Both the “economy” price tier and “premium” price tier have grown in Mzansi’s retail sector, retailers have cut back on price promotions, and marketing messages are to become increasing emotional. These are some of the key insights from a recent NielsenIQ report to assist companies in the fast-moving consumer goods (FMCG) sector to make sense of post-Covid shopping trends.
NielsenIQ Analytics Intelligence conducted a regional client webinar titled “Navigating Through Turbulent Times” to provide a comprehensive study of price and promotions trends.
The granular data made available by the analytics division’s use of weekly store-level modelling, at an item level, to estimate the impact of pricing changes or price elasticity, was a key strength of the insights given during the online event.
Speaking after the event, NielsenIQ South Africa MD Ged Nooy commented, “South Africa remains one of the most price-sensitive countries in the world. However… price sensitivity has not changed significantly from what it was pre-Covid. Rather it is their reaction to price changes that have shifted, and they are making far more strategic lifestyle changes and tactically re-assessing how they spend their money.”
Price shifts
A key question around shopping trends, asked during the webinar was whether NielsenIQ expected consumers to become more price sensitive.
“We don’t expect that to happen. Consumers are looking for value, but it is not the only attribute of concern. The number one action towards household spending is to weigh up the attributes of the product that matter the most to their current life situation,” Nooy says.
“This has seen price tiers evolving with both a growing economy price tier and a growing premium price tier.”
“This stems from the fact that there are now insulated consumers who have jobs and have re-engineered their lifestyles around a new Covid-19 reality. They are purchasing premium FMCG products to allow them to emulate a premium-type experience at home.
“On the other side of the coin, there are constrained consumers who are struggling financially and have been forced to make tactical changes in their purchase behaviour, such as buying economy brands and private label products.”
A new kind of promotion?
The webinar also specifically addressed the role of promotions amid the new Covid reality. NielsenIQ found that during the lockdowns, retailers did not change everyday prices and rolled back on promotional intensity to preserve the supply chain. They did not want to put even more pressure on the supply chain by adding additional purchase drivers like promotions to an already fraught mix.
A human connection
To counter these types of inefficiencies, some key insights shared during the webinar included that retailers need to look beyond merely communicating price and start communicating at an emotional level.
“For example, back-to-school promotions should tap into consumers’ mindsets around this real-life event and be designed around this need-state to create promotions that connect and resonate with consumers,” Nooy says.
Another catalyst for the rise of a new era in promotions and shopping trends is a significant increase in the usage of e-commerce during lockdown by certain key target markets.
When these types of consumers go online, it’s a convenient, user-friendly, pleasant experience and they are now seeking promotions that streamline their decision-making process and add to the level of ease of their shopping experience.
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