While U.S. consumers continue to take measures to adjust to rising gas prices, these actions are not as drastic as those taken in previous years. Unlike 2008, when the average price for regular gas jumped above $4.00 a gallon, today’s improving job market and strengthening economy are helping consumers cope better than during this recent economic downturn.

In the spring of 2011, consumers have adjusted to a new spending reality, but actions taken to cut down on spending habits, such as eating out less, buying less expensive grocery brands and doing more things at home are less prevalent compared to the summer of 2008 and are similar to the actions taken in the summer of 2010 when prices were well below $3.00 a gallon.

Trip compression, however, continues to dominate as a key strategy for 67 percent of households looking to save on high gas prices. And while this level is down from 2008 levels (78%), it is up four percentage points from last year. Additionally, nearly half of consumers (46%) will continue to seek lower priced gas stations and eat out less (45%) and over one-third (36%) will shop closer to home to offset high prices at the pump. Coupon clipping is also part of the gas-price offset strategy for 36 percent of households in 2011 – up four percentage points from 2008.

Another positive sign that the economy is slowly heading in the right direction is that U.S. automakers reported a solid April, with the big three auto manufacturers posting healthy sales gains – up an average of 22 percent. Small, gas-thrifty vehicles were not necessarily the biggest sellers.

Shop-to-Save Strategies Decline

One in five households (21%) say they are reducing spending to a great degree, which is down from one in four (26%) in 2008. However, with gas prices about $.90 higher per gallon than year a ago, this is an increase from 18 percent of households reducing spending to a great degree in 2010 – indicative of how some households are still feeling considerable pain at the pump.

Also in decline are saving strategies consumers deploy to lower costs: 21 percent say they are shopping more at supercenters, which is down eight and five percentage points from 2008 and 2010, respectively. Currently, 12 percent say they are buying larger economy sizes – down four percentage points compared to 2008/2010 and ten percent say they are shopping at warehouse clubs – down three percentage points from 2008/2010.

More and more savvy shoppers are taking advantage of incentive programs linked to grocery spending to buy gas. 28 percent of consumers say they are using their grocery shopper loyalty cards to save up to 10, 20 and 30 cents on a gallon of gas by redeeming points at participating gas stations. This savings is not only helping to take the pain out of the pump for consumers, but it is also helping to drive traffic for retailers.

What’s Next

With four out of six households saying they are combining errands to reduce their driving and control their gas spending, some retailers and manufacturers will feel more pain than others. Eating out less and continued interest in at-home and value-oriented activities is a sure sign that it is time to turn the volume up on product solutions and merchandising activities to capture sales from at-home consumption.

Manufacturers and retailers should offer consumers meal deals, recipe ideas, at-home entertainment options and tips & tricks for at-home personal care and in-home cleaning products. Retailers with gas saving promotions are in the driver’s seat; those without programs need to pull other levers to offer value – be it convenient location, value proposition or unique offerings, now is the time to tout those benefits.

With recent declining global oil prices and falling demand as U.S. consumers are driving less to cope, gas prices may fall about $.50 cents by Memorial Day, which would be a welcomed change. However, if gas prices remain elevated throughout the summer, chances are that consumers will react with greater severity – just like they did in 2008.

Increasingly, people around the world are focusing on their health and wellness, whether it is exercising more or watching what they eat.  In Latin America, Chileans are no exception, and new research from The Nielsen Company in Chile found that virtually every household in the nation (99%) has purchased light/diet products as part of that effort, with an average purchase frequency of almost every two weeks and an average ticket of approximately $4.40 (U.S.).

Looking beyond these numbers, Nielsen found three different levels of engagement with light/diet products:

• Intensive Buyers: the most frequent purchasers of light/diet products represent one-third of Chilean households but account for two-thirds of total expenditures in this category.  Typically, they buy these products more than 24 times a year.
• Moderate Buyers: these purchasers make up 32% of Chilean households and account for a quarter of the total category expenditure.  They buy these items 12-23 times a year.
• Occasional Buyers: these consumers buy light/diet products less than once a month.  They represent 35% of households but only account for 8% of total expenditure.

Intensive Buyers spend $192 (U.S.) per household annually on light/diet products, tripling the spending of Moderate Buyers and exceeding the spending of Occasional Buyers by 8.5 times.

