Four consumer behaviours shaping future growth

Consumers are rethinking how they shop and what they buy. To win, retailers must continually evolve to meet changing needs

The force of COVID-19 continues to spark creative ways to conduct business and meet consumers’ demands. Shopping behaviours are a testament that our “new normal” is a never-ending evolution, which makes the fast moving consumer goods (FMCG) landscape more interesting than it’s ever been. While the future may be uncertain, we do know there is a behavioural shift unfolding, which is being defined by an economic reset as consumers rethink how they shop and what they buy. The impact isn’t equal, as many of us reset our household needs and expectations. In Nielsen’s The Two Sides to Every Dollar You Sell report, we’ve highlighted four consumer trends defining future growth opportunities.

Initially, consumer demand caught the FMCG industry off guard with sales the week of March 21 increasing 55%. Faced with unprecedented demand, retailers and manufacturers quickly adapted. However, there is room for improvement as the supply chains for some categories still struggle, and this can be costly. Items topping the shopping list during the pandemic that have been impacted by out-of-stocks include hand sanitizer, antibacterial cleaners, paper products, fresh food, bread and baked goods.

While FMCG sales have stabilized, retailers and manufacturers still have plenty of work ahead of them to meet demand levels; for instance, 60% of shoppers faced out of stock items in July, down 11 points versus May. As we head into phase two of the COVID-19 crisis, not planning for future consumer demand can dramatically impact sales. What’s at risk? If the product is not on the shelf, you will lose the sale 66% of the time.

For the majority of Canadians, spending control is their new reality, with 66% of consumers limiting their overall grocery spend. Since the pandemic has impacted consumers differently, this aspiration is polarizing. For example, 89% of constrained consumers (those negatively impacted by COVID-19) are focused on spending less on groceries, compared to 58% of insulated consumers (those not impacted).

Retailers and manufacturers must continue to reward those consumers who need to manage their spend control, but don’t promote too aggressively and risk cannibalizing sales from big spenders. We need to promote with a purpose, and not use promotions as a primary growth strategy.

The do-it-yourself (DIY) approach Canadians have adapted in their daily routines has fuelled a new homebody economy. When we asked consumers about which food meal planning and preparation activities they had done more of in the past month, we found: more are cooking (+46%), trying recipes (+43%), baking (+30%), using meal deliveries (+11%), purchasing grocery-prepared meals (+10%) and ordering meal kits (+5%). With consumers across Canada expecting to spend the majority of their time at home for the foreseeable future, manufacturers and retailers can help by proactively providing them with inspiration, entertainment and recipe ideas to make their stay-at-home situations more enjoyable.

The most staggering shift has been increased trial and reliance on e-commerce for groceries, which has seen an impressive 86% increase over last year. Fuelling this dramatic shift were increases in household penetration, frequency of shopping and basket sizes.

Consumers are avoiding the stores and trying out online grocery shopping out of safety concerns and as a convenience play. COVID-19 has forced many retailers to quickly adapt and offer various delivery options. As online shopping becomes more routine and satisfaction continues to grow, retailers need to provide seamless online shopping platforms and delivery options to fuel future demand.

COVID-19 has redefined growth opportunities across Canada. Though the future is uncertain, more changes are inevitable. Retailers and manufacturers who can continually evolve to meet future consumer demand will win in the Canadian market.