CPG + COVID: Keeping Up with an Evolving Audience

The consumer package goods industry is remaining steady through COVID-19. That doesn’t mean the sector isn’t without its challenges caused by the Coronavirus like other industries. Changes in consumer behavior since the virus have affected nearly every business sector, from beauty to banking.

According to Investopedia, consumer packaged goods (CPG) is one of the largest retail segments in North America, worth $2 trillion. The sector includes everyday items people consume and use, such as beverages, household products, food, makeup, and tobacco. 

There’s a continuous demand for these products, and brand loyalty is tough to build because it’s easy to switch brands due to their low cost. CPG products tend to be staples that people stock up on because they know they’ll use them in the future. Stockpiling or pantry loading during quarantine and beyond has helped the industry admit rocky economic conditions.     

Sales surge in lockdown 

In-store and online sales of CPG items climbed as U.S. businesses and schools started to close. Nielsen data shows during the last two weeks of March 2020, CPG sales increased to $8.5 billion, 15X the average rate for the typical period. 

People stockpiled food and necessities, preparing for the U.S. lockdown of all non-essential businesses. This sudden increased demand for CPG products, online and in-store, put pressure on the supply chain and retailers. 

More recently, research from Acosta shows that grocery trips have slowed. Weekly grocery shopping is down by 20% since the start of the virus. Consumers are shopping less frequently but spending more, and they site the main reason is eating at home more often. 

As consumers make fewer trips to the grocery store and spend more, brand manufacturers can incentivize buying large quantities to drive higher sales. CPGs need to keep the momentum going, which will involve understanding changes in consumer habits and catering to their new preferences. 

Brand loyalty shifts 

Have you tried a new brand since COVID-19 started? Many consumers were forced to try new brands because what they typically bought was out of stock. The data indicates it’s been a positive experience as opposed to a negative one. 

PWC research shows that 50% of consumers are trying new brands. And of those trying new brands, 66% are likely to stick with the new brands they are trying. People like the changes, and it’s opened them up to different possibilities. 

While brands may have found they lost loyal customers due to supply issues or new habits, they find they have gained new customers. It’s up to brands to do whatever they can to retain these new customers and turn them into loyal ones. 

Larger, more established brands will have an easier time reacting to this shift in consumer purchasing than smaller start-up brands. However, it’s an excellent opportunity for growing brands to approach new customers with coupons, discounts, and trials because of how open consumers are right now to change. Consumers are more flexible and are happy to get the items they need, even if it means buying a different brand. 

CPGs can go directly to the consumer 

Direct-to-consumer or DTC has been an increasing trend in the CPG industry for a while. Brands such as The Dollar Shave Club and Blue Apron have popularized this sales approach, shipping directly to consumers. 

With fewer shoppers going to the store, big CPG brands are discovering their own way to compete directly with DTC only brands. For example, in just 30 days, PepsiCo built a new website called Snacks.com that allows customers to shop Frito-Lay products directly from PepsiCo and have them delivered to their homes. 

By bypassing traditional retailers, brands can decrease their costs and have a closer relationship with their customers, all while capturing valuable customer data that they own. Taking it a step further, CPGs can leverage Artificial Intelligence capabilities such as conversational commerce or messaging to connect with customers in different channels and win the sale. 

In addition to receiving delivery straight from brands, many people ordered their groceries online from retailers for the first time. Before the pandemic, online grocery spending was at 4%, and it increased to 15% during the months of quarantine. According to research from BCG, this trend will likely stick; 35% of consumers new to e-commerce plan to continue online grocery shopping after COVID-19 restrictions cease.

Now is the time to experiment with different methods of getting products to consumers and use emerging digital technology to do it. CPGs must look at selling through omnichannel and building the capabilities to do so if they want to survive in a post-COVID-19 market. Creatives On Call can deploy talent to help CPGs build out their digital strategy and structures. 

Build secure supply chains and agile teams  

The pandemic has highlighted supply chain vulnerabilities on a global scale. Many companies are reevaluating their current supply chain strategy and looking at ways to digitize for improved visibility and flexibility.

CPGs need to leverage technology such as AI and robotics to optimize their supply chain and anticipate risk in the future. In a PWC survey, over a third of CFOs stated they will be looking for ways to automate to improve accuracy and decision making. 

70% of the CFOs surveyed reported better resilience and agility are needed to make their companies better in the long run. Creating agile teams is another way CPGs can prepare for the future. By utilizing teams of individuals for projects, CPGs can react quickly to changes, speeding up innovation and product testing. That’s because teams involve a group of people with complementing skillsets for faster problem-solving.   

There’s little doubt that CPGs will need to reevaluate their suppliers’ strengths and weaknesses, along with their current supply chain strategy. And creating agile teams can help CPGs be more flexible in solving the current challenges the Coronavirus brings.

Forging new paths

COVID-19 has turned everything upside down. Brands that can capitalize on consumer behavior changes will have the best chance of succeeding in the post-COVID-19 world. It feels like anything is fair game at this point. CPGs should be agile and open to new ways of reaching their customers and supplying them with what they need, leaning on teams and their supply chain to do it. Changes brought on by COVID-19 are an opportunity for CPGs to gain new customers and innovate the path to purchase. 

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This is a time for marketers to step up to the challenge and get creative in meeting current demands and behavior changes. Creatives On Call call supports your business through this. Contact us here.  We have Marketing professionals ready to start in areas including:

• Strategy & Advisory

• Design and Production

• Content Creation & Management

• Customer Engagement & Experience

• Learning & Knowledge Management

• Digital Technology & Transformation

Learn more here.