While the world braces itself to reopen economies, the ripples of the pandemic outbreak will continue to have a lingering impact on the macroeconomic outlook of the world in the long-term. The pandemic outbreak which compelled nations to put a complete halt on economic activities has created collateral damages whose impact will be reverberating throughout the year and bring in a new wave of consumer behaviour.
Essentially, COVID-19 has been able to do something which no brands could do on a large scale – change consumer behaviour – something that has never been easy to change. However, a pandemic outbreak toppled the entire game faster than businesses could imagine. All of a sudden, the world found itself battling a global recession with a sudden, colossal shift in consumer sentiment.
Will The Pandemic Change Consumer Behaviour & Business Norms?
With economic activity coming to a complete standstill, companies across sectors are grappling with the uncertainty of changes in consumer behaviour post the pandemic and how it’ll impact the course of business. As the rate of unemployment is on a constant rise, it’s sure that buyers will have less cash to spend. A McKinsey and Company report of purchasers revealed that 67% would reduce spending, as over 52% feel their jobs are uncertain, whereas 85% were worried about security.
As per a study conducted by Accenture, consumers are more fearful of the economic implications of the coronavirus outbreak than for their health. The study further reveals that consumer priorities have become more focussed on the basic necessities, spiking up the demand for hygiene, cleaning, and staple items, whereas non-essential categories experience a plunge.
What makes the situation grim is the increasing unemployment rate. According to the International Labour Organisation (ILO), the pandemic outbreak will remove 6.7% of working hours in the second quarter of 2020. These staggering facts reveal the narrowing gap between economic activity and unemployment rate leading to a shift in consumer spending patterns. Consumers are increasingly spending on basic essentials instead of on style, travel or eating.
It is indeed the pandemic outbreak and the following health and economic implications that have deeply impacted consumer sentiment. Individuals around the world are reacting to the pandemic in different ways as the mounting fear of the crisis continues to evolve by the week.
The change in consumer behaviour is influencing brand decisions as the “buy local” trend picks up around the world. Digital commerce will experience a spike as many consumers move to online for grocery shopping – a rise that is most likely to prevail post-COVID. In circumstances such as these, our requirement for the essential necessities of life comes first. It’s no shocker that wellbeing tops the priority list for consumers, Accenture surveyed. According to the survey, food and clinical security, monetary security and individual well-being were other driving needs.
The pandemic outbreak has impacted consumer optimism, with European consumers being the least hopeful about the possibilities of their nation’s financial recovery at the beginning of the crisis. However, optimism in the Asian counterpart has relatively been steady, with China and India remaining consistently more confident than the rest of the world. In spite of the fact that US consumers were relatively confident during mid-March, optimism continued to drop and is presently 6% points beneath its level in mid-April. This consumer behaviour will dictate newer business norms and challenge businesses to embrace newer approaches to expand and grow.
With continued uncertainty, businesses that are more responsive and flexible in embracing the new norms of customer behaviour will dominate the market. For businesses, digitisation should become a priority with an increased focus on capitalising on the existing customer base. The pandemic outbreak has compelled businesses to become innovative with their offerings. There’s an increasing need to improvise and capitalise on online personalisation attempts to set ahead in the competition. Personalised engagement will provide traction as consumers will look for increased communication and trust post the pandemic.
The impact of the contagion has established a new order of consumer behaviour, and adapting to it remains the litmus test for many businesses. But for all we know, the velocity has swiftly escalated exponentially. The economic ramifications of the lockdown have started showing while challenging the existing norms of conducting business. This new change will usher a paradigm shift; however, we are yet to see to what extent.