So what are Brits doing with their smartphones?  Mobile web browsing was the fastest growing activity, with 10.4 million using that function in the third quarter, up from 8.8 million in the second quarter.  Downloading applications was the second fastest growing activity, with 1 million new users in the third quarter to 4.1 million.

“Although there have been sizable increases in the take-up of new mobile technologies such as video and location-based services, they remain niche forms of behavior,” said Edward Kershaw, Vice President of Mobile Media at Nielsen.  “The era of the handset as a truly multi-media device on a mass-market level lies somewhere on the horizon, and the key for companies to successfully harness mobile lies in a realistic understanding of what activities people on a large-scale are actually doing with their handsets now.”

“It was resoundingly clear from the presentations that we have a new consumer on our hands, one that has emerged from the financial crisis with what could be a permanent shift in their values, spending habits and lifestyle choices and affecting the way they consumer and purchase alcohol.  They are more frugal and demanding value.  Investing in new product development should be an essential part of any suppliers’ strategy in counteracting consumers’ heavy reliance on price discounts as a key purchase driver,” said Michael Walton, Executive Director, Nielsen Liquor Group in the Pacific.

Nielsen’s regional experts also provided a snapshot of trends in their respective markets.  The four key topics that were common across regions were:

• Low carb and low sugar: new products and brand extensions in this category are performing relatively well.
• Marketing to the over 50s demographic: This group makes up between 40-50 percent of alcohol consumers in the UK, US, Australia and New Zealand, yet are often overlooked when it comes to marketing in favor of a millennial focus.
• Online consumers: New ways and approaches to marketing to the technologically savvy consumer.
• New product development: A critical pathway to improve returns and drive real category growth.

Gavin Humphreys noted that just 57 percent of British beer drinkers popped over to the pub in 2009, compared to 70.5 percent in 1998.  In fact, the off-trade sector looks set to overtake share of beer consumption over the next two years.  While beer remains the favorite, wine is rapidly gaining share, driven by its link with in-home entertaining and also the availability of cheaper South African, Italian and Chilean varietals.

In the U.S., Danny Brager noted that more than 50 percent of Americans choose to entertain and eat at home more often.  Consumers are often trading down in an effort to find the best value, favoring domestic offerings and sticking with brands they know and trust.

Paul Kirby said that almost half of Australian drinkers claimed to be going out less often compared to last year, but are actually trading up when they do go out, sparking growth in premium and super premium alcohol segments (imported beer, international wine and bottled wine priced over $20).  Almost half of all packaged liquor was sold on promotion and 77 percent of alcohol consumers selecting their choice of outlet because it offered great promotions.

Just to the southeast, 60 percent of New Zealanders claimed to be going out less often compared to last year, according to David Hanson.  Annual sales for the off-premise market grew by 10 percent in value terms and 7 percent in volume.  More than three-quarters (77%) of all beer sales were sold on promotion.

“Trading over the summer has been volatile, but the underlying trend is a slowing of top line value growths.  Food retailers continue to rely on promotions and price cuts to draw in shoppers, a strategy that seems to be working for most chains as penetration has increased,” said Mike Watkins, Senior Manager, Retailer Services at Nielsen.

Waitrose and Morrisons recorded the strongest growth in value sales during the twelve week period (11.4% and 8.1% respectively), while the launch of Tesco’s Clubcard in August has helped increase spend per visit by 5 percent as shoppers seek to maximize spending within the store.

Perhaps as a sign of the times, the second and third fastest growing sectors were food and cooking, which saw a 56 percent increase in unique UK visitors, and coupons and rewards, up 55 percent.  Promotions offering discounts on holidays boosted traffic to Ribena’s site, from 12,000 unique UK visitors in July 2008 to almost 950,000 in July 2009.  Coupons and rewards web sites saw 10.9 million visitors in July 2009, up from 7 million a year ago.  The ability to earn reward points or getting discount vouchers towards purchases drove traffic to sites such as Nectar and MyVoucherCodes.co.uk.

“Although saving money is a major theme across the fastest growing online sectors, the variety of sectors – from mobile phones to food and cooking, from automotive and health to technology and parenting – shows the diminishing areas of daily life that aren’t being significantly enhanced or touched by the Internet.  Strong growth online isn’t just about social media,” said Alex Burmaster, Communications Director at Nielsen’s Online Division in the UK.

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“The poor weather resulted in shoppers making fewer shopping trips this year.  But with grocers increasing promotional activity, with 33 percent of sales this month being on promotion, we expect monthly growth going forward to be in the 4 to 5 percent range as food inflation continues to slow,” said Mike Watkins, Senior Manager, Retailer Services at Nielsen.

Of the top 9 grocers, Waitrose continued to perform well with double digit growth of 10.5 percent for the quarter and more than 11 percent in the last four weeks.  Asda, Sainsbury’s and Morrisons continue to grow at the expense of smaller retailers, while Tesco has launched a new customer loyalty scheme to intensify the battle for shoppers.

“With shopper promiscuity increasing and loyalty levels falling over the longer term, the added benefits of Tesco’s Club Card 2 may do the trick in keeping Tesco customers loyal to the shop and ultimately spending more of their money there,” said Watkins.

