Post-COVID

Commerce
A four-phase recovery framework with
retailer and brand implications
Reid Greenberg, Executive Vice President
Prem Shunmugavelu, Vice President

1
 Executive
Summary
The world is experiencing a dynamic and profound
shift in the shopping journey. Even without the
added layer of the current COVID-19 pandemic,
digital commerce has been gaining traction as a
preferred method of consumerism. Now, because
of the pandemic, we have digitally jumped ahead
by three to four years in the span of two months.
Pre-pandemic, ecommerce was expected to
account for 15% of US sales this year, but by the
end of April 2020, 25% of all sales came through
ecommerce channels — a 65% jump. Online
grocery has soared from 3% before COVID-19 to
10%, according to Kantar data. And ShopperTrak
states that in-store grocery traffic had decreased
48% in April.

With the widespread closing of retailers as part of

the lockdown efforts and the likelihood of a viable
vaccine 8 to 14 months away, this number is likely
to rise even more as we all become accustomed to
relying on ecommerce and omnichannel shopping.
We can look to Walmart’s unprecedented Q1 2020
numbers as a testament to what near-future
trends will look like. The retailer’s same-store sales
rose 10% from last year while ecommerce sales
surged an astounding 74%.

And these trends may become long-lasting habits,

even as we emerge from the COVID lockdown.
In fact, according to our most recent COVID-19

2
Commerce Snapshot, 64% of shoppers
said they will likely continue curbside
pickup, and 37% will continue to grocery
shop using last-mile delivery platforms
such as Instacart or Shipt. Layered on
top of the shifting path-to-purchase
journey, due to out-of-stock and inventory
challenges, many shoppers have been
forced to try store brands and lower-
priced substitutes over brand-name
products. And that could have long-term
implications for key consumer packaged
goods (CPG) brands.

As we consider what the great retail

reawakening might look like, we must
think about the new shopping habits
and how they will impact retailers and
branded manufacturers. From a brand
perspective, it’s shifted the idea of
ecommerce from a state of not urgent or
slightly urgent to now massively urgent
and critical.

3
 Four Phases
of a Post-COVID
World

4
Phase I
Acute
Non-Normal
Time Period:
Now–Early Summer 2020

Grocery and CPG industries have been front and center during
the COVID-19 crisis. While US consumers have famously been
slow to embrace online grocery shopping, the pandemic has
led to a massive acceleration in first-time online grocery orders
in addition to an unprecedented demand for grocery delivery
and pickup options. Shopping preferences have also changed
dramatically with many buying up food and household
products in bulk with a stock-up mentality.

In Phase I, where we currently are in North America, social

anxiety is high. People continue to report feeling concerned
and fearful for the coming months. While we are starting to
see some states and even some retailers open, more than 38
million people had filed for unemployment between mid-
March and mid-May. The notion of a W-shaped recovery is
gaining traction, where we experience economic growth, then
a virus resurgence, and another fall.

Nesting at home is a key theme and staying in is the new

going out. Once we start to see restrictions lift, we expect
consumers to continue spending more time at home due to
persistent safety concerns, a desire to conserve money, and
the newly realized pleasures of nesting. Through this current
phase, consumers have invested in upgrading their homes and
gardens or bought equipment for new hobbies and routines
such as fitness and cooking.

5
 Shopper and Consumer Brands

— Shoppers are still focused on sheltering in place — Brands are and should be building out omni/
with the hope of limited opening state by state.  ecommerce capabilities.

— Economic concerns significantly outweigh — Advertise and invest in causes.  

health concerns.
— Priorities are to ensure in-stock items and
— Unrest is occurring in some states and the health of workers.
communities.

Retailers Major Trends

— Retailers are facing supply chain challenges. — Contactless consumerism is here. 

They are adjusting hours for worker and shopper
safety, and limiting item quantities. — Last-mile delivery platforms continue to
accelerate.
— Retailers that have not built best-in-class omni/
ecommerce capabilities are feeling the pain.  — Direct-to-consumer (DTC) brands and
omnichannel leaders will be first in line when the
— Spring buying will skip directly to summer. economy returns.

