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Pressing needs, contingency and the new normal

The growth in sales we’ve seen from food retailers during these times has been unprecedented, and, while all retailers have grown in sales, some of them have lost a big percentage in market share.

On one hand, we have seen that store chains with a heavyweight of generic-brand products are leading this growth, due to their ability to keep their service levels and competitive prices.

On the other hand, we see many FMCG brands growing significantly as a consequence of the new normal and new consumer habits. Yes, we are all eating more popcorn, baking more cakes, and buying some products we have never consumed before.

Along the way, in-store assortments have been reduced and retailers are focusing on those products with high and medium-turnover, while innovation has come to a complete halt.

We will be moving towards a less restrictive state of alarm and we will be back, to business as “unusual”. So what will the new normal look like for food retailers and FMCG brands?

Promotions and offers will be key drivers

Once we “get back” to normal, pricing will be a determinant factor.  Retailers who run their own loyalty schemes will have a clear competitive advantage against retailers who don’t.  Loyalty programs will be a necessary tool to retain and attract spending from tighter household budgets.

Retail formats like super and hypermarkets (supercentre or superstore) will need to speed up their shift towards online shopping, this will become key for their future strategy in an environment where the global supply chain is more fragile. This means that stockpiling is almost to its lowest with the inherent consequences of rapid demand growth.

Producers will be fighting to protect their brands and to maximize their market share in an environment where the average order value will be significantly higher and the purchase frequency lower.

The “new normal” for food retailers

We don’t know yet what the near future will hold however, we can imagine how it could look like from the current consumer behavior.

We, as consumers, will be demanding a more secure and reliable service to collect and pick up our groceries. We will be demanding a more personalized shopping experience. We will continue to adopt “social distance” practices, at least for a period of time. We will be more careful about our spendings. And overall we will be trying to deal with uncertainty.

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