SNAPSHOT: COVID-19 will act as a catalyst for major shift in consumer patterns
- The coronavirus (COVID-19) outbreak will in many ways change how people live, socialise, and shop.
- Changes in consumer trends will be global in nature and apply in varying degrees across the world, likely reflecting the geographic spread of the pandemic from Asia to Europe and North America.
- In the longer-term, the outbreak will encourage multinational corporations to embrace more technological innovations to enhance resilience and mitigate supply chain disruption.
- There have been over 850,000 confirmed COVID-19 cases globally, and the number of new infections continues to rise rapidly.
- Heightened public sensitivity and awareness of healthcare will in many ways mark a defining shift in consumer preferences. For instance, increasingly health conscious consumers will probably focus more on personal hygiene items and healthy foods. This market is experiencing a major uptick in sales, which will continue in the short-to-medium term.
- Shopping habits acquired during long periods in isolation means that consumers will continue to buy goods in large quantities, including long shelf-life foods. Online shopping for groceries and other retail goods will become even more widespread. Some firms will invest heavily in setting up online sales portals and on digital advertising to broaden their reach among record numbers of users browsing the Internet daily.
- Warehousing space will become increasingly scarce as importers look to stockpiling as a short-term solution to cope with growing demand and supply chain disruption. This will usher in new investment to expand existing facilities and acquire more warehouse space.
- EU-based multinational corporations operating globally have in effect, suffered a double blow from COVID-19, as the spread of the virus first prompted a major sales drop in key markets such as China before disrupting operations in home countries.
- In the aftermath of the pandemic, the perception of a continuous threat ‘out there’ will determine consumer attitudes. Indicators for an improving situation will be a gradual lifting of travel restrictions that will follow a steady decrease in the number of infections.
- Despite a decrease in the actual risk once the pandemic subsides, consumers are unlikely to be willing to spend long hours browsing in crowded department stores or boutiques in busy high streets. Moreover, shifting consumer views will act as an impetus for longer-term changes at stores. Some could possibly introduce quotas on the number of people allowed inside, and in certain instances even require customers to wear masks. Somewhat overly cautious approaches are more likely to be embraced in some of the worst-hit countries.
- Meanwhile, consumer-facing brands will seek to show they are proactively helping towards tackling COVID-19. For instance, Giorgio Armani has repurposed clothing facilities for medical use, and fellow Italian fashion brand Bulgari started producing hand sanitiser.
- Furthermore, consumer goods producers will be under pressure to demonstrate that they have adopted new ways of packaging or transporting goods directly to end-users. This may include asking staff to wear protective equipment, including gloves when handling products.
- As a whole, the healthcare market in Europe will also likely undergo a profound transformation. Despite championing close economic integration, the EU’s failure at coordinating joint action has unveiled vulnerabilities in the ability member states have to cope with the fast-spreading virus. As a result, a growing number of governments will reorient economic resources towards enhancing health infrastructure to improve their response in the future.
- Signs of this approach have already been seen with French President Emmanuel Macron’s statement on 31 March that France will invest EUR4 billion in ‘strategic’ health products, including masks and ventilators, with the aim of helping achieve self-sufficiency by the end of the year.
- More political control over healthcare will also occur at the EU level. Indeed, the European Commission is planning to temporarily suspend tariffs and value-added tax on EU-wide imports of some medical equipment, including protective masks and garments. This will likely help governments and healthcare bodies acquire more equipment at a lower cost and faster rate due to less red tape.
- The duration of lockdowns and travel restrictions will mean a temporary shift away from some products towards specific categories of goods. A change in shopping trends will probably be prompted by comprehensive marketing campaigns targeting people confined at homes during lockdowns.
- Despite economic challenges, environmental and social sustainability will remain a key feature of corporate strategies. In fact, the outbreak will further enshrine the importance of responsible investment and supply chain management. This will translate into more pressure for transparency and product safety, including taking extra precautions to limit any potential exposure to disease.
- A lot will depend on how the pandemic evolves in the coming weeks and months. In the absence of a vaccine and growing evidence that COVID-19 will return seasonally, consumer trends observed now will be more long-lasting.
- Less disposable incomes amid a looming economic recession will decrease demand for luxury goods. In turn, companies will likely be encouraged to offer unseasonal discounts on some items, which could cut into potential profit margins but ensure a higher customer base.
- COVID-19 will be a key test for brand loyalty and reputation. In this sense, brands will be measured by their contribution to the collective effort of tackling the pandemic. Conversely, adverse media coverage on firms inadvertently risking staff wellbeing will suffer considerable reputational damage.