Five Truths, No Lies SHOPPER PERCEPTIONS AND BEHAVIOR IN A POST-PANDEMIC WORLD: SPONSORED BY - RIS News
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SHOPPER PERCEPTIONS AND BEHAVIOR
IN A POST-PANDEMIC WORLD:
Five Truths, No Lies
SPONSORED BY
H ow has COVID-19 really affected
consumers’ perceptions and
shopping behavior? How should
retailers grapple with such
changes? More than a year after the
pandemic began, results of a survey commissioned by
DemandTec by Acoustic and conducted by Progressive
Grocer parent company EnsembleIQ bring to light five
key truths about the impact of COVID on consumer
perceptions and behaviors and yield insight into how
from 752 consumers in five countries—Brazil, France,
Germany, the United Kingdom, and the United
States—and from five generations of consumers as
defined by the Pew Research Center: Generation Z (18
to 22 years), Millennials (23 to 39 years), GenerationX
(40 to 55 years), Baby Boomers (56 to 74 years), and
Mature/Silent (75+ years).
The pool of respondents comprised an equal
number of male and female consumers, all of whom
retailers might address them. hold primary or shared decision-making for grocery
shopping in their household. Survey participants
The survey is a follow-up to a research study undertaken were asked about their shopping experiences in
by DemandTec and EnsembleIQ in the summer of 2020 and perceptions of the grocery segment, as well as
to identify shopper perceptions and behaviors just a in the apparel/accessories, electronics, health and
few months into the COVID-19 pandemic. Findings from beauty, home improvement, home furnishings, and
the new study, conducted spring 2021, reflect feedback drugstore sectors.
2
34%
1 Consumers are more “on
board” with online shopping
than ever—and many won’t go back to
in-store grocery shopping even when
COVID-19 is in the rearview mirror.
not return to physical stores: Despite some
frustration with the online shopping process,
consumers generally find it to be as satisfactory
as its physical (brick-and-mortar) counterpart.
A marked 73% of survey participants described
of consumers themselves as “very satisfied” or “extremely
While retailers may have initially assumed that satisfied” with the online shopping experience,
“always” or
many shoppers who were driven to online and 65% said the same about the in-store
“almost always” grocery shopping at the outset of COVID would shopping experience.
shop online return to in-store once the pandemic has ended,
this is not the case. The pandemic sparked a With more than one in three shoppers shopping
versus in-store,
dramatic shift to online shopping, and much of primarily or exclusively online and no change
a sharp increase that shift will be permanent. in sight, all aspects of pricing, from everyday
in the ranks price to promotions and markdowns, must be
Specifically, the research reveals that prior to relevant to consumers in the channel where
of those who
COVID, a mere 8% of consumers “always” or they shop. Achieving success on this front
handle their “almost always” shopped online as opposed to necessitates leveraging modern, channel-aware,
needs primarily in-store. One year into the pandemic, however, channel-centric price, promotion, and markdown
34% of consumers fall into this category—a science—delivered via an artificial intelligence
online.
four-fold increase in the ranks of those who (AI) oriented science platform—to set the right
handle their shopping needs primarily online. prices at the right times, in turn maintaining
Additionally, 22% of consumers plan to “always” shopper engagement as well as a sharp
shop online in the future—or at least, to shop competitive edge.
online most of the time going forward.
In a recent webinar hosted by Progressive
Moreover, before COVID reared its head, 58% Grocer, “Shopper Perceptions and Behaviors in
of consumers “always” or frequently shopped 2021,” DemandTec executives, including Head
in-store rather than online. But the ranks of these of Science Geoff Pofahl, advised retailers to
shoppers have greatly diminished, with far fewer ensure that the pricing tools they implement
consumers (28%) planning to “always” or “almost for such a purpose accommodate variances
always” do their shopping in brick-and-mortar in prices, promotions, and markdowns across
stores in the future. different channels. Technology must be aligned
with today’s problems and patterns—and the
Other statistics further support the assertion permanent move to online shopping is one of
that many consumers who started shopping them. It must be built for omnichannel retailing.
mostly or entirely online during the pandemic, What works online doesn’t necessarily work in-
or those who were doing so before, will likely store, and vice versa.
