By Tom Juetten, IRI
The phrase “the new normal” has become ubiquitous as the COVID-19 pandemic continues to dramatically impact most aspects of our lives, including our shopping and consumption behaviors. While sources vary on exactly who coined the term, what is indisputable is that it first surfaced in 2008-09 as we began to envision life beyond the Great Recession.
Today we’re working toward a new new normal, courtesy of COVID-19. In addition to being in the midst of a pandemic-induced recession, we’re also now in an era of more empowered shoppers, when old navigation points like legacy brands and category-specific attributes have been replaced by cross-category societal attributes that are rooted in broad social desires and values such as sustainability, gluten-free or non-GMO.
Learning from the Past
In 2008, CPG manufacturers and retailers began using the concept of “new normal” as fuel to help them reset their businesses. Manufacturers trimmed assortments to focus on fast-moving goods. Retailers rethought their offerings and focused on targeting their best customers. Purchase behavior provided insight into the attributes that consumers most valued.
The IRI New Product Pacesetters™ report on top-selling products during that time found that recession-weary shoppers, who no longer trusted old category definitions, aggressively redefined what was considered indulgent and less processed, and what convenience meant. Just 10 years ago, P.F. Chang’s line of frozen foods carried high price tags and garnered a lot of attention as people retreated from restaurants but still wanted to treat themselves. During that time frame, we also saw coffee shop-caliber coffee catapult into people’s homes with K-cups and other experiential accoutrements. In nonfood, benefits started being bundled into laundry detergent to provide extra cleaning power, with products such as OxiClean and Clorox, Febreze freshener, and Downy fabric softener.
In a challenging and fast-changing market, retailers and manufacturers must be able to apply predictive analytics to continually remap their strategies for long-term growth, using innovation as a growth lever but also pricing, distribution and even promotion. The benefit to today’s companies is that technology has advanced significantly, offering more clarity during this time of unprecedented uncertainty. With tools such as artificial intelligence and augmented decision-making (combining technology, analytics and business process for a machine to comb through all the data, see patterns and make recommendations), you can now constantly update your strategies for winning in the new new normal.
Of course, it’s hard not to be overwhelmed by the rapid change and uncertainty we’re all facing. How can anyone — person or machine — possibly predict how consumers will behave in six months or during the recovery? We need to start with what we know, including what we learned from the last recession. Beyond the Pacesetters examples above, there is a treasure trove of what people actually purchased during that time, including what attributes they looked for.
History tells us that during times of uncertainty and fear, shoppers stockpile products, hunt for deals, trade down to value-tier products and migrate to private label. During the last recession, shoppers also started taking responsibility for their choices around the definition of “healthy” or less processed items, yet they also still demanded convenience and indulgence as part of their emotional self-care. They ventured into new retail formats, seeking more value channels and aggressively shopping multiple stores to get products that met their needs. We are certainly seeing some of these behaviors in the current crisis.
However, there are scenarios that will be unique to this recession, including that shoppers will likely pay a premium to reduce contact when shopping, with fewer total trips to the store and using more click-and-collect or home delivery. More of the food dollar will stay in the home, and consumers will be looking for convenience, as well as gravitating to retailers and products that support their heightened need for safety, cleanliness and trust.
Peering Into the Future
In many ways, the past is meeting the future. Before the COVID-19 pandemic began, the U.S. Food and Drug Administration said consumers don’t need antibacterial soaps and that some of them may be dangerous. Fast-forward to now, and consumers are flocking to products with antibacterial attributes (we saw how quickly hand sanitizers started flying off the shelves when panic-buying began in March).
CPG brands are already responding to the changing times. For example, across categories, products touting an antibacterial attribute were up 39% in March and May compared to the same time a year ago. Among household cleaning wipes, for example, 147 products promoted the antibacterial attribute in 2019, but more than twice the number (342) of products are boasting the affiliation today. In fact, antibacterial is now forming its own meta market across traditional product categories.
Pressure-testing the attributes your products currently have against the products that are selling well provides direction for innovation and advertising messages. Continuing to update attributes further builds the power of augmented decision-making (ADM) and both charts and smooths the path for future growth.
Brands that wait to see what the new normal looks like will likely be additional casualties of COVID-19. Instead, brands can own the road in this new era and harness technology and analytics to make better strategic and day-to-day decisions by understanding what shoppers are buying now and what they will likely buy next.
Based on data IRI is already seeing, competent decisions will be made by retailers and manufacturers to reframe product assortments for the post-COVID-19 world, and ADM will further support new product innovation, pricing, distribution and advertising. Sure, CPG consumer buying behavior will change, as it always does when huge events shake up the market, but you don’t need a crystal ball to predict the future. You just need a predictive road map that leverages ADM to plot your brand’s journey.
If you’d like to learn more about how to optimize your brand by isolating the attributes that drive demand, how to understand the impact and opportunity with today’s category set and/or how to forecast success for your new product and line extension launches, learn more here and/or reach out to me at Thomas.Juetten@IRIworldwide.com.