COVID-19 Part 2: The Impact of CPG and Retail on COVID-19

Two months have passed since the COVID-19 pandemic. With that comes a new wave in consumer behavior. Consumers are getting more used to their current lifestyles and anticipating how shopping will be for them after the crisis passes.

The new trend is to prioritize comfort foods over paper and pantry products. Our latest survey about the impact of COVID-19 revealed that sweets, frozen pizza, and salty snacks were top-of-mind for shoppers when they looked at their shopping lists.

However, we are also witnessing trends consolidate, with ecommerce continuing to grow in popularity, and in-store visits continuing to decline. This is directly related to rising concerns about the virus, particularly among seniors and those living in hard-hit areas. According to the Centers for Disease Control recommendations, shoppers make 52 percent fewer shopping trips.

As e-commerce continues to gain popularity, the COVID-19 pandemic will likely have a lasting impact. Our latest survey of shoppers found that 51 percent placed an order online in the four-week period ending April 7. In addition, 33% placed their first online order within the four-week period. This is an increase of 5% over our previous report. The best part is that 75 percent of online shoppers reported being very or extremely satisfied by their online grocery shopping experience.

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Are all those online shoppers going to continue shopping that way? We asked shoppers to use their imaginations to predict how shopping will be for them after this event. 31% of shoppers stated that it is very or very likely they will do more online grocery pickup and delivery than before.

The forecasts for shopper behavior are mixed. 47% of shoppers believe they will be less likely to go to the grocery and will stock up more on what they buy. However, 68% said that it is extremely or very probable that they will return to pre-pandemic grocery shopping habits. 58% of shoppers believe it’s very or very likely they’ll return to their old eating habits, but only 56 percent say that it’s very or very probable that they’ll eat more at home than before.

What does this mean for retailers? It is important to ensure that retailers have e-commerce and digital shelves in place for the accelerated growth and sustained customer demand.

Another area to focus on is lifting the spirits of shoppers. It is important to celebrate birthdays and graduations, as well as grilling season. Retailers need to provide a variety of comfort foods and snacks, as well as essentials. With the likelihood that people will stay at home in the months following COVID, it is important to provide “solutions” for shoppers that are focused on food and self-care.

Retailers should also continue to meet the needs of shoppers in terms of safety and finances. To ensure safety for shoppers in-store, stores should allow no-touch transactions wherever possible. This includes Apple Pay and self-checkout. It’s also important to remember that shoppers with lower incomes are often the most vulnerable. Many people may be using stimulus checks for food and other necessities. They will likely look to trade down or leverage grocery promotions in the near future.

The CPG industry is certainly on edge with the COVID-19 pandemic. Retailers and brands must continue to be aware of changing customer attitudes and behaviors and respond quickly to their customers’ needs. They’re doing an amazing job of rising to the occasion.


J.C. Penney files for Bankruptcy Protection

J.C. Penney filed to bankruptcy protection Friday. The company plans to close certain stores permanently and explore the possibility of a sale. The family-owned department store chain is known for selling jewelry, cosmetics, and apparel at over 850 locations. It reached an agreement with existing lenders to provide $900 million in debtor-in possession financing to help it through bankruptcy proceedings. J.C. Penney will reorganize the company and emerge from bankruptcy proceedings having eliminated several billion dollars worth of debt. However, the new financing will allow it to explore selling as part of its terms. It also stated that it would close some stores in stages and will provide more details in the coming weeks.

Total Retail’s View: It is no surprise that this iconic retailer filed for bankruptcy. We reported last week that J.C. Penney had just days to file bankruptcy and was scrambling for enough financing to allow the company to continue operating under Chapter 11 proceedings. More than 80,000 employees have been laid off or furloughed and two deadlines for debt payments missed. This month, the company also resolved a legal dispute with Sephora, LVMH beauty chain that threatened to terminate its agreement to sell cosmetics in J.C. Penney shops. J.C. Penney is now the latest brick-and mortar retailer to collapse in the wake of the COVID-19 pandemic that has been threatening long-troubled retailers. J.C. Penney had nearly $4 billion in debt before the coronavirus epidemic. This was combined with pressure from discount retailers and ecommerce companies. Bottom line: It is sad to see J.C. Penney at its current level. Friday’s bankruptcy filing ends a long decline in the 118-year old department store chain. It was founded in rural towns that were dominated by farmers and had more than 1,600 locations at one time.

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