consumers felt
that they are more likely to make impulse
purchases when shopping online, especially
Gen Zers. Time and cost savings are key drivers
of online shopping and are highly valued by Gen
Zers, Asians and Hispanic consumers.
2
Consumer Sentiment Is Up Nearly 1 Point Versus
Q4 2018 and 1.5 Points Since Q3 2019
Consumer Sentiment Index
Total U.S.

101.0% 100.7%
100.5%
100.0%
100.0%
99.5%
99.5%
99.0% 99.1%
99.0%
98.6% 98.7%
98.5% 98.2%
98.0% 97.9%
97.5% 97.6%
97.5%
97.0% 97.3% 97.6%
97.0%

96.5% 96.8%
96.4%
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019

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Consumers Feel Their Financial Health Is Good, Groceries Are
Easily Affordable, and They Can Easily Make Ends Meet

Total Population

My household's financial 55%

health is good
57%

70%
My household can easily
afford needed groceries
73%

51%
My household is making ends
meet rather easily
53%

Q4 2018 Q4 2019

Agree With Statement

Source: IRI Consumer Connect™, Q4 2018 & Q4 2019

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Middle- and High-Income HHs, Boomers and Seniors Consider Their
Financial Health to Be Better and Are Able to Easily Make Ends Meet
Consumer Financial Health Consumer Financial Health
by Income by Generation

79% 60%
50%
My household's financial 66% My household's financial
48%
health is good 51% health is good
65%
34% 72%

94% 67%
65%
My household can easily 81% My household can easily
69%
afford needed groceries 67% afford needed groceries
80%
52% 85%

76% 59%
My household is 43%
My household is 61% making ends meet 45%
making ends meet
44% rather easily
rather easily 62%
33% 70%

> $100K $55K – $99.9K $35K – $54.9K < $35,000 Gen Z Millennials Gen X Boomers Seniors

Agree With Statement

Source: IRI Consumer Connect™, Q4 2019

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Convenience and Value for the Money Continue
to Guide Store Choice Among Consumers
Store Selection Process
Total Population

Lowest everyday prices 94%

Good sale prices 94%

Convenient store location 92%

Allows me to fill my basic needs

92%
at the lowest possible cost

Quick and easy in-and-out 90%

Assortment that allows for one-stop shopping 86%

Strong loyalty card discount program 75%

Very/Somewhat Important Summary

Source: IRI Consumer Connect™, Q4 2019

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Wealthier Shoppers, Gen Zers and Millennials Are
Key Targets for Upselling Against These Attributes
Store Selection Process Store Selection Process
by Income by Generations

46% 56%
Good assortment of prepared/easy-prep 42% Good assortment of prepared/easy-prep 57%
44% 45%
meal solutions meal solutions 41%
53% 43%
49% 41%
Good selection of natural/organic 41% Good selection of natural/organic 49%
food/beverages 36% 40%
food/beverages 37%
35% 27%
54% 44%
Good selection of gourmet 36% Good selection of gourmet 49%
food/beverages 36% 41%
food/beverages 35%
37% 31%
44% 57%
Technology that makes shopping 34% Technology that makes shopping 47%
there more exciting 38% 42%
37% there more exciting 31%
27%
38% 46%
Online purchase 37% Online purchase 48%
with in-store pickup 36% 41%
32% with in-store pickup 24%
15%
22% 33%
Subscription services for frequently 17% 32%
Subscription services for frequently
purchased grocery items 21% 20%
20% purchased grocery items 12%
11%

> $100K $55K – $99.9K $35K – $54.9K < $35,000 Gen Z Millennials Gen X Boomers Seniors

Very/Somewhat Important Summary

Source: IRI Consumer Connect™, Q4 2019

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Channel Penetration Is Shifting; Grocery Holds 98% Penetration, but
eCommerce and Dollar Retailers Are Making Considerable Inroads

Penetration by Channel and Point Change VS. 2016

Point Change
Grocery 98.3 -0.4

Speciality Stores 76.5 -3.0

Drug 74.6 -3.2

Dollar 67.2 1.4

Mass/Supercenter 63.0 -5.8

Club 59.1 0.4

eCommerce 41.7 6.0

Source: IRI Consumer and Shopper Insights Advantage™, 52 WE 12/01/2019 and 52 WE 12/04/2016, NBD aligned

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Trip Frequency and Per-Trip Spending Declines in Grocery,
While Dollar Channel Saw an Uptick in Both
More eCommerce Trips but Smaller Baskets

Number of Trips Per Month Percent Change in Basket Size

By Channel 2019 and Percent Change VS. YA By Channel 2019 VS. YA

Point Change
All Outlets 11.9 0.6 -1.1

Grocery 4.5 -0.5 -1.8

Specialty Stores 2.1 2.5 -2.7

Dollar 1.2 5.0 2.9

Club 1.0 0.9 -2.0

Drug 0.9 -0.2 -0.2

eCommerce 0.8 7.5 -2.6

Mass/Supercenter 0.7 -2.4 0.6

Source: IRI Consumer and Shopper Insights Advantage™, 52 WE 12/01/2019 vs. YA, NBD aligned

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eCommerce Represents a Small Share of CPG Sales
but More Than Half of Total Omnichannel Growth

eCommerce Share of Omnichannel Sales eCommerce Share of Omnichannel Growth

14%

63%

+0.3 +1.1

eCommerce Latest 52 Weeks’ Performance:

Dollar Sales $90.8B (+28.5% Chg. vs. YA)

Note: Sales are the sum of 180 tracked categories; omnichannel is defined as Multi Outlet Sales + Total eCommerce Sales.
Source: IRI Market Advantage, IRI eMarket Insights, Latest WE 12/29/2019.

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Shelley Hughes Joan Driggs
Shelley.Hughes@IRIworldwide.com Joan.Driggs@IRIworldwide.com
Vice President, Public Relations Vice President, Content and Thought Leadership

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