COVID 19 Crisis or Opportunity? 5 Actions you should be taking now to Build your Brand
1.Recover the loyal shoppers you have lost
2.Retain the trial you have gained
3.Learn to speak in 3 languages
4.Drive the retailer range discussions early
5.Over-communicate a consistent message why shoppers should choose your brand
After months of focusing on maintaining supply, like many of my clients you are probably coming up for air as FMCG retail sales gradually head towards normality. It is crucial that as you look past the dreadful personal tragedies and analyse what you should do next to build your brand that you examine how your shopper’s habits and personal circumstances have changed. I have set out here 5 opportunities or threats to your brand from the forced shopper changes depending on what you do next.
We can all agree there has been a market shock but what is important is understanding the impact of the restrictions on shopper behaviour, how entrenched habits have been changed or weakened, how income disruption is not equal and how this provides huge opportunities for those who act fast and use data, shopper psychology and behavioural science to guide their choices.
Shoppers used to cover about 30% of a supermarket. Now they walk 100% fixed in a one-way system which may mean they miss all their normal cues to buy brands as they approach the category from a different direction. Entrenched habits have been broken because shoppers went less frequently and to different shops (possibly smaller or more local), because the stores were out of stock of what they normally buy due to supply issues or manufacturers and retailers cutting SKUs to ease logistics, because they bought online for the first time and accepted substitutions they would normally have rejected or because they tried a subscription model to secure supply of “veg boxes” or family favourites via “Heinz to Home”.
Recent research by Greenshoots (https://greenshootsresearch.com) showed that in the UK in the last few weeks 32% of shoppers visited a supermarket they didn’t normally, 52% of shoppers were forced to move from a brand or product they always buy and 6% of UK adults have done their first ever online shopping so not surprisingly e-commerce share of sales has moved to 10%. In a recent McKinsey article, they stated that Us grocery e-commerce household penetration had increased from 13% to more than 31% by late March and reported that in China 50% of shoppers who had changed stores did not intend to shift back.
This amount of change in shopper purchasing behaviour would normally be impossible to deliver partly due to inertia (not brand loyalty) and the fact that we have better things to do than re-assess the washing up liquid we buy every week, or through “Self-herding” due to the fact that once people have a pattern of, for example, overpaying for Starbucks coffee they have an aversion to change as it means admitting they were wrong for the last 4 years. There has been a major disruption to many shoppers’ “habit loops”. A habit is a behaviour that is repeated over time in a systemic way where a known cue (for example entering a retailer’s aisle or the colour and shape of a brand you use) triggers an action or routine to buy that in turn leads to a reward from successfully shopping (through a dopamine burst) which encourages the brain to want to repeat the process again. At the moment the crisis has created two major opportunities. First there are so many broken habits in retail that there is a huge danger that if you do not re-establish the habit loops that support your brand then you will lose sales forever, and second, there is a huge opportunity to capitalise on the disruption and the “undeserved trial” your brands have achieved in the crisis by establishing a new habit by encouraging repetition and short-term rewards (giving your brand promise the longer-term reward time to establish). In a 2009 study Lally at UCL said it takes an average of 66 days to form a habit (between 18 and 254) but in my experience in retail 3 visits/purchases is enough of a “toe hold” for a new habit to form when many brand choices are from inertia rather than a recent conscious choice. Once a habit emerges the brain stops fully participating in decision making and unless the habit is disrupted a new pattern has the tendency to unfold automatically.
1. Recover the loyal shoppers you have lost
If a shopper went to a store near their office and they now work at home their retailer may have changed, the store layout and range will have changed and the cues to purchases and habit will have been disrupted. If the brands and private label they were forced to substitute for your brand did ok when you were out of stock, will this forced trial turn into a habit of buying the new brand in future? If other brands have got into the favourites list on e-commerce when once you were the only brand in that category, which habit will continue, the old or the new? They won’t automatically come back to your brand and the longer the new habit is allowed to continue the weaker the memory of the routine that included your purchase will become. You need to plan specific actions to re-create the cues to trigger purchase of your brand again in order to re-establish the habit loop, possibly by increasing the short-term reward or the immediacy of that reward for completing the purchase. You will not have to fund this long term, just long enough to ensure your habit loop is dominant until the new normal is established. As you look at customer losses don’t underestimate the roll of institutional incompetence. For example, my son has bought a Sainsburys yearly online delivery pass for 4 years but they wouldn’t let him renew as they were oversubscribed in the crisis - so now he has trialled other online retailers which he would never have done by choice. Sainsburys should aim to get him back as he is a proven online shopper, not someone driven to online shopping in desperation who will soon leave once regular store shopping is safe again.
2. Retain the trial you have gained
I realised how fast entrenched habits can change when in a French service station in March I came across a 30-man queue in the toilets waiting to use the sinks to wash their hands (something I had never witnessed in 60 years in any country and any facilities). This habit change was born out of fear (one of the 6 core motivations of behaviour change: pain, pleasure, hope, fear, acceptance, rejection) and may last into the future but what are you doing to ensure the new shoppers you have attracted in this crisis establish a habit of continuing to buy your brand? In most cases your brand trial was not due to amazing marketing skills but the fact that you were available. Lifetime buyers of Andrex toilet roll fought other shoppers to buy private label toilet roll which some of them will have realised was actually quite good, but how does private label ensure this continues in the future? Habit is formed by cues, leading to repetition resulting in a reward and the more the repetition the more the habit is ingrained so it is important that you encourage the repeat purchases, especially when the original brand choice or original retailer location returns. What about the silver surfers who have shopped online for the first time ever—how will they be retained? Did you win or lose from shoppers who moved to online subscriptions like Laithwaites wine, Graze, Abel and Cole or Birch box, and what will you do to break this new habit before it is entrenched?
