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April 7, 2020updated 27 Jul 2022 1:10pm

The consumer trends to look for beyond Covid-19

As the Covid-19 pandemic continues to rage worldwide, Lucy Britner looks further ahead to suggest how the crisis could change consumer behaviour.

As the Covid-19 pandemic continues to rage worldwide, Lucy Britner looks further ahead to suggest how the crisis could change consumer behaviour.

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What are the key consumer trends driving FMCG in 2022?

The consumer landscape has permanently changed since the COVID-19 pandemic began, prompting trends to emerge or accelerate, causing subsequent macro-economic shifts. In order to stay relevant, Consumer Packaged Goods companies must stay abreast of these developments. It is here that GlobalData can offer valuable assistance. Download GlobalData’s Trendsights: Trends to Watch in 2022 report to:
  • Gain insight into the 12 most important trends across the FMCG value chain
  • See the consumer survey data that underpins these insights
  • Learn what early-movers are already doing in terms of NPD and product marketing
Take a look at this report to give yourself the best standing in this developing market.
by GlobalData
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The entire planet is in various stages of lockdown. This unprecedented time in our history has effectively shut down swathes of the foodservice sector, closed bars and pubs and sparked a jump in the use of grocery e-commerce, leading food retailers worldwide to invest quickly (and heavily) in their online supply chains.

In the week to 21 March, UK grocery retail sales jumped 45% as shoppers, concerned about the infectious nature of Covid-19, flocked to stores and online to stock up.

Locked-down consumers also sought solace online in other ways. Consumers of all ages have also had to find new ways to communicate, with the download of online apps booming. According to mobile app tracker Apptopia, in the month of March, video conferencing app Zoom was downloaded around 40m times worldwide. “That’s more than 1,200% higher than their average downloads of the previous six months,” an Apptopia spokesperson tells just-food. “Also, month over month [February compared to March], downloads are up approximately 700%.”

Similarly, a report from Kantar, released at the end of March, cites a 40% increase in usage for WhatsApp across the globe. “As countries move deeper into the pandemic, so media consumption increases across all in-home channels,” the report says. “In later stages of the pandemic, web browsing increases by 70%, followed by (traditional) TV viewing increasing by 63% and social media engagement increasing by 61% over normal usage rates.”

Meanwhile, parts of the shutdown foodservice supply chain have tried to adapt their operations, with wholesalers in certain markets opening their doors and selling directly to the public, while restaurants that had never entertained delivery have started to invest. Websites have been redrawn and online purchasing mechanics have been sorted.

Connections, health and CSR

So, what does all this mean for the future? Speaking as part of the UK Covid-19-inspired live hospitality content streaming service, Hospo Live, insights agency KAM Media’s MD, Katy Moses, outlines six trends that will define the post-coronavirus consumer: hyper-connectivity; virtual experience economy; ambient wellness; delivery; more interest in corporate social responsibility; and connection and collaboration.

With regard to hyper-connectivity, Moses points to growth in e-commerce, online learning, digital marketing and tech-enhanced experiences. She highlights an increase in older consumers becoming comfortable with e-commerce, as well as the increased importance of brand development via digital marketing. According to Moses, digital marketing will become even more important and, when “harnessed in the right way, it will be rewarded with loyalty” in the longer term.

Under lockdowns, consumers have sought more virtual experiences, be it playing quizzes, taking part in exercise classes, completing virtual escape rooms – all from the comfort of their living rooms. Moses says consumers are unlikely to stop wanting such experiences when the lockdowns end. In fact, she believes technology-enhanced experiences will become even more important to consumers.

“We will have to think of how we can continue to create online and offline experiences,” she explains. “Consumers aren’t going to stop looking at all of this. They may have also built up some loyalty.”

The so-called ‘ambient wellness’ trend will see consumers take an even greater interest in food and food safety, as well as caring more about their overall health.

Moses notes an increased interest in immune system health during lockdown, leading to greater interest in the functional benefits of certain foods. “Healthy eating wasn’t [just] a trend before – we had already adopted it as part of everyday culture – but I think we are going to become even more aware of what we eat and how we eat it.” The fact more consumers are cooking every meal at home at the moment is only likely to increase interest in the links between diet and health.

