Okay, so let's get started. My name is Jean-Pierre Lacroix, or JP, and I'm president of SLD, a brand consulting firm located in Toronto with offices in New York and Shanghai. I am very fortunate today to have with me Jeri Brownstein. She's the publisher of BXP, that's Brand Experience Packaging magazine, a big supporter of the packaging and CPG industry. They run a fantastic conference, and last week I was lucky to participate on a panel. So Jeri, why don't you introduce yourself? Hello, everyone. I'm honored to join you today. I'm a big fan of JP's and SLD. And JP's been a wonderful friend over the years. His insights have been right on the money, and we were honored to have him join us last week on a webinar with about 857 people from the consumer packaged goods and retail industry. So he whet our appetite with some phenomenal consumer insights. It's amazing what two months can do. So I'm excited to hear all the details here.
Thank you, Jeri. So let's get going. So just level set. We coined the phrase "The Blink Factor" 30 years ago, and our whole motto is "Think Blink," which is about strategy leading design. And what we specialize is in inspiring the future of immersive retail experiences. Why I'm sharing that with you is to let you know that in November of last year, our firm predicted this pandemic. Not only did it predict it, it actually predicted what social impact it would have in the US and around the world. And so this just shows you that strategic foresight is a fabulous tool, becoming much more relevant today in scenario planning and preparing for those major disruptions happening in the marketplace.
So this whole exercise started about two months ago. We wanted to really get a sense of what impact does COVID-19 have on the marketplace, attitudes, behaviors. Well, actually, our first study focused on the banking industry. We then did a subsequent study on the food service industry, and this is the third study of four studies. On June the 11th, we'll be sharing a study on the retail sector and its impact of COVID-19 impact. So let's get going.
So what were we trying to find out? We're really trying to understand the current and future packaged goods shopper behaviors, during the pandemic and post-pandemic. Are they the same? Do we see shifts in what consumers are buying and why? We want to identify which physical distancing and health safety initiatives were important for customers. We want to determine any potential difference in behavior based on age, geographical or gender. And then obviously, we want to identify some strategies the CPG industry could integrate capital S. So we looked at a variety of areas. We wanted to look at the confidence level of customers. We want to look at what are their shopping behaviors during the pandemic and post-pandemic. We want to find out if those attitudes, optimism, pessimism, had an influence on how they bought things, that influenced their purchase. We wanted to see how that was impacted by age, gender, and country.
And there are differences in a lot of these dimensions in this study about those. And then looked at shopper strategies. What are shoppers looking at during the pandemic and post-pandemic to drive purchase intent, brand loyalty? And then what are the value strategies CPG companies can undertake in rebuilding their loyalty with customers? Because it has impacted the way consumers evaluate brands during the pandemic. So just level set. We had a broad representation of age groups across North America. There were 2,000 consumers. 50% of the study was done in Canada, 50% in the US. We wanted to see if there were differences geographically. And obviously, female, male representation, which follows the typical census of men and women. We also looked at education and obviously income levels. We wanted to find out, are there influences, impacts based on education or income levels? And obviously, income levels play an important factor
as we will discover in this study.
We also wanted to find out where consumers shop, how they shop, who is the primary shopper. We wanted to really listen and hear who are the primary shoppers. 82% of our study were primary, and some were occasional. We want to get a sense of these primary shoppers by age group.
And then response profile, where were they located, large cities. We want to get a sense, are their behaviors different? We've seen that, for example, in the US, rural markets have not been impacted as much as urban markets. Are there variances in behaviors in the way they shop and how they view brands depending on where geographically or from a city standpoint, population standpoint, they're located?
Well, these are your high-level insights, and we're going to go into very deep details of each of these kind of six
insights from the study. So obviously, the pandemic has driven hoarding and pantry loading, and you'll see that in how consumers shop. I'm sure that if you look at your sales and your sales data, you'll see that there is a huge spike. If I look at recent news on C on P&G and a lot of other retailers and grocery store chains where they've had the best quarter ever. The outlook, pessimistic or optimistic, has a huge impact on how people buy. So when you start looking at segmenting and marketing to your consumers, really understand that there are two behaviors, and their attitude towards this pandemic has a huge influence on how they buy and shop. We've seen a huge shift, it's obvious, to online shopping, and order online and pick up at the store, and we'll get into those statistics. Brand loyalty, and this is one that's very concerning, has taken a hit. You will see that in our study, there are factors
driving an erosion of brand loyalty on mainstream brands. Something to watch as you come out of the pandemic, post-pandemic. When you ask consumers what is the key drivers of buying in the store, what's the key drivers, it's not about couponing, it's not about value, it's about safety and having the product in stock. Promotions play an important role, but very much secondary when you look at those two other critical factors. And interestingly, we wanted to find out, is social responsibility a key factor? And yes, it is. How companies conduct themselves during the pandemic has an important role in how consumers are loyal to those brands. Jer, do you have any thoughts, insights here on these buckets? No. Look, I think anyone that's following what's happening in the news certainly is aware of the implications of all of this. Later in our discussion after we go through some of the slides, I think it would be
interesting to get your thoughts, JP, on companies in the meat industry right now, because they've obviously been very high profile in terms of how they have conducted themselves with employees and all sorts of things related to that. So I think it'll be interesting to think through the implications for companies like that right now and what that may mean. Yes, absolutely, and that really falls in the last bucket of social responsibility. By the way, there's a quiz or a question on our dashboard, please. What has been the biggest challenge for your organization? Please, we'd welcome your input. So let's move on. Let's get into the heart of the matter. So consumer attitudes, this is a great summation of how consumers' attitude towards brands are. They should give their workers raises since they're cashing out big time and the employees are the ones risking their lives. And that's manufacturers, that's retailers, that's right across
the board. That's been a consistent theme, by the way, from bankers to food service to retailers.