3
The push to online also creates an imperative for Perhaps not surprisingly, the belief that prices
retailers to keep their multi-modal fulfillment are changing in the essential categories is more
options open indefinitely. Prior to the pandemic, prevalent among shoppers who have lost income
7% of consumers shopped online for delivery during the pandemic than among those whose
by a local store, but that figure has more than income has remained consistent or increased.
doubled and now stands at 18%. Similarly, the More than half (56%) of consumers in the former
number of shoppers who purchase goods online category perceive grocery price changes as
for curbside pickup has increased from 5% occurring more frequently now, compared to
to 10%, while the number of consumers who 49% of shoppers in the latter category. Fewer
make online purchases from distant stores for shoppers think along such lines when it comes to
shipment to their homes has increased from 7% drug and health and beauty prices: Of consumers
to 14%. “Buy online, pick up in store” (BOPIS) is
56%
whose income has decreased over the course
now an option for 12% of customers, up from 11%. of COVID, 38% feel drug prices are currently
2
changing with greater frequency, and 37% feel
the same is true of health and beauty prices.
of consumers
But the profound impact of prices on shoppers
who have lost Consumers are shopping doesn’t stop with perceptions around changing
income during with a sharper eye on prices, prices—because just when retailers thought
taking the importance of price
the pandemic perception, image, and transparency
price transparency could not get any more
dramatic, it did. Consumers’ COVID-induced
perceive grocery to new heights. flight to online channels led them to become
price changes fast acquainted with and accustomed to a higher
Economic hardship and/or uncertainty have
as occurring made shoppers acutely aware of prices, far
degree of transparency on the pricing front. This,
in turn, sparked a strong inclination to compare
more frequently, more so than at any other time in the past. prices—a pattern that will persist post-pandemic.
compared They perceive price changes as occurring more The grocery channel sees the greatest share
frequently compared to pre-pandemic days
to 49% of across all store types, most markedly in grocery
of shoppers who are more likely to compare
prices today (37%)—and down the road (38%).
consumers (52%). One-third (33%) of shoppers believe prices Conversely, just 15% of consumers will be less
whose income are changing more often in the electronics likely to compare grocery prices in the future,
segment now versus pre-COVID; 32%, in the drug
has remained and health and beauty segments; 27%, in the
while 46% will be as likely to compare grocery
prices going forward as they are to do so now.
consistent or home improvement segment; and 27%, in the
increased. home furnishings segment. Moreover, the availability of such “perks” as free
fulfillment of online orders significantly reduces
price sensitivity and has the potential to drive
demand. Shoppers are “very or somewhat
willing” to pay higher prices for their purchases in
return for the convenience of free home delivery
(58%), express shipping (54%) and even standard
shipping (50%) versus pickup. Conversely, the
opportunity for curbside pickup resonates far
less with consumers: Nearly two-thirds (63%) are
“not at all willing” or “not very willing” to accept
higher prices to avail themselves of this service—
most likely because they must still invest the
time and effort to travel to the store to get their
items.
Given these dramatic developments and
changes, it behooves retailers to rely on
dynamic pricing technology that harnesses data
science to pick up on demand signals and price
sensitivities—and sparks adjustments to ensure
optimal pricing and promotion across every
4
shopper touchpoint and product assortment. Restaurant closures, fear of contracting
Technology that supports systematic, dynamic COVID, economic concerns, and other factors
KPI optimization also allows retailers to identify are inducing consumers to increase their
35%
of shoppers
their true KPIs and to determine which products
are the most price-relevant to shoppers at a
specific moment. Aggressive prices on KPIs can
also be balanced with margin recovery elsewhere
grocery expenditures while giving other retail
segments shorter shrift. Nearly half (48%) of
respondents to the survey currently spend
“substantially more” (15%) or “more” (33%)
in the merchandise mix. on groceries than in the pre-pandemic days,
are visiting the while 29% spend more on health and beauty
grocery store DemandTec noted that all of this needs to be aids. Conversely, 53% of consumers have
done seamlessly, in an automation flow as part decreased their clothing and accessories
less frequently of daily business rather than every six months, expenditures since the pandemic began,
than before because KPIs now can change on a dime. Modern and 46% have cut their spending on home
the pandemic technology pays a pivotal role—it is a ”must furnishings.
have,” not a “nice to have.”
began. However, some shoppers have become
The use of dynamic pricing technology that highly adept at consolidating shopping trips.
works across the full assortment at store level Even stores that offer essentials—such as
is of particular importance in light of shoppers’ groceries—see a significant share of shoppers
dissatisfaction with pricing in physical stores— making fewer trips to the store to minimize
and because retailers are seemingly providing their exposure. More than one-third (35%) of
more dynamic, engaging prices online than shoppers are visiting the grocery store less
in these stores. A mere 35% of consumers are frequently than before the pandemic began.
“extremely satisfied” or “very satisfied” with in- Of these consumers, 23% are making “slightly
store prices, and 24% are “not at all satisfied” or fewer” and 12% are making “substantially
“not very satisfied.” Far more consumers (56%) fewer” grocery store trips.
are “extremely satisfied” or “very satisfied” with
prices paid for goods ordered online from and Consumers’ tendency to spend more
delivered by local stores. money—and less time—in the grocery store
3
makes it imperative for retailers to focus
on maximizing shoppers’ market basket.