The key is to identify these shoppers and encourage routine purchases by, if necessary, overspending to create a reward strong enough to establish the habit.
This may be via promotion, it may be via a free gift or collection scheme (as free has no risk to shoppers so is one of the most powerful tools) or it may be via de-escalating rewards like the Boden example where the discount gradually declines over time. It could be you create a link to a charity or the NHS where loyalty generates rewards for these good causes making it difficult to leave your brand while your habit is consolidated. Whatever you choose to do, remember you have just had a free trial bigger than your marketing budget could ever have generated but it could disappear just as quickly if you allow the old habits to establish.
3. Learn to speak in 3 languages
The natural reaction of the retail trade in any crisis is to talk price louder but COVID 19 is not a virus that believes in equality. The Daily Mail published a survey on the 23rd May stating that 33% of people are actually better off financially because of the lockdown, 37 % saw no change and 29% will be worse off. If you are reading this article you are likely to be still employed, working from home and therefore being paid the same but having no travel expenses and limited opportunity to spend what you are earning. You actually have more disposable income so this idea that everyone is now going to be poor is just not true and within different demographics the numbers are even more stark. A staggering 46% of public sector workers are better off because of the crisis and only 12% of the over 65’s are worse off so it is important that your brand strategy takes account of talking in 3 languages - Price, Value and Premium.
Some people have lost their jobs, are struggling to manage every week and are relying on food banks and government support to survive. For these people shopping is about price and they will be looking for the lowest cash outlay to buy what they need. They don’t have the cash for multibuys, or to make economies by buying bigger packs or to choose the brand they prefer. For some people their income will not have changed much and they will have some spare income, though they will be wary of what the future holds and will be looking for value and being careful of where they spend their limited discretionary income. They can spend more and buy a bigger size or multibuy if it is a better value or can trade up if they believe the better performance or taste justifies the extra cost. However, a third of people have more money and are better off and for them it is about the best quality they can find, finding things to spend their money on that make them feel good and it is about premium. For shoppers it can even change by category – I may sacrifice everything for my baby - so I choose premium diapers but then have to compromise and buy on price in other categories. The more obvious you make premium and cheapest on display and the clearer you make the value you offer, the faster it is for all your shoppers. Eye-tracking showed pre-crisis the average shopper only looks at about 6 prices in a hypermarket and whilst this is likely to rise with the hardship and unemployment there will remain a huge group of shoppers where price is not their concern.
How will your brand strategy recognise and communicate with each of these distinct groups?
How will both retailers and brands manage to communicate price and premium in the same environment so that the superior margins available from the profitable shoppers who still have disposable income are not lost in the race to the bottom on price? Some brands have already made clear their intentions, for example, Unilever recently stated that they think both premium and value will hold up in the downturn. Look to the work done by HL display (https://www.hl-display.com/about-hl/) at Carrefour in Dubai to be inspired as to how 3 languages can come alive in-store to benefit all the shoppers.
4. Drive the retailer range discussions early
Retailers had already made large cuts to ranges before the crisis to reduce costs but the crisis has led to more limited ranges driven by shortages or logistic simplicity. Manufacturers have made choices to run 24hr production lines on limited SKUs at enhanced profitability sacrificing other range in the process. Marketing Week showed the approach of the big players with companies like P&G seeing this as a “reset opportunity”. As the Grocer article in the UK of the 27th April set out, retailers have de-prioritised start-ups to streamline the supply chain, 37% of SME’s have seen declining sales and another 15% have been told to expect temporary delists. Anyone in the trade knows these temporary delists are easy to have done to you but incredibly hard to reverse and stop them becoming permanent. What are your brand plans to lead the retailers’ thinking on the future range for the category? The discussions will come and if you are not leading them you need to be prepared especially if you are a secondary brand who are likely to be most at risk.
Will it soon be a good time for new initiatives when all the current routines are broken and the shelves have space created by brands that couldn’t deliver and may not deserve to come back?
If shoppers are visiting different shops what range impact does that have and are your brands available in these new stores?
5. Over-communicate a consistent message why shoppers should choose your brand
Humans have limited cognitive resource in times of stress and so shoppers struggle to make complex decisions under the pressure of people coming within their two metres space and browsing is reduced as shoppers know people are waiting for them to choose and move out of the way so they can come past. The mere exposure effect means the brain prefers familiarity so messages that are quick to process and are consistent with the brand equity take less mental capacity and are more likely to have an impact. The stores are covered in safety messages and 2 metre spacing grids reducing the marketing communication opportunity in-store, so wherever possible use the media your brand controls by writing messages on-pack, on neck hangers or on SRP.
The messages you choose should be in line with your brand equity but also re-enforce why lapsed loyals should come back, why new trialists should stay even though their usual brand is back in-stock or why you are the real value brand not private label. The best way to deliver this is brand claims focused on the purchase barriers and as Level 4’s extensive database shows, claims increase brand choice by 28% on average and are more successful than taglines (https://bit.ly/2Xuckw8).
Claims that are relevant, distinctive, concise and consistent with other brand messages are often most effective. At this tough time claims that reduce risk, when even in normal times humans are twice as frightened of getting something wrong as pleased about getting something right, will be more effective.
People have been forced to change, have new circumstances with more or less income, have had time to reflect and will be developing new habits. This is probably the biggest opportunity to win or lose in most marketer’s lifetimes- which will you and your brand be?
If you want help, coaching or training on how to make the right choices based on shopper psychology and proven claims development get in touch via LinkedIn or my website.
Please feel free to share this article with friends and colleagues where you think it might help.
Tony Durham
Tony Durham Consulting Limited