Shifting focus from weight loss to overall wellness
When they were first introduced, light/diet products were primarily positioned as a way to achieve or maintain slimmer figures by controlling weight.  While that continues to be a big selling point for such products, the public’s interest in better health and wellness has made the category attractive to more people.

Chilean consumers are interested in light and diet products because they are more aware about their health benefits.  What’s more, when light and diet products were first introduced, they products typically had higher prices than regular products.  Now, for the most part, prices are essentially the same, making these products more accessible to all consumers including those in lower income groups.

The segmentation of buyers based on how often they buy light/diet products highlights the opportunities for both product manufacturers and retailers in gaining market share by tailoring marketing to the groups.

It is clear that while the light/diet category is attractive to more people, there remains room for significant growth.  Some segments are underdeveloped, and manufacturers can increase sales by knowing exactly how to target their marketing to specific groups.  Meanwhile, retailers can further enhance the sections where these goods are displayed to drive more traffic.

Universal Appeal
Virtually all online survey respondents in Latin America (96%) and Asia Pacific (92%) said they purchased H&B products, along with 90% of people around the world who made up the global average. But what prompts consumers to stock their cabinets with make-up, fragrances and personal care items?

For 44% of global respondents, it was the lure of the product’s promise. A pragmatic 69% of respondents said they were influenced by price, while 58% said they bought as a result of a personal recommendation. Magazine articles, Internet buzz and traditional ads all factored into the purchase equation as well.

Product samples helped about half of consumers along the buying path, as did the suggestion of a partner. But aside from price, the reason most consumers (65%) offered up for buying health and beauty products was the influence of their preferred brand.

Half of Asia Pacific respondents indicated that the Internet was a purchasing influence—the highest percent of any region. These consumers were also swayed by magazine articles (45%) and advertising campaigns (44%) more than other region. Conversely, European and North American beauty product choices were the least influenced by print and television ads, magazine editorial or the Internet and were most influenced by price; 82% of North Americans and 70% of Europeans agreed that price was a key determining factor.

Latin Americans said they were most persuaded by their preferred brand (72%) and free samples (60%). Middle Eastern survey takers reported the most balanced responses, giving fairly equal weight across all influencers. They were, however, least influenced by the product’s promise (36%) and most by their preferred brand (63%).

Channel Choices
Far and away, supermarkets were the format of choice for 60% of global respondents, with the drugstore/chemist/pharmacy a distant second destination at 39%, specialty stores in third place at 33% and the Internet trailing at 22%.

Asia Pacific shoppers scored the highest of any region (33%) to say they shop the Internet for health and beauty products—more than double Europeans (15%), Latin Americans (14%), North Americans (11%) and Middle Easterners (9%). Specialty stores were the destination of choice for 40% of Latin American and Asia Pacific shoppers and 95% of Middle Eastern shoppers say they buy health and beauty products from just two channels—supermarkets (56%) and drugstores (39%).

Mass vs. Premium: Looking Good Enough
A question for the ages: can mass market cosmetics successfully sell against more expensive, premium brands in such an image-intensive category tied to personal vanity and ego? Yes, although the degree of success varies by product type. Global results for hair products showed that 81% of online respondents think mass market hair products are a viable alternative, while 75% find mass market skincare products acceptable, and 72% believed mass market cosmetics were suitable.

North American respondents were the most positive about mass-market health and beauty products, viewing them as good substitutes, while Middle Eastern and Asia Pacific survey takers were the least enamored with the off-market products.

Region Round-Up
In almost all Latin American countries included in this survey, sales for personal care products reported volume increases during the latest rolling year ending June 2010 versus year ago: Chile +7.2%, Argentina +4.7%, Brazil +3.4%, Mexico +3.4% and Colombia +3.3%. Only Venezuela showed a negative trend, declining 2.5%.

In the U.S., dollar growth for the health and beauty department for the year ending July 2010 is flat (0.3%) and units have declined 2% as the economy is driving consumers to make tradeoffs and buy less. However, sales in the June and July 2010 period are improving as retailers are raising prices to enhance margins. In Canada, rising prices have fueled an increase in health and beauty (excluding baby and OTC) dollar sales of 3.2%, which outpaced the total market (+2.6%) while units were flat.

In Asia, consumers started to switch back into purchasing personal care, healthy and more premium products in the second half of 2009. This trend is expected to continue with the improving consumer confidence in the region.

