What should you expect in 2021?

Welcome everybody to CPG Insiders. I'm your host, Dr. Mark Young with my partner in crime, old what's his name? Justin Gerard.

Oh, what's his name?

Justin. It is 2021.

We made it and here we are.

Things are really exciting around here, by the way. We are moving to new offices this week.

Oh, it's going to be fantastic.

It is. I'm really excited about it.

I can't wait.

It's going to be cool. But the place is kind of upside down right now. My office looks like it's been vandalized at the moment. But my new office won't look vandalized hopefully.

And by the time this comes out.

It will be, should be moved.

Fantastic.

So at any rate, what we want to talk about today, folks is we're going to talk about what should you expect in 21? Wouldn't you have loved to have had the conversation in January, February of 2020 and somebody who told you what to expect?

Here's what's coming, folks.

So yeah, that would have been quite an accomplishment. But I think we can see some things that are coming forward for it. So we're going to just go over some stuff with you. The first one we're going to go over is we're going to call it staying home. Although the world is moving toward a vaccine, it's likely not going to be probably June, summer sometime when we really see the vaccine becoming available on a wide scale basis.

Yes.

And we're probably not going to see the whole mask wearing thing give up till well into the middle to end of the year.

No, the fear and the habits have been so ingrained that they're not going to be changing overnight.

So this is really going to change the way people are shopping. They're still going out less. I know people, Justin, that are kind of in, we'll say that they're in the high risk category. I know people in that high risk category that probably, probably haven't been out of their house five times since March. So they're in. These are people who've never ordered anything online that are now getting their groceries delivered online and they're doing telemedicine even though they've never done telemedicine in their life. But everything's been really changed now. This will have some other effects too. We've got that sudden increase in online shopping and that sudden increase in online shopping is going to maintain. Yeah, when consumers change a shopping habit, they don't usually change it back. And I would give you an example of this when we've dealt with grocery stores, so you take a grocery store and you put the main entrance to the grocery store under construction, rebuilding the road in front of the grocery store. Traffic goes way down because it's too hard to get in. So the road's under construction for two months.

Right.

And what happens is consumers find a different store to go to when that store gets opened. Most of that traffic that left doesn't come back because a new habit was established. And people are very fixed in the way they have it. That's why stores like Walgreens have an 86% loyalty and CVS with an 82% loyalty, because people are creatures of habit. And we're a CVS family. We're a Walgreens family. Well, as you become an online family, as you become an Amazon family, even though you feel safe to wander out of the house, you're going to continue to be an Amazon family.

Absolutely. I mean, Mark, we talk about this all the time. You think of the three main meta principles that drive our decision making. Certainty, tangibility, immediacy. Right. Those are the three meta principles. So those same principles were more cost than value for a lot of these consumers previously because they'd never experienced it before. So the tangibility of shopping online, I don't know about that. Right. Then you think about the immediacy of it. Well, I'd rather have it right now. Well, now they're getting in a day or two with Amazon. They've done it so many times, so they're planning accordingly. So now the cost isn't there anymore. Right. And then you think about the certainty again. Now they've done it. So now they've experienced enough times that they understand that there is no risk, there is certainty behind doing this.

So I don't like it. It's easy to send back.

Exactly. So their habits have completely changed and there's no reason to go back right now.

So this change, this drive to digital, folks, has really had a pretty dramatic effect. Now, according to S and p, we've had 49 major retail bankruptcies this year.

It's insane.

So, I mean, a lot of stores are really hurting and you're going to see a lot more go out. And now we add to that that we're looking at a $15 minimum wage. If we get a $15 minimum wage, we're going to see more mom and pops driven out of business.

They can't afford it.

Right. Walmart can handle it. Walmart can handle it, of course, but the small local merchant's going to struggle with that. So this is going to change the way we do business as CPG companies. It's going to change the way that consumers buy. And we have to keep that in mind. We have to keep in mind that before we would think of brick and mortar as being everything for CPG and website and Amazon were ancillary extra sales you picked up.

Right, right.

That's going to change now. We're going to see brands now that are going to literally launch as digital brands. Some of them are going to stay digital brands. Brands like Dollar Shave Club or Boland Branch. And we're going to see other brands that are going to be hybrids, like Mypillow, where he's got a big online business, but he's in retail. So we're gonna see the landscape really change from what it looks like. Right.

And it'll be interesting to see too, as you mentioned it, with this online shift, if some of the. How the major retailers also assess products moving forward. We already saw that shift starting with Amazon and they're starting to pay a lot more attention. And that was going into 2020 before all of this happened. But curious to see if the big push that Walmart's going into the dot com area, if they're going to start taking their meetings and saying, you know what, let's see what you do on Walmart.com and then we'll start talking about possibly redoing.

