The post-COVID-19 world will see shifts in consumer behavior
Due to the COVID-19 crisis, the world continues to be in the grip of what several economists are predicting will be a global recession that may even devolve into a global depression. But this crisis, with its accompanying travel and hygiene restrictions, is also giving birth to new societal habits that are namely shaping new regulations that will no doubt alter the structure of future economies and are expected to cause considerable shifts in consumer behavior.
Here are two noteworthy expected shifts that businesses should take into consideration.
1. A rise in a different kind of tourism
This crisis has dealt the travel and tourism industry a very heavy blow. The harrowing experiences of trying to get back to their home country after an outbreak in their vacation destination has more than likely left an indelible mark on the minds of many potential tourists. They are also unsure if their insurance will cover them in a foreign destination should another outbreak occur.
When traveling regains traction, there will likely be more long extensive holidays, taking a period of quarantine into account. Traveling abroad will namely only seem worth the risk for tourists if they are already planning on staying long anyway. Local tourism in which people go on holidays in remote areas of their own countries will likely also see a surge in popularity. These will both potentially be combined with working remotely.
Hotels should take note and shift their marketing efforts towards these markets through existing online platforms, perhaps even transform these platforms from one-way notification communication into two-way interactive communication in anticipation of future business. Using these channels to effectively understand and respond to customer needs in a timely manner will be crucial when they reopen.
“Some other expected shifts in societal habits include a leap from offline to online education, a transformation in health care delivery, an increase in B2B (business to business) digital channels and more specialized delivery solutions for retail businesses and product distributors as they switch to business models predominantly centered on home delivery.”
2. More skilled laborers on the market
Unfortunately, the economic fallout from this crisis is expected to cause unprecedented levels of global unemployment. Many people will find themselves obligated to rethink their career as they will not be able to switch to a competitor company in their field due to the decimation of whole industries.
This will cause a rise in demand for online courses for a large portion of the working population. People will flood to sites where they can learn new skills and receive remote training to reenter the job market at a different position. In addition, many who are lucky enough to remain employed might switch to an entrepreneurial side business to raise their family finances. Both these developments will bring valuable experience to the market once the impact of the crisis has subsided and the economy rekindles.
Some other expected shifts in societal habits include a leap from offline to online education, a transformation in health care delivery, an increase in B2B (business to business) digital channels and more specialized delivery solutions for retail businesses and product distributors as they switch to business models predominantly centered on home delivery. Another significant development will be a possible aversion from the general population to being packed in tight spaces. This is already affecting industries like those of theaters and events/festivals and is expected to give rise to some automation in some of these fields as well as measures to verify the immune status of customers.
What can companies do now?
In addition to paying attention to the expected shifts in public behavior, companies can also look at what has happened in China for some direction. Although each local situation is different, the way certain companies there have responded to the crisis early on yields some valuable lessons that seem applicable in other countries.
Here are two examples:
The cosmetics company Lin Qinxuan
At the onset of the crisis, the Chinese cosmetics company Lin Qingxuan was forced to close 40% of its stores, including all stores located in Wuhan. But rather than sulk over lost earnings, the company’s management team came up with a strategy befitting modern times: they moved their sales efforts to digital channels.
This entailed turning all of their in-house beauty advisors, which number over a hundred, into online influencers who subsequently engaged with customers virtually on social media platforms like the Chinese super app WeChat to boost online sales. This turned out to be a masterstroke as their sales figures in Wuhan saw a 200% increase compared to those from last year.
Other business owners in China have also leveraged WeChat and other social media platforms like Weibo and Tik Tok to promote their products or services via live broadcasts and online interactions. This is certainly something that can be applied in other parts of the world on platforms like Instagram and Facebook. And Tik Tok has now become a staple of the social media milieu outside of East Asia as well.
“While the lessons from Chinese companies form a valuable benchmark on how to handle the crisis, expect to see more lessons emerge from countries like New Zealand, Iceland, and South Korea in the near future.”
The Chinese branch of a global confectionery manufacturer
Some Chinese companies have already planned around accelerated digital adoption in the post-crisis world. For example, the Chinese branch of a global confectionery manufacturer accelerated its existing digital transformation efforts.
The company canceled offline campaigns for Valentine’s Day and other promotional activities and reinvested resources instead into digital marketing, WeChat programs, and partnerships with online platforms on which consumers make purchases of goods or services from physical businesses within a digital environment, the so-called O2O (Online to Online) platforms. They made all of these investments to take advantage of new consumer behaviors during the outbreak and beyond.
There is a valuable lesson in this for major companies around the world; it would be wise to now increase investments in R&D (Research and Development) and innovation instead of only cutting costs. The financial crisis of 2008 already set a precedent for this. A recent study of 100 innovative companies showed that they increased their R&D spending in 2008 and this paid off in profitability and growth in the long run.
While the lessons from Chinese companies form a valuable benchmark on how to handle the crisis, expect to see more lessons emerge from countries like New Zealand, Iceland, and South Korea in the near future.
Prepare for the new normal
The post-COVID-19 era will see a global economy shaped by new habits and regulations based on even tighter travel and hygiene restrictions in addition to more digitized consumer behavior. We are already seeing early signs of accelerated digital adoption; Formula 1 races have now switched to Esports, with real drivers, police helmets are being equipped with Infrared vision in China and indoor delivery robots have started to take off in the US.
To be sure, certain industries are more heavily impacted than others and some businesses may not survive this crisis. But for the ones that do, the shifts in consumer behavior make one thing clear: they must be agile. In this fast-changing world, that is now changing even faster, they must be able to adapt at a moment’s notice. More so than anything else, this will be the norm in the new normal.