Source: Kantar

6
Phase II
Semi-
Normal
Time Period:
Early Summer 2020–Fall 2020

During Phase II, we will begin to see more states open, especially
those that have lower infection rates and successful containment
efforts in place. According to our data, approximately 30% of people
will maintain or increase in-store shopping, but it will continue to
be more limited to household essentials. However, manufacturing
and other key industries will begin to pick up as will outdoor dining
at restaurants and some recreational activities. Retailers that
wish to open will be forced to implement new social-distancing
practices that ensure the safety of both workers and shoppers. In
certain markets, retailers that force shoppers to wear masks may be
applauded; in other geographies, a consumer backlash will emerge.

We will also begin to see schools, colleges, and universities respond

in different ways and outline what their fall plans look like.

In terms of technology, we’ve all heard about drone and robot

delivery; however, current conditions with FAA regulations clear the
path to faster adoption as contactless consumerism is a long-term
trend.

7
 Shopper and Consumer Brands

— Masks in place. Shoppers will slowly emerge — Brands will be trying to understand what semi-
from the shadows, curious about the state of normal purchase behavior looks like. Prime Day
their cities, towns, and communities.  is nearing; how are you prepared? 

— They will be eager to shop and explore, yet still — Holiday shopping will look different. What will
extremely cautious.  your messaging be?

Retailers Major Trends

— Safety first is the new “on sale” message. — Technology-to-consumer: Drones, robots, click-
Retailers will communicate how they clean and-collect, and online-to-offline (O2O) will gain
and sanitize their stores daily, so shoppers can traction (still early).
have peace of mind as they do their holiday
shopping. The number of shoppers in the store — Our learning from the early to mid-COVID phase
will be limited. Omni is still winning. will continue. 

— Some parts of the economy like manufacturing

will pick up.

Source: Kantar

8
Phase III
New
Normal
Time Period:
Winter 2020–Spring 2021

In Phase III, COVID-19 treatments are underway and a vaccine

is or will be shortly in place.

Based on category verticals, retailers may be overwhelmed

with excess inventory. This will be particularly noticeable in the
luxury and apparel business.

The thrifty consumer will emerge, seeking to do more with less.

However, as countries progress along the contagion recovery
curve, we are witnessing pockets of increased spending. It may
be fair to observe what is happening in China, for example,
where shoppers are beginning to spend more across a few
categories outside of basic nondiscretionary items, such as pet
care and grooming services, fitness and wellness, skin care,
luxury beauty, and apparel.

9
 Shopper and Consumer Brands

— Shoppers cautiously shop. They will reward — Brand communications should be different
retailers that offer store safety modifications. during this time, still.

— Examples include extended hours, wider aisles, — Consumers will want brands to talk with more
nightly cleaning, and a limited number of positivity, reassurance, and help with life
shoppers per store. today.

Retailers Major Trends

— Workers are hopeful, but worry about their — The major themes we saw previously will
health. become stickier.

— Key messaging to both workers and shoppers — Ecommerce will continue to accelerate. In-store
will be about continued workplace sanitizing. shopping will begin to accelerate.

— Safe shopping messaging is front and center. — The thrifty consumer will emerge, seeking to do
more with less.

Source: Kantar Barometer Report, Wave III

10
Phase IV
Totally
Normal
Time Period:
Late Spring 2021–End of Summer 2021

To achieve “Totally Normal,” we must have a viable and ample

supply of a vaccine, and likely multiple vaccine variations,
that can meet global demand. At the end of the day, Totally
Normal will look much different in a year than what it looks like
today. Brick-and-mortar retail is here to stay, but the retailers
that had a shopper-centric and omnichannel strategy pre-
COVID will emerge post-COVID in a position of great strength.
Retailers that understand the new rules of Totally Normal will
gain shoppers’ trust.