In terms of delivery, the opportunity now exists for anyone and everyone to experiment (safely), as consumers are likely to be at their most forgiving in terms of new businesses getting to grips with delivery tech. “Now is the time to trial,” says Moses, adding consumers aren’t going to suddenly delete apps and forget about delivery options when the lockdowns end.

“When this is all over, the companies that worked together and those that rushed to help will be the ones remembered fondly by their employees and consumers alike”

Moving to CSR, she sub-titles that section of her presentation “never forget”. Along with ‘connection and collaboration’, Moses talks about all of the companies that are doing the right thing during the crisis.

In the food manufacturing sector, a number of companies have made announcements in recent days about how they plan to support not just their employees but the wider supply chain and the communities in which they do business.

Danone has set out a suite of measures to support its workforce as well as small businesses in its “global ecosystem”, including farmers, suppliers and service providers.

Mars has pledged US$20m “to better support the communities” in which the US food giant operates, including $5m donation to support the non-governmental organisation CARE in its work supporting women, children and the refugees in the developing world, as well as a $2m donation to the United Nations’ World Food Programme.

PepsiCo is spending $45m to help fight the global battle against coronavirus, including buying protective gear for frontline workers. The funds will be distributed worldwide.

When this is all over, the companies that worked together and those that rushed to help will be the ones remembered fondly by their employees and consumers alike.

A glimpse of the new consumer in China?

For some, the light at the end of the tunnel is near and, as several cities across China tentatively reopen, we can begin to assess the new consumer mindset.

In a report published at the end of March, consulting firm McKinsey & Co. found 23% of Chinese consumers said they purchased “slightly more” alcohol during the country’s Covid-19 crisis, while 7% purchased “a lot more”. This was evened out, however, by 21% saying they bought “slightly less” and 8% purchasing “a lot less”. Snacks fared similarly, but fresh food and home cleaning products saw increased consumption. At the bottom of the scale was make-up, followed by skincare.

When it comes to how the Chinese expect their consumption to evolve following the crisis, McKinsey states the majority say they “will revert to pre-crisis levels across most categories, with 60-70% expecting to resume normal consumption or consume slightly more”. It adds: “Another 10% will consume a lot more, perhaps reflecting a degree of deferred demand.”

However, McKinsey warns 20-30% of respondents suggest they will continue to be cautious. “Brands may wish to respond to these dynamics by stepping up marketing and promotional efforts,” the report says. “These may help them both in engaging with renewed demand and encouraging consumption where it is weak.”

Last week, international potato-products supplier Lamb Weston said it was to see flickerings of an improvement in China, where the company saw foodservice demand tail-off in the early stages of the outbreak as Beijing imposed strict restrictions on people’s movements to contain the spread of the virus.

“In China, after the government placed severe social and movement restrictions that significantly reduced restaurant traffic, french fries demand declined about 50% for about a month. As restrictions have relaxed we’ve seen volume climb back to about 70% of pre-crisis demand today,” Lamb Weston president and chief executive Tom Werner said on 2 April.

It is, of course, still wise to be cautious. Nestlé CEO Mark Schneider yesterday (6 April) gave an indication of what the company is seeing in China – and his comments underlined how companies need to be ready, in the next few quarters at least, for the global economic turmoil wrought by Covid-19.

“What we’re seeing from China, for example, where there’s some improvement here, that even in the aftermath, that there’s strong demand for value products and quality products, maybe a bit less on premium and, given that we’re of course in a recessionary environment right now, I think that’s also a safe bet then for some of the other communities, as we emerge from the immediate healthcare crisis,” Schneider said.

Could grocery e-commerce be beneficiary?

E-commerce was already a big deal in the Chinese market, but McKinsey’s report suggests consumers are likely to be even more amenable to online shopping after the crisis, especially for categories that already have strong online track records. Indeed, e-commerce giant Alibaba last month announced a boom for Taobao Live, the live-streaming marketing channel.