So when we look at the current view of the pandemic, they view it as an extreme crisis. And obviously, the extreme crisis is much more impacted by the older the consumer gets. You can look at the ages here in the right-hand corner. You can see that by income levels and age groups, the older the consumer, the more it has the shift towards an extreme crisis. And that's really important to understand, that this sentiment really is driving this pantry loading activities, this fear of losing their jobs will, down the road, impact post-pandemic, their shopping behaviors.
So leading to the extreme crisis, you can see here that everyone is very pessimistic about the situation. And again, this ends up being significantly higher as they get older. Younger consumers, interestingly enough, are less pessimistic. They're actually more optimistic. The 20 to 25 years old segment is more optimistic. So as you're marketing to them, talking about the pandemic and the crisis or trying to overcome those issues, they're less receptive to that kind of messaging, whereas as you go to the older consumers. And the other insight that we had, and we'll show this later, is that pessimistic consumers tend to be much more value driven. Optimistic consumers tend to not change their behaviors from a standpoint of what they're buying. So understanding that mood and that attitude has a huge play on how consumers are buying your brands and your products.
So as I mentioned, we've been doing numerous studies in the marketplace. This chart maps a journey starting with March 20th. If you recall, March 20th was just at the beginning of the pandemic. Then I think the real crisis hit on April 15th. So if you look at the orange chart, which is the pessimistic chart, you can see that at the beginning of the pandemic, consumers were much more optimistic than pessimistic. But when the realities of COVID-19 hit the marketplace on April 15, you can see that that switched. And you can see that as we progress to May the 7th, May 7th was the study we did for the retail sector that will be released on June the 11th. But you can see that it keeps on growing. And interestingly enough, in our retail study, we asked a question at the end that we haven't asked here, which is, how do you see this pandemic? Will it have an impact long term? And there's a big discussion about the V shape, the U shape, the
L shape, and it's an L shape. Consumers see that this is going to be a long haul back to a new normal. They don't see this recovering from the pandemic anytime soon.
So we wanted to find out have your lifestyle habits shifted to home cooking and to other activities. And you can see cooking meals from scratch, huge growth right across all age groups. An interesting insight here is look at the 21 to 25. Who would've thought that this group would be into cooking? Frame of reference, a lot of these consumers live in condos with small kitchens, and you can see that obviously cooking plays an important role. Buying multi-packs, really important. You can see here that they're pantry loading. They're looking for value in the quantity, and they're also ordering takeout and delivery. Buying new, different brands. You can see here, on average, about 30% are buying new and different brands. And you'll see further on, on brand loyalty, that that has a huge impact, and you'll see what's driving that impact.
The other shift that we see, and if you read recently in yesterday's announcement earnings of Walmart, they had a phenomenal first quarter. Their e-commerce was driving the growth of their business, and you can see why. You can see here, online shopping, multi-brand platform, Amazon, Instacart, and you can see the growth there. Supermarkets such as Walmart and grocery stores, you can see that they maintain their growth overall, but the online is dominating the shopping. You can see these different behaviors.
This is, I think, one of the most critical charts.