What’s important to point out is that consumers will return to

physical stores, though with adjusted expectations. For 77%
of consumers, they will be more cautious about cleanliness,
health, and safety when returning to stores after quarantine.
Furthermore, consumers will be looking for brands that do
the same. Fully 62% of respondents said they will “switch to
brands that show higher levels of product safety.” And 46%
of consumers said they now prefer to use digital payments
in store, with 41% adding a preference for contactless self-
checkout systems.

11
 The
“Great
Awakening”

Shopper and Consumer Brands

— Post-COVID-19 habits and expectations are now — Messaging will convey new hope,
ingrained.  togetherness, and transparency.

— Speed, value, and convenience are the new — Brands with higher levels of product safety will
table-stakes in retail.  be the leaders.

— Some shoppers will habitually include PPE. — Brands that made a difference during the crisis
Cleanliness, health, and safety are paramount. will remain top of mind.

Retailers Major Trends

— Retail just emerged from the most rapid and — BOPIS, O2O, and technology-to-consumer are
forced transformation in the history of the world.  at 2025 levels. Click-and-collect will dominate.

— Those that rode into COVID-19 with strength — Wider store aisles, more distanced seating, and
remain leaders: Walmart, Costco, Target, every other seat will become normal.
Amazon. 
— Caution: Replacement brands may stay
popular.

Source: Kantar, Capgemini

12
 Retail Is
Transformed
Permanently

13
 Pandemic
Raising the
Online Stakes

Retail is going through a rapid transformation during this

unusual period of home-confined buying. Consumer purchase
drivers now favor speed, value, and convenience. These
attributes are the new table-stakes in retail and a handful of
the largest retailers, namely Walmart, Costco, and Target, can
meet them. In general, clicks-to-bricks retailers are gaining
share due to buy online, pick up in store, curbside, and delivery
offerings from physical retail locations.

We’ve seen a massive drop in in-store purchasing with a

203% increase in online sales for the week ending April 26.
The specific actions will depend partly on your posture and
business model, but all consumer-facing companies should
deepen their relationships with third-party ecommerce
partners and work with them in new ways, such as category
captaincy, deeper data exchange, or shared warehousing. At
the same time, avoid overreliance on the e-marketplace giant.
Strengthen your relationships with second-tier ecommerce
retailers and owned ecommerce (such as direct-to-consumer
websites, owned marketplaces or ecosystems, or partnerships
in which you control your brand presence and own the
consumer relationships and data).

14
Making Up
the Loss of
In-Store Sales

With customer decision journeys encompassing more digital

touchpoints and getting more complex, shoppers will expect
CPG companies to have a consistent presence online and
offline. Capturing and managing data will be essential and
can help deliver precision marketing at lower cost. Despite the
uncertainty, consider actively recruiting otherwise hard-to-
come-by digital talent.

Walmart experienced a 460% increase in app downloads

versus January 2020. However, Amazon already had a high
existing installed base when we headed into COVID-19; its app
download rate is up 20% since January 2020.

Net retailers’ online sales climbed 203% for the week ending April 26

Note: US indexed weekly sales for omnichannel retailers compared with average in Jan. 1-28, 2020. Same set of retailers with stable
in-store and online sales tracking in 2020
Source: Criteo

15
 Mobile
Shopping
Surge Since
March 11
But this growth in Walmart’s grocery app shows that
mobile is a key component to the retailer’s brick-and-
mortar and digital strategy for addressing accelerated
consumer demands in response to the ongoing
coronavirus pandemic.

Indexed Daily Downloads

During COVID-19 Pandemic in the US

+460% versus
average Jan 2020

+20% versus
average Jan 2020

Walmart Grocery

Amazon

Source: App Annie

Note: iOS and Google Play downloads

16
Pandemic =
Permanency
From our recent Kantar Barometer report, we’ve seen some
potentially short-term behaviors that may become long-term
trends. In particular, we think the post-COVID world will see a
permanent shift in the way people shop for groceries, personal
goods, and other essentials; the retailers that provide a tech-
and app-enabled, multichannel approach will gain a larger
share from competitors.

