Nielsen Global Connect, the global measurement and data analytics company, today announces a new global framework which identifies how businesses across global markets will navigate new economic challenges in the COVID-19 pandemic environment. ‘Rebound’ relates to a fast recovery in the third quarter of 2020, ‘reboot’ to a medium-term scenario that is positioned in the fourth quarter of the year, and ‘reinvent’ looks to a general return to normal living conditions at some point in the first half of 2021.
The UK has been designated by Nielsen as looking at a ‘reboot’ scenario. The UK retail industry’s path to regeneration as it moves on from the COVID-19 pandemic will be marked by a delayed recovery towards the end of the calendar year, and businesses must therefore adapt to new customer behaviours. The framework clearly distinguishes recovery from COVID-19 from that of the 2008 financial crisis, whose nature was entirely different and therefore should not be used as a direct comparison.
Although many have hoped for a ‘rebound’, or V-shaped, recovery in Britain, the government has indicated that we are looking at a long path ‘back to normal’. As such, many restrictions are likely to remain in place for a longer period – and it is this delayed transition that means the UK will need to look to the reboot model.
The three scenarios reveal new and adjusted consumer behaviours that will lead to different types of demand in terms of what, where and how consumers make purchases. They also point to a series of common characteristics likely to be exhibited by consumers over time. These are based on the conditions currently in play to manage the virus on a global basis, with localised outcomes for each market.
In the UK, there will be a greater strain on economic, financial and social factors as British consumers are likely to spend longer periods in restricted living. The consequences will therefore become exacerbated and require strategies to reboot economies and consumption, where manufacturers and retailers will need to reconsider, re-stimulate and even reformulate their portfolios and ranges to meet altered demand and needs.
In response to the UK’s environmental and lifestyle conditions and shifting consumer priorities, Nielsen has identified six major areas of change that will impact the FMCG industry as the UK moves towards the ‘reboot’ stage of recovery:
- The emergence of two different spenders: The ‘Insulated Spender’ who has not yet been financially impacted but will be cautious, and the ‘Constrained Spender’, whose employment has been severely impacted and will need support.
- Polarised consumer baskets: Insulated spenders will spend more on indulgence, while constrained shoppers will be entirely budget-focused and will look to bulk purchases and pantry necessities.
- Reassessed pricing strategies: Promotional depth and frequency will change as some products may continue to have price caps and others are price protected goods for vulnerable consumers.
- Reprioritising values: Greater value placed on health and hygiene across all products, as well as technology that reduces risk from interactions.
- Rising preference for local products: The argument for self-sufficiency will become even stronger.
- New standards of communication: Reputations are at stake for retailers and manufacturers – the actions businesses take during this crisis are very public and customers care
Scott McKenzie, Nielsen global intelligence leader at Nielsen, said: “Much has been made of comparisons to the 2008 global financial crisis, but this situation doesn’t make for accurate comparisons. The circumstances back then were fundamentally different.”
“Thousands weren’t dying each day, millions weren’t locked in their homes indefinitely, businesses weren’t ordered to close their doors, kids were still in school. The impact of this will be profound and more far reaching than anything we’ve seen in our lifetimes. The pace of change is also extraordinary.”
Paul Walker, Nielsen UK & Ireland managing director, adds: “It is essential that retailers and businesses across the retail supply chain ensure that they are well prepared to make the sufficient changes in order to live up to the demand from consumers, as well as the changed behaviours from UK shoppers. The ‘reboot’ scenario that Nielsen has identified for the UK means that retailers and brands need to urgently examine their strategies as they plan for their path to regeneration. There is unlikely to be a return to ‘normal’, and success post-pandemic will require understanding of how your brand, marketing strategy and product mix is able to recalibrate to meet the changing needs of these two key consumer groups – the insulated and the constrained.”
Walker concludes: “Never before have we had so many people out of employment so quickly, with mounting income pressures, the closure of many businesses and an ongoing health crisis in which many lives have been lost and for which there is currently no vaccine. Retailers and brands therefore need to reassess their priorities and consider how they can demonstrate care and empathy as well as providing a service to gain loyalty in the long term.”