What we've seen here is a shift towards small brands and private label. And this shift, as we'll see in subsequent slides, is driven by out of stock. When consumers are asked when your preferred brand... This question here is really asking, what are you buying? And you can see mainstream brands are actually less prevalent in sales than the smaller brands and the private label brands. As consumers shift to value and as the younger consumers are now buying more to do home cooking, you can see that it has a significant impact on mainstream brands. Any thoughts here, Jeri? JP, I think we had seen this shift happening over a very long period of time. Certainly with private label. That's been going on for quite some time now. The shift towards indie and local brands, I think has been a relatively more recent phenomenon in the last several years, with craft beer, and the craft explosion, I think kind of giving rise to this
interest in supporting brands that speak with a more authentic voice and have a more one-to-one relationship with that shopper. So I think we've seen that trend. I think what's happened with the pandemic is that we've taken it to an 11 with this. And so, it has some pretty major implications for brands, and is going to, I think, force them to pivot and rethink. And it's also, I think it's creating some trial opportunities for other brands, in that this out of stock problem, which I know you'll be talking about, drilling down into looking at that, is one of the big drivers, I think, as far as consumer attitudes towards shifting right now towards private label or other brands. So it's creating a real trial opportunity for other brands at the moment. So. And you can see that the older the consumer is, the stronger the private label attraction is. I found it interesting that the 36 to 45 indie brands have a lot
of preference. Which leads to the next slide, which is really, we asked the question, "When your preferred brand are not available, what are you likely to do?" And 38% identified "Purchase whatever comparable product is readily available, regardless of price." Next followed by, "Choose the lowest price option that is available." Obviously, private label, you can see where this links to the private label purchase behavior. And then you have, "Wait until my next trip to purchase my preferred brand." It's only 18%. "Search for my preferred product at another store," 15%. And "Search for my preferred product online," basically 2%. So the behavior here is if the product is not available in the store, the odds are they're going to pick a comparable product, a comparable national brand equivalent or private label based on the availability of those products. Very likely not to wait to buy that product, unless it's a product
that there's high brand loyalty, high preference. The odds are they will buy a competing brand. So this is very concerning. Interesting from a geographical standpoint, Canadians are much more brand loyal versus the US. So you see here at the bottom, the shift towards purchasing a comparable product is more significant in the US, 41% versus Canada, 34%. So there are geographical differences, but we see that overall, that the American consumer is much more value driven than the Canadian consumer. Although in Canada, the private label segment is a significantly larger percentage of sale. JP, I think some of that is being driven by the fact that consumers during this crisis have considerably- More angst when they walk through a store. They want to get in, they want to do their shopping, many of them coming in with a specific list, and they want to get out. I think there's a lot of anxiety in walking the store. So I think you're not going to see
shoppers traditionally doing a lot of research, looking at labels and they're just going to grab what's easiest, and it's often without a lot of thought involved. Great point.
So here's looking at expenditure of beverages. If you look at total sample is orange, the 25 to 35, and then the 46 older. We want to look at what is happening during the pandemic. What are consumers purchasing? And you can see coffee, those core staples of products, coffee, milk, fruit juice, high significant percentage. Ironically, the older consumers are buying less of it. Alcohol and flat water being equivalent between the two. You can see the total sample. You can see that things such as hot chocolates, non-dairy, sparkling, and tea and sodas, they perform less from a sales standpoint.
We do the same thing here, looking at after pandemic and during pandemic. You can see the difference between the two. You can see that after pandemic, you're going to see a drop of that pantry loading, coffee, milk, fruit juice, and alcohol, flat water, and soda, and tea. So you can see a decline there during the past the pandemic. Any thoughts here? No, I don't. What we've seen is that at a time when most of the world has been on lockdown, and retail establishments and restaurants closed in many parts of the country and the world. I think people that are working from home, staying at home, homeschooling kids, they're sometimes looking for ways to delineate the day. "Okay, I'm stopping my workday and now I'm starting my evening." And so we have seen that they're using things like alcohol potentially as a way to do that, just like they may have done with happy hour and even potentially more of that. And so we're also seeing
things like virtual cocktail hours spurring up online between friends, between coworkers, and brands being very creative about how they're leveraging those opportunities through social media, through packaging, and other types of opportunities. Yeah. And I agree. And I think what the important point here is when you look at post-pandemic, there's going to be a deceleration of this pantry loading happening. So it'll be interesting to see.
So you look at food items and you look at what items based on the different age segments, a total sample. You can see that things like frozen foods and canned soups and fresh produce do really well during the pandemic. Obviously, frozen foods and canned products, you can pantry load these, and so people are pantry loading their house, reducing the number of visits to the grocery store. But you can see baked goods did well. Dairy did very well. But you can see a big swing between the age groups when you looks at things like bakery and breakfast and cereals. Those tend to polarize between the younger and older consumers. Thinking about the fact that people now have time to have breakfast because they're not commuting. Obviously, that has a bigger impact on the younger segment.
