Shopping Behavior 2022: Of shocks and accelerators_midway
Shopping behaviors have changed. Not for the first time, but this time it is different.
**Shopping Behavior 2022:**
Of shocks and accelerators
Shopping Behavior 2022: Of shocks and accelerators
Shopping behaviors have changed. Not for the first time, but this time it is different: The pandemic turned some trends in FMCG, already noticeable before, into shockwaves that changed the retail landscape. This whitepaper responds to the need to make sense of the past year’s impact and provide recommendations for market players on strategic business decisions for the near future.
Our 5 driving forces
- Findability: The rising need to stand out: Changing routines to how consumers will shop
- E-grocery: Will it catch up?
- Fluidity: Fluid shopping occasions: new schedules, home delivery and flash services
- Expert interview with Frank Lehmann on challenges and strategies for retailers
- Balance: Holistic attention to health and wellbeing
- Expert interview with DSM on innovative solutions for sustainable, tasty and healthy food
- Purpose: Shopping behavior combining lifestyle demands with consumer values
- Expert interview with Water Unite on multiplying the impact of a single transaction
- The latest from our Sustainability Report 2021 “Who Cares, Who Does”
- Expert interview with Mosa Meat on reshaping the future of food
- Budgeteering: Balancing budget pressures, lifestyle demands and perceived quality
With special thanks to the industry experts, who contributed to this whitepaper
GfK Growth from Knowledge
GfK is revolutionizing real-time access to critical market knowledge for the consumer products industry. In a world of constant change, powerful consumer trends, and information overload, GfK provides the data, analysis and expertise to guide businesses of all sizes to plan, predict, prepare and profit.
We harness world-class analytics and technology helping you boost sales and marketing effectiveness. If you know, you can grow.
Lenneke Schils Global Insights Director FMCG, GfK Lenneke.Schils@gfk.com
About the GfK sources & studies
This whitepaper is based on several surveys, reports and analysis of GfK, including ConsumerScan household purchasing data 2020-2021, interviews of >4,600 main shoppers in seven core countries about their behavior during the COVID crisis and their expectations for the next year in May 2021, the global sustainability report 2021 “Who Cares, Who Does”, prepared by GfK in cooperation with Europanel and Kantar, across 26 markets covering >85,000 households, released in September, and the most recent survey on e-grocery buying behavior in 8 European countries on respective satisfaction drivers & barriers among >7,500 main shoppers commissioned in November 2021.
Behavior change comes in shocks and shifts, but what sticks?
COVID-19 has had a true shock effect on consumers and shopper behavior. Lockdown policies disrupted trusted shopping routines, leading to a massive reduction in touch points and less time in stores.
At the same time, home has become the new hub, serving as office, school, restaurant, and holiday destination at the same time.
As a result, two in three consumers across Europe reported behavior change in their daily routine, with 28% even strongly doing so. In Italy, nearly 48% strongly changed their behavior regarding grocery shopping, health & well-being, meal preparation, work situation, and more.
However, the COVID crisis not only resulted in “shock waves” of behavior change, it also accelerated behavior changes that were already taking place. What is of great value to all players in the FMCG market in "normal" times, is of undeniably even greater relevance in times of crisis to bring foresight on both the constants of change and lasting shocks.
The 2021 GfK study on Consumer Behavior Change identified 5 major forces defining the future FMCG landscape:
- Findability – describing how consumers shop
- Fluidity – identifying different shopping occasions
- Balance – augmented attention to health and wellbeing
- Purpose – combining consumer behavior & attitude towards responsibility
- Budgeteering – balancing budget, lifestyle and quality
This whitepaper explores the major denominators that are and will be impacting behavior change in these pivotal times. In addition, we asked market players from various backgrounds, but with equally game-changing potential, to provide their expert views on how they anticipate these changing consumer behaviors to impact their daily business.
In focus: E-Grocery
New shopper behavior calls for in-store optimization
The past year saw 3.4 billion shopping trips less than before COVID-19 across Europe.
The pandemic crisis put touch points under pressure.
Last year, shoppers spent as little time in store as possible, preferably at as little places as possible. Many stopped going to the store altogether, and moved their purchasing online.
The decline of in-store face time means findability is key to success, defining how consumers shop, the time it takes, their choice of stores and channels, how they browse through the (online) store and how they find the right products.
