“For CPGs who primarily sell to more affected industries (restaurants, theatres, stadiums, etc.) their focus is on managing the recovery phase. They’re already looking ahead to September 2020 and making sure they can support their customers in opening back up at full force. Unique packaging is being tested to improve health and safety standards across the board. These new technologies will likely continue to be used in the post-COVID period.”
John Findlay, CEO, LaunchFire
This article focuses on the likely effects of COVID-19 on CPG brands and what they can do to navigate through the crisis.
1. With an aggressive shift to contactless ecosystems, CPG brands need to re-think their in-store engagement
A major section of the CPG industry heavily relies on hosting products at physical stores. Even though most brands are accelerating towards an online presence, physical stores will re-open as the curves flatten.
A recent survey by Mckinsey explains how consumers would still visit a physical grocery stores post-pandemic. However, these numbers are expected to be lower compared to pre-COVID.
As a result of thinning consumer confidence, they are more likely to stay at home – unless, contactless in-store solutions help customers and employees feel safe. Some of the aspects of contactless retail dynamics, marketers should consider are –
1. Delivering a contactless yet interactive product-discovery experience without a store assistant
With social distancing in full swing, consumers are beginning to turn to solutions minimizing human touch or multiple hand exchanges.
As a result, discovery tablets lying by the product or in-store assistants are not expected to be a significant part of the “new normal”.
Product discovery has to be led by contactless technologies like NFC and QR Codes. Brands like Sephora are already using NFC to tell their brand stories.
2. Buy online, pickup in-store (BOPIS)
According to Adobe Analytics, the number of “buy online and pickup in-store” orders — which includes curbside pickup orders — rose 208% year-over-year during the first 20 days of April
While curbside pickup or pickup in-store is not a new concept for retail, it was mostly used by big-box brands to create an omnichannel buying experience. However, with the Coronavirus crisis, it is now a necessity.
Kohl’s and Ulta have already announced curbside pickup for the first time.
“As someone who has anecdotally tried a variety of contactless fulfillment options, I’m not sure if the clarity of communication of where, when and how you need to go about picking up and fulfilling that order is something that all retailers are consistent about”
Kyle Rees, director at Gartner.
As brands figure out the most efficient implementation of “buy online, pickup in-store” dynamics, here are a few thoughts on how early adopters like Kohl’s, Ulta and Dick’s sporting goods are doing it –
# 1. Having an “I’m here button” on the website
As soon as the consumer reaches the pickup location they access the same app/website they used to place an order and click the “I’m here” button. This notifies the store assistant to drop the package.
#2. Having a QR Code that triggers a call to the store assistant – “available”
Add dynamic QR Codes to signs in the parking that point to the phone number of the available store assistant. The incentive in using a dynamic QR Code is the flexibility in changing the phone number without changing the QR Code.
Depending on the time of the day or day of the week, this QR Code triggers a call to the available store assistant.
2. DTC is the new normal. And, consumer good brands should hop onto the bandwagon now!
CPG brands of all vertices and sizes are choosing website sales over Amazon. I recently got in touch with the CEO of Illuminate Labs (Herbal Supplements) to understand what they are doing to sustain and prepare for post-lockdown situations.
“For us, website sales have taken priority over Amazon sales
Every eCommerce CPG business today is aware of how risky it is to be fully dependent on Amazon. There have been significant issues recently with Amazon’s fulfillment, and I’ve heard horror stories from other merchants.
The learning lesson for the post-COVID world is that it’s significantly better to drive the majority of your brand’s sales through your own website because you fully control the customer experience. If you’re too dependent on a third-party channel like Amazon, you risk going bankrupt in a Black Swan event like COVID-19.
We were making the majority of our sales through Amazon, but now I’m focusing on switching that ratio in favor of website sales, through SEO efforts and increased paid spend on Google surfaces.”
PepsiCo is delivering snacks and drinks directly to consumers
Global CPG brands like Coca Cola, Unilever, Proctor & Gamble, and PepsiCo heavily rely on channels like grocery stores and restaurants.
