After ‘stock-up’ phase of pandemic, consumers expected to tighten spending

It’s only been six months since the “stock-up” phase of the COVID-19 pandemic, but that already seems like a lifetime ago.

Remember when grocery store shelves were wiped clean of pasta, canned vegetables, yeast, cleaning supplies and of course, toilet paper? During this period, retailers scaled back promotional efforts and focused on their supply chains to manage extreme spikes in demand, leading to higher prices on 64 percent of more than 500 grocery store categories, Nielsen says in a new article.

While it was a hectic time, navigating these challenges has proven beneficial to retailers. Nielsen says sales of fast-moving consumer goods (FMCG) grew by $77.9 billion across all U.S. channels in the year ending Sept. 12. That resulted in 9.3 percent year-over-year growth.

However, Nielsen says celebrations over these increases should be short-lived as consumers continue to shift toward recessionary spending patterns. Unemployment and uncertainty over their current employment will prompt consumers to tighten their belts.

According to the research firm’s COVID-19 Summer Shopper Survey, more than half of consumers said they will cook at home if economic conditions worsen, while 48 percent will find more deals and 46 percent will shop at stores that offer lower prices. Nearly 45 percent will use more coupons, while 35 percent will buy more in bulk.

“Brands and retailers need to pay the closest attention to the newly constrained and cautious middle consumer groups,” Nielsen wrote. “As the U.S. continues to face a recession, more Americans will join these groups and will look to recalibrate their shopping habits. Brands, retailers and manufacturers need to determine how to maintain their sales as the majority of consumers substantially cut back on spending and seek deals through various channels. This is particularly important in an environment where prices are inflated.”

Nielsen recommends that retailers make it easy to find information online and in-store on the lower prices and deals they offer, as well as providing a “price match guarantee and freezing prices on essential and non-perishable items, such as paper goods, sanitizing products and shelf-stable foods.”

The research firm also suggests that retailers and manufacturers direct consumers toward shelf-stable products, expand options across price tiers and reduce packaging materials to lower production and shipping costs.

With an election less than a month away — and no real end to the COVID-19 pandemic in sight — consumer uncertainty is unlikely to dissipate. But just as manufacturers and retailers rose to the occasion to meet increased demand at the start of the pandemic, they can continue to support consumers during the unpredictable times ahead.