With Canadians resigned to new living conditions amid the novel coronavirus (COVID-19) pandemic, many expect the impact to last for quite some time. An extended period of lockdown policies means the exorbitant rise of in-home cooking will continue to greatly affect shopping baskets. In the months to come, the needs of Canadians will continue to evolve at a rapid pace, and retailers and manufacturers will have to turn to new and creative ways to evolve alongside consumers.
But the fast-moving consumer goods (FMCG) industry doesn’t just have to understand consumer behaviour, it has to keep up with it. Weekly dollar growth seems to be stabilizing, as FMCG sales were up 16% for the week ended April 25, 2020 (down from +54% in the week ending March 21, 2020, when pantry loading started), hinting to a low-to-mid-teens becoming the new normal growth rate. So, while shoppers are adjusting, making fewer trips and loading up their baskets, what can retailers and manufacturers do to be part of the solution in this new environment? A loaded question that, if not dissected correctly, can quickly lead to a deep rabbit hole. For the purpose of simplicity, let’s focus on a macro view of an array of factors.
Assortment: Collaboration is the key word. While retailers are focused on keeping in-demand items on their shelves and ensuring the essentials are in stock, manufacturers need to be proactive and work with them to provide insights on the most comprehensive way to structure the shelf. When optimizing assortment, ensuring the right items that will meet the majority of consumer needs are in place, as well as providing efficiencies with a solid supply chain to keep items in stock, is crucial.
The rise of home cooking: What value can you bring to consumers who are dealing with a house full of people and a pantry full of food? With 60% of Canadians increasing their cooking and 47% looking for new recipes more than before the outbreak, providing consumers with ongoing inspiration to use the items they’ve stocked up on is one way to ease one of the many stressors Canadians have on their plates. Coming up with and sharing creative ways to use food items they’ve stored will be essential to maintaining growth and loyalty, even beyond COVID-19 impact.
Online shopping: With an increase in online shopping, including among many first-time adopters, there’s an imminent potential for acceleration of the growth of online dollars. For some consumers, it will take a long time to regain trust of exposure to public spaces, reinforcing the value of the online channel. Thus far, convenience has been a contributing factor to the growth of digital channels; however, in times of COVID-19, safety is No. 1. This reinforces the need for an expanded omni-shopper strategy that focuses on speed, reliability and trust.
Pricing and promotions: Consumers will demand more value as new routines set in. The initial wave of pantry loading from March and April favoured regular-priced over promoted items, as the household concerns to be solved were more about necessity and less about price. With household dynamics changing, unemployment levels at a record high, and new economic pressures mounting, the need to be more strategic regarding a balance between consumer needs and margin becomes imperative, as price may soon reconquer its place as a choice driver for a number of categories.
SURVEY Says not all holidays are canceled
Despite our new ways of life, Canadians yearn for a sense of normalcy. Easter, for example, was the first holiday to be directly impacted by the ‘new normal’ shopping behaviour as a result of the outbreak, but it won’t be the last. Provincial lockdowns did not stop consumers from celebrating. And even though the traditional day might have looked quite different compared to years past, restrictions didn’t keep Canadians from purchasing typical Easter essentials.
In fact, this year’s Easter FMCG sales were 12% higher than last year, generating an incremental $248 million. Although a portion of the increase comes from the ongoing above-baseline sales due to COVID-19, Canadians didn’t hold back their purchasing of Easter essentials. It’s worth noting that by the time Easter shopping days rolled around, retailers would’ve already had a holiday plan that resulted in the execution of a well-stocked up shelf with Easter items in place in anticipation of the historically high-trafficked holiday, which would’ve nudged consumers into adjusting purchasing of traditional categories.
With summer 2020 and a list of holidays in the not-so-far Canadian horizon, manufacturers and retailers will need to adjust their assortment planning and demand forecasts as consumers remain at home. Patio season will earn a new meaning, while the shopping basket will reflect more at-home, outdoor eating occasions. As summer vacations remain local, consumers will rely on retailers and food manufacturers to fill in the gap as the old ‘what’s for dinner?’ question continues to evolve. Understanding each phase of these changing times while the industry pivots in the pandemic will be critical as businesses prioritize how they reinvent themselves to meet the developing market circumstances driven by COVID-19.