Understanding Consumer Behavior Amidst Economic Uncertainty
Background on NielsenIQ and its Relevance:
NielsenIQ, a leading provider of consumer intelligence, has been closely monitoring shifts in consumer behavior. Raquel Jiménez, Director of Customer Success at NielsenIQ, recently shared insights on how Mexican consumers are adjusting their shopping habits due to economic pressures.
No Visible Consumer Spending Contraction, but Defensive Spending Migrations
Jiménez noted that there is no significant contraction in Mexican consumer spending like those observed during the 2020 pandemic or in 2009. However, she warned of defensive spending migrations as consumers adapt to the current economic climate.
Sales in Pesos Desacelerating, Volume of Purchases Remains Steady
According to Jiménez, sales in pesos are slowing down, while the volume of product purchases remains consistent. This indicates that consumers are becoming more price-conscious and making adjustments to their shopping habits.
The Rise of Price-Sensitive Consumers
Who are these consumers and why are they relevant?
These price-sensitive consumers are actively seeking the best deals across various sales channels, from traditional corner stores to supermarkets, specialty shops, department stores, digital purchases, and high-discount retailers like BBB, El Zorro, Waldo’s, and Neto.
High-discount retailers’ growth:
Jiménez highlighted that high-discount retailers have experienced significant growth across all economic segments, even expanding to upscale neighborhoods like Polanco.
These retailers have managed to gain customer loyalty, with more than 80% of consumers who try shopping at high-discount stores remaining in this channel.
The Omnichannel Consumer
What does it mean for consumers to be omnichannel?
In a recent webinar titled “Mexico: Opportunities in a Context of Uncertainty,” Jiménez explained that the Mexican consumer is becoming increasingly omnichannel. This means they are exploring multiple purchasing channels to find the lowest prices for desired products.
Traditional Channels Remain Relevant
Why are traditional channels still important?
Despite the growth of alternative purchasing channels, traditional retail channels remain crucial for product acquisition. Over the past two years, 35% of consumer spending has occurred through these channels.
In contrast, large supermarket chains have experienced a decline in spending.
Strategies for Saving Amidst Economic Stress
How are consumers responding to economic pressures?
As consumers become more price-sensitive, they are willing to switch brands and retailers to optimize their spending. Categories most affected by this shift include cooking oils, toilet paper, evaporated milk, and beer.
Elasticity of product categories:
In 2021, four out of ten Nielsen categories were considered elastic, meaning consumers could swap brands for lower prices, sometimes sacrificing quality. Today, however, 68% of categories fall into this price-sensitive zone where small price fluctuations trigger consumer reactions.
Consumer adjustments:
Consumers are now more responsive to promotions in the same product categories where they previously prioritized price over quality. Mexico remains a beverage-focused market, with non-alcoholic beverage sales continuing to grow.
Key Questions and Answers
- Q: What changes are Mexican consumers making to their shopping habits? A: Consumers are adjusting by reducing purchase quantities, switching to cheaper brands, and exploring alternative distribution channels to cope with rising prices.
- Q: How are high-discount retailers impacting the market? A: High-discount retailers, such as BBB, El Zorro, Waldo’s, and Neto, have experienced significant growth across all economic segments and have gained customer loyalty.
- Q: What does it mean for consumers to be omnichannel? A: Omnichannel consumers explore multiple purchasing channels to find the best deals on desired products.
- Q: Which product categories are most affected by price sensitivity? A: Cooking oils, toilet paper, evaporated milk, and beer are among the categories most impacted by price-conscious consumer behavior.
