COVID-19 is reshaping consumer behaviour

After the COVID-19 pandemic intruded into our daily lives, the world doesn’t look like the one we used to see before. We changed, as well as the way we behave, think, react, and….buy.
The FMCG industry is being reshaped fundamentally, bringing temporary changes in the way we work, live, and consume, and give birth to absolutely new long-term trends.

Consumer goods businesses should consider the following new consumer habits to adapt their strategies to so sensitive like never before consumers.

Even before the pandemic, digital shopping has always been a common tendency of a contemporary consumer. This is especially true for some product categories such as books, entertainment, and consumer electronics, while grocery, for instance, was still not that digital-oriented. Only 4% of grocery sales in the United States were generated by eCommerce in 2019. According to Rakuten Intelligence data, online order volume from full-assortment grocery merchants rose 210.1% from March 12 through March 15, compared with the same period a year earlier. The latest data suggests there will be a considerable increase of 169% in eCommerce purchases using various digital and omnichannel services, such as home delivery, curbside pickup, or shopping via social media platforms (Forbes).

Ocado, the UK online grocery retailer, recently revealed it has more than 1 million people on a waiting list for its UK grocery delivery service.

By the end of June, Dutch retailer Jumbo’s turnover amounted to € 5.10 billion, an increase of € 634 million compared to the first half of 2019. Jumbo’s increase in turnover was partly due to the change in consumers’ shopping behavior during the corona crisis. Jumbo customers spent more on their daily groceries, and many new customers discovered the convenience of Jumbo.com. As a consequence, online shopping boomed with a turnover increase of almost 50%.

According to Accenture’s research, 56% of consumers prefer shopping in neighboring stores or buying only local products. Correspondingly, 61% are moving to an environmentally friendly, sustainable, or ethical approach while shopping, whereas 72% are limiting food waste with an almost 100% likelihood to continue post-crisis. Accenture

Some products and brands have faced inevitable supply-chain disruptions. This was mainly driven by the fact that during the crisis, when consumers could not find their preferred product or retailer, they tended to try a different brand or even find another retailer. Value, availability, and quality became the main criteria while making a purchasing decision. McKinsey

To diminish the spread of the virus, consumers are more and more relying on a “do-it-yourself" (DIY) mentality regarding consumer goods. The self-managed routines at home became very common, resulting in a significant rise in sales performance of products such as flour (39% in the last week of June), or food preparation products like canning supplies and seaweed/sushi wrap (up 53%, each in June). Globally, Nielsen has observed a substantial boost of big in-home eating. Around the world, 52% of the population mention that purchasing meal kits are driven by the convenience of getting everything delivered at home, while 50% pointed out the willingness to try new recipes at home, and only 19% mentioned they are trying to avoid crowds in supermarkets. McKinsey

The current global economic recession and rising unemployment rates have caused the reluctance of consumers to have any extra expenses. As a result, consumers are trying to cut back on household expenses and shrink the list of FMCG goods considered as “essential ones". For those consumers whose incomes have been negatively impacted by COVID-19, the purchase of refrigerated meals could replace what used to be higher priced food they had bought before. In contrast, those whose incomes remain unchanged are more likely to indulge in a premium bottle of alcohol at home or expand their skincare product range as an alternative to the dinner at the restaurant or vacations they can no longer do. McKinsey

According to Nielsen’s survey, around 32% of global consumers have noticed a considerable decline in promotions and discounts in stores. As a result of this observation, as well as the fact that sales through online channels are rising dramatically, brands and retailers will need to strengthen their promotional activity. According to McKenzie, the reset promotional baseline is a great tool to transform consumer behavior around affordability. Nielsen

As a result, the global pandemics totally transformed the FMCG and retail industry, which is now going to be embraced by consumption migrating from branded products to private labels, increased promotion, and higher preferences to value channels discounters.
Nowadays, consumers are becoming more and more savvy, controlling the cost of the grocery shopping basket and exploring all the budget options: promotions, private labels, focusing on essentials such as multi-usage cleaning products, as well as limiting the number of shopping tips. Information Resources Incorporation report

As concluded by Information Resources Incorporation, the new trends will be observed in both cash-strapped consumers and those whose financial situation hasn’t been undermined. The former will be willing to spend on eating out and personal devices, buy less stuff, and at a lower price. This will lead to an increase in purchasing affordable treats, food-to-go, home kits, and smaller packs. Similarly, the following consumers’ group will be more focused on Private Labels rather than classic brands and deeper promos / more volume on the deal. Whereas the latter group is likely to keep the tendency to buy premium brands at premium retailers, as well as buying in bulk on promoting packs. Information Resources Incorporation report

The implication of all this for suppliers and buyers is that as new shopping behaviors emerge or regulations change, there is a more significant need than ever to stay tuned in to what is happening and remain agile in response.

Frans Muller, President, and CEO of Ahold Delhaize, (https://www.aholddelhaize.com/en/media/latest/media-releases/ahold-delhaize-q1-2020-results/), commenting on their 12.7% lift in revenue for the year ending May 2020 said “Protecting the health and safety of our associates and customers remains our first and foremost priority, along with operating our brands and supply chains smoothly. We will keep monitoring and learning from changes in consumer shopping patterns and behavior. While it is still too early to know which paradigm shifts will emerge from the COVID-19 crisis, we continue to prioritize investments in accelerating our digital and omnichannel capabilities, as well as improving our store fleet, to grow our share of wallet."

In these evolving circumstances, dialogue between suppliers and buyers becomes even more critical. Changing shopper behavior is sure to be one of the hot topics of discussion at our Wabel Online Summits this autumn.