Everyone knows old habits die hard.
When it comes to a global pandemic however, new habits stick fast.
This is the most important thing to understand about shoppers right now in the CPG industry — they’re not going back to the way it was.
On the contrary, they’re moving forward, embracing the changes forged in the throes of COVID-19, many of which made shopping easier, safer and more convenient.
So, let’s get right into it. Here are 5 things you should know about shoppers in 2021.
1. They’re still ordering groceries online
Image credit: Instacart
In 2021, shoppers are facing relentless demands on their time. Many are still working from home, with kids in varying degrees of virtual learning.
So they’ve settled into new routines for grocery shopping, largely focused on e-commerce and delivery. Mix in ongoing concerns about the virus and online grocery isn’t going anywhere.
What this means for CPG brands:
Now is the time to move full-steam ahead with your e-commerce plans. It’s here to stay and shoppers don’t have time to mess around. If your brand's digital presence isn’t front and center, they’ll switch to one that is without blinking an eye.
“Digital will continue to be the norm well after the pandemic,” says Alvaro Del Pozo, Adobe’s VP of international marketing. “As such, digital can no longer just be a component of marketing, customer service or product. It has to be treated as the core driver of customer experience and business growth.”
Recommended actions CPG brands should take:
- Explore investing in the D2C (direct-to-consumer) channel.
- Diversify your brick-and-mortar presence by investing in c-store. As traditional grocery loses market share to e-commerce, c-stores are expected to pick up the slack.
- Ramp up spending on digital marketing.
- Partner with retailers and food-delivery apps to send coupons, personalized offers, and pairing suggestions.
2. Shoppers continue to make fewer trips but spend more each time
Image credit: Imants Kaziļuns on Unsplash
Early in the pandemic, shoppers consolidated trips to avoid going to the store as much as possible. Behaviors like meal planning, collaborative list making, and pantry stocking became the norm.
And while the initial panic of the spring is a distant memory (albeit a traumatic one), many of these behaviors are not. People are still making a concerted effort to shop less frequently, whether it’s in-store or online.
For the week ending February 6, 2021, for example, trips were down 12% and sales up 8% per Catalina's Buyer Intelligence Database. Neil Saunders, managing director of GlobalData Retail, called this a "remarkable shift in the way consumers are shopping.”
What this means for CPG brands:
Fewer shopping trips means a change in what people are buying. They need the food to last, so pantry staples, middle-of-the-store items, and frozen foods are flying off the shelves while fresh products are taking a hit.
It also means a change in where people are going for quick fill-in trips. With better planning and stocked pantries, shoppers need fewer items to fill in. So they’re turning to small neighborhood convenience stores to augment their bulk shopping.
In response, many of these stores have shifted to more of a “corner store” mentality, stocking essentials like milk, eggs, produce, and cleaning products.
And with $182 billion in revenue from CPG products already, the growing consensus is brands will invest more in c-store marketing in the coming years.
Recommended actions CPG brands should take:
- Run promotions that incentivize stocking up — like BOGO’s or discounts for buying multiples.
- Take a look at your product line and promote items like pantry staples, snacks, frozen food, etc.
- Promote larger family-size packages and bundles.
- Create recipes using your products as ingredients and promote them.
- Invest in c-store channel marketing to capture revenue from fill-in trips.
- Partner with retailers to run personalized promotions focused on increasing basket size.
3. Many shoppers are still unemployed
Image credit: Whitehouse.gov
The economic devastation of COVID-19 is still playing out in 2021. And the outlook is bleak.
22 million jobs have been lost with Moody’s predicting they won’t be fully recovered until 2024.
Millions more jobs have been left behind, as women disproportionately leave the workforce to care for children at home. In September alone, 865,000 women did not return to work.
This amounts to trillions in lost GDP and a massive reduction in consumer spending. In fact, McKinsey reports that 40% of consumers plan to decrease discretionary spending this year.
What this means for CPG brands:
Millions of shoppers are operating on razor-thin budgets. And even those who have a bit more elbow room are hyper aware of their spending.