And then when you look at post and pre-pandemic, before the pandemic and after, you can see one of the big shifts is fresh will remain consistent across both post and pre, but you can see a big drop in things like frozen foods and canned cereals. So they pantry loaded, and now they don't need those products. The view is they're going to visit the store back to a new normal, which is on a regular basis, so they don't require that inventory in their homes. And you can see a shift here. So again, if you're a brand marketer in some of these categories and you've been benefiting from an accelerated number of sales and sales increase, you may want to look at what your inventory management system is because we see a decline coming out of the post-pandemic. This is
consistent with what we saw after the major recession from 2007 to 2012. I think the move towards more cooking at home and eating occasions at home during that time. Now, out of necessity, I think we've moved in that direction. But it also seems to be that consumers are also interested in kind of varying those recipes and trying new things and trying new ingredients. So there does seem to be a move towards more consumption of things that people haven't ordinarily bought in the past, to kind of make it more interesting and
more fun and
nurture and show love to their people that they live with and their families. Yep. Absolutely. And there's probably more people living in the home, so the consumption level would go up much higher because everyone's in their home. If I look at my family, my daughter has moved in with us during the pandemic. So you're going to see an increase of kids going to college, coming home, and so that would be another reason why you'd see these spikes.
We're also seeing an increase in ways to make the table more festive. Just fresh flowers, more decorative silverware and colorful napkins. And so, I think there's also been an increase in sales of things of that nature. So if you look here, I'm talking about that, if you look at attitudes, optimistic versus pessimistic, you can see that there's a huge behavioral difference between the two. Optimistic and pessimistic during the pandemic for food and beverage, you can see that the shift is significant between the two and the average, if you look at the average, and the swings between the two. So consumers who are optimistic tend to spend more. Consumers who are pessimistic tend to look for more value, more frozen foods, more of the core staples. JP, let me interject because I know I've seen charts and graphs in the US that break this sort of thing down by very specific geographic location. Different parts of the US seem to have more consumer
confidence than others. And I think a lot depends on the amount of outbreaks they've seen in their area and deaths and other issues. But, I guess my question to you as such an expert in branding and consumer engagement and experience is, how can brands leverage those differences in pessimism and optimism to communicate directly to different shoppers? What would be some of the ways that you might recommend to them to
change their communication depending on the mindset of the shopper? Well, the package itself is the communication. If you're a CPG brand,
80% of the sales happen in the store environment. And so it's looking at multi-packs versus single packs. It goes even further to look at what's your indie brand platform? Do you have flanker brands that are brands for emerging consumers, consumers who want to spend more, who are not concerned about the economy? It's about understanding what's your Costco or your big box discount retail strategy, what's your dollar store strategy versus your supermarket strategy, and what's that channel look like from a product offering? So it's a combination of pack format, pack offering, and channel strategy that you need to look at, and it's the correlation of those things that you need to look at. It's not one thing in isolation. And obviously your marketing, couponing, and value added, we'll get later on in some of these triggers that get consumers to buy more, is really important also.
So we looked at strategies. We asked consumers about strategies to overcome their anxiety.
Basically, if I were to sum it up, the number one anxiety driven by consumers is they get in their car, they get their surgical mask, their rubber gloves, they go to the store, they're out of this item, and they go to the shelf, think of toilet paper and tissue papers, the kerfuffle that was around all of that, and they get to the shelf and it's out of stock. That is a huge brand letdown. It's a combination of supply chain strategy and the retailer, but ultimately the CPG brand takes it on the chin. At the end of the day, they don't blame the retail, they blame the fact that the consumer packaged goods brand didn't produce enough inventory. So unfortunately, that's a big negative, and you saw it on driving preference to other brands. We have a model that we have, not going to get into detail because we're going to run out of time, but we look at the marketplace based on levers of change. We look at what are the needs for the organization, the consumer,
and the levers of change under structure, packs format, multi-pack, single pack, tall cans, slim cans, message, moments of truth. What are the messages you want to communicate on your packaging and your advertising, and process, what's the customer journey? So we looked at those factors as part of these strategies. Evaluating the role of digital in addition to other packaging structures first for process. Understanding the role of messaging and social responsibility. Understanding what is the pack offering, what is the physical structure of the packaging? So let's get into some of these strategies we tested. So one of them was what is going to drive, the question is not when it comes to packaged foods and beverage formats and offering, how important will the following criteria be for you? In other words, what will drive your purchase of these brands? And products are always in stock, critical, and you can see that it
is a huge influencer on brand switching. Manufacturer and delivery employees wear protective gear. So consumers want to make sure that what's being delivered to the stores is safe. And it's back to your question about the meat packers and the poultry producers, the protein producers. That created a huge scare in the marketplace. Even in our own household, when I brought
packaged chicken, my wife's first comment was, "Was that one of the suppliers that had issues about COVID-19?" And I think it's really important to reinforce To your customers, your manufacturing process, you can do that on your app, you can do that online, you can do it on your packaging. It's really important to reinforce how you are protecting your employees, and you'll see that later on from a social standpoint. The other thing is, and I know this is not at the discretion of CPG brands, but a way to check online to see what is in stock, really important. Offer online couponing and discounts, driving that, you can see here, very important. And we've seen some companies, I look at Pepsi, who have opted to offer home delivery. Overcoming some of these issues of out of stock, the supply chain bottlenecks, offering home delivery. Recipe ideas and the smaller packaging formats, augmented reality, play a lesser role. These still are important.
