Consumers

The four UK Governments have agreed to ease restrictions over Christmas with three households able to form a bubble for four days from 23^rd December.

For consumers, that’s likely to mean Christmas will start early. Gatherings are likely to be smaller, but they may last longer. We might see smaller parties, and the perfect opportunity to exclude that annoying uncle from the celebrations! But with the relaxations stopping short of New Year, that’s likely to have a big impact on usual celebrations.

We’ve seen evidence that consumers are getting prepared for Christmas early. With the added nervousness of Brexit, and financial worries, many are avoiding last minute panic buying. We’re also likely to see a continued shift to online buying as consumers seek to avoid crowded Christmas shops.

Categories

Changed consumer habits have an impact on categories in different ways. Typically, it has been alcohol, bakery, confectionery, biscuits, crisps and savoury snacks that have benefited from an uplift in Christmas sales as consumers seek to indulge.

Alcohol is likely to be the ‘big-win’ category in retail. In line with the months since the lockdown restrictions were implemented and hospitality is still being so curtailed. We’re likely to see more consumers trying something new, trading up.

It could also be a make-or-break period for key categories.  Cake sales have suffered during the lockdown with consumers home baking more.  Christmas is normally a lucrative period for the cake category and one the producers will want to get right after a disappointing year.

Whilst there might be an uplift in the week leading up to Christmas several consumers may have the future in mind which could ultimately lead to moderate consumption. The requirement for more planning and subsequent lockdown restrictions could lead to more considered purchasing.

Companies

This isn’t a ‘normal’ Christmas and New Year, so for companies, it’s a time to think beyond normal too. With only a few weeks until Christmas, the path is set for most. But there is still time to maximise your communications, ensuring they are absolutely relevant to your target consumers. It’s a time when new consumers might be buying in to your category and product, so get to know them.

It’s also a brilliant time to see what other food and drink companies have been up to. Get in store and keep your eyes open. Don’t just look at your own category and competitors, but look left and right. If you don’t see something and think ‘I wish we’d thought of that’ or ‘we could do something like that’ you’re not looking hard enough.

Consumers

I’d never heard of a K-shaped recovery until this week, but it makes sense. It predicts more affluent professionals being less affected by the Covid recession, and recovering more quickly; while those in retail, leisure and manual jobs are more severely impacted, recovering  at a much slower rate. This trend would appear to be emerging in our lockdown households with wave 4 showing increasing concerns around job losses.  If you haven’t read it yet, click here.

This ‘great divide’ of money is being matched, during Covid-times with a ‘great divide’ in confidence around safety too. Older consumers in particular are uneasy about going out, and with local lockdowns in place across areas of the country, and the arrival of winter weather, it’s all looking a bit depressing.

When things are starting to get tough, I like many consumers look for comfort in food form.  Whether it’s sharing something baked on Instagram, cooking a romantic meal, or making a simple family meal, food connects us as well as giving us a sense of purpose.

Categories

Every category is different, but for me, this concept of a K-shaped recession is an interesting way to think about changing consumer missions within categories. It suggests that categories are likely to need to meet the missions of two distinct consumers with polar opposite needs. On the one hand those highly motivated by value for money, and on the other will those driven by quality and premium products. Common to all, is a change in lifestyle i.e. less frequent eating out, either because of restrictions, anxiety or financial constraints

This all suggests to me, that now is not the time to stop innovating. Rather, really understand how your consumers’ needs are changing and evolving, and how you can meet their needs. It is becoming increasingly likely that this isn’t going to be a short sharp V-shape recession so we need to prepare for the long haul and ensure that in retail at least, categories thrive through innovation.

Companies

There are a few simple examples of retailers innovating to suit this K-shaped recession. Iceland with their increased promotion of their exclusive Greggs range, while Co op and Asda have concurrently launched a new range of ‘takeaway at home’ meal kits, developed during lockdown. We’re all familiar with this concept for ethnic food, but their Piri Piri boxes feels inspired to me.

The other end of the spectrum is where Foodservice outlets have had an interesting impact. While many have been forced to close (especially in Scotland), the return of restaurant meal-kits is very much to the fore, with average prices for cook at home meals of £40-£50 for 2. It’s a level of spend detail and personalisation we just don’t see in food retail and is likely to appeal to those less impacted financially by the recession.

So, what’s the big message? Think about how a K-shaped recession would affect your business now, do you know where do your consumers sit in terms of likely impact, and in a year from now what can you say you’ve done to help them weather the storm. Be clear what your role is in the categories you operate in.

Consumers

I often wonder (as I’m sure many do) what lasting effects of the lockdown will be on consumers’ behaviour.

One of the key behavioural changes that Levercliff and others have reported on is how consumers eating and drinking behaviours have changed – some forced, others chosen.

I think it’s only possible to really understand how these behaviours will evolve over the medium and long term by discovering and monitoring underlying consumer feelings, needs, attitudes, and circumstances. For every observed behaviour there are a multitude of different drivers.

For example, if we take one behavioural change – cooking from scratch more – the potential drivers for this increase are numerous.

-Time - I have more time to do so

-Enjoyment – I’ve learnt/relearnt a new hobby that I enjoy

-Nurturing - I want to protect and nurture my family

-Mindful - As a creative activity it helps with feelings of anxiety

-Health - I/we are trying to eat more healthily

-Thrift - It’s cheaper to cook from scratch

-Shopping anxiety – I’m shopping less often so planning my meals

-Appreciation - I like to show off my culinary skills to friends & family (e.g. on social media)

Categories

As many people like me return to a more ‘normal’ pace of life, the daily commute, children returning to school, they may have less time to cook but the other feelings, needs and attitudes will not necessarily go away.  How can categories evolve to fulfil these needs?

Some convenience food categories, such as ready meals have suffered as a result of the renaissance in scratch cooking.  A change might mean a greater focus in ready meals on home style recipes (home fridge/store cupboard ingredients) or family targeted options.  Or a renewed attempt to make the recipe kit format work in retail…perhaps less structured or lower priced.

For ingredients categories I can see a renewed focus on quick, easy and affordable, reminiscent of Jamie Oliver’s and Sainsbury’s Feed a Family for a Fiver campaign in the last recession.

Companies

I think there’s an opportunity for brands to remain relevant and gain deeper connections with their customers by being sensitive to needs and sentiments as they evolve.

A good example of a company quick to diversify to fulfil a need was a company local to me, Robert’s Bakery, launching a direct to door bread baking kit early in lockdown.

Again, to go back to the last recession, brands that did well tapped into prevailing needs at the time…an affordable treat (lipstick effect), an affordable weekend treat (the big night in).

However, with a new set of circumstances it may be different this time.  Keeping close to what your customers are thinking and feeling is as important as ever.