Proximity stores and private labels gain most from corona

Proximity stores were the fastest growers on the Belgian FMCG market in March, the first month of the lockdown. Also, private labels gained market share from A-labels.

Concern

The coronacrisis has had a major impact on the FMCG market, GfK’s Davy Van Raemdonck said on a webinar regarding the pandemic’s effects on consumer behaviour. The Belgian market was rather stable before lockdown, without real volume growth and only a minor value growth due to inflation. However, things were moving below the surface: especially private labels and hard discounters grew somewhat in the last few years.

Covid-19 is proving to be a real watershed moment however, with a huge emotional impact on consumers. GfK panels show consumers are very concerned, especially the elderly and those of lower social classes. This partially explains the stockpiling, which boosted the FMCG market with an extra 400 million euros in March. This effect may not last though: “The market will grow this year, but the size of its growth depends on when pubs and restaurants will reopen.”

Better spread

GfK has noticed that the average shopping basket value started to rise from week 9, showing a peak in the week of Easter. On average, people now spend about a third more per shopping trip, but frequency has dropped: people shop less often, but more efficiently. Only the elderly really buy less, possibly fearing being contaminated in stores. Younger people do state more often that they also shop for others, like friends or neighbours. “This solidarity is the same trend we saw in Italy”, the GfK analyst said.

As many people are at home during normal working hours, they also start shopping on different moments: Thursdays and Fridays lose importance, as people shop for groceries in a more evenly spread way. The place of shopping changes as well, with (closer) proximity stores winning out on hypermarkets (which are often further away). Belgian supermarkets also profit from the borders being closed, as cross-border shopping in cheaper countries is no longer possible. The lack of capacity means that e-commerce can not profit fully from this trend.

Unsurprisingly, major brands have lost 2 % of market share to private labels. “Recessions often favour private labels”, Van Raemdonck says. “The wake of the financial crisis of 2008 also boosted private label’s significance throughout Europe, and that effect did not go away. Major brands are more resilient and will bounce back after the pandemic, but B-brands will be crushed between those two. Brands who invest in marketing and R&D can gain from this crisis, others may pay a heavy price.”

Evolution of FMCG sales per channel in March

* This category also includes stores like ‘low end retailers’ (Action, Kruidvat, …) that were forced to close.

Source: GfK consumer panel