At such times of uncertainty, it has been – and still is – ever more important that companies learn fast and adapt to change. To help you manage your team’s capabilities, we’ll try to summarize the current challenges and options, as we look into the impacts of Covid-19 across trade channels.
Trade channel preferences have been changing quickly among shoppers
Because of the Covid-19 crisis and its consequences for the way people live, 2020 is said to be the year of digital transformation in retail. Online grocery shopping has indeed seen substantial growth. Online sales reached a peak of 32.8% of sales in the UK during the spring lockdown. That switch to e-commerce has even prompted some of the biggest consumer brands, such as Pepsico in the US and Heinz in the UK, to experiment with DTC (direct to consumer) models. While the crisis has turned many consumers towards new, more digital brands, there are some well-established brands that view the circumstances as an opportunity to regain a direct relationship with their customers – and produce higher margins by getting rid of intermediaries.
But despite rising demand for e-commerce, the fact remains that shoppers continue to rely on trips to brick-and-mortar stores for many of their essentials. This is particularly true when people have an immediate need for groceries or when online channels are sometimes unable to keep up with demand. Though the way consumers shop when they do head to the stores is certainly changing as well.
When national lockdowns were imposed across large parts of Europe, consumers reacted immediately by reducing their movements. Investigating this trend, BeMyEye asked its Eyes about how their grocery shopping habits had changed. They revealed that they were taking fewer trips to the supermarket than before the pandemic. What’s more, nearly a third of respondents reported changing their primary channel. Many were choosing to shop at convenience stores over larger premises, such as hypermarkets. Such a shift has benefited both independent convenience stores and smaller outlets of major retailers – with the former growing at 69.3% – data from Kantar has revealed.
Shoppers are taking a practical approach, weighing up factors such as proximity of store, length of line and number of visitors. The preference is for smaller units: those big enough for the necessities but compact enough to ensure each visit is as efficient as possible.
This is a critical moment for sales teams. Monitoring what is happening across a range of stores and taking effective action will require careful planning.
Considering the consumer preference for smaller stores, FMCG companies might choose to allocate more of their resources to such units. But going down that path often ends up in an operational nightmare. Considering visiting smaller stores adds more complexity: picking the right stores to visit from a bigger pool, changing the cadencies of the visits and optimizing the field forces routes. Furthermore, a sales visit to a hypermarket may still prove to be more productive than a visit to a supermarket. Why struggle to change everything if the added value is yet to be proven?
Truth is: there is no such a thing as a simple one-fits-all rule. It is now, even more than before, crucial to implement data and analytics to measure success at the store level. That way you can prioritize visits and ensure that every action taken adds value. Organizing your field sales teams’ work without relying on insights at the store level risks your people’s time and efforts.
Safety is another important aspect to think about when executing perfect store strategies across different trade channels. Not only will each retailer have their own guidelines, but stores of different sizes may have their own restrictions on the number of people in the store at any given time. Specifically, the Pharmacy channel faces these challenges more than the others, as many stores are already smaller in size. With social distancing rules and regulations in effect, ensuring a suitable distance between customers often means restricting the numbers of people in store – sometimes to three or fewer.
Implementing new strategies across Offline trade Channels
The trend-savvy reader will observe that the pandemic has largely heightened existing consumer tendencies. The shopper’s swing towards convenience stores and smaller units, for example, was not new when Covid-19 struck. Yet the conditions of the Covid-19 pandemic have prompted companies to overhaul their in-store execution methodologies and focus on what really matters.
Our interviews with authoritative voices in the industry also revealed that a strong emphasis on partnerships is helping the companies that have best weathered the challenges of Covid-19. Clear communication and frequent contact boost the success of companies and retailers alike. Cooperation ensures the supply chain and retail execution compliance across a range of trade channels.
In order to understand their new landscape better, companies are also often combining traditional sources of data with crowdsourced data. This can help sales teams to get a fuller picture of what is happening on the ground in a range of different stores and locations, enriching analytics with the power of big data. This makes it possible for managers to better prioritize the visits of their teams – based on a refined expected value of each of them for the business. If delivered in real-time, this kind of data can also help build a brand new, more adaptive sales organisation in the field. It may be totally rebuilt with the objective to intervene as soon as a major issue arises.
Change is happening, and quickly. As sales teams confront the effects of Covid-19 trade channels, they will need to monitor consumer preferences closely and consider the impact of each store visit. By bolstering partnerships and using alternative methods of data collection and analysis, industry leaders will emerge from the pandemic stronger.
If you would like to learn more about the transformation in retail execution, you can read the full outlook in our white paper “Why In-Store Execution Has Changed Forever” here.