Nielsen recently mined insights from about 35 new item launches that are actively being monitored across a variety of packaged goods categories in the U.S. and found that product innovation remains important, but should be approached in a different way. For example, approximately three-quarters of the products being tracked showed little impact of the economic downturn. Nielsen found that consumer habits with respect to everyday goods are slow to change; their purchase intent and value perceptions remain stable over time, regardless of macroeconomic conditions.

Another surprising finding that goes against conventional thinking is that premium items are not dead. Over half of the items Nielsen is tracking are priced at a premium to their parent brand and/or respective category, and many of these are performing as expected. As consumers cut back their spending in areas such as new cars or vacations, they continue to treat themselves with “affordable indulgences.”

The complete report regarding product innovation in a recession can be read in the February 2009 edition of Nielsen Consumer Insight.

Is the outlook any brighter for the new year?  Food marketing expert Phil Lempert, of SupermarketGuru.com, offers his take on what consumers and retailers can expect in 2009.

Nielsen Wire: How did consumer habits change in 2008 — and how should retailers adjust?

Phil Lempert:
In 2008 shoppers used more coupons, bought more store brands, and started using shopping lists again. I have little doubt that these “learnings” will stay with many of these shoppers through their lifetimes — the same way our grandparents who lived through the depression held on to many of the values learned through that experience. At the same time, shoppers have become smarter – they are reading more labels and asking more questions. They are also demanding better service and the chance to be heard, which is a new challenge for retailers who are trying to hold down payroll costs.

In a recent consumer survey we conducted for Readers Digest Entertaining Group, 72% of shoppers said that they will continue to use the shopping strategies they’ve discovered over the past six months even when the economy recovers. The rules have changed, and more than ever the consumer is the commander of the shopping experience.

My recommendation to retailers and manufacturers is to strengthen your relationship with your current customers and to reach out to new ones. People are nervous and looking for stability and accountability — those who offer both will win.

Nielsen Wire: How else are retail grocery stores adjusting to the struggling economy?

Phil Lempert:
With higher costs and lower available capital, many retailers will be struggling to keep their operations at an acceptable level (acceptable to both their shoppers and themselves). At the same time, many stores are in need of new technology at the front end in order to comply with the new extended bar code, as well as preparing for RFID compatibility.

The move to build smaller stores (10,000 – 15,000 square feet) – led by Walmart and Tesco – may be one solution. Significantly reduced overhead and employee costs allow this format to be profitable with much smaller volume (and may well prove to be exactly the format aging baby boomers, in particular, are looking for). The concept of having one superstore in a community, with dozens of satellite stores dotting neighborhoods will be tested over the next year, and I suspect it will be the winning formula in many locales.

Nielsen Wire: Other than prices, what factors will affect consumer choices in grocery aisles in 2009?

Phil Lempert:
In the same Reader’s Digest survey I mentioned earlier, 76% of people said they were bored with the foods they were eating and wanted more new products and recipes. Look for the winners in all categories to be those national brands that innovate (think Healthy Choice’s steamer line of frozen foods) or bring in new flavors (Budweiser Chelada) to satisfy convenience and flavor, while staying within the constraints of our new value equation.

Clearly, there has been a shift towards “local.” People want to know where their products come from — especially imports. Now, consumers expect packaged goods to identify their source, much as bottled water has done for decades. Hunt’s canned tomatoes, which are grown and packed in California, and ice creams that contain blueberries from Maine are just two examples of the transparency that will become increasingly common in grocery stores. Marketing the source, quality, and taste of ingredients will become the advertising sweet spot in 2009.

Nielsen Wire: How have advertising and marketing strategies changed for grocers in this economy?

Phil Lempert:
The old ad model does not deliver the sales or influence that it once did, which is why brands and retailers have moved on to new media that are less costly, faster, more targeted to produce, and instantly measurable. The medium is certainly the message these days, and the old mode ad vehicle simply doesn’t appeal to future consumers. Advertisers must think more holistically about their advertising — and forget the idea that buying time on the Super Bowl and producing a lavish commercial that is designed to appeal to all is little more than fodder for an episode of Mad Men.

