Appetite for Opportunity Roundtable Discussion

In early 2021 Strategy&, PwC’s strategy consulting business, in association with Spoon Guru and Google, published the Appetite for Opportunity report looking at some of the key changes in consumer behaviour during the 2020 COVID-19 pandemic. The report highlighted a number of recommendations for the entire retail industry to consider, and representatives from the three organisations involved sat down to discuss the findings and some of the implications for the grocery industry.

Leading the discussion was Markus Stripf, Co-Founder of Spoon Guru, and he was joined by Emma Burton from PwC, Georgie Altman from Google, and Andy Clarke, the Chairman of Spoon Guru and former CEO of Asda.

To hear the full discussion make sure you listen to our audio-only version, or watch the two-part video at the bottom of the page.

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Background

Before the COVID-19 pandemic, PwC, Google, and Spoon Guru began working together to create a study into changing consumer behaviour. Before the findings of the report could be collated and published, COVID-19 hit, presenting a unique opportunity to continue to evaluate and understand any newly accelerated changes. Andy Clarke noted that COVID has been a catalyst for change, quoting Nick Beaton from Asos:

“You could have a decade, without any change, and we’ve seen a decade of change in the last 12 months. You know, it took something like 25 years to get to 7% participation of online grocery and then through this last 12 months online participation moved to about 12% – and I think it moved in seven weeks.”

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Short-term reactions vs long-term change

Having Google on board with the report enabled the team to gain some great insights, especially when trying to decipher what may be short-term reactions to the pandemic, and which changes are here for the long term.

Andy Clarke noted that COVID has been a catalyst for change, quoting Nick Beaton from Asos:

 

“ I think what’s been quite interesting is to observe what are the shocks that we can then confidently, as time has moved on, say – actually, that that feels like it was a short term response to an unusual moment in time, and then what seems to be enduring. And now that we’ve gone through successive lockdowns and moments of almost normality, what has stuck through that – so that’s also been very interesting for us.”

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People are complex

One interesting insight made through studying consumer behaviour immediately before and after the pandemic, was the realisation that people are very complex. As Georgie Altman noted:

“What we actually saw is this kind of paradox of behaviour… We saw a lot of people exploring health, and we also saw a massive spike and people being interested in comfort food, because people also need to treat themselves and kind of balance things. So I think that’s happened in tandem – if you look at the data in isolation it doesn’t always tell you that more complex story about how we behave.“

This inconsistency in behaviour was also noticed by Spoon Guru in an independent study across the US and UK and published in January 2021. In those studies, it was found that while 90% of Americans and 82% of Brits claimed to be actively taking steps to strengthen their immune systems, around half were not eating more fruits and vegetables, and around 10% were eating more comfort food.

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The opportunity for retailers to be a bigger part of the conversation

It was also observed that 2020 was a year in which many people tried to educate themselves about health and food – but where are people getting their information from? As it turns out, not from food retailers.

“We have seen much more of a spike in interest in specialised diets, and I think people are really trying to educate themselves. It’s been one of those years where we’ve all spent more time online and we’re all using it as a resource for education. People are trying to do things themselves, so obviously cooking fresh and cooking from scratch, a lot of exploring ingredients, much more awareness of what’s going into their food because they’re at the coalface doing it themselves. So we’ve seen that play out with much, much deeper engagement and a much broader engagement with what we’re doing around food.”

Emma Burton added:

“When we asked consumers in the research where they went to, retailers were at the very bottom of the list or in the bottom 10% of where people were going to for this information. And I think that’s such a missed opportunity to be part of that overall conversation.”

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Sustainability

The COVID-19 pandemic has also seen an increase in interest in sustainability, particularly around more environmentally friendly diets. As Markus Stripf said in a Consumer Goods Forum podcast:

“You can’t lead a healthy life in a sick world.”

The roundtable conversation led to some interesting discussion about sustainable diets and the role retailers play in helping consumers achieve their sustainability goals. Georgie Altman posed the question:

“What are the moments in which consumers or personal attitude is changing, and what are the moments in which behavioral change is happening? And those two things are often happening in completely different places, at very different times, and there’s often a massive lag between those two things. It takes quite a long time to undo habitual behaviour and then it takes something to trigger a shift, and I guess it got me wondering… what is the role of the retailer and in changing those attitudes over the long term?

…Is it more about staying on top of the pulse of cultural shift, understanding when critical mass is there and making it much easier then for consumers to act on those shifting attitudes that might be then materialising in behaviour? Because I think that’s where a lot of it breaks down, it’s quite complicated. It’s a bit hard to know – is this sustainable, this thing I’m buying? Is it sustainably sourced? How much dairy, meat, fish should I reduce? Is my diet overall sustainable?”

All retail will want to adapt and follow trends, noted Andy Clarke, using the massive growth in vegan food as an example. However, he noted, there’s a growing governmental shift towards improved sustainability as well, similar to the salt and sugar reduction objectives 10 years ago.

“I remember, being a part of a task force on sugar reduction and salt reduction 10 years ago, because it was a governmental objective. I think we’ll probably start seeing more of that on the back of the pandemic that we’re hopefully coming out the other side of, but there’s a governmental shift, and a health service shift in terms of helping the public change their diets.

The difference, I think, that’s happened in the last 12 months is that the family’s got ahead of the curve in terms of diet, but also how they shop for them. I guess we’re going to see, and the retailers are going to have to continue to adapt to that, so that they’ve got that environmental sustainability as part of their real business plan.”

