Preparing for the new normal – adapting to new trends and consumer behaviours
How can companies can transition to the future and adapt to new emerging trends and significant consumer behaviour change? An important question for all of us these days and where I would like to share my thoughts.
Different industries are facing different challenges and will need to react differently. Zooming into the Fast Moving Consumer Goods (FMCG) manufacturers sector, we must anticipate changes in consumer behaviour and set up change strategies and teams able to adjust to our ‘’new world’’.
As the coronavirus pandemic spreads across the globe, threatening both lives and livelihoods, consumer goods manufacturers and associated industries continue to play an important role: producing essential items we all rely on for our health and well-being and convenience. CPG leaders have focused on meeting this demand while guarding the safety of employees and customers.
At the same time, forward-thinking companies start think about ‘’the next normal’’ what the world may look like after strong virus-control measures are lifted. The measures in place are expected to lead to the largest quarterly decline in economic activity witnessed in the last century.
Whilst many companies have withstood the initial economic shock, insulated perhaps by sector demand or financial strength, many have not been able to withstand the unpredictability of the pandemic restrictions. All surviving businesses will need to prepare for the expected and unprecedented long-term effects, including a significant decrease in consumer confidence, disposable income, recessionary and changes in consumer behaviour, further on fears and concern driven by uncertainty.
Let’s focus on five key trends we see emerging in terms of consumer behaviour which emerged during the crisis and, I believe, will persist afterwards, for the next 18-24 months. Trends which I strongly believe will become our ‘’new normal’’.
Current context and lessons from previous recessions, combined with the latest market trends developments lead me to anticipate at least five consumer behaviours which I believe will “stick” through the prolonged recovery and the next normal: Increased price sensitivity, increasingly higher digital engagement, rise in attention to wellness and hygiene, “nesting” at home, and a redefinition of brand purpose.
1. Economic insecurity, leading to price sensitivity
Based on the high negative economic impact driven by the lockdown and pandemic, we can estimate that a high number of consumers are pessimistic or unsure about the lasting effect of the current situation. Despite their comparative optimism for economic recovery, 46% of US consumers, 35% of French consumers or 30% of UK consumers said they plan to reduce significantly their spending in the coming months and continue to do so.
Consumers reduced their spending in several ways:
- Refocusing on home occasions, spend less time out of home (restaurants/pubs etc)
- Cutting back on nonessentials purchases and focus mainly on basic products
- Deal seeking and promotions hunting
- Trading down and replace premium products if they are not fully convinced about the main benefits.
2. A huge shift in digital engagement
Physical-distancing rules have increased consumption of online media and significantly accelerated e-commerce, particularly in markets that already are well established in terms of a digital economy. In the United Kingdom, for example, where on line’s share of grocery shopping was 7 percent before the crisis, grocers are furiously increasing capacity to meet demand. In the last 3 months, we see growth of over 50% for a various number of non-essential categories, especially since e-commerce has become the only channel as stores have closed.
I strongly believe this shift will become embeded into day to day business and we will see a big shit in the way companies have already and will continue to adapt business models and operate, both in the way they communicate, market, price and deliver their goods to consumers. Also, in the medium term, I would expect people to prefer the “safe” experience of shopping online to the prospect of shopping in crowded stores. However, the lockdowns and all the restrictions that came with them have starved consumers of the in store experience, whether that be malls, boutique stores, restaurants and other in environment experiences. So this will never completely disappear. We will simply experience this differently.
3. Rise in attention to health, wellness and hygiene
The health & wellness trend became much stronger during the outbreak. “Healthy eating” has remained the highest priority of food shoppers across Europe and consumers are also investing in at-home exercise in the context when we’ve seen how difficult been for the ones having some pre-existing conditions.
I believe this upward trajectory to continue into the next normal. Hygiene will become a core element of wellness. The speed of the virus’s spread has highlighted the level of connectivity and person to person experience in society and the associated risk. Brands should consider the implications for their strategy and communications and how this trend could be embedded at the heart of everything they do. The battle to eradicate COVID-19 will be a long one, and the manufacturers will need to prove their safety and trust credentials.
4. Spending time at home
Staying in is the new going out. Once restrictions are lifted, we should expect people to continue spending more time at home, driven by a desire to save money, persistent safety concerns, and a newfound pleasure in nesting. Through the crisis period, many have invested in upgrading their homes and gardens or bought equipment for new hobbies and routines. Next to groceries, the categories that saw the highest growth in recent weeks have been bread makers, fitness-training and craft kits.
5.Redefinition of purpose
Both big corporations and digital-native brands have nimbly connected with their social-media communities about how they’re helping people affected by COVID-19.
Consumers may expect companies to continue this heightened emphasis on social responsibility after the crisis ends. Consumers do expect that brands and corporations should take action and operate in a way that aligns with society’s interests, even if that means sacrificing shareholder value. But brands must be careful to strike the right tone. During this pandemic, high percent of consumers said they appreciate companies communicating how their brands can be helpful in daily life, but an almost equal percentage said brands shouldn’t “exploit” COVID-19 as a commercial opportunity.
To conclude companies should examine the potential impact of these trends on the categories in which they play and ensure these are embedded into their future strategies. The pace of change never been so slow and human centric companies will be the ones thriving.