Overall, Canadians were more confident than their neighbors to the south, with more positive outlooks regarding job prospects, the state of their personal finances and their willingness to spend.  With respect to jobs, 46 percent of Canadians say that local prospects will be “good” or “excellent” over the next 12 months, compared to just 28 percent in the U.S.  More than half (55%) feel that the state of their personal finances will be “good” or “excellent,” up three points since July and compared to 51 percent of Americans who said the same.  More than two-fifths of Canadians feel it is a good time to buy the things they want and need, compared to 33 percent of Americans. All of that said, a strong majority (82%) of Canadians feel that the country is still in a recession, despite the fact that the Bank of Canada announced that the recession was over.  Nine in ten Americans said that they felt their country was still in a recession.

In a sign that the consumer’s obsession with all things economic and recession is starting to recede, Canadians are once again showing concern with other issues such as work-life balance and health.  But despite these positive signs, Canadians remain cautious about spending.  Paying off debt is the top use for spare cash (with 39% saying that is their priority) followed by socking away money into savings (26%).  When they are spending, holidays and vacations is the top category (26%) with out-of-home entertainment (23%) and home improvements (20%) rounding out the top three.  Canadian men indicated that they are more likely to spend on outside entertainment and new technology, while responsible Canadian women are focused on paying off debt.

Read the full report.

With the nation seemingly emerging from recession, American consumers remain skittish about spending their money during this upcoming holiday season according to new research from The Nielsen Company.  Households continue to focus on “essential gift giving” such as staple consumables, candy, beverage/alcohol and entertaining at home, and 86 percent said that they expect to spend the same or less this year than last — with a 7 percent increase in those indicating they would spend less.  Overall, Nielsen is projecting that holiday sales will rise 0.03 percent this year, accounting for $90 billion in dollar sales.

“Given everything the consumer has absorbed over the past 12 to 18 months, the fact that we expect this coming holiday season to be flat in dollars can be viewed as a modest positive,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “Americans have undergone a fundamental change in how they spend their money, and the days of stretching finances to make purchases not deemed as necessary are over, at least for the time being.  That said, our research has shown that consumers are looking forward to loosening their purse strings a bit, but only once they feel more confident about the state of the economy and their personal financial situation.”

Update: James Russo Discusses Holiday Spending on CNBC

Other key findings from the research include:

• Traditional items such as apparel, toys and technology will be most popular categories, albeit at restrained levels and primarily sold in “value” channels.
• Products aligned with at-home entertainment such as cookware, kitchen items, bed and bath accessories and alcoholic beverages will do well.
• Gift cards are one category where consumers plan to spend more this holiday season, followed by toys and apparel.
• Value retailers such as dollar stores, online, discounters and club stores will attract the lion’s share of holiday spending as consumers minimize trips and search for the best values, while office supply, pet stores, home improvement and drug retailers are likely to feel the brunt of the economic slowdown.
• Some 20 percent of households said that they had no plans whatsoever to entertain at home or away from home during the holidays.
• Spending cut-backs are being driven by all income groups.

So how can retailers make the most of this season? They need to recognize that U.S. consumers are, first and foremost, seeking value and will start their holiday shopping well before Thanksgiving.  They should also reach out to their best customers and make them feel special and give them a reason to shop at their outlet during the season and into 2010.   Successful retailing has always been about delivering the right product at the right price and in the right place.  The difference now is effectively mining and communicating to the right consumer as an active participant in driving growth.

Chinese consumer confidence is higher in the East and North regions of the country versus the South and the West, and consumers in smaller cities (i.e., not Shanghai, Beijing, Guangzhou or the provincial capitals) are generally more confident than those in the largest cities.

“Chinese consumer confidence appears to have been boosted successfully through the government’s economic stimulus initiatives.  Additionally, many consumers in smaller cities appear to have been less affected by the downturn in the first place, so recovery is less of an issue for them,” said Mitch Barns, Greater China President, The Nielsen Company.

Half of Chinese surveyed said that local job prospects will be “good” or “excellent” in the next 12 months, compared to only 22 percent three months ago.  Nearly half of Chinese consumers described their personal finances as “good” or “excellent,” and more than 40 percent indicated a strong willingness to spend.  Saving for a child’s education continues to be a priority, with 42 percent saying that they would use spare cash for education.  Residents of the largest cities, however, indicated a greater desire to invest in the stock market or go on holidays versus residents of smaller cities.

