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The fallout from Covid for Convenience stores: Changing customer behaviour and product innovation strategies

  • SalesOut
  • SalesOut

As with almost everything else in life, the Covid-19 pandemic has turned the world of retail upside down for Convenience stores and Supermarkets. It all started before the first lockdown with the panic buying of items such as toilet paper, dried pasta and rice.

Then we had the national lockdown period with many people gravitating to convenience stores because of the ease of use. That’s when we saw certain categories benefitting hugely from the closure of pubs and restaurants.

More uncertainty

Now, we’ve moved into another period of uncertainty with local lockdowns and fluctuating guidelines, which make it hard for retailers to keep their stocks at the right level and plan for the months ahead.

Let’s take a closer look at how customer behaviour has changed during this complex timetable of events and then examine what all this is likely to mean for product innovation over the next 12 months.

Going large

One of the most significant changes we’ve seen since the outbreak began is that consumers are making less visits to stores, making the ‘big shop’ even bigger. Within both Supermarkets and Convenience, 1.5 to 2-litre pack sizes have benefitted as consumers opt for bigger packs that last longer and facilitate this new buying approach.

This trend is reflected by the news that large multipacks within Total Bottled Water are up 65-69% in value, compared with the year average. Small singles have continued to decline during the pandemic. 

Beer, wine and spirits booming

 With the restrictions placed on the hospitality sector, BWS has been the big winner in Convenience, taking full advantage of this unforeseen opportunity.

However, the lack of opportunity to go out and socialise has had other, less welcome effects. Since the outbreak, calls to the Alcoholics Anonymous helpline have gone up by 22% and calls to the Chat Now service have risen by 31%.

Tighter budgets

Of course, one of the most far-reaching issues caused by Covid is the threat to jobs and income with a recession now officially upon us. The furlough scheme provided invaluable support for many during lockdown, but still many jobs have been lost. Household budgets are expected to be tighter than ever as a result of the widespread reduced incomes.

Smart businesses have worked hard to stay on the front foot during the crisis, remaining flexible and putting the needs of their customers first. This behaviour is likely to have lasting consequences. Industry experts believe stores that implemented quick and safe social distancing will be remembered positively after the pandemic. As will those that provided much-needed support of one kind or another for the local community.

Costcutter, for example, offered payment over the phone and delivery which proved to be indispensable services for vulnerable people and those in self-isolation. In another initiative, they introduced 20 pop-up stores in NHS hospitals to support key workers.

Convenience vs Supermarkets

As we look ahead, consumers will be doing everything they can to keep their families safe, staying local and not travelling as far for essentials. Add to this, the lack of temperature checks being carried out in Supermarkets and this makes them one of the riskiest places to catch an infection. This provides the perfect opportunity for Convenience stores to take advantage and build long-lasting relationships with consumers.

On the other side of this equation, Convenience outlets will need to provide attractive pricing during the current climate or more and more people will be tempted to move back to the Supermarkets and discounters to enable their money to go further.

A move towards healthier eating

 With health top of mind for everyone right now, the ongoing trend towards healthy eating is only likely to pick up pace. According to research conducted by FMCG Gurus involving 23,000 consumers, 73% of Europeans said they will be making greater efforts to eat and drink more healthily due to the Covid outbreak.

This has now become a core value for forward-thinking companies, with many trying to develop healthier products that meet this growing demand. Over the last decade, for example, Premier Foods have removed 1,000 tonnes of salt from their portfolio and introduced low-salt versions of some popular ranges including Oxo stock cubes and Bisto Gravy Granules.

However, even though consumers want healthier food they are unwilling to compromise on taste. This means cutting sugar and salt in popular items has become something of a delicate balancing act.

What does all this mean for product innovation?

In terms of product innovation, value will become even more important than health as customers look for cheaper options, as is invariably the case during a recession.

Yet, as this recession has been caused by a health issue, healthy eating and sustainability concerns will still be relevant for those who can afford to worry about such things.

Larger sizes

As we alluded to earlier, we can see an increasing demand for multi-packs and larger sizes. Even though it might seem a less exciting development, package innovation can be just as important in a recession as the launch of brand new products.

Beer and cereal are just two examples of a shift towards large pack innovation that satisfy the need to have a good supply of provisions stored in the home for whatever unexpected events might happen next.

Multi-serve

A variation on this same theme, multi-serve products are sure to be in increasing demand in the months ahead, for financial as well as convenience reasons.

Bearing in mind the need for meticulous home hygiene in the middle of this pandemic, multi-function laundry and home care with sanitizing properties will become increasingly important in the fight against the spread of the virus.

Premium offerings

During the banking crisis in 2007, we saw a new product evolution towards professional services at home. These included restaurant-branded frozen entrées and teeth whitening products.

This time around, as people feel the need to treat themselves to compensate themselves for the sacrifices they have had to make with their social lives, we also expect to see a move towards more premium items. Restaurant-quality meals designed for home consumption and luxury personalised kits for hair treatments and nail care are the kind of things that will soon be more readily available.

Brand stretch

 Strong brands are more important than ever as people look to trusted names for reassurance at this time of uncertainty. Now is the moment for organisations to consider leveraging brand equity by moving into adjacent categories.

Alcohol has been identified as a category that is ripe for innovation here. Look out for traditional spirit brands adapting to at-home cocktail machines or developing branded frozen cocktail concoctions.

Private label products

With the need for retailers to show a greater commitment to their customers, high quality private brands are another important innovation that we expect to see plenty of at the end of 2020 and the start of 20121.

Emerging categories to look out for will be those focusing on more healthy eating and will include plant-based meats and dairy alternatives, as well as CBD products.

There’s no turning back

Who knows when and how this rapidly evolving crisis will finally be resolved? However, one thing is for certain: when all this disruption is behind us, customer behaviour will never go completely back to how it was. In the same way that working from home, in some form or another, will be with us for the long-term, so will many of the new buying habits of Convenience customers.

For more detailed information on changing customer behaviour and product innovation in the Covid crisis, please book a OneView Demo.


Published 5 October, 2021

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