Key behaviors 2021
61% always or often made a shopping list
50% always or often shopped as fast as possible
27% always or often made use of new in-store technology (e.g. self-scanning)
Many consumers also turned online for their main groceries, especially to the benefit of specialized online shops.
E-grocery value share nearly doubled in two years, raising expectations with regards to findability and online customer experience, read on in the next chapter to find out more.
What will stick in 2022
Source: GfK ad hoc study Behavior Change
After a period of alleviation in summer, the now once more imposed restrictions due to COVID-19 could last well into early 2022.
This will obviously work in favor of speedy shopping and e-commerce, despite the fact that online customer satisfaction still calls for substantial improvements, as the most recent GfK survey on e-grocery (November 2021) found.
Once we have overcome the pandemic crisis, some new shopping routes and routines will nonetheless persist:
The increased use of new technologies (net expectations1: +17%), making a shopping list (+15%) and buying different products than before (+11%) are ranked as top expectations by shoppers for the next 12 months.
Purchasing online, the reduction of in-store face-time and buying different products implies, findability is key to success and future growth.
Asked, how shoppers come across new products, promotions and roaming through shelves are top mentions, both at 51%, in Denmark even 65%. Commercials and ads as a source are only ranked third at 39%. Clearly, hasty and planned shopping threatens product adoption.
1 Net expectation: Share of shoppers that intend to do the behavior (a lot) more minus the share of those, who intend to do it (a lot) less.
In focus: E-Grocery
E-grocery: Lasting buy-in needs more inspiration
Unlike other industries, online shopping for groceries was by no means commonplace – before COVID-19. Shopping regulations, supply shortages and especially safety considerations have dramatically changed shopping behavior and bestowed unexpected growth rates on e-grocery.
The value share (EU-15) of e-grocery nearly doubled in two years from 2.1% to 3.6% (H1’19 to H1’21).
Meanwhile, numerous companies jumped on the bandwagon and the e-grocery landscape is expanding exponentially, be it via ever faster delivery, subscription models, D2C and farm-to-fork initiatives, or the exponentially growing presence of pure players and platforms.
Maturity levels in e-grocery value share across Europe highly differ, with the UK leading the way, well above 10%. In continental Europe, France, Sweden and the Netherlands have the highest value shares, the latter ranging among the fastest growing, up to 9% (H1’21) from only 4% in the first half of 2019.
Germany – the largest economy in the EU-zone –
is lagging behind with just
a bit over 2% value share (H1’2021).
Many online retailers welcomed new buyers, as the advantage of safe and hygienic shopping drove shoppers toward e-grocery. Italy and Russia achieved the highest and most stable penetration around 40%.
The recent GfK report "Friction in e-grocery: experience as a growth driver“, across eight European markets*, clearly shows that buying everyday goods online is taking flight.
Only 22% of shoppers did not buy anything online in the past year, and the majority even made a purchase within the last month.
*AT, BE, CZ, DE, IT, NL, PL, RU
Uncovering the vast landscape of e-grocers,
the most used channel is the e-supermarket at 63%, followed by category specialists (58%) and platforms (49%).
Flash delivery, and dark stores and dark kitchens following in its wake, are investor darlings. Usage rates are picking up, especially in Italy, Poland and Russia, with Glovo and Pyaterochka in the lead.
67% of European shoppers at least know one flash delivery service, and about half of them have used at least one. As the most important occasion being instant gratification, ordering food and or drinks for direct consumption, flash delivery is competing heavily with established convenience and out-of-home favorites.
E-supermarkets continue to be the first choice of online grocery shoppers (will shop next year, if available: 72%), followed by category specialists (70%). Other e-grocery services that shoppers are expecting to use include D2C (62%), platforms (61%) and flash delivery with the potential of most new buyers (55%), however predominantly in urban habitats.
Despite all the buzz, it is striking, that online satisfaction cannot beat offline. With the exception of Russia, shoppers feel more fulfilled offline than they do online. When looking closely into what drives (dis)satisfaction, we see that simplicity, findability and especially experience are crucial.
Along the e-shopper „maturity curve“, fixing findability is a must for light, inexperienced shoppers. Missing options for the comparison of relevant alternatives and pack sizes currently generate high dissatisfaction rates.
Satisfying heavy buyers is an even bigger challenge, as the user experience has a strong influence on their online retailer choice (index 186), and heavy buyers are more inclined to switch retailers. Satisfaction drives loyalty, loyalty drives bigger, more frequent baskets – fundamental for online profitability.
