The COVID-19 outbreak has had a significant, short-term impact on consumer behavior, largely driven by social distancing, health protection and concerns about supply of essential products. People are buying more online in general, and purchasing more survival items (e.g. food basics) and sanity products (e.g. entertainment). While much of this is driven by the current predicament, what remains to be seen are the longer-term shifts in attitudes and behavior that will have a lasting impact on how companies relate to their customers.
In light of the global pandemic, there are several core developments that give rise to questions around enduring behavioral change, including:
- Safety and security. Although there are a number of factors that have led people in western society to become more mindful of safety and security, the current crisis could compound this mindset, and even more than in the past, bring it to a very personal level. New questions will be raised about the safety and security of most products/services both from a physical and digital standpoint. As well, the new reality could drive change in demand for certain products and services, and/or changes to the manner in which they are delivered.
- Compassion and globalization. Unlike crises of the past, the current pandemic is global in nature and impacts all of us. This could give rise to a more enduring sense of tolerance and compassion for others. The sense that we are all in it together could have a lasting impact on how people view brands and what they expect of the companies behind them.
- Social patterns. We are social beings, but that could have a different meaning going forward. There are products, services and, indeed, entire industries that are predicated on the desire by some to gather in larger social settings. Might this give way in favor of smaller groups, greater use of technology and other behavioral change?
In the investment world, there is now much speculation around which industries could benefit and which could suffer longer term in light of the pandemic. While the main motivation is to determine where to invest for the long-term, the underpinning of speculation is potential change in consumer sentiment and behavior. Some of the speculation centers on industries that were very quickly and overtly impacted by the pandemic. For example, the travel industry had been hugely impacted short-term, and the impact could carry through to longer-term reluctance to travel or to choose vacation options that involve congregating in larger groups (e.g. cruises, all-inclusive resorts). Less obvious are the potential impacts on brands where attitudinal and behavioral change could have a more subtle impact. For example, luxury brands typically involve a more high-touch sales process; will current events lead to a change in this process or, alternatively, increased aversion to luxury brands altogether? Similarly, will increased online shopping activity during self-isolation have a more lasting impact on overall shopping behavior? Also, will online access to services beyond tangible products or simple transactions lead to expansion of what people are willing to do online (e.g. more complex service interactions)?
The prospect of permanent shifts dictates the need for companies to keep pace with where their customers are going, and how their needs are evolving. A recent article by McKinsey & Company1 outlined the imperative for companies to think across five horizons for a return to normal, including a “reimagination” stage to determine the impacts and implications of any discontinuous shifts. Already, we are seeing examples of businesses adapting to the current situation by reimagining what and how they offer products and services. Food services businesses are delivering food kits to satisfy functional and emotional needs of isolated consumers; clothing stores are offering online shopping parties; fitness clubs are offering online classes; benefit providers are offering virtual consultations with health care professionals, and so on. While these attempts to adapt to a new reality are admirable, it remains to be seen what changes will endure and what this means for going forward value propositions.
More than ever, customer insights will be needed to determine what the new normal is with respect to expectations, needs, behaviors, and the shape of future products and services. Research can be used to start understanding and gauging potential changes to layer onto initiatives and regular processes that were in place prior to COVID-19. Through qualitative approaches, observation and analytics, companies can start to take stock of how things might have changed. Armed with these observations, new filters can be applied to assess planned initiatives. Eventually, insights can be used to look for and guide the development of new opportunities that emerge.
Throughout history, black swan events like financial crises and pandemics have tended to have disruptive impacts on society and business. While companies have to walk a careful balance between staying relevant and being sensitive to the harsh circumstances of the moment, those that are prepared for eventual change will have a better chance of appealing to renewed market sentiment when the cloud lifts.
1 https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business
