COVID-19: Impact on CPG and Retail

In the weeks since COVID-19 was declared a pandemic, shopping habits in the U.S. have rapidly and fundamentally changed, leaving the consumer packaged goods (CPG) and retail industries to adapt and rise to an unprecedented occasion. Consumers are not only altering what they’re buying, but also how they’re buying, with quarantine and social distancing guidelines becoming increasingly stringent in all states.

In our ongoing research on the impact of COVID-19 on grocery shopping habits, we found that by the end of March, many shoppers were making fewer store trips than they did in the weeks prior. Among those who shopped at a mass merchandiser in March, 47 percent reported making fewer trips. With many people now looking to forego stepping foot in stores entirely, grocery e-commerce is surging, with 28 percent of online grocery shoppers making their first ever online grocery order in March due to COVID-19.

After an initial shopper focus on buying cleaning and paper products, we’re now seeing pantry food purchases on the rise. Stocking up is becoming more commonplace, with about half of U.S. shoppers making an additional stock-up grocery trip in the week ending March 29, compared to 34 percent of shoppers in the week ending March 15.

These new shopping behaviors have led to consumers experiencing frequent out-of-stocks and thus looking for substitutions. To meet the new demand, brands have adopted new modes of operation focusing on the production of the most in-need and desirable items. As brands continue to implement new supply chain strategies, they should collaborate with retail partners and be flexible to meet their evolving needs.

Beyond working to stock the essentials, other opportunities exist for retailers to better serve their customers. Comfort foods can offer consumers some much-needed solace during this difficult time, so retailers should provide an assortment of indulgent snack and dessert options. With parents now making all three meals a day at home, retailers should offer creative, budget-friendly meal solutions both in-store and online to help parents figure out what to put on plates next.

Securing a coveted grocery delivery or pickup time slot is becoming more and more difficult these days. Shoppers are refreshing web pages every 15 minutes or staying up until midnight hoping new slots will open up. To meet the needs of shoppers who prefer e-commerce, retailers should expand online ordering fulfillment and pickup/delivery time slots, and manufacturers should ensure online item images and descriptions are shopper friendly and searchable. For consumers shopping in physical stores, retailers should continue to implement new measures to reduce the risk of shopper and employee transmission of the virus, such as aisle flow solutions and expanded cashier-less checkout options.

Speaking of shopper friendly, manufacturers should also take time to re-evaluate their brand marketing messaging to ensure it’s appropriate for today’s climate. If it’s not, manufacturers should consider temporarily discontinuing or adjusting the messaging.

For more than a month now, retailers and manufacturers have been going above and beyond to meet shoppers’ evolving needs, and that consumer-focused approach will remain crucial as this crisis continues. In the coming days and weeks, consumer behavior will undoubtedly continue to change, as we all simultaneously acclimate more to our current reality and prepare for our post-COVID future.

Colin Stewart is the executive vice president, business intelligence at Acosta, a sales and marketing agency in the consumer packaged goods (CPG) industry.