NEW YORK — Product availability has been top of mind for consumers as food manufacturers adjust to meet surging retail demand during the COVID-19 pandemic. Empty shelves and temporary stockouts have disrupted brand loyalty and generated increased trial of both national branded and private label grocery items.
As many as 65% of US consumers said they have tried new brands after sheltering in place became commonplace, according to data from AlixPartners. The majority (79%) said they did so because their usual product was out of stock.
Substitutions have been particularly high among fast-selling staples like meat and protein, dairy, pasta, canned goods, frozen foods, bread and baked products.
Price sensitivity also has been a factor. There has been more willingness to try new private label brands than national brands.
“One of the likely causes is that there’s usually a lower price line for private label, and consumers have had uncertainty or direct impacts to their incomes going through the current crisis,” said Randy Burt, managing director in the consumer products practice at AlixPartners. “It’s not just a stockout that's driving that. We saw it in the great recession in 2008 and 2009 as well.”
Consumers have tried new national brands at rates of 10% to 20% and new private label brands at rates of 15% to 25%, according to AlixPartners.
Signs that the shifts in consumer behavior could continue after the crisis has ended also have emerged.
“Consumers are suggesting that they're going to continue and stick with the brand they've tried at a pretty high rate,” Burt said. “Those brands that are able to stay on shelf, that are able to deal with the spikes in demand caused by COVID-19 and the shift from away-from-home to food-at-home, are the ones that are going to be able to potentially strengthen their brands over time. The ones that weren't able to stay in stock have a challenge that they're going to be facing as, hopefully, we come out and start to get to recovery.”
As many as 30% to 45% of consumers said they were willing to stick with a new national brand, and 25% to 30% said the same for new private label brands.
Nearly half of consumers who tried new national branded salty snacks said they plan to stick to the new brand after the crisis. Consumers who tried new private label items were most willing to stick with new confectionery products, fruit-and nut-based snacks, nut butters and pasta, along with staples like meat, dairy and bread.
Demand across the grocery store is expected to remain strong even after shelter-in-place orders and limits on nonessential business are lifted.
“If we see a recession coming out of COVID-19, which is not certain by any means, then those shifts toward lower-priced food and food-at-home are going to continue,” Burt said. “The shift away from restaurants is not going to be reversed anytime soon, and that will mean that some of the demand spikes that we've seen will have more staying power.”