Q2 is behind us and the numbers were surprising. Year over year, growth was off the charts for many retailers. For some, not in a good way, but for those essential businesses selling groceries, hardware, and general merchandise, you more than likely exceeded some of your best quarters. Now what? Can we expect more of the same?
Most analysts have identified Q2 as an anomaly, a perfect storm that provided certain retail segments with a significant challenge, but also with a sizable reward. No one’s saying it was easy, but the bottom line looked pretty good. So let’s do it again in Q3. Right? That may be harder than it looks.
The landscape has changed. The pandemic is still with us, but the panic buying has diminished. The supply chain is catching up with demand and the economy is a huge uncertainty going forward.
To help bring some insight into what consumers are thinking right now, we commissioned a survey to find out how people are adjusting to the “new normal”. We believe listening to the voice of the consumer will bring about the best path forward for our clients.
In our survey of over 1,000 random consumers, 78.3% said they were “extremely concerned” or “very concerned” about the economy during the next 3 months.1
Additionally, when asked, “What impact will COVID 19 and the economy have on your household spending during the next three months”, 72% of all respondents said they were planning to spend less. That included 79% of households with incomes greater than $150,000.
Here is What We See Ahead:
We are going through a transition. The potential end or reduction of supplemental unemployment benefits will put a crimp on household budgets nationwide. And it doesn’t help that Americans filed another 1.4 million applications for unemployment insurance during the week ending July 18. This was the first increase in claims since March.2
It’s Going to Be a Fist Fight for Market Share
With 72% of shoppers saying they will spend less in the coming days, the “Value-Conscious” shopper will be more critical than ever. Promotion driven advertising will be the next battlefield for market share. Albertsons CEO, Vivek Sankaran, said during an interview on CNBC “They are focused on growing profits by winning more market share”.3 Albertsons/Safeway has been consistently advertising in printed circulars since late May. By mid-July these promotional activities were apparent in the marketplace. We observed that Albertsons had the highest page count of all grocers and their circular featured 20 money saving coupons.4 This is a classic market share grab. Advertise when and where your competitors are not. When consumers don’t see a weekly ad circular from you, they will go where they are invited.
Nothing drives traffic, retains loyalty, or moves product like a printed circular. It’s available when shoppers are ready and receptive, no devices required, and it works with all ages and income groups. A 2019 study commissioned by Mailbox Merchants showed that 58.9% of consumers rely on print for promotional offers and sale information from retailers. The same study found that consumers were likely to spend more time with print advertising vs. digital.5
Deciding when to resume advertising is like trying to time the stock market. Once you are out, it’s challenging to know when to get back in. It’s critical to recognize that circumstances will never be “perfect” and waiting too long can have significant long-term consequences. More importantly, remaining invisible creates a significant opportunity for competitors to establish new relationships with your customers.
By using print, you keep loyal customers coming in and grow new customers by showing them you are open and ready to serve them safely and with competitive pricing.