How robust will the market be for my goods or services?
COVID-19 has deeply affected consumers' views on spending. Before the outbreak, consumer confidence was sky-high, with almost half (46%) of our global survey respondents saying they expected to spend more in the next 12 months. When we reached back out to people after the pandemic began, 40% globally reported a decrease in income as a result of job loss or redundancy. In addition, the percentage of those who said they were going to spend less in the next few months almost doubled, and the number who said they were going to spend more dropped by more than 10 percentage points.
Expect market volatility and price sensitivity:
- Customers' buying habits will become more volatile
- Price and value will become paramount
What experience will I need to offer to attract customers?
Our consumer research before the COVID-19 pandemic showed that city dwellers were remarkably devoted to shopping, travelling and dining out. In fact, in-store visits were the top way of shopping for the past eight years of our consumer research. In this year's pre-COVID-19 research, 47% of our global urban respondents shopped in-store at least once per week.
In the era of COVID-19, however, even in locations where lockdowns have been partially lifted, urban consumers are making fewer shopping trips, visiting restaurants less often and consuming more at-home entertainment. Our second round of global research after the pandemic started found:
- 49% of respondents are spending less because of fewer social events and activities
- 23% have lost money due to cancelled events or activities
- 50% are using social media more than before social distancing measures were put in place
- 56% are watching more television than before social distancing measures were activated
Consumer experience must be rooted in safety and accessibility
- Customers will need an experience that reinforces safety
- They will want experiences that can be great anywhere
How should I engage with my customers?
Not only has the COVID-19 outbreak reinforced the already growing trend of online shopping, it's encouraged experimentation. Consumers have been coaxed into exploring different ways to access products and services. This has accelerated certain behaviours that have long been simmering in the background.
When we first surveyed urban consumers in late 2019, mobile online shopping was becoming more popular with consumers. Since the outbreak, our research again shows that a significant percentage of consumers say they've increased their mobile shopping habits. Most respondents said they're likely to maintain that current increased use after isolation measures are lifted.
Digital engagement will be robust and diversified
- You'll have to get the balance right between digitisation and the traditional store format
- Consumers will experiment with and accelerate new channels, such as mobile and online grocery
What experiences and products should I be offering to keep customers?
In the consumer research we did prior to the pandemic, almost half of the world's urban consumers indicated they were making dietary changes in an effort to adopt a healthier lifestyle. These included taking supplements, implementing plant-based food options or restricting certain food groups. When we returned to do more research during the pandemic, we found a huge, renewed focus not only on diet, but on the holistic concept of healthy living.
The survey results show a seismic shift towards self-care. Perhaps not surprisingly, this dynamic is most apparent in several of the countries hardest hit by COVID-19. Customers don't just want you to care about them; today they also expect companies to care about the planet.
- Customers will want you to show consideration for their well-being in the products and services you offer
- They'll expect you to make sustainable, ethical choices that recognise stakeholders as much as shareholders
- They'll need innovations that solve traditional pain points
The four key actions to take now
Expect market volatility and price sensitivity
Although consumers are becoming more upbeat, they might not be as resilient as they hope to be, especially as unemployment and household bills increase. Shoppers might decide to get by with fewer discretionary purchases. This suggests more reduced spending in categories such as clothing and footwear, travel, and household appliances.
To address these issues, companies should:
- Understand what shoppers really value to determine the minimum viable basket.What are the 'anchor' products or services that must be available at all times and prioritised through the supply chain? Focus assortments and promotions on this core basket
- Ensure that the supply chain has been recalibrated to maintain delivery of products for this core basket
- Make an effort to understand how customers' priorities are changing to put more weight on price and value. Use this opportunity to re-evaluate your relationship with your customers
- Consider new pricing strategies and loyalty programmes in the digital ecosystem to drive and maintain customer engagement
Consumer experience must be rooted in safety and accessibility
Companies with the technology and imagination to design great experiences in the home—or close to home—will have a huge advantage, at least in the short term. As more consumers begin to emerge from lockdown, there could be room for blended physical and virtual experiences that make it possible for people to stick close to home.
To be responsive to safety concerns and at-home interests, businesses should:
- Communicate frequently with consumers about safety policies, including which trusted sources they are relying on for guidance
- Improve employees' digital skills so they can engage with consumers online
Digital engagement will be robust and diversified
As tools such as digital sizing in fashion, virtual shoppers, consumer collaboration platforms and augmented reality begin to converge, companies should look to:
- Forge new strategic partnerships across the industry as the rise of direct-to-consumer platforms further fragments channels
- Invest in data and customer relationship management technology to drive frictionless commerce and engagement
- Formulate a strategy to address the opportunities and challenges that will arise from the growing popularity of online grocery shopping, including product range and offerings, supply chains and the role of the store
- Invest in enhanced network technology to allow for more sophisticated customer segmentation
- Reskill service staff so they can build content-rich experiences and better understand the end-to-end customer journey
Customers will become long-time advocates if you prioritise care, well-being and innovation
Leading businesses will look to improve customer well-being and foster a culture of innovation during this pandemic, and well after the crisis has passed. To address these issues, companies should:
- Develop new, sustainable products and services
- Establish greater inclusivity and transparency across supply chains
- Find new supply chain partners that suit shifting consumer demands
- Increase R&D investments into the future of food and nutrition
We are here to help you
COVID-19 has accelerated behavioural changes around the world: how people work, eat, communicate, play and learn. And this extends to consumption patterns, too, in every category, including groceries, entertainment, healthcare and even data.
It's important for B2C companies of all kinds to understand the degree to which the current customer journey has already changed, and just how different it might still become. We are ready to help you as you face the future. Contact us today.
