COVID-19: IMPACT ON CPG AND RETAIL - IRI Thought Leadership March 12, 2020
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
IRI Thought Leadership COVID-19: IMPACT ON CPG AND RETAIL March 12, 2020
Degree of COVID-19 Incidence Drives Impact by Country / Market
Market Response to COVID-19: Expected Phases
Gov’t / Societal Current Market Consumer
Phase Characteristics Expected CPG Impact
Response Examples Response
Monitoring for
North Central U.S.,
potential incidence Passive Increased sales of virus prevention items,
I Monitoring Netherlands, South
but no formal Prevention e.g., hand sanitizer, HH cleaners, vitamins
Africa, Greece
restrictions
Self-quarantines, Washington State, Above +
social distancing, New York, California • Stock up on necessities and symptom relief,
Active
large group event e.g., frozen and shelf-stable foods, toilet
II Containment Preparation/
cancellations, New Zealand, paper, sports drinks, cold medicine, pain relief
Prevention
increased work from U.K., France, Spain, • Start of declines in away-from-home
home Australia, Germany consumption and small-format sales
Above +
Enforced
• Increased sales of products enhancing at-
quarantines and
New Rochelle, NY home experience, e.g., DVDs, streaming
travel restrictions;
III Lockdown Cocooning services, salty snacks, ice cream, chocolate
significantly limited
Italy, China • Rapid increase in online purchases and
personal interaction
frictionless food delivery; massive declines
outside the home
in away-from-home consumption
Some Consumer Segments, Including 65+, are Likely to Exhibit Behaviors Within the Next Phase Before Their Market Moves into it
Note: Data reflected in report does not include Costco or Total e-Commerce.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2
Implications for CPG Manufacturers
Demand Planning / Supply Chain
• Adjust production to consumer demand shocks and potential short term and long-term scenarios. Consumers
may demand more for health prevention and cleaning in the short term, and may reduce demand for some
categories like cosmetics and haircare as consumers work from home and restrict socializing.
• Account for potential of weak Easter season, as social distancing takes hold. Seasonal meals might be off the
table, sales of seasonal confectionery treats may suffer.
• Consider role in and demand for “fun” products and engagement strategies as consumers spend more time
at home and stress levels increase.
• For impulse categories, determine ways to trigger demand online, as shoppers reduce in-store visits.
• Review and plan for likely supply-chain impacts, especially for raw materials that originate in China and other highly
impacted countries. As the impact of shuttered facilities takes hold, shortages and logistical bottlenecks will become an issue.
Marketing
• Consider shifting advertising to social and digital channels (vs. out of home) as consumers shift their
entertainment hours to sources they can access from home.
• Keep a close pulse on consumer sentiment and adjust communications accordingly.
• Assess long-term impact to consumer behavior and brand perceptions after crisis, e.g., potential negative
perceptions of brands brought during the pandemic, etc.
Channel / Distribution
• Prepare for a dramatic increase in online demand, particularly within pure-play and home delivery,
but click & collect will also jump substantially; may have a lasting effect post-crisis.
• Closely monitor impact to the Convenience channel, which will likely be negatively impacted by more
consumers working from home and less travel, as well as Foodservice, which will be challenged by
“cocooning” but can partially combat with frictionless delivery.
Merchandising
• Determine appropriate promotion and pricing strategy to balance consumer demand changes, perception
of brand during the crisis, and impact of increased supply costs.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 3
Implications for CPG Retailers
Inventory Planning
• Closely plan inventory and monitor out-of-stocks in high-demand categories (e.g., cleaning, preventive
health, sports drinks) by geography by phase of COVID-19 impact.
• Anticipate drop in sales of stock-up items as replenishment will take time.
• Plan for potential weakness across Easter holiday categories, particularly holiday meal items as shoppers
may forgo large family celebrations.
Merchandising
• Assure shoppers that the items they need are available, including placement of high-demand items in
front lobby displays and circulars.
• Explore co-promotion and co-display opportunities across high-demand categories.
• Plan for a potential economic downturn by altering promotions (e.g., more at the beginning of the month),
stocking more opening price point items, etc.
• Consider value and pricing proposition vs. competition as some retailers may invest more in lower prices
to attract customers.
