Retailing amidst a global health and economic crisis
Liquor retailers are urged to prepare for a ‘recession mindset’ and consider things like cost over convenience, a greater focus online, and a shift to smaller, lower-priced packs, as we adapt to a world engulfed in a global health and economic crisis.
The Covid-19: Learnings From Australian & Global Trends report produced by IRI’s Insights Director, Daniel Bone, has revealed some new and evolving consumer behaviours that liquor retailer should take note of.
According to the report published on 31 March, liquor sales were not impacted by early stockpiling shifts and in fact social distancing seemed to be impeding Q1 sales.
In the four weeks to 1/3/20 total liquor was down by 1.7 per cent. Beer and cider were in decline of 7.5 per cent and 8.0 per cent respectively, while spirits, wine and RTD were all showing growth, albeit this was well below their yearly averages.
But from mid-March, some liquor hoarding behaviour began to appear in response to uncertainty of whether liquor stores would be deemed an ‘essential service’ by the Government.
“Retail liquor supplies became highly coveted in the w/c 23 March after ambiguity around leadership statements concerning the shutdown of non-essential services.
“Dan Murphy’s and BWS were forced to partially mimic the enforced limits imposed on customers by supermarkets.”
This also coincided with a sales resurgence for Corona in Oceania, with sales up by 54.2 per cent in the one week to 22/3/20 (IRI Australia MarketEdge). Corona is also the top value growth generating alcohol brand in New Zealand.
The exponential spread of Coronavirus is more apparent each day and Australia is still in its early stages, with cases doubling close to every three days.
There is no definite way of knowing when disruption caused by the virus will come to an end, as such retailers are urged to shift their mindset, and start to consider things like cost over convenience as well as an accelerated shift to online.
IRI advises that retailers should: “Mitigate decrease in loyalty and/or encourage trial as consumers try new solutions/ brands in a low-stock store environment.
“Help shoppers make the most of products as they are reacquainted with shelf stable categories and brands amid stockpiling/hoarding.
“Capitalise on an accelerated shift to online, as shoppers seek products they cannot find in store and/or in an effort to reduce contact with others
“Be mindful of cost being valued more than convenience. Prepare for a possible migration to value brands as a ‘recession mindset’ takes hold; premium brands will be even more valued as permissible luxuries
“Navigate the likely increase in private label amid an ongoing increase in own label offerings across price tiers, as well as consumers searching for better deals
“Shift to smaller, lower-priced packs to meet demand from lower-income consumers, and from manufacturers downsizing to improve margins.”
IRI’s Covid-19: Learnings From Australian & Global Trends report can be accessed here.