“In this latest survey, we have increased the number of people that we interview so that we can now, for the first time, look at these data by region and by city tier.  The results are fascinating and it makes this an even more useful, insightful survey,” said Barns.  “China is a dynamic and diverse market.  By zooming in on regions and city tiers to take a closer look at Chinese consumers, we can more clearly see where the opportunities are within the country – and there are many.”

The middle of summer marks the beginning of the Back to School (BTS) season, as parents and kids across the country start to prepare to return to class rooms in late August and early September.  The excitement of school starting isn’t just felt by the kids – retailers also look forward to the season, as it’s an incredibly important time for the $2.5 billion office/school supplies category.  Additionally, with the economy mired in a steep recession this season, the BTS season will be closely watched for signs of a recovery in spending. Half of annual unit sales of some related products occur during the BTS period, accounting for 36-38 percent of annual revenue.

This year, as the US continues to be in the grips of recession, Nielsen is forecasting a dollar sales rise of 0.4 to 1.3 percent, to $2.17 billion, a pace below the growth achieved in 2008.  Unit sales will drop to 1.18 billion, down 5.5 percent from 2008.

In 2008, Nielsen predicted that dollar sales of BTS supplies would rise 2.6 percent; the actual result was 2.4 percent.

“Unlike the winter holidays, back to school shopping, to some extent, is not viewed as discretionary by consumers. Kids must have certain items at the start of the new school year.  That said, we expect sales to increase at an extremely modest level in dollar terms in 2009.  The nation is firmly in the midst of recession, so consumers will spend their money carefully, as they have for the better part of a year, and focus on purchasing the essentials,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company.

One peripheral category which is forecast to gain is bottled waters. Often considered a  discretionary item, bottled water is consumed as a staple, and is expected to out-pace juice sales with growth of 3.57%.

“The winners this season will be retailers who offer strong discounts and appeal to the consumer’s desire for savings and value. Look for gains from supercenters, dollar stores, drug stores and to a lesser extent, club and grocery stores,” said Russo.

Back-to-school categories include office/school supplies, artist/hobby supplies, scissors and tape/glue.  Retail outlets covered by Nielsen are food, drug and mass merchandisers, including Walmart.  Figures do not include dollar stores, online sales or office supply retail chains.

Doug Anderson, SVP, Research & Development, The Nielsen Company

SUMMARY: While the World is struggling with the economic hard times of late, the future poses a new set of challenges that do not stem from arcane financial investments, but from simple demographics. An aging population, a declining birth rate, and growing ethnic diversity will change the face and the spending behavior of consumers in the U.S. Gaining share among population groups that most marketers do not reach today—older and ethnic consumers—will require shifts in focus, tactics, and products.

The recession of 2007–2009 has placed a great deal of strain on marketers and retailers of consumer products. Price and value have become more and more important, challenging marketers to rethink product and distribution. Everyone just wants things to get back to normal, but will they? While discretionary spending will return to moderate levels as markets rebound, the economy of the United States—as well as the rest of the more developed World—is well on the road to longer-term difficult times. The economic hard times to come do not stem from the misuse of arcane investment instruments that can take a degree in calculus to understand, but rather from simple demographics. The emerging marketplace will be very different than today, and filled with wide-ranging challenges.

Tectonic demographic shifts

Since the early 1970s, birth rates in the United States have been at least 40% lower than at the heights of the Baby Boom. When a falling birth rate is combined with a very large generation like the Baby Boom, the effect is a gradual aging of the population. The median age of the population increases as the large group grows older because there aren’t enough babies being added to balance them out. For much of the large group’s life cycle, they are typically a boon to the economy—especially when they reach their prime economic productivity years (usually from the early 40s into the middle 50s). However, as this large group continues to age, they stop being an economic asset and begin to become a burden—as the Baby Boom generation will become over the next several decades.

Aging populations place stress on an economy in two ways. First, if the generation is sufficiently large, retirement can lower the size of the labor force—particularly its most skilled and most experienced component—lowering overall economic productivity. Starting in the next two years until 2030, the number of persons who reach the retirement age of 66 will increase by over 100,000 each year throughout the Baby Boom retirement years. For many of the early years in that period, the number of persons who reach the age of 19 and enter the labor force will actually decline by more than 40,000 per year for the next decade.

The second impact of an aging population is perhaps larger—the costs incurred by society to care for a large number of retirees. Social Security will begin to run at a deficit in about eight years and will deplete its trust fund by 2041 unless changes are made now. At that point, money coming into the program would only cover about 70% of the money paid out each year. Medicare and Medicaid will deplete their trust funds in only about ten years and will be the largest component of all U.S. government spending by 2030.

