FMCG in 2023: Between rational shopping and emotional messaging Take a look at the latest consumer sentiments, and intentions and motivations for the near future: How will shoppers cope? What are the implications? <big>FMCG in 2023 Between rational shopping and emotional messaging Content 1. Introduction Inflation 2023: Of coping and cutting 2. Change in shopping behavior Rational behavior intensifiesConsumers continue to cut their budgets 3. Categories under pressure Not the time for treats 4. Categories, a country perspectiveDowntrading spurs private labelsIn depth – UkraineIn depth – RomaniaIn depth – Germany 5. The anatomy of retail channels Be where the shopper is 6. Balancing short-term drivers and macrotrendsIntensify promotion and personalization 7. Digital promotion, a country perspectiveIn depth – Sweden and Denmark 8. Messaging: emotional and real Be part of the change9. Final thoughts Look after your shoppers Introduction Inflation 2023: Of coping and cuttingAs of March 2022, the past year saw soaring prices and an inflation rate reaching more than 10% on average across Europe. In December 2022, the European Central Bank (ECB) raised its inflation projections for the euro zone to 6.3% in 2023. Prices – from energy to FMCG – will continue to increase for at least another two years, though the rate is expected to slow down in 2024.As a result, shoppers will continue to be confronted with higher prices and budget squeezes in 2023 and will be forced to constantly adjust their household spend. This whitepaper takes a closer look at latest consumer sentiments, and resulting intentions and motivations for the near future: How will shoppers cope? If they need to cut their FMCG expenditures, which categories, brands and products will be losing out – and what are the implications for manufacturers and retail?The findings shared in this whitepaper originate from GfK’s Consumer Panel, enhanced by individual market research of GfK Why2Buy surveys, analyzing the shoppers’ perspective, motivations and lifestyle needs through registered purchases representing a market of 174 million households in 14 countries. GfK conducted two surveys on Behavior Change in April and most recently in November 2022, which included 15 countries – seven in Western Europe, eight in Central and Eastern Europe – and 7,855 respectively 9,634 shoppers.Insights into country differences and similarities in Europe are shared by GfK experts from Denmark and Sweden, Germany, Romania and Ukraine. GfK. Growth from Knowledge.For over 85 years, we have earned the trust of our clients around the world by supporting them in business-critical decision-making processes around consumers, markets, brands, and media. Our reliable data and insights, together with advanced AI capabilities, have revolutionized access to real-time, actionable recommendations that drive marketing, sales and organizational effectiveness of our clients and partners. That’s how we promise and deliver Growth from Knowledge.In addition to this whitepaper, click the button below for the on demand GfK webinar “Coping and cutting: Behavior change in times of instability”.Click here Lenneke Schils, Global Insights Director FMCG, GfK, Lenneke.Schils@gfk.com Marina Zabarilo, Director, Consumer Panel, FMCG & Retail Ukraine GfK Ukraine, Marina.Zabarilo@gfk.com Diana Scaunasu, Consumer Panel Lead, GfK Romania, Diana.Scaunasu@gfk.com Anna-Katherina Kraus, Commercial Director, Advanced Solutions, GfK Germany, Anna-Katharina.Kraus@gfk.com Myriam Martensen, Commercial Director Nordics, GfK, Myriam.Martensen@gfk.com Change in shopping behavior Rational behavior intensifiesConfronted with continued instability, consumers unsurprisingly demonstrate more rational purchasing behavior, which goes way beyond pure shopping as people are being forced to change their lifestyle altogether. For 73% of Europeans, saving energy has become a daily routine, nearly one third switched to a cheaper energy source. An alarming 55% of consumers state that saving has become an absolute necessity for them, not only with regards to energy but also daily needs, including food.If we compare the current financial situation of households to April 2022, we notice a slight increase of up to 38% of Europeans struggling financially, this time especially in Western European countries such as the Netherlands, Austria and Denmark. Similarly, 16% of Europeans (April 2022: 15%) fear for their job, with an increase especially in Denmark, Germany and Serbia. Slight increase in financial and job worries – especially in Western EuropeSource: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834 & April ‘22 n=7,855A closer look at GfK’s crisis types, that combine financial situation and employment security, shows increased budget concerns: over 60% of European households are in or close to a serious budget squeeze, with especially Western European countries on the rise. Across Europe, 44% of shoppers are “concerned”, struggling financially and slightly worrying about their job or not working (+1% in November 2022 vs. April 2022), a constant 18% are “affected”, being highly afraid to lose their job or currently unemployed, whereas 38% of “resistant” shoppers (-1% compared to April) are in a financially comfortable situation with no or only slight worries about their job, or no longer working.While the crash in consumer sentiment seems to slow down, the rollercoaster of the past months continues: