The Philippines was one of the earliest markets in Southeast Asia to move into the consumer behavior threshold of restricted living. Following the March 16 government announcement of Enhanced Community Quarantine (ECQ), many shoppers rushed to stock their pantries. This resulted in a constrained supply chain for fast-moving consumer goods (FMCG) which continued to be challenged as many retail and factory workers were unable to go to work.
With restrictions in available products to choose from, the impact of COVID-19 has forced a rise in disloyal purchase moments for shoppers. These disloyal moments disrupt the innate habits of shoppers and replace passive, routine purchasing with conscious product evaluation. During these circumstances, the shopper is more open to new choices.
From personal experience, the conditions of this global pandemic have disrupted even the most steadfast and routine of purchase behaviors in my household: our brand loyalty within the cultured milk category. At least two times a week, my family would purchase the same cultured milk product from the local delivery service routed to my place of work. But amid the restrictions of ECQ, we lacked access to our traditional delivery channel and nearby supermarkets were unable to keep a stock of our milk brand of choice. The conditions of the market today had forced us as shoppers to consciously evaluate what was once a passive, routine and singularly brand loyal purchase decision. In my case, this has resulted in my household becoming more open to new choices within the cultured milk category. We have developed preferences towards at least two other brands in the category, a larger brand we had tried before and a new, emerging brand that caught our attention.
As supply chain challenges continue to shift the available assortment at stores, many shoppers are similarly being forced to explore purchase options beyond their norm across many categories. In fact, during the second installment of Nielsen’s COVID-19 consumer research done April 2020, in the middle of quarantine, 27% of Filipino consumers claimed that they have switched brands during ECQ. The reality is that shoppers feel they need to find a substitute or go home empty handed. Without the luxury of being able to return to the store for things temporarily out of stock, disloyal purchases are being made in efforts to make the most out of each shopping trip and to minimize exposure outside the home.
So how can brand owners manage and make the most of the consumer disloyalty being forced by the conditions of this COVID-19 pandemic? Here are three key recommendations:
1. Ensure availability by measuring the level of out of stocks at the banner, store and location through regular in-store tracking. This should be a priority focus because it has a direct impact on revenue. Our experience across Nielsen’s global footprint of retail measurement shows that for every 3% improvement in product availability, sales will increase by 1-2%. Many companies have relied on employee-based systems for logging out of stock rates in the Philippines. Not only does this method result in delayed insights to action, but it restricts visibility to only the stores that employees have been deployed to for monitoring. Nielsen platforms solve for these challenges enabling almost real-time store availability checks.
2. Review your assortment to focus on the SKUs that provide incrementality. Many companies choose to focus efforts on the top-performing SKUs within their brand portfolio as measured by their internal sales data. This strategy fails to account for the importance of truly incremental products, which are often overlooked due to bringing in relatively lower sales totals. In a recent Nielsen assortment study using store-level data, a manufacturer was able to see 3-6% sales growth across several personal care categories all the while reducing the number of SKUs in the portfolio. COVID-19 will continue to drive streamlined assortment decisions as supply chains evolve, making it more important than ever to understand how incremental each SKU is to your business.
3. Convert a new trial to long term brand loyalty. If you are a challenger brand that generated a new trial among today’s consumers, now what? Will your product be able to maintain a regular place in the consumer’s shopping basket? In cases such as the cultured milk example for my family, there are unique factors to consider, such as nostalgia, that drive us to habitual purchase decisions. To increase the likelihood of long term product adoption, brands should run product benchmarking tests regularly to understand where to adjust attributes and positioning to the preferences of current consumers. Changes can be simulated before they are executed. Through modeling product test results, brands can take action on the outcomes that are most likely to resonate with new consumers and drive repeat purchases.