See consumers in their full life*

*Paraphrased from a recent report by Accenture, we look at the ways shoppers and consumers have changed in just a few years and how companies and retailers can remain relevant for them.

Consumer and shopper habits remained the same or similar for decades previously. They changed only when there was a major disruption in the market that warranted it or when consumption power moved from one generation to another. This was usually a once in a lifetime occurrence.

A few lifetimes in one

These days, we pack the experiences of a few different lifetimes into one. We wrote about this previously.

According to the article by Accenture, ‘The world today is radically different from the world of two years ago … or even two months ago. A non-stop barrage of external life forces—health, economic, social, environmental, political and beyond—is affecting day-to-day decisions in unavoidable ways.’

We, at salesBeat, argue, this has been the case for a few years now. Ever since social media came into being. Social media has proved to be the both the delight and bane of a brand’s existence. In the initial days of social media, brands were excited by the potential for them to target consumer and shopper groups.

Social media influencing sales & consumer behaviour

While the articles by Accenture, Forbes and by McKinsey, don’t specifically call this out, social media has been influencing what consumers buy and when for sometime now. This has been making it difficult for both brands and retailers to anticipate demand and stocking requirements.

Another layer of complexity that brands did not take into account with social media is what happens when consumers post their negative experiences with the brand on social media. Or when certain (in)actions cast the brand in a poor light in the court of public sentiment. ‘Cancel culture’ has taken over the world of FMCG & retail too as we saw during the early days of the Ukraine/Russia conflict.

In a time and age when everything makes its way online sometime or another, companies need to anticipate not just how their ads perform, but how the brand itself is perceived by consumers.

Changing priorities for consumers

While sustainability was top of mind for most Gen Z & Millennial consumers & shoppers previously, today, with rising inflation sustainability has taken a back seat. Where personalisation and authenticity were important factors in shopper decisions, again, these are playing second fiddle(s) to value for money today.

According to the Accenture report referenced, ‘People are giving themselves permission to be inconsistent. As they evaluate a growing list of things that matter to them, consumers realize they can’t expect perfect choices in every circumstance. As they make decisions, paradoxes become inevitable. And those inconsistencies are being seen as strengths, not weaknesses.’

Market & geopolitical realities

In the last 3 years, not only has social media been a constant in how it has influenced behaviour, but so have covid, unseasonal weather (climate change) and conflicts, in the form or ‘war’ or trade conflicts.

These have completely changed (and continue to change) the way we live, work and shop. However, companies, both retail and brand are still playing catch up driving uncertainties from a supply perspective.

See consumers as a whole

Accenture suggests 3 ways a company can catch up and keep pace:

  • See customers in their full life
  • Solve for shifting scenarios
  • Simplify for relevance

The paper by Accenture resonated with us as we developed salesBeat keeping in mind the consumer and their life. salesBeat isn’t only about how consumers shop or how shoppers behave, but also about how they react to the changes in their life and how this in turn impacts their choices. Also, as Salesbeat tracks the drivers of consumer behaviour and does not assume that the environment remains static, shifting scenarios are accounted for through them.

More companies need to start seeing their consumers as people whose decisions change with the circumstances around them. Currently their personas are developed based on socio economic and demographic factors that can change with changes in the economic environment around them. After all, shoppers who previously used to frequent ‘premium’ supermarket chains are now trading down to cheaper alternatives, including frequenting discounters more often.

For more detail or to read the Accenture paper in full, follow this link. If you’d like to learn more about salesBeat, visit our website or mail me on veena@salesbeat.co

Reducing stock outs in stores

This blog focusses on how sales people can reduce out of stocks at supermarkets by considering their target consumer behaviour over the last year and how likely this is to change.

Due to the sheer volume of out of stocks we’ve seen on shelves in the last few weeks across several supermarkets, we’ve decided to focus on how FMCG sales people can reduce out of stocks of their brands at their customers’ stores.

