Boris Johnson’s Sunday night message to the UK may have confused people, but one thing that is clear is that the economy isn’t about to rebound quickly; brands need to prepare instead for a ‘reboot’ and to address two distinct types of consumer , says Nielsen.
In the analytics firm’s global framework for how businesses will navigate new economic challenges in the COVID-19 pandemic environment, ‘rebound’ relates to a fast recovery in the third quarter of 2020, ‘reboot’ to a medium-term scenario that is positioned in the fourth quarter of the year, and ‘reinvent’ looks to a general return to normal living conditions at some point in the first half of 2021.
The UK is looking at the ‘reboot’ scenario, Nielsen suggests, and businesses will need to take account of new and adjusted consumer behaviours that will lead to different types of demand in terms of what, where and how consumers make purchases.
Manufacturers and retailers will need to reconsider, re-stimulate and even reformulate their portfolios and ranges to meet altered demand and needs, it says.
Nielsen has identified six major areas of change that will impact the FMCG industry as the UK moves towards the ‘reboot’ stage of recovery:
• The emergence of two different spenders: The ‘Insulated Spender’ who has not yet been financially impacted but will be cautious, and the ‘Constrained Spender’, whose employment has been severely impacted and will need support.
• Polarised consumer baskets: Insulated spenders will spend more on indulgence, while constrained shoppers will be entirely budget-focused and will look to bulk purchases and pantry necessities.
• Reassessed pricing strategies: Promotional depth and frequency will change as some products may continue to have price caps and others are price protected goods for vulnerable consumers.
• Reprioritising values: Greater value placed on health and hygiene across all products, as well as technology that reduces risk from interactions.
• Rising preference for local products: The argument for self-sufficiency will become even stronger.
• New standards of communication: Reputations are at stake for retailers and manufacturers - the actions businesses take during this crisis are very public and customers care
“There is unlikely to be a return to ‘normal’, and success post-pandemic will require understanding of how your brand, marketing strategy and product mix is able to recalibrate to meet the changing needs of these two key consumer groups – the insulated and the constrained,” said Paul Walker, Nielsen UK & Ireland Managing Director.
“Never before have we had so many people out of employment so quickly, with mounting income pressures, the closure of many businesses and an ongoing health crisis in which many lives have been lost and for which there is currently no vaccine,” he added.
“Retailers and brands therefore need to reassess their priorities and consider how they can demonstrate care and empathy as well as providing a service to gain loyalty in the long term.”
Sourced from Nielsen