Boomers and Gen X the most spend-happy; Millennials buy more per trip
Observers of popular culture have long known that in large part, generations look alike, think alike, dress alike, vote alike, live alike and share a similar attitude toward life and leisure activities. That theory certainly holds true for shopping. A recent analysis from New York researcher The Nielsen Company of the four key generations revealed generationally-consistent shopping habits that reflect diverse lifestyle preferences and economic habits, according to a March 4, 2010, blog post from Todd Hale, Nielsen senior vice president, consumer and shopper insights, titled “Mining the U.S. Generation Gaps.”
The Greatest Generation members (ages 64+ in 2009), shaped by the Great Depression and World War II frugality, are the most frequent shoppers and more deal-prone than other age segments. High-earning Boomers (ages 45-63) have the largest annual dollar spend per household of any group, followed by Gen X (ages 33-44). Millennials (ages 15-32) don’t like to waste time in-store, shopping less often than other age cohorts but buying more per trip as a result.
Millennial and Gen X shoppers favor mass supercenters and mass merchandisers over more traditional formats like grocery or drug stores, which remain a draw for the Greatest Generation and Boomers. When younger shoppers do check into a format, they make a big impression at checkout. Millennials topped the basket value list at grocery stores and mass supercenters, with Gen X taking top spending honors at mass merchandisers and drug stores. Millennials represent the largest population segment - over 76 million - just slightly larger in number than the Boomer segment. The two groups together represent half of the U.S. population. At club, dollar and convenience/gas channels, Boomers and the Greatest Generation populate the aisles more frequently, while younger shoppers offset fewer trips with bigger baskets.
Certain store banners hold a unique appeal for the younger generations, and Target is at the head of that retailing class. Target stores have managed to maintain a hip, trendy image with a strong value message with whimsical advertising; strong, almost pop-art in-store merchandising; and a roster of high-profile designers. And, with the interest in at-home meals, Target has partnered with TV cooking show host Giada De Laurentiis for a store-brand line of specialty food items and cookware. Gen X and Millennials both patronize Target more often than other age cohorts and also outspend them at Target, as well as at competitive mass merchandisers like Kmart and Walmart.
Research suggests that owning a pet can stave off loneliness and lower blood pressure. Apparently, the Greatest Generation got the message, which may account for the average $198 in annual spending among pet-food buyers in these households. The next-largest spending categories for seniors were wine, at $124 per year, and vitamins, at $107 per year. Boomers spent even more on pet food ($211 per year), followed by carbonated beverages ($140 per year) and wine ($125 per year). Pet food also topped the list for Gen X at $148 per year, with carbonated beverages a close second at $134 per year and baby food in third at $127 annually. Millennials and their young families placed baby food in the top spot with annual outlays of $170 per household, followed by carbonated beverages ($116 per year) and pet food ($112 per year).
Most households (53 percent) have favorable attitudes toward grocery shopping, but 38 percent consider it a chore. The Greatest Generation is least likely to enjoy shopping, yet also the most likely to walk up and down each aisle on a shopping trip, thus extending their time in-store. Conversely, the Millennial generation, who make the fewest trips to virtually any format, really like shopping. On a typical mission, they know how to find what they need and are less likely to shop the entire store.
Shoppers are proving to be rational consumers with more than half relying on shopping lists and consistently comparing the unit price for a product. Other ways consumers attempt to milk value out of a shopping trip include using the store circular to identify sale items and redeeming coupons - a practice that has spiked in popularity thanks to the advent of electronic and mobile coupons.
While Gen X and Millennials claimed the highest coupon redemption rates and were among the most likely to use shopping lists for most trips, they also admitted to making the most unplanned purchases on their shopping excursions. Younger shoppers tended to bring children with them more often than others; were less likely to ask for advice from meat or produce department personnel; and, in the case of Millennials, very likely to bring another adult along on most outings. For more information visit http://blog.nielsen.com/nielsenwire.
Consumers not averse to switching up snack and beverage choices
When budgets are tight, most might assume that consumers would be more reluctant than ever to take a chance on a new product. While that may be the case for some consumers and some products types, a survey conducted by Louisville, Colo., research company Market Force Information indicates that consumers are as willing as ever to sample new food and beverage items.
