Update: How COVID-19 is Impacting Shopper Behavior, Part 2
As Shoppers continue to make lifestyle changes due to the COVID-19 pandemic, the past two months have pushed growth within Grocery into overdrive, especially online and mobile purchases. According to Comscore, in Q1 2020 the total mobile spending on the grocery subcategory increased an incredible 148% over Q1 2019 to a total of $10.2B.* Grocery spending, which includes Baby and Pet, reached a 20% share of ALL mobile spending and grew 39% over Q4 2019.
Stay at home orders across the U.S. have heightened consumers’ need for safety when shopping for essential goods, and many are using online channels as their primary (sometimes only) path to purchase. Retailers are also being challenged with limiting the number of people allowed inside their stores. It’s now more important than ever that CPG manufacturers have a comprehensive understanding of shopper behaviors through an OmniShopper lens, optimizing the online and in-store experience. Retailers must continue to anticipate and deliver against fast changing shopper demand shifts, out of stocks, brand switching, acceleration of private label and price sensitivity as part of the next “new normal” retail experience.
Measuring Brand Performance
CPG manufacturers need to have a firm grasp on the performance of their brands through this shifting channel landscape while formalizing processes to capture the broad strategic and tactical implications. Traditional approaches to core workflows are not just being challenged, they’re being redefined. The pandemic caused a sudden, seismic shift for the retail sector – the shift is not happening “out there,” it is happening under us all. Much like an earthquake, the foundation of data on which the CPG market is grounded has cracked. Companies need to adapt quickly.
Optimizing Performance in eComm and Brick & Mortar
One example is in promotions. Many categories drive over 40% of their sales from trade promotion activities. For these brands, understanding of trade cannot be driven by historical performance -- COVID-19 has decreased trade promotion frequency, reduced all shopper trips, amplified the price-value importance, and moved a meaningful percentage of sales to online channels. With this comes new analytical challenges and the need to know more.
As sales shift from Brick & Mortar to online, trade spending budgets will be impacted. Depending on the online retailer, costs can vary significantly vs. traditional in-store promotions.
Trade Promotion Planning
Trade promotions are not going to work exactly like they once did. Counting on that full lift from promotions without factoring in the shift to online would be a mistake. Consider the following:
Promotional frequency will be challenged by increased competition for attention in promotional vehicles (features, TPRs, displays, etc.).
Promotional response will be impacted by changes in shopper mix and trip frequency.
Retailers will be more open to promotion optimizations and less likely to repeat last year’s failed ad just to “comp to last year.”
Traditional Brick & Mortar sales baselines will move as channels shift and competitors respond.
Trade promotion planning becomes critical as no company can afford to not deliver the maximum revenue from trade investments, especially since sales baselines are changing as channels shift.
eCommerce is Gaining
In addition to promotions, packaging and price levers also provide a meaningful opportunity in eCommerce. Testing these digital strategies in a virtual eComm shopping experience and then integrating data streams and analytics allows you to understand the impact on sales and optimize offerings before going to market.
Brick & Mortar trip frequency is clearly reduced and consumer budgets are tightening. We already know that consumers rely on packaging to inform choice and leverage promotions to stretch their wallets. Having less interaction with consumers at the shelf, brands need research to evaluate and optimize offerings before going to market.
One thing is for certain, the coronavirus crisis underscores the essential role that CPGs and retailers play in our daily lives and the overall global economy. We at TABS Analytics and Decision Insight say Thank You. We recognize the incredible commitment and hard work in producing the brands we need (and love!) and keeping them stocked in-store and online while in this era of human survival.