* Price more important to Millennials - Wal-Mart's Simon
* Consumers won't loosen belts quickly - Sainsbury CFO
* Private label seen at 50 pct of food sales by 2025
* More products offered at 1 pound, 1 euro
* "Lipstick effect" helps demand for luxury, treats
* Value and premium products set to steal more share
By Emma Thomasson and Dhanya Skariachan
LONDON/NEW YORK, Sept 12 Consumers are sticking
to frugal shopping habits developed in the recession even as
developed economies show signs of recovery, suggesting some
behaviour changes could be permanent, industry executives say.
With household budgets under pressure since the financial
crisis of 2008, consumers have flocked to discount stores,
shifted from branded goods to private-label alternatives and
shopped more often at convenience stores or online rather than
spending on expensive fuel to drive to out-of-town hypermarkets.
Those trends have benefited discounters like Aldi and Lidl
as well as retailers that have the widest own-label ranges and
networks of smaller stores, prompting consumer goods firms to
retaliate with brand promotions and smaller packaging.
"If you look at data from Millennials, who have really sort
of grown up with this, price is more important to them ... than
it was to the last generation," Walmart U.S. Chief Executive
Bill Simon told the Reuters Global Consumer and Retail Summit,
referring to the generation born between 1980 and 2000.
Walmart U.S. is the largest unit of Wal-Mart Stores Inc
, the world's largest retailer which benefited from
trading-down during the recession, but cut its forecasts last
month, citing weak results in many key markets.
The U.S. economy is expected to accelerate towards the end
of the year, helping cut unemployment, while the euro zone's
tentative recovery looks set to continue, although wage growth
will continue to lag inflation, dampening purchasing power.
John Rogers, chief financial officer of Britain's No. 3
grocer J Sainsbury, said consumer behaviour was not yet
responding to signs of economic recovery.
"Consumers are still in the place of tightening their belts,
watching how they spend, savvy shopping," he told Reuters in
London. "That's not a change that is going to quickly reverse."
Rogers said consumers were unlikely to change the habit of
shopping more frequently and wasting less food as the economy
recovers: "It is an ingrained behaviour," he said.
Strong growth of sales at convenience stores and online, as
well as of own-label goods which rose to nearly 7 percent in the
first quarter, have helped Sainsbury outperform Tesco,
Wal-Mart's Asda and Morrisons.
Rabobank expects private-label goods to double their share
of food retail to 50 percent by 2025 from 25 percent in 2010,
although growth has slowed in some mature markets as brands and
stores have launched promotions like "buy one, get one free".
"The moment they stop with promotions, private label grows
again. It is a temporary effect," said Rabobank analyst
In addition to aggressive promotions, consumer goods firms
like Unilever and Reckitt Benckiser have
responded to the own-label threat by offering brands like Dove
soap or Harpic toilet freshener in smaller packs as well as with
new value ranges.
"It is amazing how consumer behaviour has changed especially
in southern Europe," Unilever CFO Jean Marc Huet told the
Reuters summit, noting a lack of traffic on a visit to Lisbon.
"Some consumer behaviour is going back 20, 30, 40 years."
Unilever is packaging more products around the 1 pound or 1
euro price, as well as rolling out completely new budget brands
of margarine and ice cream for struggling economies like Greece.
"We don't expect any significant changes in developed
markets, both for Europe and for North America," said Huet.
Reckitt Chief Executive Rakesh Kapoor told the Reuters
summit the recession had prompted his company to do more testing
of product innovations in emerging economies like Brazil and
then roll them out to mature markets, reversing the usual trend.
"At this point of time, people will think about value in a
much more holistic way. They look at price points and benefits
in combination," he said. "So you lower the price, improve
benefits and it is very appealing for consumers."
WAIT FOR SALES
A Euromonitor survey from 2011 showed that three-quarters of
U.S. and British consumers expressed a strong interest in
finding bargains, with a majority of Brazilians, Germans and
French also keen on a good deal, while fewer than half of
Indians, Chinese and Japanese were bargain hunters.
"It is now ingrained for people to wait for the sales. The
sales have become ongoing and constant," said Euromonitor senior
retailing analyst Antonia Branston, adding that other habits
such as shopping around for food deals might be less enduring.
"It became quite fashionable to be penny pinching but that
kind of thing isn't sustainable. After a while it becomes a
grind to shop around for the cheapest product," she said.
The recession has also produced what some marketers call the
"lipstick effect" - consumers still treat themselves to small
luxuries like cosmetics, a glass of champagne or premium
chocolates even as they economise elsewhere.
"The crisis has reinforced this trend of consuming champagne
at home," Pierre-Emmanuel Taittinger, Executive Chairman of
Taittinger champagne, told Reuters in Paris, adding that in
restaurants more champagne was now drunk by the glass.
Rabobank expects the squeeze on mid-range products to
persist, predicting that value products will make up 30 percent
of spending by 2017 from 25 percent now as premium products grow
to 20 percent from 15 percent.
"In a recession people become more aware of value for money
but also want to indulge themselves. So they shop at Lidl but
also buy Prada shoes," Rabobank's Schreijen said.
(For other news from the Reuters Global Consumer and Retail
Summit, click here)
(Additional reporting by Astrid Wendlandt in Paris, Martinne
Geller in London; editing by David Evans)