While the economic, political, and cultural impacts of this pandemic will differ from country to country, there exist a handful of trends that will be experienced around the globe, albeit to varying degrees.
The direction and pace of these developments are nothing short of breathtaking. According to the Barrett Values Centre, the tectonic shifts that have taken place in people’s priorities and values within the first few weeks of the onset of COVID-19 would normally have taken five to eight years. The outbreak of COVID-19 has pushed consumers out of their normal routines. People are adopting new habits and behaviors that many anticipate will continue in the long-term.
This article is based on research on COVID-19’s effects carried out by various organizations and is written to highlight the overall impact of the once in a century pandemic. We shall discuss five key trends in consumer behavior that will continue well beyond the pandemic.
A simpler life
COVID-19 has forced a re-evaluation of what is important and how people spend their time and money. For many, such assessment has led to a sustainable embrace of the simpler pleasures of life. The desire for simplicity has translated into a pullback from conspicuous and unnecessary consumption. People are focusing more on their own personal health and the health of their friends and family.
In the immediate aftermath of COVID-19, consumers plan to spend less on entertainment events and travel. In a multinational study of consumers conducted by Brandwatch, around 70 percent of those surveyed said that they will save more money in the bank than usual. The Guardian reports that in recent months, home cooking has enjoyed a renaissance, demonstrated by the surge in demand for baking ingredients, and 71 percent more time spent online with food and cooking content since the last weekend of February 2020.
COVID-19 has forced many consumers to reassess their brand choices, partly due to the unavailability of their preferred brand during the pandemic, and partly due to brand affordability. People experimented with brands that they had never considered using before, and many came to realize the inherent value in these hitherto unfamiliar brands.
Today, less than one in five consumers are adamant about sticking to their pre-pandemic favorites. In the casino industry, a survey of 1,000 U.S. gamblers carried out by Synergy Blue revealed that just over half of the gamblers surveyed planned to return to casinos upon reopening. Of those, only 35 percent said they will return to their usual casinos. These figures imply that less than 18 percent of a casino’s pre-pandemic loyal clientele would return to that casino post reopening.
The precipitous drop in brand loyalty combined with consumers’ desire to save money would create opportunities for masstige brands. Downward brand extension on the part of some companies has the potential to reap handsome rewards.
The pandemic compelled many consumers to look online for purchases that they would usually make at a physical facility. Online sellers of groceries, toiletries and beauty products, clothes, and furniture found new customers by the millions, almost overnight. What’s more, these new converts liked the online shopping experience. For example, around 70 percent of consumers who had never shopped online for clothes before now say that they will continue to shop for garments on the Internet once the outbreak is contained.
We see a similar flight to digital in the gaming industry. Online gambling in Australia grew by 140 percent during the pandemic and many consumers who had moved away from gambling in casinos to online gambling are likely to continue with online gambling even after the pandemic.
The shift toward digital has accelerated the trend toward phygital (physical + digital) offerings. Phygital allows retailers to design immersive experiences for their customers in their physical point-of-sales by employing digital tools.
Work from home
COVID-19 lockdown necessitated a work from home solution in many countries. Most employees who work from home are broadly positive about their experience and plan to continue doing so after the pandemic. According to Accenture, 30 percent of people plan to increase the amount they work from home in the future. Accenture further reports that most consumers feel they have the right tools to work from home—and they largely enjoy it. Increasingly, it will be incumbent on businesses to have a virtual working strategy. “Work from home” will become a part of the employee value proposition for many businesses.
Working from home will not only change the ways in which firms organize their processes, but it will also impact demand for various goods and services. Rent for office space could drop, as would demand business attire, transportation services, and fuel.
Growing love for local
All through the pandemic, many governments have been urging their citizens to develop self-reliant economies. There has also been an increasing desire on part of consumers to shop local. The preference for local is reflected in both the products consumers buy (for example, locally sourced goods) and where they shop (for example, supporting community stores). In Australia, major retailers have lost share in the most recent weeks to independent and specialty grocery outlets such as butchers, bakeries, and fruit and vegetable stores. In a recently released KPMG International study entitled Consumers and the New Reality – 85 percent of Australians said they would be willing to pay more for locally sourced groceries and 90 percent said they would pay more for non-grocery items.
Nielsen’s Connect managing director Bernie Hughes says that because of COVID-19, consumers are more aware and wary of products from overseas production. There is now a well-entrenched preference for all things local. Businesses will need to connect with customers on a local level by using locally sourced ingredients in their products or by finding ways to engage with local communities in authentic ways.
The five macro-trends in consumer behavior discussed in this article will impact all industries—from aerospace to agriculture, and from casinos to cruise operators. The questions for businesses to consider are:
- How do we design and price our products to accommodate the customer’s preference for simplicity?
- What innovations can be introduced in our marketing strategy to rekindle customer loyalty?
- How do we design our offerings and channels of distribution such that the best of both worlds—digital and brick and mortar— are incorporated?
- What new opportunities are opened up by consumers working from home, and how do we capitalize on these opportunities?
- What initiatives can we undertake so that consumers perceive us as a local entity with whom they want to transact business?
COVID-19 and the ensuing post-pandemic period is, for most businesses, a time of crisis. It behooves us all to remember what Andy Grove, the former Intel CEO had to say in relation to crisis, “Bad companies are destroyed by crisis, good companies survive them, great companies are improved by them.”