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Welcome to a new week. Retailers take center stage in the ever-present effort to paint the most up-to-date picture of consumer demand. Industry heavyweights such as Walmart, Target and Home Depot report earnings, while the U.S. Commerce Department reports total retail sales for April. Plus, industry leaders gather at a Goldman Sachs forum, and in New Orleans for Future Forward.
Here’s a look at the calendar:
Goldman Sachs Global Staples Forum: Leading CPG brands broadcast updates on strategy and sales outlook for 2023 to top investors. (Tues., May 16)
Future Forward: Path to Purchase Institute presents a three-day event with a look at the latest shopper behavior and retail trends across in-store and ecommerce. (May 16-18, New Orleans)
Retail sales: The U.S. Commerce Department reports total sales for April 2023 at retailers across a wide cross-section of consumer categories, including ecommerce. This is a broad-based indicator of consumer demand. (Tues., May 16, 8:30 a.m.)
Fed Chair speaks: Federal Reserve Chairman Jerome Powell will take part in a panel discussion on monetary policy. Observers will be looking for hints of the Fed’s next move on interest rates in the battle to curb inflation. Officials have indicated that pausing rate hikes is on the table. (Fri., May 19, 11 a.m.)
Tues., May 14: Home Depot
Wed., May 15: Target, TJX
Thurs., May 16: Walmart, Dole, Farfetch, Bath & Body Works
Friday, May 17: Foot Locker
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.