Industry Needs Reinvention Before Recovery, Nielsen Says

Rebound, reboot and reinvent: This is the path forward, said Scott McKenzie, head of Nielsen Global Intelligence and the leader behind its COVID-19 insights, speaking in a webinar last week. How retailers and brands navigate these three distinct time horizons for global market regeneration will be key to economic survival.

McKenzie further outlined six stages of consumer behavior in the presentation "Life Beyond COVID-19." They include proactive health-minded buying, reactive health management, pantry preparation, quarantined living preparation, restricted living and finally, living a new normal.

“Recovery is not a realistic word right now,” he said. Businesses need to move into a survival approach as the world is “fundamentally recalibrating,” continued McKenzie, predicting that in the first half of next year, brands and companies will go through a “massive reinvention.”

Examining environmental macro data layered with Nielsen data from 100 countries, the group sees many commonalities in the way humans across the globe are responding to COVID-19 with regard to purchases, McKenzie said.

“More than ever, in the products we buy, we want them to do what they say they do,” said McKenzie. Whether that’s the efficacy or germ-killing properties of a cleaning agent or another product that fulfills a fundamental need, consumers want to know that what they are buying “is going to do the right thing" for them and their family.

A focus on essentials in an environment of financial constraint due to high unemployment rates and underemployment will also play an increasingly crucial role, he said. Receiving products via contactless experiences is equally important. McKenzie said he sees “zero-touch” packaging or disease resistant packaging coming to the fore.

In the reinvention state, brand relationships will change as consumers try new products either because they are forced to due to a lack of availability or because they are seeking out something safer or authenticated.

And while there will be a polarization of consumers in the short, medium and long term as a result of financial restraints, health will continue to be a priority. Nielsen already sees this reflected in the data, which shows a sales bump in products such as air purifiers and health bands.

Nielsen further predicts continued change in supermarket shopping habits. “Consumption changes are already happening,” said McKenzie, who sees a preference for hyperlocal—what he calls “a buying milk from cows we can see” mentality.

And while technology will continue to play a bigger role through things such as virtual reality, augmented shopping and drone delivery, there will also be a “reimagination of the retail experience,” said McKenzie. “Retail needs to be in listening and action mode at the same time.”

As retailers navigate these uncertain times, what of holiday shopping? The season will be here before we know it, as will the need for safer environments for large number of shoppers. Planning ahead for these challenges and redirecting a percentage of sales online will be key.

Prices Rising as Volumes Remain Elevated

When it comes to what supermarket shoppers are buying now, meat has reclaimed the No. 1 spot for top growing in-store department, with seafood seizing the No. 2 spot and frozen coming in third, according to Nielsen data for the one-week period ending May 2.

Nielsen further found that overall U.S. in-store CPG sales growth has leveled off again compared to the previous week’s growth (up 19.5% for the week ending May 2 vs. the same week in 2019). Meanwhile, total U.S. online CPG sales growth has taken a “downturn” despite being up by 26.6% for the week.

Hand sanitizer is still the hottest ticket in town, maintaining the top spot for in-store week-over-week category growth at 377.5%, followed by oat milk (271.9%) and fresh meat alternatives (227.5%).

Prices continue to escalate across in-store total CPG (up 6%) and specifically fresh meat (11.8%), processed meat (12.1%) and eggs (26.9%), noted Nielsen. Across the store in March, 77% of product categories experienced inflation, Nielsen noted.