As the economic and social ramifications of the Great Lockdown make themselves apparent there is a lot of discussion about what consumer behaviours will change when we reach a new normal after COVID-19. Some anticipate widespread changes, but I am not so sure. Mostly it will depend on what context the new normal creates.
Right now, I envisage three stages that we will need to deal with as people, businesses and states.
THE GREAT LOCKDOWN
Under the Lockdown, behavioral changes have been forced upon us: social distancing, working from home, limited or no access to certain products and services, forced choice of brands with which we are not familiar. In this context, I suspect that decades of prior experience will shape our brand behavior and attitudes. Relative brand desire will remain steady, unless forced use of alternatives proves the new brand more convenient, enjoyable or better value or salience declines versus competition.
RECESSION
Sadly, it is obvious we are going to experience a significant recession, adding to people’s woes. How quickly the Lockdown ends, whether there is a resurgence of the virus, how fearful people are to resume previous behavior until a vaccine is available, will all determine how deep and how long that recession lasts. From a brand point of view, we can expect that recession will force additional trading down, postponement and shifting demand, e.g. people choosing affordable luxuries not luxury, and categories and brands will battle for share of a diminished wallet.
NEW NORMAL
As I noted in a previous article, brands that invest for the future will gain competitive advantage and recover faster. However, once category demand and brand desire stabilise it is highly likely that significant market share gains will only happen when a brand manages to disrupt the new status quo. A review of brands during the Great Recession finds that most brands that made significant market share gains did so because they implemented an effective growth strategy and anticipated the future, rather than just reacting to current circumstance.
So, what might that new normal be like? In large part it depends on what is forced upon us and how we respond to that new circumstance. In another recent article, my colleague Nicki Morley discusses the fuels and frictions that determine how people change their behaviour or not. She suggests that when contextual cues and social influences remain as they did before the Lockdown people will tend to stick with their previous behaviours. In the absence of a changed context, people will only adopt new behaviours that are more convenient, more satisfying and more rewarding than previous ones. However, they must be easy to maintain, e.g. online banking or shopping.
Right now, the Great Lockdown has limited behaviour for many: no vacations, no eating out and no live sports, but people report being eager to get back to doing those things when it is safe to do so. And if we look back at history, there is evidence to suggest that they will return to their old behaviours. For instance, after 14 years of rationing in the UK, the Brits returned to eating meat and indulging themselves with alacrity, resulting in today’s “mass gluttonous malnutrition.” I have no doubt that more people are trying to grow their own food now, if only because it gives them a feeling of control and something to do during the Lockdown. However, once the circumstances that evoked this interest have passed will people continue to grow their own or get them from the supermarket? During World War II it is reported that there were 1,400,000 allotments in the UK but by 2008 this had dwindled to 330,000. Similarly, there are widespread reports of shortages of flour and yeast as people resort to home baking and post their successes on Instagram, but will the satisfaction of producing something edible from your own kitchen compete with convenience of a store-bought loaf?
One reason people might stick with these behaviours is if they have more time to indulge in them. Forced to work from home, many people have found they have an extra two hours or more a day because they no longer have to commute. Provided those individuals and their employers find remote working productive then we might find people stick with their new-found gardening and baking skills. Part of the challenge for brands in any category is to anticipate what structural changes like this will mean for their category. For instance, less commuting and working from offices would likely mean less fast food consumed and less need for new cars and smart clothes. On the upside, apart from the obvious winners like Netflix (provided it does not go bust), WhatsApp and Zoom, perhaps people will order new kitchen appliances and utensils?
I find it interesting to look at what changes people have ascribed to the Great Recession. So often, changes are ascribed to the Recession when in fact the origins far predate it. Take this article discussing whether we were more deal conscious ten years later. If we are, it is the consequence of bad decisions on behalf of retailers and investors long before 2008. There have long been too many retail stores in the US and the industry was overdue for a shakeout. When demand slowed companies reacted by discounting, which only served to compound their financial problems and encourage consumers to look for a deal. A pandemic-induced recession seems destined to finish off department store brands and others that have long been on financial life support. And, yes, online retail will benefit but, as the New York Times article points out, it is not really responsible for their demise, rather, it will be the result of weak demand and a long history of valuing volume over value.
So what do you expect to change in a new normal? What categories will thrive? What will not?
Written by Nigel Hollis, Executive Vice President and Chief Global Analyst at Kantar’s Insights Division.