Now think of that problem. Now when we look at the stats, people who shop online only and about 20% of the time buy a product online that they didn't first intend to buy.

Right.

So when we go to Walmart, we go to Super Walmart, we got 140,000 SKUs, and we walk around the shelves and we go over to the toothpaste and we look, oh, look at this. Dental whitening, whiter teeth and fresh breath. I'm going to try that one. Okay. In the digital world, that planogram doesn't exist.

Right.

So now what do I do? I type in. I probably type in the brand of the toothpaste I'm looking for. Maybe a competitor bought an ad, possibly. Maybe Amazon throws up a house brand. But for the most part, if I type in Crest toothpaste, I'm going to see a variety of Crest toothpaste. So it becomes more important than ever that we have strong advertising that gets us on the consumer shopping list before they turn that device on.

Yes, yes.

Because we no longer have the option of having this great packaging and these great offers on the package that's going to finish closing the sale.

No. And just like you're saying, if you think about it, even pushing advertising in these digital spaces, in your example of the Crest toothpaste, can you imagine what it would cost to try to conquest in that advertising space on that brand name? It would never be profitable, so you can't do it.

Now, talking about digital sales, there's another trend that's starting to develop, and that is going to be talk to order.

Yeah.

So now you have an Alexa or an Echo.

Yeah.

And you say, alexa, order me more detergent. And Alexa looks at your Amazon purchase history and says, oh, okay, he ordered, he's ordered Tide detergent and a 48 ounce for the past two times. I'm going to put that in the shopping cart and ship it.

This happened just last night. My wife was in the kitchen, and we have an Alexa Echo show in our kitchen. And she, she says, oh, I need to add this to our shopping list and the little, little flavored things. So she said, alexa, add it to our shopping list. Alexa then says, give me the UPC barcode and I can add that exact one to your shopping list. Took a picture of it. So now that is the only product that's on that list. Is that exact one not a category. This landscape is transforming and it's transforming quickly.

Well, believe it or not, the voice sales amounted to about $4 billion last year and is expected to increase 400% in the next 24 months with people just saying, Alexa, ship me this. Yep, ship me that. So again, if your brand isn't rolling off my tongue, I'm not buying you, because Alexa is either going to, going to order what I bought last time, or Alexa is going to order the brand I asked for.

Yep.

So if I'm saying, Alexa, get me Campbell's tomato soup, it's going to send me Campbell's tomato soup and it's not going to ask me, would you like to try the new Heinz tomato soup?

Right. Yes.

Yeah, it's just going to ship me what I said. So we, again, we have to advertise if we want to survive. Now, let's talk about the retailers. Retail foot traffic is down and number of trips to the store is down.

Way down.

The number of dollars that people spend is up a little bit.

Right.

But trips to the store have gone down and digital has gone up. But guess what? The retailers are not going to. Except your sales are going down at retail because their traffic's going down. So even though their traffic's down 20% they're going to expect that you are going to at least be even or grow your brand or we're going to cut you.

Well, yeah, you need to be driving traffic to my store. Why is the fact of my traffic sound my problem?

I used to deal with this at QVC and QVC had a number they wanted you to sell $15,200 per minute. And I would argue with them because sometimes they give you like Sunday morning at 7am I'm like, you don't have the viewership.

Right.

It's like we don't care. You either need to hit the numbers or we're not going to sell the product anymore. Brick and mortar is not going to be any different.

No.

Now as long as people are staying in the house, we're going to see more meals consumed in the house. And that's why we've seen a big increase in CPG in the food categories for 2020.

Oh yeah.

However, as the vaccine becomes more available and as people start feeling safe to wander out of the house, we're going to see that in home meal consumption drop.

Yes.

The CDC issued guidelines today now saying that people who have had two doses of the vaccine no longer need to quarantine even if they're exposed to someone with the disease.

That is going to get rid of a lot of fear.

Yes. So that's going to get a lot of people out of the house. I've had my vaccine, I'm good to go. I'm going out of the house.

Right. So this is going to have a couple different effects on brands. One, you're going to see it and now all of a sudden, previously you might not have been competing with as many competitors because the restaurants were out. So people weren't thinking about restaurants anymore. So now they were just confined to thinking about what I can do at. So now that that mind share was a lot smaller at the time. Well, that's going to go away. That's one, two. What this is going to do is it's definitely going to affect your frequency or buy rate because now people have more options. So it's not that they forgot about you, but now they don't have to buy you all the time, which is going to affect your volume and your top line revenue. Now it might not necessarily impact if you're trying to track towards gaining new households because people who were buying more of your product were people that already were buying it. Right, right. But your top line revenue is gonna take a hit, your volume is gonna take a hit because now people Aren't buying it as much.

