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How The Consumer Goods Industry Adapting During The COVID-19 Pandemic

Forecast retail sales value of consumer goods

Source: Euromonitor International


The COVID-19 pandemic is further from being ended. Yet, the availability of the coronavirus vaccine has made the consumer goods industry will perform better in 2021 compared to last year. Euromonitor International predicts that the market size of consumer goods will grow at 7.47% this year. The number is surpassing the growth level in 2020 which was only 4.94%. Tissue and hygiene product are still recorded the highest growth level amongst other categories beyond the COVID-19 pandemic.

Euromonitor estimates that consumer health products will grow 9.97% this year to be USD 4.1 billion. The growth of sales will be driving by pediatric, herbal/traditional products, vitamin, and over the counter (OTC) pharmaceuticals especially for cough, cold, and allergy. This type of goods is the main contributor along with tissue and hygiene products to the market.


The good news is some product which hits the bottom will increase this year. They are electronics. Last year, many people delay purchasing electronics as they are still shocked by the situation. Also, the large-scale restriction policy in many cities has forced offline retailers to close the store. As consumers and industries get used to this new situation, manufacturing facilities and offices will be able to operate normally, and the job market is slowly expected to return to normal. With more stable incomes and an improvement in the economy, consumers will start having the confidence to make big-ticket purchases once again, and consumers who previously held back on purchasing in 2020 are expected to indulge in 2021, releasing the pent-up demand. In 2020, the market size of electronics products was minus 1.83%. This year, it will soar up to 12.51% or USD 11.8 billion.


The growth of beauty and personal care and consumer health in 2021 will be higher over 2020. Color cosmetics estimated to be plunged last year will recover this year as people are slowly doing activities outside of the house. Eye make-up and lip products are expected to return to good growth this year as consumers begin to spend more freely than before. Personal care including body showers will record growth as people continue to see interest in natural and organic products due to concern over the impact of chemicals on health.


To survive during the pandemic, many companies have been involved in business innovation at the ecosystem level, in terms of the supply chain, packaging, and distribution. Some trends will continue to appear this year. First is many companies invest in the online channel. Online distribution via the internet has become one of the pillars of company sales during the COVID-19 pandemic as the government maintains to campaign social distancing.

The second is the establishment of the official store in e-commerce. The market needs continued collaboration and partnership to get out of this pandemic. The company hopes for attracting more customers as they have more choices and variations. The COVID-19 pandemic has accelerated the company's transformation process from multichannel to omnichannel. This is driven by the behavior of generation Z which considers the equality of physical space (brick and mortals) and virtual space (online) so that they can order, and pick-up goods anywhere and not queue at the counter. The key is that companies must be agile, flexible, and responsive to market demands.


The third is the grocery and logistic startup has strong demand in the market. It has been known that the coronavirus has changed people's shopping patterns from offline to online, including shopping for vegetables. Instead of shopping at the market, consumers are starting to look to shop through application platforms. Logistics startup soared as people are rapidly shopping online.


The fourth is a pricing policy. The impact of the Covid-19 pandemic on people's economic conditions has made consumers more cautious in shopping. According to a McKinsey report, 83% of consumers are more careful about spending money and 65% of consumers reduce their spending. The average consumer reduces spending in all product categories except for household necessities such as groceries, household supplies, personal care products, and home entertainment. Looking at the trend, the company can conduct an aggressive marketing strategy such as discounts. The fifth is the packaging of the product. Several factors influence consumer decisions in trying new brands, one of which is related to the value of goods such as prices, promotions, and shipping costs as well as the convenience and availability of goods when shopping. Thanks to COVID-19, consumers also pay more attention to packaging, product sustainability, and shop sanitation or cleanliness.


Nevertheless, it is quite challenging for the consumer goods industry to grow fast in 2021. The economic recovery in Indonesia will take slow as there is still the threat of decreasing public consumption and unemployment rate which is remain strong. The social assistance funds provided by the government through Pre-Work Cards are not sufficient to boost public consumption. On the other hand, although investment increases, the absorption of labor is not much because companies are doing a lot of efficiently. Economist of Institute for Development of Economics and Finance (INDEF), Enny Sri Hartati said that the recovery is depending on the government's policy to encourage the demand. "The government should focus on the health budget and social protection so that it can boost public consumption," said Enny.


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