Heavy buyer satisfaction is in extremis linked to inspiration and fun, so the “big fixes” are more enjoyable shopping, rewarding loyalty, offering one-to-one support and personalization.
Uncovering friction in e-grocery
In focus: Frank Lehmann, Retail Profiling
Fluid Living: New opportunities and more flexibility
During the pandemic, space and time have become more fluid. Working from home has evolved into a new routine for many people. But there is more to it: home is the new hub –office, school, store, restaurant and holiday destination at the same time. Working in the evenings, shopping during daytime or late at night has resulted in an implosion of the traditional “9 to 5”. More fluidity demands flexible solutions, at the same time creating new occasions.
Key behaviors 2021
60% had more meals at home
38% had at least one person working from home
29% shopped at different times than before
For 1 in 4 Europeans (EU-7) shifting especially where and at what time we shop, has erupted and home delivery soared, for example in the Netherlands by +37% occasions. The consumption of “bad food” – or better “soul food”, given the circumstances – increased: Major snacking categories such as salty snacks and chocolate both gained share of wallet in FMCG.
What will stick in 2022
As regulations are lifted, pre-pandemic routines will, to a certain extent, be reinstated and some of the fluidity shocks will attenuate. This will be especially true for meals at home, the ordering of food to takeaway or for home delivery (-10%) and the consumption of snacks (-21%).
Hybrid working models and working from home will nonetheless become the “new normal”.
In The Netherlands, 64% expressed the intention to regularly work from home post COVID-19.
These new habits obviously create new opportunities, with +4% counting to shop at different times and +3% shopping at different stores than before.
With a permanent change of these shopping routines, retailers should prepare for the “weekly shopping” and big baskets on weekdays, as well as delivery and more (walking) occasions to convenience and specialty stores.
Continuously recruiting buyers and adapting shopper activation plans should be top of mind, also to stay ahead of new distribution channels such as the ever-expanding e-grocery.
As the recent GfK report "Uncovering friction in e-grocery: experience as a growth driver" found, especially flash delivery will experience fast growth in the next months, becoming the No. 1 contender for immediate, in-home consumption.
Increased fluidity in the spheres of life are creating new occasions and will subsequently bring new providers to the market – traditional divisions of in-home and out-of-home business units belong to the past and can impede innovation.
In focus: Frank Lehmann, Retail Profiling
"Doing the ordinary extraordinary well"
Frank Lehmann is a respected voice in the retail industry. He has more than 40 years of experience working for large department stores and retail chains, including as Chief Executive Officer (CEO) of Kaufland (Holding).
Today, he and his team at Retail Profiling advise and support retail companies in the strategic development and implementation of retail business processes and strategies.
Lehmann, a recognized retail expert, is also publisher of the online magazine Supermarkt Inside and author of the respective blog.
For Frank Lehmann, one thing is clear: stationary retail is not dead and will not die out. Retail companies will continue to invest in retail space. In his view, one main trend is “hyper personalization”, the continued, personal - albeit automated – customer contact, for example via bonus cards.
Modern technologies such as self-scanning will become mainstream, also in Germany, but not as a substitute. On the contrary: More services and in-store excellence are indispensable - the customer must have the choice. "Technology is not a cure-all. IT does not make bad concepts any better."
German shoppers are not very adventurous: 71% of never or hardly use new technology in store, compared to an average of 45% across Europe (EU-7).
To generate the revenues to fund necessary investments, retailers have to concentrate, consolidate and cooperate, and possibly make unpopular choices, such as closing or selling unprofitable locations, discontinuing loss-making business units, for example non-food, and optimize the value chain through attractive acquisitions.
The scale of customer satisfaction tips towards offline. Austrian online shoppers are the least excited about online experience – 43% is more satisfied with their main offline retailer, 17% with their online retailer.
Lehmann criticizes that in the course of omnichannel initiatives, the brick-and-mortar business has suffered. Employees and storefront performance are being neglected, the brand and revenues are suffering. In his view, core competencies and strengths in-store must have top priority. Once top retail performance has been achieved in-store, the implementation of new technologies and only then building an omnichannel strategy are the next steps. New working models, outstanding customer services and professional communications are important to ensure stationary quality and top-notch retail performance.
Doing an excellent job offline often leads to being the first choice also online: When choosing an online retailer, 17% of consumers stated “because it is also my main stationery retailer”.