So what are consumers venturing to try? Specialty coffee and teas enticed more consumers to try a new brand or flavor. While 82 percent of respondents said they drink coffee or tea and cited traditional brands such as Folgers, Sanka, Lipton and Nestea as the brands they currently have at home, 52 percent said that they had tried a new brand or flavor of coffee or tea from a grocer in the past 30 days. Their purchases ranged across a variety of brands, with 15 brands receiving 10 or more mentions. Starbucks coffee garnered the highest response in the coffee/tea category with 81 mentions. Dunkin’ Donuts coffee received 43 mentions, followed by Celestial Seasonings and Folgers, with 35 and 34, respectively.
In the beverage category, Coke’s vitaminwater was the most commonly mentioned new beverage purchase, followed by V8 and SoBe. Of the top 17 brands that dominated in the beverage category with 10+ mentions, Pepsi accounted for five of them (Pepsi, Dr. Pepper, Mountain Dew, Sierra Mist and Gatorade). Starbucks also made it onto the beverage list. Fuze had a strong showing as a relatively new entrant, mentioned almost as frequently as much better-known brands such as Pepsi and Mountain Dew.
Crackers, popcorn, chips and pretzels are consumer favorites, as seven in 10 respondents said they have those at home. And it appears that consumers are very open to trying other sorts of snacks. Forty-four percent of consumers reported trying a new brand of snack in the last 30 days. And while just 17 percent of consumers said they typically have snack mixes at home, the leading brand of snack consumers remember trying in the past 30 days was Chex Mix. Chex Mix and Ritz virtually tied for number of new product trials in the snack category, with one-third more mentions than the No. 3 snack Fiber One. That said, consumers could recall buying these brands, but they typically could not recall the new flavor they tried. This fuzzy memory effect could be due to an overload of flavor varieties. Chex Mix, for example, has 13 different flavor varieties ranging from salty to sweet.
Kashi and Kellogg’s Special K cereals were the two brands mentioned most frequently as new cereal products tried. In fact, they had more mentions than any brand across the six categories researched, with 127 and 123, respectively. General Mills’ Cheerios brand rounded out the top three with 80 mentions. The nearest competitor was Post’s Honey Bunches of Oats with 24 mentions. The same branding recall issues were evident in the cereal category, where some consumers could remember the brand but not the specific flavor.
Consumers were slightly less likely to try a new cleaning product than snacks, coffee or beverages, with 29 percent of consumers reporting that they bought a new brand in the past 30 days. When they did try a new cleaning product, long-standing brands won out: Lysol was mentioned most frequently, followed closely by Swiffer and Clorox, with 29, 28 and 27 mentions, respectively.
It is probably no surprise to any veteran marketer that, when consumers were asked what made them pick up and buy a new product in various consumer packaged goods categories, four in 10 said they saw it on the shelf or display. Promotions such as coupons were mentioned as driving factors by three in 10 respondents, and referrals by friends was the next most popular reason driving new product purchases. Only 8 percent of survey respondents cited advertising as being influential. Broken down by category, cereal purchases were the most responsive to promotions and couponing and snack purchases influenced most by merchandising. For more information visit www.marketforce.com.
GM dealer service succeeds in 2010
The outlook for auto dealer service success and customer spending on said dealer service appears challenging, with decreases in service business brought on by depressed auto sales in 2008 and 2009 projected to continue for several years. But dealers who focus their energies on superior service and keeping customers happy (and coming back) may have a better chance of profiting through the drought. Despite General Motors’ tumultuous few years, the auto manufacturer managed to secure six of the seven top spots in customer satisfaction in dealer service among mass-market brands, according to the 2010 Customer Service Index (CSI) Study from Westlake Village, Calif., research company J.D. Power and Associates. Lexus placed first in customer satisfaction for luxury brands.
The study examines satisfaction among vehicle owners who visit a service department for maintenance or repair work. The CSI rankings are based on dealer performance during the first three years of ownership, which typically represents the majority of the vehicle warranty period. Five measures are examined to determine overall customer satisfaction with dealer service (listed in order of importance): service quality; service initiation; service advisor; service facility; and vehicle pick-up.
Among mass-market brands, HUMMER ranked highest, with a score of 815, and performed particularly well in the service quality and service facility factors. Also among the top five brands in the mass-market segment were Saturn (808), Buick (805), Chevrolet (787) and MINI (786). Six General Motors brands (including brands GM is divesting) ranked within the top seven in the mass-market segment. Kia and Volkswagen posted the greatest improvements over 2009.
