Total Consumer Report 2019

In almost every purchase, search query or product use case, consumers power an ecosystem of personal data. Of course, their digital fingerprints help shape better product, retail and media experiences, but they also shine a light on the need consumers have for enhanced levels of trust in their transactions—trust in advertising, trust in pricing, trust in brand claims…the list goes on.

Trust is a currency, and every time a product or experience lets a person down, there is a breakdown in the value of that currency. As we enter an era of driverless cars and AI-powered speakers that provide us personalized advice, consumers are even betting their lives on trust in technology. The stakes are high, and when data is misused, trust breaks down much faster than it can be rebuilt.   

These numbers bear out the reality of the lives that spin around the economy of trust. Consumers bet their lives on trust in technology:

The implications that play out from this mean change has to happen. If a marketer hasn’t adjusted to account for rising levels of disloyalty and a general malaise to advertising efforts, they’re in for a bumpy ride. Compared with five years ago…

A transaction today involves more than just an exchange of payment for goods and services. It involves an exchange of data and is a reflection of trust. Foundational truth sets that power rich and complete data around the rising demands of consumers will be key to winning that trust.

In this report, we’ll review and link out to viewpoints on the consumer opportunities in play today.

STORE DISRUPTORS

In stores across America, all of CPG rings in at $813 billion in annual sales, up nearly $18 billion, or 2%, from a year ago. While brands and retailers are hyper-focused on growing these figures year upon year, you can’t expect to grow from what you don’t know. At Nielsen, we’re committed to filling knowledge gaps and exploring the disrupting store trends of today and in the future.  

Today, fresh foods are one such disruptor. More specifically, it’s food and beverages sold by weight that should be on your radar. Why? Because they are too often overlooked, yet they continue to expand and drive growth across the store.

Year-over-year, center of store grocery items have driven the bulk of dollar growth, up $5.4 billion. While the likes of beverages, snacks and candy have brought renewed growth to center of store grocery, fresh foods aren’t falling to the wayside. In fact, random-weight fresh products alone have brought in $4.6 billion in added dollar growth. Putting that into perspective, that’s huge relative to each department’s performance this year.

Many manufacturers and retailers in CPG lack visibility into the expanse of random-weight products. Unlike a UPC-coded product like boxed cereal, which has the same universale code across stores, random-weight products have specific retailer-assigned codes that can vary. While your mind may think random-weight goods are most often meat and produce, the random-weight realm also includes products like seasonings, cheeses, prepared foods and snacks that are sold by weight or don’t have UPCs. Without a read into random-weight products, you’re missing visibility to 13% of the entire store. That’s $107 billion in sales, a figure that’s up over twice as much as UPC-coded fresh foods were this year.

In the same way that random-weight fresh products have proliferated more than just the store perimeter, there’s an incoming source for CPG disruption where impact may hit harder and deeper than expected. That disruptor is cannabis, and its early impact is meaningful.

Legalized recreational cannabis won’t affect all categories, but cannabis-related products are casting a wide net across the industry and soon, the mainstream U.S. storefront. From new needs for food storage to the crossover into over-the-counter medications and of course the expanse of cannabis edibles and beverages, the CPG industry should expect a variety of new entrants.

IN 2018, THE U.S. MARKET SAW AN ESTIMATED $8 BILLION IN LEGALIZED CANNABIS SALES. THIS COULD RISE TO OVER $40 BILLION BY  2025*

And this new category comes with massive growth potential. Last year, we estimate that retail sales in the states where cannabis is legalized reached $8 billion. We expect this could rise to over $40 billion by 2025*. Though cannabis includes a huge array of plant-derived compounds and not all are federally legal, it’s not too early to explore how and why consumers are using it.

Legalized recreational cannabis will open new revenue streams, but it won’t be a tide that lifts all boats. Know where and how you can brace for impact with the latest rising product formats, consumer intentions and the related implications of cannabis in the U.S. market today.

E-COMMERCE

The average American shopper is spending over 24% more online than they were two years ago. But don’t be distracted by this swift pace of adoption. Those yet to penetrate the e-commerce market are the most cautious, and they will require the most nurturing.  

Total U.S. e-commerce is already valued at over $435 billion, and its growth trajectory shows no signs of slowing. Specific to the CPG industry, online sales currently account for over $70 billion.

In order to know which e-tailers have grown and where they’ve expanded, you need to measure what actions you’ve taken and assess their success. In CPG e-commerce, share of wallet has shifted among major retail players, and this serves as a perfect scorecard for change. Amazon’s recent share shifts speak volumes to the digital progress of our industry as a whole. If Amazon isn’t growing their share in this rapidly evolving marketplace, then who is?
 
Innovation

In a world where consumers demand more choice, making the most of every product launch will be a difference maker. Why? Because everyone else is competing for the same increasingly discriminating consumers. That means your innovations need to work harder and faster.

Over the last three years, brick-and-mortar CPG unit volume has barely wavered above a 1% growth rate year-over-year in the U.S.—a clear indicator that some innovations aren’t earning their keep. With better innovation intelligence, you can take the mystery out of what drives new product success while simultaneously building trust and staying power for your brands.

So what’s wrong with innovation today? We shine a light on exactly where there’s room for improvement when it comes to launching a new product in CPG. Speed-to-market shouldn’t come at the cost of truly understanding what to realistically expect from your new product launch.
 
Retail

It’s been a polarizing year for discount retailers, and the evolution of store brands is having an impact.

Mass merchandisers and supercenters in the U.S. are among the value-oriented retailers that are benefitting from private-label performance. They saw an 11% uptick in store brand consumer spending this year. Conversely, American value grocers, including the likes of ALDI and Lidl, have actually seen a decline in store brand growth. Though overall private-label performance continues to rise year-over-year, its portfolio of products is diversifying. We’re seeing a slow but emerging rise of premium private label products, and it’s reshaping retail strategies across the CPG landscape.

 
HEALTH & WELLNESS

Consumers will buy what they trust and believe in. In the space of health and wellness in CPG, there are substitutes and alternatives at every turn.  

Based on the top wellness claims this quarter, it’s clear that consumers hold particular interest in products that benefit their bodies (such as those containing a good source of vitamins) and those that pay back to the planet (such as cruelty free or grass-fed label claims that honor better treatment of livestock). But let’s dig a little deeper.

There’s no shortage of access to products that meet a variety of health and lifestyle needs. So, companies need to do more than simply make consumers aware of their products and tell them where they’re available. They need to convince consumers to try and to continue to buy their new products. Innovations in dietary proteins have started to do just that, driving impressive growth in sales of products that claim to meet specific consumer lifestyles. Products that meet plant-based diets, for example, represent 15% of all food and beverage sales this year. But while these products are poised for growth, we review how they are poised to be scrutinized as consumers seek to determine what exactly makes a particular diet or regime a “better” choice.

CONSUMER SENTIMENT

Loyalty has always been a treasured commodity for companies, but now that consumers have endless choice and omnichannel access, it’s disloyalty, or brand switching, that manufacturers and retailers should pay attention to.

Every touch point with consumers is a chance to entice disloyalty. Consider this: Only 8% of consumers across the globe consider themselves firm loyalists to the products they use. Yet marketing tactics and investments rarely reflect this reality. Disloyalty in CPG needs to be embraced. That requires rethinking campaigns that focus solely on winning or retaining loyal customers.

Nielsen survey research confirms that North Americans and Europeans are the least likely to embrace new brands and products in CPG. Interestingly enough, these regions lead in advertising expenditures across the globe. This means that for CPG, the connection between what consumers watch and buy has never been more complex—or more important to understand.