Read the corresponding presentation: Consumer or Consumed.

More video and presentations available at Consumer360.com.

Restraint will be the new mantra among consumers, according to the Nielsen Global Consumer Confidence Survey. But, that doesn’t mean they won’t start spending again in the near future.

Respondents to the poll conducted in April, across 50 countries making up 86 percent of the GDP, said they would continue to focus on fiscal responsibility. Yet, “they will allow themselves some of those little indulgences,” said James Russo, vice president, Global Consumer Insights. “Perhaps pent up demand will play itself out and they’ll take that vacation they put off, go back to casual dining and increase out of home entertainment activities such as movie going.”

In April, 56 percent of consumers said they were spending less on new clothes. However, only 22 percent said they would continue to do so with an economic recovery predicted by year’s end.

More than half (53 percent) also cut down on out-of-home entertainment, still only 20 percent said they planned to maintain this behavior. And, while 45 percent of respondents shied away from take away meals, only 24 percent plan on avoiding these more expensive meals moving forward.

Still, consumers clearly indicated that they would remain focused on savings past the recovery. “A whole new value system has emerged,” said Russo. “One of casual restraint. There is a focus on fiscal responsibility and budgeting, but that doesn’t mean there isn’t a market for indulgences. I don’t mean diamond jewelry, but moderation will be key and you may see consumers begin to trade up and move back to mainstream retailers.”

One behavior that will not change as drastically is trying to save on gas and electricity. Slightly more than half of respondents (51 percent) said they did so in April. Forty percent of consumers said they would continue to keep an eye on such services. The same holds true with the telephone company with 34 percent currently acting with restraint and 21 percent looking to do so moving forward.

Nielsen conducted a similar study in October and it proved telling. From Oct. 2008 to April 2009, consumers across 15 behavioral segments followed through on their plans to cut back on discretionary purchases while increasing levels of savings. For example, in April, most of the 40 percent of consumers who said they would delay upgrading technology followed through with their promise. More than a third (34 percent) said they’d use their car less-29 percent ended up doing so. And 33 percent said they’d cut down on vacations and delay replacement of major household items. In both instances, 34 percent of consumers actually did.

Collaboration is the theme vividly painted at The Nielsen Company’s Consumer 360 morning kick off – as attendees found themselves consumed in data illustrating a continuously changing consumer mindset, fed by an ongoing shift in consumer psychology. And the message was clear from the start: collaboration at the retail-vendor level will be key the successfully navigating this challenging, changing landscape.

The grocery industry, indeed all of retail, is caught in the turmoil described in David Bowie’s 1971 classic “Changes.” Ch-ch-changes…turn and face the strain…Ch-ch-changes…just gonna have to be a different man. And while Bowie may have focused on the compulsive nature of artistic reinvention, the retail industry is focused now on its own reinvention – and that of today’s consumer.

Almost as if echoing Bowie’s own theatrical presentations, The Nielsen Company collaborated with Infinia Group to create a multi-media experience, entitled “Consumed: The Economy Hits Home.”

The dynamic learning platform brings guests into the minds of consumers with a series of video screens – streaming messages, visions, pictures, thoughts and observations, and of course, cutting-edge Nielsen data — combined to paint an exhibit of Mark Leiter (President, Professional Services) and John Lewis’ (President & CEO, North America of Nielsen Consumer] analysis Consumer or Consumed: Achieving Clarity in an Uncertain World.

Viewers of Consumed literally walk through Nielsen’s data and the consumer mind, sharing the latest perspective on how macro forces in today’s unpredictable economy are shaping consumers’ attitudes and behaviors. The fact is that today’s consumer is stressed, but the fact still remains that consumers are still actively shopping, buying and using a wide range of essential products. How the industry chooses to move ahead in the most productive manner is critical.

“Navigating through this new landscape requires bold leadership coupled with a sophisticated, analytical edge, one that allows you to see around the next corner and spot the many new options for growth as quickly as possible.”

Consumed spotlights nine chapters or elements to navigate- Contrast, Changes, Coping, Challenges, Channels, Choices, Competition, Clarity and Curiosity. In a blitz of media messages, the participant’s vision becomes clear – change is inevitable and welcome. The mission now is to get close to our consumers as an industry, understand and service their needs.

Key points include:

• The American dream is enduring, although that dream was just heavily edited.
• Most Americans can still afford the essentials: food, clothing and shelter.
• Living a healthier lifestyle isn’t a passing fad or fashion.
• Consumers are creatively redefining the media landscape.
• Long-term demographic forces will continue to created unprecedented growth opportunities.