Both economic and income expectations in the EU seem to recover ever so slightly in 2023 after hitting an all-time low in autumn, albeit still quite negative. However, Germany showed the fourth increase in a row in January 2023, so one could assume that consumer climate is starting a cautious rebound, albeit from an extremely low level.European Consumer Climate goes up slightly at the begin of the year 2023Source: GfK, EU Commission January 2023This slightly positive development is supported by most recent inflation rates. In Germany, for example, inflation decreased for the second consecutive month in December 2022, reaching 8.6%, and an annual rate of 7.9%, after a 10-percent-peak in October1. Similarly, inflation rate in the Euro zone saw a slight decrease from 10.1% to 9.2% in December. According to Eurostat, the Baltic countries still reach the highest rate of 20%, while Luxemburg fell to 6.2% and France to 6.7%, with Spain at the bottom of the list at 5.5%.1 Source: Federal Statistical Office of GermanyConsumers continue to cut their budgetsBut even with a slight upturn in sentiment, the cost-of-living crisis will persist and throughout 2023 consumers will make a lot of efforts to cut their expenditures further. This budget balancing act will have a strong impact on numerous areas including FMCG: nearly 2 in 3 consumers declare to cut their out-of-home (OOH) spend, rather eating at home, and 59% plan to stick to cheaper brands. After COVID-19 we are now seeing a next phase of “homing-in” within a short period of time.Industries, products and services hit hardest by these budget cuts will be OOH activities (-54%), including visiting restaurants and bars, clothes (-48%), as well as gifts, decoration and take-away/delivery (all at -46%). Plan to do much more/much less, next 6 monthsSource: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834For those struggling, cuts go a long way. Obviously, holidays, restaurants and amusement are off their list, but consequences expand well beyond the personal financial situation into the realm of healthy living: consumers feel forced to also spend less on lifestyle treatment and health, including sports equipment and memberships. With consumers being forced to abandon healthy lifestyle choices, a lasting spillover into the public health system already under pressure in numerous countries should not be underestimated. The pandemic forced many to limit or even cancel fun and health activities for almost two years. Recently, only the resistant have been in a comfortable enough financial situation to resume a “normal”, pre-pandemic life. Nonetheless, virtually everybody (93%) has changed his or her behavior in one way or the other in reaction to inflation and instability. More than 50% choose to eat at home rather than in restaurants, and over 40% are shopping around in different stores, also switching to cheaper brands, including discounter brands. 1 in 3 Europeans have taken measures to save energy and use less water, buy less food/drinks on-the-go or plan recipes according to budget. Some coping strategies are very common, others specific to single consumer groups or countries. In Italy, for example, more than 50% of consumers use their household appliances to a lesser extent, above all the oven (18% less) and the washing machine (15% less).Source: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834For struggling consumers, impulse behavior is a thing of the past and planning ahead is a must: 46% plan recipes according to budget, whereas this is by no means popular among those in a comfortable position. There is a real need for cost-efficient yet healthy meal planning and especially retailers are already promoting respective recipes and cooking programs as part of their personalized consumer dialogue. Categories under pressure Not the time for treatsOver the past six months, a growing number of shoppers has been resorting to crisis-fueled shopping tactics. As inflation lingers on, shoppers find themselves trotting down the ‘stairs of agony’ – from substituting fancy dining for fast casual, takeaway or even staying at home, all the way to down-trading to cheaper brands: The willingness to treat oneself in any shape or form is declining at a very fast pace. We have seen that OOH is the first category being cut, but with more shoppers in a squeeze, more and more budget elements are coming under scrutiny. Compared to April 2022, when 51% of shoppers worried about inflation in FMCG and changed their behavior, in fall 2022, 46% expect prices to increase even further and will modify their behavior accordingly. When it comes to FMCG, it is not so much about cutting as it is about coping – and we can expect different coping strategies to intensify.Shoppers will obviously check prices more often, but the strategies showing the biggest increase are “shifting from premium to cheaper brands” and “do more home cooking”. The biggest behavioral gaps between comfortable and struggling consumers are the efforts of the latter group to keep their basket low and to abstain from any treat: gratification has no place in the baskets of households facing a budget squeeze.Coping behaviors intensifySource: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834 & April ‘22 n=7,855 Coping strategies obviously differ by category, from buying less or only on promotion, to stockpiling, discontinuing or buying at a different retailer, just to name the