Russian Consumer Confidence Stabilizes

For the first time in eight months, Russian consumers’ confidence has stabilized after posting significant declines, according to Nielsen’s ongoing “Russians through Crisis” study.  In the second half of 2008, consumer confidence stood at 104, dropping to 88 in November 2008 and hitting a low of 75 in March 2009.  In May, confidence recorded an uptick to 82.

As with consumers around the world, job security and personal finances are the key concerns for Russians today.  Almost three-quarters of those surveyed characterized the security of their jobs as “not so good” or “bad,” while 81 percent characterized their personal finances the same way.  While these results were not positive, they showed no further signs of pessimism over previous months.  More than half (54%) of Russians said that their family income has declined over the past three months.  Given these sentiments, it is not surprising that 78 percent of Russians felt that it was not a good time to buy the items they want or need.  Discount and hypermarket retailers were the preferred destinations for Russian shoppers, as they switch to channels that can provide better value.

“Russian consumers seem to have overcome the shock of discovering that one of the world’s fastest growing economies is not recession-proof.  Consumer confidence is bottoming out, but the key question remains the duration of the bottom and when Russians will be ready to loosen their belts,” said Dwight Watson, managing director, Nielsen Russia.

Summer seems to be the season of optimism for Russians, with 19 percent of respondents saying they plan to by a travelling tour, and equal number saying they plan to purchase furniture.  Computers and mobile phones were the next most popular items for purchase.  Meanwhile, 37 percent of those surveyed said that they had no plans to make any major purchases.

“Russians through Crisis” is an integrated research project aimed at tracking and analyzing consumer confidence and purchasing behavior in the rapidly changing Russian economic environment.  More than 500 people were surveyed in key Russian cities, including Moscow, St. Petersburg, Novosibirsk and Nizhiniy Novograd.

Listening: Back to the Future of Consumer Research

David Wiesenfeld, Vice President, Insights & Innovation, Nielsen Online

What’s driving all the excitement and energy around “listening?” After all, the basic notion of “listening” - observing and interpreting naturally occurring consumer behavior - is not new. In fact, when the first professional market researchers sat in consumers’ living rooms and talked with them about their lives and their needs, they were engaging in “listening” as much as they were asking questions. These pioneers were literally the eyes and ears of their organizations. They brought consumers to life in ways that inspired a host of innovations, improving consumers’ lives and their businesses in the process.

Market research evolved to become a valuable source of information to drive decisions, even as the connection between researchers and consumers became more distant. In a slightly ironic twist, the social media revolution and 21st century technology afford modern-day practitioners the opportunity to routinely engage in “old school” hands-on research - or at least a form of it- by listening to consumers online.

P&G and Nielsen conducted a series of parallel studies to understand how learning gleaned from “listening” to online consumer conversations compares to survey-based findings (”asking”), and how to best use these techniques going forward.

What We Heard

Findings from “listening” and “asking” were largely consistent. Most importantly, in every case, “listening” added to our understanding in important ways, meaningfully enhancing insights, and sometimes suggesting a different course of action. For example, a survey on cloth diapering identified cost savings and sustainability as key reasons for using cloth diapers. Listening took this further, revealing the passion cloth-diapering moms have for “CD’ing,” and connecting it to core values around parenting. This led to a fundamentally different, more holistic understanding of cloth diapering than was available from survey results alone.

Listening consistently provided valuable depth and context… adding listening to the picture was a little like going from an X-ray to a CAT scan. Furthermore, listening revealed the level of consumer passion or intensity associated with a specific topic. Understanding “intensity” can be just as important to winning in the marketplace as understanding size or “magnitude,” suggesting the need to pursue survey-based and listening-based approaches (or hybrid methods) going forward.

To learn more about the findings from this joint study and how to use listening to enhance your understanding of the marketplace and bring consumers to life in your organization, please join us for a complimentary webinar on Friday, June 26, at 2:00 p.m. EDT.

Register for the Listening Vs. Asking webinar.

Promotions Spur Growth In UK Grocery Sales

UK grocery sales grew 5.1 percent in the 12 week period ended May 16^th, largely due to the record number of products on promotion according to new research from Nielsen.  Morrisons continued the solid performance it has been exhibiting over the last few months with sales growth of 7.9 percent over the same period a year ago, while Asda and Sainsbury also posted gains of 7.4 percent and 7.3 percent, respectively.

“With a record of 32 percent of all sales being goods on offer in the four weeks to May 2009, retailers recognize that they need to show good value for money as a fundamental shift in consumer behavior has taken place over the past few months.  At face value, this will be good news for Asda, Tesco and the other discounters, but it is also an opportunity for all other retailers to get a bigger share of wallet of the recession-struck shopper,” said Mike Watkins, Senior Manager, Retailer Services at Nielsen.

