MNC brands may suffer as buyers scrutinise health and hygiene: Nielsen

The rapid spread of the COVID-19 pandemic is pushing consumers to rethink their purchase plans, as they prioritise their safety and wellness over the need to purchase the trendiest products. As economies and markets plot their emergence from sweeping lockdowns worldwide, consumers will spend an increasing percentage of their household budget on local and homegrown brands to ensure they are more certain of the origin of ingredients and to ensure a shorter supply chain, with lesser human contact—and therefore lesser chance of contamination and infection—enroute to their homes.

Scott McKenzie, head of global intelligence at Nielsen, told attendees on a media webinar on Thursday that global companies and brands will need to recast how they proselytise their wares to their now nervy audience. “Global companies have the opportunity to position themselves locally … they need to understand the [new] dynamic of their customers … packaging and ingredients will matter and unless you understand [what goes into the product], you won’t buy them,” he said.

Consumers are more comfortable with products sourced or grown closer to them

In Asia, two markets, China and Australia, are leading this revolution on two fronts. As China has led the world into—and out of—a withering lockdown, it has rapidly put in place norms that dictate the degree of human intervention and touch with products. For example, with food delivery, it mandates that brands must disclose the health parameters of who has touched the food and details of how and where the food was prepared.

Elsewhere, Australia seems to be leading the push towards the consumption of local brands. Australians were one of the first to buy local products and be concerned about minutiae such as how the field was harvested, how livestock was fed and treated during transport and other such details as they sought to ringfence themselves from the virus’ worldwide spread.

As the world staggers to its feet, marketers and brands can expect to deal with a completely altered reality, beginning in mid-2020 and extending all the way to June 2021 and beyond. “There is going to be a fundamental rebalancing of the shopping basket as living our daily lives has been riskier than it has ever been,” says McKenzie.

For marketers and brands, this cataclysmic economic decline will be much worse than the financial contagion of 2008, since there is the additional burden of hundreds of thousands of deaths, sweeping and sudden unemployment and massive government stimulus. “This is faster moving base that will require companies to adjust constantly,” he adds.  

As markets struggle out of this slough, they will likely come up against a consumer market cleaved in two: with insulated and constrained spenders whose purchase patters will vary widely. The insulated spenders will be those lucky consumers with jobs and disposable incomes, who can afford to keep their spending intact. The second category will be more deeply impacted by the pandemic and will need to recast and shrink their budgets to manage likely job losses, salary cuts or furloughs.

Thai people waiting to fill up unemployment benefit claims

As marketers and brands begin to rapidly recast plans for this new normal, they will have to manage consumers who are shopping more carefully, changing their priorities, and moving more of their purchases online. For offline retailers, those consumers who come in will have heightened concerns about hygiene and safety (less contact shopping, physical distancing in stores), that will pinch business and profitability. As consumers prioritise some categories such as cleaning and hygiene products (and in large sizes to minimise trips to the supermarket), retailers and brands will face new challenges over store design and layout in a post COVID-19 world.