Opinion
Top 5 predictions for 2010 in consumer packaged goods
The first month of the year is a popular time for trade publications, industry analysts, fellow bloggers, and even water cooler discussions to turn to predictions for the year.
With unemployment rates remaining high for at least the first half of 2010, don’t expect any radical shift in behaviour
This year marks a particularly compelling time to do so as most of us would love to forget the prior year and look ahead to more optimistic times.
I set out to read what Consumer Packaged Goods (CPG) and retail industry leaders and press are saying to glean some insights into what the new year is likely to hold. While I did find a few glimmers of hope, I must admit most folks aren’t exactly brimming with optimism, at least not until later in the year.
The following is a summary of five things I think will happen in 2010. We have the advantage this year that nobody is getting blind-sided by a rapid collapse of the capital markets, broad global recession or rapid inclines in unemployment. At least going into year, we know exactly the hand we’re being dealt, which actually has the odd advantage of aiding the planning process.
This time next year, I’ll revisit these predictions and see how well I scored.
- Don’t expect any major change in shopper behaviour any time soon. Due to high unemployment and a gloomy economic outlook, shoppers flocked to lower cost store brands, eliminated impulse buying and generally shopped less frequently. With unemployment rates remaining high for at least the first half of 2010, don’t expect any radical shift in behaviour. In fact, HJ Heinz chairman and CEO William Johnson in a recent interview sums it up succinctly, saying: “To say that consumers will return to historic norms (in 2010) is disingenuous”.
- Retailers will get more aggressive with deductions. As retailers fight for the rarified consumer dollar, reducing or offsetting expenses has become even more critical. As a result, they will continue to make sure they double– and triple-check every promotion to ensure they’re taking every allowable deduction.
- Innovation will return to vogue. In general, most CPG manufacturers focused so much on cost containment, deflation and price pressures that the idea of new product introductions seemed almost laughable. As I wrote in a blog post last year, companies can’t grow long-term without innovating. As a silver lining for 2010, we’ll see several new, innovative consumer products that put some smaller more agile manufacturers in a real high-growth path, and other more conservative firms will respond by refocusing on innovation and new product introduction late in the year.
- Trade spending will increase (again). As consumer budgets ratcheted down in 2009, price became the most important demand level at the shelf. Until the mindset of the consumer changes, manufacturers will continue to buy down pricing. Martin Arter, president and CEO of Affiliated Foods said in a recent Supermarket News article, “Allowances have definitely gotten deeper. The manufacturers didn’t take their prices down but they offered additional promotional funds throughout the year.”
- Online media and advertising will continue to erode traditional print advertising. The GMA recently conducted an informal survey that showed 63.6% of respondents are shifting resources from traditional to social media.
Those are my predictions, and I’m sticking to them. As economic indicators continue to improve, eventually we will also see unemployment rates finally decrease.
Even if most experts don’t predict that will happen until the second half of 2010, CPG companies poised to be agile and shift along with consumer demand will be in the best position to finish the year strong.
So here’s to a healthy, happy and productive 2010.
Rob Bois is director of product marketing at MEI – a provider of Trade Promotion Management software for the Consumer Packaged Goods (CPG) industry throughout North America. This blog is republished with kind permission of MEI.
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