17
 COVID-19
Shopping Shifts
May Last

Physical-distancing rules have increased Post COVID, shoppers state they will continue ...
consumption of online media and
significantly accelerated ecommerce,
particularly in markets that already had
a head start. In the United Kingdom, for
example, where online’s share of grocery
shopping was 7% before the crisis, grocers
are furiously increasing capacity to meet
demand: The three largest grocers have
64%
added more than 500,000 new delivery
slots — an increase of more than 30%. For
Curbside
many discretionary categories, ecommerce
has become the channel as stores have
closed. Click-and-collect and curbside
pickup are here for good and currently at
levels we expected in 2025.

With the enormous amount of both online

and in-store out-of-stocks, shoppers are
being forced to trial new brands. And key
CPG brands may experience long-term
59%
implications. For example, 57% of diaper
buyers would consider switching to the trial In-store pickup
brand long term, and 63% of pasta buyers
would consider remaining with the new
brand post-COVID.

37%
Home delivery

Source: Kantar

18
Forced-Trial
Categories in
Danger of Long-
Term Switchers
The implications for brands are to focus on in-stocks, marketing,
and having a greater brand purpose.

COVID-19 forcing brand trial, with potential long-term impact

Corona Experience, Post-Corona Plan,

Diaper and pasta buyers Among Forced Triers

57%
Switch

61% 39%
Usual Brands Forced Trial

43%
Return to Usual Brands

63%
Switch

64% 36%
Usual Brands Forced Trial

37%
Return to Usual Brands

Source: Kantar, LifePoints US panelist

19
 Pandemic
Accelerating
the Inevitable

The impact of COVID has forced a seismic shift in digital

engagement. As we said earlier, we’ve experienced three to
four years of digital transformation in the span of two months.
If you entered the pandemic from a place of relative strength,
you’ll emerge even stronger. If you had inferior expertise and
capabilities in ecommerce and omnichannel, it’s really going
to hurt as we transition through the recovery phases. Those
brands and companies that were able to adapt and build will
be strong as we emerge. The brands and retailers that spent
the last two to three years investing in and building out digital
centers of excellence have experienced tremendous loyalty
and growth recently. Those that underinvested are facing
tremendous headwinds that, frankly, may be too great to
navigate through.

20
Digital
Darwinism
Is Upon Us

E-Superior What does this mean? Now more than ever, brands need a
multipronged approach to their sales channels, especially if
COVID-19 re-emerges or a similar event takes place. Is it too
late? For some yes. For others, no, but the time to prioritize is
now:

Accelerate your existing shopper-centric and digital

capabilities.
— Think through the filter of a channel-agnostic shopper. She
doesn’t care what channel she’s in as long as she can buy
your product. As an example, some of the once-darling
digitally native vertical brands are feeling massive pain
right now because they had a singular focus and only
E-Inferior recently saw the value in an omnichannel strategy.

Invest in profitable portfolio and channel rationalization.

— Have the right SKU, pack size, and pricing portfolio. This
is especially critical as we roll into a recovery layered with
tremendously cash-challenged shoppers.

— Streamline the supply chain and manufacturing process

and focus on the brands that are providing volume to allow
for capacity. Limit innovation and tests of uncharted line
extensions and innovation ideas.

E-Adaptable Have a go-to-market strategy in place that leverages all

connection points with shoppers: experience, commerce,
retailer, communication, and messaging.

21
 HOPES
Is a Strategy
During
COVID-19
We are all familiar with the statement “hope is not a Health
strategy.” In this case, HOPES is a strategy. How has
your brand “shown up” during the pandemic? COVID-19
created an inflection point for brands and retailers
that had ideas around mission and purpose and what
their brands stood for. From grocery retailers setting
aside special hours for mature shoppers to apparel
brands shifting production to make masks, companies
sometimes moved faster to support employees and Optimism
communities than governments could.

