Changing Consumer Behaviour due to Covid-19: A research report

A PREVIEW

Covid-19 pandemic has fundamentally changed the way people see the world and the market. It has impacted supply chain, advertising and consumer preferences in a disruptive way. The virus is reshaping the industry in real-time, rapidly accelerating long-term underlying trends in the space of mere weeks. Consumers across the globe are looking at products and brands through a new lens.

When lockdown was imposed initially, consumers went for hoarding of goods like grains, packaged food, home care products etc., reports suggest that people did not stock up much on confectionaries and beverages but only rushed to stock up essentials. However, as the lockdown stretched further and the realization dawned upon that covid-19 situation is going to prevail for a longer time, consumers of all kinds of FMCG goods have taken to the shops and e-commerce to buy as per their availability.

Even as this crisis continues to evolve, by exploring the changes that are happening now, we can consider what consumer goods businesses should do today to prepare for what’s next.

Reading through a lot of data reports from research agencies and a survey which we conducted between 16th and 18th June 2020, we have come up with many intriguing aspects to make a holistic picture of what’s happening to the buying behaviour and how is the business landscape changing consequently.

CHANGING CONSUMER PREFERENCES AND BEHAVIOUR

1. Despite pockets of reopening, net consumer optimism has decreased.

Consumers expect their finances and routines to be impacted for a longer duration upon the lifting of the lock down across India. According to McKinsey and company’s survey published on June’14 2020, Net optimism varies across regions, with China and India remaining more optimistic and Japan being the least optimistic of the countries surveyed. The US, Germany, and Brazil have more consumers who are optimistic about an economic recovery, while most European countries and Korea have more consumers who are pessimistic.

Despite the lifting of restrictions around the world, optimism has declined in many geographies in recent weeks. China, India, and the UK have demonstrated the sharpest declines, while the US, Germany, and France are also below the levels of net optimism seen in early April.

Majority of respondents spelled out reduction in their income and altered lifestyles since the spread of the pandemic. A trend found by several agencies globally as well.

2. Consumers are spending on essentials and not discretionary categories, with some exceptions in South Korea and China.

Consumers globally continue to see the impact of COVID-19 on their incomes, with those in Brazil, South Africa, and India most impacted. Today, consumers in more countries intend to increase spending on other basic categories, such as household supplies and personal care, as well. Chinese and South Korean consumers intend to spend more on select other categories: food takeout and delivery, snacks, skin care, non-food baby products, fitness and wellness, and gasoline. 

This is yet another development in the wake of reduced consumer incomes and grown consciousness for hygiene and urge to buy only when necessary to keep the virus at bay. Accenture conducted Covid-19 pulse survey research published in April 2020 showed that customers across demographic segments registered dip anywhere between 10 to 40 percent in purchasing goods and services in categories like alcohol beverage, fashion, consumer electronics, confectionaries etc.

Survey conducted in recent times like the one by us showed improved numbers in these categories after the opening of lockdown and a continued upswing in offerings like cleanliness products, Consumer packaged goods and online subscriptions owing to the consumer response to changing situations.

3. Adoption of digital and low touch activities during Covid-19.

Asian and American consumers plan to leverage online shopping across many categories in the near future. The use of digital and low-touch options for procuring food and goods is rapidly increasing. Consumer acceptance of digital solutions for online shopping is growing in countries with more developed e-commerce infrastructures, including the US, Germany, India, Japan, Korea, and China.

What are consumers doing in their free time?

The ways in which people spend their leisure time are changing because of the outbreak and related social distancing measures, and again, these habits are likely to be sustained. This trend is reflected in the types of apps that consumers are downloading, related to  entertainment, news, healthcare and education. Underlying consumer needs (for example, to connect, for entertainment, to learn, to stay informed) remain the same, yet the technology is changing the way it happens. As consumers continue to embrace digital to connect, learn and play, CPG companies must increase their focus on digital vs. traditional tools to engage with consumers and enhance their experiences.

Technology is creating new ways for consumers to explore personal pursuits

Several Digital applications in the United Kingdom showed a sharp surge in number of downloads and session timings since lockdown was announced in the third week of March’20.

Source: App Annie

Our survey among Indian respondents threw a similar picture in terms of surged usage of applications and social media sites nowadays where Zoom, WhatsApp and Instagram topped the list as people needed the former to largely connect at a distance for official and business purposes, WhatsApp for contacting people and forming associations in times of social distancing and Instagram to look for people, places and advertisements in these times.

People are working from home as businesses close doors and encourage remote work. Many employees plan to work from home more regularly in the future. Prior to the lockdown, ‘work from home’ was a concept only familiar to software companies; now, it’s becoming the norm across industries – even for the Supreme Court of India. People are actively taking to the digital world to stay connected and work as usual without disruption. The pandemic has led to the trend of making ‘remote working’ possible and acceptable for many. Overall, employees feel their employers have taken the right steps to protect their health and keep them well-informed.