I just had the opportunity to be a judge in the National Grocers Association Creative Choice Awards, and while I can’t reveal any of the winners until they are announced at their awards ceremony in February, I can tell you that independent grocers, with limited budgets in most cases, are doing some of the most creative and effective advertising during this economic downturn.

Nielsen Wire: But can’t chain stores just point to their prices, which are often better than smaller independent stores?

Phil Lempert:
Ads that only promote price may give a short term bump in sales, but the truth is that advertising that builds a relationship based on what a product or brand stands for and the benefits it offers the customer is more effective in building life-long value. 

My recommendation to chain retailers, in particular, is to examine what smaller grocers are doing with their ad budgets and websites. They may be shocked to find that these less glitzy and more personal ads are stealing their shoppers.

About Phil Lempert
Known as “The Supermarket Guru,” Phil Lempert is one of America’s leading consumer trend-watchers and analysts.  Lempert is the food trends editor and correspondent for NBC News’ Today show, where he reports on consumer trends, food safety, and money-saving tips. He is also a monthly columnist for Progressive Grocer magazine and Gourmet Retailer magazine, and is the host of the weekly new products webcast “5 New Food Products in 5 Minutes: The Hits & Misses.”

According to NielsenHealth, U.S. households with at least one obese member spend 9% more than the average American household on over-the-counter medications, 10% more on health and beauty care products, and almost 17% more on total medications and remedies. 

Obesity sufferers tend to live in low-income households, with incomes of less than $20,000/year, and are more likely to be middle-aged (45 to 64 years old).  These households tend to be located in less affluent towns and rural areas (39%). 

On average, households with obese members are more willing to buy generic or private label brands.  They also purchase 20% more low calorie carbonated soft drinks than the average U.S. household, and are more willing to buy prescription drugs from outside the U.S. in order to save money.

As marketers turn their attention to this once-overlooked demographic, Americans are also turning an eye inward to examine the causes of the country’s obesity epidemic.

According to a 2008 Nielsen survey cited in the November issue of Nielsen’s “Consumer Insight” online newsletter, 81% of U.S. consumers “agreed” or “strongly agreed” that weight gain can be attributed to eating too much and not exercising enough. 

What’s more, 68% of consumers “disagreed” or “disagreed strongly” with the statement that they cannot find healthy food in their grocery store.

Consumers also told Nielsen they hold food companies and their advertising partially responsible for America’s obesity epidemic.  Almost three-quarters of consumers believe that advertising by food companies encourages people to eat less-healthy food, and that these companies should provide healthier food.  In comparison, consumers did not identify the fast-food industry as a major player in the obesity blame game.

Learn more about U.S. consumers’ perceptions of obesity.

Read more about marketers’ efforts to reach obese consumers in the November issue of Nielsen’s “Consumer Insight” online newsletter.

Read coverage of Nielsen’s findings in Adweek.

Nearly two-thirds (65%) of U.S. Consumers reported they notice nutritional information on food packaging more often now than they did two years ago.  More than half (51%) said they always check the fat content on nutrition labels, while nearly half check labels for calories (48%) and trans fats (43%). 

Nielsen also found that two-thirds (67%) of U.S. consumers claimed they “mostly” understand the nutritional information on food packaging, while less than half (44%) of consumers in other countries reported the same.

The Nielsen Global Online Consumer Survey was conducted in April 2008 among 28,253 Internet users in 51 markets in Europe, Asia Pacific, North America, and the Middle East.

View the full press release.

That number is expected to grow dramatically in the future, according to Nielsen Mobile’s study, which found that about half of all consumers who transmit data via their phones anticipate making a “mobile purchase” in the future.

But some consumers are steering clear of shopping online by phone — at least for the time being. More than 40% told Nielsen researchers they were wary of security risks associated with such purchases.