Lexus ranked highest in customer satisfaction with dealer service among luxury brands for the second consecutive year. Lexus achieved an overall CSI score of 837 on a 1,000-point scale and performed particularly well in four of the five measures: service quality; service initiation; service advisor; and service facility. Rounding out the top five in the premium segment were Cadillac (827), Jaguar (822), Acura (817) and BMW (816). Among luxury brands, Cadillac and Mercedes-Benz posted the greatest improvements over 2009.
“Over time, many vehicle owners gradually defect to non-dealer service facilities for repair and maintenance needs, particularly when the warranty period expires,” says Jon Osborn, research director at J.D. Power and Associates. “With service customer retention becoming more crucial than ever during the next few years, dealerships must focus on not only providing superior levels of customer service, but also on enhancing convenience for vehicle owners and providing pricing that is more competitive with non-dealer facilities.”
Overall satisfaction with dealer service increased from 761 in 2009 to 767 in 2010, marking the tenth consecutive year of industry-wide improvement. Notable improvements were demonstrated in the service facility and service quality measures in 2010, compared with 2009. In particular, satisfaction increased in the following areas: ease of driving in and out of dealer facilities; convenience of parking; thoroughness of the work performed; the total time required to complete service on the vehicle; flexibility of accommodating the customer schedules; and thoroughness of explanations. Several other time-related metrics improved from 2009, including customer ability to get a service appointment on the same day as their initial inquiry call and service being completed the day that the vehicle was brought in for service. For more information visit www.jdpower.com.
Consumers buy brands they ‘TrustR’
Trust and recommendation are two key ingredients to brand success, and Amazon.com performs better than the rest in these categories, according to Beyond Trust: Engaging Consumers in the Post-Recession World, a study from research companies Millward Brown, Naperville, Ill., and The Futures Company, Chapel Hill, N.C. The study includes a TrustR metric for understanding and strengthening the bond between consumers and brands, which is calculated by looking at consumer responses to the questions “How trustworthy is this brand?” and “Would you recommend this brand?”
“Consumers are less likely to spend hard-earned money on brands that they don’t trust. In fact, we found that the No. 1 TrustR brand in each of the 22 countries we researched was nearly seven times more likely to be purchased, and consumers were 10 times more likely to have formed a strong bond with these brands,” says Eileen Campbell, global CEO of Millward Brown.
According to the study, the top 10 most trusted and recommended brands in the U.S. are Amazon.com (123 TrustR score); FedEx (122); Downy (120); Huggies (120); Tide (120); Tylenol (120); Toyota (119 [results prior to recall]); WebMD (119); Pampers (118); and UPS (118). For more information visit www.millwardbrown.com.
Race affinity a major factor in African-Americans’ financial decision-making
One-third of African-American consumers consult specific African-American publications when seeking information for making financial decisions, and that number rises to more than half among those with income of $100,000+, according to Financial Insights: The African-American Market, a study from Synergistics Research Corporation, Atlanta. Most widely cited was Black Enterprise (19 percent). Ebony (17 percent) and Essence (16 percent) ranked second and third.
BET (16 percent) was also cited by one in six as a source used for financial information. One-tenth cited using black financial information Web sites and TV One (9 percent) as sources. Less than one-tenth mentioned black-interest radio stations. When asked if they trust and rely on African-American media channels more than mainstream media, four in 10 of those who use African-American media say they do trust it more. For more information visit www.synergisticsresearch.com.
Debt-ridden Americans conquer their financial burdens alone
Dismal news about debt in America: 36 percent of Americans claim to have had trouble paying their bills in the past two years, and of those adults, less than 40 percent sought help from a lender or credit consolidation agency to try to modify their loans, according to data from Chicago research company Mintel.
Women struggled with their debt more than men, as 39 percent said they had trouble during the last two years, compared to 33 percent of men. People age 25-44 and black survey respondents also reported more difficulty than the general population (42 percent of 25-34-year-olds, 48 percent of 35-44-year-olds and 53 percent of blacks). In addition, adults living in urban and rural areas were more likely to struggle when compared to those living in suburban areas.
Only 37 percent of those in trouble with debt reached out for help. Going directly to their credit card or mortgage lender was the most common avenue, with 28 percent of respondents going to their credit card-issuing bank and 24 percent going to their mortgage lender to seek help. Still, more than one-third sought assistance from a credit counseling or debt consolidation service.
Overwhelmingly, those who sought help with debt did so for credit card loans (50 percent of survey respondents). Mortgage debt was the second most common at 36 percent. When asked which loan they would pay if they could afford only one, most respondents said their mortgage (48 percent), instead of credit cards (17 percent) or auto loans (13 percent). For more information visit www.mintel.com.