3 changes in consumer behaviour and how it affects the CPG industry in a post-COVID world
A year ago, companies were preparing for business as usual while trying to grapple with changes in consumer preferences, accelerated innovation and increased competition. Buzz words such as nimble innovation, best in class product development and cross-company collaboration were the order of the day.
And then 2020 happened, bringing with it massive upheaval including extreme uncertainty. In the immediate aftermath of the lockdown, consumers shifted behaviour towards price sensitivity and channel preferences, but more recently behaviours have shifted again, and three refined trends have emerged.
1) A major shift to online shopping
The shift to online accelerated in 2020, with both click and collect and home delivery. Protracted physical distancing has encouraged a mobile-first consumer mindset, and it looks like it’s here to stay.
Demand variability during the pandemic has forced many CPG companies to consistently monitor trends and adjust their supply chains quickly. And whilst online trends may persist for a while after the economy reopens, uncertainty continues requiring companies to prepare for change. To deal with sustained uncertainty, companies will need to better manage how they anticipate and plan for fluctuations in demand.
By using a combination of consumer insights, COVID-19 scenarios and their own customer data, CPG companies can better predict and mobilise against changes to consumption, channel mix and product demand by postcode.
2) Trusted brands
The first wave of lockdowns resulted in a massive spike in certain goods. The subsequent waves have been characterised by phased reopening and partial closing of stores. These shifts have created opportunities for brands to get closer to the consumer, reasserting the benefits of scale in the supply chain and key account relationships. This availability and trust have enabled large CPG companies to ‘come back’ with consumers opting for brands they can absolutely trust.
Additionally, consumers have made choices about what’s essential and what they can do without, leading to SKU rationalisation and shelf space adjustments. CPGs can build on the momentum of rationalisation by redesigning their products and maximise things that consumers value and minimise costs for less relevant buying factors.
3) “Nesting at home”
Home has been recast as the new office, gym, coffee shop, restaurant and entertainment centre. And as such, people are making unprecedented changes in how they live.
The nesting behaviour has prompted an array of opportunities and possibilities including buying products associated with homebound activities such as home improvement, crafting, cooking, exercise, gardening and even telemedicine. For instance, a massive amount of innovation has come from CPGs in ways to help people cook and to provide restaurant-style meals at home.
Consumers, those who are fortunate enough to have kept their jobs during the pandemic, have taken the opportunity to upgrade their ‘pandemic headquarters’, driven by the underlying need to feel safe and cosy.
These changes have affected many facets of consumer purchases. While changes may or may not be permanent, it’s almost certain that fundamental shifts will occur. Manufacturers must consider the role they play in this evolution of consumer needs.
For further information, including details on how to respond to these changing consumer trends and how connected planning can help, download our full whitepaper.
In our next blog, we’ll be exploring the trends that CPG companies need to remain focused on, so keep an eye on our social channels where we’ll be publishing details.