Breakfast category

This is a common sight at most grocery stores now. Popular brands and flavours out of stock on shelves and in retailer warehouses. And when customers switch brands as a result, this is highly likely to result in loss of share. How can this be prevented? Keep the consumer in mind when discussing orders with buyers. What are your consumers doing now? How do you/your family eat breakfast now? On the go or at home? How can this impact sales of your brand and should you be discussing larger orders as a result?

Milk alternatives, sugar & sweeteners

These are the shelves you never expect to see low on stock (except during panic buying) in the normal course of events. We take it for granted that your local store always has milk/milk alternatives, sugar and honey. However, since consumer habits underwent a radical change during the pandemic, more people make coffee/tea/their beverage of choice at home now instead of making/buying at work or on the go. This has driven a higher rate of sale of this category. Sales people working for brands within this category should take into account how many of these out of home consumption occasions have been replaced by at-home consumption. And their brands share of those occasions.

Condiments & Carbs

These are photographs from 3 different stores. You may wonder if these are stock photographs from 2020, but these were from different supermarkets just this last weekend (8/9 May). While some of you may attribute some of this to Brexit (Olive Oil & Pasta), the rice, frying oil and Asian condiments are not imported or packaged in the EU and so Brexit should not have an impact. When selling brands/SKUs in this category to customers, consider how consumers have been eating during the pandemic. Are they expected to continue this behaviour or will lockdowns easing have an impact?

Confectionery & snacks

Confectionery and snacks have seen varying impacts during the past year. While brands in the mint and gum category have seen a drop in demand, the remainder of the category has seen a significant rise party due to stress eating and partly due to substituting holidays for treats. As lockdowns ease this is the one category that is likely to see a swing in demand. Consider consumer motivations and drivers for this category when discussing orders. More social occasions = more mint/gum sales. More social occasions = drop in sales of snacks as well. However, home/office working also has a significant impact on sales of snacks. The quantum of change for each brand depends on the brands, their consumption occasions and how many industries/companies decide on a return to work vs continuing remote work.

Beverages

Non-alcoholic & alcoholic beverage brands have experienced stock outs over the past few weeks/months. While some of this may be attributable to supply chain constraints around aluminium cans, why are the same products in bottles not available in greater quantity? Why not use the empty space for the same brand in other formats/packaging? For brands not constrained by this, why limit sales to pre-pandemic levels? Consider how your target consumer has changed his/her way of consumption over the past year and how likely it is to change.

The pandemic has forced us all to behave and consume products differently over the past year. This has now become a habit and habits do not change easily. So if you are a sales person selling FMCG products that are not in any of the above, think of the impact of the last year on the brand/product. Has the consumption occasion changed? If so, how has it changed? For example, consumers buy and use more cleaning products and personal hygiene products now than they did before the pandemic. This is now an ingrained consumer behaviour that is unlikely to change in the medium term.

Not unless there is another significant event that forces us to behave differently.

12+ months after Covid fuelled panic buying

More than a year after Covid fuelled stockpiling of necessities and grocery staples, we still see empty supermarket shelves.

Many assume this is because of an increased focus on online sales by the large grocers, especially in the US, as evidenced by this article in Insight Grocery Business in March 2021. We’ve also seen similar instances in the UK, but in the UK, we’ve blamed these stock-outs on Brexit. There have been recent articles on similar instances in the Middle East & in several EU countries too.

An increased focus on online shouldn’t lead to empty shelves in store. Especially as those who pick stock for online orders through external providers pick products off the shelf currently. This is especially so if orders are placed on Instacart (US), Uber eats or Deliveroo (UK). And Brexit shouldn’t cause stock outs of brands made in the UK using materials sourced in the UK.

So what is really going on?

As we mentioned in our previous article on the 2021 Easter egg shortage in the UK, supermarkets, and brands that sell into supermarkets, typically use last year’s sales volumes as baseline for current year orders.

Buyers have exercised some judgement this year by not ordering sanitisers, cleaning products, kitchen cupboard products (pasta, rice, flour, canned vegetables etc), cleaning products & toilet paper in line with last year’s sales, when consumers were stockpiling in anticipation of supermarkets running out of these staples due to lockdowns. However, they did not exercise the same judgement when they ordered other brands/products (confectionery, small format beverages etc). Even less so when it came to the beer, wine & spirits inventory in store.