So CPG brands should expect high levels of price sensitivity across the board, leading to price-based brand switching and a rise in private label consumption.
To remain competitive in such an environment, CPG brands should focus heavily on coupons and value-based promotions.
Recommended actions for CPG brands to take:
- Use data on price elasticity when choosing which products to discount. For example, our aggregate c-store data shows that sales of beer brands like Miller Lite and Budweiser are significantly more sensitive to price than premium brands like Heineken.
- Invest in mobile coupons that can be personalized. Now more than ever, people want coupons for items that they already buy.
- Offer discounts for buying multiples of the same product or another item in your brand’s lineup.
- Bundle related products according to category and offer them at a discount (especially if you’re in the D2C channel).
- Offer rebates to get shoppers to try new products. Tight budgets don’t allow for gambling on something that they might not like.
4. Shoppers are using more mobile coupons than ever before
The shift to mobile coupons has been a long time coming. The pandemic tipped the scales in the second quarter of 2020 when digital coupon redemptions surpassed paper for the very first time.
Like so many other changes adopted by shoppers during COVID, mobile’s rise is unlikely to reverse course. After all, mobile coupons are easier to find, easier to redeem, and easier to personalize.
Plus, consumers are growing ever-more reliant on their smartphones — even when shopping in-store. Our data shows that physical trips are now heavily influenced by digital, with 84% of millennials using their phones in-store for shopping assistance.
What this means for CPG brands:
Brands can’t rely solely on paper coupons anymore to promote their products. Whether consumers are shopping in-store or online, they’re using mobile coupons more and more.
Our data from the c-store channel, for example, shows that mobile apps and SMS make up 82% of offer activations across all digital channels.
So if you rely heavily on paper couponing, which many CPG brands do, it’s time to re-evaluate your strategy.
Recommended actions CPG brands should take:
- Reallocate promotional dollars from paper to mobile.
- Invest in SMS marketing campaigns.
- Choose a partner with mobile offer technology expertise (like Koupon!).
- Invest in the c-store channel where immediate consumption purchases dovetail perfectly with mobile coupons.
5. Shoppers are going to make you work for brand loyalty this year
Image credit: McKinsey
According to McKinsey, consumers are switching brands at unprecedented rates. As you can see in the chart above, 36% of shoppers tried a different brand and 25% switched to a private label since the start of the pandemic.
Perhaps most concerning, though, is how many shoppers plan to continue their behavior post-crisis.
The most cited reasons for switching? Value and convenience.
What this means for CPG brands:
The bottom line for many shoppers this year is value. Plain and simple. If you’re the cheapest on the shelf, they’ll stick with you. If not, they won’t hesitate to switch.
For others, bogged down with work and kids, convenience is top dog. For these shoppers, your product needs to be the easiest to buy. You need to be available where they’re shopping, when they’re shopping and how they’re shopping.
Recommended actions CPG brands should take:
- Make data-informed decisions about your pricing, taking into account the elasticity for each product.
- Offer frequent, discount-based promotions like coupons, rebates, BOGO offers, etc.
- Invest in personalized mobile coupons.
- Partner with retailers to send offers via their loyalty programs.
- If you’re in the DTC channel, launch your own loyalty program.
- Carefully analyze retailer data to understand whether customers are coming back or sticking with new brands.
- Diversify distribution channels to ensure your product is available where your customers are shopping.
- If you’re already in DTC, explore innovative ideas like voice ordering, scannable packages and more.
Conclusion
Shoppers in 2021 are moving forward, embracing change out of necessity. And the habits they develop now are expected to stick far into the future.
Jason Thomas, head of global research at The Carlyle Group, predicts “it is likely that the most salient disparities in two years’ time will be between companies within the same industry, as some management teams focus on reinventing their businesses while others endeavor to return to January 2020 levels with only minor adjustments.”
Which side will your brand be on?
Discover how Koupon helps clients better understand their consumer by connecting with our team below.
