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Many grocery stores and other retailers providing essential goods have gone to great lengths to ensure safety within the parameters of their stores. But worldwide restrictions have prevented non-essential retailers and brands from even attempting to take the same steps.
Once this global crisis end and the restrictions around shopping lift, consumers will have many questions about the safety of shopping:
According to J. Walker Smith, brands themselves hold the answer to this question. Smith, called one of America's leading analysts on consumer trends by Fortune magazine, is the chief knowledge officer at growth consultancy firm Kantar.
The Digital Shelf Institute recently hosted Smith on its latest Digital Shelf Virtual Summit session, where he outlined how brand manufacturers could leverage the Kantar Signaling Framework, a straightforward, four-step system for regaining momentum in the market.
Smith described the ongoing COVID-19 pandemic as a “demand shock,” an unexpected and drastic crisis in demand. The latest International Organization’s Labor Report showed that working hours in Q2 are down 10.7%. Projected consumer spending in Q2 will be down 50% compared to 2019, according to The Conference Board.
All of this adds up to a shockwave of nearly unprecedented proportions felt by brand manufacturers across industries and regions.
Smith likens the longer-term result to this to that of the local economic damage wrought by past major hurricanes. In such situations, the economic opportunity presented through rebuilding often results in higher returns than what was generated in pre-hurricane conditions.
Initial data forecasts have similar results on a macro scale over the next 12 months: Goldman Sachs is forecasting 5.5% U.S. GDP growth in 2021.
But brands have a significant part to play if the economy is to realize this growth. The primary tool they have at their disposal is what Smith called “signaling,” which are the clear indicators that brands can put into the market to highlight that they are ready to handle consumer demand again.
One of the most recent examples of signaling is clearly seen in the airline industry after the 9/11 tragedy. To give consumers confidence in the safety of flying on commercial flights, the U.S. government rapidly created the Transportation Security Administration (TSA).
The goal of the TSA: Give a clear signal to prospective flyers that the airports were safe and precautions were being taken to protect them, both in terms of function and theatre.
In the post-COVID-19 environment, Smith argues that the top signal brands can provide to the market is that they are ready to do business again, but with a new focus on hygiene. If brands can convince their target consumers that they can shop safely — both at their physical locations and with the products they offer — then demand will return in a big way.
The Kantar Signaling Framework outlines the four key steps brands must take to reignite market demand amid the COVID-19 crisis: protect the space, reconsider your audience, innovate with hygiene at the core, and partner in unexpected ways. Smith stressed that hygiene would be the primary concern for shoppers and must then be at the center of each step.
When it comes to recapturing demand, the most urgent task is making sure customers feel comfortable in physical shopping locations. Grocery stores and other retailers that specialize in essential items have provided a template for brands to follow. For example, implementing clear in-store indicators for how shoppers can practice social distancing within stores.
The next step for brands, according to Smith, is understanding the root causes of anxiety for shoppers, including concerns about physical items and spaces. Once brands understand shoppers' concerns, they must address them directly.
Both society and individuals have changed due to the ongoing pandemic, which is why typical audience segmentation may now be antiquated. COVID-19 continues to impact the U.S. at differing times — and at differing levels of intensity, for example. Shoppers in the Midwest may require drastically different messaging than shoppers in the Northeast.
As Walker puts it, now is a time for examining a “deeper understanding of human needs.” Brands that can segment their audiences in a way that best fits the current economic environment — not the environments of yesterday — stand to win more than their fair share of the returning demand.
Much of the U.S is entering the third month of quarantine. Smith stressed that this is more than enough time for new, potentially permanent habits to form. In attempting to understand the new consumer experience, it's essential to keep the idea of habits in mind.
Some old habits have remained throughout the pandemic — while some have gone away. The new practices that have been introduced, however, will likely stick.
The alcohol and beverage industry presents several examples of this prediction:
Now is not the time to resort to old and familiar themes of market competition and dominance. In the spirit of signaling confidence to buyers in the safety of purchasing the types of products you sell, Smith recommended that brands pursue initiatives like joining with competitors on shared initiatives or finding new, non-traditional partners for go-to-market activities.
"For the first time in history, every brand is faced with the exact same challenge," Smith said. Innovation in approaching the partner and competitor ecosystem can turn these challenges into opportunities.
Demand may have reached historic lows over the past couple of months — and for some industries, it may still take some time to recover. But brands must consider looking at demand as almost a self-fulfilling prophecy.
Brands that take steps to ensure that buying from them is safe and hygienic — and clearly signal this to the market — will be the ones that spur economic recovery.Listen to the full session, “Signaling a Recovery to Drive Demand,” to learn more about the Kantar Signaling Framework that can help brand manufacturers take proactive steps to reawaken the economy.
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