Nielsen’s Jeff Gregori Discusses the Impact of Dollar Stores in the Uncertain Economy

Dollar stores are small to mid-size stores that sell an assortment of CPG products, ranging from household cleaning products to food, usually at low prices. Originally taking their name from the fact that most products were priced at or below one dollar, today’s dollar stores offer products at a variety of price ranges, with an average of only 23 percent of products at or below the one dollar price point. Even so, the continued focus on comparatively low prices and value is drawing shoppers from all income levels. According to Nielsen, an estimated 65 million U.S. consumers shopped at dollar stores in 2008.
“The troubled economy and rising costs in healthcare, education, and food have caused everyone — even those with high incomes — to rethink where they purchase basic household goods,” said Jeff Gregori, vice president, Retail Services, The Nielsen Company. “Five years ago, shoppers weren’t sure what they would find in a dollar store. Today, dollar stores are delivering more consistent selection and value, and consumers are shopping dollar stores more regularly to fulfill their basic CPG needs.”

The Typical Dollar Store Customer
Despite the increase in spending among high and middle income shoppers, low income shoppers are still the primary dollar store customer. According to Nielsen’s research, 45 percent of dollar store sales are from low annual household incomes (below $30K), 47 percent from middle incomes (between $30K and $99.9K), and only eight percent from high incomes (greater than $100K).
The most loyal dollar store customers tend to have low incomes and live in small towns and rural areas or in urban centers. Senior couples, senior singles (particularly widows) and younger families with children are more likely to shop in dollar stores only occasionally, relying on other retail channels to meet the rest of their household needs.

A Destination for Everyday Goods
In terms of products, dollar stores have become a regular shopping destination for everyday household staples. Among those who regularly shop at dollar stores, the most commonly purchased household items include paper goods, such as napkins and paper towels, detergent, trash bags, and cleaning and laundry supplies. The most common edible items are candy, snacks and cookies.

“With more shoppers having positive experiences at dollar stores, there is a significant opportunity for dollar stores and CPG manufacturers to build loyalty and expand into new product categories, such as food and beverages and select health and beauty care,” said Gregori. “There is also a potential growth opportunity in exploring dollar store private label offerings in both edible and non-edible products.  The challenge for dollar stores and CPG manufacturers is to get the product mix right to meet the needs of their traditional customers as well as new customers with higher incomes.”

[click to enlarge graph]

“The recession and the resulting uncertainty it has created among Americans has prompted most consumers to look at every dollar they spend,” said Pirovano. “At this point, it appears that cost beats the potential benefits of organic products when shoppers head to the grocery store.  It will be interesting to watch if sales of organic products rebound along with the economy, or whether that trend will be a victim of the vast changes affecting consumer behavior.”

Across 114 categories representing more than 99 percent of all department sales Nielsen monitors, six categories had price increases of greater than 15 percent over a year ago.  38 categories had price increases of 0 percent to 4.9 percent, while 11 had price declines. The top five categories with the largest price increases over the course of the year:

• Dry vegetables & grains 25%
• Flour 23%
• Jams, jellies & spreads (including peanut butter) 19%
• Car accessories 19%
• Pet food 16%

Higher commodity prices played a role in all of the food categories, while higher crude oil prices drove increases for motor oil in the car accessory categories.  Meanwhile, the following categories decreased in price:

• Fresh eggs -12%
• Milk -8%
• Candles & Incense -5%
• Light bulbs and telephone accessories -3%
• Non-carbonated soft drinks -3%

In the four week period ended January 24, 2009, unit prices across the store were up 5.5 percent – exactly the same as the 2008 Consumer Price Index calculated by the U.S. government.

“U.S. consumers would certainly benefit from lower prices.  But retailers should be careful with how far they push their manufacturer partners to lower prices. If they simply push for lower prices without planning for the right lower prices, they may find it extremely difficult to grow same-store sales this year,” said Todd Hale, Senior Vice President, Consumer & Shopper Insights at Nielsen.

Read the entire article about pricing trends in the lastest edition of Facts, Figures & the Future here.

Categories that drove the highest sales spikes were musical instruments and accessories, with more than half of the purchases for the year made in the last eight weeks of 2008.  Women’s and children’s fragrances, baking supplies and computer electronics products were also favorites.

Perhaps anticipating spending more time at home in the coming year, 10 percent of all homes bought new home entertainment equipment, with TVs accounting for 35 percent of those purchases. Almost two-thirds of those TVs were high-def units.  Video game consoles added up to 18 percent of entertainment equipment purchases, while DVD players contributed an additional 11 percent of sales.  VCRs continued their slow march to extinction, comprising less than 2 percent of sales.

DVD sales fell 14 percent in the last eight weeks of the year compared to the same period in 2007. Meanwhile, box office receipts climbed 11 percent to $1.655 billion during the holiday period with a number of holiday favorites hitting the big screen.

Read the complete review of holiday sales in the current edition of Consumer Insight.

• Market Index volume, in terms of unit and country currency change
• Retail channel shifting
• Shopping frequency and spending trends
• Overall consumer confidence

“Nielsen collects and analyzes data on tens of thousands of products around the world. As we were thinking of new ways to leverage this valuable resource, we thought it would be useful to summarize this information and create a monthly snapshot of consumer and retail trends across the globe. We expect that the Nielsen Economic Current will provide our clients and others with another valuable tool for evaluating these trends at both a macro- and microeconomic level,” said Todd Hale, Senior Vice President, Consumer & Shopper Insights at Nielsen.

