Consumer Trends That May Last For Years

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Alpha8472
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Consumer Trends That May Last For Years

Post by Alpha8472 »

Consumers are spending less, staying at home more, shopping more at discount stores, and choosing private labels over brand names. This could last for years or it could be permanent.

https://www.csnews.com/five-consumer-be ... -last-2023
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Re: Consumer Trends That May Last For Years

Post by jamcool »

Mebbe because of inflation…which is a real thing.
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Re: Consumer Trends That May Last For Years

Post by storewanderer »

The problem I see is a lot of brands simply aren't worth their price. I remember when I was much younger, I bought some designer/name branded t-shirt at Macy's. The thing ripped the first time I put it on down the side. I took it back to Macy's for a refund. Comment from the younger than me clerk was, not the first time she had seen that, and "so much for ..." ... being whatever brand that was.

Looking at many of these branded clothing items next to private label clothing items there just isn't much quality difference on a lot of it. Many of the same factories are making both private label and branded garments and while the branded garments supposedly have more strict fabric type and construction specifications, I am don't think the final differences end up being as great as the big brands hope. I think this plays out across many categories.

The other thing I have noticed in the inflationary environment is these big national brands are the first to increase their prices and they seem to be proud to do it. They are the first to "downsize" packages. Private labels are always "second in line" on price increases and package size decreases. Sometimes they take months or years to follow the path of name brands.

What I am still waiting to see is if private labels will finally grow in some categories where they are very weak, such as laundry and shampoo. So far I am not seeing a big push out of any retailers to introduce and push private label in those categories. Also the soda category with for instance NorCal Safeway charging 8.99 for a 12pk Coke or Pepsi and Smiths not far behind at 7.99, it seems there should be a huge "in" for private label soda, but so far not seeing much effort to push it.
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Re: Consumer Trends That May Last For Years

Post by HCal »

Alpha8472 wrote: October 8th, 2022, 10:05 am Consumers are spending less, staying at home more, shopping more at discount stores, and choosing private labels over brand names. This could last for years or it could be permanent.

https://www.csnews.com/five-consumer-be ... -last-2023
All these things happen every time there is a recession. They are never permanent. The economy is cyclical.

Many experts believe we are heading into a recession soon, and most households have less discretionary income in real terms than before, so of course they are going to cut back.

The question is how deep and how long will this be.
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Re: Consumer Trends That May Last For Years

Post by buckguy »

Not terribly enlightening. The "last for years" thing is just typical sensational nonsense---we're still living through ups and downs as supplies align with demand. Pent up demand for travel drove up prices for all manner of travel expenses that are coming down now--if anything people I know in that sector are worried that people took trips they'd planned ages ago rather than new ones---the one sustained bright spot is the gradual return of business travel. Oversupply followed by inflation has created markdowns that probably will go away through the holidays. The gas price spike lasted a few months although it has persisted where capacity is still offline---speculation, greater demand and constrained supply. Of course, the prices would come down and even the hysteria over OPEC's 1% increase in output isn't having the effect one might expect. The price gouging probably will stop, too, as common markdown items return to promotional pricing once demand has slumped enough.
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Re: Consumer Trends That May Last For Years

Post by storewanderer »

buckguy wrote: October 9th, 2022, 7:06 am Not terribly enlightening. The "last for years" thing is just typical sensational nonsense---we're still living through ups and downs as supplies align with demand. Pent up demand for travel drove up prices for all manner of travel expenses that are coming down now--if anything people I know in that sector are worried that people took trips they'd planned ages ago rather than new ones---the one sustained bright spot is the gradual return of business travel. Oversupply followed by inflation has created markdowns that probably will go away through the holidays. The gas price spike lasted a few months although it has persisted where capacity is still offline---speculation, greater demand and constrained supply. Of course, the prices would come down and even the hysteria over OPEC's 1% increase in output isn't having the effect one might expect. The price gouging probably will stop, too, as common markdown items return to promotional pricing once demand has slumped enough.
"Last for years" is absolutely true. Stop and think for a while here.

The previous recession over a decade ago put into motion heavy growth of private label goods. Not much more to say on that that hasn't already been said. But private label marketshare is significantly higher than it was in 2008 across just about every category.

It also was the last of any real growth for "mainline" retailers in the clothing business and the period since then has led to rapid expansion of concepts like Ross, TJX banners, etc. In the grocery business there has been little growth from regular grocers but discount formats/limited service/limited assortment like Aldi, Lidl, WinCo, Grocery Outlet, and Trader Joe's have collectively opened hundreds of stores.

There isn't going to be much of a return for business travel until the travel industry gets its act together and starts providing the same level of service it did before COVID. That industry and I am throwing the airlines, hotels (especially Hilton/Marriott), and car rental groups all into the same bucket here, has done a fantastic job ripping off leisure travelers and providing terrible service for the past year to pad its profits.

Did you miss the news about the large retailers including Target and Wal Mart canceling billons of dollars of orders a few weeks ago? This is a direct admission that things are not going in the right direction; they are overstocked, and canceling those orders will protect their margins/prevent further markdowns.

