The unforeseen shocks from the global COVID-19 pandemic will draw consumers, industries and societies into a course of restoration and renewal as they look to revive growth. As FMCG manufacturers and retailers reflect and rebuild their businesses and brands for the future, they will need to consider implementing strategies that connect with what consumers have endured and how they will emerge over the next few weeks and months.
As we move through the six different COVID-19 consumer behaviour threshold levels and look ahead to what ‘living in a new normal’ looks like, it is unlikely our future routines will revert back to mirror what we did previously.
Since the pandemic, we have seen significant changes in the way consumers in the Pacific have shopped and what we have purchased during this time. For example, in Australia, households added more retailers into their repertoires. This was, in part, driven by out-of-stocks in stores, but as restricted living came into play, ‘local’ shopping also became more prevalent.
In the month of March, Nielsen Homescan research revealed that all of this cross-shopping activity resulted in an increase in 30 million shopping trips. This equates to the average Australian household buying a week’s worth of additional groceries. This pattern was very similar in New Zealand.
We also saw accelerated growth of online grocery shopping. However, the potential impact was dampened as the major supermarkets were forced to restrict their online shopping availability, making it difficult to assess what real online growth could have been.
Resetting to the ‘new normal’
Across the Pacific, we are already seeing a number of category resets already in play. A return to home cooking and baking has emerged as more consumers have more time on their hands at home and also use it as an opportunity to bring the family together in the kitchen. Consumers are also looking to bring the cafe experience at home, signalled by strong growth in premium coffee options such as ground coffee and coffee beans. And we have seen an increase in hair colourants in the absence of hair salons, while hair styling products have declined as people are going out less.
Nielsen recently released new intelligence for the global FMCG and retail industry that introduces a modern framework for how businesses will exit out of the COVID-19 pandemic environment. This framework identifies three time horizons: Rebound, Reboot AND Reinvent.
The analysis behind this framework takes into account global macro conditions such as unemployment, bailout packages, and interest rates along with attitudinal inputs from consumers’ purchasing preferences based on governments response to healthcare and disease management, thereby linking into expected future FMCG sales.
Each of these time horizons would determine what, where and how consumers make purchases for essential items such as groceries and FMCG and progressively moving towards non-essentials depending upon several factors like ‘homebody’ consumer lifestyle needs, limited touchpoints, preference for online versus physical proximity at retail stores, local brands or products and changing personal financial situation impacting consumers’ wallet size.
For Australia and New Zealand, given the current levels of control of the virus spread, and the relative health of our economies leading into this event, we expect to lean more toward the Rebound horizon in Q3.
During this period, we will expect to see many consumers rebound to previous behaviours; but there will be some expectations which will have fundamentally or permanently changed:
- Demand more precautions, everywhere, 24/7 – hygiene (masks, temperature checks), sanitation (wipes, sanitisers)
- Gravitate to open rather than confined places – preference for outdoor events/large supermarkets, avoidance of indoor events/places (cinemas, restaurants)
- Value personal space – socialise at arms length, avoid store queues, gyms
- Limit touchpoints – opt for cashless/ tap ’n go, self-service, contactless encounters
- Opt for virtual before physical engagement – workplace meetings, banking, medical consultations
- Confine proximity – stay within local neighborhood stores, markets, entertainment, takeaways
- Appreciate essentials – simplify meals, weigh up benefits, ration usage, keep pantry reserves
- Assist and support local brands – business, communities, brands, retailers
- Exercise financial restraint – delay holidays/buying big ticket items (house, cars, appliances), service debt
- Authenticate information – verify news, reports, brand claims about quality assurances/sourcing
Finally, when it comes to regeneration consumption changes, Nielsen has identified six major areas of change that will impact on consumption dynamics. Some will accelerate and multiply by time horizon, some will require recalibrations, but all will have some level of impact on consumers, retailers, manufacturers and marketers.
Beyond the broader environmental considerations for governments, there will be considerable societal shifts in mindset, response to re-opened living conditions and expectations of how consumers will live, engage, socialise and shop, that will shape the changing future consumption dynamics. Advancements in technology and consumer adoption will be a considerable catalyst that will continue to influence much of the changing dynamics into the future.
The Respect, Reset and Go! webinar was hosted by Bernie Hughes – Managing Director, Nielsen Connect Pacific, and Justin Sargent – President for Nielsen China on 22 April 2020. Together, they discuss the key consumer shifts brought about by the pandemic and how businesses can make faster, smarter decisions to adapt to this new world.