June 2020 Settling In

JUNE 2020 SETTLING IN The past month has been a Whatever the words may be, we To reflect this new reality, you challenge, to say the least. As know there’s been a shift. We will see some changes in The the country grapples with the are making space in our lives for Drop this month. We brought impacts of its shameful history, more than just the pandemic. back our old format with some we continue to fight a global We are strengthening new new elements incorporated to pandemic while awaiting a muscles we never knew we had. help us understand the short- seemingly inevitable recession. We are adjusting to new and long-term impacts of the routines within our homes. trends we’re seeing. As strategists, and humans, we’ve struggled to find words to So while it may not be our new Please enjoy the June edition use for this moment. Is this our normal, we are settling into this of The Drop. We hope, as new normal? Are we finally in reality. As a result, we’re seeing always, that it provokes and the receding phase? Are we people revisit major aspects of inspires you. collectively grieving, collectively their lives, like what it means to THE DROP: JUNE 2020 THE DROP: awakening, or both? be healthy, where they live and how they buy their products. 2 JUNE 2020 THE TRENDS DTC GROCERY POST-PANDEMIC SPACES WELLNESS IS EXPERTISE BIG CITY EXODUS BEYOND SOLIDARITY GENERATION ANXIETY TREND 1 DTC GROCERY Consumers have grown comfortable with shopping online due to the pandemic. As a result, major brands are shifting into the direct-to-consumer (DTC) space to capture the attention of these new online shoppers. These brands are finding major success in their DTC tactics, indicating that the pandemic has broken down barriers for large brands in DTC. • PepsiCo • PepsiCo launched two DTC offerings: PantryShop.com, which is similar to a meal-kit site and offers a variety of bundles that include brands like Quaker, Gatorade, SunChips and Tropicana. The bundles are grouped by occasion or attribute— like the “rise and shine” bundle or “protein” bundle. The second site is Snacks.com, where consumers can create snack bundles of at least $15 with their favorite chips. Both sites offer free shipping. • Kraft-Heinz • In the UK, Kraft-Heinz launched Heinz to Home to help get its products into more homes during the quarantine and to assist frontline workers strapped with time. The website offers four bundles: The Essentials Bundle with canned favorites, The Sauces Bundle with popular condiments, the Classic Beanz Bundle with Heinz’ famous baked beans and the Baby Bundle, which allows shoppers to pick a bundle of baby foods according to age and preferences. NHS workers would receive shipping for free. • AB InBev • AB InBev was already trying out the DTC in places like China and Latin America, but the pandemic has pushed them into a swift adoption of the DTC model. Zé Delivery, their Brazil-based delivery service, received more orders in April 2020 than in all of 2019 combined. The brand’s DTC sales net around $1 million annually, and have even inspired the company to make changes to its packaging sizes to be more conducive to online bulk shopping. Shopper Implications Making connections to beloved brands • DTC allows shoppers to engage directly with their favorite brands and creates an emotional connection that can be hard to create in-store. • When ordering through DTC, shoppers never have to search for their favorites in-store or risk them being out of stock. Instead, they can easily purchase all their favorite foods to their door in a matter of days. Taking shoppers away from retailers • Retailers will be fighting even more for shoppers’ attention as large brands begin skipping traditional distribution and putting their products directly in the hands of the shopper. 4 Sources: Cassandra Daily; Fast Company; AdExchanger TREND 2 POST-PANDEMIC SPACES It will be years before shoppers feel comfortable trying on clothes someone else has worn, waiting in line next to 15 other strangers, or asking an employee for an in-depth consultation again. A survey by Rakuten reported that safety and speed are the top priorities for in-store shoppers right now. If retailers want to win at brick-and-mortar, they’ll need to completely reinvent the in-store experience with the safety of their shoppers and employees in mind – and fast. Industry leaders are considering a range of solutions to ensure consumer comfort and safety, from touch-free experiences like automatic doors and contactless payment, to health precautions such as thermo-scanners, sanitizing stations and even antiviral furniture. Some other examples include: • Contactless payments, like Alibaba’s Alipay and Smile-To-Pay, have newfound relevance in a contactless-world. • Some retailers like Best Buy have pivoted by opening for appointment-only shopping to monitor store traffic. • The opportunity