A Fork in the Road: Understanding Today’s Omnishopper  8/4/2021


NielsenIQ's Liz Buchanan

Last year became the year of the omnishopper. E-commerce went from niche to necessary, particularly in the food and beverage channels, as manufacturers and retailers grappled with supply chain issues and an overnight restructuring toward an omnichannel model. 

Along with this, retailers and brands faced the challenge of tracking these omnichannel shoppers and their multifaceted shopper journeys across platforms. To address this, NielsenIQ in April unveiled its Omnishopper solution to enhance the industry’s understanding of consumer behavior both online and offline across the U.S. marketplace.

During ECRM’s Global Market: Food & Beverage, NielsenIQ North America Commercial Lead Liz Buchanan discussed today’s omni food shopper by digging into these OmniShopper insights to share why brands and retailers must now know exactly who their customers are, and fully understand their behaviors across channels to predict what they will need in the future. Following are some key takeaways from the presentation (see full presentation in the video below):

Category Bifurcation
While overall rates of growth are still up for CPG versus 2020 as you look at the numbers, there is a clear bifurcation between those categories that grew during 2021 and those that have begun to decline. Fifty-three percent of category dollars belong to categories that declined in 2021 versus same period in 2020 and 47 percent still continue to grow as we emerge from the depths of the pandemic.

As people get out and move a little bit more as the world opens up, and try to live a little healthier, on-the-go food and diet and nutrition categories are starting to show growth versus last year. The same holds true for individual snacking, as many kids were back in the classroom this spring. Beverages, fresh fruit and family size snacking categories, however, are examples of new habits that have persisted in their growth as people still continue to eat at home more. 

Many consumers who adopted click-and-collect during the pandemic continue to rely on it for more of their shopping needs, and click-and-collect shopping is up 200 percent since 2019, growing from 34 percent of online food dollars to nearly half in 2021.

Income polarization
Two significant consumer segments have emerged as a result of the pandemic: those who are economically constrained and those who are newly economically insulated as a result of COVID. Average adjusted household income has decreased since 2019, and many who were already low-income have become even more constrained to the tune of about $4,000 annually. Some high-income households have become constrained as well, due to job loss, furlough or a loss of income of one member during the pandemic.

Those who were high income have also seen the highest percent of income increase of any group during COVID. This group typically spends a higher percentage of their disposable income on services, restaurants, and travel, all of which were restricted. As a result, they actually made more money and saved more money during COVID, which created a significantly different reality for them. Whether someone is constrained or insulated was not a factor of income, but rather one of impact within their income bracket due to COVID. This is further compounded by the prospect of looming inflation.

“We enter a period of uncertainty around the industry's economics and frankly, the country's economics, with most economists optimistic about the future of the U S economy in the mid to long-term,” says Buchanan. “This will really necessitate different strategies for brands and retailers over the next 12 to 24 months, and so there will be a need to deeply understand the consumer and their relationship to price, and price sensitivity manifests itself in different ways.”

NielsenIQ found that those most constrained shoppers are using online as a way to price explore. “We were surprised to find that the constrained consumers had actually adopted online at a higher rate than insulated consumers, and that really is driven by the need to do price exploration and find the best deals,” says Buchanan. “This continues to be an evolving landscape where everyone is now operating in a truly Omni environment and has more choices and options that are available to them than they did in the past. So understanding your shopper's level of constraint is important, so that merchandising decisions are done in the context of that true new consumer reality.”

Consumers will continue to make strategic shifts as needed in order to manage the environment. Some will buy private brands, some may eat out less, or trade down or up in categories, make shopping lists to limit waste, and may shift among channels to shop for the best value. And all of this will be done in an omnichannel context. 

Omnichannel retailing
Forty percent of CPG shoppers are now omni shoppers, and food and beverage surpassed other more mature online CPG categories such as baby, pet and personal care to become the largest CPG category, and Buchanan expects online sales of food and beverage will continue to grow. In 2019, 5 percent of total food and beverage sales were made online, a number which jumped to 9 percent in 2020. 

“You have to consider the true omni context in which all decisions are being made,” says Buchanan. “As you plan out your merchandising tactics and strategies, it’s essential that you understand the true omni environment available to the shopper and focus on helping those consumers find convenience and manage spend based on this new environment.”

Even as restrictions continue to ease, consumers will continue many of the omni channel behaviors they adopted during the pandemic as they embrace the convenience of ecommerce and click-and-collect, and have higher expectations around delivery speeds, ease and convenience. 

“We've seen that the order per buyer online continues to increase year over year since 2019 with no sign of slowing down,” says Buchanan. “There were 22 million new online CPG shoppers in 2020, a growth of 40 percent. CPG shoppers spent $160 billion online and 44 percent of e-comm share comes from food and beverage. This is a very different landscape than the one that we were looking at in 2019, and one that we expect really has reframed or reshaped what will come next as well.”

What’s next?
According to Buchanan, this pivot point requires retailers and brands to critically look at the industry and re-imagine the practices we've come to know to compete in a world to which we are still adapting. Start with understanding the consumer and shopper along three dimensions of category bifurcation, income polarization and omnichannel retailing, while keeping a finger on the pulse of the trajectories of those growing and declining segments. It’s also critical to ensure that your digital game is tight, providing the best possible experience that starts with content and search. 

The digital genie is out of the bottle, and we now live in an increasingly omni channel world. We’ve all be forced to adapt – ECRM included – and the pace of change will only quicken from this point forward.

 

EDITOR'S NOTE: ECRM's Global Market: Fall Experience will span food and beverage, health and beaty, and general merchandise categories. Click here for more information and to register!


Click here to download the slide presentation: NielsenIQ - Understanding Todays Omnishopper.pdf


 

Sarah Davidson

SVP of Grocery
ECRM

Sarah Davidson is ECRM's SVP of Grocery, and can be reached at 440-542-3033

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