Shopping Experience
• Communicate plans in place to ensure cleanliness of store (e.g., paid leave for sick workers, availability
of free hand sanitizer for shoppers etc.) and alleviate customer worries about visiting the store.
• Ensure seamless online experience and ramped-up fulfillment capabilities as home delivery and click &
collect rapidly accelerate.
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 4
IRI Coverage, by Date of Reported COVID-19 Updates
IRI Coverage, by Date of Reported COVID-19 CONTAINMENT
LOCKDOWN
Netherlands
UK 2.27.2020
1.31.2020
Germany
1.28.2020
France
1.24.2020
Spain
U.S. 1.31.2020
Italy
1.21.2020 1.30.2020
Greece China
2.26.2020
Hong Kong
New Zealand
2.28.2020
Australia
1.25.2020
South Africa
3.1.2020
Source: Centers for Disease Control and Prevention, 10 March, 2020
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 5
Consumer Response to Containment: Stock-Ups
From “Hamsterkäufe” (“Hamster Buying”) to Pantry Stocking, Consumers CONTAINMENT
LOCKDOWN
Reacted to Increased Threat of COVID-19 by Purchasing Essential Products
United States France U.K. New Zealand Italy
.
Household Canned
Hand Sanitizers 124.5% Hand Sanitizers 123.6% 101.3% Disinfectants 154.5% 73.7%
Cleaning Vegetables
Spray
44.9% Cheese 83.8% Personal Wash 100.8% Canned Meals 132.6% Canned Meat 51.4%
Disinfectant
Personal
42.6% Flour 58.5% Facial Tissues 96.6% Rubber Gloves 69.4% Flour 40.6%
Thermometers
Sanitizing Wipes 27.6% Rice 47.8% Toilet Tissue 87.5% Rice 63.1% Rice 34.0%
Dried Beans /
Powdered Milk 22.3% 48.2% Canned Meat 72.5% Canned Soup 59.8% Canned Fish 26.4%
Pulses
Source: IRI data; % change vs. year-ago based on local currency
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 6Total Store, F&B Growth Accelerated in Large-Format Containment
Channels Since the First Reported Case of COVID-19
Deep Dive: U.S. Migration from Monitoring to Containment
Dollar % Change vs. YA // Total U.S. Multi Outlet // Total Store View Model
Total F&B Non-Food
Store
6
5
4
3 6-month F&B growth benchmark (+2.2%)
2 6-month Non-Food growth benchmark (+0.9%)
1
0
-1
-2
-3
-4
-5
01-05-20 01-12-20 01-19-20 01-26-20 02-02-20 02-09-20 02-16-20 02-23-20 03-01-20
January 30
January 21 February 29
First confirmed case
Washington State confirms the U.S. reports first death
of person-to-person
first case on U.S. soil in Washington State
transmission of virus
Note: Data reflected in report does not include Costco or Total e-Commerce.
Source: IRI TSV Model
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 7U.S. Convenience and Gas Channel Sales Decelerating Containment
as Consumers Start Curtailing Their Out-of-Home Activities
Deep Dive: U.S. Migration from Monitoring to Containment
F&B Dollar % Change vs. YA // Total U.S. Multi Outlet vs. C&G // Total Store View Model
C&G MULO
6 6-month C&G growth benchmark (+4.3%)
5
4
3 6-month F&B growth benchmark (+2.2%)
2
1
0
-1
-2
-3
-4
-5
01-05-20 01-12-20 01-19-20 01-26-20 02-02-20 02-09-20 02-16-20 02-23-20 03-01-20
January 30
January 21 February 29
First confirmed case
Washington State confirms the U.S. reports first death
of person-to-person
first case on U.S. soil in Washington State
transmission of virus
Note: Data reflected in report does not include Costco or Total e-Commerce.
