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Watch out CPG Marketers, there is a new shopper influencing buying

Lisa Richardson
Lisa Richardson
SVP Strategy & Growth
June 10, 2020
June 10, 2020

Image of shopping cart in a grocery store

Delivery services and personal shoppers have rapidly become lifelines for many stay-at-home Americans. Services like Instacart and Shipt, along with curbside pickup, were mostly leveraged by early adopters until COVID-19 forced people to ask—what trips must you make, and what trips can someone do for you?

Although 2016 to 2018 saw the online grocery market double from $12 billion to $26 billion, it was still a small share of the total grocery market of $632 billion (Source: IBISWorld). Before, this form of shopping hit its stride mostly within metropolitan areas and younger generations.

A pickup in online pickups

While many still make a “new kind of normal” trip to the store, US e-commerce jumped 49% in April compared to early March 2020, with online grocery seeing a 110% boost in daily sales between March and April. Instacart alone sold around $700 million in groceries during the first two weeks of April (Source: Adobe Digital Economy Index 2020).

This rapid growth has further removed customers from the traditional point of sale, which CPG manufacturers have spent years researching and designing innovative POS techniques to capture. Consumers quickly created online shopping accounts to virtually stock their kitchens and pantries, fingers crossed that their favorite brands, foods and household items remained in stock when their shopper hits the aisles.

Empty shelves, changing pantries

For weeks, many staple items were making headlines for consistently being out of stock, but many others were “replaced.” That meant new brands and new products were making their way into households, too. Many CPG brands that have spent billions earning consumers’ loyalty have now become reduced to their category at large.

A replacement is always better than a refund, isn’t it?

Of course, having food and the household items you need will always be the best option. Consumers, rightfully so, have welcomed the swaps and filled their homes and their bodies with these products for weeks, months. All knowing and appreciating the work someone else did to get them to their door.

With sales up and food and essentials making their way safely from stores into homes, there is little to complain about for either party.

However, as a strategist who spent years working for CPG brands, I can’t help but wonder how this new shopper journey will reshape brand preference and adoption for the weeks, months and even years ahead.

The many questions now behind “What and how to eat?”

Will CPG marketers need to plan and design shopper or channel programs not just with their retail customers, but with the delivery service companies? Will Instacart or Shipt be more open to sharing customer data with CPG companies than traditional channel partners? Or are there new walls for CPG brands to scale with these new shopper partners?

Wherever possible, more brands will likely try to test DTC options like PepsiCo with their pantryshop.com and snacks.com bundles. While it can be a delicate balancing act during normal times to sell both to and against retailer partners—times are anything but typical. No consumer wants to buy everything direct, so to not fracture the market, large CPG companies will have to decide where to bundle, where to partner and where to reinvent.

65% of US consumers have tried new brands after sheltering in place.”

Will consumers grow nostalgic for their favorite products, flavors and scents that have been frequently replaced? According to data from AlixPartners, 65% of US consumers have tried new brands after sheltering in place. 79% of those consumers said it was because their usual product was out of stock—that is forced trial of a massive scale.

How many will come back?

Lastly, times like these also tend to spark great innovation and disruption because the playing field is also more even. Will more and more niche subscription-based services finally get the prime-time attention they’ve been waiting for? Will companies like Blueland get momentum, as cleaning products delivery makes us rethink packaging waste? Or maybe more alternate online stores like Thrive Market will take off due to a more ecommerce-friendly model from the beginning.

Whatever the future holds, there is no doubt that brand loyalty, purchase decision and product launches will look very different for CPG companies for a while. We are excited to see who innovates, who disrupts the category and how consumer-brand relationships weather this pandemic.

We’d also be excited to chat with you—via a one-hour complimentary consultation—about how your company’s offerings can best adapt to this ever-changing market and its growing segments.