The past few months have been a whirlwind of ups and downs for CPG brands as the COVID-19 crisis presents new challenges and opportunities. From manufacturing and processing plant contagion to panic buying and empty shelves, CPG brands are under pressure and as part of the food supply chain, that pressure isn’t going to let up any time soon.
For CPG brands, this is an opportunity to win and preserve brand loyalty. We can learn a lot from the China market, which is coming out of its first wave of pandemic. In a study conducted by Re:Hub on “Understanding the effect of the Coronavirus on China Consumers” clearly identified how brands can find a silver lining. For example, 84 percent of the respondents identified a preference for brands that were seen to be supporting China during the outbreak. A recent study of our own showed that North American consumers also feel strongly that brands need to demonstrate support for their communities. Other insights include changes in what drives purchase decisions now (availability over brand and price) and what will be more in demand as regions open up (more fresh, less tea and coffee).
Images of empty shelves in stores around the world have waned as companies begin to place limits on purchases and brands amp up production of items in demand. Initially, many brands were caught off guard and couldn’t fill the demand – leaving an opportunity for competitors to find their way into customers’ cupboards.
Considering the likelihood of second and third waves of the pandemic, a pragmatic perspective can only conclude that we are entering a “new normal” where brands will need to behave differently.
To assist in better understanding how CPG brands can stay relevant during this period of unprecedented disruption, SLD has identified six key strategies that will help brands cope over the next 3-6 months. The following strategies are expanded upon in our COVID-19: CPG’s New Reality Report as well as webinar, which you can watch here.
Strategy 1: Shelf-ready display shippers
If you are not already doing this (many retailers have begun to demand retail-ready shippers), this is the first thing we suggest you do. With a reduction of store hours and a shortage of retail staff, manufacturers can help by converting their packaging to shelf-ready displays. This strategy can help reduce stocking time as supplies become depleted at a much higher speed. It will also allow for greater shelf presence and provide an opportunity for strong messaging to consumers.
Strategy 2: Drive more B2B online engagement and sales
Face-to-face sales calls are coming to an end. Depending on how things play out, in person meetings may be unwelcome off and on for up to 36 months. CPG brands need to embrace video and telecommunication platforms for both internal and external customer facing use. Sales teams need to be armed with new tools to engage collaboratively with customers in order to deliver their brand story in an innovative new way. Powerpoint deck presentations are no longer going to impress – brands need to explore new video conferencing and chat tools that allow for a more personal but also well-branded experience.
Strategy 3: Time to revamp your packaging
This might seem surprising given that brands are in an emergency mindset. However, with empty shelves forcing customers to consider whatever is in stock (and shift their preference), right now it is important your package stands out. With a reduction in in-store promotional activities, the package is all you have to attract consumers. New formats that are more space efficient and stackable may be favored as consumers stock up.
Strategy 4: Stock-up multiple purchase programs with SKU rationalization
This shopping behavior is impossible to miss. Consumers are stocking-up or even hoarding supplies at extremely high rates. While stores have reduced the severity by placing limits on items, panic buying is going to continue. Given that second and third waves are likely and may be more severe in areas that were not hit in the first wave, brands need to be prepared for regional surges. Brands should use data to determine which SKUs are most important to consumers during quarantine and bulk-pack top sellers only. They should also ensure an agile supply chain to deploy more top selling items to areas that begin to experience second or third waves in a more responsive way.
Strategy 5: Drive more online/mobile recipe and cooking ideas
Some believe we are at the end of customers quarantined in their homes for months. However, our Foodservice COVID-19 Consumer study indicated that whether or not communities are “open,” consumers intend to keep cooking at home more than they did before the pandemic. Brands can help address boredom as consumers run out of meal ideas for the family. Promoting recipe ideas on packaging and linking to online platforms will help drive more traffic to the sites.
Strategy 6: Retooling manufacturing to support pandemic fighting materials
In our COVID-19 consumer research, supporting one’s country ranks high in every industry. It’s not going to be optional – brands seen helping their communities are going to win and those not contributing may see a backlash. As the economic fallout of the pandemic begins to hurt families across North America, CPG brands have an opportunity to contribute in a way that could have an enormous impact: donating to food banks and school lunch programs to ensure people don’t go hungry. This is no exaggeration – in New Jersey recent offers of food kits saw line-ups over a mile long. No matter what brands choose to do, supporting communities is crucial in keeping and gaining brand loyalty.
As a “new normal” becomes our reality, it’s important for brands to take a holistic view of the opportunities to remove friction points to help reduce consumer anxiety and ensure your brand is part of the solution. We have a saying at SLD, “Leadership is seeing the opportunity in the challenge versus the challenge in the opportunity.” This could not be more true today.