For optimal user experience, please upgrade your browser.

Euro Crisis Transforms Shopping Behavior

Floating Widget

Floating Item Container

Floating Rate Widget

Please Select
Your Rating

After years of declining and stagnating revenues in Western Europe, consumer goods manufacturer Unilever is following strategies it originally applied in developing Asian markets. “Poverty is returning to Europe,” Jan Zijderveld, Unilever’s top European manager, recently told Financial Times Deutschland. “If a Spaniard only spends $21 per shopping visit, you cannot sell him washing powder for half of his budget.” As a result, Unilever has begun offering smaller, less-expensive packages to ease the strain on shoppers’ increasingly limited budgets.

Leaner times ahead The number of households experiencing financial distress across the EU during early 2012 rose sharply, according to a recent European Commission report. This might not come as a surprise given the austerity measures implemented in Greece, Portugal, Spain and Italy, as well as persistently high unemployment rates. U.K. grocer Sainsbury’s found that customers are visiting more often but buying less than they used to. The picture in France is similar: Unilever France president Bruno Witvoet said, “The value of the average shopping basket tends to decrease while the frequency of purchases tends to increase.” While consumers, especially in the crisis-ridden EU countries, are demanding more affordable products, they are also increasingly planning their shopping prior to visiting a store. Until recently, consumer goods manufacturers mainly tried to achieve growth in Western Europe through larger package sizes and premium brands. The economic situation and negative forecasts, however, are encouraging them to find alternate paths for growth. In Europe, branded suppliers are seeking to offer entry-level products with smaller quantities, less ingredients or simpler packaging. Retailers are also investing in private label brands, which are rapidly increasing in sales. While smaller package sizes and entry-level prices meet consumer’s demand for greater affordability, such a strategy places manufacturers of fast-moving consumer goods in direct competition with private label brands. In Portugal and other crisis-torn markets, the economic downturn has made price a crucial factor in customers’ shopping decisions. This, together with the fact that shoppers are increasingly seeing private label products as delivering good value, is fueling sales growth, and we will see both private label and branded consumer goods adapted to shopper needs even more in the future.

New breadth of assortment The impact of retailers’ and suppliers’ initiatives on consumer behavior is backed by global loyalty solution provider Aimia, which conducted an analysis across a range of product categories at a number of retailers. “We’ve seen that retailers and manufacturers are providing a new breadth of assortment and promotions to provide their customers with more choice suited to their needs,” says David Hamilton, analytics solution director for Aimia. “Retailers who have a better understanding of their customer segments through data analysis are providing more suitable product choices which are helping customers through the recession — whether that’s in buying larger pack formats for better value, or helping customers reduce their consumption and product waste by providing smaller pack sizes.“ More tailored products will be increasingly demanded in countries less affected by the Euro crisis. In many European countries, there are more single- or two-person households, following decades of falling birth rates and the spread of more individualistic lifestyles. These consumers demand more suitable product quantities for their consumption needs (a factor that has also been behind the recent pressures on the hypermarket format in Western Europe). As such, there remains plenty of scope for both brands and private label manufacturers to achieve growth by launching more tailored products to their customers.