How FMCG Brands Can Respond To Change After COVID-19
The pandemic has changed consumers’ behaviour and there will be further changes in their wants and needs in the months ahead. Jess Smith advises on how brands can keep up.
Pronouncing dramatic change has become a cliché for our times. But there is little doubt that the COVID-19 pandemic has had a significant impact on consumer behaviour, especially when it comes to FMCG shopping. Will I ever pop into a Tesco Express during my lunch hour again? It’s still hard to imagine. Thus it is unsurprising that UK grocery sales through digital channels have grown by 75% according to Kantar data.
Consumer goods brands have long understood the need to adapt to digital shopping behaviours. But the recent disruptions have triggered a greater sense of urgency. On top of that, further change in consumers’ wants and needs is inevitable as the peak of the pandemic passes and its longer-term impact on human behaviours becomes clear. To effectively keep up, brands should therefore be looking to take multiple steps.
1. Winning the online shelf with search and partnerships
Brand owners must understand and invest in the ‘zero moment of truth’ – that consumer decision-making moment, as defined by Google – in which the consumer researches a product prior to purchase. Win the category search and the brand is automatically top of the consumer’s browsing list, giving your brand a better chance of ending up in that digital basket.
Winning search also applies to retailer websites. In physical retail, you win with scale. Share of shelf usually correlates to brand share and incremental display equals incremental share. But online, there is an infinite shelf. You need to beat the algorithm to win with smarts, not just scale. Cracking this is hard, because they are different for all retailers and they change a lot. But generally, you can’t go wrong with having a good product that is bought frequently by many with strong ratings and reviews.
Repeat purchase is 22% more likely with consecutive digital shops as people tend to shop from digital lists or previous shops. So intercepting shoppers is vital and can be achieved through online retailer partnerships and boosting e-commerce ad spends. Amazon presents an entire ad ecosystem, but supermarkets such as Tesco and Sainsbury’s aren’t far behind in terms of the importance of spending on their platforms to drive your product into online shopper baskets.
2. Think beyond the old challenges of e-commerce growth
Long standing barriers to online growth, such as minimum spends and unexpected product substitution downgrades, are less of an issue given the falling standards of the physical supermarket experience during lockdown. A whole new demographic has embraced online – an older, less affluent, more rural audience.
TIP: Win with new online shoppers through value plays, more user-friendly experience and investment in moments that surprise and delight.
Arguably, an online supermarket delivery slot has become one of the most in-demand luxuries of our time. Supermarket e-commerce capabilities seem to be the only things stopping further growth. So, consumers are finding other ways to fulfil needs – which brands must respond to.
Direct-to-consumers is one example. Heinz set up its “Heinz At Home” DTC channel during the peak of the crisis, for all your beans needs. Impressive and adaptive, though I question whether shoppers will do specific bean shops, once access to online and bricks and mortar supermarkets improves.
Another example is the subscription model, with many seeing vast acceleration of growth already present pre-pandemic. For example, smol is an eco-friendly biological laundry and dishwasher detergent brand, with capsules bought by subscription, delivered through your letterbox.
Several things worked in its favour during the early weeks of the pandemic, such as its inexpensive price, mail delivery, ability to meet heightened personal hygiene needs, and the fact it is a habitual necessity – all things likely to remain relevant once lockdown is further eased.
Some things will change, some things won’t
Following several months in lockdown, we have the luxury of perspective. So, we need to question how much will actually change permanently.
Even despite the surge in online grocery demand, it is still only 11.5% of all grocery sales. Even if we reach, in the coming years, the levels of the most mature market, South Korea (which has seen a rise to 32%, during the pandemic, from 19%) it’s still worlds away from overtaking ‘real life’ supermarket shopping. Supermarkets are likely to remain a dominant force and a place where brands need to win.
So, what are the tried and tested rules of thumb that have always worked, and will continue to help brand sales both in store and online? To remind everyone of the fundamentals that still work for FMCG brands today there are, we believe, four important routes to success:
1. Mental availability and distinctiveness.
Strong memory structures will continue to ensure that your brand makes it onto either the digital or physical shopping list. Now is not the time for a radical re-design yet it could be the time to re-think how you apply these assets. At Grey London, we’ve helped clients such as Febreze and Gillette transform their e-commerce product pages to ensure they get noticed in online environments, to enjoy incremental success.
2. Physical availability.
New partnerships can offer new distribution outlets that have emerged during the lockdown.
This has never been more important than now. We need to find ways to truly connect with our audience in new and novel ways, despite the new production restrictions. This also extends to the continued importance of product innovation.
4. The power of promotion.
UK shoppers have become very practised in searching for price and promotions, and this is also true online as well as offline. Thrifty shopping skills will be used even more, as we enter into a deep recession.
The shock of the pandemic has been huge, and it will continue to reverberate for years to come. But as brand guardians we need our perspective and knowledge to make intelligent decisions. The fundamentals are just that for a reason and they will hold brands in good stead for the uncertain times ahead. So, keep your strategy steady and be open to adapting your tactics.