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Consumer confidence in June dips to five-month low

BY Katherine Boccaccio

Washington, D.C. — The Conference Board, in its monthly sentiment index released on Wednesday, said that confidence among U.S. consumers dropped in June for a fourth consecutive month, reaching a five-month low.

The research firm’s sentiment index fell to 62, from a revised 64.4 in May. The slide in confidence raises the risk that the recently revealed slowdown in hiring will cause households to curb spending.

The median forecast of 69 economists surveyed by Bloomberg News projected the U.S. confidence index would fall to 63.

The Conference Board’s confidence gauge reflected growing concern about the short-term outlook. The gauge of expectations for the next six months fell to 72.3, the lowest level since November, from 77.3 a month earlier. The measure of present conditions climbed to 46.6 from 44.9 in May.

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Deloitte Study: Smartphones ramp up, rather than take away, in-store sales

BY Katherine Boccaccio

New York — A study released Wednesday by Deloitte found that smartphones – which already influence 5.1% of all retail store sales in the United States – are expected to impact 19% of total store sales, amounting to $689 billion, by 2016.

“The Mobile Influence Factor in Retail Sales” research study by Deloitte also indicated that mobile activities are contributing to, and not taking away from, in-store sales. In fact, said Deloitte, smartphone shoppers are 14% more likely to convert and make a purchase in the store than non-smartphone users.

“This means that mobile is an important tool for retailers to incrementally drive traditional in-store sales, strengthening the relationship between retailer and consumer to increase engagement and loyalty," said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader.

To better understand the growing impact of mobile devices on the retail sector, Deloitte’s retail & distribution practice and Deloitte Digital conducted the in-depth survey of U.S. consumers about how they use their smartphones to shop today and their likelihood of using them in future buying decisions.

Among the report’s other key findings:

Nearly half (48%) of smartphone owners surveyed say their phones have influenced their decision to purchase an item in a store, and the study shows that consumers’ smartphone use tends to be highest at or near the point of purchase.

More than six out of 10 (61%) of smartphone owners who use their devices to shop have done so while shopping at the store, and 52% reach for their phones on the way to the store.

Smartphone-toting consumers appear more likely to make a purchase than those who do not own one or do not use it to assist in-store shopping. When asked about their most recent shopping trip, 72% of smartphone owners indicated they made a purchase on that day, compared with 63% of respondents who did not use a phone. Smartphone users were also more likely to eventually make a purchase: among those who did not buy anything on their last trip, 59% of those who used a smartphone eventually made a purchase, compared to only 22% of those who did not use one.

The report emphasized the importance of mobile apps, which, said Deloitte, appear to be the inroad to consumer engagement. Nearly four out of 10 (37%) of smartphone owners surveyed who used a smartphone on their last shopping trip utilized a third-party mobile shopping application, and more than one-third (34%) used a retailer’s mobile application.

"Retailers that do not engage shoppers through specialized mobile applications or targeted smartphone-based promotions leave the door open for competitors to reach a customer who is standing in the retailer’s store and at the point of purchase," said Kasey Lobaugh, principal and direct-to-consumer and multichannel leader, Deloitte Consulting LLP. "To make the connection with consumers, retailers need to understand how mobile shoppers are willing to interact with their specific store category, format and merchandise, both inside and outside the store, and customize their mobile strategy around the shopper’s needs and experience."

As consumers buy smartphones, they are quick to tap their devices for shopping assistance, with smartphone use for store-related shopping increasing 40% after the first six months of ownership, according to Deloitte’s survey. Once these consumers are on board, they consistently use their phones for 50% to 60% of their store shopping trips, depending on the store category.

The survey found that the mobile influence factor is strongest among younger shoppers: 67% between 14 and 34 years old have used their devices to shop, and 55% indicate their smartphones have influenced their decision to make a purchase.

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Nielsen names new product winners

BY CSA STAFF

Launching new products is difficult in the best of times, but winners of the 2012 Nielsen Breakthrough Innovation Award found ways to succeed during one the worst recessions in a generation.

Nielsen announced recipients of the awards at its annual Consumer 360 event in Hollywood, Fla., this week after analyzing more than 11,000 new products in the United States between 2008 and 2010. Of the products evaluated, only 34 met award criteria. These products comprise less than 0.5% of all new product introductions during the period.

The 2012 Breakthrough Innovation winners were classified in tiers consisting of the following:

  • Platinum: Zyrtec, Bud Light Lime, Arnold Select Sandwich Thins for 2008, Chobani and Prevacid24HR for 2009 and Glaceau vitaminwater zero for 2010.

  • Gold: Nature Sweet Cherubs, Powerade ION4 Zero, Wonderful Pistachios, Tide Total Care for 2008, SoBe 0 Calorie Lifewater, Trop 50, Trident Layers, Plan B One-Step, Budweiser Select 55, Next Choice, Dove Men+Care for 2009 and Silk PureAlmond Milk, Thomas’ Bagel Thins, U by Kotex, PF Chang’s Home Menu, Schick Hydro for 2010.

  • Silver: Keebler Town House Flipsides, Miller Genuine Draft 64, Always Infinity, K-Y Yours+Mine for 2008, Nature Pride Variety Bread, Olay Professional Pro-X, Align Probiotic, Tide Stain Release, Fancy Feast Appetizers for 2009 and Special K Fruit Crisps, Oscar Mayer Selects, Lean Cuisine Market Collection for 2010.

Nielsen said its innovation awards are in contrast to those that focus on “one-year wonders,” because its program honors new products that succeed on multiple dimensions over a three-year period. This is the first year Nielsen has presented the award.

“To successfully launch a new product in any economy is beating the odds, but to launch and sustain success during a recession is remarkable,” said Vicki Gardner, SVP product innovation for Nielsen. “Breakthrough Innovation Award winners have unique bragging rights among CPG innovators.”

To be considered, honorees were expected to deliver on such attributes as distinctiveness, relevance, category impact and endurance. Although the study was conducted at the product level, there were companies whose successes underscored an organization-wide commitment to ongoing product innovation. For example, Procter & Gamble led the way with five initiatives making the list. Anheuser-Busch, Coca-Cola, Johnson & Johnson, Kellogg, Nestlé, PepsiCo, and Unilever each had two initiatives.

Winners followed multiple paths, but shared common themes. One trait shared was the understanding that getting it right the first time is neither likely nor important. Winners built a test-and-refine process to build in iterations before launch. Also, breakthrough Innovation leaders followed one of two activation models that Nielsen identified as sprinters or marathoners.

Sprinters were products that raced out of the gate in year one, then allowed momentum to sustain in-market performance in year two. Marathoners were products that deliberately start out at a slower pace and build on their success in subsequent years.

The typical sprinter profile is a larger company not straying far from the existing portfolio. They price at a premium, are aggressive with in-market trial and average nearly $50 million in one-year traditional advertising spend. After racing out of the gate, sprinters take their foot off the accelerator in subsequent years, shifting focus from growth to profitability.

Marathoners tend to be smaller companies who spend one-third as much on advertising in year one, but build support in year two, realizing an average of 80% growth in the second year.

For Profiles of the winners or to download a copy of the 2012 Breakthrough Innovation Report.

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