In the U.S., consumers remain skittish.  Shifts to private label brands continued at a strong pace, as they have for the last eight months, while consumers are shopping less frequently and spending less per trip.  Canadians, on the other hand, are spending more per trip, and are taking advantage of retail promotions.  Unlike in the U.S., private label brands are struggling to gain share as national brands step up promotional activity.

In Europe, the French remain relatively unchanged in their shopping.  Value channels continued to see growth and more retailers were selling on promotion, leading to a modest increase in the amount spent per trip.  Germans showed very little change in the number of shopping trips they took, nor did they increase or decrease how much they spent.  Unit sales increased, however.  In the UK, sales volume improved slightly from the previous month, while budget store brands’ growth slowed as consumers began returning to premium brands.  British shoppers were also spending slightly more per trip.  Italians continued to move to store brands and value channels, although they were reducing their shopping frequency.  Spaniards, who have been among the most optimistic, have not seen that reflected in spending.

Brazilians showed an 8 point surge in optimism, and this translated into more frequent shopping trips and higher sales, in both volume and value terms.  Hong Kong and China both showed growth in sales, but Taiwan showed declines, and optimism there was among the lowest in Asia.  Indian consumers’ confidence was high, and volume and value sales both increased by more than 5 percent.

“While things are starting to look up, it’s clear that Americans and Western Europeans aren’t quite convinced that recovery has taken hold and remain cautious when it comes to shopping.  The labor market is clearly affecting this behavior.  It comes as little surprise that Brazil, India and China – countries that have generally been less affected by the global recession – are among the first to see renewed consumer confidence and sales growth,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company.

The Buzz

While the idea of recovery hasn’t opened up global consumers’ wallets quite yet, it has started to infiltrate their discussions on the Web.  In June, 71 percent of survey respondents thought that their countries were in recession, an improvement from the 77 percent who thought the same in April.  Additionally, 26 percent believed that their country will be out of a recession in the next twelve months, up three points from April.  Global recession buzz has declined 27 percent since March.  In July, however recessionary buzz perked up, primarily in Western Europe.

“We are likely to see an overall downward trend in recession discussions, but it will be choppy until consumers really feel as if they are experiencing the recovery,” said Russo.

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“Shoppers continue to respond to offers, with another all-time high for promotional spend at 33 percent of fast moving consumer goods spend in the last four weeks.  As a result, all retailers are attracting new shoppers, but their loyalty and commitment are likely to be lower,” said Mike Watkins, Senior Manager, Retailer Services at Nielsen.

Sainsbury shoppers increased the frequency of their visits by 6 percent in the last four weeks, while ASDA showed strong growth in grocery and general merchandise. 

“The recent wet weather, combined with the start of the school holiday could make the level of improvement short-lived.  However, last year was a washout both in terms of weather and sales, so we are still likely to see good year-on-year improvements from food retailers over the rest of the summer,” said Watkins.

The trend is likely to continue well into autumn – the traditional time of year for flu to take hold, and fears are being voiced that the virus could put additional pressure on the UK economy with GDP being adversely affected by as much as 7%.

A Link Between Buzz And Spending

For the latest Economic Current, Nielsen tracked online discussions about the economy and found that since mid-March 2009, recession buzz has dropped 47 percent in the U.S., UK, Germany, Italy, Spain, Australia and New Zealand.

“Globally, Nielsen is tracking online discussions related to the recession and when the recovery may emerge. While discussions about the recovery are still quite low, we have seen that the public is talking less about the recession — often dramatically less,” said James Russo, Vice President, Global Consumer Insights for The Nielsen Company.

“In the U.S., we found that recession discussions have dropped since hitting a peak in January.  There appears to be a strong correlation between what consumers are saying in discussion groups and their subsequent actual purchase behavior.  From the end of 2008 to March 2009, when recession discussions were highest, we found that sales actually declined by 2.3 percent.  From mid-March to early June, as recession chats dropped, we found that sales actually showed a modest increase,” continued Russo.  “This is an important dynamic as we look to signs of a sustained recovery, and Nielsen will be at the forefront of this research.”

Noteworthy Highlights

• After showing some positive movement in April, U.S. consumers pulled back on shopping and how much they spent per trip. Meanwhile, the shift to value channels such as supercenters, club and dollar stores continued, as did the move to private label store brands.
• Canadians are slightly more optimistic than their southern neighbors. While they aren’t shopping any more frequently than before, they are spending more per trip. But like Americans, Canadians are also turning to private label store brands and value channels.
• Western Europe remained in a neutral position. Some countries’ consumers shifted to value channels and store brands, but they generally reduced the frequency of their shopping trips and spent no more, or in some cases, less than in previous months.
• Brazilians were the most positive of the lot, with consumers shopping more frequently.

Download the latest Nielsen Economic Current.

“Waitrose has gained strong momentum going into the summer, which is the time of year that brings incremental sales of fresh foods.  With new stores opening and a major media campaign in early June to support the launch of the retailer’s new private label offerings, the outlook, based on recent performance, is positive,” said Mike Watkins, Senior Manager, Retailer Services at Nielsen.