PepsiCo Q&A: CPG companies must digitally connect with customers
PepsiCo and other CPG brands are finding opportunity in the COVID-19 crisis to increase digital sales through omnichannel engagement.
Jeff Swearingen, senior VP and head of PepsiCo’s Demand Accelerator (DX), recently spoke with Chain Store Age about how CPG companies and their retail partners can effectively respond to short- and long-term shifts toward e-commerce driven by the COVID-19 pandemic.
How has the pandemic changed customer shopping habits in the short term?
As lockdowns went into effect, consumers shifted to e-commerce because of restrictions on movement and concerns about exposure to other people in indoor public spaces. The online demand was absolutely tremendous, accelerating the trend of shoppers shifting to e-commerce by as much as 10 years in a few weeks.
Many of these consumers were shopping online for the first time, and we expect that some of these consumers will continue to order online and take advantage of home delivery and click-and-collect services, even as the vaccine rollout becomes more widespread.
What we’ve heard from consumers is that during times of crisis, they like to turn to things that give them comfort, and our brands play an incredibly important role in bringing smiles and joy and comfort to shoppers. We’ve seen that increase in demand for our products, particularly with salty snacks.
What long-term changes in customer shopping habits will the pandemic create?
Behavioral science tells us that it takes an average of two months to form a new habit, which will stick only if reinforced through routines and rewards. Our data shows that despite a drop in visits to physical outlets for grocery shopping during the pandemic, the majority of consumers are craving normality and would prefer to shop in-store, so we expect many consumers to return to the store once this crisis is behind us, with a sustained increase in online grocery shopping as well.
While we’d like to make predictions about long-term shopping habits, we are still very much in the heart of this crisis from a behavior perspective. Consumers are not resuming ‘normal’ pre-pandemic out-of-home activities just yet as they await governments to lift restrictions and for the vaccine to become more readily available. So, we are still waiting on what the long-term outlook will look like.
However, we do anticipate that shoppers will continue to look for seamless, optimized online channels that fit into the new shape of their lives, which includes more time at home. There has been a significant rise in cooking and eating at home, and we think there will be at least one or two more cooking occasions at home every week, as well as a continued focus on value. Consumer finances are being pressured, driving conservative spending and a focus on the essentials.
Which digital strategies can retailers use to best meet the needs of the modern omnichannel customer?
Omnichannel marketing has become more about providing an experience — the omnichannel customer experience — transcending any one medium and simply providing shoppers what they want, when they want. Today’s shoppers are more connected on mobile, have a limited attention span, and are demanding more from brands.
Furthermore, people are being presented with an astronomical amount of choice and are bombarded with hundreds of messages every day. As a result, their decision journey is no longer linear. We’ve evolved our approach to ensure we’re delivering a more personal and valuable experience every single time a customer interacts with our brand. So, everything becomes about how personalized and contextually relevant the consumer experience is – the right message delivered to the right person at the right time, leveraging the right medium in the right context.
We think about this as ‘Identify, Engage, Convert and Optimize:’
• IDENTIFY: Know your consumer, their motivators and behaviors to build deeper customer and shopper understanding.
• ENGAGE: Ensure that you’re reaching your shoppers through personalized means and customized messaging.
• CONVERT: Prioritize the channels that work the hardest for the relevant audience at a consideration or conversion level.
• OPTIMIZE: Build a measurement ecosystem that is rooted in identifiable data that helps to continuously measure and optimize media investment.”
How are CPG brands like PepsiCo digitally connecting to consumers?
We continue to evolve our marketing strategies to ensure we are staying connected with our consumers and delivering on their needs. As media consumption shifts to significantly more digital channels, so do our investments.
In addition, we anticipated the shift to e-commerce early on and invested in those capabilities. We now have two direct-to-consumer sites, PantryShop.com and Snacks.com, that offer shoppers additional channels to meet their needs as they’ve adapted to changing circumstances like working and exercising from home and homeschooling their kids. Direct-to-consumer is one more way we can serve our consumers online, in addition to our key retailers.
In addition, we are increasing our focus on personalization and addressability in everything we do. Core to this approach is a number of proprietary in-house data platforms and digital capabilities that enable us to better understand at an addressable level who the consumer is and how we can best surprise and delight them online and offline, like when they are looking for recipes and party ideas, with the right assortment when they are inside the store.
We are also scouting and piloting partnerships with several new technology platforms that allow our brands to dynamically adjust our messaging and placements in real-time to lead to more consumer-centric and effective advertising. Leveraging such technologies ensures that we are delivering the right message to each consumer in the right place and at the right time.
How are CPG brands like PepsiCo digitally collaborating with retailers?
It’s hard to imagine, but just four years ago, CPG companies had only a 1% penetration rate online. As the pandemic pushed online grocery into exponential growth throughout this crisis, CPG companies, including PepsiCo, have embraced the challenge and opportunity to ensure consumers have access to our products.
IRI has found that total e-commerce demand has significantly outpaced all other channels since COVID-19 and was up 86% in June 2020 compared to June 2019. In the U.S. alone, e-commerce and retail media ad spending is projected to be close to $35 billion by 2023.
Success in e-commerce requires tight execution, and our digital experience team partners closely with our retail partners across the full digital journey – from shopper engagement to media to supply chain and go-to-market strategies – to ensure we’re helping them win in the marketplace with consumers. It’s a very collaborative partnership and co-development process that’s rooted in data and uncovering the deepest level of shopper understanding. Together, we hope to holistically solve consumer needs and wants.