Watch the full interview
Renovate the self: The balance of body and mind
Balance has been the biggest driver of behavior change over the past 12 months, with 35% of consumers agreed that they heavily changed their behavior with regards to their health. During COVID-19, food became an emotional stimulus and health a holistic focus that extends from body to mind.
The permanent change of pandemic waves and regulations generated stress and challenges.
As a result, people were actively seeking solutions to ease their minds and felt that they needed to regain control fostering a stronger focus on both physical and mental health.
Key behaviors 2021
50% regularly paid special attention to physical health
49% regularly paid special attention to mental health
41% regularly paid special attention to labels, respectively ingredients
More than one third of Europeans (EU-7) – in Denmark, as many as 51% – regularly took vitamins or supplements to improve their personal health.
Whereas 43% moderated “bad food” and drinks, another 29% frequently used food and drinks as a mood booster.
Looking ahead, consumers definitely want to revert this behavior, but continuous restrictions have the potential of straining body and mind even further.
What will stick in 2022
There is a strong trend towards a greater focus on natural, healthy beauty coupled with a sense for energetic, fresh renovation of the self, an aspiration to leave the pandemic behind.
More than 1 out of 2 Europeans is looking to lose weight, 46% want to take up sports and 35% plan to invest in a new look (“things you would like to do most, up to three”).
Consumers feel the desire for moderation and preventative self-care, the need to take care of their health in a holistic sense, balancing physical and mental health.
The pandemic spiked “food as a drug” to cheer up. Now, food as a drug will take a different meaning, not as a soul booster but to boost health and balance.
The interview on the next page describes, how companies like DSM are addressing the increased demand of consumers for food that is at the same time healthy, tasty and sustainable.
Source: GfK ad hoc study Behavior Change
In focus: DSM
DSM: Innovation for sustainable products
Royal DSM specializes in Nutrition, Health & Sustainable Living. The NYSE Euronext listed company delivers solutions for human nutrition, animal nutrition, personal care and aroma, medical devices, green products and applications, and new mobility and connectivity.
Based on 150 years of fermentation and biotechnology expertise, “Brighter Science. Brighter Living.” describes the mission to use scientific and innovation power to tackle some of the world’s biggest challenges, creating value for customers, shareholders, employees and the society at large.
In the interview with GfK, Elisabeth Hirschbichler, Vice President Strategy, Innovation and Marketing at DSM, describes the company’s purpose to bring together taste, texture and health in sustainable products.
During the pandemic, health has become a top priority for consumers and this behavior change will persist, with consumers looking for foods that are healthy and at the same time tasty. In addition, sustainability has become increasingly relevant.
Shoppers are checking labels more often, looking for naturalness, and trying to understand the environmental impact of the products, they buy.
Pressure is on the product value chain to continuously innovate while reducing the time to market, pushing collaboration along the value chain.
Based on its long-term expertise in nutritional science and biotechnology, DSM is addressing the challenges of more sustainable food from different angles: One objective is to make the food a last longer, for example by blending in ingredients such as enzymes, to help reduce the huge volumes of food worldwide being lost or wasted.
Innovative ingredients will also help to ensure the nutrition of a growing population with sustainable, tasty and healthy food.
Source: GfK WCWD report 2021
As consumers are looking to make the “protein transition”, DSM is addressing this major concern in an effort to make animal-based products more sustainable and plant-based products more healthy and tasty.
Hirschbichler says "We at DSM are looking to make plant-based products more tasty, also adding vitamins and minerals to ensure that plant-based alternatives deliver the same nutritional value as animal-based products.”
Another excellent example of DSM’s innovation for more sustainability along the value chain is the product Bovaer, which recently received first market authorization. A quarter of a teaspoon of this feed additive per day reduces the cow’s methane emissions by 30% – a big gamer changer for farming and greenhouse gas emissions.
Watch the full interview
In focus: Water Unite, Who Cares, Who Does: Eco-actives and Mosa Meat
Personal values push purpose purchasing
The most sticky driver of behavioral change is the resolution to shop more sustainably.
Choice hierarchy is increasingly defined by the reflection of values, with shoppers looking for brands and products that smoothly combine lifestyle demands with business for good, for example by reducing packaging, lowering the carbon footprint, or offering sustainable and fair products.
While this development started well before COVID-19, purpose-led purchasing has since accelerated at the expense of functional purchasing.
