“Reset” of consumption
- Direct link between FMCG sales and the evolution of the pandemic is disappearing
- Consumption stabilizes after COVID-19 peaks
- Economic instability and financial concerns bring changes to consumption
- 77% of Portuguese say they save more
- The 4 pillars that will transform the consumer: what, where, why and how much?
The COVID-19 pandemic had a profound impact on the needs of consumers, the dynamics of purchasing FMCG and the definition of new trends in the relationship between companies and consumers. At a time when the economy and employment have become unstable and consumers have become accustomed to new habits, a new reality and new behaviors have emerged to which the market will have to adapt. The “Reset” of consumption has arrived, the “New Normal”.
Scott McKenzie, responsible for Nielsen's Intelligence Unit, points out that “the unique conditions brought about by a pandemic that led to an economic recession are forcing consumers to rethink how they buy and what they buy. Human beings usually have months or years to adjust to new conditions. But this is no longer the world we live in. In view of the new needs of consumers, brands must be highly focused and agile in their responses. ”
A change in behavior in the face of new concerns
The media expression associated with the new coronavirus in the first quarter of this year generated changes in consumption at a global level, with a relationship between the evolution of the pandemic and consumption trends. Sales of hand sanitizer, staple foods and cleaning products, among others, skyrocketed due to the spread of the virus.
Over time, however, this correlation tends to dissipate and the consumer basket has stopped responding so immediately to the news cycle in the media. This does not mean, however, that consumers have stepped back from buying this type of goods. It just means that your purchase is no longer a reflection of news about the increase in virus transmission rates.
New socio-economic panorama brings changes to consumption | “Reset” of consumption
The change in habits that we observed during the last months, added to a new economic and labor instability, brings to consumers the need to reevaluate their consumption habits. But this impact will not be homogeneous: the constrained spenders, those whose income has been negatively impacted by COVID-19, will spend to survive, while the insulated spenders can momentarily adjust their spending, even though their income has remained
unchanged by the pandemic.
"As consumer behavior departs from the news cycle, the components of the shopping basket are going to buckle into the economic downturn and the transformation of the workforce," explains Scott McKenzie of Nielsen. “Consumers, whether they are employed or not, are less optimistic about the future. This caution will compel us to reconcile purchasing habits adopted over the past few years with a new reality in which health and the perceived value in products are the priority factors ”.
“Reset” of consumption - What will change?
When analyzing these new trends, Nielsen identified four patterns that can help to predict the factors that will weigh in the purchase decision in the future, between basket reset, basket weight gain and “do-it-yourself” weight gain ( homebody reset), the change in the purchase rationale (rationale reset) and increased attention to the value of the products (affordability reset).
- What? A basket in transformation
It is expected that consumers will carefully evaluate the products that are part of their shopping basket, since they are increasingly unable to maintain the level of expenses that occurred at the peak of the response to COVID-19 and the horizon of the which is considered “essential” in an act of purchase.
- Where? The reorientation towards consumption at home
Over months spent at home, consumers have embraced a do-it-yourself mindset regarding consumption. In each home, bakers, pastry chefs, barbers, hairdressers and chefs were born. And even though most of the restrictions on the movement have ceased, some of these habits are here to stay, also transforming consumers' buying behavior.
This change in consumption at home is perfectly aligned with the transformation required in the current business environment. Brands that are able to enhance the discovery and learning of DIY behavior will be successful, in line with the current interest in creative, conscious and safe consumption. Consumers are now available to bring a product experience to the safety of their homes.
- Because? A new purchasing rationale
In view of the current economic climate and the rising unemployment rate, consumers may find themselves with less income. 77% 1 of the Portuguese claim to have changed their spending in order to save on home purchases (against only 66% of Europeans). With less spending on meals, travel, entertainment and clothing, Nielsen predicts that consumer goods will take on new meaning and be a way to fill the void left by these savings.
In a family of constrained spenders, buying chilled meals can replace what used to be higher priced Food products, while insulated spenders can buy a premium alcoholic beverage to drink at home or expand their personal care products as a substitute for out-of-home dining experiences or trips to which you now have no access.
Brands that seek to reposition their products in this new reality need to demonstrate empathy and recognize the changes associated with these “luxuries” of consumers. If they manage to recognize and enhance this situation, they will be the ones that will most benefit consumers in search of comfort through low-cost FMCG purchases.
- How much? Rethinking the value of products
Since the beginning of the pandemic, we have seen significant reductions in the level of promotions worldwide, namely in Portugal. “We see clearly an indication that the promotional basis has been rethought, leading to an enormous opportunity to modify consumer behavior around accessibility to products. The recent absence of normal promotional activity leads to an important and historic moment in which brands will be able to rebalance their approach more efficiently ”.
In this environment of enormous disruption of consumption and transformation of trends, it is up to brands and retailers to continue to assess the perceived value that consumers attribute to each moment of purchase. The economic climate is leading to huge changes in the financial perspective of consumers. Brands and retailers that are unable to offer products that can adjust to more limited financial availability and increased price sensitivities can lose long-term traction with key consumers to secure their business. This is a challenge that requires the ability to anticipate, understand a new reality and restructure the offer in a “New Normal”, the “Reset” of the consumption that has already arrived.
Nielsen Holdings plc (NYSE: NLSN) is a global data measurement and analysis company that provides the most complete and reliable insight into consumers and markets worldwide. Nielsen is divided into two business units. Nielsen Global Media provides impartial and reliable metrics to the media and advertising sectors that create a shared understanding of the sector required for markets to function. Nielsen Global Connect provides brands and retailers of Consumer Goods with accurate and practical information and insights and a complete view of a complex and changing market that companies need to innovate and grow. Our approach combines original Nielsen data and other sources of information to help customers globally understand what is happening in the present, what is going to happen in the future and how to act on this knowledge. A S&P 500 company, Nielsen is present in more than 90 countries, covering more than 90% of the world population. For additional information, visit https://www.nielsen.com/pt/pt/