I’m sure you would agree that the ‘new normal’ is now so clichéd, I think we are all tired of hearing about it. But certainly, there are new buying behaviours being observed, and of course, strong indications that while people are afraid of getting sick, they are more fearful for their economic stability and future.
Research variously indicates that priorities, certainly at the beginning of the pandemic, centred on basic needs, sending demand for hygiene, cleaning and staple products through the roof. On the other hand, as lockdown continued and people were confined to their homes, there was an increase in searches for luxury, non-essential items or attempts to at least think about planning a travel for leisure trip, showing that people are increasingly in need of a means by which to spoil themselves.
Apparently, the factors that influence brand decisions are also changing, with a penchant for home-grown products being seen to escalate. One trend that is very likely to continue post-pandemic is the move to digital commerce for grocery shopping.
People are said to be embracing technology more than ever to support all aspects and consequences of isolation. The ways in which people spend their leisure time are changing with related social distancing measures, and again, these habits are likely to be sustained.
Surveys indicate that 61% plan to continue watching news channels post-COVID-19, with 55% prioritising family time. Entertainment, learning and DIY are also said to have risen. These trends are reflected in the types of apps that consumers are downloading, related to entertainment, news, healthcare and education.
Essentially, technology is playing a major role in how these interactions occur. Consumer packaged goods companies are urged to increase their focus on digital over traditional tools if they are to engage with consumers and improve experiences.
Calculating what kind of consumer is emerging from the current scenario may well become the difference between survival and growth, or closure.
The EY Future Consumer Index on behaviour across five key markets shows how the pandemic is creating new consumer segments.
While it is acknowledged that the global consumer was already evolving at speed pre-COVID-19, the process now appears to have become exponential. Calculating what kind of consumer is emerging from the current scenario may well become the difference between survival and growth, or closure.
It is emerging that there are key issues for retailers to consider if they are to remain competitive.
The EY index advises retailers to invest greater effort in distributing personalised content that engages potential customers and offers information that attracts their attention. Investment in better online and in-store experiences that address consumers’ interests are also recommended. E-commerce offers the potential to attract recurring purchases, as do well-structured loyalty programmes.
The EY report identifies four segments of consumer behaviour as follows:
- Save and stockpile – 35% of those surveyed
- Cut deep – 27%
- Stay calm, carry on – 26%
- Hibernate and spend – only 11%
Consumers in this last category − hibernate and spend – are said to be mostly aged 18-44 and are the ones identified to be most concerned about the impact of the pandemic. But only 40% of them say they are shopping less frequently.
While 42% say the products they buy have changed significantly, 46% say brands are now more important to them. However, it is well-established that brands need to realign with these changes in consumer spending behaviour.
The ones who deliver seamless authentic solutions and excellent customer experiences will undoubtedly emerge winners in a crowded marketplace.
What’s happening in SA?
Retail is the third-largest sector of our economy and is a labour-intensive industry in South Africa.
Statistics SA data shows the last time quarterly retail sales grew more than 3% was in the first three months of 2018, with consumer confidence slumping deep into negative territory in the third quarter of 2019 and consumer inflation at a 10-year low – this is all pre-COVID-19, of course.
An Investec report highlights the sectors of South African industry that have been hardest hit by closures and lockdown restrictions. Obviously, the restaurant industry and hospitality generally are the hardest hit.
In terms of retailers that will emerge relatively unscathed, the food sector is cited to be fairly untouched, with drug and pharmacy retailers being in pretty much the same position. Both are said to have retained a dynamic market share.
Of course, job losses appear to be an inevitable outcome of lockdown strategies, which in turn has a ripple effect as the fewer the jobs, the less the spending power and the more the damage to the economy.
However, as has been stated in the foregoing, the smart retailer that invests in targeted marketing will emerge triumphant. But to do that it will need to acquire the right technology that can take data and turn it into business advantage and get the retailer closer to the customer.
This is where data analytics has a major role to play. It is about extracting trends and patterns and using those insights to make better decisions and influence future outcomes, which ultimately leads to the ability to understand changing behaviours and satisfy new consumer demands.
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