How will consumer markets evolve after Coronavirus

The health crisis and the unprecedented disruption caused by have had profound impacts on economies, businesses and consumers worldwide, changing the way consumers live, work and shop. Uncertainty remains high, but what is clear is that economies will not emerge unscathed and the daily routines and lifestyles of consumers will shift to accommodate continued social distancing. Whilst treatment and vaccine options are investigated, and potentially into the longer term, a new normal will emerge, as fears of a or other destructive events remain palpable. The global economy is forecast to enter its worst recession since the 1930s, hitting every sector from hospitality to education and finance. Businesses are facing huge challenges in navigating through the turbulence, while coping with disrupted supply chains and rapidly changing consumer needs and habits.

How will consumer markets evolve after coronavirus?

Economic and Consumer Landscape

As consumers continue to struggle with the spread of the virus, lockdowns and new daily regimes, they are also affected by rising unemployment and deteriorating earnings. More households are expected to fall into lower-income segments. Overall, a growing anxiety about future prospects is undermining the global consumer sentiment. Yet the massive change brought about by the pandemic also makes consumers re-evaluate their life priorities, giving rise to new values and spending criteria. Many of the behaviour shifts, including a focus on family or community, health and digital solutions, are expected to last a long time, even in the aftermath of the crisis – particularly if the crisis itself endures.

The Impact of COVID-19 on Market Sizes

With the exception of fresh food, packaged food and home care, COVID-19 will have a negative impact on consumer markets.

COVID-19 THEMES

FROM SUSTAINABILITY TO PURPOSE:

The idea of sustainability evolves beyond the inclusion of ethical credentials and environmental concerns, such as plastic pollution and climate change, to a more holistic approach that aims to create social, environmental and economic value.

HEALTH BEAUTY FASHION: Companies are moving production to the pursuit of the greater good through ethical values and brand positioning. Health, beauty and fashion brands must invest more in locally produced goods now more than ever and concentrate on their brand heritage, transparency, safety and provenance.

FOOD AND NUTRITION: Issues, such as food waste, animal welfare and food security, will be front-lined whilst others, such as packaging sustainability and sustainable sourcing, will lose out.

HOME AND TECHNOLOGY: COVID-19 has both refocused and reclassified what sustainability looks like for home and technology industries. That’s not to say efforts towards cutting energy usage and tackling sea plastic have gone away, more importantly they must now co-exist with the primacy of hygiene and serving consumers during economic hardship.

SERVICES AND PAYMENTS: The pandemic has decimated service and payments sectors like foodservice, travel and sports whilst accelerating digitalisation and contactless in retailing as consumers move online during the pandemic. COVID-19 gives industries a chance to reset and build back better, putting people first to achieve the triple bottom line.

HOMETAINMENT AND THE NEW EXPERIENTIAL CONSUMER:

Consumers redefine and adapt their daily routines as they stay at home longer, further reinforcing many of the pre-COVID-19 trends towards hometainment and digital experiences. This creates strategic opportunities across products and services.

HEALTH BEAUTY FASHION: Augmented and virtual reality, combined with holographic experiences, will transform the online shopping channel by placing consumers in quasi physical store conditions. Brands will need to secure high-quality and meaningful experiences with all channels.

FOOD AND NUTRITION: Meal occasions are coming into the home and could stay. This trend is facilitated by a multitude of new social forums and free online cooking classes, some run by famous chefs.

HOME AND TECHNOLOGY: The trend towards digital education and pastimes is further enhanced, including further growth of gaming and online esports events that compensate for the lack of regular sporting events.

SERVICES AND PAYMENTS: Consumers will remain wary of sporting events, concerts, busy restaurants and more. All of this will drive new approaches to reaching consumers and building consumer relationships.

WHERE AND HOW CONSUMERS SHOP:

The rise of online, click & collect, frictionless retail and direct-to-consumer (D2C) are accelerated. Retail restrictions in place during the pandemic have fast-tracked the shift to digital distribution. Retail operations and consumer demands will prompt new strategies.