Additionally, many private pension plans are currently under-funded, and given the current economic difficulties, may not have time to recover adding more people to the public dole. The Baby Boom generation has suffered a disproportionate share of the $11 trillion in lost market equity and $3 trillion in lost real estate value from the current recession and they will find it near impossible to retire and sustain their current standard of living—particularly the 38% who will be eligible to retire in the next ten years.

Future impacts

Nielsen created a set of long-term demographic and economic projections that model the potential impacts of the aging U.S. population. The projections make use of five groups of households (Struggling, Lower Mid, Upper Mid, Affluent and Wealthy), each accounting for 20% of total, using an income-to-poverty ratio.

Households in the Struggling group have incomes that are no more than 1.5 times the poverty threshold. For a single-person household under the age of 65, this equates to having a yearly income less than $15,732. For a six-person family with four children, this means having a yearly income less than $40,407. All together, the Struggling group has a median income of $12,201.

From now until 2020, the projections show that the Struggling and Lower Mid groups will be the only ones to gain share, with the Struggling group growing by over 10%. The lower affluence groups will grow at the expense of all other groups. By 2050, the projections show that the Struggling group will have grown in size by nearly 70%, pulling households from all other affluence groups—particularly those in the middle.

For families with children, the growth in Struggling households will be even stronger. By 2050, nearly one-third of all families are expected to fall within the Struggling group. In the same timeframe, nearly 40% of all households whose household head is over the age of 65 are expected to fall into the Struggling group.

A shrinking pie

As the Baby Boom ages, and birth rates remain low, household sizes will decrease. Many aging Boomers will live alone or with one other person. The number of children per family will get smaller. Add in growth in the most economically-disadvantaged market segments, and pressures on per capita spending will be like nothing the U.S. has experienced in modern times. Between now and 2020, the U.S. will experience very minor growth in per household spending. But after that, spending on consumer products is expected to fall—and will continue to fall throughout the projection period in constant dollars.

Marketers in the U.S. and throughout the World are not accustomed to a shrinking pie, but rather are used to thriving marketplaces with robust spending growth. Broad marketplace growth enabled brands and categories to grow organically without increasing penetration or buying rate. In the near future— and for decades to come—this growth gravy train will be off the tracks. Growth will only come from increasing share against competition. The new consumer marketplace of the U.S. will bring new relevance to the phrase “share wars”.

Opportunity knocks

Over the next four decades, the old U.S. consumer mass marketplace will continue to split into distinct groups with very different product needs. By 2037, nearly one in three households will be headed by a person over the age of 65. Of these households, nearly three-quarters will be non-Hispanic white, nearly half will be single persons, and the majority of persons in the 65+ age range will be women. Despite their economic woes, the Baby Boom will still be a strong consumer market and will provide substantial opportunity for marketers willing to design and market products to an older consumer franchise.

On the other side of the divide will be America’s new families. Because birth rates are low, these new families will be smaller on average than those who have come before. However, their most distinguishing characteristic will be their ethnic and racial makeup. In only a few short years, by at least 2025, over half of all families with children will be multi-cultural. Less than half will be native born non-Hispanic white. Within this multicultural marketplace, Hispanics will be the largest group, but Asians, African and Caribbean blacks, and others will make up significant shares. Though also beset by economic woes, this group will provide substantial opportunity, but only for marketers who can navigate diverse cultures, tastes, and languages.

The future of the U.S. is a challenging one for marketers and retailers of consumer products. Gaining share among population groups that most marketers do not reach today will require shifts in focus, tactics, and products. Successfully reaching new markets like multi-cultural families offers a new set of opportunities. The breakdown of the mass market and the mass media that once served it, combined with certain economic difficulties, will make for challenging new times ahead.

“Consumers worldwide appear to be in a holding pattern and we see evidence that consumer spending might be positioned to turn around,” said James Russo, Vice President Global Consumer Insights at Nielsen.  “There is no doubt that conditions remain tough for global consumers, with continuing widespread areas of weakness, but levels of decline seem to be moderating.”

The Economic Current ranks national economic performance on a scale of one to five, with one representing very strong growth (over 5%). India and China continue to be the only countries that scored a one in February, while Canada and Russia scored twos (growth between 1% and 4%). The U.S. continues to score a four.

Watch James Russo discuss saving rates and additional findings of the Nielsen Economic Current.

