Consumer Behaviour - Post COVID 19 Lockdown
The COVID19 pandemic has changed the psychology of the consumers across the world as the virus has touched almost all shores. Given the magnitude & the complexity of the crisis and without a proper end in sight, economic recovery is becoming difficult to predict. Even experts are baffled.
Consumer behavior changes as the world retreats into a ‘survival mode’. They generally feel jittery and anxious because they feel their sense of control has disappeared.” And the more it happens the more to affects the psyche of the consumer.
However, a few weeks of change do not alter consumer behavior drastically. For example - while I agree that online grocery shopping may see a spurt, it does not mean that there will be a fundamental shift in behavior
Generally speaking, being healthy and health awareness has increased. There is more emphasis on hygiene, sanitation, etc.
India is also affected and here is my opinion on what the behavior of the customers will be towards various sectors
- Sharing Economy – Ride-Hailing
This is a strange conundrum, whilst customers will need the Uber’s and Ola’s, there is going to be a certain apprehension of using them even though the public transport system in most parts of the country is poor. Multiple people use a taxi and hence there will always be a question mark as to how healthy the previous customer was. I expect a dip in usage. However, expect the poorly maintained cars which are dirty and have low ratings to suffer. Uber and Ola will have to change by paying attention to the overall hygiene of both the driver and car, perhaps even at a premium. I don’t think customers will mind spending more a clean car as the customers' expectations have changed and they understand that caution is important.
- Public Transport
With Work from Home becoming popular (more out of necessity) and with other modes also being questioned for hygiene, I doubt whether the bus or metro for intra-city will be preferred. There would be a drop in passengers using these modes. Push comes to shove, passengers would prefer to use a private mode of transport rather than risk infection. It is not the carriage or vehicle alone but also the bus stops and stations which can be potential spots for infection.
- Tourism & Travel
Air travel to be minimized mainly due to the concerns regarding the closed environs of the aircraft and the number of people at the airports. Business travel will be ‘only be absolutely necessary’. Many people are getting a hang of working from home and hence managing teams will not be that difficult. Companies also rationalizing costs are preferring video conferences and conference calls.
The aviation sector will be one worst to be hit. Prior to the pandemic, the sector was suffering but this will be a double whammy even though crude prices are low. This probably will be the worst for the airline industry.
- Ecommerce Businesses
Whilst Online grocery companies and e-commerce firms are also hoping that a massive shift will take place towards online shopping, as some people will be wary of going to crowded shops and markets, online retail still is in its infancy in India, Many have been put off by the long waiting periods for delivery. The Kirana stores (for their proximity) and departmental chain stores (for the convenience) have responded well ensuring that customers are visiting them. I do expect a marginal increase in online e-commerce consumption once the pandemic subsides especially for those who are scared of visiting offline stores.- Fresh Uncooked Food
In most parts of the world, there has been a significant uptake in fresh vegetables and fruits as there is a tremendous increase in at-home cooking due to time availability. Cooking has also become fun and a time to bond with each other at home.
With health being an important parameter now, the consumption of healthy foods will increase.
With the drop in the restaurant business and there will be uptake for home-cooked food which will increase sales of farm produce ( vegetables, fruits, dairy, and meat).
- Online Food Aggregators
Many people will prefer home-cooked food for health and safety reasons. Whilst there is no record people having contracted the virus from packaged fresh food delivered from kitchens/ restaurants, people are still cagey. I would expect this trend to continue for some time to come. The government has also not been very forthcoming seeding doubts in the consumer’s minds. In the long run too, there will be a drop in food delivery orders. Presently they have reported a 70% drop in sales, and while this is temporary, coming up to the pre-pandemic order level will be difficult unless they offer many freebies just like in the heady days of discounting and offers but given the overall economy that is doubtful too. These aggregators will also have to ensure that hygiene standards are maintained at the partner restaurants and kitchens. Last but not least contactless delivery will become more of a norm.
- Dine-ins
The shutdown of restaurants and pubs will affect dine-in restaurant businesses. The industry body - The National Restaurant Association of India, estimates a loss up to ₹80,000 crore in 2020. Many restaurants and eateries will shut resulting in large scale job loss. Restaurants can expect a small growth after the lockdown but it will not be to the same level as pre-pandemic
- Indulgences
- Cars
Executives expect that affordable cars will see a spike in sales has customers will avoid both aggregator serviced cars and public transport. Hygiene, safety, and care will take importance. However, I doubt whether high ticket cars will see sales growing.
- Consumer Durables
Thanks to the lockdown, all appliance brands have seen a 30% drop in sales. Many manufacturers have stopped production. With March, April and parts of May affected by the virus, air conditioner sales are a whitewash. Plus given the economic conditions, customers will not invest in expensive white or brown goods
- Service
Service for appliances will increase as customers would like to stretch the rupee further and also stretch the life of the appliance. Till the economy stabilizes, customers will service or repair their durables. Expect a significant uptake here.
- Financial Products and Services
Just prior to the lockdown, financial services have been plagued by bad news. The Yes Bank saga, loan defaults, questions on Indusind, etc. I expect a flight of savings from the smaller private banks to larger, well established private banks or public sector ones. I would expect companies also to design products that are more debt-driven with less exposure to equity, simply because people want to save, take fewer risks and play the waiting game.
People’s behavior is extremely conventional, often referred to as the status quo bias summarised aptly by the expression ‘past behavior best predicts future behavior.’ The crisis has forced people to change behavior, radically in some and not in others, and if consumers find that some of the new ways suit them better then they will surely shift to it.
Just how long it will take for consumer behavior to return to normal depends on each person’s psychological resilience, including how quickly they can adapt to change, how optimistic they are and whether they can adopt strategies to regain a sense of control.
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