Thrifty, digitally savvy & health conscious
The current health crisis ushered in a new global recession, people and business globally have been facing immense challenges: social distancing, job losses, drops in sales, economic uncertainty, disrupting operations at an unprecedented scale. Under this situation, people are living differently, buying differently and, in many ways, thinking differently. The virus is reshaping consumer behavior and accelerating already existing trends, all in record time. Consultancy agencies such as Kantar, Nielsen or McKinsey predict that the newly acquired habits and behaviors will endure well beyond this crisis, permanently changing how and where we shop, live and work.
Health and safety concerns
During lock down brand loyalty lost importance to product safety. Smaller local businesses were considered safer. Transparency and traceability regarding products origin, production and distribution became paramount. Health and safety policies weighed more than sustainability. This opened up an opportunity for local brands to establish strong ties with the consumers at a time where new behaviors are born.
In the short term it is about safety, but in the mid-to-long term it is likely that transparency regarding sourcing and operations will remain important, with more importance falling on the health and nutritional benefits of the products.
Life at home
People everywhere are learning to live with the reality of COVID-19. While consumers are spending more time at home, their way of living has changed, as well as their moments of consumption.
The new reality converted homes in an office, classroom, gym, restaurant, shops and others. In general, consumers are:
- Spending more time with family, in need of new forms of entertainment.
- Snacking to fight anxiety and boredom.
- Treating themselves more to indulge, have a reward or get an energy boost.
With the new normality settling in, people gain a proactive and holistic perspective on health. This is driving demand for functional products, offering added health benefits rather than merely regular nutritional claims.
Offering solutions with added benefits, such as delivering moments of concentration, relaxation or an energy boost is a good opportunity to make your way in the home of your target consumer.
New buying, less impulse
People are concentrating their grocery trips and increasing basket value. Impulse products and on-the-go convenient formats experienced a sales decline over the past months. Out of home consumption has only now started to pick up again, but in many countries the recovery is slow, thus affecting many product categories such as gum, mints or snack bars. As consumers plan their visits to grocery stores, the purchases from small convenience stores and transaction zone were reduced. Even ice cream, a category that had experienced year-on-year growth during lock down is now in the red due to out of home consumption during summer season.
We may expect planned purchases and thrifty consumers for some time to come given the pandemic situation coupled with the economic downturn experienced all over the globe. The only way to overcome this scenario is to increase penetration, rationalize SKU’s, be creative with distribution, offer value without price cuts and focus on NPD’s that are relevant to the new reality of consumers.
‘Online’ is here to stay
Online shopping increased around the world, with India, Brazil, US, UK, France, Italy, and Germany just a few examples. In Spain for example, online sales more than doubled in the first two weeks of lockdown. This is one of the trends that shaped China after the SARS and MARS outbreaks and it is likely to shape the world now.
According to Nielsen, 89% of Chinese consumers will continue to purchase grocery products and daily necessities online.
Retailers and brands –now caught unprepared- have to adapt and build capacity to serve surging demand: product mix, distribution and logistics, consumer experience, communication etc. This area is truly a matter of ‘adapt or die’.
Even before the COVID-19 crisis consumers were becoming increasingly concerned with improving their health and longevity. With the pandemic, this trend has been on the rise.
Food and beverages fortified with ingredients that deliver immune health benefits are now more popular as consumers have looked to embrace the concept of active nutrition.
Health consciousness is the #2 priority for consumers (Accenture COVID Consumer Research). According to Deloitte, 70% of consumers affirm that they will try to strengthen their immunity with a healthier diet and more exercise.
This trend is expected to grow more than otherwise anticipated. We really need to take into account all these phenomena taking place in order to anticipate future difficulties and business opportunities, understand the deeper shifts framing consumer behavior and fit our companies for the future.