CHICAGO— Value matters.

Despite an improving economy, offering value will remain a prevailing mandate for convenience store retailers and food and beverage suppliers alike, following a second quarter that saw consumers sifting for value across retail channels. 

The latest MarketPulse survey from Chicago-based IRI found that shopper sentiment dropped to 123 in Q2 2015, compared with 138 in Q1. The drop, however, is consistent with the dip typically seen during Q2 in past years. The good news is that sentiment is higher in Q2 2015 compared with Q2 2014 (117), so consumers are feeling better about the direction of the economy and their own financial health, but they do remain cautious.

“Retailers and manufacturers must work together to create holistic pricing strategies that underscore the value proposition for consumers, while still supporting their share, margin and growth goals,” said Susan Viamari, vice president of thought leadership for IRI. “It’s not an easy task to achieve these goals. Marketers need to look across categories—and even aisles—to pinpoint categories where price cuts will generate sales lift and measured price increases will support margin without negatively impacting volume.”

Viamari asserted that consumers “are still focused on value. They want brands that will offer them a good experience—and that good experience truly must be an experience that is highly tailored to the needs and wants of each individual target consumer at any given moment of purchase.”

Indicative of a consumer’s focus on value, less than 50% of the shopping basket is purchased based on deals for two-thirds of shoppers. However, defining value presents a challenge as it means different things to different people. It’s critical for manufacturers and retailers to get the base price for products right, according to IRI.

Wallet Wary
Consumers have been wary about opening their wallets for the past several years, and this isn’t going to change anytime soon, IRI said. They are still doing their homework and planning what to purchase before leaving the house:

• 64% are making a list before going to the store;
• 52% are choosing the store they will shop at because it offers the lowest prices on needed items;
• 45% are stocking up on certain items when they are on sale.
   

Deep Insights

Constructed against a benchmark of Q1 2011, IRI’s Shopper Sentiment Index provides 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.

Overall, 24% of consumers feel their financial situation has improved during the past year, and 24% feel their situation remains unchanged. In addition, 23% expect improvement in the coming six months, which is consistent across all groups. For instance, 22% of millennials, 27% of those age 35-54 and 21% of baby boomers expect this positive progression to continue throughout the remaining months of 2015.