Post-new normal. Or how brands have to face the looming crisis.

20th May. I’ve been at home for almost 70 days with a newly large family. Covid-19 has changed almost every aspect of our lives. Isolating at home has led us to form new buying patterns and consumption behaviours. Routine and proximity shopping has taken over in order to reduce movement as much as possible, leading to a boom in local commerce and smaller regional supermarkets with reduced, although distinct, and good quality, fresh products. Significantly larger and varied baskets fill our pantries as a result of cocooning (my house is my castle). Disloyalty to our usual product and brand within a context in which shelves are empty and products are frequently out of stock, especially at the start of quarantine. E-commerce and home deliveries are now increasing into triple digits with their overcrowded websites (we’ve seen the birth of virtual queueing!), Amazon vans dyeing our streets grey and the relentless “Glovers” satisfying the foodies’ palates at home, like ants: this is the post-new normal.

We are transferring investment to digital media and social networks and reducing costs in the more traditional channels, despite the fact that we are consuming more Netflix (HBO, Amazon Prime, Disney Plus, etc.) than ever. Meanwhile, we’ve developed skills that we didn’t know we had, and we have become expert chefs, confectioners, teachers and artists, whilst immersed in working at home.

All of this is an exceptional scene of record growth in large consumption thanks to the isolation and storage effect (6% increase in the value of food in the home, Kantar Cum, p.3, 2020), which looks back with a certain relief and see how the out of home plummets (-14%). Those of us who are lucky enough to be involved in this sector haven’t seen this much green in our sales reports in years.

As Xavier Marcet noted in his recent and, as always, inspiring article, once the storm has passed we’ll realise that the things which were essential for us to survive such moments were consistency, trust and humility. And I’ll also add awareness. Awareness of knowing that we are most likely living in a mirage, something temporary, as all that glitters is not gold and the important thing in this ephemeral world of “I’ll buy you today but not tomorrow” is to shine in a way that can be sustained over time.

According to the IMF, a global economic recession is looming, with an 8% drop in Spain’s GDP, record levels of unemployment at 21% and the consequent loss of the household’s purchasing power. In short, a significant decrease in average spending will lead to a decrease in large consumption, close to -3% (source: Kantar estimation). From health crisis to economic crisis. Fear. If this is the eventual case and the predictions are correct, the “new normal” will be short lived. Let’s take heed and at least anticipate what to expect and how to turn it around.

An uncertain but foreseeable future. It is more than likely that there will be a new increase in discounters, with the authorisation of e-commerce that we hope is here to stay, as well as an acceleration of distribution brands, who have already achieved a 40% share during the isolation period (source: Kantar, FMCG packaging). Average prices fall and categories lose value, things that are hard to obtain and easy to lose. In general, the context doesn’t seem to be positive for manufacturer’s brands, as was the case in 2008 and 2011. How do we face this imminent post-new normal and turn this coming crisis into an opportunity? Among all of the strategic options that we could think of, there are two which involve attitudes that are diametrically opposed to the crisis.

The first, and apparently the easiest, is to jump on the austerity band wagon. Assuming that price will become the sales driver and fixating on improving our brand’s competitiveness at any cost with respect to the dreaded “private label” brand. Essentially, this route would significantly increase promotional investment (unlike what has happened in the last few weeks), which would also be accompanied by austerity in innovation and drastic cuts in brand support plans in order to guarantee the bottom line. The closest thing to “bread for today, hunger for tomorrow”. The only way to grow is through market penetration, as we already know, and dedicating a large part of our efforts as brands to trying to keep customers who are only concerned about price won’t lead us to success, as we probably would have lost them in the same way over a short period anyway.

Ultimately, and like any other recession, the most difficult thing will be that our customers remember our brand and make it even more relevant to them after the crisis. Here we go with the second possible attitude (and the only valid one, in my opinion); continuing to replenish our bucket with new buyers. The famous leaky bucket once again. In other words, focus on increasing the likelihood that our products will be bought (but don’t confuse this with loyalty). This, hopefully, goes much further than price or promotion. It’s a matter of activating all of the Marketing Mix P’s in the most efficient and selective way possible. Doing more of what works and less of what doesn’t. Ensuring that we have the basics well covered in all strategic areas and choosing to fight only the battles which will help us grow sustainably. So obvious, yet so complex.

Some ideas? Optimise the distribution of our blockbusters (references with highest inventory turnover), be present on the optimum range of channels and brands that grow and give us the most (Strategic Channel Management). Take the opportunity to replace the references that aren’t working well (cut the tail) and opt only for innovation (maybe in their form) which responds to current needs. Improve the numerous promotions with zero increase and negative ROI (Revenue Management) and free up resources to continue supporting the brands, despite the crisis and the EBIT target. Be modest with price positioning. Find the message which “clicks” in the minds of your customers and choose the right touchpoints to hit them with, using simple but memorable creativity which is focused on what makes our product or brand unique and different. Take care of and give visibility to our packages on the shelves with blurred planograms after the craziness of isolation. Measure degradation regularly and ensure, without doing anything risky or crazy, that our packaging highlights and communicates the value of the product. Ensure consistency of our in-store branding, even through visuals in temporary places where our customers will make most of their buying decisions. Ultimately, repair our roof. As in real life, we should do this when the sun is shining (now, during our growth) and avoid the rain (the crisis).

In the end, beyond all of the strategies and our attitudes in face of the crisis, the key to all of this is the people. As there’s always so much to do and only the companies which choose talent and the best partners (agencies, suppliers, clients, etc.) will be able to come out the other side with certain guarantees and even grow, despite the crisis. As my boss’ boss says, “Stay safe, stay kind”. And I’ll add, stay happy. Either we smile through the crisis or we’ll not be able to afterwards.

About the author: Jordi Berenguer Vall-llobera
Head of Trade Marketing & Field Iberia in Upfield
Former Marketing Director Spain in Upfield
Former Marketing Manager Chocolate & Ice Cream Iberia in MARS
Passionate marketeer and brands lover
June 2nd, 2020 | Branding
Little Buddha Brand Design Agency

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