These are top two boxes.
You look at the process, again, this protective gear is really important. Products on stock, offer online coupons. When you look at these against age groups, customer segments, you can see that the 56 plus, this idea products are always in stock, really important. That tells you that there's a lot of anxiety with older consumers going to the supermarket. There's a lot of anxiety buying products. And so having product in stock is really important for these segments, and if you look, if you go back and remember that they're also the consumers gravitating towards private label, you can see that this is a really important factor for brand switching if you're a national branded product. So you can see that there are significant changes based on age groups here, and I won't go into greater detail. Again, this report is available after this webinar, and we actually have a separate full report in even greater detail than what you have here that will be
shared. So social media is really, really important. Treatment of their employees, provide helpful tips, online portal, customer support to answer questions. These are important. So as you look at your social strategy, and a lot of you have done a great job of supporting your network to provide protective gear to your employees, but also to the healthcare workers, to your own employees and obviously sick leave, all of those things that customers are looking for companies to be responsible. Less so important are authentic and active social media, less important. Interesting promotional contests here, less important. Providing information is what they're looking for. Obviously, how you treat your employees is critical. Any thoughts here, Gerri? No, I couldn't concur more, JP. I think everything that you're saying is consistent with what we're seeing. Certainly, on our webinar last week, one of the things
that was brought forward by a couple of our retail panelists from Kroger and Walgreens was the fact that probably now more than ever, they are looking very closely at optimizing shelf assortment because they've had to make some changes in making aisles one directional and it's forced them to kind of rethink the way they planogram the store. So again, that is something that brands are going to have to really be very mindful of, at a time when consumers are not as brand loyal, out of stock issues are a challenge, and retailers are having to think through their own
merchandising and shelf space, to account for social distancing and that sort of thing. May not be for some of the huge formats that have the luxury of space, but not every retailer has that luxury of space, and so it's going to necessitate some changes in the way they merchandise product on shelf. Yeah. It'll be interesting to look at the private label sales statistics that where they net out this quarter and halfway through the year. So we looked at part of social responsibility. We suggested a range of things that CPG brands could do, food and beverage donations to those in need, food and beverage donation to healthcare workers, companies lending their company vehicles. What this is showing, and we're talking 60% to 75%, that your social activity, how your company is viewed during this pandemic, and how you support your communities is critical. It's critical. This is a key driver in how they're going to think of
you from a brand loyalty standpoint coming out of post-pandemic. And we've seen it. We've seen a lot of activity by a lot of CPG brands supporting their communities. This is really important.
Obviously, what this research shows that brands need to have a lot of empathy and compassion. And by the way, we've seen this factor across banks, food service operators, retailers, and obviously CPG brands. So this is a common, consistent theme, and it hasn't changed significantly from when the pandemic started to where we are today.
So we looked at key strategies. Let's get into that, which is getting into the more details. So, what does this all mean? From a standpoint of process, they're spending more time at home. Their eating patterns are changing, their lifestyle patterns are changing. Obviously, they're consuming more products. There are more people in the households. Obviously, staff hygiene is really important. Ensure that you're treating your employees, not having those crisis that the meat packing, protein packing industry has gone through. Companies have done a great job. If we look at our clients, Pepsi and Kraft and Nestle, they've done a phenomenal job of ensuring proper hygiene, proper protection of their employees, but also ensuring that those employees are not showing up at work sick. I think the idea of offering home delivery, that goes against retail's wanting to control the channel. But this is something you need to look at.
Do you have an online portal, an e-commerce platform? How is it doing during the pandemic? How do you drive more of those out-of-stock issues or those pantry loading opportunities that customers are looking for? And then obviously, really important is ensure your products are not out of stock. This is the key factor in brand switching. This is a key factor. Now, on the positive side, if you're an indie brand and you're looking at gaining market share, this is a huge opportunity for you. But if you're a mainstream brand not wanting to lose market share, having out of stock is going to lead to consumers buying either private label brands or your competitors. And obviously, consider a marketing program targeted, to Gerry's point, to the pessimistic versus the optimistic consumers. Understand that these are emerging attitudes. We see this in the banking sector in our study, that there are emerging
behaviors that you really need to pay attention to how you market to them.
