Tag Archives: retail

The Changing Consumer Spending

Consumer spending drives the U.S. economy, accounting for roughly 68% of the GDP. The spending includes everything we buy: food, services, entertainment, groceries, haircuts, and more. From the beginning of the year (when the economy was up), the nation has seen rising unemployment, and that means less wages to spend.

The impacts of the coronavirus pandemic are changing consumer behavior – what we spend our income on as well as how much we spend. As consumers have weathered the coronavirus pandemic and states have enforced lock-downs for shopping and entertainment, our spending and saving habits have shifted.

Interestingly, personal income rose 10.5% in April, the result of a rise in government rescue programs and household stimulus payments. But consumers also cut their spending on restaurants and hotels, as well as cut health care expenditures. In regards to large purchases, spending on autos declined 30% and furniture and appliance spending cut by 20%.

The first few weeks of the pandemic brought consumers out in mass to stock up on pantry items including toilet paper, soup, macaroni, beans, and other comfort foods. The next few weeks saw consumers buying more basic ingredients as they cooked more meals at home.

What’s next for consumer shopping changes?

Group Activities and Discussion Questions:

  1. Poll students: In the past month, roughly how much money have they spent? What items have they purchased?
  2. Is this spending different than what they experienced before the coronavirus pandemic? How is it different?
  3. Show video from WSJ about spending: https://www.wsj.com/video/consumer-spending-slid-in-april-here-why-that-matters/14661D9B-8251-43EB-B082-EDDE09187E2F.html
  4. Discuss trends in items being purchased.
  5. How should companies be using these changing habits to their advantage? Should marketing campaigns change?

Source: Wall Street Journal; other news sources

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Back to Basics: Toilet Paper

We consumers are a strange bunch. One minute we are buying in a predictable way, at the usual times and in the usual patterns. Then, boom! Suddenly the world changes seemingly overnight and consumers take drastic and unusual shopping actions.

In this case, what was once a stable item – toilet paper – became a hot product in high demand as the coronavirus hit the U.S. According to Nielsen, in the first week of social distancing guidelines, toilet paper demand increased 120% versus the same time last year. Customers began buying toilet paper in bulk and ratcheted up hoarding of the commodity product. This type of reaction is not uncommon during times of stress when consumers feel a need to control at least one aspect of their lives.

Why the shortage though? In part, it is because toilet paper manufacturing and distribution flows through an efficient, tightly-controlled supply chain. Since it is a bulky product to ship and shelve, retailers keep low inventory on-hand and depend on frequent shipments to replenish stock.

On average, the volume a household consumes toilet paper is about 141 rolls per year. But, during the current crisis, consumers are going through more toilet paper at home since more people are working at home and not venturing out to restaurants, retailers, and other out-of-home events.

Be kind. Share.

Group Activities and Discussion Questions:

  1. Discuss the elements in the supply chain and marketing channel.
  2. Diagram the supply chain and marketing channel for toilet paper.
  3. Show a brief video about toilet paper supply chain: https://youtu.be/By2mmIUzG-w
  4. Another video choice: https://youtu.be/NiQKvfo3l94
  5. View Cottonelle’s Web site and it’s plea for kindness and sharing: https://www.cottonelle.com/en-us/share-a-square
  6. Where are the stress points in the supply chain and marketing channel?
  7. What can be done to better produce and manage products such as toilet paper during times of crisis?

Source: Ad Week; Associated Press; Nielsen Research; Wall Street Journal; other news sources

 

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Just Walk Out. Amazon’s Cashier-less Grocery Stores

Two years ago Amazon launched its ‘Amazon Go’ convenience stores. It now has 25 stores across the country in San Francisco, Seattle, Chicago, and New York. These stores carry a limited selection of items focused on ready-to-eat meals and snacks. The stores use a ‘just walk out’ technology that allows consumers to pick up an item, place it in their bag, and then just walk out. No scanning or cashiers needed. All a shopper needs is an Amazon account and the Amazon Go app on their mobile device.

Now, Amazon has now expanded the concept into a much larger format called ‘Amazon Go Grocery’ in Seattle. With 10,400 square feet of space, the new Amazon Go Grocery store carries a larger amount of products, including fresh produce, meat, seafood, baker items, and household essential. The store also carries pre-made meals plus beer, wine, and spirits. The ‘just walk out’ technology is the same as Amazon Go, and uses the same app on mobile devices.

ne allows the entire family to shop together. Any item taken will be added to the account of the shopper who entered them. However, Amazon warns shoppers that if they grab an item from a top shelf to help another customer, they will be charged for it.

The stores have employees on-site to greet shoppers, restock shelve, answer questions, and help customers. However, cashier-less stores are coming under scrutiny from advocates and lawmakers who say these stores discriminate against people who do not have credit cards or bank accounts. (Amazon did change its policies to allow customers to pay with cash at its convenience stores and says the same will be true at the grocery store.)

Let’s go get groceries!

Group Activities and Discussion Questions:

  1. Poll students: How much time do they estimate they spend in check-out lines on a store visit?
  2. How does this new concept fit with Amazon’s purchase of Whole Foods?
  3. Information on the stores can be found at: https://www.amazon.com/b?ie=UTF8&node=16008589011
  4. Show video of the new store: https://youtu.be/lTzPpAbjasA
  5. What are the students’ opinions?
  6. Divide students into teams. Have each team list advantages and disadvantages of the new format.
  7. Does this technology have uses in other places?
  8. Does the technology give a competitive advantage to Amazon in the grocery industry?

Source: Associated Press; other news sources

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