By Larry Levin, IRI
So much has changed during the past few months since COVID-19 became a public health crisis and has now morphed into a financial pandemic creating havoc in the U.S. and globally. This has fueled a shift in the U.S. consumers’ shopping, purchase and consumption behaviors, significantly jilting consumer confidence, which continues to deteriorate as Americans experience multiple impacts from the virus. However, there is much we can learn directly from consumers and their current shopping experiences to ensure that products are on shelf when and where consumers need them and, especially, at the right prices.
At IRI, we’ve been surveying a representative group of primary grocery shoppers on a weekly basis since March 13 to find out how they are feeling about COVID-19, their shopping and consumption behaviors, their personal financial situations and the long-term effects they see on their everyday lives. Our week nine results show what shoppers are focusing on now.
More Shoppers Noticing Price Increases
Forty-four percent of those surveyed “strongly agreed” that prices have increased since COVID-19, up 9 percentage points versus one month ago and the highest since this survey first began nine weeks ago. This is a chilling statistic and a telling view of the shopper conundrum. Price increases were noticed more in the northeast region and by those who have lower incomes. And over one-third (34%) of those surveyed said that the store where they normally shop is offering fewer special deals than usual. Not surprisingly, the impact is far more profound considering the sizable group of Americans who have either seen their work hours condensed or completely eliminated.
Out-Of-Stocks Still an Issue
While out-of-stock rates have plateaued or begun to improve on some categories, three out of four shoppers say they still could not find a grocery item they wanted when shopping last week. This was again most prevalent in hand sanitizer, with 45% of consumers saying they couldn’t find it, sanitizing wipes (44%) and toilet paper (41%). Paper towels, face protection masks and rubbing alcohol are also difficult to find, according to approximately one-quarter of respondents.
More than half of respondents (65%) said that they “somewhat” or “completely” agreed that they tried another brand because their desired one wasn’t available. This phenomenon doesn’t just exist in the categories above but with a wide array of CPG categories, enabling manufacturers of both nationally known brands and private brands to win new and returning buyers and create a long-term relationship with them.
Meat in High Demand
With some meat processing facilities temporarily closing or reducing production, and consumers continuing to make a beeline for those aisles, 18% of those surveyed say they could not find fresh/raw beef or pork, and 14% could not find the fresh/raw chicken or turkey they wanted to buy.
Retailers restricted the amount of fresh meat/poultry purchasing for 27% of shoppers, just below the 29% who were restricted on the number of toilet paper packages they were allowed to choose from available stock.
Even with current and perceived shortages, only 9% of consumers expect to eat less meat/poultry in the next month than they ate before COVID-19. The USDA forecasts only a minor impact to annual volume, and it seems the meat supply shortage has bottomed and will likely start improving. In the near term, consumers may not always find the exact cuts they are looking for but will be creative and use what they “can” find.
Changing Shopping and Purchase Behaviors
In general, baskets have swelled over the past nine weeks as trips decreased, and the main drivers impacting consumers’ store choices continue to be: 1) where they can get the most items they want in one place (53%) and 2) conveniently located to home (52%). Pre-COVID-19, the majority of Americans shopped at three stores for groceries (IRI research confirmed the shopping “treasure hunt” for many U.S. consumers in our path-to-purchase work during the last decade). Today, consumers want to efficiently and effectively shop and are avoiding too many store visits to minimize their potential exposure to the virus.
Self-care mindsets appear to be increasing among U.S. shoppers. Eleven percent of shoppers are saying that they’ll take more vitamins/supplements in the next month than they did pre-COVID-19 – this is being driven by millennials and Gen X-ers. African Americans (22%) and Hispanics (20%) are planning to purchase more vitamins/supplements.
When asked if they would do anything differently to be prepared in case a similar health situation recurs in the future, many shoppers surveyed plan to either keep more essentials on hand at home or stock up earlier at the first sign of another crisis. Consumers are vowing to never be “caught off guard” again, especially with a strong faction believing that the virus can resurrect itself as the fall season approaches in the U.S.
Advice for Manufacturers and Retailers
While CPG has proven to be less recession-prone than a lot of other industries, there are some key ways that manufacturers and retailers can better serve both their businesses and their consumers during this time.
Keep the value/price equation at the forefront of messaging. With one out of five Americans now unemployed and this having grown at a frighteningly fast rate, more people are keeping a closer eye on their grocery bills and may switch to lower-cost items. One-third of consumers (33%) indicated that they chose a store because it has the lowest prices or best deals, and we can expect this percentage to grow if the economy worsens, especially for groups identified in IRI’s Econolink™ segmentation, where Downtrodden consumers are far more worried about having money for groceries. Dollar is one of the channels to watch, as budget-conscious consumers seek the value associated with this channel. Also, the largest portion of the U.S. population – millennials – is vulnerable to economic fallout. Retailers and manufacturers can help millennials see value beyond price, while also easing their safety concerns.
Don’t count out convenience. While consumers have been migrating to other channels during the coronavirus crisis, we anticipate a resurgence in the convenience channel. U.S. consumers are going to be hitting the road more, avoiding airplanes for the time being, and taking the Sunday drive, which may become chic again. Consumers will hit up their favorite c-store to fuel their cars and bodies. IRI will be sharing information on which segments are likely going to be shopping c-store more often. (Stay tuned for more info on that.)
Continue to focus on solutions, not products. With the increase in meals made and eaten at home – and perhaps some meal-making fatigue setting in (not to mention all those dishes always in the sink!) – find ways to offer easier meal solutions that provide relief for those who want to spend less time cooking. A total store view helps ensure that you see the store the way shoppers do – as a way to meet multiple meal, personal and home care needs.
Access granular daily data to truly understand shoppers and supply chains. The supply chain challenges that meat has seen provide a cautionary note to other categories, especially since U.S. product supply continues to be lower overall versus pre-COVID-19 levels. To understand and be able to meet increased at-home demand as the virus progresses and different states reopen with different guidelines in place, manufacturers should look to access granular consumer data as well as daily supply chain in-stock levels across departments, aisles, regions and states to prioritize action steps.
Consumer Survey Solutions – IRI’s survey solutions provide companies with a pulse on how consumers think and shop. Contact your IRI representative or email me at Larry.Levin@IRIworldwide.com to learn more.
COVID-19 Thought Leadership and Data Dashboard – Access the latest reports on the impact of COVID-19 on CPG shopping across the world, as well as CPG economic indicators such as the IRI CPG Demand Index™, IRI CPG Supply Index™, IRI CPG Inflation Tracker™ and other relevant data.
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