Podcast | Insights from the Consumer Pulse Survey, February 2022

Dave Clements (00:00): Hello everyone, and welcome to our next episode of the dunnhumby Customer First Podcast. Today’s episode, we’re going to be talking about some of the new insights we are seeing on global shopping behaviours from our latest Consumer Pulses around the world. And some of the changes we’re seeing in the light of rising inflation, but also continued response to COVID with some of the rise of the Omicron variants. My name’s Dave Clements, I’m the retail director at dunnhumby. And I’ll be talking with David Ciancio, our VP of Grocery at dunnhumby. Welcome David.

David Ciancio (00:49): Hello Dave.

Dave Clements (00:51): So David, why don’t we start off and talk a little bit about the Consumer Pulses that dunnhumby runs. Where do we run them? Why do we run them?

David Ciancio (01:00): Sure. Yeah, we’ll be talking today about the eighth time that we’ve run these Consumer Pulse Surveys since March, 2020. And this is how we talk to customers about how the pandemic has impacted them and about their attitudes about retail responses in these very hard times. So the methodology is we survey almost 10,000 shoppers in 23 countries. Through that process, we’ve seen worries, wax and wane. We’ve seen new behaviours emerge, and we’ve heard new attitudes about COVID 19 and about retail shift. This time though, in addition to the coronavirus conversation, we are also studying the impact of rising food prices, of ecommerce, of health and healthy eating, and of the environment and sustainability. So, that’s how we approach this.

Dave Clements (02:01): Yeah, so it really is a regular pulse now that we can keep seeing how things are changing, how attitudes, perceptions, behaviours are changing month to month.

David Ciancio (02:15): Right. And a good way to continue to listen to customers.

Dave Clements (02:19): So starting out, what are some of the latest concerns around the virus? Are customers worried?

The perception of food price increases is far worse than the reality

David Ciancio (02:29): Well, I think there’s three big headlines in this latest survey, right? The first is that the surge in cases from Omicron has had an impact on people. Again, they are reducing the number of trips they’re making and just about when we thought things were returning to normal, they’re not yet. In fact, some of the indicators that things were returning to normal have reversed, that’s the first headline. The second is that we track a worry index, we call it. That index has continued to decline, even though half of the respondents to this time have had personal contact with the virus. People are becoming accustomed to the presence of the virus and how to deal with it. And so we think this means that if caseloads from the omicron decline, there’ll be a continued return to what’s a more normal world, however that’s defined. And I think the third headline is even though things are returning to normal, shoppers have a big new worry and that worry is rising food prices.

Dave Clements (03:42): Yes. So people are getting used to living with COVID. I know some markets are in probably different circumstances. It can pop up in places with surges in places like New Zealand, whereas in the UK and things maybe people are getting back to normal quicker. So I’m sure it varies around the world. And as you said, this new concern that’s really rising and that’s this… the worry about inflation, the worry about some of the economic pressures, some of the stats I saw from the survey that said around 67% of people are worried about their country’s economy. And 50% are worried about their own personal finances, it’s a real concern there.

David Ciancio (04:32): Yeah. The one that jumped out to me Dave, was that 85% of people think that food prices have gone up and half 50% said they had gone up quite a lot. So economic pressures are really building. And then I thought it was fun, we asked them how much a lot meant. And so people were asked how much they felt prices had increased during the past year. And they overestimated that inflation rate, if you will, by an average of 14 points. So, that really landed with me, the perception of price increases is far worse than the reality.

Dave Clements (05:16): That’s really interesting. So I was saying if we think… let’s say I hear a lot that food inflation and prices that are around 5%, customers perceive them to have gone up 20% roughly, and actually that’s really considerable and it’s really interesting because ultimately perception is reality, whether we like it or not. Perception matters. It doesn’t matter what the facts might be, if customers feel that way. Presumably for a number of factors they feel like their shopping bill is just… more of their household income’s going on food. They’re probably seeing some prices of individual products going out. They’re probably seeing all the headlines in the media or social media that’s driving some of that perception as well.

David Ciancio (06:01): Yeah. And I think that’s a really important point for retailers to keep in mind. So we do have numbers in our heads. We know that it’s gone up 5%, in the US it’s 7%, and this varies by country. But the fact that customers think it’s so much worse means that there’s pressure on retailers and on brands to continue to deliver more value. And oh, by the way, I’ve talked with some other countries around the world who’ve got… like in Chile where the actual inflation’s at 7%, but the perception is that it’s about 37%. So, those are big concerns if you are selling goods to customers

Dave Clements (06:44): And what’s your view on how ready and how active the industry is, the retail industry in addressing inflation? What are we seeing? What are we advising? Who’s doing it best?

