Consumers are adapting behaviors to stretch their dollars

The story of 2023 has really been the story of consumers dealing with the impact of inflation, according to NielsenIQ. Unsurprisingly, as many consumers are still grappling with increased costs, they’re finding it harder to justify spending on non-essentials. This is especially true when it comes to spending on holiday gatherings. 84% of global consumers say they’re prepared to spend less, the same, or nothing on holiday gatherings and celebrations this season.

As a result, consumers are adapting their behaviors to stretch their dollars. This may be by buying bulk, shopping on promotion, or shopping private label brands. Private Label, which on average provides 13% savings versus other brands, has set a new report share, now accounting for 19.3% of CPG sales in the U.S.

Private label brands and CPG brands that can convey value this holiday season are likely to be the biggest beneficiaries of consumer spending.

Another trend is the rise of made-from-scratch sides. Shoppers are increasingly interested in making their own side dishes for their holiday meals, eschewing the pre-packaged fare. These include things like mashed potatoes, sweet potatoes, and green bean casserole. However, this does open up opportunities with 18% of surveyed respondents planning to spend more on socializing and gatherings this year.

Of this group, the majority (58%) intend to buy more premium and quality ingredients for at-home entertainment. CPG brands can cater to this trend by offering high-quality ingredients and fresh foods like seafood or meat. Retailers can also encourage shoppers to make made-from-scratch sides by providing recipes and cooking tips.

Consumers are looking for ways to save time and money, and this has led to a growing demand for more convenient food options. This includes the growth in sales of things like prepared foods (up 6% over last year), salty snacks (+11.2%), and ready-to-heat rice (+17%). With ongoing economic pressures and a range of other things to buy for the holidays, many consumers will actively focus on convenience when it comes to groceries.

Retailers and CPG brands can react to this shift by honing their pricing and promotion strategies to be more effective and competitive. This means you need to focus on providing true value and not just low prices. By aligning with shifting consumer behaviors and offering more convenient solutions, CPG brands have the opportunity to finish 2023 strong.