Will DTC actually change post-COVID retail forever?

May 29, 2020 | by David Lemley

Written For Campaign US

“Your brand will need to remain smart (or get smart if you are lagging behind) concerning your ecommerce business unit.”

Many CPG brands selling direct to consumer are flush with cash from pantry stocking and hoarding due to the coronavirus pandemic. Credit Suisse has reported that food at home likely represents 80 percent of spending today compared to 50 percent typically.

Shoppers are currently craving nostalgia and comfort food with longer shelf life in today’s COVID world, and may be reaching for less healthy options. But, remember as you give one another virtual high-fives over this unexpected windfall, that this growth is random and opportunistic rather than strategic. Will the nostalgia trend last after quarantine? No way. Brands that haven’t invested in next generation products and relationships may not benefit long-term.

Direct-to-consumer brands are betting on the ecommerce channel, but while it’s very important, it’s one of many that consumers will love once we all can go out again. So, will the DTC bubble burst in a post-COVID world?

Kind of, because when we return to a normal ecommerce/retail world, DTC will remain an important part of an omni-channel experience centered around people and their needs. But for those brands that emphasized the channel rather than having a consumer focused, defensibly different position the new normal will feel like it burst.

Your brand will need to remain smart (or get smart if you are lagging behind) concerning your ecommerce business unit. Now, it’s the gravitational center for the business. However, while it won’t go away, things will change.

There are brands, including Heinz Catsup, that have experienced a renaissance in sales as people look to stock their shelves, eat at home and throw out that old dodgy bottle that has been sitting in the back of the refrigerator since 2015. Food and beverage brands have teams working around the clock to meet demand for product during these turbulent times. CPG and retail industries are reacting to acute changes in consumer behavior, shopper demands and supply chain challenges.

Then, there are others who are over-confident, tone-deaf to the human needs for clarity, certainty and safety. They’re not connecting their brand values to people. Opportunistic brands, like Costco, will see a dip once everyone stops hoarding and stocking up on supplies. Small brands say they don’t have time to think, they are just focused on selling, and thinking tactically and operationally. While these are important, this will ensure that they are going to stay scrappy to survive, but they won’t be beloved and dominant.

Leadership teams are struggling to find the time or bandwidth to think about the future, but that’s their job. They can either use this time to stick their heads in the sand and see what happens or take a stand for their brand in a post-COVID world. These next few months are your chance to take the learnings and windfall from your opportunistic growth and create a brand strategy that transcends channel.

After things begin to return to normal it will be challenging for brands that:

  • Have rested on their laurels.
  • Become over confident by the uptick in sales.
  • Hunkered down and waited for the crisis to pass.

Brands need to put these strategies in place now:

  1. Gather data – on what was happening before the pandemic hit and then who has purchased your brand during it. Then take this further than simply agreeing internally on what it means.
  2. Learn to Listen – Engage a loyal group of customers, craft a survey to communicate with them. Get feedback so that they feel they are being heard by you. Understand how they are feeling now and how they hope to feel in the future. What’s changed about their eating habits? Use the insights and your brand values to do a reality check and help you create more meaningful connections. Build a defensible value-based position – consumers need to hear themselves in the solve.
  3. Refine and Retool Messaging — identify where you see opportunities for innovation, i.e. the data shows that nobody is going to need more ketchup for another year, so what business should we be in or get out of based on those insights? Spend time getting introspective and work on positioning and do the hard work to be honest, and make sure your value system and your consumer’s value system come closer together. Set your brand up so you that in good times/bad times your brand stands for something more than flavor and ingredients.
  4. Big Prepared to Play Big – Use brand to become a building block in your consumer’s personal identity post-COVID as you did pre-COVID. Put values first and foremost and innovate toward them to build a deeper connection. Because if you don’t, somebody else will.
  5. Become More Human — Use this time to help your brand become more human. Think about your brand’s characteristics and your consumers and their need states and then connect the dots. Write and talk like a human. Show up real. Drop the ‘we’re all in it together.’ Brands that connect the most emotionally and with smartest innovations will be the brands most beloved in 2021.