The retail response to inflation

David Ciancio (06:57): Yeah. I think there needs to be a mindset to really accommodate inflation. Remember this has been a really tough time for retailers and they’re still recovering from a supply shock and about to be another supply shock, I think with all the news now coming out of Europe, right? So their mindsets are very much, “Well, let’s just get products and let’s make sure we get those onto the shelf.” Now really quickly, they’ve had to adapt to these inflation numbers and the real cost increases.

So I think to your question, who’s doing it well? I’ll say Tesco, I think they got ahead of it a bit on the front foot with some of the pricing and promotion programs, with member pricing on Clubcard. And they’re setting the best example in the world right now. And while I’m talking about those examples, it’s really clear in this piece of research that customers are actively looking around, they’re searching online for sales and they are using coupons on… and that’s remained consistent. So there’s no spike in that, but it’s pretty amazing to me, especially thinking about value seeking customers that 60% of the shoppers say they are value seeking and all of them are changing behaviour, looking to find value and save money.

Dave Clements (08:26): Yeah. And I think we’ve seen that those retailers, but also those consumer goods brands that are really trying hard to help consumers to shield them from some of the full impact inflation are performing best, performing better because they’re really leaning into it. And whether that’s thinking about the ranges, what’s the right range? How can I get across better value perception in the range I’m carrying? Which categories I focus on? Which… How do I improve promotions? As you were saying. How do we get more efficient and effective in promotions? But also just getting tighter on the key value items, the price sensitive items in the store as well. I think those are the things that the best retailers, the best consumer goods companies seem to be trying to address.

David Ciancio (09:16): Yeah. I completely agree with that. We’ve looked around at some best practices. And so I know we have a separate blog or a separate publication around the 20 actions that retailers and brands should be taking right now during inflationary times. And I’m so glad you mentioned the key value items, that you mentioned around looking at the range itself to see if the right value items are available in the range. And it’s indeed we need as many varieties considering all these moving dynamics of the supply shock at the same time, right? So, we do have a list of suggestions of best practices that anyone listening can refer to. I just see those just now starting to be activated in many retailers. I think this is a long haul. I see inflationary pressures over the next couple of years anyway, so here’s part of the message, oh, and by the way you said, yes, those retailers who are delivering value are being rewarded, we see that in this survey and in those retail preference indexes that we’ve also conducted. So value matters and customers are shopping around to find that.

Dave Clements (10:33): So what else are we seeing beyond the inflation strategies, the impact of inflation on consumer behaviour? What else are we seeing in the consumer pulses? What else is that showing in terms of brand?

Online is here to stay

David Ciancio (10:45): Well, we’re watching online, right? And I’m interested to see in this last pulse that online shopping levels have remained very stable. So we saw a really big spike through online early in the pandemic, so in that March 2020 and April 2020 timeframe. But even now about half of global shoppers continue to use the online channel. And the fact that these results have been so stable over the last couple years, leads us to conclude that online is here to stay, that it’s reached the tipping point and that these levels of shopping online will be sustained into the future. Moreover, because we ask about how customers are feeling about that experience. Shoppers say that they’re satisfied with the online shopping experience in a way that’s comparable to the instore shopping experience. Now this latest pulse satisfaction both in store and online went down just a little bit, but they’re aligned now and I’m fascinated by that.

Dave Clements (11:54): That’s great, David. And actually you’re saying that over half of shoppers are doing a shopping trip online for their food and grocery. I also noticed that in Asia, that’s probably more like 70% of customers doing a weekly online shopping and in China, I think it’s even up to 95%. So nearly every week in some of these markets, we’re really seeing that grow. And under those numbers as well, one of the things I’ve seen is that whilst it’s stable overall, the online growth, there’s some quite interesting dynamics. So there’s not as many brand customers coming in. But we are seeing some of the new customers that joined it through COVID have now established regular use and regular shopping habits on online. So their frequency and spend on online is growing, but maybe not seeing growth in brand new customers quite as we saw in the early stages of the pandemic. So it’s still in growth, but it’s a different type of growth that’s happening at the moment.

