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How CPG Brands Can Sustain Success Beyond COVID-19 Crisis

  • Rob Patterson

As we move our way through mid-April, people across the country are passing the one-month mark in terms of time spent in social distancing. Over that time period, consumer purchase behavior has followed a rather distinct pattern, with cleaning products, pantry items, paper products, and a few other categories seeing a major surge in sales. However, as the calendar moves forward, consumers are further settling into their routines and keeping non-essential purchases to a minimum.

According to McKinsey, that prioritization of purchases won’t be going away. When they asked consumers which categories they’d purchase over the next few weeks, household supplies and groceries represented two of just three categories seeing positive purchase intent compared to normal. Yet, despite a strong outlook for CPG in the short term, the possibility of a recession on the horizon makes it important to think proactively.

One of the things we learned during the Great Recession of 2008 is that brand loyalty diminishes during tough economic times, and that was underscored by private-label products increasing their share of total CPG sales by 2.5 percentage points. Though private-label products only accounted for 18% of all U.S. CPG sales prior to the COVID-19 crisis, Catalina reports they saw a 70-80% increase in sales during the week ending on April 4th. While some consumers may only be trying these products due to name brand shortages on the shelf, the possibility of a recession and a subsequent tightening of wallets may accelerate the growth of private labels across the country.

So, what should CPG brands do? Below, we share three keys to sustaining momentum beyond the COVID-19 crisis.

 

 

Don’t Go Dark

Due to issues ranging from supply chain shortcomings and financial challenges to concerns about messaging, many CPG brands have pulled back on marketing. However, if brands don’t stay at top-of-mind for consumers as panic buying dissipates, it will be difficult to regain that momentum.

As we mentioned previously, 65% of consumers said a brand’s response in the crisis will have a huge impact on their likelihood to purchase it in the future. While brand contributions can vary widely, bringing a little value, entertainment, or joy to consumers’ lives during a difficult time will go a long way towards earning their loyalty going forward.

 

Continue to Innovate

Nielsen research from 2009 found that brands that continue to invest in new product development during tough economic times emerge from recessions with much higher growth rates than those that cut back. Though the COVID-19 crisis has been a difficult time for all, it has shined a light on consumers’ most fundamental needs, thus providing an opportunity for brands to develop new products and services that cater towards them. Brands that focus on innovating with value and convenience in mind will be the ones that win over consumers.

 

Adapt to E-Commerce

March 2020 set records in terms of CPG e-commerce buyers, surpassing December 2019 for the highest-ever count in a single month. Historical data from Nielsen suggests that this may have lasting effects, as online shoppers tend to stay engaged once they try it. While there are certainly mitigating factors given the nature of a pandemic and social distancing, early reports out of China indicate that elderly consumers have begun turning to online shopping to fill more of their needs – perhaps signaling a more permanent change in behavior in our future.

Though much remains up in the air as this crisis develops, it is the brands that are most proactive in anticipating shifts in behavior that will be best positioned for success going forward. If your brand is interested in discussing how to navigate this crisis or planning for afterwards, contact us today to learn more.

 

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Sources: “The Fight to Remain Relevant if the U.S. Enters a Recession.” Nielsen (2020), “Why CPG Marketers Can’t Afford to Go Dark Despite Coronavirus Risks.” Marketing Dive (2020), “U.S. Consumer Sentiment During the Coronavirus Crisis.” McKinsey & Company (2020).