6 May 2020
Continuing our regular series exploring Grocery Retail’s response to the Coronavirus pandemic, this week we analyse the results from dunnhumby’s latest piece of consumer research, the increasing importance of Category Management, and the actions that Retailers need to be taking now to ready themselves for an eventual recovery.
Checking in on Customer concerns
In our last post in this series, we unveiled the dunnhumby Customer Pulse, a survey of consumers from 19 global markets conducted at the end of March. Keen to develop our understanding of how Coronavirus continues to shape Customer demands, we moved ahead with a new wave of surveys using the same geographic and demographic framework.
Once again, three key issues came through loud and clear from our respondents.
As worry declines, Customer perceptions are changing
The ‘worry score’ – the number of respondents in each country who self-identify as concerned about Coronavirus – went down for more countries than up. While this may not be surprising in isolation, where worry scores decrease, so too does interest in the preventative measures being taken by Retailers. As worries ease, many Retailers may find themselves pressured to loosen restrictions faster than originally planned.
Customer satisfaction is on a knife edge
Across all markets, we found little evidence to suggest any correlation between preventative measures and Customer satisfaction. Instead, satisfaction is dictated primarily by one defining issue: stock levels. Where customers acknowledge having noticed out-of-stock items, their satisfaction levels are likely to be much lower than those who have not. Raising prices on, and limiting availability of, virus-related items can have a similarly corrosive effect on Customer satisfaction.
Simple actions can have a big impact
While Retailers may continue to find stock levels difficult to control over the coming weeks and months, other avenues may help them to mitigate dwindling levels of Customer satisfaction. Actions that are seen to have a major positive impact on perceptions include removing delivery charges for certain Customers, discounting virus-related products, and increasing the frequency of store cleaning.
A third wave of the dunnhumby Customer Pulse will be available soon.
Keeping pace means clever use of Category Management
As is apparent from the results above, one of the only constants for Grocery Retail during the Coronavirus pandemic is the speed at which Customer demands continue to change. While it might not be possible to prepare for every eventuality, adapting or refining your approach to Category Management can be a smart and effective way to keep pace with those shifting need states.
We believe that Retailers should funnel Category Management activity towards three areas.
Aim for nimble management of product assortment
As product shortages and changing demands continue to impact Customer experience, agility is vital. Customer decision trees and need states should be used as a guide when managing supply levels, emphasising higher-order needs in each category. Breadth – not depth – is one of the most pressing factors here, and Retailers can best serve Customers by ensuring that the most important need states are addressed above all else.
Ensure your Private Brand is fit for the future
Customers are looking to find increasing value in every shop as household budgets come under intense pressure. Private (Store/Own) Brand labels can provide shoppers with just that kind of reassurance, and we believe that now is the time for Retailers to shore up those lines. Reassessing the relevance of Private Brands on a category-by-category basis is a good starting point, as it is likely to reveal prominent gaps or areas that would benefit from further investment.
Maintain your investment into essential online channels
Soaring demand for online grocery has become one of the defining trends of the past few months, and there are no signs that this will change post-pandemic. Loyalty data can be a major differentiator here, providing an opportunity to create a frictionless experience by surfacing in-store favourites and relevant recommendations in a similar manner online. Retailers will also be well served by ensuring the accuracy of substitutions (particularly by arming packers with good suitability metrics) and emphasising issues of hygiene and quality around fresh produce.
The journey towards Recovery
Much of the work we’re doing to help Retailers through these unprecedented times revolves around anticipating changing Customer needs at three distinct stages of the crisis: Insecurity, Transition, and Recovery. As we move through Transition, we believe that Grocery Retailers must take action now to ensure their business is ready for the new challenges ahead.
Reset your categories to focus on what Customers care most about
The product assortment you have today may not be right for tomorrow. With economic challenges almost certain to trail the Coronavirus pandemic, Retailers need to begin looking at wholesale category resets that will make assortments leaner, fitter, and more relevant for cost-conscious Customers. Prepare to maximise shelf space for categories where variety is essential and scale down categories where it is not.
Bring a Customer First approach to assortment and space planning
Reviewing your latest customer data sets will identify changing category roles and importance of key marketing levers such as price, variety, and channels. There are already new adjacency and layout opportunities to implement by looking at the changing mix and frequency of purchase in the Customers shopping basket, especially in categories like personal hygiene and cleaning, fresh food and cooking from scratch missions. As Customer behaviours continue to change, understanding and monitoring these changes by different customer groups and different shopping missions will be critical in order to make the most informed and best retail decisions.