It is in the midst of chaos and crisis that legacies are formed, fortunes are made and lost, industries break down, new industries emerge, companies live or die, and extraordinary leaders separate themselves from the pack. Those that retreat in the present cannot lead in the future; it will take bold moves and decisive action now to define what our future looks like. As Eversight Co-founder and Chairman, David Moran has said, “If you're sitting on the sidelines right now your competition will be defining how this all looks when a new normal is established”. For Consumer-Packaged Goods (CPG) and Grocery Retail, this is showtime. To understand what we should be doing now, we can learn from the bold, and sometimes contrarian actions, of people that propelled the industry, their companies, and communities forward in the face of greater adversity less familiar to many of us today.
Market Leaders in Times of Crisis
The most prolonged and sharp downturnever experienced by the industrialized Western world started in 1929 and finally eased around 1938. While originating in the U.S., it resulted in dramatic declines in output, severe unemployment, and acute deflation for the majority of countries in the world. The Great Depression bestowed staggering social and cultural effects on communities, especially in the U.S. where it represented the harshest adversity faced by Americans since the Civil War. While there are numerous differences between our COVID-19 driven downturn and The Great Depression it is worth looking at the following companies, who in the face of prolonged adversity did not retreat; however, instead took bold actions contributing to their market leading positions persisting for almost a century onward:
1.Campbell’s Soup
Campbell’s reported a peak period during The Great Depression, attributing its results to increased advertising and the launch of its Chicken Noodle Soup. Campbell’s Chicken Noodle Soup was introduced in 1934 during the height of the downturn. As of 2009, it remained one of the top ten items sold through Grocery stores in the U.S. with an average of 250 million cans consumed per year.
Dr. John T. Dorrance was the President of the Campbell Soup Company from 1914 to 1930. Dorrance was an Americanchemistwho discovered a method to createcondensed soup. With the onset of The Great Depression he was quoted in an article that originally appeared in the Sept. 15, 1930, issue ofForbesmagazine:
"People must eat even in less prosperous times. The only difference being that greater care is exercised in the spending of the family income. Instinctively, housewives turn to the known, substantial commodities that give them the most for their money. In the same category as Campbell's Soups are the other staple, known grocery products which continue to be in greater demand in these economy times. This augurs well for the future business of both the wholesale and retail grocer during the coming year."
This is a 1937 Great Depression Era color print ad for Campbell's Noodle with Chicken Soup, featuring Hollywood star Fred MacMurray.
One of many Campbell’s advertisem*nts from the 1930s 'One of the Outstanding Food Products of The World!'
2.Meijer
Meijer, the Grand Rapids, Michigan-based retailer has its roots in The Great Depression. In 1934,Hendrik Meijeropened Meijer's North Side Grocery inGreenville, Michiganafter purchasing$338.76worth of merchandise on credit. That risk has today resulted in more than 245 supercenters and grocery stores throughout Michigan, Ohio, Indiana, Illinois, Kentucky, and Wisconsin. Meijer pioneered the "one-stop shopping" concept that has evolved through the years to include expanded fresh produce and meat departments, as well as pharmacies, comprehensive apparel departments, pet departments, garden centers, toys, and electronics. In 2019 Meijer celebrated its 85th year in business. Executive ChairmanHank Meijersaid:
“When my grandfather and dad opened their grocery store 85 years ago, they set themselves apart right from the start with a focus on their customers and an eye for innovation. That focus gave the little grocery store a future. We are thankful for our customers who helped us along the way because without them, we would not be here.”
Meijer's first store inGreenville, Michigan.
Promotions communicated on the first Meijer Store window to encourage traffic for the new business.
3.Coca-Cola
The dedication to long-term brand equity in the depths of The Great Depression is an integral foundation of the resilient fortress that Coca-Cola has built over the past century. In 1929, Coca-Cola had sold nearly 27 million gallons of syrup, an increase of more than 150% from the volume sold in 1920. The launch of the first six bottle carton in 1923 contributed to sales growth by providing consumers with the ability to consume co*ke more conveniently. Sales and net profits continued to increase healthily throughout the 1920s. A few months after the Dow Jones Industrial Average sunk more than 20% in two days, Coca-Cola management, led by Robert W. Woodruff at the time, expressed this communication:
“Of deeper significance, especially for the future, is the policy on which the management endeavors to operate the business. Sustained growth, together with the distinctive place the business occupies, has long since made Coca-Cola an industry within itself. And the policy of the management is one of broadening and strengthening the foundation of this industry—to maintain normal, sound development and as security against flurries in economic conditions.”
