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Transforming Economy is Impacting Consumers

July 14, 2008

“While analysts may disagree on whether or not the U.S. economy is in a recession, there is no question that the economy is in transformation,” Thom Blischok, president of IRI Consulting and Innovation, said in a special report on the economy.

“U.S. consumers have been hit on all sides with record-breaking gas prices, dramatic increases in grocery prices, high unemployment and declining home values. These burdens are driving fundamental shifts in what consumers buy and where they shop. Consumers are forced to make tradeoffs.”

Needless to say, the current conditions have made it more difficult for retailers and manufacturers. In an IRI Times & Trends Special Report,“Competing in a Transforming Economy,” IRI examines the competitive landscape and delivers new insights into shifting consumer shopping and purchase behavior and resulting opportunities for CPG manufacturers and retailers.

“Competing in this new, evolving economy requires fine-tuned pricing, promotion, assortment and brand development strategies that are built on an in-depth understanding of a changing consumer in a transforming economy. The challenges of growing in this economy are significant, but there are windows of success,” said Mr. Blischok.

According to IRI, escalating prices have bred exceptionally high price sensitivity, driving declining demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated channel migration. In addition, long-standing consumer purchase drivers—including convenience and health and wellness—are losing some momentum. Specifically, IRI reports that beauty and personal care categories, while not declining, have seen a significant slowdown in growth rates. Categories with high price increases have seen the largest demand declines.

IRI is also offering the new IRI Economic Key Indicator Tracking service, which provides a view of emerging market conditions, such as price and cost indices, category and private label demand shifts and share, trips and trip mission mix shifts across channels, with monthly and rolling quarter measures.

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