JP, let me make a couple of quick points, and maybe more of a question that I'd be interested in asking the audience. I know it's not an official poll survey question, but just to get folks, brands, and retailers thinking about this. I'm wondering at a time when out of stock seemed to be one of the big issues driving consumer behavior right now and brand loyalty, how brands are, and retailers, are collaborating differently at the moment. What innovative ways have they been able to develop together to make sure that they resolve some of these out-of-stock issues? I think it's a great question to ask our audience, because obviously it has huge impact.
Now more than ever is a time when brands should be collaborating with their retail partners and vice versa. Yeah, absolutely. Let's move on to the next one.
Let me get rid of my question period, so I'm going to just X. There we go. All right. On structure, explore packaging using materials that decrease the lifetime of the virus and your paper versus, we know the virus doesn't stay on paper as well as it does on metal and plastics, and these are things that companies, again, the pandemic has accelerated a lot of things CPG organizations were looking at as sustainability. Somebody asked a question, by the way, Paul asked a question, does sustainability play an important role? We did not look at sustainability as part of one of our factors. I'm sure that sustainability plays an important role, but for a subsegment, depending on the age group. The idea of pantry loading, we learned that intently with around canisters, that looking at the fact that people have limited space, specifically when we think of the younger consumers who are now cooking more in their apartments, the ability of
storage space is really important, so looking at ability of stackability of your packaging and product. And then really, going through all of these, I think there's got to be a lot of attention paid to the deceleration of consumption. This highway that people are driving on, buying a lot of consumption because everyone's migrated to the house, to the home. When that happens, when that deceleration, when people leave the home to go back to their colleges and universities, what does that do to sales and how do you manage that deceleration without managing that inventory control and that channel distribution? So, lots of opportunity here.
And then in structure, other structures.
As you can see, the growth of indie brands and private label. What is your indie brand strategy? Do you have one? Do you have flanker brands? You're seeing here consumers, this again comes back to acceleration of behaviors. What the pandemic has done is, all it's done is accelerated behaviors that already had started. Gerry, what's your thoughts?
JP, I do apologize. There was just bad lightning behind me, and I was not able to hear what you just said. There was just a big clap of thunder here. Sorry about that. Well, that's all right. Are you okay? Yeah, no. Living in South Florida, it can do that one minute and the next minute be a beautiful, sunny day, which is exactly what it was when we started our call, so schizophrenic. It's about indie brands. It's looking at filling that kind of the niche. We can see that indie brands are growing in popularity. ... suggesting that CPG brands look at indie brands as an opportunity to build, protect their brands. Yeah, absolutely. We've been seeing this movement to indie brands. I think larger brands have had some challenges because they, given their manufacturing constraints, have, I think, been a little bit slower to be able to respond to consumers' changing needs and demands. But they've seen how a number of these indie
brands have been real ankle biters for them and have been causing them fits during this time because of the shift towards brand loyalty going out the window in a lot of situations based on out of stock challenges, and value conscious consumers. I think now more than ever, brands are trying to rethink their processes to be able to respond in a much more nimble and agile way to consumers' changing demands. One thing that holds, I think, an opportunity for brands is digital printing as a way to respond more quickly. We talked about this
kind of balance between the optimistic and pessimistic consumers and the need to maybe adapt their strategies depending on how they need to communicate to those consumers. Digital printing may be one opportunity for them to do that in a way that they can respond much more quickly. Yeah. That's great. One of the other insights when you think of greater context. Consumers are going to be shopping less, wanting to shop less, going out less frequently to supermarkets and doing their shopping. We believe that, and the retail study will validate that, that behavior will continue post-pandemic for the foreseeable future as consumers are still concerned about a second and third wave. So look at offering subscription-based services to your brand. Start exploring this idea. I know P&G have done that really well, looking at a subscription-based programs for replenishment of those commoditized items. So start looking at,
what we see this pandemic do across all industries is it's accelerated current behaviors, but it's also forced companies to reevaluate their business model. And this is an example of a situation where you may need to evaluate your business model. Maybe this is a great platform to link the indie brand strategy with subscription-based model and building a new platform for your organization. Yeah. I think the subscription-based model makes a lot of sense in a lot of situations. Something else that may be an opportunity for brands, and we certainly are aware that many of them are piloting projects in this area, and some of them even have had some scalable opportunities in mass retail, and that would be in the area of smart packaging, intelligent packaging. So, having sensors that, or you had even, I noticed, JP, in that one of the things you had asked consumers about is augmented reality as part of the
experience. But smart packaging can do other things besides augmented reality. It can potentially communicate with them about out of stocks or replenishment or it's a way for retailers and brands to communicate directly to shoppers. So there's all sorts of very interesting things that brands can do with smart packaging that might also be an opportunity for them here. Great. Yeah, I agree. In the messaging, the idea of helpful tips and ideas. Absolutely. Commit your processes via your app, your packaging, your website. Your social commitment to the community, really, really important. You saw 75% of respondents indicated this was critical for brands to do that. Obviously, during the pandemic, things that the consumers don't see, customers don't see, is the staff communication. Engaging them, ensuring that they're compliant, and they feel at ease is really important. The idea of acknowledging, recognizing through special offers,
if you've got a database of your customers, they've registered for a promotion. This outbound marketing, personalized messaging is really important to protect your loyal customers.
