Economy
27 November 2022
The Week Ahead: Cyber Monday; inflation data; Kroger, Ulta earnings
Check out what's ahead in commerce for Nov. 28- Dec. 2.
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Welcome to a new week. The holiday season is in full swing, with Cyber Monday arriving to bookend the Cyber Five with an exclamation point for ecommerce. Later in the week, a bevy of earnings from retailers will provide plenty of color around the holiday weekend results. Meanwhile, economic data from the federal government will provide a portrait of consumer demand, and cover both sides of the Federal Reserve’s dual mandate of jobs and inflation as the central bank considers whether to slow the pace of interest rates.
Events
Cyber Monday: The biggest shopping weekend of the year closes out with a bevy of online deals. Adobe Analytics forecasts that Cyber Monday will bring in $11.2 billion via ecommerce, which would be an increase of 5.1% over 2021. It’s the culmination of a promotional period that has been running for (at least) a week. Underscoring the point, Amazon started Cyber Monday savings on Saturday. (Nov. 28)
Economic indicators
Consumer Confidence Index: The Conference Board releases the monthly measure of attitudes and expectations on key economic topics including inflation and interest rates. This comes after consumer sentiment, as measured by the University of Michigan, fell 5% for the month. (Nov. 29, 10 a.m.)
Retail Inventories: The US Commerce Department provides a look at the goods sitting in retailers’ stock for the prior month. In September, this measure fell slightly by 0.1% month-over-month for the first time since June 2020, but the rate remains high amid the glut of inventory that followed supply chain issues. (Nov. 29, 8:30 a.m.)
JOLTs: The Job Openings and Labor Turnover Survey from the US Bureau of Labor Statistics offers a measure of available roles, quits and hiring for the prior month. (Nov. 30, 10 a.m.)
Personal Consumption Expenditures: The US Bureau of Economic Analysis releases its report on consumer spending and inflation for October. The price index in this report is closely watched by the Federal Reserve, and all eyes will be on whether it shows cooling in the same way that the Consumer Price Index did earlier this month. (Dec. 1, 8:30 a.m.)
Jobs report: The US Bureau of Labor Statistics releases its monthly report on unemployment and job creation for November. This is the key measure of the labor market, and serves as a dual-sided indicator. Any new jobs added will be seen as good for demand at the outset of the holiday season, while an uptick in unemployment may provide evidence that the Federal Reserve’s inflation-fighting efforts to cool demand through interest rates are having an effect. (Dec. 2, 8:30 a.m.)
Earnings
- Mon., Nov. 28: Pinduoduo
- Wed., Nov. 30: Hormel Foods, PVH Corp., Victoria’s Secret and Co., Salesforce, Simply Better Brands, Five Below.
- Thurs., Dec. 1: Ulta Beauty, Designer Brands, Kroger, Lands End, Tillys, Zumiez.
- Fri., Dec. 2: Kirkland’s
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Marketing
09 June 2023
'There's a lot of ways to frame value'
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
Photo by Kelly Common on Unsplash
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.
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