Getting Ready For Stability After COVID-19

Getting Ready For Stability After COVID-19

Perspectives Article

As we move through this global health crisis, fast-moving consumer goods (FMCG) companies are coping with their respective challenges, mostly focusing on ensuring product availability on shelf through massive supply chain crisis management. 

Given the rush of consumers stockpiling essentials, many retailers have placed purchase restrictions on key categories and curbed promotions to limit bulk buying. Additionally, most retailers and manufacturers have reduced their range of products to allow more space for the top-selling items in key categories. In similar fashion, online retailers have limited their delivery to critical categories to ensure they could face the supply challenge. Even some governments have temporarily banned the export of key categories such as rice and masks.

In these extraordinary conditions, it has become extremely difficult for companies to focus beyond the day to day. A handful of retailers and FMCG manufacturers, however, have created dedicated SWAT teams to develop strong action plans for when stability returns. This is a sound strategy, as manufacturers and retailers will need to manage the full reset that the FMCG industry will experience, but they need to do so proactively and well ahead of the reset time to ensure their relevance in the marketplace.

Most manufacturers will strive to reposition their offers to cater to the new needs emerging in their markets. These new consumer needs, or accelerators, will increasingly require localization, quality, efficacy, transparency and technology to be part of a FMCG product offering.

Different categories will warrant different priorities that FMCG manufacturers will need to address as they build their post-COVID action plans. We can address these different priorities by breaking down FMCG categories into three big buckets:

  1. Categories facing incremental demand during the COVID crisis. The incremental demand will likely raise the baseline for these categories above pre-crisis levels (laundry sanitizers, vitamins, multi-purpose cleaners, antiseptic liquids, hand soaps, etc.).
  2. Categories that grew in the short term due to pantry loading. The baseline for these will likely return to pre-crisis levels (pasta, canned food, toilet paper, soup, rice, etc.).
  3. Categories that faced volume declines during the crisis (cosmetics, beverages, impulse, confectionery, etc.).

Let’s take a closer look at these three category buckets.


Manufacturers in these categories will want to look for competitive advantages in three main areas:

  1. Expanding the reach of their products and categories to capture the increased demand in the new normal. While the distribution expansion in modern trade can mostly be negotiated centrally, the traditional trade expansion will require much more effort through the deployment of a dedicated sales force (or a strong local distributor). Having the ability to adopt a Pareto approach (80/20 rule) by targeting the key category outlets (for instance, the 20% of outlets contributing to 50% of category sales) will be critical to quickly capture the new demand.
  2. Both manufacturers and retailers will be looking at increasing the overall space of these categories, which will require clear recommendations on the right number of SKUs to carry to fit that space, customize the assortment by store type and geography, and, eventually, help retailers design planograms that will maximize the sales of the category while minimizing out-of-stocks in this new normal.  
  3. As manufacturers emerge from the crisis with newly negotiated trade agreements with retailers, they will want to ensure to compensate modern trade retailers for compliance and be on their toes to react quickly to any out-of-stock situation. As these companies expand their distribution in traditional trade, they will want to put in place retailers’ incentive programs to ensure they offset competition right from the start of the reset. Linking the sales team’s remuneration to performance will become a must.


These categories will most likely leverage the early post-COVID time to reset the promo game for 2020 and beyond. With the extraordinary peak in sales that these categories have seen during COVID times, manufacturers have most likely already hit their yearly sales targets and have hence the space to completely reset the promo intensity of their category, reposition their pricing architecture, increase profits throughout 2020 (without compromising on volume targets) and redefine their new promo baseline for the following years. Many manufacturers in these categories have been wondering for years how to stop the promo spiral they were involved in… that could well be the best possible time to do so.


These manufacturers will need to battle hard as they go through the market reset. They will be feeling a big pressure on their overall retail space and will require solid arguments to compete. At the same time, promo levels will likely increase since retailers and manufacturers will be trying to recover from the volume impact created during the first half of the year. Manufacturers will eventually look at reviving the reduced interest for their product categories, and we’ll likely see category leaders and challengers adopting a category-focused communication (versus a product-centric one).

As we move toward the post-COVID era, retailers and FMCG manufacturers will need to tackle these issues proactively and work hand in hand, equipped with solid data-driven insights, to rebound in what announces to be the biggest shift in price, promotion, and assortment of the century.