“Taobao Live is driving the digitisation of China’s retail sector, offering brands and merchants a shortcut to hasten their business transformation and boost revenue using new marketing avenues,” says Feng Yu, senior director of e-commerce content at Taobao. “The current healthcare crisis is a wake-up call for retailers. It has prompted many to accelerate their digital makeovers, so that their businesses become more dynamic and resilient.” The company describes the channel as a “lifeline” for businesses during the pandemic. Taobao now plans to host live-streaming sessions from 300,000 merchants per day in 2020.

Could we see similar trends in other markets, countries where the penetration of grocery e-commerce may not have been as advanced as in China, when their lockdowns are eased?

In the UK, where before Covid-19 online accounted for around 7% of grocery sales, there have been severe issues with capacity as consumers under lockdown sought to follow the Goverment’s advice to use delivery services where possible when food shopping. Amid shopper frustration at long online queues and a paucity of delivery slots, the country’s major grocers have subsequently all invested heavily in online capacity, taking on more pickers and vans and, in some cases, doubling the slots on offer.

“We characterise the UK online channel through the coronavirus crisis as one step backwards, but two steps forward”

“Whilst some shoppers will have been disgruntled and disappointed by online order letdowns, we do also believe that the crisis may have expanded the online grocery market in the UK through the elderly and vulnerable groups in particular, which we could see remaining with the channel,” Clive Black, director and head of research at UK stockbrokers Shore Capital said today. “We also believe that the more rational economics that has evolved in UK online grocery will remain in play, so serving to be more neutral to beneficial to overall supermarket economics. Hence, we characterise the online channel through the coronavirus crisis as one step backwards, but two steps forward.”

In the US, the food industry is, at the time of writing, going through its own period of pantry-loading, which Neil Stern, senior partner at retail consultancy McMillanDoolittle, describes as the first of “four waves of significant change that will impact the industry in the coming months”.

“Wave two”, Stern says, is the “almost normal”, where the pantry-loading eases but the grocery retail sector keeps some of the sales gains it had captured when the US foodservice sector closed down. The third wave, echoing what Nestle’s Schneider intimated, is “recession”. Stern says: “Retailers need to quickly dust off their 2008-2009 recession playbooks to prepare. Expect to see big increases in private label sales as consumers trade down and even greater growth in price oriented formats (good news for the Costcos, Walmarts, Trader Joes and Aldis of the world) but also an opportunity for conventional retailers to proactively respond by offering value early.”

Stern calls the fourth wave “the new, new normal” – and it’s here where, in the US, a market where grocery e-commerce has relatively lower penetration, the online channel could benefit.

“Great disruptions (and a pandemic certainly qualifies) tends to act as an accelerator for a number of latent trends that were already in the market. E-commerce in grocery likely scales at a much faster rate. But, in responding to the value component, order on-line and pick-up in store offers a more value driven (and safer) way to deliver product,” Stern says.

“Contactless experiences might become the norm. Expect a huge increase in touch-free experiences (Apple Pay and the like) and a decrease in cash transactions. It could be a huge boost to technology services like Amazon Go which reduce interaction with associates. It might cause a massive rethinking of how a grocery store looks and feels if food safety becomes a tantamount concern. Perhaps the next generation supermarket is one-third pick-up, one-third delivery staging and a much more automated process throughout?”

While countries that are further down the road in the fight against the coronavirus can start to see a post-pandemic world take shape, others, like the UK and the US, are still getting to grips with the impact of Covid-19, not just on the healthcare systems, but on consumption and the wider economy.

When we get through the other side – and new habits have been formed – we will expect these new trends to become integrated into everything from work meetings to dining out to even doing our food shopping.

Additional reporting by Dean Best.

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What are the key consumer trends driving FMCG in 2022?

The consumer landscape has permanently changed since the COVID-19 pandemic began, prompting trends to emerge or accelerate, causing subsequent macro-economic shifts. In order to stay relevant, Consumer Packaged Goods companies must stay abreast of these developments. It is here that GlobalData can offer valuable assistance. Download GlobalData’s Trendsights: Trends to Watch in 2022 report to:
  • Gain insight into the 12 most important trends across the FMCG value chain
  • See the consumer survey data that underpins these insights
  • Learn what early-movers are already doing in terms of NPD and product marketing
Take a look at this report to give yourself the best standing in this developing market.
by GlobalData
Enter your details here to receive your free Report.

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