Ibotta's Second Annual State of Spend Report Finds Majority of Consumers Sacrificing Brand Loyalty when Faced with Increased Costs as CPG Marketers Deepen Investment in Digital Promotions

Rhea-AI Summary

Ibotta's second annual State of Spend report reveals significant shifts in consumer behavior and CPG marketing strategies amidst economic pressures. 72% of shoppers report the economy directly impacting their grocery habits, with many opting for lower-priced alternatives. Key findings include:

1. Consumers spent an additional $302 on food and beverage essentials over the past year, cutting back on discretionary categories.

2. 75% of shoppers would try a different brand if offered at a lower price.

3. 70% of CPG marketers view private labels as the biggest threat to their brands.

4. Digital promotions are seeing increased investment, up 26% from 2023.

5. 67% of CPG marketers prioritize new customer acquisition over retention.

The report underscores the growing importance of digital promotions in building brand loyalty and value for cost-conscious consumers.

Positive

• Digital promotions investment increased by 26% from 2023, indicating a shift towards more effective marketing strategies
• 75% of shoppers are willing to try different brands at lower prices, presenting opportunities for market share growth
• 78% of shoppers are more likely to return to stores offering cash back, suggesting potential for increased customer loyalty
• 50% of CPG marketers believe digital promotions will be a higher priority in three years, indicating future growth potential
• Marketers are focusing on incremental sales and customer lifetime value as key success metrics, aligning with long-term business goals

Negative

• 72% of shoppers report the economy directly impacting their grocery spending habits, potentially reducing overall consumer spending
• Consumers are spending less on discretionary categories like personal care, pet care, and health products, which could affect sales in these sectors
• 70% of marketers view private labels as the biggest threat to their brands, indicating increased competition
• Fewer people are shopping at least once a week (77% in 2024 vs 80% in 2023), potentially reducing overall sales volume
• 74% of grocery purchases are repeat purchases, making it challenging for new brands to enter the market

DENVER, Sept. 24, 2024 (GLOBE NEWSWIRE) -- Ibotta, Inc. (NYSE: IBTA), the leading technology company providing digital promotions and performance marketing solutions, today released its second annual State of Spend report providing a comprehensive look at spending trends among U.S. consumers and consumer packaged goods (CPG) marketers alike. According to the study, 72% of shoppers say the economy has directly impacted their grocery spending habits, with a majority trading down to lower-priced alternatives in the face of rising grocery costs. In turn, marketers are placing greater emphasis on customer acquisition and long-term brand building to differentiate as private label competition grows.

Ibotta’s findings are based on responses from more than 5,400 survey participants, including grocery shoppers and CPG brand marketers, and underscore the importance of utilizing promotions as an effective tool for creating long-term brand loyalty and value for shoppers – 75% of whom said they would try a different brand if it is offered at a lower price than what they usually buy.

“This year’s State of Spend highlights the ongoing consumer struggle to overcome the compound effects of years of high grocery prices and stagnant shopper budgets, leading to growth in lower-cost private label brands,” said Bryan Leach, founder and CEO of Ibotta. “If shoppers take an exit ramp to a private label product, brands understand that the cost of inaction is steep. As they think strategically about how to win consumers back, digital promotions have proven to be one of the most cost effective and immediate solutions for growing market share.”

Key findings from Ibotta’s 2024 State of Spend research include:

State of Spend: U.S. Grocery Shoppers

• Consumers are spending more on essentials – and less on everything else. Shoppers reported spending an additional $302 on food and beverage essentials over the past year – causing people to cut their spending in more discretionary categories like personal care/beauty (down $9), pet care (down $5), health, (down $5), and cleaning/household (down $3). Within food and beverage, the categories with the biggest declines in year-over-year purchases may also be seen as discretionary: alcohol (down 8%), plant based meat/dairy (down 5%), snacks (down 4%), and frozen foods (down 3%).
  • Regardless of product necessity, more than half of consumers report switching to a less expensive alternative if something they normally buy has an increased price.
• Shopping habits have evolved to meet budget and time constraints. Significantly fewer people are shopping at least once a week (80% in 2023, down to 77% in 2024), with the presence of a rewards or loyalty program being the top deciding factor for shoppers when choosing a grocery store.
  • Even though average monthly spend on household staples is flat year-over-year, 60% of consumers believe they are spending more this year compared to last. 70% say inflation has negatively impacted their household finances in the past 12 months, and 72% agree that the economy has a direct impact on their grocery spending habits, specifically.
• Decision-making at the grocery store tends to be influenced most by price, quality, store sales and familiarity, respectively. This makes it harder for brands to get in the door with new consumers, as 74% of grocery purchases are repeat purchases (compared to 26% which are new).
  • Brands have an opportunity to encourage trial by using competitive pricing and promotional strategies. 75% of shoppers say they will try a different brand if it is offered at a lower price than what they usually buy, while 64% agree that price is more important than brand name.
  • Grocery stores and retailers can tap into shoppers' desire for value by offering promotional rewards to drive repeat business and sales. 78% of shoppers say they are more likely to return to a grocery store if they offer cash back, and 75% are more likely to buy more items if they can redeem a promotional offer.
    

State of Spend: CPG Marketers

• Investment in digital promotions is on the rise – but their potential remains untapped. Digital promotions lead spending growth across tactics (up 26% from 2023), with a marked rise in use for early-stage engagement specifically (up 13% from 2023). However, there is a 12 point disconnect between how marketers and consumers perceive the positive brand value of promotions (64% and 76% respectively), suggesting marketers may be underestimating their power.
• 70% of marketers agree that the biggest threat to their brand is private label, driving the strategic focus on building brand equity, differentiating their offering, and expanding their customer base.
• Marketers’ top two priorities for measuring success are incremental sales and customer lifetime value (LTV), beating out other metrics such as market share, payback period and customer acquisition cost.
  • Incremental sales (70%) and LTV (68%) are the most common things marketers contemplate when evaluating success of their marketing initiatives.
  • More than two-thirds (67%) of CPG marketers say bringing new customers on board is more important than retaining current customers.
  • 50% of the CPG marketers surveyed believe digital promotions will be even more of a priority for them three years from now.
  • All marketers, regardless of current usage, agree that digital promotions will continue to rise in importance, with 82% agreeing they will be an important part of future strategy for their brand.
    

A comprehensive look at the report can be found here.

Methodology
CPG marketing data in this report are as of August 8, 2024. Informing the data in this report is an online survey of 422 CPG marketers at a CPG company or agency that works with CPG companies conducted by Ibotta during July 24 – August 8, 2024. Consumer marketing data in this report are as of June 23, 2024. Informing the data in this report is an online survey of 5,006 grocery shoppers in the general US population, representing the population across age, gender, and income conducted by Ibotta during June 14 – June 23, 2024.

About Ibotta ("I bought a...")
Ibotta (NYSE: IBTA) is the leading provider of digital promotions for CPG brands, reaching over 200 million consumers through a network of publishers called the Ibotta Performance Network (IPN). The IPN allows marketers to influence what people buy, and where and how often they shop – all while paying only when their campaigns directly result in a sale. American shoppers have earned over $2 billion through the IPN since 2012. Ibotta is headquartered in Denver, and has been listed as a top place to work by The Denver Post and Inc. Magazine.

Contact
Corporate Communications
Hilary O’Byrne, hilary.obyrne@ibotta.com

FAQ

How has inflation affected consumer spending according to Ibotta's 2024 State of Spend report?

According to the report, 70% of consumers say inflation has negatively impacted their household finances in the past 12 months, with 72% agreeing that the economy directly impacts their grocery spending habits.

What percentage of shoppers would try a different brand if offered at a lower price, as per Ibotta's (IBTA) 2024 report?

The report states that 75% of shoppers say they will try a different brand if it is offered at a lower price than what they usually buy.

How much additional spending on food and beverage essentials did consumers report in Ibotta's 2024 State of Spend study?

Shoppers reported spending an additional $302 on food and beverage essentials over the past year, according to Ibotta's 2024 State of Spend report.

What is the biggest threat to CPG brands according to marketers in Ibotta's 2024 report?

The report indicates that 70% of marketers agree that the biggest threat to their brand is private label products.

How has investment in digital promotions changed according to Ibotta's (IBTA) 2024 State of Spend report?

The report shows that investment in digital promotions has increased by 26% from 2023, leading spending growth across marketing tactics.