Key behaviors 2021
Nearly 1 in 3 Europeans has strongly altered his/her purchasing behavior with environmental and social purposes as key drivers – in detail:
37% regularly switched to locally produced products
37% regularly and consciously bought brands that care about animal welfare
30% regularly and consciously bought brands that care about the environment
The biggest – and rising – environmental concern across Europe is climate change, followed by plastic waste.
When analyzing how this translates into shopping behavior, GfK found that 28% of Europeans are “eco-active“, expressing a deep concern about environmental issues and taking many actions themselves to reduce their footprint.
As a result, sustainable behaviors in FMCG shopping are becoming mainstream across Europe, with Germany leading the way: Nearly 1 in 2 consumers is already greening up his/her buying behavior accordingly, as the multiyear global sustainability study “Who Cares Who Does?” found – more on page 5 of this section.
What will stick in 2022
Over 35% more consumers (net growth rate) will switch to locally produced products, in Italy even +52% more.
The same increase in consumers will buy more brands that care about animal welfare and 30% more shoppers will buy more eco-friendly brands.
Purpose has become a sociocultural value and eco-friendly consumption is regarded as an enrichment rather than a restraint. In Europe, the willingness to use buying decisions in an activist way is also very high. The pandemic has stressed “go local”, and it is here to stay. Animal-friendly and eco-friendly will follow.
Purpose Brands Drive Growth
Germany: Purpose Brands Drive Grown
Source: GfK Consumer Panel Germany | Brand types - hierarchy of needs | YTD November 2020, * excluding shares of fresh goods, generic brands
Interestingly, shoppers of all crisis types – resistant, concerned and affected – are willing to buy more in the future, showing that eco-friendly brands are resistant to economic uncertainty.
As FMCG sales spiked during the pandemic, especially A-brands fared well. Taking evidence from Germany unfolds, that in this vastly green market, purpose-led and sustainable brands outgrew other brands at double rates – and at only a fraction of the average promotional share.
However, a lot of discussion and confusion still exists around the consistency of eco-labels and seals. As eco-social consciousness becomes more mainstream, so is the offer of sustainable brands, which will strengthen the demand for transparency and trusted benchmarking.
Similarly, plastic-reduction and packaging continue to be top concerns of consumers with the need for more focused solutions: easy recognition, information and convenience are key in mainstreaming eco-active behaviors.
In focus: Water Unite
Water Unite: Everyone can contribute to the change
The non-profit organization Water Unite works in partnership with the private sector to raise and invest funds for clean water sanitation and plastics recycling in the developing world. The mission is to pull together the retail and bottling sectors globally around the shared idea of a 1 cent per liter micro-levy on bottled water sales, and to attract high value socially conscious consumers.
By buying products from a Water Unite partner, consumers invest in safe, sustainable and social schemes globally.
Started in 2018, Water Unite is already supported by Co-op (UK), Elior UK, The Rockefeller Foundation, Stone, Vitol and One Foundations.
When it comes to social responsibility, Duncan Goose, Founder of Water Unite & Director of Partnerships, still observes a difference between what consumers say and what they do.
However, the shift is happening, with shoppers spending more on eco-active or eco-considerate products, and with retailers and brands translating this shift into action at the point of sale.
Goose predicts, that the FCMG industry will experience “shocks” over the next three to five years with a need for massive adjustments due to consumer behavior changing, which has been accelerated by the pandemic.
The earlier retailers and brands adopt those consumer concerns in eco-behavior, the more they will benefit from more customers interaction.
In cooperating with brands and retailers, Water Unite helps them to adjust to these changes in eco-behavior and to the topics consumers expect to be addressed, such as sourcing, recycling, sustainable production and carbon footprint.
The micro-levy scheme plays into the hands of a wide array of consumers, looking for affordable and convenient solutions that offset their footprint.
Water Unite is already working with a number of retailers, governments, the United Nations (UN) and other stakeholders to apply the micro-levy concept internationally.
Duncan Goose sees that consumers have already started the journey to more purpose-driven behavior.
As the demand is there, retailers and brands now need to help consumers to find what they are looking for. However, to really activate this purpose-driven change will require a joint effort by all stakeholders – politics, businesses, financial institutions and consumers – to support social development.
Goose is convinced: investing in development in one country will have an impact across the world.
Watch the full interview
In focus: Who Cares, Who Does?