Additional findings include:

• Consumers in most countries are spending more per shopping trip, but cutting back on discretionary spending, such as entertainment outside of the home, buying new clothes and switching to cheaper grocery brands.
• There are noticeable shifts to value channels such as discount stores that provide high-volume, low-profit offers, even in Brazil, Russia, India and China.
• Consumers are purchasing more store brands, especially in Spain, Germany and Canada.

“There are a lot of similarities among consumer spending globally. No matter the border, consumers are reigning in their spending. In this volatile market, retailers and manufacturers need to know how to maximize their public exposure and understand the needs of consumers at a granular level to survive,” said Jonathan Banks, Business Insight Director for Nielsen in Europe.

Download the latest Economic Current.

Download the full press release.

Todd Hale, James Russo, Jonathan Banks and Jean-Jacques Vandenheede, The Nielsen Company

SUMMARY: Are consumers shopping more often? Spending less? Buying more store brands? Shifting channels? How are retailers responding? The Nielsen Economic Current tracks trends in 11 linchpin countries, indexes financial health and predicts growth trends on critical measures including GDP, consumer spending, inflation, market value and volume indices.

According to the Nielsen Economic Current (NEC), we can expect a global slowdown in 2009 gross domestic product to a lackluster 0.4%, with significant declines in North America and Western Europe. Post-recovery, NEC predicts that an ailing economy will recuperate below potential, only to plateau at a level below past rebounds. Fortunately, the fast-moving consumer packaged goods industry is holding its own, with price increases offsetting negative volume trends and private label benefiting from frugal shoppers.

The monthly Nielsen Economic Current provides global, regional and country-focused insights into consumer and retail trends around the world, including topics such as: market index volume expressed in units and country currency; retail channel shifting; shopping frequency and spending; and overall consumer confidence. NEC leverages the vast Nielsen warehouse of global data about tens of thousands of products bought by consumers in almost every nation on earth. The NEC was developed in partnership with UBS, one of the worlds leading financial firms.

The influential eleven

To construct this current economic overview, Nielsen tapped into its unparalleled database of consumer packaged goods transactions across relevant channels and added data from a carefully selected set of eleven bellwether countries whose economies serve as leading indicators of economic trends: United States, Canada, France, Germany, United Kingdom, Italy, Spain, Brazil, Russia, India and China.

A proprietary global economic index ranked by country for each category facilitates growth comparisons and enables managers to shift office conversations from gloom and doom scenarios to opportunity identification based on consumer confidence measures and shopping patterns.

Global umbrella

At the most macro level, the December 2008 NEC Global Top-Line summary noted a slowdown in global unit sales as the recessionary impact intensified. Conversely, dollar sales growth proved more resilient, in excess of 5%, as commodity prices drove value sales. Inflation levels are expected to continue to fall, with deflation now becoming another concern in some countries.

Thrifty consumers around the world are stocking up on store brands to stretch available funds. Another indicator of penny-pinching behavior is the continued shift toward value channels that reliably deliver savings. Despite the consumer hunger for bargains, most retailers have not dialed-up in-store promotions in response to this demonstrated need.

Perhaps prompted by higher than average gas prices, shoppers are bundling trips and shopping less frequently than in the past. While the number of trips may be dwindling, the register rings are increasing, although the ticket size is beginning to show some signs of weakness.

Overall, the Nielsen Global Consumer Confidence ranking is very negative, plummeting to recessionary levels and expected to remain in the cellar for the near future. Only 9/52 (3/11) countries record a positive confidence index whilst  44/52 (9/11) scored lower in October than in April.

Cross comparisons
On a country-by-country comparative basis, the news varies widely. On the Nielsen Market Index/Volume, a measure of unit sales changes, four countries reported negative results in the -1% to -4% range (United States, Canada, France, Italy), five countries recorded virtually no change (Germany, United Kingdom, Spain, Brazil, Russia), and two countries outperformed their peers with better than 5% growth (India, China).

Shifting the view from volume to value or currency, the results were much more positive, with nine of 11 countries experiencing growth, five countries exceeding 5% and four countries in the 1% to 4% range. Only Germany and Brazil ended up with no-growth scenarios.

Regional insights
Aggregating from individual countries to regions, the NEC summarizes findings into two helpful categories: what you need to know, and what to do now that you know it. The BRIC ( Brazil, Russia, India and China) regional summary for December notes that Brazil is an outlier in the group with low volume growth and low inflation, where consumer confidence is on the rise from a low baseline.

