Low consumer optimism: spending intent way below crisis levels
Since the outbreak of coronavirus, new consumer Covid-19 behaviors span all areas of life, from how we work to how we shop to how we entertain ourselves. The extent and duration of mandated lockdowns and business closures may have forced people to give up even some of their deeply ingrained habits- whether going to a coffee shop for a midday break or enjoying Saturday night at the movies. These rapid shifts may have important implications for global retailers and consumer packaged goods companies.
Executives across countries are more hopeful about the economy than they have at any time so far during the COVID-19 crisis. When is an end to the pandemic coming?
Consumer COVID 19 concerns about their well-being have obvious implications for retailers, restaurants, hoteliers, airlines, and a host of other consumer-oriented businesses. Consumers’ spending intent is still below pre-crisis levels. There is a significant change in consumer attitudes and shopping behavior, most of them are expected to remain post-pandemic. Many of the longer-term changes in consumer behavior are still forming, giving companies the chance to prepare for the next normal. Consumer beliefs and behaviors are changing fast. To keep up with and perhaps even influence – those changes, companies leverage deep consumer insights.
The lockdown has forced consumers to question their shopping habits including cost consciousness, preference for local products, and the dramatic shift towards e-commerce. Consumer appetite for the contactless way of shopping has increased during the shutdowns. Retail businesses have to seek to change their priorities, digitalization of supply chain and adopting artificial intelligence and automation.
New services expectations
While the appetite for digital and contactless ways of shopping has intensified, features like free home delivery and returns have grown to be even more important for shoppers. Clear product information with media images, speedy payment checkout, and item returns services are almost mandatory. This behavior would be there long term due to Covid’s disruption in office working practice.
Since COVID 19 pandemic, new concerns like safety and hygiene are now top of mind. Consumers want retail businesses to follow guidelines to give them the best health and safety protection against COVID 19. Seamless navigation in-store to cut down the exposure time outside has become the key level of concern. This means that the public can get the products they want easily. Contactless payment is almost mandatory – no use of money is preferred.
You continue to research and leverage customers’ e-commerce and in-store behavior and desires. You may notice a difference across the countries. These are opportunities for a major impact on all global businesses.
Do-It-Yourself (DIY) has grown to be popular during the lockdown period. Consumers are learning how to make their favorite food like chicken pies at the home. And it also means getting their children’s haircut at home now instead of going for the barber services to protect the little ones from COVID-19. Related products like hair clippers, baking tools, and those which are essentials to facilitate DIY moves should also be of focus to the retail services. So, even as vacations, restaurant meals, sporting events, and gyms take a back seat as consumers are spending more time at home. Value, essential and durable goods, hobby-related items, books, and music are popular with consumers.
Media consumption is up and video is seeing the highest increase in use, TV is one of the bigger beneficiaries as families gather around the largest screen at home. The coronavirus outbreak has not only changed the way consumers view personal hygiene and health but also the way they interact with friends, families, and communities. Isolation has to lead us to embrace technology more than ever. The way people are spending their work and leisure time is also becoming more dependent on technology. This impact of technology is to be continued post-COVID as well.
We need to process and work on these changes with the long term strategic planning agenda.
Consumer preferences realign sharply away from luxury brands and travel towards health and hygiene and personal care. Healthcare can transit from a “sickness service” to a “health and well-being service”. Down to the public’s perspective, we are down to the details of cleaning hands and very conscious of the cleanliness routine which we never have taken a second look in the past.
Health care and protection related home products like Air purification equipment, filters, Vitamin C, and masks have never been so important to us as compared in the past. Everyone has taken health and cleanliness for granted. Children are consuming virtual tours at the zoo or museums rather than usual travel to physical places.
How long does it take to recover from COVID-19?
We need to search for this answer. COVID 19 pandemic has created too much negative impact. That would be three years on the optimistic point and five years on the safe side from a global economic and health perspective.
The essential question: What is the right way to think about 2021 and beyond? The information, concerns, and insights are ever-changing. Constant research on consumer behavior and public concerns help to keep businesses’ financial in thriving mode.
Spending intent remains depressed as consumers navigate remote-based styles like indoor gathering with friends via Zoom and upcoming e- Christmas shopping without travel seems to be the best plan for now. Deemed disruption is perpetual until a stable strong vaccine. Upskilling and reskilling the workforce will become even more of a priority. For consumer goods leaders, reshaping the sales function and fostering new collaboration between the global retailers and manufacturers is critical and will help.
The set of beliefs that a consumer holds about the world is a key influencer of consumer behavior. Economic recovery depends on the return of consumers. Shopping will never be the same in this state again.
When consumers are delighted by new-found experiences and insights acquired at home during the COVID-19 pandemic, even the long-held beliefs can change, consumers are more willing to repeat and continue the new behavior.
Consumer beliefs, habits, occasions, and emotional need states will continue to evolve rapidly over the next year or two as the world awaits a COVID-19 vaccine. The retail business should open to and focus on identifying new behaviors and motivators to get a full picture of the changing consumers’ perspective on the products and services.
Moving towards value, convenience, and home-based related items are the step to close off the gap between the retail businesses to the consumers.