Who Cares, Who Does? Meet our Eco-Actives
Shopping sustainably has been an aspiration of many consumers even before the pandemic. Hence, it is not the most abrupt, but certainly one of the most sticky drivers of behavioral change: amongst all the turbulences caused by the pandemic, sustainable behaviors in FMCG are becoming mainstream across Europe.
The GfK multiyear global sustainability study “Who Cares Who Does?” across 26 countries in partnership with Europanel and Kantar, takes a closer look at the two perennial levers of true behavior change: caring and doing.
Across the globe, over half of the population feels sustainability matters more to them due to the pandemic.
The number of eco-active shoppers, who have a fundamental concern about environmental problems and take actions accordingly, has risen from 15% in 2019 to 22% in 2021 and is worth €393 billion in FMCG.
Almost 1 in 4 consumers care and act. Even more so in Europe, where eco-activists now comprise 28% of population.
Sustainability is not “just” a societal obligation, but a business imperative: At this rate, eco-actives will account for half the global population by 2029, even faster in high GDP countries
More than two thirds of shoppers have stopped buying certain products because of their negative impact, and an equal number switched to comparable products that have a positive impact. Categories and brands currently undertrading with eco-actives face major losses.
However, there is still a huge gap between those that value sustainability and would like to take action, and those that actually do: Across Europe, 68% try, but only 33% succeed.
So there is this green waiting room with shoppers, who are not acting, primarily because they feel they either cannot find or cannot afford sustainable products, or they find it hard to prioritize or succumb to in-store distractions.
GfK has identified five steps to close this gap, providing recommendations for manufacturers and retailers alike:
1. Make it understood. Projects to raise awareness are a vital first step. Showing how each individual can contribute personally is key to increase the sense of ownership.
2. Make it Easy. Eco-actives are taking time, for instance, to check labels. Other shoppers will not. Initiatives like digital watermarks for efficient sorting can be great contributions to "econvenience".
3. Make it desirabale. Green is increasingly used as a badge of honor. Tapping into this sentiment will achieve greater involvement.
4. Make it rewarding. A positive emotional pay-off, such a multiplying the impact of a single transaction, can be a great incentive. The greater the transparency and traceability, the greater the engagement.
5. Make it a habit. Conscious shopping should be an always-on option. Front of pack information, clear shelf lay-out, targeted discounts and refill stations help make green a routine.
In focus: Mosa Meat
Mosa Meat: Shape an irresistible product for a better world
Mosa Meat is a food technology company based in The Netherlands. The company’s mission is to completely reshape the future of food by making it easy to replace beef with beef, thus making the world better for the population, the planet, and for animal welfare. Founded by scientist Mark Post and food technician Peter Verstrate, Mosa Meat created the world’s first ever cultured beef burger with the public proof of concept in 2013.
By taking some cells from a cow – with no need to take its life – Mosa Meat uses natural processes to nurture and grow them into real beef.
The company has been working on developing the process into commercial products and estimates, that it will take another two years before cultured meat is commercially available, starting in high-end restaurants.
Bosch states that by using biotechnology to grow burgers from cell samples, Mosa Meat will help to prevent 97% of greenhouse gas emissions from cattle while improving animal welfare.
However, not everybody wants to become a vegetarian and Mosa Meat is paving the way for a change from conventional meat to cultured meat. Replacing meat with meat plays to the habits of people, offering a convenient way to help reduce the environmental damage caused by livestock farming.
The production of animal-based proteins has a huge impact on the environment with up to 20% of greenhouse gas emissions resulting from animal agriculture. During the pandemic, meat consumption even saw an increase in many countries. At the same time, the number of meat replacers is rising and in countries like The Netherlands penetration has reached 55%.
By using biotechnology to grow burgers from cell samples, Mosa Meat will help to prevent 97% of greenhouse gas emissions from cattle while improving animal welfare.
“The interest in cultivated meat is growing as it improves animal welfare, has a positive impact on the environment and also for health reasons. Especially younger generations completely buy into the concept, when they understand it.”
In its effort to replace conventional by cultivated beef, Mosa Meat is currently up against two big hurdles: Price and legislation.
The price for conventional meat, being subsidized, is still too low: However, Maarten Bosch counts that as conventional meat will be priced fairly overtime, and the production of cultivated beef will achieve economies of scale, the price discussion will narrow.
While Bosch sees huge market opportunities for cultivated meat around the world, he also recognizes barriers and lengthy legal procedures, especially in Europe. “Market introduction of a novel food is a lengthy process, but the outlook is positive” – for a kinder, better and healthier way to produce meat.
