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IRI releases report examining consumer spending, cost-cutting strategies

BY Michael Johnsen

CHICAGO Information Resources Inc. on Tuesday released a new report — Competing in a Transforming Economy 4.0: The New Equilibrium — that examined which consumer groups will be maintaining their current cost-cutting strategies through an economic recovery.

“Since the beginning of 2009, a new consumer equilibrium has emerged in which behaviors initially implemented to weather the storm have the potential to last well beyond an economic recovery,” stated IRI consulting and innovation president Thom Blischok. “In this phase of our research, we went beyond studying the common spending, self-reliance and self-health strategies that are becoming common place in today’s environment and examined how economic pressures have driven different types of consumers — by income level, household composition and even varying consumer mindsets — to change their strategies.”

The “Misery Index,” which captures current consumer economic wellbeing and expectations of future economic conditions, remains high for U.S. consumers at more than 14%, versus 13% in March 2008 and less than 8% in March 2007. Forecasts indicate that 2009 will continue to be challenging and 2010 will improve slowly, which leads one to believe that consumers’ current spending strategies will continue. Though perhaps even more important than the strategies themselves are the consumer groups who are driving them, IRI stated. IRI has maintained an ongoing dialogue with consumers since the economy began declining and has found that the following consumer segmentations play an important role in understanding the drivers of saving strategies:

  • Income Level

IRI closely examined how income levels drive commitment to saving and cash management strategies. For instance, do higher income households feel less pressure to cut back with higher cash inflow?  Or, do they experience more pressure with the concern of replenishing their shrunken investments quickly to support the leisurely retirement they had planned before the recession?

During the fourth quarter of 2008, IRI asked consumers if they were postponing such non-grocery purchases as electronics, furniture and clothing, and found a whopping 69% of those earning under $35,000 were delaying these purchases, versus 63% earning $35,000-$54,000; 59% in the $55,000-$100,000 level and 46% in the over $100,000 bracket. In addition, 60% of consumers earning under $35,000 are changing their definition of what is essential, compared with 58% earning $35,000-$54,000, 46% earning $55,000-$100,000 and 34% in the over $100,000 bracket.

  • Household Composition

IRI also studied which spending strategies are driven by households with kids versus households without kids. For example, do households without kids stick to their preferred brands and products since they have fewer mouths to feed, or are households with kids bending to picky eating habits and sticking to their preferred products in certain categories?

While households with kids are most likely to reduce or postpone spending on non-grocery purchases, affordable indulgences are quickly becoming a theme for these stressed out consumers. In fact, 78% of households with kids earning under $55,000 are postponing non-grocery purchases; but 64% of this same consumer segment is treating themselves to affordable indulgences, compared with 54% earning the same income without kids.

  • Consumer Sentiment

Understanding the mindset of consumers who are driving strategies is a key to success for retailers and manufacturers. IRI uncovered three emerging categories of shoppers: optimists, maintainers and pessimists. Is the optimist the first to adopt dramatic saving strategies, thinking the economy will get better soon, and they won’t have to employ them for long? Or, is the pessimist driving the trends in expectation of a long recession?

From its post-inaugural survey, IRI discovered that pessimists exemplify many of the attitudes that are driving behavioral change across channels and categories, e.g. searching for sale prices (87% versus 82% for all households), making personal care products last longer (62% versus 55% for all households), and buying fewer prepared meals at grocery stores (61% versus 55% for all households).

“Learning more about the specific consumer segments that are leading change empowers both retailers and manufacturers to craft marketing messages targeted towards their most important consumers and will also help to get these messages in front of their consumers at the right time and the right place,” Blischok said.

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Xylitol appears to fight early childhood cavities, study finds

BY Antoinette Alexander

NEW YORK Children given an oral syrup containing the naturally occurring sweetener xylitol may be less likely to develop decay in their baby teeth, according to a new study.

Peter Milgrom, D.D.S., from the University of Washington in Seattle and colleagues evaluated the effectiveness of using syrup containing xylitol, approved in the United States for use in food since 1963, among 94 children (9 months to 15 months old) from the Republic of the Marshall Islands, where early childhood tooth decay is a major health problem.

The investigators stated that “exposure to xylitol (8 g per day) in a twice-daily topical oral syrup during primary tooth eruption could prevent up to 70% of decayed teeth.”

After an average of 10.5 months, 8-out-of-33 children receiving two doses of xylitol per day and 13-of-the-32 children receiving three does of xylitol per day had tooth decay. This compared with 15-of-the-29 children in a control group, the report stated.

The study was funded by a grant from the Health Resources and Services Administration Maternal and Child Health Bureau and by a grant from the National Institute of Dental and Craniofacial Research. Danisco USA donated the raw materials used to make the syrups in this study. The study was published in Archives of Pediatrics & Adolescent Medicine.

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Pamela Anderson to launch new fragrance

BY Antoinette Alexander

BOSTON Creating quite a buzz at the recent NACDS Marketplace conference held here was celebrity Pamela Anderson, who was on hand to promote the launch of her new fragrance.

The Malibu collection will include Malibu Pink “For Playful Days” and Malibu Blue “For Elegant Nights.”

Malibu Pink is a blend of wild berries and zesty mandarin fruit lifted by sweet honeysuckle accents and white florals over sandalwood, caramel, rich vanilla bourbon and a touch of praline.

Malibu Blue features notes of pomegranate, chocolate persimmon and greens with black orchid, lotus, champacca flower and fresh vanilla violet, mahogany wood, patchouli and amber.

Malibu is scheduled to launch in limited retail stores in late July and early August, with a national rollout in September. The fragrances are priced at $39 (1.7 oz.) and $49 (3.4 oz.).

To promote the launch, IBB will embark on a million dollar marketing campaign that includes a launch event at Fountain Blue, appearances on several talk shows and special appearances at flagship stores.

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