Conversely, India’s results indicate waning consumer confidence dropping from a high baseline, perhaps associated with an inflationary trend that peaked at 13% in August. Anticipated GDP growth will be modest for the region, with the exception of China and India, which could see increases in the 6% range.

Management directives
Against that background, the NEC suggests that marketers plan for the long term by investing to shore up brand and banner equity and spending to gain a deeper understanding of consumer motivation. Given ever-tightening budget constraints, the need for efficient, precisely targeted marketing becomes even more pronounced.

A bold move that can pay dividends under these market conditions would be to launch new products with a demonstrated ability to meet a consumer need, deliver on the concept promise and enter the market with appropriate marketing support. It’s a chance to grab share of mind and wallet while competitors sit on the sidelines.

The difficult economic conditions have forced most Americans to think about how they spend their money, so it is little surprise that 63 percent of those surveyed said that they had changed their spending habits.  26 percent said that they had cut back TV-related spending, primarily by purchasing fewer video on demand and pay-per-view movies/events (16%) or making fewer purchases and rentals of DVDs (19%).  11 percent of people surveyed said that they had altered their cable/direct satellite subscription package in some way, while 3 percent said that they had cancelled their subscriptions altogether.

Overall, more men and women aged 18 to 34 said that they had cut back on TV-related spending, and that same age group also cancelled their cable/satellite subscriptions at higher rates than other age groups. Households with kids changed their spending habits slightly more (66%) than the group as a whole, as did African-American, Asian and Hispanic Households (70%, 75%, 77%, respectively).  Hispanics also cancelled their cable/satellite service at a much higher rate than other groups, with 13 percent of those households ending their service versus the overall average of 3 percent.

“While some kinds of discretionary spending, such as travel and car and clothing purchases, have taken a significant hit, TV-related expenses have been spared significant cuts at this point.  Consumers may reduce the number of movies they rent, or perhaps downgrade their service, but overall it appears that TV continues to be almost a necessity rather than discretionary,” said Pat McDonough, senior vice president of Planning Policy & Analysis at Nielsen.

To read more about this and other related data, click here for Nielsen’s SportsQuest^TM Survey.

Nielsen’s holiday retail forecast predicts a 4.7% gain in dollar sales over 2007.  Unit sales, however, are expected to be virtually flat (-0.8%) versus a year ago.

The forecast includes projected sales at food stores, drug stores, mass merchandisers, and convenience stores, across 125 product categories tracked by Nielsen.

With the economy in turmoil, the 2008 holiday season will be closely watched for indications of declining consumer spending.  Declines in consumer spending were last recorded in the fourth quarter of 1991, during the recession of the early 1990s.

Go behind the numbers: read NielsenWire’s Q&A with James Russo, co-author of Nielsen’s holiday retail forecast.

View in depth data on holiday retail sales projections and consumer spending expectations.

View the full press release.

Read coverage of Nielsen’s findings in Convenience Store News and Adweek.

Submit questions about the report to Nielsen forecast co-authors, James Russo and Todd Hale, by commenting below.

NielsenWire recently spoke with the co-author of Nielsen’s holiday retail forecast, James Russo, Vice President of Food Sector Marketing, Nielsen.

NielsenWire: What is the forecast for 2008 holiday shopping season*?

James Russo:
All consumer, economic, and trade indications point to a flat-to-declining holiday selling season across the core consumer packaged goods (CPG) categories that Nielsen tracks. While we forecast, in dollar sales, a gain of 4.7% vs. a year ago, we also predict a decline of -0.8% in unit sales. This is directly tied to the current volatile economic environment, during which close to 33% of households across all income levels are projected to spend less this holiday season, according to a Nielsen Consumer Household survey conducted during the third quarter of 2008.  But despite this tough economic climate and slowing sales, there are opportunities for growth. Segmentation of consumers, channels, and categories will be critical to uncovering those opportunities.

NielsenWire: What might take marketers and retailers by surprise this season?

James Russo:
In the past nine months, consumers have found ways to cope with the current economic situation, as indicated by the following trends:

-”Trading Down,” whether from higher-end retailers and brands to value-retailers and brands, or from vacations to “staycations,” is the new norm.

-Consumer decisions are failing into either “necessary” or “discretionary” spending.

-At-home entertainment is resurgent.

-Consumers are seeking and responding to value solutions, as evidenced by the reemergence of coupon activity as an effective promotional tool.