Right. So if you're. If you're in the food space and you saw this nice jump in 2020, which is awesome.

Yeah, it's fantastic.

You're going to have a headwind in 21.

Yes, yes.

So you're gonna have to. You're gonna have to promote hard to stand still.

Gonna say if you were one of those brands that pulled away just because, hey, you know what I mean? We need to shift money, less advertising dollars. Cause we're making the sales. So let's shift it to make up maybe other parts of the business or just, you know, help the bottom line. This year. Understandable, not necessarily a bad decision for your business. But this year you need to go hard because it's going to change come June, come July, you're going to have a lot of problems ahead of you. So if I were you, I would start spending now so you can get ahead of it.

And we have to. In the food space, we have to remember that the restaurants have really learned to do the carryout business.

Oh, yeah.

So to market themselves as an alternative to the grocery store. And we have, you know, hellofresh, all the meal kits.

Yep.

And all of the food delivery, the home deliveries. And you have to keep in mind when people are switching to a hellofresh and a blue apron, they don't need to go in the store. So if your sales are dependent on. On people walking the aisle and seeing you, you're invisible now.

Oh, yeah, absolutely. You're gone. And the other thing that a lot of those products have been able to do is bring a different type of value to a lot of consumers, which is novelty because, you know, a lot of them cooking the same thing, and they're like, what do I want New ideas. I want something different. Those packages, those hellofreshes, they can do that on a consistent basis. So they're building a different type of value than you can probably build. So you have to be concerned about that as well.

Now we have another phenomenon that is happening in 21, and it happened in 20. We saw very high unemployment.

Yes.

But we didn't see a recession.

Nope.

Now, the reason is because the government is spending like drunken saviors making it rain. Exactly. So I'm going to forego my opinion in spending trillions of dollars that we don't have. But regardless, we have massive amounts of money floating into the marketplace. We have extended unemployment benefits. There is currently a bill being negotiated that will extend another 400 a week on unemployment through September, which means we have this interesting phenomenon. We have high unemployment with companies who can't find help with people being paid more to stay home than to go to work. Because if I'm getting a $400 federal benefit, it was 600. If I'm getting a $400 federal benefit plus the state, I'm making 20 bucks an hour not to work. So my incentive to go take my $12 an hour job isn't really there because I make $8 more to stay home. But this does create opportunity because it makes this almost new quasi affluent consumer who were $10 an hour people who are now getting $20 an hour to stay home, they now have more money to go out and actually buy cool things.

Right. With less places to spend that money.

Less people competing for it and more time to spend it because they're not working.

Right. There's nothing else to do.

So there are opportunities there to be able to market to a group of people that you maybe didn't used to market to. So this is a chance where you might look at some digital media, some radio, some television and aim some messaging at some lower income demographics that previously weren't in your wheelhouse, then all of a sudden they are in your wheelhouse because they actually have disposable income.

Right.

So there's some opportunity there. Another area that's going to take a hit, that did take a hit and probably will continue is fashion and beauty. Of course, a lot of people don't feel the need to shave their legs and put a lot of makeup on when I'm sitting on a zoom call buying more clothes. Clothes sales have taken a bit of a hit on that. We've seen that. Hopefully by June, maybe some of that will start to turn around. But folks, we need to also understand we're going to be looking at a new normal for working.

Yes.

So there's going to be a lot of businesses that were five day a week in the office business that are never going to go back to five days a week. Some of the big Wall street firms aren't going back till 22. Twitter actually made their entire staff work from home. Now I think Google's done a lot of that.

I have friends at Quicken Loans that they said we'll think about talking about this concept in May, but for right now, nope, no reason to even talk about it.

So that's going to affect clothing, that's going to affect beauty, but health on the other side is getting a boost.

Yes.

So again now if your product has a functional thing, it's a Remedy, it's nutrition, it's vitamins, it's supplements. Now you have an opportunity because the virus has made people more concerned about their health and specifically because the media has done a very good job of convincing people that a variety of pre existing conditions makes you more susceptible. So now people have a little more concern. If I've got diabetes, I've got obesity, I have these underlying conditions, I need to take things for that, I need to try to head those problems off. So if you're in that category, you're now in good shape.

Yep.

