I have seen before that crises can modify our previous way of life. Think of 9/11 and the Great Recession of 2008. After those events, some things changed permanently, on both personal and business levels. For example, after 9/11, security checks in buildings and more stringent airport screenings became a standard part of life. After the great recession, home ownership rates dropped due to high unemployment and tighter loan qualification requirements, realigning the life plans for millions of people worldwide. And from COVID-19, we are already seeing changes in our approach to personal hygiene, working from home and social distancing.
But what types of broad shifts may occur in global consumer markets in response to the pandemic? How will purchasing habits and business operations change? Here are a few transitions that, due to the global scope of this crisis, I see coming in worldwide consumer behavior in the post-COVID-19 era, as well as changes in how businesses may operate going forward.
Consumer Behavior Changes
- Increased online shopping – Whether it is groceries, clothing, cleaning products or other items, if people can buy it online, they may do so – in greater numbers, frequency and volume. Some people may avoid going out to retail stores as much as they can, opting instead for the safety and convenience of online shopping and at-home delivery. As a result, retailers may have to scale up their delivery capabilities. Many establishments have already responded to this trend, with even small independent stores enabling online ordering for the first time. Also, the disproportionate impact of the virus on those age 50+ has created a surge of older, first-time users of online grocery and delivery models. This behavior shift for some older consumers may persist post-epidemic as they embrace the frictionless shopping methods popularized by Millennials.
- Preference for local shops – Ironically, the global pandemic has narrowed people’s focus to the local level. Consumers are now leaning toward smaller, hometown shops that have local sourcing, ownership, and a more direct impact on the local economy and community. These smaller stores don’t require us to be inside them for long periods of time, which is also desirable. While “big box” retailers have grown and gained market share in the past due to their wide product selection, low prices and convenient hours, this new local focus may benefit smaller, local shops and generate more revenue closer to home.
- Affinity for healthy brands – Consumers may continue to raise their awareness of and desire for more health and safety in their everyday living. And, this will directly affect their buying habits. People may read labels more closely, scrutinize the ingredients of products, and be much more careful about what they put in and on their bodies.
- Focus on reliability – Products that prove to be reliable and long-lasting over time may develop into strong brands that may be hard to displace. People may want to know that products and services “work every time” and that they don’t have to worry about them…ever. Peace of mind may hold greater value, and reliability may produce powerful brand affinity.
- Price-conscious behavior – the resulting economic downturn from COVID-19 may lead many people to decrease their consumption, increase their family savings and delay investments and major purchases (e.g. automobiles, appliances, travel, etc.). This may also create a new segment of price-conscious shoppers who may look to conserve and maximize every dollar they have and spend.
Business and Operational Changes
The changes in global consumer behavior may lead to re-examining how goods are produced, distributed and marketed, as companies adjust their operations to match the new buying patterns. And as consumer behavior and habits transform, the use of Big Data and analytics to understand their new needs becomes even more essential. The organizations that best understand the "what" and the "how" of the behavior shifts will be the ones in prime position to adapt to and benefit from this new situation.
At a high level, here are a few changes that I see emerging from companies as they adjust to new global consumer buying habits.
- An increased focus on taking care of people, sustainability and social concerns – Today´s situation was unthinkable for most of us and we may have suddenly realized some of our vulnerabilities (both individually and as a society), and this will definitely lead to some structural changes. Therefore, the only way to re-establish the global economy is for organizations to adopt policies and processes that establish strong trust among employees, customers, partners and the community. Taking care of people and prioritizing general wellbeing may become a requirement for doing business in the “next normal.”
- Greater transparency – Related to the point above, to build trust in the next normal, it may be important to communicate new protocols and the resulting actions. Various stakeholders may demand clear information and visibility into business practices.
- Reconsidering globalization – While some organizations may try to do everything locally, most may understand that in many ways we are interdependent, and some things such as health, climate and biodiversity may need broader collaboration and a global perspective. Globalization may move from being a cost and efficiency play to a resilience play. Organizations may work with partners that not only provide good price/performance; they may also need to adhere to standards and policies that effectively mitigate their risk potential in the global supply chain and improve their environmental and social impact. This aligns with the path that has already been defined by the 2030 Agenda for Sustainable Development.
- Higher service levels – Given the consumer need for reliability, companies that can provide extremely high levels of service may win out over brands that cannot. To reach this service level, organizations may need the ability to fully operate online, not as an exception but as their normal procedure. We are talking about real digitalization that may truly optimize operational efficiency and increase flexibility.
- Re-examine business continuity plans – Companies should review their entire risk governance framework from the perspective of the lessons learned during the COVID-19 crisis. I might not face another pandemic soon, but there will definitely be more crises in the future. It is important to incorporate the learnings from the pandemic into the risk management plan to reinforce the shield.
- Build security into operations – Companies must improve their cybersecurity and fraud prevention mechanisms in order to reduce risk and ensure continuity of operations. A company’s security posture impacts its ability to deliver reliable service and live up to a brand promise, while being compliant with regulations and avoiding legal issues. To date, cybersecurity has often been an afterthought, integrated into processes and systems after they’ve been deployed. It needs to become a foundational component of a company’s processes and systems, and integrated earlier, at the design stage.
There’s a saying “Don’t waste a good crisis,” because it creates new opportunities to adapt, evolve and grow. This is why companies need to be open-minded and innovative during this time of transition. Those that can learn from the disruptions caused by the pandemic and adopt new processes for the impending “next normal” may have the opportunity to thrive in the post-COVID world. It may be important for organizations to understand how COVID-19 is reshaping society, so they can adjust operations to match buyer needs in this new reality.
As an organization, it will be important to take care of people, while building trust, resilience and security into everything that we do. An important lesson learned from COVID-19 is that we need to actively take care of ourselves, take care of others, and take care of society. Companies may need to create new brand promises based on safety and a commitment to trust. Those that do this well may thrive in the post-crisis era.