Surprisingly, consumers are continuing to purchase Health and Wellness items, as evidenced by double-digit gains across products with antioxidant, organic, or whole grain claims.  Note, however, that consumers are increasingly purchasing these products from value oriented grocery stores, supercenters, and club stores.

Look also for a strong year from online sites (especially on Cyber Monday), superstores, and club and dollar stores.  Consumers are increasingly shopping at these retailers as they stock up and pursue value.

And although it is shrinking, there is still a consumer market for “affordable luxuries” and premium based consumption.  In this climate, “trading up” behavior will be less extensive, however consumers, especially during the holiday season, may opt to buy nicer bottles of wine, serve premium candy, or even purchase that new mobile phone. The challenge is to understand consumers’ motivations and shopping patterns at an increasingly local level. 

NielsenWire: What trends should consumers be on the look-out for this season?

James Russo:
CPG manufactures and retailers recognize the strategies that resonate with consumers – but, execution will be the challenge. We anticipate heavy promotional activity to drive traffic in a slowing economy, however, look for organizations to also tap into the increasing consumer desire for “at home” experiences.  This, more traditional holiday message will be delivered through advertising and marketing messages where retailers and manufacturers will push their value solution for consumers. It’s an opportunity for manufacturers and retailers to engage with shoppers, communicate their understanding of current financial pressures, and deliver their value propositions — all while securing brand and/or retailer loyalty. With over 2.5 billion customers ready to shop this season, according to Nielsen In-Store, manufacturers and retailers need to prepare for the challenges that accompany increasingly savvy consumers.

NielsenWire: How did you assemble this year’s forecast – what data did you look at and how did you analyze it to arrive at your final conclusions/predictions?

James Russo:
The Nielsen Consumer Industry forecast is different from any other industry forecast, as it is perhaps the most comprehensive. Our Business Consulting Group conducted an extensive analysis of 125 core CPG categories, in order to understand their current and historical trends during previous holiday seasons.  Then, they analyzed existing trends, along with current and expected economic conditions, to arrive at a macro-level result that delivers foresights to support our clients’ holiday and 2009 planning efforts.

NielsenWire: How accurate is this year’s holiday sales forecast?

James Russo:
It’s too early to gauge our forecast, but we are firm in our commitment to the findings and will be delivering mid-holiday period updates of our forecast, as well as insights in what consumers really think about holiday advertising.  Nielsen IAG, which measures consumer engagement with television programs, national commercials, and product placements, will also deliver an exclusive real-time summary of the most effective holiday commercials, with a focus on CPG categories and retailers.  Stay tuned on NielsenWire for these forecast updates.

NielsenWire: Looking beyond the key holiday selling season, what insights can you share that will assist marketers as they plan for 2009?

James Russo:
Millions of consumers are set to enter stores and shop online this season – they do so while grappling with historic levels of household financial pressures. The tactics and strategies CPG companies develop now, to weather the holiday retail season, will not only provide benefits in the short term, but also during the long term, as consumer behavior in the U.S. undergoes fundamental changes. It is our recommendation to utilize the economic slowdown as a time to build competitive advantage and secure your position going forward.  A few key points to keep in mind:

-Value is clearly the main motivator for consumer purchase decisions — whether it’s channel selection, product choice, functionality, or price. 

-Necessary vs. Discretionary spending will drive consumer decision-making.  Food, personal care and household basics – not nice-to-haves – will drive strong sales.

-Expect widespread “Trading Down”: consumers will move from higher-end retailers and brands to value-retailers and brands; from fresh segments to canned & frozen varieties.

-As manufacturers and retailers look to control shipping costs, a local sourcing trend will continue.

-Look for increased levels of at home consumption — whether in food or entertainment.  Products and Services that deliver on this messaging will succeed.

-New Usage patterns are emerging: skipping meals, washing clothes less often, watering down cleaning solutions, skipping medications or taking half doses.

These are unprecedented economic times, with unique challenges and opportunities.  Now, perhaps more than ever, the ability to understand your consumers and specifically what is driving their behavior will ensure success during the coming holiday season and beyond. The steps you take now will not only assure success in the short term but, more importantly, position your organization for long term growth.

Read Nielsen’s holiday retail sales forecast.

*Nielsen’s Holiday Sales Forecast includes sales during the eight weeks in November and December in food stores, drug stores, mass merchandisers, and convenience stores. 

Submit questions about the report to Nielsen forecast co-authors, James Russo and Todd Hale, by commenting below.