Watch the full interview
Budgeteering: Juggling cost and value
The years ahead will be marked by a need for budget engineering – “Budgeteering” – understood as balancing budget, lifestyle demands and perceived quality. This is especially true on the background of significant price increases for housing and energy and record inflation, which will inevitably influence the overall size of the shopping basket.
Key behaviors 2021
66% of Europeans checked prices of grocery products they intended to buy
63% paid special attention to quality
52% often / always tried to shop in stores with best promotions
Despite these behaviors being most widely established, the most significant changes in budget engineering due to the pandemic were an increased willingness to splurge on premium paired with an increased need for products with lifestyle benefits such as natural, rich in protein or limited editions.
On the other hand, as trips grew more infrequent but bigger, price sensitivity made way for basket size scrutiny.
What will stick in 2022
Inflation in the Eurozone has soared to +4.9%, the highest since the Euro was introduced and Germany ranks among the bloc’s largest economies where prices rocketed, taking the inflation rate to +6% and energy costs to +22%.
As inflation continues to rise and pandemic-related uncertainties are prolonged, many shoppers will turn toward tighter budget scrutiny.
However, COVID-19 has increased our desire for fresh, local, healthy and safe products.
Balancing budget and lifestyle will result in consumers paying more attention to quality than before, and – equally important – comparing prices, as well as trying to shop in stores with the
Shoppers will choose to trade down on purely functional items, in order to make best use of their household budget. But not at the expense of expectations on added value – on the contrary: they are willing to pay a premium when their lifestyle needs and values are reflected.
The trend towards cocooning will persist, while consumer expectations, related to their values, rising, which opens the road for brands and retailers that excel in offering added value for money.
This represents a strong momentum for added-value private labels or brands with a clear value proposition.
More communication on product benefits is the order of the day. Whereas older shoppers tend to trust manufacturer brands, for younger shoppers, who grew up with private labels, value-added private labels offer a familiar alternative.
Category managers will need to strike a balance between functional brands and value-added brands, while the total basket size remains under pressure.
The pandemic has also upped the strategy for one stop shopping. Hard discounters, which fared quite well in Eastern Europe, experienced tougher times in many western countries, where budget scrutiny was less apparent.
Soaring prices might tilt the scale again, if and when they operate creatively with added-value propositions.
Meet the expectations of more self-determined shoppers
Recent developments and the recurrence of regulations across Europe demonstrate, that the pandemic is by no means over and respective shocks in consumer behavior will last well into 2022.
With a new COVID-19 variant on the horizon, restrictions for many daily routines – from restaurants to retail –, and continued interruptions in supply chains, the economic outlook of consumers is becoming gloomier.
Market players in FMCG have to closely analyze the drivers of behavior change and adapt their strategic business decisions accordingly.
While a Europe-wide recession might be avoided, the short-term shocks in consumer behavior, such as speedy shopping or more meals at home, could last well into the first half of 2022, with the risk of shoppers cutting back on their consumption altogether.
But predictions are fairly unanimous, that economies in Europe will be catching up fast in the second half of 2022.
This whitepaper has described opportunities for brands and retails to capitalize on the behavior changes of shoppers and drive growth:
- By 2025, as much as 40% of the global population could be eco-active. Making sustainability initiatives visible is of essence to push consumer engagement and shopper loyalty
- With lasting regulations, e-grocery shopping will continue to gain value share. However, to win a bigger share of wallet, convenience and safety considerations have to make place for a better shopping experience, prioritizing product findability, decent onboarding, personalized service and rewarding loyal customers
- One-stop shopping has become a key challenge, especially for hard discount stores. Increasing the range of value-added products will be crucial to remain attractive to shoppers
The prolongation of the pandemic is strenuous on shopper health. There is a huge need for easy solutions that promote balanced living. There is a huge opportunity for brands and retailers alike in the realm of preventative health and conscious choices
Food delivery has grown tremendously during COVID-19 and shoppers are getting in the habit of ordering online. Flash delivery is emerging as a fierce contender of out-of-home delivery. Availability and assortment optimization are fundamental in reaching instant everywhere customers
Decisions in category management must take a very differentiating approach to the vast differences in basket size and consumer expectations. A good mix of functional brands and value-added brands, and a permanent reassessment will be key to success. Amidst unprecedented inflation, setting the right price in the right place is more relevant than ever