Pound for Pound – Consumers Getting Savvy

News is out that Poundland plans to open 50 new stores this year after announcing strong increases in profits and sales. Profits rose by 81.5% to £21.5m in the year to 28 March, with turnover up 28.7% to £509.8m (source: The Grocer).

At a time of economic downturn with the threat of a double dip recession on the horizon, we wondered what might be the explanation for and impact of Poundland’s success?

It is accepted now that many people adopted thrift as part of a trendy lifestyle choice but now, with the threat of a double dip, is Poundland’s success a reflection of the fact that people genuinely feel they need to spend less?

Although the high street is a place where people can experiment without risking too much and only sacrificing a retail "experience”, there is some evidence that people are willing to put effort into finding bargains in some product categories and therefore will trade off price against the convenience of doing all their shopping in one place Poundland may be scoring on the brands or products that consumers don’t feel they need to buy from a Sainsburys, a Tescos or a Waitrose.

In the previous recession, research showed that continental consumers were shopping around more for their groceries - using chains such as Aldi or Lidl for commodities, such as flour and sugar, and a regular supermarket for more 'valued' items, such as coffee and meat.

It may even be that consumers are subconsciously segmenting their shop by category - with some products sacrosanct according to retailer or brand and some categories where it's all about value and then categories where it's purely about price.

The savvy consumer - more about information & choice than actual behaviour in the past – may be coming true in the face of a genuine financial squeeze.

PreMixing Your Drinks....

The Grocer has reported Asda’s prediction of an explosion in sales of pre-mixed drinks within the next five years, suggesting that every big spirit brand will introduce a version. This backed up Mintel's earlier forecast that pre-mixed category sales would grow more than five-fold, from £25m to £140m.

Asda spirits buyer Chris Brooks told The Grocer that, despite a "very low" awareness of the category, sales had rocketed 160% in Asda between May and July this.  Asda reported that pre-mixed cans attracted different consumers from alcopops, with people buying them to relax in the evening, rather than to party.  But now, their halo effect means all the big spirit brands are expected to start creating their own.

At first, we were a little sceptical. In fact, we thought they were a pretty naff idea. We thought pre-mixed drinks would taste weak and not as good as doing it yourself. But we’ve found that they can fit in nicely to a busy schedule. And now, of course, you can get more than just the pre-mixed gin & tonic.

We have developed a liking for the pre mixed Bacardi Mojito. Our message to manufacturers and retailers alike it - bring on the more interesting drinks, keep them funky and cheap and definitely get them front of house where the consumer can find them easily, and you could well be onto a winner.

Welcome Back to the Tetley Tea Folk

So it's true - the Tetley Tea Folk are making a comeback and I hope Tetley will re-join the many brands enjoying the inoffensive and charming delights of animation style advertising - however if sketches are to be believed Tina may look more at home in a copy of Viz.  I trust Sidney will be there conveying the care and attention that goes into Tetley to give the ever-expanding range of tea brands a run for their money. The trick of course will be to make the ad as chucklesome and warm as ever but with the tongue in cheek charm that brings it up to date - MCBD no doubt have a cunning plan; I still remember delivering corking research response about their marvellous mix of the timeless Alan Whicker with the ubermodern brand Travelocity. I look forward to a tongue in cheek style cuppa without even a hint of desperation.