Shift in consumer behaviour
The borders may be closed, but people’s minds don’t seem to be wandering when it comes to where they are purchasing. This is reflected in the decrease in demand for commercial property. As observed by KPMG the preference to stay home, and the reduced desire to travel to physical retail outlets, means retailers who rely on traditional bricks and mortar have been significantly impacted, with a number likely to close. KPMG also notes that reduced revenue resulting from the pandemic has seen most retailers look at physical store footprint as a lever of cost reduction. Many are looking either to close or right-size underperforming stores. In terms of office space, Rachel Carrell, founder of British childcare service Koru Kids, says she is watching as every start-up founder she knows looks at fractional office space, rather than a permanent presence.
Bayleys National Director of Retail Sales and Leasing, Chris Beasleigh, says two key things they are hearing in the retail sector are authenticity and buy local. As observed by John Alderman of Brand Buddy Ltd, lockdowns around the world have seen an increase in self-reliance, where people have become more locally minded, situated and oriented, supporting local businesses and opting for staycations. Craig Hudson of Xerostressed the importance of buying local for our New Zealand economy, urging those who can to spend with locally-owned small businesses.
In China, Mark Tanner of China Skinny has particularly noticed a marked shift in behaviour with consumers choosing to stay home instead of dining out, learning new recipes and cooking at home, as they see it as a safer alternative to public spaces. This compares to the traditional culture of dining out or food delivery. People have invested in cooking appliances, furniture, and art, indicating this homebody trend is here to stay for some time yet. Bella Katz, an advisor on consumer retail for NZTE expects there will be a further uptake of online shopping, particularly for home and interior related luxuries as people create sanctuaries in their own homes. She also notes that in apparel, there’s a shift to more casual clothing. Since many people are working from home, the need to dress up has diminished. On this shift, NZTE refers to a March 2020 Neilsen study that found 62% of consumers in South Korea, Malaysia and Vietnam intend to continue eating at home more often than before. Shane Grant, CEO of leading US food company Danone has noted what he predicts to be a lasting shift in digital grocery shopping in all forms.
Importance of trust and safety
When making purchasing decisions, the pandemic has increased the level of importance placed by consumers on trust and safety. Sharon Fraser, General Manager at the Intercontinental Hotels Group in China has observed that consumers want to be reassured that steps have been taken to ensure their health and safety, which she believes will last well beyond the pandemic. Adam Wills of Crosstown Doughnuts noted that during times of national stress, consumers seek products that make them happy, and tend to spend their money with brands they trust.
This trend is prevalent across East Asia, says NZTE, as consumers’ emphasis placed on safety has led to retailers investing heavily to ensure they meet government requirements and exceed consumers’ expectations for hygiene and safety. Fresh food and produce are among the categories for which suppliers and retailers may need to invest in packaging to counter food safety concerns.
Beyond this, consumers are becoming increasingly aware of the supply chain of their purchases, and often moving to subscriptions rather than leaving it to chance. Mark West of the Stanley Gibbons Group believes that the subscription model will continue to grow as consumers look to automate the replenishment of key commodities, and focus on what they need as opposed to what they desire.
Shifting experiences online
With restrictions still being imposed all over the world, industries that typically rely on face-to-face engagement have been hugely impacted by Covid-19.
In a recent interview with Professor Paula Morris, conducted by The University of Auckland, Paula comments that lockdown has made people much more open to having arts experiences online. For the artist however, adapting to this shift has its challenges. Milly Olykan of the Country Music Association based in the US has observed an accelerated willingness for musicians to give away their live music online for free. She notes that the trend became a necessity as musicians looked to reach and remain engaged with their fans, and broaden their fan base. This more intimate and less produced method of engagement has led to increased interactions between artists and their fans, giving them more access to their personal lives. This has been used instead of the typically monetised meet and greets, personal appearances and corporate events, and may have a long term impact on the way artists interact with their fans in a post-Covid environment.
The world of sport is seeing necessary innovation also, with crowded in-person games feeling like a lifetime ago for many. As most events this year have been cancelled, there has been a huge knock on effect to both athletes in training, and the support systems and event industries that are involved. Jon Doig, CEO of Commonwealth Games Scotland, observed that the increasing regulations around mass gatherings has triggered an acceleration in the development and acceptance of online training, events, and e-sports as a legitimate part of the sporting system, both as an alternative and adjunct to traditional sports infrastructure.
Around the world, Covid-19 has amplified innovation across the consumer goods and services sector. This is reflected in the innovation we’ve seen, shifting consumer behaviours, the push to support local, the emphasis placed on safety and trust in the supply chain.
The next installment of this series will be on Tourism. At Kea, we pride ourselves on aggregating the thought leadership of Kiwis making waves around the world. If you would like to hear more from us, please join us as a member here.