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Has COVID-19 left CPG consumers price sensitive and more digitally engaged?

New data from dunnhumby media reveals how the pandemic has changed customer behaviour -- and what brands should do about it

Has COVID-19 left CPG consumers price sensitive and more digitally engaged?

Over the course of the lockdown, online demand for groceries surged so much that UK grocer Tesco doubled delivery capacity for its digital shoppers[1]. Nor is this an isolated example. Worldwide, almost a third of shoppers are now buying and spending more online [1]. 

A new piece of research by customer data science specialists dunnhumby media — Retail Media and COVID-19: How CPG Brands should rethink their marketing strategies in response to changing customer behaviour — has revealed in detail how lockdown has changed consumer behaviour. 

Alongside the huge increase in the uptake and volume of online grocery shopping, customers faced with sudden economic uncertainty became much more price sensitive. This expressed itself in a relatively negative attitude toward the absence of promotions during lockdown. 

Eighty percent of shoppers agreed that the restrictions on quantities put in place by many grocers during lockdown was justified, but only 18% agreed that the absence of offers/promotions was necessary [1]. A sustained absence of deals may present a threat to price and brand perception, if customers struggle to find what they want at a price they consider reasonable. 

The pandemic and accompanying lockdown has also significantly shifted consumer attitudes to lifestyle and shopping choices. Since lockdown, there has been a huge drop in the proportions of meals people eat out, with over 500 million more in-home meals globally per week [2]. People are also becoming far more engaged in meal planning than before, with searches such as "can I freeze X?" spiking over the last three months. 

Along with an increased interest in home cooking and budgeting, people have also become more focused on hygiene and their health. Eighty percent are washing their hands more, leading to a rise in the sales of soap and hand sanitiser. Health and wellness was a growing consumer trend before the pandemic, and dunnhumby media expects this to accelerate during the post-COVID-19 recovery. 

But before we assume that consumers have all become thrifty, fifties housewives, we should note that 25% of those who drink at home are buying more alcohol than they were during lockdown [3]. Nine percent of consumers also say that they are buying more junk food than before [3]. 

The pandemic has also heightened consumers’ expectations of brands. 77% of consumers say they expect brands to be helpful in their "new everyday" lives [4]. Communication was also key to how consumers wanted brands to fulfil this expectation. Only 8% of consumers thought brands should stop advertising  [4] and over 70% see a combination of both communication and promotion as necessary to providing a good customer experience post-COVID-19 [5]. 

So, what must brands do to thrive in this new retail landscape? The report, which considers a range of factors influencing retail success, including the use of retail media — advertising displayed in store and at the point of sale — makes  some recommendations. These include:

  1. Use retailer data to help customers navigate their ‘new normal’: work with data specialists to understand your brand’s role in the customer’s "new normal" and to help customers plan and make purchases in a way that delivers both value and a high-quality experience.

  2. Personalise the experience to build loyalty: using aggregate insights tailor communications by variables such as customer shopping profiles on different channels and stores, then use personalised promotions, discounts and incentives based on how customers respond. 

  3. Strengthen digital engagement with retail media: with the move to digital retail, both while consumers are under lockdown and in the new post-pandemic normal, a targeted retail-media strategy is vital to understand consumer preferences and maximise basket value. 

To find out in detail how consumer retail behaviour is changing in response to the pandemic and what dunnhumby media’s experts recommend brands do about it, download the free 10-page report.

3. dunnhumby UK Shopper Thoughts Panel
5. dunnhumby Consumer Pulse survey