With the holiday season upon us, the grocery industry stands at a crossroads influenced by dynamic consumer behaviours, economic fluctuations and global trends. This period showcases a landscape where changing spending habits and evolving preferences require retailers and CPG companies to navigate cautiously yet strategically.
Trends shaping consumer behaviour
Gifting trade-offs:
The rising cost of living is leading consumers, particularly in Canada, to be more selective in their purchases. About 56% of Canadian consumers aim to buy only what they’ll use, reflecting a global trend of conscious purchasing.
Reduced spending on gatherings:
Despite the holiday season traditionally being associated with celebrations, 88% of Canadian consumers plan to spend the same, less, or nothing on these activities. This shift signifies the impact of the cost of living, urging consumers to be more conservative with their budgets.
Early shopping preparations:
The shift towards earlier shopping preparations is evident, with 63% of Canadian consumers planning ahead before shopping, surpassing the global average of 56%. This trend signals a desire to navigate potential supply chain challenges and secure the best deals ahead of the holiday rush.
Changes to food offerings:
With economic uncertainties and changing lifestyle patterns, consumers might be inclined to alter their recipes or trade down products to manage their expenses. This shift could involve making cost-effective substitutions or opting for more affordable alternatives within their favorite recipes. Recognizing this change provides an opportunity for brands to adapt, offering versatile and budget-friendly options without compromising quality.
Understanding these trends becomes crucial for CPG companies and retailers as they gear up for the holiday season. Leveraging insights can transform strategies to meet evolving consumer demands and preferences. However, there are areas in which retailers and manufacturers can strengthen to ensure they are meeting the needs of consumers and their own goals.
Innovation and adaptation
Innovation in packaging and offerings:
Successful brands and retailers find opportunities during holidays by introducing unique packaging concepts aligned with specific occasions. Flavour line extensions, holiday meal kits, and promoting holiday private label innovation resonate well with consumers.
Adapting to changing priorities:
Consumer priorities have shifted, with stress levels rising. More consumers, particularly in Canada, are less interested in achieving certain life milestones. Homemade and sustainable choices are gaining traction, with 17% of Canadians considering homemade options, reflecting a trend towards personalized and sustainable gifting.
Anticipated outcomes for the holiday season
The landscape will be marked by distinct consumer behaviours and shifting trends. Polarized consumer demands create a noticeable divide between those primarily focused on savings and individuals eager to indulge. Thrifty consumers actively seek savings events, leading to an expected surge in the demand for discounted products. Calculated holiday spenders are likely to prioritize experiences and quality time with loved ones as valuable gifts, fostering an emphasis on shared moments. Moreover, the holiday season may witness intense competition between established brands and emerging private label options, signifying a festive branding showdown. Anticipated is a shift towards minimalism and a preference for quality over quantity, reflecting a “less-is-more” mentality among consumers.
Implications for retailers and CPG companies
It is essential for retailers and CPG companies to understand the pivotal trends in consumer behaviour as they prepare for the holiday season, since these serve as a reflection of evolving consumer preferences and values. Leveraging data and insights becomes transformative in shaping their strategies, catering to the dynamic demands of the market. Diverse marketing approaches, emphasis on experiential gifting, innovative branding, and adaptable product offerings stand as essential elements in maneuvering this ever-changing landscape.
The holiday season is not solely about increased spending, but rather mirrors the changing dynamics of consumer values. Retailers and CPG companies that effectively adapt to these shifts are well-positioned to thrive in this evolving environment.
Challenges and opportunities converge in the holiday season for the CPG industry, where understanding shifting consumer behaviours and economic dynamics becomes imperative for adjusting strategies and offerings. Innovating in product packaging, catering to early shoppers, and aligning with changing consumer priorities are crucial for success. As the landscape continually shifts, harnessing the right data and insights will be instrumental in guiding consumers and optimizing their holiday experiences.
Mike Ljubicic is managing director for Canada, NIQ | nielseniq.com