most important ones. With a big group of consumers buying only what they really need, some product categories will inevitably have difficulties to make it into the shopping basket. The top five categories, where worried shoppers declare to change their behavior even further include alcoholic drinks, confectionary, cosmetics, frozen food, meat and fish. Categories affected by further behavior changeSource: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834 & April ‘22 n=7,855The main challenge for manufacturers will therefore be to make sure, that their categories and products are top of mind, firmly placing category occasions and easy of buying into focus. Across all categories that GfK measures, two strategies are growing: planning to not buy certain products at all increases by +26% – especially alcohol and frozen food –, and wanting to buy cheaper products grows by +8%, including cosmetics, meat and fish. Categories, a country perspective Private labels are the winners of down-tradingA closer look at Europe displays similarities, but also vast differences between countries. For example, a high number of people in a country struggling financially does not necessarily correlate with a high hard discount share, as can been seen in the visual below. In Ukraine, 45% of people are struggling financially, however, the hard discount share reaches only 10%, whereas in Denmark hard discount achieves a 46% share, while 33% of people are struggling financially. Together with our GfK experts from different European countries, we will take a deeper dive into country specifics to understand respective coping strategies, shopping behavior, channel choices – and opportunities. In depth – UkraineMarina Zabarilo, Consumer Panel, FMCG & Retail Ukraine, GfK UkraineThe Ukraine is obviously the most challenging market in Europe, even in “calmer” regions towards the west of the country. Since the Russian invasion, production sites had to close, manufacturers have relocated sites, struggling with supplies and logistics.Ukrainian consumers are in general very cautious in their spending. Obviously, this has now intensified, with the rate of people severely struggling – not having enough money – being estimated to have risen from 4 to 14%. FMCG sales increased by 13% in the first nine months of 2022, but this was “eaten up” by a 24% inflation. Real consumption decreased by 9% since the war started. Not surprisingly, the shopping frequency declined – for safety reasons –, while the spend per trip increased. Retail loyalty is very high as people are trying to buy as much in one place as possible.From our experience, when in a crisis, Ukrainians tend to buy less but stick to the products they know. By contrast, brand switching peaked directly after the invasion and still ranges above 2021 levels, which to some extent is due to availability. Though supplies and logistics were – to a large extent – reconstructed by summer 2022, nearly half of all categories still saw a change in brand leader. To date, many Ukrainians have not yet experienced a depletion of their income and household budgets. As a result, a switch to the economy segment has not happened. Instead, premium and especially private labels are seeing an increase in share, with people striving to maintain a normal life: balancing budget prudence with buying their familiar brands represents very much an emotional release. UKRAINE: Market polarization - private labels and premium brands benefitSource: GfK Consumer Panel UkraineA closer look at categories further nuances the situation: If shoppers see the brand value, they are willing to pay for quality, they will stick to the brand, but buy less. This is the case, for example, in confectionary and alcoholic beverages, where premium and middle brands have experienced an increase in 2022 compared to the previous year. In oils and fats, the value proposition was obviously less convincing, and for that reason, premium, middle and brand leaders lost to economy brands and private labels. Interestingly, brand leaders lost in all four categories analyzed, i. e. confectionary, alcoholic beverages, oils and fats as well as dairy products. While further changes are to be expected in 2023, as inflation is predicted to increase to an annual rate of 30%, Ukrainian consumers remain optimistic about the future. In depth – RomaniaDiana Scaunasu. Consumer Panel Lead, GfK RomaniaIn Romania, a neighboring market to the Ukraine, the race between private labels and brands has experienced some interesting variations: in 2019, private labels contributed most to the growth in FMCG, with brands taking the lead in 2020. In 20221, private labels again won the game with an average value share of 25% and peaks of 34% in food or even 39% in dairy products. The only exception: brands score in beverages with private labels reaching a value share of only 11%.Despite the current cost-of-living crisis and private labels costing – on average – slightly more than half of the respective brands, price is not the main reason for choosing a private label product and a big price gap does not necessarily drive shoppers to buy the latter. The quality message and trust therein drive the choice: where brands deliver with regards to value, innovation and benefits, they dominate the category, such as in beverages and personal care.However, across the board, seven out of ten brands in Romania have experienced a decrease in loyalty and