JP, interesting question from our friend, Sir John Denham, asking about whether we're seeing that CPG is far behind on direct to consumer versus leaders in the space. What are you seeing there? I would agree. The challenge for CPG brands is that if we're taking Canada, you take Loblaws. It represents 42 or 47% of market share. So if you get delisted from Loblaws, you're basically out of business. And so you've got to tread lightly. And in the States, we've got Kroger and some of the Walgreens, and public. You have to tread carefully because ultimately, when you start looking at a subscription model, you're competing with your channel. And I'm sure they don't take that lightly. And so it's finding that Finding that balance of supporting retailer, your conventional channel strategy, but also leveraging some of these new business models. And so it's finding that balance. And I think that
the opportunity for these mainstream brands is to leverage these indie brands and looking at opportunities to create these relationships that go beyond the conventional channels. It's a great question. By the way, Brand Experience Packaging next month on June 24th has a webinar on this very topic called "Thinking Like an Indie Brand." That's awesome. So stay tuned. Yeah. Well, here's some more ideas here, thinking of habits hard to break. Do you create online stores? What's your e-commerce strategy, and how do you drive that behavior in an online process? And that's it. This is a summary of that, and there's a lot more detail in our report. And if you really want, we can share the actual research tables for those of you that like to get into the weeds. I will stop it here, wondering if you have any questions. It looks like we have a question from Steve. He's asking about larger formats and multi-packs as a
strategy and also the point that you made about the lack of pantry space and the ease of storage. Are you able to provide a little bit more of a perspective on that, JP? Yeah. So I think very often we look in kind of isolation, we look at, okay, this specific multi-pack. Let's dial up a bit and look at the greater context. The greater context is coming out of the pandemic, you've got what? 24 million Americans unemployed. I think there's 36 million Americans applied for unemployment insurance. Line cutups, close to 2 million. That's not going away. So think now all those consumers post-pandemic, what's going to be their shopping behavior? What's going to be their attitude? If the consumers were value driven before the pandemic, and if they were pessimistic and extremely value driven during the pandemic, I truly believe that coming out of this pandemic, you're going to have a whole different behavior. Consumers are going to be looking for value,
and so offering multi-packs, loading up the consumer, protecting your market share by loading up that consumer, taking them out of the market for two months or four months will be an effective strategy for a segment of the population, behavioral population, which is the pessimistic, the lower income consumers. Look at those strategies will have a play, but it's not the silver bullet. It will not solve all of your challenges. I think you need to look at other strategies like an indie brand, a flanker brand, and also looking at what is your distribution strategy, subscription model versus non, online purchases versus retail purchases. I think you got to look at it holistically and look at which brands you have can play in those different strategies.
Terrific, JP. I think we have another question about ways to
better communicate value other than price. Well, interesting. Again, I'm going to surmise four major studies.
Social responsibility actually trumped in all our studies, being socially responsible, committed to the community, trumped couponing and promotions right across the board. Right. And so I think value is about how you treat your employees. Value is how you maintain an in-stock strategy. Value is about your commitment to your employees and to the community.
Value's about information you share with your customers, understanding, being empathetic to their needs. 80% of all buying decisions are done emotionally. And so what is your emotional connection to your consumer that links to a value proposition beyond price? And it's all these different things that play an important role. So you feel the social responsibility aspect of that brand, provided that it is authentic, is a way to communicate that value. It is. And so you don't want to be the only brand within the category that you're competing in not doing anything, right? You really need to ensure that at best, you're maintaining an equivalent social engagement strategy and that you're communicating effectively through your channel, your communication. You look at some of the ads, I can't remember, I think it was Nissan ran an ad, a car ad, and it was just this road, and basically what they were saying is
everyone enjoys driving, and we're with you along this journey. And there were no cars in the ad. What they're really trying to communicate is, hey, we're all in it together. Together we're going to be strong. Showing empathy and understanding is really important because there's a lot of anxiety. There's a recent study that just came out last week on the level of anxiety of North American consumers. It's at an all-time high. And so being able to talk to those anxieties is really important. Putting their mind at ease, really important. It's interesting because there was a question asked earlier about antimicrobial packaging, and I know many of us that live and breathe the packaging world know that there are certain packaging material types that tend to hold the virus or hold germs ... less, and I apologize for the thunder in the background. But they encode less of that virus for less amount of time.
