What began with panic buying soon transitioned into a more rational phase of settling into the new normal.
Buying patterns have changed noticeably since the COVID-19 epidemic took hold, and they continue to change. Some changes are apparent at a glance and easy to explain, including the obvious spikes in categories such as home baking, hair dye, meal kits and more.
Yet under the surface lie a host of opportunities for both retailers and brands to make sure they are truly staying relevant to their customers in this time of need. Identifying the opportunities on an individual household level and addressing them in a timely manner will require a unique blend of technology, marketing intuition, and collaboration between retailers and CPGs. This is considerably more complex during this period given that behavioral changes are occurring at a much faster pace in reaction to news report of infection rates, lockdown regulations etc which are all very fluid.
In addition, the change in shopping behavior can be very temporary. Consider for example a customer who previously split spend into two primary stores, one close to home, and the other close to the workplace. During lockdown, all or most of the purchases may have shifted to the store closer to home, but once that shopper goes back to work, they may go back to splitting purchases again. That raises multiple challenges, for example identifying whether the customer is identified as a “defector” at the the second store during the lockdown period, and how to deal with them.
So, we put both our technology to work, and based on the data our subject matter experts came up with a number of recommendations to ensure that our clients (both retailers and CPG’s) are well poised to offer their customers marketing content that benefits all parties.
Here are a few examples:
Firstly, the data is showing us a higher level of willingness to switch brands in certain categories. In some instances, we are seeing customers try brands for the first time, most likely due to either lower pricing or inventory availability considerations. Identifying and rewarding this switch will help ensure that these first timers become repeat and even loyal customers to that brand.
Conversely, we are also seeing some customers abandon brands that they previously had been loyal to. Again, that may be due to either pricing or availability issues, but brands would be remiss not to try and tempt them back with attractive offers for their next purchase cycle.
Secondly, within this “new normal” we’ve spotted an opportunity related to “Defecting shoppers” (a term that refers to customers who previously purchased at a particular store but no longer do). All marketers know how hard it is to acquire new customers, and especially to bring defecting shoppers back home. But in some cases the pandemic is doing the job for us – we are noticing customers who had previously defected from a store are now returning. Recognizing and rewarding this behavior in both the immediate and longer terms are vital to ensure that they don’t re-defect when the dust begins to settle.
Another angle on defection relates specifically to customers who are at high risk to defect in favor of lower cost outlets in order to reduce their monthly grocery spend. Dollar stores in particular have seen healthy growth in customer count, much of which is at the expense of traditional supermarket operators. Identifying such risks before it’s too late requires an ability to spot markers within the data that point to increased defection risk prior to their defection, and to act to prevent that by providing incentives in the categories that each individual customer is most price sensitive too.
Thirdly, there is a very evident spike in private label purchases in many categories. In some cases, these are customers who had previously not tried the brand in the past and have now done so in order to try and save money. Developing new campaigns (or content within existing campaigns) to continue to encourage this private brand trial in other categories is likely to provide a very healthy return on the marketing spend.
Finally, in a previous post on how the crisis will affect grocery shopping in the medium to long term, we highlighted the change in customer willingness to try online grocery shopping. Our own data analysis combined with market studies continues to support the assertion the COVID-19 virus will be a defining moment in the development of online grocery shopping as customer continue to do some or all of their shopping via that channel even after the crisis is over. We reiterate our recommendation to retailers to ensure that they are they are well positioned to fend off poaching tactics by other online operators who are already demonstrating aggressive online marketing tactics to target these new ecommerce converts. Highly personalized targeting and retargeting has proven to be amongst the most effective forms of both offense and defense in this arena.
Challenging circumstances always drive creativity and innovation. In the supermarket industry the fastest movers will gain the lions share of rewards, while the laggards will be left to pick at the scraps.
Stay well and happy trading
Chen Katz