30 June 2020
In this fourth post in our series exploring COVID-19’s impact on global Grocery Retail, we look at four new trends shaping consumer behaviour and why value perception is set to become one of the industry’s most pressing priorities.
The latest lessons from the dunnhumby Customer Pulse
If you’ve been following this series of posts, you’ll already be aware of the dunnhumby Customer Pulse, a survey of shoppers from 19 markets around the world designed to shine a light on changing behaviours in the face of the pandemic. In our third wave of research, conducted recently, we learned that a new routine may slowly be emerging.
The worry index – a measure of how concerned consumes are about COVID-19 – is in decline. In the vast majority of countries, it is now at its lowest point since the crisis began, and attitudes are adjusting in tandem. Tolerance for preventative measures like social distancing is dwindling, and trust in the government and media response is falling too.
The early stages of the pandemic were defined by Customers making a rapid shift towards fewer, bigger shops. As worries ease, shopping trips are on the rise, baskets are getting smaller, and stockpiling behaviour is on the wane. At the same time, reliance on online remains constant. In the majority of markets surveyed, ecommerce usage remains the same as it was at the end of March.
Customer satisfaction with the in-store shopping experience is rising, and is now on a par with online delivery. This upward trend is likely to have been fuelled by real change in the in-store environment, fewer Customers now noticing quantity limits or out of stocks when compared with the results from our first Pulse study.
Almost half of shoppers say that they have seen prices increasing, with those who spend more on food particularly susceptible to that line of thinking. While higher spending shoppers may be more acutely aware of pricing, however, they are also more heavily reliant on the store – stocking up, eating at home, and visiting in person rather than ordering online.
Value perception: the pressing new priority for Retailers and Brands
As noted above, a heightened sense of awareness around price means that Retailers face a looming challenge around value perception. With economies beginning to contract, growing pressure on consumer finances will only accelerate the need for grocery stores to demonstrate a new level of value to Customers. With that in mind, we believe that there are seven key areas on which Retailers and Brands need to focus.
Meta-analysis of almost 300 research studies reveals that as GDP rises, consumer price knowledge increases – and vice versa. While pre-pandemic prosperity may have prompted shoppers to worry less about price, financial uncertainty will likely lead many to view base pricing with much greater scrutiny.
As a mechanic that can enable bulk buying behaviours, many Retailers chose to remove promotions from their stores at the beginning of the outbreak, rightly concerned that supply chain disruption would leave many shoppers without access to essential products. But if pricing drives trust, promotions drive excitement, and Customers will look to them in order to find continued value in their basket.
Relevant, timely offers and communications can be a powerful way to move the needle on value perception. From targeted coupons that offer discounts on frequently purchased items through to data-driven favourites, substitutes, and ‘forgotten’ items, personalisation can deliver strong return on advertising spend while also providing Customers with compelling evidence that you have their best interests in mind.
Some two in five Customers are planning to cut back on luxuries and switch to private label products in the wake of a recession, according to the dunnhumby Customer Pulse. Not only is this switch likely to happen quite quickly, many shoppers will remain loyal to private brands even when circumstances improve. A robust private brand selection that offers depth and variety is another way to demonstrate value to Customers during tougher times.
Just as with pricing and promotions, the depth and breadth of a Retailer’s range can play a role in value perception justifiably or not, shoppers tend to assume that a deeper assortment equates to lower prices, e.g. the assortment in a hypermarket versus a convenience store. Even spacing can be influential; a wide spread of value products prompting stronger perceptions of variety (and thus value).
Presentation, policies, and behaviours all influence perception. Larger stores, for instance, are often representative of lower prices as far as consumers are concerned. And even something as simple as a restrictive (or poorly executed) refund policy can undermine the feeling that a Retailer is committed to delivering value.
If the six levers above are the core drivers of value perception, marketing is the mechanism by which that value is communicated to Customers. Unless all of those levers are pulled at once, however, even the greatest communications campaigns will feel hollow and unfounded. To maximise the impact of their marketing, Retailers must ensure that they have a consistent and credible approach to value.
To learn more about retail strategies beyond the virus, and how retailers should manage assortments, register now for our live webinar series, Customer First Retail and COVID-19: Life After the Curve.
 Macro-economic determinants of consumer price knowledge. International Journal of Research in Marketing 18 (4): 341–355, 2001