Brand News
07 November 2022
The Week Ahead: DTC earnings, Inflation update, Election Day
Check out what's happening in ecommerce from Nov. 7-11, 2022.
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Welcome to a new week. The coming days will mark the culmination of a monthslong effort by focused teams to carefully study prevailing sentiment across the country, and bring forward a campaign that reaches people with the right message across platforms to inspire them to take action. For these upstart operations, the outcome will be make or break the ability to accomplish all that they want in 2023.
We’re not talking about Black Friday, yet. Tuesday is Election Day in the United States. providing voters with the opportunity to weigh in on key races for Congress, governor and ballot questions.
While the goals of political campaigns are oriented toward voting and legislating rather than selling goods, they employ many of the same tools as consumer brands, from data to personalization to the latest digital marketing techniques.
They even rely on some of the same indicators, like consumer sentiment. In the weeks leading up to the election, consumer confidence was running at its lowest levels since the beginning of the pandemic at a time when inflation continues to run at 40-year highs, according to Morning Consult. This is shaping how voters view the race, just as it makes a difference to their willingness to click "Buy."
We’ll find out which party put tactics and message together to convince more voters to click their button in the voting booth. Unfortunately, in this case there are no returns.
Here’s a look at the rest of this week’s happenings that are shaping the consumer economy:
Economic indicators
Consumer Credit: Last week, the Federal Reserve hiked interest rates, which will effectively make borrowing more expensive as these actions filter through the economy. This week, the Fed issues data on how much Americans have accumulated in loans, credit cards and other vehicles with its monthly report on consumer credit. (Nov. 8)
Consumer Price Index: The US Commerce Department issues its report showing the inflation rate for October. Bank of America economists expect an inflation rate of 7.8% year-over-year, which would be a slowing of price growth from September’s level of 8.2%. Timed with this print, Adobe also typically releases its monthly digital price index, showing the ecommerce inflation rate. (Nov. 10)
University of Michigan Consumer Sentiment: The initial reading from the University of Michigan Survey of Consumers provides a snapshot of consumer buying conditions and outlook. This measure has remained near all-time lows amid this year’s bout with inflation. (Nov. 11).
Earnings
Many of the most prominent publicly traded direct-to-consumer brands will report quarterly earnings this week, providing insights on consumer patterns and how brands are navigating a tough retail environment.
Monday, Nov. 7: Blue Apron, Hims & Hers, SmileDirectClub.
Tuesday, Nov. 8: Allbirds, Affirm, Coty, SquareSpace, The RealReal.
Wed., Nov. 9: Boxed, Bark, Canoo, Olaplex, HanesBrands, Purple.
Thursday, Nov. 10: Warby Parker, Solo Brands, Yeti, Figs, Grove Collaborative, AKA Brands, Brilliant Earth, Poshmark, Tapestry Inc., Ralph Lauren, Utz Brands, WeCommerce, Wix.
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Marketing
09 June
'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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