Country specific insights
by Felipe Alonso Muniz
In view of the generally rising prices, consumers are looking for ways in which they can still shop at roughly the same level as before. In principle, shoppers have three options:
Whereas the latter means looking for and using promotions, cheaper mostly means switching from brands to private label, and buying less means doing without. All these trading-down strategies vary from category to category.
We are currently seeing very high promotion shares in brand sales, even higher than in the pre-COVID year 2019 – and thus 'historically' high. At the same time, we observe brands that are showing a negative sales development – and, in particular, that established newcomers and premium brands are struggling. This does not imply that fulfilling lifestyle needs is becoming less important for shoppers, but they are increasingly resorting to premium private labels.
For all four macro trends we follow – convenience, sustainability, health and premiumization – we see premium private label representing an alternative for sophisticated shopper needs in times of inflation.
Remember that in crises – climate change, COVID-19, war in Ukraine, and inflation –, shoppers will be creative to meet their needs.
For brand manufacturers and retailers this represents potential and risk at the same time: It is imperative to adapt their strategies to the needs of shoppers. creative to meet their needs. For brand manufacturers and retailers this represents potential and risk at the same time: It is imperative to adapt their strategies to the needs of shoppers.
Top shopper strategies and main category
Source: GfK Consumer Index 29 March 2022, Germany
by Dr. Constance Scheffler
Although the beauty and homecare sectors continue to slowly recover from more than two years of pandemic, they - like the entire FMCG sector - continue to be affected by the war in Ukraine, disrupted supply chains, increased energy and commodity prices in times of rising inflation. Less home office activity and more travel have caused the homecare sector (detergents, cleaning products) to fall by -3.6% in private household consumption expenditure for the first five months of this year compared to the same period last year. The beauty sector (cosmetics, body care) could benefit from the elimination of numerous restrictions due to the pandemic; consumption expenditure increased by +4.9% within the first five months, but current market realities might put a strain on this early recovery.
year. The beauty sector (cosmetics, body care) could benefit from the elimination of numerous restrictions due to the pandemic; consumption expenditure increased by +4.9% within the first five months, but current market realities might put a strain on this early recovery.
If we look back exactly three years in time ‘pre-crises’, the dynamics have decreased in most categories. Only within paper goods can the shopper now choose between more brands and more SKUs. Within cleaning products, more brands are also available. In categories such as Facial Care, Hair Care, Cosmetics and Shower, there are actually fewer brands and SKUs listed than in 2019, despite many new product launches and beauty trends such as "Glow", "Fermented Skincare & Skincare Acids" and "Skinimalism".
and Shower, there are actually fewer brands and SKUs listed than in 2019, despite many new product launches and beauty trends such as "Glow", "Fermented Skincare & Skincare Acids" and "Skinimalism".
Price versus trips: category patterns
Source: DE GfK Consumer Panel CP+ 2.0 FMCG
Next to less brands being available, the intensity of promotions in the deodorant and shower categories has also decreased compared to 2019. Still facing declining shopping trips however, shopper reactivation is rather urgent.
As the price levels within for example the shower category are clearly positioned by brand manufacturers and private labels alike and the change in paid prices is (still) moderate, it remains exciting to observe which demand shifts and product range changes will be pushed by which shopper segments in the future.
One thing is for sure, in store confrontation and key occasion management must be high up in the shopper marketers’ playbook. be high up in the shopper marketers’ playbook.
Shower category: price range strategy
Source: DE GfK Consumer Panel CP+ 2.0 Individual, shower, MAT May 2022
by Davy van Raemdonck
The Belgian market is relatively price-driven – or rather Belgian shoppers are quite fond of price incentives. With high levels of private label, a high share of discounters, the most appreciated retailer being a discounter, and price slightly trumping quality in product orientation, the price game is nothing new on the horizon. Though admittedly, reducing Belgians to price-hunters does not really do justice to what really is an (added) value for money pursuit. Compared to other nearby markets, promotions and ads are strongly embraced by shoppers to optimize their product-value mix.
Downtrading and brand switch
Source: GfK BE Inflation Tracker | May 2022 Consumer Panel
It is noteworthy we are not seeing an uplift in economy brands, as the value-for-money perception seems to favor private labels. Brands must really work on their added-value-for-money perception via assortment relevance and innovation, clear brand communication and broad distribution to ensure, that as many shoppers as possible are swayed in the moment of truth. After all, penetration still is and will remain the road to growth.
by Diana Scaunasu
With nearly 1 in 2 Romanians struggling financially, ‘normality’ seems a far-flung dream. People are pushed back to their homes – once again. This time not because of a pandemic, but because they simply cannot afford to splurge.
Up-versus downtrading
More than elsewhere in Europe, as many as half of Romanians plan to cut down on their out-of-home spend, staying and cooking at home. The consequences of this continued cocooning are very visible when we look at the category dynamics so far: significant up-trading in fresh foods and sizeable down-trading in personal care. This definitely offers opportunities for e. g. meal components. But make no mistake: the times of homely indulgence are over.
Category growth and decline
Source: GfK Consumer Panel Romania | Total FMCG
by Ilse van Velden
The position of the Netherlands is an interesting one in this matter: a highly internationalized economy and an affluent society with the highest share of crisis resistant shoppers is now suffering from higher food inflation rates as many other countries in Western Europe.
Brands and private label shares
Looking at the latest market developments, the cost-of-living crisis has clearly taken hold of Dutch consumers: 40% of the crisis resistant shoppers are worried about grocery price increases and will adjust their behavior accordingly. If shoppers in the Netherlands were to purchase the exact same basket of 55 base products as six months ago, they would now have to pay 16% more. This, of course, does not go unnoticed. Shoppers of all groups are down-trading, and especially open market private label is profiting, with shares +2%, even compared to pre-COVID.
Basket cash bill increase
Source: GfK Consumer Panel Netherlands, total FMCG value
by Myriam Martensen
In Denmark we can clearly see an escalation of coping strategies. Starting with buying more on promotion as a first reaction, now we see shoppers moving bigger parts of their spending to discounters and private labels as well, as price levels are increasing.
In general, Danes cited sticking to promotions and strictly planned buying as preferred ways to cope. So, this means sticking to a shopping list and especially increased attention to retailer promotion leaflets. Inherently, this is bad news for those categories that are characterized by a high impulse level, but not matched with high promotion levels. Confectionery is definitely one to watch. Nearly 60% of cited future coping strategies in the category are either buying less, or not buying at all anymore.
Manufacturers and retailers alike have to make sure their promotions are as effective as ever, or they will end up losing buyers. Single price offs might be more functional at this stage than multibuys to keep penetration levels up. Because as we know, once they’re gone, it is not so easy to get them back. have to make sure their promotions are as effective as ever, or they will end up losing buyers. Single price offs might be more functional at this stage than multibuys to keep penetration levels up. Because as we know, once they’re gone, it is not so easy to get them back.
Categories: impulse vs. promotion
Source: GfK Consumer Panel – Impulse Share and Promotion Share, MAT Feb 2022