% Share of Grocery market Spend, 12 Weeks Ending May 16, 2009

Finding High-Potential Customers

Now more than ever, marketers are trying to identify and reach profitable and discrete market segments that were previously overlooked in an effort to keep growing in difficult economic conditions.  Predictive analytics is one way to do that: it marries a range of consumer, transaction and media information and reveals the “who” and “how” of an effective go-to-market strategy.

Predictive analytics can help marketers in several ways:  It can provide a deeper understanding of customers to guide the marketing spend; it offers guidance on selecting messages and vehicles for communicating with them, and; it provides key metrics for measuring campaign impact.

Nielsen teamed up with Experian, the credit reporting agency, and dLife, the leading online resource for diabetics, to develop a program targeting the diabetes community.  Diabetes accounts for 31 percent of health care costs in the U.S. and approximately $175 billion in spending.  Using diabetics’ common interest - in this case - how their disease shapes their lives and influences their food purchasing patterns - the team was able to pinpoint high-value consumer targets, determine the best retail channels to reach them and deliver marketing materials that were specific to their needs.

Read the full case study on how predictive analytics shaped this campaign and can uncover the hidden treasure of consumer value in the current edition of Consumer Insight.

Most Households Read Food Labels

Todd Hale, Senior Vice President, Consumer and Shopper Insights

Last June, we fielded a survey to our Nielsen Homescan panel which included a question asking primary shoppers about their tendencies for reading labels on food and beverage packages.  Just under two-thirds of U.S. households (61%) agree completely or agree somewhat that they read these product labels, with 31% agreeing completely.  And as you might expect, we do see some differences when we drill down across demographic groups, but we thought it would be interesting to also look at how shoppers at various retailers differ in terms of reading labels.

Here are the demographic groups who tell us they are more apt to read labels and whose response indexed 10% or higher versus the average household response.  No surprise here: better educated, older (probably needing to look at labels due to a health condition), higher income, and those in a professional/managerial occupation.  Is there an opportunity to increase font side on package labels to help older consumers decipher product ingredients?

% Households agreeing completely to “usually reading labels on food & beverage packages”:

• Total Households:  30.5%
• Female Head College Grad:  36.0% (118 index)
• Female Head Age 55 to 64:  35.0% (115)
• Female Head Age 65+:  34.8% (114)
• Incomes of $100k+:  34.1% (112)
• Professional/Managerial:  34.0% (111

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Premium Liquors Boost Aussies’ Spirits

Australians, like many consumers around the world, are cutting back personal spending by shopping less often and switching to less expensive and private label brands.  But one area where they refuse to compromise is their drink: sales of premium brands of beer, spirits and bottled wine all showed strong volume sales performance in the first quarter of 2009.

Imported and domestic premium beers posted growth of 15.3 and 18.6 percent, respectively, over the same period last year, while sales of premium spirits rose 21.3 percent.  Cheaper beer and spirit segments also showed growth, but not at the strong levels posted by their more expensive counterparts.

Overall, wine continued to experience volume losses, although increased demand for bottles costing $10-$20 was up 5.6 percent while bottles costing more than $20 showed growth of 4.1 percent.

“Instead of trading down when it comes to buying liquor, Australian consumers are becoming more sophisticated and are choosing high quality spirits, premium wines and a growing variety of premium or artisan-style beers,” said Michael Walton, executive director of Nielsen Australia’s Liquor Services Group.

Read the full press release here.

How U.S. Consumers Are Reacting to the “Great Recession”

Todd Hale, Senior Vice President, Consumer and Shopper Insights

For those of you who attended our 2009 Consumer 360 client conference, you heard the opening remarks from John Lewis, President & CEO, Nielsen Consumer North America, on the impact of the economy on our industry.  His message was about how our company is “investing considerable resources in the area of thought leadership to mine Nielsen content to understand what will happen tomorrow; where (our economy) will settle; and what will the new paradigm look like?”

When John looks at the economy he sees “consumers under profound pressure in every way and there are so many changes going on” and asked the audience “what is changing versus what isn’t changing so we don’t overlook or miss some obvious opportunities”?

I wanted to share some of John’s messaging and embellish it with some of my own observations.  As John mentioned, Nielsen research shows that only 5% of U.S. households are in “panic mode” and doing just about everything they can to modify where they shop, what they buy, and how they consume products to make it through these tough times.  The remaining 95% of consumers have modified some of their behaviors too, but these folks have been “very much in the game” for marketers to pursue.