HOW MARKETEERS SHOULD CATER TO THE EMERGING CIRCUMSTANCES:

Covid-19 has impacted the overall way of conducting businesses in such a manner that there has been a complete change in their working patterns. As discussed above, the overall marketing strategies have to be changed due to drastic alteration in the buying patterns of the consumers.

Consumer attitudes and behaviors are changing and marketers need to evolve likewise. To survive the economic slowdown, innovation, creativity, patience and empathy should be the tools of a marketer. Listed below is a summary of strategies through which marketers can sail through the period of pandemic and its aftermath.

1.    Revisit Consumer Insights:

In these uncertain times, it is essential to know what consumers need and want before it becomes a problem area. Emphasis on technology should be given to engage with the customers and to know more about them. In this emerging time, it is important to focus on the actual requirements of the consumers since social distancing leads to anxiety, pressure and a sense of boredom and loneliness.

For example, Zomato has come up with Contact less delivery since people are worried about their health and may not be willing to order online food that will be delivered by a random person through contact.

Real-time insights and technology are needed to understand the changing buying patterns and priorities. This provides an opportunity to the brands to understand the consumers well in order to deliver goods and services in an effective manner.

2.    Use Digital Media to drive engagement:

In the survey conducted it is evident that there is a lot of increase in the number of hours spent by people on social media sites. Marketers can make use of these sites in an effective way to advertise and engage with their customers on a regular basis. Senior functionaries from FMCG, FMCD, retail and advertising sectors are stressing on the need of a closer association and synchrony between the marketing efforts and sales wing in order to amplify return of capital investment in times of squeezed finances and sales.

Online video making applications such as Tik Tok are gaining more popularity since the videos are short (as much as 15 seconds) and it is easy for the viewers to watch it without ignoring it. Marketers are regularly being engaged into increasing traffic for their social media handles by directly engaging the customers through virtual events and activities.

3.    Focus on Customer Experience:

In the times of crisis, brands need to focus more on the customer experiences by carefully analyzing the various touch-points in their whole purchase journey. Being empathetic and prioritizing the customer experience can help a brand build a loyal customer-base.

For example, many airline companies are now providing their passengers with sanitizers and masks to ensure safe and secure travel without any difficulty. This provides an overall enriching experience to the customers building their trust in a brand.

It is rare to find consumers giving less priority to brand names than anything. This behaviour is attributed to the prioritizing of availability and hygiene while purchasing and local manufacturers are more accessible to them due to barriers in supply from distance. With reduced finances, cost effectiveness has also become a major factor driving consumer activity and people are buying only when features of the offering are highly needed at that time.

Providing right information and going beyond the expectations to make the customers feel delighted should be the focus of the brands.

4.    Paid Ads are really Cheap:

The latest trends we are seeing is that paid ads are getting cheaper. Also, a recent shift to live streaming applications and using online platforms have increased due to which consumers are available on digital platforms thus enabling the marketers to generate more traffic on the web.

When we average the things out per industry, we are seeing that paid ads are producing a much higher ROI than pre-Covid era. Thus, marketers can utilize this opportunity in a way to increase customer engagement and having online presence of the business driving in more opportunities to deliver better experiences to them.

5.    Making consumers feel that concerns of health, hygiene and social distancing are taken care of:

Cleanliness and hygiene are the topmost priorities of the people in the recent times. Thus, they expect to buy goods and services which ensure their safety. Brands are coming up with new ways to ensure this.

In-store experience

As consumers choose where to shop in-store, cleaning and sanitization as well as masks and barriers are priority selection criteria across countries. Physical distancing, while important, is only a core consideration for a smaller subset of consumers, although this has more importance in France, Germany, and India. No-contact purchasing, store regulations, and health checks are also lower on the priority list.

Also, in the survey conducted by us, we found that people are preferring packaged products more as compared to others. Thus, FMCG market can gain a lot of opportunities to stand up to the expectations of the consumers and deliver the goods up to an expected level of things.

TO CONCLUDE…

Until the vaccine of corona virus arrives and the concerns are put to rest, the overall industry practices will keep on evolving and we may see a complete shift of the things to an online mode rather than the traditional methods in most cases.  

It is a subject of transient study to keep predicting what comes up next in the market during the global pandemic and when will it end. But marketers and businesses need to stay aware, thoughtful and adoptive to survive this. Covid-19 has profoundly changed the way businesses are run and fundamentally altered the management practices.

In the job world, we may experience a shift towards Work from Home mode. Virtual business spaces may become the new order of the world. WFH culture proves to be a boon for the companies since now it has reduced the overall costs and improved the efficiency of the employees.

This pandemic has forced all of us to reflect on the best and most advanced practices and it has been life changing in many ways.

Stay Home, Stay Safe! :)