More Cooking, Less Shampooing: The Coronavirus Consumer Starts to Emerge
Unilever, P&G, other consumer-goods giants report major shifts in shopper behavior amid lockdowns
Consumers are cooking and cleaning more while spending less time and money on grooming and makeup, the world’s biggest consumer-products companies say, as a picture emerges of how the coronavirus is reshaping lifestyles.
The question executives and investors now face is which behaviors will stick when restrictions to fight the pandemic lift, and which will fade.
“People we know will continue to wash their hands more. Probably they’ll have more concern for surface hygiene in homes,” said Unilever PLC Chief Executive Alan Jope on Thursday. “That whole hygiene thing will carry on.”
Consumers are cooking and cleaning more while spending less time and money on grooming and makeup, the world’s biggest consumer-products companies say, as a picture emerges of how the coronavirus is reshaping lifestyles.
The question executives and investors now face is which behaviors will stick when restrictions to fight the pandemic lift, and which will fade.
“People we know will continue to wash their hands more. Probably they’ll have more concern for surface hygiene in homes,” said Unilever PLC Chief Executive Alan Jope on Thursday. “That whole hygiene thing will carry on.”
Chief Financial Officer Graeme Pitkethly said people are using personal-care products such as shampoo and deodorant less, estimating 11 fewer uses in a typical week. Makeup giant L’Oréal last week said the global cosmetics market was down 8% in the first quarter as consumers pull back on skin care and beauty products.
On the flip side, people are cooking more at home, buoying demand for brands such as Knorr soup cubes, Hellmann’s mayonnaise and Pot Noodle instant noodles, Unilever said.
“We underestimated initially the positive impact this would have on our business for at-home cooking,” said Mr. Jope. “Those center-of-the-grocery-store businesses that have been a bit flat for many years, all of those are seeing a rejuvenation.”
Spending time at home has driven up demand for toilet paper, propelling Cottonelle owner Kimberly Clark Corp. to start repurposing its manufacturing capacity to make more of the softer, thicker toilet paper used at home versus what’s typically used in offices.
One change seen as likely to be long-lasting is the shift to online shopping. Online sales—which make up about 6% to 7% of Unilever’s business—grew 36% in the quarter, as consumers under lockdown ordered more via the internet. Unilever said it plans to ramp up investments in selling directly to consumers.
“I think we will be able to look back and see this as a point of inflection for online grocery shopping,” said Mr. Jope.
Target Corp. this week said traffic to stores had slowed considerably as states imposed lockdown orders, with consumers shifting to online buying. Target has seen strong sales of food, household goods and, more recently, office supplies and cooking appliances, while sales of apparel and accessories have fallen.
Longer-term, shoppers will “embrace routines developed during these weeks at home with their families,” said Target Chief Executive Brian Cornell. Target’s model of using stores as online delivery and pickup hubs “will continue to serve us well,” he said.
Domino’s Pizza Inc. on Thursday reported a rise in U.S. sales in recent weeks as consumers ordered pizza to eat at home rather than go out. Last month, it said it would hire more than 10,000 workers to meet rising demand amid the pandemic.
Lockdowns have forced restaurants to close in many countries. That has hurt sales for Unilever’s food-services arm, which sells ingredients to restaurants, and executives at the company signaled they think sales could be slow to return.
In China, 70% of closed restaurants have reopened but are running at between 50% and 70% capacity because of social-distancing protocols, said Mr. Pitkethly. He signaled some form of social distancing would likely remain in place through the end of the year in many countries, which would continue to cap sales.
Another shift has been the decline in ice cream sales at parks, beaches and other locations that aren’t grocery stores. These make up 40% of Unilever’s ice cream business, the world’s largest with €6 billion of annual sales. The company reported a 1.7% drop in underlying sales for its food-and-refreshments unit. It is ramping up partnerships with food-delivery companies to allow consumers to order ice cream along with their takeout.
Evian owner Danone SA on Thursday said its bottled water sales for the quarter had dropped 7.4% as it, too, was hurt by similar closures.
Overall, Unilever said sales for the first three months of the year were flat, at €12.4 billion ($13.4 billion).
Unilever’s performance contrasts with that of P&G, which last week reported organic sales growth of 6% as stockpiling of laundry detergent, toilet paper and other essentials in the U.S. more than offset a slump in China.
What companies sell and where they sell it explains some of that diversion in performance. Unilever sells food, while the others don’t. It also makes most its sales from emerging markets where consumers haven’t stockpiled like they have in the West.
Unilever reported strong sales in North America, with underlying growth of 4.8%, driven by stockpiling.
“People have got bigger houses, bigger pantries, everything’s bigger in the States, and they certainly went for household stocking in the biggest way around the world,” said Mr. Pitkethly.
“There is no such thing yet as a new normal,” said Mr. Jope. “Businesses and commentators who have professed too much wisdom and insight on what the world will look like on the other side of coronavirus have come to eat humble pie.”