The complexity around people’s sustainability aspirations and actual ability was flagged by Emma Burton:

“I think it’s a really interesting question in terms of social desirability bias and consumers saying they want to make a shift, yet when push comes to shove, something gets in the way… I think there’s not necessarily a silver bullet for what that is, apart from just really getting the right data around consumers and, more importantly than the data, but the insight… actually understanding what are the trends versus what’s a fad, and being able to more accurately forecast those changes, then build them into that prioritisation of business effort and recognizing that not all consumers are the same.”

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Reducing friction to facilitate change

A 2019 study by Spoon Guru found that while 74% of consumers want to lead healthier lives, only 11% succeed in achieving that. As discussed by Markus Stripf and Georgie Altman, incremental change is key to helping people meet their health goals, especially when it comes to diet.

“I think that’s the only way you’re going to drive lasting change, you have to, it needs to be based on nudge behaviour – how do you, how do you meet people where they’re at? How do you understand what their goals are and then make it easier – just a little bit easier? I think that’s the only way you can drive lasting change, and we think, as a technology company in this space, there are digital enablers that hopefully facilitate this process for shoppers around the world.

We’ve seen some very encouraging results from a feature we’ve built, which is licensed by Tesco, for example, which recommends healthy alternatives, but we’ve also seen those recommendations only work when they are within the same price range. And the conversion rates we’re seeing are significant but again, if somebody wants a chocolate bar there’s no point in promoting an apple right, but if you show them a chocolate bar that is less that that has less sugar, less salt, more fiber people go for that, and when you then give them a mechanism to understand how they’re tracking against the goal, to incentivize them, I think that’s one of the successful methods we have at our disposal.”

“That point about incrementality is a very good one, because I think there’s an impulse when you do work like this to talk about these things wholesale, and that really isn’t how it works, that’s not how people’s habits and behaviours are formed – it is about very small trials. So we do these attitudinal shifts much more easily, but to stop changing what we actually do is very difficult, especially when it comes to food because it’s so habitual and so ingrained.”

While helping facilitate incremental behavioural changes is important, Andy Clarke raised an important decision maker – price – and the role retailers have with helping remove this barrier to consumer health:

“The cost of fulfilling a family’s dietary needs is a hugely important factor, and we know the last 12 months have seen a lot of families fall into very difficult times. So helping families unlock healthier diets at an appropriate price is going to be critical, and I think that is where the retailers play an important role to help those families, either online or in a store, recognise that you can eat healthily at a lower or the same price than what you would have bought before.”

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Recommendations for retailers and CPGs

The report made a few specific recommendations for retailers and CPGs.

1. Adopt a goal-based approach to our consumers meeting individual goals.
2. Create more personalised shopping experiences
3. Develop partnerships to gain greater consumer insights

Markus Stripf summed these up in a question to Andy Clarke:

“That’s what consumers want, right? That’s what we want, as shoppers – make it easy for me, as a retailer. I want a highly curated personalised experience, based on my requirements, I want you to help me understand my individual goals and help me track how I develop against those goals, and generate insights. What kind of insights would you need to be able to future proof your business as a retailer and be more reactive to immediate changes and consumer expectation?”

Andy spoke about the difference between personalisation, both in-store and online, and the pace of change in the retail sector:

“There’s no doubt that online is an easier vehicle for retailers to tailor individual consumer labels, and technology is changing quickly to allow the retailer to personalise the shopping experience. We already talked about how at Spoon Guru we’ve created healthy choice routes. It’s hard to execute that in a physical space, in a store. But I think the fact that online sales – it’s unlikely you’re going to step backwards. I mean it was a good conversation for the COVID crisis – there was “how big has online sales become in food – could they get to 15%?” Well now people are talking about how they’re going to get to 40%.

And, of course, for those retailers that have adapted to that pace of change for online sales. And being prepared to invest in technology that helps them personalise data – and some retailers are further ahead than others across the world… I think in stores, in the physical space, food retailers are already starting to adapt. But I think online is where that balance is going to really change. But that’s going to need some investment. And some bravery.”

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In summary

“I think this report was just a pinprick in the ocean of the insights that are out there. I think the recommendations focus more on what consumers are looking for. I do think there’s some point around how fast can retailers move, and how can they do it responsibly – how can they grow responsibly, whilst still focusing on consumer needs, while still obviously growing their businesses.”

 

“I think what has come through in a lot of what we’ve all been saying is there is a ground swell of sentiment and feeling around a lot of these issues and it’s coming en masse. We see that obviously very clearly in our own data at Google, but we also know that what people really, really want, in any experience in any industry in which they’re consuming, is ease at the point of doing something. And that is really what the next step is. How do you activate on these feelings, which are there, which is great, and how to make it a bit more possible, like you said, Markus, a bit more incremental. A lot of that does come down to being a bit smarter with technology, beginning trialling what works and seeing what actually helps and definitely leveraging data inside a little bit more, and just kind of ingraining this a little bit more into the way that retail operates. The opportunity is definitely there, but it is all going to come down to how easy it is for people to do this at a consumer level.”

“So for those boardrooms, and chief executives in particular, as investment choices around people and the appointments of roles we wouldn’t have seen 24 months ago. The environmental shift, which is in consumer behaviour, and retailers having to adapt to it.”

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Watch the two-part video on YouTube

 

https://youtu.be/5Ho6QDu1kg4 An Appetite for Opportunity: Roundtable Part 1

https://youtu.be/vBbSmTsYvnA An Appetite for Opportunity: Roundtable Part 2

Listen to the audio-only version on SoundCloud

Spoon Guru · Appetite for Opportunity Roundtable Discussion

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