Things will have to get pretty bad for prices to come down in general. In some cases it may not be possible given all of the cost increases that have occurred from every angle. But if things get bad enough, someone out there will be desperate enough to want to sell stuff that they will cut prices, and others will likely follow. At the end of the day businesses still need cash flow. The level of greed displayed by various businesses over the past two years has been quite incredible. However the continuing efforts to wash out smaller businesses and leave fewer very large chains can lead to a scenario where those few large chains call the shots and while Wal Mart and Amazon are behaving sort of like that, the reality is there is still more competition in the US than anywhere else so they can't play that game here just yet.
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Re: Consumer Trends That May Last For Years

Post by babs »

HCal wrote: October 9th, 2022, 1:55 am
Alpha8472 wrote: October 8th, 2022, 10:05 am Consumers are spending less, staying at home more, shopping more at discount stores, and choosing private labels over brand names. This could last for years or it could be permanent.

https://www.csnews.com/five-consumer-be ... -last-2023
All these things happen every time there is a recession. They are never permanent. The economy is cyclical.

Many experts believe we are heading into a recession soon, and most households have less discretionary income in real terms than before, so of course they are going to cut back.

The question is how deep and how long will this be.
We are in a recession. Two down quarters of GDP in a row is the definition of a recession. The president, regardless if party, doesn't get to decide if we are in a recession.
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Re: Consumer Trends That May Last For Years

Post by storewanderer »

babs wrote: October 9th, 2022, 7:07 pm
We are in a recession. Two down quarters of GDP in a row is the definition of a recession. The president, regardless if party, doesn't get to decide if we are in a recession.
In my opinion a recession has been coming for a while now. Many retailers had time to prepare for this and shift focus to essential goods and trim inventories. In 2021 I think everyone got drunk on stimulus which fueled spending and certain really over confident retailers like Target were still in a deep hangover from so many competitors being forced to shut down thinking nobody would ever return to the competitors when they reopened. It is no surprise what is happening.

At the same time there are some strange things. How is JCP still open with relatively few store closures? How is Kohls still open with relatively few store closures? There are definitely some zombie retailers that seem to be hanging on in this environment that I would have thought would be down to 200-300 stores total by now.
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Re: Consumer Trends That May Last For Years

Post by HCal »

storewanderer wrote: October 8th, 2022, 10:58 pmAlso the soda category with for instance NorCal Safeway charging 8.99 for a 12pk Coke or Pepsi and Smiths not far behind at 7.99, it seems there should be a huge "in" for private label soda, but so far not seeing much effort to push it.
Funnily enough, I think that many Americans consider Pepsi to be the "private label" brand. Coke is the "major brand" and Pepsi is what you buy if you're trying to save money.

I think part of the issue with sodas is that there are several off brands that are not advertised. For example, in California Shasta Cola is quite common, I've seen people buy it for parties and BBQs. These are technically not private label, but fill the same role.

Almost every major retailer also has private label soda, but it's not heavily promoted. I think it's all mostly made by the same company (Cotts???) so perhaps they are satisfied with their market share and don't want to reduce prices further.
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Re: Consumer Trends That May Last For Years

Post by storewanderer »

HCal wrote: October 11th, 2022, 1:29 am
Funnily enough, I think that many Americans consider Pepsi to be the "private label" brand. Coke is the "major brand" and Pepsi is what you buy if you're trying to save money.

In California, Shasta Cola is quite common, I've seen people buy it for parties and BBQs. Almost every major retailer also has private label soda, but it's not heavily promoted. I think it's all mostly made by the same company (Cotts???) so perhaps they are satisfied with their market share and don't want to reduce prices further.
Depends what region you are in with regards to Pepsi. You would be surprised how strong Pepsi is in a number of regions (midwest, also up in rural NorCal/southern Oregon Pepsi is very popular perhaps due to an aggressive distributor). Personally I have no issue in those Pepsi-dominant places; Pepsi has consistently had a fountain unsweetened Lipton iced tea over the years; it isn't great but it is sort of drinkable. Coke's fountain based tea offer has switched over the years from Nestea (okay but artificial taste; I kind of liked that; McDonalds had that in the 90's when they pulled the brewing equipment away), to a Fuze fountain (which tastes like vinegar), to a Gold Peak fountain (may as well have water, that stuff has zero taste though a few chains with actual brewed Gold Peak tea- that is great tea brewed).

Safeway's private label carbonated beverage in CA is made at a plant they own in NorCal (the SoCal plant was closed a few years ago).

Kroger's private label carbonated beverage may come from a Kroger owned plant somewhere in the South. The one they sell at Smiths if supplied from Las Vegas distro (and Fry's) comes from a vendor in AZ called Kahal or something like that. When Smiths here was supplied dry goods from Layton, UT distro the carbonated beverages appeared to be made at a plant Kroger owns.

I think the private label soda at Wal Mart comes from Cott, not sure where Shasta comes from. Neither of them seem to have much in the way of cut rate seltzer; Wal Mart uses something called Vintage which looks private label but isn't, for a quasi-private label unsweetened seltzer. Wal Mart does have some of the artificially sweetened "clear soda" that looks like seltzer, or once did.
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