With shrinking wallets, there’s no doubt that the spending capacity of the average person has reduced. Millions of jobs were lost, and a vaccine to end the Coronavirus remains elusive. There’s much to wring our hands over, and there have never been more testing times than now.
However, it’s also the time not to lose our optimism. So here’s what we are telling you to do – junk all the rubbish predictions about what’s working and not on consumer spending.
Right off the bat, let’s examine the motherhood statements of all times.
1. Consumers will only spend on essentials
Sure, consumers are more mindful about where they spend their money. Big-ticket and impulsive buys have reduced. However, people are compensating for the lack of entertainment and travel by spending on groceries, hygiene products and home entertainment. A look at the number of new product launches in condiments, and packaged food alone indicates a new market trend. People are cooking exotic meals and are splurging on quality ingredients that allow them to entertain at home.
The pandemic has also triggered a demand for the hygiene category, and consumers are demanding healthier options for themselves and their families. There are market opportunities, and brands are already leveraging them by launching products outside of their portfolio range.
2. Now is not the time for premiumisation
There’s been a slower offtake for premium products; however, as per this ET Prime article, people are not staying away from premium brands that are essential to their daily behaviour. A recent survey on consumer trends run by Bizom showed that buying indulgent foods comes second to the winning trend of consuming more healthy foods.
Also, if a lot of kombuchas are flying off the shelves, all hope is not lost. Studies point to consumers buying fewer items than downgrading i.e. buying cheaper products. They are more cautious and try to save money, but they will review large expenditures first. Take a look at the chocolate category. While there was an initial fall in consumption, the demand for chocolates increased sharply from June onwards. Even moderately premium products began to do well. So the key to winning here is to cut down premium choices and focus on offering value.
3. Pricing strategies are all smoke now
A major concern for most CPG brands is how to manage pricing without impacting market share and brand identity. The pandemic has created enough disruptions in that regard. But shoppers, along with buying less, are also buying affordable. They are switching channels or brands that are more affordable. However, they are also sticking to their brands if the right value packs or promotions are available.
In times of pandemic, we don’t get to control the events or the impact on the bottom lines. The best that we can do is to focus on some simple CPG truths that even the past recessions have sworn by:
1. Offer value with price and pack sizes of essentials
2. Ensure availability at all times
3. Launch products that match the changing consumer interests
4. Keep engaging the consumer
We wish you a more stress-free week! Write to us at firstname.lastname@example.org about any other half-truths that you encounter and if you want to discuss technological solutions to increase your market share.
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