Consumer spending trends shifting as Covid-19 causes retail disruption
Grocery stores all over the world are facing changes in customer bases and their ability to deliver value to brands as people adjust where they shop amidst the Covid-19 pandemic, according to Nielsen.
Prior to Covid-19, people frequented grocery stores that were on their commute home from work or were near train stations and bus stops. As working from home has become the new normal for many, people are looking to stores closer to where they live.
There are many implications regarding this new trend as brands will need to reexamine their strategies, reconstruct the priority stores list for their sales force and re-assess assortment and pricing.
According to a Nielsen Intelligence Unit investigation of sales at store level across 15 countries, reveals a retail environment in major flux due to altered travel routines.
The number of stores that account for 80 percent of fast-moving consumer goods (FMCG) sales has changed, with movement up to two percent in either direction across the 15 countries.
Though the change may not seem meaningful, in the context of hundreds of billions of dollars spent in the U.S. alone, the shift indicates much bigger consequences if the brands fail to recognize and respond.
Going beyond the health emergency, store dynamics will be forever changed due to permanent adjustments to lifestyle and work circumstances.
“Companies around the world are already signaling that they will no longer operate the way they did in the past. [...] If you add in the dynamic of a massive rise in e-commerce for the FMCG space, the need to respond to what we have discovered is one of urgency," Nielsen said.
The impact is expected to expand beyond the FMCG sector, as stores in other sectors often rely on large retail chain grocery stores to drive footfall to their typically adjacent outlets.
Five cities were analyzed in the U.S. and revealed a widening gap in sales when zip codes were viewed through the lens of population density.
According to Nielsen, the findings suggest that grocery stores aligned to high-density workplaces are no longer within reach to many new remote workers.
“Put simply, the stores that previously mattered most may no longer matter as much; some may even close,” Nielsen’s Intelligent Analytics group COO, Richard Cook told Nielsen.
The change in shopping habits may also lead some retailers to experience shifts in market share as the rebalancing plays out and the pandemic forces new rounds of lockdowns.