is rife to leverage AR in new ways for virtual product trials like Mac’s virtual makeup mirrors and ASOS’ virtual clothing try-on. • Brands and retailers are thinking beyond just alleviating negative impacts to providing health-boosting experiences, such as Stella McCartney’s flagship store that features a system that filters out 95% of pollutants for a clean-air shopping experience. Whatever approach retailers take, one thing is clear: if shoppers don’t feel safe, they won’t shop. Shopper Implications Prioritize retailers that prioritize safety • Retailers that are taking the necessary steps to make shoppers feel safe in-store will stand out to shoppers, and brands must take this into consideration when working with various retailers. Brands that break down safety barriers will win • Consider what role your brand can play in alleviating some of these safety barrier of if your brand has a right to create health-boosting retail experiences. Sources: WWD | USA Today | TrendWatching | eMarketer | Rakuten | The Drum 5 TREND 3 WELLNESS IS EXPERTISE The pandemic has resulted in consumers’ mindsets changing around health and wellness. Gone are the days of homemade house cleaners as consumers are now looking for products with scientific backing to put their minds at ease. In fact, 48% of shoppers believe a brand’s technical expert is a credible spokesperson on issues related to the virus and the brand’s response. As a result, brands are quickly shifting their manufacturing models to create hand sanitizers, masks and anything else to help during the pandemic. Some massage and spa companies are even including COVID testing and doctor visits in their spa packages. A study done by Accenture found that 69% of respondents in China said that a healthy configuration is their top consideration when looking to buy a new car. Which means industries not previously affected by health and wellness trends are now being considered for their contribution to consumers’ well-being. The past few months, health has been at the forefront of our lives more than ever, and brands will need to show consumers how they are actively improving our lives in order to stay relevant. Shopper Implications Claims and expertise will win • Brands will need to offer consumers reassurance when it comes to the information they share through scientifically backed claims and information. Every brand is a health brand • Retailers and brands alike need to understand their role in keeping consumers healthy (e.g., immune- boosting food ingredients, disinfectant products, immune health aisles/displays, sanitized spaces) and reconsider how they can reposition or repurpose product offerings in the name of health (e.g., Best Western offering up hotels as hospitals, Budweiser making hand sanitizer). Sources: Accenture; TrendWatching; Industry Report 6 TREND 4 BIG CITY EXODUS The pandemic has been especially devastating to cities, where the virus spread rapidly due to the large populations and denser living conditions. To reduce the risk of infection, hoards of people fled big cities to summer homes, family homes or rentals. For example, The Atlantic reported that 420,000 NYC residents left for some period of time, and experts believe that many of those who left big cities won’t come back. This is due to a number of factors: • Cities were already losing residents before the pandemic, as they have become less and less of a draw for young residents, due to high rents and a changing labor market. And the things that drew people to cities in the first place—large parks, public transportation, a bustling downtown and fun nightlife—now feel treacherous to take part in. • The rise in remote work makes it easier for people to work in more suburban and rural areas and, as the New York Times puts it, has some people “reconsider[ing] whether they need to live in the middle of a big city after all.” With large companies in Silicone Valley instituting indefinite remote work orders, many other workplaces will soon follow. • Hourly and essential jobs that once kept cities alive have nearly disappeared due to the pandemic, and many of these workers are unsure what role they will have when cities reopen. The impact of this exodus will be large, and will change anything from the way our cities are built to the way we shop. Shopper Implications Retailers will need to adapt • As shoppers live farther apart from each other, the same-day delivery we have become accustomed to will become more difficult logistically for retailers. • Moving out of the city means more driving and larger houses, which means we will see more pantry stock-up trips. Retailers will need to expand their footprint and offerings in order to keep up. Sources: Kinder Institute; The Atlantic; NYTimes 7 TREND 5 BEYOND SOLIDARITY For many people across the world, the end of May marked a long-overdue racial reckoning.

Load more