Get Cash Back and $0 Commissions + The Power of TradeStation
Ibotta's Second Annual State of Spend Report Finds Majority of Consumers Sacrificing Brand Loyalty when Faced with Increased Costs as CPG Marketers Deepen Investment in Digital Promotions
Globe Newswire 24-Sep-2024 9:00 AM
DENVER, Sept. 24, 2024 (GLOBE NEWSWIRE) -- Ibotta, Inc. (NYSE:IBTA), the leading technology company providing digital promotions and performance marketing solutions, today released its second annual State of Spend report providing a comprehensive look at spending trends among U.S. consumers and consumer packaged goods (CPG) marketers alike. According to the study, 72% of shoppers say the economy has directly impacted their grocery spending habits, with a majority trading down to lower-priced alternatives in the face of rising grocery costs. In turn, marketers are placing greater emphasis on customer acquisition and long-term brand building to differentiate as private label competition grows.
Ibotta's findings are based on responses from more than 5,400 survey participants, including grocery shoppers and CPG brand marketers, and underscore the importance of utilizing promotions as an effective tool for creating long-term brand loyalty and value for shoppers – 75% of whom said they would try a different brand if it is offered at a lower price than what they usually buy.
"This year's State of Spend highlights the ongoing consumer struggle to overcome the compound effects of years of high grocery prices and stagnant shopper budgets, leading to growth in lower-cost private label brands," said Bryan Leach, founder and CEO of Ibotta. "If shoppers take an exit ramp to a private label product, brands understand that the cost of inaction is steep. As they think strategically about how to win consumers back, digital promotions have proven to be one of the most cost effective and immediate solutions for growing market share."
Key findings from Ibotta's 2024 State of Spend research include:
State of Spend: U.S. Grocery Shoppers
Consumers are spending more on essentials – and less on everything else. Shoppers reported spending an additional $302 on food and beverage essentials over the past year – causing people to cut their spending in more discretionary categories like personal care/beauty (down $9), pet care (down $5), health, (down $5), and cleaning/household (down $3). Within food and beverage, the categories with the biggest declines in year-over-year purchases may also be seen as discretionary: alcohol (down 8%), plant based meat/dairy (down 5%), snacks (down 4%), and frozen foods (down 3%).
Regardless of product necessity, more than half of consumers report switching to a less expensive alternative if something they normally buy has an increased price.
Shopping habits have evolved to meet budget and time constraints. Significantly fewer people are shopping at least once a week (80% in 2023, down to 77% in 2024), with the presence of a rewards or loyalty program being the top deciding factor for shoppers when choosing a grocery store.
Even though average monthly spend on household staples is flat year-over-year, 60% of consumers believe they are spending more this year compared to last. 70% say inflation has negatively impacted their household finances in the past 12 months, and 72% agree that the economy has a direct impact on their grocery spending habits, specifically.
Decision-making at the grocery store tends to be influenced most by price, quality, store sales and familiarity, respectively. This makes it harder for brands to get in the door with new consumers, as 74% of grocery purchases are repeat purchases (compared to 26% which are new).
Brands have an opportunity to encourage trial by using competitive pricing and promotional strategies. 75% of shoppers say they will try a different brand if it is offered at a lower price than what they usually buy, while 64% agree that price is more important than brand name.
Grocery stores and retailers can tap into shoppers' desire for value by offering promotional rewards to drive repeat business and sales. 78% of shoppers say they are more likely to return to a grocery store if they offer cash back, and 75% are more likely to buy more items if they can redeem a promotional offer.
State of Spend: CPG Marketers
Investment in digital promotions is on the rise – but their potential remains untapped. Digital promotions lead spending growth across tactics (up 26% from 2023), with a marked rise in use for early-stage engagement specifically (up 13% from 2023). However, there is a 12 point disconnect between how marketers and consumers perceive the positive brand value of promotions (64% and 76% respectively), suggesting marketers may be underestimating their power.
70% of marketers agree that the biggest threat to their brand is private label, driving the strategic focus on building brand equity, differentiating their offering, and expanding their customer base.
Marketers' top two priorities for measuring success are incremental sales and customer lifetime value (LTV), beating out other metrics such as market share, payback period and customer acquisition cost.
Incremental sales (70%) and LTV (68%) are the most common things marketers contemplate when evaluating success of their marketing initiatives.
More than two-thirds (67%) of CPG marketers say bringing new customers on board is more important than retaining current customers.
50% of the CPG marketers surveyed believe digital promotions will be even more of a priority for them three years from now.
All marketers, regardless of current usage, agree that digital promotions will continue to rise in importance, with 82% agreeing they will be an important part of future strategy for their brand.
A comprehensive look at the report can be found here.
Methodology CPG marketing data in this report are as of August 8, 2024. Informing the data in this report is an online survey of 422 CPG marketers at a CPG company or agency that works with CPG companies conducted by Ibotta during July 24 – August 8, 2024. Consumer marketing data in this report are as of June 23, 2024. Informing the data in this report is an online survey of 5,006 grocery shoppers in the general US population, representing the population across age, gender, and income conducted by Ibotta during June 14 – June 23, 2024.
About Ibotta ("I bought a...") Ibotta (NYSE:IBTA) is the leading provider of digital promotions for CPG brands, reaching over 200 million consumers through a network of publishers called the Ibotta Performance Network (IPN). The IPN allows marketers to influence what people buy, and where and how often they shop – all while paying only when their campaigns directly result in a sale. American shoppers have earned over $2 billion through the IPN since 2012. Ibotta is headquartered in Denver, and has been listed as a top place to work by The Denver Post and Inc. Magazine.
