Only 38% of consumers in the UK remained loyal to their usual brands in supermarkets during the pandemic.
The research by artificial intelligence specialist Antuit.ai found that consumers who switched were more likely to have traded down on grocery brands during the period than those who traded up from own-label to brands. 20% said they traded down from brands to own-label during the pandemic, compared to just 14% who traded up.
Saving money was the main motivation for those switching to own label (55%), followed by 30% who wanted to try new products and 29% who were concerned about financial uncertainty. Lack of product availability – from the panic buying that left shelves bare at the start of the pandemic to the shelf gaps prompted by Brexit and the more recent ‘pingdemic’ – also impacted customers’ choices when it came to brands. A quarter (25%) of those trading down did so because their normal brand wasn’t available, with a further 23% saying lack of choice on the shelf had prompted them to switch.
Meanwhile, those who opted to trade up said they had opted to spend more on ‘finer’ foods and allocate more discretional spend to groceries because they weren’t socialising (38%), while a third (33%) said they were happy to trade up to support local brands and businesses at a difficult time.
However, as the pandemic eases, just 15% who traded up plan to stick with their pandemic buying habits and will revert back to the own-label goods they bought before the Covid-19 crisis. Meanwhile, the 38% who trading down said they would make the switch from brands to own-label permanently.
Siva Lakshmanan, co-CEO at antuit.ai, commented: “Consumer packaged goods companies (CPGs) had to deal with a very ‘mixed bag’ over the course of the pandemic – with demand fluctuations prompting unprecedented, unforeseen and fast-changing consumer spikes in sales on the one hand, and supply chain disruption and raw material and labour cost uncertainty on the other. Our research shows that the pandemic confirmed history is not our only indicator of the future, therefore conventional forecasting models are unable to predict the unpredictable.
“As brands look to recover post-pandemic, the imperative will be on making demand forecasting more robust and able to deal accurately and quickly to permanently changed behaviours and the complexity Covid-19 has caused. And that relies on using AI and machine learning to bring together and make sense of disparate data sets – from planning and allocation through to pricing and promotions – to optimise demand modelling so CPG companies can make better predictions immediately and improve long-term performance.”
NAM Implications:
- Curious that a move to private label is still regarded as a ‘trading down’ move.
- See Gen 4 of our paper ‘Four Generations of Private Label’
- That said, ‘Saving money was the main motivation for those switching to own label (55%)’…
- …and branded suppliers need to factor that in.
- The key is reassessing relative competitive appeal within your post-Lockdown categories…
- …whilst ensuring you include private label (all Generations) as ‘available competitors’.
