Consumer-goods firms everywhere are in the middle of a very grim time. What is significant is not only to recount current events, but to understand their deeper economic effects.
For a long period it was assumed that consumer goods were recession-proof. While shoppers no longer may be able to afford expensive jewellery or high-priced clothes, it was almost a truism that people have to eat and, of course, wear some kind of apparel.
Recently, it has become evident that consumers are starting to save even on necessities. Our economy is in the doldrums; consumers are holding back, but unfortunately for producers the cost of raw materials continues to climb.
Nowadays, given the soaring price of gasoline and the need to concentrate on a job (or searching for a replacement), people are shopping less and when they do so it is with a distinct purpose. Heretofore some have wondered aimlessly through a store, perhaps to make a casual purchase. What is noticeable is the number of shoppers taking a basket rather than pushing a cart. This is a way to prevent temptation overtaking one by making unnecessary purchases.
Increasingly most shoppers are buying smaller packages: that will suffice for the time being. Alternatively a few are taking another route and going to the big-box retailers to buy big quantities as part of a “better deal.” The latter have lost some of their allure as so many believe they cannot afford to make a large commitment even if it were superior value.
It has become obvious that consumers hesitate in front of shelves displaying, for instance, air fresheners or hair conditioners; clearly there is no need for such items.
Along with that trend, consumers have started to trade down from brand-name goods to store ones that are less costly.
Consumer-goods companies are being forced into changing their ways. They may offer a basic version of their regular product lines, and to hustle them they do not restock retailers’ shelves so frequently. As a result, the usual, more expensive items are “not in stock.”
Too, as people eat out less frequently, stores now offer their own items of pizzas or other prepared foods. Inasmuch as consumer budgets are being stretched, spending is more focused on basic, simple necessities that “will do” at the present time.
Without doubt the economic consequences of our sluggish business conditions make this a difficult era for retailers.