The never-ending quest for beauty and perfection bodes well for the H&B sector. In countries that have emerged from the recession with vigor, the sector is likely to thrive. Meanwhile, in those regions where the recovery is still shaky—or in doubt altogether—health and beauty product manufacturers and retailers need to know exactly what’s important to those consumers: value for money and high quality products that enable them to look good, despite life’s pressures.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with consumption data by market.

It was the rare household that didn’t change spending habits over the last 18 months. Faced with unemployment (or even the prospect of it), higher expenses and crushing debts, consumers around the globe used a number of tactics to stretch their money further to get the most bang for the buck.

The Nielsen Company conducted an online survey in March 2010 of more than 27,000 consumers in 55 markets from Asia Pacific, Europe, Latin America, North America and the Middle East/Africa (consisting of countries from Saudi Arabia, Pakistan, United Arab Emirates, Egypt and South Africa) to get a better sense of the steps being taken to save money in view of uncertain economic conditions.

What’s more, while recovery has taken hold in some regions (Asia Pacific and Latin America in particular), in other regions it has been tentative. Regardless, one thing remains clear: habits picked up during the recession are likely to survive even after economic recovery is in full-swing.

Value Strategies Help Savvy Consumers Save
In addition to a shift toward private label products, global online survey respondents saved money on household expenses in a number of ways, including:

• Buying items on sale (a 57% global average)
• Using coupons (40%)
• Shopping at value retailers (37%), such as supercenters and dollar stores
• Purchasing value packs (35%)
• Shopping close to home/work (25%)
• Stocking up (22%)
• Switching to cheaper health and beauty products (18%)
• Purchasing smaller packs with a lower unit price (17%)

One in 10 consumers in the online study reported no belt-tightening practices in their household.

North Americans led the world in cost-cutting strategies and adopted a host of budget-shrinking tactics. Seven in ten respondents said they bought items on sale, which is 13% more than the global average. Both Asia Pacific (46%) and North American (59%) consumers indicated they presented coupons at a checkout, outstripping the 40% global average.

In the U.S. in particular, manufacturer coupon redemption hit record highs in 2009 after years of no growth or declining growth. Meanwhile, Canadians continued to shift spending to discount or value retailers—now accounting for over one-third of total grocery sales—as their neighbors to the south have done so over the past several years.  Whether prompted by high gas prices or environmental sensitivity, North American respondents were also the most likely to say they shop in stores close to home or the office.

Value packs and stock-up shopping trips were a popular option across regions, with consumers in Middle East/Africa/Pakistan and Europeans lagging slightly behind the global benchmark. Middle East/Africa/Pakistan consumers also had the lowest incidence of using coupons (11%), shopping on promotion (42%), patronizing value retailers (21%) or stocking up to save (12%). The use of coupons as a promotion tool is not a popular marketing method in the region. Additionally, the dearth of established retailers in the Middle East and Pakistan explains the low incidence of patronage.

Roughly one-quarter of Latin (23%) and North Americans (24%) said they sacrificed beauty at the budget altar by switching to cheaper health and beauty products. Asia Pacific and Middle East/Africa/Pakistan respondents were less likely than average to say they made such a switch to save money (15%).

Cash is King; Dining In Trend Heats Up
Consumers found other ways to cope with the cash crunch as well. While 19% of the regions admitted to using credit cards more often, North America at 10% and Europe at 11% were well off that global average pace. Further supporting the belt-tightening approach, 31% of North Americans and 30% of Latin Americans said they recorded less credit card utilization versus the prior year, while only 20% of Europeans did, despite a precarious economic picture.

Foregoing credit was just one consumer coping mechanism. Based on survey findings, restaurants in some countries must be hungry for clients, as more than half of survey respondents said they ate out of the home less often than the year before. The dine-in trend was particularly strong in Latin America, North America, Europe and the Middle East.

Roughly one-fourth of residents of Indonesia, China, the Philippines, Hong Kong and India indicated that they were eating out more often than usual. Asia Pacific as a whole showed a 5% higher rate for eating out than the global average.

Dining out cutbacks appear to correlate with private label purchase patterns, with five of the top 10 “dining out less often” countries also landing on the top 10 “purchased more private label” list: Greece, Ireland, Spain, Turkey and Portugal—countries that continue to face significant economic challenges even as other parts of the world resume growth.

Note about online survey methodology
While online survey methodology allows for tremendous scale and global reach, it provides the perspectives on the habits of existing Internet users, not total populations. Where noted, the Nielsen Global Online Survey data is supplemented with consumption data by market.

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.