Health
Does your brand help ensure the health of your
consumers and shoppers?
Purpose
Optimism
Do you offer a positive outlook for the future?
How does your brand help this happen?

Purpose
Are you doing good for the sake of doing good, or are you
simply just telling people you are doing good? Empathy

Empathy
We are in this together (said with conviction and is
believable). Understand that consumers will be scared,
hesitant, anxious, and worn out.

Safety Safety
What are you doing to ensure my in-store shopping
experience is safe? My flight is safe? My visits to the
movies and restaurants are safe? Walmart and many
other retailers have altered their store hours so they can
take time each day to disinfect stores in the off-hours.

22
In mid-May, for example, PepsiCo, in partnership with hoarding behaviors and that many retail inventories
Ipsos, released results of a new survey that found can keep up with demand somewhat. However,
empathy is growing among American consumers margins and demand have not offset the massive
during the coronavirus pandemic. The survey also investments grocers have made to “keep the lights
found that brands have a role to play in amplifying on,” ranging from salary increases and bonuses to
this sentiment. Manufacturers and retailers will need to essential front-line workers.
evolve not only their consumer-facing communications
around empathy, but also how they support workers, Retailers are feeling pain and will likely ask brands to
other businesses, and their communities. In fact, the spend money in the form of trade spend, marketing,
most valued form of brand empathy PepsiCo identified higher off-invoice discounts, subsidized click-and-
was responding to workers and the community first. collect fees, and contactless consumerism.

For example, on John Krasinski’s “Some Good News”

show, PepsiCo donated $3 million to Guy Fieri’s
Restaurant Workers Relief Fund without any type of
solicitation. Nike donated 30,000 pairs of Air Zoom
Pulse sneakers to medical personnel. How brands
respond in this time will make a difference in how
consumers respond post-pandemic.

We have seen the data showing how busy grocery

stores are and their enormous stock-ups and out-
of-stocks. More recent trends suggest a decline in

23
 Profitability
Pinch

Because COVID-19 has squeezed profits from retailers, Assortment

customer partnerships will be paramount. This will
force branded manufacturers to reconsider the entire
investment strategy and be in a position to help retailers Situation:
adapt to a new post-COVID assortment mix and overall Most shopper baskets are lower margin and OOS
category strategy. As an example, the center store,
primarily made up of shelf-stable products, is driving Implication:
enormous volume now but is not the most profitable
Private label growth, stay in stock!
section. How can you help it become more profitable?
Opportunity:
We covered this earlier, but the importance of a shopper-
centric omnichannel strategy bears emphasizing. Now Grow basket, make your brand irresistible
more than ever, brands need a multipronged approach (and stay in stock!)
to their sales channels, especially if COVID-19 re-
emerges or other large-scale events transpire. Think
about which retailers, formats, and last-mile platforms
are accelerating and strap your brands to these rockets.
They will remain strong during the crisis and emerge even
stronger afterward. Delivery, curbside, click-and-collect,
ecommerce — are all surviving and thriving. Investments

Situation
Click-and-collect, delivery, cleaner stores, lifestyle
experiences, human capital

Implication
Need to find additional revenue sources (retailer
media, merchandising opps, trade funding)

Opportunity
Focus on shopper, holistic retailer planning

24
Brands and
manufacturers
need a shopper-
centric approach
interwoven with
omnichannel
excellence
Product Pricing Acquisition Comms Media Organizational
Strategy Strategy strategy Strategy Strategy Structure

Selling
Selling and Selling and
direct-to-
optimizing optimizing Social
consumer/
through through commerce
direct-to-
marketplace retailers
customer

Experience Commerce Customer

Consistency of consumer experience driven by platforms

It is critical to have the right product, pricing, customer acquisition, communication, marketing, and media strategy supported
by a best-in-class digital organization. And a multipronged route to the consumer, including marketplace, retailers, direct-to-
consumer, and social commerce must be deployed. All of this, of course, must have a consistent consumer experience that is
differentiated and natively optimized for each selling platform.