But as the lockdown stretches into its third month for many Americans—and consumer habits signal what could be a permanent shift toward online shopping—PepsiCo was quick to act.
This F&B giant recently announced delivering snacks and drinks directly to their consumers. They launched two websites that provide direct-to-consumer options for dozens of its packaged goods such as Frito-Lay, Quaker, Muscle Milk, Gatorade, Hilo Life, and more.
“What we’ve heard from consumers is that during times of crisis, they like to turn to things that give them comfort, and our brands play an incredibly important role in bringing smiles and joy and comfort to shoppers. We’ve seen that increase in demand for our products, and these DTC sites make it easy to get them”
Nike’s digital ecosystem helps battle slow retail sales
As the pandemic hit China, brands like Nike, immediately shut down half of their physical stores to stock up for their digital demand.
Over the past several years, Nike has built an ecosystem of apps that serves as its primary e-commerce platform – Nike Training Club, Nike Run Club, and SNKRS for footwear enthusiasts.
“At a time when people were confined to their homes, we moved swiftly to leverage our digital app ecosystem and Nike expert trainer network to inspire and support consumers across China to stay active and connected while at home.”
John Donahoe, Nike’s new CEO
3. A rise in hygiene standards & CPG brands SHOULD respond with transparency
As China recovered from a prolonged lockdown, one of the major challenges pitted against the consumer brands was the erosion of consumer confidence in hygiene standards.
In such situations, it is the social responsibility of CPG manufacturers to prove their safety and trust credentials.
New-age CPG brands are already taking to social media and QR Codes on the packaging to communicate their safety procedures.
Soulfull, a cereal brand, uses social media to communicate their safety measures
Pre-COVID, Soulfull a Bangalore-based cereal brand relied on purchase channels like supermarkets, e-commerce sites, and convenience stores.
However, when the pandemic hit the city and a lockdown was imposed on the city of Bangalore, Soulfull quickly flipped the switch to the direct-to-consumer channel. This has significantly helped the brand hold strong even in unprecedented times.
Soulfull took to social media to communicate the sanitization process and its safety standards
CPG brands have to connect offline and online channels to power up their sales engine
Here are a few inspirations on how other CPG brands are using contactless technologies to connect offline and online –
1. Interactive goodies – Add goodies like NFC-embedded fridge magnets or stickers which when tapped allows consumers to re-order your product.
2. Connected packaging – Bring packaging to life with a QR Code pointing at an expert demonstrating related recipes or receive quick feedback on delivery and packaging during the crisis. Consumers are extensively cooking at home and a recipe video will definitely attract scans.
3. Gamify the experience – Get your consumers to tap or scan a QR Code to enter a contest, a social media challenge, or a progress-based game. Progress-based games usually keep the consumer engaged and nudge them to choose the same brand every time!
4. Spot and target the consumer online – When consumers scan a Beaconstac QR Code, you can re-engage with them through ads on Facebook and Google
How Beaconstac is helping CPG brands prepare for post-lockdown situations
As a company that reimagines digital engagement for the physical world, we are working with various industries including CPG brands like Nestle and Nike to help them build contactless ecosystems with QR Codes and NFC at the center.
Some of the questions we commonly encounter with CPG brands are –
1. How do I communicate to my consumers that they do not need apps to scan QR Codes?
Even though Apple and Android have integrated QR Code scanning capabilities in their camera app, consumers are often unaware of how to scan QR Codes. To combat this, CPG brands have used CTA frames along with QR Codes to guide consumers. Here’s an example of how you can do it –
If you are looking for a similar contactless solution for your brand, talk to us!
I am fascinated by tech-driven marketing. Love to read & write about entrepreneurship and tech-driven business strategies for B2B and B2C companies. Have b(e)acon and eggs for breakfast and always up for doughnuts!
While restaurants are eager to formulate a robust post-crisis plan, the evolving consumer behavior makes this hard to do. In this blog post, I talk about the expected change in consumer behavior and how restaurants can adapt to keep their doors open post-lockdown.