David Ciancio (13:06): Yes. So, I thought listening to some retailers and reading the trade publications over the last year, I think there was almost a kind of expectation that online would drop off somehow and people would return to the stores. But the evidence, the data, the attitudinal pieces like this one suggest that that’s not true. Online is here to stay, click and collect is here to stay.

Dave Clements (13:31): But also I think part of that is now driven by much better supply in the market, by the retailers around the world. I saw some stats that 60% of retailers now, have now got a service for food delivery under two hours. And actually 25% of retailers have got a… the ability to deliver within 30 minutes. So that speed and convenience, that availability now of more supply I think is showing up that demand, if that makes sense.

David Ciancio (14:07): Yeah, absolutely. So, we’ve reached the future’s tipping points here. I agree.

Dave Clements (14:15): I think the really interesting thing as well for us being a passionate about understanding customers is also seeing that omnichannel behaviour is starting to emerge. So how consumers are actually moving from shopping in store this week to online next week for different missions and different customers starting to show very different types of omnichannel behaviour, and that’s fascinating seeing how that’s driving overall share of wallet for customers, how that’s driving different dynamics, different types of shopping missions that are actually now evolving that weren’t there before.

David Ciancio (14:55): Yes. And we… I think we’ve talked before about the value of shoppers who are using all channels. So store plus online, to your point, how their share of wallet is shifted more of it it’s now earned by the groceries who are omnichannel, truly omnichannel. So as I said, it’s here to stay and thinking about that customer profitability to the point you just raised is really important.

Dave Clements (15:24): So with all the focus on inflation and the impact on customers and online still important, is that reducing some of the other behaviours that were there previously, things like consumers’ push towards health and sustainability? What’s happening on that front?

Is health and sustainability still a concern?

David Ciancio (15:43): We saw in this survey that health is still an important trend, and everyone says… the vast majority respondents anyway, that there are benefits to healthy eating and shopping. In this survey that move toward health feels a little less urgent however, and although shoppers are saying that eating healthy makes them feel good and that there’s a kind of emotional reward to healthy eating, isn’t quite the same push as we saw earlier. Some of that came out in the survey, under half of respondents say they’re on actual any form of diet. They do say they might be reducing the amount of meat, but they’re not going full vegetarian or vegan.

And I think it’s important to note also that from this survey, there’s no way to find health focused people looking at any kind of demographics. Absolutely have to look at the transactional data there. So little less urgent, little less of the nudge toward healthy eating. The second subject right next to that, of course, was sustainability. We asked respondents to tell us about their attitudes there. The depth of the concern about sustainability is not as widespread as seen with health, but virtually everybody who’s focused on sustainability is also focused on health. And the conclusion for us is that health benefits might be a more appropriate retail strategy right at this moment. So if you’re wondering what the balance is between health and sustainability, this suggests start with health. And once again, it’s the transactional data where you can spot those customers who are more concerned and focused on sustainability.

Dave Clements (17:44): I think in the past as well, health and sustainability, some of those initiatives of not always been in line with better value perception. And I think by thinking about how… what are the opportunities in health and sustainability and gender that actually can drive better value, less wastage, less spend on certain items. It’s also potentially a sweet spot that actually can work really well to drive this really important program around health and sustainability, because we still need to invest in it very much for the future and it’s… should be top of mind. But keeping that value lens on it, how can it be great value to invest in these areas for consumers? Because I think when they see that, that can drive more growth.

David Ciancio (18:34): Absolutely true. And I’m glad you circled back to value, that’s still where it’s at according to this survey, and according to those retailer preference indexes. So we can’t take our eye off the ball on value.

Dave Clements (18:51): Well, thanks, David. It sounds like it’s going to be really important to keep on top of inflation, seeing how the retailers and the brands continue to work hard to shield their customers from the full impact of that. So that’s going to be on top of consumers’ minds, and it’ll be interesting to see how that continues to play out when we see the next pulses, which are… I guess, are coming out in about April time, I guess.

David Ciancio (19:18): Right. Well, good. We’ll keep listening to customers and we’ll look at the data as well. But yep, focus on value and let’s watch what happens with online.

Dave Clements (19:31): Well, thanks for listening everyone. And you can join us again soon for our next Customer First Podcast. Remember you can access all of our podcasts on a variety of different subjects impacting retail on Spotify or on our dunnhumby.com website. So thank you and goodbye.

David Ciancio (19:49): Thank you.