25
 Predicting a
Pac-Man-Shaped
Recovery

While the economic recovery may look like an “L” or a

“W,” the retail recovery may look very different. We’re
now at a moment of retail Darwinism. As we mentioned
in the introduction, a crisis will uncover your strengths
or flaws. COVID-19 truly brings this situation to life. The
upper right of the Pac-Man chart shows some retailers
that had pre-existing outstanding capabilities. The
bottom right is different story entirely. Apparel chain
J.Crew Group and luxury department store retailer
Neiman Marcus Group filed for Chapter 11 bankruptcy
protection in the first week of May as they faced
escalating losses due to store closures. Although both
companies plan to remain in business, bankruptcy points
to the clear possibility of permanent store closings or
The strong get stronger outright liquidation as COVID-19 throttles sales.

and the weak get weaker Of the 125 restaurant or retail companies tracked by S&P
Global Ratings, approximately 30% are now facing credit
ratings that indicate they have at least a 1-in-2 chance
of defaulting on their debts. In most cases, this indicates
future bankruptcy or likely liquidation.

The economic shutdown and long-lasting social-

distancing behaviors will bring about a sweeping
shakeout of retail as the industry will be forced to
implicitly reduce its physical footprint and rapidly evolve
to reach the post-pandemic consumer. This couldn’t be
more relevant to US malls and the impact the pandemic
will likely have on them.

26
 New Commerce
Key Takeaways
The new retailer dynamics: Capitalize on driving
volume through the winners. Retailer profits are facing
significant pressure in the assortment and overall
investment space. Walmart, Kroger, Target, and other
leaders will continue to invest in click-and-collect
strategies that build basket size and category depth.
As a supplier, you will need to help and partner with
retailers to ensure you are building the right digital
assortment and shelf.

The shopper HOPES strategy: Understand that

shoppers are scared, hesitant, anxious, worn out, and
financially challenged. Post-COVID fears will take years
to dissipate, especially if a second wave of infections
emerges. Nearly 60% of consumers said they are
impressed by brands providing a necessary service,
and 55% said they value brands that have made
changes to help consumers during COVID-19. Be sure
your messaging and communications prioritize and
follow the HOPES framework.

Brands’ omnichannel and shopper-centric

approach: E-superiors and e-adaptables will continue
to grow and accelerate. If you and your company
fall into the e-inferior category as it relates to digital
capabilities, now is the time to invest in building
competencies. New habits will stick: 72% of consumers
plan to shop more online and have items shipped
directly to their homes.

27
 Next Steps
No matter where you fall on the path to omnichannel
excellence, Kantar can support you. Our team of experts can
help you assess, plan, build, and launch a variety of initiatives
that will enable you to reaccelerate and ignite your business
as we journey through a COVID recovery retail landscape.
Our capabilities include:

Retail IQ
Our retail intelligence portal provides you with access to
market and retailer forecasts, retail industry analysis, thought
leadership, and trends you need to know.

Planning for the future

With our ShopperScape® data, retailer insights, and
e-assortment capabilities, we can help you and your team
unlock future growth opportunities.

Team and capability building

We work with Fortune 100 and 500 companies to build and
train high-performing teams with best practices that can
drive your omnichannel goals.

Connected shopper journey

Due to COVID-19, the path to purchase has changed forever.
We can help you map the shopper journey from trigger to
purchase and identify the new touchpoints that drive brand
and category conversion and improve your category share.

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About Kantar: Kantar is the world’s leading evidence-based insights
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over 90 markets. By combining the deep expertise of our people, our data www.kantar.com
resources and benchmarks, and our innovative analytics and technology,
we help our clients understand people and inspire growth. ©2020 Kantar Consulting LLC. Some rights reserved.