Retailers’ greatest return on their technology
investment will come from solutions that
Grocery is eating up a larger utilize both cross-item affinity analysis
share of consumer spending— and shopper price sensitivities as variables
but consumers are making fewer in recommending optimal prices and
trips to the store. promotional offers as well as markdowns.
5
59%
4 Consumers are revved up
to respond to promotional
offers—with digital delivery vehicles
leading the way.
respond to different types of promotional
vehicles. Statistics from the survey underscore
a heightened preference among consumers for
receiving offers in digital fashion, with 55% of
shoppers noting that they are “extremely likely
of consumers Promotional offers have always had their appeal, or very likely” to respond to offers delivered via
but COVID has increased the likelihood that smartphone/mobile app compared to 21% pre-
are “extremely consumers will opt into them. Today, 59% of COVID; 49%, to offers delivered via store website
likely” or consumers are “extremely likely” or “very likely” compared to 22% pre-COVID; and 45%, to online
“very likely” to respond to “dollars-off” discount offers, versus ads compared to 23% pre-COVID.
55% in pre-COVID days. A higher percentage of
to respond consumers are also “extremely likely” or “very Conversely, home mailers and in-store flyers
to “dollars- likely” to opt into “buy one, get one free” deals generate lower levels of responsiveness, at
off” discount now than they were before the pandemic (59% 42% and 41%. During the pandemic, such
versus 55%). responsiveness has increased much less than
offers, versus for digital delivery vehicles, trending upward by
55% in pre- Percentage-off discounts currently resonate with just 15%, to 42%, in the case of mailers delivered
COVID days. 56% of consumers, compared to 53% pre-COVID. to consumers’ homes and by 10%, to 41%, in the
“Buy several, get several free” and “buy several, case of in-store flyers.
get a percentage off” deals resonate slightly less
well with consumers, but their appeal is also Clearly, as increasing numbers of consumers
greater in the wake of the pandemic. More than migrate to online shopping, home mailers and
half (52%) of consumers are “extremely likely” or in-store flyers are being eclipsed by mobile apps
“very likely” to respond to the former, up from and websites. This renders it more important
48% before COVID. than ever to communicate relevant pricing
information—be it everyday prices, promotions,
Meanwhile, just as shoppers’ channel preferences markdowns, or other data—to consumers in
have changed over the course of the pandemic, accordance with their preferred shopping
so, too, have consumers’ inclinations to channel.
6
Changing
perceptions of
5 Shoppers are passionate
about private label.
Once largely considered inferior alternatives
to name brand options, private label products
and harnessing other ways to capitalize on the
potential of private label products to present
shoppers with appealing prices on these items
while continuing to yield high margins is equally
critical.
were slowly gaining ground before the pandemic
private label began. However, the pace of consumer These tasks are not best accomplished manually.
products make acceptance has quickened over the past year One reason this is so: Optimal price differentials
as out-of-stocks on name brands and budget between private label and brand name products
it imperative vary across individual product categories and
considerations bolstered reliance on store
for retailers to brands and turned some shoppers into private brands. As noted on the webinar, no single
strategically label loyalists. Consumer interest and trust approach—for example, to finding the right gaps
in private label brands continue to increase between the price of a private label product and
position and the name brand version of that product—will
at a rapid pace, with an astounding 80% of
price their respondents to the survey considering them to work. It is a job for pricing science and tools.
private label be of similar quality to or higher caliber than
offerings against national brands and 17% of participants deeming Conclusion:
them to be of much higher quality than their The lasting effects of the pandemic on shopper
national brand national counterparts. By contrast, only 4% of perceptions and behaviors are and will continue
options. consumers believe the quality of national brands to be significant, necessitating that retailers
to be superior to that of private label brands. focus differently on their business than in the
past. Automation and modernization of business
Changing perceptions of private label products processes—with upgraded technology that
make it imperative for retailers to strategically leverages modern data science-based models
position and price their private label offerings and techniques as the linchpin—will be the key
against national brand options. Identifying to their success in the short and long terms alike.
SPONSORED BY
7
DemandTec, a strategic business unit of Acoustic, is
committed to taking AI automated lifecycle pricing to
new heights. With deep and commanding worldwide retail
pricing domain knowledge and experience, DemandTec
enables retailers and CPG partners to deliver optimal pricing,
promotions, and markdowns across all retail channels to
thrive in today’s hyper-competitive retail landscape. Ranked
among the top 10 providers in 21 categories in the 2021 RIS
Software LeaderBoard, DemandTec addresses retail pricing
challenges today and into the future with relentless focus,
commitment and ongoing investment.
For more information, visit www.demandtec.com.
or email: demandtecinfo@acoustic.com
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