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Italy’s Premier Business Event Focuses on Recession, Recovery

For 25 years, Nielsen has organized what has become one of the most important business events in Italy.  The focus of L’Incontro Nielsen 2009, which was held late last month in Sardinia, was the economic crisis and possible solutions for recovery.

Jeremy Rifkin, president of the Foundation on Economic Trends and an advisor to several heads of state, opened the event by outlining his views of the crises facing the world today: economic, energy and climate. The solution, Rifkin believes, is a third industrial revolution propelled by a hydrogen economy. By focusing on the development of hydrogen as a fuel, all three crises are addressed.

Participants also heard from two academics regarding the economic crisis.  Andrea Boltho, a professor at Oxford, linked the current crisis to the collapse of housing prices, increases in the costs of oil and raw materials and the collapse of major financial institutions, which caused a decline in public confidence.  Boltho predicted that recovery would come in the second half of 2010.  Meanwhile, Franceso Daveri, a professor of economics at the University of Parma, focused on Italy and its future.  He stated that Italy entered a recession prior to the other European countries due in large part to its failure to remain competitive in the global economy.  They key to recovery, Daveri believes, is for Italian companies to innovate and change the way they do business.

Stefano Galli, managing director of Nielsen Italy, presented new research on the shopping patterns of Italian consumers.  While pointing out that confidence was low, consumers were adapting to the recession in ways similar to those in other countries: making fewer shopping trips, reducing impulse purchases and rediscovering cooking and eating at home.  Baking bread and cakes and making pasta at home were identified as some of the ways Italians are coping with the economic downturn.  Only 25% of Italians surveyed said that they believe that recovery has started and that the economy will recover in the next 12 months.

Finally, Emma Marcegaglia, president of Confindustria, the Italian employers’ federation, spoke of the depth of the economic crisis, noting that gross domestic product declined 5.9 percent last year, the worst fall in the past 30 years.  She noted that it was necessary for Italian companies to invest in “green” technology, implement reforms and focus on developing exports to Russia, the Baltic countries and other nations closer to Italy that will resume growth once recovery takes hold.

Americans Taking Small Steps in Household Energy Efficiency

Consumers are open to making energy-saving lifestyle changes. But, they are still far from becoming active managers of their household energy use, per new research from Nielsen Claritas. The annual Convergence Audit drew on data from more than 32,000 respondents replying both online and through the mail about their energy behavior.

While consumers are generally on board with energy conscious products, their green behavior has yet to extend to their habits in monitoring and paying for the energy in their homes.

Services offered by local utilities such as whole house energy audits, energy efficient HVAC rebates and weatherization services were only used by 2 percent of respondents in the past year. Energy efficient appliance rebates were used by 4 percent.

Similarly, online energy services, such as real-time pricing, load management, and service consumption monitoring were adopted by only 3 to 5 percent of consumers in the past year.

With the energy industry poised for major changes, including a heavier reliance on technology in monitoring and delivery, the report emphasizes that energy providers have major opportunities if they can educate their customers to become more active in their energy use.

Respondents showed a continued interest in energy-efficient equipment in the home, with 25 percent of consumers having purchased an Energy Star certified appliance, lighting product, or heating or cooling equipment in the last year. However this percentage fell from 27 percent last year.

Energy conserving compact fluorescent light bulbs (CFLs) have shown strong adoption with 71 percent of consumers using at least one bulb in their homes. Nearly a third (30 percent) of those surveyed said they are using more than six.

One indicator that going green is not just a trend for younger consumers is that CFL use appears to increase with age. While 64 percent of those aged 18 to 34 are using the bulbs, so are 70 percent of adults 35-54 and 74 percent of consumers 55 and older.

Ownership of CFLs is highest among those with higher income and education levels, with 76 percent use among those making over $100,000 a year.

Download the complete Convergence Audit.

Update: Jarred Peanut Butter Sales Resume Historical Patterns

After the salmonella scare at the start of the year, sales of jarred peanut butter took a hit as consumers tried to determine which products were affected.  Last month, sales returned to their normal historical patterns, a trend that continued in the most recent four week period tracked by Nielsen.  On an equivalized unit volume basis, sales were up 3 percent from the same period in 2008 and down 1 percent from the previous four week period in 2009 - a trend Nielsen has seen in previous years.  Sales rose 6.5 percent on a dollar basis over the same period last year.

“Sales trends continue to return to normal as the scare that gripped the country earlier this year fades from consumers’ memories,” said Todd Hale, Senior Vice President, Consumer and Shopper Insights at Nielsen.