CHICAGO – In the wake of a mixed economy, the unknown of a new kind of presidency and a complex retail marketplace, U.S. consumers began 2017 with a lot of change and uncertainty. The latest IRI Consumer Connect survey released this week suggests that these factors contributed to 2017 getting off to a shaky start with consumers, but projections for the remainder of the year are positive. IRI also released “Early View 2017” for a closer look at food and beverage trends.

“January and February are generally softer months for the consumer packaged goods industry, but showed sharper-than-normal declines this year,” said Susan Viamari, vice president of thought leadership for IRI. “Forty-five percent of consumers say their household finances are strained, with lower-income and younger shoppers being hit the hardest. Consumers across the board have been avidly seeking deals and, while deal-seeking will remain pervasive, the good news is that economic expectations for the remainder of the year are positive. With products that offer in-demand bells and whistles and marketing stories that really connect with their target markets, CPG marketers will entice shoppers to spend and win a fair share of that spending.”

Results from the Q1 2017 IRI Consumer Connect survey reveal that consumers are struggling, especially millennials, who have student loans and have experienced economic instability for most of their professional careers.

For instance, 33% of millennial households are having difficulty affording needed groceries, compared to 26% of generation X, 33% of baby boomers and 21% of seniors. Because millennials have entered adulthood in a tough environment, though, this group really does not feel more put out than older generations: 55% of millennial households are making sacrifices to make ends meet, compared to 53% of generation X, 54% of baby boomers and 39% of seniors.

In addition to uncertainty, consumers have faced delayed tax refunds, wild weather patterns and significant food price shifts. The combination made a negative impact on CPG sales for Q1 2017. Retail unit sales dropped by 2.6% in January and dollar sales dipped by 1.5% in January, compared to the same period the prior year.

To combat this uncertainty and stretch dollars, consumers are in money-saving mode, including:

Behavior                                                   Millennials               Total Population
Buying private label brands:                               89%                          81%
Trying lower-priced brands:                                86%                          74%
Clipping coupons (circulars/newspapers):          61%                          66%
Visiting multiple stores to keep bills down:         60%                           58%
Downloading coupons from digital deal sites:    48%                           36%

Even with the slow start, the U.S. economic outlook is healthy for 2017. Key indicators point to GDP growing by 4.3%, retail sales increasing by 5.5% and unemployment falling. Seventy percent of consumers feel their household financial position will improve in the next six months. In addition, 84% of consumers say they will make additional or unplanned purchases if in-store deals are appealing. This sentiment is consistent across generations, yet slightly lower among baby boomers (82%), compared to seniors (87%).

“This year got off to a rocky start for the CPG industry, but things are starting to look brighter,” concluded Viamari. “Our same message for marketers is ringing true yet again. Know your customers inside and out and tailor your offerings to meet their needs. By personalizing your products and messaging, you will hit the right note with consumers, encouraging them to open their wallets in support of your brands.”