In 1931, The Great Depression continued to grip the economy as unemployment rose into the mid-teens; even Coca-Cola couldn’t completely offset the downward spiral. Sales fell marginally and gallons sold decreased. Net profit losses were held-off by a reduction in operating costs and reduced raw material costs stemming from depressed demand. However, the company didn’t reduce spend for its marketing programs. The famous Coca-Cola Santa Claus appeared for the first time in 1931. By 1934, the course began to ease for Coca-Cola. The company ultimately emerged from the depths of the worst economic crisis of the 20thcentury stronger than it had been at the outset. From here on, Coca-Cola would continue to lead, building toward the brand it has become today.
In the 1930s Coca-Cola kept up with promotional campaigns and continued to innovate with advertising. This is a promotional card “Good for a Free Bottle of co*ke” circulated during The Great Depression.
In the 1930’s Coca-Cola decided to celebrate the holiday season in their promotional ads. Haddon Sundblom (an American artist) created the image that is still used to this day in Coca-Cola advertising and promotions collateral.
4. Kellogg’s
During the 1920s,Post was the leader in the ready-to-eat dry cereal (RTEC) category. It was still a relatively new market: Ready-to-eat cereal had been around for decades, but Americans were still giving a high share of wallet to oatmeal and cream of wheat products through the 1920s. With the onset of The Great Depression, there was a significant unknown as to what would happen to consumer demand in the RTEC category. Post took the perceived “safe option” reining in expenses and significantly reducing advertising spend. Meanwhile, Kellogg’s set out to define and build the RTEC category. The company doubled down on its ad spend and made aggressive moves with radio commercials to promote its new cereal, Rice Krispies. By 1933 the economy was reeling, meanwhile Kellogg’s profits soared almost 30 per cent. Kellogg’s took significant market share from Post, ultimately claiming leadership of the expanded RTEC category, a position which it remains in to this day.
Kellogg’s Rice Krispies Advertisem*nt by Vernon Grant thought to be from The Great Depression era.
5. Procter and Gamble
Procter and Gamble faced challenges with the onset of The Great Depression as key grocery accounts started cutting their orders and inventories piled up. Despite this, P&G acknowledged that even in a downturn people would continue to purchase soap and company leaders wanted to ensure that it would be their brands capturing those transactions. So rather than retreating, P&G invested in commercial radio broadcasts for the first time. The company sponsored daily radio soap operas or “serials” as they were called at the time. These serials broadly reached its core demographic of homemakers. In 1933 P&Gpioneered their own serial content starting with “Oxydol’s Own Ma Perkins”. This broadcast instantly resonated with women across the U.S. P&G went on to create various radio shows that drove massive awareness across its brand portfolio. By 1939, as The Great Depression ended, P&G was broadcasting 21 soap operas.
P&G’s “Oxydol’s Own Ma Perkins” soap opera was produced during The Great Depression.
Where to Now?
Similar to The Great Depression, we’re experiencing tectonic shifts in consumer behavior. In this particular case, we’re observing surging at-home consumption. New habits are being formed and new consumers are entering or re-evaluating categories. Brick and mortar retailers will have lost traffic to online competitors, some of which won’t return. At the same time, brick and mortar retailers selling essential products have become more critical than ever to their communities. As the world slips into a downturn, innovation in the context of new product launches, advertising, promotions, and new handover options will define the industry leaders of the future. Key themes we’re experiencing:
1.Shift back to center store
2.Shift to trusted brands
3.Heightened price sensitivity
4.Changing shopping missions
5.New consumer occasions (and new consumers)
6.Shift in fulfillment methods
7.Fight for traffic with promotions as a key lever
Testing is critical to uncovering new strategies relevant to current consumer behavior quickly and accurately. Unlike our colleagues of the past, we have unprecedented advances in technology at our fingertips to aid this response. The way those tools are put to work, or not, will define the leaders and laggards of the new normal. Now is not the time to batten down the hatches or to wait for the dust to settle. Now is the time for bold actions that embrace uncertainty head on - for those are the ones who will define the future of this industry.
