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Welcome to a new week. We’re going to get a big piece of the puzzle to help determine the results of the 2022 holiday season when U.S. retail sales data is reported by the Commerce Department. The industry calendar is also busy with the NRF Big Show in New York and Winter Fancy Food Show in Las Vegas. Plus, Procter & Gamble's earnings call will be a bellwether for Q4.
NRF Big Show: Retailers gather in New York for the National Retail Federation’s kickoff to the year. CEOs and top leaders from Walmart, Target, Macy’s, Lowe’s, Express and Neiman Marcus will headline a host of speakers throughout keynote sessions and breakouts. Plus, an expo features innovation and technology trends coming to the industry. (Jan. 14-17)
Winter Fancy Food Show: The Specialty Food Association presents three days of discovery, sampling, trendspotting, and networking for makers, buyers, retailers, brokers, distributors, and other industry professionals in Las Vegas. (Jan. 15-17)
U.S. retail sales: The U.S. Commerce Department reports data on retail sales of all types for December. This will include a good chunk of the holiday spending, allowing analysts to combine it with November figures for a picture of the overall peak season. (Jan. 18, 8:30 a.m.)
Retail inventories: The U.S. Commerce Department releases data on inventory levels for the retail trade. This has been watched closely at a time when many retailers are looking to work out of a glut of merchandise caused by supply chain issues and forecasting. (Jan. 18, 10 a.m.)
Producer Price Index: The U.S. Commerce Department releases inflation data for December on the price of goods before they reach retail. Also known as wholesale inflation, this is considered a forward-looking measure. (Jan. 18, 8:30 a.m.)
Housing starts + Existing home sales: The U.S. Commerce Department will reveal data that is carefully monitored by the housing industry, including home retailers. (Jan. 19-20)
Tuesday, Jan. 17: Morgan Stanley, Goldman Sachs
Thursday, Jan. 19: Procter & Gamble, Netflix
Amazon layoffs are set to begin on Wednesday, Jan. 18. CEO Andy Jassy previously shared that the company will lay off 18,000 people to begin the calendar year as it seeks to cut costs. The layoffs will primarily affect the company’s commerce division, as well as people operations.
Trending in Economy
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.