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Information Resources Inc. (IRI) has released a new study, “IRI Times & Trends Special Report: Competing in a Transforming Economy,” that essentially argues that regardless of whether the nation officially is in a recession, the US economy is most assuredly undergoing a significant transformation that can been in increased prices, high unemployment and declining real estate values.

“These burdens,” says Thom Blischok, president of IRI Consulting and Innovation, “are driving fundamental shifts in what consumers buy and where they shop. Consumers are forced to make tradeoffs. Competing in this new, evolving economy requires fine-tuned pricing, promotion, assortment and brand development strategies that are built on an in-depth understanding of a changing consumer in a transforming economy. The challenges of growing in this economy are significant, but there are windows of success.”

Among the key findings:

• “Escalating prices have bred exceptionally high price sensitivity, driving declining demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated channel migration.”

• “Long-standing consumer purchase drivers, including convenience and health and wellness, are losing some momentum; consumers are foregoing ultra-convenience, and some shoppers are unable to afford healthier foods.”

• “Consumers are increasing purchases of basic ingredients and meal components due to reduced restaurant spending and are decreasing purchases of ‘non-essentials’.”

KC's View:
Transformation.

That’s a serous word. But the argument that IRI makes is a compelling one, and it is an argument that we’ve been advancing around here for some months.

It just feels like the world is changing. Culturally. Economically. Environmentally. Geo-politically. It just feels like the old assumptions are falling away, and that everything is in play, from how we work to how we travel to how we perceive our customers to what kind of world we are going to leave our children. (I say this on a day when it has been reported that General Motors is looking to unload its previously profitable and prestigious Hummer division, and that Ed McMahon may lose his Beverly Hills house because of the mortgage crisis. Talk about dominoes falling…)

This isn’t cynicism or pessimism…rather, I think it is a time of tremendous opportunity, if we marshal our forces and collective intelligence and deal with reality. And even have the tenacity and temerity to think we can shape a better, more sustainable reality.