What Previous Recessions Can Teach Marketers About Packaging Post COVID 19

By Ian Segail | Blog | 17 Apr 2020 |

The COVID virus has swept the world into times of unprecedented change (There's that word again). The virus has been a great leveller. From high finance and royalty, right down to the single mum struggling on a pension. If they haven't already, purse strings will tighten considerably as consumers weigh up where to spend their money.  

At the moment, it seems that FMCG brands are relatively “unaffected.” This is because grocery stores are still able to stay open and they provide an outlet for people to “legally” get out of hibernation.

This is a viral recession not an economic decline. That said, even during economic collapses consumers still find money to treat themselves with premium products, chocolates etc. So it is with COVID, consumers confined to their homes are looking to treat themselves and will try new products even if it’s just for the sake of adding variety.

The big difference

Whilst many FMCG companies are working overtime to meet demand, profits are low because the cost of production is skyrocketing with all the additional resources and shifts required to fulfil the needs. This has not necessarily been the case in previous recessions.

The other issue for brands is raw materials for their products. Cardboard, printing and imported ingredients are all running into severe shortages. So, one of the major questions facing brands and suppliers right now is more about “How do we get products to the shelf with all the shutdowns we typically rely on from around the world?” 

The next big question

Once brands get their production and distribution sorted, (Who can know exactly when that will be?), the next big question that will consume brand marketers will be, “How do we hustle for a slice of dwindling consumer expenditure? What do we need to do to get the consumer to choose us?”  - This is the very same question posed to marketers during other recessions. How can we be relevant post the shut down?

The fact is, the astute and forward-thinking business leaders and marketers are already now beginning to ask themselves that very question. Jack Welch once was quoted that: “A leader's job is to look into the future and see the organization, not as it is, but as it should be.” 

What will be ditched and what will be switched?

fmcg australia

It won’t be long before the battle ground will switch from toilet paper and hand sanitiser to the real battle ground. Your brand for another. Your product for another. Private label or cheaper product alternatives. This battle will be taking place in the aisles and on the shelf every day, more and more as the "hens come home to roost

Consumers will be actively seeking out alternatives

For many consumers’ there will be a real tension between affordability and nutrition. Cash strapped consumers will become a lot more discerning on what they want to spend their money on as they weigh up their perception of good value for money and not-so-good value for money. Decisions will shift from what we want, to what we can afford.

All of which means that your brand's packaging design will need to carry even more of the heavy lifting than it already does (Especially as we start to see more cheaper imports enter our supermarkets once markets open up again fully).

Note: Already we are starting to see new brands from Hong Kong in the aisles

aisle products

Marketers and their product packs will need to have the answer for the consumer's question at the point of decision. "Which product will be ditched or switched?" The answer to which will be, more often than not, based on the pack design and branding, as a perception of product value.

Advertising at the point of product selection.

 'When you're looking at this product stacked on-shelf, what you're really seeing is a mini bill-board campaign,' Dave Brown.

As consumers begin to adjust their supermarket spend and read labels even more carefully, packaging’s ability to double as both visual advertising and product information becomes a vital piece of the FMCG sales puzzle. 

Of course, in the current economic environment, packaging design is only one of the ingredients of impactful marketing communications that needs to be considered.

Post COVID 19

Whilst most FMCG companies will be reducing their spend in the wake of COVID 19, the reduction will not be overly dramatic as forward thinking leaders recognise that there will be after life post the hibernation period. Investing in the future will be on the lips of most adroit marketers.

That said, even under cost pressure there is an acknowledgement of the importance of strategic packaging design, and to that end companies and marketers alike will be consciously seeking out smaller, more nimble, experienced design agencies and processes as an alternative to optimise their COGS. 

The key - Be smart 

The key during these challenging economic times is to be smart with your investments. 

SIMPLE: Slash those costs that don't deliver and apply those savings to areas which continue to deliver.  

In the current crazy FMCG environment, it is easy to focus on the big issues facing you right now. Not so easy to think future. Your product packaging must be thought of as not only a long-term investment in brand differentiation but also a powerful on shelf differentiator to generate sales in a post COVID19 world.

Key questions you need to ask to get clear on your market's needs 

  • What does your market want right now?
  • What will your market want when the storm has passed?
  • What is your market most afraid of (concerned with) right now?
  • What will your market be most concerned with after the storm?

Soon this winter will be over and we'll all be faced with spring, will we be prepared for summer when it comes? Whilst there's no doubt this summer will be different, it will still be summer.


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