So you
don't usually see brands leveraging packaging as part of the way they're communicating to their shoppers. Mm-hmm. Occasionally, if they come out with some kind of innovation, at least initially when they launch that package. But with safety and security and health being so important as far as brand loyalty, and certainly foremost in the minds of the shopper right now, you would think that would certainly be a big opportunity for brands at the moment. It would be. It's interesting. So we've done these webinars now, this is the third one on different industries. And there's a group in our audience that says it's a wait and see. "This media's really blowing this out of perspective. Yeah, it's disrupting, and yes, it's going to impact the economy, and this is going to be this." But the
new normal is really close to the old normal. And my cautionary note to you is this. Again, this is part of our strategic foresight. This is just the beginning, folks. Get ready. This global warming, this is just the beginning. Right? If we trace back the number of pandemics, you need to go back and look at the number of pandemics, they're accelerating. We've had, I think, 10 in the last 11 or 12 years. Right? We have short memory of these things. They're here to stay. This behavior, even with the vaccine, there's going to be something else that's going to come up somewhere else. Swine flu, bird flu. These things are happening because the world is getting warmer. And we need to, as brand stewards, we need to be cognizant of the fact that we need to have these contingency plans, these strategies that take a long time. They're taking microbial packaging. How long does that take, Jeri, to get it from concept to execution through a supply chain strategy?
Yeah. I think it depends on the innovation and where that material is in that process. But there's a very long lead time for that. But I think that right now, certainly there are packages that already have these properties, but they're not promoting them. Mm-hmm. So it's an opportunity, I think, for brands to tell their consumers that they're using these types of properties that obviously are designed with their consumer's safety and health in mind. Yes. Absolutely. Make a moment- I'm not sure if we have some time for a couple of additional questions, but we're getting some really interesting questions related to physical layout of a retail store, and how that might change significantly post-pandemic. And what those implications will be for consumer packaged goods in terms of less shelf space and limited selection. I know we touched on that topic, but it might be worthwhile to hear more of a
deeper perspective on that. And then in addition to that, we're also being asked a question by Jeff, I'm not sure if I'm pronouncing his name right, and Jeff, I do apologize if it's Skoke or Skokie. Might there be more innovation on the perimeter of the store where grocers may partner with local fast casual concept to offer meals with online ordering and real-time access as a home meal replacement type of an option? Yeah. So those are two great questions. First of all, I think at a high level, will people continue shopping at supermarkets? The answer is absolutely. And again, on June 11, we'll be sharing those insights with you, because we've asked that specific question. What retailers are going to have to do they've already done. I would say that if I look at the leading grocers, they've protected their employees at the checkouts. They've created self-distancing stations and signing and way finding and directional.
I was at Whole Foods this morning doing my grocery shopping, and they had arrows going down this aisle, one direction so that you wouldn't butt with any other customer. So supermarkets have done a really, really good job. Where the opportunity is across, when I look at the, I call them the connecting the dots of behavior, is this thing called touchless. You're going to see an acceleration in North America because we're way behind the rest of the world, of facial recognition credit cards, facial recognition mobile apps for payment, where your face will be your credit card, where you will not have to touch a thin card or an interact panel. It will actually be done through recognize your face. And that is going to be what gets accelerated in supermarket chains, this idea of a touchless customer experience. You're going to see more and more of that growing significantly. Now, to answer the question about the perimeter edge
Two years ago, we did a huge study on the future of supermarkets,
and I would say that, and this was validated in our food service. If you go to our website, you can download the food service. There's a stat there that's interesting where we ask consumers, "Where did you buy your take-home food?" About 11% of respondents said a supermarket. I would've said five years ago that could've been 1%. And so supermarkets are growing their take-home food service platform. We did Calgary Co-op, where we developed an entire food service strategy, and it's a significant percentage of their sales, and it's actually a high margin portion of their sales. And so you're going to see more of that development in the future. You're going to see the shrinking of the center of the store, and you're going to see a lot more around fresh and about food service. Because consumers are willing to buy from supermarkets' take-home meals. Hope that answered the question. Perfect. I think we may be at the top of the hour now, JP.
I know quite a few people have asked if you're going to be sharing the presentation deck. Absolutely. We're going to share this presentation, and we actually have a deeper document, a Pages document report that we'll also share. So you'll get both of these, and this video presentation's been recorded, this presentation, so you can actually share that with your colleagues. If individuals within your company were not able to attend, you can share the entire presentation. So I want to thank Jeri for taking the time out. It's great to spend time with you and share- Oh, likewise ... such a wealth of knowledge. It's been a pleasure. Good. And thank you everyone for joining us. I hope you found the insights of this report helpful. We're in it together. It's going to be a challenge. But having the right insights and being prepared is 90% of the battle. Thank you very much. Thank you for your time.
Thank you.