HEALTH BEAUTY FASHION: The distribution of beauty and fashion products is being heavily impacted by COVID-19. It has emerged as the ultimate retail disruptor, with the potential to accelerate e-commerce adoption, expand click & collect formats and catalyse frictionless retail and D2C operations worldwide.

FOOD AND NUTRITION: A turning point for e-commerce and a boost for meal kits is tempered by an adverse impact on impulse channels, as consumers are less likely to ‘pop in’ to buy a single chocolate bar from their local convenience store.

HOME AND TECHNOLOGY: With the surge in e-commerce, D2C brands come to the forefront, raising brand awareness and customer acquisition via a variety of platforms. Click & collect also sees a significant boost across markets.

SERVICES AND PAYMENTS: Click & collect and alternative check-out options have become expected, and social selling, super apps and marketplaces have grown drastically in importance. Significant shifts in who is shopping and how often implies changes to how retailers and brands market, merchandise and promote.

WELLNESS REDEFINED:

The primary aspects of optimal health, health in its purest form and the adoption of a holistic approach which encompasses spiritual and physical wellness are being reinforced. Mental wellness and emotional health take centre stage, with the notion of happiness becoming a more tangible commercial prospect.

HEALTH BEAUTY FASHION: Immunity and energy boosting health concepts, alongside those which support concerns related to sleep, stress and anxiety, are key beneficiaries. Digital health solutions are reinforced, and luxury wellness brands move into mental, emotional and spiritual health.

FOOD AND NUTRITION: Healthy eating will become an even more important topic to consider for consumers as the fundamental balance of exercise vs nutrition becomes disrupted by even more sedentary lifestyles.

HOME AND TECHNOLOGY: The concept of “home as health hub” resurfaces and is reinforced as many consumers ramp uptheir at-home cleaning and hygiene routines and more innovation with claims of disinfecting qualities; to surface cleaning and wellness routines.

SERVICES AND PAYMENTS: The recovery for the travel industry will look to health and wellness as a key driver. Retailers will need to bring an impression of calm, comfort and serenity to the consumer experience, with cleanliness and hygiene also at front of mind.

INNOVATION AND THE NEW ‘CORE’:

In a rapidly changing operating and consumer environment, with risk adverse retailers and consumers, the appetite for experimentation is diminished. Innovation will be driven by the demand for immunity/ health boosting ingredients, for which consumers will pay a premium.

HEALTH BEAUTY FASHION: Prominent innovations involve providing home-based services for customers, such as beauty consultations and DIY content.

FOOD AND NUTRITION: ‘Value’ is likely to become the single most important factor for consumers. The D2C channel will develop from a low-base, but smaller brands are likely to get squeezed by retailers looking to simplify their ranges.

HOME AND TECH: Innovation in the short to mid-term refocuses on agility of consumer reach and communication, efficiency and costs to consumers.

THE ‘NEW NORMAL’:

HEALTH BEAUTY FASHION: New attitudes toward physical distance, health and remote working will create opportunities related to therapeutic properties and mental well-being.

FOOD AND NUTRITION: The industry is doing well and expects to return to normal in most cases, with a residual impact of stockpiling bringing purchases forward in some cases.

HOME AND TECHNOLOGY: As consumers cut down on discretionary purchases, tech brands that focus on low-cost strategies will benefit by proving to off er the biggest bang for buck.

SERVICES AND PAYMENTS : Retailers will focus on their value proposition and technology. As the technology gap grows,sales will disproportionately go to the adopters, resulting in a more consolidated retail landscape globally.

Conclusion

expects that the per capita consumer expenditure to fall by 5.2 percent in real terms in 2020 globally, and to not return to 2019 levels until 2022. This contraction in spending will clearly impact the performance of consumer markets, with consumers re-evaluating their priorities much like they did in the aftermath of the Global Financial Crisis.