The advent of the digital age triggered significant ongoing changes in consumer behaviour, forcing businesses to adapt to remain current. However, the Coronavirus has accelerated these shifts and businesses that fall behind now are likely to get left behind.
“Most of the changes seen in 2020 were precipitated by health concerns, social distancing and the closure of non-essential businesses during lockdown, with factors like ongoing remote working and online shopping being predictable outcomes,” says Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty.
“But some of the changes we are seeing in consumer behaviour were less predictable and many have very significant long-term implications for a broad range of sectors, including real estate. “Research giants like the McKinsey Global Institute already have some very interesting findings from recent studies that businesses need to take on board – sooner rather than later.”
Although the most comprehensive data is currently for the US market, Geffen believes that the South African market will largely mirror these findings, with the following behaviour modifications being especially significant:
1. Consumers are switching brands at an unprecedented rate:
According to McKinsey, the pandemic has prompted an astonishing 75% of US consumers to change shopping behaviours in response to financial pressure, store closings and changing priorities.
This has resulted in a massive switch of brand loyalties, with 36% of consumers trying a new product brand and 25% incorporating a new private-label brand.
And, of those tried different brands, a whopping 73% intend to continue to incorporate the new brands into their routine with Gen Z (born after 1996) and high earners being the most prone to switching brands.
Consumers have cited a number of reasons for switching brands, with the key factors being availability (in-store and online), convenience and value.
This highlights the need for companies to be able to quickly become aware of when shoppers are migrating brands or retailers and then move to ensure product and service availability.
Geffen adds that the fact that this has been less pronounced in countries with a moderate degree of economic shock, such as Germany and Japan, should be an indication of how this will impact less economically-sound countries like South Africa.
Agencies can’t afford to be complacent and rest on their laurels – even the biggest, most established brands. They will have to ensure they stay on top of their game by consistently delivering service excellence and not shying away from going above and beyond their usual duties when necessary.
Even those consumers who are blessed to still be financially secure, have been through a traumatic year and a little kindness with a dollop of empathy and sound advice will go a long way. Ultimately, it’s very much about the consumer experience.
2. Back to basics:
Consumer shopping intent is currently focused on essentials and this trend is set to increase rather than decline, even amongst those with higher incomes.
This year, around 40% of US consumers reduced their spending in general and they are expected to continue to cut back on nonessentials specifically although non-essential online spending on things like clothing is beginning to make a comeback.
“The EY Future Consumer Index study has found that 35% of consumers are currently in a ‘save and stockpile’ mode, concerned about their family’s futures and somewhat pessimistic about COVID-19’s long-term implications.”
And after months of lockdown, most consumers priorities have shifted and people have a new appreciation for the simple things in life, such as quality time with family.
“This has impacted what features buyers prioritise when buying a home and many would now, for instance, opt for the house with a large garden where they can relax with family and friends rather than the lower maintenance one with expensive trendy bells and whistles.”
3. Focus on reliability and durability:
During the last two decades, disposability became an acceptable trait with quick, cheap and cheerful often being the order of the day.
However, this is quickly changing and products and services that now prove to be reliable and durable are likely to develop into strong brands that may be hard to displace.
“People increasingly want the peace of mind of knowing that products and services can be relied on - every time - and that they won’t have to worry about replacing or fixing them any time soon. And those that meet this need are likely to produce powerful brand affinity.”
Geffen concludes: “Ultimately what consumers want are brands that focus on value, authenticity and social awareness and are drawn to brands which clearly communicate a sense of purpose, reliability and quality whilst being proactive about social issues.
“Winston Churchill once said ‘Never let a good crisis go to waste’, and whilst Covid-19 has been devastating in so many ways, the silver lining is that it has also been a necessary shake-up, creating many new opportunities to adapt, evolve and grow.
“Businesses need to be open-minded and innovative during this time of transition and those which can learn from the disruptions and adapt accordingly for this new paradigm have a greater chance of generating greater loyalty thriving in a post-pandemic world.”