NEWSWIRE: Understanding the Two Sides of Every Sale

Canadian shoppers continue to readjust their need states as they search for convenient,
cost-effective ways to meet new needs amid rising COVID-19 cases and increased
stay-at-home orders. In doing so, constrained and insulated consumers alike have become
omnichannel super-users and are leveraging e-commerce in different ways to adjust for the rise
in in-home consumption.

Globally, the pandemic has been a boon for fast-moving consumer goods (FMCG) sales; it has
also boosted adoption of digital and true omnichannel shopping, with in-home consumption
rising significantly as a result. Total FMCG sales increased by 11% during the 45-week period
ended Nov. 7, 2020, as consumers funneled their out-of-home spend into in-home spend. The
grocery industry has seen record growth, but the pandemic is fueling economic worry as well as
FMCG growth.

In July, the Conference Board® Global Consumer Confidence Survey, conducted in

collaboration with Nielsen, found that 86% of Canadians had adopted a recessionary
mindset—revealing that consumers of all types—not just those financially affected—are looking
to save.While the effects of the pandemic have been widespread, the impact has been different
for insulated and constrained consumers, which speaks to a polarization that needs to be top of
mind for manufacturers and retailers looking to engage with varied consumers experiencing
different realities.

Exploring the Polarizing Trends within FMCG

The abundance of time spent at home has generated a variety of new self-serviced needs.
Insulated and constrained consumers are both driving FMCG growth, but these groups are
behaving very differently in terms of how they shop and why—and the different behaviors each
open specific doors of opportunity for retailers.

Much like different consumers browse at different rates, constrained spenders report spending
more time browsing online to decide where to shop for groceries compared with insulated
consumers, meaning they are more engaged. Given the online channel’s added convenience in
comparing products and prices, shoppers willing to search for the best deal (those being largely
from the constrained segment) will become even more invested in using e-commerce to source
grocery purchases in the ‘new normal.’

In-store shopping has perhaps never looked more different. Constrained spenders, while more
financially affected by the pandemic than insulated spenders, continue to drive FMCG sales
growth—both in and out of physical stores. While these shoppers increased their overall spend
by 6% during the 30 weeks ended Sept. 26, 2020, they made significantly fewer trips to physical
stores (-15%) during the 21 weeks ended Aug. 1. To make up for the decreased frequency,
constrained shoppers are loading up when they do shop, growing their baskets by 30% per trip.
Despite the bigger baskets, constrained shoppers aren’t stockpiling the way we saw earlier in
the year, which means that every purchase they make holds specific significance at the time of
the purchase. With a homebody mindset, however, insulated consumers tend to keep more
essentials on hand than during normal times, with total FMCG spend up 16% during the
aforementioned period.

Constrained shoppers are far less optimistic than insulated consumers in terms of future
financial outlook, and they’re carefully stretching their dollars as a result. That means they’re
seeking out stores with lower prices and ditching premium name brands, while the most
preferred saving strategies among insulated consumers include stocking up on sale items and
shopping within retailer loyalty programs. Although retailers and manufacturers may perceive
constrained consumers as less loyal (given their penchant to seek out value over other factors),
these shoppers carefully plan where and why they shop.

Now, where exactly are Canadians shopping? When looking at how share of wallet has shifted
across major brick-and-mortar formats, grocery stores gained dollar share of trade throughout
the pandemic, while mass, warehouse, drug and dollar stores experienced declines. When
considering where to shop, August Homescan panel data reveals that two-thirds of constrained
Canadians report being highly influenced by promotions and lower prices overall. In an effort to
save time and money, constrained shoppers shifted some of their share of spend from grocery
to mass merchandise and club retailers during the 21 weeks ended Aug. 1, 2020, as they
sought out one-stop-shops.
Retailers can attract constrained shoppers through promotional sales, economy package
formats, value brands and e-commerce tools that allow shoppers to compare product attributes
to find the best deals. To engage insulated shoppers, retailers should focus on enhancing the
homebody experience through premium product offerings and capitalizing on loyalty programs
to invoke repeat purchases.

E-commerce Spearheads Growth

Completely blowing brick-and-mortar growth out of the water, online shopping spiked by 113%
during the 30 weeks ended Sept. 26, 2020. Importantly, constrained and insulated spenders
drove this massive growth at equal rates. In looking at category purchasing, however,
constrained and insulated spenders increased their online food purchasing at different levels
(+123% and +186%, respectively), but for both groups, total food had an equal online dollar
share, meaning constrained and insulated consumers are leaning into online food at identical
rates.

Comparatively, insulated spenders are more likely to use online channels as a means to order
goods that they then pick up at a physical store (i.e., click-and-collect and curbside pickup). On
the other side of the fence, constrained consumers are more likely to opt for home delivery.
There still is a high potential for the constrained segment to adopt and use in-store fulfillment
methods, as 27% of these shoppers fulfilled online purchases via click-and-collect or curbside
pickup according to Nielsen’s Homescan Panel Views Survey conducted August 2020.
Constrained shoppers will continue to further shift their spend from brick-and-mortar channels
into the online space as they become increasingly motivated by sales and utilize the channel to
compare high-value, low-cost items.

As Canada confronts increased living restrictions and higher COVID-19 infection rates,
traditional grocery retailers will continue to operate with region-specific restrictions, which means
that consumers in certain regions will need to cope with longer lines to get into stores this
winter. For those unwilling to brave frigid temperatures and the risk of infection for fresh food,
consumers of all types will increase their online spend across categories and make
omnishopping an even larger part of their routines. Regardless of their ability to spend,
constantly reminding shoppers about promotions, offering exclusive in-app savings and
implementing loyalty programs across channels will entice consumers to shop. As consumers
become more entrenched in their omnichannel habits, expectations will follow suit and require
retailers and brands to create equivalent experiences both online and offline.

Methodology
The insights in this article were derived from the following sources:
● Nielsen Homescan Total Tracked Sales for the 21 weeks ended August 1, 2020 and 30
weeks ended September 26, 2020.
● Nielsen Homescan Panel Views COVID-19 Moving Forward Survey, August 2020 -
Canada
● Nielsen MarketTrack National All Channels: 45 weeks to November 7, 2020
● Nielsen & Conference Board Survey – Q1 vs Q2 2020 Canada
● Statistics Canada Pre-COVID February 2020 vs. July 2020