Last thing we're going to cover here, Justin, is new product launches for cpg. Normally the way that a product launches is you make the brand, you package it, you get the product done, you start chasing brick and mortar retail, you build an ad campaign, maybe you get a test someplace, you get a regional, you start working it up. Online sales have become so prevalent now and so big that it's now becoming possible to actually launch a CPG product as an all digital product first. So now all of a sudden I'm going to launch a product on my website, Amazon, walmart.com, target.com, drugstore.com, i'm going to pick a few dot coms with Amazon and I'm going to roll it out and I can actually do enough business there now if I have the right product and I have the right message, I can do enough business there to support my ad campaign. The beauty of this is a you can launch an all digital brand and you can keep it all digital if you want like a proactive solution or like dollar shave club. And the advantage to that is you have a relationship with the consumers, you have a database that you can market to and you're getting the retail dollar or you can build up that equity, you can build up those consumers and sell 50,000 people and you can now flip to retail, you can now go to Walmart, Walgreens, CVS and you look, I've sold 50,000 pieces, here's the backup and I'll tell you how legit this number is. I was talking to a client just before this and I won't say who the client is, but we were talking about launching a product for them digitally. And I was explaining to him that for every one we sell digitally, 10 people will buy it once we put it in retail and that retail knows that. And then my question to them was, how much of your dollar volume for 2020 has now turned to Amazon and he said 10%. And I'm like, exactly. Yep. One out of ten people will buy it. It's enough to get moving. But the brick and mortar stores know that if you sold 50,000 pieces at Amazon.

Right.

You've got a 500,000 person pent up command demand.

Yeah.

But digital is now prevalent enough that you can make a go of it in that digital realm. And again, whatever your go to market strategy is, if you have a product that has a strong continuity model to it, like proactive solution like you know, hair shave, you may actually consider now becoming the retailer.

Yeah.

And saying, look, we're going to build on a subscription model.

Right.

And there's, I mean think about how many companies doing this. Would you ever imagine a company like Madison Reed being able to survive digitally selling hair dye?

No, no.

I mean, doesn't make sense. You're selling hair color online.

Yeah. It doesn't make any sense.

And they are an all digital product. Selling beauty, selling hair coloring online and doing well.

Well, even like Warby Parker, like you're buying eyeglasses, like that is, that is something that's so personal, you have to get the look and feel of it. Like, how are you selling that online? Purely, they're doing it and they're doing it very well. And then you add on top of this again this shift in consumer habits which is affecting the retail space. And the other piece that we are not going to go into today, maybe another time, is all of the advancements in digital advertising platforms that allow for brands have given the opportunity to do it and do it well. There's so much has changed in the past year to make it so that you could do this. You could not only sell it digitally, but you could support it purely digitally and do it well.

Well, to wrap up folks, here's, here's kind of the bottom line. 21 is going to look like a continuation of 19, 20, 20.

Yeah.

But we should see a steady slowing and settling into a new normal. And as the vaccine gets out, we should start to see people sticking their heads, you know, out of the gopher hole and start wandering out of the house. But what I want to tell you is this, this is the last comment I'm going to give you. Every time there is a crisis, every time there is a blip in the economy, every time there is a downturn, a health crisis, whatever the case is, there are fortunes built in those times. When you look at Warren Buffett, and Warren Buffett is famous for saying that you buy into fear and sell into optimism because he's buying when everybody else is selling and he's selling when everybody else is buying. You have the chance to do that right now. You need to look at the landscape, work with professionals and figure out where's the opportunity in this problem. Every problem, every great challenge, every problem that faces mankind is someone's opportunity. And our job, your job as CPG marketers is to find out what's the opportunity, what is the need that I can fill, and what's the quickest way for me to fill that need and make my product available. So I will leave you with the thought of this from a very long time famous philosopher from years thousands of years back, which was fortune favors the bold. Be courageous. By the way, my personal we kind of pick words of the year around here that kind of drive our thinking. And my word for the year this year is fearless. And you need to be fearless in 21 bottom line. Well folks, hope that was helpful. If you have questions, if you think that we can give you some advice or answer some questions for you, you can always get ahold of me. You can always get ahold of Justin. Just go to jekyllhidelabs.com or cpginsiders.com and you can get ahold of us. You can even call us 800-500-4210. We do have phones.

Ooh, phones.

Although people just don't use them that often anym.

No, no.

And other than that, we will see you on another episode of CPG Insiders. If you're looking to greatly increase sales on your CPG product, don't hesitate to contact us at Jekyll and Hyde Advertising and Marketing. By the way, the only advertising agency with a guaranteed result. Just go to jekyllheidagency.com or feel free to give us a call at 850542 10.