Ecommerce soaring during COVID-19

How is COVID-19 affecting what and how we buy, and how should brands respond? In this edition, we have focused on the FMCG retail and channel purchase trends being seen across markets, and consider interesting purchasing behaviors and whether they will remain.

This week’s ten behavioral insights around COVID-19: 

1. Google mobility data shows a high degree of grocery shopping variability across the world – from “Normal”, to below 50%. Some countries are returning to normal trip levels – USA and Brazil for example – while others remain in lockdown, shopping only when it is essential (like Peru).
2. COVID-19 has re-invigorated grocery ecommerce, especially in Europe. We analyze the online share of FMCG spend in 2018 and 2019 and the forecast for 2020, with >20% growth for the channel in all regions. We used to look to the USA to see future trends – but now we go to China! There is still more room for growth again in Europe.  
3. Next we look at which categories had the highest share of trade online, with certain CPG categories more suited to this channel. The evidence from the ecommerce giants – China and South Korea – shows the way. Hygiene and Health look like good future candidates – will a supplier find a winning formula? We expect many will try given the expected ongoing growth.
4. When marketing works, it usually works amongst everyone. This is true when we look at the penetration of the online channel across different life stages in the UK. The extra growth amongst the oldest cohort is astonishing – with penetration doubling. Will these older consumers stay? The more they learn through experience that ecommerce works for them, the more likely the answer will be yes.
5. Have we moved to famous trusted brands as expected? We see that the Brits have turned to brands during the crisis, whilst there is more consistent growth across both brands and own label in Spain. The picture here is not as clear as the move to ecommerce: it could go either way. Factors like household income and how retailers have reduced ranges to cope with the extra demand are just as important as brand trust.
6. If you had to cut $20 dollars a week on your grocery bill, what would you do? We show what coping strategies households are deploying in order to save money. Simply buying less is the most common way people cope with less money to buy groceries. So, despite genuine alternative strategies, going without and reduced volume will be the primary driver as how households under financial pressure will manage their grocery spend.
7. We will reduce our CPG spend if we have less income. However, if the employed – still the vast majority of households in a recession – remain flat then CPG remains fairly protected. This is why it is the fearful employed (who react like the unemployed) that are of greater concern.
8. The level of promotions in Europe is at its lowest for some time, with a clear drop in the UK, France and Spain when lockdown began. This reduction has led to ‘higher prices’, but we expect a return to previous levels – potentially higher given recessionary and competitive retail price pressures. One to watch through the year…
9. In our second to last insight we show the growth patterns of the leading hand soap brands (including private label) in the UK, with much higher penetration to compensate for reducing frequencies. We see a really unusual pattern. If it always worked this way then the How Brands Grow book would have to be re-written! This is what happens when people don’t care what brand they buy, they just need any soap to wash their hands.
10. Despite people saying they are considering fewer brands given the current shopping conditions, the reality is, even when we are online, our brand loyalty levels have reduced across all channels. Buying more products in a category gives us more chances for more brands to be chosen. We might not be considering more brands, but we don’t just buy one brand, we buy from several.

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