the average loyalty has declined compared to 2020 – with considerable differences: the average loyalty for toothpaste, for example, reaches 45%, the one for yoghurt only 13%. Influencing factors to consider though are shopping frequency – i. e. how often does a shopper have the opportunity to switch to another product – and market concentration of brands and products – i.e. what are alternative options.Private labels, be it budget or premium, are clearly the market winners in Romania, with economy brands remaining stable and mainstream brands being squeezed. Food and dairy products are down-trading to private label brands, non-food categories, including home care, to economy brands. But at the same time, some categories still offer room for premiumization, such as beverages up-trading from mainstream to premium. A similar polarization can be observed in the channel, with premium and mainstream brands dominating online shops, while mainstream brands becoming entrenched in proximity stores, and budget private labels – not surprisingly – achieving the largest value share at discounters. Besides mainstream brands, traditional trade seems to be a good channel for economy brands and we also notice premium private labels gaining ground at hypermarkets and discounters, albeit starting from a small base.ROMANIA: Polarization of brands by channelsSource: GfK Consumer Panel Romania | FMCG excluding Fresh and Home Made1 YTD August 2022In depth – GermanyAnna-Katherina Kraus, Commercial Director, Advanced Solutions, GfK GermanyIs Germany, being able to rely on a stronger economy, in a different position and are shoppers acting differently? The country is facing similar price increases as other European countries, reaching +11.6% in FMCG in September 2022. In comparison, the respective demand shift is considerably smaller, with down-trading scoring at -2.3% in September. Does this imply that shoppers accept inflation?GERMANY: 60% of categories see down-trading (with varying strength)Source: GfK Consumer Panel Germany CP+ 2.0 FMCG, Inflationtracker, 309 categories in 18 product groupsBoth trading-up and trading-down is happening. Consumers shop less or change to a cheaper product in 60% of categories, including personal care, diapers and dishwashing detergents. On the other hand, shoppers are trading-up in categories such as rice and laundry care – sometimes unintentionally: in a number of cases, for example margarine, manufacturers implemented a “hidden” price increase, keeping the packaging size, but reducing the content. Shoppers often enough do not realize the change and continue to buy the product, thus accepting the silent price increase. Categories can also serve as substitutes with shoppers up-trading in one category to compensate the "loss" in another one, for example buying premium instant coffee instead of roasted coffee or dry instead of wet pet food.Similar to other countries, down-trading has become predominant in Germany, and it is happening in favor of private labels, especially price entry private labels. In general, premium and market leader brands are growing single digit and way below FMGC market growth, which reached +11,4% (packaged goods, Q3/2022). Looking at supermarkets, price entry private labels scored the highest growth rate at +25.8%, with premium and mid-tier private labels both just above +12%. In hard discount, all three private label categories show similar growth rates between +18% and +20%.It is interesting to observe that all retailers have increased their promotion of private labels and shoppers “buy” the value-for-money-story. Not every category is the same and there is one good example, where German shoppers accept inflation: butter has seen the largest price increase of +51.5%, while down-trading only reached -1.6%. A more detailed analysis reveals, that – in this segment – mid-tier brands and market leaders have significantly gained in value, whereas premium brands as well as private labels are less in demand. However, the increase in market share of around 40% has more or less been paid by a 50%-boost in promotion.In general, premium brands are currently under a lot of pressure in Germany, so brand identity and intense brand promotion are indispensable to maintain brand loyalty. The anatomy of retail channels Be where the shopper isBehavior changes make no stop at channel choices and again, rational factors prevail. After a two-year period of less frequent shopping due to COVID-19 restrictions, consumers are now switching retailers and shopping around to find the best deals. This presents a risk, as the likelihood of a brand being repurchased on consecutive occasions drops by 50% when shoppers switch stores1.Store choice factorsSource: Harmonized Statements EU-average 2022 vs. 2021When choosing their retailer, shoppers will look for attractive pricing and convenience – such as self-check-out –, at the expense of service and quality factors. While hard discount lost some of its momentum in the past few years, it is now the only channel, where consumers plan to shop more in the next six months. Across Europe, super- and hypermarkets, weekly markets, and even online shopping are expected to face some reductions in the single-digit range with shoppers intending to buy less in these channels. Specialty stores as well as delis, convenience and drugstores could lose most: between 16 and 18% of shoppers intend to visit these retailers less. 1 Source: