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    Gas Prices Force Consumers to Put the Brakes on Discretionary Spending: Nielsen

    The new report shows significant numbers of consumers combining shopping trips, eating out less, and staying home more.

    Increasingly feeling the pain at the pump, more consumers in the U.S. are changing their spending habits to compensate for rising gas prices, according to new research from The Nielsen Co. Nearly two-thirds (63 percent) of consumers are reducing their spending, up 18 points since June 2007 and up 14 points in the last six months alone.
     
    Nielsen's research also finds that more consumers are combining shopping trips (78 percent), and more than half of consumers are now eating out less (52 percent) and staying home more often (51 percent).

    "With gas prices passing the $4 per gallon mark, consumers are altering their driving and spending habits at dramatic levels," noted Todd Hale, s.v.p., consumer & shopper insights, The Nielsen Co. "While discretionary spending is likely to be a challenge for most low and middle income shoppers, even affluent consumers are looking for ways to make their dollars go further."
     
    Increased fuel prices are leading nearly one-third (32 percent) of consumers to use more coupons as a way to save money, up from 25 percent in December 2007. Seeking to get the bulk of their errands done while using less gas, 28 percent of consumer report doing more of their shopping at supercenters, where more items are in one store.
     
    Nielsen's research also shows that more consumers (35 percent) are buying less expensive brands, up 12 points since December 2007. While private label and lower-priced brands stand to benefit from higher gas prices, Hale suggest retailers need to be cautious when making decisions about private label products.
     
    "Many retailers are increasing their focus on private label to help shoppers cope with rising gas and food prices," he said. "While private label shows significant growth, it's important to remember that more than half of private label sales growth comes from only four product categories -- milk, fresh eggs, cheese and bread or baked goods -- categories greatly impacted by inflationary pricing resulting from higher livestock feed prices or higher raw ingredient prices. Retailers need to be judicious in selecting categories where private label opportunities exist."
     
    While the outlook for the remainder of 2008 and 2009 are certain to be challenging, Hale suggests that CPG manufacturers and retailers can be creative, for their benefit and the benefit of their customers. 
     
    "Swings in fuel supply will continue to have a tremendous impact on consumer shopping and buying behavior," he said. "Retailers can take a creative approach to promotions, pricing, and partnerships, such as aligning themselves with gas retailers to reward loyal customers with less expensive gas, while manufacturers can minimize the impact of high gas prices by targeting products and advertising around at-home or at-work meals and at-home entertaining." 
     
    Results are based on Nielsen Homescan survey responses from nearly 50,000 U.S. consumers, geographically and demographically representative of the total U.S. population, according to Nielsen.  The survey was conducted during the first week of June 2008, when regular gas averaged $3.981.

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