The Homa Files

Excerpted from WSJ “At the Supermarket Checkout, Frugality Trumps Brand Loyalty” by Ellen Byron, November 6, 2008 

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When Summer Mills visited her local CVS drugstore recently, to save a few dollars she bought the store-brand facial scrub rather than the Olay she normally uses.

“I thought I’d be able to tell the difference, but I couldn’t — I looked at the ingredients and they seemed almost the same,” says Ms. Mills…On her next shopping trip, “I’m going to buy the store-brand moisturizer and cleanser — it’s less money.”

Many Americans are changing their everyday purchases and abandoning brand loyalty, prompted by the persistent financial pressure of rising food, gasoline and electricity prices. Over the past 24 months, consumer prices have risen 7.8%…From coloring hair at home instead of at the salon to trying cheaper laundry detergents, new evidence indicates that Americans are modifying even minor household habits to save money.

Kimberly-Clark’s CEO noted that sales of the company’s potty-training pants, once one of the biggest sales-growth products in the baby aisle, have fallen off in recent months. “You’re seeing consumers leaving children in diapers longer…the diaper is less expensive per piece than a training pant”...Shoppers are even buying toilet paper differently. “When they get to the end of the month, and they’re out of paycheck, they may buy a smaller-count pack”…

To be sure, overall sales of name-brand goods are still higher than those of store brands. Still, about 40% of primary HH shoppers said they started buying store-brand paper products because “they are cheaper than national brands”…Store brands on average cost 46% less than name-brand versions, Mintel found…

Paper napkins suffered the steepest declines over the past year, followed by facial tissue and paper towels. “Not surprisingly, toilet tissue is holding up the best,” Mr. Lockwood says.  Laundry habits are changing, too. Early signs indicate shoppers are switching to cheaper detergents and softeners, a rare shift in one of the most brand-loyal product categories…

Though low-income consumers have been cutting back for the past several months, now upper-income shoppers — those with household incomes of $100,000 or more — also are making significant changes…

“This isn’t belt-tightening, it’s belt-notching…These ritual changes are much deeper and happening much faster than we expected”…

Shoppers’ changing behavior prompted P&G to alter its marketing approach and focus on in-store promotions. “More decisions are made in the store, and we have to be competitive,” CEO A.G. Lafley said…

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Full article:
http://online.wsj.com/article/SB122592835021203025.html

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