Europanel BG20Having been the big winner of the COVID-19 pandemic, online shopping has decelerated since, but is expected to stabilize across Europe. While online shoppers do appreciate the channel for the possibility to check prices and buy promotions in order to keep the total basket cost at bay, delivery costs threaten to become a dealbreaker.Online growth has deceleratedSource: GfK Retailer Trend Monitor September 2022Whereas we have seen a trend away from stationary specialist stores, online category specialists will be more able to uphold their business this year, as will e-supermarkets. By contrast, flash delivery, delivery platforms and meal boxes will be losing buyer share, as it is in especially those channels that shoppers intend to shop less than before.Online shoppers value savings aspect, but delivery costs could be a bottleneckSource: GfK, Behavior Change Nov. ’22 n= 6263E-grocery and e-specialists most popularSource: GfK E-grocery Nov. ‘21 / Behavior Change Nov. ‘22 n=6586 AT, BE, CZ, DE, IT, NL, PL, RUOnline will, nonetheless, stay relevant for specific categories and brands. Products that shoppers intend to increasingly buy online – up to 15% more – include home and personal care, staple foods, pet supplies and alcoholic beverages. As described above in “Categories under pressure”, some of these categories are subject to special scrutiny and the first ones to be cut in a budget squeeze. It is therefore extremely important to have as many touchpoints with consumers as possible - neglecting online could prove to be a vital mistake.Online important for categories in dangerSource: GfK E-grocery Nov. ‘21 / Behavior Change Nov. ‘22 n=6586 AT, BE, CZ, DE, IT, NL, PL, RUOverall, shoppers are more “creatures of habit” online than in stationary retail, providing opportunities to build brand preference and loyalty. Balancing short-term drivers and macrotrends Intensify promotion and personalizationIn times of budget squeezes and intensified rational buying decisions, it is extremely important to get your message across and differentiate through product benefits. Hence there is a need to understand what is important to shoppers, besides the cost-of-living-crisis.Not surprisingly, inflation and (perceived) high prices moved up the list of factors influencing buying decisions, currently at no. 2. But healthy and natural ingredients continue to rank in first and third place among the choice factors, whereas local and regional have lost a bit of momentum. Compared to spring this year, personalization has considerably gained in relevance. This is particularly the case for promotions, as shoppers try to make their limited budgets meet their needs. Time-saving solutions are also rising in demand - and in spite of overall down-trading there is a small but growing window for premium products.Health-focus proves to be crisis-resistant. However, healthy living and healthy ingredients have noticeably changed their meaning and are becoming more particular. Free of artificial ingredients, low on sugar and not genetically modified are still important to at least 1 in 3 shoppers, but micro-level nutrients and particular lifestyles or diets are gaining ground. This includes aspects such as rich in protein and free of lactose or gluten as well as veganism and diabetes. On average, 11% of European households have at least one person needing to watch their diabetes, 9% have a least one person being intolerant to lactose, and 4% count at least one vegan in the household. Naturally healthy still important influencerSource: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834 & April ‘22 n=7,855In the current cost-of-living-crisis it is essential to permanently monitor and adapt to changes in shopping behavior. At the same time, it is important to not lose sight of long-term macrotrends. This whitepaper focuses specifically on the impact of the current inflation and instability, with predictions on the next six to twelve months. Strategy and tactics need to embrace these short-term trends while long-term perspectives should not be deprioritized, in order to pave the way out of the perma-crisis. For the sake of perspective, this paper is zooming in on e-grocery, which (only) has a 6% share in FMCG in Western Europe1. Eco-actives currently account for a 26% share in FMCG and the long-term business potential of eco-consciousness will persist. Although we currently observe a deceleration in green trends, we are expecting this to be a glitch.Similarly, European countries are showing different trend patterns that require different strategies. For example, carbon-neutral is an important long-term trend for 21% of German consumers, but only for 10% of Polish shoppers.In general, financially comfortable shoppers continue to show a stable preference for premium products as well as aspects including organic, carbon neutral and corporate responsibility, while for struggling consumers healthy, time-saving and personalized promotions are stronger influencers of buying decisions at present. Personalized promotions will certainly not be a short-term fad. Online leaflets and digital loyalty schemes are continuously expanding their reach across Europe and the regular use of online leaflets has increased by 6%.1 Six biggest countries in Western Europe Digital promotion, a country perspective In depth – Sweden and DenmarkMyriam Martensen, Commercial Director Nordics, GfKConvenience and personalized