The results of a new consumer study into consumption habits, both currently and in the near term, provides a mixed bag of results for the convenience channel, writes Norrelle Goldring of Illuminera.
One of the key determinants of the recovery of out-of-home channels as the COVID-19 pandemic eases will be the extent to which people return to some sort of work commute.
Project Hearth, Illuminera’s recent study into at home consumption behaviour changes since COVID-19, has yielded a number of out of home related channel findings across multiple categories and this is one of them. Forty-six per cent of a sample of 2,200 people, as at late October, are now working from home somewhere between occasionally and all the time, versus 30 per cent pre-COVID.
This appears to have had marked impact on beverages, with 33 per cent of consumers reporting increased coffee consumption at home, supported by appliance manufacturers’ skyrocketing sales of at home coffee machines since the pandemic. In focus groups, consumers said that during ‘cocooning’ at home they realised how much they’d been spending on coffees out, and that an at home coffee machine would save them money ‘in the long run’. (Conversely, there’s also evidence from multiple sources that in the absence of being able to travel or shop, some consumers are spending on the home, on things like furniture, big ticket appliances and kitchen renovations).
Likewise higher at home tea consumption was reported by 25 per cent of our consumers. At the other end of the spectrum energy drinks, soft drinks, flavoured milk and sports drinks were all claimed to be consumed less than pre-COVID, and in the 30 week-long household food and beverage diaries we collected in late September, none featured energy or sports drinks. (It should be noted that in September, some states were still not conducting community sport).
Snacking is one of the occasions where we also saw a marked change. Since COVID, consumers are snacking more frequently at home, whether out of treat, boredom, reward, or just needing a break. In the first few months of the pandemic this often took the form of more indulgent snacks as treats, with a related rise in chocolate in particular. However in the past few months, in a bid to lose the resulting ‘COVID kilos’ and because many now realise working from home in some fashion is likely to become permanent, consumers are looking for healthier snacking options. Some are starting to bake their own snacks such as banana bread, or make their own hummus. We have observed the rise of cheese and crackers, including in the new occasion of snacking while preparing dinner due to longer dinner preparation times. This means convenience retailers should be looking to upweight healthy snacking options such as muesli bars, fruit, cheese and crackers, and even soups; and to make them as visible as possible.
When it comes to cooking, not only are many cooking from scratch more often but they are increasingly cooking with leftovers for lunch the next day in mind. This may result in fewer people running out for an easy lunch sandwich. On the other hand, the increase in cooking at home has led to a need or even desperation for variety, including for international meals. Particularly for less involved cooks, convenience retailers can win by ranging some simple heat and eat Indian, Asian and Mexican meals that are quick and easy to prepare.
With regard to shopping channels, the pandemic has obviously seen a spike in supermarket shopping but what we have also observed is fewer trips, basically a return to a weekly shop, that is more planned but with more bulk buys via larger pack sizes, more items in the pack, and more multiple-item purchases.
This means that consumers’ pantries are more stocked than they have been in the past and there may be less need for ‘emergency’ trips to the c-store. Having said that, between the bushfires and the pandemic we have observed across all of our studies this year a consumer desire to support local businesses, with consumers saying they are shopping at local stores 30 per cent more often. This includes independent takeaways and restaurants as well as supermarkets.
Shopping is becoming hyperlocal, supporting high streets, and shoppers are not only looking for familiar and well-known brands but to support local brands, even if this is more expensive.
C-stores in local areas have an opportunity to range and promote local products, in the way White’s IGA have their ‘Locavore’ program. It also means that local retailers ranging local brands don’t have to be the cheapest, or need to heavily discount local items and familiar brands.
Looking immediately ahead, the upcoming Christmas/New Year holiday period should be a boon for highway roadhouses given the mandate for domestic travel. Given the above, retailers should look to provide and actively promote ‘better for you’ snack options and beverages as we expect a quicker snap back to healthier options post-Christmas indulgence than we have seen in previous years.
In the medium term we would expect continued subdued sales in convenience as consumers have become used to spending less in general. For instance, a number had tried meal delivery kits but reverted to cooking from scratch as it was cheaper. Although as some people return to the office, even in a part time capacity, road traffic will pick up and thus will c-store traffic. Convenience retailers can leverage this traffic with not only a strong value coffee offer, but a visible ‘better for you’ snack selection and localised product ranges.
For more information about Project Hearth, contact [email protected]