Source: IRI TSV Model
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 8Social Chatter is Increasingly Focused on Self-Care with a 438% Containment
Surge (vs. Avg.) in Mentions as U.S. Confirmed Cases Increase
Deep Dive: U.S. Migration from Monitoring to Containment
Source: IRI Social Pulse, powered by Infegy
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 9Buyer Growth and Trips Accelerated Across Containment
Many Health-Related and Shelf-Stable Products
Deep Dive: U.S. Migration from Monitoring to Containment
Product Trip and Buyer Growth past 4 weeks vs. YAG through 23 February 2020
Categories % Change in Product Trips % Change in Buyers
TOTAL STORE 4.1% 1.0%
1 Hand Sanitizers 64.1% 41.7%
2 Spray Disinfectant 29.1% 21.6%
3 Refrigerated Milk Substitutes - All Other 91.6% 102.7%
4 Ear Care Products 40.8% 43.4%
5 Canned Fruit Juice 27.8% 21.2%
6 Frozen Other Breakfast Food 46.0% 53.1%
7 Ready To Serve Rice 16.7% 13.5%
8 Liquid Fruit Drink Mixes 31.0% 32.9%
9 Cloth All Purpose Cleaner 19.9% 17.0%
10 Personal Thermometers 26.8% 33.3%
11 SS Energy Drinks Non-aseptic 33.3% 33.2%
12 Convenience / Pet Still Water 13.2% 12.6%
13 Internal Analgesic Liquids 14.6% 11.7%
14 Cornmeal / Baking Oat Bran 13.0% 17.0%
15 SS Bottled Tomato / Veg Juice / Cocktail 15.2% 12.7%
Source: IRI National Consumer Network
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 10Lockdown
Italy: A View of Containment to Lockdown
Before all of Italy was placed into lockdown, most attention was on the Lombardy region, Italy’s
epicenter for COVID-19. A snapshot of FMCG sales in Lombardy and the rest of the country for
one weekend provides an example of what it looks like to go from Containment to Lockdown.
% Sales Increase Across Categories for February 23-24, 2020, Compared Previous Four Weekends
Canned Meat Canned Tuna Mozzarella Pasta Flours / Mixture
+406% +217% +188% +174% +163%
+196% +111% +60% +107% +85%
Toilet Paper Tomato Sauce Bottled Still Water White Bread
+146% +129% +107% +89%
Lombardy
+129% +103% +74% +52% Rest of Italy
Source: IRI processing of daily sales data. Base top 200 products for value sales. LCC categories Yellow Zone: Lombardy, Veneto and Emilia-Romagna and the provinces of Pesaro, Urbino and Savona
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 11Italy: Consumers in Containment Phase Lockdown
Already Seeking Longer-Term Solutions
CPG Sales % Change vs. Year Ago
Online Channel Sales in Italy Doubled in the First Days of COVID-19 Exposure in Italy
Online
101.5%
81.2% 89.6% 87.1% 87.5% 87.4% 88.0%
61.2% 67.1%
48.5% 45.3% 47.4% 42.2% 51.5%
Lu_17 Ma_18 Me_19 Gi_20 Ve_21 Sa_22 Do_23 Lu_24 Ma_25 Me_26 Gi_27 Ve_28 Sa_29 Do_01
Where Delivery is Not Available, Consumers are Adopting Click & Collect;
Incidence of Using Click & Collect is Up Threefold from the Same Period in 2019
356.7%
326.8%
Click & Collect 281.8%
Home Delivery 230.5%
205.4%
144.0%
86.3% 97.7% 102.8%
72.1% 68.1% 74.2% 56.8% 66.4%
102.3% 82.8% 91.8%
60.1% 47.7% 44.4% 46.2% 41.0% 73.1% 76.8% 77.7% 79.0% 47.7% 62.8%
Lu_17 Ma_18 Me_19 Gi_20 Ve_21 Sa_22 Do_23 Lu_24 Ma_25 Me_26 Gi_27 Ve_28 Sa_29 Do_01
Source: IRI Panel online, Dates reflect Monday, 17 February through Sunday, 1 March, 2020
© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 12IRI Global Headquarters
CONTACT US 150 North Clinton Street
Chicago, IL 60661-1416
FOR MORE IRI@IRIworldwide.com
+1 312.726.1221
INFORMATION Follow IRI on Twitter: @IRIworldwide
© 2020 Information Resources Inc. (IRI).
© 2020 Information Resources Inc. (IRI). Confidential
Confidential and
and Proprietary.
Proprietary. 13 13You can also read
