Radical consumer shifts ahead

by Louise Burgers. Consumer behaviour has already changed radically under lockdown across the world and new paths to purchase established as retailers have scrambled to unlock ecommerce solutions. In the ‘new normal’, post-pandemic world, consumers are expected to value luxury and prestige less and value health and basic sustenance more.

Earlier this week, local experts from global research giant Kantar shared the significant shifts that business and brands can expect for channels, consumers, brands, media and organisations. This is the second report on that indepth presentation to business and brands in Africa. Norman Reyneker, Kantar Insights retail, sales and shopper at Kantar, spoke on the accelerated omnichannel in his presentation, entitled, From modern bricks and mortar to accelerated omnichannel. He said South African shoppers were already shopping online 22% more, since the crisis began to dominate media headlines.

“COVID-19 is a catalyst for changes to retailing, a force that will change the way we buy and shop today and after the crisis. Shoppers will continue to shop in physical stores, but are looking online to reduce shopping trips and access a different experience. This accelerated adoption of digital channels will change the game to accelerate an omnichannel world of retail.”

There has been a 300% increase in order volumes since the onset of coronavirus in South Africa; and 43% of shoppers said they would shop online more after the crisis. In fact, 84% of shoppers surveyed in China, said they had tried at least one new online service during crisis. In South Africa, local grocery retailers quickly amplified their online offering and we’re seeing rapid adoption of services that previously felt like an “uncomfortable and costly habit change”, Reyneker said.

This leapfrog to ecommerce is impacting all grocery categories and spurring innovation, like Pick n Pay’s WhatsApp local store option, allowing consumers to place their orders via WhatsApp and then pay on arrival. This rapid adoption is also increasing trust in online ordering and epayments.

Even before lockdown, 73% of SA consumers were choosing to shop closer to home; 63% aimed to continue choosing the same brands they always buy, preferring trusted, reliable favourites; and 45% paid more attention to the origins of the products as safety becomes a factor and local brands were favoured. However, he warned that in the advent of stockouts, consumers would try new brands.

Agility and availability

Reyneker commended retailers for the measures they had taken to help consumers feel safe in store with sanitiser products and social distancing guidelines. In navigating this new crisis, there were opportunities for retailers to help consumers:

1. Secure agile supply and availability, across all channels. It was important that retailers are responsive and agile to meet shoppers needs.
2. Think and act fast on ecommerce. Be available and visible digitally. You don’t have to own the solution. Try new things, test, use experts in your fields to trial and test to scale fast in the coming months.
3. Adjust your promotional strategy. Refocus on multibuys rather than price discounting, reducing the need for consumers to shop as often. In the convenience channels, focus on pack sizes and pricing to respond to constrained spending.

“When shoppers return from the crisis, they will have experienced different paths to purchase in this new normal. Are you ready for them? Use this time to learn fast to anticipate shopper needs in the future.” Reyneker mentioned how Netflorist had pivoted its business to include the home delivery of fresh produce, as an example of creative and innovative thinking. This is what retailers can do now, Reyneker advised, in embracing an abundant market philosophy and prepare new omnichannel strategies now to delight shoppers post-recovery:

1. Accelerate digital transformation: Relook at the channel mix, be ready for accelerated O2O adoption, learn fast in digital channels to ensure the right mix, SKUs and strategies.
2. Understand retailer recovery strategies: Be at the front of discussions with top retailers.
3. Evaluate the right portfolio for returning shopper sentiments: Understand shopper journeys and sentiments, track behaviours, use these to guide strategic planning.
4. Create capability for the recovery: Use downtime to train, build capabilities and build anticipative teams.

“Brand suppliers need to support retailers in thinking creatively and having the right portfolio ready for consumers who have experienced different paths to purchase in this new normal,” Reyneker said.

Category management

There will be category shifts, warned Tanya Copland, strategy at Kantar Insights, as consumers turn to categories that can help get them through these unprecedented times. Consumers have moved from wanting it all to a renewed respect for the essentials and category shifts will be fundamentally rooted in needs. “With sustenance and security threatened during this pandemic, people will have a renewed drive to keep their basic needs intact and to protect these into the future.”

In China, there was a 40% increase for staples during the COVID-19 outbreak; and a 22% decline in expected demand of luxury goods after the outbreak.

She referenced Maslow’s hierarchy of needs to project consumer choices. These needs will never again be taken for granted. In times of crisis, needs shift, creating dynamic category demand, Copland said. “In the short term, higher-order needs will receive less focus. Culture will drive these into new paradigms. Goals will be reset, new pursuits undertaken. Needs are constrained by social distancing but will return to normal post-pandemic. Nothing will ever be taken for granted again, not basics nor treasures. Love and belonging will remain strong. Complex desires like self-esteem and prestige will be regulated far down, as people struggle to get their lives back on track during recovery.”

During the outbreak, categories that have all but ceased activity, with zero spend from consumers, are: gym, wealth management, out of home, entertainment, travel, luxury, hairdressers, beauty salons, cosmetics, appliances, electronics, medical cosmology, restaurants, alcohol, clothing. Categories that have increased use/spend include telco, social media, nutritional supplements, medical insurance, finance management, medical prevention, household, food and beverage, medicines, epidemic prevention. Unchanged is personal care. The future, post-lockdown world will see new forms of self-actualising emerge and a shift away from luxury goods and a reprioritising of health, security and sustenance – from spiritual to meaning.

Post-pandemic, during recovery, some categories will recover, and medium-term demand will return, albeit with new mindsets and priorities embedded. These are the changes Kantar predicted, said Copland:

• New forms of self-actualisation will emerge, and some demand will be restored.
• There will be a shift away from luxury goods as people reprioritise emotional needs particularly.
• People will have strong desires to reconnect in the beginning.
• Health will never be neglected again, and sustenance and security will continue to be a new priority. Categories that cater to health needs and provide security in terms of medical insurance, financial management, medical prevention, will increase.

What does this mean for brands? Copland asked. This massive cultural shock will translate into new meaning, with purpose. “Business needs to be agile and creative to respond to shifting consumer demand after the crisis and adapt supply to meet dynamic demand. They need to collaborate, curate and not compete. Competitors could become allies. Pivot your production capability to deliver or deploy new utility.”

She cited alcohol manufacturers coming together to supply pure alcohol for the urgent manufacture of hand sanitiser. In recovery, post-pandemic, this is what brands should be doing to meet the changing category dynamics of recovery:

1. Future proof your category: With better scenario planning on supply chain and crisis response, the ability to deliver in this ‘new normal’ world will improve.
2. Gear up for innovation pipelines: Prepare to cater to new needs, utilities and context in post-recovery – the entire ecosystem will change, from retailer to supplier to consumer. New formats will be needed and a rethink innovation.
3. Anticipate a change in the value equation: Impacted by the economic downturn of COVID-19, consumers will have less to spend. Ask how your brand can offer long-term value to retain users and win share? There will be a new value equation for sure, said Copland.

Retailing Africa will be delving deeper into Kantar’s six pillars for brands and business to navigate growth and recovery, with follow up articles this week. Here was the first, published 1 April 2020: How to plan for business recovery post-COVID-19.

Louise Burgers (previously Marsland) is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.

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