October 20, 2020
By Michelle Pelletier Marshall, Women in Agribusiness Media
At the 2020 Women in Agribusiness Summit, Liz Harrison and Tamara Charm of McKinsey & Company spoke about the big shifts in sales through the eyes of consumers, B2B decision makers, and farmers, based on the results of McKinsey’s global research and surveys done throughout this year.
Charm, a senior expert at McKinsey, began the presentation by providing detailed information about three recent shifts in consumer behavior since COVID-19 (based on polls from March to August 2020):
1. Homebody economy – 68 percent of U.S. consumers are not yet resuming “normal” out-of-home activities.
2.
Shock to loyalty – 77 percent of U.S. consumers have changed stores, brands, or the way they shop. The top change in consumer behavior is the way they shop, with over 40 percent trying curbside pickup/delivery apps, 35 percent trying a different brand, 33 percent trying a different retailer/store/website, 24 percent trying private label, and 21 percent using a digital shopping method. The top drivers across countries, from the U.S. to Italy to China, are: value, availability/convenience and quality.
3. Flight to digital and omnichannel – There has been a 15 to 35 percent increase in consumers who purchase online. The U.S., UK, and India have seen the greatest shift to online purchasing through the pandemic. “People would say that we went forward 10 years in a month, in terms of online penetration in the U.S.,” said Charm. “The implication here is that if you’re a company providing goods and services to consumers, making sure that there is a satisfactory online experience will be great because consumers really want to shift and spend there for now. We think this trend will persist.”
Harrison, an associate partner for McKinsey, reflected on the implications these trends have for businesses. “The first [implication] is that if you were to bet, and again, this is this is B2B decision makers telling us what they think, but they’re telling us that they do not want nor expect to go back to the traditional in-person sales model,” said Harrison. Noting the results from their surveys, only 20 to 30 percent of B2B buyers want to ever interact with reps in-person, even in their ideal post-COVID-19 model; 3 out of 4 believe the new model is as effective, or more so, than before COVID-19; and over 90 percent of B2B decision-makers expect the remote and digital method to continue for the long run.
And this focus on remote and self-service is not just for low-value purchases. While 29 percent of buyers are fine with this method for purchases under $50,000, 14 percent-plus would purchase remotely for sales over one million dollars, according to McKinsey survey results.
The ‘Next Normal” is Here to Stay
The staying power of this new sales model is here to stay. Ninety-one percent of those U.S. B2B businesses surveyed were “very likely” or “somewhat likely” to sustain these shifts 12 months post-COVID, up from 80 percent in early May 2020.
This preference transfers to agriculture as well where digital interactions rose among farmers across the entire supply chain, with young farmers leading the charge in digital ordering. “While there are some differences based on farm size and farmer age, the general trend of an increased role in digital has persisted,” Harrison said. “The big takeaway from studies done earlier this year is that across each stage of the journey from researching to repurchasing, digital is preferred over 50 percent, and this is a significant jump from 2018.”
Harrison noted that the larger the farm size (7,000 acres-plus), the more likely they are to use online ordering tools. “…as we think about the next generation of farmer, which one could argue is that 35 to 54 [years old] bucket, that’s where we actually see the highest propensity and desire to have that self-service functionality partnered with that supportive in-person or video rep that is trusted,” said Harrison.
For more information about the agenda and topics discussed at the 2020 Women in Agribusiness Summit, visit womeninag.com. Registration is still open to access all the recorded sessions, and includes online messaging to all attendees, which is open for a full year.
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