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Online consumers 'tend to shop in stock-up mode, in bigger packages': Kellogg Chief Digital Officer

Two years prior to the coronavirus pandemic, Kellogg invested into its e-commerce business and it sure did pay off. Julie Bowerman, Kellogg Chief Global Digital Customer & Consumer Experience Officer, joins Yahoo Finances Alexis Christoforous and Brian Sozzi to discuss the growing online business division, changing consumer trends, and much more.

Video Transcript

BRIAN SOZZI: Welcome back to The First Trade. The COVID-19 pandemic has fundamentally changed how people shop for food. More people are ordering groceries online than ever before, putting new pressures on big food to adapt. Let's welcome in Julie Bowerman. She is Kellogg's chief global digital customer and consumer experience officer. Julie, good to see you here. Appreciate you taking the time. So how has the pandemic changed how you think about the e-commerce business at Kellogg?

JULIE BOWERMAN: Yeah, well, we've certainly, like many brands, seen an acceleration of our business online during the pandemic period. But I think our story is a little, maybe, different in that, for us, we made this decision two years ago to make the investments, put the strategy in place. Because we saw that e-commerce was going to be a significant part of our growth agenda. And even pre-COVID, we were experiencing pretty significant growth.

So for us, we were in a good position to be able to capitalize on what's occurred over the last few months.

ALEXIS CHRISTOFOROUS: Julie, I'm curious what the typical consumer order looks like. Is there still a lot of hoarding going on, especially of, you know, certain kinds of staples on the supermarket shelves?

JULIE BOWERMAN: Yeah, well, one of the things-- I'd say the trends of the way in which consumers shop online is a little bit different. They tend to shop a little bit more in stock-up mode. They tend to shop in bigger packages. One of the things, though, that I will tell you that has changed during the pandemic period that, I've got to say, pre-pandemic wasn't as much a dynamic around shoppers is that that frequency is increasing definitely. And so smaller baskets are definitely more part of the routine. As more and more consumers have adopted, have gotten used to how to use online grocery, it becomes kind of more a multiple times during the week.

BRIAN SOZZI: Julie, we've talked to a lot of executives here in the food space the past few weeks. And they're seeing consumers again stock back up, not to the extent they were in March. But again, they're back out there now, probably seeing the COVID numbers, restocking their pantries. Are you seeing that in real time on the Kellogg platform?

JULIE BOWERMAN: Yeah, we have-- you know, we're in a quiet period right now. So we haven't reported our third-quarter earnings yet. But I'd say through June, through second quarter for sure, we saw that, definitely. You know, I think what's also happening is that-- and this is a little bit behavior even pre-pandemic, and maybe you've experienced this in your own households as you've probably shifted some of your shopping to more online-- is that, you know, as you're buying more online, you get used to the convenience factor. You build your list of your regularly-bought items.

And so that naturally has a tendency for you to just continue to shop there. And I think, you know-- and again, stock up, to answer your question a little bit better.

BRIAN SOZZI: Julie, what about the demographic? I mean, you know, I think, when we think about online shopping, we just think a younger shopper gravitates to that but during this pandemic, have you seen a shift in demographic? And have older people embraced shopping online?

JULIE BOWERMAN: Definitely, absolutely. I mean, it used to be, you know, what we would call the millennial or the younger group that was a big part of the early adopters. But now, it spans across a lot of different segments. And what's interesting is it's not just a developed market dynamic. Even markets like Canada or Latin America that generally lagged grocery online development, we're seeing massive growth in those markets, again, across to all different types of consumer segments.

BRIAN SOZZI: Julie, you know, yesterday, I tried to have Target's new same-day delivery service ship. And it's absolutely amazing. I got what I needed, which included some groceries, in under an hour. It was absolutely amazing. And a lot of other retailers are moving same-day delivery. What big changes are you making to the Kellogg e-commerce platform next year just to address some of these fundamental changes in how we buy things?

JULIE BOWERMAN: Yeah, I mean, for us, you know, since we're at a B2B2C-- so we-- the majority of our e-commerce business is not direct. It's through retailers. A significant amount of investment and people training-- if you think about kind of what we've had to do kind of in the organization to be able to serve, now, all retailers that have an e-commerce channel, we're training our sales organization.

So it's not just the people with e-commerce or digital titles that need to be able to talk e-commerce store customers. And we're putting tools in place around, how do we measure our business, how do we execute what we call the digital shelf? So if you think about kind of in the brick-and-mortar context, when you put packages on shelf, or you put in-store point of sale, there's the same context in the online environment. But we're doing it through digital technology and digital content.

And so we've had to make investments in all of those areas that our ability to execute very efficiently, very agilely, and at what the needs are of a particular customer. So every customer has, you know, kind of different formats or different capability capabilities. And so we've really built a lot of capability to assure that, whether it's a Shipped and a Target or it's a Walmart, or it's a Tesco, or it's a Woolies in Australia, you know, we're in a position that we can serve those customers to our best ability.

- Julie, Ines here. Have you been able to work on any new types of products? Because some companies during the pandemic sort of put a hold on any new developments. Are there any that are coming down the pipe for Kellogg?

JULIE BOWERMAN: Yeah, I mean, one of the things about the online channel I would tell you, what we saw in brick and mortar during the pandemic is that retailers had to really curate their assortment to their high-velocity SKUs. I mean, fortunately, kind of with the brands that we have, and the strength and the scale of our brands, you know, we kind of sit in that curated assortment. And so as that happened, I'd say in the brick and mortar context, then online became a place where you could expand your assortment more. And as you start to expand your assortment, you're able to learn about buying behaviors or brands that might be more interesting, or brands that might not fit on the brick-and-mortar shelf.

And so that then informs those insights, then are able to inform our innovation pipeline. So absolutely, we look at it as, you know, not just kind of the mainstay of the business, but also kind of the future pipeline and bringing those consumer and shopper insights into how we think about where we should innovate.

BRIAN SOZZI: All right, we'll leave it there. Julie Bowerman, Kellogg chief global digital customer and consumer experience officer. Good to see you. And keep those digital shells stocked for us. We all need to eat.

JULIE BOWERMAN: I will. Nice to meet you all. Thanks for your time today.

BRIAN SOZZI: Thank you.