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Loyalty, plastics, local and prices are key influences on retail in 2019

IRI, the analytics and insights provider for FMCG, OTC healthcare and retailers, has published its FMCG trends for the year ahead.

1. Loyalty programmes.

Paul Hinds, IRI’s Senior Vice President of International Retail Solutions, says: “It’s not loyalty, but impactful customer engagement that retailers need to focus on. Loyalty programmes remain an important component of the customer experience, but they are increasingly commoditised, with customer usage driven by habitual collection of points rather than meaningful engagement with the retailer and its brand. This lack of purpose and differentiation is a challenge for retailers who need to derive value from their programmes to justify continued investment, especially with disruptive online retailers and specialist ‘clubs’ able to develop one-to-one relationships with the customer without the need for a traditional points-based programme.

“Understanding the what, when, where and how customers buy and then making a quick, impactful decision to drive growth that can also be accurately measured, is still beyond the reach of many retailers. Those companies who get this right, embedding a customer insight-driven approach across the entire business, will be the ones that lead the pack.”

2. Plasticphobia.

George Knowlson, IRI Insight Analyst: “The final episodes of Blue Planet II made consumers more aware of the impact that their lives and choices are having on the environment and many are looking to make a change. Plastic bottles became a target in the press and we’ve seen this have an impact on water sales, halting growth of a category that enjoyed strong growth for many years.

“Choice of packaging will become a key attribute in consumer brand choice and being first with ethical options could pay big dividends. 2019 is likely to expose new skeletons from cupboards that could be devastating for some and great opportunities for those with strong ethical options in their range.”

3. A move to geocentric purchasing.

Olly Abotorabi, IRI Senior Regional Insights Manager: “Local and national brands are increasingly winning consumers’ hearts and minds. Our 2018 European Shopper survey showed that more than half of UK consumers prefer to buy local brands. Support for UK producers, and better quality and taste were cited as the most influential factors. We have a strong innovative ‘local scene’ in the UK, driven by a desire for authenticity and provenance. We’re also seeing increased uptake of free-from, vegetarian and vegan products, and movements like zero food miles gaining momentum and being promoted by smaller, challenger players.

“Retailers and manufacturers will need to work smarter to ensure they can convert those shoppers who are ‘interested’ but not yet ‘buying local’ by promoting authenticity, making sure the price is right and ensuring they can find the products on the shelves before they walk out of the store.”

4. Promotions and range will stay in check.

Stephen Jacobs, IRI Insight Director: 2018 saw a further de-escalation of promotions and range expansions have been kept in check. “These new strategies are working for retailers, but are making the task for brands increasingly more challenging. For this reason, we can see the strategies continuing and possibly increasing slightly.” In 2018, range expansion was capped in the Christmas build-up, pushing the year-on-year trend to -6%, as retailers are demanding that both promotions and new ranges must drive incremental growth, or they have no place in their stores.

5. As Brexit plays out, prices will be scrutinised.

Jacob continues: “While the debate continues on the impact of Brexit, the big one to watch is the pound exchange rate, as this has a huge impact on the cost of goods from overseas. If we see a dramatic change in currency rates it could be the mechanism that opens the pricing floodgates, with food and drink prices and long-term inflation around 8% down on the wider market, will the market adjust prices around 10% to catch up on all that lost inflation? Or will we find ourselves fixed in an eternal price standoff? My guess is it will be somewhere between the two. Be prepared for the worst and hope for the best, but having no plan could leave you very exposed and missing a big opportunity that is only going to happen once.”

IRI UK insights index.

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