Despite increased sales across confectionery and beverages during the later stages of the pandemic, supermarket orders were placed for similar sales volumes as last year during the same time.

So now you see stock-outs across categories and markets.

The only thing in common across categories and markets is the impact of covid on consumer behaviour and choices.

As supermarkets still order on the basis of previous year volumes, they’ve had to exercise their judgement when placing these orders. This is difficult when everything the buyer knows about consumption habits has changed, after more than a year of living under pandemic conditions/lockdowns.

A google search on habits and how long it takes to form a habit runs the gamut from 14 days to 54 days, with the most cited number being 21 days. A study by the University College of London found that it takes 66 days for a habit to form. If the new behaviours were easy, it took 20 days (the example they cite is drinking a glass of water after breakfast every day) and, based on how disruptive the new habits were, ranged to 254 days.

Many of us have lived in lockdowns/pandemic conditions for more than 254 days. Depending on where we live, this has ranged between 75 days and 270 days. Enough time for new habits to form.

Add in significant variations in weather due to climate change, and (almost permanent) changes to how and where we work and/or study. No wonder retailers/FMCG companies are struggling!

If you’d like to understand how best to leverage data to arrive at optimal order volumes for your supermarkets/brands, email me on veena@salesbeat.co

What should the sector expect over 2021 with lockdowns easing?

This blog is about how lockdown easing is expected to impact sales in different sectors.

Over 2020, we saw significant increase in food & beverage sales and cleaning products.

Sales in the make up and hair care sectors was lacklustre.

This was driven by lockdowns causing consumers to stay at home. As they were not able to go out to a restaurant, they shopped at grocery stores for different foods and beverages. Due to the very same driver, sales of make-up and hair care brands decreased significantly.

Increased sales of cleaning products in 2020 was driven by an increased consciousness of hygiene due to the pandemic.

As we look at 2021, with successful vaccination campaigns and with lockdowns easing, we expect make up and hair care sales to increase in anticipation of and due to social activity. As restaurants, bars and cafes opening up, we expect grocery sales of food & beverages to decline slightly. But the sector is expected to retain a major share of the gains from last year as people cautiously venture out as lockdowns ease.

The one sector we expect will retain the increased sales from 2020 is the cleaning products sector. As people go out and enjoy the return to normal, to keep safe, we expect consumers to buy and use more cleaning products than they used to pre-covid.

If you’d like to learn more and understand how individual categories may be impacted by the easing of lockdowns, email me on veena@salesbeat.co

The rise and rise of the values/purpose driven consumer

This post talks about the importance of using data to create brands that consumers want. The post also includes a video summarising the content.

For more details, read on!

A basic tenet of branding is that consumers will not buy brands that do not align with their values. Millennials and Gen Z have given new meaning to this.

A study by IBM found that 40% of all consumers, are purpose driven consumers. These consumers have a global presence with the majority, in Europe, South East Asia and Latin America. To this group, the values represented by brands drive their purchasing decision and they are more willing to change their habits to reduce environmental impact than are value (not to be confused with values) driven and product driven consumers.

Then there is the brand driven consumer (majority in India, parts of the Middle East & Latin America) which makes up 13% of all consumers globally. This group stands out in that while the brand is key, this group is even more willing to change habits to ensure sustainability and reduce environmental impact than are values driven consumers. So 53% of consumers are sustainability & values focussed than 10 years ago when value & product driven brands were predominant.

Leading FMCG brands that were also Certified B-Corp, grew by 21% on average in 2017 compared to a national average of 3% across their respective sectors. (B Corp 2018)

It is clear that to drive growth and gain share, FMCG companies need to adopt AND live values that reflect those of their target consumers.

This makes data paramount for FMCG brands. Data on what consumers want, on consumer values, on the channels they frequent and on the boundaries of operation. Brands need to be developed in line with what customers want, like tech companies do with users, rather than how FMCG companies of old developed brands and then told their customers that the brands were what they wanted.