Another week and ten more thoughts to share and inspire.
We believe behavioural evidence has a huge role to play to help us see what's happening clearly and to develop growth strategies and responses to them. We have focused on insights that truly reveal what happens to people’s FMCG purchase and consumption habits whilst staying at home, as a way to predict what consequences to expect in future behaviour.
This week we travel to Africa and Latin America to see how COVID-19 is impacting purchasing in these regions. We also build on last week's 'thinker', showing how promotions impact brand loyalty alongside channel hopping and look at how quickly home delivery is returning to normal in Spain.
This week’s ten insights around purchase and consumption behaviour and COVID-19:
1. How soon will it be before we start talking about traffic jams? Once restrictions are lifted and we start our morning commute again, quite quickly! At other times – weekends, mid-day – the roads could look like the way they do now for at least a month. Using TOMTOM traffic congestion data we have seen how traffic at weekends are still at lockdown levels in Beijing and Wuhan. Getting fully back to normal behaviours and talking about everyday problems is going to take time.
2. With 4.5 billion people globally impacted by restrictions, we are seeing more and more markets display a period of stockpiling, with the stockpiling effect even higher in Africa but happening later than other regions such as LATAM. With this stronger uplift, will that mean the African markets will face even stronger decline? One to watch.
3. An update of the China CPG spend growth shows that growth rate has not returned to the pre-COVID level, suggesting—like traffic congestion levels—that going back to how it was before straight away is unrealistic. And, more pessimistically, given the underlying trend, not for quite some time.
4. The significantly rising unemployment numbers across the world are making everyone nervous about the future. Based on current spend per household, if 16% of people move to the lowest income levels, UK CPG spend would decline by 3.5%. With CPG being essential for everyone and the spend difference between higher and lower income levels in developed countries not that great, this decline is not as large as other less essential sectors may see.
5. Famous brands are so successful because they attract any member of society. And, most importantly, they can do it while charging on average twice as much money as perfectly acceptable cheaper alternatives. We see here that Branded share of CPG spend never moves more than 1-2% from the average, whatever your income level. How brands continue to maintain high reach at these levels of premium in more uncertain times is what they will need to concentrate on.
6. We talked last week about how changing retail channel makes you less brand loyal. We’ve flipped it this week to show that again but also show how price promotions are, in fact, the great disruptors of loyal brand buying. The probability of changing brands from one purchase to the next is at 41% if you switch from offline to online, but this number jumps to 64% if the alternate brand is on promotion. But if you think this switch will stick, you should think again.
7. We look at the top line sales growth patterns of three categories from different sectors of CPG and the shapes are fascinating as they hide many usage behaviours underneath. We are seeing some people stockpile and then use faster than previously, versus others being more frugal than before. How you encourage more usage should be a high priority.
8. In France there has been a 50% increase in Apéritif at Home occasions and the accompanying food categories have benefited as a result. We suspect someone is working on the perfect drink or snack while on a video call as we speak. Are there other new eating occasions in isolation to exploit? Are there products you should associate your brand with more closely?
9. In lockdown we are all cooking more. But you need some breaks now and again! In Spain the number of food delivery occasions dropped by a third during the first two weeks of lockdown and by the third week had returned to previous levels. We think take-home delivery will continue to grow the longer we stay in lockdown. And lunch continues to be the occasion with the most potential.
10. We’ve named two brands of the week. The Rolling Stones for their involvement with One World: Together At Home, and Apple for their latest iPhone. How do 56-year-old brands last? Keep turning up where a lot of people might be watching. Play the same old stuff but highlight the parts that play well with the current context. You can get want you want: growth. And Apple: potentially getting ahead of the impending value market by launching high quality features at a lower than expected cost. Can you do that?