promotions are increasingly supported by online leaflets, digital loyalty schemes and digital price signs as well as retailer apps. The spreading digitization enables retailers to better target their shoppers and Swedish consumers, being known as especially tech-savvy, rank second with 31% of shoppers being influenced by personalized promotions. Across Europe, 16% of purchasing decisions are influenced by personalized promotions, with Romania at the top of the list at 38% and Bulgaria reaching 29%.Personalized promotions based on loyalty cards are standard in Swedish grocery and, in case of ICA, the largest retailer group, up to 90% of Swedish households have a banner loyalty card of one or more grocery stores. Shopping around and bargain-hunting have become popular coping strategies in Europe with Danish consumers leading the space with nearly 1 in 2 shoppers scouring different stores to find the best prices. Adding to an increase of Danish people struggling, especially among families and older people, this coping strategy is facilitated by a unique high density of shops in Denmark.As a result, promotion shares are rising, in September 2022, for example, to 40% in Denmark and 38% in Sweden.THE NORDICS: More shopping around as more consumers struggleSource: GfK, Behavior Change Nov. ‘22 EU-15 n=9,834 | GfK Consumer Panel Denmark & SwedenConsumers are also trying to save money by reducing waste, be it through a better use of leftovers at home or buying smaller portions and less packaged food in store. In Denmark, the top three criteria influencing purchase decisions are now inflation and price perception, followed by healthy ingredients and waste reduction in third place: for 28% of Danish shoppers, eco-friendly packaging ranks fourth in their buying decisions. Danish retailers are climbing onto the bandwagon, using “eco-economizing” as an additional promotion lever, for example with recipes for leftovers, surprise bags of ‘Too Good To Go’, promoting odd form vegetables or special portioned packaging. Messaging: emotional and real Be part of the changeIn times of increasing rational decisions, emotional messages are needed to get through to shoppers, especially because consumers declare to be more suspicious of advertising. When it comes to pure rationality, brands ever so often have to give way to private labels. Hence, the countercyclical and credible communication of brand values, innovation and benefits has to balance out the rational price incentive in order to build brand loyalty.In times of crisis, brands need to invest: the likelihood of traditional brands keeping their share over the course of five years reaches a mere 62%, whereas private labels have a 73% chance – and we know, once lost to private labels, it is hard to win shoppers back.So how do brands communicate to cut through? Being connected is a proliferating desire of people, not only in uncertain times. The sense of belonging, feeling part of a wider community has been the fastestgrowing trend in Western Europe in 2022, and we expect it to stay as a fundamental mindset. It is therefore essential to see and live past this crisis and build meaningful, real connections, as we also observe the notion of “insta-flawlessness” diminishing. Being real and emotional – to the point of vulnerability – is of essence and drives credibility. The success of the social media platform BeReal reflects the unfiltered, real life that is re-gaining relevance. Especially younger audiences are attracted by emotional and transformational messages. As part of our GfK Purpose Impact Monitor, we compared how traditional purpose ads and transformational purpose ads resonate with different consumer groups. Younger viewers, in general, are more receptive to purpose ads, though their level of attention is lower. But the traditional purpose ad, communicating the values of a brand, falls behind transformational ads, which put the consumer at the center. Younger consumers felt emotionally more connected to ads that promoted a positive message of change, feeling understood and inspired.Purpose ads inspire and have an emotional impact on younger audiencesSource: GfK Purpose impact monitor, w/Thomas Kolster, author of the Hero Trap and Goodvertising Agency; 20 traditional and transformational purpose ads studied using Ad Fit Optimizer Final thoughts Look after your shoppersInflation and instability will stay with us at least throughout 2023 and shoppers will need to constantly review their personal situation, adapt and find ways to make best use of their household budget. To master these persistent behavior changes, here are some “temporary truths” for the near future.#1 Strategize for the struggling – while the number of consumers struggling is increasing, invariably lower prices are not the only solution. #2 Be incremental to your category – with some categories fighting to stay in the basket, it is important, in particular for leading brands, to bring shoppers back to the category.#3 Saving gets personal(ized) – there is a need for creativity, making saving meaningful, in close cooperation with the retail channel.#4 Be where your shopper is – as more consumers are shopping around, being at “arm’s length” is indispensable. #5 Lead with the heart – despite rational behavior intensifying, brands need to stay emotionally connected: going silent would be a big miss. Investing in advertising and availability will be vital to come out as a winner.