Tag Archives: shopping

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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Meal Kits Rebound

Meal kits have been around for a number of years. When they first launched, the novelty and ease of use quickly drove the subscriptions up. But sales plateaued as competitors proliferated and differentiation between companies was missing. After all, how many meal subscriptions does a household need? The cost of the first sale was high, and competitors all seemed to be trying to reach the same target market. Growth stalled.

But, the coronavirus pandemic is changing the dynamics of the market once again. With more people staying at home, restaurants closed, and fear of the virus in crowded places such as supermarkets, meal kits are primed for a resurgence. According to Nielsen Research, consumer spending on meal kits in April of this year is nearly double the level from the same period a year ago.

Restaurants also are getting in on the action with Panera Break readying a launch of its own make-your-own salad and sandwich kits. It is being joined by other dining chains such as Denny’s, Chick-fil-A, Shake Shack, and others. Doing an Internet search for “meal subscription boxes” brings up dozens of options for meal and snack subscriptions!

Environmental conditions have a big impact.

Group Activities and Discussion Questions:

  1. Discuss the importance of environmental scanning in marketing.
  2. What are the environmental factors that are impacting the meal kit industry?
  3. How can meal kit companies use this information to retain and grow their customer base?
  4. Divide students into team. Have each team research one of the following meal kit companies, or another of their choosing:

Hello Fresh: https://www.hellofresh.com/

Home Chef: https://www.homechef.com/

Sun Basket: https://sunbasket.com/

Blue Apron: https://www.blueapron.com/

Freshly: https://www.freshly.com/

  1. How are these companies different? How are they similar? What is the value offered by each company?
  2. Have students build a SWOT analysis chart for the company.

Source: 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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