NEW YORK — Companies preparing to navigate an uncertain post-pandemic future should reframe their thinking from recovery to regeneration, said Scott McKenzie, global intelligence leader at Nielsen.
“Recovery is not a realistic word right now,” he said. “Regeneration speaks very much to a recalibration of what consumers will do and what companies will need to do in acknowledgement of the change that has come.”
Nielsen identified three scenarios to help companies better prepare for what may lie ahead. While each scenario leads to different kinds of demand in terms of where and how consumers make purchases, they also point to common behaviors likely to be exhibited over timest.
Financial constraints, growing adoption of e-commerce, reliance on essentials and easy authentication for health and wellness claims are just some of the changes that companies will need to respond to in the weeks and months ahead.
“Being in listening mode and action mode at the same time should just be the new way of working, but at speeds that we’ve never seen before,” Mr. McKenzie said.
The first scenario sees a rebound occurring as early as the third quarter — if the spread of the virus is significantly contained in the weeks ahead. Under such a scenario, supply would start to normalize, product availability would stabilize and potential price impacts would be minimal. Some consumers would begin converting back to their previous preferences. Increased attention on health and wellness would persist, with consumers looking for products with claims that are easily backed up.
“More than ever with the products we buy, we want to know they do the jobs they say they do,” Mr. McKenzie said. “Efficacy is huge.”
Consumers also will want transactions that don’t involve proximity to others. Interest in zero-touch packaging, disease-resistant packaging, no-contact delivery and no-contact checkout will increase.
The shift away from brick-and-mortar toward e-commerce will continue gaining momentum, Nielsen predicted.
“Those experiences need to get better and they need to get better faster,” Mr. McKenzie said. “That means collaboration between manufacturers and retailers will also need to be amplified as retailers make bigger investment into their digital platforms.”
These changes would further accelerate in the second scenario, which sees a reboot occurring in the fourth quarter. Wallet restrictions would be tighter and reliance on essentials would increase. More value would be placed on products made with local ingredients.
“There's a real concern about products that may have crossed multiple borders,” Mr. McKenzie said. “People are looking for contactless experiences and guarantees of safety and hygiene along with the products they buy, hence products that come from a shorter supply chain. This affinity and trust that comes with local is something chains and big brands are using, but they’re having to rethink that positioning that may already be in their wheelhouse.”
The third scenario sees a return to normal living conditions occurring during the first half of 2021. Changes outlined in the previous scenarios would have an even bigger impact on the way companies operate. Polarization of purchasing patterns between consumers with insulated spending levels and those with restrained spending habits due to unemployment or other COVID-19-related challenges would also increase, requiring companies to examine pricing dynamics.
All three scenarios result in changes that may have otherwise taken years to evolve.
“Not innovating, not changing your product flow and adjusting what your product portfolio looks like … would be a fundamental mistake,” Mr. McKenzie said. “A wait-and-see mindset may work for costs, but what we’re faced with right now is going to require real-time innovation adjustments, real-time pricing adjustments, real-time assortment and portfolio adjustments. Recalibration is the name of the game right now.”