COVID-19: Unlocking the ‘new normals’
Our Director of Expert Solutions, Phil Dorsett takes a look at how brands, manufacturers and retailers can combine purchase and usage insight to forecast demand and find the "new normal".
"As consumers we all saw it, all felt it - the frustration of empty shelves as we anticipated an inevitable period of lockdown. We blamed. We pointed the finger at those people the press told us were ‘stockpiling’.
Kantar then revealed that you were more likely to be contributing to the empty shelves than you thought - purely by going to the shops a little more often than normal. And I don’t blame you, I did the same.
But in doing so we put more demand on the system than Christmas, and that takes months of planning - it’s no surprise there were empty shelves.
Sure, there were some categories and brands that felt this more - the ones you couldn’t see when out shopping - but the vast majority of food and drink saw increased sales. Because in that week, that pre-lockdown week, we all were worried about what was going to happen next.
Large, established categories, like baked beans and dry pasta, saw sales at double the usual levels. Liquid soap? Triple. The impact was huge.
Concern and preparation for what is going to happen next is a very human instinct, and now the industry is asking itself that very same question whilst faced with the challenge of managing supply with variable demand over the coming months.
We then went into lockdown; a new experience for all but the highest of at risk groups. At least the majority of us were doing it in our reasonably well stocked homes - stocked with a range of things we thought we would need now and in the future. This has never been better illustrated than by the extra week’s worth of grocery sales seen in March.
At this point some things were more clear to us than others. We knew we’d be at home a lot more, for example. Within the industry, amongst the chaos, predictions were made – some of them not so bad – but margins of course matter.
We’d normally be out, we’d normally have less time, we normally felt a little more stability with our incomes. These times are different and normal rules don’t apply - ‘lockdown norm’ isn’t just a case of scaling up more normal times. And it’s evolving week on week.
Never before had so much been consumed at home in seven days - a near doubling of in home lunch occasions in that week being an example of the challenge faced. This will be a bumper time for supermarkets, as long as they can suitably anticipate, respond to and facilitate demand.
The typical currency for attempting this task? Sales – recent and past. However, whilst it wasn’t a hard and fast rule, by and large we actually consumed less of the things we’d stocked up on – far less when you consider the increased amount of time spent in the home.
In simple terms – much of the extra week’s worth of product purchased in March, still exists deep into April. So purchasing isn’t in itself a good predictor of what we will then do (and need to replenish), making it a headache to manage supply during these few months. Particularly given stocks are high in the home of some items even now.
The biggest known unknown
The biggest unknown of course in early lockdown? We've no idea how long it will last for – all we know is that it will be “at least a further three weeks” - and given recent shopping experiences, many are worried about how to keep stocks high enough for the duration.
Further, philosophies are changing so rapidly – for example whereas pre-lockdown we made more effort than ever to go out for supplies, in the last few days we’ve made nearly as much effort to avoid doing so to maintain social distancing.
Most recently we’ve seen the largest baskets growing, footfall dropping, and demand for online shopping going through the roof. These are all symptoms of the jostling between our household’s requirements and the safety of its members.
What will I need, what do I want, what do I have, what can I house and how can I manage that equation with minimal contact with the outside world? That’s the fascinating interplay currently in the industry, and it will continue to be so throughout lockdown, into a transition period and beyond.
Understanding the balance of all these factors is the only way to ensuring the right things, in the right quantities, arrive in the right places.
That’s hard to do well. What makes it harder still is just how quickly things evolve – as more knowledge of COVID-19 is uncovered and digested, which guides the strategies of shoppers as much as it does the government. We’re currently absorbed by ‘lockdown norm’, whatever that is, and for however long it may be, but already minds are starting to move towards exit strategies and transition periods.
How to manage supply and demand through monitoring human behaviour
We have a challenge to humanity. COVID-19 attacks humans, we respond as humans.
Monitoring (and anticipating) human behaviour and sentiment, therefore, is how the industry can best manage and facilitate our demands and requirements.
That goes for pre and post lockdown period(s), as well as any transitions in and out thereof. There’s likely to be a few, if not proposed, then realised.
The challenge of anticipating and managing supply and demand in such ‘unprecedented times’ (I was really hoping to avoid that phrase) will run deep into next year."
Contact us to find out more about our COVID-19 Impact Forecasting service.