In addition to global and regional components, the Economic Current will follow trends in eleven countries representing over 70 percent of Global GDP.  Countries were chosen based on their importance to the overall global economy as well as countries where Nielsen captures a broad set of consumer, retail and media content. The countries which the Economic Current will track on an individual basis are:

• United States
• Canada
• France
• Germany
• United Kingdom
• Italy
• Spain
• Brazil
• Russia
• India
• China

Over the course of the next week, Nielsen Wire will feature brief summaries on key sections of the latest edition of the Economic Current. In the months ahead, new editions of the Economic Current will be supplemented with podcasts by senior executives and analysts who will provide further insight on global consumer trends.

For the complete report, click here.

It’s no secret that consumers nationwide have been forced to alter their behavior and spending patterns due to the weak economy in 2008. But, specifically, just how are they coping?

Based on its extensive research in the Consumer Packaged Goods and Entertainment categories, The Nielsen Company has some answers.

The New Mantra: If You Can’t Eat It… You Don’t Need It

Consumers are relying more and more on food staples and “value” items such as rice, noodles, and pasta, which dominated Nielsen’s list of the fastest-growing categories in 2008.

Dollar sales vs. a year ago:

• Bulk rice up 38 percent
• Ramen noodles up 30 percent
• Dry pasta up 25 percent
• Margarine up 21 percent
• Spam up 14 percent
• Canned vegetables up 9 percent
• Frozen vegetables up 7 percent
• Macaroni & cheese up 7 percent

Consumers Are Cooking From Scratch…

Noteworthy is an 8.2 percent increase in unit sales of Canning & Freezing Supplies.  Consumers are now growing and storing their own foods, as well as cooking from scratch rather than buying more expensive prepared “convenience” foods.

And Drinking More Alcohol

Consumers are buying more Wine (7.9 percent increase in unit sales) and Liquors2.6 percent increase in unit sales).

…But, Are Taking Their Vitamins

During these hard economic times, consumers are buying more vitamins (4.3 percent increase in unit sales).  In fact, for most of 2008, the vitamin category was the only Health & Beauty category to grow unit sales by more than 2 percent.  Nielsen predicts that vitamin sales will outpace other categories in 2009. As the U.S. population gets older and time-stressed families supplement less than desirable eating habits, vitamins will continue to grow unit volume, though competitive pricing may keep dollar growth lower.

However, the growth of organic products will slow dramatically. Unless organic marketers can do a more effective job of demonstrating better taste or concrete health benefits, expect the growth of UPC-coded organics to decline less than +10 percent.

“Going Green” Is Now Optional

“Going green” will be motivated more by cost-cutting than planet-saving intentions. Families on a tighter budget will be less likely to pay extra for environmentally-sustainable “green” products, but they will improve the environment as a by-product of cost-cutting strategies, such as saving money on gas by combining errands (lowering car emissions), and by purchasing less non-essential goods (producing less waste).

Consumers Are Trading Down… Or “Out”

Consumers are shifting dollar and unit spending in favor of less expensive private label/store brands as opposed to purchasing established name brands.  Store brands hit an all-time high in unit sales and dollars at the end of 2008.  Also, 48 percent of consumers consistently cited that they prefer larger sizes of items with lower pricing per serving over downsized products at historic price levels.

Nielsen predicts that national established brands will try aggressively to win back store brand business from consumers by using innovative packaging, unique flavors, and additional health and wellness claims.

50 percent of consumers are dining out less often, while more than 30 percent are “trading down” to less expensive restaurants.

…And Are Paying With Cash

Nielsen predicts that cash will be king, especially at convenience stores.  As credit card companies continue to raise fees on retailers, there is more motivation to offer discounts for shoppers paying cash.  Convenience stores will take the lead on cash discounts, as many already offer lower gas prices for cash purchases.  As other retail channels offer cash discounts, credit card companies may get enough pressure to reduce fees for retailers.

…But Still Love Going To The Movies, Especially 3D Movies

2008 box office sales are up 1.6 percent year over year, and 3-D cinema admissions will increase due to the growing availability of 3-D movies and theaters. While many families are likely to keep a tight rein on their entertainment budgets in 2009, Nielsen predicts that 3-D movie theaters might be the exception because consumers appear to love 3-D films.  Gross sales increased more than 60 percent in 2008 for 3-D films compared to traditional films due to higher prices and higher attendance.  There are already more than one thousand 3-D theaters in the U.S., and as many as eleven major 3-D movie releases expected to hit screens in 2009.

…And Downloading Music

Though overall CD sales are down 14 percent, consumers are digitally downloading music tracks at a feverish pace – up 27 percent, while sales of digital albums are up 32 percent.

Ironically, in the new digital age, sales of vinyl LPs were at an all-time high (1.88 million). There has been a resurgence of vinyl due to the new turntables on the market that enable consumers to play an LP and also transfer the music onto their mp3 players/iPods or flash drives. All of the turntables today have this digital transfer capability.

…And Watching TV

Television viewing is at an all-time high among Americans, with the average person watching 4 hours, 45 minutes per day during the 2007-2008 season.